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

Saturday, June 9, 2018

week ending Jun 9

In Parting Interview, Bill Dudley Admits Why The Fed Got It All Wrong - The outgoing New York Fed President sat down with Liberty Street Economics' editor Trevor Delaney for his exit interview... and  - whether by intent or accident - Dudley let's slip a couple of 'truths' that we suspect Jay Powell would rather 'we, the people' were not aware of."One of the challenges going into the financial crisis, for example, if you look at the big DSGE model - dynamic stochastic general equilibrium model - it didn’t include a finance sector....So the whole experience of what actually happened during the global financial crisis - the collapse of the financial system and that taking down the real economy - wasn’t an actual possibility within the major macro models that some economists were using to forecast the economy."..."The financial market indicators give you a lot more information about what people expect to happen tomorrow and how the economy is likely to evolve, conditioned by those economic indicators.For twenty years now, I’ve been a big proponent of thinking about things through a prism of financial conditions. In other words, the Federal Reserve sets monetary policy, and that monetary policy sets financial conditions, and those financial conditions are what actually drive the economy.Historically macroeconomists imagined that changes in federal funds were transmitted directly from the Fed to the macroeconomy.But in my mind, the linkage between the federal funds rate and financial conditions is quite variable.   So if you just focus on the federal funds rate, you’re going to, at times, make pretty bad forecasts about what’s actually going to happen in the real economy."  Read the full transcript here...

Flat Yield Curve May Result in a More Aggressive Fed - Tim Duy - By all accounts, the Federal Reserve is intent on pushing ahead with its plan to gradually raise interest rates despite some strong signals in the bond market that policy makers risk going too far. Specifically, I'm talking about the yield curve, which is the flattest since 2007 and is rapidly heading toward an inversion.  The question of whether an inverted yield curve, which is traditionally a veryprescient recession indicator, will cause the Fed to rethink its tightening plans is shaping up to be the next big debate among policy makers, with potentially major consequences for financial markets. The answer may lie in recent comments by key Fed officials who suggest an inversion may not mean what it has in the past.  The implications for investors are two-fold. First, the Fed may be very aggressive when boosting rates over the next year. Not aggressive in the pace of rate hikes, but aggressive in the willingness to keep increasing them despite an inverted yield curve. Investors should not discount the Fed’s intentions to continue hiking rates, especially if the economic data remains strong. Second, the Fed is playing with a spark that might kindle the next recession sooner rather than later. Maybe the yield curve is not the signal it once was, but history is not on the Fed’s side with this bet.  During monetary tightening cycles the yield curve flattens as rates on short-term bonds rise more quickly than rates on long-term bonds. The curve tends to flatten nearly completely as the economy reaches the mature stage of the business cycle and the Fed pushes policy rates toward their neutral level. At about 45 basis points, the difference between two- and 10-year Treasury note yields is down from about 125 basis points when the Fed began its current rate hiking cycle in December 2015. A flat yield curve can coexist with an extended period of economic growth, such as during the late 1990’s.

Senate banking panel to vote on two Fed nominees — The Senate Banking Committee has scheduled a vote Tuesday on two of President Trump’s nominees for the Federal Reserve Board.  The panel will vote on economist Richard Clarida to be vice chairman of the Fed board, as well as Kansas Banking Commissioner Michelle “Miki” Bowman, who was nominated for a seat designated for a community banking expert.  Clarida is a professor at Columbia University and managing director of Pacific Investment Management Co. If confirmed, he would fill the vice chairman's seat that has been vacant since October when Stanley Fischer retired.

Spreads Watch - Menzie Chinn -  In all the excitement between the Italian crisis and the US lashing out with tariffs to be levied against our allies, it was easy to overlook this event:   The 10year-3month spread broke through 1%, to 0.9%, while the 10year-2year spread plumbed new depths, to 0.4%. As the graph indicates, the last time around in 2005, this event presaged the onset of a recession about 2 and a half years later. As I noted in an earlier post, about three of the six times that this has happened in US post-war history, a recession has not occurred. Was this a special event, driven by once-off factors? The spread dropped on 5/29 as the ten year dropped, likely because of safe haven effects. This point is highlighted by Figure 2, which shows the VIX against the spread. Note, however, that by 6/1 the VIX had returned to more normal levels, and yet the spread remained at 1%. In other words, the spreads continue their downward march.  Using data through March and a formal model, the probability of a recession within of 12 months of March was 30%. Presumably for the 12 months from May, the probability is higher.

Q2 GDP Forecasts - From Merrill Lynch: Better than expected trade data nudged up 2Q GDP tracking to 3.8% qoq saar [June 8 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 4.5 percent on June 6, down from 4.8 percent on June 1. [June 8 estimate]  From the NY Fed Nowcasting Report  The New York Fed Staff Nowcast stands at 3.1% for 2018:Q2 and 2.9% for 2018:Q3. [June 8 estimate]  CR Note: These estimates suggest real annualized GDP in the 3% to 4.5% range in Q2.

Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020 -- U.S. economic growth could face a challenging slowdown as the Trump Administration’s powerful fiscal stimulus fades after two years, according to former Federal Reserve Chairman Ben Bernanke.Bernanke said the $1.5 trillion in personal and corporate tax cuts and a $300 billion increase in federal spending signed by President Donald Trump “makes the Fed’s job more difficult all around” because it’s coming at a time of very low U.S. unemployment. “What you are getting is a stimulus at the very wrong moment,” Bernanke said Thursday during a policy discussion at the American Enterprise Institute, a Washington think tank. “The economy is already at full employment.” The stimulus “is going to hit the economy in a big way this year and next year, and then in 2020 Wile E. Coyote is going to go off the cliff,” Bernanke said, referring to the hapless character in the Road Runner cartoon series.The timing of Bernanke’s possible slowdown would line up badly for Trump, who has called the current economy the best ever and faces reelection in late-2020. Bernanke, who stepped down from the U.S. central bank in 2014, is a distinguished fellow in residence at the Brookings Institution in Washington

Bernanke Video: "What you are getting is a stimulus at the very wrong moment" This discussion with Ben Bernanke is worth watching. He discusses monetary policy, QE, and the poor timing of the recent fiscal stimulus (something I've mentioned several times).The Bernanke portion of the video ends around the 35 minute mark. Ben Bernanke: Lessons learned from 10 years of quantitative easing | LIVE STREAM – YouTube

Larry Kudlow: A Horseman Of Economic Apocalypse? -- In my last article I outlined the unfortunate propensity of Donald Trump to invite such “swamp creatures” into his cabinet and into the White House. Some of these people are rather notorious and well-known, like Council on Foreign Relations warmonger John Bolton.  However, others have gone under the radar. The name of Larry Kudlow has been making the rounds lately, at least in mainstream economic circles, largely because of his role in Trump’s accelerating global trade war efforts. Kudlow is the Director of the National Economic Council and adviser to the Trump administration, recently replacing Goldman Sachs alumni Gary Cohn. As such, he is perhaps the greatest influence in the White House in terms of U.S. economic policy when applied in international relations. A powerful position indeed.Kudlow has been in the news feeds the past couple of days due to his remarks concerning tariffs on Canadian aluminum and steel, saying that Canada was “overreacting.”  The media has also expounded on his confidence that the trade war will be "brief" and that deals will be easily reached that address the concerns of the US.  He has also been aggressive in his comments on the World Trade Organization and the G7, which appeals to many of us conservatives at first glance; however, when one realizes how little leverage is truly behind such rhetoric, Kudlow's tough stance becomes unimpressive.First, I highly doubt that Kudlow is surprised by Canada’s anger over trade tariffs considering their economy is so distinctly integrated with the U.S.  Second, every time we hear rumors that the trade war is being quickly resolved, talks fall apart and tensions escalate.  The most likely outcome in my view is that retaliatory measures by numerous foreign trading partners will be common and unrelenting during Trump’s trade war. Count on it.  That said, the fact that Kudlow in particular is overseeing Trump’s economic war should not go without examination or concern by Trump supporters.

U.S. in Early Talks for Potential Summit Between Trump and Putin   —The White House is planning for a potential summit between President Donald Trump and President Vladimir Putin of Russia, according to people familiar with the efforts, a meeting that would bring to the international stage one of the world’s most enigmatic political relationships. A senior administration official said Friday that Jon Huntsman, the U.S. ambassador to Russia, has been in Washington to help arrange a meeting between Messrs. Trump and Putin. The planning is still at an early stage, the official said, with the two nations needing to agree on a date and location. “This has been an ongoing project of Ambassador Huntsman, stretching back months, of getting a formal meeting between Putin and Trump,” the official said. Any meeting between the two presidents would be expected to include discussions on Syria, Ukraine and nuclear-arms control. The summit’s purpose would be to resolve longstanding differences, people familiar with the matter said. The summit would mark the third meeting between Messrs. Trump and Putin, who held discussions on the sidelines of two international meetings in 2017—one at the Group of 20 summit in Germany last July and at a November summit in Vietnam. The potential meeting comes as special counsel Robert Mueller continues to investigate alleged Russian interference in the 2016 presidential election and whether associates of Mr. Trump colluded with Moscow. Mr. Trump has denied any collusion and has described the probe as a “witch hunt.” Russia has denied meddling in the election. Asked about a summit taking place amid Mr. Mueller’s investigation, another administration official said, “Of course there are discussions of the political perception.” 

Austria Offers to Host Summit Meeting Between Trump and Putin - The Austrian government is encouraging President Donald Trump and Russia’s Vladimir Putin to hold a summit in their country, potentially echoing a historic Cold War meeting there between a newly elected President John F. Kennedy and the Soviet leader Nikita Khrushchev. Austria offered to host a meeting between the two leaders, a White House official said on Thursday. While Trump and Putin have previously discussed the possibility of a summit, the U.S. has nothing further to say on the idea, added the official, who was granted anonymity to discuss the matter. White House Press Secretary Sarah Huckabee Sanders confirmed in April that Putin and Trump had talked about meeting in a number of potential locations, including the White House. Russia and the U.S. are in talks about a summit but there are no agreements yet, RIA Novosti reported Friday, citing an unidentified Russian diplomat. An Austrian government spokesman declined to comment.Putin asked Austrian Chancellor Sebastian Kurz to organize a summit when he met him in Vienna on Tuesday, the Wall Street Journal reported Thursday. Speaking to Austrian public broadcaster ORF before the Vienna visit, Putin said he and Trump speak regularly by phone but have no immediate plans for a formal meeting.“I think that the possibility of these meetings depends to a large extent on the internal political situation in the United States,” Putin said, according to the English translation of the interview provided by the Kremlin. “The congressional election campaign is getting under way and then there will be the next presidential election, and the president of the United States is coming under attack over various matters. I think this is the main reason.” Russian efforts to disrupt the American presidential election in 2016 remain a source of tension between the two nations and has led to U.S. sanctions of several Russians close to Putin and his circle.

 Sen. Paul To Hold Hearing On "Unauthorized War's Effect On Federal Spending" - Senator Rand Paul (R-KY) announced today that on Wednesday, June 6th, he will be holding a hearing on the enormous costs of the endless wars which continue to be fought under the 2001 Congressional Authorization for the Use of Military Force passed after the 9/11 attacks.  According to a press release from Paul's office, the hearing "will explore both the financial impact and the constitutional implications of open-ended war under the existing Authorization for Use of Military Force (AUMF) and examine the potential ramifications if Congress adopts the revised AUMF proposed by Senators Bob Corker (R-TN) and Tim Kaine (D-VA)." Unlike the great majority of Congressional hearings, Paul's line-up of witnesses actually promises to provide some serious debate and cogent analysis of the issue. Noted Constitutional scholars Judge Andrew Napolitano (a member of the Ron Paul Institute Board) and Professor Jonathan Turley will provide expert testimony. The two will be joined by Christopher Anders, Deputy Director of the ACLU Washington Legislative Office.The Corker/Kaine revised AUMF is sold as Congress finally waking up to its Constitutional war obligations, but as Sen. Paul has noted in a letter to his Senate colleagues, "it is clear upon reading that the Kaine/Corker AUMF gives nearly unlimited power to this or any President to be at war anywhere, anytime and against anyone, with minimal justification and no prior specific authority."By many estimates, Iraq and Afghanistan alone have cost the American taxpayer close to $3 trillion with no end in sight and no "victory" in sight. That does not include money spent to overthrow and murder Libya's Gaddafi, to raise an army of jihadists to overthrow Assad in Syria, and to expand the US military presence to 50 out of 53 African countries. And, of course, to backstop Saudi Arabia's genocide in Yemen.

Military Contracts Are the Destiny of Every Major Technology Company - Friday afternoon, Gizmodo reported that Google would not renew Project Maven—its contract with the military to develop image-recognition AI—when it expires next year. A Google executive cited a wave of negative attention the company experienced from pursuing the project as a main reason for not renewing the contract. Nevertheless, top Google executives defended the company’s work on the project and didn’t say whether Google would be leaving the military business entirely. This was a telling omission, considering that Google is actively pursuing a multi-billion dollar cloud computing contract with the Department of Defense. In other words, Google employees may have won on the AI issue, but what comes next? Is getting cozy with the Department of Defense the inevitable destiny of any company working on cutting-edge technology? Friday’s announcement came on the heels of a New York Times article published Thursday about how Google was experiencing an “identity crisis” as a result of Project Maven. One of the problems with capitalism is that it demands growth, and in this sense Amazon and Google are paragons of the capitalist mindset. From its humble origins as a search engine run in a garage, Google has grown to be a company conglomerate called Alphabet employing 90,000 people that is a world leader in AI research, open source technologies, self-driving cars, and literal moonshot ideas. Likewise, Amazon has morphed form a book retailer to becoming the world’s “everything store,” a logistics company, a drone research lab, and a cloud computing platform. There are only so many markets that can be conquered and any company that grows large enough will eventually run up against the highly fortified walls of the military-industrial complex. In the age of the forever war that is fought as much IRL as in cyberspace, the complex is quite welcoming to technology companies, and many try to win Pentagon contracts as soon as they can. In fact, it’s amazing that Google and Amazon could grow as large as they have without the help of military cash.

US ramps up threats to China and North Korea --Defense Secretary James Mattis and other senior Pentagon officials issued military and economic threats against China last weekend, and also toughened Washington’s demands on North Korea.Speaking at the annual Shangri-La strategic forum in Singapore, Mattis accused Beijing of waging “intimidation and coercion” against other countries by “militarising” islets in the South China Sea. China would face “larger consequences” from the US, he asserted, including financial ones.US President Donald Trump, backed the remarks by his Pentagon chief, tweeting on Saturday: “Very surprised that China would be doing this?”Mattis also declared North Korea would receive no relief from sanctions until it had demonstrated “verifiable and irreversible” steps to denuclearisation. And US troops would remain in South Korea regardless of the outcome of next week’s possible summit between the US and North Korean leaders. Mattis’s comments followed a provocative declaration last Thursday by Lieutenant General Kenneth McKenzie, the Pentagon’s director of the Joint Staff. Asked by a reporter if the US could “blow apart” one of China’s man-made islands, he said: “I would just tell you that the United States military has had a lot of experience in the Western Pacific taking down small islands.”  These remarks, referring back to World War II, underscore the reality that the June 12 talks between Trump and North Korean leader Kim Jong-un, if they proceed, are not about peace on the Korean Peninsula. Whatever the outcome, the US military and trade war confrontation with China, intended to reassert Washington’s post-World War II hegemony over the region, will escalate.

U.S. Evacuates Multiple Employees From Chinese Consulate Over Mysterious Illness -- The U.S. State Department has sent "a number of individuals" from the U.S. Consulate in Guangzhou, China, back to the U.S. after screenings showed they may have been affected by mysterious health problems similar to what diplomats experienced in Cuba. Two weeks ago, the agency said one government employee in Guangzhou experienced "vague, but abnormal, sensations of sound and pressure," similar to the unexplained incidents — sometimes described as "sonic attacks" — that recently sickened staffers in Cuba. The State Department says it sent a medical team to Guangzhou to screen any employees or family members who requested a test. On Wednesday, State Department spokesperson Heather Nauert said the employees were sent to the U.S. for a "further evaluation and a comprehensive assessment of their symptoms and findings."A department spokesperson said the agency was not specifying the exact number of people evacuated, saying it was due to medical privacy concerns.On Tuesday, Secretary of State Mike Pompeo announced a task force to respond to the "unexplained health incidents."  He said that as of now, 24 government employees or family members who worked in Cuba had confirmed symptoms "similar to those noted following concussion or minor traumatic brain injury." The Guangzhou employee was found to have similar symptoms on May 16

The US has a secret plan for AI to hunt down North Korea's nukes — but it could make war more likely (Reuters) - The U.S. military is increasing spending on a secret research effort to use artificial intelligence to help anticipate the launch of a nuclear-capable missile, as well as track and target mobile launchers in North Korea and elsewhere.The effort has gone largely unreported, and the few publicly available details about it are buried under a layer of near impenetrable jargon in the latest Pentagon budget. But U.S. officials familiar with the research told Reuters there are multiple classified programs now under way to explore how to develop AI-driven systems to better protect the United States against a potential nuclear missile strike.If the research is successful, such computer systems would be able to think for themselves, scouring huge amounts of data, including satellite imagery, with a speed and accuracy beyond the capability of humans, to look for signs of preparations for a missile launch, according to more than half a dozen sources. The sources included U.S. officials, who spoke on condition of anonymity because the research is classified. Forewarned, the U.S. government would be able to pursue diplomatic options or, in the case of an imminent attack, the military would have more time to try to destroy the missiles before they were launched, or try to intercept them.  The Trump administration has proposed more than tripling funding in next year's budget to $83 million for just one of the AI-driven missile programs, according to several U.S. officials and budget documents. The boost in funding has not been previously reported.

White House confirms Trump-Kim summit on resort island Sentosa -- The Capella Singapore, a luxury hotel on the Singaporean resort island of Sentosa, is seen in May. Photo: Kyodo The landmark summit between US President Donald Trump and North Korean leader Kim Jong-un will be held at Singapore’s Capella Hotel on the island resort of Sentosa, off the city state’s southern tip, the White House has confirmed.Trump’s press secretary Sarah Sanders confirmed the venue for the June 12 event on Twitter on Tuesday, writing: “The venue for the Singapore summit between @POTUS and Leader Kim Jong Un will be the Capella Hotel on Sentosa Island. We thank our great Singaporean hosts for their hospitality.”The Singapore government meanwhile has announced enhanced security measures around the venue and said it would restrict air space over the city state from June 11 to 13. The five-star Capella Hotel, owned by Singapore property firm Pontiac Land Group, was not an obvious choice among observers to host the summit because, unlike the more central Shangri-La Hotel, high-key political meetings have not previously been held there. But it does have the advantage of seclusion.

Trump Wants Kim to Commit to Disarmament Timetable in Singapore -- The White House wants North Korean leader Kim Jong Un to commit to a timetable to surrender his country’s nuclear arsenal when he meets President Donald Trump next week in Singapore, a high-stakes summit that could last as long as two days -- or just minutes. Trump has been advised not to offer Kim any concessions, as the White House seeks to put the onus on the North Koreans to make the summit a success, one U.S. official said. The president is determined to walk out of the meeting if it doesn’t go well, two officials said. Alternatively, Trump is toying with the idea of offering Kim a follow-up summit at his Mar-a-Lago resort in Palm Beach, Florida -- perhaps in the fall -- if the two men hit it off. “There could be more than one meeting, more that one conversation” between Trump and Kim, presidential counselor Kellyanne Conway told reporters Wednesday, adding a nuclear deal may take “2, 3, 4, 5” meetings. Other than announcing that the two leaders will first meet at 9 a.m. Singapore time June 12 at the Capella Hotel on Singapore’s Sentosa Island, the White House has described no schedule for the summit. If the first meeting goes well, there will be further events that day and perhaps even on June 13. 

Trump's hawkish security adviser may have tried to sabotage the Kim Jong Un summit — and now he's out of the talks - President Donald Trump's hawkish national security adviser, John Bolton, infuriated North Korea with a strange and threatening comment about denuclearization in May, and now he seems excluded from the countries' talks.When Trump met with the North Korean official Kim Yong Chol in the White House recently, only Secretary of State Mike Pompeo attended. Bolton, who has plenty to say about North Korea, did not.The reason most likely goes back to Bolton's comment in May that the US was looking at a "Libya model" for denuclearizing North Korea.The Libyan leader Muammar Gaddafi was killed by rebels in 2011 during a conflict in which the US intervened a few years after Libya dismantled its nuclear program. Bolton's comment was widely understood to imply that North Korean leader Kim Jong Un too would soon meet his end. North Korea responded shortly after by lashing out at Bolton, saying it could not hide its anger toward him.Now, Pompeo has told Trump that allowing Bolton to meet with North Korean officials would be "counterproductive," according to CNN. "There has been considerable tension between them ever since" the two men clashed over Bolton's Libya comment, CNN quoted a source as saying. Bolton has never expressed much hope for a summit between Trump and Kim Jong Un, and now a growing chorus of experts think he may have tried to sabotage the summit.

Dennis Rodman will be in Singapore for Trump-Kim summit- NY Post - NBA star turned Kim Jong Un soulmate Dennis Rodman will be in Singapore during President Trump’s summit with the North Korean dictator next week, The Post has learned. “The Worm” will arrive in the country a day before the June 12 sitdown — and sources said he could even play some sort of role in the negotiations. “No matter what you might think about his presence. One thing’s for sure the ratings will be huge,” a source said. “A lot of times in situations that involve complex diplomacy countries like to identify ambassadors of goodwill and whether you agree with it or not Dennis Rodman fits the bill.” The zany, 6-foot-7 ex-baller — who has struck up an unlikely bromance with the pint-sized, 5-foot-7 Kim, and has visited the rogue regime five times in the past — took some of the credit for getting the two leaders together. In an April interview with TMZ, Rodman said that Kim didn’t understand the president until he gave the North Korean strongman a copy of Trump’s ghost-written book, “The Art of the Deal,” for his birthday in 2017. “I think [Kim] didn’t realize who Donald Trump was at that time, I guess, until he started to read the book and started to get to understand him. Donald Trump and Kim Jong-un are pretty much the same,” Rodman told the website.

Senate Probe Exposes Obama's Secret Iran Deal To Sidestep US Sanctions - Seemingly not satisfied with airlifting billions in US taxpayer cash on pallets to Tehran, AP reports that the Obama administration secretly sought to give Iran access to the U.S. financial system by sidestepping sanctions kept in place after the 2015 nuclear deal, despite repeatedly telling Congress and the public it had no plans to do so. An investigation by Senate Republicans released Wednesday that exposes the Obama administration's politically-motivated actions to secretly offer help to Iran while withholding the truth from the American taxpayers about the extent of Washington's handouts to Tehran. As AP reports, The report by the Senate Permanent Subcommittee on Investigations revealed that under President Barack Obama, the Treasury Department issued a license in February 2016, never previously disclosed, that would have allowed Iran to convert $5.7 billion it held at a bank in Oman from Omani rials into euros by exchanging them first into U.S. dollars. If the Omani bank had allowed the exchange without such a license, it would have violated sanctions that bar Iran from transactions that touch the U.S. financial system. While issuing the license was not illegal, AP reports that it still went above and beyond what the Obama administration was required to do under the terms of the nuclear agreement.  Under that deal, the U.S. and world powers gave Iran billions of dollars in sanctions relief in exchange for curbing its nuclear program. Last month, President Donald Trump declared the U.S. was pulling out of what he described as a “disastrous deal.” The license issued to Bank Muscat stood in stark contrast to repeated public statements from the Obama White House, the Treasury and the State Department, all of which denied that the administration was contemplating allowing Iran access to the U.S. financial system.

 Trump and Allies Set for Showdown Over Trade -  President Donald Trump is headed for a showdown with America’s allies at a Group of Seven summit this week, with the European Union and Canada threatening retaliatory measures unless he reverses course on new steel and aluminum levies.Trump changes his mind often enough that U.S. allies and rivals alike hope he’ll do just that on the duties. An all-out trade war may become unavoidable if he doesn’t. “We still have a few days to avoid an escalation. We still have a few days to take the necessary steps to avoid a trade war between the EU and the U.S.,” French Finance Minister Bruno Le Maire said after a meeting of G-7 finance ministers and central bank governors in Whistler, British Columbia.Meanwhile, the Trump administration is facing a warning from China that it’ll end negotiations to resolve trade tensions if the U.S. pursues planned tariffs on the Asian nation. Commerce Secretary Wilbur Ross discussed increasing China’s purchases of U.S. goods during a just-concluded visit to Beijing, the White House said on Monday, but its statement made no mention of shelving tariff plans.  The White House appeared unfazed by threats from allies. Top economic adviser Larry Kudlow said over the weekend the blame for any escalation lies with U.S. trading partners. Trump doubled down on that message Monday morning, taking aim at barriers against American agricultural exports.

US singled out by G7 allies over tariffs ahead of summit - The United States was singled out by some of its closest allies over the imposition of tariffs that they warn will undermine open trade and weaken confidence in the global economy. The dispute over US President Donald Trump's new levies on steel and aluminum imports from the European Union (EU), Mexico and Canada is driving a wedge in the G7 group of industrial nations. Following Saturday's conclusion of a three-day meeting of G7 finance ministers, Canadian Finance Minister Bill Morneau issued a summary saying the other six members want Trump to hear their message of "concern and disappointment" over the US trade actions.  Allies, including Canada and the EU, are threatening retaliatory tariffs. The G7 ministers urged US Treasury Secretary Steven Mnuchin to deliver their message before leaders of the group's member countries meet next week in Quebec. Ministers urged the US to abandon the tariffs ahead of the leaders' summit before the move causes deeper divisions within the G7. "The international community is faced with significant economic and security issues, which are best addressed through a united front from G7 countries," said the summary, which was agreed to by the attending ministers. "Members continue to make progress on behalf of our citizens, but recognise that this collaboration and co-operation has been put at risk by trade actions against other members," it added. Bruno Le Maire, France's finance and economy minister, was blunt in his assessment of the Whistler meeting, where ministers confronted Mnuchin. "It has been a tense and tough G7 ... I would say it's been far more a G6 plus one than a G7," said Le Maire, who called the tariffs unjustified. "We regret that our common work together at the level of the G7 has been put at risk by the decisions taken by the American administration on trade and on tariffs," he said. 

G7 ministers criticize US tariffs and warn of trade war - US Treasury Secretary Steve Mnuchin has faced sharp criticism from angry finance ministers of other G7 nations over America's imposition of new tariffs on steel and aluminium imports. France's Bruno Le Maire warned a trade war could begin in "a few days". Meanwhile US Commerce Secretary Wilbur Ross met Chinese Vice Premier Liu He in Beijing to try to ease trade tensions. Afterwards China warned that all trade talks with the US would be void if Washington introduced sanctions. State news agency Xinhua said China was willing to increase imports from many countries including the US. Mr Ross is seeking deals on agriculture and energy to narrow the yawning US trade deficit with China, days after Washington threatened to impose additional tariffs on $50bn (£37bn) of Chinese goods. On Saturday President Trump insisted on Twitter that the US had been "ripped off by other countries for years on trade". He says steel tariffs will protect US steelmakers, which he says are vital to national security. Mr Trump has also complained about barriers US firms face in Europe and elsewhere. "Time to get smart!" he added. At a heated meeting in the Canadian ski resort, the EU and Canada threatened to retaliate. But Mr Mnuchin denied that the US had abandoned leadership in the global economy and said he had passed on the other countries' strong feelings to Mr Trump. There was no joint statement at the end of the meeting, which the BBC's North America correspondent Chris Buckler says is a clear sign of discord. 

 "Just Days Left" To Avoid Trade War France Says, As G-7 Condemn Trump -  With Trump refusing to back down and slapping Section 232 tariffs on steel and aluminum imports from the EU, Canada and Mexico, which were enacted at midnight on June 1, the G-7 meeting taking place in Whistler, also known as Canada's Davos, ended up being one big "bash America" show, with French finance minister Bruno Le Maire saying that "it has been a tense and tough G-7. I would say it has been far more a G-6 plus one than a G-7" pointing at the US, which on Friday he said was "alone against everyone and running the risk of economic destabilization."Seemingly unable to grasp that Trump would dare break with decades of politically correct tradition and turn his back on allies who continue to impose tariffs on US exports yet balk when the US retaliates in kind, Le Maire said on Saturday that Washington has just a few days to take urgent measures if it wants to avoid unleashing a full-scale trade war with its European allies. "We still have a few days to avoid an escalation. We still have a few days to take the necessary steps to avoid a trade war between the EU and the US, and to avoid a trade war among G7 members,"  Le Maire told journalists after the conclusion of the G-7 meeting, according to Reuters. He added that it is up to the US to make the first move: "The ball is in the camp of the United States, it is up to the American administration to take the right decisions to smooth the situation and to alleviate the difficulties." Other top officials of the world’s leading economies joined the French minister in his call for urgent actions. In the "chair’s summary" of the meeting, Canadian Finance Minister Bill Morneau said "the international community is faced with significant economic and security issues, which are best addressed through a united front from G-7 countries" adding that "members continue to make progress on behalf of our citizens, but recognize that this collaboration and cooperation has been put at risk by trade actions against other members."

Macron-Trump bromance soured by ‘terrible’ phone call – report - RT -- A phone call between Donald Trump and French President Emmanuel Macron last week reportedly went badly, after Macron berated Trump for his trade policies, a media report claims. The two leaders talked about trade and the migration problem in Libya. According to CNN’s anonymous ‘sources familiar with the call,’ it was “just bad, it was terrible.”“Macron thought he would be able to speak his mind, based on the relationship,” the source said. “But Trump can't handle being criticized like that.”The call took place on the same day that the Trump administration slapped import tariffs on steel and aluminum from Mexico, the EU, and Canada. The tariffs were widely condemned, and – in a public statement before the call – Macron called them illegal and “a mistake on many points.”“It is a mistake because it responds to a worldwide unbalance that exists in the worst ways through fragmentations and economic nationalism,” he said. “I prefer to say things directly and not through the press; and I will tell him what I told you, which are my convictions that he knows already.” Macron stressed that there would be a European response, and the EU announced on Friday that it would cease trade negotiations with the US and slap retaliatory tariffs on $3.3-billion worth of American products, including orange juice, peanut butter, and Harley Davidson motorcycles.

Trump’s Trade Bloviation Is Becoming Policy—That’s Petrifying --  Jared Bernstein -- How big a deal are the tariffs that Trump formally announced on Thursday? Pretty big, I fear. If you were thinking of importing some steel or aluminum from the European Union, Canada, or Mexico, you’d better act quickly. As of midnight tonight, imports on these metals from those places will face tariffs of 25 and 10 percent, respectively. The tariffs will bump up overall prices only a tiny bit, too little for anyone to distinguish from all the other determinants of inflation. It should also help boost capacity in U.S. steel production. But it will hurt the many more American producers and employees for whom these metals are inputs. Added to these effects will be the higher costs of other imports, as countries hit by Trump’s tariffs are already outlining retaliatory measures.But what worries me more than the tariffs is the shift from the Trump administration’s shift from bark to bite. Up until now, most of Trump’s rhetoric on trade has been just that: bloviation without action. Given my well-honed skepticism about this administration’s ability to genuinely help those workers hurt by trade, this shift from bloviation to actionable policy is more troubling than reassuring. To understand why the tariffs going into effect at midnight may not be that big a deal as what could come later, it’s helpful to go through a few economic facts first.

  • Steel and aluminum comprise less than two percent of our imports
  • While the prices of these metals will climb more noticeably, to get to theoverall price effect, we must consider both the weight of these products in our price measures and the fact that only part of the price increase will get passed forward to purchasers. Goldman Sachs researchers ran the numbers and estimated that the steel tariffs will raise prices on steel by around 0.03 percentage points (3 one-hundredths of a percent); the impact of the aluminum tariffs will be much smaller.
  • I do worry a bit more about this fact: less than 200,000 domestic workers produce these metals here in the U.S. But more than 6 million work in industries that use them as inputs. It’s possible that we will see a sharper bite from the tariffs and more direct job displacements in these input industries.

But to really wrap your head around potential impacts, you have to consider a slew of knock-on effects. While we don’t yet know the magnitude of retaliation by our trading partners, we do know the form they will take: countervailing tariffs on stuff we import. After all, if I were a European trade minister, I’d be seriously pissed off right about now.

Shortly before Trump announced tariffs, his former adviser dumped millions in steel-related stocks -- President Trump’s decision Thursday to impose crippling tariffs on the imports of steel and aluminum took many by surprise — particularly investors, as the Dow Jones Industrial Average closed the day’s trading down more than 400 points, or 1.7 percent, at 24,608.  But one billionaire investor and former Trump adviser, Carl Icahn, was seemingly unvexed, having dumped a million shares tied to the steel industry a week before the president announced 25 percent tariffs for foreign-made steel.A Feb. 22 SEC filing shows Icahn sold off his $31.3 million stake in the Manitowoc Company, which is a leading global manufacturer of cranes for heavy construction based in Manitowoc, Wis., according to the company’s website. Since Trump’s announcement Thursday, Manitowoc’s stock has plummeted to about $26. Icahn — who has had majority interest in several companies including Motorola, Xerox, Family Dollar and Pep Boys — had sold his shares for about $32 to $34 each, according to the SEC disclosure, which was first reported by Think Progress.Icahn had not actively traded any Manitowoc stock since January 2015, according to regulatory filings.  The tariffs are Trump’s response to a determination by the Commerce Department earlier this month that increasing import volumes posed a risk to U.S. national security. Trump’s decision, which leans on a little-used provision of U.S. trade law, has now caused other countries to retaliate against American exports. The European Union, for example, is considering duties on U.S. imports worth about $3.5 billion if the White House enacts its tariffs, Reuters reported Friday.

Trump's tariffs are 'frankly insulting,' says Canadian PM Justin Trudeau - ‘The idea that we are somehow a national security threat to the United States is quite frankly insulting and unacceptable.’That’s Canadian Prime Minister Justin Trudeau sharing his thoughts with NBC’s Chuck Todd on the new tariffs the White House announced last Thursday. “The idea that the Canadian steel that’s in military, military vehicles in the United States, the Canadian aluminum that makes your, your fighter jets is somehow now a threat?” Trudeau continued. “Our soldiers who had fought and died together on the beaches of World War II... and the mountains of Afghanistan, and have stood shoulder to shoulder in some of the most difficult places in the world, that are always there for each other, somehow — this is insulting to them.”Watch this clip from the interview:Following the announcement of the tariffs last week, Canada retaliated with some of its own. The Canadian foreign affairs minister called it “the strongest trade action Canada has taken in the post-war era.” She added that “this is going to hurt America and the American consumer first and foremost.”Trump doesn’t appear to be too concerned about that.  “When youre almost 800 Billion Dollars a year down on Trade you cant lose a Trade War!” he tweeted on Saturday. “The U.S. has been ripped off by other countries for years on Trade time to get smart!”

Trudeau calls Trump’s tariffs against Canada ‘insulting and unacceptable’ — In a sharp rebuke from one of America's closest allies, Canadian Prime Minister Justin Trudeau criticized the White House rationale for imposing punitive trade tariffs on Canada as "insulting and unacceptable," the latest leader to warn of a looming trade war with the United States. The complaint, which aired Sunday on NBC's "Meet the Press," was a dramatic departure from the conciliatory approach Trudeau has shown to President Trump over the last year, and signaled the growing pushback from U.S. allies to the protectionist trade policies. The White House announced last week that Canada, Mexico and the European Union nations would face a stiff 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. Initially announced in March, the levies took effect Friday. In imposing them, Trump invoked a little-used provision in the law that permits the use of tariffs to counter a national security threat. Trudeau denied on "Meet the Press" that Canada or its steel and aluminum industries posed any such menace. Canada is one of America's largest trading partners and one of its closest military and political allies. "The idea that we are somehow a national security threat to the United States is, quite frankly, insulting and unacceptable," Trudeau said. He said Canada would impose retaliatory tariffs against American-made steel and aluminum, as well as on other goods. Officials have said cheese, whiskey, orange juice and dozens of other items will be targeted, many from states that Trump won in 2016 in an effort to pressure him to reverse course. 

 A sense of dread ahead of the G-7 - President Donald Trump is on track to be standing very much alone when he heads to a summit of the U.S.’ closest friends and foreign allies later this week. With just three days before Trump is set to arrive at the G-7 in the Canadian coastal town of Charlevoix, Quebec, diplomats and U.S. officials alike are feeling a general sense of dread amid growing international tensions — largely relating to trade — and little hope of reaching consensus.Canada, Japan and key European Union nations have tried to win over Trump by playing nice on the world stage, but after nearly a year and a half, their frustrations are bursting into public view. In just the past week, the EU has begun rallying support among countries like Mexico and Canada to forge a united front against aggressive U.S. trade policies. Japan has grown increasingly concerned it’s being pushed aside as Trump finalizes plans to meet with North Korean leader Kim Jong Un. And France, whose President Emmanuel Macron had worked hard to build rapport with Trump, is reeling from a “terrible” phone call that went south after Macron bluntly criticized U.S. tariffs.Trade generally — and steel and aluminum tariffs specifically, which are recent enough that Canada and key EU allies will still be licking their wounds — is expected to be a major topic of discussion. But there are “extremely low expectations” that progress can be made, a senior EU official told reporters Tuesday. “We do not expect any breakthrough on the trade dispute with the U.S,” they said. While it will not be the first time G-7 leaders are divided at their annual conclave, experts noted that this year is remarkable because the focus is on existential threats to the international order rather than specific policy issues.In the past, “it was either … the placement of nuclear weapons in Europe, or the Iraq war, or, you know, you name the issue,” said Heather Conley, director of the Europe program at the Center for Strategic and International Studies. “It was an issue — it was not the fundamental underpinnings of the international system that the U.S. created in the post-World War II environment. That is now what feels at stake. And that’s what is different.”

Trump Scorns ‘Unfair Trade’ at G-7, Maps Plan to Exit Early - The Group of Seven is kicking off with more Donald Trump threats on trade, cueing up a whirlwind 24 hours of talks between allies before the U.S. president leaves early.“Looking forward to straightening out unfair Trade Deals with the G-7 countries. If it doesn’t happen, we come out even better!” the president wrote on Twitter, hours before he’s due to arrive in Quebec. “I am heading for Canada and the G-7 for talks that will mostly center on the long time unfair trade practiced against the United States.”I am heading for Canada and the G-7 for talks that will mostly center on the long time unfair trade practiced against the United States. From there I go to Singapore and talks with North Korea on Denuclearization. Won’t be talking about the Russian Witch Hunt Hoax for a while!— Donald J. Trump (@realDonaldTrump) June 8, 2018The tweets confirm Trump will indeed come, after weeks of speculation he may cancel rather than endure widespread criticism from allies over steel and aluminum tariffs. Instead, he looks set to fire back with his America First mantra. Other leaders, such as France’s Emmanuel Macron, have warned they won’t sign a joint statement that bows to Trump’s wishes. “The American President may not mind being isolated, but neither do we mind signing a 6 country agreement if need be,” he tweeted.The G-7 summit is set up to be the most acrimonious in years, putting pressure on Justin Trudeau as host to bridge a divide between Trump and Europe, with Japan’s Shinzo Abe poised to fall somewhere in the middle. Trump will leave the summit early to attend a summit with North Korean leader Kim Jong Un.

U.S., EU take small step on trade, but no breakthrough at G7 summit (Reuters) - The United States and European Union will establish a dialogue on trade within the next two weeks, a French official said on Friday, signaling a modest step forward for bitterly divided allies at a Group of Seven summit in Canada. U.S. trading partners have been furious over President Donald Trump’s decision last week to impose tariffs on steel and aluminum imports from Canada, the European Union and Mexico as part of his “America First” agenda. Some countries have retaliated with their own levies on U.S. imports. “The principle of a dialogue was agreed this afternoon,” the French official told reporters. “Everyone agreed, including President Trump.” While G7 leaders confronted Trump with a slew of data on imports and exports in a bid to sway his thinking, Trump countered his own numbers and held his position that the United States was at a disadvantage on international trade, an official who followed the talks said. But Trump struck a more affable tone after a meeting with French President Emmanuel Macron, saying the French leader was helping work out trade issues. “Something’s going to happen. I think it will be very positive,” Trump said, without giving details. Macron said it was possible to advance the trade issues that have split the U.S. and its allies. “I think, on trade, there is ... a way to progress all together,” he told reporters after his meeting with Trump. “I saw the willingness on all the sides to find agreements and have a win-win approach for our people, our workers, and our middle classes.” German Chancellor Angela Merkel on Friday floated an idea to set up a way to resolve trade disputes between the United States and its allies. An official described Merkel’s suggestion as a “shared assessment and dialogue” mechanism, but gave no further details. It was unclear if the technical talks were part of her initiative. The proposal was supported by other leaders present, the official said. European Commission President Jean-Claude Juncker offered to visit Washington for an assessment of EU-US trade to help resolve the dispute, an official said. Expectations for a major breakthrough on trade at the summit, however, remain low, with U.S. allies focused on avoiding rupturing the G7, which in its 42-year history has tended to seek consensus on major issues.

Exclusive: Mexico set to impose 20 percent tariff on U.S. pork legs  (Reuters) – Mexico will impose a 20 percent tariff on U.S. pork imports, two industry officials with direct knowledge of the plan told Reuters on Monday, for the first time providing details of the country’s retaliatory measures to U.S. President Donald Trump’s tariffs on steel and aluminium. Last week, Mexico said the retaliatory tariffs would apply to pork legs and shoulders from U.S. suppliers, which account for about 90 percent of the country’s $1.07 billion (£803.6 million) annual imports of the cuts. “It’s a 20 percent (tariff) on legs and shoulders, fresh and frozen … with bones and without bones,” said Heriberto Hernandez, president of Mexico’s leading pork producers association OPORPA, following a briefing earlier on Monday with Economy Minister Ildefonso Guajardo and his team. The government has not yet given details of the level of the tariff and did not immediately respond to a request for a comment about the tariff or the meeting. Hernandez said he supported the Mexican government’s decision and does not expect it to cause pork prices in Mexico to rise because “there are many alternatives” to U.S. suppliers. The tariff was in response to the Trump administration’s decision last week to impose steel and aluminium tariffs on Mexican exporters on grounds that countries including Mexico engage in competition damaging to U.S. national security. The U.S. decision to go ahead with the steel and aluminium tariffs has complicated talks with Mexico and Canada to rework the North America Free Trade Agreement (NAFTA).. Last year, Mexico imported nearly 650,000 tonnes of pork legs and shoulders worth an estimated $1.07 billion, according to government data.

Defense industry braces for hit from Trump tariffs | TheHill: The defense industry is bracing for the fallout from the Trump administration’s decision to impose tariffs on steel and aluminum imports from Europe, Mexico and Canada. The 25 percent tariff on steel and 10 percent tariff on aluminum, which went into effect Friday, are expected to raise costs for the U.S. defense industry, biting into its bottom line. Though U.S. defense firms primarily buy steel and aluminum domestically, the tariffs are likely to lead to increased prices in the U.S., said former Pentagon official Andrew Hunter, a senior fellow at the Center for Strategic & International Studies.“The whole point of the tariffs is to allow those suppliers to raise prices and they’ve already started doing so. It’s definitely going to increase costs. And of course that ultimately leads to increased costs for the taxpayer,” he said. The tariffs are also likely to make ally countries less inclined to buy U.S.-made defense systems, should they have to absorb added costs associated with the trade rules, Hunter added. President Trump first announced the tariffs in March, citing national security concerns. He imposed them under Section 232, a law that allows tariffs to be imposed for national security reasons. The defense industry lobbied against the tariffs and quickly spoke out against them, warning they would lead to retaliation by trading partners. The European Union and Mexico are already poised to hit back with tariffs on U.S. exports. “We have concerns about tariffs for a number of reasons: the impact on the global supply chain; what that could mean to our companies; certainly, what escalation might mean in terms of retaliation,” said Eric Fanning, CEO of the defense industry lobbying giant Aerospace Industries Association (AIA). Fanning said AIA has communicated its concerns to the White House, while one defense industry consultant told The Hill that other defense contractor giants, including General Electric (GE), have begun to reach out to Congress in hopes of swaying the administration. 

Steel Tariffs Are Taxing Some American Companies --New tariffs intended to bolster the American steel and aluminum industries are starting to have the opposite effect in a key part of the U.S. supply chain.U.S. steel producers are benefiting from tariffs that make it more expensive for companies to buy the metals overseas.But some U.S. firms that use the metals to make everything from refrigeration parts to wheels say the tariffs have led to higher materials prices that are forcing them to charge more for their products. These firms say that in some cases, customers are turning to foreign suppliers that use cheaper, tariff-free metals to make the same products they can then export to the U.S. without bumping up against the new trade barriers.The fallout, while so far limited, illustrates how efforts to protect some U.S. companies can cause unintended pain for others.“This is a nightmare for steel consumers,” said H.O. Woltz III, chief executive of Insteel Industries Inc., a North Carolina maker of concrete reinforcements. Mr. Woltz said some of Insteel’s customers have indicated they will boost imports.  Aneesa Muthana, owner of Pioneer Service Inc. in Addison, Ill., said her company recently lost two orders—worth about $60,000 annually—from a longtime customer.Pioneer Service doubled the price of some refrigeration and climate-control parts to account for higher steel costs, she said. In response, the customer tapped a Chinese competitor to supply the parts. “This is really hurting manufacturing,” Ms. Muthana said.One option for manufacturers with established supply chains abroad is to shift production outside the U.S. to take advantage of lower costs.

Today's Pickup: more trade war madness — FreightWaves - Here we go again: it appears that the United States is once again at risk of sparking a trade war on multiple fronts. The US’s biggest trading partners, including Canada, Mexico, China, and the EU are all pushing back hard on the Trump administration’s protectionist policies by imposing tariffs of their own. Mexico unveiled tariffs on American steel as well as a range of agricultural products, from pork legs and cranberries to bourbon and Tennessee sippin’ whiskey. The European Union is levying tariffs on American yachts, cigarettes, and jeans. Canada published tables of American goods that it would subject to tariffs: steel products like rebar and pipeline tubes will be hit with a 25% duty while other commodities, ranging from ketchup, insecticide, plywood, postcards, and aluminum foil will get 10% tariffs.  But all may not be lost: just this morning, the Wall Street Journal is reporting that “China offered to purchase nearly $70 billion of U.S. farm and energy products if the Trump administration abandons threatened tariffs, according to people briefed on the latest negotiations with American trade officials.” As of Tuesday, Mexico will impose tariffs of 15 percent to 25 percent on U.S. steel products, the Mexican economy ministry said in a list published in the government’s official gazette.  “I think that the authorities are being abused, and I think a number of people around here do. So we’re crafting some legislation, working with other offices to try to pull back some of those authorities to Congress. What the legislation we’re working on would do would be to make sure before those things could even occur you’d have to get congressional approval.” -Sen. Bob Corker (R-TN), on the Trump Administration’s use of tariffs

An anti-tariff lobbying blitz with little to show for it - Lobbyists on K Street have earned business over the past several months from major U.S. companies looking for relief from President Donald Trump’s waves of tariffs, but so far they have little to show for all that cash. POLITICO’s Theodoric Meyer and Marianne Levine report this morning that some of the biggest companies in the country are relying on large firms, trade associations and coalitions to try to help them change Trump’s mind on steel and aluminum tariffs as well as duties and other investment restrictions on China. Lobbying shops are also helping clients petition the Commerce Department for special exemptions from penalties on steel and aluminum products.Rather than drain the swamp, as Trump promised on the campaign trail, the uncertainty surrounding his administration has provided new avenues for Beltway lobby shops to fill their coffers. But lobbyists are nonetheless struggling to sway White House decisions, or even predict them, and they again risked looking feckless when Trump announced late last week that he was expanding tariffs to hit even the U.S.’ closest allies. “It’s become very frustrating to the business community that the president is resistant to our advice,” said David French, the top lobbyist for the National Retail Federation. “We keep digging around in the manure, and we hope to find a strategy somewhere.” Read the story here.

Koch brothers finance campaign to oppose Trump’s tariffs  — Three organizations financed by conservative billionaire industrialists Charles and David Koch are launching a multimillion-dollar campaign against President Donald Trump’s tariffs on imports.The groups said Monday that the multiyear initiative will include advertising, education of activists, lobbying, policy analysis and “grass roots mobilization.” The groups — Freedom Partners Chamber of Commerce, Americans for Prosperity and The Libre Initiative — released a list of trade recommendations that focus on encouraging competitive markets and eliminating tariffs.The effort is an indication of the deep consternation among business groups — normally strong Republican allies — about the effect of the tariffs, which have angered foreign countries, rivals and allies alike. It also serves as a message to Republican lawmakers to hold their ground against tariffs. Pro-business Republicans worry about the increased cost of industrial supplies that would result from the tariffs, while Farm Belt interests fear retaliation from China and others on exports from the U.S. The tariffs have been welcomed by some Democrats and union members.

Republican Resistance in Congress to Tariffs Grows - —Republicans are ratcheting up their opposition to restrictive new tariffs that President Donald Trump advanced based on national security, with GOP lawmakers threatening legislation to rein in the White House.Sens. Bob Corker (R., Tenn.) and Pat Toomey (R., Pa.) are pushing to attach to a must-pass defense authorization bill a measure to limit Mr. Trump’s power to use the 1962 Trade Expansion Act to impose tariffs based on national security concerns.The move on tariffs comes as the Republican president also faces headwinds from the GOP-controlled Congress on the administration’s effort to cut nearly $15 billion from the federal budget through a package of spending rescissions.On trade, Republicans find themselves at an inflection point now that the administration has gone ahead with tariffs of 25% on steel and 10% on aluminum from U.S. allies, including Canada, Mexico and the European Union. The U.S. is also threatening additional tariffs on imported cars and parts.“I would hate to see this great, booming economy, as a result of the policies of this administration, be squandered by a trade war,” said Senate Majority Whip John Cornyn (R., Texas). “There’s quite a bit of resistance to the tariffs, based not on the merits so much, as the fact that this is an unguided missile and the retaliation can occur in sectors that are vulnerable.”Enacting legislation to tie Mr. Trump’s hands isn’t the preferred option for Republicans, who have relied mostly on trying to persuade the president to step back from his most ambitious plans. But a temporary truce between the White House and Senate Republicans ended late last month when the White House allowed a series of tariff exemptions to expire. “When you can just name anything a national security issue, you undermine the whole trade-agreement process,” said Mr. Corker, adding he didn’t see how a new tariff on vehicle and auto-parts imports, for instance, would qualify as countering a national security threat. “That has been greatly abused and that’s the reason I’m offering this legislation.” Mr. Corker’s measure would require the president to submit to Congress any proposal to adjust such import restrictions as tariffs or quotas in the interest of national security under Section 232 of the law, a person familiar with the matter said. The proposal would qualify for expedited consideration in Congress and the legislation would apply to restrictions imposed within the past two years and to all similar actions going forward, the person said.

Trump Auto Tariffs Would Be "Net Negative" - Destroy 157,000 American Jobs - New tariffs on imported automobiles and parts under consideration by President Trump could threaten more than 157,000 American jobs, according to a recent policy briefing published by the Trade Partnership WorldWide, an international trade and economic consulting firm. President Donald Trump talks with auto industry leaders, including General Motors CEO Mary Barra (4th L) and United Auto Workers (UAW) President Dennis Williams (4th R) at the American Center for Mobility in Michigan in March 2017. (Source: Reuters) The six-page policy report said automobile tariffs introduced by President Trump would ultimately be detrimental to American workers. The organization analyzed the potential net impacts on American jobs and the economy from a 25 percent tariffs imposed on U.S. imports from all trading partners of automobiles, lightweight trucks, other vehicles, and parts.“We find that the tariffs would have a very small positive impact on high-skilled workers in the motor vehicle and parts sectors, but very large negative impacts on workers – both high- and lower-skilled – in other sectors of the economy. Overall, U.S. economic output would decline,” the report warned.The organization’s models indicate that Trump’s auto tariffs would boost employment in the auto sector by about 92,000, however, then eliminate 250,000 jobs across many industries throughout the broad economy. On top of that, American consumers will dish out about $6,400 more for an imported automobile that would cost around $30,000, which accounts for nearly a 21 percent increase in overall price. All in all, the report stated the economy would lose about .01 percent of its value if the auto tariffs were enacted. The study found:

  • The tariffs would result in a net loss of 157,000 U.S. jobs. A net loss of 250,000 jobs in the rest of the economy would more than offset an increase in U.S. motor vehicle and parts sector employment of 92,000 jobs.
  • About three jobs would be lost for every job gained in the motor vehicle and parts sector.
  • GDP would decline by 0.1 percent as higher costs, net job losses, and declines in producer and consumer spending power work their ways through the economy
  • Tariffs would add about $6,400 to the price of an imported $30,000 car.

Why Steel Tariffs Matter - Last week, President Trump announced that the tariffs on steel and aluminum imports he’d previewed in March would also affect Canada, Mexico, and the European Union. The move drew intense criticism from leaders abroad. Canadian Prime Minister Justin Trudeau has called the tariffs “insulting,” while the EU trade commissioner favored the term “illegal.” The EU quickly announced retaliatory tariffs. Some of the most heated rhetoric has come from home. “This is dumb,” said Republican Senator Ben Sasse in a widely quoted response. “Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents. We’ve been down this road before—blanket protectionism is a big part of why America had a Great Depression.”Getting from metal duties to the Great Depression requires a few steps. What, specifically, are the effects of these tariffs likely to be? To the extent that they disrupt global trade conventions, what’s the mechanism? I asked Peter Chase, a senior fellow in Brussels with the German Marshall Fund specializing in trade and transatlantic relations, for his take on Trump’s first step towards trade war. Though critical of the policy, he pointed not so much to any economic impact as to the longer-term damage this policy might do to existing trade treaties and alliances. (interview transcript follows)

 NAFTA Negotiators Missed 2018 Deadline, Key GOP Senator Says - The U.S. Congress probably won’t have time to approve a new North American Free Trade Agreement this year, as Cabinet members from the three trading partners continue to negotiate changes to the pact, according to Senate Majority Whip John Cornyn.Asked if the deadline for congressional approval of a new deal had run out, Cornyn said, “yeah, I think so.”“It looks like they are kicking it over to 2019,” he told reporters in Washington on Monday. “I wish it had been handled earlier.”Cornyn’s comments are the most definitive after House Speaker Paul Ryan said early last month that American legislators needed notice of a NAFTA deal by May 17 so they could vote before this Congress ends in 2018. Ryan later said there might be a couple weeks of wiggle room, placing the deadline around early June.The U.S., Mexico and Canada have been holding periodic discussions since August after President Donald Trump threatened to withdraw from the 24-year-old pact if he can’t renegotiate one that would shrink America’s trade deficit and boost manufacturing jobs. It could take Congress at least six months to vote on a new agreement after it receives notice that a deal has been reached. Pushing NAFTA talks to next year could change the dynamic of negotiations. Democrats may take one or both chambers of Congress from Republicans in November midterms and push back against a new trade deal, while Mexicans will elect a new president in July. The current front-runner, Andres Manuel Lopez Obrador, has at times taken a strong anti-Trump tone and has been a vocal critic of NAFTA.

Beijing warns Washington: all trade promises are off if US imposes tariffs - The latest round of back-and-forth trade negotiations between Beijing and Washington ended on Sunday with a warning from Beijing that its trade promises will “not go into effect” if the US puts any sanctions – including additional tariffs – back on the table. Beijing’s strong statement puts the ball firmly back in the court of US President Donald Trump as to whether Washington should go ahead with tariff plans against Chinese products and risk a full-blown trade war, or if it should take a step back and accept the concessions China has offered. No specifics were announced by either side after the second round of trade talks in the Chinese capital over the weekend, this time between an American delegation led by US Commerce Secretary Wilbur Ross and a Chinese team headed by Vice-Premier Liu He. While the Chinese side said talks between Ross and Liu had made “positive and concrete progress” on agreements reached in Washington in areas such as agriculture and energy, it said the details needed “further confirmation”. “The achievements reached by both China and the US should be based on the premise that the two sides are coming from opposite directions and will not fight a trade war,” state news agency Xinhua said on Sunday. “If the United States introduces trade sanctions, including levying additional tariffs [on Chinese products], all the economic and trade agreements reached by both sides will not go into effect,” it added. Washington has yet to release its statement on the talks, although Ross said earlier on Sunday that discussions between the world’s two largest economies had been “friendly and frank”, with the 50-member delegation from the US raising topics including additional Chinese purchases of US exports. 

How China Skirts America’s Antidumping Tariffs on Steel - Three years ago, the steel mill outside the small city of Smederevo, Serbia, appeared headed for the scrap heap. The Serbian government, which owned the mill, had stopped subsidizing it after six straight years of losses. Hemorrhaging cash, it struggled to buy spare parts and raw materials such as iron ore. Now production is hitting all-time highs under its new owner, Hesteel Group, a Chinese state-owned steel producer. Exports from the plant, which is backed by tens of millions of dollars from Chinese state banks and investment funds, are surging. And it has started shipping steel to the U.S.As the Trump administration ramps up its fight against Chinese steel and Commerce Secretary Wilbur Ross ended trade talks with Beijing over the weekend without a settlement, U.S. officials are confronting a strategic shift from China’s state-backed manufacturers. For the past several years, they have been shutting production at home and expanding overseas, fueled by tens of billions of dollars from Chinese state-owned lenders and funds.  By owning production abroad, Chinese steelmakers aim to gain largely unfettered access to global markets. Their factories back in China are constrained by steep tariffs imposed by the U.S. and numerous other countries—largely before President Donald Trump took office—to stop Chinese steelmakers from dumping excess production onto world markets. But their factories outside China face few so-called antidumping tariffs.The Trump administration in March jolted the global trading system by imposing additional tariffs of 25% on all imported steel and 10% on aluminum, a move aimed at ratcheting up pressure on China to shut domestic steel and aluminum plants. (Last week, those tariffs were extended to Canada, Mexico and the European Union.) The EU is considering its own tariffs to stop metals exports blocked by the U.S. tariffs from flooding into Europe. Even though the new U.S. tariffs apply to Chinese steelmakers that moved production abroad, the moves are still paying off. The Trump tariff rate is much lower than existing U.S. antidumping tariffs on steel produced inside China, which often exceeded 200%.

"This Is A Red Line": Beijing Warns Trump Trade Deal Is Off If US Imposes Tariffs - In a scathing editorial warning Trump to back off on his latest tariff threat, on Sunday China said that any trade deals between the US and China, and any progress and commitments made so far in bilateral negotiations would be withdrawn if President Donald Trump follows through with this threat."If the U.S. rolls out trade measures including tariffs, all the agreements reached in the negotiations won’t take effect," the state-run Xinhua News Agency reported this morning, citing a statement from the Chinese team that met with a U.S. delegation led by Commerce Secretary Wilbur Ross, which arrived in China overnight.Separately, China has continued to express growing frustration with the tactics deployed by the White House, and an editorial in the nationalist, state-run tabloid Global Times said that "the U.S. can’t have its cake and eat it too," adding that the U.S. "needs to choose between tariffs and exporting more to China.  "China's anger is the result of Trump’s revival of the simmering trade war between the two superpowers after Trump last week unveiled a plan to slap tariffs on $50 billion of Chinese imports, casting into doubt ongoing trade discussion about how to reduce China’s $375 billion goods-trade surplus with the U.S. As Bloomberg clarifies, the Xinhua report came out on Sunday after Ross met with Chinese Vice Premier Liu He for talks that Ross called “friendly and frank, and covered some useful topics about specific export items.” At the same time as negotiators focus on technical steps to reduce the U.S. deficit, Trump’s aggressive reversals have rattled Beijing as it raises concerns about the possibility that any agreement made could be simply torn up by the president.  “Bluff, threat, and willful moves might work in business bargaining, but they could backfire in talks among nations.” Meanwhile, suggesting that all the progress achieved over the past two months in trade negotiations would be lost if Trump follows though with tariffs, a commentary by state-run China Radio International said that the government’s stance on canceling any agreements reached in the talks if Trump’s tariffs go into effect was a "red line."

 Exclusive: China’s ZTE signed preliminary agreement to lift U.S. ban – sources (Reuters) - ZTE Corp has signed an agreement in principle that would lift a U.S. Commerce Department ban on buying from U.S. suppliers, allowing China’s No. 2 telecommunications equipment maker to get back into business, according to sources familiar with the matter. ZTE ceased major operations since the seven-year ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea. A Commerce Department spokesman said on Tuesday that “no definitive agreement has been signed by both parties.” ZTE did not immediately respond to requests for comment. The preliminary deal includes a $1 billion fine against ZTE plus $400 million in escrow to cover any future violations, sources said, adding that the terms were in line with Reuters reporting on the U.S. demands on Friday. The sources requested anonymity because they were not authorized to publicly discuss the matter. The Commerce Department plans to amend its 2017 settlement agreement and count the $361 million ZTE paid as a part of that, allowing the United States to claim a total penalty of as much as $1.7 billion, the sources said. Trump tweeted last month that he told Commerce officials to find a way for ZTE to resume operations, later suggesting penalties of a $1.3 billion fine and changes to its board and top management. As part of the deal, sources said, ZTE promised to replace its board and executive team in 30 days. It would also allow unfettered site visits to verify that U.S. components are being used as claimed by the company, and post calculations of U.S. parts in its products on a public website, they added. 

ZTE Nears Deal to End U.S. Ban, but Customers Are Antsy -- ZTE Corp. is nearing a deal with the U.S. to save its business, but the Chinese telecommunications giant faces more battles ahead to turn around its fortunes as losses pile up and aggrieved customers demand compensation for delayed projects. On Monday, ZTE executives in Shenzhen signed a preliminary agreement that would allow it to resume buying parts from American suppliers and restart idle smartphone and telecom-equipment factories following an April ban imposed by the U.S. Commerce Department, according to people familiar with the matter. To clear the path to an agreement, ZTE has gone on the offensive to remedy its failures to meet the conditions set by the Commerce Department under a settlement of a probe into the company’s evasion of American sanctions on Iran and North Korea. ZTE has stripped responsibilities and job titles from a clutch of senior employees, issued letters of reprimand, and is attempting to claw back bonuses from 35 people, one person said. Time is short for ZTE. It is facing a flurry of demands for compensation from foreign telecom network operators whose projects have stalled without supplies from ZTE, the people said. Even if U.S. companies resume shipments to ZTE, the Chinese company must win back customers and shake off damage to its reputation from the episode. President Trump’s mixed messages about a plan to help controversial Chinese telecom giant ZTE has baffled Washington.  It isn’t clear when a formal deal will be ready, the people said. The agreement is under legal review by Trump administration officials and could be ready in a matter of days, one of these people said. Late last month, President Donald Trump said he would allow ZTE to resume buying U.S. goods in exchange for a fine of $1.3 billion and a leadership shake-up. Mr. Trump’s actions have effectively turned ZTE into a bargaining chip in broader U.S.-China trade negotiations, which are sputtering.

Senate Introduces Plan To Thwart Trump's ZTE Deal -  A group of Senators have introduced legislation that would stop President Trump from dropping its ban on Chinese telecoms giant ZTE buying products from US companies.While its chances of passing are less than 50-50, Axios points out that there is significant anger among lawmakers over ZTE's repeated violations of US sanctions, including the fact that the firm has been twice caught selling banned tech to North Korea and Iran. The ban on using US technology would've effectively killed ZTE, according to Axios.The measure, introduced as an amendment to the National Defense Authorization Act, will see its fate decided next week, when debate begins on the NDAA, a routine policy bill that Congress passes every year, according to Reuters. Here are a few key points from Axios:

  • The amendment to amend the must-pass National Defense Authorization Act is helmed by Sens. Chris Van Hollen (D-Md.) and Tom Cotton (R-Ark.) and co-sponsored by Sens. Chuck Schumer, (D-N.Y.), Marco Rubio (R-Fla.), Richard Blumenthal (D-Conn.), Susan Collins (R-Maine), and Bill Nelson (D-Fla.).
  • Van Hollen had already successfully introduced an amendment that would thwart future deals with China to reduce penalties, crafted under the assumption the NDAA would beat the Trump administration's China deal to the fininsh line. It didn't.
  • Many lawmakers suspect ZTE of sabotaging equipment sold to U.S. companies to help China spy on the U.S.

Reuters says strong backing from the bill would be out of place for Republicans who control Congress and have generally been strong supporters of President Trump's legislative agenda, with only a handful ever voting against the White House. Furthermore, the White House has insisted that there's no "quid pro quo" involved and that other trade measures being discussed are "quite separate" from the decision to reduce ZTE's penalty to a $1.3 billion fine, plus the addition of some toothless oversight board.

Mexico Details Its List of Retaliatory Tariffs Against U.S. -- The Mexican government published Tuesday its detailed list of U.S. goods that will face import tariffs in retaliation for the U.S. decision to place duties on Mexican steel and aluminum, including American staples such as cranberries, apples and bourbon.The Economy Ministry said the tariffs will remain in effect as long as the U.S. continues to charge duties on Mexican steel and aluminum, and that Mexico could at any time modify the list of products targeted. The ministry estimates the value of the tariffs at about $3 billion, representing close to 1.5% of annual trade between the two countries. The administration of U.S. President Donald Trump last week ended the exemptions to the steel tariffs for Mexico, Canada and the European Union, prompting them to threaten tit-for-tat measures while challenging the U.S. tariffs at the World Trade Organization.The U.S. tariffs went into effect after negotiations with Mexico and Canada to redraw the North American Free Trade Agreementhit snags over content rules for the auto industry, and over controversial U.S. demands to eliminate dispute settlement mechanisms in the pact and introduce a so-called sunset clause under which Nafta would expire in five years unless explicitly renewed by its members.Mexico on Tuesday slapped a 25% import tariff on a wide range of steel products from the U.S., matching the U.S. steel duty. The retaliatory measures also include 20% on pork products, 20% and 25% duties on cheeses, and a 25% duty on bourbon. Cranberries made the list, as did U.S. apples, with a 20% duty. Economy Minister Ildefonso Guajardo said last week in a televised interview that some targeted goods come from U.S. districts that have key lawmakers who have been pointing out to the Trump administration the need to be careful in handling such trade decisions.“Somehow it’s sending a clear message that this sort of thing benefits no one, and affects all of us,” he said. Fearing an influx of steel into Mexico from world suppliers affected by the U.S. tariffs, Mexico also raised duties it had imposed between 2015 and 2017 on steel imports from countries with which it doesn’t have free trade agreements. Those tariffs, which aimed to counter damage suffered by the Mexican steel industry from cheap Asian imports, were also seen discouraging triangulation of steel through Mexico into the U.S. under Nafta. The tariffs led to greater steel imports from countries with which Mexico has free trade agreements, and less from countries with which it doesn’t, the government said. Mexico ran up a $3.6 billion steel trade deficit with the U.S. in the past two years, according to the local steel industry chamber.

 Wall Street Journal: Why Bashing Chinese Steel Dumping Results in Bashing Allies --  Yves Smith - There are tons of reasons not to like Trump’s trade games of chicken. First is that it isn’t clear what he is trying to accomplish, save the pleasure he gets from poking people in the eye with a stick and some talking points for upcoming elections. Second is that even though there is a case to be made for the US becoming more of an autarky, whether to increase national security or domestic employment, merely changing some trade rules of the road won’t get us there. The US has ceded too many critical skills, like operational know-how, that technocrats and MBA undervalue. Trump would need to engage in industrial policy when the both parties, but particularly Republicans, are allergic to that.1  However, most of the criticisms of Trump trade moves focus on different complaints: that Trump is threatening the architecture of trade rules and may kick off a trade war; that even though there is some merit in trying to rewrite the rules with China, the US should be focusing on industries of the future and not old economy ones like steel; and that Trump’s first trade salvos, his tariffs on steel and aluminum, are alienating our allies like Canada and Europe and not having much impact on China.  The Wall Street Journal, which like the rest of the business press, has been making unhappy noises about Trump’s trade brinkmanship, published a story tonight that shows that the conventional wisdom about China’s production is inaccurate. How China Skirts America’s Antidumping Tariffs on Steel explains how China, facing antidumping tariffs on steel that can top 200%, have already been moving production offshore:By 2013, China’s domestic economy was slowing, leading Chinese steel and aluminum producers to flood global markets and drive down prices. The average price of Chinese steel exports fell by about 50% between 2011 and 2016.Governments around the world responded by imposing more than 130 antidumping tariffs against Chinese metals manufacturers, mostly on steel, depriving the domestic market of an important outlet.Beijing responded by ordering capacity cuts: a net of 150 million tons of annual steel capacity is slated to be shut between 2016 and 2020, as are aluminum plants that were built without government approval. At the same time, in 2014, the government launched a plan, called International Capacity Cooperation, that enlisted Chinese state financial institutions to help manufacturers add production overseas…In northern Brazil, a Chinese consortium is expected to break ground later this year on an $8 billion project to build one of the world’s biggest steel plants, expanding Brazil’s potential steel output even though the industry there operates at less than 70% of capacity.

China Rx: How the US Depends on China for Its Drugs -  Yves Smith - A few years back, the punditocracy was in a tizzy because it had come to their attention that the US had become dependent on China for rare earths, which are critical to the production of high-performance magnets, low carbon products, diesel additives, lasers and many other goods. We pointed out then that rare earths were far from an isolated case. China has become the biggest supplier of ascorbic acid, which is widely used in food production to improve quality and stability. A recent book, China RX: Exposing the Risks of America’s Dependence on China for Medicine by Rosemary Gibson and Janardan Prasad Singh, appears not to have gotten the attention it warrants. I learned about it thanks to reader Patrick F, who recommended a C-SPAN panel on the book with author Gibson plus other experts, such as former Clinton Administration official Patrick Malloy. If you go to C-SPAN, you can read a transcript auto-generated from the closed captioning. You can also listen Gibson describe some of the key points from her book in the interview below. The big message of Gibon’s and Singh’s book is that the US relies on China for the production of active ingredients in drugs and in many cases, of the medications themselves, to the degree that we would have a public health crisis if supplies were interrupted. As Gibson said on C-SPAN: Many people that we spoke to, both former government officials and some in industry said that if China shut the door on exports, within months, pharmacy shelves in the United States to be empty, and hospitals would cease to function. And don’t assume generics king India would step into the breach. India gets many of the active ingredients for its pharmaceuticals from China. Gibson forecasts that China will overtake India in generics manufacture within a decade. As Gibson explains, the US no longer makes its own penicillin, in part because China dumped penicillin in 2004, driving the last US plant out of business.

China Offers to Buy Nearly $70 Billion of U.S. Products to Fend Off Trade Tariffs - China offered to purchase nearly $70 billion of U.S. farm, manufacturing and energy products if the Trump administration abandons threatened tariffs, according to people briefed on the latest negotiations with American trade officials.In weekend talks in Beijing, Chinese negotiators led by Liu He, President Xi Jinping’s  economic envoy, presented a U.S. team headed by Commerce Secretary Wilbur Ross a package that includes Chinese companies buying more U.S. soybeans, corn, natural gas, crude oil, coal and manufactured goods.Chinese and U.S. officials estimated the value of the package at nearly $70 billion in the first year.President Donald Trump has pressed China to commit to reduce the $375 billion U.S. merchandise trade deficit with China by $200 billion. Chinese officials are arguing this could go a long way toward meeting that target.Throughout the negotiations, Mr. Liu made clear to Mr. Ross that the offer would be void if Washington proceeds with its plan to impose tariffs on $50 billion of China-made products, the people briefed on the talks said. That proviso could make the deal a non-starter in Washington, where the White House has said it plans to move ahead with the tariffs shortly after June 15, as a way to pressure China to make more sweeping changes in its economy. The U.S. wants Beijing to stop pressuring U.S. firms to transfer technology to their Chinese partners and halt what the U.S. considers unfair subsidies and other aid to Chinese firms that compete internationally for advanced technology.Mr. Ross briefed Mr. Trump on the results of his weekend trade mission on Monday, and plans to continue discussing details of his trip with other U.S. trade officials on Tuesday, according to people familiar with the negotiations.U.S. officials are skeptical of the Chinese offer for several reasons, said people involved with the talks. They argue that Chinese energy purchases would largely divert U.S. sales to other nations and have no overall impact on the U.S. trade deficit. They also aren’t sure that the U.S. could ramp up agriculture production that quickly. The White House said early last week that it would go ahead with the levies and other sanctions to restrict China’s access to U.S. technology and punish Beijing for what the U.S. says are unfair trade practices. 

White House Urges US Airlines To Resist Beijing's "Orwellian Nonsense" On Taiwan - After describing it as "Orwellian nonsense" last month, the Trump administration is again pushing back against China's request that US airlines change how they refer to Taiwan to make clear that it is a part of China. “This is Orwellian nonsense and part of a growing trend by the Chinese Communist Party to impose its political views on American citizens and private companies,” the White House press secretary, Sarah Huckabee Sanders, said in a statement. According to the Financial Times, US officials have asked United, American Airlines and Delta not to comply with China's demands, which stipulate that airlines should refer to Taiwan as "Taiwan, China" on their websites and maps. China sent letters earlier this year to 36 foreign airlines demanding they remove any language which implied that Taiwan was an independent state, saying they have until later this month to comply.The White House has urged airlines to push back and tell China that this issue should be handled by the US and Chinese governments. American Airlines CEO Doug Parker told the FT last month that the Taiwan issue is "between countries." "The United States has replied to the Chinese government and as a result we are following the direction of the US government," said Mr Parker, who would not say if he viewed the order as Orwellian nonsense. "I’m not certain if we are obliged to [heed the US government guidance] but right now it is between our government and their government and we are following the guidance of our government." While the White House is trying to reassure carriers that it will handle the issue with China, air lines are nervous because they could lose access to valuable routes in China at a time when the Chinese market is becoming increasingly important for aviation. "If airlines are denied landing rights, they will simply have to deal with the commercial realities presented by the Chinese government and US top cover won’t help," said Evan Medeiros, a former White House Asia official. "The only message the Chinese will understand is if the airlines, for their own reasons, are not willing to accept Chinese demands. The Chinese know the pressure points, and it is airline operations and not government-to-government interactions."

Donald Trump’s trade policy violates every rule of strategy - Larry Summers - Donald Trump has put aggressive trade policy at the centre of his approach to the economy. No other economic subject has received such sustained presidential attention or generated so much controversy. This is problematic as most economists agree that changes in trade policy are unlikely to have a big effect on growth in employment or over gross domestic product and that liberalising trade is likely to do more for US prosperity than managing trade. But take as a given the US president’s mercantilist premise that the central priority of American economic policy should be achieving more fairness in opening up markets around the world. Even given this dubious judgment about ends, the US is proceeding in a remarkably unstrategic and ineffective way. Indeed it is violating almost every strategic canon. A first rule of strategy is to have well defined objectives so that success can be judged and your negotiating partners are not confused about what you want. Is the US’s primary objective to reduce its trade deficit overall or just with particular countries? Is it to protect employment in politically sensitive sectors such as steel and automobiles? Is it to stop commercial practices such as joint venture requirements that unfairly penalise American companies doing business in foreign countries? Is it to gain more market access for US companies regardless of how successful they are likely to be, as in the case of increased access for the US auto industry to the Korean market? From tweet to tweet, and senior official to senior official, it is impossible for anyone to know what this administration’s priorities are. When everything is presented as a top priority, as often seems to be the case, nothing can really be a top priority. No one can be confident that making concessions will resolve disputes. After all, when China’s current account balance was approaching 10 per cent of GDP, it was a priority for the US to bring it down sharply. Today it is running below 1.5 per cent of GDP and America is more truculent than ever towards China on trade.

