Federal Reserve lifts interest rates and indicates further hikes - The US Federal Reserve has lifted its base interest rate for the third time this year and indicated that it plans a further increase in December. The base rate was set at a range between 2 and 2.25 percent, the first time it has gone above 2 percent since 2008. The rise was the eighth in the current cycle after the Fed began to lift its rates in 2015. In its statement accompanying the announcement, the Fed dropped the word “accommodative” from its outlook, a move which Chairman Jerome Powell said did not signal a change in the policy path but that the term had lost its usefulness as the US economy strengthened. The decision brought criticism from President Trump who told a press conference in New York he was “not happy” about the decision. Trump, who criticised an earlier decision to raise rates, said he would rather see the paying down of debt. Asked about the criticism at his press conference, Powell brushed it aside. “We don’t consider political factors or things like that,” he said. Outlining the decision, Powell said the economy was “strong.” Unemployment was down, wages were up, while inflation remained low. For the first time since the Fed began its low-interest rate regime following the financial crisis of 2008, its base rate is now above the level of inflation. The Fed’s statement made no reference to the growing tensions with China and the impact of Trump’s tariff measures. Powell said that while there had been a “rising chorus” from companies concerned over trade and it was possible tariffs could be passed on through increased prices there was no evidence of that so far in the data.
The Fed Hikes Rates For The 8th Time, Ends Accommodative Era - The Fed's eight rate-hike since 2015 was perhaps the most anticipated yet, and Jay Powell did not let investors down, delivering the 25bps hike everyone expected. And so it was - but all eyes were on the dot plots and the language changes in the statement. As Bloomberg noted, Fed policy makers face two important decisions at their September meeting: One, whether to retain optionality around a potential fourth interest-rate increase in December; and, two, the appropriate policy trajectory as rates approach neutral. Here are the Key Takeaways from the Fed report:
- Only meaningful change in FOMC's statement is removal of the sentence on maintaining "accommodative'' policy.
- The overview of the economy is same as August statement: labor market continues to strengthen, activity "strong.'
The decision to remove "accommodative" signals that the FOMC feels the US economy is getting closer to a neutral policy rate setting, which would be seen as dovish since the FOMC could pause at neutral. However, as Bloomberg notes, the dovish impact from the language is offset by the dots which show the FOMC is full speed ahead for four hikes this year and three hikes in 2019. According to Neil Dutta from Renaissance Micro, the main news in the statement is that the Fed removed its accommodative language, which might indicate one of two things: "that the Fed is close to the end of hiking or the Fed is moving closer to a restrictive policy setting." The Dots: The near-term dots were unchanged, except for the longer-run dot, the so-called r-star estimate, which rose from 2.875% to 3.000%
Fed Raises Rates and Says More Coming, Brushing Off Trump Jabs - Federal Reserve officials raised interest rates and cemented expectations for another hike this year as they reaffirmed that a strong U.S. economy will probably warrant further gradual increases well into 2019.The quarter-point hike boosted the benchmark federal funds rate to a target range of 2 percent to 2.25 percent. The move reflected an upbeat assessment of the economy that was identical to the central bank’s last policy statement eight weeks ago, despite concerns over President Donald Trump’s escalating trade war.“This gradual return to normal is helping to sustain this strong economy,” Chairman Jerome Powell told reporters Wednesday following a two-day meeting of the Federal Open market Committee in Washington.After a decade-long expansion that’s been marked by mostly modest growth, Powell said “this is a pretty good moment for the U.S. economy.”Growth and job gains have been “strong” and inflation remains near the central bank’s 2 percent target, the FOMC said in its statement. Barring a negative surprise, updated “dot plot” forecasts made a December rate hike almost certain, with 12 of 16 officials now expecting another increase by year-end. That grew from eight in their June projections. In the statement’s only change from the previous one issued Aug. 1, the committee dropped its long-standing description of monetary policy as “accommodative,” though Powell played down the significant of that move and said it was not a policy signal. Powell and his colleagues are trying to pull off a feat the central bank has accomplished only once in its 104-year history: Engineer a soft landing of the economy by raising rates just enough to prevent overheating, but not so much that they trigger a recession.
After a decade of falling pay US Federal Reserve acts to stop “wage inflation” --- The US Federal Reserve lifted its base interest rate on Wednesday, raising it above two percent for the first time since the US central bank began its low-interest-rate regime after the global financial crash of 2008. Explaining the rate hike, the Fed’s Open Market Committee said it was closely monitoring and would quickly react to “indicators of inflation pressures and expectations.” The talk about inflationary pressures is a code word in ruling circles for the fear of rising wages. As Financial Times commentator John Authers noted in a recent article, “[W]age inflation is central to the Fed’s reaction function.” The stupendous run-up on the global stock exchanges and vast increase in the personal fortunes of the financial oligarchy have depended on the relentless downward pressure on workers’ wages and conditions. Mass unemployment, home foreclosures and the spread of poverty during the Great Recession were used as a hammer to restructure class relations in the United States and around the world and destroy social rights and protections won by workers over generations of class struggle. While governments of every stripe handed out trillions in “economic stimulus” packages to the financial speculators and corporations responsible for the crash, the watchwords for the working class were austerity, “labor flexibility” and the poverty-level wages and precarious employment associated with the so-called Gig Economy. The percentage of family income spent on health care rose from 8 percent in 2008 to 12 percent in 2015, adding to a de facto cut in real wages. With official unemployment levels hitting record lows, however, employers have been forced to slightly increase wages over the last several months to attract labor. The Labor Department reported earlier this month that average hourly earnings were up 0.4 percent in August from the previous month and 2.9 percent from a year earlier, up from an average annual increase of 2.7 percent recorded in July. In real terms, last month’s average hourly earnings rose by only 0.2 percent points above the inflation rate. Nevertheless, this princely sum—the highest average wage hike in nine years—was enough to set the alarms off and provoke the US Federal Reserve to come out with both guns blazing to stop wage “inflation.”
The Fed’s Not Backing Off: Powell’s Standouts & Zingers at the Press Conference Wolf Richter -- I have to say, Fed Chairman Jerome Powell is a breath of fresh air when he talks, after the near-physical pain I experienced listening to his last three predecessors. I actually get what he is saying, even if it’s a little twisted. I can make out his veiled disdain for fancy but dubious economic theories and iffy forecasts. And I get to look forward to some zingers when I least expect them – such as at today’s press conference, when he valiantly defended the Fed’s preferred inflation measure, core PCE, by saying that it “tends to run a little lower, but that’s not why we pick it.” Even though the question came at the end of the press conference, I’m pulling it to the top because it’s so important. Asked if fiscal policy – the ballooning deficit, after tax cuts and spending increases – comes up a lot at FOMC meetings, he said: “It doesn’t really come up. It’s not really our job…. We don’t have responsibility for fiscal policy. But in the longer run, fiscal policy will have a significant impact on the economy, so for that reason, I think, my predecessors have commented on fiscal policy, but they have commented on it at a high level rather than trying to get involved in particular measures. “My plan is to stick to the same approach, and stay in our lane. So I would just say, it’s no secret, it’s been true for a long time, that with our uniquely expensive healthcare delivery system and the aging of our population, we’ve been on an unsustainable fiscal path for a long time. And there is no hiding from it, and we will have to face that, and I think the sooner the better. “This is the economy in the range of full employment. Interest rates are low. It’s a good time to be addressing these things. So I put that out there and leave it at that.” A sentence that had vanished from the FOMC statement today, after having been standard for years – “The stance of monetary policy remains accommodative” – caused instant media speculation that the Fed would “pause” next year, in line with persistent bias in the media of seeing every vagueness as a dovish signal. Powell shot this down several times, first in his prepared statement and then in the Q&A. In the statement, he emphasized, “overall financial conditions remain accommodative,” and specifically addressed the disappearance of that sentence: This change does not signal any change in the likely path of policy; instead, it is a sign that policy is proceeding in line with our expectations. We still expect, as our statement says, “further gradual increases….”
Buyer-Beware- The Fed Always Hikes Until It Breaks Something - With today's Federal Reserve rate-hike as baked into the cake as it can be, all eyes will be on the expectations for the future and the word "accommodative" and, no doubt, stocks will charge on ahead aimlessly flouting the fact that "well The Fed wouldn't be hiking if they were worried" and/or "The Fed will immediately switch to easing if stocks take a dip."However, while investors will pore over the Federal Reserve’s dot-plot projections today, looking for any and every silver lining, Bloomberg's Ye Xie warns that it would be wise not to lose sight of the bigger picture. Regardless what the Fed does and says today, equity investors should expect lower returns and higher volatility in the coming months and years.Via Bloomberg,Two more hikes by year-end shouldn’t spell the death-knell for stocks, on the face of it. After all, estimates of the Fed’s real neutral policy rate are on the rise -- using market-based measures -- and the Fed itself has suggested the short-run neutral level could be higher.Nevertheless, as policy becomes less accommodative, the Fed no longer suppresses risk premiums. Note that Fed tightening typically leads equity volatility by two years or so. Remember the January-February volatility shock? It came 25 months after the first Fed hike. So expect more such episodes, even if they’re not of the same magnitude.
PCE Price Index: August Headline & Core - The BEA's Personal Income and Outlays report for August was published this morning by the Bureau of Economic Analysis. TThe latest Headline PCE price index was up 0.11% month-over-month (MoM) and is up 2.22% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.04% MoM and 1.96% YoY. Core PCE remains below the Fed's 2% target rate. The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016 with a decline in 2017 only to bounce back later in the year. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.
Chicago Fed "Index Points to Steady Economic Growth in August" - From the Chicago Fed: Index Points to Steady Economic Growth in August: The Chicago Fed National Activity Index (CFNAI) was unchanged at +0.18 in August. Three of the four broad categories of indicators that make up the index increased from July, and two of the four categories made positive contributions to the index in August. The index’s three-month moving average, CFNAI-MA3, rose to +0.24 in August from +0.02 in July. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. This suggests economic activity was slightly above the historical trend in August (using the three-month average).
America's GDP advances by 4.2% in 2Q - America’s economy extended its strong momentum in the second quarter, with gross domestic product (GDP) increasing at a 4.2 percent rate, according to the final revision. The prior, first revision pegged second-quarter GDP at a 4.2 percent annual rate, above the originally reported 4.1 percent. GDP is one of the main indicators used to measure the health of a country’s economy, and according to the second-quarter GDP reading, the economy appears to be firing on all cylinders. U.S. corporate profit growth moderated in the second quarter versus the first, while consumer spending was steady at a 3.8 percent annual rate, unrevised from the previous estimate. Business investment and global trade were slightly higher than the prior calculation. The strong growth in the second quarter followed a 2.2 percent increase in the first quarter.
U.S. GDP Growth Unrevised at 4.2% in Second Quarter - The U.S. economy expanded at a strong pace in the second quarter, with growth expected to pull back slightly this quarter but still continue its solid run. Gross domestic product, a broad measure of the goods and services produced across the U.S., rose at a 4.2% seasonally and inflation-adjusted annual rate in the second quarter, the Commerce Department said Thursday. That matched the agency’s August estimate. Economists surveyed by The Wall Street Journal had expected a 4.3% reading. Overall, Thursday’s report reinforced the view that the U.S. economy was on robust footing in the second quarter, powered by gains in consumer spending, net exports and business investment. Output is expected to expand at a solid pace in the third quarter, though it is anticipated to cool some from the April through June period. Forecasting firm Macroeconomic Advisers upwardly revised its third-quarter growth rate projection to 3.4% after solid new-home sales figures on Wednesday. Growth in U.S. corporate profits moderated in the second quarter compared with the first, according to the government’s broad estimate of profits at U.S. companies. After-tax corporate profits with inventory valuation and capital consumption adjustments, a measure of profits from production that quarter, rose 2.1% in the second quarter from the prior quarter after rising 8.2% in the first quarter. After-tax profits without inventory valuation and capital consumption adjustments rose a seasonally adjusted 3.3% from the prior quarter after rising 8.5% in the first quarter. Tax legislation enacted late last year appeared to give companies’ after-tax profits a first-quarter boost, which cooled in the second quarter. Among other changes, the tax overhaul cut the corporate tax rate to 21% from 35%. The strong growth posted in the second quarter followed a growth rate of 2.2% rate in the first three months of the year. Thursday’s numbers showed consumer spending, which accounts for more than two-thirds of U.S. economic output, rose at a 3.8% annual rate, unrevised from the previous estimate. Business investment was slightly stronger than previously thought, with fixed nonresidential investment rising at a 8.7% annual rate, compared with a previously reported 8.5%. Global trade added 1.22 percentage points to the quarter’s GDP growth rate, compared with an earlier estimate of 1.17 percentage points. Exports were revised up, and imports revised down. Meanwhile, certain pockets in the economy showed weakness in the second quarter. Residential investment declined at a 1.3% annual rate, and private inventories were downwardly revised, subtracting 1.17 percentage points from second quarter growth.
Q2 GDP Third Estimate: Real GDP at 4.2% - The Third Estimate for Q2 GDP, to one decimal, came in at 4.2% (4.16% to two decimal places), an increase from 2.2% for the Q1 Third Estimate. Investing.com had a consensus of 4.2%.Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:Real gross domestic product (GDP) increased at an annual rate of 4.2 percent in the second quarter of 2018 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.2 percent.The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was also 4.2 percent. With this third estimate for the second quarter, the general picture of economic growth remains the same; a downward revision to private inventory investment was offset by small upward revisions to most other GDP components. Imports which are a subtraction in the calculation of GDP, were revised down slightly (see "Updates to GDP" on page 2). [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.66%. Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 13.7% below trend. A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.35%. Six of the eleven recessions over this timeframe have begun at a higher level of current real YoY GDP. In summary, the Q2 GDP Third Estimate of 4.2% was as expected and much better than the Q1 Third Estimate.
Final Q2 GDP Estimate At 4.2%, Strongest In 4 years - After bursting higher in second quarter, when according to the first estimate of Q2 GDP, the US economy grew at an annualized 4.1% rate, a number which rose to 4.2% in the second estimate in August, moments ago the BEA reported that according to its final estimate of second quarter GDP, US growth remained unchanged at a 4.2% annualized rate, or technically 4.15% - in line with consensus and still the highest since the summer of 2016 - at a time when the Trump's $1.5 trillion fiscal stimulus was boosting the US economy. While overall GDP growth was unrevised from the second estimate, there were small revisions in the subcomponents, reflecting upward revisions in most categories, which were offset by a downward revision to inventory investment. After last month's modest drop in Personal Consumption (from 4.0% initially reported to 3.8%), in the final revision, this number remained unchanged at 3.8%, and in line with expectations.In terms of contribution to the bottom line, the various line items were as follows:
- Personal Consumption: 2.57%, up from 2.55%
- Fixed Investment:1.10%, up from 1.07%
- Change in Private Inventories: -1.17%, down from -1.07%
- Exports: 1.12%, up from 1.10%
- Imports: 0.10%, up from 0.07%
- Government consumption: 0.43%, up from 0.41%
- Financial industry profits increased 3.7% Q/q in 2Q after falling 2.1% prior quarter
- Federal Reserve bank profits down 4.7% in 2Q after falling 2.8% prior quarter
- Nonfinancial sector profits rose 4.2% Q/q in 2Q after rising 2.7% prior quarter, and a notable downward revision from the 5.1% print in the last estimate.
Visualizing GDP: An Inside Look at the Q2 Third Estimate -- The chart below is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics:Real gross domestic product (GDP) increased at an annual rate of 4.2 percent in the second quarter of 2018 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.2 percent.The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was also 4.2 percent. With this third estimate for the second quarter, the general picture of economic growth remains the same; a downward revision to private inventory investment was offset by small upward revisions to most other GDP components. Imports which are a subtraction in the calculation of GDP, were revised down slightly (see "Updates to GDP" on page 2). [more here] Let's take a closer look at the contributions of GDP of the four major subcomponents. The data source for this chart is the Excel file accompanying the BEA's latest GDP news release (see the links in the right column). Specifically, it uses Table 2: Contributions to Percent Change in Real Gross Domestic Product. Over the time frame of this chart, the Personal Consumption Expenditures (PCE) component has shown the most consistent correlation with real GDP itself. When PCE has been positive, GDP has usually been positive, and vice versa. In the latest GDP data, the contribution of PCE came at 2.57 of the 4.16 real GDP, up from the previous revision and still a positive contribution to Q2 GDP. Gross Private Domestic Investment was a small negative contributor. Net Exports were positive in Q2. Government Consumption Expenditures came in as a positive contributor. As for the role of Personal Consumption Expenditures (PCE) in GDP and how it has increased over time, here is a snapshot of the PCE-to-GDP ratio since the inception of quarterly GDP in 1947. To one decimal place, the latest ratio of 69.4% is just below its record high.
Ray Dalio- America Has About 2 Years Until The Next Recession - Since stepping back from running Bridgewater Associates, Ray Dalio has apparently had a lot of free time to author LinkedIn posts and make the media rounds promoting his new e-book (available for free on Amazon) "A Template for Understanding Debt Crises". The substance of these interviews has been pretty consistent: Dalio argues that we're nearing the end of the business cycle (the seventh inning, to be precise) and that, while stocks probably have more time to ramp higher, investors hoping to invest for the long term should be cautious: Because the next downturn is, at most, a year or two away. As any trader familiar with Dalio's "1937 thesis" is no doubt aware, Dalio is a student of history. In many ways, the modern economy resembles that of the late 1930s: Still-low interest rates have pushed asset prices near full capacity, the wealth gap has widened, populism is ascendant and economic tensions are intensifying around the world (thanks in large part to Trump's trade war with China, of course). As Dalio explains in an interview with Business Insider's Henry Blodget, although the economy is running at full steam, rising interest rates will put a damper on activity, eventually triggering the inevitable downturn. However, with the Fed's monetary toolkit already largely spent and the US budget deficit already precariously wide, US policy makers will have few options to help revive the economy. The only solution, Dalio believes, is to make sure "capitalism works for everyone." Otherwise, the US will be doomed to repeat the late 1930s, when the economy kept lapsing into recession until it was finally saved by full-scale industrial warfare. As Dalio explains, he's a firm believer in the "endless waltz" theory of capitalism, namely that investors, corporations and consumers will make the same mistakes over and over again, and that the only way we can prepare for these inevitable lapses is by studying the factors that have contributed to them in the past. I believe that the same things happen over and over again, and if you study the patterns of them, you understand the cause-effect relationships, and then, can write down principles for dealing with them well. We dealt with them very well in that financial crisis and in other debt crises, and I wanted to pass that template along.
What is the yield curve forecasting? - - It's well-known that in the United States, recessions are often preceded by an inversion of the yield curve. Is there any economic rationale for why this should be the case? Most yield curve analysis makes reference to nominal interest rates. Economic theory, however, stresses the relevance of real (inflation-adjusted) interest rates. (The distinction does not matter much for the U.S in recent decades, as inflation has remained low and stable). According to standard asset-pricing theory, a high 1-year yield signals that growth is expected to be high over a one-year horizon. A high 10-year yield signals that annual growth is expected, on average, to be high over a ten-year horizon. If the difference in the 10-year and 1-year yield is positive, then growth is expected to accelerate. If the difference is negative--i.e., if the real yield curve inverts--then growth is expected to decelerate. Here is a plot of the 10-1 real yield spread in the United States from 1985-2018 (blue line) along with the year-over-year growth rate of real per capita consumption--nondurables plus services (orange line). Well, it's not perfect, but as is clear from the figure, the real yield curve flattened and inverted prior to each of the past three recessions. Consistent with the theory, note that consumption growth tends to decelerate as the yield curve flattens. This is true even in non-recessionary episodes. In particular, the consumption growth deceleration of 1985-85, 1988-89, and 2006-07 were each associated or preceded by a flattening or inverted yield curve. Each of the three recessions occurred when consumption was growing at a moderate to low pace. Does the recent flattening of the yield curve portend recession? Not necessarily. The flattening of the real yield curve may simply reflect the fact that real consumption growth is not expected to accelerate or decelerate from the present growth rate of about 1% per annum. On the other hand, a 1% growth rate is substantially lower than the historical average of 2% in the United States. Because of this, the risk that a negative shock (of comparable magnitude to past shocks) sends the economy into technical recession is increased. While the exact date at which the shock arrives is itself is unpredictable, the likelihood of recession is higher relative to a high real interest rate, high growth economy.
Debt Threat Rises- The Government Will Soon Spend More On Interest Than On The Military - As debt and interest rates rise, the government is about to be in a disastrous situation. Very soon, they will spend more money paying interest on the national debt than they will on the bloated military budget. By the year 2023, interest payments on the national debt could surpass the entire budget for the Department of Defense, according to the New York Times. The ballooning debt is being spurred by an inability by those who claim authority over the economy to stop spending and the hike in interest rates. With more and more money being robbed from the unborn and spent by the government and more going toward interest, political “leaders” will find it harder to do pretty much anything. While many are worried about the crumbling infrastructure, others say it’ll be more difficult to make emergency moves like pulling the economy out of future recessions. Which is strange, because the government causes recessions and doesn’t “fix” them,they simply put band-aids on gaping wounds. This mentality that the government will save people when they are $21 trillion in debt is a delusional one, other economic experts have said.In about 5 years, more than $900 billion in interest payments will be due annually, easily outpacing spending on several other socialist programs. Already the fastest-growing major government expense, the cost of interest is on track to hit $390 billion next year, nearly 50 percent more than in 2017, according to the Congressional Budget Office. The inability of the government to rein in spending will eventually result in an economic meltdown the world had never seen nor is prepared for. The government literally cannot steal enough money from producers in the form of taxes to get out from under this problem anymore.“It’s very much something to worry about,” said C. Eugene Steuerle, a fellow at the Urban Institute and a co-founder of the Urban-Brookings Tax Policy Center in Washington. “Everything else is getting squeezed.” Gradually rising interest rates would have made borrowing more expensive even without any additional debt, but the government never cuts spending. In fact, Republicans, who are supposed to be “fiscally conservative”, while holding all three houses of government, approved a budget bill in February that raised spending by $300 billion over two years. All of these problems will add to the financial pressure.The deficit is expected to total nearly $1 trillion next year for the first time since 2012, under the Obama Administration.
“Taxpayer Money” Threatens Medicare-for-All (And Every Other Social Program) - Three assertions:
- + There is no such thing as “taxpayer money.”
- + Taxes do not pay for government spending. (Nor does debt. No revenue is needed.)
- + Leftists who continue to talk as if “taxpayer dollars” must be collected to “pay for” government programs are undermining Medicare-for-all and every other progressive policy initiative.
I know these assertions run counter to an economic ideology that has been ingrained in us as obvious and irrefutable, known for sure. And I know how easy and seemingly effective it is to say things like: “Look at all the taxpayer dollars going to the military. We should spend some of those taxpayer dollars on healthcare instead.” But I want to show, with specific examples, why using this language is a bad idea—a really bad idea. There are two reasons why it’s important to stop talking like this: 1) Because it’s not true, and 2) Because it perpetuates an ideology of how money and public financing work that is not only false, but profoundly reactionary and politically damaging—that is designed to, and will, impede achieving the most basic progressive goals. Let’s deal with the second point first, since I know a lot of leftists won’t overcome their resistance to understanding and promoting an economic proposition that runs counter to the common wisdom unless they can see the political point of it.
The Trump Administration’s Latest Tax Scam for the Rich – Robert Reich - Hard to believe, but the Trump administration is proposing yet another massive tax windfall for the rich. It would be to reduce their capital gains taxes. Those are taxes on the increased value of their stocks and bonds, businesses, and other valuables, when they sell them. Trump would do this by eliminating whatever portion of that increased value was due to inflation.Here are three reasons why reducing capital gains taxes would be another tax scam for the rich.
- 1. The people who’d get most of the benefits are already richer than ever and pay a lower effective tax rate than they have in decades. An estimated 63 percent of the benefits of this proposal would go to the wealthiest one-tenth of 1 percent of Americans, while the bottom 80 percent of us would get only 1 percent of its benefits, according to a University of Pennsylvania Wharton School analysis. If anything, Congress should raise capital gains taxes, not lower them. The capital gains tax rate is already lower than the rate on ordinary income. Yet the wealthy now own most of the nation’s assets and enjoy most of the capital gains. In 2016 (the most recent date for which data are available), the richest 10 percent owned 84 percent of the entire stock market.
- 2. The cost of this change would be a whopping $10 billion a year, for the next 10 years. That’s just about the yearly cost of funding free lunches for 20 million poor kids. Yet the federal debt is already ballooning. Over ten years, this proposal would increase it by an estimated $100 to $300 billion.
- 3. Trump and his administration say they have the power to make this change by themselves without even being authorized to do so by Congress. Rubbish. Congress has already decided that capital gains taxes should not be indexed for inflation. That’s why, when the same idea came up during the George H.W. Bush administration, the Department of Justice’s Office of Legal Counsel stopped it cold. It’s another big handout to the wealthy, another huge increase in the federal deficit, and it’s illegal. Don’t let Trump and his enablers get away with this tax scam for the rich.
Iran is keeping its nuclear commitments — despite Trump - op-ed by Hassan Rouhani September 21 - Hassan Rouhani is president of Iran. - I faced two options on May 8, when President Trump announced the United States’ official withdrawal from the nuclear agreement with Iran, officially known as the Joint Comprehensive Plan of Action (JCPOA). I could have reciprocated and announced Iran’s withdrawal, which was certain to throw the region into further insecurity and instability. Or I could have considered a short grace period for the remaining parties to compensate for the adverse effects of the United States’ decision on the valuable accord that had been achieved after 12 years of tough, intensive negotiations. In keeping with our tradition of respect for the rule of law and norms of international law, and to safeguard peace and security in the region, I opted for the latter. The United States expected a hasty Iranian withdrawal so that it could easily forge an international alliance against Iran and automatically revive previous sanctions. Our action, instead, thwarted such a move. The talks with the remaining JCPOA participants, and their reiteration of compliance with the accord, placed the United States in a lonely position. Such a serious chasm between the United States and its European partners on a critical foreign policy matter was unique and unprecedented — which, I can say, proved that we were right in our approach to the nuclear deal and our proactive diplomacy. Current U.S. foreign policy toward Iran is out of step with the realities on the ground — in Iran, in the region and around the world. I would argue that it is not even in line with U.S. national interests. Fed by disinformation and fake analysis from terrorist groups and Israel, the U.S. administration is under the illusion that resorting to sanctions will lead to concessions from Iran. Iranians, though, are known to close ranks and put up stiff resistance in the face of external pressure. The United States, through its pervasive sanctions regime, failed to force Iranians to yield during the pre-JCPOA period. It was the United States that changed tack and opted for negotiations. In our current talks with the remaining JCPOA participants, we have emphasized that safeguarding the long-term interests of the Iranian people is paramount to us. If these interests can still be secured despite the United States’ exit from the accord, we will remain in the deal; otherwise, we will pursue a different course of action. Our logic is simple and straightforward: Either all parties to the deal will benefit, or none will. Silence in the face of open U.S. bullying of other countries to cut economic and trade relations with Iran, in blatant contravention of the established rules of international law, is simply not acceptable, and not an option for us.
From reality TV to U.N., Trump to wield Security Council gavel (Reuters) - He has chaired board meetings, cabinet meetings and starred in a reality television show, but on Wednesday U.S. President Donald Trump will wield the gavel in the United Nations Security Council to denounce Iran for what his administration sees as its malign regional behavior. Trump is able to preside over the 15-member council as the United States holds the monthly rotating presidency, which coincides with the annual gathering of world leaders at the United Nations in New York this week. “I am sure that’s going to be the most watched Security Council meeting ever,” U.S. Ambassador to the United Nations Nikki Haley told reporters. But despite the unpredictable nature of Trump, some diplomats aren’t expecting a reality television performance in the Security Council, where nearly every member is likely to be represented by their prime minister or president except Russia and China, which are expected to send ministers. “I don’t think it will be that entertaining at all,” said one senior U.N. diplomat, speaking on condition of anonymity. “Even those who don’t like him, the attitude of all other heads of state and government in a public meeting when faced with any president of the United States of America is to be on their best behavior,” the diplomat said. It is rare for the council - formed in 1945 to maintain international peace and security - to meet at the head-of-state and government level. This will be the third time the body is chaired by a U.S. president. It has the ability to impose sanctions or authorize the use of military force.
UN audience laughs when Trump boasts of achievements -- An audience of world leaders at the United Nations laughed on Tuesday when President Trump boasted of his achievements during his time in office."In less than two years, my administration has accomplished more than almost any administration in the history of our country," Trump said, opening his address to the U.N. General Assembly.Audience members then began chuckling and the laughs grew louder when Trump said "so true." Trump smiled and paused, then responded: "I didn't expect that reaction but that's OK." The president touted his domestic efforts, including tax cuts and his push to build a wall along the U.S.-Mexico border, before addressing his foreign policy goals.Trump often claimed that his predecessor, former President Obama, turned the U.S. into a laughingstock on the world stage. "We need a President who isn't a laughing stock to the entire World. We need a truly great leader, a genius at strategy and winning. Respect!" Trump tweeted in 2014.
Trump And Erdogan Share Icy Exchange At U.N - President Donald Trump and Turkey’s President Recep Tayyip Erdogan won't be doing any handshaking, back slapping or chummy antics before photographers anytime soon. The two leaders reportedly engaged in a handshake and very brief and presumably icy exchange behind the scenes at the United Nations General Assembly on Tuesday. There was also some diplomatic confusion during President Trump's address to the assembly, with Erdogan getting up and leaving the assembly hall during Trump's speech. This caused some reporters present to interpret the move as a snub; however, the Turkish delegation later clarified in a statement that Erdogan was preparing for his own speech, which followed Trump's in the official schedule. According to Bloomberg the two shook hands out of site of reporters' cameras, but did not broach key tensions dividing the two NATO allies, as they encountered each other between speeches. As Bloomberg reports, “Cordial” would not describe the current state of U.S.-Turkey relations. Trump unexpectedly doubled tariffs on Turkey in August as a dispute over the fate of Andrew Brunson, an American pastor detained in Turkey, remained unresolved. Pastor Brunson, a 50-year-old evangelical pastor from Black Mountain, North Carolina was detained starting in 2016, and is undergoing trial in Turkey while under "house arrest" and is facing charges of espionage and aiding terrorist groups after being accused of cooperating with "Kurdish terrorists" and colluding with the Gulenist Islamic movement. He faces up to 35 years in prison if found guilty, and has now been in Turkish custody for two years.
Iran's Rouhani slams US 'economic terrorism' in clash with Trump -- US President Donald Trump and his Iranian counterpart Hassan Rouhani clashed sharply at the UN General Assembly on Tuesday, with the former urging the international community to isolate Tehran from global trade, and the latter calling US sanctions "economic terrorism". Weeks of speculation about a possible breakthrough meeting devolved into a war of words over Trump's decision to withdraw from the 2015 nuclear deal and to reimpose economic sanctions on Iran. Trump fired the first volley, repeating his administration's contention that Iran is the world's "leading sponsor of terrorism". "Iran's neighbours have paid a heavy toll for the regime's agenda of aggression and expansion," Trump said, accusing Iranian leaders of having "embezzled billions of dollars" from the country's treasury to wage proxy wars. "The dictatorship used the funds to build nuclear-capable missiles, increase internal repression, finance terrorism, and fund havoc and slaughter in Syria and Yemen," he said. "We ask all nations to isolate Iran's regime as long as its aggression continues." Trump promised Iran would face more economic difficulties when the second round of sanctions targeting the energy sector snap back on November 5. Rouhani later hit back at Trump saying his decision to impose more sanctions is a form of "economic terrorism", accusing the US administration of trying to topple his government. "It is ironic that the US government does not even conceal its plan for overthrowing the same government it invites to talks," Rouhani said.
Iran's Rouhani Blasts US For Nazi Disposition, Dares Trump To Return To Negotiating Table - In what sounded like a last-ditch plea for the US to reconsider its abandonment of the JCPOA, Iranian President Hassan Rouhani urged the US during his speech before the United Nations General Assembly not to abandon its commitments to international institutions and asked it to return to the negotiating table.Without using Trump's name, Rouhani warned of rulers who have "xenophobic tendencies resembling a Nazi disposition", and claimed that "those seeking dominance and hegemony are enemies of peace and perpetrators of war." He added that the US government "seems determined to render all international institutions ineffectual". Its decision to abandon the Security Council-sanctioned JCPOA while inviting Iran to engage in bilateral talks is one such example of this. Rouhani continued, saying that while he's glad that the rest of the international community has stuck to the agreement, the US's decision to abandon the agreement is exemplary of a pattern propagated by the US to defy international norms when it doesn't suit the US's interests."According to this resolution, all countries and regional organizations were called upon to support the JCPOA and refrain from actions that undermine implementation of commitments. Based on 12 consecutive reports from the IAEA Iran has complied with its commitments. However, the US never remained faithful to its obligations, and accused Trump of making "flimsy excuses" in violation of its commitments."He added that while Iran seeks nothing but peace, the US is an authoritarian regime that believes in "might makes right" over the rule of law. However, Iran believes that there is no better way but dialogue."The US understanding of international relations is authoritarian. Its understanding is might makes right..it's understanding of power, not of legal authority, is reflected in bullying, not in legal imposition. No state and nation can be brought to the negotiating table by force. And if so, what follows is an accumulation of the grapes of wrath to be reaped later by the oppressors. Rouhani exhorted the US to drop its sanctions threats and "return to the negotiating table", adding that if the administration dislikes the Iran deal because of its association to Obama, that it could remake that legacy by returning to the table.
Trump delivers fascistic tirade at the United Nations - In his second appearance before the United Nations General Assembly Tuesday, US President Donald Trump delivered a fascistic tirade, threatening military aggression and all-out trade war, while invoking retrograde nationalism, “sovereignty” and “patriotism” as the only way forward in confronting the immense problems confronting humanity. A year ago, the American president shocked the world body by announcing from the podium that he was “ready, willing and able” to “totally destroy” North Korea and its 25 million people, while referring to the country’s leader Kim Jong-un by the imbecilic nickname of “Rocket Man.” This time around, the reaction to his megalomaniac remarks was somewhat different and, in its own way, expressed the deep-going breakdown of the global capitalist order. Trump’s address began with what amounted to a campaign stump speech to the world body, claiming to have made “extraordinary progress” in the year since he last appeared there. His boast that he had accomplished more in his period in office than “almost any administration in the history of our country” provoked open and derisive laughter from assembled diplomats and heads of state, forcing him to depart from his prepared text and acknowledge, “I didn’t expect that reaction.” The “reaction” underscored the near universal recognition that the United States is no longer a guarantor of a global capitalist order, but rather a kind of rogue state spreading chaos and disruption, both militarily and economically, across the globe. Trump is not the cause of this transformation, but rather the personification of the protracted degeneration of American capitalism over a period of decades. In his speech, Trump reveled in his administration’s repudiation of international institutions, from the UN’s Human Rights Council, from which the US is the first country to withdraw, to the International Criminal Court, which Washington has threatened with sanctions if it attempts to hold US officials responsible for war crimes, to the UN global compact on migration, which cuts across the Trump administration’s systematic persecution of immigrants and refugees.
Rejecting globalism, Trump lays out vision for UN based on ‘patriotism’ - Since US President Donald Trump’s first address to the United Nations General Assembly last year, the champion of an “America First” foreign policy has by most accounts taken control of a decision-making process once driven by members of the Washington establishment. On Tuesday, speaking again to world leaders at the UN, Trump lambasted the “so-called experts who have been proven wrong over the years, time and time again.” Sticking to a script that betrayed either a lack of awareness or an indifference to the audience at hand, Trump launched immediately into a characteristically hyperbolic exultation of his achievements since taking office, which was met with audible laughter. “In less than two years my administration has accomplished more than almost any administration in the history of our country,” he touted, adding in response to chuckles from world leaders: “Didn’t expect that reaction, but that’s okay.” Boasting of a strong stock market, progress towards erecting a border wall and increasing border security as well as a massive increase in military spending, Trump showered the hall with the same talking points that garner loud applause from his political base at campaign rallies. “Our military will soon be more powerful than it has ever been before… In other words: our country will be a stronger, safer and a richer country than it was when I assumed office.” “We are standing up for America and for the American people. And we are also standing up for the world.” Cutting foreign aid Standing up for the world, Trump insisted, would in large part require retreating from it, so that other “countries could step up to provide more funding to protect their interests. “The United States is the world’s largest giver in the world – by far – of foreign aid. But few give anything to us,” he lamented. “Moving forward, we are only going to give foreign aid to those who respect us and, frankly, are our friends.” “The United States is committed to making the United Nations more effective and accountable,” Trump promised, adding that, to this end, “the United States will not pay more than 25% of the UN peacekeeping budget.”
Read Trump’s speech to the UN General Assembly (transcript) Vox. “We reject the ideology of globalism, and we embrace the doctrine of patriotism.”
Donald Trump is unlikely to forgive the laughter of the UN - Donald Trump is accustomed to addressing diehard supporters at rallies. His press conferences are rare and tightly controlled. So the open derision of his fellow leaders at the UN general assembly clearly came as a surprise. He insisted he was “OK” with the mirthful reaction to his claims of historic achievements, but he was clearly not OK. Trump is said never to forgive or forget those who laugh at him, so this second outing at the UN podium is unlikely to end well for his administration’s already ambivalent relations with the global body. Trump made an entrance – nearly half an hour later than his allotted time – determined to trash everything the UN stands for. The president explicitly rejected “the ideology of globalism” in globalism’s high temple and proposed in its place the “doctrine of patriotism”. While most leaders have used their time on the UN stage to list the agreements they have made, the protocols agreed and treaties signed, Trump clearly delighted in telling the world how many such pieces of paper he had ripped up.The lead writer of the speech was reportedly Stephen Miller, now the primary bridge between the White House and the American far right. It showed. The address was a manifesto for nativism.Any remaining pretense of altruism was stripped away from this vision of US foreign policy, and in its place was a strong tinge of resentment and self-pity.Trump observed that the US was the world’s biggest aid donor, “but few give anything to us”.“Moving forward, we are only going to give foreign aid to those who respect us and, frankly, are our friends,” he warned.
Foreign policy bigwigs: Trump risking war with Iran - President Donald Trump is risking a potential war with Iran unless he engages the Islamist-led country using diplomacy, not just pressure tactics, dozens of prominent U.S. foreign policy, intelligence and national security figures argue in a new public statement.The statement, released by a group calling itself the National Coalition to Prevent an Iranian Nuclear Weapon, comes as Trump prepares to speak at the annual United Nations General Assembly. Iran is expected to be a hot topic during this week’s U.N. gathering of world leaders, many of whom are upset that Trump pulled the United States out of the Iran nuclear deal. The statement, shared first with POLITICO, is unusual in that it acknowledges the legitimacy of Trump’s criticisms of Iran’s overall behavior, even as it pushes the president to rethink his strategy. “Applying pressure and unilateral sanctions without viable diplomatic options ... could lead to a more dangerous, destructive and enduring regional conflict with Iran,” argue the more than 50 people who signed the statement. Among the signatories: former Director of National Intelligence James Clapper, who served Republican and Democratic presidents; former Secretary of State Madeleine Albright, who served in the Democratic administration of Bill Clinton; and former Treasury Secretary Paul O’Neill, who served the GOP White House of George W. Bush. The letter offers tacit agreement with many of the Trump administration’s criticisms of Iran, whose government is a leading backer of terrorist groups and has links to militias well beyond its borders. The signatories insist, however, that the administration’s goal of reining in Iran “can only be achieved through a strategy that is both multilateral — engaging close allies and other powers — and which combines pressure and diplomacy.” The administration’s approach so far, which does not include diplomatic outreach of any significance, "has left Iran the option of either capitulation or war,” the statement declares.
Bolton to warn Iranian regime of 'hell to pay' - National security adviser John Bolton on Tuesday is expected to warn Iran that there will be "hell to pay" if they "continue to lie, cheat, and deceive" or if they "cross" the United States and its allies, according to excerpts of the speech published by media outlets."I might imagine they would take me seriously when I assure them today: If you cross us, our allies, or our partners; if you harm our citizens; if you continue to lie, cheat, and deceive, yes, there will indeed be HELL to PAY," Bolton will say in a speech at an event organized by a group called United Against a Nuclear Iran, according to excerpts obtained by news outlets such as Axios and Reuters. Bolton will also reportedly warn Iran that the U.S. "will come after you" if Iran doesn't change its behavior. "The days of impunity for Tehran and its enablers are over. The murderous regime and its supporters will face significant consequences if they do not change their behavior. Let my message today be clear: We are watching, and we will come after you," the excerpt reads. Bolton's speech comes amid escalating tensions between the U.S. and Iran. President Trump on Tuesday took aim at Iran during a defiant address at the United Nations General Assembly, calling world leaders to join the U.S. in isolating Tehran over its "aggression." "We ask all nations to isolate Iran's regime as long as its aggression continues," he told the U.N. General Assembly in New York. Earlier in the day, Trump tweeted that he has "no plans" to meet this week with Iranian President Hassan Rouhani. That came a day after Rouhani said he will not meet with Trump during his visit to New York for the U.N. General Assembly.
Europe, Russia and China join forces with a new mechanism to dodge Iran sanctions -- In the latest sign of the growing divide between Washington and its allies, the European Union's foreign policy chief announced Monday that the bloc was creating a new payment mechanism to allow countries to transact with Iran while avoiding U.S. sanctions.Called the "special purpose vehicle" (SPV), this mechanism would aim to "assist and reassure economic operators pursuing legitimate business with Iran," according to a joint statement released by the remaining members of the Iran nuclear deal — France, Britain, Germany, Russia and China."This will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world," Federica Mogherini, the EU's high representative for foreign affairs, told the UN General Assembly on Tuesday.The technical details will be worked on by experts in future meetings, she said. But analysts already doubt the viability of the plan — while the SPV would establish a clearer financial channel to trade with Tehran, it's not likely to be able to protect participating companies from U.S. secondary sanctions. American sanctions have already been imposed on a number of Iran's industries — including aviation, metals, automotives and its ability to trade gold and acquire dollars — as a result of President Donald Trump'swithdrawal from the 2015 nuclear deal. On November 4, a second round of penalties will fall on Iran's massive oil sector, which accounts for 70 percent of the country's exports. Iran is the world's seventh-largest oil producer. The Iran nuclear deal, known officially as the Joint Comprehensive Plan of Action, was spearheaded by the Obama administration and signed by the aforementioned five world powers, the U.S. and Iran, lifting economic sanctions on Tehran in exchange for curbs on its nuclear program. The Trump administration pulled out of the agreement in May, calling it the "worst deal ever," despite U.S. allies and international agencies attesting to Iran's compliance to the deal's requirements. Washington's subsequent reimposition of sanctions now threaten to cut those who transact with Iran off from the U.S. financial system. The move angered U.S. allies and the deal's signatories, who have since been searching for ways to enable their companies to continue doing business with the Islamic Republic. All of the deal's remaining members engage in trade with Iran, particularly for its oil.
Erdogan Has Ordered Turkish "Operations" Against Political Enemies On US Soil - A spokesman for Turkish President Erdogan said during a Friday press conference that "operations" have been ordered against Turkey's political enemies, including those on US soil. Our relevant units and institutions will continue their operations in the countries the FETO operates in whether it be the U.S. or some other country," said spokesman Ibrahim Kalin, describing how Turkey's National Intelligence Organization, MIT, would target followers of Muslim cleric Fethullah Gulen worldwide. "Rest assured that they will feel Turkey breathing down their neck," added Kalin. Erdogan has been cracking down on Gulen's network, which is said to be in the millions, while Gulen himself lives in exile in Pennsylvania following the failed July 15, 2016 coup attempt that resulted in over 250 deaths and the imprisonment of thousands of suspected dissidents. In March, MIT officials kidnapped six Turkish nationals in Kosovo to stand trial in Turkey for their support of Gulen. The incident caused international outrage. "Operations similar to the one conducted in Kosovo can be carried out in other countries. All should know that Turkey will not allow the FETO to breathe a sigh of relief," Kalin told reporters Friday, adding that Erdogan "has given very clear instructions on this issue." Friday's announcement marks the most extreme steps taken by Ankara against Erdogan's enemies. Meanwhile, Turkey has been intimidating enemies of the state living in US exile. As the Caller reported last year, "at least six academics and journalists living in exile in the states were tracked and photographed by Turkish news outlets."
Rep. Tulsi Gabbard: It is Outrageous that the US is Supporting a Genocidal War in Yemen -- Real News Network video and transcript - Over 5 million children are facing starvation and a cholera outbreak is raging in Yemen, the worst humanitarian crisis in the world, yet the US continues to support the Saudi bombing and destruction of the country, says Rep. Tulsi Gabbard, in this Real News Network interview. The child protection group, Save the Children, has just released a report stating that as many as five million children face starvation in Yemen due to food shortages and soaring prices. The reason for this crisis, which the U.N. has called the worst humanitarian crisis in the world, is going on for three years now in the war in Yemen between the Houthi ethnic group and a coalition of countries led by Saudi Arabia that includes the United States. U.S. has been providing the bombs, the planes and strategic and logistical support for this war. Last month, Saudi forces bombed a school bus, killing forty children, and Saudi Arabia called that attack legitimate. The Progressive Caucus in the U.S. Congress is trying to evoke the War Powers Act and war powers that they have to put an end to U.S. support for the war in Yemen. Let’s listen to Congresswoman Tulsi Gabbard introducing this resolution.
Trump’s “Opposition” Supports All His Evil Agendas While Attacking Fake Nonsense - Caitlin Johnstone --A new article from the Wall Street Journal reports that Secretary of State Mike Pompeo lied to congress about the measures Saudi Arabia is taking to minimize the civilian casualties in its catastrophic war on Yemen, and that he did so in order to secure two billion dollars for war profiteers.This is about as depraved as anything you could possibly imagine. US-made bombs have been conclusively tied to civilian deaths in a war which has caused the single worst humanitarian crisis on earth, a crisis which sees scores of Yemeni children dying every single day and has placed five million children at risk of death by starvation in a nation where families are now eating leaves to survive. CIA veteran Bruce Riedel once said that “if the United States of America and the United Kingdom tonight told King Salman that this war has to end, it would end tomorrow, because the Royal Saudi Airforce cannot operate without American and British support.” Nobody other than war plutocrats benefits from the US assisting Saudi Arabia in its monstrous crimes against humanity, and yet Pompeo chose to override his own expert advisors on the matter for fear of hurting the income of those very war plutocrats.It would be so very, very easy for Democratic party leaders and Democrat-aligned media to hurt this administration at the highest level and cause irreparable political damage based on this story. All they’d have to do is give it the same blanket coverage they’ve given the stories about Michael Flynn, George Papadopoulos and Paul Manafort which end up leading nowhere remotely near impeachment or proof of collusion with the Russian government. The footage of the starving children is right there, ready to be aired to pluck at the heart strings of rank-and-file Americans day after day until Republicans have lost all hope of victory in the midterms and in 2020; all they’d have to do is use it. But they don’t. And they won’t.
U.S., Russia Clash at U.N. as Lavrov Calls for Easing of North Korea Sanctions — The Trump administration worked to move ahead on its top diplomatic priority—the denuclearization of North Korea—but ran head-on into opposition to its plans from Russia, which called for the easing of United Nations sanctions against Pyongyang. The proposal by Russian Foreign Minister Sergei Lavrov at the U.N. Security Council ran directly counter to the U.S. demand that countries maintain strong economic pressure aimed at forcing the country to give up its nuclear weapons. While the U.S. could veto any proposal to lift sanctions, and most countries on the 15-member Security Council spoke in favor of strictly enforcing sanctions, the remarks undermined a united international message to North Korea at a time when the U.S. and U.N. have found lapses and leaks in sanctions enforcement world-wide. Secretary of State Mike Pompeo, who chaired the meeting, announced plans to travel to Pyongyang in October to set up another summit meeting between President Trump and North Korean leader Kim Jong Un. But while laboring to push the diplomacy forward, the U.S. has said international sanctions must remain in place to ensure North Korea’s continued cooperation. However, Mr. Lavrov, speaking at a Security Council meeting on North Korea chaired by Mr. Pompeo, proposed exemptions that would allow joint economic projects in North Korea—such as investments in rail and road infrastructure—to commence. Mr. Lavrov said such projects would send a positive signal to North Korea as a reward for taking steps to implement a promise to give up its nuclear weapons. He said it was unacceptable to use sanctions as a form of “collective punishment.” “Negotiations are a two-way street,” he said, adding that Russia would work on a draft proposal to ease sanctions pressure. A year ago, the Security Council voted to toughen sanctions, a result of months of intense U.S. diplomatic pressure to isolate North Korea for its nuclear tests. Mr. Pompeo continued to maintain that it was critical for all nations to strictly enforce sanctions to maintain pressure on North Korea. He used his opening address to swipe at Russia and China, both permanent Security Council members who earlier backed sanctions, over the sale of petroleum products in excess of North Korea’s maximum 500,000-barrel allowance and other forms of economic relief. “The members of this Council must set the example on that effort, and we must all hold each other accountable,” Mr. Pompeo said.
China and Russia clash with US over North Korea sanctions - Following the laughter that greeted US President Donald Trump’s address to the United Nations General Assembly, there was another fraught reception for American diplomacy at the UN yesterday, when Beijing and Moscow openly disagreed with Washington over sanctions on North Korea. In a UN Security Council meeting chaired by Mike Pompeo, the US Secretary of State called for continued enforcement of sanctions against North Korea – currently, the most heavily sanctioned nation on earth – even as South Korea and the US engage in active summitry with the nuclear-armed state. But while Pompeo said UNSC members should “set an example” with sanctions, Russia and China argued that “positive developments” in North Korea should be rewarded with eased measures, Reuters reported from New York. “Enforcement of Security Council sanctions must continue vigorously and without fail until we realize the fully, final, verified denuclearization,” Pompeo said, according to the agency. However, Chinese delegate Wang Yi said that UNSC resolutions include provisions for the modification of sanctions if North Korea comes into compliance, and “given the positive developments,” China believed the council “needs to consider invoking in due course this provision to encourage [North Korea] and other relevant parties to move denuclearization further ahead.” Russia’s veteran Foreign Minister Sergei Lavrov supported China. “Any negotiation is a two-way street,” he said. “Steps by [North Korea] towards gradual disarmament should be followed by the easing of sanctions.”While China, North Korea and Russia have suggested a phased denuclearization, with incentives granted to Pyongyang at each step, Washington’s position is that the sanctions must remain in place until full denuclearization is achieved. That stems from the frequently expressed belief inside the Trump administration that “maximum pressure” is what forced North Korea to come out of its shell and engage the international community this year.
North Korea Nuclear Deal Could Take ‘Years,’ Trump Suggests - President Trump said Wednesday that he has years to reach an agreement with North Korea to rid the country of nuclear weapons, reversing the position he took a year ago that Pyongyang had to disarm rapidly.“I don’t want to get into the time game,” he said at a news conference late in the day, after serving as chairman of a United Nations Security Council meeting on nuclear proliferation.“I got all the time in the world,” Mr. Trump said. “I don’t have to rush it.”Mr. Trump’s statement came despite satellite photographs and other evidence that have led American intelligence agencies to conclude that North Korea continues to produce nuclear fuel and fabricate it into weapons. American officials estimate that the country now has between 20 and 60 nuclear weapons, and the number may be rising. But Mr. Trump argued that the halt in nuclear and missile testing by North Korea — and a series of private letters exchanged with Kim Jong-un, the country’s leader — had taken the urgency out of the disarmament issue.
Pompeo Vows Series Of Actions Against Venezuela's Maduro In The Coming Days - Secretary of State Mike Pompeo issued an incredible statement to Fox News on Friday, vowing to take "series of actions" in "the coming days" against Nicolas Maduro's government in Venezuela.The threat was couched in terms of being in the "best interest" of Venezuelans, and though Pompeo didn't specify details, he said the US is “determined to ensure that the Venezuelan people get their say.”“I think you’ll see in the coming days a series of actions that continue to increase the pressure level against the Venezuelan leadership folks who are working directly against the best interest of the Venezuelan people,” Pompeo told Fox. It is the broad nature of the threat that makes it unusual, but particularly the timing and context, as it follows the early August failed assassination attempt on Maduro which interrupted a live television broadcast from Caracas. Maduro had been speaking at a military parade when two explosive-laden drones said to be flying in the direct of the podium exploded in the area. In the aftermath the Venezuelan socialist leader blamed the United States and allied right-wing groups for being behind the attack, in a speech describing, “They tried to assassinate me today," while blaming the attack on right-wing factions specifically connected to Columbia and Florida. He claimed at the time that "several of those intellectually responsible and the financiers of this attack live in the United States, in the state of Florida," and called on U.S. President Donald Trump to "fight these terrorist groups". Washington has steadily increased sanctions on Venezuela over the past number of months after Trump administration officials have accused the Maduro government of stamping out democracy and jailing opposition leaders. Maduro for his part has blamed the country's ills, specifically the collapsed economy and now worthless currency, on Washington plotting and subversion. But lately a series of statement and stories in the media have served to fuel and confirm his suspicions that the US is planning covert regime change. Certainly Pompeo's latest comments will add to Maduro's fears that more major "plotting" is afoot.