4 Reasons Why The Market Is Completely Ignoring Escalating Trade Wars - Back in March, JPM's head quant Marko Kolanovic laid out the simplest case why despite all his bluster, angry tweets and constant puffing, Trump will not dare to engage in a full-blown global trade war which would impair the global economy and cripple capital markets. The reason: a plunge in the S&P would adversely affect the mid-term elections, potentially resulting in a big loss for the GOP and raising the threat of impeachment for Trump, should Republicans lose control of Congress. Then, over the weekend, Goldman took the opposite approach, inverting cause with effect, and stating that if Trump wants to win a trade war, the market has to tumble. By implication, if Trump is not willing to take said trade war to its bitter, market-adverse end, any Trumping threat will remain merely a negotiating tactic, one which America's trade war adversaries will take increasingly less seriously, which is precisely why there is a risk that Trump may crash the market, just to prove to US trade partners that he is serious. The question is will Trump dare to go that far. The answer, according to DataTrek's Nick Colas and increasingly, the market - is no... and is also one of the main reasons why US stocks remain resilient in the face of escalating trade tensions. We will therefore focus our attention on some reasons why stocks seem impervious to the “Smoot Hawley, Part 2” narrative. Here are 4 potential explanations:

  • #1) President Trump is driving this process, and markets believe there is no way he consciously tanks the US equity market/economy ahead of midterm elections. Moreover, he is bucking both conventional economic wisdom and most of the Republican Party with his trade stance, leaving him fully exposed to any economic/market blowback.
  • #2) Growth in US large cap Technology is powerful enough to swamp even trade fears. The S&P 500 is down 0.5% this year once you exclude the Technology sector (+11.2% YTD, and 25% of the S&P). This group moves to its own beat, and that tempo remains strong. All this comes even as Tech is the single most international group in the index in terms of offshore revenues (48%).
  • #3) The uncertainty created by potential trade wars has been enough to halt the move to higher US interest rates, supporting equity valuations. Remember when the 10-year US Treasury seemed headed right to a 3.25% yield? That was all of 2 weeks ago. Now, problems in the Eurozone combined with trade policy concerns have pulled that yield solidly below 3%.
  • #4) The economic effect of a global trade war may be worse on Europe, Japan and China than they are on the US, and global equity investors have to put their money somewhere. The recent troubles around the Italian election highlighted the still-fragile nature of the economic recovery in the Eurozone. Japanese Central Bank policy, easy as it is, has still failed to generate inflation. And China still needs US consumers to fund its expansion and continue to pull millions of its citizens out of poverty.

Is There Method To Donald Trump's Supposed Madness On Trade? - President Donald Trump, it is said, is unleashing a global trade war, which is already beginning with promised retaliatory measures from our closest trading partners. Trump justified his action by claiming that steel and aluminum are strategic materials essential for national defense. In all likelihood national defense had little to do with his action. Rather, it is a ploy to put a “national security” halo around a measure being taken for economic reasons. That doesn’t mean it’s the wrong move, however. It’s important to put these measures into the context of long-term US trade policy. US trade policy since World War II could almost have been designed to undermine the economic interests of American workers and American producers. Starting with Germany and Japan, our defeated enemies, we offered them the proverbial deal they can’t refuse: they get virtually tariff-free, nonreciprocal access to our huge domestic market to assist with their economies’ recovery from wartime destruction; in return, we would take their sovereignty: control of their foreign and security policies, as well as their military and intelligence establishments, plus permanent bases on their territory.In effect, Germany and Japan ceded geostrategic control of their own countries and were rewarded at the expense of domestic US economic interests. This may have seemed a good deal for both sides at the time, in light of the mounting Cold War with the Soviet Union. Germany and Japan were flat on their back, we were the only major world economy not devastated by the war – in fact, our economy was booming. We could afford to be generous, especially as the arrangement strengthened our geopolitical position vis-à-vis the USSR and Soviet bloc. Unfortunately, not only was the Germany-Japan arrangement not ended when those nations recovered by the end of the 1950s, it became the standard for our trade relation with other countries in non-communist Europe, as well as some in the Far East, notably South Korea.  Though reduced politically to the status of satellites, these countries also benefited from having to spend only token amounts on their own militaries. (In fact, Japan accepted an arbitrarily low military spending cap of one percent of GDP, now beginning to erode.) This meant they could focus all of their resources on their economies, even while protecting them from outside competition, including from the US.This is not to say no one in the US benefited economically. American corporations – or more accurately, companies that originated in the US but had gone global – jumped at the opportunity to dump their pricey American workers (along with bothersome labor and environmental regulations), move their manufacturing operations abroad, and then import their products back into the US virtually tariff-free.

Trump Is Probing the Constitution for Weaknesses, and Finding Them -- Thursday morning, President Trump declared steel and aluminum tariffs on the European Union, Canada, and Mexico. He also announced a pardon of Dinesh D’Souza, a right-wing provocateur and conspiracy theorist, whose cause had been taken up by Senator Ted Cruz, and floated granting two other pardons he might enjoy. What both these maneuvers have in common is Trump’s discovery of powers available to him under the Constitution that enable him to make change without any approval from other branches of government. It is a bit like a small child discovering dangerous weapons lying about the house.Tariffs are a taxing power. Raising taxes usually requires two chambers of Congress. Why can Trump do it? A 1962 law gives the president authority to impose tariffs for national security reasons. In the middle of the 20th century, control of natural resources and certain kinds of manufacturing determined the outcome of wars. Japan and Nazi Germany selected areas of conquest in order to acquire oil and other resources needed to fuel their militaries; factories that built cars and appliances could be converted to making tanks and fighter planes. The law allowing the president to set tariffs for national security reasons set few limits on how this alleged need would be defined, but that didn’t matter, because presidents used it sparingly.Great-power competition to turn control resources and factories into military domination barely exists any more. But the law still does, and Trump has exploited this ambiguity to full effect. It would be too kind to say his tariff policy has zero relationship to military necessity; in reality it has a negative relationship. Trump has imposed tariffs on America’s allies, not its enemies. Indeed, Canada, one of the tariff targets, is part of the Department of Defense’s industrial base. Meanwhile, Trump has unilaterally relaxed trade sanctions on ZTE, a Chinese telecommunications firm that poses a wide array of serious national security risks. Why is Trump bailing out a dangerous Chinese firm that has violated American law? Well, he made his strange decision shortly after China announced a $500 million investment in a theme park right next to a Trump-owned property in Indonesia, which will put money directly in Trump’s pocket. At best, the tariff power is being used capriciously, in a way that has lost all touch with its original intent. At worst, in combination with the president’s decision to maintain his worldwide business empire while in office, it is a recipe for using government policy to facilitate personal bribes.

 McConnell Cancels August Recess "Due To Historic Democrat Obstruction" - Senate Majority Leader Mitch McConnell has issued a statement canceling the August recess, "due to the historic obstruction by Senate Democrats." McConnell Statement:“Due to the historic obstruction by Senate Democrats of the president’s nominees, and the goal of passing appropriations bills prior to the end of the fiscal year, the August recess has been canceled.""Senators should expect to remain in session in August to pass legislation, including appropriations bills, and to make additional progress on the president’s nominees"But there may be an ulterior motive to McConnell's decision.By way of background, Politico reports that a group of more junior senators are publicly urging McConnell to cancel recess to get the Senate’s work done - and to keep 10 vulnerable Democratic senators off the campaign trail. A group of 16 senators sent McConnell a letter this month urging him to cancel the regular summer break.Politico noted that if McConnell were to cancel much or all of the August recess, Republicans could find themselves short of votes to pass nominations or bills. With Sen. John McCain (R-Ariz.) out of work battling cancer, Republicans currently only control 50 votes, so any absences could be decisive. Vulnerable Sen. Dean Heller (R-Nev.) will also want to be at home campaigning.Still, the Senate election map is so tilted against Democrats that merely threatening to cancel the recess could prod them to cooperate, lest they lose critical days on the stump.So now McConnell has made the gamble - we will see if it works to keep Democrats from their midterm campaigning or backfire with even more gridlock and/or failed nominations and bills.

Trump administration holds mass trials of immigrants under “Zero Tolerance” policy -- An article published last week in the Intercept has exposed yet another horrifying manifestation of the cruel and inhumane anti-immigrant policies of the US government. Over the past month, federal courthouses along the US-Mexico border have become the sites of daily mass trials of immigrants charged with the crime of “illegal entry.” These trials are a direct consequence of the new “zero tolerance” policy, which Attorney General Jeff Sessions described as “sending a message to the world” that “we are not going to let this country be overwhelmed ... If you cross this border unlawfully, then we will prosecute you.” Sessions also added that people who were “smuggling a child” would not be spared “and that child will be separated from you as required by law.”  What this has meant is that even parents who make the dangerous border crossing in order to escape violence, and so to protect their children, are treated as “smugglers.” According to the Customs and Border Patrol, in April alone, 50,924 people were detained after crossing the border without papers, including 4,314 unaccompanied children and 9,647 family units. The mass trials of the detainees have become yet another step in the policy of criminalizing migrants regardless of whether or not they are seeking asylum, while continuing the vicious federal policy of tearing apart migrant families.  The scenes in the Brownsville Federal Courtroom described by reporter Debbie Nathan are both shocking and heart-rending. On any given day in May, the courtroom was filled with about 40 migrants, “exhausted ... with hands cuffed and shackled to their waists, their legs in chains ... stumbling, shuffling, clanking, and clanging in tandem.” The judge, whose task it is to determine whether the defendants understand the charges against them, was forced to ask many of his questions en masse because of the sheer numbers he faced. This, as Nathan reports, created the bizarre spectacle of the otherwise “mute and downcast” migrants providing “thundering group responses.” It did not appear as though the defendants, who for the most part came from impoverished and violence-ridden Central American countries and spoke only in Spanish, understood either the content of the charges or the judge’s explanation of their sentences. In addition, it was apparent that none of them had the benefit of meaningful legal counsel. On most days, public defenders were given less than two hours to talk to the whole group, which meant each defendant had at best a few minutes with a lawyer.

Leaked Photo Of Shackled Illegals Shows "Mass Trial" After DOJ Enacts "Zero Tolerance" Policy -  A photo taken from inside a Pecos, Texas immigration court shows dozens of illegal immigrants in orange jumpsuits, standing as they await their fate in a "mass trial" designed to expedite their deportation. The proceedings, covered by reporter Debbie Nathan of The Intercept, have sparked controversy over the Trump administration's new "zero tolerance" policy which has led to separated families amid a report that the Department of Health and Human Services has lost track of 1,475 unaccompanied migrant children who had been placed with sponsors. “You’re going to be deported,” she remembers them telling her. “And your child will stay here.” The next morning, the child was taken. Delia fell on her knees during the removal, wailing and begging not to be separated. Officials looked on indifferently,” https://t.co/my3htM79m6 — Trenni Kusnierek (@trenni) June 3, 2018  Each day was the same. The courtroom was filled with exhausted immigrants, with hands cuffed and shackled to their waists, their legs in chains — dozens of defendants stumbling, shuffling, clanking, and clanging in tandem. “Raise your right hand,” Morgan commanded as a translator spoke Spanish into their headphones. The shackled defendants struggled to comply.  The judge’s job is to determine if defendants understand the criminal charges against them and whether they feel they have had adequate legal representation. If they say they want to plead guilty, he asks whether they are doing so of their own free will. After that, they can make a statement — an “allocution” — and then the judge sentences them. -The Intercept Last month Attorney General Jeff Sessions ordered a "zero tolerance" policy in which federal prosecutors are to criminally charge every single immigrant who enters the country illegally - expanding a program called Operation Streamline introduced in 2005 under the Obama administration, and facilitated the aforementioned mass trials currently in use.

Sen. Merkley Says Immigrants Are Kept in Cages that Looked ‘Like Dog Kennels’ - Sen. Jeff Merkley (D-OR) drew attention to the plight of recently arrived immigrants under President Donald Trump's administration over the weekend when he posted video of himself being denied access to one of the facilities where unaccompanied immigrant children are housed. But on Monday night, he spoke with MSNBC's Chris Hayes and described the condition of many of the immigrants at a processing center he did get to see — and his description was deeply disturbing."The first room had a series of cages that look a lot like dog kennels, which people had recently arrived — they had been put into them," he said. "They were very crowded. The individuals had space blankets, so you had all these silver space blankets, no mattresses, and people looking very distressed and upset. A number of women holding children in their arms."He continued: "And then adjacent to that is a very, very large warehouse, with much larger cages, and in those, the children have already been separated from the parents." He described one child he saw in this warehouse as four or five years old. And while some of these children likely arrived on their own, some came with families and then were separated from their parents by border agents, even though they were seeking asylum — a form of legal immigration. Merkley's description of the dehumanizing treatment these immigrants are being put through perhaps shouldn't be a surprise, given Trump's willingness to use dehumanizing rhetoric to discuss immigration. Hayes explained on Twitter: "And to be clear: the cages themselves predate the Trump admin. The systematic child separation policy, however, is new." Watch the interview below:

Sen. Jeff Merkley denied entry into one migrant detention facility, claims he saw kids caged in another - Democratic Sen. Jeff Merkley tried to visit an immigration detention facility in Texas over the weekend, but was soon denied access into the building. This prompted questions about what's going on behind closed doors at some of the country's detention facilities amid concerns about the separation of children from their parents who have attempted to cross the border illegally. Merkley live-streamed his arrival at a detention facility run by the Office of Refugee Resettlement in Brownsville, Texas on Sunday, which he said was housing children who had been separated from their families at the border. During Merkley's live stream, the senator introduced himself to guards outside the building, identifying himself as a member of Congress and asking for permission to enter. The windows at the facility appeared to be blacked out. "I was barred entry," Merkley said. "Asked repeatedly to speak to a supervisor -- he finally came out and said he can't tell us anything. Police were called on us," he added in a tweet.  Merkley's colleague, Sen. Bob Menendez tweeted in response to the senator's story, saying he shared a similar experience in being barred from gaining access to a detention facility. He said that Homeland Security Secretary Kirstjen Nielsen "owes us answers." And amid uproar over the treatment of children who make it into the U.S. after being forced to part ways with their families, Merkley claimed in his interview with CNN that he witnessed kids in cages at a separate facility in McAllen, Texas. "When I was at the center at McAllen Border Station, this is the processing center, earlier and I was admitted there and I did see the people, hundreds of children locked up in cages there at that facility," said Merkley, claiming that the federal government was "whitewashing" the challenges of the entrance system. He added, "They have big cages made out of fencing and then wire and nets stretched across the top of them so people can't climb out of them."

DHS Scrambles To Find Temporary Housing For Migrant Children On Military Bases, Border Stations - Just weeks after the US Department of Homeland Security introduced a new policy that allowed ICE agents to separate children and adults crossing the border, NBC News is reporting that the rapidly rising number of minors being housed at the border is forcing DHS to scramble to find new accommodations as the administration continues to separate migrant children from their parents.In May, President Trump introduced his "zero-tolerance" policy, saying that parents and migrant children would be separated at the border. The Department of Homeland Security then inflamed the situation by revealing that it had lost track of some 1,500 children. Since then, demands for more oversight at DHS have intensified. As of Sunday, 300 of 550 children currently in custody at US border stations had spent more than 72 hours there, having reached the time limit for temporary detention. These stations often lack the resources necessary to house children, including bedding and other resources.Almost half of these children are younger than 12, meaning they're classified as "tender age children." Given the inadequacy of their temporary accommodations, DHS scouts are searching for more space where these children can be comfortably housed for the interim period until they've been placed in permanent accommodations. As NBC notes, the "overstays" at border stations are a result of a backlog at U.S. Health and Human Services (HHS), which is the agency responsible for sheltering migrant children longer term and matching them with relatives or foster parents in the U.S. The agency's Administration for Children and Families has 11,200 unaccompanied children in its care and takes 45 days on average to place a child with a sponsor.

Exclusive: U.S. sending 1,600 immigration detainees to federal prisons (Reuters) - U.S. authorities are transferring into federal prisons about 1,600 Immigration and Customs Enforcement (ICE) detainees, officials told Reuters on Thursday, in the first large-scale use of federal prisons to hold detainees amid a Trump administration crackdown on people entering the country illegally. An ICE spokeswoman told Reuters five federal prisons will temporarily take in detainees awaiting civil immigration court hearings, including potential asylum seekers, with one prison in Victorville, California, preparing to house 1,000 people. President Donald Trump has made his hard-line stance on immigration an integral part of his presidency and has promised to build a wall along the U.S.-Mexican border to stem the flow of migrants. He has also promised to keep immigrants targeted for deportation locked up “pending the outcome of their removal proceedings.” Under former President Barack Obama, many immigrants without serious criminal records were allowed to await their court dates while living in the United States. Others were housed in immigration detention facilities or local jails. ICE has used federal prisons in the past but not on this scale, sources said. The new policy drew criticism from immigration advocates and former officials. Kevin Landy, a former ICE assistant director responsible for the Office of Detention Policy and Planning under the Obama administration, said the move to house so many detainees at once in federal prisons was “highly unusual” and raises oversight concerns. “A large percent of ICE detainees have no criminal record and are more vulnerable in a prison setting – security staff and administrators at BOP facilities have spent their careers dealing with hardened criminals serving long sentences for serious felonies, and the procedures and staff training reflect that,” he said. “This sudden mass transfer could result in some serious problems.” Officials of a prison employees’ union said the influx of ICE detainees, who were arrested at the border or elsewhere in the United States by immigration officials, raises questions about prison staffing and safety. Union leaders at prisons in California, Texas and Washington state who spoke to Reuters said they had little time to prepare for the large intake of detainees. 

Trump administration to send 1,600 ICE detainees to federal prisons -- The United States government will be transferring 1,600 migrants, including asylum seekers, held by Immigration and Customs Enforcement (ICE) to federal prisons in the first large scale transfer of immigrants from ICE detention centers to institutions run by the Bureau of Prisons (BOP). The decision is part of the Trump administration’s “zero tolerance” immigration policy.The detainees, notwithstanding the absence of any prior criminal record, will be transferred to five federal prisons in Victorville, California; La Tuna, Texas; Sheridan, Oregon; Phoenix, Arizona; and Seattle, Washington. This appalling decision shows clearly that the criminalization of migrants by the US government continues to accelerate, with a new nadir reached almost every day.Reuters, which first broke the story on Thursday, reported that the transfer is the result of a new agreement between ICE, the US Marshals Service, and BOP, as a means to “provide more bed space.” The detainees are expected to be in the prisons for 120 days while ICE finds new detention facilities. While administration officials make this sound like a hospitality issue, the reality is far more frightening.Under previous administrations, there at least existed an important distinction between asylum-seekers and other types of undocumented migrants. The former were released and allowed to remain with their families as their cases were being considered by the courts. The latter, if found to be first-time offenders were generally put through civil deportation proceedings and held in ICE detention centers or county jails while awaiting hearings. Under the new “zero tolerance” policy, all such distinctions have been erased. All undocumented migrants, regardless of circumstances, are treated as “criminals,” and are being subjected to cruel and inhumane treatment, including mass trials, summary sentencing and forced separation of parents from children.

DHS will use facial recognition to scan travelers at the border -- Last year, the Department of Homeland Security (DHS) put out a notice, saying it was looking for a facial recognition system that could work with images taken of people inside their cars. The idea was that such a system could be used to scan people entering and leaving the country through the US/Mexico border and match them to government documents like passports and visas. Now, The Verge reports that DHS will be launching a test of a system aiming to do just that. The Vehicle Face System, as it's called, is scheduled for an initial deployment in August and it will be installed at the Anzalduas border crossing. The test will take place over one year and will aim to take images of passengers in every car that enters or leaves the US through the crossing. Those images will be matched to government documents and travelers will be verified before they get to the border checkpoint, in theory. While car windshield reflections have typically prohibited facial recognition systems from being effective with images taken through windshields, those behind these tests are hoping to get around that problem. They're using sensors that can capture images at multiple focal lengths, which might allow the system to differentiate people from reflections. The work is part of a larger biometric data project that currently includes ongoing facial recognition pilots in eight airports including the Hartsfield-Jackson Atlanta International Airport, Washington Dulles International Airport, JFK International Airport and Chicago O'Hare International Airport. There are, of course, concerns over how this technology will be implemented. "This is a way for the federal government to track people -- monitoring who goes where and what they do there," ACLU attorney Mitra Ebadolahi told The Verge. "In a free society, we should all be able to safely live our lives without being watched and targeted by the federal government." 

Construction Breaks Ground On Trump's Border Wall With "Anti-Climbing Plate" In San Diego - Construction has just started on a 14-mile section of President Trump’s new border wall along the Mexico–United States border and will include “anti-climbing plates” to deter illegal border crossings. Despite many obstacles and strong opposition from Democrats, construction of the wall started near San Diego on Friday, June 01, which is excellent news for his conservative base, in regards to border security heading into the midterm elections this fall. John Gibbins, a freelance reporter, covering breaking news in San Diego-Baja California region, has taken a photograph of the alleged construction zone.On the right is Tijuana, Mexico. On the left San Diego in the U.S.. Down the middle is current border wall. Construction has started on a new section of border wall right where the pile of rocks is at lower left. #TrumpWall pic.twitter.com/YqibM5zD2o Another journalist captures heavy machinery at the construction area.Barely a month after VP Pence visited the border in California, wall constructions begins in San Diego. First pics were released today #borderwall pic.twitter.com/e821uAVaBJ    According to Fox 4 News, the new wall will replace 14-miles of an old, rusted metal barrier that was erected in the early 1990s from Vietnam-era scrap metal. The barrier currently stands 10-feet high, which has done very little to thwart illegal border-crossings. The new wall is a bollard-style design measuring 18 to 30 feet tall and includes “anti-climbing plates” welded on the upper half of the structure. Fox 4 News indicates that construction workers have broken ground about a half mile from the Pacific Ocean in Border Field State Park in San Diego, California, and eventually move east to the bottom of Otay Mountain in East County.

Trump After 500 Days: More Lifetime Federal Judges - Jerri-lynn Scofield - Today Trump trumpeted his (ahem) successes– real and otherwise– in his first 500 days as President (see this White House press release, President Donald J. Trump’s 500 Days of American Greatness) One achievement: confirming “the most circuit court judges of any President in their first year, and [securing] Justice Neil Gorsuch’s confirmation to the United States Supreme Court.” This Administration accomplishment cannot be denied, as I have acknowledged previously: One year in, the Trump administration continues to set records for the discipline and efficiency with which it is seating federal judges– who have lifetime tenure, and will continue to serve long after the Donald is a bad memory. As David Lat writes in Above the Law, the administration well understands that the success of advancing its agenda, in the longer term, depends in significant part on the composition of the federal judiciary. Trump cannot replace sitting judges, but he can make sure, going forward, that those who share a similar ideological approach, are ruling on his initiatives and those of his successors: “Many of President Trump’s initiatives might get stuck in Congress, struck down by courts, or undone by his successor — but his appointees to the federal bench, appointed for life, will be around for a long, long time (especially given the administration’s focus on youth when selecting nominees).”   Brookings published this report today, Senate obstructionism handed a raft of judicial vacancies to Trump—what has he done with them?, explaining one necessary condition for Trump’s success in seating federal judges:  The reasons for the vacancies—old news to most—was the flimsy confirmation record in the 2015-16 Senate (the 114th), with its new Republican majority. Just as it refused to consider Merrick Garland’s Supreme Court nomination, it shut down the lower court confirmation process.  The Brookings report concludes that conditions that prevailed in the Senate in 2015 and 2016: contributed to the contentiousness and polarization of the once semi-ministerial task of confirming judge. There is no reason to expect the process to get any better. We are reaching the point that confirmations stop unless the same party controls the White House and Senate. Currently, Republicans are not resting easy and are working to confirm further judicial nominations– with Senator Chuck Grassley going so far as proposing to surrender the August congressional recess to further this goal, as recently reported by The GOP senator: Work during August recess to help confirm judges:

 ‘Reality TV stars running the country’: Twitter reacts to Trump-Kardashian meeting on prisons - Twitter has lit up at the news that reality TV star Kim Kardashian West is expected to meet US President Donald Trump at the White House — to talk prison reform.  At a meeting planned for Wednesday, Kardashian West is expected to bring up the case of 63-year-old grandmother Alice Marie Johnson who is serving a life sentence for a first-time, non-violent drug offence. Johnson has already been in prison for more than two decades and it is understood that Kardashian West has been speaking to Trump’s son-in-law Jared Kushner about a pardon for months. While the case is an important one, the funny and somewhat depressing side has not been lost on Twitter, with numerous users pointing out that reality stars — of which Trump was one himself — now seem to be “running the country” and lamenting celebrity culture which “deifies” people like Kardashian West instead of real experts on important issues. Johnson’s case was first noticed by Kardashian when she saw a video about it on social media and decided to pay for a new legal team to fight the sentence. Trump has the power to decide whether or not to pardon Johnson, but there has been no indicated yet as to what he will do.

Trump Commutes Life Sentence Prompted By Kardashian Meeting - President Trump on Wednesday commuted the sentence of Alice Marie Johnson, a 63-year-old woman who was handed a life sentence in 1996 on non-violent drug charges, after meeting with Kardashian West, according to the New York Post.  Kardashian celebrated the commutation as the "best news ever" on twitter. BEST NEWS EVER!!!! https://t.co/JUbpbE1Bk0 — Kim Kardashian West (@KimKardashian) June 6, 2018    Kardashian West had requested the meeting to advocate for prison reform - and specifically to lobby Trump to pardon Johnson. During her time at the White House, Kardashian West also met with Trump son-in-law and senior advisor Jared Kushner. Trump has issued several high profile pardons, including pardoning Sheriff Joe Arpaio, conservative commentator Dinesh D'Souza and former assistant to the vice president Scooter Libby. Johnson was convicted after getting involved with a cocaine trafficking ring - something she says she did because she was broke and had suffered through a series of tragedies, including losing a job at FedEx, seeing her marriage end in divorce and losing her son, who had been killed in a motorcycle accident. Trump is reportedly preparing to pardon up to 30 convicted felons. The commutation was originally reported as a pardon by Axios, which has since changed the report.

Trump Taps Bannon Ally for Top Broadcasting Job - President Donald Trump has tapped a conservative filmmaker who is a close ally of former White House strategist Steve Bannon to lead the broadcasting arm of the U.S. government, a $685 million agency that oversees prominent U.S.-funded outlets including Voice of America and Radio Free Europe/Radio Liberty.Michael Pack, who ran the conservative Claremont Institute, is a sharp critic of what he calls the “politically correct agenda” at universities around the country, where he says liberal media professors indoctrinate students with courses on environmental filmmaking and gay culture.The White House on Friday evening announced Pack’s nomination to be CEO of the Broadcasting Board of Governors. The position requires Senate confirmation.If confirmed, Pack will take over a troubled government agency roiled by fierce political infighting since Trump took office, according to sources inside the board and others familiar with internal deliberation. In addition to VOA and RFE/RL, Pack would oversee the Office of Cuba Broadcasting, Radio Free Asia, and the Middle East Broadcasting Networks, which collectively reach 278 million people each week in 61 languages around the world, according to the board’s own figures. The Trump administration requested $661 million for the agency’s budget in fiscal year 2019.

Farm Bill Targets Food Stamps — But Not Handouts to Well-Off Farmers - As more than a million Americans face losing food stamps under President Trump's vision for reauthorizing the farm bill, his vow to wean families off dependence doesn't apply to thousands of others who have been relying much of their adult lives on payments from the government's sprawling agriculture program. And many of those farmers have been getting aid for far longer than the average 10 months that a food stamp recipient gets help. In fact, 27,930 farmers have been collecting for 32 years, a report released Wednesday shows. The assistance is supposed to keep their farming operations afloat, but it flows in good years and bad. It is well known that the farm bill long ago strayed from its Dust Bowl roots, when the temporary subsidies were established to help farming operations survive brutal drought and other such catastrophic events. But the new data compiled by the advocacy organization Environmental Working Group are setting off fresh charges that food stamps are not the only form of welfare bankrolled under the bill. "We are struggling to understand how some of these operations manage to get paid every single year," said Scott Faber, vice president of government affairs at the group. "It is remarkable that 28,000 people have managed to get a check every year for 32 years." Not all of the recipients live and work on hardscrabble farms. Some are managing operations that are quite lucrative, according to the report. At least 245 of them appear to live far from where the cotton, corn, wheat and other subsidy-eligible commodities are grown; they are in urban locations such as Santa Monica and the Napa Valley's St. Helena. While most of the recipients are in the Midwest and Texas, there are 87 Californians who have been collecting farm bill checks since the mid-1980s. Their operations span the entire state, and range from big, industrial farms to the hobby farms of wealthy individuals.

Justice Dept. argues key parts of ObamaCare are unconstitutional | TheHill: The Department of Justice (DOJ) argued in court Thursday that key parts of ObamaCare are now unconstitutional, siding in large part with a conservative challenge to the law. The move is a break from the normal practice of the DOJ to defend federal laws when they are challenged in court. Under President Trump, the department has opted not to defend a law that it strongly opposes. Attorney General Jeff Sessions acknowledged in a letter to Speaker Paul Ryan(R-Wis.) that the DOJ has a "longstanding tradition" of defending federal laws, but argued that this is "a rare case where the proper course is to forgo defense" of the law. The lawsuit in question was filed in February by Texas and 19 other GOP-led states, arguing that ObamaCare is unconstitutional and should be overturned.Legal experts are deeply skeptical the challenge can succeed, and 17 Democratic-led states have already intervened to defend the law in the absence of DOJ action. The DOJ argues that ObamaCare’s protections against people with pre-existing conditions being denied coverage or charged more should be invalidated, maintaining that the individual mandate that people have insurance or face a tax penalty is now unconstitutional. The conservative states and DOJ point to the Supreme Court's 2012 ruling that upheld ObamaCare's individual mandate under Congress's taxing power. Now that Congress has repealed the mandate penalty as part of last year's tax bill – while technically keeping the mandate itself in place – they argue the mandate is no longer a tax and is now invalid. They also argue that the key pre-existing condition protections cannot be separated from the mandate and should be invalidated. The DOJ argues the remainder of the law can stay. 

What we owe Monica Lewinsky - By all accounts, Bill Clinton came into his second term determined to care though a very ruthless neo-liberal plan. The era of big government was over. And part of it he succeeded in cramming through. He signed into law “reforms” that deregulating mortgages and led to the great crash of 2008. And he got rid of #GlassSteagall, which made our response to 2008 concentrate on saving the great too big to fail banks.But the big piece de resistance, for the Clintonites, was privatizing social security. In November, 1996, Mother Jones had a big article about the drive among third way dems to privatize social security, quoting such stalwarts as members of the Social Security Advisory Council who were all about “reforming” SocSec, and Dems who were talking about Clinton in a “Richard Nixon goes to China” mode becoming a real statesmen and screwing us for generations to come. The vice president of the Democratic Leadership Council – remember that Trojan horse – were quoted as being cautiously optimistic that Clinton would lead the way on “reform”.But the state of play in 1996 changed drastically on January 17, 1998, when Drudge reported that Clinton was being investigated for an affair with an intern. Yes, Monica Lewinsky! And that day did more than anything else to turn the tide. It shows that one person can make a difference. The scandal did not keep Clinton from happily signing mortgage legislation that led to disaster, or dissolving the regulatory structure that had kept American banks from the gorge and crash syndrome to which they are inherently heir. But these pieces of legislation, however bad, are not as bad as the Cato-touted reforms that Clinton’s Social Security “advisors” were hoping to jimmy through.

SCOTUS Overturns Case Against Gay-Biased Baker - The Supreme Court has ruled in favor of a Colorado baker who refused to bake a cake for a gay wedding over religious reasons. In a landmark 7-2 ruling (Ruth Bader Ginsburg and Sonia Sotomayor against), the Court found that the decision by Jack Philips of Masterpiece Cakeshop to refuse the same-sex couple's request is protected under the first amendment.  In 2012 gay fiancés David Mullins and Charlie Craig asked Philips to create a custom cake for their wedding. Philips, who does not make cakes for Halloween, adult parties, anti-American messages or themes which he has religious objections to, refused. Mullins and Craig filed discrimination charges with the Colorado Civil Rights Commission which agreed with the couple - saying that Philips violated the Colorado anti-discrimination law barring businesses from refusing service based on race, sex, marital status or sexual orientation. The Colorado Court of Appeals also sided with the couple.

A day of reaction at the US Supreme Court - The United States Supreme Court issued two reactionary decisions yesterday, dealing blows against abortion access, the rights of detained immigrants, and civil rights for lesbian and gay people.  In the first decision, Azar v. Garza, the court voted unanimously to invalidate a lower court ruling upholding the right of detained minor immigrant women to abortion. All four Democratic nominees supported the order, which allows Trump’s policy blocking young immigrants from abortion access to remain in effect. Defending the policy, Office of Refugee Resettlement Director E. Scott Lloyd said in December that immigrant detention centers “cannot be a place of refuge while we are at the same time a place of violence” and that “we ought to choose to protect life rather than destroy it.” He was not referring to recent reports showing immigration officials systematically sexually and physically abusing immigrants, including children, at detention centers across the country. In the second decision, Masterpiece Cakeshop Ltd. v. Colorado Civil Rights Commission, the court ruled 7-2 that Colorado violated a baker’s “free speech” rights when it sanctioned him for refusing to bake a cake for a gay couple’s wedding. Five Republicans and two Democrats—Elena Kagan and Stephen G. Breyer—accepted the baker’s argument that he was the victim of discrimination at the hands of the state’s civil rights commission. Although the decision does not specifically state that business owners can refuse to serve gay customers, it does establish the absurd rule that the “right” of the discriminator must be weighed against the rights of the people being discriminated against. The court berated the Colorado civil rights commission for comparing the baker’s bigotry to anti-Black and anti-Semitic prejudice, ruling that while “Colorado law can protect gay persons in acquiring products and services on the same terms and conditions as are offered to other members of the public, the law must be applied in a manner that is neutral toward religion.”

Democratic Congressman: "Looks Like Zuckerberg Lied To Congress" - Responding to a report in the New York Times which revealed Facebook gave at least 60 major device manufacturers unprecedented access to user data, Democratic Congressman David Cicilline (RI) tweeted on Sunday: "Sure looks like Zuckerberg lied to Congress about whether users have “complete control” over who sees our data on Facebook," adding "This needs to be investigated and the people responsible need to be held accountable." The Times reported Sunday evening that Facebook gave at least 60 major device manufacturers access to user data over the last decade - including Apple, Amazon, BlackBerry, Microsoft and Samsung - as part of a data-sharing partnership program which allowed the companies to integrate various features such as messaging and "like" buttons into their products. The agreement has allowed manufacturers to access information on relationship status, calendar events, political affiliations and religion, among other things. An Apple spokesman, for example, said that the company relied on private access to Facebook data to allow users to post on the social network without opening the Facebook app, among other things.Even more disturbing, the manufacturers were able to access the data of users' friends without their explicit consent, despite Facebook declaring they would not let outside companies access user data. The catch? The NYT explains.Facebook’s view that the device makers are not outsiders lets the partners go even further, The Times found: They can obtain data about a user’s Facebook friends, even those who have denied Facebook permission to share information with any third parties.In interviews, several former Facebook software engineers and security experts said they were surprised at the ability to override sharing restrictions. -NYT“It’s like having door locks installed, only to find out that the locksmith also gave keys to all of his friends so they can come in and rifle through your stuff without having to ask you for permission,” said Ashkan Soltani, a research and privacy consultant and former chief technologist for the Federal Trade Commission (FTC).

Facebook reveals data-sharing deals with Huawei, other Chinese tech makers - Politico - Facebook has data-sharing partnerships with Chinese electronics companies including Huawei, a telecommunications giant that's been flagged to the U.S. as a national security threat, the social media giant said Tuesday.“Huawei is the third largest mobile manufacturer globally and its devices are used by people all around the world, including in the United States. Facebook along with many other US tech companies have worked with them and other Chinese manufacturers to integrate their services onto these phones," Francisco Varela, Facebook's VP of mobile partnerships, said in a statement.  Facebook controlled and approved any use of Facebook data on Huawei devices "from the get go," Varela added, and all user information stayed on the devices rather than being sent to Huawei's servers.Varela said Facebook had similar deals in place with China's Lenovo, OPPO and TCL, which make a range of consumer electronics and telecom devices.  The company has said it's winding down its data sharing partnerships. Doubts are growing in Washington over Facebook's handling of user data after a New York Times report disclosed the partnerships with device makers, which also include Apple and Samsung.

Facebook security officer: Not all speech is “created equal” - Alex Stamos, Facebook’s chief security officer, presented an overview of the Orwellian censorship regime implemented by the world’s largest social media company last week at an annual military conference in Tallinn, Estonia.Speaking before an audience of generals, intelligence agents and US-aligned Eastern European politicians, Stamos warned that millions of “people who feel they have been ignored or oppressed” are using Facebook to “push for radical politics.” The speech was an account of how the company is partnering with the US and other governments throughout the world to control public discourse online, with the primary but unstated aim of suppressing access to left-wing, anti-war and socialist viewpoints.  First, Stamos said Facebook is seeking to combat “fake news” through “changes in the news feed that surface this content to people.”But instead of seeking to determine if a piece of news is “fake,” Facebook is carrying out mass profiling of news sources by “Look[ing] to metadata around the people who have created the account, the news site that’s running it,” to evaluate whether it is “trustworthy.” Through this Orwellian censorship regime, Facebook segregates news organizations into categories and determines how many people are able to view their postings on that basis. In other words, the company’s evaluation of whether a piece of news is “fake” is determined not by whether it is accurate, factually grounded or verifiable, but rather by who posts it. The logical implication is that if one of Facebook’s “partners” in the establishment media posts a story, no matter how inaccurate, biased, or poorly sourced, the company will still promote it as “trustworthy.” Facebook’s policy on “fake news,” in other words, is political blacklisting.

Facebook Gave Some Companies Special Access to Additional Data About Users’ Friends -- Facebook struck customized data-sharing deals that gave select companies special access to user records well after the point in 2015 that the social network has said it walled off that information, according to court documents, company officials and people familiar with the matter. Some of those and other agreements, collectively known internally as “whitelists,” also allowed certain companies to access additional information about a user’s Facebook friends, the people familiar with the matter said. That included information like phone numbers and a metric called “friend link” that measured the degree of closeness between users and others in their network, the people said. The whitelist deals were struck with companies including Royal Bank of Canada and Nissan Motor Co. , who advertised on Facebook or were valuable for other reasons, according to some of the people familiar with the matter. They show that Facebook gave special data access to a broader universe of companies than was previously disclosed. They also raise further questions about who has access to the data of billions of Facebook users and why they had access, at a time when Congress is demanding the company be held accountable for the flow of that data. Many of these customized deals were separate from Facebook’s data-sharing partnerships with at least 60 device makers, which it disclosed this week. Several lawmakers and regulators have said those device-maker arrangements merit further investigation. 

There Is No Justification for What Mark Zuckerberg Did to WhatsApp - Felix Salmon - The Wall Street Journal published a bombshell story on Tuesday about what reporters Kirsten Grind and Deepa Seetharaman call “the messy, expensive split between Facebook and WhatsApp’s founders.” The dishy piece makes for great reading. (Do the multibillionaire founders of global communications platforms make time to grouse at each other about who gets to pick out office chairs? Yes. Yes, they do.) Behind the dishiness, however, is a very important story that pretty much clears up any doubt as to whether Mark Zuckerberg is a trustworthy man who keeps his promises—or a profit-obsessed machine who’s much stronger on greed than he is on morals. By the time you’ve finished the WSJ piece, only two options seem possible: Either Zuckerberg is a liar, or he’s a liar with absolutely no concept of the sunk-cost fallacy. When Facebook bought WhatsApp for $22 billion in 2014, the companies rolled out a very clear messaging campaign, based around WhatsApp’s motto of “no ads, no games, no gimmicks.” The messaging service  would be owned by Facebook, and Facebook could continue to make as much money as it wanted from ads on its own platform, but WhatsApp would retain its purity of product and even roll out end-to-end encryption.WhatsApp wasn’t an easy acquisition for Zuckerberg, because the two apps have very different founding principles. Koum, who grew up in Ukraine, believes deeply in privacy; Zuckerberg thinks that the more open and connected we are, the happier we all become. And so in order to acquire WhatsApp, Zuckerberg not only had to pay a lot of money and give up a board seat to Koum; he also had to make a lot of promises. Some of those promises were even enshrined in the acquisition agreement: If Facebook imposed “monetization initiatives” like advertising onto WhatsApp, its founders’ shares would vest immediately, and they could leave without suffering any kind of financial penalty. Thus did WhatsApp retain exactly the independence that it had been promised—until it didn’t.

Whoever Controls The Narrative Controls The World - caitlinjohnstone - MSNBC host Joy Reid still has a job. Despite blatantly lying about time-traveling hackers bearing responsibility for bigoted posts a decade ago in her then-barely-known blog, despite her reportedly sparking an FBI investigation on false pretenses, despite her colleagues at MSNBC being completely fed up with how the network is handling the controversy surrounding her, her career just keeps trundling forward like a bullet-riddled zombie. To be clear, I do not particularly care that Joy Reid has done any of these things. What is interesting to me, however, is the fact that Reid's bosses are protecting her career so adamantly. Both by refusing to fire her, and by steering the conversation into being about her controversial blog posts rather than the fact that she told a spectacular lie in an attempt to cover them up, Reid is being propped up despite this story constantly re-emerging and making new headlines with new embarrassing details, and despite her lack of any discernible talent or redeeming personal characteristics. This tells us something important about what is going on in the world. It is not difficult to find someone to read from a teleprompter for large amounts of money. What absolutely is difficult is finding someone who is willing to deceive and manipulate to advance the agendas of the privileged few day after day. Who else would be willing to spend all day on Twitter smearing everyone to the left of Hillary Clinton while still claiming to stand on the political left? Who else would advance the point-blank lie about "17 intelligence agencies" having declared Russia guilty in US election meddling months after that claim had been famously and virally debunked? Who else would publicly claim that Edward Snowden's NSA leaks did not benefit anyone besides Russia? Who else could oligarchs like Comcast CEO Brian L Roberts, whose company controls MSNBC, count on to consistently advance his agendas?  While it's easy to find someone you can count on to advance one particular lie at one particular time, it is difficult to find someone you can be absolutely certain will lie for you day after day, year after year, through election cycles and administration changes and new war agendas and changing political climates. A lot of the people who used to advance perspectives which ran against the grain of the political orthodoxy at MSNBC like Phil Donahue, Ed Schultz and Dylan Ratigan have vanished from the airwaves never to return, while reporters who consistently keep their heads down and toe the line for the Democratic establishment like Chris Hayes, Rachel Maddow and Joy Reid are richly rewarded and encouraged to remain.

Mueller says Manafort tried to tamper with potential witnesses | TheHill: Special counsel Robert Mueller said in a court filing on Monday that President Trump's former campaign chairman Paul Manafort has attempted to tamper with potential witnesses while on pretrial release. Mueller's team has asked the court to revoke or revise Manafort's release conditions, including his bond and house arrest, in the wake of the filing, which was first reported by Reuters. FBI agent Brock Domin said in the filing that Manafort and a longtime associate linked to Russian intelligence attempted to contact via phone call, text and encrypted messages two people from the "Hapsburg group," which Manafort had worked with to lobby for Ukrainian interests. Domin said that Manfort's attempts at contact were “in an effort to influence their testimony and to otherwise conceal evidence” and that the probe into the matter was still ongoing. Domin said he believed the effort was an attempt to "suborn perjury." In a Tuesday statement, Manafort's representation said the filing would not alter his defense. "Mr. Manafort is innocent and nothing about this latest allegation changes our defense. We will do our talking in court," his attorneys said. Mueller's investigation into Moscow's meddling in the 2016 presidential election and any possible coordination with the Trump campaign reached its anniversary last month.

Manafort Tried To Tamper With Witnesses After Indictment, May Have To Return To Jail - Paul Manafort, President Trump's former campaign manager, has been accused of attempting to tamper with witnesses in his federal tax and lobbying case. Court documents reveal that Manafort tried to contact several associates after his indictment last year via phone and encrypted messaging program to get their stories straight over lobbying practices, which prosecutors say violates the terms of his release. They have asked a federal judge to "revoke or revise" the order governing the terms of his supervised release, which could send him to jail until his trial. Manafort is currently under 24-hour GPS monitored house arrest. FBI agent Brock W. Domin wrote in court documents that one witness reported Manafort's contact, and that he appeared to be trying to coach him on their story about where they lobbied. The order reads: The day after the Superseding Indictment was made public, Manafort also sent Person D1 a text message on an encrypted application, stating “This is paul.” Two days later, on February 26, 2018, Manafort used the same encrypted application to send Person D1 a news article describing the Superseding Indictment’s allegations concerning the Hapsburg group, which included the statement that “two European politicians were secretly paid around €2 million by Manafort in order to ‘take positions favorable to Ukraine, including by lobbying in the United States.’” One minute after sending the news article, Manafort wrote: “We should talk. I have made clear that they worked in Europe.” Toll records for one of Manafort’s phones indicate that Manafort had a short call with Person D1 on February 24, 2018, and that Manafort attempted to call Person D1 again on February 25 and 27, 2018 As noted in Special Agent Domin’s declaration, Person D1 has told the government that he understood Manafort’s outreach to be an effort to “suborn perjury,” because Person D1 knew that the Hapsburg group worked in the United States—not just Europe.

 Special counsel Mueller files witness tampering indictment against Paul Manafort and Russian citizen - Special counsel Robert Mueller on Friday filed new witness tampering criminal charges against ex-Trump campaign chief Paul Manafort as well against Russian citizen and former Manafort operative Konstantin Kilimnik.The superseding indictment — the third against Manafort issued by a Washington, D.C., federal grand jury — came days after Mueller asked a judge to revoke Manafort's $10 million bail and jail him because of alleged efforts to tamper with potential witnesses at his upcoming trials.Manafort, 69, and the 48-year-old Moscow resident Kilimnik were both charged with obstructing justice and conspiracy to obstruct justice by using intimidation or force against a witness, and also with tampering with a witness, victim or informant.The charges echo allegations Mueller made Monday in his request to revoke Manafort's bail. Kilimnik was a longtime employee of Manafort's political consulting entities and had done work for him in Ukraine. He is also suspected of having connections to Russian intelligence services.The indictment accuses Manafort, while being confined to his home, of conspiring with Kilimnik to influence two potential witnesses against Manafort between late February and April.The witnesses are identified as "Persons D1 and D2" in the superseding indictment. That is exactly how Mueller, in his bail revocation request, identified two witnesses who had worked with Manafort and whom he allegedly tried to tamper with.The "Person A" identified in Monday's filing by the special counsel as Manafort's accomplice in that effort appears to be Kilimnik.In that filing, Mueller said that in February, after he filed a second superseding indictment against Manafort, both Manafort and Person A "repeatedly contacted Persons D1 and D2 in an effort to secure materially false testimony concerning the activities of the Hapsburg group." That group was a collection of former senior European political leaders who allegedly acted as third-party paid lobbyists for Ukraine.Court filings say that Person D1 told Mueller's investigators that Manafort reached out to him on Feb. 26 using the WhatsApp encrypted messaging platform to say, "We should talk. I have made clear that they worked in Europe," referring to the Hapsburg group.

Trump’s Lawyers, in Confidential Memo, Argue to Head Off a Historic Subpoena— President Trump’s lawyers have for months quietly waged a campaign to keep the special counsel from trying to force him to answer questions in the investigation into whether he obstructed justice, asserting that he cannot be compelled to testify and arguing in a confidential letter that he could not possibly have committed obstruction because he has unfettered authority over all federal investigations. In a brash assertion of presidential power, the 20-page letter — sent to the special counsel, Robert S. Mueller III, and obtained by The New York Times — contends that the president cannot illegally obstruct any aspect of the investigation into Russia’s election meddling because the Constitution empowers him to, “if he wished, terminate the inquiry, or even exercise his power to pardon.” Mr. Trump’s lawyers fear that if he answers questions, either voluntarily or in front of a grand jury, he risks exposing himself to accusations of lying to investigators, a potential crime or impeachable offense. Mr. Trump’s broad interpretation of executive authority is novel and is likely to be tested if a court battle ensues over whether he could be ordered to answer questions. It is unclear how that fight, should the case reach that point, would play out. A spokesman for Mr. Mueller declined to comment. “We don’t know what the law is on the intersection between the obstruction statutes and the president exercising his constitutional power to supervise an investigation in the Justice Department,” said Jack Goldsmith, a Harvard Law School professor who oversaw the Justice Department’s Office of Legal Counsel during the Bush administration. “It’s an open question.”

    In Leaked Letter, Trump's Lawyers Tell Mueller To Go Pound Sand - A 20-page confidential letter from President Trump's legal team leaked to the New York Times argues that President Trump could not have obstructed justice at any point during his presidency due to his Constitutional authority, and that he cannot be compelled to testify in front of Special Counsel Robert Mueller due to his Constitutional powers as President. The letter, crafted by Trump's legal team, reveals that the White House has been waging a quiet campaign for several months to prevent Mueller from trying to subpoena  the president - contending that because the Constitution empowers him to "if he wished, terminate the inquiry, or even exercise his power to pardon," Trump could not have illegally obstucted any aspect of the investigation into potential collusion between his campaign and Russia during the 2016 US election.  Mr. Trump’s defense is a wide-ranging interpretation of presidential power. In saying he has the authority to end a law enforcement inquiry or pardon people, his lawyers ambiguously left open the possibility that they were referring only to the investigation into his former national security adviser, Michael T. Flynn, which he is accused of pressuring the F.B.I. to drop — or perhaps the one Mr. Mueller is pursuing into Mr. Trump himself as well.Mr. Dowd and Mr. Sekulow outlined 16 areas they said the special counsel was scrutinizing as part of the obstruction investigation, including the firings of Mr. Comey and of Mr. Flynn, and the president’s reaction to Attorney General Jeff Sessions’s recusal from the Russia investigation. -NYT"It remains our position that the president's actions here, by virtue of his position as the chief law enforcement officer, could neither constitutionally nor legally constitute obstruction because that would amount to him obstructing himself, and that he could, if he wished, terminate the inquiry, or even exercise his power to pardon if he so desired," writes President Trump's former attorney John Dowd, who left the team in March. The leaked letter effectively reveals Trump's trump card in the event Mueller proceeds with a subpoena.

    Trump allies hustle to prevent Mueller subpoena - President Donald Trump’s closest associates are ramping up their message to special counsel Robert Mueller: Do not subpoena the president to testify. A series of developments over the weekend demonstrated the Trump team’s deepening resolve to maintain control over — if not block altogether — the president’s meeting with the prosecutor looking into Russia’s interference in the 2016 election. ..On Sunday, top Trump allies publicly warned Mueller against a subpoena and indicated that Trump would tolerate only a tightly choreographed interview. That came a day after a months-old letter from Trump’s legal team was published in The New York Times stating the team's view that Trump cannot be compelled to testify and that, as president, he could not have committed obstruction of justice. A source familiar with the letter confirmed its authenticity to POLITICO. Trump’s lawyers have for months been in quiet negotiations with Mueller, who is investigating whether any campaign aides helped Russia meddle in the election and whether the president sought to obstruct the probe by, among other things, firing FBI Director James Comey in 2017. The talks have broken into public view as Trump’s team seeks to limit the length and scope of the interview, get Mueller’s questions in advance and win other concessions that it believes could keep the president from making mistakes or perjuring himself. Rudy Giuliani, the former New York City mayor and Trump’s personal lawyer, said Sunday that, as things stand, he would advise Trump against sitting down with Mueller’s investigators. “We’re leaning toward not. But look, if they can convince us that it will be brief, it would be to the point, there were five or six points they have to clarify, and with that, we can get this long nightmare for the American public over,” Giuliani said on ABC’s “This Week with George Stephanopoulos.” In the same interview, Giuliani asserted that Trump has the power to pardon himself, though he said the president has “no intention” of making such a move. 

    Trump Asserts He Can Pardon Himself, Challenges Mueller’s Legal Authority -  President Donald Trump said Monday that he has the “absolute right” to pardon himself, a bold assertion that raises the stakes as he and Special Counsel Robert Mueller may be headed toward a Supreme Court battle that could test once and for all how much a president is above the law. “As has been stated by numerous legal scholars, I have the absolute right to PARDON myself, but why would I do that when I have done nothing wrong?” Trump wrote on Twitter. Trump quickly followed up with another tweet challenging Mueller’s legal authority. “The appointment of the Special Councel is totally UNCONSTITUTIONAL!” Trump wrote, misspelling Mueller’s title. “Despite that, we play the game because I, unlike the Democrats, have done nothing wrong!” White House Press Secretary Sarah Huckabee Sanders initially sidestepped questions during a press briefing later Monday on whether the president considered himself above the law, saying Trump “hasn’t done anything wrong.” Pressed for an answer, she said, “Certainly no one is above the law.” Trump’s declarations come after months of negotiations between Trump’s legal team and Mueller’s prosecutors over a presidential subpoena that have yet to bring them to an agreement over terms of an interview regarding the probe into Russian meddling in the 2016 presidential election. Trump’s lawyers have been building a legal argument since late last summer for why Mueller shouldn’t be able to question Trump, the details of which were outlined in a confidential January memo to Mueller that was leaked to the New York Times over the weekend. 

     Yes, the President Can Pardon Himself - Jonathan Turley --  President Trump this morning has caused a stir by declaring that he can grant himself a self-pardon.  As I argue in today’s column and prior writings (here and here), he is right.   In his tweet today, Trump declared:   As has been stated by numerous legal scholars, I have the absolute right to PARDON myself, but why would I do that when I have done nothing wrong? In the meantime, the never ending Witch Hunt, led by 13 very Angry and Conflicted Democrats (& others) continues into the mid-terms! 8:35 AM – Jun 4, 2018  I am one of those scholars, though I have argued that a self-pardon would be ignoble and self-defeating act.It would likely be used as an impeachment allegation, though that could raise some interesting questions. Unlike the argument that a President cannot be indicted in office (which I have long rejected), the use of pardon authority presents a more difficult question for both obstruction and impeachment claims. This is a power left to presidents without limitation beyond barring its use to effectively block an impeachment.To use pardons in an obstruction case would be a complicating factor for appeal.  All pardons are about negating a conviction or barring a prosecution.  They are in the sense naturally obstructive.  A court would have a difficult time separating what is constitutionally permitted and what is criminally actionable over a straight pardon claim.  Impeachments allow for a broader definition to address abuses of powers. What do you think?

    Cambridge Analytica Director Met With Assange To "Discuss US Election" - Just ahead of what would be Alexander Nix's second appearance before the the Commons digital, culture, media and sport (DCMS) select committee, The Guardian reports that a senior executive at Cambridge Analytica had visited Wikileaks founder Julian Assange in person, raising new questions about the connection between the two firms. According to the report, which WikiLeaks denies, Brittany Kaiser, who had served as a director at Cambridge until earlier this year, said she had been in close contact with Wikileaks' founder Julian Assange, even traveling to see him inside the Ecuadorian embassy in London and funneling money to Wikileaks' bank accounts using cryptocurrency.   Both Cambridge and Wikileaks are already part of Robert Mueller's investigation.The connection between the two firms wasn't publicly known until October last year, when it was revealed that Cambridge had "reached out" to Assange and Wikileaks and offered to help them index the missing 33,000 Hillary Clinton emails. Assange said in a statement that he had turned down Cambridge's offer.Kaiser had been a director at the firm until earlier this year. She visited Assange on Feb. 17, 2017 under the pretext of discussing the outcome of the US election, and reportedly referred to Wikileaks as her "favorite charity." Reports about her activities eventually reached investigators, who sought to make it public. When Kaiser appeared before MPs in April, she acknowledged that some employees at the company had contact with lawyers who also represented Assange. During his first appearance before the committee, Nix had said that "we have no relationship with Wikileaks. We have never spoken to anyone at Wikileaks. We have never done any business with Wikileaks. We have no relationship with them, period."

    Ivanka Trump may soon be in the crosshairs of FBI and congressional investigators -- Ivanka Trump connected Michael Cohen with a Russian athlete, who offered to introduce Donald Trump to Russian President Vladimir Putin, BuzzFeed reported Wednesday. The goal of the proposed meeting was to help pave the way for a Trump Tower in Moscow, according to emails and four sources BuzzFeed spoke with. Ivanka Trump, the president's eldest daughter, told Cohen in November 2015 to talk to the athlete, the former Olympic weightlifter Dmitry Klokov, and Cohen had at least one subsequent phone conversation with Klokov, the report says.  BuzzFeed reported that Cohen and Klokov also exchanged several emails, in one of which Klokov told Cohen he could set up a meeting between Putin and Donald Trump, a presidential candidate at the time, to clear the way for a Trump Tower in Moscow.  But Cohen reportedly emailed Klokov to decline his offer and say the Trump Organization already had a deal to pursue the project. The Russian athlete copied Ivanka Trump in his reply and questioned Cohen's authority to make decisions for the Trump Organization, at which point Trump asked Cohen why he did not want to pursue the deal through Klokov, the report says. BuzzFeed said Klokov told the outlet he did not "send any emails" to Cohen but stopped responding when it told him it had learned that he had sent at least two emails to Cohen and had at least one phone call with him at Trump's request.

    McCabe Scrambles To Secure Immunity Before Senate Testimony - Former Deputy FBI Director Andrew McCabe is said to be in negotiations with Senate Judiciary Committee Chairman Chuck Grassley for immunity ahead of his testimony on the upcoming DOJ Inspector General report on the FBI's conduct during the Clinton email probe. “Grassley, an Iowa Republican, has quietly requested that several former officials appear in front of the Judiciary Committee to discuss the long-awaited internal Justice Department report, which sources say will detail a series of missteps surrounding the Justice Department and FBI’s investigation into Clinton’s handling of classified information while secretary of state,” reports CNN. McCabe's attorney, Michael Bromwich, insisted that “Under the terms of such a grant of use immunity, no testimony or other information provided by Mr. McCabe could be used against him in a criminal case,” adding “Mr. McCabe is willing to testify, but because of the criminal referral, he must be afforded suitable legal protection."“This is a textbook case for granting use immunity… If this Committee is unwilling or unable to obtain such an order, then Mr. McCabe will have no choice but to invoke his Fifth Amendment privilege against self-incrimination.” -Michael BromwichAs we reported Friday, federal investigators from the D.C. U.S. Attorney's office recently interviewed former FBI director James Comey as part of an ongoing probe into whether McCabe broke the law when he lied to federal agents, reports the Washington Post.Investigators from the D.C. U.S. Attorney’s Office recently interviewed former FBI director James B. Comey as part of a probe into whether his deputy, Andrew McCabe, broke the law by lying to federal agents — an indication the office is seriously considering whether McCabe should be charged with a crime, a person familiar with the matter said. -Washington PostOf particular interest is that Comey and McCabe have given conflicting reports over the events leading up to McCabe's firing, with Comey calling his former deputy a liar in an April appearance on The View

    Trump Blasts Awan Plea Deal: "Server Scandal Key To Democrat Corruption" - After months of delays, former IT aides to Congressional Democrats, Imran Awan and his wife Hina Alvi, look like they're about to slide right out of a D.C. courtroom with a plea deal in their bank fraud case - while a litany of far more serious allegations documented by the Daily Caller's Luke Rosiak remain unprosecuted. “Awan and his wife, Hina Alvi, were charged last summer with bank fraud. They now appear poised to strike a plea deal with the Department of Justice. A plea agreement hearing is set for July 3 before U.S. District Judge Tanya S. Chutkan in Washington,” -Fox NewsAwan was arrested one day after reports emerged that the FBI had seized a number of "smashed hard drives" and other computer equipment from the residence Imran Awan, the IT aide of Debbie Wasserman-Schultz, we learn that Awan has been captured at the Dulles airport while attempted to flee the country. While charged with bank fraud, there is ample evidence that the Awans were spying on members of Congress through their access to highly-sensitive information on computers, servers and other electronic devices belonging to members of Congress.  President Trump wasn't too pleased with the rumored plea deal: Our Justice Department must not let Awan & Debbie Wasserman Schultz off the hook. The Democrat I.T. scandal is a key to much of the corruption we see today. They want to make a “plea deal” to hide what is on their Server. Where is Server? Really bad!— Donald J. Trump (@realDonaldTrump) June 7, 2018 Of course, the MSM will be talking about how Trump's was incorrect since the Awan plea deal is for bank fraud, and has nothing to do with the multitude of still-unprosecuted allegations related to potential spying. In their attempts to show how uninformed the President is, the MSM will undoubtedly "red pill" their audience over the other Awan allegations. Meanwhile, if GOP legislators and investigators get their way, Debbie Wasserman Schultz may soon be in the hot seat...

    Do not go gently into that financial regulatory rollback – Jared Bernstein -  Here’s a headline from last week’s Washington Post: “Congress to roll back post-crisis financial rules as banks post record profits.”On Wednesday, a New York Times article began: “Big banks are getting a big reprieve from a post-crisis rule aimed at curbing risky behavior on Wall Street.”If those don’t make you nervous, you’re either too young (or too stricken with amnesia) to remember the financial crisis of a decade ago, or you have a vested interest in such financial deregulation.I assert this not because the financial rules are costless to the sector. They’re burdensome, and some of them, including the Volcker Rule referred to in the articles above, are ambiguous. I assert this for the following reasons:

    • • The historical record shows that underregulated banks will eventually and systematically underprice risk, leading to asset bubbles.
    • • When those bubbles implode, the costs will be born not by the banks, who will get bailed out, but by the rest of us.
    • • Despite the compliance burden, lending and liquidity in the sector have been robust, leading to record profits (amped up by the tax cuts), even amid historically low interest rates.
    • • This recent deregulatory push isn’t just the work of our checked-out president and a Republican congressional majority that is  devoted to providing valued goodies to their donor base. It’s the return of bipartisan, lobby-driven amnesia that regularly afflicts us at this point in the economic expansion.

    Democratic CFTC member becomes first regulator to oppose proposed Volcker changes - — A Democratic member of the Commodity Futures Trading Commission became the first regulator to oppose proposed changes to Volcker Rule already issued by the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.  Rostin Behnam, the CFTC’s only current Democratic commissioner, announced his dissent a day before the Securities and Exchange Commission is set to become the final regulator to vote on the proposed changes to the proprietary trading ban. His opposition are unlikely to stop the SEC from issuing the plan, which is expected to be supported by the two Republican members of the board.  “Unfortunately, the concerns I have outlined, and my exclusion from the process, leave me unable to support this proposal,” Behnam said about his vote. “I look forward to hearing from the commenters on my concerns and I’m sure many others, and I hope that we can have a fulsome dialogue that leads to agreement on a sensible final rule.”  He warned that the proposal's expansion of what constitutes risk-mitigating hedging activities potentially provides a method to evade oversight.   “Specifically here at the CFTC, we need to think very carefully about how the definition of hedging activity in the proposal compares to our definitions of hedging activity in the context of other critical rules like the de minimis threshold or position limits,” Behnam said. He also criticized the process for the proposal, saying he was given little notice of it before voting on it at a meeting scheduled for Tuesday.Though the proposal has been criticized by some Democratic lawmakers, it has been supported by other Democrats, including FDIC Chairman Martin Gruenberg and Fed Gov. Lael Brainard.

    Reform law has overlooked benefit for funding-starved banks - A section of the law rolling back key Dodd-Frank Act provisions could help small banks in need of funding. Embedded in the nearly 200-page document is a change to how banks report reciprocal deposits, or those that a bank, with certain conditions, can hold with help from a placement network. Under terms of the law, reciprocal deposits at well-capitalized banks with a Camels rating of 1 or 2 can total the lesser of $5 billion or 20% of total liabilities. That's welcome news for institutions such as FVCbank in Fairfax, Va., which relies on reciprocal deposits to compete with larger banks, said Patricia Ferrick, the $1.1 billion-asset bank's president. The product provides security or comfort to customers who may be concerned about parking large sums of money with smaller banks, she added.  The change could provide an even bigger lift to banks that have used the product sparingly because regulators had required them to report reciprocal deposits, which exist to guarantee deposits over the Federal Deposit Insurance Corp.’s $250,000 insurance limit, as brokered deposits. Regulators view brokered deposits with more skepticism than core deposits; banks that rely on those deposits pay higher deposit insurance premiums.

    Elizabeth Warren 2020 speculation gains steam with sweeping pitch for new regs— Sen. Elizabeth Warren, D-Mass., offered a sharp rebuke to the Trump administration's deregulatory agenda Tuesday, defending post-crisis reforms she helped implement and announcing legislation to end "corporate capture of the regulatory process." In a speech that will fuel speculation of a presidential run in 2020, Warren said she plans to introduce bills to “padlock the revolving door between government and industry,” stop government officials from making policy decisions that benefit them personally, and empower government agencies to pass strong regulations to keep corporate influence out of the process.She framed the Trump administration's recent policies, including efforts to roll back Consumer Financial Protection Bureau rules, as a "war on regulations." "The so-called war on regulations isn’t about freedom," Warren said in remarks prepared for an event at Georgetown University Law School. "The war on regulations is waged on behalf of giant companies that don’t want to follow any rules. So let’s call it what it really is — a war on public health, a war on public safety, a war on truly free and competitive markets, a war on American workers, a war on American consumers."She said "ending this war on public safety and competitive markets will ... take standing up and making the case, loud and clear: strong government rules matter.” “We cannot — we must not — accept a government that works only for a privileged few,” Warren said.

    Capital vs. liquidity: Why the debate comes up short - The latest debate over capital levels highlights an age-old storyline, pitting the importance of capital against that of liquidity in bank evaluations.The traditional approach to bank regulation has been the CAMEL view, where the emphasis in monitoring banks, in order of priority, has been capital adequacy, asset quality, management capability, earnings and liquidity. (The traditional CAMEL acronym was later expanded after several financial crises to CAMELS to reflect the importance of sensitivity to interest rate risk.)The regulatory focus on bank capital began in the late 1800s with informal capital-to-deposit guidelines. They became formalized with specific capital-to-asset requirements after the Great Depression. And whenever there is an actual or perceived problem at a bank, the regulators have historically required more capital.The directly opposite approach, traditionally promulgated by the industry, has been the so-called “LEMAC” view, where bankers believe liquidity and earnings are most important with asset quality and capital being of lesser importance. Bankers argue, among other things, that higher capital reduces their capacity to lend and get an acceptable return on capital. Citibank promoted the LEMAC approach in the 1980s when they were under regulatory pressure to increase relatively low capital levels in the face of Latin American debt problems. Citibank’s view then — and the view of many bankers today — is that liquidity management is of paramount importance. As long as a bank has access to funds, even at an increasing cost, it can stay in business until the market refuses to provide liquidity at any cost or the regulators shut the bank down. As long as a bank continues to make money, as they are doing today, shareholders are happy, bank management is happy (and compensated for those gains) and regulators should be happy, as this should mean more capital. What makes today’s debate over capital different is that it is pitting several former regulators who favor a capital-based approach against new ones who back the liquidity-first view. This is not surprising, however, since much of the new regulatory guard, including Treasury Secretary Steven Mnuchin, is made up of former bankers.

    Fed sets dates for public release of 2018 stress tests - The Federal Reserve has announced the schedule for the release of its 2018 stress test results, with the Dodd-Frank Act Stress Test results set to be unveiled on June 21 and the Comprehensive Capital Analysis and Review stress tests results to be released on June 28. It's been clear that the central bank would issue the stress test results by the end of June, but the specific dates of the releases are generally not announced until a few weeks before that deadline. Both releases will be made public at 4:30 p.m.

    Wall Street Has Placed a Derivatives Noose Around the U.S. Insurance Industry -  Pam Martens --Several early warning signs emerged in the stock market yesterday. The tech-heavy Nasdaq Composite Index closed at a record high but every major Wall Street bank with large exposures to derivatives closed in the red yesterday. Leading the decliners were Deutsche Bank with a loss of 1.61 percent; Morgan Stanley closed down 1.49 percent; Bank of America lost 0.95 percent while Citigroup, Goldman Sachs and JPMorgan Chase were in the red by less than one percent. But the red ink didn’t stop there. Five of the seven U.S. insurance companies that were singled out in the 2017 Financial Stability Report from the U.S. Treasury’s Office of Financial Research also closed in the red yesterday. The five insurers showing losses of less than one percent were Ameriprise Financial, Hartford Financial Services Group, Lincoln National Corp., Prudential Financial and Voya Financial. Two other insurers with hefty derivative exposure to Wall Street who eked out a few pennies gain yesterday were AIG and MetLife. The 2017 Financial Stability Report included this cautionary text: “…some of the largest insurance companies have extensive financial connections to U.S. G-SIBs [Global Systemically Important Banks] through derivatives. For some insurers, evaluating these connections using public filings is difficult. Insurance holding companies report their total derivatives contracts in consolidated Generally Accepted Accounting Principles (GAAP) filings. Insurers are required to report more extensive details on the derivatives contracts of their insurance company subsidiaries in statutory filings, including data on individual counterparties and derivative contract type. But derivatives can also be held in other affiliates not subject to these statutory disclosures, resulting in substantially less information about some affiliates’ derivatives than required in insurers’ statutory filings.” The scariest black holes according to the report are occurring at MetLife, Prudential Financial and, believe it or not, AIG – the insurer that blew itself up with Wall Street derivatives in 2008 and required a $185 billion taxpayer backstop. As the articles below indicate, it’s going to be impossible for regulators and members of Congress to claim — as they did after the 2008 financial collapse — that nobody could have seen this coming.

    $1.1 Billion in Crypto Has Been Stolen This Year -- Cybersecurity company Carbon Black announced that roughly $1.1 bln worth of digital currency has been stolen in the first half of 2018, CNBC reported June 7. The security company said that criminals take advantage of the dark web to facilitate large-scale cryptocurrency theft. Estimates reportedly show that there are 12,000 marketplaces and 34,000 offerings associated with cryptotheft hackers can take advantage of. The dark web can be only accessed with the application of special software and allows users to stay anonymous and mostly untraceable. Carbon Black Security strategist Rick McElroy, who was interviewed by CNBC, said that basic malware costs an average of $224 and can be priced as low as $1.04. McElroy added that it even sometimes comes with a form of customer support. According to the report, the malware marketplace is worth $6.7 mln. The report notes that thefts can be carried out by organized crime cartels or criminal gangs, but often it’s a highly-trained engineer who works alone and is looking for a means of supplementary income. As explained by McElroy, cyber-theft is “pretty easy to do” and anyone could be capable, not only notorious hacker groups. He added:"You have nations that are teaching coding, but there's no jobs. It could just be two people in Romania needing to pay rent."Unlike banking and conventional financial operations, cryptocurrency holders do not have institutional support to protect their savings or cover their losses in case of a fraud or hacker attacks. McElroy said:Per the study, exchanges were the most popular target for cybercriminals this year, making up 27 percent of attacks.

    Not just Wells Fargo: OCC finds sales practice abuses at other banks --  Federal regulators have quietly ended a review of large and midsize banks’ sales practices that found several systemic issues — and hundreds of problems at individual institutions — and have no plans to make the results public. The Office of the Comptroller of the Currency began a broad examination of more than 40 banks after it was revealed that employees at Wells Fargo employees had opened millions of fake accounts in an effort to meet aggressive sales goals. The review uncovered specific examples of other banks opening accounts without proof of customers’ consent, an OCC spokesman acknowledged Tuesday. It also spurred the issuance of warnings on five specific industrywide issues that banks needed to address, and more than 250 specific items regulators wanted fixed at individual banks, according to a consultant briefed on the OCC’s findings. “This has hit home for the C-suite and the boards of the major banks,” said Dan Ryan, who leads the banking practice at PwC and was briefed on the OCC’s findings. “No one buried their head in the sand.” Yet the results of the review have not been publicly disclosed, and OCC has no plans to release a report, according to Bryan Hubbard, a spokesman for the agency. Hubbard declined to comment on why the agency is not making the results public, and he did not confirm that the OCC issued “matters requiring attention,” regulatory speak for red flags that need to be addressed, as a result of the review.

    OCC Covering Up for Wells Fargo Type Abuses at Other Banks -Yves Smith - Earlier this week, American Banker reported that the Office of the Comptroller of the Currency launched a wide-ranging examination of 40 banks in the wake of the Wells Fargo fake accounts scandal. Recall that the reason that Congresscritters and the general public were so incensed was that in some cases the San Francisco bank was stealing, via taking money from customer deposits to pay fees on the fake accounts. In other cases, customers had their credit scores damaged as a result of the process.The American Banker article makes clear that not only is the OCC refusing to say which banks are up to no good, let alone saying how much “no good” is happening, but it also appears that the OCC isn’t doing anything more serious than having chats with management over tea and cookies telling them they need to tidy these messes up.I assume Elizabeth Warren has taken note and will subject the Comptroller of the Currency, Joseph Otting, who was formerly head of OneWest (eek!) to some pointed questions.Let’s be clear: there’s no reason not to name names, save that the OCC has gone back to its bad form of being in the business of bank protection, as opposed to bank regulation. Obama appointee Tom Curry actually did combat some of the agency’s worst behaviors, and his most important action was forcing out its general counsel, Julie Williams, who was the worst sort of bank stooge. The OCC doesn’t even deign to justify its silence, taking the view that the fact that this misconduct is confidential regulatory information means the agency can keep it hidden. Help me. Since when is it in the public’s interest to keep crooked conduct secret? Even in the case of a full blown scandal that eventually resulted in the resignation of its CEO, no one ever thought that anything more than Wells Fargo’s stock price was at risk.

    Public deserves to know results of OCC sales practices inquiry -- In Canada, a government agency recently published the results of its review of retail sales practices at the nation’s six largest banks. It found that the industry’s sharp focus on sales can increase the risk that consumers will pay for unsuitable financial products or services.A similar reckoning is under way in Australia, where a government commission that was established in the wake of various scandals has been holding public hearings on consumer banking practices.But here in the U.S., the regulatory review of banking sales abuses has happened behind closed doors. The Office of the Comptroller quietly wrapped up its review of sales practices at 40 large and midsized banks, typically firms with more than $10 billion of assets, earlier this year. And as American Banker reported Tuesday, the agency has no plans to release a report on its findings. Nor has the OCC explained why it plans to keep its conclusions confidential. That is a worrisome stance, as it prevents the public from assessing the extent of the problems that the review uncovered and the adequacy of the steps being taken to prevent their recurrence. It will only fuel the perception that the OCC, helmed by a former bank CEO, is too cozy with the big banks it regulates.

    Firestorm over faulty accounts is just beginning --Press reports indicate that the Office of the Comptroller of the Currency has discovered that 40 financial institutions have been opening new consumer accounts without consent. The OCC has also said that it does not plan to release the names of these institutions, and that the matter is being handled administratively.Because the names are not being released, there are several bank CEOs who are, or should be, breathing a sigh of relief. The fallout from such activity would likely be intense, particularly given that this activity allegedly continued to occur even after Wells Fargo was publicly excoriated and fined for such activity. But banks that believe that the OCC's protection will be enough to shield them from being publicly disclosed are deluding themselves: The press, plaintiff’s attorneys, consumers, members of Congress and state attorneys general will be aggressive in trying to identify these institutions. Disclosure is simply a matter of time. Banks should consider acting proactively before someone else does it for them.  Further, institutions should understand that the circumstances of their case will not protect them from criticism — when the story starts to break, they will be lucky to get a word in edgewise, so relying on facts to differentiate their activity from Wells will not be enough to avoid intense scrutiny. The firestorm from disclosure is going to be even more intense for those first few institutions that are made public — they are going to bear all the brunt of this outrage, no matter what the circumstances surrounding their participation are.

     Former State Street executive faces U.S. fraud trial (Reuters) - A former executive at State Street Corp (STT.N) went on trial on Monday on U.S. charges that he participated in a scheme to defraud the bank’s clients by charging them secret commissions on billions of dollars in trades.  Jury selection wrapped up on Monday in Boston federal court in the case of Ross McLellan, a former executive vice president at the bank accused of committing securities fraud and wire fraud. Lawyers will deliver their opening statements on Tuesday. McLellan is one four former employees of the Boston-based bank who have since 2016 faced charges by the U.S. Justice Department that they engaged in schemes to overcharge institutional clients, allowing State Street to earn millions of dollars. Two of those former executives - Edward Pennings and Richard Boomgaardt - pleaded guilty in 2017 and are expected to testify at the trial, according to court papers. Assistant U.S. Attorney Stephen Frank said Boomgaardt would be the first witness. Slideshow (2 Images)McLellan, 46, pleaded not guilty and denies wrongdoing. “What he denies is that any unlawful or improper commissions were charged,” Martin Weinberg, McLellan’s lawyer, said in court prior to jury selection. The case followed a 2014 settlement between State Street and the UK Financial Conduct Authority in which the bank paid a fine of 22.9 million pounds, or $38 million at the time, for charging six clients mark-ups on certain transactions. In January 2017, State Street agreed to pay $64.6 million to resolve related U.S. criminal and civil investigations and entered into a deferred prosecution agreement. 