The White House Has A Step-By-Step Program Of Escalation For Venezuela - The White House has prepared an intelligence blueprint for regime change in Venezuela, according to a bombshell Monday evening report in Axios. According to the report, which follows a New York Times story from early this month that confirmed the administration had previously established a "clandestine channel" involving covert meetings with Venezuelan military coup plotters targeting President Nicolás Maduro, the White House has prepared for multiple scenarios involving dramatic military escalation that could trigger US invasion of the small Latin American country. Per Axios, The White House National Security Council drafted a step-by-step “program of escalation” for Venezuela after President Trump took office, including the grounds for military intervention, a former senior official said today.The plans were revealed by Fernando Cutz, who was a top adviser to former National Security Adviser H.R. McMaster and the top National Security Council official on South America, while speaking at an event at the Wilson Center. Cutz said he was part of a working group to lay out potential scenarios of escalating crises in Venezuela and corresponding options detailing the US reaction to events. Among the scenarios Cutz outlined included the potential for a Venezuelan military assault and takeover of the US embassy in Caracas, or a massacre of 1,000 civilians which could trigger an America military response on humanitarian grounds. However Cutz voiced skepticism over the success of many of the plans, questioning what would come the day after if a coup d'état or even complete regime collapse were to occur.
Trump seems to encourage Venezuela military coup amid fresh sanctions - President Donald Trump on Tuesday appeared to encourage a military coup in Venezuela, saying the “horrible” socialist government represented a threat to its own citizens. Speaking in New York ahead of a bilateral meeting with Colombian President Iván Duque, Trump questioned the bravery of Venezuela’s military but suggested they could easily overthrow President Nicolás Maduro amid an economic and humanitarian crisis.“It’s a regime that frankly could be toppled very quickly by the military if the military decides to do that,” Trump said. He also brought up an August 4 incident where a drone exploded at a military rally in Caracas, as Maduro was speaking, sending troops scattering. “You saw how the military spread as soon as they heard a bomb go off way above their head,” Trump said. “That military was running for cover. That’s not good.” Trump didn’t rule out U.S. intervention in the South American nation but said he wouldn’t telegraph his actions, as he often accused his predecessor, President Barack Obama, of doing. “I don’t like to talk about military. Why should I talk to you about military?” he said. “Obama — he used to say exactly what he was going to do, and then it would be 10 times tougher to do it. I don’t do that.” Venezuela’s Foreign Minister Jorge Arreaza fired back, saying it was “grotesque” for Trump to talk about “coups and assassinations” at the United Nations. “Of course,” he said, “because it isn’t his family that’s going to die, it’s easy for [Trump] to promote violence and the assassination of leaders in a country.”
The House We Built: How the United States Walked Away from Decades of Accountability – Jurist - As the world turns inward, nationalistic perspectives are on the rise. It feels like 1930, where the international order laid out in the Versailles Treaty, was about to be turned upside down. Today, something terrible is lurking around the corner, sitting in the shadows of anarchy and fascism. The rule of law tentatively steps forward afraid of what comes next. In this kaleidoscopic age, we do not know. All the international institutions laid out after World War II are being threatened by strongmen who seek their own personal power over the backs of citizens who seem too addled by consumerism or in the depths of social media. It has become a dog eat dog world and the dogs are the new nationalistic strongmen who have risen to power in an astonishingly short period. The cornerstones to our system of international peace and security, the United Nations, the North Atlantic Treaty Organization, the World Trade Organization, and the European Union among others, are faced with the reality of a diminished role by the United States in ensuring that the rule of law remains the fundamental currency of this international order. Since 9/11, the United States’ role in international peace and security has been more of a threat to peace than as a leader and champion of the rule of law. No more so than today. By way of example related to this diminished role, the North Carolina Commission of Inquiry on Torture is about to release its report on 27 September regarding the depths of the horror that was the Retention, Detention, and Interrogation Program led by the current director of the Central intelligence Agency. After the planes crashed into the buildings on that fateful September day, the United States began to slip down a slope that had no bottom. The world recoiled in horror at subsequent American policy and actions related to its misguided “war on terror.” A blind and bleeding giant, the Americans swung the club of illegality about the world trying to kill the fly that was international terrorism. The United States has never really recovered from this mindset and has lost all credibility as a nation of law.
Can the US win a trade war? - Marshall Auerback - Contrary to what President Donald Trump thinks, trade wars are neither good, nor easy to win. But ultimately, as in any war, there are winners and losers. In that respect, the US president is probably right in his implicit assumption that the US, not China, is likely to come out ahead in its steadily intensifying trade conflict with Beijing – at least in the short term, until China can wean itself off its export-led mercantilist growth model. This is not to say that there will not be collateral damage in the US, although it is interesting to note that even as the conflict has intensified, the Dow Jones Index has continued to hit new historic highs, while China’s Shanghai SE Composite Index is down more than 17% year to date. So clearly there are some implicit bets being placed on the outcome of this particular conflict in favor of the US Are these bets rational? The roots of this conflict and, indeed, much of the basis for Trump’s presidency lie in trade – or, more precisely, the outcomes of trade, globalization and the unimpeded offshoring of American manufacturing. As I have written before, these phenomena in aggregate have created the effect of a “synthetic” open borders immigration policy, as American manufacturers have relocated to low-cost (especially with regard to labor) jurisdictions in China under the assumption that pre-existing free trade arrangements would safeguard the ease of shipping these cheaper goods back to the US. The “Chimerica” nexus has imparted deflation in two ways:
1.The threat of offshoring (or the actual implementation of it) has moderated demands for higher pay to workers in the US, and
2.The importation of cheaper Chinese goods has also kept prices lower, thereby nipping incipient inflationary pressures in the bud.
Trump’s goal is to disrupt this “Chimerica” nexus and induce bringing supply chains back to the US. However, one potentially adverse outcome is that this policy may be inflationary, by creating short-term bottlenecks as the flow of cheap Chinese imports is disrupted. Furthermore, a tariff, like a devaluation, is expansionary as it diverts demand from foreign to home producers, thereby further contributing to potential inflation.
The next cold war? US-China trade war risks something worse --President Donald Trump is making good on his pledge to escalate the trade war with China by imposing tariffs on US$200 billion of Chinese goods. The Chinese government, for its part, is already retaliating with new taxes on $60 billion of American imports.If you’re curious why China’s sanctions don’t match Trump’s, there’s an easy explanation. As a number of commentators have correctly pointed out, Beijing is running out of American products to target. Americans bought $375 billion more stuff from China than the Chinese bought from the U.S. last year, which means Trump has a lot more to punish.While this may mean that China’s leverage on trade is limited, it doesn’t mean that Trump can easily win this confrontation.That’s because China has many other ways to retaliate, such as dumping its considerable holdings of U.S. debt or making it harder for Trump to get a nuclear deal with North Korea. In these and other areas, Beijing has enormous leverage. This has led some to suggestthat the trade war may soon turn into a “new cold war.”Could the U.S. and China really be on the verge of the kind of geopolitical stalemate that dominated the second half of the 20th century? Much will depend on how China responds to the latest tariffs. I believe that this response could take four forms.
China Summons US Ambassador Over Sanctions Scandal - China's foreign ministry summoned the US ambassador on Saturday to lodge an official protest over the sanctions imposed by the United States against a Chinese military organization for buying Russian fighter jets and missiles, state media reported. The announcement came just hours after a Chinese defense ministry spokesman called on the US to "immediately revoke the sanctions or "bear the consequences." Vice Foreign Minister Zheng Zeguang, summoned US Ambassador Terry Branstad and "lodged solemn representations over US sanctions against (the) Chinese military", the Foreign Ministry said in a brief online statement, and added the following: Zheng Zeguang pointed out that the US action to impose sanctions on Chinese military agency and official on the ground of relevant military cooperation between China and Russia severely violates basic norms governing the international relations. Such mean behavior is a blatant hegemonic act. The China-Russia military cooperation is normal cooperation between two sovereign states, and the US side has no right to interfere. The US act has severely harmed the state-to-state and mil-to-mil relations and affected the cooperation in international and regional affairs between China and the US. The Chinese side will take every necessary measure to firmly safeguard its national interests. We strongly urge the US side to correct its mistake immediately and withdraw so-called sanctions. Otherwise, the US side will have to bear all the consequences. China's central military commission also summoned an acting military attache at the U.S. embassy on Saturday night over the sanctions. The Chinese side also decided to immediately recall commander Shen Jinlong, who is in the United States for an international maritime force meeting, CCTV reported
China summons US ambassador and recalls naval chief over sanctions move - China summoned America’s ambassador and recalled its naval chief from the US on Saturday to protest sanctions Washington slapped on Chinese entities for procuring military equipment from Russia, and threatened to follow through with additional measures by its military. Beijing also postponed a three-day bilateral military dialogue in Beijing, which was to begin on Tuesday, and warned of possible further measures if Washington does not withdraw the sanctions, according to reports by China’s state broadcaster CCTV.The meeting was to be the second of its kind, part of a series of multi-track bilateral dialogues started after US President Donald Trump took office last year. China’s government called on the US to “immediately correct its mistake, revoke the sanctions, and the Chinese military reserves the right to take further countermeasures”, according to the CCTV report.China’s response to the sanctions is the latest escalation in tensions between the two countries, and negotiation break-downs, playing out on multiple fronts.The US State Department announced on Thursday that the Chinese defence ministry’s Equipment Development Department (EDD) violated US sanctions on Russia by buying the country’s jets and missile equipment. Both the EDD and its director, Li Shangfu, were named in the sanctions.The US Department of State said the sanctions were invoked under Section 231 of the Countering America’s Adversaries Through Sanctions Act of 2017 “for engaging in significant transactions with persons on the [List of Specified Persons]”.
Trump Escalates Tensions With China Through Taiwan Weapons Deal - While Washington slaps another $200 billion worth of tariffs on Chinese goods with one hand, it is offering a $330-million weapons deal to Taiwan with the other – adding yet more fuel to the U.S.-China trade war fire.The U.S. State Department has approved the sale of F-16 fighter plane parts and other military aircraft to Taiwan in a deal worth up to $330 million, leading Beijing to suggest that the move will hinder any efforts at cooperation on tariffs.This is where U.S.-China relations really could hit a boiling point, with China claiming self-ruled Taiwan as its territory and Washington threatening to disrupt the status quo.The Pentagon says the deal would contribute to the “foreign policy and national security of the United States”, recognizing Taiwan as “an important force for political stability, military balance and economic progress in the region”.But to Beijing, it’s a very thinly veiled threat, and where it concerns Taiwan, the view in the mainland is that this is a breakaway province that must be brought back into the fold, even if that means through the use of force. So selling weapons to Taiwan is a call to arms.“We urge the U.S. side … to immediately cancel this deal and cut off military ties with Taiwan to avoid doing serious damage to China-U.S. relations, peace and stability in the Taiwan Strait and cooperation between U.S. and China in important areas,” China’s Foreign Ministry spokesman Geng Shuang told a press briefing on Tuesday. The same sentiment was issued by the Chinese Defense Ministry.China’s Vice Commerce Minister Wang Shouwen said at a news conference on Tuesday that on trade, the U.S. was putting a “knife to China’s neck.” Adding a Taiwanese weapons sale to Trump’s trade attacks is only adding pressure to that knife. Of course, it’s a major victory for Taiwan, which views the proposed deal as a prop for helping it face security challenges from Beijing. It’s also a very bold new commitment on the part of Washington to the Taiwan Relations Act.
China Strongly Urges US To Halt Taiwan Arms Sales After $300 Million Deal - Though it's hardly surprising, given President Trump's stridently anti-China rhetoric during the campaign, relations between the US and China have deteriorated to a dramatic degree since the beginning of 2018. And with the US and China trading threats following the US's decision to sanction a branch of the Chinese military for buying arms from Russia (as China threatened the US with unspecified "consequences" if it didn't undo its "mistake"), the US has thrown gasoline on the fire by moving ahead with a planned sale of F-16 fighter jets and other weaponry to Taiwan in defiance of China's warnings, per Reuters and Bloomberg.The arms sale follows China's participation in joint military drills with Russia earlier this month, as well as drills in the Strait of Taiwan earlier this year that were intended to simulate an invasion.Taiwan welcomed the arms package, adding that a "case-by-case" approach to arms sales might be more efficient than previous large shipments of arms. According to Reuters, the order includes parts for both US-made and domestic fighter aircraft as well as tools to help Taiwan maintain its "defensive and aerial fleet" as mainland China has never renounced the "use of force" to bring Taiwan under control.The $330 million request covers spare parts for "F-16, C-130, F-5, Indigenous Defense Fighter (IDF), all other aircraft systems and subsystems, and other related elements of logistics and program support," the Pentagon said, adding that it notified Congress of the possible sale. Lockheed Martin Corp (LMT.N) makes the F-16.The Pentagon said the proposed sale is required to maintain Taiwan’s "defensive and aerial fleet," and would not alter the military balance in the region. In response, China "strongly" urged the US to honor "One China" principle and immediately revoke its sales of military hardware to Taiwan, Chinese defense ministry spokesman Ren Guoqiang said. Chinese Foreign Minister Geng Shuang echoed that warning in a Tuesday press briefing, saying that U.S. arms sales to Taiwan were a serious breech of international law and harmed Chinese sovereignty and security interests.
China accuses US of ‘bullying’ on trade but calls for cooperation - Beijing has accused Washington of bullying tactics and economic intimidation, while restating its own stance that only cooperation on trade issues will produce results, in the government’s most comprehensive statement of its trade war stance to date. The white paper released by the official Xinhua New Agency on Monday came after Beijing declined on Saturday the US invitation to hold talks to try to resolve the ongoing trade dispute and only an hour after the latest round of US tariffs on US$200 billion of Chinese imports kicked in. The document declared that the “America first” economic policies being pursued by the US administration and punitive tariffs on Chinese products had “greatly undermined” bilateral economic ties and threatened the world’s multilateral system of trade. In keeping with its practice not to personalise the trade conflict, the white paper never mentions US President Donald Trump by name throughout the 36,000-word text. The government re-emphasised its belief in free trade and multilateralism. “Cooperation is the only right option and only win-win cooperation can lead to a better future” for China and the US, it added. The white paper – titled “Facts about the China-US trade dispute and China’s stance” – marked the latest effort by Beijing to portray itself as occupying the moral high ground in the quarrel with the US, analysts said.
China reveals its new party line: We're trying to save the world from the US -- China hit out against the U.S. in a 71-page paper, accusing President Donald Trump's administration of "trade bullyism practices" that have become "the greatest source of uncertainty and risk for the recovery of the global economy."The document, published on Monday, outlined the Chinese government's response to criticisms leveled against it by the U.S. Issues addressed in the report include the trade imbalance between the two countries, Beijing's subsidy policy and alleged intellectual property theft by China's companies.Meanwhile, Beijing called out Washington for practices that it said inhibit fair competition in the U.S. — such as subsidies — and allegedly abusing national security laws to obstruct the "normal investment activities" of Chinese companies on American shores.Of note, those claims from China's leadership mirror exactly whatmany experts say Beijing has, in fact, done. Yet despite the longstanding evidence of Chinese protectionism, the Monday white paper sought to position Asia's largest economy as the global standard-bearer for fair trade."China does not want a trade war, but it is not afraid of one and will fight one if necessary," Beijing said in the document. "We have a highly resilient economy, an enormous market, and the hard-working, talented and united Chinese people. We also have the support of all countries in the world that reject protectionism, unilateralism and hegemony.""The US government has taken extreme trade protectionist measures, which have undermined the international economic order, caused damage to China-US trade and trade relations around the world, disrupted the global value chain and the international division of labor, upset market expectations, and led to violent swings in the international financial and commodity markets. It has become the greatest source of uncertainty and risk for the recovery of the global economy," the paper said. The document was released on the same day as an escalation in the trade dispute between the world's two largest economies. The Trump administration levied tariffs on an additional $200 billion of Chinese goods on Monday, while the government of Chinese President Xi Jinping retaliated by targeting roughly $60 billion worth of U.S. imports.
Full Text: The Facts and China's Position on China-U.S. Trade Friction - Xinhua | English.news.cn: (Xinhua) -- China published a white paper on Monday to clarify the facts about China-U.S. economic and trade relations, demonstrate its stance on trade friction with the United States, and pursue reasonable solutions.Please see the attachment for the document. Full Text: The Facts and China's Position on China-U.S. Trade Friction
China warns Iowa soybean farmers of ‘a president’s folly’ China reached into the US heartland in its escalating trade war over President Donald Trump’s tariffs, using an advertising supplement in Iowa’s largest newspaper to highlight the impact on the state’s soybean farmers as “the fruit of a president’s folly’’. The four-page section in Sunday’s Des Moines Register, which carried the label “paid for and prepared solely by China Daily, an official publication of the People’s Republic of China,” featured articles including one outlining how the trade dispute is forcing Chinese importers to turn to South America instead of the US for soybeans. “Pretty savvy political play being run by China,’’ Tommy Vietor, a former national security spokesman for President Barack Obama, said on Twitter about the tactic. The advertising targets a state critical to Trump and Republicans at a time the trade war between the world’s two largest economies is intensifying. The US is imposing tariffs on an additional US$200 billion in Chinese imports starting Monday, on top of the US$50 billion in goods already hit with levies. Meanwhile, US$110 billion of goods from the US will become subject to Chinese retaliatory tariffs around the same time. “As the largest importer of US soybeans, China is a vital and robust market we cannot afford to lose,’’ the supplement quotes Davie Stephens, vice-president of the American Soybean Association and a Kentucky soybean grower, saying in a statement. China on Saturday called off planned trade talks with US officials, and there’s a growing consensus in Beijing that substantive talks will only be possible with the Trump administration after US midterm elections in November, according to people familiar with the situation. ’ Trump has accused China of “taking advantage of the United States on trade for many years,’’ and the tariffs the US has been imposing are meant to be a response to allegations of intellectual property theft and forced transfer of US technology.
Jamie Dimon explained the hidden danger of Trump's trade war with China - JPMorgan CEO Jamie Dimon has some concerns about President Donald Trump's trade war with China.On the same day Trump imposed a 10% tariff on $200 billion worth of Chinese goods— adding to the tariffs on $50 billion worth of goods that were already in place — Dimon warned that the problems with the "trade skirmish" are not limited to the direct cost increase from the duties.During a Monday interview with CNBC, Dimon said that while the tariffs are a "tax on America," the real danger will come from companies' responses to the cost increases."Remember, people do other things," Dimon said. "They have other supply lines. But it's a $20 trillion economy. So that's a negative isn't that. It's confidence, consistency. If people start reducing investment, if people start moving to supply chains around, that we have seen already moving around the market a little bit."Dimon's point is that while the direct effects of the tariffs — higher costs for businesses, higher prices for consumers— may produce a slight growth lag, the larger disruption will come from tariffs' second-order effects.The uncertainty over trade policy is already becoming anundercurrent in business and consumer confidence measure — the most recent being the Business Roundtable CEO survey, a survey of 141 US CEOs that was released Monday.The survey (Dimon is the chairman of the group) found that roughly two-thirds of executives believed the tariffs would be a moderate or significant drag on their companies' capital spending plans going forward."Current trade policies and uncertainty about future trade policies are having negative effects, especially on capital investment," Joshua Bolten, CEO of the Business Roundtable, said in a release. "Decreases in capital investment not only impact the operations of Business Roundtable companies, less spending on equipment and facilities also squeezes small- and medium-sized suppliers and the millions of Americans they employ."In turn, the slip in confidence and uncertainty around trade policy could cause firms to delay investment or hiring. Or they could decide to move their supply chain to an area less affected by the tariffs. The most notable example of supply-chain shift was Harley Davidson, which announced that it would move some of its production overseas to avoid the European Union's retaliatory tariffs on American motorcycles.
Trump slams China at UN for ‘victimising’, ‘cheating’ and ‘plundering’ USUS President Donald Trump used the occasion of his second address to the United Nations on Tuesday to amplify his anger about China’s trade and economic policies, accusing Beijing of “relentless product dumping” and other unfair practices. Singling out China as a rogue nation in terms of trade while discussing his administration’s most pressing foreign policy issues at the 73rd annual UN General Assembly in New York, Trump’s move signals further escalation in the bilateral trade war that started in July, and his administration’s determination to change the course of the Sino-US relationship, analysts said. “The UN has a special meaning in Chinese political discourse. UN membership and status as a permanent member of the UN Security Council symbolise China being accepted and embraced as a member of the global community of nation-states,” said Zhao Ma, an associate professor of Chinese history and culture at Washington University in St. Louis. “To openly criticise China on China’s most valued global stage shows the Trump administration’s effort to put maximum pressure on China for future trade talks,” Zhao said.Trump’s comments continue a downward spiral in US-China relations, reflected most recently by Beijing’s calling off a new round of high-level trade talks that was meant to convene in Washington this week. Several rounds of trade negotiations since May have failed to end the tariff war.
US attacks on China ‘risk total destruction of mutual gains’ - Washington is putting four decades of gains in its relationship with Beijing at risk of “total destruction” with its repeated attacks on China, Chinese Foreign Minister Wang Yi told a group of businesspeople and others in New York on Monday. Addressing members of the US-China Business Council and the National Committee on US-China Relations, Wang said China and the United States had played a key role in global affairs since they established diplomatic ties in 1979, but recent developments had stopped that momentum. “The US is increasingly implementing negative policies in relation to China ... frequently blaming China for its unhealthy attitudes in economics, trade and security to artificially create opposing emotions against China,” the Chinese foreign ministry quoted Wang as saying. “These claims are neither true nor responsible, and only poison bilateral relations. “If the trend continues, it will totally ruin the gains of the Sino-US relations in the past 40 years. This is unfavourable to both China and the US and ultimately to the world.” He said cooperation was the only way forward. “We have learned this over the last 40 years … The two sides must unswervingly move forward in the direction of cooperation,” Wang said. The warning came a week after the administration of US President Donald Trump slapped tariffs on US$200 billion in Chinese goods. China responded with duties of its own on US$60 billion in American products. Beijing also called off planned trade talks with US officials and accused Washington of using bullying tactics and economic intimidation. Chinese state media have echoed the message, saying the tariffs are part of a US attempt to contain China. But Wang also sought to find common ground with the administration, saying China was not pursuing a trade surplus with the US and the door was still open for talks. “China does not intend to seek a trade surplus and is willing to resolve trade imbalances through consultations,” Wang said.
Opinion: China and US preparing for a protracted trade war - China and the United States are poles apart when it comes to resolving their current trade dispute. Recognition in the markets that the US-China trade war could drag on for years will force a re-evaluation of how the changed circumstances will affect prices across asset classes. That re-evaluation is arguably already starting. President Donald Trump asserts strongly that his interest is in securing “fair” trade deals, but his words seem to indicate that he is a mercantilist who believes that running trade deficits, by definition, weakens the US. China willing to talk trade but not with American ‘knife at its neck’ “We are fixing one-sided trade deals that have stolen American jobs and drained American wealth, just taken away our wealth. It’s like candy from a baby, they took our money, they took our jobs. They took everything. They took our dignity,” Trump said on Friday at a rally in Missouri. More specifically, “China last year took US$500 billion from our country – 500 billion, not million, 500 billion.” He added: “We have rebuilt China. We have given them such wealth.” Yet, as Chinese Premier Li Keqiang told the World Economic Forum in Tianjin, China is aware that it remains a developing country, and it still ranks at the “lower end of the world” in terms of per capita GDP. At its heart, though, this trade war is surely just one aspect of a much deeper problem. Although the emergence of China as an inexpensive manufacturing base has mightily benefited US consumers and many US companies, Washington has become increasingly wary about what China’s rise implies for America’s global influence. The possibility that China’s economy could grow in size to exceed that of the US is a case in point. As Graham Allison, of the Harvard Kennedy School, wrote last year in Foreign Policy magazine, one of the lessons of the cold war was that “domestic performance is decisive”. “Had the Soviet economy overtaken that of the US by the 1980s, as some economists predicted, Moscow could have consolidated a position of hegemony. Instead, free markets and free societies won out,” Allison wrote. The “vital question” for the US-China rivalry today is whether President Xi Jinping’s “Leninist-Mandarin authoritarian government and economy proves superior to American capitalism and democracy”. A combination of that kind of strategic unease and Trump’s mercantilist approach does no leave much room for a new trade bilateral relationship to be cemented any time soon.
Get Ready for Trump's Trade War With China to Be Long—and Ugly - U.S. investors have shrugged off fears of a China-U.S. trade war, but as tensions rise, investment economists and strategists are grappling with a new idea: The battle may not end anytime soon. The U.S.-China economic conflict will be long and ugly “with little chance of a deal anytime soon,” TS Lombard economists Larry Brainard and Charles Dumas write in a note to clients. While China was prepared in late May for talks on trade, that has changed given the events of the subsequent months, they say. Now, the duo write, the leadership in Beijing has concluded that the “U.S. is determined to check the country’s rise via demands that strike at the heart of the economic model on which Communist Party power rests.” As a result, China is taking a harder line, in part to avoid the leadership being seen as negotiating with a gun to their head, they say. “The current mood in Beijing is to take a tough position on future talks by demanding that the US demonstrate its sincerity before agreeing to new meetings.” Following another round of tariffs between China and the U.S., the business community is pushing back. The WSJ’s Gerald F. Seib explains. Photo: AP The latest round of tariffs, on $250 billion of imports from China, begins at 10%, but is set to rise to 25% in January. The pair expect the conflict to escalate, so that the 25% rate covers the bulk of Chinese exports to the U.S. That, they say, would drive a redirection of Chinese trade, ultimately serving as the catalyst for the rise of an Asian trading bloc with China at the center. China’s trading partners in East and Southeast Asia should benefit over the medium term. Chinese companies have moved manufacturing to Malaysia and other Southeast Asian countries in previous U.S. tariff cases, highlighting what could happen in the near future.
Here comes the 30-year trade war - Pepe Escobar - Alibaba’s Jack Ma has warned that the ongoing US-China trade war could last at least 20 years. As we’ll see, it’s actually more like 30 – up to 2049, the 100th anniversary of the foundation of the People’s Republic of China (PRC). Steve Bannon always boasted that President Trump was bound to conduct a “sophisticated form of economic warfare” to confront China. The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and “play by the rules.” The Trump administration plan – which is, in fact, trade deficit hawk Peter Navarro’s plan – has three basic targets:
1.Displace China from the heart of global supply chains.
2.Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products.
3.Force multinational corporations to stop doing business in China.
The overarching concept is that unending confrontation with China is bound to scare companies/investors away. There’s no evidence South Korean or German conglomerates, for instance, would withdraw from the vast Chinese market and/or production facilities. And even if the Flight Away from China actually happened, arguably the American economy would suffer as much, if not more, than China’s. The latest US tariff volley may lower China’s GDP by only 0.9 percentage points, according to Bloomberg Economics. But China may still grow a healthy 6.3% in 2019. This is a decent overview, with numbers, of what the trade war might cost China. What’s certain is that Beijing, as confirmed by a rash of editorials in Chinese state media, will not just play defense. Beijing sees the trade war as “protracted.” A Commercial Cold War 2.0 atmosphere is now in effect but China is fighting the ideological war on two fronts. At home, Beijing is using strong language to define its position against the US but taking a significantly softer approach in the international arena. It’s extremely helpful to understand how the current situation has arisen by examining the work of Wang Hui, a professor of Chinese language and literature at Tsinghua University, top essayist and the star player of China’s New Left. Hui is the author of the significant The Rise of Modern Chinese Thought, published in 2005 and still without an English translation. Some of Hui’s key conclusions still apply 13 years later, as he explains how Chinese society has not yet adapted to its newfound status in international relations; how it has not solved the “accumulated contradictions” during the breathtakingly fast process of marketization; and how it still has not mastered the inherent risks in the globalization drive. Hui’s analysis is echoed in many a Chinese editorial including delicious throwback lines such as the “sharpening of internal contradictions” in international relations. After all “socialism with Chinese characteristics,” as codified by Deng Xiaoping and renewed by Xi Jinping, excels in exploiting and bypassing “internal contradictions.”
China willing to talk trade but not with US ‘knife at its neck’ - The door for renewed high-level trade talks between Beijing and Washington is still open but China will not agree to proceed with a “knife at its throat”, Wang Shouwen, the vice-minister of commerce who led the Chinese delegation to Washington for the last round of trade talks in August, said on Tuesday. China has referred to US tariffs as a knife at its throat since the first levies were imposed in July. While Wang and seven other top officials briefing the media on Monday’s “white paper” did not say directly that the United States would have to remove all tariffs before any new trade talks, that condition seemed to be implied. The white paper is the country’s most comprehensive statement of its trade war stance to date and came as new tit-for-tat tariffs came into effect. In it, China accused Washington of “bullying” tactics and economic “intimidation”, while underlining its own position that only cooperation on trade issues would produce results. Beijing continued to try to occupy the moral high ground on the trade issue and globalisation in general while portraying the US as the economic aggressor and China as the undeserving victim. Wang said new talks to resolve the trade dispute could take place if the US treated China as an equal and kept its word to abide by any agreements. “China and the US have held four rounds of high-level talks. Many agreements were made, and the two sides even filed a joint statement,” he said, referring to talks in May when it appeared briefly that a framework for avoiding a trade war had been worked out. “But the US side turned the tables, abandoned those agreements and slapped restrictive trade measures [on Chinese imports], making it impossible to proceed with further talks.”
Trade wars could be worse for China's economy than the pain they inflict on US - China's economy, much more vulnerable to exports, is likely to take a bigger hit than the U.S. from the escalating trade war. Even so, China's leaders are not likely to blink any time soon, particularly with mid-term elections approaching, and President Donald Trump is not expected to back down. The U.S. slapped tariffs of 10 percent on $200 billion in Chinese goods, and China retaliated by putting tariffs on $60 billion in U.S. goods. Economists expect Chinese growth to take a hit of 0.5 to 0.6 percentage points in 2019 if tariffs are raised to 25 percent on Jan. 1 as the U.S. has announced. "If you put tariffs across the board on both countries...it's a four times bigger hit to China because they export four times as much as they import," said Ethan Harris, head of global economics at Bank of America Merrill Lynch. "The tariffs announced so far could have as much as a half percent impact on Chinese growth...In the U.S. we've got even less because first of all the shock is much smaller, and the momentum is so strong in the economy, it gets lost in the numbers," he said. BofA now expects Chinese growth in 2019 of 6.1 percent, even with the offsetting positive from China's stimulus programs. JP Morgan expects China's growth to slow by 0.6 percentage points because of the weakening of both export and import activity. The current tariffs are likely to affect U.S. growth modestly, by 0.1 or 0.2 percentage points, but if the 10 percent tariffs on $200 billion on Chinese goods are raised to 25 percent, and China retaliates, the hit could be 0.2 or 0.3 percentage points in 2019, Harris said. BofA expects 2019 U.S. GDP to grow by 2.7 percent. Harris said the trade war may not end until U.S. consumers feel the effects, or people become concerned that it will be prolonged and continually escalating. So far, the stock market is ignoring the tariffs and potential economic damage, but strategists said a sharp sell off because of tariffs could affect financial conditions — and get the Trump administration's attention.
Trump’s Tariffs on Chinese Imports Are Actually a Tax on the US Middle Class – Dean Baker - In his escalating trade war with China, Donald Trump is acting increasingly like Captain Queeg in the Caine Mutiny. He has imposed a 10 percent tariff on $200 billion in US imports from China, a rate he proposes to increase to 25 percent at the start of the next year. He also is threatening tariffs on the rest of our imports from China, an additional $300 billion in goods and services. The straight arithmetic tells us that 10 percent of $200 billion is $20 billion on an annual basis. If this rises to 25 percent next year, the tariffs would be $50 billion. If we add in 10 percent tariffs on another $300 billion, that comes to $30 billion, bringing the total to $80 billion. While Trump talks as though he thinks his tariffs are taxing China, they aren’t. Most immediately, they are a tax on US households. The full $80 billion would come to a bit less than $600 per household. It is true that the tariffs will not be passed on dollar for dollar. Some companies will decide it’s better to see their profit market squeezed than pass on the full price increase. This means that Apple and Nike may not raise the price for the iPhone and running shoes by the full amount of the tariff. In that case, a portion of the tax will be borne by US companies manufacturing items in China. This is fine, since corporate profits are near record highs as a share of GDP. But, this is still not taxing China. There will be some spillovers where either Chinese companies importing items to the US end up with less money or Chinese suppliers selling to US companies are forced to accept less money, but there is little doubt that the bulk of the tariff will be borne by the US. Trump is effectively proposing one of the largest tax increases on the middle class in memory. Trade is not about one country winning and another country losing. Interests within some countries win, while others lose. When millions of manufacturing workers in the Midwest were losing their jobs in the last decade, US corporations that were importing items made in China — like General Motors, Apple, and Walmart — were winning. This simple and obvious point seems completely lost on Donald Trump, who seems to think that the balance of imports and exports is a scorecard. This Trumpian confusion must be kept front and center in understanding Trump’s trade wars. While lowering the value of the dollar and reducing the trade deficit in manufactured goods would benefit most US workers, the items on Trump’s agenda largely go the other way. He continually rants about China stealing our intellectual property. If China pays Microsoft, Pfizer and Boeing more money for their intellectual property claims, it will lead to a larger trade deficit on manufactured goods. That story is good for people who own lots of stock in these companies, but bad news for most everyone else.
Pentagon fears losing race for 5G to China -- The next generation of wireless internet could be a boon for the U.S. military, but also comes with national security concerns about China’s role in the market. Industry leaders have promised 5G, or fifth generation, wireless networks will bring lightning-fast speeds to support futuristic new technologies. For the military, that could mean better communications and support for tactical operations around the world. “With 5G, DOD [Department of Defense] will benefit of course from the larger range of spectrum available to 5G, the increased number of frequencies,” said retired Rear Adm. David Simpson, former chief of the Federal Communications Commission’s (FCC) Public Safety and Homeland Security Bureau. “You’re not only going to be able to get more data through and be able to have more people in a unit access an image or a video of something or maybe rehearse an operation, you’re going to be able to also move around in those frequencies and be less detectable.” For the Pentagon that means the U.S is in a race with China for dominance in 5G, with the foreign power appearing to be ahead. Experts warn that could pose national security risks here as China increases its wireless market share globally and as other companies rely on Chinese products to build out networks. he Trump administration singled 5G out as a priority in its National Security Strategy. The strategy, released in late 2017, names “deploying a secure 5G Internet capability nationwide” as one of the infrastructure improvements that will “increase national competitiveness, benefit the environment and improve our quality of life.” In January, Axios published a leaked document showing the National Security Council considered a proposal to pay for and build a national 5G network, citing threats from China. “China has achieved a dominant position in the manufacture and operation of network infrastructure,” the document said. It also warned that “China is the dominant malicious actor in the Information Domain.”
How China Systematically Pries Technology From U.S. Companies - DuPont Co. suspected its onetime partner in China was getting hold of its prized chemical technology, and spent more than a year fighting in arbitration trying to make it stop. Then, 20 investigators from China’s antitrust authority showed up. For four days this past December, they fanned out through DuPont’s Shanghai offices, demanding passwords to the company’s world-wide research network, say people briefed on the raid. Investigators printed documents, seized computers and intimidated employees, accompanying some to the bathroom. Beijing leans on an array of levers to pry technology from American companies—sometimes coercively so, say businesses and the U.S. government. Interviews with dozens of corporate and government officials on both sides of the Pacific, and a review of regulatory and other documents, reveal how systemic and methodical Beijing’s extraction of technology has become—and how unfair Chinese officials consider the complaints.China’s tactics, these interviews and documents show, include pressuring U.S. partners in joint ventures to relinquish technology, using local courts to invalidate American firms’ patents and licensing arrangements, dispatching antitrust and other investigators, and filling regulatory panels with experts who may pass trade secrets to Chinese competitors. In DuPont’s case, the dispute concerned a process to produce supple textile fibers from corn, a $400 million business for the company in 2017. The antitrust investigators, say the people briefed on the raid, told DuPont to drop the case against its former Chinese partner. U.S. companies have long complained that Beijing pressures them to hand over intellectual property. More recently, their concerns have escalated as China turns into an advanced rival in industries ranging from chemicals to computer chips to electric vehicles. Coerced technology transfer is now a central part of the spiraling U.S.-China trade fight, a standoff that appears to be only more entrenched. The White House estimates China inflicts $50 billion yearly in damages on U.S. companies. That transfer, U.S. executives regularly complain, weakens American businesses’ competitiveness and undermines the incentive to innovate.
The US Will Lose Its Trade War with China --The United States cannot win its tariff war with China, regardless of what President Donald Trump says or does in the coming months. Trump believes that he has the upper hand in this conflict because the US economy is so strong, and also because politicians of both parties support the strategic objective of thwarting China’s rise and preserving US global dominance. But, ironically, this apparent strength is Trump’s fatal weakness. By applying the martial arts principle of turning an opponent’s strength against him, China should easily win the tariff contest, or at least fight Trump to a draw.6Economists since David Ricardo have argued that restricting imports reduces consumer welfare and impedes productivity growth. But that is not the main reason why Trump will be forced to back down in the trade war. In handicapping the US-China conflict, another economic principle – rarely used to explain the futility of Trump’s tariff threats – is much more important than Ricardo’s concept of comparative advantage: Keynesian demand management. Comparative advantage certainly influences long-term economic welfare, but demand conditions will determine whether China or America feels more pressure to sue for trade peace in the next few months. And a focus on demand management clearly reveals that the US will suffer from Trump’s tariffs, while China can avoid any adverse effects. US businesses could not, in aggregate, find extra low-wage workers to replace Chinese imports, and even the few US businesses motivated by tariffs to undercut Chinese imports would need to raise wages and build new factories, adding to the upward pressure on inflation and interest rates. With little spare capacity available, the new investment and hiring required to replace Chinese goods would be at the cost of other business decisions that were more profitable before the tariff war with China. So, unless US businesses are sure the tariffs will continue for many years, they will neither invest nor hire new workers to compete with China.
China Denies U.S. Navy Ship’s Request for Hong Kong Visit —The Chinese government denied a U.S. Navy ship permission for a port visit to Hong Kong next month, U.S. military officials said Monday, a decision issued as Beijing also canceled a high-level naval meeting in the U.S. The rebuffs come as tensions burgeon between the two countries over a range of military and economic differences. Last week, the State Department imposed sanctions on a Chinese military agency for buying Russia’s SU-35 combat aircraft and S-400 surface-to-air missile system, leading China to formally complain to the U.S. ambassador and acting defense attaché. Also last week, the Trump administration announced plans to impose a 10% tariff on $200 billion worth of Chinese goods, which China immediately countered by announcing tariffs on $60 billion worth of U.S. goods. Both sets of tariffs went into effect Monday. In addition to denying the amphibious assault ship USS Wasp a port visit to Hong Kong, China recalled Vice Adm. Shen Jinlong from a visit to the U.S. That means he won’t meet with his U.S. counterpart, Chief of Naval Operations Adm. John Richardson, at the International Seapower Symposium, a gathering of global navy officials at the Naval War College in Newport, R.I. “We were informed that Vice Adm. Shen Jinlong has been recalled to China and won’t conduct a visit with Adm. Richardson. We have no additional information at this time,” Army Lt. Col. David Eastburn, a Pentagon spokesman, said in a statement.
Andy Xie- Change Is Coming & With It, A Reckoning - The door for compromise and restoring a functional relationship between the United States and China appears to have closed. The 10 per cent tariffs on US$200 billion of Chinese goods, rising to 25 per cent from January 1, is the final straw. There will be more negotiations to come. At some point, there may be announcements of compromises and a positive outlook. But, for now, the reality is that China and the US have gone into rivalry mode – a rivalry that will define the 21st century. The dispute began with US President Donald Trump’s complaints about the bilateral trade balance and access to China’s market. It then morphed into a dispute on intellectual property rights violations and China’s economic model of subsidising technology development. Now, it is about global strategic rivalry.The US’ contention is that China makes money from the US and is using it to push America out of Asia and elsewhere. It is difficult to see how the US could climb down from this position. To follow its rhetoric, it will try to cut off China from its market and block technology exchanges. This rivalry may bring short-term pain to both nations, and to the world, but it may prove beneficial to all in the long run. The lack of external checks has led to rising internal imbalances in both countries. Since the end of the cold war, the US has been marred by surging inequality, while bubbles and ignorant hubris have come to occupy the central ground in China’s economic management and political thinking. Financial speculation and corruption have become normalised around the world. The titanic rivalry between the world’s No 1 and No 2 economies will put all on their toes. Some of the most egregious trends could be reversed. The short-term pain is quite visible in China. Its stock marketis plummeting. And the property market is on edge and may soon follow. It would be wrong to blame it on the trade war.
Trump Pursues Trade Deals in Asia, Europe Amid Frostiness With China -- The Trump administration is turning to allies in Asia and Europe for trade deals as U.S. relations with China deteriorate and the world’s two largest economies exchange tit-for-tat tariffs that risk damaging global commerce. President Trump signed a revised free-trade pact on Monday with South Korea, as he steps up efforts this week to show he can strike new market-opening deals and isn’t antagonistic to trade. Mr. Trump also hopes by Wednesday to persuade Japan to enter formal bilateral trade talks, part of a commercial diplomacy effort this week by the president and his advisers on the sidelines of United Nations meetings in New York.Trump aides also have meetings planned with their European Union counterparts to advance a trade-expanding framework unveiled in July. “In addition to this deal, we have many other deals in the works—reciprocal deals,” Mr. Trump said as he signed the Korea pact. The moves come as Mr. Trump escalates his trade fight against China, with new 10% taxes on $200 billion in Chinese exports taking effect Monday. Beijing has retaliated with tariffs on $60 billion in American-made goods. The U.S. administration is expected soon to explore penalties on $267 billion more in Chinese products, covering virtually all Chinese goods sold in the U.S. This week’s efforts also coincide with what appears to be a rough patch in Mr. Trump’s efforts to rewrite the North American Free Trade Agreement. The administration has been pushing Canada to join by Sept. 30 a new Nafta framework set last month between the U.S. and Mexico. But talks with Ottawa broke down last week with no resolution on a number of sticking points. No new high-level negotiations were scheduled as of Monday afternoon. Mr. Trump took office last year vowing to shake up the global free-trading system. He’s done so in many ways, with a broad array of tariffs imposed not just on China but on allies around the world, and with threats to rip up existing trade deals and pull out of the World Trade Organization. But he has faced a backlash from U.S. business and farm groups worried about the costs to consumers and exporters, and from lawmakers in his Republican Party facing tough congressional elections in November. The White House has countered those concerns by insisting Mr. Trump’s goal is preserving and expanding, not contracting, trade—albeit on terms he considers more fair to the U.S., and in ways that he says would reduce the American trade deficit with other countries. The Korean deal is his first such concrete effort. Speaking in advance of the signing, Mr. Trump told reporters that new pact was “a long time coming,” calling it a “basic redoing” of the old accord. He described the original deal as “a very unfair agreement for the United States.
Japan and U.S. agree to expanded trade framework ahead of Abe-Trump summit - Japan and the United States agreed on Tuesday to create a framework for expanding trade between the two countries. The two governments reached the accord at the second round of their “free, fair and reciprocal,” ministerial trade dialogue in New York. The meeting came at a time when trade issues are becoming a source of friction between Tokyo and Washington, with U.S. President Donald Trump having voiced his frustration at his country’s massive trade deficit with Japan. “We basically shared the view on a framework and steps for boosting bilateral trade,” economic revitalization minister Toshimitsu Motegi, who represented Japan at the New York meeting, told reporters after the one-hour talks. The two countries are aiming to reach a formal agreement to form the framework at a meeting between Prime Minister Shinzo Abe and Trump on Wednesday, with a relevant statement expected to be announced after the bilateral summit. At Tuesday’s meeting, which was also attended by U.S. Trade Representative Robert Lighthizer, the two countries “made efforts to bridge the gap” between their positions, based on an idea presented by the Japanese side as a basis for discussions, according to Motegi. Motegi stopped short of unveiling specifics of the talks. Still, he said, “We are discussing areas in which you are interested,” suggesting that the two sides talked about automotive trade and tariffs on farm products. Tokyo is desperately hoping to see its products exempted from additional automobile and auto parts tariffs planned by the U.S. administration. Japan is expected to consider launching bilateral tariff talks on the assumption that it obtains a U.S. promise to exclude its automobiles and auto parts from the extra tariffs.
Foreign Direct Investment In US Goes Negative- Blame Trump's Trade Policy - Foreign Direct Investment (FDI) in the US should be rising. Tax cuts spur investment and the US economy seems much stronger than abroad. Nonetheless, FDI is negative... The lead-in chart is from the Organization for International Investment report on Foreign Direct Investment in the United States, Preliminary 2nd Quarter 2018.Second-quarter 2018 foreign direct investment flows in the United States were in negative territory, resulting in a divestment of $8.2 billion, following a relatively strong first quarter. The second quarter was marked by unusually high selloff and purchase activity, which suggests that some $100 billion invested in the United States has transferred ownership abroad. In that quarter, U.S. affiliates paid off $32 billion in loans to related parties. Clearly, much of this unprecedented FDIUS activity is due to changes in ownership. Yet, it can partially be viewed as a response to import tariffs and other trade actions from the Trump Administration as international companies hit the pause button on potential investments.Foreign direct investment in the United States in 2017 was the fourth-strongest for the past decade, but was down 40 percent from 2016. This followed record-breaking years in 2015 and 2016; FDIUS for each year reached nearly half a trillion dollars. These investments benefit the American economy as international firms build new factories across the United States, buoy their well established U.S. operations, fund American research and development activities, and employ more than 6.8 million Americans in well-paying jobs. Looking at foreign direct investment more broadly, foreign companies invest in the United States for many reasons. A list of positive factors include the large U.S. market, world-class research universities, a stable regulatory regime, and a solid infrastructure that allows businesses to easily access the U.S. market. Whether the United States will retain its status as the world’s most attractive investment location hinges mainly on future macroeconomic developments and changing financial conditions.
Trade Wars Could Collapse US Car Sales And Slash 715K Jobs- It Would Trigger A Downward Cycle - The most significant and dangerous risks stem from policymaking. And on top of the list is, of course, the protectionist crusade of the Trump administration to disrupt the post–World War II global economic order the US was instrumental in building. The impact of President Trump's escalating trade war with China is already being felt, auto experts warn, and not in a good way. Retaliation by China to tariffs already in place have made some American auto exports uncompetitive, and could collapse US auto sales by 2 million vehicles per year, resulting in the loss of up to 715,000 American jobs and a devastating hit of as much as $62 billion to the US GDP.As per NBC News, the Center for Automotive Research (CAR) warns that the auto industry could receive a devastating blow if Section 232 declares foreign-made cars and car parts a threat to national security.Kristin Dziczek, a vice president and senior economist at CAR, said if Section 232 is enacted, it could trigger a “downward cycle” in the auto industry - not seen since the last great recession. The latest research from CAR demonstrates how the trade war is disrupting the complex web of international supply chains, the repair of which will be expensive, and the jump in automobile costs could damage global and US markets. The uncertainty surrounding the trade war is also seen as extremely disruptive to business planning and hence investment plans. The indirect effects on business investment may damage the auto industry on a medium-term basis. Already announced tariffs on imported aluminum and steel have added about $240 to the cost of producing a new automobile in the US, said Peter Nagle, a senior economist at IHS Markit. The first round of tariffs with China has also increased the cost of foreign parts used on American assembly lines. Nagle added that the series of trade tariffs would “exacerbate” the difficulties the auto industry currently faces as it struggles to thwart the first downturn in sales since the last recession.President Trump activating tariffs using Section 232 rules would be disastrous, he warned. Nagel estimated consumers would be “looking at price increases of $1,300 for a typical mass-market product, up to $5,800 for a luxury vehicle.” He said those increases would not be limited to just imported vehicles. Toyota, for example, has forecast the price of a US-manufactured Camry would jump by about $1,600.
Trump metals tariffs will cost Ford $1 billion in profits, CEO says (Reuters) - Steel and aluminum tariffs imposed by the Trump administration have cost Ford Motor Co (F.N) about $1 billion in profits, its chief executive officer said on Wednesday, while Honda Motor Co (7267.T) said higher steel prices have brought “hundreds of millions of dollars” in new costs. “From Ford’s perspective the metals tariffs took about $1 billion in profit from us,” CEO James Hackett said at a Bloomberg conference in New York, “The irony of which is we source most of that in the U.S. today anyway. If it goes on any longer, it will do more damage.” Hackett did not specify what period the $1 billion covered, but a spokesman said the automaker’s CEO was referring to internal forecasts at Ford for higher tariff-related costs in 2018 and 2019. Higher U.S. steel prices have resulted in “hundreds of millions of dollars” in additional annual costs, Rick Schostek, executive vice president of Honda North America, told the U.S. Senate Finance Committee, even as more than 90 percent of steel in its vehicles assembled in the United States is made domestically. Honda also faces retaliatory tariffs from Canada and China on lawn-mowers it builds in North Carolina and transmissions made in Georgia.
Trump's Plan to Supersize US Trade Deficit, Pt. II - Contrary to his rhetoric, I noted some posts ago that Trump is actually doing all he can to widen the US trade deficit. The last GDP report for the second quarter for 2018 was artificially boosted by Americans trying to beat the imposition of tariffs on goods imported by China. However, we have passed that point. Now that tariffs are already beginning to be imposed, American importers no longer have the impetus to "beat" some tariff imposition deadline. Voila, today's trade deficit that was far larger than anticipated $-75.8B instead of $-70.8B--though humbly not be me.So, what will drive the United States' trade balance in the age of trade war are likely two: First, American exports are being hit abroad by other countries' retaliatory tariffs on American goods. This is particularly the case with soybeans and other agricultural exports now being taxed more by the Chinese. Second, American imports continue to climb, demonstrating the ineffectiveness of tariffs in "reducing" trade deficits when domestic saving shortfalls are not addressed. If not China, then there are several other countries willing and able to supply America's fix of imported goods since the United States still needs to plug its current account deficit somehow.The merchandise-trade deficit unexpectedly grew in August to $75.8 billion, the widest in six months, as exports of food, industrial supplies and autos declined, Commerce Department data showed Thursday. While analysts said the trade deficit partly reflected an expected drop in soybean exports following a second-quarter surge ahead of Chinese-imposed tariffs [...], the numbers illustrate how the trade war is spurring volatility in the data. In addition, the widening deficit runs contrary to Trump’s aim of a narrower gap and underscores the challenges of achieving that goal amid strong domestic demand -- which tends to boost imports -- and retaliatory tariffs from abroad. “The administration’s narrative, that the second-quarter drop in the deficit was a result of their trade policies, has now fallen apart, as it was always likely to do.” The bottom line is this: the Q2 GDP growth figure was artifactual, boosted as it was by American buyers stocking up on China-made goods ahead of tariffs being applied. Now that that tomfoolery is done with, we are beginning to see what the trade war-era pattern will be like. The trade deficit will likely increase, not decrease, since the United States domestic saving shortfall still keeps growing (via Trump's tax cuts). That the US dollar is gaining strength only makes the trade deficit worse as it makes imports more attractive to Americans and exports less attractive to the United States' trading partners.
As aid checks go out, farmers worry bailout won’t be enough - Farmers across the United States will soon begin receiving government checks as part of a billion-dollar bailout to buoy growers experiencing financial strain from President Donald Trump's trade disputes with China.But even those poised for big payouts worry it won't be enough. And while support for Trump is near unwavering in the heartland, some growers say that with the Novemberelection nearing, such disappointing aid outcomes could potentially affect their vote."It's pretty obvious that the rural agriculture communities helped elect this administration, but the way things are going I believe farmers are going to have to vote with their checkbook when it comes time," said Kevin Skunes, a corn and soybean grower from Arthur, North Dakota and president of the National Corn Growers Association.Corn farmers get the smallest slice of the aid pie. Corn groups estimate a loss of 44 cents per bushel, but they're poised to receive just a single penny per bushel."If these issues haven't been resolved, there could be a change in the way farmers vote," Skunes said. "A person has to consider all things." Farmers are already feeling the impact of Trump's trade tiffs with China and other countries. China has hit back hard, responding with its own set of tariffs on U.S. agricultural products and other goods.