    Elizabeth Warren floats pot banking bill to help states circumvent federal ban — Two senators are proposing legislation that would give cannabis-related businesses in states that legalized the substance access to banking.  Sens. Elizabeth Warren, D-Mass., and Cory Gardner, R-Colo., announced a bill Thursday to exempt persons complying with state marijuana laws from the federal pot prohibition under the Controlled Substances Act.The legislation would enable business operating in states that have legalized pot to access the financial system, thereby removing a considerable hurdle for a fast-growing industry. Some banks have been wary to offer services due to the federal prohibition. “These archaic laws don’t just hurt individual people,” Warren said at a press conference. “They hurt businesses who are in the marijuana business from getting access to banking services. That forces a multibillion-dollar industry to operate all in cash. That’s bad for business and bad for safety.”  Gardner noted that cities and states where pot is legal can collect taxes from pot businesses, "but if you are in the business, if you work for the business, you can’t get a bank loan or set up a bank account because of the concern over the conflict between state and federal law.”  The bill, known as the Strengthening the Tenth Amendment Through Entrusting States Act, or STATES Act, has also garnered support in the House from Reps. Earl Blumenauer, D-Ore., and David Joyce, R-Ohio.Isaac Boltansky, an analyst at Compass Point Research & Trading, said he does not see a path for the bill to pass in the current Congress. But, he said, “We view its structure and substance as a clear signal that the broader policy trajectory is bending towards a clarification of federal cannabis policy.”

    Strange bedfellows: Trump backs Elizabeth Warren's pot banking bill –— President Trump said Friday he would likely sign a bill co-authored by Sen. Elizabeth Warren, D-Mass., that would enable banks and credit unions to do business with cannabis-related companies in states where marijuana is legal.Warren, one of the harshest critics of Trump and the banking industry, co-sponsored the legislation with Cory Gardner, R-Colo. The bill would exempt persons complying with state marijuana laws from the federal pot prohibition under the Controlled Substances Act.  “I really do, I support Senator Gardner,” Trump told reporters Friday. “I know exactly what he's doing; we're looking at it. But I probably will end up supporting that, yes.” The bill likely won’t pass the current Republican-controlled Congress, despite the fact that it only affects states that have legalized marijuana for medical or recreational purposes. “Despite the president's remarks, we don't see the White House fighting for this legislation,” said Jaret Seiberg, an analyst with Cowen Washington Research Group. “As a result, we leave unchanged our 33% odds for action in this Congress and our 66% odds for action in next Congress.”  Despite his strained relationship with Warren, Trump may want to close a deal on legislation that benefits financial institutions. The president may also be motivated by a desire to undermine Attorney General Jeff Sessions, who has avidly opposed marijuana legalization, even at the state level.  “We suspect Trump … would prioritize closing the deal rather than letting his feud with Warren kill the bill,” Seiberg said. “Part of this as well may be another effort by the president to demean Attorney General Jeff Sessions. ... Sessions opposes state legalization. He also rescinded the Justice Department guidance on how companies could avoid trouble in states were cannabis is legal. The president has just publicly rebuked how Sessions has handled this issue.” Banks and credit unions are often cautious in providing services to cannabis-related businesses given potential legal ramifications and conflicts between federal and state laws. The Warren-Gardner bill, known as the Strengthening the Tenth Amendment Through Entrusting States Act, or STATES Act, has also garnered support in the House from Reps. Earl Blumenauer, D-Ore., and David Joyce, R-Ohio.

    McKinsey’s and CalPERS’ Ignorance and Sleight of Hand on Private Equity --  Yves Smith - From time to time, we’ve written about how the consulting firm McKinsey has issued reports on the private equity industry that a well-informed reader would recognize as slanting its data and conclusions in favor of the private equity fund managers, who in the trade are called “general partners”. The reason for that isn’t hard to find. We were told a few years ago by a well placed insider that private equity firms accounted for more than half of McKinsey’s revenues starting in 2002, and that was almost certainly also true of McKinsey’s biggest competitors for their business, Bain and BCG. And even if private equity firms have slipped in their share of total revenues, they are still almost certain still the firm’s biggest single client group. That’s a long-winded way of saying McKinsey can’t afford to bit a hand that feeds it so well. Yet as we’ll discuss, even a McKinsey report which takes care to put not-exactly-positive developments for private equity in the best possible light, nevertheless shows that the “models” that CalPERS has persuaded itself are “innovative” are old hat. The report also separately confirms that as we’ve said, CalPERS is flagrantly labeling an investment approach that is indirect, meaning through outside parties, as direct, because direct investing is what the cool kids are doing. We’ve embedded the McKinsey report at the end of this post.

    SEC chief says agency won’t change securities laws to cater to cryptocurrencies The head of the Securities and Exchange Commission made it clear Wednesday that the agency won't bend the rules for cryptocurrency when it comes to defining what is or what isn't a security. "We are not going to do any violence to the traditional definition of a security that has worked for a long time," U.S. Securities and Exchange Commission Chairman Jay Clayton told CNBC Wednesday. "We've been doing this a long time, there's no need to change the definition." Clayton said the U.S. has built a $19 trillion securities market that's "the envy of the world" following the current rules. The agency is not adjusting rules for the fundraising process known as initial coin offerings, or ICOs, either, he said. ICOs have raised $9.1 billion this year alone, according to the latest research from Autonomous Next. "If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules," Clayton said "If you want to do any IPO with a token, come see us." The SEC is "happy to help you do that public offering" if issuers take the responsibility SEC laws require, he said.

            Wall Street CEO to Worker Pay Ratios Don’t Capture What’s Going On - Pam Martens - The Dodd-Frank financial reform legislation that was passed in 2010 required that publicly traded companies report publicly how much the CEO makes compared to the median salary of workers. The Securities and Exchange Commission, with its close ties to Wall Street, stonewalled for years in passing the final rule and had to be pressured and publicly embarrassed in open letters from members of Congress before it finally implemented the rule. As a result, eight years later, we are finally seeing the hard numbers that define CEO greed in America. In May, Democratic Congressman Keith Ellison from Minnesota’s 5th District released a study on the new data that was being released. The study was titled “Rewarding or Hoarding: An Examination of Pay Ratios Revealed by Dodd-Frank.” Among the key findings in the study were the following: Two-thirds of the richest 1 percent of American households are headed by corporate executives;CEO pay in the U.S. is excessive compared to other countries. Citing Bloomberg data, the study revealed that “the average U.S. CEO makes more than four times the average pay of a CEO abroad”;   The report found that the average CEO to median worker pay ratio today is 339 to 1 versus in 1965 when the average CEO received only an average of 20 times the average worker’s pay; The AFL-CIO has conveniently compiled the data of companies that have reported, where it can be pulled up under the company’s name or stock symbol. Citigroup’s CEO Michael Corbat registered a 369:1 ratio. JPMorgan Chase’s Jamie Dimon clocked in a close second at 364:1. Bank of New York Mellon’s CEO Gerald Hassell (who retired last year) came in at 345:1. Wells Fargo CEO Tim Sloan, who has battled a barrage of scandals at the bank, earned $17.6 million for 2017, according to the bank’s SEC filing, 291 times the median worker’s compensation. Bank of America’s CEO Brian Moynihan is something of a surprise with a much lower 250:1 ratio while Morgan Stanley’s CEO James Gorman almost looks tame at 192:1. Goldman Sachs’ CEO Lloyd Blankfein (who famously bragged about his company doing “God’s work”) also surprised with a 163:1 ratio, the lowest in this group. The problem with the pay ratio numbers is that when it comes to Wall Street, this methodology doesn’t at all capture what’s really going on in terms of the greed factor.

      Short-Termism Is Harming the Economy – Buffett, Dimon - Every generation of Americans has a responsibility to leave behind a stronger, more prosperous society than the one it found. The nation’s greatest achievements have always derived from long-term investments. In both national policy and business, effective long-term strategy drives economic growth and job creation.For public companies, these same principles are true. That’s why today, together with Business Roundtable, an association of nearly 200 chief executive officers from major U.S. companies, we are encouraging all public companies to consider moving away from providing quarterly earnings-per-share guidance. In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability. Because well-managed and well-governed businesses are the engine of the U.S. economy, good corporate governance is imperative. Though publicly owned companies account for only about 4,300 of America’s 28 million businesses, they are responsible for a third of all private-sector employment and half of all business capital spending. America’s public companies drive job creation, opportunity and economic growth.This announcement today builds on the Commonsense Corporate Governance Principles that business leaders developed in 2016. These principles acknowledge that the financial markets have become too focused on the short term. Quarterly earnings-per-share guidance is a major driver of this trend and contributes to a shift away from long-term investments. Companies frequently hold back on technology spending, hiring, and research and development to meet quarterly earnings forecasts that may be affected by factors outside the company’s control, such as commodity-price fluctuations, stock-market volatility and even the weather.

      Gimme more credit: standards tighter for consumers: I wanted to write a little more about the Senior Loan Officers Survey that was released early last month. There are aspects of it that serve as long leading indicators, turning well before the economy as a whole does. As I pointed out last month, credit for large and medium size firms remains very loose (blue in the graph below). It remains loose for small firms as well (red): There's no sign of the credit contraction we had before the last, big recession. Interestingly, though, it remains the case that no size of firm is particularly interested in borrowing: For larger firms, that may be explained by the ability to do stock buybacks and/or to park money overseas. For smaller firms, it remains puzzling that they are turning down easy credit. Nor are banks increasing spreads to either sized firm: Turning to consumers, there is less data over any substantial period of time. Banks' willingness to extend consumer loans is getting close to, but not yet at, the point (approximately +5%) that it has reached about a year before the last 3 recessions: On the other hand, they have been tightening credit standards for consumer loans and credit cards: There are a few more series that deal with loans to ordinary consumers, but these typically only date from 2011 and so are of limited value. Of those we can say that over the last seven years, demand for auto and various consumer loans has weakened: And banks have been tightening standards for such loans over the same time: If credit does play a role in the onset of the next economic downturn, it seems more likely that it will be caused by a tightening of credit to producers rather than to consumers. 

      A New Threat to Your Finances: Cell-Phone Account Fraud - Consumer Reports -- Consumers have a new privacy threat to worry about. It’s known as cell-phone account fraud, where crooks open up a phony cell-phone account in your name and use it to access your bank account, sign up for credit cards, or sell the phone number for other criminals to use.  While little known among consumers, cell-phone account fraud can have a devastating impact on your finances—and your reputation. "It's a rude awakening," says Kyle Marchini, senior fraud management analyst at Javelin Strategy and Research, an advisory firm for the financial industry. "Cell-phone account fraud can become a huge mess that, unlike credit card fraud, doesn't have infrastructure in place to resolve." Unlike other types of fraud, there are fewer consumer protections. It’s also harder to detect, so it can go unnoticed for months. By then, your bank account may be drained, credit card companies may be after you for unpaid bills, and the police may be investigating you for crimes committed in your name. “Sometimes you may not find out about it until the account goes into arrears, and it can take months or years to fix that, not to mention the monetary expense usually entailed,” says Brian Krebs, who runs KrebsOnSecurity.com, a website focused on cybercrime and security.  “The hassle of trying to recover from this kind of ID theft is a lot worse than the few steps that people need to take to prevent it.”

      Is Mulvaney trying to purge CFPB's advisory board? - Mick Mulvaney's decision to scrap meetings of the Consumer Financial Protection Bureau's consumer advisory board is stoking fears among consumer advocates that the agency's acting director wants to stack the panel with his own hand-picked members.Members of the 25-member board, which under the Dodd-Frank Act is mandated to "advise and consult" the agency, on Monday voiced criticism of the CFPB's having canceled a meeting scheduled later this week and a previous one in February. They said Mulvaney is flouting the law, and appears to be laying the groundwork to change the board's composition."We continue to hold out hope that the acting director will start following the law, and be open to input from a body that has provided valuable input and engagement for many years," said Chi Chi Wu, a staff attorney at the National Consumer Law Center, and a member of the CFPB's consumer advisory board. Wu was one of 11 consumer advocates, attorneys and other stakeholders on the board who held a press conference alleging that Mulvaney is ignoring statutory requirements that the board meet twice a year. They suggested he wants to suspend meetings until his own hand-picked advisers have been chosen to replace existing members. In March, the CFPB announced on a blog post that it was accepting applications for three of its advisory boards and specifically wanted "experts with diverse viewpoints," including "representatives of banks that primarily serve underserved communities." The letter stated that "10 seats on the Consumer Advisory Board will become vacant in the fall of 2018." Dodd-Frank requires that the consumer advisory board meet twice a year, with a mandate to "advise and consult with the Bureau in the exercise of its functions under the Federal consumer financial laws."

       Mulvaney makes it official, fires CFPB advisory board members - The Consumer Financial Protection Bureau fired all 25 members of the agency's Consumer Advisory Board during a conference call Wednesday, saying it wanted to bring in more diverse views.Anthony Welcher, a political appointee and the CFPB's policy advisory for external affairs, told consumer advisory members during a brief call that the agency would be modifying how the board works."We've decided we're going to start the advisory groups with new membership, to bring in these new perspectives and new dialogue," Welcher said, according to a recording of the call obtained by American Banker. "We want more diverse voices and we want to bring people in from larger-scale organizations, larger-scale opportunities in the communities to hear about processes we may be going through.     The CFPB sent an email to the consumer board members stating that it would continue to convene a consumer advisory board, which is mandated by the Dodd-Frank Act, but would reconstitute the group with "new, smaller memberships." "Smaller memberships will ensure streamlined discussions about the Bureau’s policy priorities and needs in a productive manner," the email stated.The CFPB said the board's members and those of two other agency boards, the Community Bank Advisory Board and the Credit Union Advisory Board, were terminated and that they were not allowed to re-apply. Ann Badour, the Consumer Advisory Board's current chair, said in a press release that Mulvaney was shutting out the views of consumer advocates.  “Firing the current CAB members is another move indicating Acting Director Mick Mulvaney is only interested in obtaining views from his inner circle, and has no interest in hearing the perspectives of those who work with struggling American families,” Baddour said.

      Mulvaney's defense of CFPB board upheaval: I'm trying to fix leaks - Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, said Friday that the agency fired more than 60 members of three advisory boards because the boards were simply too big. Mulvaney also said he wants some future advisory board meetings to be held in private because he fears information will be leaked to the media.The consumer, community bank and credit union advisory board members were fired Wednesday via a conference call by Anthony Welcher, a political appointee and the CFPB's policy adviser for external affairs. "I actually got feedback from people saying, you know what, these groups are too big, they're not comfortable being candid, and they would actually like some private meetings," said acting CFPB Director Mick Mulvaney. Bloomberg News   Mulvaney defended the firings at a public forum in Topeka, Kan., on elder abuse, and said the boards will be reconstituted. "First of all, the boards are statutory, we have to do them, we are absolutely going to continue to do them," Mulvaney said. "They are much bigger and got to be much bigger under the previous administration of the bureau than I was comfortable with." Mulvaney said the large size of the panels and the public nature of certain advisory board meetings had made some members unwilling to be candid about their views. His comments indicated some participants wanted to be able to speak freely without other members present.Mulvaney has asked the CFPB's inspector general to investigate leaks, a source of frustration during his tenure. He warned the agency's staff in a memo on April 12 that he would pursue disciplinary and other actions against employees who leaked confidential information. The CFPB has offered several reasons for the firings of advisory board members, including that they were a cost-savings move.

      Mick Mulvaney’s rationale for firing CFPB advisory board doesn’t hold water - Mick Mulvaney is fond of saying he wants to make the Consumer Financial Protection Bureau into a “gold-standard” regulator, arguing that its tone and substance should be more like the Securities and Exchange Commission.   Which makes it extra tough to explain the sophomoric way the CFPB handled the decision to dismiss the members of three advisory councils earlier this week. During a conference call on Wednesday morning, a Mulvaney aide told 60-plus members of the three panels that the boards were being disbanded and reconstituted with new membership. (The current members would not be allowed to reapply.)The news wasn’t exactly a shock — warnings from members of the Consumer Advisory Board that they saw something like this in the offing had appeared in the pages of American Banker — but the rationale and manner in which it was done was still surprising.   Anthony Welcher, a political appointee and the CFPB’s policy adviser for external affairs, said the decision was made in part because the committees — the Consumer Advisory Board, Community Bank Advisory Council and the Credit Union Advisory Council — were too expensive to maintain.He said the bureau saves hundreds of thousands of dollars a year “by not having the meetings the way that we’ve been structuring them.”Welcher later added that the dismissed members could continue to offer their input, just not on the government’s dime.“We're not necessarily going to be paying for your travel to have that conversation," he said.But members immediately protested that no one previously had asked them to pay their own way, and many appeared willing to do so anyway.  It’s difficult to understand how the CFPB’s costs for such outings could be so high, unless members were staying at the Ritz Carlton. Moreover, it was unclear why the agency couldn’t find a cheaper way to hold such meetings. Maybe the CFPB should look into videoconferencing.

      CFPB reform roadblock: Too many commenting deadlines — The Consumer Financial Protection Bureau's unprecedented move to seek public input on almost every function of the bureau was a boon for reform advocates. But actually collecting comments has proved challenging.The finance industry and consumer advocates are struggling to respond to the dozen requests for information — known as RFIs — that the agency issued at a feverish pace during acting Director Mick Mulvaney first few months at the agency. As the comment period is closing for many of these requests, responders say they have had to be selective in what issues they take up, and in many cases, organizations must deliberate before determining what position to take in a response. The time crunch has prompted questions over whether the CFPB will get the full story on key areas like enforcement and rulemaking.  “It was not a bad idea to seek comments on all the bureau’s functions, but it was all done so quickly, and one on top of another, that it made it really difficult to respond,” said Lucy Morris, a partner at Hudson Cook’s Washington office and former deputy enforcement director at the CFPB.Consumer advocates, meanwhile, argue that the accelerated commenting schedule seems designed to benefit bigger lobbying operations with the capacity to craft and articulate a position quickly.“The RFI process is particularly disturbing because the rapid-fire issuance, broad scope and short timeline for responses gives a procedural advantage to industry, who has a tremendous amount of resources to devote to responding to them when compared to individual consumers and consumer advocacy organizations,” said Linda Jun, senior policy counsel at American for Financial Reform and a former legal services attorney.

      Exposure to repossessed property in post-crisis CMBS rising rapidly - The exposure to repossessed property in commercial mortgage bonds issued since the financial crisis is rising rapidly, and the decline in the oil and gas industry is largely to blame, according to Fitch Ratings. To be sure, the bulk of CMBS loans secured by repossessed property were issued before the financial crisis. The overall exposure in mortgage bonds rated by Fitch through the end of May was 387 assets with an outstanding balance of $6.3 billion, 94% of which are in CMBS 1.0 deals. The remaining $398 million in repossessed assets are held in CMBS 2.0 transactions, and that represents a nearly 30% increase from the $303 million at the end of December 2017, and a more than five-fold increase from $82 million at the end of December 2016. (The year-end 2015 tally was just $33 million.)   Not surprisingly, retail properties lead with 42% of the total outstanding balance of REO followed by office at 38%. Fitch expects this trend to continue as CMBS 2.0 defaults further increase. The property type concentration of repossessed CMBS assets 1.0 and 2.0 assets differ. Repossessed assets in older deals are primarily retail (43%), followed by office buildings (39%) with hotels a distant third (6%). The six largest retail repossessed assets are all underperforming regional malls which include the Killeen Mall, Sierra Vista Mall and Lakeside Mall. “Special servicers are having greater difficulties repositioning and/or stabilizing these assets prior to marketing them for sale,” the report states. Conversely, repossessed assets in post-crisis deals came largely from 2014 deals and were comprised of multifamily and hotel properties. These loans defaulted due to the decline in the oil and gas industries, with the top two geographic concentrations in North Dakota (28%) and Texas (26%).

      U.S. restricts Freedom Mortgage in continued VA loan crackdown --Freedom Mortgage, one of the largest U.S. home lenders, is being punished by a government-owned mortgage guarantor amid concerns that the Mount Laurel, N.J.-based company is helping to enable unnecessary refinances of veterans' loans. Effective July 1, Freedom will be restricted from issuing Ginnie Mae bonds with loans insured by the Department of Veterans Affairs intermingled with loans from other lenders, Ginnie Mae said Friday in a statement on its website. Buena Park, Calif.-based lender Sun West Mortgage Co. will face the same restriction, the agency said. Ginnie Mae guarantees mortgage-backed securities including loans backed by the Department of Veterans Affairs. A Freedom spokeswoman didn't immediately respond to an emailed request for comment. A Sun West representative didn't immediately return a phone message. Some mortgage firms have generated revenue in recent years through rapid, repeated refinances of veterans' loans, a process called churning that can make money for the lender but result in unexpected costs to the borrower, according to Ginnie Mae. Some lenders perform the refinances themselves, while others charge above-market rates, setting the servicemember up for the next refinance, the agency’s executives have said. Ginnie Mae has taken multiple steps to try to slow the refinances. In February, the agency warned nine lenders that they were at risk of being kicked out of its main bond program because the securities they issued refinanced so quickly. In April, Ginnie Mae told two lenders, NewDay USA and Nations Lending, that they could only issue "custom pools" that aren't mixed with loans from other lenders, though Nations was allowed back into the primary program shortly thereafter. Under the new restrictions, Freedom and Sun West will also only be allowed to issue custom pools. Such securities often get worse prices from bond investors. Ginnie Mae said that Freedom's and Sun West's restriction could end as soon as next year if the rate at which their bonds refinance slows. NewDay's restriction could end as soon as October, Ginnie said. Congress has also tried to tackle the issue. Legislation enacted in May included provisions designed to make it harder for lenders to churn veterans through multiple loans.  

      CFPB's Mulvaney set to drop PHH case - The Consumer Financial Protection Bureau is poised to dismiss its case against PHH Corp., a nonbank mortgage lender and servicer whose appeal of a $109 million penalty led to a four-year legal battle over whether the agency's single-director structure was constitutional. The CFPB's enforcement director, Kristen Donoghue, and a team of CFPB attorneys filed a joint statement late Tuesday with PHH's lawyers recommending that acting Director Mick Mulvaney dismiss the case outright. "Enforcement Counsel and Respondents have conferred, and have agreed to recommend dismissal of this administrative proceeding," the joint statement said. "Accordingly, Enforcement Counsel and Respondents respectfully request that the Acting Director proceed to dismiss this matter." PHH chose last month not to file a petition to appeal an earlier ruling on constitutional grounds to the Supreme Court. Mulvaney had sent a list of questions on May 11 to both sides in the case, asking for recommendations on how to proceed, an unusual step that indicated he was laying the groundwork for a dismissal. In the two-paragraph legal filing, Donoghue stated that Mulvaney's questions about the case "are now moot." PHH, of Mount Laurel, N.J. , notched a huge victory in January when the U.S. Court of Appeals for the D.C. Circuit threw out a $109 million fine over allegations of alleged kickbacks, and remanded part of the case back to the CFPB. 

      How a CFPB overhaul of the qualified mortgage rule will remake mortgages -  With the Consumer Financial Protection Bureau in the midst of reviewing the qualified mortgage rule, mortgage lenders and the secondary market are closely watching to see if the more industry-friendly bureau will loosen some of the consumer protections established by the Dodd-Frank Act provision.The result could be increased secondary market options for lenders, particularly if more loans meet the criteria of QM's safe harbor, which protects lenders from borrower legal challenges that a lender didn't follow the ability-to-repay rule.Right now, the secondary market is perceived as having two flavors: the loan meets the qualified mortgage test or it doesn't. In the four years since the qualified mortgage rule have been in effect, an overwhelming number of loans originated has been in the safe harbor it provides to lenders.The simplest and easiest way to stay in that harbor is to originate loans that are sold to Fannie Mae or Freddie Mac. Loans sold to the government-sponsored enterprises are automatically deemed to be a qualified mortgage because of what is known as "the patch." Similarly, all government-guaranteed mortgages currently receive automatic QM status.That's given the GSEs and loans originated for sale in Ginnie Mae securities a stranglehold on the QM market. And from a sales perspective, having fewer potential buyers doesn't necessarily provide the optimal price for the loan.But absent further action either by the CFPB or Congress, the patch is set to expire when Fannie Mae and Freddie Max exit their government conservatorship or on Jan. 10, 2021, whichever comes first. Meanwhile, the nascent non-qualified mortgage market sprung up because there are many consumers who do not meet either conforming or government loan program underwriting guidelines, but would still be responsible borrowers. In three short years, the volume of securitizations of non-QM loans has grown exponentially and so far, has been expected to do so in the near term. That changes the real dividing line for a mortgage lender's origination and exit strategy. Rather than making secondary market execution decisions based on whether the loan qualifies for the QM safe harbor, lenders may be better served evaluating whether the loan qualifies for purchase by Fannie Mae and Freddie Mac. In that context, even with a broader definition of what is a qualified mortgage, the nonagency space is going to expand as the market moves to serve those borrowers who couldn't get loans because lenders would not go outside the safe harbor. In essence, the conventional mortgage secondary market could develop into a number of boxes, like agency QM; nonagency QM; agency-eligible private-label QM; and nonagency non-QM.

      Looser qualified mortgage standards may put a dent in GSE market share - Editor's Note: This is part two of a two-part series on the future of the qualified mortgage rule from the June issue of National Mortgage News magazine. Read part one here. Since its inception, the qualified mortgage rule has been synonymous with loans purchased by the government-sponsored enterprises or guaranteed by federal agencies like the Federal Housing Administration and Department of Veterans Affairs.The recent growth in the non-QM market and concurrently, in private-label securitizations, is a result of participants across the loan life cycle becoming more comfortable with the risk characteristics of these loans, especially as interest rates rise.There are lenders that have or will securitize agency-eligible mortgages in the private-label market now because they can get a better execution. A change to the QM definition could provide a boost to those securitizations.The current administration would like to pull back the government guarantee on certain types of loans such as cash-out refinancings, high-balance loans, second home mortgages and investor loans, said Peter Norden, CEO of HomeBridge Financial Services. The Trump administration would prefer the private sector own the paper and take the risk, rather than the government giving an implied or explicit guarantee, he added. It is one of the reasons HomeBridge is working on a deal where it would securitize otherwise agency-eligible paper in the private market.  HomeBridge wouldn't be the first. Some recent private-label deals that included agency-eligible paper were from loanDepot, which did a $299.8 million securitization in March made up of 226 prime jumbo loans and 227 high-balance GSE-eligible loans, while Flagstar did a $329 million transaction consisting of 1,077 agency-eligible loans secured by investment properties.  “The private-label execution on some QM loans that qualify for the agencies that have a lot of loan-level adjusters can be as good as or better than the agencies," Norden said.  "There is nothing in the QM rules or in the ability-to-repay guidelines that says a low FICO score borrower can't get a loan. There is no FICO minimum for a QM loan. The problem is that most lenders, particularly the depository banks, decided not to participate with those borrowers," he said. If the CFPB widened the QM tent, it would theoretically be a net benefit to lenders like Carrington, said Sharga. But on other hand, it also might increase the number of lenders that participate in the lower-credit-score space and make it more difficult to maintain market share.

       Black Knight Mortgage Monitor for April - Black Knight released their Mortgage Monitor report for April today. According to Black Knight, 3.67% of mortgages were delinquent in April, down from 4.08% in April 2017. Black Knight also reported that 0.61% of mortgages were in the foreclosure process, down from 0.85% a year ago. This gives a total of 4.28% delinquent or in foreclosure.  Press Release: Black Knight’s April 2018 Mortgage Monitor: This month, leveraging both the Black Knight Home Price Index and Census Bureau income data, the company reports on how rising home prices and mortgage interest rates have affected housing affordability. While homes in much of the country are still more affordable than long-term norms, 19 states are either close to or past their long-term average affordability levels.  “Last month, we reported that January and February 2018 saw faster rates of monthly home price appreciation (HPA) than the start of any year since 2005,” said Graboske. “While the pace of annual home price growth slowed a bit in March, HPA is still around 6.5 percent. We’ve also seen interest rates climb by nearly three-quarters of a percent so far this year. Together, those two factors have resulted in a $150 increase in the monthly payment on a 30-year mortgage used to purchase the median-priced U.S. home, about a 14 percent rise since the start of 2018. Stronger-than-average income growth in recent years still hasn’t been enough to keep up with rising HPA and interest rates. Seven states are now less affordable than their long-term norms and another 12 are close to hitting that point. Though much of the country remains more affordable than long-term norms, the current trajectory would change that sooner rather than later. We’ve modeled out multiple economic scenarios, some more conservative than others, and even with historically strong income growth, the current combination of home price and interest rate increases isn’t sustainable.

       Mortgage delinquencies on the mend after hectic hurricane season -- Historically, mortgage delinquencies in the month of April have risen 85% of the time, but April 2018 bucked that trend as they fell, according to Black Knight.The total delinquency rate dropped 10.17% year-over-year in April and 1.6% from the previous month to 3.67%, its second lowest level in 12 years. This marked the end of seven consecutive months of annual delinquency rate increases, which were onset by the 2017 hurricane season.The improving delinquency rate was driven by progress made in hurricane-affected areas, in addition to slight delinquency declines in non-impacted regions. Foreclosure starts in particular fell 30% in cities impacted by hurricanes last year, while the number of loans overall in active foreclosure fell to their lowest point since August 2006.  While a healthier economy has also helped better the national delinquency rate, job and income growth still didn't put a halt to affordability struggles for homebuyers.Growth in home prices and interest rates caused the average monthly payment for a median-priced home with a 20% down payment to shoot up 14% since the start of 2018, an increase of $150 per month. And though much of the nation is more affordable than long-term norms, seven states are less affordable historically with 12 states nearing the same outcome.Housing affordability could be in danger of hitting an all-time low point in five years, according to one Black Knight projection."In recent years, incomes have been growing at a rate of 4.37% annually, as compared to a 2.75% 25-year average. Even so, a half percentage point increase in interest rates each year, combined with the current rate of [home price appreciation], would push affordability to an all-time low by 2023,"

      Chicago has more underwater homes than any other U.S. metro area -… A recent report from Zillow, the real estate website, shows the share of homeowners across the country who are underwater on their mortgage is 9.1%, falling below 10% for the first time since the housing market collapsed more than a decade ago. Good news, since the average U.S. home lost more than a quarter of its value when the market crashed, Zillow says, sending millions of homeowners spiraling into negative equity — in other words, their homes' values were lower than their mortgage balances.Now the bad news: While most of the nation appears to be rebounding when it comes to the housing crisis, Chicago is not faring so well. According to Zillow's 2017 Q4 Negative Equity report, the city has the most homes with negative equity of all the metro areas in the country. The real estate website looked at estimated home values in relation to mortgage debt and lines of credit associated with homes in over 870 metro areas, 2,400 counties and 23,000 ZIP codes across the nation to arrive at data that reveal Chicago has 253,725 homes where the owners owe more on their mortgages than their houses are worth. That number equates to 15.5% of homeowners in the Chicago metro area having negative equity, making the city the second-highest metropolitan area in the country for percentage of homes in negative equity, just behind Virginia Beach, Va. Worse news: 20% of Chicago's underwater homeowners owe at least twice as much as their homes are worth. "Places like Chicago — where I don't think the negative equity is primarily the result of the boom and bust years -- is the result of much deeper, long-standing structural issues," said Aaron Terrazas, Zillow senior economist. "You look at where negative equity is in Chicago and it is on the South Side, heavily concentrated in neighborhoods where there is very deep poverty and larger issues around employment and wage growth that in many respects are more challenging than just waiting out a recovery or for home values to rise."

       CoreLogic: Underwriting Loosening for Conventional Conforming Loans --Some interesting data and analysis from Archana Pradhan at CoreLogic: Underwriting Loosening for Conventional Conforming LoansMortgage underwriting guidelines have loosened in the last couple of years. To expand the credit box to creditworthy borrowers, Fannie Mae began accepting mortgages with loan-to-value (LTV) ratios up to 97 percent in December 2014 and Freddie Mac in March 2015. To further expand access to credit, Fannie Mae raised its DTI ratio level from 45 to 50 percent in July 2017. DTI and LTV ratios along with the credit scores are three important factors in mortgage underwriting. This blog focuses on only conventional conforming (CC) home-purchase loans, which is a majority of the U.S. mortgage market.…Though both DTI and LTV standards have been relaxed, there has been no change in credit score standards. Holding steady at 755, the average credit scores for the homebuyers with CC home-purchase loans in Q1 2018 was unchanged from Q1 2017. However, the average credit score was much higher than the pre-crises level. For example, the average credit score of homebuyers was 705 in 2001, but dramatically rose during the Great Recession and was 755 in Q1 2018. In addition to high credit score standards, those high LTV/DTI loans in Q1 2018 were fully documented and are thus different than the pre-crash high LTV/DTI loans, many of which were low- or no-doc loans.… This data indicated that underwriting continues to be cautious but loosening slightly for conventional conforming home-purchase loans during the Q1 2018 than a year earlier and in early 2000s.

       MBA: Mortgage Applications Increase in Latest Weekly Survey --From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 1, 2018. This week’s results included an adjustment for the Memorial Day holiday. .. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 8 percent compared with the previous week and was 9 percent higher than the same week one year ago. ...  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.75 percent from 4.84 percent, with points decreasing to 0.46 from 0.47 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. Refinance activity will not pick up significantly unless mortgage rates fall 50 bps or more from the recent level. The second graph shows the MBA mortgage purchase indexAccording to the MBA, purchase activity is up 9% year-over-year.

      Mortgage Rates and Ten Year Yield - With the ten year yield getting close to 3%, there has been some discussion about whether mortgage rates would hit 5% soon. Based on an historical relationship, 30-year rates should currently be around 4.75%.As of yesterday, Mortgage News Daily reported: Mortgage Rates Hold SteadyMortgage rates were little-changed today after rising somewhat quickly over the past 4 business days. … In terms of mortgage rates, we might think of it as an average 30yr fixed rate teetering between 4.625% and 4.75%. The graph shows the relationship between the monthly 10 year Treasury Yield and 30 year mortgage rates from the Freddie Mac survey. Currently the 10 year Treasury yield is at 2.97% and 30 year mortgage rates were at 4.56% according to the Freddie Mac survey last week.To reach 5% (on the Freddie Mac survey), based on the historical relationship, the Ten Year yield would have to increase to about 3.25%.

      U.S. house prices to rise at twice the speed of inflation and pay: Reuters poll  (Reuters) - An acute shortage of affordable homes in the United States will continue over the coming year, according to a majority of property market analysts polled by Reuters, driving prices up faster than inflation and wage growth. After losing over a third of their value a decade ago, which led to the financial crisis and a deep recession, U.S. house prices have regained those losses - led by a robust labor market that has fueled a pickup in economic activity and housing demand. But supply has not been able to keep up with rising demand, making homeownership less affordable. Annual average earnings growth has remained below 3 percent even as house price rises have averaged more than 5 percent over the last few years. The latest poll of nearly 45 analysts taken May 16-June 5 showed the S&P/Case Shiller composite index of home prices in 20 cities is expected to gain a further 5.7 percent this year. That compared to predictions for average earnings growth of 2.8 percent and inflation of 2.5 percent 2018, according to a separate Reuters poll of economists. [ECILT/US] U.S. house prices are then forecast to rise 4.3 percent next year and 3.6 percent in 2020. “We are not seeing a temporary phenomenon. House prices have been outrunning family incomes for several years in the U.S. and while demand has cooled off a bit, the supply side is still very tight,” said Sal Guatieri, senior economist at BMO Financial Group. “I think house prices will continue to outrun family incomes for at least another year and it will take some time for demand to slow and to some extent supply to increase.” The latest poll comes after weak existing and new home sales data for April. A further breakdown of the April data showed the inventory of existing homes had declined for 35 straight months on an annual basis while the median house price was up for a 74th consecutive month. About 80 percent of nearly 40 analysts who answered an extra question said the already tight supply of affordable homes in the United States will either stay the same or fall from here over the next 12 months.

      More Than Half Of American Homes Are Overvalued, CoreLogic Warns - A history of economic cycles dating back to the mid-1800s reveals a troubling outlook for today’s Central Bank induced bull market of hopes and dreams, which could be in the later innings. It is quite evident that Americans have quit saving as their gig-economy jobs have left them in financial ruin - now being squeezed by the higher cost of living.The charades of economic stability could continue for a little longer, with President Trump’s stealth quantitative easing program to Wall Street via debt-financed tax reform, which has induced a massive wave of more than $2.5 trillion in stock buybacks — a gift to corporate America.No matter where one looks, the valuation of many financial assets are overextended, and new evidence today from CoreLogicshows this troubling picture very late into an economic cycle: More than half of U.S. residential real estate markets were overvalued in April.Almost half of the US housing market is overvalued: CoreLogic https://t.co/gHrtR0dsDf pic.twitter.com/MRPKTYVY7Z— FOX Business (@FoxBusiness) June 6, 2018CoreLogic reports that residential real estate prices nationwide increased 6.9 percent year over year from April 2017 to April 2018. The firm’s Home Price Index (HPI) also shows a 1.2 percent rise on the month-over-month basis from March to April 2018. This has certainly sparked the debate of housing affordability across the nation with many millennials struggling to achieve the American dream. CoreLogic Market Condition Indicators showed that 40 percent of the 100 largest metropolitan areas were overvalued in April, compared to 28 percent undervalued, and 32 percent in line with valuations.The report uncovers a shocking discovery that of the nation’s top 50 largest residential real estate markets, 52 percent were overvalued in April.

      How Chinese Investors Inflate Housing Markets in the US, Canada, and Australia, as Governments Try to Stem the Tide 00 Top residential real estate brokerages in the US have been promoting US homes to investors in China for years. Brokerage firms in Canada, Australia, New Zealand, and other countries have done the same. Commissions are at stake! They have set up units in China and are partnering with Chinese real estate portals, such as Juwai.com. Warren Buffett’s Berkshire Hathaway HomeServices, a subsidiary of HomeServices – the second largest residential brokerage in the US – entered the fray belatedly a year ago with a marketing agreement with Juwai.com “to syndicate all of its franchisees’ residential listings.” And not just in the trophy cities on the coasts, but all of Berkshire’s listings, anywhere.One of the properties it offers on Juwai.com today is this mansion on 8387 Ford Road, Superior Township, Michigan:  Scrolling down the page of any of these listings reveals four red buttons that lead to the crux of these deals for Chinese investors (so-so translations below):

      • Top left: Guide on how to buy a house in the US.
      • Top right: Guide with maps of school districts and housing around the “top 100” universities.
      • Bottom left: Guide for obtaining a US investor immigrant visa EB-5
      • Bottom right: Guide on how to apply for study abroad.

      And these brokerage firms in the US, Canada, Australia, New Zealand, and other countries are doing expos and conferences in China to lure investors to make the leap. This massive marketing effort in China by these firms has worked like a charm.

      Update: Framing Lumber Prices Up Sharply Year-over-year, At Record Prices --Here is another monthly update on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs - and now prices are well above the bubble highs. This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through May 2018 (via NAHB), and 2) CME framing futures. Right now Random Lengths prices are up 42% from a year ago, and CME futures are up about 70% year-over-year. There is a seasonal pattern for lumber prices. Prices frequently peak around May, and bottom around October or November - although there is quite a bit of seasonal variability. 
      Rising costs - both material and labor - will be headwinds for the building industry this year.

      Leading Index for Commercial Real Estate Increases in May - Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing. From Dodge Data Analytics: Dodge Momentum Index Inches Up in May The Dodge Momentum Index eked out a small gain in May, moving 1.8% higher to 167.8 (2000=100) from the revised April reading of 164.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. May’s gain was the result of a 4.7% increase by the commercial component of the Momentum Index, while the institutional component fell 2.4%. The Momentum Index has posted solid gains through the first five months of 2018, rising 19% from the same period of 2017 and reaching a level not seen since mid-2008. However, the upturn to this point shows that the current expansion has been more drawn out than what occurred during the previous cyclical expansion. It has been nearly seven years since the Momentum Index hit bottom in July 2011, but it has yet to eclipse its previous peak set in December 2007. At the same time, the recent gains for the Momentum Index suggest that construction spending for nonresidential buildings should remain healthy through the rest of 2018.

      Fed's Flow of Funds: Household Net Worth increased in Q1 -- The Federal Reserve released the Q1 2018 Flow of Funds report today: Flow of Funds.  According to the Fed, household net worth increased in Q1 2018 compared to Q4 2017: The net worth of households and nonprofits rose to $100.8 trillion during the first quarter of 2018. The value of directly and indirectly held corporate equities decreased $0.4 trillion and the value of real estate increased $0.5 trillion.  The Fed estimated that the value of household real estate increased to $25.1 trillion in Q1. The value of household real estate is now above the bubble peak in early 2006 - but not adjusted for inflation, and this also includes new construction. The first graph shows Households and Nonprofit net worth as a percent of GDP.  Household net worth, as a percent of GDP, is higher than the peak in 2006 (housing bubble), and above the stock bubble peak. This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.  This graph shows homeowner percent equity since 1952. Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008. In Q1 2018, household percent equity (of household real estate) was at 58.7% - up from Q4, and the highest since Q4 2005. This was because of an increase in house prices in Q1 (the Fed uses CoreLogic). Note: about 30.3% of owner occupied households had no mortgage debt as of April 2010. So the approximately 50+ million households with mortgages have far less than 58.7% equity - and about 2.5 million homeowners still have negative equity.  The third graph shows household real estate assets and mortgage debt as a percent of GDP. Mortgage debt increased by $34 billion in Q1. Mortgage debt has declined by $0.6 trillion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates). The value of real estate, as a percent of GDP, was up in Q1, and  is above the average of the last 30 years (excluding bubble).  However, mortgage debt as a percent of GDP, continues to decline.

      Household Wealth Rises Above $100 Trillion For The First Time Ever... There Is Just One Catch -- In the Fed's latest Flow of Funds report released at noon today, the Fed unveiled released the latest snapshot of the US "household" sector as of March 31 2018. What it revealed is that with $116.3 trillion in assets and a modest $15.6 trillion in liabilities, the net worth of US households rose above $100 trillion for the first time ever, hitting a new all time high of $100.8 trillion, increasing for 10 consecutive quarters and up $1.0 trillion as a result of an estimated $490 billion increase in real estate values, as well as a $511 billion increase in various stock-market linked financial assets like corporate equities, mutual and pension funds, and deposits as the market soared to new all time highs in the fist quarter, even if it ended Q1 on a slightly subdued note after the February VIXplosion and March rate spike.--Total household assets in Q1 rose $1.1 trillion to $116.3 trillion, while at the same time, total liabilities, i.e., household borrowings, rose by only $44 billion from $15.5 trillion to $15.6 trillion, the bulk of which was $10.1 trillion in home mortgages. The breakdown of the total household balance sheet as of Q1 is shown below.  And the historical change of the US household balance sheet.  nd while it would be great news if wealth across all of America had indeed risen as much as the chart above shows, the reality is that there is a big catch: as shown previously, virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans.  s the following chart from Deutsche Bank shows, the wealth inequality in the US is now as bad as it just during the Great Depression, with the top 0.1% of the US population owning as many assets as the bottom 90%.

      Real Disposable Income Per Capita in April - With the release of last week's report on April Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita.At two decimal places, the nominal 0.36% month-over-month change in disposable income was trimmed to 0.13% when we adjust for inflation. The year-over-year metrics are 3.20% nominal and 1.21% real.Post-recession, the trend was one of steady growth, but generally flattened out in late 2015. Things seem to have picked up slightly in 2018.The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013. It will be interesting to see how the recent tax legislation affects the trend. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000.  The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000.  Nominal disposable income is up 77.3% since then. But the real purchasing power of those dollars is up only 27.3%.

      US Consumer Credit Growth Slows To Weakest In 7 Months - Following last month's notable slowdown in the growth of consumer credit (to its weakest since Sept '17) expectations were for a bounce but April confirmed search trend data and saw a further slowdown.As Bianco Research noted ahead of this data, consumer spending has been rolling over into the spring of 2018. The next chart looks at changes in searches for apparel, home improvement, autos, furniture, and more. The dwindling popularity of these types of search has reached the fastest pace of decline since 2009.  Credit searches are also falling, led by home financing. We have offered analysis of credit card delinquencies, which we expect to climb across the top 100 banks to 3.7% over the next year.  And so, against expectations for a $14.00bn rise in Consumer Credit (from $11.62bn), credit growth slowed to just $9.262bn, the weakest growth since September 2017. After crashing to 5 years lows in March, revolving debt rebounded by 2.263bn in April, but non-revolving debt growth slowed dramatically from adding $13.38bn in March to adding just $6.999bn (to its weakest since Sept 2017)...The big question - after 4 months of weakness in revolving credit and the notable slowdown in aggregate consumer credit growth: will this be a momentary blip or a lasting shift in trend?The results are consistent with first-quarter data that showed household spending cooled following a strong run of gains. All that dis-saving (and credit-card-debt engorgement) managed to spike consumer confidence to near record highs... It also confirms that with the US personal savings level once again near all time lows, and with households no deleveraging on their credit cards, the second quarter is about to get very ugly for the economy which is 70% driven by consumer spending.

      Private Equity Kills Toys R Us, Workers Get No Severance -- Jerri-Lynn Scofield - Toys R Us will shutter all stores by the end of this month. I wrote about the role private equity played in killing this venerable 70- year old New Jersey firm when it filed for Chapter 11 bankruptcy protection last September in Toys R Us: Another Private Equity Casualty. So I won’t repeat that sad and sorry tale here (but I will refer interested readers to this earlier post by Yves on the general trend,  Private Equity Firms Sued Over Retailer Bankruptcies— and the earlier links included therein). The purpose of this post is to discuss the consequences of this liquidation for the company’s workers.  As Bill Pascrell, a New Jersey Democrat whose Congressional district included the company’s headquarters for 16 years until a 2012 redistricting  landed it to another district, wrote in USA Today, Amazon didn’t kill Toys R Us, greedy Wall Street profiteers did it: The so-called Retail Apocalypse can be attributed to Amazon and Walmart, but this is only part of the story. Another part belongs to private equity, whose methods of leveraging immense debt are wreaking havoc on the retail landscape. Toys R Us is the most recent victim. In 2005, three Wall Street firms paid more than $6 billion for the company, but only $1.2 billion came from their own pockets; the rest was borrowed. When Toys R Us was purchased, its new owners tethered that $5 billion of debt plus annual interest payments of $400 million to its neck. Finance executives justify leveraged buyouts by claiming that they allow ailing companies to become leaner and more financially nimble in a way that protects the business and its workers. But how could Toys R Us innovate or change course while weighed down by that anchor? In practice, these deals favor the equity tycoons who help themselves to enormous bonuses. Simultaneously, their new possessions are left holding debt they cannot pay. An otter cracks open a clam before discarding the shell, and so do these firms: Toys R Us owners reportedly walked away with more than $200 million.

      Annual Vehicle Sales: On Pace to decline slightly in 2018 -- The BEA released their estimate of May vehicle sales this morning. The BEA estimated sales of 16.81 million SAAR in May 2018 (Seasonally Adjusted Annual Rate), down 1.8% from the April sales rate, and up slightly from May 2017.Through May, light vehicle sales are on pace to be down slightly in 2018 compared to 2017.This would make 2018 the sixth best year on record after 2016, 2015, 2000, 2017 and 2001. My guess is vehicle sales will finish the year with sales lower than in 2017. A small decline in sales this year isn't a concern - I think sales will move mostly sideways at near record levels. As I noted last year, this means the economic boost from increasing auto sales is over (from the bottom in 2009, auto sales boosted growth every year through 2016). This graph shows annual light vehicle sales since 1976.   Source: BEA. Sales for 2018 are estimated based on the pace of sales during the first five months.

      April Trade Deficit at $46.20B, Better Than Forecast - The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report:The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $46.2 billion in April, down $1.0 billion from $47.2 billion in March, revised.In this release and in the accompanying "U.S. International Trade in Goods and Services: Annual Revision" release (FT-900 Annual Revision), the U.S. Census Bureau and the U.S. Bureau of Economic Analysis (BEA) are publishing revised statistics on trade in goods and services. With these releases, statistics on trade in goods on a Census basis are revised beginning with 2015, and statistics on trade in goods on a balance of payments (BOP) basis and on trade in services are revised beginning with 2010. Today's headline number of -46.20B was better than the Investing.com forecast of -50.00B. Annual revisions were made. This series tends to be extremely volatile, so we include a six-month moving average.

      Trade Deficit decreased to $46.2 Billion in April - From the Department of Commerce reported:The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $46.2 billion in April, down $1.0 billion from $47.2 billion in March, revised. … April exports were $211.2 billion, $0.6 billion more than March exports. April imports were $257.4 billion, $0.4 billion less than March imports.Exports increased and imports decreased in April.Exports are 28% above the pre-recession peak and up 10% compared to April 2017; imports are 11% above the pre-recession peak, and up 8% compared to April 2017.In general, trade has been picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.  Oil imports averaged $54.00 in April, up slightly from $54.50 in March, and up from $45.40 in April 2017. The trade deficit with China increased to $28.0 billion in April, from $27.7 billion in April 2017.

      AAR: Rail Carloads Up 3.2% YoY, Intermodal Up 6.6% YoY -- From the Association of American Railroads (AAR) Rail Time Indicators.   The U.S. economy is clicking right now, and freight railroads are both beneficiaries and enablers of that. In May 2018, originated carloads on U.S. railroads were up 3.2% over May 2017, the third straight month with year-over-year growth greater than 3%. In May 2018, 15 of the 20 commodity categories the AAR tracks saw higher carloads, including nearly all the major categories. Total carloads averaged 263,884 in May 2018, the most for May since 2015. … May was a good month for intermodal too: U.S. intermodal originations in May 2018 were up 6.6% over last year. This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Light blue is 2018.  Rail carloads have been weak over the last decade due to the decline in coal shipments.U.S. railroads originated 1,319,420 carloads in May 2018, up 3.2% (41,078 carloads) over May 2017. Year-over-year carloads have risen by more than 3% for three straight months. Carloads averaged 263,884 in May 2018, the most for May since 2015. Year-to-date carloads through May (5.67 million) were up 1.2%, or 66,071 carloads, over the first five months of last year and were up 8.1% (422,829 carloads) over the first five months of 2016.The second graph is for intermodal traffic (using intermodal or shipping containers):  U.S. railroads originated 1,398,203 intermodal containers and trailers in May 2018, up 6.6%, or 86,010 units, over May 2017. Average weekly intermodal volume in May 2018 was 279,641 units — that’s the second most in history. (Only February 2018, at 279,853, had more.)  Year-to-date intermodal volume through May was a record 5,993,584, up 6.0%, or 336,944 units, over the same period in 2017. Barring a catastrophe, this year will be another record year for U.S. intermodal.

      U.S. factory orders fall on weak aircraft, machinery demand (Reuters) - New orders for U.S.-made goods fell more than expected in April, weighed down by declines in demand for transportation equipment and machinery, but the underlying trend continued to suggest strong momentum in the manufacturing sector. Factory goods orders decreased 0.8 percent, the Commerce Department said on Monday. Data for March was revised up to show orders rising 1.7 percent instead of the previously reported 1.6 percent increase. Economists polled by Reuters had forecast factory orders falling 0.5 percent in April. Orders advanced 8.3 percent on a year-on-year basis in April. The monthly decline in factory orders is likely to be temporary amid reports of strong manufacturing conditions in May. A survey by the Institute for Supply Management last week showed sentiment among manufacturers perking up in May amid a surge in new orders. Manufacturers, however, complained about rising prices for raw materials, especially for steel. The Trump administration in March announced tariffs for steel and aluminum imports to protect domestic industries from what it says is unfair competition from foreign producers. Prices are likely to rise even higher following Washington’s decision last week to extend the duties to steel and aluminum imports from Canada, Mexico and the European Union. Some manufacturers also said they could not find skilled workers.  Manufacturing, which accounts for about 12 percent of U.S. economic activity, is being supported by strong domestic and global demand. Orders for transportation equipment fell 6.0 percent, pulled down by a 28.9 percent plunge in the volatile orders for civilian aircraft. Transportation orders increased 6.9 percent in March. Orders for motor vehicles rose 1.0 percent in April. Orders for machinery dropped 0.7 percent after tumbling 3.1 percent in March. That reflected a decline of 11.6 percent in orders for mining, oil field and gas field machinery. Orders for industrial machinery fell 10.0 percent. But orders for electrical equipment, appliances and components increased 1.8 percent. There were also increases in orders for fabricated metal products and primary metals. Unfilled orders at manufacturers rose 0.5 percent in April. They have increased in five of the last six months. Manufacturing inventories increased a moderate 0.3 percent, which also bodes well for factory production.

      April 2018 Manufacturing New Orders Declined?: US Census says manufacturing new orders declined. Our analysis shows the rolling averages improved. According to the seasonally adjusted data, it was civilian aircraft which accounted for much of the decrease. The data in this series is noisy so I would rely on the unadjusted 3 month rolling averages which improved and remains in a long term improvement trend. Remember the headline numbers are not inflation adjusted. And this month: Revised historical data from the Manufacturers' Shipments, Inventories, and Orders (M3) Survey were issued on May 17, 2018. These revisions result from: • benchmarking the M3 shipments and inventories data to the 2016 Annual Survey of Manufactures (ASM) and revised 2015 ASM data on a 2012 NAICS basis; • incorporating the unfilled orders to shipments ratios obtained from the 2016/2015 Manufacturers' Unfilled Orders (M3UFO) Survey by applying these ratios to the respective ASM shipments data, as well as incorporating revised unfilled orders to shipments ratios for prior years by applying them to the respective ASM shipments data; • adjusting the new orders data to be consistent with the benchmarked shipments and unfilled orders data; • correcting monthly data for late receipts, reclassifications of reported data, and revisions to previously reported data; • updating the seasonally adjusted data based on the results of benchmarking and the recent annual review of the seasonal adjustment models. These revisions spanned the seasonally adjusted data for January 2002 through March 2018 and the data not seasonally adjusted for January 2007 through March 2018.  Econintersect Analysis:.

      • Unadjusted manufacturing new orders growth accelerated 2.2 % month-over-month, and up 9.4 % year-over-year.
      • Unadjusted manufacturing new orders (but inflation adjusted) up 5.2 % year-over-year.
      • Three month rolling new order rolling averages was up 0.6 % month-over-month, and is up 8.5 % year-over-year.
      • Unadjusted manufacturing unfilled orders growth accelerated 0.2 % month-over-month, and up 3.7 % year-over-year
      • As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth up 0.5 % month-over-month, and up 2.0 % year-over-year.

      Wholesale Trade June 8, 2018 – Highlights:  Inventories need to be built up in the wholesale sector in what may be soft news for GDP, where low inventory numbers are a negative, but very good news for production and employment. Wholesale inventories inched only 0.1 percent higher in April against, however, a 0.8 percent surge in sales. This mismatch pulls down the stocks-to-sales ratio to a very lean 1.28. Year-on-year rates confirm the imbalance with inventories up 5.8 percent against a 7.8 percent rise in sales. The nation's businesses, wholesalers included, have been very conservative in their inventory manage, reflected not only in hard data like today's report but also anecdotal reports like ISM manufacturing where more and more of the respondents say inventories of finished goods are too low.

      ISM Non-Manufacturing Index increased to 58.6% in May -- The May ISM Non-manufacturing index was at 58.6%, up from 56.8% in April. The employment index increased in May to 54.1%, from 53.6%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management: May 2018 Non-Manufacturing ISM Report On Business®  “The NMI® registered 58.6 percent, which is 1.8 percentage points higher than the April reading of 56.8 percent. This represents continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index increased to 61.3 percent, 2.2 percentage points higher than the April reading of 59.1 percent, reflecting growth for the 106th consecutive month, at a faster rate in May. The New Orders Index registered 60.5 percent, 0.5 percentage point higher than the reading of 60 percent in April. The Employment Index increased 0.5 percentage point in May to 54.1 percent from the April reading of 53.6 percent. The Prices Index increased by 2.5 percentage points from the April reading of 61.8 percent to 64.3 percent, indicating that prices increased in May for the 27th consecutive month. According to the NMI®, 14 non-manufacturing industries reported growth. The majority of respondents are optimistic about business conditions and the overall economy. There continue to be concerns about the uncertainty surrounding tariffs, trade agreements and the impact on cost of goods sold.” This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. This suggests faster expansion in May than in April.

      Markit Services PMI: Growth Accelerates in May --The May US Services Purchasing Managers' Index conducted by Markit came in at 56.8 percent, up 2.2 from the final April estimate of 54.6. The Investing.com consensus was for 55.7 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: According to the latest survey data, business activity increased at a sharp rate across the U.S. service sector in May. Although the pace of new business growth softened slightly, it remained among the fastest in the last three years. Backlogs of work meanwhile accumulated at the quickest pace in over three years, prompting companies to boost capacity by upping the rate of job creation to the strongest since September 2015. The survey also showed rates of both input cost and selling price inflation accelerating. [Press Release] Here is a snapshot of the series since mid-2012.

      US Services Surge Signals 3.5% GDP Growth, But Rising Cost Concerns Loom - US Services surged to a three-year high, according to Markit's PMI survey, but with business optimism near record highs, concerns over rising costs and the impact of tariffs are rising.Inflationary pressures intensified in May, as input cost inflation accelerated to the fastest since October 2013. Anecdotal evidence suggested the latest rise in cost burdens was due to higher material inputs, often linked to tariffs, higher interest rates and rising energy and fuel prices. Output charges also increased at a quicker rate, with inflation accelerating to a three-month high. Anecdotal evidence suggested the latest rise in cost burdens was due to higher material inputs, often linked to tariffs, higher interest rates and rising energy and fuel prices... or put another way - corporate margins are about to get crushed.

      • US Services PMI are back above the PMI Manufacturing level at 56.8 (better than expected and up from 54.6 in April)
      • ISM Services rebounded from 4-month lows to 58.6, catching up to Manufacturing (better than expected)

      US Productivity Growth Disappoints In Q1, Unit Labor Costs Surge - For the eighth straight quarter, US productivity grew in Q1, rising 0.4% QoQ (improving on Q4's +0.3%). However, the Q1 gain was less than the +0.6% expectation (and well below the preliminary +0.7% level) as Unit Labor Costs accelerated more than expected.  This is the equal longest streak of productivity gains since 2010 (which corresponded to the V-shaped bounce off the great financial crisis lows). On the bright side for some, unit labor costs rose more than expected up 2.9% QoQ SAAR, the fastest rate since Q1 2017 and has accelerated in each of the last 4 quarters... However, real compensation declined for the 3rd straight quarter.

      Weekly Initial Unemployment Claims decrease to 222,000 -- The DOL reported:In the week ending June 2, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 221,000 to 223,000. The 4-week moving average was 225,500, an increase of 2,750 from the previous week's revised average. The previous week's average was revised up by 500 from 222,250 to 222,750. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal. The previous week was revised up.The following graph shows the 4-week moving average of weekly claims since 1971.

       BLS: Job Openings Increased in April to New Series High A milestone: In April there were 6.698 million job openings, and, according to the April Employment report, there were 6.346 million unemployed. So there are now more job openings than unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015. From the BLS: Job Openings and Labor Turnover SummaryThe number of job openings was little changed at 6.7 million on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, the quits rate was unchanged at 2.3 percent and the layoffs and discharges rate increased to 1.2 percent. ... The number of quits was little changed at 3.4 million in April. The quits rate was 2.3 percent. The number of quits was little changed for total private and increased for government (+17,000). Quits increased in state and local government education (+14,000) but decreased in arts, entertainment, and recreation (-25,000). The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. This series started in December 2000.Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for April, the most recent employment report was for May.Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.Jobs openings increased in April to 6.698 million from 6.633 million in March. The number of job openings (yellow) are up 9.7% year-over-year.Quits are up 9.1% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").Job openings are at the highest level since this series started, and quits are increasing year-over-year. This was a strong report.

      US Job Openings Hit Record High, Exceed Number Of Unemployed Workers - Two months after the number of US job openings reported by the JOLTS unexpectedly dropped by 150,000 led by food service and construction workers, all it took was two months of revised data to set the seasonally-adjusted, statistically inferred US labor market back on track, and according to the latest JOLTS report, in April the number of job openings soared to a new all time high, rising by 65,000 to a record 6.698 million, the highest number of vacant jobs on record... ... for the third consecutive month surpassing the total number of unemployed Americans, meaning that if the job openings and unemployed job searchers were properly aligned, the US would have no unemployment. The number of job openings increased in durable goods manufacturing (+33,000) and information (+26,000) but decreased in finance and insurance (-84,000). The number of job openings was little changed across all four geographic regions. Adding to the exuberant picture, while job openings jumped, the number of total hires also increased to just shy of cycle higher, rising to 5.578 million in April from 5.486 million in March. The number of hires was little changed at 5.6 million in April. The hires rate was 3.8 percent. Hires for total private and for government were little changed. Meanwhile, that other closely watched category, the level of quits - which indicates workers' confidence they can leverage their existing skills and find a better paying job - posted a modest drop, and in April declined to 3.351 million from 3.387 million. The number of quits was little changed for total private and increased for government (+17,000). Quits increased in state and local government education (+14,000) but decreased in arts, entertainment, and recreation (-25,000). The number of quits was little changed in all four regions. And with a total 5.4 million separations (a 3.6% rate), this means that there were 1.7 million layoffs and discharges in April, 100,000 higher than in March. he layoffs and discharges rate increased to 1.2 percent over the month. The number of layoffs and discharges edged up for total private and was little changed for government. Layoffs and discharges increased in arts, entertainment, and recreation (+51,000) and in finance and insurance (+27,000). The number of layoffs and discharges was little changed in all four regions.

      The Surprising Reason Why There Are Now More Job Openings Than Unemployed Workers - As we reported yesterday, for the first time in history, the number of job openings in the US (6.7MM) has surpassed the official number of unemployed workers (6.1MM). And yet something about that number does not make sense. When we reported on the jobs number back on June 1, we observed that the number of people not in the labor force has risen to nearly 96 million, and while much of this is due to demographics, and the America's "opioid" epidemic, a lot can be assigned to an increasingly inefficient labor market that lacks dynamism. Subsequent deep dives into the jobs number show us that the health of the job market may not be on a par with where it was back in 2006 , and that the job market "health" may be judging a book by its cover. One such indicator to note is the amount of churn that occurs between jobs: churn is supposed to give an indication of how active participants in the workforce are in looking for better opportunities than the ones they currently have. In a market where there was recently more job openings than there were unemployed people to fill them, as was reported by the Wall Street Journal, one would expect churn to be at, or exceeding, levels it has previously been at during times of a "healthy" economy. However, churn data shows no such thing. In fact, churn is still lower than it was in 2006 when unemployment was 4.8%. Some more details from the WSJ, which echoes what we said yesterday, namely that "the economy hit a new milestone in April, the Labor Department reported Tuesday. For the first time since record-keeping began in 2000, there were more job openings than there were unemployed people to fill them. It is the result of the steady job gains that have sent the unemployment rate down to 3.8% last month." However, "the big surprise is that with all of those openings, people aren’t changing jobs as much as you’d expect." 

       Nurse Practitioners, Physician Assistants Receive Class Action Status in VA Overtime Lawsuit -- A federal judge has certified a class action lawsuit involving nurse practitioners and physician assistants accusing the U.S. Department of Veterans Affairs of failing to pay overtime since 2006. Judge Elaine D. Kaplan of the U.S. Court of Federal Claims granted certification in an action brought by class representatives Stephanie Mercier, Audricia Brooks, Deborah Plageman, Jennifer Allred and Michele Gavin on behalf of nurse practitioners and physicians assistants at 85 different facilities across the country.Provost Umphrey attorneys Michael Hamilton of the firm's Nashville office and Guy Fisher in the Beaumont, Texas, office are among the attorneys working on the lawsuit along with counsel David Cook and Clement Tsao of Cincinnati's Cook & Logothetis, LLC, Douglas Richards of Lexington, Kentucky and Robert Stropp of Washington DC's Mooney Green, P.C."These health care professionals dedicate their time for the well-being of our veterans, and by law, are entitled to overtime when they are required to work beyond their work schedules," said Mr. Hamilton. "We believe this lawsuit to be critical for veteran patient safety and health. To expect these employees to work extended hours without overtime pay is wrong. With the class certification, we can now proceed onto the next step in this lawsuit."  The lawsuit seeks compensation for employees who worked overtime processing electronic and computer patient records using VA facility computers, VA laptops and sometimes personal computers, work that is critical to the medical treatment of patients. Nurse practitioners and physician assistants say the work is considered mandatory. Those who failed to complete the assignments were subject to disciplinary measures for poor time management. Mr. Hamilton and Mr. Cook estimate that as many 10,000 VA employees could be represented in the class action lawsuit

       Teamsters Vote to Authorize Strike as UPS Contract Talks Heat Up - United Parcel Service Inc. workers voted overwhelmingly to authorize a strike, a negotiating tactic that gives the company’s 280,000 Teamsters members an option to walk out if the current contract talks fail. “This does not mean we will strike,” Denis Taylor, director of the Teamsters package division, said on a webcast announcing the results. “It means we have a credible strike threat.” More than 90% of votes cast authorized the strike, which grants the negotiating committee the power to call for a work stoppage after the current contract expires. The two sides are negotiating to replace a five-year contract that expires on July 31. They have reached tentative agreements on some noneconomic issues but have only recently begun discussing topics like pay raises and health benefits. Unions often hold strike authorization votes during contract talks to put pressure on a company during negotiations. UPS workers didn’t have strike authorization votes during the past two contract talks, in 2013 and 2007. In three earlier bargaining sessions, UPS workers did authorize strikes, including one in 1997 that resulted in the company’s only work stoppage. UPS says the vote doesn’t mean a strike is imminent. In advance of the vote tally, UPS spokesman Glenn Zaccara said business continues as usual and the delivery giant continues to negotiate with the Teamsters about two weeks a month. “UPS is confident in our ability to reach an agreement that meets the needs of our employees and the business,” he said. 

      Military-style raids sweep up 114 immigrant workers in Ohio -- Two hundred immigration agents dressed in military gear descended upon two garden nurseries in the Ohio cities of Sandusky and Castalia yesterday, arresting 114 immigrants in the largest single immigration raid of the Trump era.It was a workday that began like any other for the workers of Corso’s Flower and Garden Center in the former industrial hub near Lake Erie. However, before noon more than half of them were headed for immigration internment camps where they face months or even years of detention.Images depict a brutal crackdown of police-state proportions. Armed agents surrounded the facilities, swarmed the workers, lined them up against the walls, cuffed them and frog-marched them into the backs of unmarked buses. Lynn Tramonte, the director of the immigrant rights group America’s Voice Ohio, told the World Socialist Web Site: “These raids are significant for many reasons. One, our government is using SWAT-team style tactics to arrest ordinary workers who pose no threat to anyone. It’s an outrageous misuse of tax dollars. Two, our government is doing this without any regard at all for the consequences of their actions. What happens when Mom or Dad doesn’t come home tonight? Who picks up the children from school? Who makes them dinner and helps them with their homework?”US Customs and Border Protection (CBP) agents set up full perimeters around the premises, preventing workers from trying to escape. Agents with guns strapped to their bodies tied up women, took their personal belongings, and forced them off the facilities. The military-style raid is a warning to the working class. It sends a message that the Trump administration is preparing an ever-greater use of armed force to carry out its anti-immigrant program. The Associated Press reported that the raid was a “heavy show of force that involved aircraft surveillance.”

      Banning Drug Offenders From Food Stamps Ended Up Backfiring, New Study Finds  - An often overlooked provision in the 1996 welfare reform act barred felons with drug convictions from obtaining welfare — including participation in the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) — unless states actively waived those restrictions. Twenty-two years later, a Ph.D student in the economics department at the University of Maryland has been able to test the actual effects of the ban. Cody Tuttle, whose paper was released earlier this spring, found that at least in Florida, the law had the opposite intended effect — increasing recidivism among drug traffickers, rather than reducing it. Tuttle looked at a sample of around 1,000 Florida drug traffickers who committed offenses within 240 days of August 23, 1996 — the day the ban went into effect. His study focused on drug traffickers because in Florida, the ban was limited to that population. “What I find is that for those people that are banned from SNAP … they’re more likely to go back to prison,” Tuttle told The Intercept. In fact, his report shows that individuals who committed drug trafficking offenses after the SNAP cutoff date were “nine percentage points more likely” to return to prison.Tuttle also found that the crimes that resulted in recidivism were primarily financially motivated. “A lot of them are going back for selling drugs again, or committing theft, so these are crimes they’re going to earn money for committing. I don’t see that they’re going back [to prison] for crimes that are not going to earn them money,” he said. Because policing and jailing people comes at an expense, this increase in recidivism also means that the food stamp ban has cost the state of Florida. “I find the societal cost of the ban in Florida,” which includes both incarceration costs and victimization costs, “is about $3,700 per banned offender,” Tuttle concluded in his paper. “With approximately 19,000 banned offenders, this implies the ban has cost Florida over 70 million dollars to date, a number that grows with every new trafficker who resorts to crime to make up for the lost benefits.” By comparison, the average single man on SNAP receives between $80 and $150 per month from the federal government.  SNAP benefits are collected for a median spell of 10 months, meaning that providing SNAP in the first instance not only avoids human costs — it’s more cost-effective strategy for the state and costs less overall.

      In Win For Privacy Rights, Court Says Police Need Warrant To Search Area Around Home -- In a win for privacy rights, the U.S. Supreme Court on Tuesday ruled that police may not search the area around a private home without a warrant, even when they think they have seen stolen property on the premises. In other words, police can't just look on property or peek in windows, see something they think is illegal and start searching without a warrant.The case began when an orange and black motorcycle twice evaded police in Virginia. After some investigation, Albemarle County police were able to track down the driver, Ryan Collins, to his girlfriend's house. Later, Officer David Rhodes saw a similar motorcycle under a tarp outside a private home. When Collins arrived at the home, he was arrested and charged with receiving stolen property and convicted. The Supreme Court of Virginia affirmed the conviction, ruling that the search was proper.  On Tuesday, the Supreme Court reversed that decision. Writing for the court majority, Justice Sonia Sotomayor said the private area around a house, known as the curtilage, is part of the home itself and cannot be searched without a warrant. The court rejected the police's contention that the motorcycle was like an automobile, which the court has long ruled can be searched without a warrant if an officer sees something in plain sight. Sotomayor noted that the court has always said that the power to search an automobile does not extend to the area around the house. The majority noted that police must have a warrant to search a suspect's home and to enter the curtilage.

      US media turns blind eye to the death of 5,000 Puerto Ricans - Last week, a stunning new study was published in the New England Journal of Medicine by a team of Harvard scientists, who estimate that the true death toll from Hurricane María in Puerto Rico may be as high as 5,000. The report is a powerful blow to the lies of both the local and federal governments, which to this day officially acknowledge just 64 deaths. The study is a damning exposure of one of the most monstrous cover-ups in US history. Eight months after the storm, the independent study by Harvard researchers provides the only comprehensive scientific assessment of the death toll from the hurricane and the grossly under-funded and incompetent recovery effort. It is the first and only study to use data collected from on-the-ground research and is undoubtedly the most accurate to date. Despite the highly significant findings, the report has been virtually ignored by US cable news networks and online and print media outlets.  From Tuesday when the study was released until midday Wednesday, the three main cable news networks—Fox News, CNN and MSNBC—gave the Harvard study a combined total of just over 30 minutes of coverage. On Fox, the findings were given only 48 seconds of air time.The report was released the same day that ABC television abruptly cancelled  the revived Roseanne television series after its star, Roseanne Barr, posted a racist tweet. The watchdog group Media Matters calculated that cable news networks covered Roseanne Barr’s tweet and her show’s cancellation 16 times as much as the deaths of thousands of US citizens in Puerto Rico. The Harvard report was buried or ignored by the major newspapers. On Wednesday, the New York Times ran a single article on the study on page 13 of its print edition. There were no commentaries on the massive death toll on that day’s editorial or op-ed pages. By Thursday, the report had vanished from the Times’ print edition, while the Roseanne Barr story appeared on the front page and two full inside pages. USA Today had nothing at all on the Harvard study in its print edition.

      Indigenous Women Have Been Disappearing for Generations. Politicians Are Finally Starting to Notice. -- Women on the Yakama Indian Reservation in Washington state didn’t have any particular term for the way the violent deaths and sudden disappearances of their sisters, mothers, friends, and neighbors had become woven into everyday life.  Roxanne White, who is Yakama and Nez Perce and grew up on the reservation, has become a leader in the movement to address the disproportionate rates of homicide and missing persons cases among American Indian women, but the first time she heard the term “missing and murdered Indigenous women” was less than two years ago, at a Dakota Access pipeline resistance camp at Standing Rock. There, she met women who had traveled from Canada to speak about disappearances in First Nations to the north, where Prime Minister Justin Trudeau’s administration launched a historic national inquiry into the issue in 2016.“I knew exactly what they were talking about,” White said. “I had survived all of this and witnessed all of this.” White’s aunt was murdered in 1996, and there were plenty of others in her orbit who had disappeared or died violently. In the mid-2000s, the FBI re-examined 16 deaths in the vicinity of the Yakama reservation, mostly Native American women whose remains were found between 1980 and 1992 — so many deaths in such quick succession that many were convinced it must have been the work of a serial killer. As the mysterious deaths went unsolved, community members also became convinced of the FBI’s indifference. Nearly 10 years later, a new law set to take effect in June will require the Washington State Patrol to determine just how many American Indian women have gone missing in the state. Working with tribes and the Department of Justice, the agency will use the data as part of a study to determine how to report and identify missing women.

      Inmate Whose Case Helped Intellectually Disabled People Escape Death Row Will Still Be Executed -- At 13 years old, Bobby James Moore couldn’t tell time. He didn’t know how to track seasons or the days of the week. He didn’t understand how to do basic math, like subtraction. His teachers called him “stupid.” When he was 14, Moore’s father whipped him for being illiterate, and Moore dropped out of school after he failed every subject in ninth grade. After he was kicked out of his home, Moore lived on the streets and ate food out of trash cans.On Wednesday, the Texas Court of Criminal Appeals ruled that Moore was intellectually competent — at least, competent enough to be executed.Moore, who shot and killed a supermarket clerk in 1980, when he was 20 years old, was at the center of a Supreme Court case last year over Texas’ test for evaluating death row inmates’ intellectual ability. A lower court had found that Moore, who’s shown an IQ of about 70.66 in the past, was intellectually disabled. That earned him a death row reprieve, but the Court of Criminal Appeals reversed that ruling.Then, in a 5-3 decision in March 2017, the Supreme Court found that the test used by the Court of Criminal Appeals to determine intellectual ability was significantly flawed. Created in 2004, the test used science from 1992 and relied on legal questions like, “Can the person hide facts or lie effectively in his own or others’ interests?” or “Does his conduct show leadership or does it show that he is led around by others?”  The Supreme Court sent Moore’s case back to Texas, asking the Court of Criminal Appeals to rewrite its test. On Wednesday, a 5-3 majority of the court used a more modern standard to evaluate Moore.The judges still found him eligible for execution. They ruled that, because Moore figured out how to calculate buying goods at the prison commissary and learned how to read at a seventh-grade level while in prison, he passed its new intellectual disability test.

      ‘Shut the lights off, say no more’: Nursery rhyme prepares kindergartners for lockdowns - It’s not unusual for the walls of a kindergarten classroom to be plastered with colorful posters.But a poster in a Somerville, Mass., school caught the attention of Georgy Cohen and her husband, Rick Healey — and it didn’t have anything to do with ABCs or washing your hands.Handwritten in multicolored markers, the neat block print read:
            Lockdown, Lockdown, Lock the door
            Shut the lights off, Say no more
            Go behind the desk and hide
            Wait until it’s safe inside
            Lockdown, Lockdown it’s all done
            Now it’s time to have some fun!
      Accompanying the text were three images: a lock with a key in it, a hand turning off the lights and a person holding a finger to his lips. The words go with the tune of “Twinkle, Twinkle, Little Star.” Healey told The Washington Post that he and his wife came across the poster while they were visiting the school Wednesday as part of an official tour for parents who plan to send their children to kindergarten in the fall. The couple have a 5-year-old daughter.  He said he was “saddened” to see the poster, but recognized why the approach may be necessary in an era of school shootings.“I can understand why it was put to that song, to help kids understand it without panicking,” he said. “It’s something a 5-year-old can wrap their brain around without having the full meaning behind it apparent to them.”He declined to identify the school, but several news outlets reported that poster was at Somerville’s Arthur D. Healey School — no relation to Rick Healey.