The US-Mexico Trade Deal Dies -- Nobody is calling it that, but the low key story on the back pages of today’s major papers report that this is what has happened, not to my surprise. September 29 (or maybe the 30th at a stretch) is the deadline for President Trump to submit to the Congress the final version of the US-Mexico trade deal if there is any chance of it being passed by the US Senate in time for outgoing Mexican President Pena Nieto to sign it on his last day in office on November 30 after the outgoing Mexican parliament could approve of it. The US Senate rules are that there is a 90-day waiting period for the initial announcement of a trade deal and a 60 day waiting for delivering the final detailed agreement. The Trump administration got their initial report in on time, but with only it involving US and Mexico. Sept. 29 is the deadline for the final deal. As noted in previous posts here (Aug. 29, and Sept. 6), top Republican senators such as No. 2 John Cornyn of Texas and others have said they will not approve a deal that does not include Canada, a reformed NAFTA. Let me note that it was not impossible for this US-Mexico trade deal to form the basis of such a deal. But, unfortunately, in the immediate aftermath of the announcement of the US-Mexico deal Trump announced that Canada must settle the negotiation on “our terms.” Oh. The funny thing is that there was a possible deal. The US was making demands of Canada about the dairy industry (never a part of NAFTA because it was so hard to make a deal) and Canada was making demands about the lumber industry, generally described as a dispute over “dispute resolution.” There were other issues, but these were the politically hard and sensitive ones involving such places as Wisconsin and Quebec. In the end it appears that no deal between the US and Canada has been made and probably will not be made in time for the Sept. 29 deadline. The newspaper reports provide zero details of the official negotiations, led by official US trade rep Robert Lighthizer on the US side, a hardline but experienced and knowledgeable official. All we have is that there is no deal between and the US and there will be no further official negotiations between now and the deadline of Sept. 29 or 30. It looks like the successor to NAFTA, if anything, will have to be renogiated from scratch with the incoming leftist Mexican president, Lopez Obrador, but Canada will have to be brought in, no matter what, or else involved will laugh very loudly at President Trump.
JPM Is Worried That Trump Is Getting So Cocky, He Is About To Make A Major Miscalculation - It has been one of the pronounced paradoxes of this market: the harder Trump pushes and escalates trade wars with various opponents - mostly China - the more the market rewards him by setting new all time highs, leading the president to believe he is "winning" and resulting in even more aggressive future escalations. Perhaps as a result, earlier today Goldman said that following Trump’s threat of further escalation in the trade war with China, the bank now thinks the probability that all imports from China will ultimately be subject to tariffs has risen to 60%. And, in a note from JPMorgan's strategists over the weekend, the bank expressed a similar - if even more nuanced - concern, warning that it is starting to make "forecast and strategy changes" around issues emerging from the US-China conflict. One is the growing possibility that the US-China trade war enters Phase III in 2019, resulting in tariffs on all +$500bn of imports from China, similar to Goldman's conclusion. The bank notes that without more policy easing, this scenario implies weaker China growth, which directly impacts the commodity complex’s incipient recovery. And depending on the weight authorities give to monetary versus fiscal measures over the next 6 to 12 months, the renminbi could depreciate sufficiently to pull EM Asia and the non-oil commodity complex lower. The other, and more interesting, concern is that US economic and equity market resilience - despite tariffs - will embolden the President on all geopolitical fronts – autos, NAFTA and particularly Iran – and thus risk a major miscalculation from sanctions that are tough to calibrate. This possibility is the driver behind JPM’s revised oil price forecast for the next several quarters, from a previous average price forecasts for Brent of the low $60s (mid-$50s on WTI) in Q4 2018 and Q1 2019 to $85/bbl (WTI $76/bbl) over the next six months, with even a spike to $90/bbl increasingly likely. As a reminder, some analysts still believes that it was oil's superspike in the summer of 2008 that ultimately catalyzed the collapse of Lehman.
Trump administration seeks to limit access to U.S. for immigrants who use or are likely to use public assistance WaPo - The Trump administration will make it much more difficult for immigrants to come to the United States or remain in the country if they use or are likely to use housing vouchers, food subsidies and other “non-cash” forms of public assistance, under a new proposal announced Saturday by the Department of Homeland Security. U.S. immigration laws have long contained provisions limiting foreigners who are likely to be dependent on financial aid and therefore a “public charge.” But the proposed changes amount to a broad expansion of the government’s ability to deny visas or residency to immigrants if they or members of their household benefit from subsidies like Medicaid programs, the Supplemental Nutrition Assistance Program (SNAP) or Section 8 housing vouchers. “Under long-standing federal law, those seeking to immigrate to the United States must show they can support themselves financially,” DHS Secretary Kirstjen Nielsen said in a statement, adding that the proposed changes would “promote immigrant self-sufficiency and protect finite resources by ensuring that they are not likely to become burdens on American taxpayers.” The proposal will publish in the Federal Register in the coming weeks, according to DHS, triggering a 60-day public comment period. “After DHS carefully considers public comments received on the proposed rule, DHS plans to issue a final public charge rule that will include an effective date,” the agency said. DHS officials say they are anticipating court challenges to any change. While the proposal does not include tax credits and other health benefits that were under consideration in previous drafts, immigrant advocates have raised concerns that the rule change will force families to forgo help to avoid jeopardizing their immigration status. “This would force families — including citizen children — to choose between getting the help they need and remaining in their communities,” s “The last thing the federal government should do is punish families that have fallen on hard times for feeding their children or keeping a roof over their heads and avoiding homelessness.”
Trump administration takes aim at immigrants who receive federal benefits --On Saturday, in another vicious escalation of its war on immigrants, the Trump administration announced plans for federal regulations to prevent immigrants who have ever received certain federal benefits from obtaining green cards or visas, placing class-based limits on immigration to the United States.Under the proposed rule, which will likely take effect after a pro forma 60-day public review and comment period, disqualifying benefits include Medicare Part D prescription drugs, Medicaid, food stamps and Section 8 housing vouchers.The new rule will affect people applying for immigration visas or those with temporary residency seeking to remain in the country. It could also prevent the more than 600,000 with Deferred Action for Childhood Arrival (DACA) benefits from obtaining permanent residency.The draconian regulations are plainly aimed at working class immigrants. It will now force those seeking permanent lawful status to choose whether to forgo benefits that they or family members would otherwise be eligible for, or receive the benefits, give up any chance of a green card or change in visa status—and potentially risk deportation. Even current green card holders could be subject to the new rule and lose their status as lawful permanent residents if, in certain circumstances, they leave the country and try to return.According to the Kaiser Family Foundation, almost 20 million children, 90 percent of whom are US citizens, could be affected by the new regulations because their parents or other relatives would be forced to stop receiving benefits in order to maintain the possibility of obtaining permanent residency or an improved visa status.The proposed policy will cause immigrants to be “hungrier, sicker and poorer,” Olivia Golden, the executive director of the Center for Law and Social Policy, told USA Today. “It targets documented working parents who are playing by the rules. Everything that we know suggests that it’s a terrible idea. We have to fight back.”
Trump administration moves to impose class-based restrictions on immigration - On Saturday night, the Trump administration quietly announced a change to immigration regulations that will effectively bar immigrants from acquiring legal status if their families have used social programs.The change, which will go into effect after a pro-forma 60-day public comment period, is a monumental attack on the international working class. The explicit formalization of a class-based immigration system marks a turning point that will substantially alter the state of social relations in favor of the rich.The new policy labels all undocumented immigrants who have ever used cash- or non-cash benefits as “public charges.” Working class immigrants whose families have used programs like food stamps, Section 8 housing assistance, subsidized housing under the Housing Act of 1937, Medicaid or health care subsidies under Medicare Part D will now be relegated to permanent illegality.According to the new rule, an income below 125 percent of the federal poverty level ($31,400 for a family of four) will be a “negative factor” in considering a green card or a visa application. On the contrary, an income over 250 percent of the federal poverty line will count as a “strong positive factor.” In other words, wealthy immigrants will be approved to travel and immigrate while the working class will be forced to live in the shadows.Tens of millions of workers will be affected by the change. Just under 10 million undocumented workers, most of whom have escaped brutal poverty and violence in countries devastated by US imperialism, have already used the benefits outlined in the rule.Beyond this 10 million, almost all non-citizen immigrants, including those who already have legal permanent residency, will likely forego future use of social services, with disastrous implications for health and nutrition. In addition, 18 million US citizen children with at least one immigrant parent will now go without access to necessary public programs, since immigrants will be penalized for allowing even citizen children to use social programs. The Department of Homeland Security (DHS) callously states in its proposed rule that the policy will lead to “worse health outcomes… especially for pregnant or breastfeeding women, infants, or children,” “increased use of emergency rooms,” “increased prevalence of communicable diseases,” “increased rates of poverty and housing instability, and reduced productivity and educational attainment.” These are not undesired consequences, but deliberate goals.
US announces new barrier to citizenship for low-income immigrants - On Friday, US Department of Homeland Security (DHS) Secretary Kirstjen Nielson signed a proposed new rule that will require all immigrants applying for permanent legal status or citizenship to provide evidence of their financial status, including applications for public benefits, proof of private health insurance and credit histories and scores. The rule is another major step in the Trump administration’s drive to create a class-based immigration system. The DHS defends the new rule as a means of preventing immigrants who may become a “public charge” from acquiring permanent legal status. This is supposedly being done to prevent foreigners from becoming a “burden” on the American taxpayer—an appeal to national chauvinism and xenophobia. Neither the Trump administration nor its nominal opposition in the Democratic Party evinces a similar concern for the burden on the average taxpayer of multitrillion-dollar tax cuts for corporations and the rich. According to the proposal, a credit check is needed to reveal an individual’s bill payment history, current debt, work history, bankruptcies and, most importantly, whether a person can be “self-sufficient” in the United States. This proposal follows a regulation change announced last week that will effectively bar immigrants from acquiring permanent legal status if their families have used social programs. That new policy labels as public charges all undocumented immigrants who have ever used cash or noncash benefits—such as food stamps, housing vouchers or Medicaid—making it all but impossible for them to obtain permanent legal status (a green card). This directly affects just under 10 million undocumented workers who have already used the benefits outlined in the rule. Millions more immigrant workers will be affected because they will forgo use of public benefits for themselves and the children for fear of being branded “public charges” and targeted for deportation. There are 10.4 million children who are US citizens with at least one noncitizen parent. Of this group, nearly 6 million children receive public health benefits. These families could be separated if a parent is considered a public charge and not granted legal permanent residency.
Undocumented Immigrant Faces a Choice: Become an Informant for ICE or Be Deported -- Carlos Rueda Cruz clambered into his Toyota Tacoma pickup truck to go to work. He made it three blocks before he saw the flashing lights in his rearview mirror. The police approached with guns cocked, Carlos said. They shouted for him to put his hands in the air. As Carlos stepped out of his truck, he noticed five law enforcement vehicles surrounding him. The police started asking questions: Where are you going? Are you carrying any drugs or weapons? Why are you here ? The interrogation on that early morning in 2017 lasted five minutes before the officers, who turned out to be ICE agents, announced that they were executing an order for Carlos’s arrest. The agents brought Carlos, 26 years old at the time, to their office downtown. At first, the officers simply demanded that he sign papers that they told him would allow them to send him back to Mexico. He refused and asked for an attorney. But unlike U.S. citizens in criminal cases, undocumented immigrants aren’t automatically afforded a lawyer. An agent, through a translator, told Carlos that he had two options: Either turn in other undocumented immigrants or be deported himself.The agent laid out the choices in stark detail. At a monthly check-in at the ICE office, Carlos would report names of other undocumented people. He would need to produce one name per month for three months. If he refused, he would be sent back to Mexico. In that moment, sitting in front of an ICE agent, Carlos pondered another existential question: Do I turn in other members of my community, or abandon my two young kids and wife, pregnant with a third child? Frightened, he agreed to cooperate. Soon, according to Carlos, he would be drawn against his will into a deal with U.S. Immigration and Customs Enforcement, which asked him to snitch on other undocumented immigrants or face deportation. When he refused to comply, he faced retaliation.
America's obsession with rooting out communism is making a comeback --Jodi Dean - from the Guardian: It was a scene straight out of the 1950s, but the year was 2017. Travis Allen, a Republican from southern California, took to the floor of the state assembly on 8 May to denounce communism. “To allow subversives and avowed communists to now work for the state of California,” he railed, “is a direct insult to the people ofCalifornia who pay for that government.”Allen was speaking out against a move to remove language from the California code that that bars members of the Communist party from holding government jobs in the state.Anti-communist language remains on the books in several states, and in California, at least, it’s not going anywhere. After facing backlash from Republicans, veterans and the Vietnamese American community, the bill’s sponsor, the Democratic assemblyman Rob Bonta, announced last week that he would not move forward with the bill.... Lest there be any misunderstanding: members of the Communist party are currently allowed to hold government jobs in every American state. Such laws were passed around the country during the so-called red scare of the 20th century, but they have long since been ruled unconstitutional by the supreme court.
Communist party members may still be barred from US citizenship - Jodi Dean - From: the Guardian: The applicant cannot become a citizen if they are a member of the Communist party or have been within the past 10 years, have advocated communism’s establishment in the US, have published or circulated “subversive” materials advocating communism, or are affiliated with any groups that do so. The restriction stems from the 1952 McCarran-Walter Act (also known as the Immigration and Nationality Act) which collected and reorganized immigration law. It has been amended since its original passing, but Section 313, which bans members of the Communist party, remains.
Google Workers Discussed Tweaking Search Function to Counter Travel Ban —Days after the Trump administration instituted a controversial travel ban in January 2017, Google employees discussed ways they might be able to tweak the company’s search-related functions to show users how to contribute to pro-immigration organizations and contact lawmakers and government agencies, according to internal company emails. The email traffic, reviewed by The Wall Street Journal, shows that employees proposed ways to “leverage” search functions and take steps to counter what they considered to be “islamophobic, algorithmically biased results from search terms ‘Islam’, ‘Muslim’, ‘Iran’, etc.” and “prejudiced, algorithmically biased search results from search terms ‘Mexico’, ‘Hispanic’, ‘Latino’, etc.” The email chain, while sprinkled with cautionary notes about engaging in political activity, suggests employees considered ways to harness the company’s vast influence on the internet in response to the travel ban. Google said none of the ideas discussed were implemented. "These emails were just a brainstorm of ideas, none of which were ever implemented,” a company spokeswoman said in a statement. “Google has never manipulated its search results or modified any of its products to promote a particular political ideology—not in the current campaign season, not during the 2016 election, and not in the aftermath of President Trump’s executive order on immigration. Our processes and policies would not have allowed for any manipulation of search results to promote political ideologies.”The disclosure is certain to fuel complaints by many Republicans that Google, a unit of Alphabet Inc., stifles conservative viewpoints online and promotes a liberal worldview. Those longstanding concerns have received more attention recently from some GOP congressional leaders, as well as President Trump himself, in the run-up to the 2018 midterm elections.
White House Drafts Order to Look Into Google, Facebook (Bloomberg) -- The White House is considering a draft executive order for President Donald Trump that would instruct federal antitrust and law enforcement agencies to open probes into the practices of Alphabet Inc.’s Google, Facebook Inc., and other social media companies. Bloomberg News obtained a draft of the order, which a White House official said was in its early stages and hasn’t been run past other government agencies. Separately, Lindsey Walters, deputy White House press secretary, said in an emailed statement that the document isn’t the result of an official White House policy making process. The document instructs U.S. antitrust authorities to “thoroughly investigate whether any online platform has acted in violation of the antitrust laws.” It instructs other government agencies to recommend within a month after it’s signed, actions that could potentially “protect competition among online platforms and address online platform bias.” Read the Executive Order draft on bias in online platforms The document doesn’t name any companies. If signed, the order would represent a significant escalation of Trump’s aversion to Google, Facebook, Twitter and other social media companies, whom he’s publicly accused of silencing conservative voices and news sources online. A Facebook spokeswoman said the company has no comment on the order. The press offices of Google and Twitter didn’t respond Saturday to emails and telephone calls requesting comment.
Trump To Investigate Google, Facebook Under New Executive Order- Bloomberg -- According to a an early draft of an Executive Order (EO), the White House will instruct federal law enforcement and antitrust agencies to launch investigations into the business practices of Facebook, Google and other social media companies, according to Bloomberg which says it has seen the draft. While not specifically calling out companies by name, the document orders US antitrust officials to "thoroughly investigate whether any online platform has acted in violation of the antitrust laws," while instructing other agencies to return recommendations within a month of Trump signing the EO which could potentially "protect competition among online platforms and address online platform bias." The document doesn’t name any specific companies. If signed, the order would represent a significant escalation of Trump’s antipathy toward Google, Facebook, Twitter and other social media companies, whom he has publicly accused of silencing conservative voices and news sources online....The draft order directs that any actions federal agencies take should be “consistent with other laws" -- an apparent nod to concerns that it could threaten the traditional independence of U.S. law enforcement or conflict with the First Amendment, which protects political views from government regulation. –Bloomberg Last month, Trump tweeted that "Social Media is totally discriminating against Republican/Conservative voices. Speaking loudly and clearly for the Trump Administration, we won’t let that happen. They are closing down the opinions of many people on the RIGHT, while at the same time doing nothing to others."
Draft executive order from Trump would crack down on tech companies - The White House has a draft of an executive order demanding that federal antitrust and law enforcement agencies look into the practices of tech giants Google and Facebook, among others, claiming that the tech companies are biased against conservative voices. The draft, which was obtained by Bloomberg and the Washington Post, asks that antitrust agencies “thoroughly investigate whether any online platform has acted in violation of the antitrust laws.”The document is intended to address alleged bias in online platforms. Twitter CEO Jack Dorsey and Facebook COO Sheryl Sandberg faced questions about that in Senate hearings earlier this month. It is very much in the draft stages, a White House aide told Bloomberg, and has not been shown to other government agencies. Deputy White House Press Secretary Lindsey Walters told Bloomberg in an email that the document is not the product of any official White House policy process. Three White House aides have denied authorship of the draft, which leaked just a few days before Attorney General Jeff Sessions is set to meet with state attorneys general regarding tech companies’ practices. The meeting was set up to help Sessions determine whether there is an antitrust case to be made against some of the companies. Neither the National Economic Council nor the Office of Science and Technology Policy is responsible for the document, according to the Post. Tech companies have been concerned, according to the Washington Post, that President Trump could try to take action against them, based on his disdain for companies like Twitter and Facebook and what they say are baseless claims that they are censoring conservative voices. While the majority of Americans think that there is some form of censorship occurring in large tech companies, even right-wing organizations like the American Legislative Exchange Council worry that the executive order could interfere with First Amendment rights.
Google China Prototype Links Searches to Phone Numbers - The Intercept. -- Google built a prototype of a censored search engine for China that links users’ searches to their personal phone numbers, thus making it easier for the Chinese government to monitor people’s queries, The Intercept can reveal.The search engine, codenamed Dragonfly, was designed for Android devices, and would remove content deemed sensitive by China’s ruling Communist Party regime, such as information about political dissidents, free speech, democracy, human rights, and peaceful protest.Previously undisclosed details about the plan, obtained by The Intercept on Friday, show that Google compiled a censorship blacklist that included terms such as “human rights,” “student protest,” and “Nobel Prize” in Mandarin. Leading human rights groups have criticized Dragonfly, saying that it could result in the company “directly contributing to, or [becoming] complicit in, human rights violations.” A central concern expressed by the groups is that, beyond the censorship, user data stored by Google on the Chinese mainland could be accessible to Chinese authorities, who routinely target political activists and journalists. Sources familiar with the project said that prototypes of the search engine linked the search app on a user’s Android smartphone with their phone number. This means individual people’s searches could be easily tracked – and any user seeking out information banned by the government could potentially be at risk of interrogation or detention if security agencies were to obtain the search records from Google.
Google’s privacy chief confirms existence of ‘censored Chinese search engine’ Project Dragonfly - Google has confirmed for the first time the existence of Project Dragonfly, reportedly a censored search engine for China, but a company executive told the US Senate he did not know details of the project.“There is a Project Dragonfly,” Google’s chief privacy officer Keith Enright told a Senate hearing on Wednesday, but maintained that he was “not clear on the contours of what is in scope or out of the scope for that project”.Project Dragonfly was earlier reported to be the code name for Google’s secret mission to develop a censored search app specifically for China, which would blacklist websites on human rights, democracy, religion and other issues deemed sensitive by the Chinese government, according to a report published last month by The Intercept. “My understanding is that we’re not close to launching a search product in China, and whether we eventually could, or would, remains unclear,” Enright said repeatedly in response to lawmakers’ questions regarding the company’s plan for a China-focused search engine and its implications for censorship and human rights.The privacy chief added that if plans to launch a search product for China were in the final stages, he and his team would already be actively engaged in conducting privacy reviews to ensure the product adhered to Google’s privacy values. “Any product we launch anywhere in the world will reflect our values and commitment we made to our users,” Enright said. Google executives made similar remarks in August, saying the company was “not close to launching” a search product in China, according to reports citing an internal meeting with employees. The executives reportedly said the company was still considering how to do business in the country. Google chief executive Sundar Pichai said that plans to re-enter China with a search engine were “exploratory” and in the “early stages”, according to Bloomberg.
Former Google Scientist Tells Senate to Act Over Company’s “Unethical and Unaccountable” China Censorship Plan - A scientist who quit Google over its plan to build a censored search engine in China has told U.S. senators that some company employees may have “actively subverted” an internal privacy review of the system.Jack Poulson resigned from Google in August after The Intercept reported that a group of the internet giant’s staffers was secretly working on a search engine for China that would remove content about subjects such as human rights, democracy, peaceful protest, and religion. “I view our intent to capitulate to censorship and surveillance demands in exchange for access to the Chinese market as a forfeiture of our values and governmental negotiating position across the globe,” Poulson told his bosses.Now, Poulson has sent a letter to members of the Senate Committee on Commerce, Science, and Transportation ahead of a hearing on Wednesday at which Keith Enright, Google’s chief privacy officer, is scheduled to appear. Despite a major internal and external backlash over a period of almost two months, Google has so far refused to publicly address questions about its China censorship plan, code-named Dragonfly. The appearance of Enright on Capitol Hill is likely to be the first time a representative of the company is forced to provide answers about the project. In his letter to the senators, Poulson said that there has been “a pattern of unethical and unaccountable decision making from company leadership” at Google. He called on the lawmakers to pressure Enright to respond to concerns raised by 14 leading human rights groups, who said in late August that Dragonfly could result in Google “directly contributing to, or [becoming] complicit in, human rights violations.”
An internal war is raging over Google’s China search engine, says the man who walked out over the plans -- An internal war is raging at Google over the company's project to build a censored search engine in China. That's the picture painted by Jack Poulson, a scientist who quit Google last month over the China plans, in a letter to the Senate Committee on Commerce, Science, and Transportation. Poulson revealed that there are two sides emerging at Google: Those who want to discuss and expose information about the secret plans, dubbed "Project Dragonfly," and those who want to suppress transparency. The scientist said Google management is "clamping down" on whistleblowers trying to lift the lid on Project Dragonfly details, while many employees also "fear the possible consequences" of speaking out. In his letter to Senator John Thune, he listed four details about the China plans he has been able to verify. These included linking phone numbers to search queries and only including Chinese government-approved air quality data in results. "Each of these details was internally escalated by other employees to no avail, and many of them were discussed extensively on internal mailing lists; I understand that such discussion has since been increasingly stifled," Poulson continued. His words about the two factions at Google echo the reporting of The Intercept, which has led the way in exposing details about Google's ambition to return to China after exiting in 2010. The website reported last week that Google management responded furiously when they discovered that secret details about Project Dragonfly were being circulated in a confidential memo authored by an engineer.
Facebook Is Giving Advertisers Access to Your Shadow Contact Information -- Last week, I ran an ad on Facebook that was targeted at a computer science professor named Alan Mislove. Mislove studies how privacy works on social networks and had a theory that Facebook is letting advertisers reach users with contact information collected in surprising ways. I was helping him test the theory by targeting him in a way Facebook had previously told me wouldn’t work. I directed the ad to display to a Facebook account connected to the landline number for Alan Mislove’s office, a number Mislove has never provided to Facebook. He saw the ad within hours.One of the many ways that ads get in front of your eyeballs on Facebook and Instagram is that the social networking giant lets an advertiser upload a list of phone numbers or email addresses it has on file; it will then put an ad in front of accounts associated with that contact information. A clothing retailer can put an ad for a dress in the Instagram feeds of women who have purchased from them before, a politician can place Facebook ads in front of anyone on his mailing list, or a casino can offer deals to the email addresses of people suspected of having a gambling addiction. Facebook calls this a “custom audience.” You might assume that you could go to your Facebook profile and look at your “contact and basic info” page to see what email addresses and phone numbers are associated with your account, and thus what advertisers can use to target you. But as is so often the case with this highly efficient data-miner posing as a way to keep in contact with your friends, it’s going about it in a less transparent and more invasive way. Facebook is not content to use the contact information you willingly put into your Facebook profile for advertising. It is also using contact information you handed over for security purposes and contact information you didn’t hand over at all, but that was collected from other people’s contact books, a hidden layer of details Facebook has about you that I’ve come to call “shadow contact information.” I managed to place an ad in front of Alan Mislove by targeting his shadow profile. This means that the junk email address that you hand over for discounts or for shady online shopping is likely associated with your account and being used to target you with ads.
Facebook Sued By PTSD-Stricken Moderator Over Rape, Torture, Bestiality, Beheadings, Suicide And Murder - A Northern California woman hired to review flagged Facebook content has sued the social media giant after she was "exposed to highly toxic, unsafe, and injurious content during her employment as a content moderator at Facebook," which she says gave her post traumatic stress disorder (PTSD). Selena Scola moderated content for Facebook as an employee of contractor Pro Unlimited, Inc. between June 2017 and March of this year, according to her complaint. "Every day, Facebook users post millions of videos, images, and livestreamed broadcasts of child sexual abuse, rape, torture, bestiality, beheadings, suicide, and murder," the lawsuit reads. "To maintain a sanitized platform, maximize its already vast profits, and cultivate its public image, Facebook relies on people like Ms. Scola – known as “content moderators” – to view those posts and remove any that violate the corporation’s terms of use.""You’d go into work at 9am every morning, turn on your computer and watch someone have their head cut off. Every day, every minute, that’s what you see. Heads being cut off," one content moderator recently told the Guardian. According to the lawsuit, Facebook content moderators are asked to review over 10 million potentially rule-breaking posts per week, with an error rate of less than one percent - and a mission to review all user-reported content within 24 hours. Making the job even more difficult is Facebook Live, a feature that allows users to broadcast video streams on their Facebook pages. The Facebook Live feature in particular "provides a platform for users to livestream murder, beheadings, torture, and even their own suicides, As a result of having to review said content, Scola says she "developed and suffers from significant psychological trauma and post-traumatic stress disorder (PTSD)" - however she does not detail the specific imagery she was exposed to for fear of Facebook enforcing a non-disclosure agreement (NDA) she signed.
Big Tech’s Business Model Is Broken, Report Says --Silicon Valley tech giants can’t be trusted to police themselves and should be subject to tougher regulation, including around their pattern of acquiring competitors to accumulate ever-larger stores of user data, according to a critical new report released Monday.The business models powering digital advertising platforms like Facebook Inc. and Alphabet Inc.’s Google still undermine user privacy and incentivize disinformation campaigns despite recent efforts by tech companies to prevent abuse, says the report from Harvard’s Shorenstein Center on Media, Politics and Public Policy and New America, a left-leaning Washington-based think tank. The report lands amid a broad discussion in the industry and in Washington, D.C., about how aggressively lawmakers should move on Silicon Valley’s biggest firms, and comes just days before the Senate Commerce Committee is due to hold a high-profile hearing on the privacy practices of several large tech companies. Google, Amazon.com Inc., Twitter Inc. and Apple Inc. will all send privacy executives to testify at the Senate hearing, along with telecommunications firms AT&T Inc. and Charter Communications Inc. A Facebook representative isn’t scheduled to attend.The authors argue that the federal government should take the lead on regulations rather than states like California, which recently passed a tough new privacy law that the industry broadly opposes. Most big tech companies have said they are open to sensible regulation as long as it doesn’t overly curtail their ability to offer personalized products and services to consumers. Mr. Ghosh and his co-author argue that protecting user data will require a combination of stronger privacy laws and limits on how much data the tech companies can gobble up. They add that tech companies also need to provide additional disclosure about how their information is used to serve them ads, far beyond what is currently shared. Over the course of the year, the tech companies have announced changes to their privacy practices and have tried to take steps to shore up user trust. But those changes don’t go far enough to address the deeper problems of the platforms, which are still reliant on maintaining user attention, according to Messrs. Ghosh and Scott, who wrote a separate report in January critical of the big tech companies.
Uninformed Consent - Harvard Business Review -- Technology has advanced far beyond the browser cookies and retargeting that allow ads to follow us around the internet. Smartphones now track our physical location and proximity to other people — and, as researchers recently discovered, can even do so when we turn off location services. We can disable the tracking on our web browsers, but our digital fingerprints can still be connected across devices, enabling our identities to be sleuthed out. Home assistants like Alexa listen to our conversations and, when activated, record what we’re saying. A growing range of everyday things — from Barbie dolls to medical devices — connect to the internet and transmit information about our movements, our behavior, our preferences, and even our health. A dominant web business model today is to amass as much data on individuals as possible and then use it or sell it — to target or persuade, reward or penalize. The internet has become a surveillance economy.What’s more, the rise of data science has made the information collected much more powerful, allowing companies to build remarkably detailed profiles of individuals. Machine learning and artificial intelligence can make eerily accurate predictions about people using seemingly random data. Companies can use data analysis to deduce someone’s political affiliation or sexuality or even who has had a one-night stand. As new technologies such as facial recognition software and home DNA testing are added to the tool kit, the surveillance done by businesses may soon surpass that of the 20th century’s most invasive security states. The obvious question is, How could consumers let this happen? As a behavioral scientist, I study how people sometimes act against their own interests. One issue is that “informed consent” — the principle companies use as permission to operate in this economy — is something of a charade. Most consumers are either unaware of the personal information they share online or, quite understandably, unable to determine the cost of sharing it — if not both.
Trump Gets 100 Countries to Sign On to His U.N. Drug War Plan, Ignoring Changing Thinking on Human Rights and Legalization -- The Trump administration announced last week that it would kick off the United Nations General Assembly with an event inviting member states to join a revamped U.S. war on drugs. On Monday, Donald Trump got his drug meeting — but not quite everyone signed on. Billed as a “Global Call to Action on the World Drug Problem,” the State Department said that 130 countries had agreed to a nonnegotiable text, but missing from that list were a number of key U.S. allies. For the U.N. member countries, some realpolitik over dealing with the U.S. was involved, but analysts of international affairs and drug policy said that many governments chafed at the way the document and meeting were proposed — even if the U.S.’s powerful position at the world body meant that more than 100 countries signed up anyway. “I think a lot of delegations, including a lot of delegations that ended up signing, found it entirely offensive that one country would take it upon itself with a few others, pronounce a text as nonnegotiable, and then pressure countries to sign up because they said so,” said John Walsh, director for drug policy and the Andes at the Washington Office on Latin America. Advocates like Walsh expressed concern at the substance of the U.S. program, as well. “The U.S. is trying to lead us backwards now to the failed policies that led us here,” he said. Some U.S.-allied governments echoed those concerns, albeit in softer terms. Speaking to Norwegian TV, the country’s Foreign Minister Ine Eriksen Soreide said the call had “too little focus on the health side of drug policy,” explaining why Norway had turned it down like all the other Nordic countries. New Zealand’s Prime Minister Jacinda Ardern made similar remarks. Nigeria and Brazil were the largest countries to refrain, and Germany was the biggest in Europe to decline. Others who kept away included Uruguay, which has legal marijuana market, and South Africa, which days ago legalized private use of the drug.
The Opioid Crisis Response Act: Looking Ahead, Ignoring the Present - Jurist - On September 17, 2018, the U.S. Senate voted overwhelmingly (99-1) in support of the Opioid Crisis Response Act (OCRA) of 2018. OCRA proposes a series of measures addressing the devastating, long-term impacts of opioid addiction and abuse nationally. Building on efforts previously authorized in 2016 via the Comprehensive Addiction and Recovery Act (CARA) and the 21st Century Cures Act, OCRA seeks to launch and fund an array of opioid prevention and response efforts through multiple federal agencies in collaboration with state and local governments.OCRA’s proposed measures, detailed below, are based on a series of bipartisan hearings and unquestionably well-intended. Someday, they may even help curtail opioid-related morbidity and mortality in the U.S.Today, however, 150 more Americans will succumb to opioid addiction or misuse. Since the epidemic’s inception in 1999 to 2017, approximately 670,000 lives have been lost to abuse and misuse of these drugs in prescription (e.g. oxycodone, morphine, methadone) and illicit (e.g. heroin, fentanyl) forms. Hundreds of thousands more are admitted each year to emergency departments or seek life-saving treatments. When the Secretary of the Department of Health and Human Services (HHS) issued a national state of public health emergency (PHE) on October 26, 2017, the epidemic was instantly established as the worst ever PHE since the term originated in 2001. Sadly, without substantial and immediate public health interventions, millions of current and future opioid users will continue to face severe physical and mental impacts. Like many Americans, chances are you know or have witnessed someone who is at risk of, or died from, opioid abuse. These contemporary deaths are preventable but require significantly greater efforts and resources than Congress promises via OCRA. As examined below, its plan to address the opioid epidemic has long-term possibilities, but tens of thousands of Americans may die in the short-term waiting for federal collaborative efforts to take effect.
It’s Now Three Women Accusing Kavanaugh with “Significant Evidence” of Gang Rape - Pam Martens - Yesterday, two of the most trusted reporters in America, Ronan Farrow and Jane Mayer of The New Yorker,reported that Senate Democrats are investigating a second sexual assault allegation against Supreme Court nominee Brett Kavanaugh. The second charge comes from a woman who attended Yale University when Kavanaugh was a freshman there in the 1983-84 school year. The women, Deborah Ramirez, told the reporters that “she remembers Kavanaugh had exposed himself at a drunken dormitory party, thrust his penis in her face, and caused her to touch it without her consent as she pushed him away.”Like Dr. Christine Blasey Ford, the first woman to accuse Kavanaugh of sexually assaulting her when she was 15 and he was 17, Ramirez is also calling for the FBI to investigate the incident. Dr. Ford, a professor in clinical psychology in California, is expected to testify this coming Thursday before the Senate Judiciary Committee in a public hearing.Former Federal prosecutors have been regularly appearing on news programs stating that while investigating sexual assault is not the role of the FBI, re-opening the background check that it did on Brett Kavanaugh is not only necessary, but critically needed, under the circumstances. Neither Chuck Grassley, the Chair of the Senate Judiciary Committee that is conducting the confirmation hearings for Kavanaugh, nor the White House that requested the original background check, have been willing to re-open the FBI’s investigation into Kavanaugh – leading millions of Americans to lose faith in the process of putting a judge in a lifetime position on the highest court in the nation. Farrow and Mayer note that by his freshman year at Yale, “Kavanaugh was eighteen, and legally an adult.” If the Ramirez allegation is true, that would mean that Kavanaugh perjured himself before the Senate Judiciary Committee write the reporters because he “swore under oath that as a legal adult he had never ‘committed any verbal or physical harassment or assault of a sexual nature.’ ”
The Presumption of Guilt – WSJ - The last-minute accusation of sexual assault against Supreme Court nominee Brett Kavanaugh is an ugly spectacle by any measure. But if there is a silver lining, it is that the episode is providing an education for Americans on the new liberal standard of legal and political due process. As Ms. Hill and Sen. Hirono aver, the Democratic standard for sexual-assault allegations is that they should be accepted as true merely for having been made. The accuser is assumed to be telling the truth because the accuser is a woman. The burden is on Mr. Kavanaugh to prove his innocence. If he cannot do so, then he is unfit to serve on the Court. This turns American justice and due process upside down. The core tenet of Anglo-American law is that the burden of proof always rests with the person making the accusation. An accuser can’t doom someone’s freedom or career merely by making a charge. The accuser has to prove the allegation in a court of law or in some other venue where the accused can challenge the facts. Otherwise we have a Jacobin system of justice in which “J’accuse” becomes the standard and anyone can be ruined on a whim or a vendetta. Another core tenet of due process is that an accusation isn’t any more or less credible because of the gender, race, religion or ethnicity of who makes it. A woman can lie, as the Duke lacrosse players will tell you. Ms. Hirono’s standard of credibility by gender would have appalled the civil-rights campaigners of a half century ago who marched in part against Southern courts that treated the testimony of black Americans as inherently less credible than that of whites. Yet now the liberal heirs of those marchers want to impose a double standard of credibility by gender. A third tenet of due process is the right to cross-examine an accuser. The point is to test an accuser’s facts and credibility, which is why we have an adversarial system. The denial of cross-examination is a major reason that campus panels adjudicating sexual-assault claims have become kangaroo courts. It’s worth quoting from the Sixth Circuit Court of Appeals ruling this month in Doe v. Baum on a sexual-assault case at the University of Michigan. “Due process requires cross-examination in circumstances like these because it is ‘the greatest legal engine ever invented’ for uncovering the truth,” wrote Judge Amul Thapar. “Not only does cross-examination allow the accused to identify inconsistencies in the other side’s story, but it also gives the fact-finder an opportunity to assess a witness’s demeanor and determine who can be trusted. So if a university is faced with competing narratives about potential misconduct, the administration must facilitate some form of cross-examination in order to satisfy due process.”
WaPo Concealed Kavanaugh Party Claim From Public After Coordinating With Accuser- Strassel - The Washington Post has been busted by WSJ columnist Kimberly Strassel for intentionally withholding information from their reporting of Christine Blasey Ford's claim that Brett Kavanaugh sexually assaulted her at a high school party in the early 1980s, which "further undercuts the Ford accusation." Strassel obtained a copy of the email WaPo sent to Mark Judge, one of the teenagers Ford claims was at the party - revealing that the Post knew the names of those at the alleged party, as well as the fact that one of them was a woman - Ford's "longtime" friend Leland Keyser (then Ingham).Publicly, the Post reported that there were four boys at the party the same day they revealed to Judge that they knew there was a girl. What's more, WaPo now writes: "Before her name became public, Ford told The Post she did not think Keyser would remember the party because nothing remarkable had happened there, as far as Keyser was aware." And instead of reporting this, the Post allowed Ford's claim tha there were four boys at the party stand until word of Keyser's alleged attendance became public knowledge late last week. Scroll down to read:
‘I know his heart. This is not consistent with Brett.’ Kavanaugh’s tearful wife backs embattled Supreme Court nominee as he ADMITS high school drinking but DENIES sex assault saying he was a VIRGIN and pleads for a ‘fair hearing’ Supreme Court pick Brett Kavanaugh launched an all-out bid to save his nomination Monday, blasting 'smears' against him and flat-out denying charges of sexual assault in a dramatic TV interview where his wife vouched for his character and 'heart.'Kavanaugh sat for a joint interview with Fox News alongside his wife, Ashley, where he directly took on accusations by a two women who have made explosive assault allegations against him from decades ago.'What I know is the truth, and the truth is I've never sexually assaulted anyone,' Kavanaugh told Fox News' Martha MacCallum in an interview where the couple were seated side-by-side. His wife said she never believed the accusations that have imperiled the nomination of her husband, an accomplished judge on the D.C. Circuit Court of Appeals Court, to reach the Supreme Court.'No. I know Brett I 've known him for 17 years. And this is not at all character … It's really hard to believe. He's decent. He's kind. He's good. I know his heart. This is not consistent with Brett,' Ashley Kavanaugh said. In another explosive part of the interview, Kavanaugh said he was a virgin in high school and 'many years thereafter' as he sought to fend off charges.'We're talking about allegations of sexual assault. I've never sexually assaulted anyone. I did not have sexual intercourse, or anything close to sexual intercourse in high school or for many years thereafter, and the girls from the schools I went to and I were friends,' he told MacCallum. 'So you're saying through all these years that are in question that you were a virgin?' the host asked him. 'That's correct,' Kavanaugh responded. 'Never had sexual intercourse with anyone in high school?' she followed up. 'Correct.'
Kavanaugh’s Fox News Interview: Dark Money Transforms Him into a High School Virgin Who Went to Church Every Sunday -- Pam Martens - Last evening we got a sneak peek at what all of that coaching of Supreme Court nominee Brett Kavanaugh at the White House over the past two months has done for his demeanor under fire. He’s now effectively been turned into a cross between Fred Rogers, the beloved host of the children’s show Mister Rogers’ Neighborhood and Ward Cleaver, the wholesome dad in the 1950s sitcom, Leave It To Beaver.In an interview last evening with Fox News host Martha MacCallum, Kavanaugh sat next to his wife Ashley and did everything just short of singing the refrain “look at me I’m Sandra Dee, lousy with virginity.” Kavanaugh told MacCallum that he was a virgin throughout his high school years and “many years after.” What he focused on at his elite private high school known as Georgetown Preparatory in North Bethesda, Maryland was “academics and athletics” and “going to church every Sunday at Little Flower,” Kavanaugh said on the news program.But when MacCallum directed a question to Ashley Kavanaugh about whether there should be an FBI investigation, Brett Kavanaugh jumped in and answered the question instead and avoided a direct response. (Read the full transcript here.) Lying to the FBI frequently results in criminal charges and jail time.The Kavanaugh self-portrait on Fox News stands in stark contrast to how Kavanaugh describes his high school days on his yearbook page and how his close friend and former classmate, Mark Judge, has described the high school experience in two books he authored – one titled Wasted: Tales of a Gen-X Drunk. The humble, respectful-of-women profile Kavanaugh carefully crafted last evening also stands in sharp disagreement with the sexual assault allegations against him that have surfaced from at least three women. Given this study in contradictory personas, it’s relevant to note that Kavanaugh has serious dark money backing his nomination and has undergone an extraordinary amount of coaching at the White House since he was first nominated in early July. That coaching has become even more intense as the sexual assault allegations surfaced.
The Kavanaugh Nomination’s Money Trail Leads Back to Clarence Thomas -- Pam Martens -The dark money stench now surrounding the Brett Kavanaugh Supreme Court nomination bears a striking resemblance to what happened in the backdoor effort to land Clarence Thomas onto the Supreme Court in 1991. After credible testimony from Anita Hill over egregious sexual harassment by the nominee, Thomas was confirmed in a 52 to 48 vote by the Senate on October 15, 1991. That was the narrowest margin for a Supreme Court nominee in more than a century.In 2011 it emerged that Virginia Thomas, wife of Clarence Thomas, had received at least $1,051,214 in compensation from the Heritage Foundation from 1999 to 2007 while Thomas sat as a Supreme Court justice. Despite his legal requirement to report that income and its source, he had failed to do either and had to amend years of his financial disclosure reports.The Heritage Foundation has been heavily funded over the years by the billionaire Koch brothers, Charles and David Koch, the majority owners of the fossil fuels conglomerate, Koch Industries. Greenpeace calls the Heritage Foundation “Koch Industries’ Climate Denial Front Group” and reports that it has received $5,716,325 from Koch foundations from 1997 through 2015. That funding is just the tip of the iceberg, however. Tens of millions more have come from the Koch network, a group of super wealthy corporate heirs who meet semi-annually to strategize on how to assert their will on Washington. As we have previously reported, Koch-related individuals are now spread in pivotal posts throughout the Trump administration. (See How Did Koch Industries’ Law Firm Grab Control at the White House.)
If Brett Kavanaugh’s Calendar Doesn’t Show the Binge Drinking He Boasted of in His Yearbook, What Does It Prove? - The New York Times reports that Brett Kavanaugh plans to offer the Senate Judiciary Committee pages from his high school social calendar which include no mention of a scheduled engagement with a teenage Christine Blasey in the summer of 1982, as if that somehow proves that he did not attempt to rape her at a drunken house party. It is, of course, blindingly obvious that teenage boys do not typically use calendars to schedule criminal acts of sexual assault, or, for that matter, to make a written record of their illegal activities after the fact. But in Kavanaugh’s case, there is an obvious way to establish how incomplete of a record his calendar is: comparing pages for that summer, and the ensuing school year, to the regular binge-drinking sessions he referred to in his high school yearbook. In his yearbook entry for the 1982-83 school year, Kavanaugh boasted about his leading role in a club devoted to drinking 100 kegs of beer, and referred to episodes of drunken vomiting, a wild “FFFFFFFourth of July” party, and run-ins with the police during outings at the beach. As my colleague Peter Maass explained, the cryptic references to those drunken episodes from Kavanaugh’s yearbook entry have been described in greater detail by his close friend, Mark Judge, in two memoirs, “Wasted: Tales of a Gen X Drunk” and “God and Man at Georgetown Prep.” According to Blasey, Judge was in the room when Kavanaugh assaulted her, both as a witness and an accomplice. Judge has denied that account, but his memoir details repeated episodes of blacking out while drinking, and having no memory of his activities even the following day. According to CNN, in “God and Man at Georgetown Prep,” Judge describes the 100-keg quest in detail and also writes of a bachelor party that he and friends threw for a teacher at someone’s house, which included one of those kegs and a stripper. If Kavanaugh was present at that party, or helped to plan it, it would be interesting to see if it is mentioned on his calendar, and if the name of every guest was listed.
Kavanaugh’s fate rests with Sen. Collins - Sen. Susan Collins (R-Maine), a prominent moderate voice and one of the Senate’s most conscientious members, is poised to make or break Brett Kavanaugh’s chance at becoming a Supreme Court justice.A big reason for that is several Senate colleagues are waiting to see what Collins will do before announcing their positions.Senate Democratic Leader Charles Schumer (N.Y.) has asked centrist members of his caucus to keep their powder dry on Kavanaugh until they know where all Republicans stand. And GOP senators will need to take a position if Senate Majority Leader Mitch McConnell (R-Ky.) follows through with Monday’s promise to eventually hold an up-or-down vote on the floor.Over her 22-year Senate career, Collins has built a reputation as a fair-minded, practical swing vote who is willing to stand up to Republican leadership and presidents from her own party. She voted against former President Clinton’s impeachment in 1999, helped craft a compromise to get past a major partisan impasse over circuit court nominees in 2005, was a key player in sinking a proposal to repeal ObamaCare last year and has consistently criticized President Trump for controversial statements since he took office.She also voted against Betsy DeVos and Scott Pruitt, Trump’s controversial picks to head the Department of Education and the Environmental Protection Agency, respectively. Kavanaugh will have virtually no chance at confirmation if Collins says she believes Christine Blasey Ford’s allegation that he sexually assaulted her at a high school party in 1982, according to people on both sides of the partisan Supreme Court fight.On the flip side, it will be very difficult for Democrats to muster the votes to stop him if Collins rejects Ford’s accusations as insufficiently substantiated and announces support for Kavanaugh.Senate Republican aides think that Sen. Lisa Murkowski (R-Alaska) will likely vote the same way as Collins, who thus far has played a more vocal role in the debate over Kavanaugh. “We’re talking about a jury of one: Susan Collins,” said a senior GOP aide.
Sex Crimes Prosecutor Emerges As GOP Pick To Question Kavanaugh, Ford - The fact that all 11 Republican members on the Senate Judiciary Committee are men, it was somewhat inevitable they would bring in outside female assistance to question Supreme Court nominee Brett Kavanaugh and his accuser Christine Blasey Ford about her allegation of sexual assault. According to multiple reports tonight, Arizona prosecutor Rachel Mitchell has emerged as Senate Republicans’ choice. The Washington Post reports that Mitchell, the sex crimes bureau chief for the Maricopa County Attorney's office in Phoenix, is the likely candidate, according to two people familiar with the decision. Senate Judiciary Committee Chairman Charles E. Grassley (R-Iowa) has just confirmed that it will be Mitchell, noting that she "has experience prosecuting sex crimes." Grassley said he appointed a woman from the outside in order to “depoliticize” the process and prevent a rerun of Anita Hill’s testimony at Justice Clarence Thomas’s 1991 confirmation hearing. “The whole point is to create an environment where it’s what Doctor Ford has asked for, to be professional and to not be a circus,” said Grassley.
Four Key Undecided Senators Meet Privately on Kavanaugh Vote - Four Senators whose votes will be key to deciding whether Supreme Court nominee Brett Kavanaugh is confirmed met behind closed doors Thursday evening without reaching any conclusion, one of them said. “We’re still talking,” said Senator Joe Manchin, a Democrat from West Virginia, who hasn’t said how he’ll vote. “There’s no decisions made on anything I can assure you of that.” He added: “There’s some concerns that people have and they’re going to try and close the loop.” Those in the meeting also included three Republicans who also haven’t said how they’ll vote on Kavanaugh: Susan Collins of Maine, Jeff Flake of Arizona and Lisa Murkowski of Alaska. All three then went into a meeting of all Republican senators in the Capitol. The lawmakers huddled after testimony Thursday from Christine Blasey Ford, who alleged Kavanaugh sexually assaulted her while in high school, and from Kavanaugh, who denied it. Manchin didn’t specify what concerns the lawmakers had. He called both Ford and Kavanaugh credible. Republicans have a 51-49 majority in the Senate. Manchin is one of the Democratic senators running for re-election in a state where Trump won by a wide margin.
Kavanaugh nomination live updates: Committee moves him forward, Senate Judiciary to ask administration for FBI background probe - Judge Brett Kavanaugh's nomination to the Supreme Court moved out of the Senate Judiciary Committee but the floor vote is delayed a week as the panel asks the administration to direct an FBI investigation into "current credible" sexual assault claims. The Republican-led committee wrapped a crucial vote on advancing the nomination to the full Senate — a day after nearly nine hours of emotional and at times wrenching testimony from the judge and his accuser, Christine Blasey Ford, on her allegation ofsexual assault when they were teens.As we await the White House’s response to the committee’s request for an additional FBI probe into sexual assault claims, ABC News' Meridith McGraw and Alex Mallin have compiled how the president has answered questions on this very subject over the past 10 days.Those answers have varied from:- "The FBI said they really don't do that" - The FBI has already investigated - Why didn't someone call 36 yrs ago? - "Look at what Joe Biden said"
The Kavanaugh hearing: A spectacle of political filth and reaction --The day-long, nationally televised hearing before the Senate Judiciary Committee, devoted to allegations of sexual assault against Supreme Court nominee Brett Kavanaugh, was an exercise in political degradation.The Democratic Party has chosen to wage its campaign against the nomination of Kavanaugh on the most right-wing basis possible. Rather than focus public attention on Kavanaugh’s ultra-right political views—his opposition to abortion rights, his rubber-stamping of police violence, his consistent defense of corporate interests against workers and consumers—or on his lengthy record as a partisan legal thug going back to the Clinton impeachment, the Democrats engineered a hearing in which all attention was focused on Kavanaugh’s personal conduct as a teenager. Six broadcast and cable networks provided all-day coverage, even pre-empting their own evening news programs when the hearing ran past 6:30 p.m. Eastern Time. The national television audience was subjected to hour after hour of “grilling” by Democrats on such matters as references to flatulence and vomiting in Kavanaugh’s high school year book, whether Kavanaugh and his high school classmates drank beer on weeknights, and the meaning of obscure entries in a day-to-day calendar kept by a 17-year-old boy.Perhaps the low point came when Senate Judiciary Committee lawyer Rachel Mitchell—brought in for the day to serve as an “expert” questioner so that Republican senators wouldn’t be seen as bullies of Kavanaugh’s accuser, Christine Blasey Ford—took Judge Kavanaugh through a carefully worded denial that he had ever exposed himself or placed his penis next to a Yale woman classmate’s face while they were both drunk at a party. What has any of this to do with the social and political issues confronting tens of millions of working people in the United States? How does the obsessive focus on the 36-year-old actions of a teenage boy in any way advance the struggle against the reactionary politics of Judge Kavanaugh and President Trump today?
Kavanaugh Vote Delayed One Week As Trump Orders New FBI Investigation - Brett Kavanaugh's nomination has been stalled on the Senate floor after GOP leadership agreed Friday afternoon to a one-week delay for an FBI investigation into allegations of sexual harassment against the Supreme Court nominee. Earlier in the day, the Judiciary Committee approved Kavanaugh's advancement by a vote of 11-10 along party lines."There's going to be a supplemental FBI background investigation" said Majority Whip Sen. John Cornyn (R-TX) in a Friday statement, which he said would last no longer than a week. Cornyn, Majority Leader Mitch McConnell, R-Ky., and a number of other Republicans had huddled in McConnell's office Friday afternoon to discuss how to proceed on the confirmation following a call from three key senators to delay the vote. -CNBCImmediately prior to the Judiciary Committee voted, GOP Senator Jeff Flake of Arizona - who is not running for reelection - attempted to push for a delay pending an FBI investigation, however he was unsuccessful after Chairman Grassley rushed the vote. Flake then vowed to vote no on the full floor decision, and was joined by GOP Senator Lisa Murkowski of Alaska, just one day after Dianne Feinstein cornered her in a hallway for an apparent "talking to."
Kavanaugh Hearing: Why Republicans Fired their Sex Crimes Questioner Midstream - Pam Martens - Apparently, somebody on the Republican staff of the Senate Judiciary Committee forgot to give Rachel Mitchell the memo advising her that she was supposed to lob softball questions at Brett Kavanaugh, the Supreme Court nominee now accused by two separate women of sexual assault and by a third of aiding and abetting the gang rape of women during his teen years.Rachel Mitchell is the long-tenured sex crimes prosecutor from Maricopa County, Arizona who was hired by the Republican majority on the Senate Judiciary Committee to avoid the optics of 11 male Republicans questioning Dr. Christine Blasey Ford yesterday over the intimate details of her sexual assault allegations against Kavanaugh.The Republicans allowed Mitchell to conduct all questioning of Ford, who testified first, on behalf of Republicans, and to proceed with questioning Kavanaugh in the afternoon session that followed. The way the proceeding worked up until the point that Mitchell was fired from her post was that the Chair of the Committee, Senator Chuck Grassley, would name a Republican Senator and then designate his five minute slot for questions to Mitchell to conduct on his behalf. After that five minutes was up, Grassley would then call on a Democratic Senator, who would personally conduct the questioning, not using Mitchell as a surrogate.This is the point in Mitchell’s questioning of Kavanaugh that doomed Mitchell to get her walking papers. After this exchange, Mitchell continued to sit at her little desk in the hearing room but her voice was never again heard. The Republican Senators from that point on took over their own five minute slots. But instead of questioning Kavanaugh, most of the time was spent lavishing praise on the nominee or demonizing Democrats.
Supreme Court clash puts regulatory nominees on back burner - — The protracted and hyperpartisan confirmation process for Supreme Court nominee Brett Kavanaugh has complicated the Senate's efforts to advance financial regulatory nominees before the midterm elections. The Federal Reserve Board still has three vacant seats. Trump administration picks for the Consumer Financial Protection Bureau, National Credit Union Administration and Ginnie Mae are also still in limbo. Rather than move quickly, Kavanaugh's nomination has been mired in controversy over sexual assault allegations. On Friday, GOP senators appeared headed toward holding a vote on the appeals court judge. But the bitterly partisan Supreme Court fight has taken up most of the energy in Congress, casting doubt on how quickly other nominees can advance. Kathy Kraninger, an official at the Office of Management and Budget, has attracted strong criticism from Democrats opposed to her running the CFPB. Bloomberg News “The question is with the Kavanaugh thing going on, what impact is that going to have? Is that going to blow everything up and people are just going to hunker down and wait for the election or wait until after the election,” . “Even then, I don’t know if you’re going to get a ton of confirmation votes.” The three Fed nominees are Carnegie Mellon professor Marvin Goodfriend (nominated in November 2017), Kansas Bank Commissioner Michelle Bowman (April 2018) and Nellie Liang, a Brookings Institution fellow and former Fed staffer who was named earlier this month. Also pending are Kathy Kraninger, whom the White House named in June to run the CFPB, Rodney Hood for a seat on the NCUA's board and Michael Bright to head up Ginnie Mae. Besides the Senate's scheduling posing an obstacle, a number of the nominees have baggage of their own. Kraninger has attracted strong criticism from Democrats opposed to her running the consumer bureau. Meanwhile, Goodfriend's nomination has been in doubt for months after Sen. Rand Paul, R-Ky., indicated opposition. (The GOP holds a slim 51-to-49 seat majority in the Senate.) More recently, a report in Politico pointed to some Republican concerns about Liang, who helped craft a number of the Fed's post-crisis tools for supervising large banks.
They Think It Would Be Fun to Run a Newspaper: Billionaires Buying Up Media Is Another Step Toward Oligarchy - The announcement that Time magazine would be bought by software CEO Marc Benioff highlighted the growing trend of billionaires buying up media outlets. While media moguls have always been wealthy—with press barons (Rupert Murdoch, Michael Bloomberg, Donald Newhouse, etc.) still well-represented on Forbes’ running list of the world’s billionaires—what distinguishes this new breed of press magnate is that they bought their media properties with fortunes made in other industries.Some, like Benioff, come out of the tech industry; tech tycoons like Amazon’s Jeff Bezos, eBay’s Pierre Omidyar and Steve Jobs’ widow Laurene Powell Jobs have profited from a tech boom (or bubble) that gives them plenty of cash to spend. Others come out of the financial sector, which has doubled its share of the US economy over the past 70 years. Real estate developer Mort Zuckerman—who owned The Atlantic from 1980–1999, the Daily News from 1993–2017, and still owns US News & World Report, which he bought in 1984—was a harbinger of non-media money coming into the media sector. Wherever their money comes from, the new moguls’ interest in buying up outlets is generally less the direct profit involved—media profits are typically declining as the old local monopoly model erodes—and more the power that comes with control of the public conversation. Being a latter-day Citizen Kane is a personal ego boost, to be sure, and provides a platform for an individual ideology—whether it’s Philip Anschutz’s social conservatism or Omidyar’s civil libertarianism. But it also can be a tool to advance more personal interests: Sheldon Adelson is a fervent supporter of Israel and its Likud Party, but he bought a Las Vegas paper when it was running critical coverage of a lawsuit that threatened to shut him out of the gambling business. Bezos’ purchase of the Washington Post instantly made him the most powerful media figure in the nation’s capital—a handy position to be in when your company is seeking multi-billion-dollar government contracts. Whatever the motivation, billionaires buying up media is another step toward oligarchy, as a handful of super-wealthy individuals assume power over crucial news outlets, both locally and nationally.
What’s in a Resume? A Lot, When It Comes to Trump Staffers - ProPublica - It’s no surprise that hundreds of staffers on 2016 presidential and congressional campaigns parlayed their work into political jobs in the Trump administration. But you wouldn’t always know about those roles from reading their financial disclosures, which sometimes reveal them and sometimes don’t. Details about the past jobs and work histories of these staffers — from on-the-ground field work for Donald Trump’s presidential campaign to fundraising for super PACs supporting Republican congressional candidates — can be found in the place where people tend to exhaustively list their credentials: their resumes. The Washington-based transparency group Property of the People took information from ProPublica’s Trump Town database and submitted Freedom of Information Act requests seeking the resumes of more than 2,700 political appointees in the Trump administration.We’ve added the documents the group collected to the Trump Town app and created a separate page so that you can examine them yourself. We’ll update the page as we get more. Think of the resulting information as the equivalent of batting statistics on baseball cards, in this case for staffers in the Trump administration: It’s data viewed as fascinating by some, and as minutiae by others. The resumes received so far largely cover staffers with midlevel and junior positions, and many in this initial batch come from the departments of Agriculture, Interior and Transportation. They reveal a wide range of roles played by some of them in propelling Trump into the White House — and also their sometimes quirky employment histories.
Hedge Fund CIO- Trump Is Childish, Self-Centered, Bullying, Full Of Shit - But Authentically So - Eric Peters, CIO of One River Asset Management - “Trump represents authenticity,” said the Australian investor, reflecting. “Childish, self-centered, misogynistic, money-focused, bullying, full of shit – but authentically so,” he continued. As an American abroad, you discover most discussions weave their way back to The Donald, what his presidency says about the state of our union, our world, humanity. Nearly every foreigner I meet is appalled. But intrigued, perplexed. Most are drawn to the spectacle in the way that attracts our gaze to horrific car wrecks. “The more transgressions that come out, the more authentic he becomes.” And it’s true. “Mainstream politicians are the ultimate distillation of inauthenticity.” In pursuit of becoming what people want them to be, they become nothing, often worse. "Who’s the most authentic politician you can think of globally? Scarily, given he’s horrible - to me at least - on so many levels, I reckon it’s Trump. Possibly because… at least he’s a wolf in wolf’s clothing." There’s a price to pay for Bill Clinton’s serial infidelities wrapped in slick lies, Bush’s tragic neo-conservative wars waged on pretense. Not a single banker was incarcerated for 2008’s corruption, conflicts of interest. Obama, earth’s most powerful commander-in-chief, proved unwilling to shield black children from everyday slaughter in his hometown Chicago ghettos. As Barak was Bush’s legacy, Trump is the legacy of Obama’s empty eloquence. We lose faith in institutions when priests prey on their young flock, then find shelter in the churches shadow.
Just Two NY Times Paragraphs On Russiagate - A Striking Admission - This week The New York Times published an epic 10,000 word piece entitled "The Plot to Subvert and Election - Unraveling the Russia Story So Far."It's essentially the Times' summary of everything that can be definitively established thus far after two years of national obsession and inquiry into alleged Russian election meddling and influence that supposedly ushered Trump into the White House in 2016. The massive investigative piece has the following lede at the top: For two years, Americans have tried to absorb the details of the 2016 attack — hacked emails, social media fraud, suspected spies — and President Trump’s claims that it’s all a hoax. The Times explores what we know and what it means.But what do we learn? Buried among the nearly 200 paragraphs of seemingly endless intelligence "claims" wherein the reader will be disappointed to find no smoking gun detailing any actual conspiracy of meddling and collusion, we find two specific paragraphs — which though contradictory — are incredibly revealing about the nature of the whole 'Russiagate' scandal. First, in paragraph 5 we are told by the Times journalists: President Trump’s Twitter outbursts that it is all a “hoax” and a “witch hunt,” in the face of a mountain of evidence to the contrary, have taken a toll on public comprehension. And as Moon of Alabama blog astutely observes, after one-hundred-and-seventy-eight paragraphs featuring repetition of "unproven intelligence claims, spin around a few facts and lots of innuendo" the same authors finally admit that Trump is actually right. Near the end of an exhaustively long piece meant to chronicle the "evidence" that few are likely to ever read in full, we find this bombshell candid admission:Mr. Trump’s frustration with the Russian investigation is not surprising. He is right that no public evidence has emerged showing that his campaign conspired with Russia in the election interference or accepted Russian money. In an astounding contradiction within a single NYT article, the "mountain of evidence" at the opening becomes Trump "is right that no public evidence has emerged" by the story's closing. Enough said?...
UK Begged Trump Not To Declassify Russia Docs; Cited Grave Concerns Over Steele Involvement - The British government "expressed grave concerns" to the US government over the declassification and release of material related to the Trump-Russia investigation, according to the New York Times. President Trump ordered a wide swath of materials "immediately" declassified "without redaction" on Monday, only to change his mind later in the week by allowing the DOJ Inspector General to review the materials first. The Times reports that the UK's concern was over material which "includes direct references to conversations between American law enforcement officials and Christopher Steele," the former MI6 agent who compiled the infamous "Steele Dossier." The UK's objection, according to former US and British officials, was over revealing Steele's identity in an official document, "regardless of whether he had been named in press reports." We would note, however, that Steele's name was contained within the Nunes Memo - the House Intelligence Committee's majority opinion in the Trump-Russia case.Steele also had extensive contacts with DOJ official Bruce Ohr and his wife Nellie, who - along with Steele - was paid by opposition research firm Fusion GPS in the anti-Trump campaign. Trump called for the declassification of FBI notes of interviews with Ohr, which would ostensibly reveal more about his relationship with Steele. Ohr was demoted twice within the Department of Justice for lying about his contacts with Fusion GPS.
Deputy Attorney General Rod Rosenstein is reportedly on the way out - Deputy Attorney General Rod Rosenstein is resigning Monday, according to Axios, which cited a source familiar with the matter.NBC News' Pete Williams, however, reported that Rosenstein would not resign of his own accord, and that he will only depart if the White House fired him. He will refuse to resign if asked to do so, Williams added.Rosenstein was at the White House when Williams reported this on the air. However, President Donald Trump is in New York for the United Nations General Assembly.Bloomberg has reported that the White House accepted Rosenstein's resignation, citing a person familiar with the matter.Rosenstein's expected resignation will immediately raise questions about the fate of the ongoing investigation by special counsel Robert Mueller, who is probing Russian interference in the 2016 presidential election, and possible obstruction of justice by Trump.The special counsel's office declined to comment on the report.Rosenstein's job security was called into question after The New York Times reported last week that the No. 2 DOJ official had discussed invoking the 25th amendment to remove Trump, and had also talked about surreptitiously recording the president.Other reports, however, suggested that Rosenstein was being sarcastic when he made those comments.In an interview with radio host Geraldo Rivera over the weekend, Trump hinted that he was considering firing Rosenstein."Certainly it's being looked at in terms of what took place, if anything took place. I'll make a determination sometime later but I don't have the facts," Trump said when asked if he would cut Rosenstein loose over the reports. Rosenstein oversees the special counsel investigation, and has appointed Mueller to run the Russia probe last year, after Attorney General Jeff Sessions recused himself from the case.
Trump to meet with Rosenstein after conflicting reports about deputy attorney general's departure - President Donald Trump will meet with Deputy Attorney GeneralRod Rosenstein on Thursday amid swirling reports that the No. 2 Justice Department official's departure is imminent."At the request of Deputy Attorney General Rod Rosenstein, he and President Trump had an extended conversation to discuss the recent news stories," White House press secretary Sarah Huckabee Sanders said in a statement."Because the President is at the United Nations General Assembly and has a full schedule with leaders from around the world, they will meet on Thursday when the President returns to Washington, D.C."Axios published a bombshell report Monday that Rosenstein is resigning, citing sources with knowledge.But the report was contradicted by other news outlets, including from NBC News' Pete Williams, who reported that Rosenstein would not resign of his own accord after his off-the-cuff comments about possibly recording and removing Trump were revealed last week. He will only depart if the White House fired him and will refuse to resign if asked to do so, Williams reported. News of Rosenstein's potential departure was a "huge shock" to the Justice Department, Williams added. A Justice Department official told The New York Times that if Rosenstein is out, then Solicitor General Noel Francisco would oversee the Russia investigation.
“The Strategy Was to Try and Do Something Really Big”: Trump Wanted to Nuke Rosenstein to Save Kavanaugh’s Bacon – At the beginning of one of the most consequential weeks of Donald Trump’s presidency, an enormous smoke bomb was detonated in the news cycle when Axios, deeply wired in Trump’s West Wing, reported that Deputy Attorney General Rod Rosenstein had resigned. Quickly, a head-spinning array of conflicting accounts were put forth: had he been fired? Was he heading to the White House to be fired—or was he going to a regularly scheduled meeting? Finally, Sarah Huckabee Sanders brought a measure of clarity by tweeting that whatever was going to happen to Rosenstein would happen on Thursday, when the president returned from New York. For all the morning’s madness, there may have been an underlying logic. Over the weekend, as Brett Kavanaugh’s prospects appeared increasingly imperiled, Trump faced two tactical options, both of them fraught. One was to cut Kavanaugh loose. But he was also looking for ways to dramatically shift the news cycle away from his embattled Supreme Court nominee. According to a source briefed on Trump’s thinking, Trump decided that firing Rosenstein would knock Kavanaugh out of the news, potentially saving his nomination and Republicans’ chances for keeping the Senate. “The strategy was to try and do something really big,” the source said. The leak about Rosenstein’s resignation could have been the result, and it certainly had the desired effect of driving Kavanaugh out of the news for a few hours.
Axios Publishes Text Of Rod Rosenstein Resignation Letter - One day after Axios White House Correspondent Jonathan Swan sent markets reeling by reporting that Attorney General Rod Rosenstein had "verbally resigned" in a conversation with White House Chief of Staff John Kelly, Swan is back with what he claims is the text of the resignation letter that the DOJ sent to the White House on Rosenstein's behalf.The letter, which was reportedly written in the voice of Attorney General Jeff Sessions, declared that Sessions was "confident" that Noel Francisco, the solicitor general who is said to be more amenable to Trump, would dutifully carry out the oversight of the Mueller probe. Importantly, Axios said the statement's veracity was confirmed by three sources. Read the brief statement in full below: Rod Rosenstein has served the Department of Justice with dedication and skill for 28 years. His contributions are many and significant. We all appreciate his service and sincerely wish him well. Matt Whitaker, my Chief of Staff for the last year, will instill confidence and uphold the integrity of the Department as the second highest law enforcement officer in the Nation.Finally, I am confident that Noel Francisco will oversee the special counsel with a commitment to justice as Acting Attorney General for this matter. As I have said before, the American people deserve an expeditious resolution of this investigation consistent with the rule of law.According to Axios, talks over Rosenstein's resignation were effectively foiled after Axios published its misleading report, setting off a frenzy of media speculation that forced the White House to reconsider its tactics after markets tanked and allies of Trump warned against letting Rosenstein leave. Rosenstein initially offered his resignation to Kelly on Friday, and negotiations had been ongoing over the weekend. Still, there's one important piece of the puzzle that Axios doesn't yet know:What I don't yet know: How exactly the conversation between Rosenstein and Kelly changed on Monday. I don't know what terms he had demanded and how, if at all, his demands changed from Friday to Monday. As of now, it's possible that he remains Deputy Attorney General for the foreseeable future. He meets with President Trump on Thursday.
Trump Considers Keeping Rosenstein On, Advisers Say —President Trump told advisers he is open to keeping Deputy Attorney General Rod Rosenstein on the job, and allies of the No. 2 Justice Department official said Tuesday he has given them the impression he doesn’t plan to quit. That raised at least the possibility that a roller coaster of a week could end with no major shake-up in the top ranks of the Justice Department, even as White House and Justice officials cautioned that it was impossible to know for sure what Mr. Trump would do. Mr. Rosenstein oversees special counsel Robert Mueller’s investigation into Russian meddling in the 2016 election and any links to Trump campaign officials. Mr. Trump has dismissed the probe as “a witch hunt.” The president has told advisers that he wants to hear directly from Mr. Rosenstein about reports that he discussed secretly recording the president and recruiting cabinet members to remove him from office, according to people who have spoken to the president. That meeting is scheduled for Thursday afternoon. The president’s willingness to hear out Mr. Rosenstein signaled to advisers that he harbors doubts about whether the top official in fact sought to have him ousted him from the Oval Office, these people said. The issue arose after the New York Times reported that Mr. Rosenstein floated the idea in early 2017, something he has strongly denied. Republicans in the House were preparing a subpoena for memos allegedly detailing Mr. Rosenstein’s comments on surreptitiously recording the president, according to a person familiar with the matter.
Trump: I’d ‘prefer’ to keep Rosenstein, may delay meeting -- President Trump signaled Wednesday he is leaning toward keeping Rod Rosenstein on the job, after an explosive report alleged that the deputy attorney general had suggested secretly recording the president last year.“I would much prefer keeping Rod Rosenstein,” Trump said at press conference on the sidelines of the United Nations General Assembly on Wednesday evening.“Many people said I had the right to absolutely fire him. He said he did not say it. He said he does not believe that. And nobody in this room believes it, by the way,” Trump said.Trump also said he may delay the meeting with Rosenstein, scheduled for Thursday, so it does not distract from the confirmation proceedings of Supreme Court nominee Brett Kavanaugh, who is set to testify on Capitol Hill along with one of the women accusing him of sexual misconduct in high school. Rosenstein has been under the microscope since The New York Times reported Friday that he proposed secretly taping Trump in spring 2017 and drumming up support among Cabinet officials to invoke the 25th Amendment to force Trump from office for being unfit. Rosenstein has challenged the report, calling it “inaccurate” and “factually incorrect.” Since, speculation has mounted that Trump could fire Rosenstein. On Monday, conflicting reports emerged that Rosenstein expected to be fired or prepared to resign over the developments. On Monday, the White House announced that Trump and Rosenstein would meet Thursday to discuss the news reports. Some of Trump’s allies have argued that the president should fire Rosenstein if the allegations are true. Others, including many Democrats on Capitol Hill, have warned against it, pointing to the damaging implications for the Russia investigation, which Rosenstein is overseeing at the Justice Department.
Read: Trump's bizarre, rambling solo press conference on Kavanaugh, Rosenstein, and more - President Donald Trump touched on a wide array of topics during a rambling solo press conference in New York on Wednesday evening, and fielded several questions about his embattled Supreme Court nominee Judge Brett Kavanaugh. Kavanaugh has recently been accused of three separate claims of sexual assault and misconduct as a young man. But Trump, who earlier in the day called the allegations “ridiculous,” devoted several minutes to stridently defending the nominee’s reputation. According to the president, the claims are the result of Democrats orchestrating “a big fat con job.” Trump claimed that Democrats had “destroyed a man’s reputation,” and that Kavanaugh was “one of the highest quality people that I have ever met.”Trump also weighed in on topics as varied as the US’s trade relationship with China and the Israel-Palestinian peace process. He seized the opportunity to reiterate his hatred for the North American Free Trade Agreement (NAFTA), which he is currently trying to renegotiate with Canada. Read the complete transcript of the press conference below.
GOP Leaders Threaten Rosenstein With Subpoena If He Refuses To Testify About McCabe Memos - Roughly nine months after Deputy AG Rod Rosenstein testified before the House Judiciary Committee that he would not fire Special Counsel Robert Mueller without "good reason", House Republicans are again moving to haul him in for questioning following a steady drumbeat of pressure that has intensified over the past week. This comes after they said they would subpoena the memos themselves late Thursday. According to the Washington Post, Rosenstein will be called back to Capitol Hill to testify, and if he refuses, the House will subpoena him, said Rep. Mark Meadows, who tweeted Friday that GOP leadership had agreed on a plan.Leadership has agreed to call Rod Rosenstein before Congress, for a closed door hearing with our panel investigating, so he can explain his alleged comments on "wiring" POTUS--as well as other inconsistent statements. If Mr. Rosenstein fails to show up, we will subpoena him.— Mark Meadows (@RepMarkMeadows) September 28, 2018 The calls for Rosenstein's testimony have intensified since the New York Times published a bombshell story last Friday alleging that Rosenstein tried to organize an attempt to oust President Trump via the 25th amendment, and that he had suggested surreptitiously recording the president. However, the story, which was drawn from memos allegedly taken by former FBI Deputy Director Andrew McCabe, has been disputed by some people who attended a meeting with McCabe and Rosie the day before Mueller's appointment was announced. Since then, reports about Rosenstein's imminent firing/resignation have proven false, as Trump has said he wants to hear Rosenstein's side of the story. The two, who met briefly Thursday, will meet again next week. A spokeswoman for House Speaker Paul Ryan said Friday that the Judiciary Committee "is calling the shots" and that "we support the Judiciary Chairman." As WaPo points out, House Republicans attempted to curry the votes to impeach Rosenstein, claiming that his Rosenstein's DOJ wasn't complying with an investigation into the genesis of the Mueller probe. But in recent weeks House leaders had changed their tune, saying that Rosie had become cooperative. Trump has also considered firing him at least twice.
House Intel Committee Votes To Release 53 Trump-Russia Transcripts - The House Intelligence Committee on Friday voted to release 53 transcripts related to the panel's Trump-Russia investigation, reports The Hill, "teeing up a massive document dump ahead of the November midterm elections." The transcripts will include testimony from several current and former key members of Trump's orbit, including Steve Bannon, Jared Kushner, Jeff Sessions, Donald Trump Jr., Roger Stone and Director of National Intelligence Dan Coats. Also included will be interviews with former Obama administration officials such as former Director of National Intelligence, James Clapper as well as former deputy Attorney General Sally Yates. The transcripts — 53 in total — will not immediately be released but will now go to the Office of the Director of National Intelligence for a classification review, which could take days or weeks to complete.The documents are poised to revive discussion about the House panel’s Russia investigation, which dramatically broke down into partisan infighting and culminated in Republicans moving to end the probe in a party-line vote last March. Democrats have accused the GOP leaders of ending the probe prematurely. -The Hill House GOP released a report on their findings in April which found no collusion between the Trump campaign and Russia.
Obama White House counsel Gregory Craig under scrutiny by prosecutors in offshoot of Mueller probe WaPo - Federal prosecutors have stepped up their investigation of prominent Washington attorney Gregory Craig for work he conducted at his former law firm on behalf of the Ukrainian government in 2012, an effort coordinated by Paul Manafort, according to people familiar with the matter. Shortly before Manafort pleaded guilty to charges of conspiracy and obstruction this month, attorneys for Craig received requests for information from prosecutors in the Southern District of New York, who are investigating Craig’s activities as an offshoot of the broader probe led by special counsel Robert S. Mueller III, according to one person with knowledge of the exchange. Craig’s case — and that of two Washington lobbyists who worked with Manafort on Ukrainian matters — were referred last April to New York prosecutors, who appear to be focused on whether the three failed to register as foreign agents while working with Manafort’s Ukrainian clients. A spokesman for the U.S. attorney’s office of the Southern District of New York declined to comment. No charges have been filed, and representatives for the three men have expressed confidence that their clients did not violate the law. Still, the investigation of Craig — a White House counsel for President Barack Obama — along with lobbyists Vin Weber and Tony Podesta, has shaken Washington’s lobbying and legal community, which until recently had faced little scrutiny of its representation of foreign clients. “There is a rising level of concern, particularly from law firms providing services to foreign governments,” said Joshua Ian Rosenstein, an expert on foreign lobbying registration compliance at the Sandler Reiff law firm.
Voting Machine Used in Half of US Is Vulnerable to Attack, Report Finds - Election machines used in more than half of U.S. states carry a flaw disclosed more than a decade ago that makes them vulnerable to a cyberattack, according to a report to be delivered Thursday on Capitol Hill.The issue was found in the widely used Model 650 high-speed ballot-counting machine made by Election Systems & Software LLC, the nation’s leading manufacturer of election equipment. It is one of about seven security problems in several models of voting equipment described in the report, which is based on research conducted last month at the Def Con hacker conference.The flaw in the ES&S machine stood out because it was detailed in a security report commissioned by Ohio’s secretary of state in 2007, said Harri Hursti, an election-security researcher who co-wrote both the Ohio and Def Con reports. “There has been more than plenty of time to fix it,” he said.While the Model 650 is still being sold on the ES&S website, a company spokeswoman said it stopped manufacturing the systems in 2008. The machine doesn’t have the advanced security features of more-modern systems, but ES&S believes “the security protections on the M650 are strong enough to make it extraordinarily difficult to hack in a real world environment,” the spokeswoman said via email. The machines process paper ballots and can therefore be reliably audited, she said.The Def Con report is the latest warning from researchers, academics and government officials who say election systems in the U.S. are at risk to tampering. Earlier this month, the National Academies of Sciences, Engineering, and Medicine recommended U.S. states move away from voting machines that don’t include paper ballots. And senior intelligence officials have described Russian efforts to interfere in the 2018 midterm elections as deep, real and ongoing. Voting security took on new urgency following the 2016 election. Russian hackers were accused by U.S. intelligence agencies of probing the election infrastructure of at least 21 states, breaching a small number of voter-registration databases, and promoting divisive propaganda on social media. Moscow denies the allegations. U.S. officials say there is no evidence vote tallies were manipulated.
Lawmakers urge Fed to follow through on reg relief for midsize banks — Nearly 30 House Republicans are calling on the Federal Reserve Board to use new authority to relieve all banks with less than $250 billion of assets from enhanced supervision that was established after the crisis. The recent regulatory law raised the asset threshold for "systemically important financial institutions" from $50 billion, but gave the Fed discretion to continue subjecting banks between $100 billion and $250 billion to heightened measures. In a letter dated Friday, the 30 House members — led by Rep. Barry Loudermilk, R-Ga. — called on the Fed to de-designate all firms with less than $250 billion of assets. “Due to the fact that there have been no past or present findings of systemic risk, we strongly believe that the Fed should take quick action to completely remove these firms, both domestic and international, from all SIFI-associated regulations,” the members said in the letter, which was addressed to Fed Vice Chairman of Supervision Randal Quarles. Quarles, along with Federal Deposit Insurance Corp. Chair Jelena McWilliams, Comptroller of the Currency Joseph Otting, and National Credit Union Administration Chairman J. Mark McWatters, will testify to the Senate Banking Committee Tuesday on their progress in implementing the reg relief law — known as S 2155. Fed Chairman Jerome Powell has said previously that the Fed will continue to review firms between $100 billion to $250 billion to determine if they should be subject to enhanced prudential standards. And Quarles has said the Fed is working on a framework to determine how to regulate those banks. “We are concerned that you have expressed the intention to further review these firms in order to determine how to regulate them. ... While we fully recognize the need to monitor systemic risk and to take action in cases where risks to financial stability and/or safety and soundness emerge, the lack of any current risk posed by these firms provides a sound basis for such action in the immediate future,” the letter said. The House letter follows a similar effort by some Republicans in the Senate.
Why Dodd-Frank Is a Protection Racket for Banks - Ten years after the crisis, financial regulation leaves taxpayers holding the bag for banks’ safety net.Regulation is best understood as a dynamic game of action and response, in which either regulators or regulatees may make a move at any time. In this game, regulatees tend to make more moves in pursuit of safety-net subsidies than regulators can or do make to stop them. Moreover, regulatee moves tend to be faster and more creative, and to have less-transparent consequences than the moves that regulators make.In modern times, banking crises have occurred when managers pursued concentrated risks that made their institutions increasingly vulnerable, but generated a series of substantial and long-lasting safety-net subsidies until things finally went south. As I explore in my new INET working paper, such subsidies can prove long-lasting because the regulatory cultures of almost every country in the world today embrace—in one form or another—three strategic elements:
- Politically-Directed Subsidies to Selected Borrowers: The policy framework either explicitly requires—or implicitly rewards—institutions for making credit available to favored classes of borrowers at a subsidized interest rate. In recent crises, subsidized loans to homeowners played this role. However, the next crisis may feature loans to current and former students, pension funds, and state and local entities;
- Subsidies to Bank Risk-Taking: The policy framework commits government officials to offer on subsidized terms explicit and/or implicit (i.e., conjectural) guarantees of repayment to banks’ depositors and other kinds of counterparties engaging in complex forms of bank deal making;
- Defective Monitoring and Control of the Subsidies: The contracting and accounting frameworks used by banks and government officials leave no paper trail. They are careful not to make anyone directly accountable for reporting or controlling the size of these subsidies in a conscientious or timely fashion.
Taken together, the first two elements of the subsidization strategy invite commercial and investment banks to use the safety net to extract wealth surreptitiously from ordinary taxpayers. To keep subsidy-generating leverage high, the bulk of the subsidies banks receive are promptly paid out to top managers and to shareholders in the form of dividends and share repurchases. The rest is shifted forward and backward: mostly to large creditors and politically favored borrowers, but a few dollars might be reserved for like-minded academic researchers and community groups.
Why regulators need to take another look at bank capital - In the 10 years since the financial crisis, regulators and banks have made many changes to strengthen the financial system. There’s perhaps no bigger change than the significant increase in the amount of capital banks of all sizes now hold as an insurance policy against losses. We agree that these higher capital levels have helped to make the system safer, but asking banks to hold too much capital, the wrong kind or making the calculation methodology too complex can also have negative repercussions for consumers and the broader economy. Now is the right moment for regulators to get bank capital levels right, so banks can fully support the communities they serve, without compromising the safety and soundness improvements over the last 10 years. We’re pleased to see regulators asking the right questions, namely, “Are there ways to make improvements?”Banks finance their operations in a number of ways, but capital is fundamental. Before gathering deposits and taking on debt comes capital. Because of the risk to investors, it is also the most expensive. Capital stands as a wall between those who lend to banks and a loss on their investment. But only the earnings left after paying depositors, creditors and everyone else — the profits — go to the capital investors. Too much capital, and those profits can be spread very thin, discouraging existing capital backers and making it hard to get new ones. Too little capital, and creditors become nervous. So do regulators. That’s why adequate amounts of high quality capital are a shared interest of bank management and bank supervisors. The very appropriate question that bankers and regulators are asking is, “Does it really take thousands of pages of regulation and guidance to give life to that basic principle?” Earlier this year, when Federal Reserve Vice Chairman for Supervision Randal Quarles counted 24 different capital and other loss absorbing requirements, he concluded, “I am reasonably certain that 24 is too many.”
SEC Enforcement Wanes on Trump’s Watch - Jerri-lynn Scofield - Stephanie Avakian, the co-director of enforcement for the Securities and Exchange Commission (SEC), last week delivered a speech in Dallas in which she defended the agency’s enforcement program despite a drop in fines collected and cases brought during the 2018 fiscal year. Statistics such as the number of actions the SEC brought in a fiscal year and the dollar amount of judgments and orders obtained in that year are interesting so far as they go, but they only tell us so much. Put simply, statistics do not provide a full and meaningful picture of the quality, nature, and effectiveness of the Division’s efforts. The speech is clearly an attempt to get out in front of soon-to-be released figures– as yet unavailable, as the Commission’s fiscal year closes on September 30. Earlier accounts suggest these figures are declining, thus continuing a downward trend, according to the WSJ: Total fines ordered through SEC enforcement activity fell 7.2% in 2017 to about $3.8 billion, the lowest total since 2013, according to SEC figures.Nearly a year ago, Steven Peikin, the SEC’s other co-director of enforcement, announced the agency would abandon the “broken windows” enforcement strategy pursued under SEC chair Mary Jo White (see this November 2017 post, SEC Soon to Have Five Sitting Commissioners; Budget Constraints Will Stymie Enforcement). As summarised by Compliance Week in a May article:As I discussed in my November post, the SEC’s enforcement record during White’s tenure was much less impressive than what she took credit for. Some of the drop in fines collected and cases brought during the last year represents the abandonment of the broken windows approach. I find myself agreeing with Republican Congressman Bill Huizenga about how such statistics can be manipulated, as spelled out in Compliance Week:
SEC Decision Begins Process of Reforming Corporate Governance -- The Securities and Exchange Commission (SEC) should be commended for its decision last week to rescind two previously issued guidance letters that had allowed third-party firms known as “proxy advisors” to wield undue influence over the shareholder proposal process. SEC Chairman Jay Clayton pulled the letters ahead of a planned November public roundtable to discuss federal regulation of the shareholder voting process at public companies. The move is a welcome first step in reforming an essential part of the corporate governance process. SEC rules governing the proxy process are at the center of investor participation in, and influence over, corporate governance at public companies. The letters, prior staff guidance about investment advisers’ responsibilities in voting client proxies, resulted in investment advisers becoming over-reliant on proxy advisory firms for voting recommendations on shareholder proposals. As a result, these firms came to wield undue influence over shareholder proposal process. No surprise, then, that a growing body of evidence shows an inherent conflict of interest exists within proxy advisory firms, including the apparent conflict of offering both ratings and consulting services simultaneously to the same client.When coupled with the inability of company leaders to have input into the recommendations of proxy advisory firms — even in cases where the information is incorrect or misleading — and the lack of transparency in the analysis process, the role of proxy advisors deserves a closer look to ensure that shareholders benefit from changes sought through the shareholder proposal process.
SEC charges Tesla CEO Elon Musk with fraud - Tesla CEO Elon Musk has been sued by the Securities and Exchange Commission for fraud, according to court documents filed Thursday. Sources close to the company told CNBC the company was also expecting to be sued, though Tesla was not named as a defendant in the complaint.Shares of the automaker fell more than 13 percent in extended trading Thursday. The stock is roughly 30 percent below its 52-week high of $387.46.The SEC complaint alleges that Musk issued "false and misleading" statements and failed to properly notify regulators of material company events. The SEC held a press conference Thursday evening regarding the complaint. Among other remedies, the SEC is seeking to bar Musk from serving as an officer or director of a publicly traded company if found guilty."A chairman and CEO of a public company has important responsibilities to shareholders," Stephanie Avakian, co-director of the SEC's division of enforcement, said during the press conference. "Those responsibilities include the need to be scrupulous and careful about the truth and accuracy of statements made to the investing public, whether those statements are made in traditional forms such as a press release or an earnings call or through less formal methods such as Twitter or other social media." "Neither celebrity status nor reputation as a technological innovator provide an exemption from the federal securities laws," she said. Musk called the allegations "unjustified" and said he "never compromised" his integrity. "This unjustified action by the SEC leaves me deeply saddened and disappointed," Musk said in a statement to CNBC. "I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way."
SEC Sues Elon Musk for Fraud, Seek to Bar Him Permanently from Executive, Board Role in a Public Company -- Yves Smith - As we’ve pointed out regularly, the SEC has been hobbled by Congress for so long that its enforcement actions focus mainly on insiders trading cases. To see the agency file a suit against Elon Musk, and (as we’ll see) on such short notice means they are highly confident they can prove that Musk violated securities laws. The Wall Street Journal describes how Musk gave the SEC the middle finger: The SEC had crafted a settlement with Mr. Musk—approved by the agency’s commissioners—that it was preparing to file Thursday morning when Mr. Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in proceeding with the agreement, according to people familiar with the matter. After the phone call, the SEC rushed to pull together the complaint that it subsequently filed, the people said.It’s one thing to have some preliminary discussions and then decide that you’ll see the SEC in court. It’s quite another to complete an agreement, have the SEC commissioners bless it, and then renege.And indeed, it looks like the SEC has a slam dunk case. As most readers will recall, Musk tweeted that he has the financing lined up to take Tesla private: Am considering taking Tesla private at $420. Funding secured. — Elon Musk (@elonmusk) August 7, 2018 Analysts who called Tesla’s Investor Relations department about the details of the financing didn’t get more information but were reassured that the “funding secured” statement was accurate. Musk later tweeted other details consistent with a deal being structured and ready to go: My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla.” This story was front page news for a day or so until it became clear that this going private plan was pure varporware. Musk had had four conversation about the general idea with a sovereign wealth fund, presumably from the Middle East, since it repeatedly asked Musk to open a facility there. Musk did not agree to the idea. Again from the complaint regarding the very last meeting: The July 31 meeting lacked discussion of even the most fundamental terms of a proposed going-private transaction. For example, there was no discussion at the July 31 meeting of (1) any dollar amount or specific ownership percentage for the Fund’s investment in a going-private transaction; (2) any acquisition premium to be offered to current Tesla shareholders; (3) any restrictions on foreign ownership of a significant stake in Tesla; (4) the Fund’s available liquid capital; (5) whether the Fund had any past experience participating in a going-private transaction; (6) any regulatory hurdles to completion of a going-private transaction; or (7) the board approval process necessary to take Tesla private.
Taxpayers On The Hook For Millions In Losses After Ex-JPM Traders' Leveraged Power Bet Goes Sour -- BusinessWeek on Tuesday published a story about GreenHat Energy LLC, an ill-fated power speculator that bought a sizable position in long-dated financial transmission rights. FTRs, as they're more widely known, are an obscure power derivative designed to allow distributors to hedge against sudden spike in transmission costs when parts of the grid are temporarily taken offline (due to inclement weather or some other hazard). Houston-based Greenhat opened the positions via PJM Interconnection LLC, which oversees a wholesale electric grid serving 65 million people between Chicago and Washington, DC. GreenHat opened its FTR position in 2015. By April 2016, the first signs of a problem had emerged. Around that time, another trader on PJM known as DC energy, one of the largest buyers of FTRs, complained to PJM about rival portfolios with no collateral attached.When PJM approached GreenHat, one of its partners, Andrew Kittell said his firm had offsetting contracts that would pay out more than $62 million should their FTR bet turn sour. PJM mentioned this in one of its filings to the Federal Energy Regulatory Commission.But as it turns out, that was a lie. Two years later, Greenhat's position was in bad shape, thanks to renovations to transmission lines that reduced congestion. However, instead of cutting their losses, the Greenhat traders doubled down. When their collateral cushion finally ran out, PJM sent the firm an invoice for $1.2 million that it never paid. Its position was soon declared in default. But since the power exchange lacks a coherent clearing mechanism to absorb the losses of traders who default, PJM was forced to spread the tab around to its other clients - i.e. the rest of us (virtually everybody who uses electricity connected to that grid will pay some of GreenHat's bill in the form of higher electricity prices).
Banker Fired For Assisting Tax Evasion, Loses Lawsuit Seeking Unpaid $2.1 Million Bonus - It's hardly a secret that the banking sector encourages nefarious behavior, but generally after it's recognized that you’ve helped somebody evade taxes to the tune of over $4 million, we can probably agree its time to stop pushing your luck. A first priority might be trying to remedy the wrongdoing or pursue restitution for unlawful behavior. It definitely should not be suing the employer that fired you for your unpaid bonus.That, however, is exactly what Rajesh Parmar, who headed up a HSBC Private Bank business unit in South Asia did. After it was revealed in the midst of a regulatory investigation that he helped his clients evade millions of dollars in taxes, he turned around and sued HSBC for $2.4 million in unpaid bonuses and damages. But justice was swiftly served Monday, when Parmar not only lost his lawsuit against HSBC, but was also required to pay 150,000 pounds in court costs related to the case. On Monday, the Judge presiding over his case, Nicholas Cooke, stated that Parmar had "no realistic prospect of succeeding with his claims," and promptly awarded a summary-style judgement in favor of HSBC. Parmar's client, Sanjay Sethi, pled guilty in 2013 to hiding as much as $4.7 million from the Internal Revenue Service, and it was uncovered during the investigation and through court filings that he had conspired with somebody called "U.K. Banker A" who was then only identified as the head of a cross border banking group tied to South Asia.This turned out to be Parmar. As for HSBC, the bank is still being subject to ongoing criminal and regulatory investigations. The DOJ and the IRS are reportedly still looking into the company‘s business unit and how they had advised their clients on their tax reporting obligations.
Ultra-Rich Families Ride Surging Stocks to Double Annual Returns - These are heady times for the world’s richest clans.Family offices scored average returns of 15.5 percent last year, up from 7 percent in 2016 and 0.3 percent the prior year, according to UBS Group AGand Campden Wealth. Those in Asia led the way with a 16.4 percent return in 2017, fueled by soaring stock markets and private equity. North American firms have more than a quarter of their assets in equities This is the fifth annual survey from UBS and Campden, providing insight into the discreet world of family offices, which manage the fortunes, tax affairs and often lifestyles of the wealthy. While the Rockefeller family set up one of the earliest versions in the 1800s and European families were early adopters, they’ve proliferated this century, partly because of the boom in tech billionaires. Microsoft Corp. co-founder Paul Allen created Vulcan Capital in 2003. A few years later, Alphabet Inc. President Sergey Brin started Bayshore Global Management, and former Google Chief Executive Officer Eric Schmidt set up Hillspire. Brin’s Los Altos, California-based firm has employed ex-bankers, philanthropy experts and a former Navy SEAL for security, while Schmidt’s Palo Alto-based family office controls a 20 percent stake in hedge fund D.E. Shaw & Co. The trio have collective fortunes valued at almost $100 billion, according to the Bloomberg Billionaires Index. Of the 311 family offices that responded to the latest survey, 37 percent were created after 2010. The average assets held by respondents was $808 million and the average worth of the families was $1.1 billion. Just over 1 in 5 said they have two family office sites, while some have as many as five locations.
Insider Selling Soars- Fastest Pace Of September Sales In Past Decade -- One month ago, we reported that insider selling reached $450 million daily in August, the highest level this year; on a monthly basis, insiders sold more than $10 billion of their stock, the most of any month this year and near the most on record. One month later, TrimTabs is out with a follow up monthly report which finds even more of the same: according to the investment research company, the "best-informed market participants" are selling their own stocks at the fastest pace in September in the past decade, even as stock buyback announcements have hit record levels.Corporate insiders have sold an average of $400 million daily in September through Friday, September 21, TrimTabs founds, adding that this month’s volume of $5.7 billion is already the highest in any September in the past decade. Of course this comes at a time of record corporate stock buybacks, resulting in a perverse loops in which insiders dumping near record amount of stock to their own, far less informed, shareholders. “While insiders are selling hard with their own money, they’ve committed record amounts of shareholders’ money to prop up stock prices this year,” said David Santschi, Director of Liquidity Research at TrimTabs Investment Research. Indeed, stock buyback announcements by U.S. public companies have already reached $827.4 billion in 2018, topping the previous record of $809.6 billion in 2007 with more than three months left in the year. According to Goldman, the final authorized buyback number will be no less than $1 trillion.
Upside Down World- Junk Bonds Set For Record Winning Streak As High Grade Suffers Worst Year Since 2008 - For the latest confirmation of the upside down market, look no further than corporate bonds where the riskiest, CCC-rated junk bonds are set to make a positive return for the 3rd consecutive year, the longest winning streak since records began in 1997. Not only have the lowest quality junk bonds, those rated CCC or lower, generating respectable absolute returns of 5.8% YTD, they have also outperformed higher quality debt with a 1% total return so far this month, according to Bloomberg and ICE data. Additionally, the lowest rated junk bonds have also outperformed the broader junk bond index, which has returned 1.9% YTD. And while the key contributor to the outperformance of lowest-rated bonds is demand for, well, higher yielding paper as investors continue to chase returns, a key structural issue has been the lack of HY supply, which at $150 billion YTD is the lowest since 2009.Meanwhile, as investors scramble for any paper that promises a material yield, regardless of underlying fundamentals, investment grade corporate bond returns have, in the worlds of Bloomberg's James Crombie "fallen from darling to deadbeat."Continuing a theme we first highlighted in June, when we showed the "odd divergence" of IG bonds spreads widening even as junk bond spreads touched record lows...
Corporate America, not banks, could cause the next recession - There's a $6.3 trillion elephant in the room. And it just might cause the next recession. The last downturn was triggered by Wall Street and Americans accumulating too much debt — particularly in the sizzling housing market. A decade later, it's Corporate America borrowing with gusto. Egged on by extremely low rates, US companies have piled on a record-setting $6.3 trillion of debt, according to S&P Global Ratings. All that debt is easy to ignore right now. Default rates are minuscule. Companies are sitting on tons of cash, and their coffers are growing thanks to the soaring US economy and corporate tax cuts. But eventually, both the economy and corporate profits will slow, leaving companies less firepower to pay down debt. And it won't be as easy to roll over the debt that's due. Debt-laden companies would be vulnerable to rising borrowing costs caused by the Federal Reserve's interest rate hikes. If companies are stuck in a credit crunch, they will have to pull back on hiring and investment. That could be a recipe for a recession. "Corporates, not consumers or banks, will cause [the] next recession," Michael Hartnett, Bank of America Merrill Lynch's chief investment strategist, wrote to clients on Thursday. Corporate America's debt binge has helped finance the recovery. Companies have borrowed to open factories, buy equipment and develop products. A chunk of that debt has also gone to reward Wall Street with massive stock buybacks.After a decade of low rates, companies have taken on more debt relative to the size of the economy than ever before. Total US business debt as a percentage of GDP is at a record high, according to David Ader of Informa Financial Intelligence. The riskiest category of borrowers has never been more leveraged. Companies with junk credit ratings are holding a record low $8 of debt for every $1 of cash, according to S&P.And then there are so-called zombie companies — which can't even afford interest payments, despite the strong economy and low rates. Ben Breitholtz, data scientist at Bianco Research, found that 14% of the companies in the S&P 1500 don't have enough earnings before interest and taxes to cover interest expenses. That's above the world average of 10%. Those zombie companies are probably cringing as central bankers slowly end the easy-money days. The Fed is expected to lift rates on Wednesday, the eighth hike since late 2015. Four more moves before the end of 2019 may be in the cards. At the same time, the Fed is trimming its $4.5 trillion balance sheet — an experiment that could contribute to higher borrowing costs as foreign central banks follow suit and unload bonds.
Goldman Warns Of A Default Wave As $1.3 Trillion In Debt Is Set To Mature - Ten years after the Lehman bankruptcy, the financial elite is obsessed with what will send the world spiraling into the next financial crisis. And with household debt relatively tame by historical standards (excluding student loans, which however will likely be forgiven at some point in the future), mortgage debt nowhere near the relative levels of 2007, the most likely catalyst to emerge is corporate debt. Indeed, in a NYT op-ed penned by Morgan Stanley's, Ruchir Sharma, the bank's chief global strategist made the claim that "when the American markets start feeling it, the results are likely be very different from 2008 — corporate meltdowns rather than mortgage defaults, and bond and pension funds affected before big investment banks."But what would be the trigger for said corporate meltdown? According to a new report from Goldman Sachs, the most likely precipitating factor would be rising interest rates which after the next major round of debt rollovers over the next several years in an environment of rising rates would push corporate cash flows low enough that debt can no longer be serviced effectively. While low rates in the past decade have been a boon to capital markets, pushing yield-starved investors into stocks, a dangerous side-effect of this decade of rate repression has been companies eagerly taking advantage of low rates to more than double their debt levels since 2007. And, like many homeowners, companies have also been able to take advantage of lower borrowing rates to drive their average interest costs lower each year this cycle.... until now. According to Goldman, based on the company's forecasts, 2018 is likely to be the first year that the average interest expense is expected to tick higher, even if modestly. There is one major consequence of this transition: interest expenses will flip from a tailwind for EPS growth to a headwind on a go-forward basis and in some cases will create a risk to guidance. As shown in the chart below, in aggregate, total interest has increased over the course of this cycle, though it has largely lagged the overall increase in debt levels.
Janet Yellen Says It's Time For Alarm As Loan Bubble Runs Amok - The deluge of leveraged loans is getting increasingly difficult to regulate as it takes over Wall Street. A new report brings up a perfect example of this: Bomgar Corp., who just lined up $439 million in loans. It was the company's third trip to the debt markets this year and estimates have the company's leverage potentially spiking as high as 15 times its earnings going forward, raising the obvious question of the risk profile of these loans. As rates move higher like they are now, the loans - whose interest rates reference such floating instruments as LIBOR or Prime - pay out more. As a result, as the Fed tightens the money supply, defaults tend to increase as the interest expenses rise and as the overall cost of capital increases. And because an increasing amount of the financing for these loans is done outside of the traditional banking sector, regulators and agencies like the Federal Reserve aren't able to do much to rein it in. The market for leveraged loans and junk bonds is now over $2 trillion. Escalating the risk of the unbridled loan explosion, none other than Janet Yellen - who is directly responsible for the current loan bubble - recently told Bloomberg that "regulators should sound the alarm. They should make it clear to the public and the Congress there are things they are concerned about and they don’t have the tools to fix it." As we noted recently, the risks of such loans defaulting are obvious, including loss of jobs and risk to companies on both the borrowing and the lending side. Tobias Adrian, a former senior vice president at the New York Fed who’s now the IMF’s financial markets chief, told Bloomberg: "...supporting growth is important, but future downside risks also need to be considered." He also stated that regulators had "limited tools to rein in nonbank credit". But you'd never know this by listening to the Federal Reserve. According to Fed chairman Jerome Powell, during his press conference Wednesday, the Fed doesn’t see any risks right now. Powell said that "overall vulnerabilities" were "moderate". He also stated that banks today "take much less risk than they used to".
How the Crisis Caused a Pension Train Wreck -- Yves Smith - We’ve been writing for some time that one of the consequences of the protracted super-low interest rate regime of the post crisis era was to create a world of hurt for savers, particularly long-term savers like pension funds, life insurers and retirees. Even though the widespread underfunding at public pension plans is in many cases due to government officials choosing to underfund them (New Jersey in the early 1990s is the poster child), in many cases, the bigger perp is the losses they took during the crisis, followed by QE lowering long-term interest rates so much that it deprived investor of low-risk income-producing investments. Pension funds and other long-term investors had only poor choices after the crisis: take a lot of risk and not be adequately rewarded for it (as we have shown to be the case with private equity). And as we’ve also pointed out, if you think public pension plans are having a rough time, imagine what it is like for ordinary people (actually, most of you don’t have to imagine). It is very hard to put money aside, given rising medical and housing costs. Unemployment means dipping into savings. And that’s before you get to emergencies: medical, a child who gets in legal trouble, a car becoming a lemon prematurely. And even if you are able to be a disciplined saver, you also need to stick to an asset allocation formula. For those who deeply distrust stocks, it’s hard to put 60% in an equity index fund (one wealthy person I know pays a financial planner 50 basis points a year just to put his money into Vanguard funds because he can’t stand to pull the trigger). The Financial Times turns to this topic today with a solid piece, Legacy of Lehman Brothers is a global pensions mess, that includes useful data. As many others have, we’ve pointed out that one of the effects of the post-crisis regime was to move risks out of the banking system and into the hands of savers. As the pink paper describes it: Pension funds have taken on many of the risks that were once held by banks. Low bond yields, which make it more expensive to guarantee an income, have forced them to take extra risks. They now hold assets, such as hedge fund and private equity investments, with much concealed leverage. And many companies have transferred the risk of bad investment performance from their shareholders to savers – and savers are not usually well-equipped to deal with them. The result: the risk of a sudden banking collapse, which almost happened 10 years ago, has reduced. But the risk of social crisis, as people enter retirement without enough money, is rising. And betting wrong can make a big difference: While the S&P 500 gained 175 per cent after Lehman fell, stocks in the rest of the world gained only 55 per cent, equivalent to a nominal annual return of barely 4 per cent.
Consumer group calls for CFPB fair-lending official's ouster -- A consumer advocacy group is calling for the ouster of a Trump political appointee at the Consumer Financial Protection Bureau after The Washington Post reported that the official wrote 14 years ago that a majority of hate crimes were hoaxes and contended that using a racial slur did not make someone a racist. The Post reported late Wednesday that Eric Blankenstein, who oversees the enforcement of fair-lending laws as the CFPB’s policy director for supervision, enforcement and fair lending, expressed controversial views including spelling out a racial slur for African-Americans on a 2004 blog post he co-wrote with two other anonymous contributors. Blankenstein wrote in the political blog that “hate-crime hoaxes are about three times as prevalent as actual hate crimes,’’ the newspaper said. In the Post story, Blankenstein said his previous writings had no bearing on his current role. "The insight to be gained about how I perform my job today — by reading snippets of 14 year old blog posts that have nothing to do with consumer protection law — is exactly zero,” he told the paper.“Any attempt to do so is a naked exercise in bad faith, and represents another nail in the coffin of civil discourse and the ability to reasonably disagree over questions of law and policy,” he said. “The need to dig up statements I wrote as a 25 year old shows that in the eyes of my critics I am not guilty of a legal infraction or neglect of my duties, but rather just governing while conservative.” In his writings decades ago, Blankenstein referred to a proposal at the University of Virginia as "racial idiocy," for seeking to impose harsher academic penalties for acts of intolerance, the Post said. In the blog, Blankenstein wrote “Fine … let’s say they called him a n ----,” the Post reported, noting that he spelled out the slur. “Would that make them racists, or just a------?”