      Ron Paul: Homeschooling Protects Children From Violence & Marxism - The February mass shooting at a high school in Parkland, Florida prompted many parents to consider homeschooling. This is hardly surprising, as the misnamed federal “Gun-Free Schools” law leaves schoolchildren defenseless against mass shooters. Removing one’s children from government schools seems a rational response to school shootings.School shootings are not the only form of violence causing more parents to consider homeschooling. Many potential homeschooling parents are concerned about the failure of school administrators to effectively protect children from bullying by other students.Of course many parents choose homeschooling as a means of protecting their children from federal education “reforms” such as Common Core. Other parents are motivated by a desire to protect their children from the cultural Marxism that has infiltrated many schools. The spread of cultural Marxism has contributed to the dumbing down of public education. Too many government schools are more concerned with promoting political correctness than ensuring that students receive a good education. Even if cultural Marxism did not dumb down education, concerns that government schools are indoctrinating children with beliefs that conflict with parents’ political, social, and even religious beliefs would motivate many families to homeschool.Even when government schools are not intentionally promoting cultural Marxism or other left-wing ideologies, they are still implicitly biased toward big government. For example, how many government schools teach the Austrian economics explanation for the Great Depression — much less question the wisdom of central banking — or critically examine the justifications for America’s hyper-interventionist foreign policy?Parents interested in providing their children with a quality education emphasizing the ideas of liberty should consider looking into my homeschooling curriculum.

      Philly Middle-School Students Given 'Bulletproof Backpack' As Graduation Gift The graduating 8th grade class of St. Cornelius in Chadds Ford, Pennsylvania got an unusual gift as they prepared to join the ranks of American high-schoolers - bulletproof plates for their backpacks. The graduating 8th graders at St. Cornelius seemed unsure just what to make of their "welcome to high school" gifts.“I never thought I’d need this,” one student explained. As Fox29 reports, the "ballistic shields" were donated by a local company - Unequal Technologies, who developed the ultra-thin 10-by-12-inch plate that can slip into a backpack. "Handguns are useless against a product like this. Shotguns are useless against a product like this," explained Rob Vito, Unequal’s president.Unequal donated the ballistic shields to the graduating 8th grade class and 25 plates were given to school faculty. Vito’s daughter attends St. Cornelius.In a clear sign that times have changed; while parents and guardians of students told the news outlet that a bulletproof backpack may be extreme, they pointed out that it's necessary. "You hear about these school shootings almost weekly, and I can't believe that's where we are in our nation today, but that's the fact," said one great-grandparent who was attending the event.Principal Barbara Rosini seemed happy for the help..."Anything that we can do to protect our children and our staff, that’s what we have-- that's my job, to try to protect them and I try to do the best I can."While officials are offering firearms-training to teachers, and anti-gun protests continue around the country, one can't help but wonder if this 'gift' was nothing but an uncomfortable piece of free promotion by the bulletproof pack provider - one look at the kids' faces above as they received their 'gift' tells you everything. As one commenter asked: "did the big pharma companies give them free adderall, ritalin, and prozac to get them through high school?"

       Junior High Teacher Charged Criminally After Feeding Puppy To Snapping Turtle In Class -There is an interesting (and rather disgusting) case out of Idaho where science teacher Robert Crosland is facing six months in jail after a national controversy over his feeding of a live puppy to a snapping turtle in front of students in his class at Preston Junior School. The exercise would ultimately lead to the death of both the puppy and the turtle in addition to the criminal prosecution of Crosland.The exercise occurred on March 7th and some students were reportedly traumatized despite the reported popularity of Crosland as a teacher.  Previously, Crosland fed guinea pigs to his turtle. The turtle was killed by state officials later as a non-native species.  Crosland was then charged with misdemeanor animal cruelty.   The line for such charges remains uncertain for me.  It is common for example for live mice to be fed to snakes.  Is the difference the cuteness of the animal being devoured?  Moreover, if Crosland killed the puppy with a hammer or knife in a quick fashion, would he be allowed to feed it to the turtle?  I personally am appalled by the exercise which clearly would produce trauma for many of us, particularly given the close human connection to dogs.  However, there remains that pesky question of whether a live animals can be used as prey or whether a puppy (which in this case was reportedly sick) can be used if dispatched first by the owner. Crosland clearly picked the wrong species for turtle food.  A petition to have him fired has reached roughly 200,000 signatures.

      Teens, Social Media & Technology 2018 -- Pew Research -- Until recently, Facebook had dominated the social media landscape among America’s youth – but it is no longer the most popular online platform among teens, according to a new Pew Research Center survey. Today, roughly half (51%) of U.S. teens ages 13 to 17 say they use Facebook, notably lower than the shares who use YouTube, Instagram or Snapchat.This shift in teens’ social media use is just one example of how the technology landscape for young people has evolved since the Center’s last survey of teens and technology use in 2014-2015. Most notably, smartphone ownership has become a nearly ubiquitous element of teen life: 95% of teens now report they have a smartphone or access to one. These mobile connections are in turn fueling more-persistent online activities: 45% of teens now say they are online on a near-constant basis.The survey also finds there is no clear consensus among teens about the effect that social media has on the lives of young people today. Minorities of teens describe that effect as mostly positive (31%) or mostly negative (24%), but the largest share (45%) says that effect has been neither positive nor negative. These are some of the main findings from the Center’s survey of U.S. teens conducted March 7-April 10, 2018. Throughout the report, “teens” refers to those ages 13 to 17.

      Study Reveals 45% Of American Teens Are Online "Almost Constantly" -- According to a recent survey, 45% of American teens say they are online “almost constantly,” about double of what it was 3 years ago. “The results varied by gender. Fifty percent of girls said they were always online compared with 39 percent of boys.  Teens’ internet presence has been enabled by near-universal adoption of smartphones, with 95 percent having access to a smartphone, according to the survey.”    According to tech designers, software is deliberately designed to be “sticky” to affect our brains’ neurotransmitters so users spend more time on devices.  In 2017, CBS’ 60 Minutes, aired a segment about this called, “Brain Hacking.”  It featured an interview with tech designer, Tristin Harris.  Other tech folks have also expressed remorse for their contribution to this. Recently, Good Morning America aired a segment on a 48-hour experiment featuring 4 kids with unlimited screen time.  There’s a reason why a documentary film about Digital Addiction was namedElectronic Crack. Of course, parents are addicted, too.  This is hurting families in the same ways as other sources of addiction.  So where are the lawsuits?  Where are the well-funded widespread marketing campaigns to fight Digital Addiction? Professor Ollie Johansson discussed addictive behavior caused or increased by smart phone use.  (1:49:05 of video)  He also referenced research done by Dr. Henry Lai. Media outlets and researchers continue to report about Digital Addiction but most fail to address the effect that cell phone and WiFi radiation exposure has on the brain.  Research has proven that exposure to all sources of cell phone and wireless WiFi radiation disrupts the blood-brain barrier which can cause it to leak.  Our pets are being exposed, too, when we use this around them.  In regard to kids, no “safe” level of cell phone or WiFi radiation has still been scientifically determined for children or pregnant women  Regardless, even Sesame Street markets technology to kids.

      Why LA Unified may face financial crisis even with a giant surplus this year - With more than half a billion dollars socked away for next school year, the Los Angeles Unified School District hardly seems just two years from financial ruin. It’s a scenario that is especially tough to swallow if you’re a low-wage worker seeking a raise or a teacher who wants smaller classes. But budget documents show that today’s $548-million surplus cannot be sustained — and that even basic services face steep, seemingly unavoidable cuts because of massive problems barreling the district’s way. “There’s a disconnect between the rosy short-term picture and what we know is coming,” said board member Kelly Gonez.Board member Nick Melvoin, more bluntly, said, “We’re in a death spiral.” Facing these financial ills will be a central challenge for Austin Beutner, the district’s new superintendent. The former investment banker’s selection over more traditional candidates may signal the school board’s willingness to tackle budget problems that have plagued the district for years. The nation’s second-largest school system has enjoyed a major infusion of funding since the bone-deep cuts it endured during the recession. But in coming years, school officials project growth in employee pension and healthcare costs will eclipse the change in revenue. By 2020, projections show a $408-million shortfall. And that doesn’t account for some employees’ recently won pay raises or the impact of an increasingly likely economic recession.

      Nashville teachers, school workers denounce pay freeze --At a public hearing on Tuesday night, June 5, officials from the Metro Nashville City Council outlined a proposed 2018–19 budget, which includes no money for teacher and school employee pay raises but continues tax giveaways to the rich.Dozens of teachers and school workers lined up before the City Council to have their brief say on a budget that mandates serious cuts to school personnel, programs and free lunches. It will also eliminate a paltry 2.5 percent pay raise that was proposed for teachers.“How can we proclaim to the world that we are such a smart and creative city when we spend between $3,000 and $4,000 a year less than the national average per public school student and $15,000 less than children in some private schools in Nashville?” one participant asked.Nashville resident Marti Profitt told councilmembers she knew of schools where children would run to the bathroom between classes in hopes of getting the only stall with a door. She spoke of schools where children had classrooms without furniture and of one teacher’s pleas for chairs. “She told me, ‘I’ve got 36 children and three are sitting on the floor,’” Profitt recalled. “Councilmembers, do you ever have to look for chairs?”

      The Numbers That Explain Why Teachers Are in Revolt - - They have taken to the streets in West Virginia, Oklahoma, Kentucky, Arizona, Colorado — and more recently in North Carolina. Dissent is building in Louisiana and Nevada, too. But while the protests are spreading this year, the underlying conflict between public school employees and policymakers has roots in decisions made during the last recession, when states and local districts short of cash curtailed education spending for the first time in decades. This had a pronounced effect on school staffing, with layoffs hitting many states. Districts cut support staff as well as regular classroom teachers. In North Carolina, the number of teachers is down 5 percent since peaking in 2009, while the number of teaching assistants is 28 percent lower. And teacher pay stagnated nonetheless. Moreover, the recovery that has lifted the private economy has not quite restored school spending to pre-recession levels, especially in states run by fiscal conservatives determined to hold the line on government spending. For a system that had experienced nothing but spending growth for a quarter century, the past few years have been a major shock. K-12 pending per pupil rose 26 out of 29 years before 2010, only to tumble three consecutive years at the beginning of this decade. One reason for the consistent rise was a movement in education to reduce class sizes by adding teachers, and to provide more social services beyond basic instruction. Then came a one-two punch to the growth in education spending: The recession worsened financial problems already widespread in many states, and voters began electing conservative governors and legislatures that promised to rein in budget woes with spending cuts.  By 2016, more than half of states controlled by Democrats had restored education spending per pupil to 2009 levels, but the same was true in only 5 of 22 states controlled by Republicans.  The Center on Budget and Policy Priorities, a liberal think tank, notes that seven states with school funding controversies — Arizona, Idaho, Kansas, Michigan, Mississippi, North Carolina and Oklahoma — cut taxes in recent years.

      Here Are The Schools With The Best ROI In Each State - The average US student today is graduating with $39,400 in student-loan debt, an enormous sum, particularly for liberal arts grads with few reliable employment options allowing them to earn more than $30,000 a year right out of school. The aggregate figure is even more egregious: Nationally, students owe more than $1.4 trillion on their loans, nearly 50% more than all credit card debt in the US. Given this enormous sum, Brookings Institute projects that nearly 40% of student loan borrowers will default by 2023. And yet, most Americans still believe that college is a sound investment.But students who bother to conduct an ROI analysis will find that the return on a degree varies widely depending on the school. Which is why, in a recent study, HowMuch.com and Payscale decided to calculate the schools with the best 20-year ROI in each state. Many of the names may not be widely familiar to people - and some might be downright surprising (particularly the winner for Connecticut, where the Coast Guard Academy beat out Yale). Indeed, across the US, technical colleges and military academies appear to outrank big-name schools at every turn. In its analysis, HowMuch and Payscale factored in the cost of tuition, the average student debt, the typical length of time to graduate and the graduation rate. They then compared the 20-year ROI for the school with the 20-year ROI for somebody who skipped college to start a career out of high school.  Here's the full list of schools with the highest ROI in each state:

       Here’s How Higher Education Dies -- Maybe higher education has reached its peak. Not the Harvards and Yales of the world, but the institutions that make up the rest of the industry—the regional public schools who saw decades of growth and are now facing major budget cuts and the smaller, less-selective private colleges that have exorbitant sticker prices while the number of students enrolling in them declines.  Higher ed is often described as a bubble—and much like the housing market in 2008, the thought goes, it will ultimately burst. But what if it’s less of a sudden pop and more of a long, slow slide, and we are already on the way down? Bryan Alexander started grappling with the idea of “peak higher education” in 2013—inspired by the notion of “peak car,” “peak oil,” and other so-called “peaks.” At the time, there were signs that the industry was already struggling. The number of students enrolled in higher education had dropped by a little over 450,000 after years of booming growth, the proportion of part-time faculty—more commonly referred to as adjuncts—had steadily become a more significant part of the professorship, and there was a general skepticism about the skyrocketing costs of college and concerns over whether a degree was worth it. Taken individually, he said, each sign was troubling enough. But when looked at together, they represented the outlines of a bleak future for higher education. Alexander, a self-described higher-education futurist and a former English professor, came to the conclusion that after nearly a half century of growth, higher education might be as big as it could get. It would, he reasoned, only get smaller from there. Now, five years on, he says the “depressing” hypothesis is playing out. In the spring of 2013, there were 19,105,651 students enrolled in higher ed; this spring, there were 17,839,330, according to recently released data from the National Center for Education Statistics. That represents a roughly 7-percent decrease—and is driven largely by declining enrollments in the for-profit and community-college sectors, as well as stagnant enrollments among four-year non-profit public and private institutions. And the trend of declining enrollment in higher education is likely to continue, he argues, for a couple of reasons, but most notably, a declining birth rate means that there will be fewer 18-year-olds entering academe, and there are fewer international and immigrant students to fill those seats.

      Poor People’s Campaign activists arrested in multiple states - Activists with the national Poor People’s Campaign faced backlash from government officials and law enforcement during nationwide protests Monday. More than 100 people in Kentucky, Kansas, California, New York, Maryland, South Carolina, North Carolina, Ohio, and Washington, D.C. were arrested or blocked from entering government buildings. The campaign, which marks 50 years since Martin Luther King Jr. and the Southern Christian Leadership Conference organized thousands of Americans in the original anti-poverty effort of the same name, seeks to raise awareness about economic disparities and poverty, systemic racism, ecological devastation, and increased military spending. The multi-state, 40-day movement entered its fourth week on Monday, with protests in more than 30 states focusing on health care and environmental justice.  In Kentucky, hundreds of activists were barred from entering the state capitol building in Frankfurt following a rally in which speakers objected to the state’s Medicaid work requirements that threaten to kick thousands off health coverage. Officers blocked the building entrance, telling protesters that they would only be allowed in two at a time. “So you’re going to literally block us from our constitutional right?” said co-chairman of the Poor People’s Campaign, Rev. William Barber, according to the Associated Press. In a statement following the protests, Barber elaborated on his disappointment, arguing that Kentucky officials are “trying to change the rules to prevent people from speaking out — in violation of its own Constitution.” He added that “the rules that need to be changed are not the ones that allow for peaceful, nonviolent protest, but the ones that rob the poor of the right to healthcare and allow billion-dollar companies to pollute our water and environment. Politicians in Kentucky are afraid to hear a true critique of their policies, but we will not be silenced by their descent into authoritarianism.”

      Medicare Will Be Insolvent In 2026, Sooner Than Expected; Social Security To Follow In 2034 - Medicare's trust fund has just eight more years of solvency until 2026, and Social Security will be exhausted in 2034, according to Thursday projections by the trustees for the government programs. While Social Security's expected depletion is unchanged from last year's projection, the date for Medicare's demise was moved up three years.  Social Security is made up of several funds; the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) are combined for the designation OASDI, while Medicare's Hospital Insurance trust fund is designated HI.  If allowed to expire, beneficiaries would face an immediate reduction of around 20% in benefits. The costs of Medicare and Social Security will increase substantially as a percentage of GDP through 2035 due to a sharp rise in beneficiaries as baby-boomers retire, and lower birth rates that have persisted since the baby boom resulting in slower growth of the labor force and GDP.  Social Security’s annual cost as a percentage of GDP is projected to increase from 4.9 percent in 2018 to about 6.1 percent by 2038, then decline to 5.9 percent by 2052 before generally rising to 6.1 percent of GDP by 2092. Under the intermediate assumptions, Medicare cost rises from 3.7 percent of GDP in 2018 to 5.6 percent of GDP by 2035 due mainly to the growth in the number of beneficiaries, and then increases further to 6.2 percent by 2092. The growth in health care cost per beneficiary becomes the larger factor later in the valuation period, particularly in Part D.

      AP Exaggerates Social Security Problems -- Dean Baker at Beat-the-Press has pointed out (sorry, not able to link to it) that Associated Press put out a tweet that presents an essentially hysterical story about future prospects for Social Security following the recent release of the Trustees.  This report says that as of 2026 Medicare and as of 2034 Social Security will face a “shortfall.”  However, the AP tweeted that what they face is “insolvency.”  Needless to  say, “insolvency” is much more serious than “shortfall” and simply feeds the overblown hysteria that so many think about these programs, feeding political pressures to mess with them. The new report provides the latest update on what would happen if the forecast happens and nothing is done.  Given that the projection is that Social Security benefits are set to increase by about 20% by 2034, if somehow nothing were done and benefits were set to be reduced so that they could be paid by expected tax revenues, the benefit would be cut back by about that amount to about what they are now in real terms.  In short, this is not the hysterical crisis AP suggested or that so many think is out there. We have seen this nonsense before. Of course, Dean accurately points out that by law the benefits must be paid. This may also be a time to remind everybody that the US is really in much better shape demographically in terms of life expectancies, retirement ages, and expected population growth rates than most other high income nations, with such cases as Japan and Germany in much worse shape than the US.  However, all these nations are making their public old age pension payments.  In the case of Germany the payments are higher than in the US, but the payments are being made, and its economy is humming along very well.  There simply is not basis for any of this hysteria in the US regarding the future of Social Security.

      New York, Washington state propose double digit rate hikes for ObamaCare plans -The Hill - ObamaCare insurers in New York and Washington state are proposing double-digit rate hikes for 2019, citing recent and upcoming changes to the law.In New York, 14 insurers are asking state regulators to approve an average rate hike of 24 percent, while 11 insurers in Washington state want to increase premiums by an average of 19.08 percent.New York attributed the proposed increases to Congress's repeal of the individual mandate, while Washington state blamed uncertainty over the Trump administration's looming changes to ObamaCare."With respect to the individual market, the single biggest justification offered by insurers for the requested increases is the Trump Administration’s repeal of the individual mandate penalty," New York's Department of Financial Services said in a statement. "Insurers have attributed approximately half of their requested rate increases to the risks they see resulting from its repeal."Without the repeal, which takes effect next year, the average increase among ObamaCare insurers in New York would have been about 12 percent, regulators estimate. Of the 14 insurers that have submitted rate proposals for the 2019 plan year, all but one are asking for an increase. Fidelis asked state regulators to approve a 38.6 percent rate hike, attributing 25.9 percent of that increase to the repeal of the mandate. Emblem asked for a 31.5 percent increase, with 12 percent attributed to the repeal of the mandate. The proposals are not final and must be approved by the state.

      U.S. Births decreased in 2017 - From the National Center for Health Statistics: Births: Provisional Data for 2017. The NCHS reports: The provisional number of births for the United States in 2017 was 3,853,472, down 2% from 2016 and the lowest number in 30 years. The general fertility rate was 60.2 births per 1,000 women aged 15–44, down 3% from 2016 and another record low for the United States. ... Here is a long term graph of annual U.S. births through 2017.  Births have declined for three consecutive years following increases in 2013 and 2014. With fewer births, and less net migration, demographics will not be as favorable as I was expecting a few years ago.

      America's Collapsing Fertility -- There is a looming issue that will have an impact on everything in the global economy.  Japan is already feeling the effects and major economies including China and the United States are lining up for their "turn at bat".  Unfortunately, there is almost nothing that can be done about this issue; central bankers will be incapable of reversing the impact and governments will find themselves helpless in the face of the upcoming crisis.  While it almost seems laughable to those of us that are Baby Boomers who spent our formative years growing up in an ever-expanding population (remember the warnings about population overgrowth?), human beings, particularly in developed nations, simply aren't procreating enough.  A recent study by the U.S. Centers for Disease Control looks at the looming demographic issues that will change the future for millions of Americans.In the 2017 edition of the National Vital Statistics which looks at the provisional 2017 data on U.S. births, the CDC provides us with a clear picture of the changing birth and fertility rates over the past 50 years.  Here is a graphic from the report showing the number of live births and the fertility rate for the United States since 1970:The provisional number of live births in 2017 for the United States was 3,853,472, down 2 percent on a year-over-year basis and the lowest number in 30 years.  To put this into perspective, back in 1987, there were 242,289,000 Americans compared to 326,965,105 on December 31, 2017, an increase of 84,676,105 or 34.9 percent.  In other words, 35 percent more Americans produced fewer children than they did back in 1987. From the Census Bureau, here is the 2016 population tree for the United States:

      New CDC Study Shows Large Increase in Suicides Since 1999 - Yves Smith -  The CDC deemed suicide to be a public health crisis in 1999. Every state save Nevada has seen an increase in the suicide rate since then. A new CDC study plumbs some of the dimensions of this development: Suicide has become the second highest cause of death for the 18 to 34 year old age groupThe female rate of suicide, which historically has been lower than that of men, has risen to approach the male level. But white males showed the biggest increase of any gender or racial cohortGunshot is far and away the most common method In the states that track the data, more than half the suicides were of people who has not been diagnosed with a mental health issue.  The Washington Post report on the CDC study awkwardly acknowledged that the rising suicide rate was a symptom of broader social ills: The dramatic rise in opioid addiction also can’t be overlooked, experts say, though untangling accidental from intentional deaths by overdose can be difficult. The CDC has calculated that suicides from opioid overdoses nearly doubled between 1999 and 2014, and data from a 2014 national survey showed that individuals addicted to prescription opioids had a 40 percent to 60 percent higher risk of suicidal ideation. Habitual users of opioids were twice as likely to attempt suicide as people who did not use them… The problems most frequently associated with suicide, according to the study, are strained relationships; life stressors, often involving work or finances; substance use problems; physical health conditions; and recent or impending crises. The most important takeaway, mental health professionals say, is that suicide is an issue not only for the mentally ill but for anyone struggling with serious lifestyle problems.

      Government report shows sharp rise in US teen deaths --A report released Friday shows a shocking rise in deaths between 2013 and 2016 among US children and teens aged 10-19. While deaths in this age group declined between 1999 and 2013, from 2013 to 2016 the total number of deaths, as well as the death rate, increased by 12 percent. These grim statistics expose the social crisis confronting America’s youth in the form of gun violence, suicide, the opioid crisis, poverty and war.  The study published by the Centers for Disease Control and Prevention (CDC) found that injury deaths—including unintentional injury, suicide, homicide and war—comprised 70 percent of all deaths for persons aged 10-19 in 2016. By contrast, the non-injury death rate (from natural causes such as cancer and heart disease) declined for this age group by 23 percent from 1999 to 2013 and remained relatively stable after that.  Particularly telling, the number and rate of total deaths in 2016 for adolescents aged 15-19 was more than three times that of children and teens aged 10-14. For teens aged 15-19, the injury death rate increased by 19 percent in 2016 from the recent low in 2013. At a time when young men and women in this age group should be finishing high school and contemplating college or a career, increasing numbers of them are meeting a violent death. The CDC report is based on data from death certificates filed in all 50 states and the District of Columbia between 1999 and 2016. The data collected by researchers shows that motor vehicle traffic fatalities accounted for 62 percent of unintentional injury deaths, followed by poisoning at 16 percent and drowning at 7 percent. Poisoning deaths include drug overdoses, which account for 90 percent of these deaths, mostly in older teens. Following a decrease in homicide deaths among children and adolescents between 2007 and 2014, these deaths increased by 27 percent from 2014 to 2016. The suicide rate declined by 15 percent between 1999 and 2007, then rose by a staggering 56 percent between 2007 and 2016.

      Opioids Are Responsible For 20% Of Millennial Deaths, "Crisis Will Impact US For Generations - The opioid crisis has become a significant public health emergency for many Americans, especially for millennials, so much so that one out of every five deaths among young adults is related to opioids, suggested a new report. The study is called “The Burden of Opioid-Related Mortality in the United States," published Friday in JAMA. Researchers from St. Michael’s Hospital in Toronto, Ontario, found that all opiate deaths — which accounts for natural opiates, semi-synthetic/ humanmade opioids, and fully synthetic/ humanmade opioids — have increased a mindboggling 292 percent from 2001 through 2016, with one in every 65 deaths related to opioids by 2016. Men represented 70 percent of all opioid-related deaths by 2016, and the number was astronomically higher for millennials (24 and 35 years of age).According to the study, one out of every five deaths among millennials in the United States is related to opioids. In contrast, opioid-related deaths for the same cohort accounted for 4 percent of all deaths in 2001.Moreover, it gets worse; the second most impacted group was 15 to 24-year-olds, which suggests, the opioid epidemic is now ripping through Generation Z (born after 1995). In 2016, nearly 12.4 percent of all deaths in this age group were attributed to opioids. “Despite the amount of attention that has been placed on this public health issue, we are increasingly seeing the devastating impact that early loss of life from opioids is having across the United States,” said Dr. Tara Gomes, a scientist in the Li Ka Shing Knowledge Institute of St. Michael’s.“In the absence of a multidisciplinary approach to this issue that combines access to treatment, harm reduction and education, this crisis will impact the U.S. for generations,” she added.

      Cincinnati, Ohio area fentanyl overdoses increase by one thousand percent over the last five years --Overdose deaths caused by the synthetic opioid Fentanyl in the Cincinnati area increased by one thousand percent over the course of the last five years, according to a new report in the Cincinnati Enquirer.Fatalities attributed to fentanyl use in Harrison County, which includes Cincinnati and its immediate suburbs, climbed from 24 in 2013, the first year area law enforcement began noticing its spread, to 324 in 2017. The narcotic, which is often mixed with methamphetamine, cocaine, or heroin, was found to be present in 90 percent of all drugs analyzed by the county crime lab through May of this year.The Hamilton County coroner, Dr. Lakshmi Sammarco, told the Enquirer that the drug was responsible for 85 percent of all overdoses by opioids that her office handled in the last year. Originally developed in the 1960s as a general anesthetic, fentanyl is a synthetic opioid which does not require the cultivation of poppies to manufacture. In subsequent decades the drug was further developed into a medication to treat severe pain in cancer patients, particularly those who had developed a high tolerance to other opioids. Said to be approximately 75 times as potent as the same amount of morphine, fentanyl was the most widely used synthetic opioid as of 2017.

       Seniors Are More Conservative Because the Poor Don’t Survive to Become Seniors - One of the abiding realities of our political era is a major generational split anchored on the right by disproportionately conservative seniors and on the left by disproportionately progressive millennials and post-millennials. This is often thought of as a perfectly natural, even inevitable, phenomenon:  There is some truth in those stereotypes, though different cohorts of young people in the past have been far more conservative than today’s, and on non-cultural matters, seniors have sometimes been as or even more progressive than their children or grandchildren (e.g., the so-called Greatest Generation, which mostly came of age during the Great Depression, was persistently Democratic-leaning politically). But there is something else driving the relative homogeneity of seniors: Poorer people are often hobbled by chronic illness, and succumb to premature death. A new academic study featured at the Washington Post’s Monkey Cage blog explains: Political participation of the poor is overall lower because of poverty, bad health and many other factors, but millions of impoverished Americans across the country also die prematurely. For instance, in 2015, research funded by the National Institutes of Health and the Social Security Administration revealed that, since 1990, among the bottom quarter of Americans with the least education, life expectancy has either stagnated or decreased. That’s for well over 40 million people. Add to this negative trend the fact that mortality among the poor increases during middle age — which is when citizens generally get more involved in politics. The premature disappearance of the poor, then, occurs precisely at the moment when they would be expected to reach their “participatory peak” in society. But they don’t live long enough to achieve that milestone.

      Are Google and Facebook Responsible for the Medical Quackery They Host? -  Roy Chowdhury is an Indian engineer with, he says, an honorary Ph.D. in diabetes science from Alliance International University, a school in Zambia that bears many of the hallmarks of an online scam. He runs a small nutrition clinic near Delhi. Two months ago, Chowdhury posted a brief video on YouTube arguing that HIV is not real, and that anti-retroviral medication actually causes AIDS. He offered to inject himself with the blood of someone who had tested positive. Within weeks, the video had more than 380,000 views on YouTube. Tens of thousands more people watched on Facebook. Most of the viewers appear to be in India, where some 60,000 people die of HIV-related causes each year.  After the March video, Chowdhury kept on posting. Follow-up videos on HIV racked up hundreds of thousands more hits. He also distributed copies of an ebook titled “HIV-AIDS: The Greatest Lie of 21st Century.” When I spoke with Chowdhury by phone last month, he claimed that 700 people had gotten in touch to say they had gone off their HIV medications. The actual number, he added, might be even higher. “We don’t know what people are doing on their own. I can only tell you about the people who report to us,” he said. Chowdhury’s figures are impossible to verify, but his skills with digital media are apparent — as are the troubling questions they raise about the role of Silicon Valley platforms in spreading misinformation. Such concerns, of course, aren’t new: Over the past two years, consumers, lawmakers, and media integrity advocates in the United States and Europe have become increasingly alarmed at the speed with which incendiary, inaccurate, and often deliberately false content spreads on sites like Facebook and YouTube — the latter a Google subsidiary.  Facebook and Youtube are not just hosting medical quackery. Their algorithms are helping people to find it, and to view more of it.  Dubious — and potentially deadly — cures for autism have found sanctuary on social media for years, for example. Desperate cancer patients have been lured online to baseless treatments peddled by shady “experts.” And opponents of childhood vaccination thrive in an expanding and self-reinforcing internet bubble that researchers describe as “more real and more true” for its inhabitants than anything coming from the outside. The question is, when content on social media and similar platforms nudges people toward dangerous medical decisions, do those websites bear any responsibility? And if so, how should they regulate such reckless speech? These questions grow particularly stark with AIDS denialism. After all, convincing someone that the 2001 terrorist attacks on the World Trade Center and other U.S. sites was an inside job can make them sound a little whacky at parties. Convincing someone that AIDS is a hoax can kill them.

      DNA for Sale: Ancestry wants your spit, your DNA and your trust. Should you give them all 3? - Aided by venture capital and a flood of savvy marketing, Ancestry LLC has grown to become the world’s largest DNA testing conglomerate. Since 2012, it has lured more than 5 million people to spit into tubes and add their genetic code to the world’s largest private database of DNA. It has also banked away the world’s largest collection of human spittle, numbering in the hundreds of gallons.In the age of Facebook and Google, consumers seem comfortable surrendering their personal information to corporations that aggregate it and monetize it. But Ancestry and other DNA testing companies have added an audacious tweak: Consumers are now paying to hand over their genetic code, their most sensitive individual identifier, to companies that could monetize it far into the future.Ancestry officials say they have state-of-the-art systems to prevent hacking and security breaches. So far the company has sidestepped privacy scandals that tripped up companies like Facebook, which allowed a political data firm, Cambridge Analytica, to access data from 50 million customers, or government agencies like the U.S. Office of Personnel Management, which a few years ago exposed more than a million personnel records and security clearance data to hackers. But a three-month review by McClatchy, including visits to Ancestry’s headquarters and a main testing lab, reveals a pattern of breached promises to customers, security concerns and inflated marketing pledges that could give consumers some pause:

       DNA Website MyHeritage Hacked; 92 Million User Accounts Exposed - In an odd coincidence, earlier today we asked rhetorically "what could go wrong" if millions of Americans trust a DNA collecting company - in this case ancestry.com - with their genetic code. At almost the exact same time, Bloomberg reported that the Israeli-based consumer genealogy website, MyHeritage had been hacked, and that the email addresses and password information linked to more than 92 million user accounts have been "compromised."According to MyHeritage, its security officer had received a message from a researcher who unearthed a file named “myheritage” containing email addresses and hashed passwords of 92,283,889 of its users on a private server outside the company.“There has been no evidence that the data in the file was ever used by the perpetrators,” the company said in a statement late Monday, supposedly in an attempt to make its nearly 100 million users and customers feel comfortable.It was not explicitly clear if any client "genetic material" had also been compromised as part of the security breach. Like Ancestry.com and 23andMe, MyHeritage lets users submit their DNA, build family trees, search historical records and hunt for potential relatives. Founded in Israel in 2003, the site launched a service called MyHeritage DNA in 2016 that lets users send in a saliva sample for genetic analysis. The website currently has 96 million users of whom 1.4 million users have taken the DNA test.

      The Political Significance of LSD -- “Microdosing” on psychedelic substances like LSD—ingesting just enough to heighten cognitive faculties, enhance creativity, improve concentration and alleviate depression—is currently back in vogue among people not normally associated with anything remotely ‘countercultural’ in the USA. New York University, for example, is hosting clinical trials using psilocybin to treat alcohol addiction. The Multidisciplinary Association for Psychedelic Studies (MAPS) has been at the forefront of research in treating patients suffering from chronic treatment-resistant PTSD (Post Traumatic Stress Disorder) with MDMA, commonly known as ‘Ecstasy. The Food and Drug Administration (FDA) recently designatedits MDMA-assisted psychotherapy project as a ‘breakthrough therapy.’ Apart from MDMA, MAPS also advocates the use of Ayahuasca,Ibogaineand medical marijuanafora variety of conditions ranging from bipolar syndrome and drug addiction to autism-related disorders, ADHD and clinical depression. The therapeutic use of psychedelics isn’t new. Between 1953 and 1973, the US federal government funded over a hundred studies on LSD with more than 1,700 subjects participating. Psychedelics were tested on convicts, substance abusers, people suffering from chronic depression and obsessive-compulsive disorder, schizophrenics and terminal cancer patients. LSD was also tested on artists and scientists to explore its effects on creativity, and on divinity students to examine spirituality from a neuroscientific perspective. The empirical data gathered from these tests was largely positive.LSD “truly was an acid, dissolving almost everything with which it came into contact, beginning with the hierarchies of the mind… and going on from there to society’s various structures of authority” says author Michael Pollan in his book How To Change Your Mind: The New Science of Psychedelics. And that’s what makes this subject socially and politically interesting.“It is curious to me that what I see as the two greatest threats—environmental crisis and [political] tribalism—these drugs directly address both those mindsets” Pollan told the Guardian in a recent interview. “They undermine our tendency to objectify nature, to think of ourselves as separate from it. They undermine tribalism in that people tend to emerge from these experiences thinking that we are all more alike, all more connected.”

       Air Pollution Linked to Genetic Changes in the Brain - There's little question that air pollution is toxic for the human body. Studies have shown that particulate matter in the air can lead to lung disease, heart disease, strokes, and lung cancer. But researchers thought the brain might be protected due to the blood brain barrier—a natural system that filters out foreign substances and certain neurotransmitters before they circulate in the brain. A new study from researchers at Cedars-Sinai Medical Center in Los Angeles shows that many heavy metals found in the air may make it into brain tissue, and those pollutants are activating genes that may lead to cancers or neurodegenerative disorders. To understand how air pollution impacts the brain, doctor Julia Ljubimova, director of the Nanomedicine Research Center at Cedars-Sinai, produced air with the same chemical makeup as that found in Riverside, California, in the Los Angeles Basin. She and her team then subjected rats to the air, with different groups of rats breathing the polluted air for two weeks, one to three months, and 12 months. After examining the rodent brains, the researchers found higher than normal concentrations of heavy metals including cadmium, cobalt,lead , nickel, vanadium and zinc accumulated in the rats exposed to the pollution for a month or more. Even more disturbing, coarse particles of the pollutants had switched on certain genes. The research appears in the journal Scientific Reports . "Initially I was even skeptical we could find anything. For example, a smoker has to smoke 20 years to develop lung cancer," Ljubimova said, "so I was very, very surprised when we found so many changes." So how are these heavy metals making it into the brain despite the blood brain barrier?  Particulates inhaled through the nose have a more direct route into the brain through the olfactory system and may accumulate through that pathway. Once in the brain, the metals cause inflammation, switching on certain genes including those that cause both benign and malignant tumors, and others that are suspected of causing neurodegenerative disorders like Parkinson's, ALS, Alzheimer's, and other types of dementia— something that other recent studies have also found .

      Consumer Product Safety Testing Overlooks Cancer Risk From Exposure to Multiple Chemicals - Mixtures of chemicals commonly found in consumer products are more likely to increase breast cancer risk than the same chemicals individually, according to a new analysis. But safety tests by government regulators don't routinely evaluate the combined effects of multiple chemical exposures. For a study published in the peer-reviewed journal Toxicological Sciences , a team from the California Pacific Medical Center Research Institute looked at how the combination of three widely used chemicals can cause healthy breast cells to behave more like cancer cells.They tested the aggregate effect of BPA, a plastics additive; methyl paraben, a preservative in cosmetics and body care products; and PFOA, a non-stick chemical formerly used to make Teflon. BPA , PFOA , and methyl paraben are all found in the bodies of Americans, due to their presence in consumer products and drinking water .In tests for the study, when all three chemicals were present together, they changed breast cell biology in a more profound and consequential way than each chemical individually. The scientists noted that the doses of three chemicals tested were close to the levels found in people, and suggested that in the body, these mixtures could increase breast cancer risk.Although everyone is exposed to a mixture of many chemicals every day, federal and state health agencies look at safety testing for only one chemical at a time. The effects of individual chemicals in these daily mixtures add up, but at the moment, federal agencies such as the U.S. Environmental Protection Agency (EPA ) and Food and Drug Administration do not determine the safety of chemicals on the basis of the aggregate effects of chemicals people come in contact with daily."It's been suspected for years that chemicals behave differently in mixtures than they do by themselves," said Dr. William Goodson, a senior author of the study. "The tragedy is that no regulations require that the effects of chemical mixtures be evaluated. With the existing consumer product safety testing, we are sailing blind into a perfect storm of chemicals with almost no knowledge of what to expect."

      You’re eating microplastics in ways you don’t even realise -- We’re increasingly aware of how plastic is polluting our environment. Much recent attention has focused on how microplastics – tiny pieces ranging from 5 millimetres down to 100 nanometres in diameter – are filling the seas and working their way into the creatures that live in them. That means these ocean microplastics are entering the food chain and, ultimately, our bodies.  But fish and shellfish aren’t our only food sources that can contain microplastics. And, in fact, other sources that don’t come from the sea might be much more worrying. A portion of consumer-grade mussels in Europe could contain about 90 microplastics. Consumption is likely to vary greatly between nations and generations, but avid mussel eaters might eat up to 11,000 microplastics a year. It’s harder to know how many microplastics we might be consuming from fish. Most studies to date have only analysed the stomach and gut content of these organisms, which are usually removed prior to consumption. But one study has found microplastics in fish liver, suggesting particles can get from digestive tissues to other body parts. Microplastics have also been found in canned fish. Numbers identified were low, so the average consumer might only eat up to five microplastics from a portion of fish this way. The particles found might also come from the canning process or from the air. Another marine food source of microplastics is sea salt. One kilogram can contain over 600 microplastics. If you eat the maximum daily intake of 5 grams of salt, this would mean you would typically consume three microplastics a day (although many people eat much more than the recommended amount).  However, other studies have found varying amounts of microplastics in sea salt, possibly because of different extraction methods used. This is a widespread problem in microplastics research that makes it hard or impossible to compare studies. For example, one study seems to only have looked for microfibres (tiny strands of artificial materials such as polyester) while a further study only looked for microplastics larger than 200 micrometres.

      EPA to Ignore 68 Million Pounds of Chemical Emissions in Limited Risk Assessment - The U.S. Environmental Protection Agency (EPA) will limit the criteria it uses to determine the health risks of 10 dangerous chemicals including asbestos, The New York Times reported Thursday.A 2016 amendment to the Toxic Substances Control Act of 1976 required the EPA to evaluate hundreds of hazardous chemicals to decide if they should face more restrictions or be banned entirely. But documents released by the EPA last week suggest the EPA is kowtowing to the chemical lobby in the narrow criteria it is using the asses the safety of the first 10 chemicals, restricting its analysis to the risks posed by direct exposure to a chemical, and not the risks associated with exposure to contaminated air, soil and water.In the case of asbestos, which kills almost 15,000 U.S. citizens annually, the EPA will only consider risks from new uses of asbestos and not risks from asbestos already present in tiles, adhesives and pipes, Newsweek reported Thursday.President Donald Trump has dismissed health concerns about asbestos, calling it "100 percent safe, once applied,"   He blamed the asbestos scare on the mob. "I believe that the movement against asbestos was led by the mob, because it was often mob-related companies that would do the asbestos removal. Great pressure was put on politicians, and as usual, the politicians relented," he wrote, according to Newsweek. EPA spokesperson Jahan Wilcox told The New York Times that the agency felt chemical contamination of the broader environment was already regulated by the Clean Air and Water Acts.But Democratic Sen. Tom Udall of New Mexico, who helped pass the 2016 amendment, countered that the limited risk analysis was not in keeping with the spirit of the law. "Congress worked hard in bipartisan fashion to reform our nation's broken chemical safety laws, but [Administrator Scott] Pruitt's E.P.A. is failing to put the new law to use as intended," Udall said in a statement.

      Trump EPA to shred rules on toxic pollution --At the direction of the Trump administration, the Environmental Protection Agency (EPA) is radically revising its method for determining health and safety risks associated with toxic chemicals, considering only the impact of exposure in the workplace and direct consumption of the toxins, but not the longer-term impact of the diffusion of such substances into the air, water and land. A report in the Friday edition of the New York Times characterized the decision as “a big victory for the chemical industry,” which effectively guts enforcement of a law passed in 2016 requiring the EPA to evaluate hundreds of chemicals, many of them in common use, and determine if they should face new restrictions or be withdrawn from the market.According to the Times, “as it moves forward reviewing the first batch of 10 chemicals, the E.P.A. has in most cases decided to exclude from its calculations any potential exposure caused by the substances’ presence in the air, the ground or water, according to more than 1,500 pages of documents released last week by the agency.”The agency will consider possible harm caused by workplace exposure—i.e., in the manufacturing of a chemical—and by direct consumption where the chemical is normally used, as with perchloroethylene, a suspected carcinogen widely used in dry-cleaning. But the accumulating runoff of perchloroethylene into rivers and streams, into the air, or into landfills will not be studied, even though 44 states have found the chemical in drinking water. Two of the senior officials involved in this decision-making come directly from the chemical manufacturing industry. Nancy B. Beck, who oversees the toxic chemical unit of the EPA, was previously an executive at the American Chemistry Council (ACC), an industry lobby. Another official involved is Erik Baptist, a former lawyer for the American Petroleum Institute, which lobbies for the oil and gas companies, many of which have chemical subsidiaries.

      Toxic Border Pollution Sickens U.S. Border Patrol Agents - The pungent, salty air that emerged over South Bay communities last February was not a familiar whiff of wrack decomposing on our favorite beaches. In fact, it was the estimated 143 million gallons of raw sewage that raced down the rugged canyons of Tijuana, funneling directly through the mouth of the Tijuana River into the Pacific Ocean. Beachgoers, visitors, and residents of San Diego County have suffered the devastating effects of these spills for decades—yet little has been done to remedy the origins.The perpetual disaster has direct, negative consequences on our local economy, tourism, marine life and growing public health concerns for residents of San Diego County. A problem that has remained dormant for many years has come into the spotlight in recent months due to the direct effect it is having on U.S. Border Patrol agents and, consequently, our national security. A trip to the Tijuana River Valley with public lands liaison agent Amber Craig, supervisory border patrol agent Bill Rogers and Chris Harris, the secretary and director of Legislative & Political Affairs for the National Border Patrol Council, was indicative of the devastation to the area. Conditions were far less than ideal for the agents working in the Tijuana River Valley—and even worse for those without homes living amidst the sewage and rubbish on either side of the border. Nauseated daily by foul smells and constant exposure to toxins, metals, and raw sewage, many border patrol agents have been concerned about long-term health complications. In fact, some agents are keeping daily health records to document their respiration disturbances and rashes. Even cases of Hepatitis A, MRSA, and flesh-eating bacteria have been linked to exposure in the South Bay.

      Coal Miners' Fund Set For Deep Cuts As Black Lung Epidemic Grows - A new government report says that the federal black lung trust fund that helps sick and dying coal miners pay living and medical expenses could incur a $15 billion deficit in the next 30 years. That's if a congressionally mandated funding cut occurs as planned at the end of the year.The cut in the funding formula comes as NPR has reported and government researchers have confirmed an epidemic of the most advanced stages of black lung, along with unprecedented clusters of the disease in the central Appalachian states of Kentucky, Virginia and West Virginia. The report from the Government Accountability Office reviewed the viability of the federal Black Lung Disability Trust Fund, which paid out $184 million in benefits in fiscal year 2017 to 25,700 coal miners suffering from the fatal mine dust disease and their dependents.A tax on coal companies supports the fund, but that tax is set for a 55 percent cut at the end of 2018, even as the fund's debt exceeds $4.3 billion and demand for benefits is expected to grow."You have to address the fact that the serious forms of black lung appear to be increasing and that may put even more strain on the trust fund," says Rep. Bobby Scott, D-Va., the ranking Democrat on the House Committee on Education and the Workforce.  "The last thing you want to do ... is to reduce the revenue,"  Miners with certified cases of black lung receive $650 to $1,300 a month for living expenses. They also receive medical care directly related to their disease, which averaged $6,980 per miner last year.

      GMO Golden Rice Offers No Nutritional Benefits Says FDA -- The biotech industry and its supporters have promoted GMO Golden Rice for decades as an urgently needed solution to vitamin A deficiency.But, in a surprising twist, the US Food and Drug Administration (FDA) has concluded its consultation process on Golden Rice by informing its current developers, the International Rice Research Institute (IRRI), that Golden Rice does not meet the nutritional requirements to make a health claim.   Golden Rice refers to GMO rice plants modified to produce beta-carotene (also called provitamin A) in their grain. This latest version of Golden Rice contains three added genes. Two specify enzymes in the β-carotene biosynthesis pathway, and are taken from bacteria and maize. The third specifies a (non-antibiotic) selectable marker protein used in the modification process (Paine et al. 2005). First described in the scientific literature over 18 years ago by public sector researchers (Ye et al. 2000), various public and private sector iterations of Golden Rice have subsequently been produced (Bollenidi et al. 2014). These represent repeated efforts to increase beta-carotene levels, while still maintaining plant vigor and yield.The Golden Rice version submitted to FDA by IRRI, called event GR2E, is the only Golden Rice to have ever been submitted for regulatory approval. In 2017, it was approved for import by regulators in Australia, New Zealand, and Canada. Originally developed by Syngenta, Golden Rice GR2E is now funded by the Gates Foundation. The letter containing FDA’s statement on GR2E’s lack of nutritional benefit was posted on May 25th, 2018 (FDA 2018b)

      Bayer to Drop Monsanto Name After $63 Billion Takeover - Bayer plans to complete its $63 billion acquisition of Monsanto on Thursday after receiving all required approvals from regulatory authorities. The German pharmaceutical company will also retire the St. Louis-based corporation's 117-year-old name. "Bayer will remain the company name. Monsanto will no longer be a company name. The acquired products will retain their brand names and become part of the Bayer portfolio," Bayer announced Monday. Fortune pointed out that name-changes during acquisitions is unusual, especially when a company is very recognizable. However, as one of the world's most hated companies , ditching Monsanto's name was not only expected, it was likely Bayer's best way forward. Monsanto's historical line-up of products includes banned and highly toxic chemicals such as 2,4,5-trichlorophenoxyacetic acid (a dioxin-containing component of the defoliant Agent Orange ); PCBs (polychlorinated biphenyl); and Lasso , a herbicide banned in Europe. Glyphosate , the main ingredient in Monsanto's best-selling weedkiller RoundUp, is the most widely used pesticide in the world and likely the most controversial . Monsanto is also the largest maker of genetically modified ( GMO ) seeds, giving them major hand control of the world food supply.  Activists have also condemned the company's pursuit of lawsuits against small farmers to protect its patents on seeds.

      "Kill Monsanto Before It Kills Your Kids" - Raul Ilargi Meijer: There are a lot of industries in our world that wreak outsized amounts of havoc. Think the biggest global banks and oil companies. Think plastics. But there is one field that is much worse than all others: agro-chemicals. At some point, not that long ago, the largest chemical producers, who until then had kept themselves busy producing Agent Orange, nerve agents and chemicals used in concentration camp showers, got the idea to use their products in food production. While they had started out with fertilizers etc., they figured making crops fully dependent on their chemicals would be much more lucrative. They bought themselves ever more seeds and started manipulating them. And convinced more and more farmers, or rather food agglomerates, that if there were ‘pests’ that threatened their yields, they should simply kill them, rather than use natural methods to control them. And in monocultures that actually makes sense. It’s the monoculture itself that doesn’t. What works in nature is (bio)diversity. It’s the zenith of cynicism that the food we need to live is now produced by a culture of death. Because that is what Monsanto et al represent: Their solution to whatever problem farmers may face is to kill it with poison. But that will end up killing the entire ecosystem a farmer operates within, and depends on. However, the Monsantos of the planet produce much more ‘research’ material than anybody else, and it all says that the demise of ecosystems into which their products are introduced, has nothing to do with these products. And by the time anyone can prove the opposite, it will be too late: the damage will have been done through cross-pollination. Monsanto can then sue anyone who has crops that show traces of its genetically altered proprietary seeds, even if the last thing a farmer wants is to include those traces. Anyway, when reading John Vidal in the Guardian yesterday, I was struck by some numbers.  Bayer-Monsanto, soon to be just Bayer, own 60% of proprietary seeds and 70% of agrochemicals in the world. That’s roughly comparable to the numbers of vertebrates and insects that have vanished from the countrysides of Germany, France and England. Life itself is dying. Species extinction is now a bigger threat than climate change. Vidal: Who Should Feed The World: Real People Or Faceless Multinationals?  Bayer-Monsanto will have an indirect impact on every consumer and a direct one on most farmers in Britain, the EU and the US. It will effectively control nearly 60% of the world’s supply of proprietary seeds, 70% of the chemicals and pesticides used to grow food, and most of the world’s GM crop genetic traits, as well as much of the data about what farmers grow where, and the yields they get. It will be able to influence what and how most of the world’s food is grown, affecting the price and the method it is grown by.

      An Indian state banned pesticides. Tourism and wildlife flourished. Will others follow? WaPo - Fifteen years ago, the tiny Indian state of Sikkim launched a radical experiment: Its leaders decided to phase out pesticides on every farm in the state, a move without precedent in India — and probably the world. The change was especially significant for India, a country whose progress in agriculture was defined by the introduction of fertilizers and pesticides that rapidly boosted food production across the country, staving off famine and reducing the country’s reliance on foreign aid.But with the indiscriminate use of pesticides came a spike in cancer rates in industrial farming areas. Rivers became polluted and soil infertile. Sikkim’s leaders say they were driven to go all-organic by those concerns and because pesticide residue — including from some chemicals banned in other countries — was tainting fish, vegetables and rice. The cloud-wreathed Himalayan state is starting to see the dividends. Overall health has increased in the state, leaders say, and Indian Prime Minister Narendra Modi’s government has embraced Sikkim and organic farming throughout India, pouring about $119 million into supporting organic farmers nationwide. India is betting that Sikkim can be the global model for other jurisdictions around the world that want to go all-organic.

      What Would Happen if All the Bees Died Tomorrow? - It's almost impossible to overstate the importance of pollinators in our ecosystem. In case you missed this day in high school biology, when a male flower loves a female flower, it invites a pollinator to round out its threesome. The bee transfers pollen from the male flower to the lady bits of female flowers. A few days later, a baby watermelon or apple emerges.   While bees are not the only pollinators we have (bats, birds, butterflies, and some flies can do this work, too), they're by far the best creatures for the job. In part, this is because they need pollen to feed their larvae, so they're biologically driven to gather the stuff. Other pollinators visit flowers only to suck nectar, and any pollen that sticks to them in the process is a happy accident. Like human sex, there's more than one way for plants to get it on. "The majority of our food sources are wind-pollinated," says Dykes, meaning the breeze does the work of the birds and the bees. Corn and wheat, two staples of the typical Western diet, are both wind-pollinated, and would be unaffected by a massive pollinator catastrophe. However, while from a calorie perspective our food system would be secure, from a diversity standpoint, things would be bleak. Much of our produce, like almonds, peaches, plums, apples and cherries, rely on bee-assisted pollination. In fact, "One analysis of the global crop market found that pollinators are essential or highly, moderately, or slightly necessary for 91 crops consumed by humans," Niño says. "We would definitely lose many of the foods that make our diets vibrant, healthy, and nutritious." The scenario above, of course, presumes that we don't replace our lost pollinators with any alternative options. Plants can be pollinated by hand (or, in the future, by drone). Last year, images from China's Hanyuan county showed humans hand-pollinating pears, most likely in response to massive reductions in China's bee population. But hiring humans is pricey. "MIT graduates calculated that the cost of hand-pollinating a hectare [about two acres] of apples would be approximately $5,715-$7,135. This compared to a recommendation of one two-story colony per acre at a high rental price of $45 per colony and $90 a hectare carries a much heftier price tag," Niño says.

      Farmed salmon are deaf – and now we know why - The odds are that every second farmed salmon we eat has lost much of its ability to hear.  Although fish senses aren’t usually a consideration when they’re on a plate, researchers now know that deafness in farmed salmon is due to a deformity in the ear, caused by accelerated growth in aquaculture.  The findings, published in the Journal of Experimental Biology, raise significant welfare issues and may also explain the poor survival of farmed hatchlings in conservation programs.  Scientists from the University of Melbourne looked at salmon farmed in Norway, Chile, Scotland, Canada and Australia and found the deformity was widespread. The study’s lead author, Ms Tormey Reimer, says when they went looking for the cause of the deformity they found that the fastest-growing fish were three times more likely to be afflicted than the slowest, even at the same age. “We also found that we could reduce the incidence of the deformity by reducing how fast a fish grew. Such a clear result was unprecedented,” says Ms Tormey, a masters graduate from the School of BioSciences at the University of Melbourne.

      Loggers fall 800-year-old tree in one of the last old-growth forests in B.C. -- Logging underway in Vancouver Island’s Nahmint Valley threatens one of the last prime spots of B.C. old-growth habitat and points to the NDP government’s failure to honour its election promise, says an Island-based conservation group.Ancient Forest Alliance led a media tour last week to examine a freshly felled Douglas fir estimated to be 800 years old.“This is a monumental screwup,” said Ken Wu, alliance executive director. “They’ve just cut down the ninth largest Douglas fir.”Group researchers identified the living tree earlier this month as chainsaws buzzed with logging activity on surrounding mountainsides. They assumed the big fir was protected and were astonished to find it felled a couple of weeks later.Wu said their concerns relate not only to the felled fir but to the area as a whole. Nahmint Valley, 40 km west of Port Alberni, is known as an all-too-rare “hot spot” of old-growth in the province.He holds the NDP government directly responsible because the logging is administered by its own agency, B.C. Timber Sales (BCTS). BCTS has auctioned cut blocks that overlap areas of ancient old growth, the group contends. Extensive logging in the area began this spring.Mike Stini, a Port Alberni conservationist, said he spoke with the mill owner responsible for the cut block and was told the contractor was specifically told not to fall the big Douglas fir in question.“There are so few of the giant firs left,” Stini said. “We’ve got to do something.”

      UK weather: May 2018 hottest since records began in UK - BBC News: Last month was the warmest May since records began more than 100 years ago, the Met Office has said. According to provisional figures, May 2018 saw an average daily maximum temperature of 17C (63F). It would beat the previous May record of 16.9C set in 1992. The Met Office said spring 2018, which ran from March to May, had been "very dynamic with many fluctuations". But the period was 0.3C higher than the average between 1981 and 2010. Across the UK, the average May temperature was 1.5C above the long-term 1981-2010 average at 11.9C. With 245.3 hours of sunshine, it is also likely to be confirmed as be the sunniest May since 1989, which saw 241.7 hours of sun. Records for temperature began in 1910 and sunshine in 1929. Less than two-thirds of the average amount of rain for the month fell in May 2018. But with wetter than average spells during March and April, the rainfall for the UK for spring (March to May) as a whole has been near average.

      Hottest Month of May Ever Recorded in U.S. --Surpassing a mark set during the peak of the Dust Bowl in 1934, the continental U.S. just had its hottest May on record thanks in large part to the human-caused climate crisis, the National Oceanic and Atmospheric Administration (NOAA) announced on Wednesday."For May, the average contiguous U.S. temperature was 65.4°F, 5.2°F above the 20th century average," NOAA observed in its breakdown of the new data. "The first five months of 2018 were marked by large month-to-month swings in temperature, but when averaged, the contiguous U.S. temperature was 45.0°F, 1.6°F above the 20th century average and was the 21st warmest January-May on record.""The warmth was coast-to-coast," Jake Crouch, a climate scientist with NOAA's National Center for Environmental Information, said in an interview with USA Today. While acknowledging that tropical storms—in addition to other "climate anomalies"—played a role in driving up May's average temperature, Crouch told USA Today that the man-made climate change contributed significantly to the record-breaking heat.

      A 1,000-Year Flood in Maryland Shows the Big Problem With So Much Asphalt -- The rain started to fall in Ellicott City, Maryland on the afternoon of May 27. Nearby tributaries of the Patapsco River were already dangerously swollen from last month’s steady precipitation. The storm intensified, and floodwaters soon tore through Ellicott City’s main street, submerging the first floors of buildings, sweeping away cars, and killing at least one person.  The storm was a so-called “1,000 year flood,” meaning it had a 0.1 percent chance of occurring this year. But this “exceptionally rare” event is deja vu for residents — they’re still picking up the pieces from a similar flood that destroyed the area back in July 2016. So what’s behind the propensity for floods in Ellicott City? Part of the problem is its vulnerable location: the town lies at the foot of a hill where river branches meet the Patapsco River. And, of course, climate change makes storms wetter and increases the frequency of severe, record-breaking weather. But there’s another thing people are pointing out: concrete.When hard, impermeable concrete replaces absorbent green spaces, it’s much easier for floodwaters to overwhelm stormwater drainage. “That’s what happened in Ellicott City,” says Marccus Hendricks, an assistant professor at the University of Maryland School of Architecture, Planning, and Preservation.“Nearly one-third of the Tiber-Hudson sub-watershed that feeds into historic Ellicott City is now covered by roads, rooftops, sidewalks and other hard surfaces that don’t absorb water,” the Baltimore Sun wrote in 2016. In a press release, the Sierra Club’s Maryland Chapter called for a stop to development in the Tiber-Hudson watershed: “We may not have control over severe weather events (except by fighting climate change), [but] we can take ownership over the role that development played in this disaster.”

      In the Northeast, just a few hundred miles separate record wet and dry -  There’s a stark difference in rainfall in the Northeast this spring. While areas from Washington to New York City are swimming in excess rain, New England has had one of its driest 30-day periods on record.The Washington region has logged widespread rainfall totals of 10 to 15 inches since the beginning of May. The Potomac River is roiling with all of the extra water. The ground is soggy and saturated and hasn’t seen enough sun in the past 30 days to dry out between deluges.On May 27, 6 to 10 inches of rain fell around Ellicott City, Md., over the course of just a few hours and caused catastrophic flash flooding in the historical mill town. Days earlier, Frederick, Md., was struck by an intense line of thunderstorms that dumped six inches of rain and baseball-size hail in two hours. The flooding drenched homes and businesses and prompted several high-water rescues.On the whole, the Washington region just had its wettest 30-day period on record. Several weather stations logged record rainfall since May 6, including Baltimore, Beltsville, Md., and Damascus, Md.But a mere train ride away, cities farther north are in the opposite situation. It has been the driest 30-day period for several Northeast cities, including Portland, Maine. In New Hampshire, Concord has had its second-driest period, and Lebanon its third. While rainfall totals generally exceed 12 inches in the D.C. area, they are below two inches north of Massachusetts.

      Hurricanes are moving more slowly — which makes them even more dangerous The globe’s hurricanes have seen a striking slowdown in their speed of movement across landscapes and seascapes over the past 65 years, a finding that suggests rising rainfall and storm-surge risks, according to research reported Wednesday.The study, published in the journal Nature, finds a 10 percent slowdown in storm speed between 1949 and 2016. It points directly to the example of Hurricane Harvey, whose catastrophic rains were enabled by the storm’s lingering in the Houston area for such a long period. . Slower-moving storms will rain more over a given area, batter that area longer with their winds and pile up more water ahead of them as they approach shorelines, said Jim Kossin, a scientist with the National Oceanic and Atmospheric Administration and the study’s author. “Every one of the hazards that we know tropical cyclones carry with them, all of them are just going to stick around longer,” Kossin said. “And so that’s never a good thing.” The question of hurricane speed, and whether it would change under global warming, has drawn little attention in the past in comparison with more headline-grabbing questions, such as whether storms are getting stronger overall. Kossin decided to investigate it, based on the expectation that climate change is already altering the general, large-scale circulation of the atmosphere, within which hurricanes are embedded and by which they are steered.  “I went in with that hypothesis and looked at the data, and out popped the signal that was much bigger than anything I was expecting,” Kossin said. Here were the results:

      Oregon Governor Declares State Of Emergency After Public Discovers "Untreatable" Toxin-Laden Water - Toxins have been found in tap water in Salem, Oregon, resulting in the declaration of a state of emergency by Oregon Governor Kate Brown. The declaration was issued for both Marion and Polk Counties and includes the capital city of Salem, as well as the towns of Turner and Stayton. The National Guard is expected to deliver water to residents using 10 water stations supplied by 2,000-gallon tankers. Toxic algae blooms have been plauging the Pacific Northwest and, as it turns out, officials in Salem, Oregon misled the public about the presence of an algae bloom and the safety of their water as early as May 23rd. On that day, the city of Salem issued a press release assuring residents that their water was indeed safe, despite an adisory issued on the very same day by the Oregon Health Authority alerting residents to the existence of toxic algae blooms the city's water source, the Detroit Reservoir.“The city has a vigorous water testing and sampling program, and staff are keeping a very close eye on the developing situation,” residents were told. “City of Salem drinking water remains safe to drink."Less than a week later, the city's tone changed dramatically when officials began sending alerts informing residents that the city's water was contaminated. Officials said the water is harmless to shower in or wash dishes and laundry with, but stressed that drinking the water could cause symptoms including vomiting and diarrhea and even kidney and liver damage. Experts have warned that the water cannot be treated - filters, boiling, and other methods will not eliminate the troublesome cyanotoxins.

      New California Law Limits How Much Water People Can Use – There will soon be more focus on flushes and scrutiny over showers with a new law signed in by the governor. California is now the first state in the nation to enact tough new water-efficiency standards. The controversial rules limit how many gallons a person can use inside their home per day. “So that everyone in California is at least integrating efficiency into our preparations for climate change,” said Felicia Marcus, Chair of the State Water Resources Control Board.So, what are the new rules?In 2022, the new indoor water standard will be 55 gallons per person, per day. by 2030, it will fall to 50 gallons.“With a child and every day having to wash clothes, that’s, just my opinion, not feasible. But I get it and I understand that we’re trying to preserve…but 55 gallons a day?” said Tanya Allen, who has a 4-year-old daughter.Just how many gallons do household chores take? An 8-minute shower uses about 17 gallons of water, a load of laundry up to 40, and a bathtub can hold 80 to 100 gallons of water.“She likes to bathe three times a day and she does laundry all day,” said Rocka Mitchell from Texas.He and his wife Ginger are living in Sacramento for work and say it would be hard to conserve. “I couldn’t do it. My family is way too large,” she said.

      It's Now Against The Law In California To Shower And Do Laundry On The Same Day - Governor Jerry Brown is retiring but not before he passes a few draconian laws as parting gifts for California. Two bills were signed into law on Thursday of last week to “help California be better prepared for future droughts and the effects of climate change.” The mandatory water conservation standards will be permanent, according to their wording, and not just for use in times of crisis. To make a long story short, now that these bills are law, it’s illegal to take a shower and do a load of laundry in the same day because you’ll exceed your “ration.”  Here’s the wording of the new laws. Senate Bill 606 establishes a “governing body” to oversee all water suppliers, both private and public and will require extensive paperwork from those utility companies. Assembly Bill 1668 is where it gets personal.  This establishes limits on indoor water usage for every person in California and the amount allowed will decrease even further over the next 12 years. The bill, until January 1, 2025, would establish 55 gallons per capita daily as the standard for indoor residential water use, beginning January 1, 2025, would establish the greater of 52.5 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use, and beginning January 1, 2030, would establish the greater of 50 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use. The bill would impose civil liability for a violation of an order or regulation issued pursuant to these provisions, as specified. If you’re wondering how the government would know how much water your family is using, the utility providers will be obligated to rat you out of face massive fines. And they’re encouraged to spy in all sorts of creative ways. They “shall use satellite imagery, site visits, or other best available technology to develop an accurate estimate of landscaped areas.”  Now, if you’re wondering where I get my assertion that you can’t shower and do laundry on the same day, here’s some math:

      • An 8-minute shower uses about 17 gallons of water
      • A load of laundry uses about 40 gallons of water
      • A bathtub holds 80 to 100 gallons of water
      • A dishwasher uses 6 gallons of water

      There are also standards to be established for outdoor use such as landscaping, caring for livestock, and gardening, but those numbers don’t seem to be available at this time. Maybe Californians just get to wait in suspense to see if their chickens are allowed to have water on the same day as their vegetables. Back when I lived in California, we were only “allowed” to water our gardens two times per week, which, in that heat, as you can imagine, didn’t lead to very productive gardens.

       News drones reveal big companies are draining local water supplies in Peru, Colombia ICIJ - In the parched Peruvian province of Ica, where a state of water emergency has been in effect since 2005, an unlikely business is booming: the cultivation of asparagus for export.The flourishing green stalks in the middle of the desert raised the suspicions ofFabiola Torres, a journalist and a member of the International Consortium of Investigative Journalists.She suspected big Peruvian agriculture companies were violating the province’s rules for water usage and earning millions of dollars exporting Peru’s prized asparagus by depleting scarce water supplies for local families and smaller farmers. But when she traveled to Ica, some two hundred miles south of Lima at the edge of the Atacama desert, she found the agribusiness properties were walled off, and no one was willing to talk.“It was a hostile zone,” said Torres, the editor of the investigative website Ojo Publico, which has partnered with ICIJ on its Paradise Papers and Panama Papers investigations. “The only ones there are the agro-exporters and their security guards.”So Torres decided on a novel approach: she launched a drone. Soaring a hundred meters above the desert, remotely piloted by Ojo Publicoreporters, the drone gathered footage that quickly confirmed Torres’ suspicions. It showed the companies’ properties dotted with illegal wells that were extracting subterranean water from beneath the desert, sometimes camouflaged beneath green mats.Instead of confronting the companies, Peruvian authorities granted licenses after the fact to many illegally drilled wells, Ojo Publico found. The result was a system that allowed agricultural companies to deplete underground water supplies with impunity as Ica struggled with drought.

       EPA taps former chemical industry attorney to oversee cleanups | TheHill: The official tapped to chair the Environmental Protection Agency (EPA) task force charged with overseeing the cleanup of some of the country's most contaminated sites is a former lawyer for a plastics and chemicals company suspected of creating some of those sites. The Associated Press reported Saturday that Steven Cook, who has served as deputy assistant administrator for the EPA’s Office of Land and Emergency Management since February, previously worked as in-house corporate counsel for plastics and chemicals giant LyondellBasell Industries. Bloomberg first reported that Cook had been tapped to chair the Superfund Task Force, which was created last year by EPA Administrator Scott Pruitt to revamp efforts to clean up the toxic sites. According to EPA records reported by the AP, LyondellBasell is potentially responsible for creating at least three dozen Superfund sites. Superfund sites are contaminated areas designated for cleanup by the federal government. Pattie Shieh-Lance, a corporate spokeswoman for LyondellBasell, told the AP that the company had "resolved its Superfund obligations nearly a decade ago" and "does not currently have any such obligations." The AP reported that Cook signed a memo in April recusing himself from regulatory matters involving his former employer, although he is allowed to participate in matters involving LyondellBasell if the decision would also affect five or more other companies.

      Bad air day: Indian city chokes on world’s worst pollution - Soot turned the white handkerchief around Abhash Kumar Sharma's face to black as the police officer tried to direct gridlocked traffic in the Indian city with the world's dirtiest air. It was all he had to ward off the pollution blamed for filling Kanpur's hospital beds with growing numbers of chronic lung and cancer cases. "It is the same story for everyone who spends such long hours out in this city," said Sharma, who does not get a mask for his duties. "The pollution gets into your eyes and it often stings." The city of three million people has been smarting since a World Health Organization (WHO) report last month put it at the head of 14 Indian cities in the world's top 15 with the dirtiest air. The pain has building up for much longer, but as the world marks Environment Day, the fallout has reached crisis point for many in Kanpur. Sunil Dahiya, senior campaigner with Greenpeace India, said "the models available to us make it certain that hundreds of thousands of people are dying in India each year because of air pollution". A senior doctor at the Murari Lal Chest Hospital, Anand Kumar, said the number of patients has jumped from about 40,000 in 2015 to 64,000 last year. "More than 50 percent of these patients, maybe more, come with breathing-related issues," the doctor told AFP. "Even the severity is worsening. Many who earlier recovered in a day or two now need days and much stronger medication to get better." The number of chronic pulmonary disease and lung cancer cases is rising among non-smokers, particularly women, he added. "There is no reason for it (other) than primarily atmospheric pollution." 

      Whale that died off Thailand had eaten 80 plastic bags -- A pilot whale has died off southern Thailand after swallowing 80 plastic bags, Thai marine officials say.The whale vomited five bags during a vain attempt by conservation officials to save it in a canal in Songkhla province.The bags, weighing about 8kg (17lbs), had made it impossible for the whale to eat food, a marine expert said.A recent report warned the amount of plastic in the ocean could triple in a decade unless litter was curbed. Thailand is a major user of plastic bags and its government last month announced it was considering a levy on them. They are believed to kill hundreds of marine animals there each year.The small male pilot whale had been discovered ailing and unable to swim in the Na Thap Canal last Monday. Environmental officials used boats to try to help float the whale and erected a sunshade for it. They nursed the whale through the week but it died on Friday afternoon.Marine biologist Thon Thamrongnawasawat told Agence France-Presse the bags would have made it impossible for the whale to eat nutritional food. "If you have 80 plastic bags in your stomach, you die," he said.

       Plastic wasteland: Asia’s ocean pollution crisis - A Vietnamese mangrove draped with polythene, a whale killed after swallowing waste bags in Thai seas and clouds of underwater trash near Indonesian "paradise" islands -- grim images of the plastic crisis that has gripped Asia. About eight million tonnes of plastic waste are dumped into the world's oceans every year, the equivalent of one garbage truck of plastic being tipped into the sea every minute of every day. More than half comes from five Asian countries: China, Indonesia, the Philippines, Thailand and Vietnam, according to a 2015 Ocean Conservancy report. They are among the fastest growing economies in Asia, where much of the world's plastic is produced, consumed and discarded -- most of it improperly in countries where waste management is at best patchy. "We are in a plastic pollution crisis, we can see it everywhere in our rivers, in our oceans... we need to do something about it," Greenpeace Indonesia campaigner Ahmad Ashov Birry told AFP. World Environment Day on Tuesday is highlighting the perils of plastic with the tagline "if you can't reuse it, refuse it". But it is not just an issue of aesthetics, plastics are killing marine life. Last week a whale died in southern Thailand with 80 plastic bags in its stomach, an increasingly common sight alongside dead seabirds and turtles gorged on plastic and washed ashore. Experts warn the greatest threat might be invisible. Microplastics -- tiny shards that easily soak up toxins after breaking off from larger plastic pieces -- have been found in tap water, ground water and inside fish that millions of people eat across Asia every day. Scientists still do not fully understand the health effects of consuming microplastics. "We're conducting a global experiment with no sense of where we're heading with this whole thing,"

      Greenpeace Finds Microplastics and Hazardous Chemicals in Remote Antarctic Waters - Another day, another sign of the reach of the global ocean plastics crisis. A Greenpeace expedition toAntarctica turned up microplastics in more than half of ocean water samples taken in the world's southernmost waters. It also found chemicals dangerous to wildlife in a majority of snow samples, Greenpeace reported Wednesday ."We may think of the Antarctic as a remote and pristine wilderness," Frida Bengtsson of Greenpeace's Protect the Antarctic campaign said in the press release, "but from pollution and climate change to industrial krill fishing, humanity's footprint is clear. These results show that even the most remote habitats of the Antarctic are contaminated with microplastic waste and persistent hazardous chemicals." Greenpeace took the samples on a landmark expedition during the first three months of 2018 that helped fill in the limited global data on microplastic pollution in the Antarctic. In seven of eight samples of surface water tested, they found at least one microplastic per litre (approximately 1.06 quarts) of water. Out of nine samples taken with manta trawl nets, they found two that contained microplastics.   Greenpeace also tested for chemicals known as per- and polyfluorinated alkylated substances (PFASs). These are chemicals used in industrial processes and commercial products, notably for water or dirt repellent in outdoor gear. They break down very slowly once they enter the environment and have been known to impact wildlife reproduction and development. Greenpeace found PFASs in seven of nine snow samples. The results were reported in depth in the document Microplastics and Persistent Fluorinated Chemicals in the Antarctic .

       Mediterranean at Risk of Becoming a ‘Sea of Plastic,’ WWF Warns - The Mediterranean Sea is turning into a dangerous plastic trap, with record levels of pollution from microplastics threatening marine species and human health, according to a new World Wildlife Fund (WWF) report released Friday.  Coinciding with World Oceans Day, the WWF report "Out of the Plastic Trap: Saving the Mediterranean From Plastic Pollution" raises the alarm on the dramatic effects that excessive plastic use, poor waste management and mass tourism are having on one of the most visited regions in the world.Bringing together the most recent data and scientific evidence on plastic use in Europe and the many ways in which it impacts marine life, the report presents a detailed roadmap of the urgent actions institutions, businesses and citizens need to take to stop plastic waste from reaching the sea."The impacts of plastic pollution in the Mediterranean are also being felt across the world and are causing serious harm both to nature and human health. Worsening plastic pollution will threaten the Mediterranean's global reputation for tourism and seafood, undermining the local communities who depend on these sectors for their livelihoods. The plastics problem is also a symptom of the overall decline in the health of the Mediterranean and must serve as a rallying call for real action," said John Tanzer, leader of the WWF International oceans program.Today, plastic represents 95 percent of the waste floating in the Mediterranean and lying on its beaches. Most of this plastic is released into the sea from Turkey and Spain, followed by Italy, Egypt and France, with tourists visiting the region increasing marine litter by 40 percent each summer. Large plastic pieces injure, suffocate and often kill marine animals, including protected and endangered species, such as sea turtles and monk seals. But it is microplastics—smaller and more insidious fragments—that have reached record levels of concentration of 1.25 million fragments per km2 in the Mediterranean Sea, almost four times higher than in the "plastic island" found in the North Pacific Ocean. By entering the food chain, these fragments threaten an increasing number of animal species as well as people.

      India Announces 'Game-Changing' Single-Use Plastics Ban -- India turned their hosting of this year's World Environment Day into far more than a symbolic act when it announced plans Tuesday to eliminate all single-use plastics by 2022, UN Environment reported .The theme of this year's World Environment Day was "Beat Plastic Pollution," and India's decision could be a "game-changing" part of that effort, since it is home to 1.3 billion people and is one of the world's fastest-growing economies, head of U.N. Environment news and media Keith Weller told CBS ."This has been the biggest, most resonant World Environment Day ever, thanks to the leadership of our global host India," Head of UN Environment Erik Solheim said in the press release. "India has made a phenomenal commitment and displayed clear, decisive and global environmental leadership. This will inspire the world and ignite real change."The announcement was officially made by Minister of Environment, Forest and Climate Change Dr. Harsh Vardhan, who touted it as a way to "achieve the India of our dreams." In addition to the plastics phase-out, the country also joined UN Environment's Clean Seas campaign. India will develop action plans to combat marine litter at the national and regional level and measure the total amount of plastic pollution in the waters off of India's 7,500 kilometers (approximately 4660 miles) of coastline.Plastic pollution is a major problem in India, which generates 25,000 tonnes (approximately 27557.78 U.S. tons) of plastic waste every year and only recycles 60 percent of it, Vardhan said in an IANS article reprinted by the Economic Times Tuesday.It is also an increasingly visible problem, as plastic increasingly clutters the country's landscape and beaches. "There is a huge issue of waste management in India and everyone can see that; we went from train to Agra from Delhi and we saw. There was plastic all over the rails, that's a problem," Solheim told IANS.