Trump anti-discrimination official faces rebellion at agency over racially tinged blog posts - A senior Trump appointee at an agency responsible for enforcing laws against financial discrimination faced open rebellion from subordinates Friday over blog posts he wrote years ago expressing controversial views on the n-word and hate crimes, according to internal emails obtained by The Washington Post. The uproar came as two Democrats on the Senate Banking Committee and a national housing rights organization called for the departure of the appointee, Eric Blankenstein, a policy director at the Consumer Financial Protection Bureau. The upheaval was triggered by a mass email from a senior civil servant who harshly criticized the writings, which The Post revealed and linked to Blankenstein in a report Wednesday. Writing under a pen name in 2004, Blankenstein questioned whether the n-word was inherently racist and claimed that the great majority of hate crimes were hoaxes.“The tone and framing are deeply disturbing to me as a woman, African American, advocate for LGBTQ rights, and human being,” Patrice A. Ficklin, a career staffer and director of the Office of Fair Lending and Equal Opportunity, wrote to hundreds of agency employees.Earlier in the week, Blankenstein asked Ficklin, his subordinate, to write a supportive note about him for The Post’s initial story. In her email Friday, Ficklin said she had not read Blankenstein’s blog when she did so. “After the article appeared, I began to read his posts and was struck by how they reminded me of debates we’ve had with Eric on supervisory and enforcement matters,” she wrote.“And while he has been collegial, thoughtful and meticulous, I have had experiences that have raised concerns that are now quite alarming in light of the content of his blog posts — experiences that call into question Eric’s ability and intent to carry out his and his Acting Director’s repeated yet unsubstantiated commitment to a continued strong fair lending program under governing legal precedent,” she wrote. Career employees rallied swiftly around Ficklin, sending supportive emails agency-wide, according to multiple emails obtained by The Post.
Warren wades into CRA overhaul with revamp plan of her own — Sen. Elizabeth Warren, D-Mass., on Tuesday threw a new twist into efforts to reform the Community Reinvestment Act.Just as the federal bank regulators try to modernize their CRA policy through reforms authorized under the current law, Warren released a bill that would apply CRA requirements to a broader array of institutions — including credit unions — and make penalties tougher for any violations."Obligations under the Community Reinvestment Act ... to provide credit to lower-income and middle-class communities are too weak," according to a summary of the bill, which includes other housing and economic proposals. "The bill extends the law to cover more financial institutions, promotes investment in activities that help poor and middle-class communities, and strengthens sanctions against institutions that fail to follow the rules." Whereas now the law only applies to FDIC-insured banks, both credit unions and nonbank mortgage originators would have to follow CRA requirements under the proposal. Warren's bill also proposes billions of dollars of new investments into affordable housing trust funds. Those include $445 billion into the Housing Trust Fund and $25 billion in the Capital Magnet Fund. The summary of the bill said reductions in investments for lower-income and middle-class housing projects "creates shortages that drive up costs for everyone, produces crumbling and unsafe housing stock in many urban and rural communities, and slows economic growth." The bill, called the American Housing and Economic Mobility Act, would also prohibit discrimination on the basis of sexual orientation, gender identity, marital status and source of income, among other things.
Fed's Powell 'hopeful' agencies will come together on CRA reform — Federal Reserve Board Chairman Jerome Powell expressed hope Wednesday that the bank regulators will issue a joint proposal on modernizing the Community Reinvestment Act. The level of agreement between the Fed, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency on how to update CRA policy has been in question after the OCC last month went out on its own with an advance notice of proposed rulemaking. The ANPR asked for comment on 30 questions about CRA reform, yet the OCC has indicated that further moves on updating the policy will be done jointly. "Many of the issues we had were reflected in the OCC’s ANPR and we’re hopeful that over time there will be a joint rulemaking with the OCC and the FDIC and the Fed," Powell said at a press conference that accompanied a meeting of the Federal Open Market Committee. "It’s a process and we’re very much interested in pushing forward.” Federal Reserve Board Chairman Jerome Powell Now is "an appropriate time to revisit the way we think about CRA," said Federal Reserve Board Chairman Jerome Powell. "But we don’t want to lose that focus on community and we definitely want to see that fundamental purpose of the law sustained." Bloomberg News Now is "an appropriate time to revisit the way we think about CRA," Powell said, "but we don’t want to lose that focus on community and we definitely want to see that fundamental purpose of the law sustained."
Growth in new CMBS issuances reduces delinquency rate: Fitch -- Commercial mortgage-backed securities delinquency rates are likely to continue to decrease for the rest of the year, as new issuances outpace maturing loans and precrisis loans continued to get resolved by special servicers, Fitch Ratings said. The 60-day delinquency rate for loans backing CMBS fell to 2.48% in August, compared with 2.64% in July. This is the fourth consecutive month of declines.The delinquency rate is expected to finish 2018 between 2.25% and 2.75%, Fitch previously said. But if interest rates rise too quickly, that could affect the ability for loans maturing next year to refinance, which could cause defaults to rise. Newly reported delinquencies were $115 million in August, the lowest since 2015, Fitch said in a press release. There are 582 loans totaling $9.8 billion in Fitch-rated transactions that are at least 60 days delinquent, in foreclosure or have become real estate owned. Delinquencies from CMBS deals done prior to the crisis made up $8.6 billion, or over 88% of the total. Of this, 62% are REO. New issuance volume for July was $7.1 billion from eight transactions while portfolio runoff was only $3.5 billion, resulting in a higher overall index denominator. There were an additional $5.8 billion of new CMBS in August, which will be added to September's calculation. For the rest of 2018, there are only $6 billion of nondelinquent securities scheduled to mature. Among commercial mortgage loan investor types, CMBS had the highest delinquency rate at the end of the second quarter, a recent Mortgage Bankers Association report said.CMBS resolutions by special servicers in August totaled $652 million, of which 55% were REO from precrisis deals.There were $377 billion of outstanding post-crisis CMBS and just $17 billion of precrisis deals rated by Fitch at the end of August.Delinquency rates across all property types were the same or lower compared with July.Retail had the highest delinquency rate at 5.31%, down from 5.6% in July. This was followed by office at 3.37%, down from 3.69%, and hotel at 2.33%, down from 2.51%. Mixed use was unchanged at 2.26%, industrial was down eight basis points to 2.18% and multifamily was unchanged at 0.45%.
CMBS exposure to Hurricane Florence broad, but impact likely limited -- Estimates of commercial mortgage bond exposure to Hurricane Florence vary widely, but rating agencies generally view the impact on performance to be fairly limited. Moody’s Investors Service estimates that a little over half of the commercial mortgage backed securities it rates have some exposure to North and South Carolina, where the Florence struck last week with windspeeds that were relatively modest, Category 1on the Saffir-Simpson scale, but brought excessive rainfall and storm surge. Of the 637 transactions Moody's rates, 345 hold loans backed by properties in areas potentially affected. Those 345 deals hold a combined 1,479 properties in North Carolina (69.9% of the affected universe by balance) and South Carolina (30.1%), with an aggregate loan balance of $10.7 billion, or 2.7% of the total collateral, by balance.. Moody’s rates 39 commercial mortgage bonds with exposures of 10% or larger, including 38 conduit/fusion deals (of which 15 were issued after 2009) and one single-asset, single borrower deal. The exposure includes 160 properties securitized by Freddie Mac in 18 different K-series transactions; mortgage bonds located in North and South Carolina, representing 3.6% of collateral in Freddie Mac deals that Moody’s rates, of which the largest deal exposure by share representing 6.9% of its respective transaction. Morningstar Credit Ratings has identified some $1.49 billion in securitized commercial mortgages potentially at "elevated risk" because of major damage in the wake of Hurricane Florence. It found 189 properties backing 187 securitized loans in 16 of the 18 North Carolina counties that the Federal Emergency Management Agency declared disaster areas eligible for individual assistance. This includes properties with a combined balance of $1.05 billion in Cumberland and New Hanover Counties, home to the state’s sixth- and eighth-largest cities, Fayetteville and Wilmington, respectively. Properties in counties that are not part of the disaster declaration have also seen significant damage, Morningstar says.
Fannie Mae, Freddie Mac tighten capital rules for PMI companies - Fannie Mae and Freddie Mac issued new capital requirements for private mortgage insurers that will create big swings in carriers' asset reserves. The change that had the largest impact was the removal of the credit for future premiums from the calculation of available assets. The government-sponsored enterprises first approached the private mortgage insurers with an initial version of these proposed changes at the end of last year. Several of the mortgage insurers then issued warnings about the negative effect the proposal would have on their capital cushion, although all added they would be able to remain in compliance with the revised requirements. A larger cushion is a measure of a company's ability to pay claims when a loan goes into foreclosure. The updated Private Mortgage Insurer Eligibility Requirements go into effect on March 31, 2019. "Future premiums are not included as capital under state insurance regulations nor are they included as capital under statutory accounting guidelines. If the updated PMIERs were to include future premiums in available assets while state regulators did not include future premiums in statutory capital, Freddie Mac could be exposed to the risk of statutory insolvencies and deferred payment obligations," an FAQ issued by the GSE said. Fannie Mae issued a similar FAQ. If PMIERs 2.0 had been in effect at the end of the second quarter, MGIC's cushion would have been approximately $600 million, compared with the previously reported $1 billion. After the GSEs provided the private mortgage insurers with their initial proposal at the end of 2017, MGIC warned its cushion could be "materially lower." PMIERs 2.0 will not affect plans for its mortgage insurance subsidiary to upstream dividends to the holding company, MGIC said.
Appraisers balk at plan to 'virtually eliminate' SBA property valuations -- The House of Representatives passed two bills that would tie appraisal requirements for Small Business Administration loans to bank regulators' requirements for all commercial real estate loans. But the plan has been met with opposition from the Appraisal Institute, which claims the SBA will take on unnecessary risk if its members are cut out of transactions. Following a rule change by the Federal Reserve Board, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. earlier this year, banks are not required to obtain appraisals on the collateral backing commercial real estate loans if the property is worth less than $500,000. Previously, the threshold was $250,000. The bills, HR 6347, the 7(a) Real Estate Appraisal Harmonization Act, and HR 6348, the Small Business Access to Capital and Efficiency Act, would remove the current statutory $250,000 limit for SBA loan appraisal waivers and instead rely on the banking regulators' standards. Both bills passed on a voice vote taken on Sept. 25, but their fate in the Senate is unclear. The higher thresholds would "virtually eliminate" the need to get appraisals for SBA 7(a) and 504 loans, the Appraisal Institute warned in a letter to House Speaker Paul Ryan before Tuesday's vote. And while banking regulators require CRE lenders to obtain property evaluations on collateral eligible for appraisal waivers, a similar requirement is not included in the SBA bills, the appraisal group said. SBA 7(a) loans As a result, the bills "fail to fully align the SBA requirements with those of the federal bank regulatory agencies," the Appraisal Institute letter reads.
Black Knight: National Mortgage Delinquency Rate Decreased in August From Black Knight: Black Knight’s First Look: Strong Summer of Improvement for Mortgage Delinquencies; Industry Bracing for Impact from Hurricane Florence
• Mortgage delinquencies fell again in August and are now down 5.7 percent over the past two monthsAccording to Black Knight's First Look report for August, the percent of loans delinquent decreased 2.4% in August compared to July, and decreased 10.4% year-over-year.
• This marks the strongest such decline during July-August on record, since before 2000
• Foreclosure starts also eased in August and are now more than 12 percent below last year’s level
• Delinquencies resulting from 2017’s hurricanes continue to decline – just 25,100 remain in the mainland U.S.
• Some 391,000 homeowners with mortgages were located in Hurricane Florence’s evacuation area, with an estimated 283,000 in the 18 North Carolina counties declared disaster areas so far by FEMA
The percent of loans in the foreclosure process decreased 4.4% in August and were down 28.2% over the last year.Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.52% in August, down from 3.61% in July.
The percent of loans in the foreclosure process decreased in August to 0.54% (from 0.57% in July).The number of delinquent properties, but not in foreclosure, is down 185,000 properties year-over-year, and the number of properties in the foreclosure process is down 105,000 properties year-over-year.
Mortgage delinquencies fall to 12-year low, but effects of Florence loom The mortgage delinquency rate dropped to its lowest level in over 12 years, but servicers should expect an increase following the impact of Hurricane Florence, according to Black Knight. The mortgage delinquency rate was 3.52% in August, down from 3.93% a year ago and from 3.61% in July. However, these numbers will likely be on the rise in the coming months following the fallout from Hurricane Florence. Florence's evacuation area accounted for 391,000 homeowners with mortgages, of those, an estimated 283,000 were in the FEMA-declared disaster areas. "Because of when Florence made landfall, there's no sign of the storm's impact on mortgage performance just yet. But, as anyone watching the news is aware, this is a situation that continues to develop," Ben Graboske, executive vice president of Black Knight's data and analytics division, said in a statement to NMN. Mortgage delinquencies There are now 1.82 million properties with a delinquent mortgage, down 185,000 from a year ago and 43,000 from July. The number of properties with a mortgage late by 90 or more days but not yet in foreclosure hit its lowest post-recession count of 510,000 in August, down 47,000 properties from a year ago and 18,000 from July. There were 48,000 foreclosure starts in August, down 12.25% since last year and a slight month-over-month drop of 0.62%.
Freddie Mac: Mortgage Serious Delinquency Rate Decreased in August - Freddie Mac reported that the Single-Family serious delinquency rate in August was 0.73%, down from 0.78% in July. Freddie's rate is down from 0.84% in August 2017. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. This is the lowest serious delinquency rate for Freddie Mac since January 2008. These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The increase in the delinquency rate late last year was due to the hurricanes (These are serious delinquencies, so it took three months late to be counted). We will probably see another, smaller, bump this year following hurricane Florence. I expect the delinquency rate to decline to a cycle bottom in the 0.5% to 0.75% range - but this is close to a bottom.
North Carolina flooding soaks federal taxpayers all over again -- When Hurricane Florence reached Belhaven, N.C., last weekend, the flooding that followed was unlike anything Ricky Credle, the mayor of the tiny coastal town had ever experienced. "I've been here 45 years," Credle said in a phone interview. "I've never seen this much water." For federal taxpayers, however, the flooding in Belhaven was all too familiar. Since 1978, 120 homes in the town of 1,600 people have cost federal taxpayers $13.4 million in National Flood Insurance Program payouts, according to data the Natural Resources Defense Council obtained from the Federal Emergency Management Agency; 36 received more money than their total value. Five of those homes have gotten federal flood insurance payments ten times or more, including one that received money 15 times. The result: homes that flood keep getting rebuilt with public money, only to flood again. That leaves people living in vulnerable areas who might rather receive money to move away — and the flood insurance program, already more than $20 billion in debt, going deeper underwater. "We spend all this money to rebuild these homes, and we spend very little money helping people get out of these homes – even when that's what they want," said Rob Moore, a senior policy analyst at the Natural Resources Defense Council. "Efforts to help move people move somewhere safer are seen as a last option, instead of a first option." Encouraging people to keep rebuilding in vulnerable places reflects the design of the flood insurance program. Not only does it subsidize people's premiums, it imposes no limit on the number of times a homeowner can make a claim. At the same time, federal programs designed to pay people to move out of flood-damaged homes often take years to result in offers, by which time many people have repaired their homes and moved back in. There are more than 1,100 so-called severe repetitive loss properties across North Carolina, the NRDC data shows. The federal government has paid out $163.9 million in flood insurance for those homes, which is almost 60% of their combined total value. More than 400 have gotten more in federal insurance claims than the home is worth.
Nearly 700,000 properties damaged in wake of Hurricane Florence - Hurricane Florence Hurricane Florence's flooding and wind destruction affected about 700,000 residential and commercial properties across North Carolina, South Carolina and Virginia, according to CoreLogic's latest estimates. While the mortgage delinquency rate fell to a 12-year low this week, that number will be on the rise in the coming months due to Florence and the impact of the impending hurricane season. If last year was any indication, the delinquency rate could peak above 4.5% by December. Any housing markets devastated by Florence and all hurricanes that follow will still be on the mend a year from now. Worst-case projections estimate a total of $28.5 billion in storm surge and inland flooding losses, plus an additional $1.5 billion in wind damage. Of the surge and flooding losses, an estimated $18.5 billion are uninsured. "The uninsured losses make up such a large share of the total — a greater percentage than Hurricane Harvey last year — because Florence is primarily a flood event, and insurance coverage for flood is limited, especially on the residential side," "Flood insurance is only mandatory for homes with mortgages that are located within FEMA's special flood hazard areas (SFHAs) — essentially 100-year flood zones. Many of the homes impacted by Florence's floods are outside of these areas, and some of the homes within the SFHAs don't carry mortgages." North Carolina bore the brunt of the storm and holds the majority of the estimated damage. About 80% of both residential and commercial properties and losses lie in the Tar Heel State, with South Carolina accounting for close to the remaining 20%.
FHA will require second appraisal for some reverse mortgages — The Federal Housing Administration will now require lenders originating certain new reverse mortgages to offer a second property appraisal in cases where property valuations may be inflated. The agency says that the additional appraisal validation policy will reduce risks to the mutual mortgage insurance fund and protect home equity conversion mortgages, also known as reverse mortgages. “The financial soundness of FHA’s reverse mortgage program is contingent on an accurate determination of a property’s value or condition,” the agency said in a press release. The property value is used to decide the amount of equity that is available to the borrower, and is also used by the FHA to determine the amount of insurance benefits paid to a borrower. FHA Commissioner Brian Montgomery told reporters in July that the agency was trying to determine the direct cause of losses to its reverse mortgage program. In the agency’s 2017 report to Congress, it was revealed that losses from the program drove the capital reserve ratio down to 2.09% from 2.35% a year earlier. The FHA is required by law to maintain a 2% capital reserve buffer to cover projected losses. The agency is addressing the accuracy of appraised property values due to "continuing volatility" in the reverse mortgage program, it said in the release. Starting with case numbers assigned Oct. 1 through Sept. 30, 2019, the FHA will perform a risk assessment of appraisals submitted for use in new reverse mortgage originations. Depending on the outcome of the assessment, the agency might decide to require a second appraisal before approving the reverse mortgage for an insurance endorsement. The new policy will prohibit lenders from approving or closing a reverse mortgage until FHA has performed an initial risk assessment and, if required, a second appraisal.
Why Millennials Are Flocking To Rust Belt Real Estate - As real estate prices in major U.S. cities continue to soar, some young buyers and renters have decided to take their business elsewhere. They're investing in homes in such states as Ohio, Michigan and Wisconsin, experts say, in search of more affordable living and new places to plant down roots.For decades, the part of the U.S. otherwise known as the Rust Belt has been synonymous with hard times for decades, ever since manufacturing bases like Detroit began to suffer the effects of de-industrialization. Plants closed down, jobs disappeared, and once-vibrant cities became symbols of decay.In recent years, however, the revitalized Rust Belt economy hasbrought in younger workers, and made the area's real estate an attractive investment bet. The overwhelming driver of the millennial shift to the region is affordability. However, Constantine Valhouli, Director of Research for the real estate research and analytics firm NeighborhoodX, said that there's more to it than that. Rather than just home ownership, "it is about having roots and contributing to the revival of a place that needs businesses that create jobs and create value," he said.And slowly but surely, formerly blighted towns and cities are coming back to life, with the help of a younger class of real estate buyers. According to Paul Boomsma, president and CEO of Leading Real Estate Companies of the World (LeadingRE), the latest influx of buyers see cities as financial opportunities and places to build something new – especially with prices far below prevailing prices in big cities."Millennials are swiping up properties for next-to-nothing prices near downtown city areas that have completely revitalized," Boomsma said. LeadingRE member Haring Realty has listed athree-bedroom Victorian home in Mansfield, Ohio, with an asking price of $39,900. Compared that to what Zillow data show is the median home value of nearly $700,000 in New York City and a whopping $1.3 million in San Francisco, and there's little wonder why aspiring home owners are flocking to the Rust Belt.
What Beyoncé and These Billionaires Have in Common: Massive Mortgages - Beyoncé and Jay-Z financed their $88 million purchase of a sprawling contemporary mansion in Bel-Air last year with a $52.8 million mortgage from Goldman Sachs , public records show. The initial fixed rate interest payment is 3.4%, but the rate becomes adjustable starting in 2022, meaning the couple will likely have monthly payments of more than $200,000 from the outset, a mortgage expert estimated. Mr. Griffin has taken out more; through a limited liability company he took out two mortgages which combined total approximately $114 million for the construction of his Palm Beach home in 2016, public records show. JP Morgan Chase issued the debt. When Daryl Katz, the billionaire owner of the Edmonton Oilers hockey franchise, paid $85 million for a Malibu, Calif., compound earlier this year, he took on a $47.45 million, 30-year mortgage from UBS Bank USA, property records show. Mr. Katz is likely making monthly payments of over $200,000 a month on the loan, if it follows typical guidelines, mortgage experts said. The borrowers and banks involved in the transactions involving Beyoncé and Jay-Z, Mr. Griffin and Mr. Katz declined to comment. While the total number of these mega-loan borrowers remains small in comparison with the overall market—senior banking executives said the big banks only do a handful each year—the number is inching up. Of the 233 mega-loans priced between $10 million and $20 million with balances currently outstanding across the country, almost 23% were originated in 2017, and nearly 16% were originated this year, according to data from real-estate research firm CoreLogic . A disproportionately large number of the loans—123—originated in California, according to Frank Nothaft, CoreLogic’s chief economist. In comparison, 40 of the loans were originated in Florida, and 31 were originated in New York.
MBA: Mortgage Applications Increased in Latest Weekly Survey - From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey Mortgage applications increased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 21, 2018. .. The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 4 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since April 2011, 4.97 percent from 4.88 percent, with points increasing to 0.47 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Mortgage applications increase even as rates reach a seven-year high -- Mortgage applications were up 2.9% from one week earlier, even as the rate for the 30-year conforming mortgage reached its highest point in over seven years, according to the Mortgage Bankers Association. The MBA's Weekly Mortgage Applications Survey for the week ending Sept. 21 found that the refinance index increased 3% from the previous week. This is the second consecutive week of increased application volume after two months of slower activity. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased 9 basis points to 4.97%, its highest point since April 2011. The refinance share of application activity increased to 39.4% from 39% the previous week. "Rates rose last week as investors looked past U.S.-China trade tariffs and towards this week's Fed meeting," Joel Kan, the MBA's associate vice president of industry surveys and forecasts, said in a press release. "Treasury yields increased 8 basis points for the week as the growth outlook for the U.S. remained positive and data on housing starts and home sales showed a reprieve after a few months of weak results." "Mortgage applications also increased as post-Labor Day growth continued for both purchase and refinances," he said. The seasonally adjusted purchase index increased 3% from one week earlier. The unadjusted purchase index increased 2% compared with the previous week and was 4% higher than the same week one year ago. Adjustable-rate loan activity remained unchanged at 6.5% of total applications, while the share of Federal Housing Administration-guaranteed loans decreased to 10.4% from 10.6% the week prior. The share of applications for Veterans Affairs-guaranteed loans increased to 10.1% from 10% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.7% from the week prior. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 15 basis points to 4.92%. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 4 basis points to 4.94%, while for 15-year fixed-rate mortgages the average increased 8 basis points to 4.38%. The average contract interest rate for 5/1 ARMs increased to its highest level in the history of the survey, 4.22% from 4.17%.
Bank Of America Calls It- The Peak In Home Sales Has Been Reached; Housing No Longer A Tailwind - Bank of America is ringing the proverbial bell on the US real estate market, saying existing home sales have peaked, reflecting declining affordability, greater price reductions and deteriorating housing sentiment. In the latest weekly report from chief economist Michelle Meyer, the bank warned that "the housing market is no longer a tailwind for the economy but rather a headwind." "Call your realtor," the BofA note proclaimed: "We are calling it: existing home sales have peaked." BofA's economists believe the peak was seen when existing home sales hit 5.72 million, back in November 2017. From this point on, sales should trend sideways, as this moment in time is comparable to the rate the economy witnessed in the early 2000s before the bubble inflated. And while BofA believes existing home sales have plateaued, they do not think the same for new home sales. The reason: new home sales have lagged existing in this "economic recovery" - leaving homebuilders some room to flood the market with new single-family units before a turning point in the entire real estate market is realized. The deterioration in affordability can mostly explain the peak in existing home sales. This is due to the Federal Reserve reinflating real estate prices back to levels last seen since before the 2008 crash. The National Association of Realtors (NAR) affordability index prints 138.8, the lowest since August 2008. Chart 1 (below) shows there is a leading relationship between the trend in affordability and in home sales -- a simple regression suggests the lead is about three months. In major cities, affordability continues to be a significant problem for many Americans amid a rising interest rate environment and elevated home prices, existing home sales should remain under pressure for the foreseeable future.
Case-Shiller: National House Price Index increased 6.0% year-over-year in July –- S&P/Case-Shiller released the monthly Home Price Indices for July ("July" is a 3 month average of May, June and July prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: Home Price Gains Slow According to the S&P CoreLogic Case-Shiller Index: The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.0% annual gain in July, down from 6.2% in the previous month. The 10-City Composite annual increase came in at 5.5%, down from 6.0% in the previous month. The 20-City Composite posted a 5.9% year-over-year gain, down from 6.4% in the previous month.Las Vegas, Seattle and San Francisco continued to report the highest year-over-year gains among the 20 cities. In July, Las Vegas led the way with a 13.7% year-over-year price increase, followed by Seattle with a 12.1% increase and San Francisco with a 10.8% increase. Five of the 20 cities reported greater price increases in the year ending July 2018 versus the year ending June 2018. Before seasonal adjustment, the National Index posted a month-over-month gain of 0.4% in July. The 10-City and 20-City Composites reported increases of 0.2% and 0.3%, respectively. After seasonal adjustment, the National Index recorded a 0.2% month-over-month increase in July. The 10-City Composite remained flat and the 20-City Composite posted a 0.1% month-over-month increase. Eighteen of 20 cities reported increases in June before seasonal adjustment, while 13 of 20 cities reported increases after seasonal adjustment. 15 of 20 cities saw smaller monthly increases in July 2018 than in July 2017. Sales of existing single family homes have dropped each month for the last six months and are now at the level of July 2016. . The index of housing affordability has worsened substantially since the start of the year. “Since home prices bottomed in 2012, 12 of the 20 cities tracked by the S&P Corelogic Case-Shiller indices have reached new highs before adjusting for inflation. The eight that remain underwater include the four cities which led the home price boom: Las Vegas, Miami, Phoenix and Tampa. All are enjoying rising prices, especially Las Vegas which currently has the largest year-over-year increases of all 20 cities. The other cities where prices are still not over their earlier peaks are Washington DC, Chicago, New York and Atlanta."The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).The National index is 9.9% above the bubble peak (SA), and up 0.2% (SA) in July. The National index is up 48.6% from the post-bubble low set in December 2011 (SA). The second graph shows the Year over year change in all three indices.Real House Prices and Price-to-Rent Ratio in July - It has been over eleven years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 9.9% above the previous bubble peak.However, in real terms, the National index (SA) is still about 9.6% below the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is still 15.7% below the bubble peak. The year-over-year increase in prices is mostly moving sideways now around 6%. In July, the index was up 6.0% YoY. Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted). Case-Shiller and others report nominal house prices. As an example, if a house price was $200,000 in January 2000, the price would be close to $285,000 today adjusted for inflation (42%). That is why the second graph below is important - this shows "real" prices (adjusted for inflation). The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through July) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA)and the Case-Shiller Composite 20 Index (SA) are both at new all times highs (above the bubble peak). Real House Prices Real House PricesThe second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to December 2004 levels, and the Composite 20 index is back to June 2004. In real terms, house prices are at 2004 levels. This graph shows the price to rent ratio (January 2000 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to February 2004 levels, and the Composite 20 index is back to November 2003 levels. In real terms, prices are back to mid 2004 levels, and the price-to-rent ratio is back to late 2003, early 2004.
Zillow Case-Shiller Forecast: Slower House Price Gains in August --- The Case-Shiller house price indexes for July were released yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close. From Melissa Allison at Zillow: July Case-Shiller Results and August Forecast: Autumn ChillA slight autumn chill has fallen over the housing market, and after an incredibly hot past few years, it’s probably fair to say the cooldown is a welcome development for many would-be home buyers.... Seasons, just like the housing market, change slowly as environmental conditions shift. Winter in the housing market is certainly not here yet, but it’s increasingly clear that the end of the hot season is rapidly approaching. Zillow forecasts a further annual slowdown in August, of 5.7 percent. Those Case-Shiller results will be available on Tuesday, Oct. 30. The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be smaller in August than in July.
Contracts for existing homes declined in August for the fourth time in the last five months --The NAR reported this morning that pending home sales, i.e., contracts to buy existing homes, declined by 1.8% in August. This was the fourth decline in the last five months. This metric has now been negative YoY for the last eight months.Since pending contracts become existing home sales one or two months later, this strongly suggests that existing home sales will continue their recent decline for the next several months.According to the NAR's spokesman, Lawrence Yun:The greatest decline occurred in the West region where prices have shot up significantly, which clearly indicates that affordability is hindering buyers.So far, that makes perfect sense. But then he added,and those affordability issues come from lack of inventory, particularly in moderate price pointswhich is somewhat misleading. Inventory has increased YoY for the last several months, which means that if we could seasonally adjust, it would probably have bottomed earlier this year. And yet prices have continued to rise.Elsewhere, the report suggests that inventory will continue to rise, and that potential sellers haven't gotten the message that prices are too high, because Yun also said:According to the third quarter Housing Opportunities and Market Experience (HOME) survey, a record high number of Americans believe now is a good time to sell. Just a couple of years ago about 55 percent of consumers indicated it was a good time to sell; that figure has climbed close to 77 percent today.That 77% number isn't because they expect to have to sell at lower prices. The takeaway from today's Pending Home Sales report is that the decline in existing home sales from its peak a year and a half ago is going to continue.
New Home Sales increase to 629,000 Annual Rate in August -- The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 629 thousand. The previous three months were revised down significantly."Sales of new single-family houses in August 2018 were at a seasonally adjusted annual rate of 629,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.5 percent above the revised July rate of 608,000 and is 12.7 percent above the August 2017 estimate of 558,000. "The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still somewhat low historically. The second graph shows New Home Months of Supply. New Home Sales, Months of SupplyThe months of supply decreased in August to 6.1 months from 6.2 months in July. The all time record was 12.1 months of supply in January 2009. This is at the top of the normal range (less than 6 months supply is normal). "The seasonally-adjusted estimate of new houses for sale at the end of August was 318,000. This represents a supply of 6.1 months at the current sales rate." Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973. The inventory of completed homes for sale is still somewhat low, and the combined total of completed and under construction is also somewhat low.
New Home Sales Disappoint Despite Home Price Drop, Inventory Surge -Following existing home sales disappointment, hope was once again high for a bounce in new home sales in August but once again disappointed with a 629k print (up from a revised 608k), but missed expectations of 630k. While the sales gain was the first in three months, the downward revisions to prior figures indicate that the market in recent months was slower than previously reported, adding to broader indications of cooler demand in residential real estate. On the bright side New Home Sales rose YoY... Median home prices dropped from 328.1K to 320.2K... Notably, 318,000 new houses were on the market at the end of August, the most since February 2009. KB Home is down in the pre-market... But it's not alone as US homebuilder stocks have been hammered, catching down to the ugly reality of US housing data as The Fed hikes rates and crushes affordability... Perfect time to hike rates today.
Comprehensive Housing Update For September: More Signs Of Sales Rolling Over -- Let's start with a look at mortgage rates, and their effect on sales. Here are mortgage rates since their low in May 2013, from which I've subtracted 4.5%: What this shows is, although the immediate move in the 2013 "taper tantrum" was more dramatic, interest rates only remained elevated for a limited time: only five months of the next nine over 4.4%, and only two months total over 4.5%. This year they have remained over 4.4% for seven straight months, and above 4.5% for the last five. Now let's see how that affected housing sales, by adding in single family permits (the least volatile metric) in red (right scale): Notice that increases in housing permits stopped in late 2013 and for the first 8 months of 2017, slightly after hefty increases in mortgage rates. In the beginning months of 2016, they also slowed down briefly. By contrast, when mortgage rates declined in late 2014-15, and the last eight months of both 2016 and 2017, shortly thereafter issuance of housing permits increased at an accelerated pace.This year the trend in permits has actually been downward since February, the steepest such decrease since the bottom in 2011.Since mortgage rates remain at seven-year highs, we can expect continued pressure on sales. Next, here's a comparison of single family starts (blue), permits (red), and new single family home sales (green) since the beginning of 2016: Both new home sales and single family starts have not made new highs since last November, 9 months ago. Single family permits have not made a new high since February. Although I have not shown them, since the NAR does not allow FRED to retain more than one year's data, existing home sales have not made a new high since March of 2017, 1 1/2 years ago! Next, to show you the longer term trend in this expansion, here is the YoY% change in all three series since the beginning of 2013: Finally, another good indicator for the housing market is to subtract new houses for sale from new houses sold, as this typically turns down well before any recession begins. Here's what that looks like now:
U.S. Personal Income Rises 0.3% In August, Slightly Less Than Expected- Personal income in the U.S. rose by slightly less than expected in the month of August, according to a report released by the Commerce Department on Friday, while personal spending increased in line with economist estimates. The report said personal income climbed by 0.3 percent in August, matching the increase seen in July. Economists had expected income to rise by 0.4 percent. Disposable personal income, or personal income less personal current taxes, also increased by 0.3 percent for the second consecutive month. Meanwhile, the Commerce Department said personal spending rose by 0.3 percent in August after climbing by 0.4 percent in the previous month. Spending had been expected to increase by 0.3 percent. Real spending, which is adjusted to remove price changes, edged up by 0.2 percent in August after rising by 0.3 percent in July. With income and spending rising at the same pace, personal saving as a percentage of disposable income was unchanged from the previous month at 6.6 percent. The report also said a reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth held at 2.0 percent for the fourth straight month.
Consumers Pulled Back Slightly on Spending in August-- U.S. consumer spending cooled slightly in August from the strong pace of growth this spring, although sky-high consumer sentiment bodes well for retailers headed into the holiday season. Household spending—what Americans paid for all goods and services, such as groceries and health care—rose 0.3% in August from the prior month, the Commerce Department said Friday. Consumer spending powers the U.S. economy, and August’s gain was the smallest since February, marking a modest pullback from a 0.4% increase in both June and July, and 0.5% rises in April and May. .Still, strong consumer confidence, rising wages, low inflation and low unemployment should help power spending in the months ahead. Consumer sentiment in September was the third-highest level since 2004, according to a University of Michigan survey released Friday. Most of the gain in the final sentiment reading for September was among the bottom third of households by income, whose consumer-sentiment index was the highest since November 2000. A survey by another group, the Conference Board, earlier in the week showed overall household confidence in the U.S. was at its highest level in September since 2000. The rise in confidence among low-income households was a positive sign for economic growth, since economists have noted that lower-income households have a high propensity to spend additional income. Friday’s report showed Americans are saving less overall. The saving rate in August was 6.6%, the same as in July but down from 7.4% six months ago. Americans’ spending matched the pace of their income gains, which also rose 0.3% in August from the prior month, the government said. “These data indicate a solid but slowing momentum in consumer spending growth in the third quarter, around 3.5% after a remarkable 3.8% advance in the second quarter,” After the release of Friday’s spending and income report, forecasting firm Macroeconomic Advisers estimated gross domestic product expanded at a 3.2% annual pace in the current quarter. The Federal Reserve Bank of Atlanta’s GDPNow model predicted a 3.6% growth rate. The projections for the third-quarter growth rate remain well above the 2% growth seen throughout the expansion.
Consumer Confidence Explodes To 18 Year High But Wage-Gain Hopes Fade - American consumers' optimism about the short-term outlook improved considerably in September, with the Conference Board Consumer Confidence index soaring to 138.4 from 134.7 (smashing expectations of a dip to 132.1). “After a considerable improvement in August, Consumer Confidence increased further in September and hovers at an 18-year high,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “The September reading is not far from the all-time high of 144.7 reached in 2000. Consumers’ assessment of current conditions remains extremely favorable, bolstered by a strong economy and robust job growth. The Expectations Index surged in September, suggesting solid economic growth exceeding 3.0 percent for the remainder of the year. These historically high confidence levels should continue to support healthy consumer spending, and should be welcome news for retailers as they begin gearing up for the holiday season.” However, it is noteworthy that the number of people expecting income growth fell the most since April 2017...Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 25.4% to 22.6%, but the proportion expecting a decrease declined marginally, from 6.9% to 6.5%. The gap between 'Present Situation' and 'Expectations' has widened to historically concerning levels, that have in the past preceded recessions...Of course, as we have shown before, historically high confidence combined with low savings rates has been an ominous precursor for the stock market...
Michigan Consumer Sentiment: September Final Remains High - The University of Michigan Final Consumer Sentiment for September came in at 100.1, up 3.9 from the August Final reading.Investing.com had forecast 100.5. Surveys of Consumers chief economist, Richard Curtin, makes the following comments:Consumer sentiment remained at very favorable levels in September, with the Index topping 100.0 for only the third time since January 2004. Most of the September gain was among households with incomes in the bottom third, whose index value of 96.3 was the highest since November 2000. In contrast, the Sentiment Index among households with incomes in the top third lost a total of 8.1% during the past seven months since reaching its cyclical peak of 111.9 in February 2018. This divergence across income subgroups has been observed in past economic cycles and indicates that the expansion has now benefitted nearly all population subgroups. All households held very optimistic expectations for improved personal finances in the year ahead, the most favorable financial prospects since 2004 (see the chart). Despite a lessening in September of the expected size of gains in nominal incomes, inflation expectations also declined, acting to offset concerns about declining living standards. Consumers anticipated continued growth in the economy and expected the unemployment rate to continue to slowly decline during the year ahead. The single issue that was cited as having a potential negative impact on the economy was tariffs. Concerns about the negative impact of tariffs were cited by nearly one-third of all consumers in September. Those that voiced negative views of tariffs also held much less favorable prospects for the economy and held inflation expectations that were 0.6 of a percentage point higher than those who didn't mention tariffs. The pace of growth in real personal consumption expenditures can be expected to average 2.6% during late 2018 and into the first half of 2019. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
US Retailers Warn Trade Wars Will Unleash Unavoidable Price Hikes Before Holidays - President Trump ramped up the trade war on Monday as $200 billion in Chinese imports took effect. This is the third round of US tariffs on Chinese imports, a significant escalation of the conflict between the world's two largest economies. And caught in the middle of the crossfire are US retailers, who have spent a great deal of time on investor conference calls warning about imminent price hikes during the upcoming holiday season, which could send shock waves through the wallets of American consumers. The chief executives from Walmart, Target, Gap Inc. and Best Buy, among others, have been some of the most vocal companies warning about "unavoidable" price hikes. According to a letter from Robert Lighthizer, the US Trade Representative, tariffs on some $200 billion worth of Chinese imports took effect Monday. There are several hundred items on the list, including electronics, kitchenware, tools, and food. The taxes are set around 10 percent but will jump to 25 percent at the beginning of 2019. The resulting margin compression will force retailers to either eat the cost of the tariffs or pass it along to consumers, right before the critical holiday season: "The new tariffs are bad news for the retail sector, especially as the latest round seems to extend the tax to a vast array of consumer goods," GlobalData Retail Managing Director Neil Saunders said in comments emailed to Retail Dive. "Many retailers will now be faced with a difficult choice of whether to pass the cost increases across to consumers or to take a hit on their margins. The exact response will vary from retailer to retailer but, both strategies are likely to be used." In a late cycle economic environment, tariffs are especially dangerous for retailers because it could exacerbate the effects of other rising costs, "including more spending on technology, elevated logistics costs, higher gas prices, and rising labor expenses. In short, additional tariffs are the last thing the retail sector wants," according to Saunders. The new duties are across a wide assortment of goods, from apparel to appliances, mainly covering consumer products. Retail Dive said some retailers are working with suppliers on how to respond to their impact, while others look to shift their manufacturing bases.
Used-Car Sales Boom as New Cars Get Too Pricey for Many WSJ - The gap between the price of a new and used vehicle is as wide as it has been in years, pushing an increasing number of consumers to the used-car lot and putting pressure on auto makers to deepen discounts on new cars to keep them competitive. Demand for used cars was unusually strong this summer and will remain at elevated levels through the year’s end as higher interest rates and rising prices on new cars continue to stretch buyers’ wallets, industry analysts said. Used-car buyers are finding a growing selection of low-mileage vehicles that are only a few years old. While used-car values have also increased in recent years, the gap between the price of a new and preowned car has also widened and is now at one of its largest points in more than a decade, according to car-shopping website Edmunds.com. New-car prices have steadily climbed in the years following the recession as companies packed vehicles with more expensive technology and buyers shifted away from lower-priced cars to bigger and more expensive sport-utility vehicles and trucks. The average price paid for a car hit an all-time high of $36,848 in December of 2017 and remains at near-record levels, according to Edmunds.com. “When people see the price has gone up, it is sticker shock, especially when people only buy a car every five to six years,” At the same time, the used-car market is being flooded with leased cars being returned to dealerships, increasing the supply and options for buyers looking for two- and three-year-old vehicles that are generally well maintained. And unlike in recent years, where the selection on the used-car lot has tilted toward slow-selling sedans, dealers are offering more of the crossover and sport-utility vehicle models that are in hot demand now. The customer who would never consider buying used before is now driving off the lot in a preowned vehicle, Mr. Allan said. With nearly 40 million in sales last year, the used-car market is more than double the size of the new-car business. The shift in demand is a troubling sign for auto makers, which will be under pressure to deepen discounts to keep customers from defecting to the used-car market. New-vehicle sales have started to cool this year following a seven-year growth streak. A But as interest rates rise and credit tightens, auto companies are pulling back on such sales incentives. The average monthly payment on a new car was $536 in August, up from $507 last year and $463 five years ago, according to Edmunds.com.
US Traffic Volume Declines For The First Time In 4 Years - Trump's fears that rising gasoline prices will impact consumer behavior have come true.The volume of traffic on U.S. highways has stopped growing, alongside gasoline consumption, as rising prices are starting to curb driving behavior, a new analysis by Reuters' energy analyst John Kemp shows. Traffic volumes in July were 0.3% lower than a year earlier, after seasonal adjustments, the latest Federal Highway Administration data showed. Traffic growth has been negative in two months so far this year, the first readings sub-zero prints since the start of 2014. Meanwhile volumes were up by less than 0.3% in the three months from May to July compared with the same period a year earlier, down from annual growth of 2-3% throughout 2015 and 2016.It will come as no surprise that there has been a correlation between traffic volumes and the cyclical rise and fall in oil and gasoline prices since at least the early 1990s. While traffic volume dropped in 2013 and again in mid-2014, the sharp decline in oil prices between the middle of 2014 and early 2016 provided a tremendous boost to vehicle use. But as oil prices have recovered over the last 30 months, that stimulus has faded and traffic growth has once again slowed to a crawl, and in fact turned negative. The reason: the average cost of gasoline purchased by U.S. motorists surged by more than 55% between February 2016 and September 2018. Separate data on gasoline consumption showed a similar plateau as higher prices encourage motorists to limit fuel use. Gasoline consumption rose by just 18,000 barrels per day in the first half of 2018 compared with the same period a year earlier, despite strong economic growth and substantial job creation.
September U.S. Auto Sales Expected To Collapse - According to the latest estimates released by Edmunds, new vehicle sales for September are expected to collapse both on a monthly basis and year-over-year basis. The company predicted that 1,392,434 new cars and trucks will be sold in the U.S. in September, which makes for a estimated seasonally adjusted annual rate (SAAR) of 17 million. This will be a 5.4% decrease from last month and an 8.3% drop from September of last year.This comes despite both Septembers facing large hurricanes, Harvey in 2017 and Florence this year. Jeremy Acevedo, Edmunds' manager of industry analysis, stated: "Vehicle replacement demand following Hurricane Harvey bolstered auto sales last September, and Hurricane Florence has had a very limited impact on auto sales this month, which are the primary reasons why we're seeing this year-over-year decline. With that said, a SAAR of 17 million is certainly not an unhealthy number — September is still shaping up to be a robust month for sales."
US Airlines Score Win As Congress Drops ‘Reasonable Fee’ Rules - The U.S. airline industry scored a win on Saturday as bipartisan congressional legislation dropped plans to mandate “reasonable and proportional” baggage and change fees, but included other new passenger protections. After weeks of negotiations, a 1,200-page bill to reauthorize the Federal Aviation Administration (FAA) was unveiled early Saturday that would require the FAA to set minimum dimensions for passenger seats — including legroom and width — and prohibits airlines from involuntarily removing passengers from flights after they’ve cleared the boarding gate. In April 2017, video went viral on social media of 69-year-old passenger David Dao being dragged from a United Airlines (UAL.O) flight at Chicago’s O’Hare International Airport after he refused to give up his seat to make room for crew members. United apologized and promised not to remove seated passengers to make room for other passengers. But airlines had heavily lobbied against new rules limiting fees. U.S. airlines revenue from baggage and reservation change fees increased from $5.7 billion in 2010 to $7.5 billion in 2017. Other fees are not reported to regulators. The compromise bill did not include language adopted by a Senate Committee in 2017 that would have required the reasonable fee rules. It was struck in a compromise unveiled by Senate Commerce Committee Republican chairman John Thune and House Transportation and Infrastructure Committee chairman Bill Shuster, a Republican, along with the top Democrats on the two committees Senator Bill Nelson and Representative Peter DeFazio.
How bad maps are ruining American broadband - Like countless other American cities, Cleveland, Ohio, suffers from a lack of meaningful broadband competition. With only one or two largely apathetic ISPs to choose from, high prices, slow speeds, limited deployment, and customer service headaches are the norm. It’s particularly bad in the city’s poorer, urban areas. AT&T has avoided upgrading lower-income minority neighborhoods at the same rate as higher-income parts of the city, despite decades of subsidies and tax breaks intended to prevent that from happening, according to a report by the National Digital Inclusion Alliance (NDIA). Even in more affluent neighborhoods, users are lucky if they have an ISP that can deliver speeds over 50 Mbps. The problem is much bigger than Cleveland, but the FCC isn’t ready to do much about it. US customers pay some of the highest prices for broadband in the developed world, and broadband availability is sketchy at best for millions of Americans. But instead of tackling that problem head on, the FCC is increasingly looking the other way, relying on ISP data that paints an inaccurately rosy picture of Americans’ internet access. And as long as regulators are relying on a false picture of US broadband access, actually solving the problem may be impossible. As it currently stands, ISPs are required to deliver Form 477 data to the FCC indicating broadband availability and speed twice a year. But the FCC doesn’t audit the accuracy of this data, despite the fact that ISPs are heavily incentivized to overstate speed and availability to downplay industry failures. The FCC also refuses to make the pricing data provided by ISPs available to the public. Worse, the FCC’s methodology declares an entire ZIP code as “served” with broadband if just one home in an entire census block has it. As a result, the government routinely declares countless markets connected and competitive when reality tells a very different story.
California wants to stop hackers from taking control of smart gadgets MIT Technology Review California has been a pioneer when it comes to shaping policies to tackle everything from climate change to consumer privacy. Now it could take the lead in yet another area: cybersecurity for online gadgets. The state’s lawmakers have just sent California’s governor, Jerry Brown, draft legislation that aims to tighten the security of web-connected devices.If he approves it, California will become the first US state with a law specifically tailored for the internet of things (IoT).It’s not hard to see why such legislation is needed. Barely a day goes by without some new report of hackers compromising all kinds of products, from web-connected dolls to security cameras. And billions of new connected devices will be flooding onto the market over the next few years.Some experts think it’s only a matter of time before hacked gadgets cause serious injuries, and perhaps even kill people (see “For safety’s sake, we must slow innovation in internet-connected things”).California’s legislation, which would come into effect in January 2020, requires connected devices to have a “reasonable” security feature or features “appropriate to the nature and function of the device.” It also requires manufacturers to either create a different default password for every gadget they sell or prompt users to change a common default password before they use a device for the first time. All too often, gadgets still come with common hard-coded passwords. That means if hackers can crack the password, they can take control of a large number of similar devices. Other security controls governing things like communication with different devices vary widely, and often reflect industry-developed standards. There are federal and state laws that dictate how consumer data gathered via IoT products should be handled. However, until now there hasn’t been legislation that focuses on IoT security.
Honeywell’s ‘smart’ thermostats had a big server outage and a key feature stopped working entirely — and customers were furious - The internet-enabled thermostats made by $122 billion appliance giant Honeywell has been having server issues, leaving some customers unable to control their temperature via an app as advertised — and they're furious about it. Customers flocked to Twitter to complain about technical issues that plagued Honeywell Home, the 112-year-old company's recent line of internet-connected devices. They said a major outage started several days ago, and problems have been ongoing for weeks. Those same customers have also complained about what they say is a lack of communication from Honeywell. In a statement, Honeywell disputes those complaints, and says that the problems were only for a short period on Tuesday. "Earlier today, a small number of customers using Honeywell's Total Connect Comfort app experienced delays, which have been resolved. Their thermostats performed as designed locally, however the temperature could not be set remotely," said Honeywell spokesperson Bruce Eric Anderson in a prepared statement. As Anderson says, the thermostats were still controllable if owners have physical access, but the ability to control the temperature remotely via app — the main selling point of these devices — had been offline. This can cause issues for people managing multiple properties, like landlords, or those customers with mobility issues. The outage highlights one of the persistent problems with the so-called "internet of things:" The usefulness of products are often dependent on the reliability of internet services they have no control over — and when they crash, there's nothing people can do.
Walmart to salad growers: If you want to sell, you have to blockchain - Los Angeles Times: Produce companies that want to sell lettuce and salads at Walmart and Sam’s Clubs will have to learn the skills of cryptocurrency traders, the giant retailer announced Monday. By the end of January, 2020, Walmart will require California-based produce companies such as Dole, Taylor Farms and Fresh Express to join a blockchain-based supply chain that the mega-retailer has been experimenting with for nearly two years to enable Walmart to trace the source of food-borne illness.Shifting to the encrypted system of shared information made famous by bitcoin would enable Walmart and its suppliers to contain and limit recalls involving Walmart and Sam’s Club stores, a $280-billion grocery empire. “We’re requiring our suppliers of fresh leafy greens to be able to trace back their product to the source, to the farms, in seconds and not days or weeks,” Frank Yiannas, Walmart’s vice president for food safety, said Monday. The move by Walmart could upend the way the produce industry controls its supply lines — a system that lags behind not just last century’s “digital age,” but the current era of “smart” interconnected devices and data encryption capabilities. Produce companies centered in the Salinas Valley and Yuma, Ariz., were hit hard this year by a nationwide scare over romaine lettuce tainted with E. coli bacteria. Five people died and 205 were sickened in the 36-state outbreak that began in April and prompted an unusual national advisory for consumers to avoid any lettuce grown in the Yuma region. Consumers were largely baffled and unable to find out where their lettuce was grown, officials acknowledged at the time. The strain of bacteria responsible for the illnesses was found in a Yuma-area irrigation canal, but only one farm was identified as a source of an isolated group of illnesses among Alaska prisoners. Authorities believe there were multiple farms that grew tainted lettuce but were unable to prove the thesis before lettuce production halted in the region. By the time it was declared over in July, the outbreak was the most extensive and deadly ever to hit the produce industry.
US Goods Trade Deficit Surges Near Record High (Don't Tell Trump) - Do not show this to President Trump, he will not be happy... In the few months since President Trump unleashed his trade war, predicated on managing back America's massive merchandise trade deficit, things have gone very wrong, judging by the numbers. Against expectations of a $70.6 billion deficit, August's goods trade balance plunged to $75.8 billion - just shy of July 2008's record high deficit of $76.025 billion... Notably, the trade deficit was worse than the forecast range $68b to $73.9b from 36 economists. Whether this reflects pre-emptive actions ahead of actual tariffs is unclear:
- Exports fell 1.6% in Aug. to $137.912b from $140.199b in the prior month
- Imports rose 0.7% to $213.742b in Aug. from $212.246b in July
With exports of food and beverage and Industrial supplies plunging in August (and consumer goods surging). Imports were dominated by a 3.2% increase in Automotives.