      Climate Justice Protestors Arrested Nationwide - Dozens of activists with the Poor People's Campaign were arrested and hundreds more blocked from entering government buildings across the country Monday during more than 30 nationwide protests at state capitols. Many of the protests focused in the government's lack of response during disasters like Hurricane Maria and the Flint water crisis and the disproportionate impact of climate change and pollution on the nation's poor. The campaign reports that thousands have been arrested since the 40 Days of Moral Action movement, which began in mid-May and will culminate in a march on Washington, DC on June 23. As reported by ThinkProgress :"Over the course of the past month, the Poor People's Campaign has elevated a different topic each week . Throughout the first full week of June, that focus is shifting to ecological devastation and health, highlighting their intersection. On Monday, representatives from some of the country's leading environmental organizations, including the Sierra Club and Friends of the Earth , assembled alongside members of the broader campaign effort, though it was the latter group that dominated the podium." ‘'Bodies count [and] everything is connected,' emphasized Rev. Beth Johnson, one of the first speakers to take the stage on Monday. Like many leaders in the Poor People's Campaign, Johnson is a member of the clergy, and she addressed the crowd with a preacher's energy. Off to her right sat a large casket placed in front of the podium, meant to commemorate the various lives lost to, among other things, limited access to health care and the onslaught of environmental degradation.

      Thousands of acres ablaze in Colorado, New Mexico and California -  Massive wildfires in California, Colorado and New Mexico have torched thousands of acres and forced hundreds to evacuate their homes.By Sunday, the Ute Park Fire in New Mexico had grown to more than 31,000 acres, according to the US Forest Service spokeswoman Judith Dyess.Since it broke out Thursday, the fire has forced 2,200 people in the area to evacuate their homes, Dyess told CNN. The small community of Ute Park, with a population of about 70, was evacuated overnight.Officials are hopeful that rain in Sunday's forecast will give firefighters battling the blaze a short reprieve. "We anticipate getting pretty severe thunderstorms this afternoon," Dyess said, but added that there won't be enough rain to significantly change long-term prospects for the fire.So far, about 14 outbuildings have been destroyed at the Philmont Scout Ranch, according to the US Forest Service. The ranch, which belongs to the Boy Scouts of America, had already been evacuated by the time the fire closed in on it. A blaze known as the 416 Fire in Colorado's La Plata County had grown to 2,250 acres and was 10% contained on Sunday, according to authorities. Like officials in New Mexico, Colorado's firefighters were looking for help from two storms forecast for the area, according to Vickie Russo with the US Forest Service. Russo said authorities were in discussions to reopen US 550, a major traffic artery between Silverton and Durango, Colorado. The highway had been shut down while firefighters worked to prevent the 416 Fire -- burning on the west side of the highway -- from crossing to the east.

      Hawaii volcano eruption: Aerial drone footage reveals huge cracks in Kilauea summit volcano - A drone mission has alarmed scientists monitoring the erupting Hawaii volcano, which has become one of the world’s most dangerous and volatile sites.Kilauea has shocked the world with streams of lava swallowing houses and giant fissures opening up across Hawaii. The latest aerial drone footage of the volcano has revealed dramatic changes within the volcano spotted at one of Kilauea's main cratersThere are new alarming cracks and fault seen in a collapsed crater, some of which are spewing with intense steam. Scientists are concerned that an "expanding collapsed crater" and the debris blocking the vent could trigger a massive explosion.  The Halema‘uma‘u crater has undergone a sudden transformation since the eruptions began in early May, including the surprising disappearance of a lava lake.The drone footage from the US Geological Survey (USGS) shows "yellow sulfur substance on the rubble-covered floor and a scattering of large ballistic blocks around the crater rim".USGS officials revealed that the empty vent once housed a 12-acre lava lake up until a few weeks ago. The vent is currently empty of lava and has been stretched to massive 100-acres. The boulders blocking the crater's eruptive vent have stopped huge clouds of ash emerging, but the consequences are unknown.Kyle Anderson, a geophysicist with the Hawaiian Volcano Observatory, said experts are uncertain whether this could end eruptions or cause another bigger explosion. He said: "We really don’t know the implications of this long-term. "It's possible that new explosions will blast through the rubble at the bottom of the vent.

      Dramatic Drone Footage Shows Massive Kilauea Crater Collapse, Miles Of Lava Devastation -- The number of homes destroyed in Hawaii's Kilauea eruption has jumped to 117 from 87, according to Monday figures released by the Hawaii County Civil Defense. An estimated 20-40 homes were destroyed in Kapoho, while around a dozen people were trapped on the eastern tip of the island after fast-moving lava cut off all access to the rural community, according to spokeswoman Janet Snyder.Kapoho was destroyed in 1960 by a similar Kilauea eruption. The trapped residents ignored several days of warnings from authorities, but many have refused to abandon their homes. So far, 18 people have been arrested for trying to sneak past off-limits areas to catch a look at the oozing lava (or loot homes). The Hawaii Volcano Observatory reported that Fissure 8 is continuing to feed “a large channelized flow” along Highway 132. Fissure 8 continues to be the most active, with fountains of lava shooting as high as 220 feet.Officials said Monday that volcanic gas emissions near Kilauea’s summit still remain high.Janet Babb, geologist with the U.S. Geological Survey told Fox News: “I don’t think any of us are thinking this is winding down.” -Fox News   Sunday marks the one-month anniversary of Kilauea's recent eruption, as ash shot 8,000 feet in the  air.  USGS geophysicist Brian Shiro said that 500 earthquakes had struck near the summit over a 24-hour period.

      5.5-magnitude quake rattles Big Island; No tsunami generated - A 5.5-magnitude quake rattled the Big Island Sunday afternoon, US Geological Survey officials said. No tsunami is expected from the quake, which is among the strongest of recent quakes felt around the Big Island. The quake rumbled an area near Kilauea Volcano just before 4 p.m., sending an ash cloud 8,000 feet into the air.A Civil Defense alert went out across the state informing Hawaii residents of the quake, but there is no statewide danger. "What is happening here is that this is an explosion that’s actually giving rise to this earthquake," said Westen Thelen, a United States Geological Survey seismologist. "It does measure a 5.5, but as it turns out, that energy is being released so slowly that for the most part it doesn’t feel like a standard magnitude 5.5 earthquake would."Officials say that the afternoon explosion happened in a shallow part of the crust near Kilauea, right up next to the service. Thelen says that despite its magnitude, only people in the area of the volcano would have felt any tremors.For the most part, if you have a regular 5.5 magnitude earthquake on the Big Island, everyone on the island feels it, everyone on Maui feels it, (even) a few people on Oahu feel it," Thelen said.As of 11 a.m. Sunday, officials said 500 smaller earthquakes were recorded near the summit within the last day — it's the most earthquakes recorded in a 24-hour period on Hawaii Island.Satellite imagery also showed drastic changes happening at the Halemaumau Crater on Sunday morning. Scientists say cracks formed along the rim of the crater indicating a large portion occurred on the western rim had begun to fall in. "The west side of Halemaumau is clearly unstable, and it is possible that rockfalls and continued slumping will occur in the future," USGS said.

      Entire Hawaii Neighborhood Vanishes Under Lava Flows - (AP) -- A neighborhood called Vacationland on Hawaii's Big Island had disappeared by Wednesday as lava poured into two oceanfront subdivisions, smothering hundreds of homes and filling an ocean bay, turning it into new land that now juts into the sea. Molten rock entirely covered Vacationland and only a few buildings remained in the nearby Kapoho subdivision, officials with the U.S. Geological Survey said. "The bay is completely filled in and the shoreline is at least 0.8 miles out from its original location," said Geological Survey geologist Wendy Stovall. "Vacationland is gone, there is no evidence of any properties there at all. On the northern end of that, there are just a few homes in the (Kapoho) beach lots area." County officials said the two subdivisions have 279 homes, and most are feared destroyed from the most recent lava flows in the low-laying area. "Over the course of essentially two days, that entire area was covered by lava," Stovall said. Molten rock from the erupting Kilauea volcano already has destroyed at least 117 homes in the Lanipuna Gardens and Leilani Estates neighborhoods where lava surfaced more than a month ago. The total number of homes destroyed in the eruption stands at about 400. Scientists are still recording vigorous volcanic activity. While only one crack in the ground is spewing molten rock and the height of fountaining lava has decreased in recent days, "it's still really impossible to tell," when it will end, Stovall said. A magnitude 5.6 earthquake struck the summit of Hawaii's Kilauea volcano summit, sending a plume of ash and rock about 10,000 feet (3,048 meters) into the sky Wednesday. The lava inundation is among the most destructive and costly in volcano property loss in U.S. history. While no one has been killed and only one lava-related injury has been reported, the number of destroyed homes dwarfs other recent American eruptions.

       Hawaii volcano's bubbling lava is enough to cover Manhattan --The Kilauea volcano erupted 36 days ago, and with it came massive ash clouds, earthquakes, mountains of lava and hundreds of evacuations on Hawaii's big Island.Since May 3, Kilauea's lava, ash and rocks have destroyed about 600 homes, closed major highways and prompted health warnings.The eruption has spewed out enough lava to fill 45,400 Olympic-sized pools since it started, the US Geological Survey said.The lava is "enough to cover Manhattan 6.5 feet deep" and fill 11.3 million average dump trucks, it said.  It's not just bubbling out fast, it's hot too. The eruption temperature of Kīlauea lava is a scalding 2,140 degrees Fahrenheit, according to the USGS.  "This is the hottest lava we've seen during this eruption," Wendy Stovall, a scientist with USGS told CNN affiliate Hawaii News Now. "Lava can't get hotter than where we are." The melting point of steel is about 2,500 degrees Fahrenheit. An eruption at Kilauea summit jolted the area Wednesday with the force of a 5.4 magnitude earthquake and hurled an ash plume that reached 10,000 feet above sea level.Over the weekend, there were 500 quakes in the summit area of Kilauea in a 24-hour period -- the highest rate ever measuredThose earthquakes have continued near the summit, according to Jim Kauahikaua, a geophysicist with the US Geological Survey's Hawaiian Volcano Observatory. He told reporters on Monday that temblors are nearly continuous at the summit and that gas emissions remain "very high."At least 12,000 earthquakes on Hawaii's Big Island in the last 30 days. The volcanic gas and ash emission could affect air quality across the central and southern half of Big Island, Hawaii County Civil Defense Agency said.The lava's entry into the ocean was also producing laze -- a hazardous mix of acidic steam, hydrochloric acid gas and tiny shards of volcanic glass. Residents have been warned to avoid the area.

      Yellowstone Eruption Fears Spike As Largest Geyser Erupts For The 8th Time --- Yellowstone caldera eruption fears have spiked as the supervolcano’s largest geyser erupted for the eight time.  So far, scientists aren’t certain why the Steamboat geyser continues to erupt, adding to the fears. After years of silence, Yellowstone’s Steamboat geyser, a better show than Old Faithful, has spewed boiling water hundreds of feet in the air eight times since March.  Steamboat, the tallest geyser in the vast Yellowstone National Park, isn’t reliable at all, unlike the more famous Old Faithful that belches steam with regularity. But the fact is, Steamboat has been more faithful, at least lately, spewing eight times since March 14, after being silent for nearly four years. But that regularity is terrifying and puzzling scientists. Until this recent series of eruptions, the last time Steamboat blew was in September 2014. Steamboat’s latest eruption was Monday morning when the geyser shot boiling hot water hundreds of feet into the air. Steam billowed from the geyser for hours longer. Steamboat is located in the Norris Geyser Basin, known to have the hottest and most changeable thermal area in nearly 3,500-square-mile wilderness park that sits on a volcanic hot spot called a caldera. That accounts for the geyser’s towering columns of steam (it’s very, very hot underground) but leaves a major fear-provoking question unanswered: Why now, and is it a sign the giant volcano is waking up?

      Guatemala volcano: Several dead as Fuego volcano erupts - BBC News: Seven people have been killed and nearly 300 injured after Guatemala's Fuego volcano erupted, officials say. The volcano, about 40km (25 miles) south-west of the capital Guatemala City, has been spewing black smoke and ash into the sky. The National Disaster Management Agency (Conred) said a river of lava hit the village of El Rodeo, destroying houses and burning people inside. In Guatemala City, La Aurora airport has been closed due to ash. President Jimmy Morales said a national emergency response had been launched. This eruption is the biggest since 1974, according to local experts. The Conred head Sergio Cabañas told a local radio station that a river of lava had changed course towards El Rodeo. "It's a river of lava that overflowed its banks and affected the El Rodeo village. There are injured, burned and dead people. "Unfortunately El Rodeo was buried and we haven't been able to reach the La Libertad village because of the lava and maybe there are people that died there too." Mr Cabañas later said the dead included a member of his agency's staff. Three children are among the seven so far confirmed dead. An ash-covered woman told the Diario de Centroamerica that lava had poured through corn fields and she thought more people may have died. "Not everyone escaped, I think they were buried," A total of about 1.7 million people have been affected by the eruption, the Guatemalan government says. 

      Guatemala's Fuego Volcano Erupts, Killing at Least 62 — Rescue workers searched for survivors on Monday amid a desolate landscape of ash and mud after a volcano erupted near the Guatemalan capital the previous day, killing at least 62 people. The number of missing after Volcán del Fuego’s eruption was unclear, said the authorities from Guatemala’s natural disaster commission, known as Conred. The volcano, which sits less than 30 miles from the capital, Guatemala City, erupted just before noon Sunday and continued to spew ash, rocks and gas into the air. A second powerful eruption followed at 6:45 p.m. By Monday, the intense activity had subsided, Conred said. The volcano, whose name means “fire,” had returned to its normal state of activity. Some two million people were affected by the volcano’s ash, which billowed 15,000 feet into the air and dispersed over a nine-mile radius. More than 3,200 people were evacuated, and at least 46 people were injured, some of them with severe burns. More than 1,600 were in shelters. Earlier, Reuters reported that the capital’s airport was closed because of the danger that ash posed to aircraft, citing Guatemala’s Civil Aviation Authority. The Guatemala eruption was unlike the continuing lava flows at Hawaii’s Kilauea volcano because it was spewing what scientists call “pyroclastic flows” — quickly moving avalanches that can be “devastating and deadly.” The United States Geological Survey defines a pyroclastic flow as a “chaotic mixture of rock fragments, gas and ash” that can reach temperatures of several hundred degrees Celsius and travel at a speed of tens of meters per second. It says the combination of speed and high temperature makes such flows particularly dangerous and deadly.

      Death toll rises as volcanic eruption buries entire towns in Guatemala - The National Coordinator for the Reduction of Disasters (CONRED) of Guatemala confirmed that at least 62 people have died after a volcanic eruption Sunday created pyroclastic flows that wiped out entire communities. The preliminary numbers include 300 injured, 2 million affected, and 3,300 evacuated, with about 1,000 in shelters. There is still an unknown number of missing, and the death toll is expected to rise dramatically.  On Sunday, a survivor leaving the “furnace” told El Periodico, “there are way too many buried, a multitude of dead, countless people are dead.”   On Sunday night, at a press conference with ministers and CONRED, President Jimmy Morales declared shamelessly: “Our budget does not allow us to allocate a cent to this emergency. I’m ashamed to say this again, but the Budget Act does not allow us to count a single cent for emergencies.” The Finance Ministry announced it could scrape together about $25 million. Located 20 miles northwest of the capital, Guatemala City, and 12 miles from Antigua, the Fuego volcano, one of the most active in Central America, had long given repeated and increasingly alarming warnings, according to residents, but no evacuation orders were made in time. In contrast to the criminal indifference and neglect of the government and the ruling class, the immediate aftermath of Fuego’s first eruption saw the mobilization of the population across Guatemala at collection points to send food, diapers, clothes, blankets and other aid, while local inhabitants have prepared meals for rescue teams. There have been breathtaking scenes of bravery by ill-equipped rescuers, including fire fighters, paramedics, rank-and-file military and police who decided among themselves to penetrate deeply into unstable and buried areas amid scorching temperatures, with several being injured and at least one losing his life, but helping evacuate hundreds more as pyroclastic flows continued.The US Geological Survey indicates that these flows, composed of molten rock, mud and other volcanic materials, move at speeds faster than 50 mph, compared to running-pace lava flows. Temperatures can reach 700 degrees Celsius (1,300 degrees Fahrenheit), leaving low probabilities of survival for anyone caught unawares in a region where most people have no vehicles and the roads are in poor condition.

      Guatemala’s Fuego volcano erupts in fury - Guatemala’s President Jimmy Morales declared three days of national mourning on Monday after the eruption of Volcan de Fuego on Sunday, June 3, 2018. According to media reports, it is the most powerful eruption since 1974. Late in the day on June 4, the official death toll was up to 65, and many more were injured. The volcano spewed a river of hot lava that cut directly through the village of El Rodeo, at the foot of the volcano, burying the town and causing some deaths. Later, 18 bodies are said to have been found in the village of San Miguel Los Lotes. Meanwhile, the volcano belched thick, black smoke nearly six miles (10 km) into the air. Fleeing residents became covered in ash, and ash drifted the 27-mile (44-km) distance to Guatemala City, Guatemala’s capital. More than 3,000 people were forced from their homes, according to media reports. CONRED, Guatemala’s government agency for disaster relief, released a video of the event in which Consuelo Hernandez said:Not everyone escaped, I think they were buried. We saw the lava was pouring through the corn fields and we ran toward a hill.Rescue workers were hampered when roads were cut by the lava flows. The ash forced the closure of La Aurora International Airport, where the military assisted in clearing ash off the runway.Fuego Volcano is famous for being almost constantly active at a low level. Small gas and ash eruptions occur every 15 to 20 minutes, but larger eruptions are rare. However, the volcano has been in a more active period since 2002.  The tweets below are from PNC Guatemala (@PNCdeGuatemala on Twitter), the national civil police force. If you click on each tweet, you will find an enlarged view, with a translation button below the tweets. They tell part of the story of yesterday’s dramatic events in Guatemala.

      "No Survivors": Guatemala Volcano Buries Entire Village, 65 Dead After Violent Eruption Spews Rivers Of Hot Lava - Rescue workers searched tirelessly for survivors amid a desolate grey landscape of ash and destruction on Monday, one day after Guatemala's Fuego volcano erupted near the capital. At least 65 are dead and an unknown number of people are missing, according to Guatemala's natural disaster commission, also known as Conred.Volunteer firefighters waded though layers of ash that reached knee-deep in places, only to find the charred remains of those who had been unable to flee the torrent of burning rock and ash that poured down the slopes of the volcano, whose name means “fire.” -NYT“We saw bodies totally, totally buried, like you saw in Pompeii,” said Dr. Otto Mazariegos, president of the Association of Municipal and Departmental Firefighters, who added that the death toll was expected to rise, "Probably in the hundreds." Rescue workers have been unable to reach sites on the south side of the volcano due to a lack of access. The speed of the volcano's flows took many by surprise - with some stopping by the road to watch the eruption - only to break into a sprint when they realized how fast the plumes were approaching. Survivors returning to the village of San Miguel los Lotes on Monday found nothing but distruction, as the village was turned to rubble by the force of the eruption.  “My mother is buried there,” Inés López told a Guatemalan newspaper, Prensa Libre, standing amid the wreckage of his home. He was numb with grief. “What can I do to cry? My heart is hard, hard. All our family is here, buried,” he said waving his hand over the ruins. –NYT

      Guatemala volcano: Nearly 200 missing and 75 dead - BBC --At least 192 people are missing and 75 are dead as a result of the explosion of the Fuego volcano in Guatemala on Sunday, officials say. Villages on the slopes were buried in volcanic ash and mud. Rescue work on Tuesday was disrupted when a new eruption sent hot gas and molten rock streaming down the volcano's south side. More than 1.7 million people have been affected by Sunday's eruption, with more than 3,000 evacuated. Tuesday's explosion took many by surprise after volcanologists said the eruption, which had sent ash up to 10km (33,000ft) into the sky on Sunday, was over for the near future. Eddy Sanchez, the head of Guatemala's National Institute of Seismology, had predicted "no imminent eruption over the next few days". Boris Rodriguez has no-one to turn to now. He lost more loved ones in a single night on Sunday than many do in a lifetime. Mr Rodriguez's wife, both of her parents, his brother and sister-in-law and their children died when the Fuego volcano erupted. "I saw the children's bodies," he told me between sobs. "They were huddled together in the bed, like they were trying to hide from what was happening." Most of his neighbours in the village of El Rodeo have similar stories of grief. The village was almost entirely wiped off the map. Sunday's blast generated pyroclastic flows - fast-moving mixtures of very hot gas and volcanic matter - which descended down the slopes, engulfing communities including El Rodeo and San Miguel Los Lotes.Volcanologist Dr Janine Krippner told the BBC that people should not underestimate the risk from pyroclastic flows and volcanic mudflows, known as lahars."Fuego is a very active volcano. It has deposited quite a bit of loose volcanic material and it is also in a rain-heavy area, so when heavy rains hit the volcano that is going to be washing the deposits away into these mudflows which carry a lot of debris and rock.

      A West Coast State of Mind – Kunstler - Driving south on I-5 into Seattle, the Cascadia Subduction Zone came to mind, especially when the highway dipped into a gloomy tunnel beneath Seattle’s relatively new skyscraper district. This fault line runs along the Pacific coast from north of Vancouver down into California. The western “plates” move implacably east and downward under the North American plate, building up massive tectonic forces that can produce some of the most violent megathrust earthquakes on the planet. The zone also accounts for a chain of volcanoes that tend to produce titanic explosions rather than eruptions of lava and ash as seen in the hula movies. The most recent expression of this tendency was Mt. St. Helens in 1980, an impressive cataclysm by the standards of our fine-tuned complex civilization, but a junior event of its type compared to, say, the blow-off of Mt. Mazama 7,500 years ago, which left Crater Lake for the tourists. A publicity-shy correspondent writes: By all accounts Mazama was floating upon a vast lake of steamy rhyolite. It was a structurally unstable stratovolcano the size of Mount Shasta with a net volume of 80 cubic miles. A 5 minute Triple Junction 9.3 Richter Scale shaker uncorked the Mount Mazama champagne bottle via massive lahars which removed the overpressure. Geologists estimate that the eruption lasted for about one day. It’s only been in the last thirty years that Seattle hoisted up its tombstone cluster of several dozen office and condo towers. That’s what cities do these days to demonstrate their self-regard, and Seattle is perhaps America’s boomingest city, what with Microsoft’s and Amazon’s headquarters there — avatars of the digital economy. A megathrust earthquake there today would produce a scene that even the computer graphics artistes of Hollywood could not match for picturesque chaos. What were the city planners thinking when they signed off on those building plans? I survived the journey through the Seattle tunnel, dogged by neurotic fantasies, and headed south to California’s Bay Area, another seismic doomer zone. For sure I am not the only casual observer who gets the doomish vibe out there on the Left Coast. Even if you are oblivious to the geology of the place, there’s plenty to suggest a sense of impossibility for business-as-usual continuing much longer.  Things go on until they can’t, economist Herb Stein observed, back in the quaint old 20th century, as the USA revved up toward the final blowoff we’ve now entered. The shale oil “miracle” (so-called) has given even thoughtful adults the false impression that the California template for modern living will continue indefinitely. I’d give it less than five years now.

      The White House apparently forgot to tell NOAA not to mention climate change  - “Sea level rise” and “climate change” are not phrases Trump appointees typically use to describe anything but hoaxes. But on Monday, the acting head of the National Oceanic and Atmospheric Administration (NOAA), spoke to a crowd of more than 600 scientists, advocates, and policymakers about the agency’s commitment to studying climate change and its effect on the warming oceans. NOAA’s acting head, oceanographer and retired Navy admiral Timothy Gallaudet, delivered a keynote address that kicked off the week-long international symposium that focused on climate and the oceans. “What NOAA is doing to inform our public to better adapt and advance our blue economy under the changing climate conditions,” he said. “We’re talking about warming of waters, changing current patterns, ocean acidification and sea-level rise. Understanding these is more important to the administration, because of what NOAA is doing in terms of advancing the blue economy.”   Since Trump took office, the administration has been relentlessly undermining environmental enforcement against polluters, and the science that underpins that work. Trump officials have systematically tampered with climate science at the Environmental Protection Agency, the Department of Energy, and the Department of the Interior. References to climate change have been scrubbed from federal websites; grants have been scrutinized for any mention of the word “climate;” scientists were sidelined from public outreach orbarred from advisory committees altogether. Trump’s often-repeated promise to “cancel all wasteful climate change spending,” appeared to be getting closer to being fulfilled.  And then you have NOAA. It’s an autonomous agency within the Department of Commerce that’s also responsible for the National Weather Service. And it has continued its climate work, such as hosting monthly calls in which climate scientists preview their seasonal forecasts. It’s also sponsoring the fourth climate symposium held this week bringing scientists around the world to Washington, DC, for an event that predated the Trump administration.

      Gov. Brown says fallout from Trump quitting Paris accord is 'far more serious than anyone is saying' -- His promised coal renaissance sputtered. Rollbacks of environmental protections are tangled in court. Even automakers aren’t on board for his push toward heavier-polluting cars. But even so, a year after President Trump pulled out of the landmark Paris accord on climate change, the struggle to contain global warming has grown considerably more complicated without the prodding and encouragement once provided by the U.S. government. And though many in the climate movement hope progress toward cutting emissions can continue despite Trump’s retreat, there are growing doubts about reaching the Paris agreement’s goal of limiting global warming to 2 degrees Celsius, if Washington does not re-engage soon. In an interview, Gov. Jerry Brown acknowledged the hope felt by many climate activists because of efforts from states like his and by private companies. But he also said the world is only just beginning to feel the environmental harm inflicted by the Trump administration. “He has set in motion initiatives that will cause damage,” Brown said, comparing the planet under Trump’s climate policies to a person who has just fallen from the top of the Empire State Building. “You are falling down four stories, but have 80 to go,” he said. “Maybe you are not damaged yet, but it is certain you will die.” The governor said his overriding concern is that global progress has stalled. “This is real,” Brown said. “It is far more serious than anybody is saying.”

      Jerry Brown: 3 Billion Will Die from Global Warming -- On April 17, 2018, California Governor Jerry Brown delivered a speech at the National Press Club in Washington DC. A day later the headline that forms the title of this post appeared in Google News. I’ve been unable to find out exactly how many views Google News gets, but it’s probably in the billions/year range, and this headline is sufficiently eye-catching that even viewers who just skim through the articles can hardly miss it. Three billion global warming deaths is, however, a lot, and the question is where Gov. Brown got this number from. It turns out to be a recent World Health Organization report that cites 3 billion as the number of people potentially affected by “household air pollution from inefficient cooking practices“. How Gov. Brown translated this into 3 billion global warming deaths isn’t clear, but if you sincerely believe that climate change will destroy civilization the important thing is to get the message across. The facts are secondary.In the interests of fairness we must first consider what Gov. Brown actually said in his speech. According to CNS News and other sources it was this: “The prospect is 3 billion people on this planet will be subject to fatal lethal heat events.” A heat event that is both fatal and lethal can be guaranteed to kill the people who are subjected to it, but this is not quite as catchy a headline as 3 billion will die. So Gov. Brown got some help from the media in delivering his message.Second, the World Health Organization has consistently projected that climate change deaths will be far lower than Gov. Brown claims. WHO estimates (probably overestimates, but that’s a separates issue) only the health impacts of climate change, but these include the impacts of drought (malnutrition etc), and the impacts of floods are generally included in a separate category. The are no estimates of deaths from the wars climate change is projected to cause in the future that I have been able to find. Here now is a summary of the studies that list WHO’s climate change mortality estimates, which have not increased much with time:

      Rich nations spend $100 bln a year on fossil fuel subsidies despite climate pledges  - The world's major industrial democracies spend at least $100 billion each year to prop up oil, gas and coal consumption, despite vows to end fossil fuel subsidies by 2025, a report said on Monday ahead of the G7 summit in Canada. Britain, Canada, France, Germany, Italy, Japan and the United States - known as the Group of Seven (G7) - pledged in 2016 to phase out their support for fossil fuels by 2025. But a study led by Britain's Overseas Development Insitute (ODI) found they spent at least $100 billion a year to support fossil fuels at home and abroad in 2015 and 2016. "Governments often say they have no public resources to support the clean energy transition," the study's lead author Shelagh Whitley told the Thomson Reuters Foundation. "What we're trying to do is highlight that those resources are there (but) it is being used inefficiently. "The G7 have pledged to phase out fossil fuel subsidies, but they don't have any systems in terms of accountability to meet the pledges - they don't have road maps or plans," added Whitley, head of the ODI's climate division. Researchers scrutinised and scored each country against indicators such as transparency, pledges and commitments, as well as their progress towards ending the use, support and production of fossil fuels. France was ranked the highest overall, scoring 63 out of 100 points, followed by Germany (62), Canada (54) and the UK (47), the report said. The United States scored lowest with 42 out of 100 points due to its support for fossil fuel production and its withdrawal from a 2015 global pact to fight climate change. President Donald Trump announced a year ago he was ditching the deal agreed upon by nearly 200 countries over opposition from businesses and U.S. allies. The 2015 Paris agreement committed nations to curbing greenhouse emissions and keeping the global hike in temperatures "well below" 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial times. Britain scored the lowest on transparency for denying that its government provided fossil fuel subsidies, even though it supported tax breaks for North Sea oil and gas exploration, the report said.

      Scientists checked the carbon footprint for 13,000 cities worldwide. These were the worst. - The United States is home to three of the top 10 world cities with the worst carbon footprints, a new study says. Researchers at the Norwegian University of Science and Technology gathered carbon emissions data from 13,000 cities around the world and built an interactive map of the results. In the process, they found that New York City, Los Angeles and Chicago all had extremely high carbon emissions. Seoul came in at No. 1, with an output of 276.1 metric tons (plus or minus roughly 51.8 metric tons) of carbon dioxide a year. Guangzhou, China, came was ranked at No. 2, followed by New York City; Hong Kong; Los Angeles; Shanghai; Singapore; Chicago; Tokyo/Yokohama, Japan; and Riyadh, Saudi Arabia. Overall, the top 100 cities made up roughly 18% of the entire planet’s overall carbon footprint, with affluent cities and suburbs generally being the biggest culprits. The good news is that “this means concerted action by a small number of local mayors and governments can significantly reduce national total carbon footprints,” said Daniel Moran, the study’s lead author, in the study’s release. But the bad news is that some of the richest cities are spewing out high levels of carbon emissions, all while the poor are expected to suffer most from global warming. Cities with higher numbers of people are likely to have a higher carbon footprint overall, but some fairly small metropolitan areas in the United States still have a surprisingly high output. Miami, a city of roughly 5.5 million people, ranks at 21, for example — that’s higher up on the list than New Delhi, India, a city with more than 20 million people.

      Companies and pension funds must disclose climate change risks to their businesses, say MPs - The government should make it mandatory for large companies and pension funds to report their exposure to climate change risks, a committee of MPs has said.Current rules encourage short-term thinking while neglecting concerns such as sustainability, the Environmental Audit Committee (EAC) said. It recommended that new rules onclimate change disclosure should be in place by 2022.Institutional investors are sometimes confused about the extent of pension trustees’ duty to consider environmental risks, the MPs said.The report urges the government to lay down in law the duty that pension funds and other large asset owners have to consider the long-term value of their investment. In light of this duty, institutional investors should be considering environmental risks, the committee said. This is especially important given the long time horizons of pension funds’ investments and the huge sums of money involved, the committee said. UK pension funds manage trillions of pounds worth of assets.  Mary Creagh MP, chair of the Environmental Audit Committee, said: “We need to fix the incentives in our financial system that encourage short-term thinking. Long-term sustainability must be factored into financial decision making.

      Climate Change Has Run Its Course – WSJ - Climate change is over. No, I’m not saying the climate will not change in the future, or that human influence on the climate is negligible. I mean simply that climate change is no longer a pre-eminent policy issue. All that remains is boilerplate rhetoric from the political class, frivolous nuisance lawsuits, and bureaucratic mandates on behalf of special-interest renewable-energy rent seekers. Judged by deeds rather than words, most national governments are backing away from forced-marched decarbonization. You can date the arc of climate change as a policy priority from 1988, when highly publicized congressional hearings first elevated the issue, to 2018. President Trump’s ostentatious withdrawal from the Paris Agreement merely ratified a trend long becoming evident. A good indicator of why climate change as an issue is over can be found early in the text of the Paris Agreement. The “nonbinding” pact declares that climate action must include concern for “gender equality, empowerment of women, and intergenerational equity” as well as “the importance for some of the concept of ‘climate justice.’ ” Another is Sarah Myhre’s address at the most recent meeting of the American Geophysical Union, in which she proclaimed that climate change cannot fully be addressed without also grappling with the misogyny and social injustice that have perpetuated the problem for decades. The descent of climate change into the abyss of social-justice identity politics represents the last gasp of a cause that has lost its vitality.  While opinion surveys find that roughly half of Americans regard climate change as a problem, the issue has never achieved high salience among the public, despite the drumbeat of alarm from the climate campaign. Americans have consistently ranked climate change the 19th or 20th of 20 leading issues on the annual Pew Research Center poll, while Gallup’s yearly survey of environmental issues typically ranks climate change far behind air and water pollution. ” Mr. Downs predicted correctly that environmental issues would suffer this decline, because solving such issues involves painful trade-offs that committed climate activists would rather not make.

      Zinke cites ‘environmental disaster’ in sending park police to border | TheHill: Interior Secretary Ryan Zinke is doubling down on his decision to send law enforcement officers from his department, including from the National Park Service (NPS) and U.S. Park Police (USPP), to help apprehend immigrants in the country illegally along the U.S.-Mexico border. In a string of interviews this week, Zinke heavily promoted his decision to send 22 officers to patrol two national parks in Arizona and Texas — a move first reported by The Hill in early May.Speaking to the Fox Business Network on Thursday, Zinke called the state of the border an “environmental disaster.” He cited strewn needles and garbage on park land at the border and habitat destruction as reasons why he was deploying USPP and NPS officers. “It’s unfettered and we need to shut the border down for a number of reasons,” Zinke said. “I’m in charge of our federal lands. I’m a steward ... and now all of a sudden our agents are down at the southern border, you know what you have to look at? Needles.” Zinke’s efforts have drawn criticism from Democrats who say it is a political stunt. “This is not within the purview of Interior,” said Rep. Raúl Grijalva (Ariz.), the ranking Democrat on the House Natural Resources Committee. “It’s a ridiculous idea but the motivation is political pure and simple, it has nothing to do with safety or enforcement. And it certainly doesn’t enhance the mission of the Park Service.” 

      'Carbon bubble' could spark global financial crisis, study warns - Plunging prices for renewable energy and rapidly increasing investment in low-carbon technologies could leave fossil fuel companies with trillions in stranded assets and spark a global financial crisis, a new study has found.A sudden drop in demand for fossil fuels before 2035 is likely, according to the study, given the current global investments and economic advantages in a low-carbon transition. The existence of a “carbon bubble” – assets in fossil fuels that are currently overvalued because, in the medium and long-term, the world will have to drastically reduce greenhouse gas emissions – has long been proposed by academics, activists and investors. The new study, published on Monday in the journal Nature Climate Change, shows that a sharp slump in the value of fossil fuels would cause this bubble to burst, and posits that such a slump is likely before 2035 based on current patterns of energy use. Crucially, the findings suggest that a rapid decline in fossil fuel demand is no longer dependent on stronger policies and actions from governments around the world. Instead, the authors’ detailed simulations found the demand drop would take place even if major nations undertake no new climate policies, or reverse some previous commitments. That is because advances in technologies for energy efficiency and renewable power, and the accompanying drop in their price, have made low-carbon energy much more economically and technically attractive.

      Our Energy Problem Is A Quantity Problem -  Gail Tverberg - Reading many of today's energy articles, it is easy to get the impression that our energy problem is a quality problem - some energy is polluting; other energy is hoped to be less polluting. There is a different issue that we are not being told about. It is the fact that having enough energy is terribly important, as well. Total world energy consumption has risen quickly over time. In fact, the amount of energy consumed, on average, by each person (also called "per capita") has continued to rise, except for two flat periods.There is a good reason why energy consumed has risen over time on a per capita basis. Every human being needs energy products, as does every business. Energy is what allows food to be cooked and homes to be heated. Energy products allow businesses to manufacture and transport goods. Without energy products of all kinds, workers would be less productive in their jobs. Thus, it would be hard for the world economy to grow.When energy consumption per capita is rising, it is easy for workers to become more productive because the economy is building more tools (broadly defined) for them to use, making their work easier. Manufacturing cell phones and computers requires energy. Even things like roads, pipelines, and electricity transmission lines are built using energy. Once energy consumption growth flattens, as it did in the 1920-1940 period, the world economy is negatively affected. The Great Depression of the 1930s occurred during the 1920-1940 period. Problems, in fact, started even earlier. Coal production in the United Kingdom started to drop in 1914, the same year that World War I began. The Great Depression didn't end until World War II, which was immediately after the 1920-1940 period. In the 1920-1940 period, many people, especially farmers, were not able to earn an adequate living. This is a situation not too different from the one today, in which many young people are not able to earn an adequate living. Strange as it may seem, this type of wage disparity is a sign of inadequate energy per capita, because jobs that pay well require energy consumption. The 1980-2000 flat period was in many ways not as bad as the earlier one, because the lack of growth in energy consumption was planned. The United States changed to smaller, more energy-efficient cars in order to reduce the amount of gasoline consumed. Oil-powered electricity generation was taken out of service and replaced with other types of generation, such as nuclear. Heating of homes and businesses was changed to more efficient systems that did not burn oil.

      Britain Has Gone Nine Days Without Wind Power -- Britain’s gone nine days with almost no wind generation, and forecasts show the calm conditions persisting for another two weeks.  The wind drought has pushed up day-ahead power prices to the highest level for the time of year for at least a decade. Apart from a surge expected around June 14, wind levels are forecast to stay low for the next fortnight, according to The Weather Company. U.K. turbines can produce about as much power as 12 nuclear reactors when conditions are right. During the “Beast from the East” storm that hit Britain in March, they generated record levels of power and at times provided the biggest share of the nation’s electricity. On Wednesday, wind generated about 4.3 percent of the U.K.’s electricity. Coal output has dropped near zero. Gas and nuclear have picked up the slack with 54 percent and 25 percent respectively, according to data from National Grid Plc. Low wind power isn’t a threat to supplies in June when demand is low. On a dull, dark day in winter when heating demand peaks, a calm day might leave the U.K. grid vulnerable. “People would’ve started worrying about brownouts,” Elchin Mammadov, analyst at Bloomberg Intelligence said. “This shows that relying on wind, solar and batteries to supply the majority of our power is reckless for energy security.”

      China Deals Shocking Blow To Solar Industry - Market researchers are in a rush to lower their solar capacity addition forecasts for this year after China surprised everyone by announcing it will not issue approvals for any new solar power installations this year and will also cut the feed-in tariff subsidy that has been a major driver of the solar business in the country that accounts for as much as 50 percent of capacity.Reuters reports that companies including IHS Markit and Wood Mackenzie have already revised their solar additions forecasts for the year. IHS analysts slashed their projections by between 5 and 10 GW of new additions, although in China alone, they saw a potential reduction in new solar capacity of up to 17 GW. Earlier this year, the firm had forecast Chinese solar capacity additions of 53 GW.Wood Mackenzie, for its part, expects new Chinese solar capacity to be 20 GW lower than earlier forecast, which was 50 GW.GMT Research also reduced its China new solar capacity additions forecast by as much as 40 percent to 28.8 GW, with one analyst saying, “When the industry talks about China, it’s always about how demand in the region exceeds expectations. That is not going to be the case anymore.”   Although surprising, the Chinese planning commission’s move makes sense: subsidy costs have been swelling at a fast rate and have become difficult to manage. Greentech media reports that in 2017, these hit US$15.6 billion (100 billion yuan) and the government has still not paid these in full. At the rate of new solar capacity approvals from the last few years, subsidy costs would have reached US$39 billion by 2020, according to Wood Mac estimates. As for the global consequences of the change, Chinese solar makers already took a hit on their stock prices, and now solar panel prices will likely take a dive, too, although this dive would spur demand for the panels outside China. This, in turn, will likely increase international competition in solar panels, analysts cited by Reuters said.

      Even the Newest 'Clean' Diesel Cars Release 'Toxic Smog,' Study Finds - A new analysis reveals that the latest models of diesel cars approved for sale since the 2015 Volkswagen"dieselgate" scandal are exceeding nitrogen oxides (NOx) limits set by the Europe Union. For the study, the International Council on Clean Transportation (ICCT) used a "difficult-to-impossible to cheat" emissions test involving remote-sensing technology and statistical analysis to measure real-world exhaust emissions on more than 700,000 cars and 4,850 vehicle models across Europe.The results were "a striking confirmation of [the] worst fears about diesel cars," said the U.S.-based ICCT, as quoted by the Financial Times .According to their findings, all Euro 6 rated cars—the latest emissions standard for diesels—exceeded the Euro 6 diesel NOx emissions limits measured in real-world driving. For Euro 6 cars in particular, the researchers also found:

      • Four manufacturer groups had average emissions more than 12 times above the Euro 6 diesel type-approval limit, and the highest-emitting vehicle family has emissions 18 times the limit.
      • All Euro 6 diesel models rated exceeded the Euro 6 diesel NOx emissions limits measured in real-world driving.
      • The highest-emitting petrol Euro 6 vehicle family has approximately the same level of NOx emissions as the lowest-emitting diesel vehicle family.

      The results were compiled in a new rating database called The Real Urban Emissions Initiative (TRUE). The study also found that all of the Euro 3, 4 and 5 diesels were in the red. Gasoline-fueled vehicles, in contrast, fared much better. Most Euro 3-5 petroleum vehicles had good or moderate ratings. And all Euro 6 petrol cars received a “good" or "moderate" rating.

       In California, utilities will spend $768 million on electric car infrastructure - On Thursday, California regulators approved three plans from the state's three largest utilities, which will together result in nearly $768 million in electric vehicle (EV) infrastructure spending. As a whole, the plan is the largest coordinated effort for state-level EV infrastructure spending thus far.The California Public Utility Commission (PUC) was directed to smooth the path for infrastructure plans from the three utilities—Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE)—by a 2015 lawAccording to the San Francisco Chronicle, PG&E will spend more than $22 million on installing 230 direct current fast-charging stations in the state. PG&E and SCE together will spend $236.3 million and $342.6 million, respectively, "on infrastructure and rebates to support electric trucks, buses, and other medium or heavy-duty vehicles," including 1,500 charging stations for those vehicles. SDG&E set aside $136.9 million to give rebates to up to 60,000 customers who install charging stations in their homes.All three utilities set aside $29.5 million to study the effectiveness of their programs.Utilities have a clear incentive to promote EVs: wrestling the transportation sector's fuel spending away from the oil and gas industry would be a major feat. But there's also a disincentive for utilities to encourage EV adoption too fast. A January study from the National Renewable Energy Laboratory (NREL) showed that too many EVs in any one neighborhood could put strain on the grid that would require costly upgrades. Dedicated infrastructure spending before EVs become commonplace could alleviate that concern.

      Big investors urge G7 to step up climate action, shift from coal (Reuters) - Institutional investors with $26 trillion in assets under management called on Group of Seven leaders on Monday to phase out the use of coal in power generation to help limit climate change, despite strong opposition from Washington. Steam rises from the cooling towers of Matla Power Station, a coal-fired power plant operated by Eskom in Mpumalanga province, South Africa, May 20, 2018. REUTERS/Siphiwe SibekoGovernment plans to cut greenhouse gas emissions were too weak to limit warming as agreed by world leaders at a Paris summit in 2015, they wrote. U.S. President Donald Trump announced a year ago that he was pulling out of the pact. “The global shift to clean energy is under way, but much more needs to be done by governments,” the group of 288 investors wrote in a statement before the G7 summit in Canada on June 8-9. Signatories included Allianz Global Investors, Aviva Investors, DWS, HSBC Global Asset Management, Nomura Asset Management, Australian Super, HESTA and some major U.S. pension funds including CalPERS, it said. As part of action to slow climate change, the investors called on governments to “phase out thermal coal power worldwide by set deadlines”, to phase out fossil fuel subsidies and to “put a meaningful price on carbon”. The investors also urged governments to strengthen national plans for cutting greenhouse gas emissions by 2020 and to ensure that companies improve climate-related financial reporting. Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGC), said it was the first time that such a broad group of investors had called for a phase-out of thermal coal, used in power generation. “There is a lot more momentum in the investor community” to put pressure on governments, she told Reuters. The IIGC was among backers of the statement, delivered to G7 governments and to the United Nations. 

      Europe's Largest Asset Manager Sees 'Tipping Point' on Climate Risk Pricing - The world’s deepest-pocketed investors are starting to take climate change seriously, according to Amundi SA. “We are really observing a tipping point among the institutional investors on climate change,” said Frederic Samama, co-head of institutional clients at the Paris-based firm. “Until recently, that question was not on their radar screen. It’s changing, and it’s changing super fast.”  Risks from global warming range from damage to physical assets from extreme weather to falling prices on fossil fuel-related assets, as the world moves away from burning coal and oil. Bank of England governor Mark Carney has repeatedly warned that these risks are not priced in adequately and that investors may have exposure to a “climate Minsky moment” if they don’t take action.  Amundi’s remarks hold weight because it has 1.4 trillion euros ($1.6 trillion) under management, making it the largest asset manager in Europe. It runs the world’s largest green bond fund with the International Finance Corp. and is planning to deploy $2 billion into emerging markets. Mainstream investors are beginning to recognize both the threats and opportunities coming from climate-related issues, Samama said. “If we have this major shift required in terms of how we manage the planet, for sure it will impact the asset prices,” he said. “Can we evaluate the automakers without taking into account the new bans of diesel cars? Can we evaluate the fossil fuel industry without taking into account the risks of regulation related to the drop of the price of renewable energy?”

      China eyes role as world’s power supplier - Xie Qiuye, president of China’s Electric Power Planning & Engineering Institute, has been charged with developing an electricity plan for Laos, a nation struggling with a glut of electricity supply from Chinese-built dams on the Mekong river. Mr Xie’s job is to find a rational solution for Laos, even as powerful Chinese construction companies vie for more dam contracts in China’s poor southern neighbour. His answer — to make Laos into a regional power hub, exporting electricity to the rest of south-east Asia — depends on a technology that is being pushed hard by a powerful former state electricity boss with a vision for connecting world power markets. In Laos, in Brazil, in central Africa and most of all in China itself, ultra high-voltage cable technology that allows power to be commercially transported over vast distances with lower costs and increased load is justifying the construction of massive power projects. It is dubbed the “intercontinental ballistic missile” of the power industry by Liu Zhenya, its biggest backer and for a decade the president of State Grid, China’s powerful transmission utility. UHV allowed China to binge on dam building in its mountainous hinterland, then transport the power thousands of kilometres to its wealthy, industrial east coast. But by enabling this, and other projects, UHV has left western China with such a glut of power that Mr Liu in 2016 proposed using the technology to export power as far away as Germany. Now Mr Liu is promoting UHV internationally through his Global Energy Interconnection initiative. Designated a “national strategy” and championed by Xi Jinping, China’s president, the initiative feeds into one of China’s most ambitious international plans — to create the world’s first global electricity grid.

      Kansas utility shuts down largest plant after fatal accident (AP) — The largest electric utility in Kansas has shut down its biggest generating plant following an accident that left two workers with fatal burns. Westar Energy confirmed Monday that the employees died Sunday night at the University of Kansas Medical Center in Kansas City, Kansas. They were flown there by helicopter after the accident late Sunday morning at the Jeffrey Energy Center, about 30 miles northwest of Topeka. The company identified the workers as Operations Supervisors Craig Burchett of Overbrook and Jesse Henson of Manhattan but did not provide additional details about them. Westar said equipment with high-pressure steam behind it apparently failed. Westar said the plant's three coal-fired generating units are shut down while the "full circumstances" are reviewed. Jeffrey accounts for nearly 26 percent of Westar's total generating capacity.  

      While coal-fired power stalls here, U.S. firms help plants expand in Southeast Asia - Although the Trump administration has pulled the United States out of the Paris agreement and spurned the scientific consensus of climate change, the numbers got the attention from federal officials and American companies in a Downtown hotel ballroom last week.The delegates warned of big cuts in carbon, mercury, sulfur, dust and nitrogen oxide — and the need for technology to meet those standards, established by the United Nations and the Paris climate accords. That’s because the presenters had flown in from India, Indonesia and Vietnam — three countries relying heavily on coal-fired power to support booming economies and a burgeoning middle class.  And instead of cleaner air, the U.S. officials and executives were seeing dollar signs. Termed a “reverse trade mission,” the Asian officials were here to see coal plant pollution control technology and seek deals with engineering firms that manufacture it. Pittsburgh was seeing a stark shift in national policy under the new administration. President Donald Trump last year rescinded the Obama’s administration's climate action plan prohibiting the use of public dollars to develop the coal power industry.  “We are open again to support coal-fired projects,” said Paul Marin, director of partnership and innovation for the U.S. Trade & Development Agency, which helped organize the delegation. Earlier this year, the Virginia-based federal agency, which helps U.S. companies invest in infrastructure projects in countries with emerging economies, put out a call for proposals. The agency received 30 proposals from American firms that included plans for providing emissions control equipment, retrofitting decades-old plants and building plants from scratch. Meanwhile, the reverse trade missions were designed to give delegates from coal-dependent countries a look at U.S. coal-fired power plants and to meet with firms that — many years ago — fitted those plants to meet emissions standards.

      Pruitt calls for selling Wyoming coal to Asia - The head of the Environmental Protection Agency hasn’t forgotten his recent trip to Wyoming and thinks the largest coal producing state in the country should be exporting overseas. In a recorded interview with the Washington Free Beacon, a conservative news website, Administrator Scott Pruitt noted the demand for Wyoming coal in Asia and the global benefit of burning Wyoming’s rock instead of poorer quality coal available internationally. “If we really cared about clean air, we would allow Indonesia to buy our coal from Wyoming, because it’s far cleaner than what they are using now,” he said. Pruitt visited Wyoming’s Black Thunder mine outside Wright in late March, the same week that the EPA held a listening session in Gillette on repealing the Clean Power Plan – an Obama-era legacy that sought to reduce carbon dioxide emissions from the power sector by 32 percent relative to 2005 levels. Wyoming coal does have a lower sulfur content than some other regions, including Appalachia. However, it does not perform better in terms of carbon dioxide, the key emission targeted in the Clean Power Plan and, to some degree, in the Paris Climate Accord. Still, getting out of the Paris agreement, a multinational pact to decrease carbon dioxide levels in the face of climate change, was a “historic decision,” Pruitt said. “It was a failed agreement from the very beginning,” he said. Policies like the Clean Power Plan and the Paris agreement amount to political window dressing, Pruitt said, because they please certain circles but fall short of stated targets to combat global warming.

      Trump orders Rick Perry to take 'immediate steps' to stop coal plant closures | TheHill: President Trump has ordered Energy Secretary Rick Perry to take 'immediate steps' to prevent the further closures of coal and nuclear power plants around the U.S., the White House said Friday. White House press secretary Sarah Huckabee Sanders said in a statement that the president had ordered the Department of Energy to take the measures due to a national security interest in securing the national power grid's resilience."President Trump believes in total energy independence and dominance, and that keeping America’s energy grid and infrastructure strong and secure protects our national security, public safety and economy from intentional attacks and natural disasters," Sanders added. "Unfortunately, impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation's energy mix, and impacting the resilience of our power grid." The statement from the White House comes hours after Bloomberg News obtained a draft memo detailing an Energy Department plan to order grid operators to buy electricity from coal and nuclear plants that are at risk of retiring due to cheaper energy available from renewable energy sources and natural gas. "Too many of these fuel-secure plants have retired prematurely and many more have recently announced retirement," the 41-page memo reads. The Energy Department measure would also create a “Strategic Electric Generation Reserve," which would shore up the U.S.'s domestic energy reserves in case of an emergency. 

       Trump Orders Action to Stem Coal, Nuclear Plant Shutdowns -- President Donald Trump ordered his energy secretary to take immediate action to stem power plant closures, arguing that a decline in coal and nuclear electricity is putting the nation’s security at risk.  “Impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation’s energy mix and impacting the resilience of our power grid,” White House spokeswoman Sarah Sanders said in an emailed statement Friday. Trump has directed Energy Secretary Rick Perry “to prepare immediate steps to stop the loss of these resources and looks forward to his recommendations.” Trump’s directive comes as administration officials search for ways to extend the life of money-losing coal and nuclear power plants that face competition from cheaper natural gas and renewable energy. The plants are considered “fuel-secure” because they house coal and nuclear material on site and are not dependent on pipelines that can be disrupted, wind that stops blowing or a sun that sets. Coal producers rose on the news, with Peabody Energy Corp. climbing the most since Aug. 1, 2017 and closing up 4.8 percent to $45.35. Arch Coal Inc. rose 2 percent to $83.81. Consol Energy Inc. gained 3.7 percent to $45.70, while Alliance Resource Partners LP was up 1.3 percent to $19.50. The Stowe Global Coal Index was up 1 percent. The department’s strategy, outlined in a memo obtained by Bloomberg News, would use authority granted under a pair of federal laws to establish a “strategic electric generation reserve” and compel grid operators to buy electricity from at-risk plants. The steps are necessary, the memo says, to protect national security. The move comes as Trump uses similar national security arguments to justify market interventions aimed at protecting other treasured political constituencies -- steelworkers and automakers -- at the expense of U.S. allies.

      New energy plan could save coal and nuclear plants but sacrifice consumers -  WSJ - The Energy Department wants to roll out a plan to save failing nuclear and coal-fired power plants – a move that could hit energy consumers in the wallet, reports The Wall Street Journal’s Timothy Puko. Coal and nuclear energy producers have suffered as a boom in natural gas production and renewable power have lowered prices and edged out the competition. President Donald Trump pledged during his presidential campaign to help coal miners in particular, and he received millions of dollars in campaign donations from coal-company executives. In recent months, he prodded Energy Secretary Rick Perry on several occasions to craft a solution. Opponents say the plans would undermine the competition in power markets that has lowered prices and could raise consumer costs by billions of dollars.

      Pipeline fears anchor Trump's coal, nuclear bailout - The threat of a malicious cyberattack on natural gas pipelines emerged Friday as a theme in the Trump administration's working plan to toss a lifeline to coal and nuclear power plants. The idea that a blackout caused by a fuel shortage could shut down a U.S. military base or disrupt the banking sector justifies a federal directive forcing grid operators to keep running coal and nuclear plants widely expected to close because they're expensive and unprofitable, according to a draft policy memo from the Department of Energy.The distributed nature of gas infrastructure — from thousands of miles of pipelines to remote compressor stations — makes the sector "difficult to protect," the memo concluded. Under the DOE plan, the federal government would ensure fuel supplies are available if a gas pipeline is taken offline by ordering grid operators such as PJM Interconnection to buy power or future commitments from coal and nuclear plants, which have on-site fuel.Security experts broadly agree that natural gas infrastructure faces threats from hackers and terrorists. But the severity of those dangers is up for debate. Since the memo's release Friday, ahead of a White House National Security Council meeting, critics have questioned whether DOE's plan is the best way of addressing threats from sophisticated state actors like Russia or Iran, or whether the threat is being used to achieve one of President Trump's political goals: help for coal-burning utilities and coal-mining communities whose voters helped put him in office. Coal industry CEOs and top Republican donors, including Joe Craft of Alliance Resource Partners and Robert Murray of Murray Energy Co., have urged Trump to intervene in the electricity markets to support coal against cheaper natural gas and renewable energy (Energywire, Aug. 23, 2017). The DOE draft plan to use a combination of the 1950 Defense Production Act and the Federal Power Act to intervene in power markets has already driven a new wedge into the U.S. energy sector. Coal interests praised the plan. But a coalition of natural gas, oil, renewable power, competitive market proponents and environmental groups lined up against it Friday, as they were when Energy Secretary Rick Perry last year pressed the Federal Energy Regulatory Commission to earmark financial support to "baseload" coal and nuclear plants.

      Trump’s Bizarre Bid To Bailout Coal And Nuclear - The Trump administration is pulling out all the stops to give a leg up to coal and nuclear, moving to take unprecedented action to intervene in the U.S. electricity markets to essentially bail out failing plants as they face an existential threat from natural gas and renewable energy. For more than a year, the Trump administration has been trying to come up with a justification to boost coal and nuclear power plants, but several attempts have failed to pass legal muster. In 2017, Secretary of Energy Rick Perry proposed offering a subsidy of sorts to power plants that held a 90-day supply of fuel on site, a definition that only coal and nuclear could meet. FERC rejected that proposal earlier this year. But Trump isn’t given up yet. Last week, the President basically ordered Sec. Perry to come up with some way to keep unprofitable plants open, a desperate bid that has attracted criticism from many directions. “Impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation’s energy mix and impacting the resilience of our power grid,” White House spokeswoman Sarah Sanders said in an emailed statement to Bloomberg on Friday. The President ordered Secretary Perry “to prepare immediate steps to stop the loss of these resources and looks forward to his recommendations.” The legal logic is based on some federal laws that use national security as justification to keep the aging coal and nuclear plants open. The administration argues that because coal and nuclear can keep fuel on site, and are not dependent on pipelines, they are more secure than other forms of electricity generation. The proposal calls for the Energy Department to direct the purchase of electricity from a list of specific facilities “to forestall any future actions toward retirement, decommissioning or deactivation,” according to a memo that was obtained by Bloomberg News. In other words, the government wants to force consumers into buying more expensive electricity from failing coal and nuclear power plants. That would then buy time to conduct a two-year study that would look at vulnerability to the U.S. electricity system, including a focus on the vulnerabilities of gas supplies via pipelines. The move is odd, given the alleged sanctity of the free market for Republicans and the supposed antipathy to picking “winners and losers.” But Trump’s proposal is a brazen attempt to prop up specific industries – assets that are failing in the market – at the expense of other, more efficient and more profitable entities.

      US natural gas industry says Trump is using them as a ‘scapegoat’ to bail out coal and nuclear plants -- One of the natural gas industry’s largest lobbying groups called out President Donald Trump’s plans to bail out the coal and nuclear industry Thursday, saying he was using their industry as a “scapegoat.” Under pressure from Trump, Energy Secretary Rick Perry has repeatedly questioned the reliability of the nation’s natural gas pipeline network, stating coal and nuclear plants could be better counted on in a crisis because they store their fuel on-site. A plan drawn up by the Energy Department would raise rates for two years for coal and nuclear plants, at a time many are being driven out of business by new natural gas plants and wind and solar farms. “The Interstate Natural Gas Association of America is deeply troubled by the Trump administration’s apparent move to scapegoat natural gas to prop up uneconomic coal and nuclear plants,” a statement from the gas lobbying group read.

      Trump officials took actions on energy policies suggested by coal tycoon, documents show - Trump officials have taken actions that closely resemble measures contained in drafts of half a dozen executive orders and other proposals submitted by coal tycoon Robert E. Murray in the early days of the administration, according to documents released by the Energy Department.In two instances, the Energy Department and Environmental Protection Agency took steps within a month similar to Murray’s ideas to roll back what he called “anti-coal” policies.The Energy Department recently drew up a plan also advocated by Murray to impose a state of emergency to avoid the closure of ailing coal and nuclear plants.The Environmental Protection Agency has taken steps to revoke or alter some of the other regulations Murray wanted changed, though some of his proposals have not been adopted and he is not the only coal executive to seek federal assistance.  Murray has been a major donor to the Trump campaign and GOP political activities. Murray’s meeting with Perry, some portion of the documents and the substance of his requests have been widely reported. But the new documents released confirm reports of Murray’s influence and the alignment of his interests with the Trump administration’s. A March 23, 2017, memo from Murray asked that the Energy Department “issue an emergency directive to have an immediate study done of the security and resiliency of our electric power grids.” On April 14 last year, Perry directed his chief of staff to produce a study “to explore critical issues central to protecting the long-term reliability of the electric grid,” within 60 days.  One of the March 28, 2017, proposed executive orders called on the EPA to suspend and review a 2015 rule limiting the release of toxic metals from power plants into waterways. On April 13, 2017, Pruitt announced he would “review and reconsider” the rule.In an email statement Wednesday, Murray Energy’s senior corporate counsel Gary M. Broadbent said that the company’s chief executive provided the documents to Perry “in an effort to assist in the reversal of the illegal, job-killing, anti-coal regulations of the Obama Administration.”

      A meltdown didn’t kill Three Mile Island, but shale probably will -  For the cluster of small towns stretching along the Susquehanna River and south of Harrisburg, the closure of Three Mile Island will be a powerful blow. Last year alone, the plant sent $1.5 million in taxes and other payments to surrounding Londonderry Township, Dauphin County, and the local school district. And while the nuclear plant may not be the area’s biggest employer—that title goes to various entities with “Hershey” in their names, from a medical center to the amusement park just up the road—its 675 workers make good money. The average salary is $89,000, according to Exelon. That’s helped boost the median household income of Londonderry Township (population 5,242) to nearly $63,000, according to U.S. census data—higher than the statewide median of $55,000. Through its 44-year existence, Three Mile Island has been a powerful draw for generations of highly skilled engineers, mechanics, and others who’ve often come up through the ranks of the U.S. Navy or top-flight universities. “These people go out to dinner, buy houses, go to Home Depot, go to Lowe’s,” says Steve Letavic, manager of Londonderry Township. “How do we replace that as a region? I don’t think you can.” Across the U.S., more communities are grappling with such questions, as the owners of nuclear plants dating back to the 1960s and ’70s begin to put their facilities into premature retirement. That’s because the plants are having trouble staying competitive in an era of cheap natural gas, a product of the shale boom. Also, nuclear power’s attraction as a clean energy source has been eclipsed by no-emissions alternatives such as wind and solar power. Nuclear’s reversal of fortune is visible all over Three Mile Island. On the outside, four giant cooling towers climb into the Pennsylvania sky, but two of them haven’t emitted any steam since the accident. On the inside, some of the areas of the plant look like they’ve been frozen in time since the ’70s.

       FirstEnergy's request for Trump relief draws more critics - Toledo Blade - The Trump Administration plan to bail out struggling nuclear and coal-fired power plants comes two months after FirstEnergy Solutions filed what many experts see as a historic and potentially landmark petition for relief under Chapter 11 bankruptcy laws.FirstEnergy is a subsidiary of Akron-based FirstEnergy Corp. The FirstEnergy bankruptcy filing includes FirstEnergy Nuclear Operating Co., which oversees the Davis-Besse nuclear plant east of Toledo, the Perry nuclear plant east of Cleveland, and the twin-reactor Beaver Valley complex west of Pittsburgh.The case has become a high-profile one nationally because FirstEnergy is one of America’s largest utilities.Those nuclear plants — in addition to numerous coal-fired power plants under FirstEnergy — represent a huge chunk of electricity for the regional electric grid Pennsylvania-based PJM Interconnection operates in 13 states, including Ohio. That grid, which serves 65 million people, is the nation’s largest.Because nuclear and coal-fired plants have become so unprofitable — unable to compete against record-low natural gas prices — FirstEnergy appealed to U.S. Department of Energy Secretary Rick Perry for help when it filed for bankruptcy in March. It called upon him to exercise emergency authority under a pair of federal laws typically reserved for wars or natural disasters.Now, with administration spokesman Sarah Huckabee Sanders announcing on Friday that President Trump has directed Mr. Perry to prepare “immediate steps” to keep such plants open, the utility appears to be getting its wish.

      Letter: Studies on fracking, methane show mixed results - Columbus CEO -- Clarke Owens - Jon Baker's recent front-page article, "Study: East Ohio water unaffected by drilling," devotes its last two paragraphs to the words of Jackie Stewart, a public relations spokesperson for a group launched by the Independent Petroleum Association of America. She claims the study finds that "fracking is not a major threat to groundwater."  Another, online article about the same study (www.sciencedaily.com) says: "Researchers hypothesized that methane concentrations in the drinking-water wells they sampled would increase over time with the growth of natural gas drilling in the area. This is a correlation researchers observed in Pennsylvania's Marcellus region." Instead, the study found that methane in groundwater was naturally occurring. The Pennsylvania researchers attributed the contamination to failed well casings, which hadn't happened "with the wells of homeowners we worked with for our study." The study was limited to new wells. "Researchers did find wide variability in methane concentrations in the drinking water, ranging from 0.2 micrograms per liter to 25.3 milligrams per liter, which is strong enough to catch fire in enclosed spaces. But researchers found no relationship between the methane observed in drinking water and the new gas wells."  The study concluded: "Clearly, additional monitoring is needed to determine whether methane concentrations and source signals in this region change as the number of oil and gas wells continues to increase."  Google the issue and you get a mixed result.  But a Cornell University professor did a study in 2014 showing that nine percent of unconventional wells in Pennsylvania since 2009 have structural integrity issues. He was concerned the problem will grow as wells age, and tens of thousands of them are bored.

      Gas Pipeline Growth For TransCanada - Two years ago, TransCanada Corporation (TRP) acquired the enormous Columbia Gas pipeline network. Columbia Gas Transmission LLC owns the various pipelines that make up the Columbia Gas system, and TransCanada Corporation owns 100% of that subsidiary. Let's take a look at how TransCanada Corporation is growing its massive gas pipeline division. Now that the Leach Pipeline is operational (came online in early January) the Columbia Gas system runs for 12,000 miles. Primarily, the pipeline transports Appalachian gas supplies to buyers in the Northeast, but that is changing as the network gets larger and larger. Operations are supported by Columbia Storage, which has 285 billion cubic feet of natural gas storage capacity (entirely or almost entirely owned by TransCanada). The company also owns half of the 12 Bcf Hardy Storage facility in West Virginia.When it comes to natural gas Appalachia is brimming with supply, and production growth out of the Marcellus and Utica shale plays show no signs of letting up. To grow, TransCanada needs to make sure that ever rising Appalachian gas supplies can reach end buyers.That isn’t as easy a task as it seems due to the risks posed by construction cost overruns, regulatory hurdles, political concerns, financing costs, and competition from other pipeline operators. Midstream firms have a preference for expanding existing pipelines rather than building new ones. Generally speaking, expansions of existing pipeline systems are an easier sell to both the public and regulators than building a new one from scratch. Let's go over some of those expansions. The Mountaineer Xpress project is a 171-mile endeavor that involves constructing a pipeline from Marshall County in the northern part of West Virginia down to Cabell County in the southwestern portion of the state. Gas will be supplied through receipt points in Pennsylvania and West Virginia, and with 2.7 Bcf/d of gas takeaway capacity, this is quite a large endeavor. On top of putting pipe in the ground, TransCanada is upgrading three existing compression stations and building three new ones as part of the Mountaineer Xpress project. When operational, the system will send 1.8 Bcf/d of gas supplies to the TCO Pool and the remaining 0.9 Bcf/d will go to either the TCO Pool or the Leach Interconnect. Through the Leach Pipeline, those gas supplies can ultimately reach Southern US markets. The pipeline can carry up to 1.5 Bcf/d of gas across 160 miles from Marshall County in West Virginia down to Leach, Kentucky. From there, the Leach Pipeline connects with the Rayne Pipeline which runs to Rayne, Louisiana. In conjunction with the Mountaineer Xpress project, TransCanada launched the Gulf Xpress endeavor. The Gulf Xpress project involves building seven new compression stations and upgrading an existing one along an existing pipeline built a while ago. When completed, this $800 million development will add roughly 875 MMcf/d to the Columbia Gulf pipeline system's transportation capacity.

      Here’s mud in your eye - It’s been a bad two weeks for the Mountain Valley Pipeline, and a time of hope for opponents.  On Tuesday, a proposal by the pipeline to pay Franklin County up to $300,000 to lease 10 acres of public land to store equipment during construction failed on a tie vote of the seven-member Board of Supervisors, with one abstention.  The supervisor’s vote wasn’t the first blow to the project this month, either locally or nationally. On May 17-18 earth destabilized by tree cutting and land clearing along the pipeline route buried both lanes of Cahas Mountain Road under nearly 8 inches of mud.  The flooding and erosion was just the type of thing protesters had been claiming would happen and gave some weight to their warnings. State regulators ordered a temporary stop to pipeline work until better sediment control measures were put in place.  On Wednesday, The Roanoke Times reported that six county landowners affected by the mudslide had filed a lawsuit against the pipeline, claiming the sediment swamped their hayfields and made its way into nearby streams.  More seriously for the pipeline, on Tuesday Reuters reported that the U.S. Army Corps of Engineers had pulled its nationwide permit and “could delay the $3.5 billion project’s expected late 2018 in-service date. “The Army Corps said in a filing made available on Thursday that it pulled the permit on May 22 to determine if it is at odds with West Virginia environmental rules,” according to Reuters. If the pipeline is found to be in violation, construction will be rerouted around three West Virginia rivers, Reuters reported. But it’s likely to go forward anyway, despite sometimes obsessive hostility towards it.

      Regulators cite Mountain Valley Pipeline a second time for erosion problems -- For the second time since work began on the Mountain Valley Pipeline, regulators have put the company on notice that it is breaking rules meant to protect the environment. Crews building the natural gas pipeline failed to prevent sediment-laden water from running off at a work site in Wetzel County, West Virginia, according to a notice of violation issued last week by the state’s Department of Environmental Protection. Opponents of the project have long argued that clearing land and digging ditches along steep mountain slopes for the massive buried pipeline will invite problems with erosion, leading to contamination of streams that feed public and private water supplies.  Those fears were corroborated April 25, when West Virginia environmental regulators issued their first notice that Mountain Valley was using inadequate erosion and sediment control devices. Ann Rogers, director of development for the Blue Ridge Environmental Defense League, said she was “grievously concerned” to learn of a second notice — especially coming so soon in a construction process that is only a few months old. “People need to understand that we’re just getting started,” she said. “If you think this is bad, wait until they start digging deeper into the ground.” After receiving their first notice of violation, pipeline officials wrote in a letter to regulators that the issues had been “fully addressed and resolved.” Yet just a few weeks later, they were facing more problems in Wetzel County, the starting point for a 303-mile buried pipeline that will pass through Southwest Virginia. One trouble spot was in a “known flood plain,” according to written reports, and in another construction area water was seen running through a silt fence meant to curb erosion. “Sediment deposits were observed in stream, causing conditions not allowable,” an inspection report stated. 

      Mountain Valley Pipeline protesters lock themselves to drilling equipment - Opponents of the Mountain Valley Pipeline tried a new tactic Monday: chaining themselves to construction equipment. West Virginia state police arrested three people who were trying to slow down workers in Lindside, a community in Monroe County, West Virginia. They delayed construction for a few hours on Route 219. Police cut them out around 10 a.m., about two hours after they received a call. Police said Maxwell Shaw, 24, Evin Ugur, 21, and Sydney White, 18, are all from Massachusetts and are out on bond. Court documents showed they're each facing three misdemeanors, one each for trespassing, obstructing and resisting arrest. That could mean up to two and a half years in jail. Witnesses say about 25 other pipeline opponents came out to watch. One of them was Jammie Hale, who lives in Giles County. “Very humbling. You see somebody willing to put their life and limb in jeopardy to save my farm, my land, my community. Oh yeah, it’s very humbling,” he said. He described a tense atmosphere. Witnesses said police threatened to use tasers, pepper spray and batons. “There’s people going every which way and then police, law enforcement pulling in and you don’t know what to expect or exactly what’s going to happen,” he said. He’s encouraged by the efforts. “Nowadays people are scared to stand up and take a stand and to see especially some young people,” he said. This comes just three days after the last sitter in Virginia came down from a spot blocking construction in Giles County. “I hope a lot of people get involved and say ‘I’m going to stick up for my neighbor, for their rights, for our constitutional rights,’” Hale said. 

      W.Va. DEP suggests pulling or changing part of MVP permit   The West Virginia Department of Environmental Protection suggested last week it might modify or waive a condition on a river-crossing permit issued to pipeline developers.The federal Clean Water Act permit, called the Nationwide 12, is at the center of a legal challenge against the U.S. Army Corps of Engineers, which approved the permit for the pipeline.The 300-mile line is designed to run natural gas from Wetzel County, W.Va., to Pittsylvania County, Va., crossing 600 streams and 400 wetlands, Kallanish Energy understands.The Mountain Valley Pipeline is ineligible for the Nationwide 12 permit because four major river crossings don’t comply with one of the permit’s conditions, lawyers for the Sierra Club, the West Virginia Rivers Coalition, the Indian Creek Watershed Association and others argued in a motion for preliminary relief filed May 22, the Charleston (W.Va.) Gazette-Mail newspaper reported.The “Special Condition C,” added to the Nationwide 12 permit by the DEP, stipulated stream crossings be completed within 72 hours. But developer Mountain Valley Pipeline LLC told the Army Corps in 2017 construction on the Elk, Gauley, Greenbrier and Meadow river crossings could take between four and six weeks to complete. After the lawyers challenged the permit, arguing that Mountain Valley Pipeline wasn’t eligible for the permit because construction would take longer than 72 hours, the Army Corps blocked construction on crossings of the four rivers.Wednesday, the Army Corps of Engineers wrote to the DEP, asking for information about construction methods, and whether the DEP planned to take additional action on the Special Condition C, or its application to the four river crossings.On Thursday, Scott Mandirola, director of the DEP’s division of water and waste management, wrote: “Yes, the WVDEP intends to take whatever action is necessary to make it clear that the most environmentally protective methods are used for the stream crossings detailed in your letter,” the Gazette-Mail reported.

      TransCanada Pipeline Explodes in West Virginia - A newly installed TransCanada natural gas pipeline exploded early Thursday in the remote Nixon Ridge area of Marshall County in West Virginia.  No injuries were reported but flames and smoke from the blast could be seen as far as 20 miles away , residents told local media. Area police told CBS News the fire was "very large—if you can see it from your house, evacuate."  "It sounded like a freight train coming through, or a tornado, and the sky lit up bright orange, and then I got up and looked out the window and flames were shooting I don't know how far into the sky," Tina Heath-Chaplin, of Moundsville, told WPXI .  TransCanada—the same company behind the Keystone pipeline—said the explosion has been contained and an investigation is underway.  "As soon as the issue was identified, emergency response procedures were enacted and the segment of impacted pipeline was isolated. The fire was fully extinguished by approximately 8:30 a.m," the company commented Thursday.  "The cause of this issue is not yet known," TransCanada continued. "The site of the incident has been secured and we are beginning the process of working with applicable regulators to investigate, including the Pipeline and Hazardous Materials Safety Administration."

      Gas line explosion rocks Moundsville area of northern West Virginia, sends flames high in air -- A powerful gas line explosion sent flames shooting into the sky early Thursday in the Nixon Ridge area of Marshall County, West Virginia, reports CBS Wheeling affiliate WTRF-TV. The flames could be seen for miles around.The blast, in a TransCanada pipeline, was felt around 4:20 a.m., the station says.One person told WTRF it shook his house so badly it felt like a tornado was ripping through the area.  Moundsville, W. Va. police told CBS News the fire was "very large -- if you can see it from your house, evacuate"     Ohio County, W. Va. Ohio County Emergency Management Agency Director Lou Vargo said they were getting dozens of 911 calls from people who could see the flames and were very alarmed.In addition:BREAKING: @MarshallCoWVOEM says they have received calls from Ohio, Belmont, Marshall, and Wetzel Counties that people can see this explosion. Hart says he could see if from Cameron @WTRF7News pic.twitter.com/WMPQjrTllo — Tessa DiTirro (@TDiTirroWTRF) June 7, 2018

      TransCanada's New 'Best-In-Class' Gas Pipeline Explodes in West Virginia, Causing Fiery Blast -- This morning, residents of Marshall County, West Virginia, awoke at 4:15 a.m. to a major natural gas rupture and explosion on TransCanada's Leach XPress pipeline on Nixon Ridge — a quickly built pipeline only half a year old. The fire was visible for miles, local TV news reported. Police warned anyone who could see the flames to evacuate — and the Emergency Management Agency director of neighboring Ohio County said officials had received dozens of 911 calls from locals able to see the fire, which was extinguished roughly four hours later. The blast was so powerful that one resident told a local CBS affiliate it felt like a tornado was passing through. No one was injured, and no property damage was reported, TransCananda said in a statement released today, adding that the cause of the explosion was not yet determined. The Leach XPress pipeline is just six months old, having been put into service on January 1, 2018. At the time, TransCanada emphasized that it was built quickly — but safely. “Leach XPress was done in less than a year,” Scott Castleman, manager of U.S. Gas Communications for TransCanada, said in a January statement. “We’re looking forward to generations of safe operations,” he added. “This is truly a best-in-class pipeline and we look forward to many years of safe, reliable, and efficient operation on behalf of our customers.” 