Trade gap in August widens to six-month high as exports fall - The U.S. trade deficit in goods in August widened to a seasonally adjusted $75.8 billion, according to a preliminary report released by the Census Bureau that excludes services.Exports fell 1.6% while imports rose 0.7% in what looks to be the worst showing since February.Retail inventories rose 0.8% and wholesale inventories increased 0.7%.While the widening trade gap should reduce third-quarter GDP, the increase in inventories may offset that.Americans snapped up foreign autos, which rose by 3.2% during the month. But exports deteriorated — in part because of China’s sudden resistance to U.S. soybeans, as foods, feeds and beverages exports tumbled 9.5%. China has stopped buying soybeans in retaliation to the U.S. tariffs against the second-largest economy. There’s good and bad news in the trade picture. Imports have been strong because the U.S. economy has been growing rapidly; conversely, tariffs enacted by the White House against China and a host of aluminum and steel producers have raised the cost of doing business. Ahead of the government’s report, JPMorgan Chase analysts calculated that the trade-weighted effective U.S. tariff rate has climbed to 3% from 1.7% last year. Increasing tariffs further on China, as proposed, would take that rate to 6.2%, and a 25% tariff on all autos would boost the U.S. rate to 9.1%. The harder line comes as Americans have their doubts on trade’s effectiveness. A study from the Pew Research Center found that while 74% thought trade was “good,” just 36% thought trade creates jobs and only 31% thought it increased wages.
Headline Durable Goods Orders Up 4.5% in August - The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders: New orders for manufactured durable goods in August increased $11.1 billion or 4.5 percent to $259.6 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 1.2 percent July decrease. Excluding transportation, new orders increased 0.1 percent. Excluding defense, new orders increased 2.6 percent. Transportation equipment, also up two of the last three months, led the increase, $10.9 billion or 13.0 percent to $95.3 billion. Download full PDF The latest new orders number at 4.5% month-over-month (MoM) was better than the Investing.com consensus of 1.9%. The series is up 11.8% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at 0.1% MoM, which was worse than the Investing.com consensus of 0.4%. The core measure is up 7.3% YoY.If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 3.3% MoM and up 3.9% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is down 0.5% MoM and up 7.5% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.
Durable Goods Headline Beat Hides Disappointing Slump In Business Spending- After a surprise tumble in July, preliminary August Durable Goods Orders were expected to rebound aggressively and rebound they did - jumping 4.5% MoM (+2.0%exp), the biggest jump since Feb '18. However, scratch below the surface and things are not nearly as positive as the headline suggests. Durable Goods Ex Transportation rose just 0.1% MoM in August, the weakest growth since January... Well below the 0.4% expected jump. However, it gets worse, as Capital Goods Orders Non-Defense, Ex Aircraft - the main proxy for business spending - tumbled 0.5% Tow more notable aspects - car production dropped but war spending surged again...
- Bookings for motor vehicles and parts fell 1 percent; communications equipment up 0.7 percent, computers and related products down 0.8 percent.
- Defense capital-goods orders jumped 44.4 percent, most since February.
Thank goodness we are at war in so many places!!
New orders for key US-made capital goods unexpectedly dropped in August - New orders for key U.S.-made capital goods fell in August after four straight months of strong gains, while shipments barely rose, but that will probably not change expectations of solid growth in business spending on equipment in the third quarter.The Commerce Department said on Thursday that orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.5 percent last month, pulled down by a decline in demand for computers and electronic products.There was also a decrease in motor vehicle orders. Data for July was revised slightly lower to show the so-called core capital goods orders increasing 1.5 percent instead of the previously reported 1.6 percent surge. Economists polled by Reuters had forecast core capital goods orders rising 0.4 percent last month. Core capital goods orders increased 7.4 percent on a year-on-year basis.Shipments of core capital goods edged up 0.1 percent last month after an upwardly revised 1.1 percent gain in July. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. They were previously reported to have increased 1.0 percent in July.With business confidence at multi-year highs, in part buoyed by a $1.5 trillion tax cut package, August's surprise drop in core capital goods orders is likely to be temporary. There are, however, fears that an escalating trade war between the United States and China could hurt confidence and undercut both consumer and business spending. Business spending on equipment has risen since the fourth quarter of 2016. It is expected to underpin economic growth in the third quarter, even as trade is expected to weigh on output.Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, surged 4.5 percent in August as demand for transportation equipment jumped 13.0 percent. That followed a 1.2 percent drop in durable goods orders in July. Orders for motor vehicles and parts fell 1.0 percent last month. Orders for civilian aircraft soared 69.1 percent last month. Boeing reported on it website that it had received 99 aircraft orders in August, up from 25 in July.
Dallas Fed: "Texas Manufacturing Expansion Continues amid Increased Uncertainty" --From the Dallas Fed: Texas Manufacturing Expansion Continues amid Increased Uncertainty Texas factory activity continued to expand in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, dipped six points to 23.3, indicating output growth continued but at a slower pace than last month.Other indexes of manufacturing activity also suggested slower expansion in September. The new orders index fell nine points to 14.7, its lowest reading in six months. Similarly, the growth rate of orders index slipped to 11.5, also a six-month low. The capacity utilization index retreated slightly to 21.6, while the shipments index fell five points to 20.8.Perceptions of broader business conditions remained positive this month, although outlooks were less optimistic and uncertainty increased further. The general business activity index edged down but remained highly elevated at 28.1. The company outlook index held above average but retreated nine points to 18.2, its lowest reading in more than a year. The relatively new index measuring uncertainty regarding companies’ outlooks moved up four points to a new high of 19.9. The employment index remained positive but dropped 11 points to 17.7. One-quarter of firms noted net hiring, compared with 7 percent noting net layoffs. The hours worked index moved down to 12.7.So far the regional surveys for September have indicated solid growth.
Richmond Fed: "Fifth District Manufacturing Activity Was Robust in September" - From the Richmond Fed: Fifth District Manufacturing Activity Was Robust in September - Fifth District manufacturing activity was robust in September, according to results of the most recent survey from the Federal Reserve Bank of Richmond. The composite index rose from 24 in August to 29 in September, buoyed by increases in shipments and new orders, while the index of the third component, employment, dropped. Survey respondents were optimistic, expecting growth to continue in the next six months.The employment index fell in September but remained positive, while growth in wages and the average workweek expanded. Manufacturing firms continued to struggle to find employees with the skills they needed, and they expect this difficulty to continue in the coming months.So far the regional surveys for September have indicated solid growth.
Kansas City Fed Survey: Activity Continued at Solid Pace -- The latest index came in at 13, down slightly from 14 last month, which indicates that activity continued to expand in September but at a slower pace. The future outlook decreased to 27 from 29 last month. Here is a snapshot of the complete Kansas City Fed Manufacturing Survey.
September Regional Fed Manufacturing Overview - Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia.Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP.The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated." Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for September is 22.2, down from the previous month's 22.9. It is below its all-time high of 25.1, set in May 2004.
Weekly Unemployment Claims: Up 12K, Worse Than Forecast - This morning's seasonally adjusted 214K new claims, up 12K from the previous week's revised figure, was worse than the Investing.com forecast of 208K.
Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term Ideas- Hurricanes Katrina and Rita devastated the U.S. Gulf Coast in 2005, destroying homes and businesses and causing mass evacuations. The economic effects of disasters are often studied at a regional level, but little is known about the responsiveness of individuals’ employment and earnings to the damages, disruption, and rebuilding—particularly in the longer run. Our analysis is based on data that tracks workers over nine years, including seven years after the storms. We estimate models that compare the evolution of earnings for workers who resided in a storm-affected area with those who resided in a suitable control counties. We find that, on average, the storms reduced the earnings of affected individuals during the first year after the storm. These losses reflect various aspects of the short-run disruption caused by the hurricanes, including job separations, migration to other areas, and business contractions. Starting in the third year after the storms, however, we find that the earnings of affected individuals outpaced the earnings of individuals in the control sample. We provide evidence that the long-term earnings gains were the result of wage growth in the affected areas relative to the control areas, due to reduced labor supply and increased labor demand, especially in sectors related to rebuilding. Despite the short-term earnings losses, we find a net increase in average quarterly earnings among affected individuals over the entire post-storm period. However, those who worked in sectors closely tied to tourism or the size of the local population experienced net earnings losses.
Struggling U.S. Farmers Worry About a Resurgent Russia - Amid a multiyear, brutal slump in grain prices, Russian agriculture is thriving. The country exported more than 40 million tons of wheat in the year ending June, around 50% more than the previous year, and the highest level for any country in the past quarter-century. Russia overtook the U.S. as the world’s biggest exporter of wheat in 2016, and again beat the U.S. in 2018.The growing Russian competition is one more pressure point threatening American farming, which is facing the biggest wave of farm closures in the U.S. since the 1980s. A global oversupply of grain has pushed prices down to around half the level in 2012, when prices peaked, making it difficult to turn a profit in dollars.U.S. trade disputes with China and other countries could make Russian wheat even more attractive, if big buyers apply retaliatory tariffs to U.S. grains. China has added a 25% tariff on U.S. wheat, but Chinese restrictions on imports from Russia have prevented Moscow from taking advantage yet, according to Swithun Still, director at Switzerland-based Solaris Commodities SA, which trades Russian grain.For now, “it’s not the trade war, it’s economics” that is helping Russian wheat compete, even in places close to the U.S. such as Mexico, Mr. Still said. Russian “quality got better, and it’s cheaper.” Russian farmers come out ahead when export earnings are converted into rubles. Since the Russian currency has depreciated, a dollar now converts to twice as many rubles as it did in 2014. Russia has a similar advantage against the euro and other currencies. Russian farmers can cover their costs at home to keep planting, and also undercut Western competitors on price.
New Amazon facility in Oregon: Tax cuts for corporation, poverty wages for workers --After years of tax-break negotiation and construction, a new Amazon fulfillment center will soon be running at full speed in Troutdale, Oregon, a town 15 miles east of Portland. Amazon anticipates the opening of 1,500 full-time positions at the fulfillment center, which would immediately double the number of Oregon employees working for the Seattle-based internet retail and logistics giant. Residents in the area have been inundated with radio advertisements and news articles about the new facility, which present Amazon as a benevolent provider of “competitive wages, benefits, stocks, and a pre-paid tuition program.” Presenting the $14 an hour that will be paid at the fulfillment center as generous is a cruel joke, especially given the staggeringly high rental and living costs in the greater Portland area.The massive 855,000-square foot facility is the first of its scale in Oregon, and cost $180 million to build. Operating with Amazon’s notorious logistics model, based on fast-paced labor and automated machines, the fulfillment center will specialize in large-sized products, such as exercise equipment and furniture. There will also be massive fulfillment centers opening in Salem, Oregon this year, and in North Portland next year.Local and state officials offered a total of $213.1 million in tax breaks to provide Amazon free rein to expand its exploitation of the working class in Oregon, specifically in rural and suburban resource-poor areas of the state. Amazon has acquired $1.12 billion in tax cuts across the United States since 2000, but Oregon achieved the highest amount promised to the corporation of all fifty states.Of this giant amount, $176 million would come through Oregon’s Strategic Investment Program, for a proposed data center in the city of Hermiston. Corporations in Oregon pay below 8 percent in excise taxes, and account for only 38 percent of all state taxes, the 4th lowest percentage of the 50 states and Washington D.C. These tax cuts will be paid for by working and middle-class people in the state through the form of more cuts in essential public services. Oregon already trailed West Virginia and Louisiana in per pupil school funding, according to the 2016 Annual Survey of School System Finances, U.S. Census Bureau. Several school districts, including Portland, have carried out budget cuts and layoffs.
Amazon’s Aggressive Anti-Union Tactics Revealed in Leaked 45-Minute Video Amazon, the country’s second-largest employer, has so far remained immune to any attempts by U.S. workers to form a union. With rumblings ofemployee organization at Whole Foods—which Amazon bought for $13.7 billion last year—a 45-minute union-busting training video produced by the company was sent to Team Leaders of the grocery chain last week, according to sources with knowledge of the store’s activities. Recordings of that video, obtained by Gizmodo, provide valuable insight into the company’s thinking and tactics.Each of the video’s six sections, which the narrator states are “specifically designed to give you the tools that you need for success when it comes to labor organizing,” take place in an animated simulacrum of a Fulfillment Center. The video’s narrators are clad in the reflective vests typical of the real-world setting. “We are not anti-union, but we are not neutral either,” the video states, drawing a distinction that would likely be largely academic to potential organizers. To expound on what non-neutrality might look like, the video adds in plain language (emphasis ours): “We do not believe unions are in the best interest of our customers, our shareholders, or most importantly, our associates. Our business model is built upon speed, innovation, and customer obsession—things that are generally not associated with union. When we lose sight of those critical focus areas we jeopardize everyone’s job security: yours, mine, and the associates’.”Amazon’s anti-union training video comes to light amid an image crisis for the company. Years of reporting on low pay and poor working conditions reached a fever pitch late this summer when Senator Bernie Sandersproposed legislation directly challenging the company’s reliance on social subsidy programs. Likewise, Amazon lost more than it gained in a charm offensive ploy that rewarded its warehouse ambassadors for tweeting nice things about the company—like how they are free to use facility restrooms and are not slaves. Gizmodo has opted to not publish the video itself in order to maintain source anonymity.
Unions Are Lying, Cheating Rats’: Leaked Video Reveals Amazon’s Belligerent Anti-Worker Tactics -- As Amazon works to combat its public image as a starvation-wage employer by doling out mere pennies in pay hikes and deploying an army of workers to sing the company's praises on Twitter, a video leaked on Wednesday revealed that the trillion-dollar company is continuing to work feverishly behind the scenes to crush any attempts by workers to unionize and bargain collectively for better wages and working conditions. The 45-minute training video—which, according to Gizmodo, was sent to managers of the Amazon-owned Whole Foods last week—instructs company leaders on how to detect "early warning signs of potential organizing," which include workers "suddenly hanging out together" and using "union words" like "living wage." In a tweet responding to the video on Wednesday, the AFL-CIO—America's largest federation of unions—wrote: "We like those 'union words' which gave us a middle class. Shame on Amazon." It speaks volumes to how Amazon views its workers when they use paranoid rhetoric toward unionizing like "unusual group behavior" pic.twitter.com/Ope6Ur53tb While warning managers not to openly threaten workers who they believe are engaged in organizing efforts, the video encourages company leaders to give their "opinions" on unionization.
'Someone is going to die in this truck': Amazon drivers and managers describe harrowing deliveries inside trucks with 'bald tires,' broken mirrors, and faulty brakes - Some Amazon delivery drivers say the trucks they have used to transport packages to customers' doorsteps were beaten up and falling apart.In interviews with Business Insider, current and recently employed drivers and managers of Amazon-affiliated courier companies described anxiety-ridden shifts where they drove in trucks with broken windows, cracked mirrors, jammed doors, faulty brakes, and tires with poor traction."You are riding on bald tires in trucks with broken mirrors and messed-up doors," said Arnold Burns, a former delivery driver for Amazon-affiliated TL Transportation in Langhorne, Pennsylvania. "They have a serious problem with upkeep of their vehicles."Omer Childs, a former driver, said she drove vans with broken windshields, broken doors, and low tire pressure when she worked for Amazon-affiliated Second Samuel Transportation in Michigan.TL Transportation and Second Samuel Transportation did not respond to requests for comment.Sid Shah managed vehicle inspections and repairs for DeliverOL, another Amazon-affiliated company, out of an Amazon facility in Aurora, Colorado.He described vehicle upkeep as "pathetic" and said it was a constant battle to get funding authorization for repairs. Workers were regularly forced to drive trucks with expired registration tags, bald tires, missing side mirrors, jammed doors, broken lights, and other problems, he said."I had brake pads and brake discs on one van that needed to be replaced. I called [DeliverOL] and said someone is going to die in this truck if they drive it," Shah recalled. "They forwarded me to some maintenance guy who said, 'You don't need new brake pads — they aren't under warranty.' "If brakes are screeching and it's literally rubbing metal to metal, you need to fix your brakes," he said. DeliverOL did not respond to requests for comment.
Michigan governor prepares to deploy National Guard to replace locked-out roadway workers In an escalation of the three-week lockout of roadway construction workers on 100 highway projects throughout Michigan, the contractors’ association and Republican Governor Rick Snyder are preparing to use National Guard troops as strikebreakers.On September 4, the Michigan Infrastructure and Transportation Association (MITA)—which is made up large concrete, excavation, asphalt and other private construction companies, locked out as many as 2,000 construction workers after the labor agreement expired in June and negotiations on a new contract reportedly led to a conflict over hiring practices and health care benefits. The workers, members of Operating Engineers Local 324, run machines like earth movers, front-end loaders, bucket loaders on tracks, cranes and other heavy equipment.During the road-building season, it is not uncommon for these men and women to work 12 hours a day, seven days a week. Workers need the extra money they make on overtime to support their families through the winter months and the extra hours they bank in fringe benefit funds to maintain their health insurance and retirement funds for the time when they are off work.On Friday afternoon, WXYZ Channel 7 reported that the MITA was “working with the National Guard on how to best deploy National Guard equipment operators to road projects currently shut down because of a defensive lockout with Operating Engineers, Local 324.”
Workers Overdose On The Job, And Employers Struggle To Respond — Jimmy Sullivan prepared for his job as a bricklayer the same way every morning for years: injecting a shot of heroin before leaving his car. The first time he overdosed on the job, in 2013 at a Virginia construction site, a co-worker who is his cousin stealthily injected a dose of Narcan, an opioid antidote, into Sullivan’s leg. He woke up and went straight back to work. The second time, in 2014, his cousin revived him again, and after resting for an hour in his car, Sullivan was back on the job. His boss told him not to let it happen again. But within a month, Sullivan had again overdosed on the job site. This time, another worker called 911. After a few hours at the hospital, he went back to work.As the opioid epidemic continues to rage across the country, with a record 72,000 drug overdose deaths estimated in 2017, the fallout is increasingly manifesting itself at construction sites, factories, warehouses, offices and other workplaces. A stunning 70 percent of employers reported that their businesses had been affected by prescription drug abuse, including absenteeism, positive drug tests, injuries, accidents and overdoses, according to a 2017 survey by the National Safety Council, a research and advocacy organization.At least 217 workers died from an unintentional drug or alcohol overdose while at work in 2016, up 32 percent from 2015, according to the Bureau of Labor Statistics. Workplace overdose deaths have been increasing by 25 percent or more a year since 2010. Those numbers don’t include the many more overdoses that don’t end in death, like Sullivan’s, or accidents caused primarily or partly by drug impairment.Incident reports from the Occupational Safety and Health Administration paint a grim national picture of workplace overdose deaths: a mechanic at a Fiat Chrysler Automobiles plant in Michigan, a construction worker on a barge in Rhode Island, a crawfish fisherman in Louisiana and a Sam’s Club worker who died while stocking shelves in a Texas warehouse. But despite the growing problem, many employers have turned a blind eye to addiction within their workforce, ill-equipped or unwilling to confront a complicated issue they do not know how to address, according to researchers and business executives.
American nuns win victory holding Smith & Wesson accountable A group of American nuns has won a second victory in their battle to force gun manufacturers to do more to prevent gun violence, convincing shareholders of American Outdoor Brands – formerly known as Smith & Wesson – to require the company to report on what it’s doing to advance gun safety.Shareholders of the gun company formerly known as Smith & Wesson voted on Tuesday to approve a shareholder resolution introduced by a coalition of nuns that will require the company to report on what it’s doing to monitor how its guns are used in violence, as well as what it’s doing to make its products safer.Shareholders of Sturm Ruger, another major gun manufacturer, approved a similar resolution by an overwhelming 69% majority in May, just three months after the Parkland, Florida, school shooting that left 17 people dead.On Monday, Sister Judy Byron, who introduced the resolution during Tuesday’s virtual shareholder meeting, said she was not sure if the political will to hold gun companies accountable had dissipated in the seven months since the Parkland shooting. The approval of the resolution suggests that concern over gun violence – and shareholders’ worries about what long-term impact America’s escalating mass shooting problem might have on gun companies – is holding strong. Both American Outdoor Brands and Sturm Ruger have bristled at the shareholder activism from religious groups, even though the resolution American Outdoor Brands shareholders approved simply requested that the companies report to shareholders about what the company is doing to advance “gun safety measures and the mitigation of harm associated with gun products”, as well as what reputational and financial risks the company faces as a result of gun violence.
The number of undocumented immigrants in the United States: Estimates based on demographic modeling with data from 1990 to 2016 – Abstract: We apply standard demographic principles of inflows and outflows to estimate the number of undocumented immigrants in the United States, using the best available data, including some that have only recently become available. Our analysis covers the years 1990 to 2016. We develop an estimate of the number of undocumented immigrants based on parameter values that tend to underestimate undocumented immigrant inflows and overstate outflows; we also show the probability distribution for the number of undocumented immigrants based on simulating our model over parameter value ranges. Our conservative estimate is 16.7 million for 2016, nearly fifty percent higher than the most prominent current estimate of 11.3 million, which is based on survey data and thus different sources and methods. The mean estimate based on our simulation analysis is 22.1 million, essentially double the current widely accepted estimate. Our model predicts a similar trajectory of growth in the number of undocumented immigrants over the years of our analysis, but at a higher level. While our analysis delivers different results, we note that it is based on many assumptions. The most critical of these concern border apprehension rates and voluntary emigration rates of undocumented immigrants in the U.S. These rates are uncertain, especially in the 1990’s and early 2000’s, which is when—both based on our modeling and the very different survey data approach—the number of undocumented immigrants increases most significantly. Our results, while based on a number of assumptions and uncertainties, could help frame debates about policies whose consequences depend on the number of undocumented immigrants in the United States.
An Untold Number of Indigenous Children Disappeared at U.S. Boarding Schools. Tribal Nations Are Raising the Stakes in Search of Answers. -- When Yufna Soldier Wolf was a kid, she was made well aware of why her family members only spoke English, and why they dressed the way they did. Her grandfather and other elders used to recount their experiences at boarding schools, where the government sent hundreds of thousands of Indigenous children, from nearly every Indigenous nation within U.S. borders, to unlearn their languages and cultures. “A lot of them were physically abused, verbally abused, sexually abused,” she said. At the center of the stories were the children who never came home from the Carlisle Indian Industrial School, where her grandfather was a student. “My grandpa used to say, ‘Don’t forget these children. Don’t forget my brother — he’s still buried there,’” Soldier Wolf said. She promised that she would remember. The school, which opened in 1879 in Carlisle, Pennsylvania, and closed its doors 100 years ago this month, was the United States’ most notorious Indian boarding school and the starting point for more than a century of child removal policies that continue to tear apart Indigenous families today. Carlisle, and hundreds of federally funded boarding schools like it, were key to the U.S. government’s project of destroying Indigenous nations and indoctrinating children with military discipline and U.S. patriotism. It was Soldier Wolf’s closeness to her family and their stories of abuse at the school that inspired her to become the Northern Arapaho tribal historic preservation officer and work on the return of the children lost at Carlisle. In June, after about a decade of back-and-forth with the U.S. Army, which owns the Carlisle property, Soldier Wolf stood present as Little Plume, the last of three Northern Arapaho children buried there, was exhumed and sent back to the Wind River Reservation in Wyoming. The remains of two others, 14-year-old Horse and 15-year-old Little Chief, Soldier Wolf’s great uncle, had been returned the previous August. The Northern Arapaho Tribe is the first to succeed in bringing home children interred at Carlisle’s military cemeteries — but it won’t be the last, and Carlisle is only the tip of the iceberg.
Why We Hyperparent, Helicopter and Heavily Manage Our Children It’s official: American kids are wimps. As the post-Millennial generation starts to leave the nest, growing numbers of professors and employers are noticing something that therapists have been discussing for awhile: this generation is far too fragile. They’re terrified of failure. They can’t take a joke. They want trigger warnings and safe spaces to protect them from scary ideas. Admittedly, there are upsides to this middle-aged cautiousness: compared to their parents at similar ages, teens today are more leery of recreational drugs and less likely to get pregnant. They do love their prescription medications, however. Antidepressants and prescription stimulants play a big role in high school and college life today. How did we end up with so many can’t-do young people? One theory is that American kids have been coddled and overprotected into a state of helpless, fearful dependence. Modern parents are bombarded with horrific stories about kidnappings and tragic accidents, creating the (false) impression that the world is far more dangerous than it used to be. It isn’t surprising, then, that so many become “helicopters” or “lawn mowers,” shielding their kids from anything that might be upsetting, scary, or difficult. Coddling is so pervasive today that families that encourage independence may be harassed by law enforcement or Child Protective Services. Skenazy’s “free-range kids” movement has worked to win legal protections for families that allow children to engage in such perilous activities as walking dogs, playing in parks, and riding city buses. Modern parents aren’t just a product of scary news stories and overzealous lawsuits. From our first positive pregnancy test, we are inundated with reminders that we, as progenitors, are expected to be full-fledged life managers to our children from birth through adulthood. The village is gone, and in its absence we have been charged with arranging every aspect of life in such a way as to secure our kids’ well-being. Why wouldn’t we walk them to the bus stop?
Study links restricting screen time for kids to higher mental performance -- Parents who possess the resolve to separate their children from their smartphones may be helping their kids' brainpower, a new study suggests.Children who use smartphones and other devices in their free time for less than two hours a day performed better on cognitive tests assessing their thinking, language and memory, according to a study published Wednesday in the Lancet Child & Adolescent Health.The study assessed the behavior of 4,500 children, ages 8 to 11, by looking at their sleep schedules, how much time they spent on screens and their amount of exercise, and analyzed how those factors affected the children’s mental abilities.The researchers compared the results with national guidelines for children’s health. The guidelines recommend that children in that age group get at least an hour of physical activity and no more than two hours of recreational screen time a day and nine to 11 hours of sleep each night.The researchers found that only five percent of children met all three recommendations. Sixty-three percent of children spent more than two hours a day staring at screens, failing to meet the screen-time limit. Children who did not meet all three criteria performed worse on thinking, language and memory tests than kids who met the recommendations, according to the study. But reduced screen time was positively linked to superior mental performance, the study found.
Exploring the effects of student absenteeism -- EPI - With the great majority of states choosing some measurement of school attendance as their so-called “fifth metric” required by the Every School Succeeds Act,1 researchers, policymakers, and advocates are questioning how useful these metrics are at informing us about student achievement and education equity, as well as guiding policy. Our recently released report, “Student absenteeism: Who misses school and how that matters for performance,” examines how much school students are missing, which groups of students are missing the most school, and how bad missing school is for performance. We learned that about one in five students—19.2 percent—missed three or more days of school in the month before they took the 2015 National Assessment of Educational Progress (NAEP) assessment. Students who have been diagnosed with a disability, Hispanic-English language learners, Native Americans, and students who are eligible for free lunch, were the most likely to miss school, while Asian students were rarely absent. Our findings also confirmed that missing school negatively effects performance, even after accounting for student and school characteristics (including gender, race/ethnicity, language status, disability status, income, and school socioeconomic characteristics). Even students with only occasional absences were negatively affected. For these students, relative to those who did not miss school, absenteeism makes a moderate dent in their performance (a tenth of a standard deviation), but the decline in performance becomes more troubling as the number of missed days increases (up to about two-thirds of a standard deviation for those missing more than 10 school days). Unfortunately, our findings mirror those of many other studies in terms of the groups that face particular disadvantage. Over a quarter of students with Individualized Education Plans (IEPs), and nearly as many—23.2 percent—of students eligible for free lunch missed three or more school days (compared with 18.3 percent of non-IEP students and 15.4 percent of students who are ineligible for meal subsidies). Both low-income and IEP students are also more than twice as likely as their non-poor and non-IEP peers to be absent from school for more than 10 days, i.e. to miss about half of their days. These findings extend to race, ethnicity, and language status as well. Hispanic-English Language Learners (ELL) and Native American students were the most likely to miss 3 or more days of school (24.1 and 24.0 percent respectively), while only about 9 percent of Asian-non-ELL students did. Hispanic-ELL students and Asian-ELL students are the most likely to miss more than 10 school days per month: 3.9 percent and 3.2 percent respectively did so (compared with their non-ELL counterparts: non-ELL Hispanic: 1.6 percent, non-ELL Asian: 0.1 percent).
Vanished Classmates: The Effects of Local Immigration Enforcement on Student Enrollment - NBER - Immigration and Customs Enforcement (ICE) is the federal law-enforcement agency with primary responsibility for enforcing immigration laws within the U.S. However, for over a decade, ICE has formed partnerships that also allow local police to enforce immigration law (i.e., identifying and arresting undocumented residents). Prior studies, using survey data with self-reported immigrant and citizenship status, provide mixed evidence on the demographic impact of these controversial partnerships. This study presents new evidence based on the public-school enrollment of Hispanic students. We find that local ICE partnerships reduce the number of Hispanic students by nearly 10 percent within 2 years. We estimate that the local ICE partnerships enacted before 2012 displaced over 300,000 Hispanic students. These effects appear to be concentrated among elementary-school students. We find no corresponding effects on the enrollment of non-Hispanic students. We also find no evidence that ICE partnerships reduced pupil-teacher ratios or the percent of students eligible for the National School Lunch Program (NSLP).
After Parkland: The militarization of high schools in the US -- The February 14 mass school shooting at Stoneman Douglas High School in Parkland, Florida was a significant political event in the United States. The indiscriminate killing of 17 innocent people provoked horror and outrage. Hundreds of thousands of young people, some not old enough even to vote, took to the streets to protest the killings and the indifference of lawmakers to the conditions that produce such atrocities. Mass casualty incidents, or shootings where four or more people are killed, occur on average every 16 days in the US. Such a rate is more than ten times the average 20 years ago. School shootings have become a fact of life for young people. In the aftermath of Parkland, the Democratic Party in particular worked to control the protests and focus them on gun control reform, covering up the real causes of mass shootings—the militarized state of American society, inequality, the general brutalization of social relations, the destruction of social programs and health care.More than six months after the Parkland tragedy, nothing has been done to resolve such issues. Instead, as high school classes began last month, many students were met with what amounted to a militarized fortress, complete with armed police officers, chain link fences and security cameras. At Douglas High School, the site of the tragedy last February, the Broward County School system has hired 18 additional security officers to patrol the hallways. The team includes full time police officers supplied by the county sheriff’s department, campus monitors and “security specialists,” according to the Fort Lauderdale Sun-Sentinel. The publication notes that schools throughout the district are employing such enhanced security measures as well. According to the Sun-Sentinel, “On the first day of school next year, there will be only one way to get in during the school day at 135 of Broward’s 230 schools. Although many doors will be open for arrival and dismissal, signs and fences will steer visitors during the day toward a ‘Welcome Center,’ where they will have to show their IDs to enter the school.” The publication also reported that students and faculty are now required to wear their identification at all times.
Teachers’ Strikes May Reinvigorate US Labor Movement - Last spring, public school teachers led an inspiring wave of strikes across the United States. That momentum has carried over into the 2018-19 school year. With school opened for less than a month, teachers in several districts in Washington state have already won significant gains in pay, benefits and school funding through walkouts. In Puerto Rico, teachers struck on the third day of school to oppose school closures demanded by financial vultures, who continue to ravage the island. And in Los Angeles, the country’s second-largest school district, teachers have authorized a strike if their demands to prevent wage and benefit cuts and against school privatization aren’t met. In addition to the strike and potential walk-outs, teachers in West Virginia have formed WV United, according to Labor Notes reporter Dan Dimaggio. WV United is a rank-and-file caucus consisting of members of both the nation’s major teachers unions, the National Education Association, and the American Federation of Teachers. WV United is affiliated with the United Caucuses of Rank-and-File Educators (UCORE). Teachers in West Virginia kicked off the wave of strikes in the spring, and educators and other school staff in Arizona, Oklahoma, Colorado, North Carolina and Kentucky soon followed, holding large-scale walkouts that led to the statewide closure of schools for extended periods in some instances. Similar actions also took place in individual municipalities such as Jersey City, New Jersey. In every instance, there was a tremendous degree of unity. Rank-and-file participation was robust. Rallies were large and often quite spirited. Few teachers crossed picket lines in those places where schools weren’t completely closed and the public was highly supportive. People’s class allegiances emerge as struggles intensifies, and that some of the striking teachers may have voted for Trump is irrelevant.
Unprecedented study finds US ranks 27th among nations investing in education, health care - - The United States ranks 27th in the world for its investments in education and health care as measurements of its commitment to economic growth, according to the first-ever scientific study ranking countries for their levels of human capital. The nation placed just behind Australia (ranked 26th) and just ahead of Czech Republic (ranked 28th). In contrast, China's ranking of 44th in 2016 represents an increase from its 1990 ranking of 69th. "The decline of human capital in the United States was one of the biggest surprises in our study," said Dr. Christopher Murray, director of the Institute for Health Metrics and Evaluation (IHME) at the University of Washington. "Our findings show the association between investments in education and health and improved human capital and GDP - which policymakers here in the US ignore at their own peril. As the world economy grows increasingly dependent on digital technology, from agriculture to manufacturing to the service industry, human capital grows increasingly important for stimulating local and national economies." The World Bank President, Dr. Jim Yong Kim, defines human capital as "the sum total of a population's health, skills, knowledge, experience, and habits." It is a concept that recognizes that not all labor is equal, and the quality of workers can be improved by investing in them. The US's ranking of 27th in 2016 represents a significant decrease from its 1990 ranking of 6th. It comes from having 23 years of expected human capital, measured as the number of years a person can be expected to work in the years of peak productivity, taking into account life expectancy, functional health, years of schooling, and learning. Overall, US residents had 43 out of a possible 45 years between the ages of 20 and 64; expected educational attainment of 12 years out of a possible of 18 years in school; and a learning score of 89 and a functional health score of 88, both out of 100. Learning is based on average student scores on internationally comparable tests. Components measured in the functional health score include: stunting, wasting, anemia, cognitive impairments, hearing and vision loss, and infectious diseases, such as HIV/AIDS, malaria, and tuberculosis.
Analyzing The Grim Reality Of College Acceptance Rates Over Time - Every year, it seems it’s harder to get in to the top colleges in the United States. Perfect grades and SATs were barely enough a decade ago to get admission into the Ivy League and now competition is even more fierce. But just how hard is it to get into a top college today and how does that compare to the past? If you got into a top school a decade ago, would you have a chance today? Are some schools even more difficult to get into than others?We analyzed data from Priceonomics customer BusinessStudent.com who assembled admissions rates from top schools in 2006 and compare them to twelve years later in 2018. We restricted our analysis to just the top schools in the United States a decade ago (the top 51according to US News back then) to see how their admissions rates changed.Yes, it’s much harder to get into a top school today than it was in 2006 and admissions rates have plummeted across the board. The school that’s had the sharpest drop in acceptance rates is the University of Chicago, followed by Northwestern and Duke. Of the 51 schools we looked at, 49 schools were more difficult to get into, but 2 actually had higher admissions rates.***A common refrain among alumni from a top school after seeing current admissions rates is “Wow, I don’t think I could get in if I applied today.” The data confirms there is some true to this notion. Not only that, but the more competitive the school, the harder it is to get into.The chart below shows the schools ranking in 2006 (grouped by 10s) and their past versus current admissions rates.
Tulane Mandates New Students Take Race & Inclusion Course - Tulane University now requires all incoming students to enroll in a “Race and Inclusion” course, a new addition to the curriculum that has been condemned by some students for its lack of acknowledgment of viewpoint diversity. In a recent press release, Tulane announced that all new enrollees will be mandated to enroll in a course that focuses at least 60 percent of it content on “race and inclusion” to help students understand the “increasingly diverse society” they live in. Courses such as “Dear White People,” “Critical Race Theory,” “Introduction to Fiction: Race and Inclusion,” and “Difference and Inequality” all fit the "Race and Inclusion" course requirement, according to the school’s course search and Campus Reform’s phone calls with to professors. Professor Michael Cunningham, who advocated for the new requirement but won’t be teaching any of the classes, told Campus Reform that the new requirement was partially prompted by students’ disappointment with the lack of diversity engagement on campus. “One of the reasons that students reported a desire to attend to Tulane was because of the perceived diversity,” wrote Cunningham by email on Wednesday. “Many students reported that their perceptions were not met when they got to campus.” The new requirement will also prepare Tulane students for working with a diverse workforce, he added. “By the year 2044, the U.S. population will be comprised of [a] majority of people from racial, ethnic, and linguistic diverse backgrounds… Thus, the ‘normal’ experience of growing up in the U.S. is inclusive of the experiences from racial and ethnic minority populations." One of the classes that fulfill the requirement this semester is “Introduction to Fiction: Race and Inclusion.” Joel Dinerstein, the professor who will teach the course, told Campus Reform that he compares it to a “bootcamp course on race.” The goal is for “students to read non-white authors critiquing American society (and race) in order to open them up to new perspectives outside of American mythologies of equality and freedom,” Dinerstein said.
Death at Delta Sig: Heiress Wages a Million-Dollar War on Frats - It’s almost midnight when Deborah Tipton settles down to study the evidence once again. In her grand Memphis home, the scene of elegant dinner parties and fundraisers, police reports and private investigators’ notes cover an antique dining table. As if searching for a clue from beyond the grave, she pores over the most painful pages, the ones containing text messages from her dead son.“Getting hazed bad now and need Xanax. I didn’t even sleep last night and was shaking.” “I can’t trust anyone right now.”“What could they do that’s so bad in two hours. They’re just going to yell at us a bunch and maybe make us work out or eat something nasty. They can’t kill us.” Tipton has struggled to untangle the last hours of her son’s life ever since March 26, 2012, the balmy Monday when police officers gave her the news. Robert, 22 and a junior at High Point University in North Carolina, was dead. The authorities would later rule his death an accident, a drug overdose, another example of fraternity partying run amok. Case closed. To his mother, however, it remains very much open. Her singular quest to solve it may test the power of America’s college fraternities, which have beaten back such inquiries for generations. Fraternities own $3 billion in real estate and house a quarter of a million students who tap into an unrivaled alumni network of presidents, members of Congress, corporate executives and Wall Street investors. Facing such opposition, most might be daunted. Not Deborah Tipton. Heir to a fortune in rice and cottonseed oil, she has the money and connections to fight a forever war. For six years, she has poured her substantial resources into solving the riddle of what happened that weekend at her son’s Delta Sigma Phi fraternity chapter.. And Tipton says she has found plenty to make her question the official story. Four years after Robert’s death, her team got its hands on the full police file. The autopsy photos showed that he had angry purple bruises on his face, around his neck and on his legs and buttocks, as well as a jagged gash on his head.
The problem with all those liberal professors - Chicago Tribune: Suppose that you start college with a keen interest in physics, and you quickly discover that almost all members of the physics department are Democrats. Would you think that something is wrong? Would your answer be different if your favorite subject is music, chemistry, computer science, anthropology or sociology? In recent years, concern has grown over what many people see as a left-of-center political bias at colleges and universities. A few months ago, Mitchell Langbert, an associate professor of business at Brooklyn College, published a study of the political affiliations of faculty members at 51 of the 66 liberal-arts colleges ranked highest by U.S. News in 2017. The findings are eye-popping (even if they do not come as a great surprise to many people in academia).Democrats dominate most fields. In religion, Langbert’s survey found that the ratio of Democrats to Republicans is 70 to 1. In music, it is 33 to 1. In biology, it is 21 to 1. In philosophy, history and psychology, it is 17 to 1. In political science, it is 8 to 1. The gap is narrower in science and engineering. In physics, economics and mathematics, the ratio is about 6 to 1. In chemistry, it is 5 to 1, and in engineering, it is just 1.6 to 1. Still, Lambert found no field in which Republicans are more numerous than Democrats. True, these figures do not include the many professors who do not have a political affiliation, either because they are not registered at all or because they have not declared themselves as Democrats or Republicans. And, true, the ratios vary dramatically across colleges. The faculties of Wellesley, Williams and Swarthmore are overwhelmingly Democratic, with ratios at or above 120 to 1. At Harvey Mudd and Lafayette, the ratios are 6 to 1. At the U.S. Naval Academy at Annapolis, it is 2.3 to 1; it is just 1.3 to 1 at West Point. But despite the variability, none of the 51 colleges had more Republicans than Democrats. According to the survey, over a third of them had no Republicans at all. For two reasons, these numbers, and others like them, are genuinely disturbing. The first involves potential discrimination on the part of educational institutions. Some departments might be disinclined to hire potential faculty members based on their political convictions.
Racism Drives Higher Costs for Historically Black Colleges in Bond Markets - Why do historically black colleges and universities pay more to raise capital? New research argues that investors’ racial preferences appear to influence their willingness to purchase HBCUs’ bonds, with this trend particularly pronounced in states with the historically highest levels of racism. In large capital markets, such as the $3.9 trillion dollar municipal bond market, the last thing you’d expect to see is evidence of racial discrimination. After all, unlike labor markets that involve personal interactions, financial markets are remarkably impersonal. Investors lend money to people they do not (and likely will never) know, which is used for purposes typically far removed from their day-to-day experiences. As long as a fair rate of return is obtained, a reasonable benchmark would involve investors not “seeing color,” other than perhaps green. And yet, in our forthcoming paper in the Journal of Financial Economics “What’s in a (school) name? Racial discrimination in higher education bond markets?” we find evidence that at least in some cases, they do. The headline result is that investors’ racial preferences appear to influence their willingness to purchase bonds issued by historically black colleges and universities (HBCUs), and that this reluctance increases the cost these schools pay when raising capital. Two features of the municipal bond market work in tandem to create the necessary conditions for this result to obtain. First, the municipal market tends to be highly localized, with most investors facing a tax advantage for buying bonds from issuers in their home states. Whereas interest from all qualifying municipal bonds are exempt from federal income tax, most states treat in-state and out-of-state issuers differently, with interest from only the former being exempt from state taxes.1) The second relevant feature is that the tax benefits of municipal bonds typically increase with income, due to the convexity of the tax schedule. Because Whites are heavily overrepresented in the right tail of the income and wealth distribution,2) the potential tax benefits of HBCU-issued bonds are most advantageous to the demographic group—White Southerners—where race relations with Black Americans has historically been the poorest.
You’re Probably Not Getting that Loan Forgiveness You’re Counting On - In 2007, President George W. Bush signed a program into law that was intended to encourage Americans to go into public service. The idea was that if you worked at a civic-minded job and made 120 on-time student loan payments—or what amounts to ten years worth—the rest of your debt would be wiped. In 2013, the recently-formed Consumer Financial Protection Bureau (CFPB) estimated that up to a quarter of the American workforce could qualify for some form of forgiveness. And while the first group of borrowers were technically eligible for forgiveness under the 2007 law last year, CNBC reports the program so far looks like something between a bureaucratic shit-show and an abysmal failure. Persis Yu, director of National Consumer Law Center's Student Loan Borrower Assistance Project, said in an interview she could understand why this may have happened. She's striving for debt forgiveness herself and once had to argue with FedLoan Servicing, a student loan servicing company contracted by the Department of Education, about the number of payments she'd made thus far. "I was like, 'No no,' its really this number," she told me. "It took a lot of legwork, and the documentation was also very challenging to read. It would have been really hard for a lay borrower [to figure out]" She said that experience pointed to a "huge, huge information gap" between borrowers and loan servicers in general, and that bad information was the reason so many thought they qualified for forgiveness only to discover they didn't. The reasons might vary from borrowers not having filled out some paperwork, updated their address upon moving, or just not being eligible due to some technicality their servicer had failed to inform them of. What's more, Yu argued, this news "bodes horribly" for the millions of people banking on another debt forgiveness program—the one based on making income-contingent payments for 20 years, regardless of your career. "Is the answer that you need to keep 20 years worth of records? I guess so," she said, "But is that a reasonable expectation? I don't know people who do that. Five to seven years is more reasonable. And that's assuming you never have a fire or a flood or have a hard-drive crash."
How the Great Recession turned America’s student-loan problem into a $1.5 trillion crisis Like millions of Americans in the wake of the 2008 financial collapse, Charles Newmeyer struggled to find a job. The now 32-year-old figured he’d increase his chances of landing a gig if he upped his credentials, so after speaking to a recruiter, he enrolled at a local campus of WyoTech college in 2009. Newmeyer ultimately graduated with a degree in advanced automotive technology and a handful of other certifications, but they weren’t much help in getting him towards his eventual career path. What’s more, Newmeyer is still paying for a degree that he realized shortly after graduating would have cost much less at a community college. WyoTech was part of Corinthian Colleges, a chain of for-profit schools that collapsed in 2015 amid allegations it misled students. Meanwhile, Newmeyer said he and his family are struggling to manage the $78,000 he acquired from attending the school. He is just one of millions of students who made sometimes desperate decisions in the aftermath of the financial crash to improve their skills and hopefully find well-paid work.The Great Recession helped push student debt passed $1.5 trillion, up from about $671 billion at the beginning of 2008, according to Federal Reserve Bank of New York data. The crash, which began 10 years ago this month with the collapse of Lehman Brothers, created a perfect storm of high unemployment, stagnant wages and the declining value of American homes meant that families had fewer resources to use to pay for college.Meanwhile, tight budgets limited the amount states could spend on their public colleges, pushing many of the schools to raise prices.“At the very same time that people had less money to pay for college, they had to pay more for it,” said Ben Miller, the senior director of postsecondary education at the Center for American Progress, a left-leaning think tank.But it wasn’t just rising costs and poorer families that pushed the nation’s aggregate student loan balance up. As workers looked to retool during the downturn, colleges and graduate schools also saw a surge in students.Now, 10 years after the start of the financial collapse, Americans of all types are saddled with student debt that’s holding them back from future financial goals, like buying a home, or, worse, crippling them financially.
Millennials Are Causing the U.S. Divorce Rate to Plummet - Americans under the age of 45 have found a novel way to rebel against their elders: They’re staying married. New data show younger couples are approaching relationships very differently from baby boomers, who married young, divorced, remarried and so on. Generation X and especially millennials are being pickier about who they marry, tying the knot at older ages when education, careers and finances are on track. The result is a U.S. divorce rate that dropped 18 percent from 2008 to 2016, according to an analysis by University of Maryland sociology professor Philip Cohen. Demographers already knew the divorce rate was falling, even if the average American didn’t. Their question, however, was why? And what do current trends mean for the marital prospects of today’s newlyweds?One theory is that divorce rates are falling largely because of other demographic changes—especially an aging population. Older people are less likely to get divorced, so maybe mellowing boomers were enough to explain the trend. Cohen’s analysis of U.S. Census Bureau survey data, however, suggests something more fundamental is at work. Even when he controls for factors such as age, the divorce rate over the same period still dropped 8 percent.“The change among young people is particularly striking,” Susan Brown, a sociology professor at Bowling Green State University, said of Cohen’s results. “The characteristics of young married couples today signal a sustained decline [in divorce rates] in the coming years.” Young people get the credit for fewer divorces because boomers have continued to divorce at unusually high rates, all the way into their 60s and 70s. From 1990 to 2015, according to Bowling Green’s National Center for Family and Marriage Research, the divorce rate doubled for people aged 55 to 64, and even tripled for Americans 65 and older. Cohen’s results suggest this trend, called “grey divorce,” may have leveled out in the past decade, but boomers are still divorcing at much higher rates than previous generations did at similar ages.
The Body in Poverty - My childhood in Kansas happened to coincide with the moment that health-insurance and drug companies essentially merged with the nation’s for-profit hospital system, creating costs that were prohibitive for uninsured families like ours.2 In our parts, health care was rare not just because of escalating costs but because of our remote location. We didn’t put much faith in doctor visits, anyway. We told ourselves that we didn’t need doctors, but the truth was that we couldn’t afford them. If you had a real health emergency, you were liable to be dead before some small town’s ambulance made it down the muddy, sandy ruts of our dirt roads. But a decade-old dropper of stinging red iodine would fix most cuts, so we went on like everything was fine.3 By the time I was born, rural hospitals were closing and American health care had been transformed into a slick big business in the urban centers. Being the youngest of six, my dad was the only baby that Grandma Teresa gave birth to in a hospital rather than in the farmhouse where they were raised. But when I was a kid, the old ways of country doctors were still hanging on in places like ours—places that, I would later learn, much of the country thought endured only in movies and books.4 As an infant, one night I came down with a dangerously high fever. My parents rushed me miles along bumpy roads to the rural home of Dr. Joseph Stech, a small-town physician who still sometimes made house calls. We didn’t have health insurance, but my parents could afford Dr. Stech’s fees. What was still preventable in the 1980s would, in a couple of decades, become manifest; what was once treatable would become deadly. I’m not sure my immediate family’s brushes with death when I was a kid—Mom’s hemorrhage in childbirth, Grandma Betty’s collapsed lung, Dad’s chemical poisoning—would be survived today. Mom would have been less healthy going into labor, Grandma would have been sent home too soon for lack of insurance, Dad would have been given a cheaper and less effective treatment. The mortality rate for poor rural women, in particular, has risen sharply over my lifetime
U.S. Near Bottom, Hong Kong and Singapore at Top of Health Havens Want medical care without quickly draining your fortune? Try Singapore or Hong Kong as your healthy havens. The U.S. will cost you the most for treatment, both in absolute terms and relative to average incomes, while life expectancy of Americans -- about 79 years -- was exceeded by more than 25 countries and territories, according to an annual Bloomberg analysis in almost 200 economies. A health-efficiency index was then created to rank those with average lifespans of at least 70 years, GDP per-capita exceeding $5,000 and a minimum population of 5 million. Americans aren’t getting their medical money’s worth, according to each of the categories. The U.S. had the second-highest per-capita spending on health care at $9,536. Switzerland’s average based on gross domestic product was $9,818. But that $282 supplement helped deliver an extra 4.2 years of life -- with the average Swiss lifespan of almost 83. Compared to residents of the Czech Republic -- which had an average life expectancy almost at parity with the U.S. -- Americans spent more than double on health care relative to GDP, 16.8 percent versus 7.3 percent. Health spending in the U.S. is estimated to increase to 18 percent of GDP in the U.S., according to estimates from the Altarum Institute. The latest reading of the Bloomberg index reflects the second full year of "Obamacare," the short name for the U.S. Affordable Care Act, which expanded access to health insurance and provided payment subsidies starting on Jan. 1, 2014. The latest health-efficiency gauge used 2015 data, as that’s the most-recent for most economies from the World Health Organization. That lag time also puts the spotlight on the U.K., which fell out of Europe’s top 10 in the health ranking based on 2015 data. The nation voted in favor of Brexit the following year, with costs and efficiency of the National Health Service a key issue for British voters. Spain’s health system efficiency ranked third behind Hong Kong and Singapore, followed by that of Italy, which moved up two spots from a year earlier. Italy ranked as the world’s healthiest country in a separate Bloomberg gauge. Thailand moved up 14 places to No. 27, the biggest annual improvement, as per-capita spending declined 40 percent to only $219, while life expectancy advanced to 75.1 years. Medical tourism industry is among Thailand’s fastest-growing industries.
Special Report: High-nicotine e-cigarettes flood market, despite FDA rule (Reuters) - The sleek Juul electronic cigarettes have become a phenomenon at U.S. high schools, vexing educators and drawing regulatory scrutiny over their sweet flavors and high nicotine content. Now, a new wave of lower-priced Juul knock-offs is showing up at convenience stores, vape shops and online - despite a U.S. Food and Drug Administration rule banning the sale of new e-cigarette products after August 2016 without regulatory approval. Start-ups and major tobacco firms have launched more than a dozen new high-nicotine devices with Juul-like designs since the FDA imposed the deadline, according to a Reuters review of the companies’ online advertisements, social media posts and public statements. An electronic cigarette device made by JUUL (R) is shown next to other similar devices (L to R) Vuse Alto, Suorin ishare and myblu in this photo illustration taken September 20, 2018. Picture taken September 20, 2018. REUTERS/Mike Blake/Illustration The FDA earlier this month threatened to ban Juul and four other leading vaping products unless their makers take steps to prevent use by minors. But the warning came after companies introduced a slew of new Juul copycats following the August 2016 deadline with no regulatory consequences. In a statement to Reuters, the agency said it was investigating whether certain brands are being improperly sold without FDA approval and that it “plans to take additional action on this front very soon.” The agency said it would focus on products with high-nicotine concentrations and flavors appearing to target young people, and take “swift action wherever appropriate.” The FDA set the August 2016 deadline to rein in the fast-growing industry but allowed sales of Juul and other older devices to continue without regulatory approval until 2022. The companies that started marketing new devices after the deadline include startup firms such as Kandypens, Myle Vapor and VGOD, as well as large multinational tobacco companies including British American Tobacco Plc and Imperial Brands Plc. Kandypens touted its new Rubi vaping device last October - more than 14 months after the August 2016 cutoff - with an Instagram post saying it had been “working hard over here for the last 12 months” on the product. Vaping distributor VGOD posted on its website in May that it was “an honor to finally introduce the STIG,” referencing its Stig Pods, a disposable three-pack of high-nicotine devices.
The Notorious Pill Mill- Just One Doctor Wrote 335,000 Painkiller Prescriptions - For ten years, two pharmacies just four blocks apart in Williamson, West Virginia, dispensed some 20.8 million prescription painkillers in a town of only 3,191 residents. Those shocking figures were released earlier this year by the congressional committee investigating the opioid crisis that has devastated the Rust Belt. From December 2002 to January 2010, more than 335,000 prescriptions for painkillers were issued by Dr. Katherine Hoover at a small clinic in the struggling West Virginia town, a rate of about 130 per day. In a recent interview via NBC News, Hoover argued that she did nothing wrong. "I prescribed narcotics to people in pain. I did everything I could to help people have a better life, which I told the FBI," Hoover said. "Every prescription I wrote was justified for the person who had gotten it." Hoover, 68, wrote more opioid prescriptions than any other doctor in the state from 2002 to 2010, government investigators said in court documents. As of 2016, West Virginia became one of the deadliest states for fatal opioid overdoses. Court records show Hoover arrived in Williamson in 2002 and started working at the Mountain Medical Care Center, a private clinic which took anyone who could pay in cash. Williamson is a small blue-collar city of some 3,000 residents just across the Tug Fork River from Kentucky. When the coal industry collapsed, it left behind many miners - many of whom were already reliant on painkillers. Federal investigators told NBC News that Hoover and the other Mountain Medical Care employees exploited the system and reaped massive amounts of money in return. The clinic was a for-profit pill mill, charging $450 in cash for first-time clients, and investigators said doctors often did not even see the patients to whom they were giving prescriptions. Clients who wanted a second prescription would pay $150 to a receptionist, who would hand out a new script after asking several questions, investigators claim. With a script in hand, clients would then walk down the street to either one of the two Williamson pharmacies; over the decade, some 20.8 million painkillers were dispensed. Federal court documents showed Hoover was West Virginia’s top prescriber of controlled substances. She was described by the clinic’s owner as its "bread and butter."
1 In 4 Baltimore Hospital Admissions Are Babies Addicted To Opioids -- With a bag of heroine now cheaper than a pack of cigarettes, America's opioid epidemic shows no signs of slowing down. However, even more worrying is this condition is now spreading to the youngest, as Axios reports, every 15 minutes, a baby is born addicted to opioids. As the following Axios report details, in Baltimore, doctors at Mt. Washington Pediatric Hospital say babies born with Neonatal Abstinence Syndrome - a set of conditions caused by withdrawal from exposure to drugs - now account for 25% of the hospital’s admissions.Nationally, the number of babies born with the syndrome has increased by over 400 percent since 2004. For Baltimore Health Commissioner Dr. Leana Wen, the community must first recognize addiction as a disease to address the larger trend of the opioid epidemic. But as drug-related deaths continue to increase, the future remains uncertain.
CDC: 80000 People Died of the Flu Last Winter in the US - An estimated 80,000 people died of the flu and its complications in the U.S. last winter — the highest death toll for the diseases in at least four decades. Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, released the total in an interview with the Associated Press Tuesday night.Flu experts knew it was a very bad season, but at least one found the estimated toll surprising. “That’s huge,” said Dr. William Schaffner, a Vanderbilt University vaccine expert. The tally was nearly twice as much as what health officials previously considered a bad year, he said. In recent years, flu-related deaths have ranged from about 12,000 to — in the worst year — 56,000, according to the CDC. Last fall and winter, the U.S. went through one of the most severe flu seasons in recent memory. It was driven by a kind of flu that tends to put more people in the hospital and cause more deaths, particularly among young children and the elderly. The season peaked in early February. It was mostly over by the end of March, although some flu continued to circulate. Making a bad year worse, the flu vaccine didn’t work very well. Experts nevertheless say vaccination is still worth it, because it makes illnesses less severe and saves lives. “I’d like to see more people get vaccinated,” Redfield told the AP at an event in New York. “We lost 80,000 people last year to the flu.” CDC officials do not have exact counts of how many people die from flu each year. Flu is so common that not all flu cases are reported, and flu is not always listed on death certificates. So the CDC uses statistical models, which are periodically revised, to make estimates. CDC officials called the 80,000 figure preliminary, and it can be slightly revised. But they said it is not expected to go down.
Some people have been infected with antibiotic-resistant bacteria — and it's been traced to puppies - Antibiotic-resistant bacteria that have infected more than 100 people and that have been linked to pet store puppies appear to have spread at least in part because healthy dogs were given antibiotics— a decision that all but surely fostered antibiotic resistance."This is shocking," said Lance Price, head of George Washington University's Antibiotic Resistance Action Center. "This is an important study that's shining a light on something that we need to spend more time on."More than half of the puppies in a sample of roughly 150 dogs studied as part of the outbreak investigation were given antibiotics not because they were sick, but to keep them from becoming so, according to a new study published Thursday. The technique, called prophylaxis, has been widely used in food animal production and is blamed for fueling antibiotic resistance."We just have to change how we're thinking about antibiotics," warned Matthew Wellington, antibiotics program director for US PIRG, the Public Interest Research Group.The outbreak of the bacteria, Campylobacter jejuni, which causes diarrheal disease, started in early 2016 and continued until February of this year. People from 18 states fell ill, including 29 pet store employees. The investigation, which began in August of 2017, discovered that puppies were the source of the problem. Thursday's study was published in Morbidity and Mortality Weekly Report, a journal produced by the Centers for Disease Control and Prevention. It revealed how many antibiotics the dogs had been given as well as the results of testing done on bacterial samples — known as isolates — from 10 of the sick people and eight of the puppies to see which drugs might kill the bacteria.
A Perfect Storm Surrounds One Of The Worst Ebola Outbreaks In History Right Now - An Ebola outbreak that has been going on in the Democratic Republic of Congo since August is already one of the worst in history – the 7th worst to be precise – and it looks like it may spiral out of control. Peter Salama, WHO Deputy Director-General for Emergency Preparedness and Response, called the situation “a perfect storm.” Unrest and war in the region combined with community resistance and mistrust of medical personnel are making it difficult for the World Health Organization to get a handle on the outbreak. Dr. Salama said:“We are now extremely concerned, that several factors may be coming together over the next weeks to months to create a potential perfect storm. A perfect storm of active conflict, limiting our ability to access civilians, distress by segments of the community, already traumatized by decades of conflict and of murder……We’ve seen attacks now on August 24, September 3, 9, 11, 16, 21 and most recently and most dramatically September 22 in the city itself of Beni,” he said. He said that Beni was the base for the agency’s base for the “entire operation.” (source)The outbreak is based in North Kivu, which is on the border of Uganda and Rwanda. Violence has displaced more than a million people in the area, and there have been a number of brutal machete attacks against civilians. Things got so bad that the WHO was forced to cease their operations for an entire week while the Ebola virus spread.One of the armed groups in DRC which pose a threat to civilians and the international response to Ebola, the ADF – Allied Democratic Forces – has sufficient military capacity to ambush blue helmets from the UN’a Stabilization Mission in DRC (MONUSCO) and government forces – the FARDC.“The ADF in particular has enormous capabilities,” Dr Salama said. “They’ve been able to overrun entire FARDC-bases in and around Beni, they’ve been able to ambush (UN) forces.” (source) ADF is an Islamist group that is a serious threat to the Congolese government as well as relief workers.
Trump Administration Proposes Weakening Rules Governing Organ Transplant Centers -- The Trump administration this week proposed eliminating a decade-old regulation that puts hospitals at risk of losing their Medicare funding if too many of their patients die or suffer organ failure after receiving transplants.The rule the government is proposing to scrap is the same one that led the Centers for Medicare and Medicaid Services to cut off funding last month for heart transplants at Baylor St. Luke’s Medical Center in Houston after an investigation by ProPublica and the Houston Chronicle revealed an outsized number of patient deaths and complications in recent years.The proposal was unveiled Monday as part of the White House’s push to “cut the red tape” and do away with “burdensome regulation” that officials said put paperwork ahead of patients. In a speech announcing the proposed changes, CMS Administrator Seema Verma said the agency’s existing policies have “put lives in danger.”“We are proposing to remove those inefficiencies to reduce the amount of time patients have to wait, so that they can begin healing,” Verma said.The proposal, now subject to public comment and revision before it is finalized, surprised many transplant physicians who have long called for relaxed federal oversight. They’ve argued that the rules requiring that hospitals meet certain survival thresholds for transplants discourage them from taking on risky patients or accepting less-than-perfect organs, lengthening the time patients spend on the waiting list. Some experts, however, said the proposal would not help patients because it would weaken the government’s authority to hold transplant programs accountable if they fail to provide safe patient care. The regulation was put in place in 2007 after a series of scandals at transplant programs revealed lax federal oversight. Several transplant programs had compiled abysmal patient survival statistics for years while continuing to receive Medicare funding. Even though it has the authority to do so, Medicare rarely terminates programs for poor outcomes.
As China builds biotech sector, cash floods U.S. startups (Reuters) - For three whirlwind days in June, U.S. scientist Zhi Hong went shopping at the Boston Bio Conference to find drugs to fill the pipeline of his two-week-old drug company. The former GlaxoSmithKline executive pitched dozens of U.S. biotech companies to partner with his start-up, Brii Biosciences. Months earlier, Hong had raised $260 million - much of it from Chinese and Asian investors - with a strategy to bring U.S. biotechnology drugs to China, the world’s second-largest prescription drug market and home to a rapidly growing biotech sector. Brii is now discussing partnerships with about a dozen drugmakers, which it aims to help by conducting clinical trials in China, applying for governmental approval and eventually negotiating reimbursement in a bid to capitalize on China’s stated plan to become the next global player in biopharma. Brii is one of many biotech startups riding a wave of money from Asia that so far this year has poured $4.2 billion into private U.S.-based biotech companies. That is over 43 percent of the total amount of venture funding invested in the biotech sector, according to PitchBook, up from just 11 percent in 2016. These investors range from China’s 6 Dimensions Capital and Hillhouse Capital Group to Hong Kong-based Blue Pool Capital, the investment arm of Alibaba’s executives. They are in search of better returns across the Pacific after China’s recent homegrown biotech push has driven sky-high valuations. “There are companies in China that haven’t even started clinical trials, and they have received term sheets for $400 million,” said Nisa Leung, managing partner and leader of healthcare sector at China-based Qiming Venture Partners, referring to the agreements that describe the terms of an investment. “I think that’s crazy.”
Clearing out old cells might help the brain - MIT Technology Review - A new pack of anti-aging companies like Unity Biotech, Cleara Biotech, and OisÃn Biotechnologies think there’s a connection between so-called senescent cells—those that no longer divide—and the effects of growing old. Clear out cells that have gone into this sleeplike state, the thinking goes, and youthful vigor will return. But not much has been known about how these cells affect the brain. Now scientists who have taken a careful look at the brains of mice think senescent cells could have a role in neurodegeneration and memory loss.In the new study, senior author Darren Baker of the Mayo Clinic in Minnesota found that if researchers removed senescent cells or prevented them from building up, they could prevent brain degeneration in mice prone to it. The results, published in Nature, are among the first to take a careful look at senescence and its possible connection to conditions like Alzheimer’s and Parkinson’s disease. “I think this is a very interesting new avenue, a new way to look at aging,” says Li-Huei Tsai, director of the Picower Institute for Learning and Memory at the Massachusetts Institute of Technology and the author of an editorial accompanying the study. “I am kind of optimistic that this new idea is going to stimulate a lot of people to think about this.”
Air pollution rots our brains. Is that why we don’t do anything about it? - Researchers from Beijing University and Yale School of Health published research last month showing that people who live in major cities – which is, today, most of us – are not only suffering from increases in respiratory illnesses and other chronic conditions due to air pollution, but are losing our cognitive functions. The study showed that high pollution levels lead to significant drops in test scores in language and arithmetic, with the impact on some participants equivalent to losing several years of education. Other studies have shown that high air pollution is linked to premature birth, low birth weight, mental illness in children and dementia in the elderly.We’re only just beginning to understand how the air we breathe affects not just our physical environment, but our mental capacity as well. And the air we breathe is changing in the long term, as well as the short. Rising carbon dioxide levels – the main driver of climate change – aren’t just a hazard to the earth and other living creatures, they’re also affecting our thinking. At higher levels, CO2 clouds the mind: it makes us slower and less likely to develop new ideas, it degrades our ability to take in new information, change our minds, or formulate complex thoughts. Global atmospheric CO2 levels passed 400 parts per million in 2016, and despite global agreements to keep runaway climate change under control, little action has been taken. The very worst-case scenario – AKA business as usual, which is the track we’re on – predicts atmospheric CO2 concentration of 1,000ppm by 2100. At 1,000ppm, human cognitive ability drops by 21%. As we come to understand more about the effects of CO2, we have been measuring more of it, and finding that as it increases outside, it increases inside, too. Outdoor CO2 already reaches 500ppm regularly in industrial cities; indoors, in poorly ventilated homes or school workplaces, it can regularly exceed 1,000ppm. A study of bedrooms in Denmark found that overnight concentrations of CO2 exceeded 2,000ppm, with measurable effects on student’s performance the following day. Schools in California and Texas, when measured in 2012, regularly exceeded 2,000ppm in the daytime. Even if we meet the most stringent targets set at the Paris agreements in 2015, 2100 will bring atmospheric CO2 levels of 660ppm – with around a 15% decrease in average brainpower. It’s possibly one of the most tragic ironies of the whole sorry business that climate change is making it harder for us to think, just when we need new and bold ideas to deal with its effects.
New Report Highlights Toxic Chemicals in Consumer Products - A new report by the Breast Cancer Prevention Partners (BCPP) details findings from product testing they performed on beauty, personal care and cleaning products, with an emphasis on products often marketed to vulnerable populations, such as children and women of color. The report focuses on the identification of chemicals used for fragrance in these products because, currently, chemicals used for fragrance do not have to be disclosed. The simple term "fragrance" on your shampoo or lotion label could represent several (if not many unknown, and potentially harmful, chemicals. Although BCPP was only able to test a small fraction of the market (32 products), BCPP's main findings raise concern and confirm the need for transparency of ingredients in products used in our homes. Almost 100 of the over 300 fragrance chemicals identified were linked to adverse health effects. Of the products tested by BCPP, the product that contained the most fragrance chemicals linked to health concerns was Just for Me Shampoo, a shampoo aimed at children of color, with popular perfumes following closely behind.And it's not just fragrance ingredients. BCPP found a total of 24 chemicals of concern, 14 of which were fragrance chemicals, in Just for Me Shampoo—including four carcinogens, 19 hormone disruptors, six developmental toxicants and three chemicals that can trigger, or worsen, respiratory problems, like asthma. Due to a loophole, fragrance ingredients are not required to be disclosed in personal care products or cleaning products; and until recently, there were no requirements for disclosure of ingredients in cosmetics used in professional setting or in cleaning products in general. This year California became the first state in the U.S. to extend retail cosmetic ingredient disclosure requirements to products used by salon workers. And last year, with the passage of the NRDC co-sponsored Cleaning Products Right to Know Act of 2017 n California, manufacturers of cleaning products will have to disclose the majority of the ingredients in their products on labels and online. The Act's disclosure requirements include fragrance ingredients, the first and only product category with fragrance disclosure requirements.
EPA Places Children’s Health Leader on Unexplained Leave - The U.S. Environmental Protection Agency (EPA) placed the head of the Office of Children's Health Protectionon administrative leave Tuesday in a move that those close to the agency suspect is intended to sideline the office's work, The New York Times reported Wednesday.Dr. Ruth Etzel, a pediatrician and epidemiologist who joined the EPA in 2015, was asked to hand in her badge, keys and cellphone Tuesday, but was not being disciplined and would continue to receive pay and benefits, an anonymous official within the EPA told The New York Times."This seems like a sneaky way for the EPA to get rid of this program and not be upfront about it," Dr. Mona Hanna-Attisha, a top Michigan pediatrician whose blood tests of Flint residents helped confirm lead poisoning from the water there, told The New York Times.Sources close to the agency said that the children's health office often calls for stricter standards on regulating chemicals and pollutants, since children are more vulnerable to toxins than adults due to their size, the fact that they are still developing and the fact that some of their behaviors, like crawling or sticking objects in their mouths, put them in more potential contact with contaminants.This has put the office at odds with an administration intent on rolling back environmental regulations.The anonymous official said that a proposal for reducing children's lead exposure, which had been in development for more than a year with the help of 17 federal agencies, had been stalled since July. Etzel had also opposed a move by the EPA's current office of chemical regulation leader and former chemical industry lobbyist Nancy Beck to rescind an Obama-era standard saying farm workers under 18 could not apply the most toxic pesticides.
Trump Administration Asks Court to Re-Hear Case That Banned Chlorpyrifos --- The Trump administration is appealing a federal court ruling that ordered the U.S. Environmental Protection Agency (EPA) to ban chlorpyrifos, a widely used pesticide tied to brain damage and other health problems in children. In August, the Ninth Circuit Court of Appeals ruled the EPA must ban the pesticide within 60 days based on strong scientific evidence that chlorpyrifos—which is applied on dozens of fruit, nut and vegetable crops—is unsafe for public health. The court's ruling nullified a decision by then-EPA Administrator Scott Pruitt, who rejected his own agency's proposal to ban the toxic chemicals. Reports showed that Pruitt made the decision after intense lobbying from the pesticide and agriculture industry and the leading chlorpyrifos manufacturer, DowDuPont.On Monday, the Trump administration requested the full court to rehear the case, effectively postponing the effectiveness of last month's court order.In their Monday filing, Department of Justice attorneys said the court's ruling violated Supreme Court precedent and the law when it made its decision, The Hill reported.The attorneys said the Ninth Circuit should have overturned the EPA's decision and sent it back for reconsideration rather than ordering a full ban, The Hill wrote. They also argued that the court did not have the authority to rule in the case, and it should have gone to a lower district court first."The important thing here is that courts are not supposed to operate this way," EPA spokesman Michael Abboud told The Hill in a statement."This opinion nullifies the [Federal Insecticide, Fungicide, and Rodenticide Act] process, violating a congressionally mandated statute. EPA takes science and health issues very seriously, but we must work within the legal process established by Congress."
EPA Watchdog: 'Emergency' Pesticide Approval Process Is Flawed - The U.S. Environmental Protection Agency's Office of the Inspector General released a report Tuesday finding that the agency's practice of routinely granting "emergency" approval for use of pesticides across millions of acres does not effectively measure risks to human health or the environment. The inspector general recommended that the EPA "develop and implement applicable outcome-based performance measures to demonstrate the human health and environmental effects of the EPA's emergency exemption decisions." The EPA disagreed with the recommendation, leaving the issue of chronic overuse of the emergency exemptions unresolved. "This report makes clear that the EPA has been abusing emergency approval to greenlight pesticide uses that are either too dangerous or the risks are unknown," "Corporate agriculture is essentially using this as a backdoor to getting highly toxic pesticides approved that would have never made it through the EPA's normal review process." Under the Federal Insecticide, Fungicide and Rodenticide Act, the EPA has the authority to approve the temporary emergency use of unapproved pesticides if the agency determines the pesticide is needed to prevent the spread of an unexpected outbreak of crop-damaging insects, for example. But this provision has been widely abused. That widespread abuse was chronicled in the Center's recent report, Poisonous Process: How the EPA's Chronic Misuse of 'Emergency' Pesticide Exemptions Increases Risks to Wildlife. For example, as of 2017 the EPA had granted 78 "emergency" exemptions for sulfoxaflor, a pesticide that the EPA itself concluded is highly toxic to bees.
Monsanto's global weedkiller harms honeybees, research finds - The world’s most used weedkiller damages the beneficial bacteria in the guts of honeybees and makes them more prone to deadly infections, new research has found. Previous studies have shown that pesticides such as neonicotinoids cause harm to bees, whose pollination is vital to about three-quarters of all food crops. Glyphosate, manufactured by Monsanto, targets an enzyme only found in plants and bacteria. However, the new study shows that glyphosate damages the microbiota that honeybees need to grow and to fight off pathogens. The findings show glyphosate, the most used agricultural chemical ever, may be contributing to the global decline in bees, along with the loss of habitat. “We demonstrated that the abundances of dominant gut microbiota species are decreased in bees exposed to glyphosate at concentrations documented in the environment,” said Erick Motta and colleagues from University of Texas at Austin in their new paper. They found that young worker bees exposed to glyphosate exposure died more often when later exposed to a common bacterium.Other research, from China and published in July, showed that honeybee larvae grew more slowly and died more often when exposed to glyphosate. An earlier study, in 2015, showed the exposure of adult bees to the herbicide at levels found in fields “impairs the cognitive capacities needed for a successful return to the hive”. “The biggest impact of glyphosate on bees is the destruction of the wildflowers on which they depend,” said Matt Sharlow, at conservation group Buglife. “Evidence to date suggests direct toxicity to bees is fairly low, however the new study clearly demonstrates that pesticide use can have significant unintended consequences.” The new research, published in the Proceedings of the National Academy of Sciences, found that some of the key beneficial bacteria in bees’ guts have the enzyme that is targeted by glyphosate. It also found that the ability of newly emerged worker bees to develop a normal gut biome was hampered by glyphosate exposure. Harm to gut bacteria by glyphosate exposure has also been shown in a pilot study in rats. “Gut bacteria play a vital role in maintaining good health, in organisms as diverse as bees and humans,” said Goulson. “The finding that these bacteria are sensitive to the most widely used pesticide in the world is thus concerning.”
‘Natural’ Bread Tests Positive for Glyphosate -- Three non-profits have sued sandwich chain Pret A Manger for labelling certain breads and baked goods as "natural" when they tested positively for glyphosate, Beyond Pesticides announced in a press release Wednesday. The suit was filed by Richman Law Group Friday in the Superior Court of the District of Columbia on behalf of Beyond Pesticides, the Organic Consumers Association (OCA) and GMO Free USA."Consumers expect Pret's food to be free of synthetic pesticides, including glyphosate. Glyphosate, patented as a chelator and an antibiotic, is linked to adverse health effects including cancer, infertility and non-alcoholic fatty liver and kidney diseases. Glyphosate shouldn't be present in the food system at all, but a company that willfully misrepresents its products needs to be held accountable," GMO Free Executive Director Diana Reeves said in the press release announcing the suit.The suit comes as glyphosate, the active ingredient in Monsanto's widely-used Roundup weedkiller, has come under increased scrutiny after a California jury ruled in favor of a former groundskeeper who claimed that constant use of Roundup caused his cancer.Two of the groups involved in this suit, Beyond Pesticides and OCA, settled a similar suit against General Mills in August when the company agreed to stop calling the oats in its Nature Valley granola bars "100% natural" when they also tested positive for glyphosate, Reuters reported. The Pret suit asks the company to either accurately label the presence of glyphosate in its products or work to make them actually glyphosate-free.
Mosquitoes Genetically Modified To Crash Species That Spreads Malaria - For the first time, scientists have demonstrated that a controversial new kind of genetic engineering can rapidly spread a self-destructive genetic modification through a complex species. The scientists used the revolutionary gene-editing tool known as CRISPR to engineer mosquitoes with a "gene drive," which rapidly transmitted a sterilizing mutation through other members of the mosquito's species. After mosquitoes carrying the mutation were released into cages filled with unmodified mosquitoes in a high-security basement laboratory in London, virtually all of the insects were wiped out, according to a report in Nature Biotechnology. The mosquitoes were created in the hopes of using them as a potent new weapon in the long, frustrating fight against malaria. Malaria remains one of the world's deadliest diseases, killing more than 400,000 people every year, mostly children younger than 5 years old.. "This is a game-changer. This is a completely new era in genetics." Other researchers agree. "This is an extraordinary paper," says Kevin Esvelt, an evolutionary engineer at the Massachusetts Institute of Technology and a leading "gene drive" researcher. He was not involved in the new research. "We know what the costs of malaria are — and they are horrific," Esvelt says. "This could save a lot of lives." Crisanti, Esvelt and others are especially encouraged because the mosquitoes did not appear to further mutate in a way that would diminish the effectiveness of the engineered mutation. That has been a major problem plaguing attempts to use gene drives. But the researchers stressed that many years of additional research are needed to further test the safety and effectiveness of the approach before anyone attempts to release these mosquitoes or any other organisms created this way into the wild.
Study: Climate change will bring more pests, crop losses - A new study finds that global warming will bring with it an increase in agricultural pests, which will lead to significant crop loss across the globe.Scientists have already raised grave concerns about the effects of climate disruption on global agriculture. Research has shown that rising temperatures can reduce nutrient quality in staple grains, and that droughts and flooding can reduce yields. The recent report adds an additional worry.The new findings make “intuitive and scientific sense,” based on what scientists already know about insects, says Michelle Tigchelaar, a research associate at the University of Washington and a co-author of the study. Insects are ectotherms. “This means that as the global temperature rises, their body temperatures rise, and so they will eat more. Essentially, their energy use goes up,” she says. And as temperatures rise, more insects will survive through the winter and reproduce at faster rates.Put those two things together and the result is a larger insect population that will need to eat more to survive.The unique part of the study, Tigchelaar says, was that it was the first time scientists quantified how big these impacts could be.“What's surprising about these results is that this is not an insignificant contribution to future crop losses,” she says. “It is not going to be the dominant factor of how climate impacts crops, but it is not insignificant and will definitely aggravate the problem.”The insect boom will primarily affect the world’s main staple crops — corn, wheat and soy. Wheat will likely see the largest crop losses, Tigchelaar says, because it is grown in temperate climates, where the study predicts the largest rise in numbers of insects will occur. To put a figure on it: Two degrees of global warming could double the volume of wheat that is currently lost to pests.
'Not Another Flint! Let Us Vote!' - Markie Miller, an organizer from Toledo, Ohio, has been working for more than two years to pass a Lake Erie Bill of Rights amendment to the city’s charter. If passed, the law would recognize legal rights for the 9,900 square-mile body of water.“We all live and work here and it’s where we want to raise our kids,” Miller tells The Progressive. “Of course we are going to defend living here and what that looks like. We have everything to lose.” But Ohioans, like most Americans, are told they cannot challenge corporate personhood and are “preempted” by their state legislature from taking a slew of proactive actions. “We want to revoke that idea of corporate personhood,” Miller says. “So if it comes down to the rights of an industry to pollute and the rights of the ecosystem to exist and flourish and evolve naturally, we would like people to see that the ecosystem’s rights should take priority above a company or industry’s right to operate—especially if what they’re doing is directly harming people and ecosystems.” The charter amendment is a direct challenge to the supremacy of corporate personhood, says Miller, an organizer with the group Toledoans for Safe Water and the statewide Ohio Community Rights Network, which pushes similar laws across the state. The Lake Erie Bill of Rights proposes a mechanism whereby local residents could sue corporate polluters on behalf of the law. It gives “residents of Toledo legal standing to sue on behalf of Lake Erie, it makes them trustees of the lake,” Miller explains. If passed, the law could feasibly be used by residents to protect the lake from new pipelines, water privatization, and polluting companies. The lake has recently suffered from large, toxic algae blooms, which are exacerbated by industrial farming practices and climate change. The transformative law proposed by Toledoans for Safe Water was slated to appear on Toledo’s 2018 November municipal ballot. However, on August 28, at a special meeting of the Lucas County Board of Elections, things changed. The Board of Elections’ attorney said the board can refuse to certify a ballot initiative if it thinks the measure is beyond the “constitutional power of the municipality.” In Ohio, as in many other states, municipalities have very few powers. Miller says she is aware of the many obstacles that stand in the community’s way of proactively protecting their drinking water and the Lake Erie ecosystem. She sees the Bill of Rights effort as proposing a new legal paradigm, with the goal of politicizing the issue and putting it to a vote.
Congress Poised to Act to Reduce Major Source of PFAS Chemicals in Drinking Water - House and Senate leaders included a provision in legislation to fund the Federal Aviation Administration and strengthen disaster programs that will give commercial airports the option to switch to firefighting foams that do not include the highly toxic fluorinated chemicals known as PFAS. Under current law, airports are required to use firefighting foams that contain these chemicals, which have been linked to cancer, kidney disease and other health issues. Firefighting foams made with PFAS chemicals are a significant and widespread source of drinking water contamination. In March, Washington became the first state to ban the use of PFAS chemicals in firefighting foams. Congress could vote later this week on the bill that includes the option for airports to switch to PFAS-free foam. "EWG appreciates the bipartisan group of leaders who came together to tackle this serious and growing threat to the nation's drinking water," said EWG Legislative Attorney Melanie Benesh. "On behalf of communities grappling with PFAS-contaminated tap water, EWG applauds their leadership on this important issue. Safeguarding the public from the dangers posed by toxic chemicals in our tap water should be a top priority for all our elected leaders." EWG's ongoing research on the growing crisis estimates roughly 110 million Americans could have PFAS-contaminated drinking water.
Half the World’s Killer Whale Populations at Risk From Toxic Chemicals -- Polychlorinated biphenyls (PCBs) were banned in the U.S. in 1978, but their persistence in the world'soceans is still posing a major threat to killer whales.A study published in Science Friday found that current concentrations of PCBs could lead to the disappearance of half of the world's killer whale, or orca, populations over the next 30 to 50 years, according to an Aarhus University press release published by ScienceDaily."It is like a killer whale apocalypse," study author Paul Jepson at the Zoological Society of London told The Guardian. Ten out of the world's 19 killer whale populations were rapidly dwindling, the study found. PCBs were widely used in electronics and plastics beginning in the 1930s. Countries began to ban them in the 1970s and 1980s, and in 2004 the Stockholm Convention came into effect, in which 152 countries promised to phase them out entirely by 2025 and clean up existing waste, CNN reported.But the research suggests the convention isn't moving fast enough. "I think the Stockholm Convention is failing," Jepson told The Guardian. "The only area where I am optimistic is the U.S. They alone produced 50 percent of all PCBs, but they have been getting PCB levels down consistently for decades. All we have done in Europe is ban them and then hope they go away."Killer whales are especially impacted because they are at the top of the marine food chain, and concentrations of the toxic chemicals increase as they accumulate in the tissues of larger and larger animals. Further, killer whales pass PCBs onto their offspring through their milk. Killer whale populations in highly contaminated areas like Brazil, the Strait of Gibraltar, the northeast Pacific and the UK were especially under threat and had already been reduced by half in the years when PCBs were being used."In these areas, we rarely observe newborn killer whales,"
Everything you’ve been told about plastic is wrong – the answer isn’t recycling - Head to the kitchen, open your fridge and cupboards, and take out everything that’s made of plastic. Bags of pasta, rice (or quinoa, if that’s your jam), bottles of olive oil or soy sauce, blocks of cheese, cartons of milk and juice, packaging around meat and fish, bags of spinach, two-packs of avocados, punnets of cherry tomatoes, herb and spice jars (at the very least the lids), washing up liquid bottles, sponges (the packets and, often, the sponge itself). The list goes on – and that’s just one room. It’s fine though, right? Because you recycle. Or so goes the story we’ve all been brainwashed into accepting: that if we all just get a few containers and separate out our waste, it will be taken by some nice people who will magically make it go away without any negative consequences. Recycling is the grown-up version of squeezing our eyes shut, sticking our fingers in our ears and shouting “lalalalalala!”. Meanwhile our marine life is fastbecoming extinct, our air is so polluted that limits and benchmarks are becoming laughable, natural disasters are more devastating than ever and, of course, the planet is hurtling ever closer to “disastrous” levels of global warming.Today, though, some of us have received a wake-up call. The news that the government is considering changing the way plastic is recycled in England has prompted questions about how exactly itis recycled, the answer to which is not very effectively at all. Of all that plastic you found in your kitchen, two thirds cannot be recycled (if you carefully inspect the packaging, you’ll see much of it states “not currently recyclable” somewhere in microscopic text). Even the thermal paper your shopping receipts are usually printed on contain BPA and cannot be recycled. We need to open our eyes to the reality of how much plastic ends up in landfill, but perhaps even more importantly, we must reframe the idea of recycling. When it comes to plastic, it is not a solution – it’s the last resort.
Court restores federal protections for Yellowstone-area grizzly bears - A U.S. District Court judge restored federal protections Monday to about 700 grizzly bears living in and around Yellowstone National Park, canceling planned hunts in Wyoming and Idaho and overturning a Trump administration finding that the iconic population had recovered.In a 48-page order, Judge Dana L. Christensen wrote that the case was “not about the ethics of hunting, and it is not about solving human- or livestock-grizzly conflicts.” Instead, he said, the ruling was based on his determination that the U.S. Fish and Wildlife Service had illegally failed to consider how removing the Yellowstone bears from the endangered species list would affect other protected grizzly populations, and that its analysis of future threats to the bears was “arbitrary and capricious.”The decision sided with multiple conservation and tribal organizations that sued Fish and Wildlife after it delisted Yellowstone grizzlies in 2017, and it supported one of their primary contentions: that the isolation of the bear population, which is expanding outward but remains unconnected to the other major U.S. grizzly population near the Canada border, makes it genetically vulnerable. “The Service appropriately recognized that the population’s genetic health is a significant factor demanding consideration,” Christensen wrote. “However, it misread the scientific studies it relied upon, failing to recognize that all evidence suggests that the long-term viability of the Greater Yellowstone grizzly is far less certain absent new genetic material.” In a statement, Fish and Wildlife said it was reviewing the ruling and noted that it means the bears' management — in the hands of Wyoming, Montana and Idaho since last year — now returns to the federal government. Nevertheless, the agency said, “we stand behind our finding that the Greater Yellowstone Ecosystem grizzly bear is biologically recovered and no longer requires protection. . . . Our determination was based on our rigorous interpretation of the law and is supported by the best available science and a comprehensive conservation strategy developed with our federal, state, and tribal partners.”
Indonesia sets first moratorium on palm plantation permits (Reuters) - Indonesia's government has issued a presidential instruction to place a moratorium on new permits for palm plantations for three years, as part of efforts to protect forests, a presidential official said on Friday. With around 12 million hectares (46,000 square miles) of palm plantations, Indonesia is the world's biggest palm oil producer and environmentalists blame much of the country's forest destruction on land clearance for the crop. The instruction, which was signed on Sept. 19, aims to "improve governance of sustainable palm plantation, provide legal certainty, (and) guard and protect environmental preservation," according to a copy of the document verified by presidential staff member Ahmad Erani Yustika. Indonesia's government has already put in place a moratorium on primary forest and peat land clearing, which has been regularly extended since it was first implemented in 2011. The latest rule on palm plantations also includes freezing new permits that are currently being processed. The government will also evaluate long-standing permits that have been issued but not yet implemented, including permits issued despite plantations being in forest areas, the document showed. An industry body said the new measure could cause problems for some palm companies if their existing permits were evaluated based on the more recent government plan. "We need to see historically, what the policy was when the permits were issued," said Eddy Martono, a senior official at the Indonesia Palm Oil Association. The moratorium is also aimed at encouraging farmers to increase palm yields on land already being cultivated. Indonesia has suffered one of the highest rates of deforestation in the world - often cleared for palm oil and other plantations or pulp and paper mills. In the last half century more than 74 million hectares of Indonesian rainforest - representing an area twice the size of Germany - have been logged, burned or degraded, according to Greenpeace.
Los Angeles reduces Eastern Sierra water deliveries because of climate change--at risk, ranchers say, is a way of life - Citing climate change, the Los Angeles Department of Water and Power this year shifted its irrigation policy, saying ranchers who lease grazing areas on its 6,400 acres near Crowley Lake should no longer bank on the promise of ample water when they renew. Water officials say the change is necessary as decreased snowmelt leaves them little water to spare. But the move could turn grasslands brown, rattling ecosystems, the local economy and a way of life, ranchers warn. “Without irrigation, we’d be looking at mostly cheatgrass and tumbleweeds, which are good for nothing,” “Does L.A. have the right to destroy habitat and the livelihoods of families, friends and neighbors who have lived here for generations?” The LADWP has for seven decades provided several lessees in the area about 5 acre-feet of water per acre per year, which made their pastures nutritious through the summer and added luster to the area’s hiking, biking and angling hotspots. (An acre-foot of water equals about 326,000 gallons, more than enough to supply two households for a year.) But as the agency prepares for a future with less snow, more rain and prolonged periods of drought, the prospect of flooding pastures with enough water to serve 50,000 families annually has lost its appeal. The LADWP said it would have to spend about $18 million to replace the amount of water requested by ranchers and the lost hydropower it could generate — an unacceptable burden for its Southern California ratepayers of about $30 per family per year. Beyond that, water officials say, irrigation was never a guarantee tied to the leases held by ranchers, who pay an average $10 to $15 per acre per year to graze on irrigated pastures. As it drafts new 20-year leases for 10 longtime ranchers in area, the department says lessees should anticipate that little to no water will be available for them. The agency said it would continue diverting about 1,000 acre-feet of water per year to protect the estimated 600 sage grouse in the area, a segment of a subspecies only found along the California-Nevada border. The amount of water needed to sustain the bird, and whether any of it will be available to ranchers, will be determined by an ongoing environmental review, officials said.
Washington and many other cities have experienced a record number of warm nights this year - Across large portions of the nation, it has been an exceptionally long, steamy summer. While there have been plenty of hot afternoons, unusually warm nights have set this summer apart, piling up in record numbers.From Southern California to northern Maine, scores of U.S. cities have racked up more warms nights than ever previously recorded, as indicated by the frequency of low temperatures of 70 degrees or higher. Washington has observed such warm low temperatures a record 85 times this year, compared with the normal of 57. Fifteen have occurred in September alone, a record for the month. And there are probably more to come. Many locations along the East Coast have joined Washington in accumulating these warm nights in record numbers, including Caribou, Maine, Boston, Salisbury, Md., Richmond, Norfolk, Wilmington, N.C., and Charleston, S.C. Especially in the Northeastern United States, the record number of warm nights is closely related to the fact that it has been so humid. Temperatures at night don’t fall as much when the air is loaded with moisture. It’s been humid and it’s been cloudy — the two often go hand in hand. Instead of the crystal-clear skies September is typically known for, Washington just finished one of its cloudiest stretches in memory, lasting 10 days. The record frequency of warm nights is perhaps unsurprising, considering that the National Oceanic and Atmospheric Administration recently announced low temperatures in the Lower 48 states ranked warmest on record between June and August. An increase in the frequency and intensity of warm nights is an expectation of climate change, because of urbanization and increasing greenhouse gas concentrations in the atmosphere. Overnight low temperatures are warming “nearly twice as fast as afternoon high temperatures,” NOAA said. For its part, Washington has seen a dramatic increase in its annual frequency of low temperatures of 70 degrees or higher, as shown in the chart below. A century ago, the District averaged half as many nights with lows at 70 or higher, compared with current times.
Hurricane Florence hit 10 days ago, and still hundreds of roads remain closed, thousands evacuated - Ten days after Hurricane Florence roared onto land along the coastal Carolinas, hundreds of roads remain closed, thousands of residents remain out of their homes or under evacuation watches, and hundreds are being rescued from rising waters.The death toll from the storm reached 43, and tentative damage estimates in the range of $50 billion place Florence among the 10 most costly hurricanes in U.S. history.North Carolina Gov. Roy Cooper said teams conducted more than 350 rescues over the weekend, raising the total to more than 5,200 since Florence slammed through the state. Ten river gauges in the state showed major or moderate flood stages, the National Weather Service said.“Florence continues to bring misery to North Carolina,” Cooper said. “Remain careful and cautious in areas impacted by the storm, and stay away from flooded roads and communities. Don’t put yourself in danger.”More than 400 roads remained closed across the state, although the last blocked segment of I-95 was reopened late Sunday, Cooper's office said. Parts of I-40 have slowly emerged from the floodwaters, but other sections could remain underwater for another week. Firefighters from the town of Penderlea, in the southeastern part of the state, hosed fish carcasses off I-40 to prevent vehicles from skidding.Cooper said 74,000 state residents have applied for Federal Emergency Management Administration aid. In South Carolina on Monday, authorities in Georgetown County urged thousands of residents who live in or near flood zones along the Intracoastal Waterway, Waccamaw River and Pee Dee River to evacuate "for their own safety and the safety of first responders." The county opened two shelters and said residents who use them can bring their pets.
Florence was another 1,000-year rain event. Is this the new normal? -- Over a massive region of southeast North Carolina and northeast South Carolina, Florence produced an extraordinary rainstorm that statistically has a 1-in-100 chance of occurring each year. Over substantial areas, the deluge had a 0.1 percent chance of happening, what is known as a 1,000-year event.These exceptional rainfall events keep happening and appear to be part of a trend toward more extreme tropical rainmakers, probably connected to climate change. Average recurrence intervals for maximum 72-hour rainfall during Florence. (MetStat) Since August 2017, three hurricanes have set rainfall records for tropical weather systems in four states. First came Harvey, which dumped an unheard-of five feet of rain in Texas last August. No storm in recorded history had produced so much water in the United States. In all, the hurricane and its remnants generated 33 trillion gallons of water over the country, enough to engulf Houston in a tank of water 3.1 miles high. Then came Lane in August, which bombarded the Big Island with more than 50 inches, becoming Hawaii’s rainiest tropical storm. As a point of exclamation, Florence slammed into the Carolinas over the past week, setting tropical storm rainfall records in two states, surpassing 20 inches in South Carolina and 35 inches in North Carolina. Ryan Maue, meteorologist with weathermodels.com, tweeted that the storm dispensed 11 trillion gallons of rainfall along the way. Florence’s rainfall in North Carolina was the most for any tropical weather system north of Florida along the East Coast on record, and fourth most for any state.. Recently published research has shown hurricanes are slowing down, taking in more water and growing bigger. “If you have bigger, slower, wetter storms, you’re going to set rainfall records,” Although it’s not certain how much of the change is the result of global warming, a study published in June found that storms have slowed down by about 10 percent since 1946. “Every one of the hazards that we know tropical cyclones carry with them, all of them are just going to stick around longer,” Jim Kossin, study author and a scientist with the National Oceanic and Atmospheric Administration, told The Washington Post’s Chris Mooney. “And so that’s never a good thing.”
Carolina CAFOs Are a Disaster for Farmers, Animals and Public Health - In the aftermath of Hurricane Florence, I've joined millions who've watched with horror as the Carolinas have been inundated with floodwaters and worried about the various hazards those waters can contain. We've seen heavy metal-laden coal ash spills, a nuclear plant go on alert (thankfully without incident), and sewage treatment plants get swamped. But the biggest and most widely reported hazard associated with Florence appears to be the hog waste that is spilling from many of the state's thousands of CAFOs (confined animal feeding operations), and which threatens lasting havoc on public health and the local economy.And while the state's pork industry was already under fire for its day-to-day impacts on the health and quality of life of nearby residents, Florence has laid bare the lie that millions of animals and their copious waste can be safely concentrated in flood-prone coastal areas like southeastern North Carolina. The state is home to 9.7 million pigs that produce 10 billion gallons of manure annually. As rivers crested on Wednesday, state officials believed that at least 110 hog manure lagoons—open, earthen pools where pig waste is liquified and broken down by anaerobic bacteria (causing their bubblegum-pink color) before being sprayed on fields—had been breached or inundated by flood waters across the state: Perhaps not surprisingly, the state's pork industry lobby group is reporting much smaller numbers: by Wednesday afternoon, the North Carolina Pork Council's website listed only 43 lagoons affected by the storm and flood. In any case, the true extent of the spills may not be known for many days, as extensive road closures in the state continue to make travel and assessment difficult or impossible.
Dam breach sends toxic coal ash flowing into a major North Carolina river - North Carolina floodwaters continued to inundate a 47-year-old basin of toxic coal ash alongside Duke Energy’s L.V. Sutton power plant on Saturday, sending polluted waters pouring into a man-made lake and then into the Cape Fear River. The rising waters also swamped a 625-megawatt natural gas plant at the site, forcing it to shut down. The water at the plant was at least six inches deep, Duke spokeswoman Paige H. Sheehan said. Video released by state regulators Saturday showed equipment and buildings at the plant poking up from a vast expanse of water.The company said in a news release Friday that workers were moving “large stones and other materials” to help plug gaping holes in the dams and on Saturday added it was bringing additional construction materials from across the state. Sheehan said Duke has deployed booms with curtains below them to try to contain some of the leaking material. The breakdown in the defenses at the Duke plant underscored how even though Hurricane Florence is over, rising river waters keep adding to the environmental mess left in the storm’s wake. There were at least 34 hog lagoons spewing feces and urine into the surrounding areas, according to state officials. Nine more were inundated by floodwaters, and 47 on the edge of overflowing. Fears about the situation at Duke Energy’s L.V. Sutton power plant near Wilmington have been growing since before Florence made landfall. Earlier in the week, rainfall from the storm punched holes in the wall of a separate coal ash landfill also near the former coal plant, which sits on the banks of man-made Sutton Lake and near the Cape Fear River, failed in several places. A special black membrane installed to contain the waste was torn open in at least two spots. Duke Energy estimated last weekend that the storm had washed away more than 2,000 cubic yards of coal waste — enough to fill more than 150 dump trucks. The environmental group Waterkeeper Alliance said in a statement Saturday that breaches at the landfill “swallowed a bulldozer and a tractor.” On Friday came more bad news. The company said the dam separating the Cape Fear River from man-made Sutton Lake, which holds water used to cool the power plant, suffered one large breach and several smaller ones. Meanwhile, a steel wall separating the oldest of two remaining coal ash disposal basins at the site was submerged by floodwater. The National Weather Service said water levels in the river would continue to rise into Saturday and stay above record levels into next week.
Flood Shuts Down N.C. Power Plant, Sweeps Waste Into River -- River flooding caused the shutdown Friday of a natural-gas plant near Wilmington, N.C., after several breaches in a cooling lake were discovered and some waste tied to the facility’s past as a coal-fired plant entered waterways. Duke Energy Corp. said Friday that the rising Cape Fear River overtopped the dam at a cooling pond next to a coal-ash landfill at its L.V. Sutton Power Plant. The plant burns natural gas after coal-fired units were retired in 2013. The company believes the coal ash—which was about 5 feet below a steel wall at last check—is still contained, but Duke Energy spokeswoman Paige Sheehan said she couldn’t rule out the possibility that coal ash was moving into the Cape Fear River. The company said another type of waste from burning coal to generate electricity—lightweight hollow beads of alumina and silica known as cenospheres—was entering the river, and environmental groups warned people to stay out of the affected water. Though Florence made landfall a week ago, the process of draining away the water the storm dumped on the region is proving painfully slow. Some rivers around the border of the Carolinas near the coast are still in major flood stages, or have yet to crest. The Cape Fear River near the Duke Energy power plant was forecast to crest sometime over the next few days. Duke Energy has been in the process of moving coal ash at the Sutton power plant from ponds into a lined landfill meant to store the material permanently. Environmental groups that sued the company to install the new system have expressed concern about the risks from storms and flooding. The company said water was flowing out of the south end of Sutton Lake in a second breach, and that cenospheres are leaking into the Cape Fear River. Cape Fear Riverkeeper Kemp Burdette said he was assessing the situation on-site Friday, and called any seepage of coal ash into the river a serious concern. “Cenospheres are coal ash, so if cenospheres are moving into the Cape Fear River, then that means coal ash is moving into the Cape Fear River,” he said. If that happens, then floodwaters could be carrying metals like arsenic, boron and chromium, he said.
Toxic spills highlight Trump's deregulation of coal plant waste - The breach of a pond used to store coal ash in North Carolina has revived criticism of the Trump administration’s efforts to loosen restrictions on how power plants dispose of the toxic waste.The Environmental Protection Agency in July relaxed Obama administration requirements that forced companies to keep a closer watch on coal ash disposal sites and their potential groundwater contamination -- and signaled further revisions sought by industry are coming.“The rollbacks by the Trump administration make these kinds of risks more likely and more dangerous,” said John Rumpler, clean water program director for advocacy group Environment America. Duke Energy Corp. said Friday that floodwaters from Hurricane Florence had overwhelmed a coal ash basin at its Sutton power plant in Wilmington, North Carolina, raising the possibility the material had spilled into the Cape Fear River. The Obama-era regulation, put in place after several spills including one in North Carolina, wouldn’t prevent coal ash from pouring into the river. But environmentalists say the Trump administration’s changes will prolong the lives of those toxic waste sites and increase the risk of spills. More than 100 million tons of coal ash are generated each year from about 400 power plants across the country. When stored in disposal ponds, such as the one compromised in North Carolina, it is a toxic slurry teeming with mercury, arsenic, lead and chromium -- substances that can cause irreversible brain damage, cancer and other diseases. The Trump EPA’s July overhaul effectively added a year of usable life to some existing coal ash ponds, while also giving utilities and states more flexibility in deciding when they have to be cleaned up. Under the newly updated rule, state regulators can suspend groundwater monitoring requirements for some coal ash disposal sites and are empowered to certify whether the facilities are adequate.. The EPA estimated the changes would spare power producers as much as $31 million a year.
Economic Damage Wrought By Hurricane Florence Nearly 10 Times Worse Than Expected - Rivers in the Carolinas are still rising and North Carolina Gov. Roy Cooper has warned that it still isn't safe for displaced residents to return to their property. But that hasn't stopped Moody's from releasing the first estimate of the economic damage wrought by Hurricane Florence. According to the Wall Street Journal, the ratings agency's estimates put the total economic toll at somewhere between $38 billion and $50 billion - more than double an initial estimate of between $8 billion and $20 billion from Goldman Sachs and S&P. And nearly ten times CoreLogic's initial estimate of between $3 billion and $5 billion. If damages reach the upper end of that range, it would leave Florence in seventh place among the biggest storms, just after 1992's Hurricane Andrew, according to Moody’s estimates.Notably, the expected toll is lower than each of last year's three major hurricanes:Based on Moody’s estimates, last year’s three hurricanes each caused more damage than Florence: Harvey’s tally reached $133.5 billion; Maria’s $120 billion; and Irma’s $84.2 billion.Still, the storm has continued to wreak havoc in the region as the death toll has risen to 41. Rivers in the Carolinas have continued to rise, and rescues are still being carried out by first responders. Meanwhile, water levels for the Cape Fear River are expected to peak on Saturday: Florence, which made landfall Sept. 14 and has claimed 41 lives in the Carolinas and Virginia, is continuing to wreak havoc. Rivers in the Carolinas are continuing to rise, and more than 600 roads were still closed Friday in North Carolina. North Carolina Gov. Roy Cooper warned it still isn’t safe for many people to return home including the 3,700 who remain in shelters. Part of the Cape Fear River is forecast to crest Saturday while the Waccamaw River at Conway, S.C., isn’t expected to crest until Tuesday or Wednesday next week , according to the National Weather Service.
Flooding envelops South Carolina homes as Florence death toll rises -- Twelve days after the once-fierce Hurricane Florence arrived on the Carolina coast, and more than a week after it blew north and dissipated, rivers swollen by the storm's relentless rains are still flooding homes and businesses in their paths as they make their way to the sea. The slow-moving disaster has allowed forecasters to pinpoint exactly who will flood. There have been few rescues or surprises in South Carolina -- just black, reeking water slowly seeping in and even more slowly receding. A week ago, firefighters in Conway, South Carolina, went to a neighborhood and told surprised residents their houses would flood from Florence -- even though they had never had water in them before. On Monday and Tuesday, those same firefighters checked on the same neighborhoods with maps that detailed each of the nearly 1,000 homes that could expect to be inundated. "It's kind of playing out exactly like we forecast," Conway Fire Chief Le Hendrick said. In one part of the city on Tuesday, some homes were surrounded by six feet of floodwater, CBS affiliate WBTW-TV reported. "These are all great people who pretty much lost everything," The Waccamaw River, which flows through the city of 23,000 and floods at 11 feet, was expected to crest on Wednesday at 21.7 feet. On Friday, it surpassed the previous record high of 17.9 feet set in 2016 by Hurricane Matthew.The waterway was not expected to drop below 18 feet or so until sometime next week. All that water is making its way to Georgetown, where five different rivers reach the sea. Officials there said the worst of the flooding would start Wednesday and last until Thursday, likely leaving only one highway into the city.
Impact of Hurricane Florence continues to be felt throughout the Carolinas - Two weeks after Hurricane Florence first made landfall on the North Carolina coast, its impact is still being felt throughout the region. The death toll now stands at 48 across the three states—North and South Carolina and Virginia—most directly affected by Florence, with 37 of those in North Carolina. The latest reported fatality was an 85-year-old North Carolina man who, while cleaning up storm debris, suffered an injury that later became infected, causing his death. On Friday, the North Carolina Coastal Federation issued a warning to residents advising them to avoid coastal waters for the time being due to pollution caused by flooding runoff. Over 30 inches of rain fell on the region due to Florence, inundating the ground and causing a large amount of agricultural and industrial waste to flow into the area’s waterways. This has caused elevated levels of bacteria in coastal waters. The Fayetteville Observer has reported an outbreak of large mosquitoes due to the vast amounts of standing water left over from the storm. . Local residents say it is the worst mosquito outbreak in their lifetimes, with some of the breeds being up to 3/8 of an inch long. The state has allocated $4 million for mosquito eradication efforts. Residents in Lumberton, North Carolina have sought approval from a federal judge to file a class action lawsuit against the railroad giant CSX for blocking efforts to improve the community’s flood prevention system in advance of the hurricane, causing the city to flood and destroying a large number of homes. The lawsuit alleges that CSX knew about the risk of flooding in the area for years but did nothing to address it. The storm has caused an ongoing agricultural disaster. Approximately a dozen reservoirs holding animal waste were flooded in the storm, spilling waste into the surrounding areas. Four million chickens and turkeys died in the storm, and 5,500 hogs. Many farms throughout the state have been isolated by the floodwaters, preventing delivery of supplies and imperiling livestock. South Carolina has also continued to suffer in the aftermath of Florence. The wastewater treatment plant in Conway, South Carolina was forced to close earlier this week due to flooding. As a result of the closure, millions of gallons of untreated wastewater flooded into a tributary of the nearby Waccamaw River, and state officials have warned residents to avoid any areas inundated by the untreated sewage.