      Appalachian natural gas market reacts to explosion,force majeure - An explosion early Thursday morning in Marshall County, West Virginia, on TransCanada's Columbia Gas Transmission system caused a force majeure on the pipeline's Leach XPress and put prices in the region on a roller-coaster.  In Thursday trading at Columbia Gas, Appalachia saw an 11-cent climb to $2.77/MMBtu, according to Platts preliminary pricing data, changing direction from other points in the area, as Texas Eastern Transmission M-2 plunged 21 cents and the Dominion Transmission South Point dropped 26-cents. This is the first time in seven trading sessions that Columbia Gas, Appalachia has moved opposite of both Tetco M-2 and Dominion South. Balance-of-the-month gas prices could also see opposite movement for Columbia Gas, Appalachia versus Tetco M-2 and Dominion South as no return-to-service date for the pipeline has been announced.For gas day Friday, timely cycle, and until further notice, LXPSEG MA41 capacity was set to zero. This month, flows through the affected segment (LXPSEG MA41) were averaging 1.46 Bcf/d while Leach XPress-related production receipts were averaging 1.24 Bcf/d. Platts estimates approximately 0.5 Bcf/d of production could be lost because of the outage. In a notice to shippers, Columbia said, based on current nominations, the potential impact to firm service was 1.3 Bcf. The impact on production is expected to be well below that, however, as gas is routed to alternative pipelines. There are several alternatives for routing production around the outage, including to Rover Pipeline, Rockies Express Pipeline, and Texas Eastern Transmission. During a previous restriction on the LXPSEG MA41 segment in late May, flows through LXPSEG MA41 fell May 22 and May 24-25, the bulk of production was routed to Texas Eastern, Rover and Equitrans, with smaller volumes to Rockies Express.

      No natgas flows through West Virginia Leach Xpress, producers use other pipes (Reuters) - TransCanada Corp said on Friday it cannot move natural gas until further notice through the section of its Leach Xpress pipeline in West Virginia that ruptured early Thursday until, prompting customers to seek other pipelines to ship their gas. Alternative pipelines to route production around the outage included Energy Transfer Partners LP’s Rover, Tallgrass Energy Partners LP’s Rockies Express (REX), EQT Midstream Partners LP’s Equitrans and Enbridge Inc’s Texas Eastern Transmission (Tetco), analysts at S&P Global Platts said in a note. The blast that shut the pipe did not cause any injuries and was contained Thursday morning, TransCanada said. Columbia Gas Transmission (TCO), the TransCanada subsidiary that operates the pipe, declared a force majeure on Thursday and said the damaged section of pipe could affect movement of about 1.3 billion cubic feet per day (bcfd). One billion cubic feet a day is enough gas for about 5 million U.S. homes. Despite the pipeline shutdown, overall output in the Marcellus and Utica shale gas region of Appalachia increased to 27.4 bcfd on Thursday from 27.3 bcfd on Wednesday, according to Thomson Reuters data. U.S. oil and gas exploration company Range Resources Corp, which uses the Leach pipeline to transport its gas to market, said on Thursday it expects to temporarily lose access to its 0.3 bcfd of capacity on the pipe. As it reroutes gas to other pipes, Range said it does not anticipate impacts to production volumes and also said it currently expects the impact to second quarter cash flow to be minimal. S&P Global Platts said several gas producers whose gas normally flows on the Columbia system reported just minor impacts, including Southwestern Energy Co, which like Range said it was utilizing a variety of pipelines in the area to get its production to market. The Leach shutdown caused Appalachia prices to trade in opposite directions on Thursday, with TCO up about 11 cents, while Dominion South dropped about 39 cents, according to data from SNL, another unit of S&P Global. The 1.5-bcfd Leach Xpress in West Virginia and Ohio, which entered full service at the start of this year, transports gas from the Marcellus and Utica shale formations in Pennsylvania, Ohio and West Virginia to consumers in the U.S. Midwest and Gulf Coast. 

      WVU researcher receives NIH grant to explore effects of fracking on cardiovascular health -- Building and operating a hydraulic fracturing well site can emit airborne particles in multiple ways. But scientists still don’t fully understand how these particles impact human health.Travis Knuckles, assistant professor in the West Virginia University School of Public Health, has received $450,000 from the National Institutes of Health to investigate these questions.Hydraulic fracturing is a process in which oil and gas are extracted from rock by injecting mixtures of water, sand and chemicals underground. Over three years, Knuckles will explore how particulate matter in the air from fracking sites can make it harder for the body to control how much blood enters the capillaries, the narrowest blood vessels, and turn oxygen into ATP, a chemical that is a primary energy source for cells.The particulate matter at the center of Knuckles’ study is especially fine. Each particle has a diameter of less than 2.5 micrometers. That’s smaller than a particle of talcum powder—even smaller than a red blood cell. Particles that small have been shown to cause cardiovascular disease, worsen its symptoms and make it more deadly.   “We have a pretty good idea of what particulate matter does in general,” said Knuckles, who is part of WVU’s Department of Occupational and Environmental Health Sciences and the WVU Health Sciences Center Toxicology Working Group. “The issue is that we have not looked at particulate matter from these gas wells as a toxicant unto itself. How is that emission different from a typical emission near a roadway? Is it more toxic than ambient particles in a broad sense?” He and his research team will compare how airborne-particulate samples collected from the Marcellus Shale Energy and Environment Laboratory near Morgantown and from downtown Morgantown influence microvascular tissue.

        Livestock Maybe Affected by Fracking via Unknown Mechanism in Fayette County, PA -- After years of seeing reproductive issues among his yearling heifers that grazed in the pasture, Broadwater is convinced that a shale gas well there damaged the health of those cows via a seep that formed at the bottom of the slope on the well’s south side. “They don’t care about the farmer,” Broadwater said of Chevron and the state Department of Environmental Protection as he stood between the seep and the gas well. In 2010, Atlas Energy developed the National Mines 26H natural gas well site on Broadwater’s property, and Chevron acquired it in 2011. Broadwater began to have problems with his herd almost immediately. The first two to three years after the well was drilled, only half of the heifers were pregnant, which struck him as highly unusual. Broadwater bought a new bull, recalling that Chevron blamed his herd’s reproductive issues on the bull. The heifers continued to have trouble breeding, though, and about three years ago, Broadwater stopped making the pasture near the well available to his cattle. He saw an increase in births right away. This year, the yearling heifers have had a 100 percent calving rate, having not been exposed to the 26H seep water. But all of the cows that previously grazed in the pasture have continued to struggle with infertility issues and disappointing breeding rates, Broadwater said. He recounted with exasperation that his 3-, 4-, and 5-year-old cows, having been exposed to the seep water, have this year had four stillborn calves and one that was born with a cleft palate and died hours later. Broadwater has no doubt that the seep is a direct result of the gas well, noting that the seep had killed grass below it for more than 300 feet below. A lifelong farmer, Broadwater, 68, recalled the veterinarian for his herd saying that whatever is killing the grass can’t be good for his cows, especially since the grass is their primary food source.

         Study shows vigilance vital - The state Department of Environmental Protection is the last word in Pennsylvania on most industrial processes that affect the environment, A recent disturbing case from Western Pennsylvania demonstrates, however, why residents themselves should be wary beyond the scope of the DEP’s official pronouncements. For decades, until a few weeks ago, the DEP had allowed local governments to use brine — wastewater from gas and oil drilling — to control dust on dirt and gravel roads.  As reported by StateImpact Pennsylvania, researchers William Burgos and Nathaniel Warner of Penn State University looked into the practice after discovering it in a DEP database about the use of drilling wastewater. They collected brine from 14 townships and reported, in the journal Environmental Science and Technology, that lead and radium in the wastewater washed out of the road material in simulated rainstorms.  The researchers said that some of the lead and radium is carried into the air as dust when the roads dry. Burgos and Warner reported that between 2008 and 2014, the use of oil and gas wastewater on state roads released four times the amount of radium into the environment than from specialized treatment plants that handle brine, and 200 times the amount released from spills. DEP suspended permits for brine last week, following a lawsuit filed last year against the agency for allowing the spread of pollution. State lawmakers should find out why the DEP allowed the use of toxic materials for dust control. And citizens facing environmental issues should not hesitate to demand answers from the agency beyond its minimum regulatory requirements. 

        Penn township fracking battle continues in court - The battle over fracking in Penn Township returned to a Westmoreland County courtroom Monday with residents discussing their experiences and fears about unconventional gas well drilling. “We were told that we would not be affected by drilling,” said Tracey Mason, who lives near Apex Energy's Quest well pad in the northeast corner of the township. She described noise like a “jet engine” keeping her family up at all hours and driving through a fog of dust kicked up by drilling. This week's testimony is expected to conclude Tuesday. Experts on both sides of the issue testified before Westmoreland County Judge Harry Smail last month. Local environmental group Protect PT challenged the township's zoning ordinance, which allows hydraulic fracturing wells in both industrial and rural-zoned areas. The anti-fracking group contends wells should be limited to industrial zones. Protect PT called 10 of its members as witnesses Monday to talk about why they oppose fracking. All live in or near the township, many near the Poseidon and Quest well pads, which are currently operating. Other well pads are in various planning stages. Noise, pollution and decreasing property values were top concerns. Resident Larry Irr said he's worried the sound-blocking barriers won't be enough to deaden the noise of drilling. “It's like trying to stop the green giant with a playpen,” he said. In addition to its own solicitor, the township is being represented by lawyers from Apex Energy and Huntley and Huntley Energy Exploration, which own the current and proposed fracking wells. The township and energy companies are expected to call six witnesses Tuesday, including township employees who will focus on how the zoning ordinance was created.

        Testimony concludes in Penn Township fracking case - The fate of fracking in Penn Township is in a judge's hands after four days of testimony featuring more than 20 witnesses and more than 100 documents presented as evidence. Local activist group Protect PT challenged the township's mineral extraction overlay in court before Westmoreland County Judge Harry F. Smail. The overlay allows unconventional gas well drilling in rural and industrial zones. The court heard from anti-fracking residents Monday. On Tuesday the township and the gas companies that do business there presented their side. Township Community Development Director Bill Roberts said the township's zoning ordinance was developed over about seven years, in accordance with changing state and federal rules. The township started working on a new zoning ordinance in 2009, updating regulations that remained largely unchanged since the '90s. In 2012 state legislators passed Act 13, which limited municipalities' ability to restrict natural gas drilling. Parts of the law were overturned by the Pennsylvania Supreme Court in 2013. The changing standards delayed implementation of Penn Township's ordinance, Roberts testified. “We just kept adjusting as we moved along, until we ended up with the ordinance you see in front of you,” he said. The ordinance includes limitations on sound, noise and traffic generated at drill sites, he said. Protect PT questioned whether the gas companies influenced the development of the ordinance. Ryan Hamilton, Protect PT's lawyer, asked Roberts numerous questions about township Commissioner Jeff Shula, whose son works as a geologist for Huntley and Huntley Energy Exploration, which has one active fracking well in the township and has several more in development. Shula recused himself from voting on the final ordinance but was involved in shaping some of the earlier drafts. 

        State legislators ask feds to support ethane storage hub in Pennsylvania -- Two legislators from southwestern Pennsylvania have filed a resolution calling for federal legislation and policies to support the construction of an ethane storage hub in the Appalachian region. State Rep. Jim Christiana, R-Monaca, and state Sen. Camera Bartolotta, R-Canonsburg, spoke Tuesday in favor of the storage hub at a news conference in Harrisburg. “Pennsylvania is one of the nation's leading states in terms of natural gas production, manufacturing and the petrochemical industry,” Bartolotta said. “Building an ethane storage and distribution hub would help our state capitalize on its existing infrastructure and natural resources, giving us an opportunity to create more quality jobs and drive business growth throughout the region.” Bartolotta said among the “strategic steps” necessary for the hub's development is the passage of several bills by Congress. Such a hub could be used for the storage and distribution of ethane feedstock to petrochemical facilities such as the one being built by Shell Chemical Appalachia LLC in Beaver County, said Abby Foster, president of the Pennsylvania Chemical Industry Council. “The development of ethane storage facilities would drive additional investments to grow the supply chain and solidify this market for Pennsylvania,” Foster said.  A 2017 study commissioned by the Pennsylvania Department of Community and Economic Development forecasted that, from 2026 to 2030, the expected ethane output from the Marcellus and Utica Shale plays will be enough to support up to four additional ethane steam crackers in the region. Shell Chemical is building the $6 billion facility on the Ohio River with a view toward using ethane from the Marcellus Shale and processing it into ethylene and, finally, polyethylene pellets for the plastics industry. It has begun hiring for production operator positions and anticipates up to 600 jobs. 

         How Sunoco's Mariner East pipeline is affecting real estate prices in Pa.'s Chester and Delaware Counties - Two months after Angela and Matthew Cibelli moved into their family’s dream home in Uwchlan Township in 2016, a representative of Sunoco Pipeline LP stopped by their house to outline upcoming construction plans for the Mariner East project. “What construction?” replied Angela, unaware that the previous owner had signed an easement allowing Sunoco to occupy their backyard to build two new underground pipelines across their Marchwood property. Shannon Healey experienced a similar sinking feeling when she learned Sunoco planned to dig up the property that she and fiance Kevin Bullman bought last year on Lenni Road in Middletown Township. Sunoco had paid the previous owner for the easement.“We wouldn’t have bought here if we had known,” said Healy.The $5.1 billion Mariner East project, which aims to deliver 675,000 barrels a day of propane and other highly volatile gas liquids across Pennsylvania to Marcus Hook through three pipelines, has produced considerable anxiety in some neighborhoods in Chester and Delaware Counties, the most densely populated areas along its 350-mile route.The project has unsettled the residential real estate market, as some fearful homeowners sold out ahead of construction, and some buyers moved in unaware of the forthcoming disruption. Many who remained are basically stuck until the dust settles, uncertain of the value of their homes.“I’m scared of it,” said Kate White, 57, whose house on Lenni Road in Middletown is less than 10 feet from the pipelines. “I would love to move, but who would buy my house now?”   “When I found this house, I thought it was perfect,” said Ray Magliano, who paid $300,000 at the end of 2015 for a three-bedroom house on Wildwood Avenue in Glen Riddle, not knowing that Sunoco had paid the previous owner to expand its easement. The new pipelines run 36 feet from his front door.  He said a lawyer advised him it would cost more than it was worth to challenge the sale. Zillow, the real estate website, now estimates his home is worth 10 percent less than what he paid for it.

        Pennsylvania adopts new controls for cutting methane from shale gas wells - New shale gas wells in Pennsylvania will have to meet permit conditions that directly control emissions of the greenhouse gas methane for the first time, the Wolf administration announced Thursday as it released final versions of contentious air quality permits that had been under development for two years.The two general permits will apply to new natural gas wells tapping the Marcellus and Utica shales, and new compression and processing stations built along pipelines. Both permits will go into effect on Aug. 8.Department of Environmental Protection Secretary Patrick McDonnell said the permits “are some of the first in the nation to comprehensively address methane emissions from all equipment and processes, and they also address other types of air pollution that contribute to poor air quality.”Methane is the second-most prevalent greenhouse gas released from human activities after carbon dioxide, but it is more potent at trapping heat in the atmosphere over the short term. Natural gas is mostly made up of methane, so minimizing leaks means companies keep more of their product to sell.That was the point emphasized by Marcellus Shale Coalition President David Spigelmyer, who said Thursday that the industry is already “focused on ensuring methane and related emissions are managed safely and effectively.” “We remain concerned about imposing additional requirements through operating permits, particularly those that exceed DEP’s statutory authority,” he said.

        Fact of the Matter: Dominion's Pipeline Jobs Claim "Deceptive" -- Dominion Energy has taken to the airwaves to gain public support for the Atlantic Coast Pipeline, a controversial 600-mile project that will send natural gas from West Virginia to Virginia and North Carolina.  One much-televised ad features Brian Simpson, a heavy equipment operator and member of the International of Operating Engineers, Local 147. “For me, the Atlantic Coast Pipeline means a good, steady job with benefits,” he says.  ”The scene shifts to footage of Simpson talking to two colleagues at a construction site. A narrator says, “The Atlantic Coast Pipeline: 17,000 jobs.” The logo of the pipeline appears on the screen with white print underneath it saying, “17,000 JOBS..” That’s a lot of jobs and the figure, as it’s cited in the commercial, is greatly exaggerated and misleading. The source of the number, according to a Dominion spokesperson, is a 2014 report prepared for the energy corporation by Chmura Economics and Analytics, a Richmond-based company. The report contains some major qualifications about its job estimates that Dominion doesn’t share in its commercial. Chmura estimated the pipeline would support 17,240 “cumulative jobs” in Virginia, West Virginia and North Carolina during its six-year development and construction phase from 2014 through 2019. That doesn’t mean 17,240 people will find pipeline-related work during those years, as the ad implies. “Cumulative jobs” is a measure of the number of people projected to have pipeline jobs each year multiplied the number of years the development and construction phase is expected to last. In other words, if someone was hired for a job that lasted for six years, that would count as six cumulative jobs. Chmura estimated that the pipeline will spur an annual average of 2,873 actual jobs during its development and construction phase. Multiply that number by the six-year duration of phase, and you come up with 17,238 “cumulative jobs” which, when rounded off, matches Dominion’s ad claim.

        FERC splits again on affiliates, climate in Florida pipeline approval - FERC’s latest split pipeline decision highlights a growing partisan divide over pipeline approvals at the commission. LaFleur and Glick, the two Democratic commissioners at FERC, have regularly issue dissents or concurrences based on affiliate relationships and carbon impacts since the agency’s quorum was restored last year. The three Republican commissioners, meanwhile, typically vote to approve applications. That divide will likely influence FERC’s ongoing review of its pipeline certification policies, announced by Chairman Kevin McIntyre in December 2017. In this case, Glick took aim at the relationship between Florida Southeast Connection, owner of the proposed 5-mile pipeline, and Florida Power & Light, which owns the natural gas plant that would be the sole recipient of its gas. Florida Southeast says it has contracts for capacity on its proposed pipeline, called precedent agreements, with FP&L, but both companies are owned by NextEra Energy, which Glick said should raise questions over whether the pipeline is actually needed. “Although precedent agreements generally can be one measure for determining whether a pipeline is needed, precedent agreements among affiliates are less valuable for this purpose because they are not necessarily the product of arms-length negotiations,” Glick wrote. “Instead, under such circumstances, the Commission must look behind the precedent agreements and consider other indicia of need … including projections of the demand for natural gas, analyses of the available pipeline capacity, and assessments of the cost savings that the proposed pipeline would provide to consumers.” The FERC majority dismissed this argument, writing that it is “current Commission policy to not look behind service agreements to make judgments about the needs of individual shippers.” “The mere fact that Florida Power & Light is an affiliate of Florida Southeast does not call into question the need for the project or otherwise diminish the showing of market support,” the majority wrote. 

         Oil Hunt Damages Everglades’ Big Cypress National Preserve -  New oil development has no place in sensitive wetland habitats in the Florida Everglades. The Burnett Oil Company, based in Texas, claimed it could explore for oil in the Big Cypress National Preserve with no significant, long-term impacts to sensitive wetlands. But these claims have been refuted, as Burnett Oil has caused significant damage.As NRDC previously reported , the fossil fuel industry targeted the Big Cypress National Preserve in the western Everglades for oil development, beginning the first of four planned phases of seismic survey activities in 2017. However, heavy rains forced the oil company out of the preserve before the seismic activities were complete.Even after damaging wetland soils and vegetation last year, the oil company returned to the preserve this spring to continue its hunt for oil.NRDC and its partners retained environmental professionals to inspect and document the damage these activities are causing. Here's a report outlining the damage along with recommendations for restoration, mitigation and long-term monitoring. The consultants observed extensive soil rutting, which will have long-term adverse effects on the preserve's hydrology, soils and vegetation. Nonetheless, there were no signs that the oil company attempted to restore the wetland impacts, as its state and federal permits require. For example, the 33-ton "vibroseis" vehicles compacted and deeply rutted soils due to their sheer weight. These ruts are almost 2 feet deep in places. The vibroseis vehicles created seismic survey lines that are up to 15 feet wide. In several locations where vibroseis vehicles turned around or were rerouted, consultants observed even wider paths of soil disturbance.

        Gas pipeline firms appeal federal judge's order to pay for canal erosion -- Four natural gas pipeline companies that were ordered to repair some erosion along pipeline canals in Plaquemines Parish by a federal judge in August 2017 and May of this year have appealed their case to the U.S. 5th Circuit Court of Appeals.The notice of appeal does not contain an explanation of why the rulings by U.S. District Judge Jane Triche Milazzo were being challenged."We are appealing because while the court awarded only $1,100 in money damages and ordered less than a third of the specific relief requested by the plaintiffs, important issues were wrongly decided and should be reversed on appeal," said Dave Conover, a spokesman for Kinder Morgan, the parent company for two of the pipeline firms.Attorneys representing New Orleans-based Vintage Assets Inc. and other landowners who filed the suit against the pipeline companies did not immediately respond to a request for comments.In August 2017, Milazzo found that Tennessee Gas Pipeline Co. LLC and Southern Natural Gas. Co. LLC, both subsidiaries of Kinder Morgan, and the privately owned High Point Gas Transmission LLC and High Point Gas Gathering LLC, had to repair some of the erosion that had occurred since 1953 along the paths of their canals through property largely owned by New Orleans-based Vintage Assets Inc. in the Breton Sound basin in Plaquemines Parish.After a September 2017 bench trial aimed at determining what should be repaired, Milazzo ruled in May that the companies had to restore 9.6 acres of wetlands that she found they had allowed to erode, and must pay $1,102 in damages.  The cost of restoring the wetlands could be significant, and a permanent injunction Milazzo issued with her ruling required the companies to maintain the wetlands adjacent to the canals for as long as right-of-way agreements allowing the pipelines to be there are in force.

        Oil vs wild rice: Enbridge, opponents gear up final US pipeline push (Reuters) - Canada’s Enbridge Inc (ENB.TO) faces an indefinite delay to its biggest-ever capital project if a U.S. state regulator denies its preferred pipeline route through Minnesota, but a victory would spell relief for Canadian oil shippers and northern U.S. refiners. Some pipeline opponents, which include environmental and Native American groups, are trying to convince the Minnesota Public Utilities Commission (PUC) to kill the project. Others oppose only Enbridge’s proposed new pipeline route, saying it would consume more land and threaten Native Americans’ traditional harvest of wild rice from wetlands. Enbridge wants to replace the aging 1,031-mile (1,660-km) Line 3 pipeline that runs from Alberta to Wisconsin. Worsening bottlenecks in Alberta have steepened a price discount for its heavy crude, and several pipeline projects that could ease the situation face stiff opposition. Line 3, placed into service in 1968, operates at half its capacity due to integrity concerns. Its replacement would allow it to return to approved capacity of 760,000 barrels per day.   The PUC is set to decide late this month whether the total $7 billion project is necessary and if so, what route it should take. An administrative law judge recommended in April the expanded pipeline should follow the existing route. Enbridge prefers a new route that bypasses an indigenous reservation, avoids some ecologically sensitive areas and prevents a pipeline shutdown of up to one year.  A different route would require a detailed evaluation that would set back plans to start the added oil flow by late 2019, said Guy Jarvis, Enbridge’s executive vice-president of liquids pipelines and major projects.

        Shale Country Is Out of Workers and Dangling 100% Pay Hikes -Jerry Morales, the mayor of Midland, Texas, and a local restaurateur, is being whipsawed by the latest Permian Basin shale-oil boom. It’s fueling the region and starving it at the same time. Sales-tax revenue is hitting a record high, allowing the city to get around to fixing busted roads. But the crazy-low 2.1 percent unemployment rate is a bear. As a Republican first elected in 2014, he oversees a government payroll 200 employees short of what it needs to fully function. “This economy is on fire,” he said. Fire, of course, can be dangerous. In the country’s busiest oil patch, where the rig count has climbed by nearly one third in the past year, drillers, service providers and trucking companies have been poaching in all corners, recruiting everyone from police officers to grocery clerks. So many bus drivers with the Ector County Independent School District in nearby Odessa quit for the shale fields that kids were sometimes late to class. The oil industry has such a ferocious appetite for workers that it’ll hire just about anyone with the most basic skills. “It is crazy,” said Jazmin Jimenez, 24, who zipped through a two-week training program at New Mexico Junior College in Hobbs, about 100 miles north of Midland, and was hired by Chevron Corp. as a well-pump checker. “Honestly I never thought I’d see myself at an oilfield company. But now that I’m here -- I think this is it.” That’s understandable, considering the $28-a-hour she makes is double what she was earning until December as a guard at the Lea County Correctional Facility in Hobbs. When the boom goes bust, as history suggests they all do, shale-extraction businesses won’t be able to out-pay most employers anymore. Jimenez said she’ll take the money as long as it lasts.

        Why Aren’t Permian Oil Producers Profitable? - The Wall Street Journal recently reported that only five of the Top 20 U.S. oil companies focused mostly on hydraulic fracking generated more cash than they spent in the first quarter of this year. This continues a trend that has been ongoing throughout the fracking boom. The article doesn’t list the cash flow picture for the entire Top 20, nor did it explain how it calculated cash flow. But based on the numbers they reported and my own analysis, it appears they are defining cash flow as simply the amount of cash generated from operations minus capital expenditures.The story indicated that overall, companies spent $1.13 for every $1 they took in. It further noted that “Oasis Petroleum Inc. spent $3.27 for every $1 it made in cash, while Parsley Energy Inc. spent almost $2 for every $1 it made in cash.”Hedging was blamed for the underwhelming cash flow. The article noted that many producers hedged oil prices at $50 to $55 a barrel, and were therefore unable to cash in on the rally in oil prices. Of course, that makes you wonder why a company would hedge at a price that they should have known would result in negative cash flow. Continental Resources infamously ditched its hedges in 2014 after oil prices declined to $75/bbl. The company expected prices to bounce back quickly. Continental hasn’t yet resumed hedging but expects to do so at some point. Notably, Continental was reported to have the highest cash flow among its peers at $258 million for Q1. EOG Resources was also highlighted for generating a $110 million cash surplus for the quarter.

        Natural Gas Basis Implications Of Permian Production And Takeaway Capacity - Gas producers in the Permian are facing the prospect of severe transportation constraints over the next year or so before additional gas takeaway capacity comes online. Left unchecked, continued production growth could send gas at Waha spiraling to devastatingly low prices for producers. However, there are a number of ways producers and other industry stakeholders could mitigate the growing supply congestion in West Texas, at least in part, and possibly dodge the proverbial bullet. The longer-term solution will come in the form of new pipeline capacity, which will shift vast amounts of Permian gas east to the Gulf Coast and potentially create a new problem — supply congestion and price weakness along the Gulf Coast, at least until sufficient export capacity is built there to absorb the excess gas. Today, we wrap up our Permian gas blog series, with our analysis of how these events will unfold, including an outlook for Waha basis.  In Part 1 of this series, we discussed the meteoric rise of Permian gas production as a byproduct of the crude-focused drilling boom in the basin. The supply growth has happened much faster than many market participants expected and both crude oil and gas production growth is now facing prolonged periods of takeaway constraints and constraint-driven supply price discounts unless either producers slow down or more takeaway capacity is built (see All Dressed Up With Nowhere to Go for more on the crude takeaway). In Part 2, we took a closer look at the effects of rising production on outbound gas flows, pipeline utilization and prices. . As we detailed in Part 3, there are six publicly announced pipeline projects vying to relieve Permian constraints, all with routes that move gas east to where the demand is growing the most — at the Gulf Coast.

        Gas Glut in Permian Sparks Dilemma Over How Much to Burn - -- Texas is facing a burning question that’s pitting the state’s economy against its environment, and oil drillers against each other.With natural gas pipelines in the Permian Basin reaching 98 percent of capacity, Texas is weighing whether to keep intact or loosen strict state regulations that limit flaring, the process used by drillers to burn off excess gas pumped up along with their oil. Now the limit for individual wells is 45 days. After that, without a rare-granted exemption, the gas must be piped away or the well must close.Shut wells mean less revenue for companies and the state at a time when oil prices and production are surging while regional gas prices are in a tailspin. Ending or expanding the cap solves the problem. But it also gives drillers that haven’t paid for space on existing pipes a competitive edge over those that have, and could spark environmental protests.“This is not a simple thing we’re talking about,”  “It’d be a pretty big policy shift and we want to be very thoughtful about what the ramifications could be."Sitton said he’s meeting with producers across the Permian, and hopes to have a decision within six months, when he believes the dilemma will come to a head.  The gas associated with that boom has filled up all but two percent of pipeline capacity as of the end of April, according to RBN Energy LLC, and Rystad Energy AS suggests oil output may grow 10 percent more by the end of 2018.Natural gas prices in the Permian, meanwhile, are the cheapest in the nation. The region is “ground zero for the oversupply caused by associated gas production,” said John Kilduff, a partner at Again Capital LLC in New York, by email. If oil output continues to boom, gas prices “could certainly go to zero.”

        Permian drilling activity drives diesel demand and projects to supply more of it. Drilling and completion activity in the Permian Basin doesn’t only produce vast quantities of energy, it consumes a lot of energy too, mostly in the form of diesel fuel to power the trucks, drilling rigs, fracturing pumps, compressors and other equipment needed to keep the oil patch humming. And while refineries within or near the Permian meet a portion of the region’s needs, rising demand for diesel there is spurring the development of new infrastructure — and the repurposing of existing assets — to bring additional fuel into the Permian from refineries along the Gulf Coast. Today, we discuss efforts to move more diesel to the oil fields of West Texas. Texas consumes far more distillate — most of it ultra low sulfur diesel (ULSD) — than any other state: an estimated 485 Mb/d (or 20.4 million gallons a day) in 2016, the most recent year that state-by-state statistics are available from the Energy Information Administration (EIA). That was 82% more than California, and more than triple the distillate consumption of other high-population states like New York, Pennsylvania and Florida. Four-fifths of Texas’s distillate/diesel consumption is by the transportation sector, the vast majority of it by tractor trailers and other trucks that transport everything from petrochemicals to corn chips across the Lone Star State. In the past few years — and especially in the past two or three — diesel consumption has been on the rise in the red-hot Permian Basin in West Texas, and in neighboring counties in southeastern New Mexico. There, diesel is the king of fuels. It powers almost everything: the trucks that haul oilfield equipment, frac sand and water to well sites, the trucks that haul produced water from the lease to disposal wells, and, increasingly in recent months as takeaway pipelines out of the Permian have filled up (see No Time), the trucks that transport crude oil long distances to downstream pipeline injection points (and sometimes all the way to Corpus Christi and Houston).

        Permian tracker: Pipeline build-out to support increased production - Production from the US' fastest growing oil play continues to rise, but infrastructure has lagged the surging output leading to steep discounts at the region's pricing hub. New pipelines in development should alleviate the regional bottleneck and support further production growth, particularly with the backdrop of a firmer global market.  The Midland WTI discount to Cushing WTI averaged $10.26/b in May, widening from a $5.96/b discount in April, S&P Global Platts data shows. The Midland discount to Houston averaged $14.28/b, nearly doubling the $7.79/b average discount in April. In May 2017, the discount was just $2.28/b.  While Midland WTI prices have been pressured lower because takeaway capacity is lagging production growth, crude prices on the Gulf Coast have been lifted by strong export demand for US crudes. Weekly US crude exports hit a record high 2.57 million b/d the week ending May 11, according to the US Energy Information Administration. Current pipeline takeaway capacity out of the Permian is roughly 3.1 million b/d, which combined with local refinery demand for Permian crude at just under 300,000 b/d falls short of production.Current price discounts have made moving crude by rail economical, although there is limited rail capacity. There is roughly 315,000 b/d of Permian Basin rail capacity, but much of that is now being used to move other commodities like frac sands.Plains All American, which is already trucking volumes from the Permian, said it sees limited opportunities for offering CBR services from its McCamey, Texas terminal, which can move up to 15,000 b/d as transloading facilities in the basin are geared more towards handling frac sand. Murex, along with Cetane Energy, said it will expand Cetane's transloading facility at Carlsbad, New Mexico, boosting its CBR capacity by 40,000 b/d to 75,000 b/d in the third quarter. To meet the growing output, two waves of pipelines are being planned across Texas, offering a total of 3.1 million b/d of new takeaway capacity by mid-2020.

        • **Gray Oak (Q3 2019 completion): Phillips 66 (75%) owner and Andeavor (25%) said in late April it has received shipper support to move ahead with the 700,000 b/d pipeline, and also launched an open season that could increase throughput on the line to 1 million b/d. The pipeline will move crude to Corpus Christi and to Sweeny/Freeport along the Houston Ship Channel and is targeted for start up in third quarter 2019.
        • **EPIC Midstream (Q3 2019): The San Antonio-based company is working to bring on more shippers on its Eagle Ford Permian Ingleside and Corpus Christi pipeline for which it secured 75,000 b/d and 100,000 b/d of firm capacity, respectively, from Apache and Noble Energy. The pipeline is due for start up by the third quarter of 2019 and has increased capacity in the line to 675,000 b/d from 590,000 b/d. That figure may increase further to 825,000 b/d.
        • **Cactus II (Q3 2019): Plains All American is moving ahead with the permitting, right of way and procurement process for the 650,000 b/d pipeline that it plans to bring into service in third quarter 2019. Cactus II will ship barrels from the Delaware Basin to the Port of Corpus Christi, and the adjacent Ingleside Terminal on the Texas Gulf Coast,
        • **Midland to Nederland (2020): Energy Transfer Partners, which is in talks with shippers, said mid-May it will announce "very soon" strategic partners for the 600,000 b/d pipeline that will ship crude from Midland to Nederland on the USGC.
        • **Jupiter (2020): An open season will be launched late summer by Dallas-based Jupiter Midstream for the pipeline, which will have a capacity of up to 500,000 b/d and will move barrels from the Permian to Brownsville on the southernmost tip of the Texas Gulf Coast.

        New Mexico official says Texas landowners are “stealing” millions of gallons of water and selling it back for fracking — After you head northeast on Ranch Road 652 from tiny Orla, it’s easy to miss the precise moment you leave Texas and cross into New Mexico. The sign just says “Lea County Line,” and with 254 counties in Texas, you’d be forgiven for not knowing there isn’t one named Lea.  But the folks who are selling water over it know exactly where the line is.  That’s because on the Texas side, where the “rule of capture” rules groundwater policy, people basically can pump water from beneath their land to their heart’s content. But on the New Mexico side, the state has imposed tight regulations on both surface and groundwater that restrict supply. Here’s the rub — or the opportunity, depending on your perspective: With an oil fracking boom driving demand for freshwater on both sides of the state line in these parts, Texas landowners are helping to fill the void with water from the Lone Star State — including from at least one county in which Gov. Greg Abbott has declared a drought.  Now a top New Mexico politician is crying foul, saying that unregulated pumping from wells next to the state line is depleting the shared aquifers that supply water to southern New Mexico.  “Texas is stealing New Mexico’s water,” said New Mexico State Land Commissioner Aubrey Dunn. “If you put a whole bunch of straws in Texas and you don’t have any straws in New Mexico, you’re sucking all the water from under New Mexico out in Texas and then selling it back to New Mexico.” The difference in ownership of land in the two states contributes to the divergent water policies. In Texas, more than 90 percent of the land is privately owned. In New Mexico, by contrast, only 43 percent is owned by individuals, while 57 percent is in government or tribal hands.

        Watchdog: Government isn’t sufficiently tracking costs from ‘orphaned’ oil, gas wells | TheHill: Costs to the government from dealing with “orphaned” oil and natural gas wells on federal land are likely increasing, the Government Accountability Office (GAO) said. But the Bureau of Land Management (BLM) doesn’t track the costs of dealing with such in an effective, agencywide way, the GAO concluded in a Tuesday report. “Precisely how the agency’s actual reclamation costs and potential liabilities have changed is unclear because BLM does not systematically track them at an agency-wide level,” GAO auditors wrote in their report.“BLM headquarters officials we interviewed told us that they did not have any information on actual costs incurred to reclaim orphaned wells and stated that BLM’s data systems were not designed to track incurred reclamation costs,” the auditors wrote. Orphaned wells are old oil and gas wells whose driller is unable to pay to reclaim them, usually due to bankruptcy. Auditors gathered data from 13 of the BLM’s 33 field offices to try to get their own estimate of orphaned well costs. That exercise found that those offices spent about $2.1 million between 2010 and 2017 on orphaned wells. The average cost were well was $267,600, compared with a $171,500 per well cost when GAO examined the issue in 2010. The total cost of reclamation for orphaned wells those offices knew about was $46.2 million. The GAO also found that the number of known orphaned wells across BLM lands has increased to 219 in 2017, from 144 in 2010. 

        Trump's BLM Ready to Sacrifice Ancient Rock Art for Gas Drilling - While the Ancestral Puebloan people of the Southwest were building citadels like Chaco Canyon , the Fremont people were carving mysterious petroglyphs depicting horned, broad-shouldered triangular men and sweeping carvings of desert snakes. Nowhere is their legacy more apparent than in eastern Utah's Molen Reef. Fremont artifacts dominate this cultural heritage site, but its rock art ranges from 3,000-year-old panels from the Barrier Canyon tradition to etchings by Mormon pioneers crossing the Utah desert. They aren't easy to see, but that's not a bad thing. You won't find these cultural treasures on a map, and Jonathan Bailey, a Ferron, Utah-based photographer and author of Rock Art: A Vision of a Vanishing Cultural Landscape , thinks it should stay that way. "There are hundreds of rock art panels in the Molen Reef, and maybe a dozen are known," he said. "They are mostly pristine, unexcavated sites that have very little vandalism." Bailey worries about the resources being compromised by human activity before they can be cataloged and protected. But the Bureau of Land Management (BLM) has different plans for the area. In January 2018, the agency approved the leasing of 32,000 acres for mineral exploration between the San Rafael Swell and Molen Reef—just as it has in many other places in Utah . In Molen Reef, instead of highly publicized conservation efforts led by environmental organizations, tribal groups, or multibillion-dollar outdoor recreation outfitters, the resistance is being led by a scrappy group of rock art enthusiasts fighting to save the sites they love to explore.  The Utah Rock Art Research Association (URARA) has been protesting oil and gas leasing in the area for years. The group works with environmental organizations and others because "wilderness concerns cross over with rock art concerns." But it avoids taking partisan stances. "We're an organization of both Republicans and Democrats," said Diane Orr, cochair of URARA's conservation and preservation committee. "Our concern with oil and gas leases is when the leasing process does not carefully look at all the resources in the area and really evaluate what needs to be protected."

        How Weakened Fossil Fuel Regulation Hurts Small Towns - From the start, President Donald Trump’s administration has made dismantling regulations, especially for the oil, gas, and coal industries, a top priority. Environmental Protection Agency Administrator Scott Pruitt, Interior Secretary Ryan Zinke, and Trump have teamed up with the Republican-led Congress to get federal agencies on the case, by streamlining environmental permitting and attempting other sweeping changes. As an environmental sociologist who has spent hundreds of hours researching communities directly affected by oil and gas production, I find that many people living in these places feel that fossil fuel industries already had the upper hand before Trump took office. Companies enjoyed significant exemptions from federal environmental regulations that date back to George W. Bush’s presidency and remained on the books throughout the Obama administration. After the enactment of the 2005 Energy Policy Act, the law that codified many of these exemptions, states became responsible for creating their own policies, procedures, budgets and enforcement plans—most of which weren’t in place before the boom got underway. The government exempted fracking from federal environmental regulations like the Safe Drinking Water Act and the Clean Water Act. States could decide rules like setbacks from homes, zoning, water acquisition and disposal, and most other aspects of drilling. This made it easier and quicker to permit hydraulic fracturing, but the states had to scramble to determine how to regulate it. As fracking spread into more densely populated areas, wells ended up within a few hundred feet of homes, schools, hospitals, and other buildings in states like Colorado, Texas, Pennsylvania and North Dakota. That made a big impact on people’s quality of life.But in places like Denton, Texas, and Colorado’s Front Range, the people who live in places most affected by these types of changes have no seat at the table. They live alongside oil fields and gas patches but have little power to affect what happens around them.

         Journalist Cleared of Trespassing at Pipeline Protests (AP) — A journalist arrested last year while covering protests over the Dakota Access oil pipeline has been cleared of criminal trespass charges in North Dakota. Judge Thomas Schneider ruled Friday that Jenni Monet complied with police orders while reporting on the demonstration, the Bismarck Tribune reported . "It's a great day for journalism and for North Dakota in recognizing the essential role that reporters play in shaping our democracy," Monet said. "Today the court upheld our constitutional right to press freedom, which has never been more important than right now." Monet was reporting for Yes! Magazine on police clearing a protest camp in Morton County when she and 75 others were arrested on Feb. 1, 2017, according to court records. Police testified the Last Child Camp sat on Dakota Access-owned property across from the main camp, but demonstrators alleged it was treaty land. Prosecutor Chase Lingle alleged Monet was guilty of criminal trespass for remaining on the property after police ordered the group to leave. "Journalists have no special right to accessing private property," Lingle said. Lt. Tom Iverson of the North Dakota Highway Patrol had asked Monet and some others who said they were journalists for their press credentials, Monet said. She said she was the only one who displayed credentials and believed Iverson had consented to allowing her to remain on-site and report. A Beulah officer later arrested her. Schneider said Monet didn't knowingly break the law when she stayed on the property. "I believe she thought she was licensed or privileged to be there," he said. Monet said Friday that journalism is vital in "shining a light where there's darkness, especially in marginalized communities like Standing Rock." 

         Taxpayers Still Shelling Out Billions Annually in Fossil Fuel Subsidies – The world's richest countries continue to subsidize at least $100 billion a year in subsidies for the production and use of coal , oil and gas , despite repeated pledges to phase out fossil fuels by 2025.The Group of Seven, or G7, consists of Canada, France, Germany, Italy, Japan, the UK and the U.S. The group, as well as the larger G20, agreed as early as 2009 to phase out fossil fuels in order to combat climate change .But a new report from Britain's Overseas Development Institute (ODI) reveals that on average per year in 2015 and 2016, the G7 governments supplied at least $81 billion in fiscal support and $20 billion in public finance, for both production and consumption of oil, gas and coal at home and overseas."With less than seven years to meet their 2025 phase-out deadline, G7 governments continue to provide substantial support the production and use of oil, gas and coal," the authors stated .The study, co-authored by Oil Change International , the International Institute for Sustainable Developmentand the Natural Resources Defense Council , was issued Monday ahead of the G7 summit in Canada. For the study, each G7 member was rated on the following measures: transparency; pledges and commitments; ending support for fossil fuel exploration; ending support for coal mining; ending support for oil and gas production; ending support for fossil fuel-based power; and ending support for fossil fuel use. France ranked the highest overall, with 63 out of 100 points. While the country is lagging behind in its support for fossil fuel use, France earned the top spot for making early progress in ending fossil fuel exploration and production and ending coal mining, the researchers determined. Germany (62 points) and Canada (54 points) rounded out the top three in the dubious list.

        New U.S. pipeline expected to lower natural gas prices in Central Canada: — Consumers in Ontario and Quebec can expect to pay less for natural gas to heat their homes as a new pipeline connects shale gas from the northeastern United States to the Dawn storage hub near Sarnia in southwestern Ontario. The Rover Pipeline last week won approval from the U.S. energy regulator to increase shipping to its capacity of 3.25 billion cubic feet per day of natural gas, transporting the fuel from Marcellus and Utica shale wells in the northeastern U.S. to American markets and, via the Vector Pipeline connection, to the Dawn hub for distribution in Central Canada. "Prices are as low as they've been in the last 10 years and there's more downward pressure, because of the incremental supply, than there would be upward pressure," said Chris Shorts, director of storage, transportation, marketing and utilization for Union Gas Ltd., operator of the Dawn hub. He said he couldn't estimate what that will do to an average bill — consumer natural gas rates in Ontario and Quebec are affected by market gas prices but also take into account transmission and management costs. Union Gas last year increased its capacity to accept gas on the Vector connection by about 300 million cf/d to about 1.8 billion cf/d, he said, adding the actual amount delivered each day will vary according to sales contracts between shippers in the U.S. and buyers in Canada. Natural gas volumes arriving at Dawn are already being affected by about 1.4 billion cf/d in western Canadian natural gas added late last year after TransCanada Corp. brought in discount tolls to increase the use of its poorly utilized Canadian Mainline gas system, he said. 

        Canada promises climate progress and buys a pipeline instead - The Canadian government’s decision to buy a controversial oil pipeline project is drawing intense criticism from environmental groups and could open the door to legal challenges over its ability to meet the emissions reduction target the country promised to the Paris Climate Agreement.The Trudeau administration announced last week it would buy the Trans Mountain Pipeline from Houston-based Kinder Morgan for $3.5 billion. Kinder Morgan had threatened to walk away from a planned expansion of the pipeline, which has been mired in lawsuits, if the government could not assure the company it could proceed. Instead of providing assurance, Prime Minister Justin Trudeau decided to buy the whole pipeline and proceed with the expansion.  Kinder Morgan secured federal permits in 2016 to build a pipeline parallel to its existing, 65-year-old one. It would increase the volume of crude it could move from the oil sands of Alberta to the coast of British Columbia from 300,000 barrels to 890,000 barrels per day, most of which will be shipped overseas. Kinder Morgan estimated that the new 715-mile pipeline will cost $5.72 billion to build.The government’s plan to own Trans Mountain is heightening the already intense criticism of Trudeau and his oft-repeated claim that the country can both boost oil production and reduce emissions by 30 percent from 2005 levels by 2030, the country’s commitment to the Paris Agreement.“Trudeau has beautiful speeches and a great reputation as environmentally progressive. But his actual policies involve taking actions on climate change as long as it doesn’t touch the oil industry,” said Keith Stewart, a senior energy strategist with Greenpeace Canada.

        Canada pushes Trans Mountain pipeline to sell oil to China far beyond US shores - As it battles over trade with its big southern neighbor, Canada is looking westward for new markets for its oil.In the thick of a bitter trade dispute with the United States, the only customer for its crude oil, the Canadian government has opted to buy a pipeline project that will more than double the oil it can send to the West Coast — and then on to new markets in Asia.While the pipeline project has been moving on its own timeline, the purchase coincidentally comes during one of the thorniest periods in U.S.-Canadian trade relations. Analysts say ironically that should in fact help Canadian Prime Minister Justin Trudeau find some support for thecontroversial project, which has pit the province of British Columbia against Alberta and has prompted protests across the country.The construction is slated to begin this summer, but it is opposed by the British Columbia government, local governments, environmental interests and even groups in Washington state. Canada has long sought a pipeline solution, both to the east and west coast, and has so far failed. There is a lot to gain from moving its oil resources outside of North America, including much higher prices and access to the world's fastest growing market.Trudeau's government late last month announced it would buy Trans Mountain pipeline, its British Columbia terminal and expansion project for about $3.5 billion, after owner Kinder Morgan Canada found the project too risky. Trudeau has said he wants to make sure the pipeline expansion gets built and then sold to a new operator so Canada can send oil on to new customers in Asia."We are going to ensure that it gets built so that we can get our resources to new markets," Trudeau told Bloomberg News.

        Quebec to ban shale gas fracking, tighten rules for oil and gas drilling - The Quebec government is banning fracking for shale gas provincewide. Pierre Moreau, the minister of energy and natural resources, announced a series of new measures to regulate oil and gas exploration Wednesday afternoon in Quebec City. The ban on fracking for shale gas, he said, would protect the low-lying Lower St. Lawrence region in particular. Under the new measures, which will amend Quebec's Petroleum Resources Act, passed in 2016, the government would also ban drilling for oil and gas in 13 waterways across the province. That includes the Lake of Two Mountains, Lake Memphremagog and the St. Lawrence River, Moreau said. "The story of the energy transition is being written, and these rules on hydrocarbons are part of that," Moreau said. He said the government is approaching the issue with "caution." In urban areas where oil and gas exploration is already prohibited, the government plans to now extend that ban to a one-kilometre zone around those municipalities. "This regulatory measure means that any exploration and exploitation of hydrocarbons will be strictly banned on the entire surface of the island of Montreal and the island of Laval," Moreau said.Outside these urban areas and the additional one-kilometre zones, the government also plans to increase the allowable distance between an oil well or gas drilling site and what Moreau called "sensitive" areas. Wells will now need to be at least 300 metres from a private residence, at least 550 metres from a school, hospital or public building, and 200 metres from an ecotourism site, Moreau said. 

        U.N. Report Calls U.S. Fracking History Cautionary Tale – After looking back at the history of shale gas extraction in the United States, international development and trade experts say hydraulic fracturing should be approached with caution by countries considering ways to meet growing energy demands. Mitch Jones, a senior policy advocate with the watchdog group Food and Water Watch, says a new report by the United Nations Conference on Trade and Development adds to a growing body of research pointing to hazards associated with fracking. "Fracking in the U.S. – whether it's in Pennsylvania, or in Wyoming and North Dakota or Colorado – serves as a cautionary tale for other countries that are considering fracking for shale gas on their own," he states.In its recent Commodities at a Glance report, the United Nations' trade division points to groundwater contamination, increased seismic activity and methane waste as fracking's biggest drawbacks. Analysts also say all countries should move as quickly as possible to stop burning fossil fuels, including shale gas. The Trump administration has called for expanded fossil fuel production in an effort to achieve energy dominance. The Petroleum Association of Wyoming has not yet responded to a request for comment on the report.The U.N. agency also warns that investments in shale gas should not come at the expense of renewable energy and efficiency strategies, both considered critical to limit the impacts of climate change.  Jones points to a recent Rocky Mountain Institute study warning that nearly $1 trillion in natural gas infrastructure could end up as stranded assets in investment portfolios.

        Mansfield woman sabotaged fracking gear while wearing her daughter’s hoodie - A dog walker sabotaged survey equipment “out of rebellion” for the mess a fracking firm has made of the countryside, a court heard. Fiona Radford, from Langwith, snipped a cable linking underground probes to a seismic monitor with secateurs, while walking her dog in a field, off Devonshire Drive, on January 20. Prosecutor Simon Rowe said INEOS, which owns the device, put CCTV footage of the incident on social media and tracked down Miss Radford because she was wearing a distinctive hoodie. In police interview, she said: “I did it. I cut it. I was angry. I wanted to hurt them like they have hurt us.” “She had been visited by an elderly lady the day before who was upset because the fields had been damaged by vehicles going on and off the field,” Mr Rowe said. She contacted INEOS, Derbyshire County Council and landowners, the Welbeck Estates, to complain, but received no response, he said. “She said she did it out of rebellion for what INEOS had done,” Mr Rowe said. “She wasn’t hiding her actions, she did it in daylight. “Later she said she regretted it, and wouldn’t do it again, and would stick to protesting.” INEOS intend to pursue her for the £570 cost of repairs through civil means, the court heard. Michael Little, mitigating, said: “Prior to this her protests had been limited to putting posters in her window.” He said Miss Radford had seen red when her elderly friend told her she couldn’t use her disability scooter because of the “unfortunate mess” the countryside had been left in by INEOS. Police initially contacted her daughter because the hoodie seen in CCTV belonged to her, but she was at university, and when Miss Radford found out, she contacted police.

        Greenpeace protesters abseil into oil firm Total's AGM -  More than 250 Greenpeace activists hijacked Total’s annual shareholders’ meeting in Paris to protest at the oil company’s plans to drill in the mouth of the Amazon and French Guiana.  Four activists descended by ropes from the ceiling above the stage, as the Total chief executive, Patrick Pouyanné, began his presentation, with at least 20 more gaining access to the Palais des Congrès. Some of the activists chained themselves to fixtures in the hall with the proceedings disrupted by chants and the blowing of whistles. The remainder of the 250-strong group protested outside the venue.  Edina Ifticene, who was invited by Pouyanné to address the annual meeting to explain the protest, said direct action had been planned after Total ignored the activists last year.  “We have been campaigning for more than a year and a half,” she said, speaking to the Guardian. “Last year at the annual meeting we had a share [of stock] and so asked questions of the company and provided a lot of evidence and arguments. They said everything is fine and there is no ecological risk. This year we decided to take direct action, we want Total to listen to us.”Total wants to explore Brazil’s Foz do Amazonas basin, which geologists estimate could contain up to 14bn barrels of oil, or more than the entire proven reserves in the Gulf of Mexico. Brazil’s environmental agency rejected the company’s bid for a licence for the fourth time on Tuesday, requesting more information.   A Greenpeace expedition in April documented coral in the area where Total plans to drill, after an earlier discovery of a massive coral reef nearby. Greenpeace also opposes Total’s investment in offshore oil production in French Guiana, which will boost its presence in the potentially lucrative area. Total faces more protests this month, after France’s largest farmers’ union called for a blockade of refineries in protest at the company’s decision to use imported palm oil at a new biofuel production site.

        Royal Dutch Shell Surpasses Exxon As World’s Largest Oil & Gas Company - Royal Dutch Shell took the top spot among oil and gas companies on the Forbes Global 2000’s list of the biggest and most powerful public companies, surpassing last year’s leader Exxon Mobil Corp. San Ramon, Calif.-based Chevron Corp. was the third-biggest oil and gas company on the list. France’s Total SA was the fourth-ranked, followed by China Petroleum & Chemical Corp., known as Sinopec, and PetroChina Co. Ltd. BP plc, Gazprom and Rosneft of Russia and India’s Reliance Industries Ltd. rounded out the top 10.

        Nordstream 2 Reveals The Extent Of U.S. Weakness --The latest twist of the Nordstream 2 Saga is the U.S. is now threatening to sanction the European companies acting as Gazprom’s financier’s for the pipeline.  This threat has been there since President Trump signed the sanctions bill spearheaded by a dying John McCain last summer. But, don’t let appearances fool you.  Trump wasn’t reluctant about signing that bill.  He welcomed it.  He went to the Three Seas Summit with “European Energy Security” on his lips and trade tariffs/barriers in his heart.He knew where this would lead.  And so did we.  The recent report from RT linked above reveals just how desperate the U.S. is to stopping Nordstream 2, and, frankly, it’s pathetic.“Everything is on the table. The administration is taking a whole-of-government approach to stopping the Nord Stream project,” the source said, as cited by the media.Last summer, Congress approved the so-called Countering America’s Adversaries Through Sanctions Act (CAATSA). The legislation allows the White House to introduce punitive measures against the participants of the energy project, investing over $5 million in those enterprises.“We have been clear that firms working in the Russian energy export pipeline sector are engaging in a line of business that carries sanctions risk,” a State Department spokeswoman told the media.Trump and his increasingly erratic foreign policy inner circle continue to up the stakes for European companies and countries that do not go along with his plans to remake the world in his image. Nordstream, along with Turkish Stream and potentially a revived Southstream into Bulgaria represent an existential threat to U.S. control over European politics and its economy.

        Growing US shale production reshaping global LNG market -- The US gas market is undergoing a structural shift that threatens to shake the established global LNG order. In 2017 the US became a net exporter of natural gas for the first time in 60 years. Driven by a combination of increased shipments to Mexico, and growing throughput at the Sabine Pass LNG export terminal, net exports averaged around 0.4 bcfd in 2017, compared to 1.8 bcfd net inflows in 2016. Growing shale production underpins the market shift. In addition to fueling exports, the supply abundance is altering the landscape of domestic demand through an expansion in natural gas electricity generation and industrial use. Short term, the abundant supply has weighed heavily on Henry Hub prices, and the incremental export demand has done little to change this. And medium-term prospects for significant LNG export demand come on the heels of a 5-year expansion in domestic natural gas generation capacity. This article details how the coming combination of domestic and export demand will inject much needed bullishness into the market. The advent of shale has seen US dry gas production grow at a meteoric pace to 73.3 bcfd in 2017 from 58 bcfd in 2010. Output is expected to reach 82.8 bcfd by 2019 according to the US Energy Information Agency (EIA). Production growth is expected to accelerate through 2020 before slowing, averaging 3% over the next 7 years (Fig. 1). Longer term EIA forecasts see production reaching 95.5 bcfd by 2024. The regions that will drive gas production growth are the East, Southwest, and Gulf Coast, which coincide with the location of future US LNG projects. On a regional basis, the EIA forecasts Gulf Coast dry natural gas production to grow 13% in 2018 to 16 bcfd from 14.1 bcfd in 2017 and by another 24% to 19.8 bcf/d in 2024. The Southwest, which includes West Texas is expected to increase 5% in 2018 to 10.94 bcfd and by a further 13% to 12.4 bcfd in 2024. Eastern dry gas production is expected to grow 5% in 2018 to 23.5 bcfd from 22.4 bcfd in 2017 and by a whopping 58% to 35.6 bcfd in 2024. The supply growth from these regions will be sustained by new demand from exports in the form of LNG and pipeline shipments to Mexico, as well as an increase in domestic demand from power generation.

        NYMEX July natural gas futures down 1.7 cents to $2.913/MMBtu early Tuesday - NYMEX July natural gas futures extended Monday's fall in early Tuesday trading, easing back towards the $2.90/MMBtu mark, after having nudged $3/MMBtu Monday morning. The NYMEX July contract was seen trading at $2.913/MMBtu at 0700 EDT (1100 GMT), 1.7 cents lower than Monday's settlement of $2.930/MMBtu. The contract ranged between $2.911/MMBtu and $2.927/MMBtu, easing lower as Monday's bearish sentiment continued -- the contract lost 3.2 cents during the first session of the week on a drop in demand over the weekend that trumped forecasts of warmer-than-average weather for most of the US. National Weather Service forecasts show that above-average temperatures were expected over most of the US in its 6-10 day outlook, with below-average conditions due in the northwest and the southeast. 

        NYMEX July natural gas futures steady at $2.899/MMBtu in early trade - NYMEX July natural gas futures were broadly steady in early Wednesday trading, ticking up slightly after Tuesday's fall and nearly back to the $2.90/MMBtu mark after weather-related losses over previous trading sessions. The NYMEX July futures contract was seen trading at $2.899/MMBtu at 0700 EDT (1100 GMT), 0.9 cent higher than Tuesday's settlement of $2.89/MMBtu. The contract ranged between $2.887/MMBtu and $2.912/MMBtu, easing lower as the bearish sentiment continued, after the contract lost 4 cents Tuesday on the back of a mixed weather outlook. In its latest forecast, US National Weather Service showed above-average temperatures over most of the US in its 6-10 day outlook, while below-average conditions were expected in the Northwest of the country. Milder temperatures could drive demand further down, with total US demand falling 600 MMcf to 70.4 Bcf Tuesday.

        July Natural Gas Called A Nickel Higher Ahead of EIA Storage Report --July natural gas prices were set to open 5.6 cents higher at $2.952 as the market anticipates another sub-100 Bcf storage injection once the Energy Information Administration (EIA) releases its weekly report later this morning for the week ending June 1.The EIA storage report will reflect the Memorial Day holiday week, which typically corresponds with a strong storage injection. But market estimates are wide ranging, between 77 Bcf and 98 Bcf and fall short of the triple-digit injection some would expect from a holiday weekend.  INTL FCStone Financial Inc. Senior Vice President Tom Saal told NGI that the story is the Memorial Day weekend. “If we got over 100 Bcf, I wouldn’t be surprised. That weekend should produce a big number.” His official estimate, however, is for a 97 Bcf injection.ION Energy’s Kyle Cooper is projecting a 97 Bcf injection, while a preliminary Bloomberg survey had a median estimate of an 89 Bcf build. A Reuters poll pointed to a 90 Bcf injection, and the Intercontinental Exchange EIA Financial Weekly Index settled Wednesday at an injection of 94 Bcf.The reporting week period was a hot one from Texas to the Midwest, where 90s reached Chicago for several days and 100s in Texas for strong demand, according to NatGasWeather.  Sub-tropical Storm Alberto, however, brought showers and cooling to the Southeast for light demand.“There was also the Memorial Day holiday that eased demand, as well as the potential for last week’s EIA report having been a little too low and in need of a few Bcf higher correction. Thus, many ways this report comes in squirrely,” NatGasWeather said. Last year, a build of 103 Bcf was reported by the EIA, and the five-year average build stands at 104 Bcf. There were 71 cooling degree days (CDD) last week compared with 44 CDDs at the same time last year and a 30-year normal of 42 CDDs. In the week ended May 25, 96 Bcf was added to storage.

        Pipe Explosion, Heat and Sub-100 Bcf Storage Build Lift Nymex, Spot Natural Gas Prices -- Nymex July natural gas prices found some support on Thursday as an early-morning pipeline explosion combined with another sub-100 Bcf reported storage injection from the Energy Information Administration’s (EIA) storage report to lift the prompt month some 3.4 cents to $2.93.Spot gas prices also rose amid some returning heat to high demand centers. The NGI National Spot Gas Average rose 3 cents to $2.61/MMBtu.Trading action was swift Thursday morning as news broke that Columbia Gas Transmission LLC’s  (TCO) Leach Xpress Pipeline in West Virginia -- which began flows in January -- had exploded. TCO said about 1.3 Bcf/d of firm service could be disrupted indefinitely after the explosion and fire occurred on the line in Marshall County, WV, prompting the company to issue a force majeure.TCO said that until further notice, capacity on the segment would be cut to zero. A spokesperson for TransCanada Corp., which owns the TCO system, said the incident occurred at 4:15 a.m. ET. The cause of the blast remains unclear and the impacted area has been isolated, the company said.The Nymex July futures contract was up a nickel before the start of trading as news of the explosion spread, and support remained strong just before the storage report from the EIA. “With supply growth being so critical to the health of summer fundamentals, it is no surprise that this morning's Columbia Gas incident” in West Virginia was met with price upside, Societe Generale (SocGen) natural gas analyst Breanne Dougherty said. “Until the storage deficit softens, ALL bullish news is expected to get a pronounced market response.”

        Analysis: Strong JKM prices to drive US LNG to East Asia this summer - US LNG exporters should deliver a record number of cargoes to East Asia this summer, thanks to the region's unseasonably strong gas prices, which are likely to remain elevated through next winter. On Friday, the Platts JKM for July-delivered cargoes was assessed at $9.60/MMBtu. That anomalously high price has been exacerbated recently as certain portfolio players move to cover short positions. More fundamentally, though, elevated crude-linked contract prices and continuing strength in spot-market demand from China are largely behind the recent run-up in prices. In contrast to previous shoulder seasons, Asian LNG prices have actually strengthened this spring and are at their highest, seasonally, dating back to 2014, S&P Global Platts data shows. In recent years, the Platts JKM has reached annual highs around $10/MMBtu during the peak-demand months of winter, followed by significantly lower prices from April through October. Last May, for instance, the index traded at an average $5.59/MMBtu. This May, the JKM averaged $8.68/MMBtu. But this season's elevated prices look like more than just a flash in the pan. With crude-linked contracts now valued in the mid-$10s/MMBtu and strong Chinese demand expected to continue, forwards markets are betting on prices at over $9/MMBtu through first-quarter 2019. Those price levels should drive a record share of US cargoes to consumers in East Asia this summer, with South Korea, China and Japan likely to import the majority of those volumes. Through May, US exporters have already shipped the LNG equivalent of roughly 196 Bcf of gas to consumers in East Asia this year. To put that number in perspective, consider that total exports in 2018 have amounted to just over 406 Bcf, meaning that nearly half of all US cargo sales have targeted East Asian buyers this year. 

        The Road To Mexico -- Elections July 1, 2018 -- ArgusMedia says it has a 3-part series on the Mexico election from an energy stand point. This is the first installment of that 3-part series: Like his fellow populist leader in the US, Mexico's leading presidential candidate wants to make Mexico great again, starting with making more refined products within the country's borders. Andres Manuel Lopez Obrador says he would make good on that promise by building up to two new refineries in Mexico, which would also come at a great estimated cost of $8bn. Lopez Obrador, an early opponent of the energy reforms, has been leading the polls for over a year, cementing a solid double-digit lead for months. Lopez Obrador has said he will stop Mexican crude exports to boost the domestic production of gasoline and diesel. He has also argued in favor of freezing fuel prices and reviewing all awarded upstream contracts. After years of severe budget cuts imposed on state-run oil company Pemex, Lopez Obrador has said he would focus heavily on Pemex.  Rocio Nahle, the candidate's pick for energy secretary under a Lopez Obrador presidency, toldArgus in a March interview that Mexicans could expect "a radical change in the organization of Pemex."  Lopez Obrador's Mexico-first energy program, formalized in a 415-page document published late last year, has stirred national pride among his supporters, upset by US president Donald Trump's repeated tirades against the US' southern neighbor.  Mexico's fuel and natural gas imports from the US have been rising for years. In 2017, state-run Pemex gasoline imports rose 13pc to 570,000 b/d from the previous year, while diesel imports increased by more than 26pc to 237,500 b/d. Pemex's natural gas imports dipped 8.6pc in 2017 to 1.766 Bcf/d, but were still 62pc more than the 1.089 Bcf/d imported at the beginning of the current administration in 2012.

        Ecuador To Sell A Third Of Its Amazon Rainforest To Chinese Oil Companies -- Ecuador plans to auction off more than three million hectares of pristine Amazonian rainforest to Chinese oil companies, angering indigenous groups and underlining the global environmental toll of China's insatiable thirst for energy. On Monday morning a group of Ecuadorean politicians pitched bidding contracts to representatives of Chinese oil companies at a Hilton hotel in central Beijing, on the fourth leg of a roadshow to publicise the bidding process. Previous meetings in Ecuador's capital, Quito, and in Houston and Paris were each confronted with protests by indigenous groups. Attending the roadshow were black-suited representatives from oil companies including China Petrochemical and China National Offshore Oil. "Ecuador is willing to establish a relationship of mutual benefit – a win-win relationship," said Ecuador's ambassador to China in opening remarks. According to the California-based NGO Amazon Watch, seven indigenous groups who inhabit the land claim that they have not consented to oil projects, which would devastate the area's environment and threaten their traditional way of life.  "We demand that public and private oil companies across the world not participate in the bidding process that systematically violates the rights of seven indigenous nationalities by imposing oil projects in their ancestral territories," a group of Ecuadorean organised indigenous associations wrote in an open letter last autumn.

        PdV considers force majeure on oil exports (Argus) — Venezuela's state-owned PdV is considering a declaration of force majeure on some of its oil supply contracts in June unless its clients agree to accept volume reductions of up to 50pc, PdV officials tell Argus.PdV's tumbling crude production, chronic breakdowns of its heavy crude upgraders and difficulty importing critical light crude and naphtha are progressively reducing the amount of oil available for export. The company was already taking advantage of flexibility in its supply contracts to shave off up to 10pc in export volumes. But larger cuts are now looming. PdV "in the best case only has about 695,000 b/d of crude supply available for export in June," a PdV marketing division executive said.Because the distressed company's problems are structural, any force majeure declaration would set a commercial bar that the Opec country could not quickly overcome.PdV is asking its principal clients that are collectively owed 1.5mn b/d of crude in June to accept smaller volumes and restructure existing supply contracts for up to one year.Among the drivers behind PdV's supply deficit is ongoing maintenance at its PetroPiar upgrader in which Chevron owns a 30pc stake. The facility, which has been off line since early May, supplies about 160,000 b/d of synthetic crude to the country's export portfolio. Maintenance will last through the end of June at the earliest, PdV officials say. Chevron declined to comment.Three other upgraders, all run by PdV, are in poorer operational condition. PdV could invoke force majeure if new supply deals involving smaller volumes cannot be worked out with clients such as Chinese state-owned CNPC, India's Reliance and Russia's Lukoil.The energy ministry likely would attribute a force majeure declaration to US financial sanctions and the effects of its debt-related dispute with US independent ConocoPhillips that severed PdV's Dutch Caribbean logistics last month. From the perspective of Venezuela's increasingly isolated government, the strategy would boost its international case against sanctions by adding pressure to the oil market.

        Venezuela’s Oil Meltdown Defies Belief --Venezuela might have to declare force majeure on its oil exports as production plunges and its ports are unable to ship enough crude.The ongoing meltdown in Venezuela’s oil sector could tighten the oil market more than expected.  Reuters reported Tuesday that Venezuela is considering declaring force majeure, a legal declaration made in extraordinary circumstances to basically get out of contractual obligations. In other words, Venezuela’s PDVSA is essentially prepared to say that it can’t supply the oil that it promised.The utter collapse of the country’s oil production is obviously a big factor in PDVSA’s inability to ship enough oil. Output is down below 1.5 million barrels per day and falling fast.But the tanker traffic at a handful of its ports has created unexpected bottlenecks, which have slowed loadings. Clogged ports are the direct result of the seizure of operations on several Caribbean islands by ConocoPhillips last month. The American oil major sought to enforce an arbitration award, laying claim to a series of storage facilities on the islands of Bonaire, Curacao and Aruba.Those assets were crucial to PDVSA’s operations – in fact, they had become even more important as PDVSA’s facilities in Venezuela deteriorated. They had the ability to service very large crude carriers (VLCCs), and were important for storing and blending PDVSA’s oil, and preparing it for export. Since ConocoPhillips tried to take over those facilities, PDVSA has tried to shift operations back to its ports in Venezuela. But those terminals are in very bad shape, and cannot make up for the loss of the Caribbean facilities. Reuters reported that there are more than 70 tankers sitting off the Venezuelan coast.

        Venezuela Seeks OPEC Support Against U.S. Sanctions - Cash-strapped Venezuela is pleading with OPEC for solidarity against U.S. sanctions, a week after Iran also asked its fellow cartel members for support against the returning U.S. sanctions on Tehran. “I kindly request solidarity and support from our fellow members,” Venezuela’s Oil Minister Manuel Quevedo wrote in a letter to OPEC seen by Bloomberg News. In the letter, Quevedo is calling upon the cartel to discuss “the constraining effects of unilateral sanctions imposed by the United States of America, which represent an extraordinary aggression, financially and economically, for our national oil industry’s operations and the stability of the market.” The letter by Venezuela is similar to the one that Iran sent to OPEC last week, in which Tehran sought support from fellow OPEC members against the returning U.S. sanctions and wanted the issue on the agenda at the Vienna meeting later this month. In his letter, Iranian Oil Minister Bijan Zangeneh also suggested that his country does not agree with “recent remarks by certain OPEC members, noting that the Organization adopted decisions by consensus and no single member spoke for the body.”

        Kazakhstan introduces 3-month ban on imports of Russian gasoline - Kazakhstan has introduced a three-month ban on the import of Russian gasoline, according to a document on the energy ministry website, which becomes effective 10 days after its publication. The ban could be related to rising gasoline prices in Russia, according to market sources. Kazakhstan's energy minister Kanat Bozumbaev said that so far the rise in Russia's gasoline prices was not having a big impact on Kazakhstan's domestic prices. He said the higher Russian prices were offset by healthy domestic supply, adding that stocks are exceeding consumption significantly and in four or five months Kazakhstan will be able to cover 90% of its needs, according to a Tengrinews report published on the energy ministry website. Kazakhstan is reliant on imports of Russian oil products until it completes the upgrade of its refineries. Kazakhstan's energy minister also said recently that last year the country covered 30% of its gasoline demand, 20%-25% of diesel and 58%-60% of jet fuel with Russian imports. But once the upgrades are completed in three or four months, Kazakhstan will be able to fully cover its gasoline, diesel and jet requirements, Bozumbaev said as quoted by Kazinform news agency and reported on the energy ministry website. In the second half of the year, Kazakhstan will also decide on a location for a new, fourth refinery, Bozumbaev said on the energy ministry website. He also said that all three refineries in the country will reduce the duration of their turnarounds from 45 to 20 days annually and a 45-day turnaround will be held only once every three years. Up until 2018 each refinery stopped for 30 to 45 days every year, the minister said. The change of the maintenance cycle will increase crude oil processing by 300,000 mt/year and thus allow the Kazakhstan market to be entirely supplied with domestic product. 

        A trade war between the US and China is brewing, but what role will US crude oil exports play? - Capitol Crude podcast - US Treasury Secretary Steven Mnuchin has called energy trade a rare bright spot in trade relations with China and has called for a nearly sixfold increase in American energy exports. Is that realistic? This week, Meghan Gordon and Brian Scheid talk with Jane Nakano, a senior fellow with the energy and national security program at the Center for Strategic International Studies, about energy trade between the US and China and where it's headed.

        European refiners winding down purchases of Iranian oil (Reuters) - European refiners are winding down oil purchases from Iran, closing the door on a fifth of the OPEC member’s crude exports after the United States imposed sanctions on Tehran, company and trading sources said.  Although European governments have not followed Washington by creating new sanctions, banks, insurers and shippers are gradually severing ties with Iran under pressure from the U.S. restrictions, making trade with Tehran complicated and risky. U.S. President Donald Trump on May 4 announced his decision to quit a landmark 2015 nuclear deal between Iran and world powers and reimposed sanctions on Tehran. The sanctions on Iran’s petroleum sector will take effect after a 180-day “wind-down period” ending on Nov. 4.  “We cannot defy the United States,” said a senior source at Italy’s Saras, which operates the 300,000-barrels-per-day (bpd) Sarroch refinery in Sardinia. Saras is determining how best to halt its purchasing of Iranian oil within the permitted 180 days, the source said, adding: “It is not clear yet what the U.S. administration can do but in practice we can get into trouble.” A drop in crude trading between Iran and Europe could complicate efforts by the European signatories of the nuclear deal - France, Germany and Britain - to salvage the agreement. Refiners including France’s Total, Italy’s Eni and Saras, Spain’s Repsol and Cepsa as well as Greece’s Hellenic Petroleum are preparing to halt purchases of Iranian oil once sanctions bite, the sources said. These refiners account for most of Europe’s purchases of Iranian crude, which represent around a fifth of the country’s oil exports.  Iran’s crude sales to foreign buyers averaged around 2.5 million bpd in recent months, according to data collected by Reuters and EU statistics office Eurostat. The bulk of the exports go to Asia.

        Why India is ignoring US sanctions and sticking with Iran -- Pepe Escobar --Pay very close attention to what India’s External Affairs Minister, Sushma Swaraj, said after meeting with Iranian Foreign Minister Mohammad Javad Zarif earlier this week in New Delhi: “Our foreign policy is not made under pressure from other countries … We recognize UN sanctions and not country-specific sanctions. We didn’t follow US sanctions on previous occasions either.”  After fellow BRICS members China and Russia, India left no margin for doubt. And there’s more; India will continue to buy oil from Iran – its third top supplier – and is willing to pay in rupees via state bank UCO, which is not exposed to the US. India bought 114% more oil from Iran during the financial year up to March 2018 than in the previous term.India-US trade amounts to $115 billion a year. In comparison, India-Iran trade is only $13 billion a year. India may grow an impressive 7% in 2018 and has reached a GDP of $2.6 trillion, according to the IMF, ahead of France, Italy, Brazil and Russia. To keep growing, India badly needs energy.So for New Delhi, buying Iranian energy is a matter of national security. Couple it with the obsession in bypassing Pakistan, and it’s clear this is all about a complex interconnection of geopolitics and geoeconomics.The comprehensive India and Iran partnership revolves around energy, trade and investment connectivity corridors, banking, insurance, shipping and – crucially – the imminent possibility of doing everything using the rupee and the rial, bypassing the US dollar.India-Iran already trade in euros – so that is step one in bypassing the long arm of the US Department of the Treasury. Both nations are still using SWIFT. Assuming the EU does not give in to the unilateral US violation of the Iranian nuclear deal, known as the JCPOA, India’s oil imports won’t be sanctioned.

        China’s oil storage is OPEC’s latest concern in managing global supply - Having drained one glut, OPEC and its allies have found a new, brimming oil hoard to worry about: China’s crude reserves. China’s state-and-commercial-owned oil stores will help the Organization of the Petroleum Exporting Countries and other major producers determine whether to continue their supply cuts or open the taps wider again. Excess Chinese oil could feed into any resurgent glut and push prices down. OPEC estimates commercial oil stocks in the Organization for Economic Cooperation and Development are now 20 million barrels below their five-year average, according to a person familiar with the matter. Chinese stocks are going in the opposite direction, analysts estimate, as Beijing shores up its reserve as a buffer against oil shocks and local refiners scoop up crude to maintain their ‘use it or lose it’ import quotas.

        Iraq's OPEC oil pledge questioned as government talks take shape - Iraq's oil policies and OPEC strategy are likely to come under closer scrutiny during the political jostling to form a new federal government in Baghdad. The second-largest producer in the Middle East after Saudi Arabia depends on crude for 90% of revenues, but output is restricted because of 1.8 million b/d of cuts agreed by OPEC and its allies. Some newly-elected politicians linked to nationalist cleric Moqtada al-Sadr, whose Saeroon Alliance coalition won the most seats, question if the OPEC deal is good for Iraq. "For sure Iraq's share of exports should be unlimited so it can compensate for the low oil prices which have increased taxes on the people and workers," Qusay al-Yassiri, a Saeroon lawmaker-elect from southern Dhi Qar province, said. Iraq exported 3.49 million b/d in May, according to official figures. "We should be able to export whatever we can via open share, we have an abundance of oil and we need to benefit from that," al-Yassiri said. Al-Yassiri was one of a dozen newly elected members of parliament and politicians allied to al-Sadr's political bloc interviewed by S&P Global Platts. Negotiations to form a new government are gathering pace following elections on May 12. Oil prices have recovered 75% since last year to trade above $80/b in May due to growing geopolitical risk in the Middle East and concerns over supplies from Venezuela. Oil ministers from the countries participating in the OPEC/non-OPEC pact are scheduled to meet in Vienna on June 22 with an extension to the deal hanging in the balance. Baghdad's restraint could be crucial to maintaining compliance, which has been high at 152% for April. To date, Iraq's own commitment has been patchy, with its cuts averaging 45% of its quota over the course of the deal, according to the International Energy Agency. 

        Saudis May Hike July Oil Prices To Asia To More Than 4-Year-High - Saudi Arabia may raise again its official selling prices (OSPs) for oil bound for Asia in July, and the price of its flagship Arab Light crude could reach its highest since February 2014, a Reuters survey of five refiners and traders showed on Friday.The possible increase could come as Asian demand for Middle Eastern crude oil is growing ahead of the peak summer oil consumption period, and as the Dubai oil benchmark has gone deeper into backwardation—the market situation in which front-month prices are higher than prices further out in time—a sign of rising demand for prompt deliveries.According to the Reuters survey, Saudi Aramco may raise the OSP for Arab Light to Asia by as much as US$0.40 per barrel to a premium of US$2.30 a barrel to the Oman/Dubai Middle East benchmark. This would be the highest OSP for Arab Light in Asia in more than four years—since February 2014 when the OSP was set at a US$2.45 premium to Oman/Dubai.Although they expect such a rise, most of the survey respondents hope that the increase for Arab Light would be smaller, due to weaker jet fuel margins and to potential Saudi concern that a big price hike would make its Arab Light grade uncompetitive compared to other Middle Eastern crudes and Russian grades of similar quality. Moreover, with rising U.S. oil exports to Asia and the wide WTI Crude discount to Brent Crude, Asian refiners have seized the opportunity to boost the cheaper U.S. crude oil imports and are cutting some pricier imports from the Middle East, particularly after Saudi Arabia’s recent pricing policies that raised prices for the Asian markets.

        "The Strongest Flashing Red Light Since 2008": Will Oil Shock Trigger The Next Recession? - When analysts talk about the biggest threats to the second longest economic expansion in US history that has sent the unemployment rate in the US to its lowest level in 18 years, the risk of a trade war often occupies a sizable chunk of the conversation. And now that President Trump has decided to slap Section 232 tariffs on metals imports from some of America's closest allies, we'll be hearing even more about the risks as academics and economists latch on to the notion that tariffs will harm the US economy (the same way Brexit would unleash a UK depression). But while trade-war related risks have yet to materialize, the possibility that we're headed for - or are already in the middle of - an oil shock is looking increasingly more likely, despite numerous analysts and economists writing off rising oil prices as a non-issue (in a recent note about how rising oil prices will impact the Asian economy, researchers at SocGen played down oil price risks to both growth and inflation). However, those ignoring the very real problems posed by climbing crude prices at this point so very late in the business cycle do so at their own peril, as David Fickling, an opinion columnist at Bloomberg, pointed out in a recent column. But it's not just big bank strategists who are overlooking the risks of rising oil: the abovementioned SocGen energy analysts see oil price pressures receding in the near future as OPEC and Russia start to crank up production, pushing the price of crude lower. As it turns out, retail investors are also overlooking the risks, too. As evidence, Fickling points to the number of web searches for the terms "oil shock" and "oil crisis".  And yet, as Fickling points out, the number of warning signs suggesting that oil prices are already having a very real negative impact on growth - particularly in Asia and South America - are rapidly increasing.

        • In Brazil, a strike by truckers protesting the price of fuel brought the economy to a halt over the past week, interrupting exports of soybeans, coffee and chicken and prompting some to call for a return to military dictatorship.
        • In India, prices for diesel and gasoline have hit multi-year records, leading to demands for the government to cut taxes and for a price cap to be imposed on state-controlled Oil & Natural Gas Corp.
        • Governments in Thailand, Vietnam and Indonesia and implementing or planning increases in retail fuel subsidies to protect consumers from the effects of rising oil prices and weakening national currencies.
        • Airline profits have probably peaked because of headwinds from fuel costs, according to Alexandre de Juniac, CEO of the International Air Transport Association. Philippine budget carrier Cebu Air Inc. this week promised to impose fresh fuel surcharges.
        • Moody’s Investors Service just blamed high oil prices in part for a 0.2 percentage-point cut in its outlook for India’s 2018 GDP growth, and warned of the potential of falling consumption spending and rising inflation across the globe if current high prices are sustained.

        Shale Bottlenecks Could Send Oil Prices Higher - Amid reports that OPEC will likely decide to start easing production quotas after June 22 and an IEA forecast that electric vehicles will displace 2.5 million bpd in crude oil demand by 2030, some analysts remain upbeat about the future of oil prices, citing transport constraints in the U.S. shale patch as well as companies’ prioritization of returning cash to shareholders over investing in new production. CNBC recently quoted one such analyst, Tamar Essner from Nasdaq Corporate Solutions, as saying I think it's temporary. I think the fundamental picture is still really strong. The market's getting a bit dislocated right now based on a risk-off sentiment." Essner went on to note the 500,000-bpd fall in production in Venezuela and speculated that it could fall by another half a million barrels daily by end-2018. If this happens, he said, U.S. shale drillers would not be able to ramp up production quickly enough to meet growing demand.Indeed, Venezuelan production has been sliding inexorably, and chances are that it will continue to fall until the year’s end, at least. However, U.S. drillers have increased their daily production since the start of the year by 1.28 million bpd already, if we are to believe EIA’s weekly production estimates and monthly reports, which have historically proven to be quite accurate.So, that’s 1.28 million bpd more over five months. Even if the EIA is erring on the positive side, the increase in U.S. production could be around 1 million barrels daily, which would be enough to offset a Venezuelan production decline of the same proportions. But, say bullish analysts like Essner, U.S. drillers have already hedged their production at lower prices, so they won’t see as much cash coming in as they would have otherwise. Also, they have made their capex plans based on cheaper oil. True as this may be, again, if we are to believe EIA figures, drillers are drilling more and pumping more oil. The situation is a bit paradoxical.

        WTI Crude Drops Below Key Technical Support After OPEC, Russia Headlines - For the first time since September 2017, WTI Crude has tested the 100-day moving-average and is now down over 10% from its highs 8 days ago after an OPEC committee stressed the need to ensure supplies can meet growing demand, adding to speculation the group will phase out its production cuts. The 100DMA is holding WTI around $65.28 for now at around two-month lows as Bloomberg reports Saudi Arabia and Russia signaled plans to restore output for the first time since the end of 2016. Their production cuts have cleared a global inventory surplus and there’s now a growing risk of supply disruptions due to U.S. President Donald Trump’s decision to renew sanctions on Iran and Venezuela’s economic crisis. Crude’s surge last month gave rise to concerns demand may falter, even as rising fuel prices have sparked protests from Brazil to Siberia. “OPEC and Russia have shown concerns about the impact of the rapid escalation in oil prices on global demand,” Bank of America Corp. analysts said in a note. While governments may intervene to cap fuel prices in emerging markets, “we note the growing risks to consumption arising from higher U.S. interest rates and political turmoil in Europe.” While Saudi Arabian Oil Minister Khalid Al-Falih said scaling back supply caps put in place since early 2017 is “on the table,” most producers weren’t consulted about the proposal to revive supplies.

        Crude Oil Prices Settle Lower as Fears of OPEC Easing Output Curbs Linger – Crude oil prices settled lower on Monday as signs of ongoing expansion in U.S. output and uncertainty over whether OPEC would ease production limits continued to weigh on sentiment. On the New York Mercantile Exchange crude futures for July delivery fell 1.61% to settle at $64.75 a barrel, while on London's Intercontinental Exchange, Brent fell 2.03% to trade at $75.22 a barrel. The number of oil rigs operating in the US increased by 2 to 861, its highest level since March 13, 2015, according to data from energy services firm Baker Hughes, pointing to signs of an expansion in U.S. output. The uptick in drilling activity emerges as the Energy Information Administration said last week U.S. oil output rose 215,000 barrels per day to a record 10.47 million barrels per day in March. Oil prices were also held back by uncertainty over whether OPEC and its allies would ease curbs on production limits to plug the gap from falling supplies in Venezuela and an expected drop in Iran oil exports as U.S. sanctions loom. OPEC in its most recent report said the production-cut agreement had helped slashed excess global oil supplies to just above the five-year average. In November 2016, OPEC and other producers, including Russia agreed to cut output by 1.8 million barrels per day (bpd) to slash global inventories to the five year-average. The OPEC-led deal was renewed last year through 2018 and is expected to come under review at OPEC's meeting on June 22. The weaker start to crude prices arrived on the back of a 5% slump last week as traders continued to slashed their bets on further upside in oil prices, according to data released Friday. CFTC COT data data last week showed speculative net long positions in WTI crude oil fell to 324,235 from 377,520 in the prior week. The negative sentiment on oil prices comes despite analysts continuing to tout higher oil prices amid strong oil demand growth and robust fundaments. "We continue to forecast 1.8 million barrels per day in 2018 global oil demand growth, ahead of the IEA forecast of 1.4 million barrels per day," Goldman Sachs said.

        Crude oil futures complex lower on expectations of more OPEC supply - ICE August Brent was lower in US morning trading Tuesday on expectations OPEC oilproducers will soon relax production limits. At 1326 GMT, ICE August Brent was $1.16 lower at $74.13/b. NYMEX July crude was down 40 cents at $64.35/b. NYMEX July ULSD was 2.77 cents lower at $2.1248/gal. NYMEX July RBOB was 2.31 cents lower at $2.0993/gal. ICE August Brent touched a low of $73.81/b so far Tuesday, dipping below its Bollinger Band lower limit calculated at $74.3/b, suggesting the front-month contract may have veered into oversold territory. The last time ICE Brent dipped below the Bollinger Band lower limit was May 8. A rally then lifted Brent to its upper limit until prices fell hard on indications Saudi Arabia and Russia were considering raising supply. Bloomberg reported Tuesday that US government officials have asked Saudi Arabia and other OPEC producers to increase production by more than 1 million b/d, citing unnamed sources. "Reports that the US asked Saudi Arabia to increase production are taking blame for the sell-off this morning, one of many story-lines that will be debated as the count-down to the June 22 OPEC meeting continues," TAC Energy said in a note. A meeting in Kuwait City over the weekend involving Gulf oil ministers failed to yield any clues on production strategy ahead the June 22 meeting in Vienna. ICE August Brent was $9.85/b above NYMEX August crude Tuesday morning, in from $10.61/b Monday. The ICE Brent/WTI spread settled Friday at $11.02/b, its widest since February 2015. 

        The Oil Trader Tug-Of-War - Despite the recent sell-off, Brent Crude prices continue to be supported by geopolitical events and supply concerns, while the U.S. benchmark WTI Crude has been pressured to the downside by pipeline constraints in the most prolific U.S. shale basin amid record-high American oil production.The discount of WTI Crude to Brent Crude topped $10 a barrel last week, and even touched $11 a barrel last Thursday. The WTI-Brent spread is currently at its highest since 2015.The huge discount of the U.S. oil benchmark to the international benchmark is setting the stage for a tug-of-war between oil majors and big oil trading houses that seek to capitalize on the wide price gap to make profitable arbitrage exports of U.S. crude oil on the one hand, and hedge funds and other money managers who bet that WTI will be pushed further into discount.Hedge funds are betting that the spread will continue to widen, while physical oil traders bet on record U.S. oil export volumes to narrow that gap, brokers and traders tell Bloomberg. The WTI discount to Brent has doubled from around $5 a barrel in mid-May, while U.S. production continues to break records by the week, and the Permian faces takeaway capacity constraints. The Permian’s production is expected to grow by another 78,000 bpd in June over May, to 3.277 million bpd, EIA estimates show.  But pipeline capacity “may be in short supply over the next year, putting downward pressure on barrels priced in the region and potentially restricting production growth in 2019,” according to Dallas Fed’s Energy Indicators report from May.

        Oil Bulls Flee On OPEC Concerns – Pessimism is back in the oil market, at least for now, on rising expectations that OPEC and Russia will hike production. WTI dipped below its 100-day moving average this week, breaking technical resistance to lower prices. “We are breaking key levels of support now,” Phillip Streible, analyst at RJO Futures, told Reuters. “Once we started taking out $65.50 or so, it really started to accelerate. People are not really believing that the rally will continue,” he said.  According to Bloomberg, the U.S. government has asked Saudi Arabia to boost oil production by 1 million barrels per day. The request would be unusual, but not surprising since high gasoline prices are always a political threat to the party in power. It does not seem that Saudi Arabia and Russia have reached an agreement yet, but the two countries are considering several options for an increase in production. A series of deals in the last few months indicate a growing focus on petrochemicals from state-owned oil giants in the Middle East, according to Bloomberg. The strategy shift comes as the durability of long-term oil demand is up in the air. The IEA has stated that petrochemicals will represent one of the largest sources of oil demand growth over the next few decades, outpacing the transportation sector. The Gulf Petrochemicals & Chemicals Association told Bloomberg that oil producers can earn $15 per barrel from refining and an additional $30 per barrel from using fuels to produce petrochemicals.   OPEC has aimed to drain OECD inventories below the five-year average, an objective that looks to have been completed recently. However, now they have their sights on China’s oil inventories, which have been on the rise. The problem is that precise data on Chinese inventories is hard to come by, but Ursa Space Systems, an oil data company, estimates that inventories have climbed by 130 million barrels over the past year in China. OPEC is concerned about boosting oil production while China is sitting on a mountain of supply.

        WTI/RBOB Drop After Huge Gasoline Build - Last week saw API and EIA disagree but WTI rallied into the API print tonight amid expectations for a 2.1mm crude draw. However, the biggest gasoline build since the first week of Jan sparked selling in both WTI/RBOB. API:

        • Crude -2.28mm (-2.1mm exp)
        • Cushing -1.038mm (-500k exp)
        • Gasoline +3.759mm - biggest build since the first week of January
        • Distillates -871k

        After last week's EIA data showed the exact opposite of API's one wonders whether the extra noise is worthwhile (and who is correct), but the big surprise gasoline build will be the one to watch in tomorrow's data... The price advantage for crude from U.S. wells “just begs for more exports” of U.S. crude, said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York.

        U.S. Asks OPEC for 1 Million Barrel a Day Oil Output Hike - The U.S. government has quietly asked Saudi Arabia and some other OPEC producers to increase oil production by about 1 million barrels a day, according to people familiar with the matter. The rare request came after U.S. retail gasoline prices surged to their highest in more than three years and President Donald Trump publicly complained about OPEC policy and rising oil prices on Twitter. It also follows Washington’s decision to reimpose sanctions on Iran’s crude exports that had previously displaced about 1 million barrels a day, or just over 1 percent of global production. While U.S. lawmakers have habitually criticized the Organization of Petroleum Exporting Countries at times of high oil prices, and the government has on occasion encouraged the cartel to pump more, it’s unusual for Washington to ask for a specific output hike, the same people said, asking not to be named discussing private conversations. It’s not clear precisely how the request was communicated. Raising production was discussed at a meeting of some Arab oil ministers over the weekend in Kuwait City. A statement published after the talks pledged to “ensure stable oil supplies are made available in a timely manner to meet growing demand and offset declines in some parts of the world.” Saudi Arabia and Russia last month proposed a gradual production increase, although other members of the group have yet to agree. Benchmark Brent oil futures dropped as much as 2 percent to $73.81 a barrel in London trading after the U.S. request was reported. "Looks like OPEC is at it again," Trump wrote in mid-April in a post on Twitter. "Oil prices are artificially Very High! No good and will not be accepted!" The White House declined to comment on specific conversations, but a spokesperson for the U.S. National Security Council said access to affordable and reliable energy underpins global economic growth and the nation’s security. "We welcome any market-based action that increases energy access and fosters a healthy global economy," the spokesperson said

        OPEC's Dilemma: Demand Destruction Or Production Boost - The early signs of discontent and demand destruction could be forcing OPEC’s hand, but increasing production carries its own risks. OPEC and Russia are considering raising oil production in a few weeks’ time, and while much of the focus has (rightly) been on the supply outages in Venezuela and the potential for disruptions in Iran, the prospect of demand destruction also looms large for the cartel and its partners. Oil forecasters had been predicting a blistering oil demand growth for 2018. But lately, those bullish forecasts are not looking quite as good, precisely because oil prices had climbed to their highest level in more than three years. For instance, in May the International Energy Agency revised down its forecast for demand growth for 2018 from 1.5 million barrels per day (mb/d) to 1.4 mb/d. But a growing list of other signs should cause OPEC some concern, and might ultimately push the disparate members of the group into agreeing on higher output. A nationwide truckers’ strike in Brazil paralyzed the country. Truckers were outraged by the soaring cost of fuel.  The country’s GDP is expected to take a significant hit. That strike was followed up by an oil workers’ strike, which forced the temporary shutdown of a series of refineries.  Brazil is emblematic of the pain that consumers face when oil prices rise by so much in such a short period of time. There are similar signs of disgruntlement around the world. Bloomberg notes that there are plans or calls for changes to fuel prices in India, Thailand, Vietnam and Indonesia. The reactions vary in degree and approach, but across the world there is unrest at the rising cost of energy. These developments will not be lost on OPEC and its non-OPEC partners as they gather in Vienna on June 22. Keeping the production cuts in place for the rest of 2018, which has long been the plan, could risk overtightening the oil market, potentially sending prices up towards $100 per barrel. That would lead to much wider economic pain and conflict. Ultimately, high prices would destroy oil demand, a development that would likely backfire on OPEC. However, the flip side of this is that OPEC also faces risks if it decides to increase oil production. 

        Why Have Oil Markets Turned So Bearish? - Oil prices slid early on Tuesday, as reports of the U.S. asking OPEC to lift oil production and hedge funds boosting their short positions added to bearish sentiment. Rising geopolitical concerns over Iran vowing to enrich uranium amid EU attempts to salvage the nuclear deal as well as heightened tensions in the Iranian-Israeli feud helped to boost prices in the afternoon, but prices extended losses after the API inventory report. WTI Crude traded as low as $64.22 yesterday - near two month lows and well below the levels on May 8, the day on which the U.S. withdrew from the Iran nuclear deal. Earlier on Tuesday, Bloomberg reported that the United States had quietly asked Saudi Arabia and several other OPEC nations to raise oil production by some 1 million bpd.While the U.S. government has often expressed opinion against OPEC’s oil price-fixing policies, including a recent comment by President Trump, asking for a specific amount of oil production come online is a rare move.Saudi Arabia and some of its close Arab allies in the Gulf, as well as the leader of the non-OPEC nations taking part in the production cut deal - Russia - are the only producers that have the spare capacity to increase production. So, in case of increased production from OPEC and allies, the potentially lower oil prices would hurt the other OPEC members that don’t have the spare capacity to boost output. On the geopolitical front, Iran’s Supreme Leader Ayatollah Khamenei ordered on Monday the Atomic Energy Organization of Iran to “make the necessary arrangements to reach 190,000 SWU in the framework provided by the JCPOA.”“Iranian nation & government will not stand being under both sanctions & nuclear restrictions. The Atomic Energy Organization of #Iran must immediately make the preparations for achieving 190K SWU-- for now within #JCPOA-- starting tomorrow,” a tweet from the leader’s Twitter account says.The Prime Minister of Israel, Benjamin Netanyahu, tweeted, referring to Iran’s pledge to enrich uranium:“Ayatollah Khamenei, ruler of Iran, declared his intention to destroy Israel. Yesterday he explained how he would do this – with the unrestricted enrichment of uranium, to produce an arsenal of nuclear bombs. We are not surprised. We will not allow Iran to obtain nuclear weapons.”The Iran-Israel spat continues to escalate while the EU, China, and Russia try to salvage the Iran nuclear deal. Meanwhile, analysts continue to speculate as to how much of Iran’s oil exports would be affected when the U.S. sanctions on Tehran return.

        Crude Oil Prices Rebound to Settle Higher Ahead of US Inventory Data – WTI crude oil prices settled higher Tuesday shrugging off fears of an uptick in global output following a report that the U.S. government had asked major oil producers to increase oil output. On the New York Mercantile Exchange crude futures for July delivery rose 1.2% to settle at $65.52 a barrel, while on London's Intercontinental Exchange, Brent fell 0.16% to trade at $75.16 a barrel. Crude prices rebounded from session lows as focus shifted toward U.S. energy inventory data due Wednesday expected to show a draw in domestic crude supplies for the second straight week. Oil prices started the day on the back foot after Bloomberg reported, citing sources, the U.S. government had asked Saudi Arabia and other OPEC members to increase oil output by around 1 million barrels a day. The request comes in the wake of President Trump's tweet in April, in which he criticised OPEC and claimed oil prices were "artificially high." Jeff Currie, Goldman’s global head of commodities research, played down the impact of an increase of 1 million barrels per day, insisting stockpiles would continue to edge lower in the second half of this year. Sentiment on oil prices remained mostly negative, however, as investors continued to fear OPEC, at its meeting on June 22, could ease production curbs to offset falling supplies in Venezuela and an expected drop in Iran oil exports as U.S. sanctions loom. In November 2016, OPEC and other producers, including Russia agreed to cut output by 1.8 million barrels per day (bpd) to slash global inventories to the five year-average. The OPEC-led deal was renewed last year through 2018. A fresh batch of inventories data from the U.S. Energy Information Administration data due 10:30 ET Wednesday expected to show U.S. crude stockpiles fell by 1.824 million barrels last week. 

        US Crude Oil Inventories increased This Past Week -- June 6, 2018 -- Weekly petroleum report, link here:

        • US crude oil inventories: increased by 2.1 million bbls
        • US crude oil inventories: 436.6 million bbls; "in the lower half of the average range for this time of year" -- per the EIA; my own "baseline" -- 350 million bbls -- so for me, an inventory of 437 million bbls is still a huge over-supply
        • total motor gasoline inventories increased by 4.6 million bbls last week (and yet gasoline prices are said to be going up)
        • distillate fuel inventories rose by 2.2 million bbls
        • refineries operating at 95.4% capacity -- a huge jump from the recent 91% to 93%; despite that,gasoline production DECREASED last week, slightly under the "benchmark" of 10 million bbl/day
        • distillate fuel production INCREASED slightly last week, slightly over the "benchmark" of 5 million bbl/day

        Following the report, WTI dropped ten cents to $65.42/bbl. 

        WTI/RBOB Tumble After Biggest US Inventory Build Since 2008 -  WTI/RBOB are trading lower - near two-month lows - after API reported  a big gasoline build overnight (but crude draw), as traders anticipate EIA's confirmation (or denial as in the case of last week). However, a big surprise crude build (and gasoline build) sent prices notably lower, along with production hitting a new record high. Inventories DOE:

        • Crude +2.072mm (-2.1mm exp)
        • Cushing -955k (-500k exp)
        • Gasoline +4.603mm - biggest build since Dec 2017
        • Distillates +2.165mm - biggest build since Feb 1018

        Once again API was completely wrong on crude's inventory data. A big surprise crude build - along with major builds in gasoline and distillates - was a big shock for traders. However, this is the 3rd weekly decline in Cushing stocks. Total petroleum supplies soared 15.8 million barrels last week, the biggest weekly gain since October 2008. Crude exports were expected to remain high since the Brent/WTI spread is so wide... Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that crude oil differentials blowing out to more than $9 a barrel vs. Brent drive the near-term narrative as summer driving season kicks into gear. Strong domestic production estimated above 10.7 million barrels a day is balanced against a tighter oil complex with elevated exports and refining demand. However, Exports fell sharply, possibly reflecting protests against high fuel prices in Latin America... Production rose once again to a new record high...+31k b/d to 10.8mm b/d... But, interestingly, Bloomberg notes that booming production in the Permian has outpaced pipeline capacity, causing the spread between WTI Midland and Houston to blowout beyond $20 a barrel last week. Gulf Coast refinery runs and exports coupled with the production number will determine if the discount for Midland crude to Houston continues to widen.

        Crude Oil Prices Settle 1.2% Lower on Surprise Increase in U.S. Supplies – WTI crude oil prices settled 1.2% lower on data showing a surprise build in U.S. crude supplies and an ongoing expansion in U.S. output to a record. On the New York Mercantile Exchange crude futures for July delivery fell 1.21% to settle at $64.73 a barrel, while on London's Intercontinental Exchange, Brent fell 0.01% to trade at $75.36 a barrel. Inventories of U.S. crude rose by 2.072 million barrels for the week ended June 1, confounding expectations for a draw of 2.000 million barrels, according to data from the Energy Information Administration (EIA). The unexpected rise in crude supplies emerged as exports fell - despite the widening spread between WTI crude and Brent oil prices – and imports rose sharply. Crude imports rose 715,000 barrels per day (bpd) last week to 8.3 million barrels per day (bpd), while exports fell 500,000 bpd to 1.7 million bpd. A 1.5% uptick in refinery activity, however, limited the size of the build in crude inventories yet product supplies rose sharply. Gasoline inventories – one of the products that crude is refined into – rose by 4.603 million barrels, missing expectations for an increase of just 0.587 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – rose by 2.165 million barrels, missing expectations for a build of 0.784 million barrels. The sharp builds in product stockpiles come as total petroleum product supplied sank to 18.5 million barrels a day, the lowest since Dec. 2016, according to Bloomberg. U.S. oil output, meanwhile, continued its expansion rising to a record 10.8 million bpd, according to preliminary EIA data. Sentiment on oil prices has sourced in recent weeks on expectations OPEC and its allies would ease production cuts to curb falling supplies from Venezuela and Iran, slowing the pace of rebalancing in oil markets. Those fears were exacerbated Tuesday following a report the U.S. government had asked Saudi Arabia and other OPEC members to increase oil output by around 1 million barrels a day.

        Oil bounces back, settles higher on Iran, Venezuela output woes - Oil futures finished Thursday’s session sharply higher and the energy complex broadly rose, as traders fretted over a looming supply outage in Iran and falling output in Venezuela. “The looming supply outages in Iran and the increasing outages in Venezuela explain why prices recovered quickly again,” wrote commodity analysts led by Eugen Weinberg at Commerzbank in Frankfurt, in a Thursday note. They noted that several European oil companies have announced plans to withdraw from their businesses in Iran due to the risk of U.S. sanctions, while Reuters data shows that Venezuela is behind in its shipments to customers by almost a month. U.S. benchmark West Texas Intermediate crude for July delivery rose $1.22, or 1.9%, to settle at $65.95 a barrel on the New York Mercantile Exchange. August Brent crude, the global benchmark, gained $1.96 or 2.6%, at $77.32 a barrel on the ICE Futures Europe exchange. Venezuela is “nearly a month behind delivering its crude to customers due to falling output and congestion in its key oil ports,” said analysts at ICICI Bank in a daily note. “This was exacerbated after ConocoPhillips seized assets [last month] in the Caribbean port of Venezuela, which is hindering the ability to load cargoes and deal with its customers.” WTI oil prices had notched a two-month low Wednesday after the U.S. Energy Information Administration said crude supplies climbed by 2.1 million barrels in the week ended June 1, versus expectations for a decline of more than 1 million barrels. Concerns about excess U.S. supply have allowed the spread between WTI and Brent to widen, leaving the U.S. discount to the global benchmark near $11 a barrel. Globally, oil prices have been pressured by speculation the Organization of the Petroleum Exporting Countries and its allies will move to boost production in an effort to make up some of the lost Iranian and Venezuelan output.

        Oil Falls On OPEC Uncertainty - Oil prices seesawed this week, dipping on expectations of more supply from OPEC+, but rebounding on news of deeper troubles in Venezuela. Trading will likely be choppy over the next two weeks until the market gets some clarity from the Vienna meeting.     President Trump has done severe damage to the U.S.’ relationship with its closest allies, and the other six countries attending the G7 Summit today in Quebec are prepared to issue a statement denouncing Washington’s policies. Trade tariffs, among other issues, have isolated President Trump, although he doesn’t seem to mind. The White House said he would leave the G7 Summit early, before any official statements are issued. The fraying ties mean there is little sign of a solution to the trade fights on the horizon.  Trump’s 25 percent steel tariffs on Canada, Mexico and the European Union could drive up the cost of oil production in the U.S. shale patch if the industry is not granted exemptions. Also, oil and gas pipeline construction relies on specialty steel, about 75 percent of which comes from outside the United States. Steel makes up 10 to 20 percent of the cost of drilling a shale well, and half of the steel for drilling is imported. The tariffs are already having an impact – U.S. steel prices are up 20 percent since February.  The U.S. reportedly asked Saudi Arabia for higher oil production to offset Iranian outages, a request that was made before the U.S. withdrawal from the Iran nuclear deal. The apparent sudden shift in the Saudi position shortly after the conversation has angered a lot of OPEC members. “It’s crazy and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran’s export due to their Illegal sanction on Iran and Venezuela,” Iran’s OPEC governor, Hossein Kazempour Ardebili, told Reuters. “OPEC will not accept such a humiliation. How arrogant and ignorant one could be (to) underestimate the history of 60 years’ cooperation among competitors,” he said. The comments raise the possibility of a contentious meeting in Vienna. Venezuela wrote to OPEC members, issuing a call to denounce U.S. sanctions.

        Baker Hughes: US rig count climbs 2 units to 1,062 - The US drilling rig count reached 1,062 units working, up 2 rigs the week ended June 8, according to Baker Hughes data. The count is up 135 units from this time a year ago when the count stood at 927. Offshore units were up 1 unit from last week with 20 rigs working. A total of 1,039 rigs were drilling on land, unchanged from last week. The number of rigs drilling in inland waters was up 1 unit to 3 working. US oil-directed rigs were up 1 unit this week to 862 and also up from the 741 rigs drilling for oil this week a year ago. Gas-directed rigs gained 1 unit and now total 198. This time a year ago, 185 units were drilling for gas. Among the major oil and gas-producing states, Texas was up 3 units to 538. Colorado was up 2 units to 34. Louisiana reached 59 units, up 1. Eight states were unchanged this week, namely New Mexico, 90; Pennsylvania, 39; Ohio, 23; West Virginia, 18; California, 15; Alaska, 9; Utah, 8; and Arkansas, 1. North Dakota, at 54, was down 1 rig and Wyoming, at 25, was down 2 rigs. Canada gained 13 rigs to 112 working from a week ago. This week a year ago, 132 rigs were drilling. Oil-directed rigs increased 13 units this week to 69, while those targeting gas were unchanged at 43. 

        US Rig Count Creeps Higher Amid Record Oil Production  --U.S. drillers added 2 rigs to the number of oil and gas rigs this week, according to Baker Hughes, with oil and gas rigs each increasing by 1. The oil and gas rig count now stands at 1,062—up 135 from this time last year. The Permian basin saw the biggest increase in the number of rigs, at 3. The prolific basin now boasts 112 rigs year over year at 480 total rigs. The second largest basin, Eagle Ford, has 80 total rigs—a decrease year over year.Canada, for its part, gained 13 oil rigs for the week—after last week’s gain of 18 oil and gas rigs. Despite two weeks of significant gains, Canada’s oil and gas rig count is still down year over year.Oil benchmarks were trading down on Friday, despite Venezuela’s freefalling oil production and export woes that has created a backlog of 24 million barrels in the country, combined with the threat of even more crude oil export disruptions in Iran as US sanctions set in in the coming months.At 1:00pm EST, WTI was trading down 0.44% (-$0.29) to $65.66, with Brent down 0.92% (-$0.71) to $76.61. Brent crude is trading at nearly the same level as this time last week, but the WTI benchmark is trading almost $1 lower than last week levels.  U.S. oil production continues putting downward pressure on oil prices, and for the week ending June 01, production reached 10.800 million bpd—the fifteenth build in as many weeks. U.S. production continues to offset OPEC’s production cut efforts that took 1.8 million barrels out of play.At 14 minutes after the hour, WTI was trading down 0.50% at $65.62, with Brent trading down 1.01% at $76.54.

        Oil Prices Edge Lower After Recent Rally -- Oil prices edged lower Friday, giving up some ground as investors continued to bet on increased supply despite concerns over output from Venezuela and Iran.  Light, sweet crude for July delivery fell 0.3% to $65.74 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 1.1% to $76.46. On Friday afternoon, Saudi Arabia said it has started increasing crude production ahead of a June meeting to assess whether to ease caps on output among major exporters. Oil futures were little changed in electronic trade following the announcement. Traders have been anticipating a ramp up in crude supply from the Organization of the Petroleum Exporting Countries, following comments from Saudi Arabia and Russia in May that the countries were open to adding supply to the market, after more than a year of measured controls. Prices traded slightly higher earlier in the session, on uncertainty over supply disruptions elsewhere. The economic crisis in Venezuela is curtailing the country’s oil production, while the planned reinstatement of U.S. sanctions against Iran is expected to hit production from the third-largest member of the Organization of the Petroleum Exporting Countries.“If you take the expected decline for Venezuela and then Iran, you want to be 800,000 to 1 million barrels a day lower by year-end,” Analysts said that while U.S. shale is driving global oil-production growth, it wasn’t enough to offset supply issues elsewhere. The U.S. Energy Information Administration forecasts the country’s production will rise to 10.7 million barrels a day on average in 2018, up from 9.4 million barrels a day last year. This leaves OPEC members, along with Russia, to potentially plug any gap. OPEC and its allies are meeting later in June to discuss the outlook for their deal to cut supplies, currently due to expire at the end of the year. Saudi Arabia has the largest spare production capacity of any oil exporter globally.

        US crude dips 21 cents, settling at $65.74, as China demand dips, JP Morgan cuts price forecast --Oil prices fell on Friday, extending losses as JP Morgan cut its crude price forecast, after already weakening on concerns about surging U.S. output weighed and falling demand in China. U.S. West Texas Intermediate (WTI) crude futures ended the session down 21 cents at $65.74. The contract fell slightly on the week, marking its third straight loss over a five-day period. Brent crude futures were down 87 cents, or 1.1 percent, at $76.45 per barrel at 2:29 p.m. ET, on pace for a slight weekly increase. "It's all about the JP Morgan report," said Bob Yawger, director of energy futures at Mizuho in New York. JP Morgan cut its 2018 crude forecast for WTI by $3 to $62.20 a barrel, traders said. The bank did not immediately respond to a request for the report. Crude prices were down slightly earlier in the session after data suggested Chinese demand was waning and concerns lingered about growing U.S. output. China's May crude oil imports eased away from a record high hit the month before, customs data showed on Friday, with state-run refineries entering planned maintenance. May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd). That compared with 9.6 million bpd in April. Further weighing on prices has been surging U.S. output, which hit another record last week at 10.8 million bpd. That's a 28 percent gain in two years. It puts the United States close to becoming the world's biggest crude producer, edging nearer to the 11 million bpd churned out by Russia. The surge in U.S. production has pulled down WTI into a discount versus Brent of more than $11 per barrel, its steepest since 2015. "This is occurring because of the rapid increase in production from U.S. shale coupled with the tightening of supplies elsewhere through the actions of OPEC and Russia," said William O'Loughlin, investment analyst at Australia's Rivkin Securities. U.S. energy companies added oil rigs for a third week in a row even though crude prices have declined about 8 percent over the past three weeks.

        Oil demand could keep growing until 2050 in conflict-ridden world: Equinor (Reuters) - Global oil demand could peak in the early 2020s if countries pull together to hit climate goals, or keep growing until 2050 in a conflict-ridden world, according to Norwegian oil and gas firm Equinor.  Expectations for when oil demand will peak could change the supply dynamics, as investors weigh up whether to back long-term projects or to reduce their risks by focusing on investments with more rapid returns, such as shale oil, it said. “An oil market in potential decline increases the uncertainty the producers face, reduces their investment horizon, and increases the focus on short payback periods for investments,” Equinor said in its new energy outlook. Equinor, formerly known as Statoil, changed its name on May 15 to reflect its strategy of becoming a “broad energy” company.  Oil demand in 2050 varies between 59 million and 122 million barrels per day (bpd) in its three scenarios called Renewal, Reform and Rivalry, compared with 97.8 million bpd in 2017. The Renewal scenario is consistent with the goal of the Paris climate agreement to limit a rise in the world’s average surface temperatures to below 2 degrees Celsius above pre-industrial times. The Reform scenario, based on a continuation of existing policy and technology trends, sees oil demand peaking at 111 million bpd around 2030, and declining to 105 million bpd in 2050. The geopolitical backdrop in Rivalry is “a fluid, volatile and conflict-ridden world”, where a lack of trust prevents countries from addressing climate change effectively. “The value proposition of democracy declines, with many parts of the world now ruled by dictators and autocrats, some of whom are intent on exporting their authoritarian political models. Other issues than climate dominate the energy policy agendas,” Equinor said of this scenario.

        Israel’s Netanyahu tours Europe to advocate action against Iran --Israeli Prime Minister Benyamin Netanyahu completed a tour of three major European capitals—Berlin, Paris and London—to push for an all-out offensive against Iran.His message to Chancellor Angela Merkel, President Emmanuel Macron and Prime Minister Theresa May was that the nuclear deal with Iran is effectively dead and buried, and that the task now is to oppose Iranian influence in Syria and throughout the Middle East. Netanyahu spoke with the full backing of Washington. His visit takes place just weeks after President Donald Trump unilaterally withdrew from the Iran nuclear accord signed in July 2015 by the US, Germany, France, Britain, Russia and China. The US not only announced that it would re-impose crippling economic sanctions on Iran and introduce further unspecified sanctions, but also demanded that the European Union (EU) sever its trade relations with Iran— worth $25 billion in 2017—or face secondary sanctions, making it clear that the EU was no less a target than Iran.  The European powers are furious because Trump’s moves cut across their attempts to exploit Iran economically. They fear that the move presages a war with Iran that would destabilise the entire Middle East and lead to soaring oil prices and a further mass influx of refugees. They have called for the treaty to be preserved and vowed to defend their business interests. US-EU tensions are already growing over US demands that the European powers increase their military spending, its pull-out from the climate agreement, the imposition of tariffs against EU steel and aluminium and its threats to impose a 35 percent tariff on the import of European cars.However, their position is weak, faced with a globally linked economy tied to dollar-denominated trade and investment—and both they and Netanyahu know it. Major European companies have already started curtailing their activities in Iran, while the European Investment Bank has baulked at EU proposals that it should support investment by European firms.

        Iran: Oil Prices Could Jump To $140 On US Sanctions  --Oil prices could jump to $140 a barrel due to the U.S. sanctions against Iran and Venezuela, Iran’s OPEC governor Hossein Kazempour Ardebili told Reuters on Friday.The Iranian official also criticized a reported request that the United States made of Saudi Arabia to help stabilize oil prices in case the sanctions against Iran drives oil prices up.A day before U.S. President Donald Trump pulled the United States out of the Iran nuclear deal, a senior official of the Trump Administration phoned Saudi Arabia to ask it to help keep oil prices stable should the U.S. decision on Iran disrupt oil supply, Reuters reported yesterday.Earlier this week, Bloomberg reported that the United States had quietly asked Saudi Arabia and several other OPEC nations to raise oil production by some 1 million bpd.Commenting on the U.S. request to Saudi Arabia, Iran’s Kazempour told Reuters:“It’s crazy and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran’s export due to their Illegal sanction on Iran and Venezuela.”  “No one in OPEC will act against two of its founder members,” he said. “The U.S. tried it last time against Iran, but oil prices got to $140 a barrel.”According to the Iranian official, OPEC will not accept the U.S. request because “OPEC will not accept such a humiliation. How arrogant and ignorant one could be (to) underestimate the history of 60 years’ cooperation among competitors.” Iran and Venezuela have separately pleaded over the past week to their fellow OPEC members for support and solidarity against the U.S. sanctions.  Iran and Venezuela are currently the two key oil supply concerns globally that supported the oil price rally in recent weeks, before Saudi Arabia and Russia hinted at discussions that they were considering reversing some of the cuts to offset production losses and “ease market and consumer anxiety.”

        Iran Moves to Lift Its Nuclear Enrichment Capacity — Iran announced on Tuesday that it had completed a new centrifuge assembly center at the Natanz nuclear site, in a first step to increasing its enrichment capacity. While Iran said it would keep enrichment within limits set by the 2015 nuclear accord, the center’s opening seemed to signal that it could swing to industrial-level enrichment if that agreement, which the United States withdrew from last month, should further unravel. The head of the Atomic Energy Organization of Iran, Ali Akbar Salehi, told state television that the center’s construction had been “in line with our safeguard commitments but not publicly announced.” A spokesman for the Iranian nuclear agency, Behrouz Kamalvandi, said a letter had been sent to the International Atomic Energy Agency explaining the action. He also told the semiofficial Iranian Students’ News Agency that Tehran would increase its capacity to produce uranium hexafluoride, a feedstock for centrifuges. It was unclear whether the assembly center would actually begin to produce new centrifuges. Under the 2015 nuclear deal, Iran stopped enriching uranium to the 20 percent level that would allow for rapid development of a nuclear weapon and agreed to a limit of under 5 percent. It will adhere to that limit, Iran’s supreme leader, Ayatollah Ali Khamenei, said in a speech on Monday. It was also uncertain whether the opening of the centrifuge plant would have any significant impact on Iran’s nuclear program, which continues to be closely monitored by the International Atomic Energy Agency. 

         China hosts summit with Russia, Iran as nuclear deal wobbles - Iran, China and Russia may seek ways to salvage the nuclear deal ditched by Donald Trump when their leaders meet this weekend at a summit on the Chinese coast.The Shanghai Cooperation Organisation (SCO), a regional security bloc led by China and Russia, is set to hold its 18th annual gathering in the city of Qingdao on Saturday and Sunday. Iran's President Hassan Rouhani is attending this year -- just the second time an Iranian leader has participated. It comes after US President Trump controversially pulled Washington out of a 2015 international pact with Iran that placed limits on its nuclear programme in return for easing economic sanctions.China is Iran's top trade partner and one of the biggest buyers of its oil, but those who oppose the US abandonment of the deal risk huge fines for busting the tough American measures. Rouhani is taking part because "Iran is currently evaluating the signatories of the nuclear deal to see to what extent they'll be able to effectively maintain it even after the US's withdrawal", said Gao Shangtao, an expert on Middle East relations at Beijing Foreign Affairs College. "To put it bluntly, if Tehran feels assured that China and Russia can withstand the pressure of US sanctions and continue to do business with Iran, then Tehran will seek to retain the deal -- otherwise, it's meaningless," he said.

        Saudi Arabia Detains 17 in Sweeping Crackdown - Saudi Arabia on Saturday said it detained 17 people for "undermining" the kingdom's security, in what campaigners have dubbed a sweeping crackdown against activists just weeks before a ban on women driving ends. Rights groups earlier reported arrests of at least 11 people in May, mostly identified as women campaigners for the right to drive and to end the conservative Islamic country's male guardianship system. Without naming anyone, the public prosecutor's office said the number of detainees stood at 17, adding that eight of them had been "temporarily released" until the investigation is completed. Nine suspects, including four women, remain in custody after they "confessed" to a slew of charges such as suspicious contact with "hostile" organisations and recruiting people in sensitive government positions, it said in a statement released by the Saudi Press Agency. The statement accused the detainees of "coordinated activity undermining the security and stability of the kingdom". Previous reports in state-backed media branded some of the detainees traitors and "agents of embassies". Campaigners have dismissed the reports as a "smear" campaign. The crackdown has also sparked a torrent of global criticism, casting a shadow on the kingdom's much-publicised liberalisation push launched by powerful Crown Prince Mohammed bin Salman.

        'An enormous, long-standing Ponzi scheme': A court rules that a Saudi business empire was complicit in defrauding more than 100 banks - A court ruled that a giant Saudi-Arabian business empire was complicit in defrauding more than 100 banks, in what liquidators called "the largest Ponzi scheme the world has ever seen."A Cayman Islands court ruled the collapse of family owned Saudi conglomerate, Ahmad Hamad Algosaibi & Brothers ​(AHAB) in 2009, was the result of a $6 billion fraud from within, with the judge labeling the scheme a "cauldron of corruption."This case began in July 2016 and produced a 1,348 page verdict, the Cayman Compass reported.Partners at family firm AHAB brought claims against Maan Al Sanea, who married into the family and managed its financial empire. Al Sanea was accused of committing fraud which crippled the company. AHAB said he forged documents to borrow billions of dollars of unauthorised debt and transferred much of it to accounts in the Cayman Islands. The Saudi company also made claims against Al Sanea's liquidators in an attempt to reclaim the wealth. While the judge found that Al Sanea had indeed falsified accounts and committed fraud to enrich himself, he ruled that he had done so with full knowledge of the AHAB partners who were the "primary architects" of the scheme. The judge said that the partners were willing to accept Al Sanea's borrowing activities as "quid pro quo" for running the corrupt Money Exchange which was used as a fraudulent vehicle to allow the Saudi partners to enrich themselves.

        GCC crisis, one year on: What’s the impact on Gulf economies? - A year ago, the four Arab states of Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a full land, sea and air blockade on Qatar.  Since then, the richest country in the world per person, was forced to tap into its sovereign wealth fund and do everything it could to shore up its economy, banking system and currency. And those efforts have been paying off.Earlier this year, Qatar raised $12bn in a bond issue, which showed that despite the rift with its Gulf neighbours, international investors still feel confident betting on Qatar's future growth.The peninsula is reshaping supply lines and developing domestic goods while pushing ahead with its $200bn infrastructure plan. The world's largest exporter of liquefied natural gas (LNG) is also busy forging new long-term supply deals.  Qatar is in a much better position right now. It seems that the economic cost of the blockade, or the crisis, has been limited. The government has managed to intervene in certain sectors, it has managed to provide some guarantees and the central bank has provided much-needed liquidity.Qatar [is] not really in an isolated position internationally, and that's a function of both the importance of the gas reserves and gas exports but also the financial cushion that Qatar has through its sovereign wealth fund, the Qatar Investment Authority. It's in a much better situation today. It is contained, but it's far from ideal because obviously the position of Qatar, its geography, its trade links. So this is far from a preference, but I think one year after the beginning of the Qatar crisis with the other GCC members, the economy is not crashing and Qatar seems to have adjusted to what is a very challenging situation.

        Qatar Won the Saudi Blockade -  A year ago Tuesday, a coalition of Arab countries led by Saudi Arabia imposed a historic land, maritime, and air blockade on Qatar. The measures were designed to strong-arm Doha to comply with a list of demands that involved alleged support for Islamic extremists throughout the Middle East, including within the four countries — Bahrain, Egypt, the United Arab Emirates, and Saudi Arabia — that later became known as the anti-Qatar quartet.The quartet received added momentum one day after the start of the blockade from U.S. President Donald Trump, who tweeted: “So good to see the Saudi Arabia visit with the King and 50 countries already paying off. They said they would take a hard line on funding … extremism, and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism!” A year on, however, Qatar has not only weathered the storm — it also appears to have emerged as the main winner of the conflict. The anti-Qatar quartet failed in its mission of forcing Qatar to accept its 13 demands, which included shutting down Al Jazeera and other media outlets said to be funded by Doha, and to cease support for various regional Islamist groups, ostensibly both Sunni and Shiite.  Rather than convincing commentators and politicians in the West that Qatar had serious problems it needed to address, the effect has largely been the opposite. In large part, that’s because the quartet failed to anticipate Qatar would organize an effective public relations campaign of its own in the West.

        Saudi Arabia warns of military action if Qatar gets Russian missiles - Saudi Arabia has threatened military action against Qatar if it goes ahead and acquires Russia’s top of the range S-400 air defence missile system, Le Monde daily reported. Citing information it had obtained, Le Monde said that Riyadh had written to French President Emma­nuel Macron asking him to intervene to prevent the deal going ahead and to help preserve regional stability. There was no immediate official reaction from the president’s office or the French foreign ministry to the report. Saudi Arabia, backed by other regional powers including Bahrain and the Unite Arab Emirates, broke off relations with Qatar in June last year, accusing the Gulf state of supporting radical Islamist groups and of being too close to Iran — Riyadh’s arch rival in the region. They subsequently imp­osed economic sanctions on Qatar which has consistently rejected the charges against it. In an effort to ease its isolation, Qatar has sought new friends, including Russia. 

        UN Warns 10 Million More Yemenis Expected To Starve To Death By End Of Year -  During a briefing last Friday, the UN warned that millions more Yemeni civilians are expected to starve to death before year’s end as a result of a blockade imposed on the country by the Saudi Arabia-led coalition. The Saudis’ unsuccessful bid to quash the Houthi-led resistance movement against Western and Saudi imperialism in Yemen has already claimed the lives of thousands of civilians and transformed the country into the world’s worst humanitarian crisis since the war began in 2015. Mark Lowcock, the UN’s emergency relief coordinator, expressed his concern regarding the “recent decline of commercial food imports through the Red Sea ports” — adding that, if conditions do not improve, the number of Yemenis at the brink of starvation would rise from the current figure of 8.4 million to 18.4 million by this December. Given that there are approximately 28 million people in Yemen, a continuation of the Saudi-led blockade would mean that nearly two-thirds of the entire country’s population will soon face starvation.  The UN’s dire warning regarding the situation in Yemen, undoubtedly the worst humanitarian crisis in the world, comes just as the Saudi-led coalition, with support from the United States and the United Kingdom, is preparing for an assault on the key Yemeni port of Hodeidah. On Monday, a coalition spokesman announced that its forces were within 20 km from the Houthi-held port, which has long been a key coalition target. The UN and other groups have long warned that any assault on Hodeidah would drastically worsen the crisis and greatly increase the number of Yemenis facing starvation.

        The Yemeni Holocaust -- We often ask, what would we do if there was another Holocaust? Surely we would do something? Surely, at least, we would not be complicit?The question might have been answered in Rwanda, where the UN commander begged the UN for orders to intervene, orders which never came. The general, Romeo Dallaire, has spent the rest of his life curled around his failure to act despite orders. Meanwhile, we have the blockade of Yemen, which despite claims, continues: Mark Lowcock, the UN’s emergency relief coordinator, expressed his concern regarding the “recent decline of commercial food imports through the Red Sea ports” — adding that, if conditions do not improve, the number of Yemenis at the brink of starvation would rise from the current figure of 8.4 million to 18.4 million by this December. Given that there are approximately 28 million people in Yemen, a continuation of the Saudi-led blockade would mean that nearly two-thirds of the entire country’s population will soon face starvation.Not sure how many of those who face starvation will starve to death, rather than simply sit on the edge of death, but millions of lives are at risk, this is deliberate, it is happening in slow motion, and the rest of the world is doing nothing.Well, if they aren’t helping the mass murder, like America (and America was helping under Obama, so no, this isn’t a partisan issue.)America could stop Saudi Arabia cold if it wanted to; and it certainly could at least not participate. But, of course, we all know that in the run up to World War II no one cared what was happening to the Jews: we refused to let in Jewish refugee ships, after all. If all Hitler had done was the Holocaust, no one would have gone to war with him over that.

        Washington considers direct intervention in siege of Yemeni port city -- In what would constitute a major escalation of the US role in the near-genocidal war waged over the last three years by Saudi Arabia and the United Arab Emirates (UAE) against Yemen, US officials were in discussions yesterday on the Pentagon taking a direct role in the siege of the country’s Red Sea port city of Hodeidah.  Saudi and UAE-led forces came within 10 km of Hodeidah on Monday, having pushed north up Yemen’s western coast with the aid of relentless air strikes against Houthi rebel forces, which control the city as well as the country’s northwestern provinces, including the capital of Sana’a, which is 230 miles to the north. The Wall Street Journal Monday cited US officials reporting that “The Trump administration is weighing an appeal from the United Arab Emirates for direct US support to seize Yemen’s main port. ...” Secretary of State Mike Pompeo, a strong proponent of global US military intervention, has asked American officials to come up with a “quick assessment” of the prospects for a direct US military role in the siege of Hodeidah. The Journal report cited one official raising doubts that the US-backed forces “would be able to do it cleanly and avoid a catastrophic incident.” Another senior American official, however, told the Journal: “We have folks who are frustrated and ready to say: ‘Let’s do this. We’ve been flirting with this for a long time. Something needs to change the dynamic, and if we help the Emiratis do it better, this could be good.’ ” A battle for control of Hodeidah poses a direct threat to the city’s civilian population of 400,000, with the potential of a Saudi blitzkrieg combined with a direct US intervention recreating the kind of mass slaughter unleashed by the Pentagon in Mosul, Iraq and Raqqa, Syria. More broadly, such a siege threatens the lives of millions of Yemenis in the Houthi-controlled highlands, for whom Hodeidah is the sole aid lifeline in a country historically reliant on imports for 90 percent of its food.

        Amnesty International report finds US guilty of war crimes in Syria - The US carried out war crimes in its four-month-long siege of the Syrian city of Raqqa last year, according to evidence gathered by Amnesty International and released in a report by the human rights group on Tuesday.The report takes its title, “War of Annihilation,” from the description given by Defense Secretary James Mattis of the tactics that would be pursued in taking the city from the Islamic State of Iraq and Syria (ISIS). The report concludes that “the impact on civilians was devastating.”  “There is strong evidence that [US] coalition air and artillery strikes killed and injured thousands of civilians, including in disproportionate or indiscriminate attacks that violated international humanitarian law and are potential war crimes,” Amnesty International declared. While the Pentagon utilized proxy ground troops in the siege, organized in the so-called Syrian Democratic Forces (SDF), comprised almost entirely of members of the Syrian Kurdish YPG militia, their advance was made possible only through a relentless bombardment by US warplanes and artillery units.The Amnesty report quotes US Army Sergeant Major John Wayne Troxell, who declared: “In five months they [US Marines] fired 30,000 artillery rounds on ISIS targets. … They fired more rounds in five months in Raqqa, Syria, than any other Marine or Army battalion, since the Vietnam War. … Every minute of every hour we were putting some kind of fire on ISIS in Raqqa, whether it was mortars, artillery, rockets, Hellfires, armed drones, you name it.” Using satellite imagery and eyewitness testimony, the report decisively refutes the claim by the top US commander in the operation, General Stephen Townsend, that the US offensive on Raqqa had been “the most precise air campaign in history.”  . “On the ground in Raqqa we witnessed a level of destruction comparable to anything we’ve seen in decades of covering the impact of wars.”

        Syria: 'Russian' warplanes bomb rebel-held Idlib, dozens dead -  Air attacks believed to have been carried out by Russia on a village in Syria's rebel-held Idlib province killed at least 44 people overnight, inflicting the highest death toll in a single attack on the region this year, a monitoring group said on Friday."Warplanes, which are likely Russian, targeted the village of Zardana in northern rural Idlib overnight and caused the highest death toll in a single attack on the region including 11 women and six children," Rami Abdulrahman, the director of the group, said.  Russia's defence ministry, however, denied that it carried out the deadly air strikes, according to Russian news agencies.   More than 60 people were also injured in the attacks that took place in the village of Zardana, said the Britain-based watchdog adding that the attack occurred after Muslims broke their Ramadan fast after sunset.The death toll is expected to increase as some of those injured in the attacks were in a critical condition, Abdulrahman said.The White Helmets rescue group said the air raids had targeted a market near a mosque in Zardana, according to the Reuters news agency.Rescue workers were still searching under the rubble for survivors.

        UAE buying Jerusalem properties on behalf of Israel - A Palestinian businessman who is affiliated with former Fatah leader Mohammed Dahlan is planning to buy real estate in the Old City of Jerusalem on behalf of the UAE which is helping the occupation expand its illegal settlements, the deputy head of the Islamic Movement in Israel, Sheikh Kamal Khatib, warned yesterday. Khatib posted on Facebook that “an Emirati businessman very close to the Crown Prince of Abu Dhabi, Mohammed Bin Zayed, is planning to buy houses and properties adjacent to Al-Aqsa Mosque in particular, with the help of a Jerusalemite businessman who works for Dahlan.” “They offered a resident of Jerusalem $ 5 million to buy his house which is adjacent to Al-Aqsa Mosque. When he refused, they raised the offer to $20 million, but the attempt to lure him was unsuccessful.” Khatib warned that these moves as similar to those which took place in 2014 when “Bin Zayed’s regime” purchased houses for settlement institutions in the Silwan ​​and Wadi Hilwa areas in occupied Jerusalem. He added: “Under these dangerous circumstances, we advise our honourable people in Jerusalem not to deal with any attempt to sell homes or real estate to any party and under any cover … Rulers of the Emirates are a cancer destroying the body of the Ummah.”

        Israeli troops open fire on Gaza protesters as Middle East marks anti-Israel Al-Quds Day - Friday's anti-Israeli Al-Quds Day demonstrations turned violent along the Gaza border, as Israeli soldiers opened fire on Palestinian protesters. More than 600 Palestinians were reportedly wounded as protesters came under Israeli gunfire as they headed to the Gaza fence. According to Gaza's Health Ministry, at least four Palestinians were killed, including a 15-year-old.   The demonstrations in Gaza were organized by Hamas, the Islamic militant group ruling the blockaded Palestinian enclave. Gaza residents were urged to head to the perimeter fence on the Israeli border after noon prayers. The call was issued through mosques and loudspeakers mounted on cars that toured Gaza neighborhoods. Several protesting Palestinians also donned uniforms similar to those worn by Jewish prisoners in World War Two. Ahmed Abu Artima told the AP news agency: "We want to remind the world that the Israeli occupation is committing the same massacres that the Nazis committed."

          Jordan sees largest anti-government protests in years - Al Jazeera - Hundreds of Jordanians took to the streets of the capital Amman on Sunday in a fourth day of nightly protests against IMF-backed price increases that have shaken the kingdom. Demonstrators who converged near the cabinet office chanted slogans calling for the sacking of Prime Minister Hani Mulki, vowing they would only disband if the government rescinded a tax bill it sent to parliament last month, which critics say worsens living standards. "We are here until we bring the downfall of the bill... This government is shameful," demonstrators chanted as police prevented them from approaching the heavily guarded government offices. "Our demands are legitimate. No, no to corruption," they yelled, urging King Abdullah II, who is seen as a unifying force, to intervene and crack down on official graft. About 3,000 people faced down a heavy security presence to gather near the prime minister's office in Amman in the early hours of Sunday, waving Jordanian flags and signs reading "we will not kneel". Protests have gripped the country since Wednesday when hundreds responding to a call by trade unions, flooded the streets of Amman and other cities to demand the fall of the government. "Women have started looking in rubbish bins to find food for their children, and every day we're hit by price hikes and new taxes," said one protester. Bank employee Mohammad Shalabiya, 28, said demonstrators wanted "to tell the government that the citizen's income isn't suitable for this kind of law and that we have a right to demonstrate".  

        Jordan’s prime minister resigns amid massive protests against IMF-dictated austerity -- Jordan’s Prime Minister Hani Mulki resigned yesterday following days of anti-government protests in Amman and other major cities. The protests were against a new law lowering the income tax threshold, a hike in the sales tax, and increases in the cost of fuel, electricity and water. King Abdullah, the country’s real ruler, cancelled his planned overseas trip and appointed education minister Omar al-Razzaz, a former World Bank economist, in Mulki’s place. The king’s move follows the failure of his announcement last Friday suspending price increases until the end of the year—at a cost of $22.5 million—to assuage popular anger.On Saturday, he called on parliament to lead a “comprehensive and reasonable national dialogue” on the new tax law, saying, “It would not be fair that the citizen alone bears the burden of financial reforms.”Petra, one of Jordan’s news agencies, reported that legislators were set to ask Abdullah’s permission to hold an exceptional session to withdraw the changes.Last Wednesday, 33 unions called a general strike of health care and public-sector workers—Abdullah’s key and very narrow social base—along with small towns, villages and tribal areas where the clans and indigenous minority East Bankers live. This was to protest legislative proposals aimed at increasing the proportion of income tax payers from 4.5 percent to 10 percent. The average wage, such as a teacher’s salary, is around $350 a month, or less than $5,000 a year. This will hit families hard, because Jordan is a low-wage economy, where the median age is 22 years and it is the norm for young people to live at home with their parents until they can afford to marry. Many work at two or three jobs, if they can find them in a country with an official unemployment rate of 18 percent, a gross underestimate.

        Jordanians vow to continue protests, demand 'new approach’ - Jordanians have vowed to continue protesting after the resignation of the country's prime minister, broadening their demands to include a complete overhaul of the government's system and approach.  The protests began last week amid anger over an income tax reform bill and price increases. Prime Minister Hani al-Mulki resigned on Monday, a move seen by many as an attempt by the kingdom to defuse the outrage over the economic policies. But protesters are expected to again take to the streets later on Monday for the fifth consecutive day, demonstrators and organisers say, calling for a "new approach" to how the government operates. "We're going to send the government a new message today," Odai Nofal, who hails from the province of Zarqa, told Al Jazeera."That power lies with the people, that the government needs to be cautious when dealing with its citizens from now on," the 28-year-old said. "If they want to resolve the country's economic crisis, they should place more of the burden on established corporations rather than their people."

        At Western-led summit, Chinese find controversy and a clash of cultures | South China Morning Post: A war of words between China and the United States at a regional security summit over the weekend has again highlighted the difficulty a rising China faces as it tries to navigate the international system and engage in dialogue with the West. Beijing’s low-level delegation found itself at the centre of controversy during the Shangri-La Dialogue in Singapore – an annual forum for Asia attended by defence ministers and other officials from more than 50 countries – when it hit back at US criticism over its increasingly assertive stance, particularly in the South China Sea. On Saturday, after US Defence Secretary Jim Mattis rebuked Beijing in a speech over its militarisation in the contested waters, Chinese Lieutenant General He Lei, vice-president of the Academy of Military Science, took an equally tough line – saying the US was the real source of conflict in the region. Behind the scenes, Chinese delegates said they were at a disadvantage at the forum and felt their voices were ignored because it was dominated by Western countries, with different ideologies, who led the narrative. “The US has created a grand narrative consisting of keywords including ‘rule-based order’, ‘freedom of navigation and overflight’, and ‘militarisation’ – once you hear these words, you know it’s a criticism targeting China,” said Yao Yunzhu, a retired PLA major general and a delegate at the forum. Yao also said the Chinese military officials found it frustrating trying to communicate with their Western counterparts because of the language barrier and differences in how they approached conflict.

        More US and China Jousting Over South China Sea - It should come as no surprise that U.S. officials took China to task last weekend over its seemingly never-ending South China Sea build up.  Saturday at the annual Shangri-La Dialogue, a much covered and annual international security forum in Singapore, U.S. Defense Secretary James Mattis pulled no punches, stating that Beijing’s moves in the disputed body of water was intended to intimidate its neighbors. The former Marine Corps four-star general, who served as the Commander of U.S. Central Command during the Obama Administration, said that the U.S. is willing to work with China on a “results-oriented” relationship, but Beijing’s actions in the South China Sea call into question its intent and the Pentagon will “compete vigorously” if needed.  “Make no mistake: America is in the Indo-Pacific to stay. This is our priority theater,” Mattis said. “We are aware China will face an array of challenges and opportunities in coming years, we are prepared to support China’s choices if they promote long-term peace and prosperity for all in this dynamic region,” he added. “Yet China’s policy in the South China Sea stands in stark contrast to the openness our strategy promotes. It calls into question China’s broader goals.” Mattis’ remarks drew a stern rebuke from Chinese Lieutenant-General He Lei, deputy head of the Academy of Military Sciences of the People’s Liberation Army (PLA) and leader of the Chinese delegation at this year’s Shangri-La Dialogue. “It is those that are shouting about ‘the militarization of the South China Sea’ who are militarizing the South China Sea,” the general said in a press conference later the same day. He also defended China’s actions as necessary on its own islands and reefs in the South China Sea in accordance with international law. “Certain countries, under the guise of so-called ‘freedom of navigation’ and ‘freedom of aviation,’ have sent military vessels and aircraft to the waters and airspace near China’s territory, even sailing within 12 nautical miles of Chinese waters. This has jeopardized China’s security and challenged China’s sovereignty,” the general said. He added that freedom of navigation activities “are the true root of the militarization of the South China Sea.”

        Mattis Warns Of "Consequences" If Beijing Continues Weaponizing The South China Sea -- The United States and China appear to be headed for a military collision in the Southeast Asia region, as Washington warns of a more powerful military response to the increased weaponization of the heavily disputed islands in the South China Sea.Speaking at the IISS Shangri-La Dialogue, a civilian and military defense summit in Singapore, U.S. Secretary of Defense James Mattis blasted Beijing Saturday morning for the militarization of artificial islands in the South China Sea and warned there could be “much larger consequences” in the near term.  “There are consequences that will continue to come home to roost if China does not find a way to work more collaboratively with nations that have interests in the disputed region,” Mattis said, while he addressed ministers and high-ranking delegates from over 50 countries. During the entirety of the speech, Mattis did not define what exactly those consequences would be.  The Wall Street Journal said Mattis’ warning to Beijing, was in direct response to a question from an audience member, which he responded by saying, “despite China’s claims to the contrary, the placement of these weapons systems is tied directly to military use for the purposes of intimidation and coercion,” adding that “China’s militarization of the Spratlys is also in direct contradiction to President Xi Jinping’s 2015 public assurances in the White House Rose Garden that they would not do this.”

          "Unacceptable": China Blasts Mattis For "Irresponsible Comments" About South China Sea Islands - A Chinese general on Saturday defended Beijing’s military build-up in the South China Sea, blasting the "irresponsible comments" made by U.S. Defense Secretary James Mattis, who on Saturday accused  Beijing of threatening its neighbors in the heavily disputed waters and warned China of "consequences" if it continues weaponizing the South China Sea. "Any irresponsible comments from other countries cannot be accepted," Lieutenant General He Lei told  reporters at the IISS Shangri-La Dialogue, a civilian and military defense summit in Singapore, after Mattis warned that "there are consequences that will continue to come home to roost if China does not find a way to work more collaboratively with nations that have interests in the disputed region." He then clarified that "as long as it is on your own territory you can deploy the army and you can deploy weapons", indicating that to China the "contested" islands are anything but. "We see any other country that tries to make noise about this as interfering in our internal affairs," General He said, referring to the Pentagon chief's comments. Beijing’s recent deployment of anti-ship cruise missiles, radar-jamming equipment, and strategic bombers to the disputed islands have dramatically increased geopolitical tensions around the region. In an attempt to counter rising territorial tensions, the Chinese general said Beijing’s militarization of the islands were for "national defense" purposes. “They are for the purpose of avoiding being invaded by others … As long as it is on your own territory you can deploy the army and you can deploy weapons," he said. Last Sunday, we reported that the U.S. Navy conducted its “freedom of navigation” patrols near the islands to demonstrate the right to sail through the international waters. "We did not do freedom of navigation for America alone,” Mattis said in his speech while referencing the recent freedom of navigation drill. "We do freedom of navigation, give freedom for all nations, large and small, that need to transit those waters for their own prosperity and they have every reason to do so,” he added, but what he really meant is that the US continues to engage in ultimately futile attempts to spook China into military submission, even though such overtures are clearly having the opposite effect.

           China is putting troops, weapons on South China Sea islands, and has every right to do so, PLA official says | South China Morning Post: China is well within its rights to station troops on islands it claims in the South China Sea, the head of the country’s military delegation at the Shangri-La Dialogue in Singapore said on Saturday in response to criticism by US Defence Secretary Jim Mattis. “Deploying troops and weapons on islands in the South China Sea is within China’s sovereign right to do and allowed by international law,” said He Lei, a lieutenant general with the People’s Liberation Army. “All irresponsible remarks [on the subject] are an infringement of China’s domestic affairs,” he told a press conference just two hours after Mattis said in his speech at the event that Beijing had been “intimidating and coercing” its neighbours with its military activities in the disputed waterway. He also likened the construction of military outposts in the South China Sea to the decision by late paramount leader Deng Xiaoping to send a PLA garrison to Hong Kong after the 1997 handover, in a show of the country’s sovereignty in the region. He’s comments were the first at such a public and international event to acknowledge Beijing’s plans to base both troops and weapons on its natural and man-made islands in the Paracel and Spratly archipelagoes. China had previously insisted that its developments on a string of islets, reefs and shoals – the territorial rights to which are still fiercely contested by several countries and regions – would only ever be used for defence purposes.

          US Plans "Significantly More" South China Sea War-Drills To Counter China's "New Reality" - After an exciting weekend of comments from U.S. Defense Secretary James Mattis and Chinese People’s Liberation Army Lieutenant General He Lei at the IISS Shangri-La Dialogue, a civilian and military defense summit in Singapore, it appears the United States had to have the last word. On Sunday, two U.S. officials told Reuters that the Pentagon is considering increased naval war drills in the South China Sea near China’s heavily disputed militarized islands. The officials, who are working jointly with Asian diplomats — declined to comment about the Pentagon’s progress in finalizing the plan for the new drills. Such a move could further increase geopolitical tensions in one of the world’s most volatile regions. Officials explained to Reuters that the naval drills could involve more extensive patrols, ones involving a large number of warships or operations including closer surveillance of the Chinese military bases on the islands, which now includes anti-ship cruise missiles, radar-jamming equipment, and strategic bombers. U.S. officials said they are not doing this alone. They are aligning international allies and strategic partners to increase “naval deployments through the vital trade route as China strengthens its military capabilities on both the Paracel and Spratly islands.” “What we have seen in the last few weeks is just the start, significantly more is being planned,” said one Western diplomat, referring to a freedom of navigation patrol late last month that used two U.S. ships for the first time. “There is a real sense more needs to be done.” While the Pentagon does not directly comment on future classified operations, there is a reason to believe that more naval drills are set to intensify in the second half of 2018. Last month, we reported that the U.S. Navy conducted its “freedom of navigation” patrols near the islands to demonstrate the right to sail through the international waters, even as President Donald Trump asked Beijing for cooperation on North Korea.

          More Americans flee US consulate in China as mysterious sonic sickness linked to illness spreads | South China Morning Post: More US citizens have been evacuated from a US consulate in Guangzhou, China, after suffering what appears to be the same strange, sound-related illness that befell Cuba consulate workers in 2016, it emerged on Wednesday. Consulate worker Mark Lenzi and his wife heard strange noises over the course of several months before falling ill with what they described as neurological symptoms, The New York Times reported. On Wednesday night they were flown to the US with their children, including a three-year-old boy who was also affected. Speaking to The Washington Post that same day, Lenzi described the sound as being like “marbles bouncing and hitting a floor then rolling on an incline with a static sound”. They asked their neighbour if he was responsible, but he denied it. Months later, the couple began to develop excruciating headaches and suffer sleep deprivation – as did their son. Consulate doctors prescribed painkillers and sleeping tablets, they said. Then, last month, he found out that their neighbour had been evacuated from the consulate, having suffered similar symptoms. Those included “subtle and vague, but abnormal, sensations of sound and pressure”, the State Department said at the time. He was checked and diagnosed with a “mild traumatic brain injury”, the State Department said.

          The odd reality of life under China’s all-seeing credit score system - In the UK, credit scores are mostly used to determine whether people can get a credit card or loan. But in China, the government is developing a much broader “social credit” system partly based on people’s routine behaviours with the ultimate goal of determining the “trustworthiness” of the country’s 1.4 billion citizens. It might sound like a futuristic dystopian nightmare but the system is already a reality. Social credit is preventing people from buying airline and train tickets, stopping social gatherings from happening, and blocking people from going on certain dating websites. Meanwhile, those viewed kindly are rewarded with discounted energy bills and similar perks. China's social credit system was launched in 2014 and is supposed to be nationwide by 2020. As well as tracking and rating individuals, it also encompasses businesses and government officials. When it is complete, every Chinese citizen will have a searchable file of amalgamated data from public and private sources tracking their social credit. Currently, the system is still under development and authorities are trying to centralise local databases. Given the Chinese government's authoritarian nature, some portray the system as a single, all-knowing Orwellian surveillance machine that will ensure every single citizen’s strict loyalty to the Communist Party. But for now, that's not quite the case. Rogier Creemers, a researcher in the law and governance of China at Leiden University, has described the social credit setup as an "ecosystem" of fragmented initiatives. The main goal, he says, is not stifling dissent – something the Chinese state already has many tools for at its disposal – but better managing social order while leaving the Party firmly in charge.

           Pre-Coup Planning: Kim "Replaces" Top Military Officials Ahead Of Historic US Summit - Suggesting that some North Korean government hardliners remain opposed to denuclearization, and may even have had political overhaul ambitions in Kim's absence in one week, Yonhap and Reuters reported Monday morning that Kim Jong Un has removed the top three military officials from their posts ahead of the historic June 12 summit with Trump in Singapore.While there has been no specific reason cited for the "replacement", it is possible that Kim was worried about the military - which holds an immense amount of power in North Korean society - staging a coup in his absence one week from today.  Rumors about the officials' removal were first reported by a Japanese newspaper early Monday local time, and Reuters later reported the rumors were indeed confirmed by a senior US official.According to the Japanese source, the officials were replaced because they "lacked flexibility in thinking" indicating that the suddenly reformist Kim is setting out to purge the hardliners in his government. It's widely believed that the North Korean military would oppose any denuclearization deal with its longtime arch-nemesis.Here's a breakdown of who is replacing who, courtesy of Yonhap: No Kwang-chol, first vice minister of the Ministry of People's Armed Forces, replaced Pak Yong-sik as defense chief, while Ri Myong-su, chief of the KPA's general staff, was replaced by his deputy, Ri Yong-gil, according to the source. These changes are in addition to Army Gen. Kim Su-gil's replacement of Kim Jong-gak as director of the General Political Bureau of the Korean People's Army. The replacement was confirmed in a North Korean state media report last month. Meanwhile, North Korean state media reported that Kim Su Gil had replaced Kim Jong Gak, but was silent about the other personnel changes. Reuters added that Secretary of State Mike Pompeo spoke with Kang Kyung-hwa, his South Korean counterpart, in a 15-minute phone call on Monday where they talked about the upcoming summit. One senior intelligence official cited by Yonhap said the firings could represent a "generational change", as Kim - already one of the world's youngest heads of state - seeks to install younger, forward-thinking officials who share his desire to revive the North's moribund economy, which has been increasingly choked by sanctions passed by the US and the United Nations Security Council.

          Russia pushes back at US on North Korea | Asia Times: The visit by the Russian Foreign Minister Sergey Lavrov to Pyongyang on May 31 was a poignant moment for both countries. This was a rare meeting between a senior Russian official and a member of the Kim dynasty. Yet, Russia has been the oldest friend and mentor of the ruling family in Pyongyang. Kim’s family escaped from Japanese-occupied Korea to the Soviet Union in 1920 when the revered founder of North Korea, Kim Il Sung, was only eight years old. He grew up in Russia, joined the Red Army and fought the Japanese in Manchuria. When World War II ended, Kim returned to his country and with some Soviet backing, went on to lead North Korea’s Communist Party and lay the foundations of the new state north of the 38th parallel. Make no mistake, it was not a coincidence that Kim received Lavrov on the same day his deputy Vice-Chairman Kim Yong-chol met US President Donald Trump at the White House. Kim told Lavrov in front of TV cameras: “I highly value the fact that Putin’s administration strictly opposes the US’ hegemony. You strictly oppose, and we are always ready to conduct negotiations and a profound exchange of opinions with the Russian side on this issue.” Russia’s Cold War ally is picking up the threads with ease. Unsurprisingly, Lavrov gave whole-hearted backing for the North Korean stance on the vexatious issue of denuclearization. In Lavrov’s words: “We assume that a complete resolution cannot be achieved until all the sanctions are lifted. It is up to the negotiators to make this happen, but in any case, it would be impossible to achieve this in a single round. The same applies to denuclearization. For this reason, this should be a step-by-step process with reciprocal moves at each of the stages.”

          Putin Invites Kim Jong Un To Russia For September Summit - Not to be outdone by the US, Russian President Vladimir Putin has reportedly invited North Korean leader Kim Jong Un to visit Russia in September,  Russian-language media reported.The report by Russian news agency RIA News was picked up by Reuters. RIA cited Ivan Melnikov, the deputy speaker of the lower house of Russia's parliament, as the source for the announcement. Last week, Bloomberg reported that Putin had sent a confidential message to Kim via Russian Foreign Minister Sergei Lavrov. Reports of the summit invitation followed allegations that North Korea's detonation of its nuclear-testing site had been fabricated. Kim famously promised to close the site as a gesture of good faith toward Washington (though several reports by independent observers had previously claimed that the site was already unusable following a catastrophic tunnel collapse in the wake of a September nuclear test). Of course, Putin isn't the only world leader planning a meeting with Kim. Sky News reported on Sunday - citing the North's state-run KCNA news agency -that Syrian President Bashar al-Assad is planning a visit to the DPRK to meet with Kim.A KCNA report quoted Mr Assad as saying: "I am going to visit the DPRK (Democratic People's Republic of Korea) and meet Kim Jong Un."It said Mr Assad made the comments on Wednesday while receiving diplomatic credential documents from North Korean ambassador Mun Jong Nam.There was no indication such a trip had been planned and Syria has not confirmed the comments.The report also quoted Mr Assad saying he was sure Mr Kim would "achieve the final victory and realise the reunification of Korea".According to KCNA, Mr Assad said: "The world welcomes the remarkable events in the Korean Peninsula brought about recently by the outstanding political calibre and wise leadership of Kim Jong Un." If the Assad meeting goes ahead as planned, it would be the first time a world leader met with Kim in Pyongyang. North Korea and the Syrian regime have maintained strong relations during the Syrian civil war, as the North has been accused of helping arm the Syrian regime.

          "Dollar Is King": Indonesia Joins India In Begging Fed To Stop Shrinking Its Balance Sheet - It's getting a little tight around the neck for emerging market central bankers.On the same day that the governor of Malaysia's central bank quit, and just days after Urjit Patel, governor of the Reserve Bank of India, took the unprecedented step of writing an oped to the Federal Reserve, begging the US central bank to step tightening monetary conditions, and shrinking its balance sheet, thereby creating a global dollar shortage which has slammed emerging markets (and forced India into an unexpected rate hike overnight), Indonesia’s new central bank chief joined his Indian counterpart in calling on the Federal Reserve to be "more mindful" of the global repercussions of policy tightening amid the ongoing rout in emerging markets.As Bloomberg reports, in his first interview with international media since he took office two weeks ago, Bank Indonesia Governor Perry Warjiyo - who bears a remarkable resemblance to what Jamie Dimon would look like if he were about 40 pounds overweight - echoed what Patel said just days earlier, namely that the pace of the Fed’s balance sheet reduction was a key issue for central bankers across emerging markets.  As a reminder, the RBI Governor made exactly thew same comments earlier this week, arguing that slowing the pace of stimulus withdrawal at a time when the US Treasury is doubling down on debt issuance, would support global growth, as the alternative would be an emerging markets crisis that would spill over into developed markets.

          Central Banker Observes Sudden "Evaporation" Of Dollar Funding, Warns Of Global Turmoil - Last October, just as the Fed started shrinking its balance sheet, we published yet another article on what is arguably the biggest threat to not only risk assets, but also the global economy: "The Dollar Funding Shortage: It Never Went Away And It's Starting To Get Worse Again." While hardly a novel problem, we first discussed the return of the dollar funding shortage in March 2015, the fact that global stocks kept rising, and that overall funding conditions remained relatively loose keeping the global economy well-lubricated, prevented said dollar funding shortage from becoming a major concern to policymakers, despite occasional recent hiccups such as the Libor-OIS spread blow out, which both we and Citi explained w as a symptom of the creeping shortage of the world's reserve currency. Until now. In an op-ed published overnight in the FT, a central banker writes that when it comes to the turmoil gripping the world's Emerging Markets, whether it is the acute, idiosyncratic version observed in Argentina and Turkey, which according to JPM may be doomed... ... or the more gradual selloffs observed in places like Indonesia, Malaysia, Brazil, Mexico and India, don't blame the Fed's rate hike cycle. Instead blame the "double whammy" of the Fed's shrinking balance sheet coupled with the dollar draining surge in debt issuance by the US Treasury.That's the message from the current Reserve Bank of India, Urjit Patel, who writes that "unlike previous turbulence, this episode cannot be attributed to the US Federal Reserve’s moves on interest rates, which have been rising steadily since December 2016 in a calibrated manner." But does that mean that the Fed is not to blame for what increasingly looks like another budding EM crisis? Not at all: according to Patel, the dollar funding shortage "upheaval" stems from what he sees as the confluence of two significant events of which the Fed’s balance sheet reduction is one, while the second is the dramatic increase in US Treasury issuance to pay for Trump's tax cuts; what is notable is that both events are drastically soaking up dollar liquidity.

          Citigroup Faces Criminal Charges in Australia: 3x Felon JPMorgan Is Said to be Cooperating - Pam Martens - - The largest bank in the United States, JPMorgan Chase, is already a 3-time felon. One more felony count and its Chairman and CEO, Jamie Dimon, might have finally been sacked by the bank’s timid Board for placing the bank’s global reputation under yet another scandal.  So, it appears this morning, based on an avalanche of reporting from Australia, that JPMorgan Chase has ratted out U.S. behemoth, Citigroup; the troubled German bank, Deutsche Bank; and Australian bank ANZ, in order to save its own skin. The Australian Financial Review politely writes that “JPMorgan blew the whistle” on the other banks over a $1.9 billion share sale of ANZ in 2015 and “is believed to have been granted immunity from alleged criminal cartel conduct.”Notably, Citigroup was one of the banks handed a felony count along with JPMorgan Chase in 2015 for engaging in the foreign currency cartel.  Citigroup released a statement this morning indicating that it “steadfastly denies the allegations made against it, and certain employees.” Under Australian cartel laws, employees can face up to 10 years in prison while the company can be fined three times the profits achieved in the illegal conduct.The criminal charges will focus on an 80.8 million share sale by ANZ in 2015 to comply with new regulatory capital requirements. Citigroup, Deutsche Bank and JPMorgan were the lead underwriters in the share sale. According to a statement from ANZ, prosecutors are alleging that it and its three underwriters reached a secret understanding of how $800 million of ANZ shares that they were unable to sell to outside investors during the offering would be eventually disposed of. According to a statement from the Australian Competition and Consumer Commission this morning, both the bank and employees of Citigroup are expected to be charged. The statement read: “Further to its earlier statements regarding criminal cartel charges expected to be laid by the Commonwealth Director of Public Prosecutions (CDPP) against ANZ, its Group Treasurer Rick Moscati, and Deutsche Bank, the ACCC can confirm that Citigroup Global Markets Australia Pty Limited is the other company against which charges are expected to be laid, along with a number of individuals. The expected charges follow an extensive ACCC criminal cartel investigation. The ACCC will not make any further comment until charges are laid.”

          Citibank, DB To Fight Possible ‘Criminal Cartel’ Charges In Australia –- Amid an ongoing investigation in Australian banks, insurers, financial service providers and pensions funds for everything from rate-rigging to mistreating customers and questionable consumer lending practices, two major global banks are now facing criminal charges in the country.Prosecutors are now expected to lays “criminal cartel” charges against Citigroup, Deutsche Bank and the Australian Bank (ANZ) over a $1.9-billion share of ANZ’s stock, according to the Australian Competition & Consumer Commission (ACCC)More specifically, the Commonwealth Director of Public Prosecutions is expected to charge the three banks and a number of individuals over “alleged cartel arrangements relating to trading in ANZ shares following an ANZ institutional share placement in August 2015”, ACCC chairman Rod Sims was quoted as saying.ANZ group treasurer Rick Moscati is among the individuals expected to be charged, and it comes at an unfortunate time: He is slated to become ANZ’s chief risk officer. Australian media have speculated that a recorded video conference all with Citigroup and DB discussing the share sale.ANZ said the charges related to the placement of 80.8 million shares, which were a subject of underwritten deal by global giants Deutsche Bank, Citigroup and JP Morgan as a part of a bid by ANZ to raise capital to meet tough new regulatory requirements that would have forced them to inject billions of dollars into their mortgage books and boost capital to “unquestionably strong” levels.There is also unconfirmed speculation that JP Morgan may have been granted immunity from the alleged criminal cartel proceedings as the whistleblower.The Australian Securities and Investments Commission is now investigating whether ANZ’s announcement should have explicitly stated that the joint lead managers took some 25.5 million shares of the placement, representing approximately 0.91% of total shares on issue at that time.In other words, the underwriters ended up with almost $800 million in ANZ shares. The three banks have announced plans to appeal the charges and deny any wrongdoing in the deal.

          Argentina Bailed Out With Biggest Ever Loan In IMF History - Just a few weeks after Argentina became ground zero for the coming Emerging Market crisis, when its currency suddenly collapsed at the end of April amid soaring inflation, exploding capital outflows and a central bank that was far behind the curve (as in "13% of rate hikes in a week" behind)... ... the IMF has officially bailed out the country - again - this time with a $50 billion, 36-month stand-by loan, and coming in about $10 billion more than rumored earlier in the week, it was the largest ever bailout loan in IMF history, meant to help restore investor confidence in a nation that, between its soaring external debt and current account deficit, prompted JPMorgan to suggest that along with Turkey, Argentina is in effect, doomed. As the JPM chart below shows, the country’s total budget deficit, which includes interest payments on debt, was 6.5% of GDP last year, much of reflecting a debt binge of about $100 billion over the last two and a half years. The primary fiscal deficit in 2017 was 3.9%.

          Petrobras chief resigns as Brazilian truckers end strike -- Brazil’s 11-day truckers’ strike was declared over Saturday after a crisis committee formed by President Michel Temer met at the Planalto presidential palace and announced that all of the highway blockades and concentrations of trucks had been lifted across the country.One immediate casualty of the strike was Petrobras President Pedro Parente, who resigned on Friday after the “free market” fuel pricing policy he had introduced was at least temporarily scrapped, with the government seeking to appease the strikers with an offer of discounted fuel over a period of two months along with imposing future increases on a monthly basis.Under Parente, a series of measures had been introduced to meet demands of international finance capital and prepare the giant state-run energy firm for privatization. These included the daily readjustment of fuel prices in accordance with global market prices and the value of the Brazilian real against the dollar resulting in a 19 percent hike over the past year—seven times the rate of inflation. The sharp increase in fuel costs provoked the revolt by Brazil’s truckers, who have also suffered a decline in work. A study reported Sunday by Folha de S.Paulo showed that the number of trucking runs has fallen by 26 percent since the period of economic growth in 2003-2007. With the deepening of the capitalist crisis in Brazil, between 2014 and 2016, 72,000 truckers’ jobs were wiped out.

            Brazil Central Bank Intervenes In FX Market After Real Routed To 2 Year Lows - With the Brazilian economy unexpectedly keeling over in the past two weeks, following the trucker strike protesting surging gas prices which has effectively paralyzed the nation, coupled with an oil-worker strike which has led to a sharp drop in state revenues, and last week resulted in the resignation of Petrobras CEO Pedro Parente, the country's currency has been in freefall in recent weeks, plunging from 3.55 to 3.75 since May 10, amid concerns of a sharp economic slowdown.And moments ago, the Brazilian central bank became the latest Emerging Market whose central bank was forced to intervene in the FX market amid relentless dollar strength, as the USDBRL spiked above 3.80, the highest level since March 2016, when Emerging Markets were crashing following the Chinese devaluation.BRAZIL'S BCB RAISES INTERVENTION IN FX AS BRL BREACHES 3.80/USD   As Bloomberg explains, the Brazil central bank announced a new auction of up to 30,000 FX swaps 12:20pm-12:30pm, with results 12:40pm, local time; this means another 1.5BN on top of the usual 750MM.  The intervention managed to halt the BRL's descent, and after sliding just below 3.80, the USDBRL is back down to 3.77

            Brazil real plummets despite central bank intervention (Reuters) - The Brazilian real on Thursday plummeted to its weakest in more than two years, as concerns over the nation's fiscal outlook added fuel to a sell-off despite increased central bank intervention. The currency tumbled as much as 1.9 percent to 3.9132 to the dollar, extending losses to 4.8 percent so far this month. It is down nearly 19 percent since February. Rising U.S. bond yields have hit demand for emerging market assets in general, but Brazilian markets have been particularly affected after several opinion polls and a nationwide truckers' strike against high diesel prices cast doubt on bets that the winner of this year's elections will stick to a market-friendly agenda. The sell-off drove the central bank to increase sales of currency swaps, which function like sales of dollars for future delivery, in a bid to cushion volatility. Yet the real was still the biggest loser among Latin American currencies, surpassing even the Mexican peso, which has been hard hit by fears that the North American Free Trade Agreement (NAFTA) negotiations may deteriorate. A Reuters poll showed the real is likely to strengthen in coming months, but forecasts span an extremely wide range, highlighting how the recent slump has heightened uncertainty around the foreign exchange rate. Assurances by central bankers that the currency sell-off will only drive monetary policy insofar as it affects inflation and inflation expectations also seemed to have little effect on markets, with yields on short-term interest rate futures soaring. "The central bank changed its plans and held rates at its last meeting because of the foreign outlook and the currency, so it's very reasonable that it could do so again for the same reasons," a partner at a Rio de Janeiro-based asset manager said, referring to the bank's unexpected decision to withhold from cutting rates last month. Analysts told Reuters that the recent sell-off is unlikely to contaminate long-term inflation expectations, but that could change if the currency breached the 4.00-to-the-dollar threshold. >

            The Week That Stopped Brazil -- A few years ago, David Harvey brought the Left’s attention to capital’s massive dependence on supply chains. He speculated that if New York City delivery drivers went on strike, the city would starve in about a week. Last week, their Brazilian counterparts proved Harvey right. In the span of a few days, striking truck drivers brought São Paulo — which counts around four million more inhabitants than NYC — and many more cities in Brazil to a grinding halt.The sudden rise of usually invisible workers pushed Brazil’s right-wing president Michel Temer into a corner over the price of diesel. Since the 1950s, the Brazilian state has prioritized road transportation over rail; today, the country features only twenty-nine thousand kilometers of railroad but 1.6 million kilometers of roads. As a result, commercial activity is highly dependent on road transportation, making the truck drivers’ roadblocks enormously effective. Many localities ran out of fuel, the middle class had to abandon their cars and ride public transit, and businesses, schools, and other entities closed their doors. The strike shocked the Left, whose mobilizations, despite the April 2017 general strike, haven’t achieved nearly the same impact as the truck drivers’ strike. Leftist labor unions, like the Petrobras Workers Union, are now attempting to push truckers’ demands for lower diesel prices into a political protest against Temer’s economic policies. But they haven’t been able to replicate the truck drivers’ momentum.

            How Venezuela Re-elected Maduro, Defying the U.S. - The Venezuelan people reelected Nicolás Maduro for a second presidential term on May 20, bucking a U.S.-backed political tide of reaction that had swept away previously left-leaning Latin American governments – often by extra-parliamentary means – in Brazil, Argentina, Chile, Paraguay, Honduras, and even Ecuador.The United States and the right-wing opposition in Venezuela had demanded an election boycott and Maduro’s resignation. Instead, a majority of Venezuelans defiantly voted for Maduro, affirming the legacy of Hugo Chávez.Chávez was first elected in 1998 and died in office on March 5, 2013. He had spearheaded a movement that turned Venezuela from an epigone of Washington into an independent force opposing U.S. hegemony. The Bolivarian Revolution reclaimed Venezuela’s history and forged a new national identity that no longer looked to Miami for affirmation. Even some of the most anti-chavismo now take pride in being Venezuelan. Such has been the depth of the sea change in national consciousness. Venezuelan society became more inclusive for the poor, especially women, people of color, and youth. Of the 300-odd mayoralties in Venezuela, over 100 mayors are under 30 years old. As historian Greg Grandin observed, this inclusiveness has awakened “a deep fear of the primal hatred, racism, and fury of the opposition, which for now is directed at the agents of Maduro’s state but really springs from Chávez’s expansion of the public sphere to include Venezuela’s poor.”On a geopolitical level, the Bolivarian Revolution placed a renewed focus on opposing U.S. dominance. While some on the left have become confused about opposing imperialism, Washington has made regime change in Venezuela a priority. Maduro inherited all this and more: a dysfunctional currency system, deeply engrained corruption, an entrenched criminal element, a petro-economy dependent on the international market, and the eternal enmity of Washington.

            Trade Wars: How Exposed Are EU States and Industries to the US? - How much do EU Member States and industries depend on being able to reach the US consumers with their goods and services? A simple way of addressing this question is to look at each country’s and sector’s bilateral exports to the US as a share of its GDP, shown in Figure 1.However, this approach disregards the complexity of global trade emanating from cross-border production sharing and trade in intermediates. An alternative approach that is more intuitive and increasingly popular is to focus on value-added trade flows, i.e. the value of output sold abroad, minus the value of intermediates used in its production.  In this particular case we use an approach that differentiates value-added according to its source and final destination in terms of absorption (consumption of final goods); it accounts for all the possible ways, direct and indirect, that value created in the EU ends up in US consumption of final goods, irrespective of how it finds its way there (forward linkages). The latter is relevant when the prospect of the US imposing multilateral tariffs (and not only bilateral vis-à-vis the EU) is likely.To implement it, we use world input-output tables (WIOT) from the World Input-Output Database (Timmer et al., 2015). WIOT combine national supply and use tables with bilateral trade data. They deconstruct output produced into intermediate supply and final consumption of goods and services across the world. The latest available WIOT (2014) cover 43 countries in total, including all EU28 countries (as well as a model for the rest of the world), and 56 detailed sectors (see Technical appendix). Among EU countries, Ireland is still the most exposed but roughly 7.8% of aggregate domestic value-added (i.e. GDP) ends up in final goods and services purchased in the US (Figure 2). While arguably this is a lot, Ireland’s exposure measured in value-added terms is about half of that derived from gross bilateral exports (amounting to approximately 13.5% of GDP). The value-added figures also show relatively large exposures to US demand for Germany, the Netherlands and Belgium, to the tune of 3.5% of the GDP. On the other hand, Spain, Greece, Cyprus, and Malta are the least vulnerable to US final consumption. Large countries such as France and Italy sit in the middle of these extremes at around 2%.

            G7 conflict set to deepen at leaders’ summit -- The division that opened up at last week’s G7 finance ministers’ meeting, between the United States and the other six major economies, is set to widen at the two-day leaders’ summit starting tomorrow in Quebec, Canada.The European Union (EU) is pushing ahead with retaliatory tariffs following the Trump administration’s refusal to grant it a permanent exemption from steel and aluminium tariffs imposed on “national security” grounds.Following the finance ministers’ meeting, French Finance Minister Bruno Le Maire characterised the G7 as the “G6 plus one.” This description is becoming more than a rhetorical flourish as Canada, the EU and Japan seek to coordinate their response to the US.Japanese Trade Minister Hiroshige Seko told reporters on Tuesday: “Japan and the EU will team up on this issue and call on cooperation from other countries.”The European Commission (EC) said yesterday it would proceed with plans to impose tariffs on €2.8 billion worth of goods in accordance with a list drawn up when the US tariffs were first announced in March. The US has warned that European steel and aluminium tariffs would be met by further measures.Jyrki Katainen, the EC vice-president with responsibility for trade, said Brussels had received “full support” for counter-measures against the US. “We want to defend our industries and our legitimate interests.” Under EU rules, the retaliation plans will go to governments for review. Unless opposed by a weighted majority of members, measures are expected to be in force by next month.

            Why Europe is pivotal player for China in a three-way trade puzzle - China should collaborate on multiple fronts to work through a three-way stand-off over trade between Beijing, Brussels and Washington, observers and diplomats have said. The need for a strategic balancing act has gained fresh urgency with Beijing and the European Union (EU) to hold high-level economic talks on June 25, according to a European source, after dialogue due last year was delayed. The two sides would also soon start a new round of talks on what would form the Comprehensive Agreement on Investment, covering market openness, the source said. There had been signs that Beijing and Brussels were ready to engage over trade and investment since Chinese Vice-Premier Liu He and European Commission Vice-President Jyrki Katainen agreed on May 24 to hold economic dialogue as soon as possible, but the discussions will have a complex backdrop. The EU and the United States hold similar positions on uneven intellectual property treatment and the slow pace of opening up market access in China, but have been in dispute on aeroplane subsidies for more than a decade. The EU and China share common concerns on the unilateral trade actions taken by the US, and its exit from the climate change accord and the Iran nuclear deal, but have long disputes on industrial overcapacity and anti-dumping rules. “The situation is very complicated because the interests and conflicts of three parties intertwine,” said Cui Hongjian, a senior fellow with China Institute of International Studies. “It is not a simple friend-or-foe question.”

            Poland's US Military Base Is More About China Than Russia -  Poland is proposing to host a permanent US military base on its territory. Poland wants to replace Germany as the US’ preferred partner in Europe, taking advantage of American distrust with Berlin over Nord Stream II and trade disagreements while capitalizing on the Pentagon’s desire to “contain” Russia, thus satisfying multiple strategic objectives at once.The Polish leadership believes that the region-wide “Three Seas Initiative” of 11 other Central and Eastern European states that it wants to lead is ideologically compatible with the Trump Administration’s anti-liberal populism and represents another strategic convergence with the US.Paradoxically, however, while Poland is striving to advance its national sovereignty, it’s nevertheless sacrificing it by wanting to host an American military base, which is why a deeper explanation of this proposal is necessary.Poland isn’t just strategically important to Germany, Russia, and the US, but also to China, being Beijing’s top partner in the 16+1 collection of Central and Eastern European states and correspondingly one of its top Silk Road nodes.  China is constructing a high-speed railway between the Hungarian and Serbian capitals that’s expected to travel further southwards through the Balkans in connecting to the Chinese-owned Greek port of Piraeus, one of the largest in Europe and the envisioned terminal of what can be called the Balkan Silk Road. This project, however, could also expand northwards through Slovakia and thus to Poland, the largest country in the region and the heart of the “Three Seas Initiative”, which would be a game-changing geopolitical development if it ever happened.

            Putin Signs Law On Countermeasures To "Unfriendly Actions" By US And Its Allies - While Trump and Putin may, or may not, be planning a long overdue summit between the US and Russia - as a reference, presidents George W. Bush and Barack Obama each held summits with Putin within six months of taking office; meanwhile 16 months into his tenure, Trump has yet to do the same - today Russian President Vladimir Putin signed a law stipulating implementation of counter-sanctions against the US and its allies. According to the Russian media, the legislation will be applied to any state or person for "hostile actions" against Russia, and allows Russian authorities to cut international cooperation with foreign states and impose import and export restrictions among other countermeasures. Trade embargos will not extended to certain goods, however, that are imported by Russian citizens for personal use.As RT adds, the bill which is aimed at defending “economic interests and security” was drafted by State Duma Speaker Vyacheslav Volodin and the heads of all four parliamentary caucuses in mid-April. It was approved by Russian lawmakers by the end of May. The move came in retaliation to Washington’s economic penalties against Moscow. However, contrary to domestic concerns, the countersanctions do not apply to imported essential items, for which no replacements are produced in Russia or other countries, although in case of escalating trade wars, those are precisely the products which trading partners will limit their exports. As a reminder, in early April, the US Treasury included 24 Russians, including high-profile politicians, and 14 corporations on a sanctions list relating to alleged "malign activity around the globe." The move has been repeatedly condemned by Russian authorities, with Moscow immediately promising to retaliate. It is unclear if by signing today's law, Russia will next proceed to respond in kind to the US action.

            What Goes Around Comes Around In Spain - Mariano Rajoy is gone from Spain’s political scene.  And good riddance.  Live by the sword die by the ballot box.  Catalan and Basque separatists took their revenge on Rajoy’s brutal crackdown on last year’s Catalan independence movement by voting with the Socialists and Podemos to oust Rajoy from power.The political situation in Spain has been complicated for nearly two years now as Rajoy governed with a very weak, cartel-style coalition.  It was cobbled together under duress and pressure from the European Union to not allow anti-austerity party, Podemos to take power and prevent Catalan independence.That was Friday.  Today the new government in Catalonia was sworn in and it looks to be just as set on seceding from Spain as the last one was.  The difference now is that EU-firster, Rajoy, is no longer in power.The leader of the Socialist party, Pedro Sanchez, has vowed to discuss Catalonia’s situation “government to government” which is a radical change from Rajoy’s refusal to even countenance a dialog with former Catalan leader Carles Puidgemont, who is in Germany out on bond after being arrested by German authorities at Rajoy’s request.Now, Spain’s political future is up in the air and at a time when hard-core populists in Italy are determined to either tear down its relationship with the EU or force it to reform bodily.Matteo Salvini is preparing to oust thousands of refugees.  Italian politicians are calling for Germany to leave the euro, going on the offensive against German rule over the rest of Europe.  And now, Spain’s Socialists are trying to put together a weak, minority government which thumbs its nose at Podemos after using its support to get rid of Rajoy and take power.Sanchez is trying to go it alone with support of around 20% of Spanish voters in putting together a cabinet.  He’s doing this to keep Brussels from lashing out at involving Podemos in the mix who will push to undo fiscal austerity policies demanded by the Troika — EU, ECB and IMF.But, it’s also obvious he’s willing to repay the separatists for their support.  And in this way keep everyone honest.  Brussels can’t push him too hard because he’ll simply allow the Catalans to go forth with their independence drive again this fall while also throwing domestic opponents a bone by loosening austerity policies.

            Sánchez Government Lifts Financial Controls On Catalonia - Pedro Sánchez's new Spanish government has decided to lift extraordinary financial controls on the regional Catalan government, the new cabinet spokeswoman, Isabel Celaá, confirmed in a press conference on Friday afternoon. Banks will be instructed to allow payments "without the supervision of the Bank of Spain", said Ms. Celaá, adding that the new socialist government characterised the move as a "gesture of normalisation". The exacting financial control measures were put in place last year by the previous Popular Party government in order to check if any public money was being spent on the illegal separatist referendum on October 1, 2017 or the Catalan independence process. The suspension of home rule in Catalonia following a declaration of independence in the Catalan Parliament on October 27, 2017 lasted for seven months. Ms. Celaá said the priority for the new cabinet is the territorial situation in Catalonia and that the Sánchez government's approach will be constitutional but with dialogue: "we will try to move forward". She did not specify when the Prime Minister will meet Quim Torra, the new First Minister of Catalonia. 

            JPMorgan's Stunning Conclusion: An Italian Exit May Be Rome's Best Option -- With Europe having a near heart attack last week, as Italian bond yields exploded amid deja vu fears that the new populist government would press the "Quitaly" button and threaten the EU with exiting the Eurozone in order to get budget spending concessions from Brussels, the discussion about Europe's record Target2 imbalances quietly resurfaced after years of dormancy. And with €426BN, Italy has the highest Target2 deficit with the Eurosystem (Spain is a close second with €377BN) any discussion about an Italian euro exit raises concerns about costs.After all, as JPMorgan reminds us, it was only a year ago, in January 2017,  that in a letter to European Parliament MPs, ECB President Draghi made the stunning admission that a country can leave the Eurozone but only if it settles its bill first,  or as Draghi said "if a country were to leave the Eurosystem, its national central bank’s claims on  or liabilities to the ECB would need to be settled in full." By linking the Eurozone exit cost to Target2 balances, where Germany is on the other end with a receivable balance of nearly €1 trillion, Draghi "reminded" populist politicians in Europe that a euro exit or divorce would be difficult and even more costly relative to the past because of the continued rise in Target2 balances following the ECB’s QE program. As the chart below shows, and as we and the BIS have discussed previously, due to QE induced cross border flows since 2015, Target2 balances have exploded since the launch of the ECB's QE (and third Greek bailout in 2015), and surpassed the previous extremes from the depths of the euro debt crisis in the summer of 2012.

            Italians Angry After ECB Admits It Slashed Purchases Of Italian Debt During Latest Crisis - Heading into the second half of May, just as the political turbulence in Italy was rising as investors took fright at 5-Star’s attempts to form a coalition government with the anti-immigrant League party, and what was initially a trickle of selling in Italian BTPs became a full-blown liquidation panic, some Italians wondered if the Mario Draghi wasn't using a page from the Silvio Berlusconi playbook and allowing Italian bonds to tumble without ECB intervention, simply to "pressure" the domestic political process against the formation of a populist, Euroskeptic cabinet, something European Budget Commissioner, Guenther Oettinger scandalously suggested last week when he said that "the negative development of the markets will lead Italians not to vote much longer for the populists." Elsewhere, Laura Castelli, another Five Star parliamentarian close to leader Luigi Di Maio said in an interview with Huffington Post that “the ECB and Italian banks have slowed up if not suspended their buying of BTP [Italian government bonds] . . . which is adding to pressure on spreads”. She also argued that "quantitative easing is being weakened at exactly the moment when we need it strengthened to secure the stability of the EU." As it turns out, skeptical Italians was proven right because as the ECB revealed when it disclosed its PSPP bond purchases for the month of May when "lo spread" between the yield on Italian and German government bonds blew out to its highest level for five years - leading some of the country’s politicians to hit out at perceived "bullying" from the bond markets - the central bank sharply scaled back the proportion of Italian purchases relative to all other bonds purchased under QE in the month of May, which according to the FT is an "admission that could fuel suspicions of the new Eurosceptic Italian government that the central bank is seeking to punish it." As shown below, in total less than 15% of ECB's net May purchases were of Italian debt, the lowest proportional allocation to Italy since the bond-buying program began in March 2015.

            Juncker Lies Again? "EU Won't Meddle In Italy's Affairs” --The situation surrounding Italy "must have become serious" for The European Union, because it appears EU Commission President Jean-Claude Juncker is lying once again. Juncker who in 2011, in the depths of the EU crisis, admitted "when it becomes serious, you have to lie" said this weekend that, while he had been tempted to intervene during the recent political impasse in Italy, he was determined not to feed the populist narrative: that the EU is meddling in domestic affairs.As Giuseppe Conte was sworn in as Italian prime minister on Friday - after a last-ditch coalition deal between the two parties ended months of political deadlock and narrowly averted the need for a snap election in the eurozone’s third-largest economy - Juncker proclaimed: “By keeping out of it, I’m not helping. By getting involved, I’m not helping. I am caught between a rock and a hard place.” Throwing the new government in Rome an olive branch, saying that Brussels and “German-speaking countries” must not repeat the error made during the Greek crisis by reading stern lectures to the Italian people. In an interview with German news service RedaktionsNetzwerk, Juncker admitted to “concern” about the recent developments in Italy, but insisted that the recent turmoil in the financial markets in response to the new government had been “irrational” and should not be seen as a guide to how the political story will unfold in Rome.“I think very highly of President Mattarella, but I have not spoken to him during this crisis. I have not interfered, although I have been tempted to,” Juncker said. “I do not want to feed the accusations spread by the populists that we are sitting in Brussels meddling in Italy’s affairs. I am certain the Italians have a keen sense of what is good for their country. They will sort it out.”Juncker offered a more placatory tone, suggesting that Brussels and Berlin had learned the lessons of the Greek crisis. He also denied that the eurozone was set on a course for another economic downturn

            The ECB Deserves This Bout of Political Hot Water -- The European Central Bank’s QE bond buying has come under unusual scrutiny. The central bank doesn’t deserve to shake off charges of political favoritism particularly quickly.The bank said Monday that it underbought Italian bonds and overbought German securities in May, relative to its economy-weighted guidelines for monthly purchase amounts known as the capital key. As a reminder, last month the spread between Italy and Germany blew out to levels that started reminding everyone of the Greek debt crisis, and this served as evidence of investor nervousness about Italy’s struggles to form a government. This selloff, coupled with the news of the ECB’s buying, prompted Five Star leader Luigi Di Maio to pin the reason for the spread widening on the ECB’s diminished Italian bond buying. The central bank’s statement raised suspicion among some analysts that officials skewed purchases away from Italy to punish a prospective euro-skeptic government. The ECB’s press spokesman said the change was necessary to accommodate a large German redemption, and that it is acting in line with its stated rules on purchases. That makes a lot of sense and is absolutely normal practice – provided conditions are normal.But the bank did not need to bind itself so tightly to that logic. Its rules on reinvesting maturing bonds state that this must be done:...in a flexible and timely manner in the month they fall due, on a best effort basis, or in the subsequent two months, if warranted by market liquidity conditions. The published monthly net purchase volumes per jurisdiction may therefore fluctuate owing to the timing of these reinvestments. There it is: The asset purchase program has flexible terms for coping with redemptions that permit deviations for reasons of liquidity concerns. And there was a serious one in the case of Germany; the bank’s purchases drove 10-year yields down by 40 basis points in late May to a new low for the year. The ECB should have known that the tiny German free float meant their overbuying would have sucked up liquidity.

            New Italian government: little regard is paid to what voters really think -- Italy is like a house in which for years there have been leaks that nobody noticed, a house that could suddenly collapse. That suddenly, but inevitably, collapses. As the Italian house collapsed, these politicians have continued to demonstrate arrogance and contempt in the face of people’s fears and the progressive impoverishment of the nation, and especially of the south. The government “experts” have given up seeking genuine communication with people – to such an extent that we currently find ourselves wondering what happened to the now threadbare relationship of trust between the elite and the people, politicians and voters. Over recent years, governments have responded to popular unease by attempting to redistribute some of the resources, but this was seen as nothing more than handouts to people, so as to take on populist parties on their own turf. The unspoken message went: “Be good and you, too, will be able to grab a few crumbs.” But the time for handouts is over and this behaviour has only increased support for the Lega and the Five Star Movement (M5S), both of which promised to “give back what had been wrongfully taken away”. What we are seeing today stems from what happened yesterday. It didn’t come from nowhere, like some unexpected meteorite. Similarly, what happens tomorrow depends on how far we can really get a grip on what is happening now. The fact that even now, despite everything, scant consideration is given to the choices made by people, and the reasons underlying those choices, is revealed by the attitude taken to M5S and Lega voters. It’s identical to that adopted towards those who voted for Silvio Berlusconi in the past and constitutes an air of superiority which assumes people have been conned without realising it. But there has been no con trick, either now or before; just discontent that is no longer manageable. And if there is no specific project for growth for the south of Italy in the Lega-M5S manifesto, it’s also true that politics at the national level long ago gave up the south as a lost cause.

            Italian Bonds Slide After Italy's New Prime Minister Spooks Markets With "Radical" Plans - The eye of the hurricane may have passed over Italy and the winds are again starting to pick up speed, because shortly after Morgan Stanley laid out what a worse case scenario for Rome could look like (ugly, read here), Italian bonds started selling off again, with 2Y yields rising to session highs following Italian premier Conte's inaugural speech in which the populist premier spooked markets by reiterating that the new populist government will pursue a radical policy program, and highlighting legislative priorities that will be extremely costly - including the right to universal income, minimum wage, overhauling the healthcare system, prioritizing social rights, and so on - all without saying just how these will be paid for (spoiler alert: much more debt).Conte also said that a new flat tax would be introduced, even if no timeframe has been provided, and there was no mention of avoiding the hike in sales taxes which is currently planned for 2019, or canceling the "Fornero" pension reform.Amusingly, in the speech Conte also said that he plans on reducing public debt, although in light of the surge in spending which will not be financed with increased revenue, it is not clear how that can be achieved. As Bloomberg economist Stephanie Flanders notes "Italy cannot convincingly cut its public debt as a share of GDP without reasonable growth in nominal GDP (real growth plus inflation). Even the more optimistic forecasts do not point to nominal GDP growing much faster than 2.5% in the foreseeable future. By contrast, the average cost of its public debt is 3.1%." A much more important chart is the following from Morgan Stanley showing what would happen to Italy's debt/GDP if interest rates rose even modestly from their artificially low levels.

            Italy’s New Prime Minister Conte Says Euro Exit Off the Table, But Mr. Market Pouts About Spending Talk - Yves Smith -  In his inaugural speech before Parliament, Italy’s new prime minister, Guiseppe Conte, stressed his populist bona fides while moderating some of the positions that ruling coalition members 5 Star and Lega, had adopted during their campaign. The most striking was that Conte walked back the idea of a possible Euro exit, as well as delaying and diluting a key 5 Star promise, that of an income guarantee. However, a more measured populist stance wasn’t enough to satisfy Mr. Market, since Conte stressed that Italy wants to renegotiate some of the Eurozone economic rules of the road, with getting more spending wriggle room a key demand. Interest rates on Italy’s two year government bond rose 22 basis points after Conte’s speech, to 1.02%.From Il Sole 24 Ore, via Google Translate, is a recap of Conte’s remarks on his government’s position on the idea of leaving the currency union: “The exit from the Euro is not in question, and it is not a goal we want to pursue,” the prime minister reiterated, once again emphasizing his government’s distance from market fears, which emerged even today from the spread trend. “The theme – he clarified – is another: is it legitimate or not for a government, a country, renegotiating economic policies? Do we have to give up discussing economic policies? We are talking about this. If there is any margin or not we will find out. We are determined to do it ». However, this was not part of the prepared speech. Indeed, as Il Sole pointed out: Among the key words of the government contract, which do not appear in the debut speech, we also note the absence of “fiscal peace”, “Euro”, “Tav”, even if different topics, from the tax authorities to Europe, to public tenders and works, he has dedicated specific steps. Investors wanted to hear a firm promise of Euro loyalty. The Financial Times noted the absence of any statement that Italy was “inextricably bound to the single currency.” But given that the two parties had wanted to appoint a strident Eurozone critic as finance minister, Conte’s stance in his debut represents a marked shift in a short period of time. Conte stressed that his government would seek Eurozon-EU level reforms on many fronts. As Politico noted: He said the two governing parties have been “accused of being populists and anti-system, well … if populism is the ruling class listening to people’s needs … if anti-system means aiming at introducing a new system … then both political forces deserve both these qualifications,” he said. The Financial Times highlighted this section: “Monetary union must be oriented towards the needs of citizens and must balance the principles of responsibility and solidarity more effectively,” Mr Conte said.

            Italy’s new PM Giuseppe Conte’s inaugural speech vows radical change - In his first speech to parliament, Italy's new prime minister, Giuseppe Conte, outlined his government's plans for economic growth, opposing "golden pensions" and opening up to Russia. On Tuesday, he told Italy's Senate that if "populism" means the ruling class listens to the needs of the people and "anti-system" removes old privileges and encrusted power, then his Cabinet deserves to be called both.  After Conte's speech, the Senate approved his government 171-117, with 25 abstentions.:

            • Conte called for the Dublin Regulation — which requires people seeking asylum to register in the first EU state they enter — to be overhauled.
            • "We will seek ... to set up an automatic, obligatory system to redistribute asylum-seekers."
            • "We are not and will never be racists. We want procedures that determine refugee status to be certain and speedy, to effectively guarantee their (refugee) rights."
            • "We intend to reaffirm our membership of NATO, with the United States of America as a privileged ally."
            • "We will support opening up to Russia. ... We will push for a review of the sanctions system, starting with those that risk humiliating Russian civil society."
            • Conte responded to speculation that Italy may consider pulling out of the eurozone. "Leaving the euro was never up for discussion," he said. "It is not up for discussion. The issue is another: Is it legitimate or not for a government of a country to renegotiate economic policy?"
            • "We want to reduce the public debt, but we want to do it by increasing our wealth, not with austerity that, in recent years, has helped to make it (public debt) grow."
            • "Italian public debt is fully sustainable today. However, its reduction must be pursued, but with a view to economic growth."
            • "The government's goal is to provide income support for families most affected by socio-economic hardship. The support ... will be conditional on vocational training and job reintegration. We propose, in a first phase, to strengthen the employment centers."
            • "We will also take action to help pensioners who do not have enough income to live in a dignified manner."
            • "We need to cut the pensions and annuities of parliamentarians, regional councilors and employees of constitutional bodies. ... The so-called golden pensions are another example of unjustified privilege that must be opposed. We will intervene on pensions that exceed €5,000 per month when the sum has not been covered by the contributions paid."

            "The Good Times For Illegals Is Over, Get Ready To Pack Your Bags": Italy's New Interior Minister Promises Mass Deportations --Italy's new interior minister Matteo Salvini said in a Saturday rally that "the good times for illegals is over - get ready to pack your bags," adding "Countries need to start doing their job and no more smugglers should be docking in Italian ports," a not-so veiled jab at NGOs organizing rescues at sea.  Salvini, the leader of the conservative League party, assumed his role as Deputy Prime Minister and Minister of the Interior on Friday. He is currently on the road to rally support for his party's candidates in the south of Italy, attending a Sunday rally in Sicily - a prime destination for most of the hundreds of thousands of migrants which have poured into Italy in recent years, mostly from Libya. A controversial agreement between Italy's former centre left government and authorities and militias in Libya has triggered a fall in overall arrivals of some 75 percent since the summer of 2017. But since the start of this year, Italian authorities have registered more than 13,500 arrivals.The latest came late Friday, just hours after Salvini took his oath of office, with some 158 people, including nine children, landing in Pozzallo after being rescued by a humanitarian boat in an operation coordinated by the Italian coast guard. –France24 After being sworn in, Salvini said that he would ask experts within his ministry "how to reduce the number of arriving migrants and increase the number of expulsions." In order to boost deportations - of which there were only 6,500 in 2017, Salvini will need to increase the number of detention centers while signing agreements with countries which migrants originate from - most of which are not excited to have their citizens returned.  And in order to pay for his plan, Salvini is eyeing the billions of euros earmarked every year to help deal with the demands of the asylum seekers.

            Czech leader opposes Merkel's idea of EU immigration 'flexibility’ - (Reuters) - The Czech Republic opposed on Monday German Chancellor Angela Merkel’s idea of a flexible European Union approach to migration and an independent border police, saying protecting frontiers should be up to individual member states. Prague, along with other central European governments, has rejected a quota system drawn up by the European Commission to redistribute asylum seekers around the bloc. With an EU summit due to tackle the dispute this month, Merkel called at the weekend for a flexible system in which countries that refuse to take in refugees could compensate by making contributions in other areas. She also said the European border police force Frontex should be allowed to operate independently. Czech Prime Minister Andrej Babis rebuffed this approach. “The idea that Frontex will guard everything by itself is not realistic in the long term,” he told reporters when asked about Merkel’s comments. “Individual states must guard that.” Babis said later on Twitter he was not against common border controls but the EU should use the potential of member states first. “We support all EU initiatives to fight against illegal migration,” he said. Migration has divided the EU’s 28 member states since more than one million migrants, many of them Muslims, arrived in 2015 largely from the Middle East and Africa. The Czech Republic - along with Hungary, Slovakia and Poland which together form the Visegrad Group - has taken a hard line on the issue and refused to accept more than tiny numbers of migrants. EU leaders will again discuss migration at the end of this month. Merkel said over the weekend she was not sure that any deal to break the impasse over burden-sharing could be reached by then. Unlike western EU states, the Visegrad countries have little experience of immigration historically and some have expressed fears for their Christian culture from any sizeable intake of migrants. Babis questioned how countries could compensate for refusing to take in migrants and said on Twitter his country was “ready to continue with financial solidarity, but not as sanctions for not accepting quotas”.

            French riot police launch mass expulsions of refugees from Paris --Last Wednesday, in the early morning hours, hundreds of French riot police assaulted and tore down one of the biggest refugee camps in France, at the Saint Denis Canal in the 19th district of Paris. Over 1,700 refugees, who came largely from Somalia, Sudan and Eritrea, had been living rough for months in squalid conditions in the camp. Most of the refugees in this camp had escaped from their war-torn countries and made the dangerous crossing of the Mediterranean Sea from Libya, where they had to evade continuing fighting as well as mass refugee prison camps set up after the 2011 NATO war in that country.The CRS (Republican Security Companies) riot police forcibly expelled refugees including women, unaccompanied minors and children and escorted them to 20 temporary detention centers across the Paris area. Refugees were only allowed to bring their belongings in shopping bags or small suitcases. Several hundred refugees fled and escaped before the riot police entered into the camp.After the initial police assault, bulldozers destroyed hundreds of tiny, two-person sleeping tents that volunteers had supplied to the refugees. When the police bulldozers demolished the camp, riot police patrolled the Saint Denis Canal and guarded the entire surrounding area, in order to suppress any resistance that emerged. It was the 35th time since mid-2015 that police forcefully removed refugees from makeshift camps in Paris; some 28,000 refugees have been expelled this way.Refugees are reportedly to be detained in temporary prison centers while police check their documents and administrative situation. After a brief examination, refugees face the risk of deportation from France due to President Emmanuel Macron’s draconian new asylum law, passed in April to slash the number of asylum applications and create conditions for mass summary expulsion proceedings.  According to certain press reports, last Thursday 2,132 migrants were deported from Charles de Gaulle Airport in Paris.

            Germans Appalled by Threat From Trump’s Ambassador to Help Far-Right Nationalists Take Power Across Europe - The German government demanded a formal explanation from the United States on Monday of what, exactly, the new U.S. ambassador in Berlin, Richard Grenell, meant when he promised to use his office to help far-right nationalists inspired by Donald Trump take power across Europe. In an interview with Breitbart News, published on Sunday, Grenell said he was “excited” by the rise of far-right parties on the continent and wanted “to empower other conservatives throughout Europe, other leaders.”  US Ambassador to Germany Richard Grenell makes clear he is a political activist who will use his position to promote political change in his host country (and all over Europe). https://t.co/ruo0lrGFMa  — Mathieu von Rohr (@mathieuvonrohr) June 3, 2018   Grenell was apparently not asked if that group includes the far-right Alternative for Germany — known by its German initials AfD — the largest opposition party in the German parliament, but he did praise Austrian Chancellor Sebastian Kurz, a center-right politician who is in coalition with the Freedom Party, which was formed in the 1950s by a former Nazi officer. A spokesperson for the German foreign ministry told reporters that Chancellor Angela Merkel’s government had “asked the U.S. side for clarification” as to whether the remarks “were made as reported.” Grenell, a former Fox News pundit whose abrasive Twitter style had already alienated many Germans, tweeted on Monday that it was “ridiculous” to suggest that he would endorse candidates or parties, but stood by his claim to Breitbart that Europe, like America, was “experiencing an awakening from the silent majority — those who reject the elites and their bubble. Led by Trump.”

            Merkel calls for EU militarism, financial austerity in reply to Macron -In a Sunday interview in the Frankfurter Allgemeine Zeitung, German Chancellor Angela Merkel replied to proposals for European Union (EU) policy made by French President Emmanuel Macron in a speech last September at the Sorbonne in Paris. These proposals will be discussed in an EU summit in Brussels later this month.For a half year after that speech, Berlin did not reply, as Germany’s main bourgeois parties fought over how to form a government. In the meantime, the crisis of the EU has intensified. Not only is Washington threatening China and the EU with a potentially catastrophic trade war and threatening all-out war across the Middle East by scrapping the Iran nuclear treaty, but the EU’s disintegration is accelerating. Two years after Brexit, a far-right government that is hostile to the euro has taken office in Italy, the third-largest EU economy.At the same time, there are escalating protests and strikes across Europe, with mass protests against Macron’s cuts in France, and strikes against wage austerity in airlines across Europe, as well as in the metalworking and automobile sectors threatened by US trade tariffs.Thus, via Merkel’s FAZ interview, the two largest EU powers were trying to coordinate a response to the prospect of the greatest combination of wars, economic shocks and class struggles since the EU’s founding in 1992. But the EU is politically bankrupt. While Merkel endorsed Macron’s calls for hundreds of billions of euros in new military spending and vindictive anti-immigrant policies, she did not resolve bitter conflicts that erupted inside the European ruling class a decade ago, after the 2008 Wall Street crash, in the Greek sovereign debt crisis.At the Sorbonne, Macron proposed a common EU military budget, an EU military intervention force, a common European Monetary Fund (EMF) for eurozone sovereign debt crises, and a common European investment fund worth hundreds of billions of euros. Merkel endorsed Macron’s calls for a military build-up: “I am in favor of President Macron's proposal for an intervention initiative. However, such an intervention force with a common military-strategic culture must fit into the structure of defense cooperation.” She called for more “European coordination” on foreign policy, especially on decisions for war.

            EU army looms? Merkel backs Macron’s European Defense Force initiative - Chancellor Angela Merkel has supported “in principle” the idea of a joint European Defense Force proposed by French President Emmanuel Macron. Germany’s opposition had been the main stumbling block for the much-discussed project. “I am in favor of President Macron’s proposal for an intervention initiative,” the German chancellor told Frankfurter Allgemeine newspaper on Sunday.“However, such an intervention force with a common military-strategic culture must fit into the structure of defense cooperation,” she said. Merkel said that the German military, the Bundeswehr, “must, in principle, be part of such an initiative,” but added that her statement “doesn’t mean that we are to be involved in every mission.”During his key speech at Sorbonne University last September, Macron proposed a European military “intervention force” that would protect the continent by taking action in hotspots around the globe. It’s a crucial element of the French leader’s defense reform, which is aimed at integrating European defense capacities. But the talks on implementing the European Defense Force have so far been complicated due to Berlin’s cautions approach to the initiative.“European defense cooperation is very important. Of the 180 weapon systems that currently co-exist in Europe, we must move to a situation like the United States, which has only about 30 weapons systems,” Merkel said.

            German Industry’s Bad News Just Keeps Coming - German industrial production unexpectedly fell in April, continuing a run of poor economic news from Europe’s largest economy.The 1 percent drop in output, along with a shock decline in factory orders reported earlier this week, indicates a moderate pace of expansion at the start of the second quarter. A separate report showed that exports fell 0.3 percent in April, while in France, industrial production also declined.The euro fell after the German data and was down 0.2 percent at $1.1772 as of 9:44 a.m. Frankfurt time.  A series of downbeat numbers from across the euro area suggests that a slower pace of expansion is the new normal. The continued weakness even in the region’s largest economy, underscored by four months of sliding manufacturing orders, will cast a shadow over the European Central Bank’s crucial policy meeting next week, when officials plan to discuss the future of their stimulus program.

            Algebris has launched an 'end of the world fund' - Algebris Investments, the €12bn asset manager, has launched an “end of the world fund” pitched as a solution to the nagging fears of institutional investors that another financial-market meltdown or crisis might be overdue. The fund will be run by Alberto Gallo, a popular investment bank strategist turned hedge fund manager, and will attempt to buy the equivalent of doomsday insurance through investments in credit, fixed income and equities which profit when those markets plummet or gyrate with unusual violence. It was launched on June 1 with the backing of two large institutional investors and seed money from Algebris. The group expects the fund, officially called a “Tail Risk Fund”, to attract commitments of €100m to €500m in the coming months. The launch is a sign of investor jitters after years of global economic expansion, which might revive an investment strategy that became popular following the 2008 financial crisis. The term “tail risk” comes from statistics, and refers to rare and extreme events that fall outside what is normally expected. Gallo, whose two-year old Macro Credit fund has €1bn of assets under management, told FT Alphaville the idea for the new fund came to him last year during a bout of late-night strategising with colleagues in Spain. Widespread optimism made them think. “Last year, every trade worked out well, liquidity was plentiful, everyone was optimistic, so we started thinking about what could go wrong”, he said. So the fund was conceived as a way to prepare for a possible shock to the financial system, after a decade of easy money and quantitative easing provided by central banks. It came to life after Algebris was one of several groups approached by large investors looking for investment strategies designed to limit losses to portfolios.

             Brexit: coprophagia is king -- The newspaper could have worked something out for itself. But, after decades of spoon-feeding, The Sunday Times needed a "leaked" report from government sources to "reveal" what we've writing about for years. Thus, with breathless self-importance, it devoted its front page to telling us that Britain (not the UK) "would be hit with shortages of medicine, fuel and food within a fortnight if the UK tries to leave the European Union without a deal". Its source was a "Doomsday Brexit scenario", said to be drawn up by senior civil servants for David Davis. Whitehall, we were informed, had begun contingency planning for the port of Dover to collapse "on day one" if Britain crashes out of the EU, leading to critical shortages of supplies.  Nevertheless, it seems, it was only last month that officials in Davis's Brexit department and the departments of health and transport drew up these scenarios for a no-deal Brexit. Supposedly, there were three levels, mild, severe one and one dubbed "Armageddon". Conveniently, the newspaper now has a source that tells it: "In the second scenario, not even the worst, the port of Dover will collapse on day one. The supermarkets in Cornwall and Scotland will run out of food within a couple of days, and hospitals will run out of medicines within two weeks".  Such information, freely in the public domain, would have been available to any newspaper – had they cared to use it. But not a single national newspaper, nor any of the broadcast media, have elected to use that which the European Commission so conveniently provided.    Instead, in the manner of an industry where nothing exists until one of their number has "discovered" it, they all waited for the ST to run the story. Then, in a riot of coprophagia, most of them followed suit, with variations which increasingly included government denials and, in the Telegraph, claims from their favourite son, Jacob Rees-Mogg, that the revelations were "fear on speed"

            Theresa May's new Brexit blueprint 'delayed until after crunch EU summit in June' - Theresa May’s new Brexit blueprint on Britain’s future relationship with Brussels has been delayed and will not be published until after June’s crunch EU summit, it has emerged.The European Council will meet on June 28-29 and the expectation was that the UK would publish a lengthy document detailing what it wants its relationship with the bloc to look like after withdrawal before EU leaders convene.But the document, likely to run to 150 pages, has reportedly been temporarily shelved, dashing the hopes of Brexiteers who wanted it to set the tone for discussions.   Leave-backing MPs now fear decisions about the UK’s future relationship will be pushed back even further and the “can” may be “kicked down the road” closer to the October meeting of the council when the broad terms of a deal are supposed to be agreed.The Financial Times said allies of the Prime Minister had confirmed the white paper would be published in July with David Davis, the Brexit Secretary, “disappointed” at the delay.Downing Street simply said the document would be published “when it is ready”.The failure of the Government to agree to an approach on future customs arrangements with the EU means there is a large hole at the heart of the white paper which is also expected to cover issues like regulatory divergence, security and financial services.The Cabinet remains split on whether to pursue a customs partnership or a maximum facilitation model.But with the October deadline now looming large, critics believe the Government needs to make a decision on the matter sooner rather than later.Mrs May has used a number of high profile speeches to set out in broad terms what the UK’s negotiating aims are.But the white paper is viewed as a key piece in the Brexit puzzle because it will set out in greater detail what the UK wants in a variety of areas.

            Red line crossed? Britain could stay in European VAT area after Brexit -- Britain could stay in the European VAT area after the Brexit transition period, according to reports - a move which would see one of Theresa May's so-called "red lines" crossed. According to the Financial Times, Britain is taking an “active role” in shaping new EU VAT regulations for the 2020s, suggesting the Treasury is planning for the UK to remain inside the area after the Brexit transition period due to end at the end of 2020. In a letter seen by the newspaper from financial secretary to the Treasury Mel Stride to Dover MP Charlie Elphicke, the minister writes: “The government aims to keep VAT processes after EU exit as close as possible to what they are now.”If Britain sought to remain inside the EU VAT area, it would continue to be bound by rules set in Brussels which are policed by the European Court of Justice (ECJ), breaking one of prime minister Theresa May’s negotiating red lines.Mrs May has previously made the jurisdiction of the ECJ a red line in Britain’s negotiations, saying that the British Supreme Court would be the “ultimate arbiter” after Brexit. Businesswoman Nicola Horlick , a champion of the anti-Brexit Best for Britain group, said staying in the EU VAT area after the transition period would mean that it would not be necessary to have VAT collection at the border. But she added: "It will also mean that the UK will be bound by rules set in Brussels and that any disputes will fall under the jurisdiction of the European Court of Justice.  "This seems to cross one of Theresa May’s red lines, but it is an acknowledgement of how difficult it is to maintain borderless trade with the minimum of disruption and delays if there is a clean break with Europe.  "The government still seems to think that we can leave the single market and customs union, but trade freely with the EU, but it is unclear to me why [European chief negotiator Michel] Barnier would agree to this."

            UK parties divided over Brexit as businesses sound warnings (AP) — British and European businesses are sounding increasingly urgent warnings about the economic damage the U.K.'s exit from the European Union could cause, as the U.K.'s two biggest political parties acknowledged Wednesday that they remain deeply divided over post-Brexit trade and customs arrangements. Britain is due to leave the EU on March 29, 2019, and the bloc is frustrated with what it sees as a lack of firm proposals from the U.K about future relations. Prime Minister Theresa May declined to say Wednesday when the government would publish a promised document setting out its negotiating position. May's Conservative government is split between ministers who favor a clean-break "hard Brexit" — leaving Britain freer to strike new trade deals around the world — and those who want to keep closely aligned to the EU, Britain's biggest trading partner. "We have a Cabinet that is completely and totally divided so there is no plan for what the negotiating position is going to be," Labour Party Brexit spokesman Keir Starmer acknowledged that "there are very divided views" among the opposition party's lawmakers over whether Britain should try to remain in the EU's single market. "I wish I could report complete unity," Starmer told the BBC. "But we are not in that position." Some Labour lawmakers want Britain to stay in the single market to minimize disruption to the U.K. economy after Brexit. Party leader Jeremy Corbyn is calling instead for the U.K. to have "full access" to the single market. Critics say that is vague, and EU leaders have repeatedly said Britain can't have the benefits of membership without the responsibilities. 

            UK officials float third way Brexit customs compromise — U.K. officials are examining a “third way” customs plan which would involve EU border checks being carried out between Northern Ireland and mainland Britain instead of at the land border with the Republic. The compromise plan is an attempt to square the circle of keeping the U.K. outside the EU customs union after Brexit — thus freeing Britain up to strike trade deals around the world — while avoiding the need for a hard border in Northern Ireland. The U.K. and EU have agreed that the final Brexit deal must guarantee no return to a hard border in Ireland, but remain at loggerheads over how this will be achieved. The U.K. government has insisted that a comprehensive future trade and customs agreement — which will not be fully negotiated until after Britain has left the EU — will be able to solve the dilemma but is yet to agree what this relationship will look like. According to two senior U.K. government figures briefed on the new proposal — one minister and one official — the scheme would involve Northern Irish ports being considered effectively as an entry point to the EU on goods for which the U.K. has agreed to align standards with the bloc. It is a modification to the so-called “maximum facilitation” or “max fac” customs model favored by Brexiteers and being discussed by senior ministers. That model aims to use technology to avoid border checks on the Northern Ireland land border. The compromise proposal would mean that goods shipped to Northern Ireland from mainland Britain after Brexit would be treated as if they were entering the EU at that point, thereby removing the need to check them again when they cross into the Republic. If it proves acceptable to Brussels, the proposal would go some way to solving the Irish border impasse because it would negate the need for a hardening of the border in Northern Ireland — something both sides have said they want to avoid. But because it would create a de-facto customs border in the Irish Sea, it may prove to be political dynamite in Westminster.

            Brexit referendum on final deal possible, Foreign Office minister says - A minister at Boris Johnson’s Foreign Office had said a second EU referendum on the final Brexit deal negotiated by Theresa May would be “possible”, but that he does not think one will be held. Speaking in Berlin Sir Alan Duncan, minister of state at the department, said voters would not be allowed to reverse the original decision to leave the EU under such a plebiscite, but would get “the choice would be between the exit deal on offer or having no deal at all”. The Government has repeatedly refused to offer a second referendum on the issue, and only relented on giving MPs themselves a “meaningful” vote on the Brexit deal after being defeated in the House of Lords. That vote is due in October. But while Sir Alan said the notions that Brexit might not happen or that there would be second referendum on the UK's membership of the EU were "myths", he appeared to suggest a public vote on whether to accept the final deal reached with the bloc was feasible. “It would, I suppose, just be possible to ask the people in a referendum if they liked the exit deal or not,” Sir Alan told the WDR Europaforum conference on Thursday. “But that would mean the choice would be between the exit deal on offer or having no deal at all. In his address he argued that such a referendum would be “illogical” and that “the national mood is to accept the referendum and get on with it”. He added: “Another referendum is not going to happen.” Last year the minister told an audience in the US that Brexit had happened because blue-collar workers had been “stirred up by an image of immigration, which made them angry and throw a bit of a tantrum”. At the time he said labour shortages after leaving the EU “could cause us a lot of damage”. The Liberal Democrats have called for a second referendum on the final deal, while Labour has not ruled one out. Shadow Chancellor John McDonnell said in April that the party was “not opposed to any form of democratic engagement”, and that “we’ve not ruled anything out”. But the close Jeremy Corbyn ally added: “My preference is not another referendum, but a general election.” All eye are currently on the MPs’ vote scheduled for October. Labour has set six tests it says the deal will need to meet in order for them to back it, including it delivering “the exact same benefits” as membership of the single market and customs union.

            Brexit: End of free movement risks collapse of UK social care, report warns -- The end of EU free movement because of Brexit risks exacerbating the crisis in social care and causing a “domino effect” in the sector, new research has warned.The services, which face growing demand because of an ageing population, currently have a deficit of 90,000 staff vacancies – with charities increasingly hiring skilled EU nationals to fill posts. But 87 per cent of all EU charity workers employed in social care would not meet the conditions for work visas currently imposed on non-EU nationals, the study by the Institute for Public Policy Research (IPPR) found, leaving charities “facing a perfect storm of high employee churn, skills shortages, low pay, and increasing labour demand”. Immigration controls are already starvinghealth services of skilled workers, with the government just this week forced to review a migration cap on foreign doctors in response to a growing workforce crisis.Social care charities, which increasingly prop up overstretched NHS and local authority services, believe it will be more difficult to recruit the staff they need, with most having no experience in handling the complex work visas needed to hire staff from outside the EU, according to the research. A survey of 100 charity representatives conducted by the Charity Finance Group found around half of respondents believed it would become harder for them to recruit; 62 per cent of them had no experience of using the visa system of recruiting non-EU nationals. Training domestic workers is often not an option for charities because of funding issues; the Employer Skills Survey found that more than half of such organisations want to do more training but could not because of a lack of funds. Since the year 2000 the number of EU nationals working in the UK’s charity sector has more than doubled from 14,000 to 31,000, with around half of those working social care. The researchers said that while “the imposition of immigration controls post-Brexit could lead to a dramatic shift in employers’ ability to recruit from the EU”, it was also the case that “falling net EU migration since the referendum result suggests that an impact could be felt even before any changes to free movement rules are introduced”.

            Labour is set to keep Britain tied permanently to EU single market | Daily Mail Online: Furious MPs have accused Jeremy Corbyn of killing hopes of keeping Britain in the single market after Labour tabled a 'cake and eat it' amendment to the Brexit Bill.The leadership faced an angry backlash after unveiling a fudged position designed to head off a mounting backbench rebellion.The party is proposing a change to the government's legislation calling for 'full access' to the EU single market.But it will not back an amendment that was passed by the Lords demanding that the UK stays formally in the single market.Remainer MPs said the tactic meant both changes were now doomed to failure - as Tory rebels will not vote for an amendment tabled by Labour. Shadow Brexit Secretary Sir Keir Starmer admitted today that the party was not 'united' on the issue of European Economic Area (EEA) membership and there were 'strong and different' views. Pressed on why the party will not back an amendment on the EEA, Sir Keir replied: 'The difficulty with that, and I think everybody recognises this, is that there are very strong and very different views across the PLP on that particular amendment. 'So, whilst there's unity on all the others and we will all be voting together, on that amendment there are very divided views.' Asked if he was putting party unity before his beliefs about what is right for the country, he replied: 'I'm injecting some honesty about where we are in the Labour Party.' 

            More Brexit Insanity: Corbyn Proposes Dead-on-Arrival, Misbranded “Soft” Brexit; Auto Part Makers to Take Huge Hit; Irish Border Groundhog Daze --Yves Smith - British officials seem determined to outdo Lewis Carroll’s Queen in how many impossible things they can believe before breakfast. We’ll discuss four sightings: Corbyn’s single market nonsense, the auto parts industry nightmare, the Government’s new-almost-certainly-old Irish border plan, and customs paralysis. There’s even more but we needed to keep the post to a digestible length. The latest is Labour Leader Jeremy Corbyn acting as if he had a remedy to the Brexit conundrum by proposing that the UK remain in the single market. But this is just a variant of an idea that the Tories proposed regarding Ireland and separately, for the City, that of having the UK have some sort of really super special deal with the EU…and keeps them in the single market…but lets them still negotiate their own deals!Corbyn presented these wooly-headed ideas at a speech in Coventry earlier this year. Richard North tore them apart then:That much puts Corbyn in exactly the same “have your cake and eat it” territory as the Conservatives – except that he has an entirely different means of achieving this magical state. Mr Corbyn is effectively suggesting that we enter into a customs union with the EU in order to give us full access to European markets and maintain the benefits of the single market and the customs union.And that really is gibberish. Even if it was technically possible, which it isn’t, it would be a political non-starter. The EU has said any number of times that the UK is not going to get full EU benefits once it has left – whatever mechanism is chosen. Reader vlade flagged the Guardian’s description of what it correctly called a “scheme to maintain access to EU single market.” This is the guts of the idea: Although EU negotiators have repeatedly made it clear that there can be no cherry picking to the UK’s advantage in the negotiations, [Labour shadow Brexit secretary Keir] Starmer insists the new proposal would deliver full access to the single market, backed by EU-agreed standards, rights and protections. There would be shared UK-EU institutions and regulations, and no new impediments to trade.

             UK services sector recovers but Brexit fears choke growth - The British economy is showing signs of having come through the worst of its recent slowdown triggered by bad weather, after the dominant services sector expanded more quickly than expected. Despite the better news from the latest business survey by IHS Markit and the Chartered Institute of Procurement and Supply (Cips), the key barometer for the largest sector in the economy revealed mounting fears over Brexit. The latest snapshot from the Markit/Cips UK Services PMI showed activity in the sector, which includes banks, restaurants and hotels, recovered to a three-month high in May. However, firms responding to the survey said business volumes had continued to rise at a relatively subdued rate, citing Brexit as a key reason for the slow growth. The Cips group director, Duncan Brock, said: “It felt as though the sector was losing its lifeblood this month as Brexit worries continued to claw away at confidence.” The reading on the PMI, where anything above 50 indicates expansion, rose to 54.0 in May from 52.8 a month earlier, beating economists’ expectations for a modest rise to 53.  Showing greater strength for the economy than previously feared, the increase will put pressure on the Bank of England to raise interest rates, potentially from as early as August. The pound reflected that optimism, rising two-thirds of a cent to $1.3275.

            Nicola Sturgeon ‘can’t remember’ independent Scotland start-up costs – Nicola Sturgeon was unable to say how much it would cost to set up an independent Scotland when asked repeatedly for the figure quoted in the SNP’s Growth Commission. On the opening day of the SNP conference in Aberdeen, the First Minister was also unable to say how much it would cost to set up a Scottish social security agency. In an interview for Channel 4 News, the SNP leader was asked on several occasions how much the Commission had forecast it would cost to set up the new ministries required to run an independent country. The Growth Commission forecast that the setting up costs of an independent Scotland would come to £450 million over five years. After attempting to dodge the question, Ms Sturgeon finally admitted after around its fourth time of asking that she couldn’t “recall the exact figure in the report”. Interviewer Ciaran Jenkins then asked her twice how much it would cost to set up a Scottish social security agency. Ms Sturgeon admitted: “I don’t have all these figures right at the tip of my fingers right now.” Mr Jenkins, Channel 4’s Scotland correspondent, said he was trying to get an idea of whether the numbers were realistic. He said it would cost £200 million to set up a Scottish social security agency. He then said it cost more than £178 million for computer system to make payments to Scottish farmers, adding that the figures together were “almost your entire budget for setting up a new country”. Ms Sturgeon said she had not come up with the figures produced by the Growth Commission. “They are figures that a respected academic has come up with. Therefore I think they deserve to be treated seriously.” 

            TSB says 1,300 people lost money through fraud since IT meltdown – as it happened  -- TSB bosses faced another bruising session in front of the Treasury select committee as they were quizzed about the continuing IT meltdown which hit 1.9m of its customers.  Chief executive Paul Pester said 2,200 customers had suffered fraudulent attempts to access their accounts since the IT problems first surfaced. Of these 1,300 had received compensation. Earlier FCA boss Andrew Bailey mentioned a figure of 10,600 incidents, but Pester clarified that the figure referred to alerts sent to accounts when suspicious activity was detected by the bank’s systems. Pester said the bank had set up a dedicated fraud line to deal with the overwhelming number of enquiries, and waiting times were only a few minutes. But committee chair Nicky Morgan said she had received reports during the meeting of people holding on for nearly 30 minutes before hanging up. MP John Mann expressed amazement when Pester and TSB chair Richard Meddings professed ignorance of a case when someone had received a letter giving details of someone else’s bank account. He also slammed the level of compensation - £100 - awarded to a constituent for their ruined wedding.  With Pester profusely apologising several times during the course of the meeting, Mann said the level of compensation amounted to “£1 per apology”.  Morgan described the level of compensation as “absolutely inadequate.” Overall Pester said the bank had spent £70m on compensation and additional resources to cope with fixing the problems so far.He was also forced to deny he had deliberately misled the committee at its previous hearing. Mann asks if heads will roll, but Meddings says that will depend on the outcome of an investigation by Slaughter and May into the causes of the fiasco.  Pester says he will not fall on his sword since he wants to fix the problems, while on the thorny question of possible golden parachutes, Meddings says if people are found to be grossly negligent that will be taken into account in the terms of their departure.The meeting ended with Nicky Morgan saying she expected the TSB executives to be called back again to update the committee on the progress in fixing the problems.

            Don Quijones: Visa Goes Down in the UK, Chaos Ensues, Cash is Suddenly King -- For over 12 hours on Friday, shopping centers in the UK and other parts of Europe were plunged into chaosas millions of consumers were unable to use their Visa debit or credit cards at points of sale. The credit card company, which was finally able to restore normal service early Saturday morning, said it had no reason to believe the hardware failure was due to “any unauthorized access or malicious event”.   While the mayhem caused by the outage may have been short lived, it served as a stark reminder of the risks, both for consumers and retailers, of depending purely on cashless payments. In the UK, the chaos unleashed was particularly acute since it is one of the world’s most cashless economies, pipped to the post only by Canada and Sweden, as a recent study by industry analysts reported.In 2017, cards overtook cash for retail payments in UK for the first time ever, according to figures from the British Retail Consortium. According to Visa, payment processing through its systems accounts for a staggering £1 in every £3 of all retail spending in the UK. Which is why, when those systems stopped working yesterday, the chaos was greater in the UK than almost anywhere else as cashless customers missed trains, were unable to fill up their cars, pay for their groceries, or even clear their bar tab — this was Friday, after all!“There is never a good time for the payments system to go down but a Friday afternoon, when there is a flood of people leaving work, must be among the worst,” one banking industry source said. In a beautiful irony, Visa, a company whose stated mission is to “put cash out of business” as quickly as possible, had little choice but to urge its customers to withdraw and use physical bank notes for transactions until the technical issue was resolved. Without access to cash, the chaos caused by yesterday’s outage would have been immeasurably worse.

            Grenfell Tower Inquiry: Twenty-seven minutes and fire had taken hold: so why weren’t residents told to get out? - Grenfell Tower victims had more than half an hour to escape the high-rise block before the stairs filled with toxic smoke, but were told to stay put by the fire service, the official inquiry was told on Monday. The failure to evacuate the building immediately by the London Fire Brigade (LFB) may have “made all the difference between life and death”. An official report revealed that the controversial “stay put” strategy had “substantially failed” by 1.26am when flames could be seen to have reached the top of the 23-storey tower block. It said the building remained “tenable for escape” while the stairwells stayed smoke-free, which was until at least 1.30am. But it would take the fire service until 2.47am – 41 minutes after it had declared the disaster a “major incident” – to abandon the advice and instead encourage residents to evacuate. The inferno on June 14 last year claimed the lives of 72 people in the single-greatest loss of life to a fire in a residential building in Britain since the war. No one who lived below the 11th floor died. A report by Dr Barbara Lane, a leading fire engineer, questioned LFB’s continuation of the “stay put” advice when it should have been clear that the blaze, which broke out in flat 16 on the fourth floor, had not been contained and was spreading rapidly up and across the block. She uncovered serious safety breaches relating to the £10 million refurbishment of the building that included the installation of flammable cladding and more than 100 “non-compliant” fire doors. Dr Lane said there was “an early need for a total evacuation of Grenfell Tower”. Instead, the fire service, which first arrived at the scene at 12.59am, only withdrew the “stay put” policy almost two hours after the first emergency call. She suggested the “culture of non-compliance” on basic fire safety coupled with “stay put” guidance that exposed Grenfell victims to thick toxic smoke in the stairwell had led to “a disproportionately high loss of life”. The inquiry was played a voice recording of a panicked call made by Bahailu Kebede, one of the occupants of flat 16, who told the 999 operator in a call at 12.54am: “Quick, quick, quick. It’s burning.” 

            Electrocution, cardiac pain, and a miscarriage: Amazon warehouse investigation reveals 600 ambulance calls for injured workers - Amazon is under fire again over the way it treats the thousands of people who work at its warehouses after an investigation revealed 600 ambulance calls to its UK sites over the past three years. Freedom of Information requests lodged by GMB, one of the UK's largest trade unions, revealed 115 ambulance calls just to Amazon's Rugeley warehouse in central England.The calls include three for maternity- and pregnancy-related issues and three for major trauma. There were 14 calls for people with breathing problems, one call for the building being on fire, and two for electrocution. The union found that there had been only eight ambulance calls over the same period to a similar-size Tesco warehouse close to Rugeley.The GMB officer Mick Rix accused Amazon of treating its workers like "robots.""Hundreds of ambulance call-outs, pregnant women telling us they are forced to stand for 10 hours a day, pick, stow, stretch, and bend, pull heavy carts, and walk miles — even miscarriages and pregnancy issues at work," he said."I've never seen figures like this — Amazon Rugeley must be one of the most dangerous places to work in Britain. Amazon should be absolutely ashamed of themselves." The miscarriage Rix referred to was raised at a meeting of British lawmakers, who were discussing the gig economy. According to testimony at the meeting, an Amazon worker said one of her colleagues had a miscarriage as a result of the continuous pressure to hit targets.

            British School Forces Boys To Wear "Gender-Neutral" Skirts Instead Of Shorts - A private secondary school in Oxfordshire, England is banning its male students from wearing shorts during the summer months, and is instead requesting that they wear a more "gender neutral" ensemble that includes that staple of men's athletic wear: The skirt.  According to the Daily Mail, Chiltern Edge Secondary School's rule change comes after an unfavorable ruling by a government agency tasked with overseeing educational standards.School leaders said the skirts were a "more formal" alternative to shorts, regardless of how uncomfortable they might make male students at the school.Unsurprisingly, parents are complaining about the bizarre school dress code, which is part of a larger trend of schools adopting "gender neutral" uniforms to make transgender students feel more at home.  Of course, parents of straight students can rest assured that their children will also feel comfortable: Because if they don't want to wear the "gender neutral" skirt ensembles, they can simply wear blazers and trousers in the sweltering heat.  Following the change, parent Alastair Vince-Porteous asked staff if his son could wear tailored shorts – but the school said that they were not part of the uniform. The bemused father was then told that the uniform policy was ‘gender-neutral’ and boys could of course wear a skirt if they wished. The move follows a trend for schools adopting gender-neutral policies to help transgender pupils feel more welcome. Many schools now say skirts and trousers can be worn by either gender. Under the Equality Act, schools have a duty to protect transgender students from discrimination.This case came to light at the weekend, as temperatures are set to soar to 26C (79F) next week.

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