Carolina's farms could take billions in losses from Florence - — Hurricane Florence is testing the resolve of farmers in the Carolinas, who could face billions of dollars in agricultural damage while still feeling the sting from Hurricane Matthew almost two years ago. After last weekend's high winds and rain that was measured in feet, followed by this week's rising rivers and standing water in fields, early farm reports are confirming pre-storm worries about losses to tobacco, cotton and corn crops. North Carolina industry leaders remain anxious about whether sweet potatoes and peanuts — grown beneath the soil and susceptible to flooding — will suffer greatly as well. Matthew hurt eastern North Carolina farmers in 2016, but that storm arrived in October, after most of field crops had been brought in. With Florence, most major crop harvests were still underway or just getting started. "This hurricane couldn't have come at a worse time," North Carolina likely won't have preliminary crop damage estimates until the end of the next week, state Agriculture Commissioner Steve Troxler said. Floodwaters and blocked country roads still were making it difficult for agency agronomists to check out farms. Five of North Carolina's top six farming counties are within the hardest-hit areas in the eastern part of the state. "I think it's easily going to be in the billions of dollars," Troxler said in an interview Thursday, calling the damage "catastrophic" and "unbelievable." In South Carolina, meanwhile, crop damage was estimated at $125 million so far. This week, state Agriculture Commissioner Hugh Weathers visited farmers in damaged areas previously hurt by Matthew and by record flooding in 2015. Weathers said farmers told him that while this year's cotton crops had been damaged by high winds and peanuts were rotting in soaking soil, no crop was a total loss. Jason Jones, a fifth-generation farmer in Craven County, said the un-harvested corn on his 1,800-acre (728-hectare) farm is "just about completely flat" and neighboring farms lost all of their tobacco in the fields. Jones said farmers have crop insurance, but it doesn't cover the total loss.
Most of ocean off NC deemed unsafe due to hurricane runoff - Waters off much of the North Carolina coast are no longer safe for swimming or even wading due to Hurricane Florence runoff, according to a warning posted by the North Carolina Coastal Federation.As of Friday, only two coastal counties had been cleared for swimming: Dare, Currituck, say state officials.Elsewhere, you could risk “severe” illness, including “bacterial infections, earaches, hepatitis, skin rashes and respiratory issues,” said the release posted Wednesday.“We need to be loud and clear that swimming in coastal waters is currently a threat to public health, safety and welfare,” said a statement issued by Todd Miller, executive director of the nonprofit federation.Earlier this week, NASA satellites captured images of the pollution runoff filling rivers and floating into coastal waterways, the News & Observer reported. The North Carolina Recreational Water Quality Division says flood waters contain a mix of septic tank waste, sewer water, petroleum products, chemicals and animal waste. State officials have been testing waters off popular beaches and announced Monday that bacteria levels at swimming sites in Dare and Currituck counties were at acceptable levels, but “a precautionary water quality advisory remains in effect for all other coastal counties.” The advisory says North Carolinians, tourists and even fishermen who come into contact with coastal waters “should exercise caution, limit wound exposure and thoroughly wash their hands.”
Florence is nation’s second wettest storm, behind Harvey — Hurricane Florence was the nation’s second rainiest storm in 70 years, a top rainfall meteorologist calculated. Only last year’s Hurricane Harvey rained more over a 14,000 square mile (36,260 square kilometers) area during a four-day time period, said Ken Kunkel, a meteorologist at the National Oceanic Atmospheric Administration and North Carolina State University. Scientists said climate change likely boosted rainfall totals for both storms. Kunkel’s preliminary analysis found more than 17.5 inches (0.4 meters) fell on average over five weather stations in the 14,000 square miles of the eastern Carolinas stretching from Fayetteville, North Carolina, to Florence, South Carolina. The amount is second to Harvey’s 25.6 inches (0.6 meters). The third rainiest storm was in March 2016 in northern Louisiana and the seventh was in southern Louisiana in August 2016. The three rainiest and four of the top seven have all occurred in the last three years — which Kunkel said is no coincidence. Kunkel examined rainfall over a compact area — 14,000 square miles, a figure based on latitude and longitude squares — and larger areas such as 20,000, 30,000 and 80,000 square miles. Florence’s unusual amount was most noticeable on the smallest scale. When the scientist looked at a bigger area, 20,000 square miles, Florence fell to seventh place, behind Harvey, 1998’s Hurricane Georges, the two Louisiana rainstorms, a 1962 northern California downpour and a 1994 Texas drenching. The analysis has not been published or peer reviewed yet, but will be, Kunkel said. It is “not surprising — but still terrifying — that the two top ranked soakers happened over the past two years,” said Pennsylvania State University climate scientist Michael Mann, who wasn’t part of Kunkel’s research but praised it. He said warmer oceans, more moisture and slower moving storms due in various ways to climate change make storms dump more rain.
Chaos Erupts After Massive 7.7 Magnitude Earthquake Rocks Indonesia - A massive magnitude 7.7 earthquake struck off the Indonesia island of Sumatra on Friday, prompting tsunami warnings across the Pacific ring of fire, according to USGS. The quake followed a smaller quake killed one person and damaged some homes. Video footage uploaded to social media and circulated on local television showed the chaos that erupted following the quake, as people ran screaming through the streets, stricken with fear. According to Al Jazeera, the quake hit central Sulawesi island at a depth of 10 kilometers just hours after a smaller quake killed at least one person in the same area. Indonesia's disaster agency issued a warning for the West coast of Sulawesi Island and the East Coast of Borneo Island. Meanwhile, authorities in Jakarta were having trouble reaching officials in the impacted area. Residents were asked to stay alert, as a number of aftershocks were expected. "We advise people to remain in safe areas and stay away from damaged buildings," Sutopo Purwo Nugroho, spokesperson for the National Disaster Mitigation Agency, said in a televised interview. He added that there was "much damage" in the Donggala area - home to about 300,000 people - where the first quake hit.
Dramatic Footage Captures Tsunami Crashing Into Heavily Populated Indonesian Coastline - The massive 7.7 magnitude earthquake that shook the Indonesian island of Sulawesi unleashed a tsunami that destroyed property along the island's Palu region. Amid the chaos, a stunning video of the tsunami's impact on the coastline was uploaded to social media. The footage shows hundreds of people running for their lives as pandemonium erupts.Jadi tadi setelah #gempadonggala yang beritanya sudah banyak beredar itu temen saya masih bisa kontak adiknya. Tapi setelah itu dia dapat video ini, dan ga bisa hubungin keluarga dan teman-temannya. Mungkin sinyal mati semua. Jadi kalau ada info kabarin ya. pic.twitter.com/2HY4Yqg0ut— Dian Onno (@DianOnno) September 28, 2018 In another part of the video, water can be seen crashing towards the Baiturrahman Mosque and the Palu Grand Mall.Officials said that waters have receded and details of casualties haven't been released. A separate tsunami hit another city, Donggala. Officials said houses were swept away and multiple families were reported missing. Communications in central Sulawesi were knocked out and rescue officials are having trouble reaching people. Officials e xpect to have more information in the coming days.
Hundreds killed in Indonesia quake-tsunami - Nearly 400 people were killed when a powerful quake sent a tsunami barrelling into the Indonesian island of Sulawesi, officials said Saturday (Sep 29), as hospitals struggled to cope with hundreds of injured and rescuers scrambled to reach the stricken region.The national disaster agency put the official death toll so far at 384, all of them in the tsunami-struck city of Palu, but warned the toll was likely to rise. About 540 people were badly injured, it added. In the city - home to around 350,000 people - partially covered bodies lay on the ground near the shore, the day after tsunami waves 1.5 metres (five feet) high hit the coast. There were also concerns over the whereabouts of hundreds of people preparing for a beach festival that had been due to start Friday evening, the disaster agency said. Hospitals were overwhelmed by the influx of injured, with many people being treated in the open air, while other survivors helped to retrieve the remains of those who died.One man was seen carrying the muddy corpse of a small child.The tsunami was triggered by a strong quake that brought down buildings and sent locals fleeing for higher ground as a churning wall of water crashed into Palu, where there were widespread power blackouts. Dramatic video footage captured from the top floor of a parking ramp in Palu, nearly 80 kilometres (50 miles) from the quake's epicentre, showed waves bring down several buildings and inundate a large mosque. About 17,000 people had been evacuated, the disaster agency said, and that figure is expected to rise. The shallow 7.5 magnitude tremor was more powerful than a series of quakes that killed hundreds on the Indonesian island of Lombok in July and August.
'We're moving to higher ground': America's era of climate mass migration is here - The era of climate migration is, virtually unheralded, already upon America.The population shift gathering pace is so sprawling that it may rival anything in US history. “Including all climate impacts it isn’t too far-fetched to imagine something twice as large as the Dustbowl,” said Jesse Keenan, a climate adaptation expert at Harvard University, referencing the 1930s upheaval in which 2.5 million people moved from the dusty, drought-ridden plains to California.This enormous migration will probably take place over a longer period than the Dustbowl but its implications are both profound and opaque. It will plunge the US into an utterly alien reality. “It is very difficult to model human behaviour under such extreme and historically unprecedented circumstances,” Keenan admits.The closest analogue could be the Great Migration – a period spanning a large chunk of the 20th century when about 6 million black people departed the Jim Crow south for cities in the north, midwest and west.By the end of this century, sea level rise alone could displace 13 million people, according to one study, including 6 million in Florida. States including Louisiana, California, New York and New Jersey will also have to grapple with hordes of residents seeking dry ground.“There’s not a state unaffected by this,” said demographer Mat Hauer, lead author of the research, which is predicated on a severe 6ft sea level increase. There are established migration preferences for some places – south Florida to Georgia, New York to Colorado – but in many cases people would uproot to the closest inland city, if they have the means. “The Great Migration was out of the south into the industrialized north, whereas this is from every coastal place in the US to every other place in the US,” said Hauer. “Not everyone can afford to move, so we could end up with trapped populations that would be in a downward spiral. I have a hard time imagining what that future would be like.”
Humans Contribute to Earth's Wobble, Scientists Say - Humans are responsible for some of the wobble in Earth's spin. Since 1899, the Earth's axis of spin has shifted about 34 feet (10.5 meters). Now, research quantifies the reasons why and finds that a third is due to melting ice and rising sea levels, particularly in Greenland—placing the blame on the doorstep of anthropogenic climate change. Another third of the wobble is due to land masses expanding upward as the glaciers retreat and lighten their load. The final portion is the fault of the slow churn of the mantle, the viscous middle layer of the planet."We have provided evidence for more than one single process that is the key driver" for altering the Earth's axis, Scientists have long known that the distribution of mass around the Earth determines its spin, much like how the shape and weight distribution of a spinning top determines how it moves. Also, Earth's spin isn't perfectly even, as scientists know thanks to slight wiggles in the movements of the stars across the night sky that have been recorded for thousands of years, said Erik Ivins, a study co-author and a senior research scientist at JPL. Since the 1990s, space-based measurements have also confirmed that the Earth's axis of rotation drifts by a few centimeters a year, generally toward Hudson Bay in northeastern Canada. Researchers knew that a proportion of this wobble was caused by glacial isostatic adjustment, an ongoing process since the end of the last ice age 16,000 years ago. As the glaciers retreat, they relieve the land underneath of their mass. Gradually, over thousands of years, the land responds to this relief by rising like bread dough. (In some places on the edges of the ancient ice sheets, the land might also collapse because the ice had forced it to bulge upward.)But in the new research, published in the November issue of the journal Earth and Planetary Science Letters, Adhikari and his colleagues found that glacial isostatic adjustment was only responsible for about 1.3 inches (3.5 centimeters) of axis wobble per year. That was only about a third of the wobble—4 inches (10.5 cm)—observed each year over the 20th century.The researchers also accounted for other shifts in land and water, such as groundwater depletion and the building of artificial reservoirs, all part of humanity's terraforming of the planet. The results revealed that these environmental processes cause another 1.7 inches (4.3 cm) of wobble each year. The melting of the Greenland ice sheet was a particularly important contributor, the researchers found. That's because Greenland has released a large amount of water that was once locked up on land into the oceans, where its mass has been redistributed, Ivins told Live Science. Mountain glaciers and small ice caps elsewhere have also contributed to sea-level rise, he said; but they aren't as concentrated, and their effects on the Earth's rotation often cancel each other out.
Oxygen Loss in Canada Linked to Climate Change --Oceanographers have identified an act of slow suffocation, as oxygen loss grows near one of the world's richest fishing grounds, and are linking the change to human-triggered global warming.They have measured a dramatic drop in levels of dissolved oxygen deep in the Gulf of St Lawrence, in eastern Canada, and they link this increasing strangulation to shifts—connected to climate change driven by ever higher ratios of carbon dioxide in the atmosphere, as a consequence of the profligate burning of coal, oil and natural gas—in the Gulf Stream and the Labrador Current.As carbon dioxide and other greenhouse gas levels have risen in the past 100 years, the Gulf Stream has shifted northward, and the Labrador Current has weakened. As a consequence, according to new research inNature Climate Change, more warm, salty and oxygen-depleted water from the Gulf Stream is getting into one of the world's great waterways. Lower oxygen levels have already affected the Atlantic wolffish, the researchers say. And the change is a threat to the Atlantic cod, and the Greenland halibut: two of the world's most prized commercial catches.
Melting Arctic Permafrost Releases Acid that Dissolves Rocks - As temperatures rise in the Arctic, permafrost — permanently frozen ground — is defrosting at an alarming rate. But the permafrost isn't the only thing in the Arctic that's melting. Exposed rock that was once covered in ice is dissolving, eaten away by acid. And the effects of this acid bath could have far-reaching impacts on global climate, according to a new study. Scientists investigated areas once covered by permafrost in the western Canadian Arctic, finding evidence of weathering caused by sulfuric acid, produced by sulfide minerals that were released when the permafrost melted. Another type of naturally occurring chemical erosion is caused by carbonic acid, and it also dissolves Arctic rock. But although carbonic-acid weathering locks carbon dioxide (CO2) in place, sulfuric-acid erosion releases CO2 into the atmosphere, and it does so in quantities that were not previously accounted for, researchers wrote in the study. On land, melting permafrost is shaping new landscapes, through a process called thermokarst — a term for thawing-driven erosion that originated in Russia, according to the U.S. Geological Survey (USGS). Thermokarst creates land formations such as lakes, pits and sinkholes, and it was previously unknown how this process could affect weathering of exposed minerals, and how that might then impact CO2 release, according to the study."These processes may influence the permafrost carbon-climate feedback, but have received little attention," the scientists reported. Over geologic timescales, weathering caused by carbonic acid can help to regulate climate, by trapping CO2 and restricting its transfer into the atmosphere. But the researchers found that thermokarst in regions that were rich in sulfides drove production of sulfuric acid, rather than carbonic acid, and thereby released quantities of CO2.
This hissing, bubbling Alaska lake is frightening scientists - Katey Walter Anthony has studied some 300 lakes across the tundras of the Arctic. But sitting on the mucky shore of her latest discovery, the Arctic expert said she’d never seen a lake like this one. Set against the austere peaks of the western Brooks Range, the lake, about 20 football fields in size, looked like it was boiling. Its waters hissed, bubbled and popped as a powerful greenhouse gas escaped from the lake bed. Some bubbles grew as big as grapefruits, visibly lifting the water’s surface several inches and carrying up bits of mud from below. As the permafrost thaws across the fast-warming Arctic, it releases carbon dioxide, the top planet-warming greenhouse gas, from the soil into the air. Sometimes, that thaw spurs the growth of lakes in the soft, sunken ground, and these deep-thawing bodies of water tend to unleash the harder-hitting methane gas. But not this much of it. This lake, which Walter Anthony dubbed Esieh Lake, looked different. And the volume of gas wafting from it could deliver the climate system another blow if lakes like this turn out to be widespread. The first time Walter Anthony saw Esieh Lake, she was afraid it might explode - and she is no stranger to the danger, or the theatrics, of methane. In 2010, the University of Alaska Fairbanks posted a video of the media-savvy ecologist standing on the frozen surface of an Arctic lake, then lighting a methane stream on fire to create a tower of flame as tall as she is. It got nearly half a million views on YouTube. So now, in the Arctic's August warmth, she had come back to this isolated spot with a small research team, along with her husband and two young sons, to see what secrets Esieh Lake might yield. One thing she was sure of: If the warming Arctic releases more planet-warming methane, that could lead to. . . more warming. Scientists call this a feedback loop. "These lakes speed up permafrost thaw," Walter Anthony said. "It's an acceleration." There was only so much the team would learn from the instruments they had hauled here. To get a firsthand look, they would have to get in. They'd brought their wet suits.
2018 Arctic sea ice minimum --Arctic Sea Ice by Neven - Another great video, this time from NASA Goddard: 2018 Arctic Sea Ice Ties for Sixth Lowest Minimum Extent on NASA Record – YouTube
New research shows the world’s ice is doing something not seen before -- In this warming world, some parts of the planet are warming much faster than others. The warming is causing large ice bodies to start to melt and move rapidly, in some cases sliding into the ocean. This movement is the topic of a very new scientific study that was just published in the journal Earth and Planetary Science Letters. The Arctic is warming much faster than other parts of the planet and the ice there is showing the signs of rapid warming. This fact has serious consequences. First, melting ice can cause sea levels to rise and inundate coastal areas – it also makes storms like hurricanes and typhoons more destructive. Melting ice also causes a feedback loop, which can cause more future warming and then more ice loss. Some ice floats on water and is called sea ice. When it melts, the ocean water level hardly budges because the ice is already in the sea displacing liquid water. Other ice is on land and may be a large ice sheet or a smaller glacier. These ice bodies sit atop the land and “rest” there. In some cases, they extend out off the land and into the ocean where they partly float on liquid water. When this land ice melts, the liquid flows into the oceans and can cause significant ocean level rising. And this brings us to the new paper. The researchers looked at a type of high latitude glacier in their study. These glaciers hold enough water to cause about 1 foot (about a third of a meter) in sea level rise. But regardless of how they move, these glaciers, particularly the glaciers that have both cold and temperate parts, experience surges in their motion. These surges are short duration times where the glacier moves a lot. During a surge, ice is redistributed from one part of the glacier to another region. The authors in this study observed such a glacier surge. At the Vavilov Ice Cap on October Revolution Island, the authors find it “is undergoing extraordinary acceleration and thinning but displays no previous evidence of surging.”
As the Arctic Melts, the Fabled Northwest Passage Opens for Cargo Ships - When a blue-hulled cargo ship named Venta Maersk became the first container vessel to navigate a major Arctic sea route this month, it offered a glimpse of what the warming region might become: a maritime highway, with vessels lumbering between Asia and Europe through once-frozen seas.Years of melting ice have made it easier for ships to ply these frigid waters. That’s a boon for the shipping industry but a threat to the fragile Arctic ecosystem. Nearly all ships run on fossil fuels, and many use heavy fuel oil, which spews black soot when burned and turns seas into a toxic goopy mess when spilled. Few international rules are in place to protect the Arctic’s environment from these ships, though a proposal to ban heavy fuel oil from the region is gaining support. “For a long time, we weren’t looking at the Arctic as a viable option for a shortcut for Asia-to-Europe, or Asia-to-North America traffic, but that’s really changed, even over the last couple of years,” says Bryan Comer, a senior researcher with the International Council on Clean Transportation’s marine program. “It’s just increasingly concerning.” Venta Maersk departed from South Korea in late August packed with frozen fish, chilled produce, and electronics. Days later, it sailed through the Bering Strait between Alaska and Russia, before cruising along Russia’s north coast. At one point, a nuclear icebreaker escorted Venta Maersk through a frozen Russian strait, then the container vessel continued to the Norwegian Sea. It’s expected to arrive in St. Petersburg later this month.The Arctic region is warming twice as fast as the rest of the planet, with sea ice, snow cover, glaciers, and permafrost all diminishing dramatically over recent decades. In the past, only powerful nuclear-powered icebreakers could forge through Arctic seas; these days, even commercial ships can navigate the region from roughly July to October—albeit sometimes with the help of skilled pilots and icebreaker escorts.Russian tankers already carry liquefied natural gas to Western Europe and Asia. General cargo vessels move Chinese wind turbine parts and Canadian coal. Cruise liners take tourists to see surreal ice formations and polar bears in the Arctic summer. Around 2,100 cargo ships operated in Arctic waters in 2015, according to Comer’s group.
At this rate, Earth risks sea level rise of 20 to 30 feet, historical analysis shows - Temperatures not much warmer than the planet is experiencing now were sufficient to melt a major part of the East Antarctic ice sheet in Earth’s past, scientists reported Wednesday, including during one era about 125,000 years ago when sea levels were as much as 20 to 30 feet higher than they are now. “It doesn’t need to be a very big warming, as long as it stays 2 degrees warmer for a sufficient time, this is the end game,” said David Wilson, a geologist at Imperial College London and one of the authors of the new research, which was published in Nature. Scientists at institutions in Australia, New Zealand, Japan and Spain also contributed to the work. The research concerns a little-studied region called the Wilkes Subglacial Basin, which is roughly the size of California and Texas combined and contains more than 10 feet of potential sea-level rise. Fronted by three enormous glaciers named Cook, Mertz and Ninnis, the Wilkes is known to be vulnerable to fast retreat because the ice here is not standing on land and instead is rising up from a deep depression in the ocean floor. Moreover, that depression grows deeper as you move from the current icy coastline of the Wilkes farther inland toward the South Pole, a downhill slope that could facilitate rapid ice loss. What the new science adds is that during past warm periods in Earth’s history, some or all of the ice in the Wilkes Subglacial Basin seems to have gone away. That’s an inference researchers made by studying the record of sediments in the seafloor just off the coast of the current ice front. Those sediments corresponded in time to several well-known past warm periods, when seas rose considerably. But what’s worrying is that these eras were in many cases not much warmer than the planet already is right now.
Climate change: we need to start moving people away from some coastal areas, warns scientist - We are all too familiar with images of flooding in low lying areas after heavy rainfall or houses destroyed by coastal erosion after a storm. For an increasing number of people, coastal flooding and erosion is a real threat to property, the local economy and, in some cases, life. Hurricane Florence, for example, forced more than a million people on the US East Coast to flee from their homes.Coasts support important industries (such as ports and tourism) and their populations are growing faster than inland areas. But coastal areas are also particularly sensitive to impacts of climate change, which are likely to increase the extent, intensity and frequency of coastal flooding and erosion.So not only have we occupied areas that naturally flood and erode from time to time, we have changed the environment in ways that increase coastal flooding and erosion risk. And we continue to do so, sometimes with serious legal consequences. Meanwhile, public policies have not been very effective in managing this predicament. Traditional hard engineering approaches of coastal protection (such as groynes, revetments and seawalls) are known to cause detrimental effects, which in the longer term can aggravate the problem they were supposed to solve. The impact of Hurricane Katrina in New Orleans was a stark reminder that engineering structures are not effective against all events at all times. They are built based on trade-offs between the level of protection needed and the costs of construction and maintenance. Meanwhile, “protection” gives a false sense of safety and enables occupation of risk areas, increasing the number of people and assets in risk areas.
IPCC Manipulating Climate Report Summary to Favor Wealthy Nations -- From time to time, the IPCC (the UN Intergovernment Panel on Climate Change) issues special reports along with its more general, every-five-years-or-so Assessment Reports. (The latest assessment report is AR5 from November 2014. It can be accessed here.) They’re about to release a new special report, Global Warming of 1.5 °C, that details the risks if global warming rises above 1.5°C (but stays below the official target of 2°C) “in the context of strengthening the global response to the threat of climate change, sustainable development and efforts to eradicate poverty.” This is in response to concern expressed at the Paris meeting by especially vulnerable nations that two degrees warming is still too much. Note that many of the (initially) most vulnerable nations are also among the poorest — small island nations like Kiribatu, the countries of sub-Saharan Africa and Bangladesh, to name just a few. Of course, every nation will ultimately be vulnerable. Florida, for example, is one Typhoon Haiyan away from a panicked collapse in all real estate prices and mass exodus. Thus this conflict isn’t just about how much fossil fuel its owners get to turn into wealth (a lower warming limit means significantly lower fossil fuel sales); it’s also about what wealthy nations must do to help the poorer ones, if anything. Apply that idea — that manipulating these Summaries matters to people who want to manipulate the world’s response to climate change — to the especially sensitive special report that’s coming and you will learn a lot about the critical issues emerging around global warming. Again, the issues are justice and money, not just money. Let’s start with the money issue. This is from the Guardian, which has obtained comments about what appears to be manipulation of the Summary for Policymakers being added to the report on 1.5°C global warming: Warnings about the dangers of global warming are being watered down in the final version of a key climate report for a major international meeting next month, according to reviewers who have studied earlier versions of the report and its summary. They say scientists working on the final draft of the summary are censoring their own warnings and “pulling their punches” to make policy recommendations seem more palatable to countries – such as the US, Saudi Arabia and Australia – that are reluctant to cut fossil-fuel emissions, a key cause of global warming. Cuts made to the final draft of the summary include:
- • Any mention that temperature rises of above 1.5C could lead to increased migrations and conflict;
- • All discussion of the danger of the Gulf Stream being disrupted by cold water flowing from the Arctic where more and more sea-ice is melting;
- • Warnings about the dangers that 1.5–2C temperature rises could trigger irreversible loss of the Greenland ice sheet and raise sea levels by 1–2 metres over the next two centuries.
Other cuts from the summary include the sentence: “Poverty and disadvantage have increased with recent warming (about 1C) and are expected to increase in many populations as average global temperatures increase from 1C to 1.5C and beyond.” The original summary also stated “at 2C warming, there is a potential for significant population displacement concentrated in the tropics”. Again this is not mentioned in the report for policymakers. The clear implication of the Guardian article is that fossil fuel countries and companies want to water down the Summary because of the financial benefit: they get to sell more coal, oil and methane (“natural gas”).
US to be hit worse than almost any other country by climate change, report says. The US will be hit harder than almost any other country by climate change, according to a major new report.The research is the first time that researchers have developed a reliable set of data that allows each country to know just how much economic damage will be done by carbon dioxide emissions. And the surprising results show that considerable damage could be done to some of the world's greatest powers.The three countries set to lose the most from climate change are United States, India and Saudi Arabia, according to the new research. The findings rely on measuring the social cost of carbon, in an attempt to understand how much is lost through climate emissions. And it also found that the damage being done worldwide by those emissions is significantly higher than in estimates used by authorities including the US government. The social cost of carbon is a measure designed to take into account the full price that harmful emissions have to the economy. Often, politicians and companies argue that the cost is relatively minimal – it doesn't hurt the environment in any immediate way, and could initially benefit the economy through increased crop yield in some regions – but SCC aims to take into account the full cost over time. The measure is used, among other things, as a way to work out the true cost of policy decisions. The US Environmental Protection Agency, for instance, uses it as a way to inform decisions. The new study shows that the US economy in fact stands to lose considerably from climate change, despite repeated suggestions from politicians that the opposite is true. "Our analysis demonstrates that the argument that the primary beneficiaries of reductions in carbon dioxide emissions would be other countries is a total myth," said lead author and University of California San Diego assistant professor Kate Ricke. "We consistently find, through hundreds of uncertainty scenarios, that the US always has one of the highest country-level SCCs.
A Cultural Crisis of the Climate Crisis -- Climate chaos promises catastrophe. No one within the system is doing anything and no one will do anything. There is one and only one way to avert the worst of the climate crisis: Stop emitting greenhouse gases; stop destroying sinks; rebuild sinks on a massive scale. All else is a lie. Most of all, the Big Lie is that anything constructive can be done within the congenitally destructive framework of the economic civilization. The understanding that catastrophe is inevitable has long been around among “fringe”, “doomer” types. The fact is so incontrovertible that by now it’s starting to trickle into academia and the mainstream media, triggering much shrill criticism from the climate establishment. These mainstream scientists, even as they sound the climate change alarm, have systematically dampened it. The IPCC has been consistently lukewarm in its projections, which reality consistently has outstripped. This isn’t just because the panel needs to attain consensus on its reports, though this does automatically water things down. It’s primarily because the IPCC, and climate scientists in general, have an institutional ideology and personal temperament which inertially cause them to focus on linear projections, discount non-linear, chaotic effects, and in general water down their conclusions. This is hard-wired into their linear, gradualist ideology. In most cases they’re unable to comprehend evidence against this linear gradualism. And then of course they have venal, careerist interests. All this leads them to sound the climate change alarm, but only in such a way as to set up another propaganda campaign on behalf of productionism, capitalism, the economic civilization. The problem has to be solvable within the capitalist framework. This propaganda is required by their ideological commitment to Mammon, technocracy, and productionism, and it’s required for their career and funding interests. That’s why climatologists and mainstream environmental groups have been so peculiarly ambivalent and lukewarm about the crisis: Sound the alarm, but not too loud. They must reject any implication that the crisis cannot be solved within the framework of capitalism, productionism, the economic civilization. They reject this in spite of the self-evident fact that the crisis cannot be confronted that way, that this framework will never, can never, do anything but drive the crisis unto its ultimate worst. That’s why they howl at anyone who tells the truth: The truth nullifies their entire ideology, their entire corporate-capitalist power agenda, their entire technocratic-productionist religious commitment.
This is how UN scientists are preparing for the end of capitalism -- Capitalism as we know it is over. So suggests a new report commissioned by a group of scientists appointed by the UN secretary general. The main reason? We’re transitioning rapidly to a radically different global economy, due to our increasingly unsustainable exploitation of the planet’s environmental resources and the shift to less efficient energy sources. Climate change and species extinctions are accelerating even as societies are experiencing rising inequality, unemployment, slow economic growth, rising debt levels, and impotent governments. Contrary to the way policymakers usually think about these problems these are not really separate crises at all. These crises are part of the same fundamental transition. The new era is characterised by inefficient fossil fuel production and escalating costs of climate change. Conventional capitalist economic thinking can no longer explain, predict or solve the workings of the global economy in this new age. Those are the implications of a new background paper prepared by a team of Finnish biophysicists who were asked to provide research that would feed into the drafting of the UN Global Sustainable Development Report (GSDR), which will be released in 2019. For the “first time in human history”, the paper says, capitalist economies are “shifting to energy sources that are less energy efficient.” Producing usable energy (“exergy”) to keep powering “both basic and non-basic human activities” in industrial civilisation “will require more, not less, effort”.
Macron- No Trade Deals With US After Trump Rejected Paris Accord - French President Emmanuel Macron has insisted that countries avoid signing trade deals with any other country which refuses to abide by the Paris Climate Accord - of which the US is not a signatory, according to The Independent. Speaking at the UN General Assembly in New York, Macron said that France will no longer accept "commercial agreements" with countries that do not "respect" the global warming accord. The French president called for the upholding of trade rules that “guarantee fair competition on equal footing” during his Tuesday speech, following a Monday afternoon meeting with Donald Trump and the US president’s speech on Monday morning. Mr Macron appeared defiant towards Mr Trump, suggesting he’d no longer negotiate trade deals with the US after its withdrawal from the climate agreement last year. “We will no longer sign commercial agreements with powers that do not respect the Paris accord,” Mr Macron said without directly referencing Mr Trump or the US. -IndependentThe Independent notes that the US is reportedly the only nation in the world which remains opposed to the Paris agreement, following Trump's decision to pull out of it last year. Macron also took a shot at Trump's "America First" policies, suggesting that international superpowers should pursue peaceful resolutions to global issues, from Iran's nuclear program to the Syrian conflict. "As I was saying a year ago, today we should not aggravate regional tensions but rather through dialogue and multilateralism pursue a broader agenda that allows us to address all the concerns caused by Iranian policies," Macron said Monday, adding "nuclear, ballistic, regional." He also criticised the president’s decision to pull out of the Iran Nuclear deal, touting its success in preventing the country’s "nuclear military path”. “What will bring a real solution to the situation in Iran and what has already stabilised it? The law of the strongest? Pressure from only one side? No!“ he said. “We know that Iran was on a nuclear military path but what stopped it? The 2015 Vienna accord.”
Trump Administration Acknowledges Anthropogenic Climate Change - Shorter Trump administration: human civilization is going to collapse from catastrophic climate change, so why bother to reduce greenhouse emissions? This is not the Onion. Last month, deep in a 500-page environmental impact statement, the Trump administration made a startling assumption: On its current course, the planet will warm a disastrous seven degrees by the end of this century. A rise of seven degrees Fahrenheit, or about four degrees Celsius, compared with preindustrial levels would be catastrophic, according to scientists. Many coral reefs would dissolve in increasingly acidic oceans. Parts of Manhattan and Miami would be underwater without costly coastal defenses. Extreme heat waves would routinely smother large parts of the globe. But the administration did not offer this dire forecast, premised on the idea that the world will fail to cut its greenhouse gas emissions, as part of an argument to combat climate change. Just the opposite: The analysis assumes the planet’s fate is already sealed. The draft statement, issued by the National Highway Traffic Safety Administration (NHTSA), was written to justify President Trump’s decision to freeze federal fuel efficiency standards for cars and light trucks built after 2020. While the proposal would increase greenhouse gas emissions, the impact statement says, that policy would add just a very small drop to a very big, hot bucket.
Summer average wholesale electricity prices in western U.S. were highest since 2008 – EIA - As a result of record-high temperatures and fuel supply constraints this summer, wholesale electricity prices in the western United States reached their highest levels since 2008. In the area served by the California Independent System Operator (CAISO), peak-period electricity prices in July averaged $101 per megawatthour (MWh), the highest monthly average since the current day-ahead market began trading in April 2009. Peak-period electricity prices at the Palo Verde trading hub in Arizona and at the Mid-Columbia hub in the Pacific Northwest averaged $89/MWh and $72/MWh, respectively, in July. Prices in each area also remained relatively high through August. Summer 2018 temperatures were much warmer than normal in the western United States. In June, July, and August, the Portland, Oregon area experienced 29 days with temperatures higher than 90 degrees, compared with 10 days during a normal summer. California set a new record in July with a monthly statewide average temperature of 79.7 degrees, surpassing the previous record set in 1931. The hot summer temperatures led to relatively high demand for electricity. Electricity load in the western states was particularly elevated during the last week of July. On July 24 and July 25, CAISO issued a Flex Alert asking customers to set their air conditioners at 78 degrees or higher and to avoid using appliances during peak hours. Hourly electric load data collected through EIA’s U.S. Electric Operating System survey indicate that the coincident hourly load for the Western Interconnection (including the Northwest, Southwest, and California regions) peaked at 139.4 gigawatts (GW) during the evening of July 24, 2018, the highest level since EIA began compiling this data in mid-2015. The elevated electricity demand contributed to the highest wholesale prices in at least the past 10 years. Daily average electricity prices at CAISO’s SP-15 trading hub, which reflect electricity market conditions in Southern California, reached $377/MWh on July 24. Electricity prices at the Mid-Columbia hub between Oregon and Washington averaged $230/MWh that day, and prices at the Palo Verde hub in Arizona reached $291/MWh on July 25; both were the highest daily average prices since 2008. Hot weather during the second week of August again led to relatively high electricity prices at the western U.S. trading hubs, and Mid-Columbia prices reached a new high of $255/MWh on August 7.
Don’t deploy negative emissions technologies without ethical analysis - Nature - In October, the Intergovernmental Panel on Climate Change (IPCC) will release a special report on keeping global temperature rise within 1.5 °C of pre-industrial levels. Governments requested the report at the 2015 Paris climate conference. Policymakers want to know what further steps would be needed to stay well within the 2 °C threshold, above which the risks of climate change become more dangerous. The IPCC report will confirm an open secret: in the light of growing emissions, targets for mitigating climate change increasingly depend on ‘negative emissions technologies’ that suck carbon dioxide out of the atmosphere. Staying within 2 °C could mean extracting billions of tonnes of CO2 this century. Atmospheric carbon — captured after burning biofuels, for instance — could be locked in the ground or sea for thousands of years. Forests and soils could be managed to store more carbon. Or more-speculative means that are still in the realm of basic research could be used1. Examples include fertilizing the oceans with iron to enhance phytoplankton growth, increasing the weathering of minerals or developing devices that remove CO2 directly from the air. The vast scale at which such technologies would need to be implemented raises ethical concerns. For example, growing more biomass to burn as fuel would take land away from food production and use water for irrigation2. Famines, civil unrest and damage to biodiversity could follow3. Seeding the oceans with iron could undermine marine ecosystems. Covering an area twice the size of the United States with crushed silicate stones to enhance weathering would affect communities, agriculture and ecosystems. Geoengineering debates have been dominated by solar-radiation management — altering the reflectivity of the whole atmosphere seems more dystopian than growing forests or storing carbon. Yet there has been no systematic evaluation of the ethics of carbon removal methods by the climate assessment community or professional philosophers. The IPCC’s latest review (its fifth assessment report) included a chapter on ethics4, setting out concepts of responsibility, justice and welfare. But it did not dwell much on negative emissions technologies, nor did other chapters consider ethics. Carbon removal methods must be ethically evaluated in the context of climate policy pathways.
Council overturns veto of Spokane sustainable energy measure (AP) — The Spokane City Council has quashed the mayor's veto of an ordinance that would push the city to reach fully sustainable energy by 2030. The Spokesman-Review reports the council overturned Mayor David Condon's veto Monday by a vote of 6 to 1. The ordinance would create a sustainability committee to develop a plan with local utilities to achieve the energy goal. The committee would update the city's current sustainability plan and find ways to reduce the local effects of climate change. Condon says in a statement that he was "disappointed" the council chose not to work with his office to revise the ordinance. He says the energy goal is important, but he hopes to revisit the legislation in the future.
How The Sahara Could Power The Entire World - Solar and wind farms, stretched across North Africa's Saharan desert and relying solely on existing technologies, could produce enough electricity to power the entire world. (That amount of electricity approximates over 21 terawatt hours.) As an added benefit these combined wind and solar arrays would also increase rain fail in the arid Sahel region thereby slowing the steady southern encroachment of the desert. This was the conclusion arrived at by academic researchers using supercomputers. Teams at the University of Maryland and University of Illinois modeled their results in a study financed in part by a Chinese government agency. Their results were published in the prestigious journal Science (September 7). Yes, we know it sounds farfetched. And even perhaps too ridiculous consider. But is it any crazier or more uneconomic than the two biggest nuclear construction projects currently underway in the U.S. and Europe? Spending $25 billion or more to erect bespoke nuclear power generating stations (when a comparable gas fired facility could be built at a relatively small fraction of the cost) shows that regardless of economics, for those that the politicians favor, funds can often be found. And it is not just new nuclear technologies that should be singled out for economic excesses. Southern Company's recent attempt at building a truly clean coal electric power generating station resulted in the $4 billion Kemper County project in Mississippi. That facility now only burns natural gas rendering large parts of the investment economically irrelevant. But for sheer scale it is typically nuclear construction that provides the biggest numbers. In this regard consider the proposed $20-$30 billion ITER nuclear fusion project. The point? We already spend huge sums to experiment with and develop increasingly carbon free power sources. From a technological perspective the Sahara wind/solar project is practically "old school". It relies exclusively on so called off the shelf, existing technologies. The challenge as we see it, apart from financing, would come from the actual construction. Giant construction projects in relatively inhospitable climates almost always pose a challenge. This would be akin to building the Alaska pipeline or putting huge oil rigs in the North Sea or in Arctic waters.
Hurricane Florence crippled electricity and coal — solar and wind were back the next day - CBS - Nearly two weeks after Hurricane Florence swamped North and South Carolina, thousands of residents who get power from coal-fired utilities remain without electricity. Yet solar installations, which provide less than 5 percent of North Carolina's energy, were up and running the day after the storm, according to electricity news outlet GTM. And while half of Duke Energy's customers were without power at some point, according to CleanTechnica, the utility's solar farms sustained no damage. Traditional energy providers have fared less well. A dam breach at the L.V. Sutton Power Station, a retired coal-fired power plant near Wilmington, North Carolina, has sent coal ash flowing into a nearby river. Another plant near Goldsboro has three flooded ash basins, according to the Associated Press, while in South Carolina, floodwaters are reportedly threatening pits that contain ash, an industrial waste from burning coal. The lesson, according to environmentalists: Utilities' vulnerability to major storms underscores the urgency of shifting to energy that it is not only clean and renewable, but also more resilient. The push comes in response to the Trump administration's move last year to prop up coal and nuclear plants under the argument that because they can store their fuel on-site, they can provide constant power and thus serve national security purposes. But Florence's shutting down of one nuclear plant and breaches of old coal ash ponds show that no source of power is immune, environmentalists say. The vast majority of power failures that happen during storms occur because transmission lines or substations get damaged -- not because fuel runs out. Above-ground lines, vulnerable to wind, rain and hail, can even fail during a thunderstorm, let alone a hurricane.
Trump's DOE Claims To Protect The Grid; It's Really Protecting Coal And Nuclear - --Power companies are closing aging, expensive coal and nuclear plants and turning to facilities that use more affordable natural gas brought on by the fracking boom.In early September, Akron, Ohio-based FirstEnergy Corp. said it plans to shut down its remaining four coal-fired generation in Ohio and Pennsylvania within four years. This comes after its announcement last March that it would be closing three nuclear plants in the same two states. Earlier this year, Vistra Energy Corp. closed three coal-powered plants in Texas and recently announced plans to close another coal plant in Schuylkill County, Pennsylvania. For environmentalists, it means a shift to cleaner burning fossil fuel. For free-market economists, it validates the idea that when left alone, classic market mechanisms — price, supply and demand — can work toward the common good. Unfortunately, President Donald Trump, who in the past has embraced the virtues of market economics, is pushing for bailouts of coal and nuclear plants. Indeed, FirstEnergy’s plant closures, not scheduled until 2022, may be a veiled attempt to encourage assistance.Not only does this subsidy plan go against the principles of Trump’s own Republican party; it’s been roundly rejected by the Federal Energy Regulatory Commission (FERC), of which three of four commissioners are Trump appointees. Now Trump has called on Department of Energy Secretary Rick Perry to invoke “national security concerns” as the rationale to dredge up a Cold War era clause in the Federal Power Act. DoE suggests the wave of coal and nuclear plant shutdowns create a “serious threat to the stability” of the U.S. electricity grid.The solution is to force retail power companies to buy capacity from failing coal and nuclear plants, a demand that would add $11 billion a year to consumer energy costs, according to an analysis by the Energy Innovation and the Climate Policy Initiative.Sensing this argument wouldn’t be enough, in a leaked memo to Congress, the White House claimed the country’s gas pipeline infrastructure was not sufficiently hardened against cyberattack. Subsidies to coal and nuclear plants, therefore, are necessary to safeguard electricity delivery in case of sudden loss of gas pipeline capacity. This is fearmongering at its worst, for DoE’s claims about the degree of pipeline vulnerability are not true.
BMW warns of lower profits on new emissions rules and escalating trade war 'distorting demand' - A visitor of BMW World walks past a BMW car during the annual accounts press conference of German car manufacturer BMW at the BWM World in Munich, Germany. Shares of BMW fell 5 percent Tuesday after the automaker warned investors its 2018 revenues and profits will likely fall due to the costs of implementing new emissions standards in Europe and rising uncertainty stemming from the escalating global trade war.Automotive revenues are now expected to fall slightly from the 88.6 billion euros ($104.4 billion at the current exchange rate) it generated last year, the company said. It previously told investors sales would rise.BMW had also previously forecast profits to be on par with last year, but now expects a "moderate decrease," the company said. The company earned 10.7 billion euros ($12.6 billion at the current rate) in 2017."The continuing international trade conflicts are aggravating the market situation and feeding uncertainty," BMW said in a statement. "These circumstances are distorting demand more than anticipated and leading to pricing pressure in several automotive markets."The German automaker also said the industry's shift to a new laboratory test for emissions, the Worldwide Harmonised Light Vehicle Test Procedure, has created "supply distortions in several European markets and an unexpected intense competition."BMW had already expected 2018 to be a challenging year, due to the more than 1 billion euros in investments it is making in mobility, along with currency headwinds. Fellow German automaker Daimler had warned at the end of July that the heightening trade war between the U.S. and China could affect its profitability this year. Both automakers have factories in the United States, where they build vehicles for both the U.S. market and for export.
Environmentalists and police battle in a 12,000-year-old German forest in fight over coal mining - Los Angeles Times: When German riot police began removing environmental protesters from treehouses perched high in a 12,000-year-old forest, they were met with an organic response: buckets of human waste raining down on their helmets and shoulders. Two weeks later, most of the 150 activists have been removed from their redoubts in the oak and beech trees of Hambach Forest, a few miles west of Cologne. The Hambach Forest clearing, due to be carried out by a major power company, RWE, has been in the works for years to help meet the energy needs of the world’s fourth-largest economy. But it has met with stiff resistance from environmentalists who say their country is two-faced because it continues to allow the operations of 90 coal-burning power plants that account for nearly 40% of its electricity. The current protests have attracted widespread media coverage and growing support for the activists — even though some people believe the environmentalists have no right to be on property owned by a utility that long ago won state approval for its tree-clearing mine project. “There are two main goals: to preserve the forest and to ensure the brown coal lying in the ground beneath stays there instead of being burned for electricity,” said Tobias Muenchmeyer, deputy director of Greenpeace in Germany. In all, 51 treehouses, many of them connected by ropes about 70 feet in the air, dotted the ancient forest when a force of 400 police officers showed up to remove the 150 demonstrators inside. It appears, though, that the authorities were taken by surprise by the response. The canisters of waste hurled out of the blue skies splattered on the black uniforms of the riot police and forced them into a disorderly retreat. Adding to the barrage, some of the 150 activists — males and females ages 17 to 40 — tossed rocks and at least one crude incendiary device, authorities said. “Coming from those heights, as you can imagine, it dispersed out over a rather large area, hitting quite a few officers,” police spokesman Paul Kemen said. “It’s not only disgusting but inhumane and rather barbarous. It shows an utter lack of respect for human dignity.” As it turns out, the activists’ victory proved short-lived, with authorities bringing in a 120-foot-high crane topped with cherry-picking baskets to remove and charge them with trespassing and disturbing the peace. Of the 51 treehouses, only a dozen had yet to be cleared.
Satellite Images Show Runaway Expansion of Coal Power in China - Chinese coal-fired power plants, thought to have been cancelled because of government edicts, are still being built and are threatening to “seriously undermine” global climate goals, researchers have warned.Satellite photos taken in 2018 of locations in China reveal cooling towers and new buildings that were not present a year earlier at plants that were meant to stop operations or be postponed by orders from Beijing.The projects are part of an “approaching tsunami” of coal plants that would boost China’s existing coal capacity by 25%, according to the research group Coalswarm.The total capacity of the planned coal power stations is about 259GW, bigger than the American coal fleet and “wildly out of line” with the Paris climate agreement, the group said in a new report.“This new evidence that China’s central government hasn’t been able to stop the runaway coal-fired power plant building is alarming – the planet can’t tolerate another US-sized block of plants to be built,” said Ted Nace, executive director of CoalSwarm, which is funded by international green groups and private donations.Huadian Nanxiong power station China’s Huadian Nanxiong coal power station. Although the station was subject to suspension orders, satellite imagery shows construction carrying on there from 2017 to 2018. Photograph: Planet Labs Inc Many of the power stations date back to a 2014-16 surge when the regime permitting construction was devolved from Beijing to provincial authorities. That led to a threefold increase in permits being issued between 2013 and 2015. In response, during 2016 and 2017 the Chinese government ordered projects to be slowed down, postponed or cancelled. But satellite photos analysed by Coalswarm show many power stations have continued to be built, including the Huadian Nanxiong station in south-east China. Despite the government ordering the plant to be suspended in January 2017, two cooling towers had sprung up by March 2018.
China coal power building boom sparks climate warning -- Building work has restarted at hundreds of Chinese coal-fired power stations, according to an analysis of satellite imagery. The research, carried out by green campaigners CoalSwarm, suggests that 259 gigawatts of new capacity are under development in China. The authors say this is the same capacity to produce electricity as the entire US coal fleet. The study says government attempts to cancel many plants have failed. According to this study, there was a surge in new coal projects approved at provincial level in China between 2014 and 2016. This happened because of a decentralisation programme that shifted authority over coal plant construction approvals to local authorities. The report says that at present China has 993 gigawatts of coal power capacity, but the approved new plants would increase this by 25%. China's central government has tried to rein in this boom by issuing suspension orders for more than 100 power plants but this analysis suggests that these efforts have been significantly less effective than previous news reports had indicated. In this study, the researchers used satellite photos to examine every power plant that was subject to a suspension order. They found construction ongoing at many locations. In September last year, China's National Energy Administration ordered a group of plants - that together could produce 57 gigwatts of electricity - to slow down construction. The organisation also prohibited them from connecting to the grid in 2017. However the satellite data suggests that half of this capacity appears not to have slowed down at all. "This new evidence that China's central government hasn't been able to stop the runaway coal-fired power plant building is alarming - the planet can't tolerate another US-sized block of plants to be built," said Ted Nace, from CoalSwarm.
U.S. power producers' coal consumption falls to 35-year low: Kemp (Reuters) - Despite political support from the White House, U.S. coal consumption continues to fall, as power producers shutter coal-fired units in favour of cheaper and more flexible natural gas as well as solar and wind.Electric power producers’ coal consumption fell to 298 million short tons in the first half of 2018, down from 312 million in the same period in 2017, marginally below 2016, and the lowest since 1983 (https://tmsnrt.rs/2ObCbGz).U.S. power producers generated almost 6 percent less electricity from coal in the first half of the year even as total generation rose almost 5 percent and gas-fired generation was up 17 percent.Coal-fired generation declined by 32 billion kilowatt hours in the first six months, while gas-fired generation rose by 89 billion, nuclear was up by 16 billion, solar rose 7 billion and wind was up by 15 billion.Generators continued to close coal units, with coal-fired generating capacity down to 246 gigawatts at the end of June 2018, compared with 262 gigawatts in June 2017 and 273 gigawatts in June 2016.Remaining coal units are being run for fewer hours and/or at lower rates than last year, another indication they are struggling to compete with cheap natural gas.Capacity utilisation at the remaining coal-fired units was at or below prior-year levels in six of the first seven months in 2018 (“Electric Power Monthly”, Energy Information Administration, September 2018).Another 9 gigawatts of coal- fired generation capacity are scheduled to close before the end of 2020, so coal consumption is unlikely to rise and will probably continue to decline in the next few years.
Future of Last U.S. Nuclear Plant Remains Uncertain Amid Talks -- The owners of the only remaining nuclear-power plant being built in the U.S. extended a vote on whether to continue construction until Tuesday, after one sought to impose conditions on footing its escalating costs. The three major partners, Southern Co. SO -2.51% , Oglethorpe Power Corp. and the Municipal Electric Authority of Georgia, had faced a deadline of Monday to each vote to proceed with work to expand the Alvin W. Vogtle Electric Generating Plant. The vote was triggered by a recent disclosure by Southern, the lead partner, that the costs of the project had risen by another $2.2 billion. That raised the total tab to upward of $27 billion, more than twice the original estimate. The project is also taking years longer than originally expected. This last-minute negotiation suggested that continuing work on the half-built nuclear-power plant, while possible, remained uncertain. Oglethorpe, a not-for-profit that purchases power on behalf of its public power members, said Monday evening that it voted to continue construction if Southern could provide a cost cap or other fiscal protection against additional cost overruns. “Southern Company should be willing to bear further risk of…missed budgets, not our members,” Oglethorpe Chief Executive Mike Smith said. Oglethorpe said it would agree to a recent $2.2 billion increase in the projected cost and another $800 million to increase the contingency fund. But it said additional costs should be shouldered by Southern and its shareholders. Southern expressed disappointment with Oglethorpe’s attempt to extract concessions and hoped it would agree to move forward. “Oglethorpe Power is using the vote to try to burden others with its obligations and extract unreasonable concessions,” the company said. While Southern supports going ahead with Vogtle, it is unclear if the Atlanta-based utility would agree to the conditions sought by Oglethorpe or seek a different deal.
Deal Keeps Alive Last U.S. Nuclear Power Plant Under Construction -- Owners of the last remaining nuclear-power plant under construction in the U.S. agreed to keep working, even as rising costs and unpredictable financial risks threaten the half-built project. After several days of closed-door negotiations, lawsuits and intense political pressure to craft a deal, the owners agreed Wednesday to finish work on the Alvin W. Vogtle Electric Generating Plant in Waynesboro, Ga. Southern Co., the project leader, came to a new deal with co-owners Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and Dalton Utilities. Under the deal, Southern agreed to cover a growing percentage of the project’s construction costs if the price tag continued to climb. The Atlanta-based utility also agreed to purchase future tax credits from its co-owners at a discounted cost. The owners have been struggling for the past couple of years after the designer and lead construction contractor, Westinghouse Electric Co., filed for bankruptcy after costs rose and the project fell years behind schedule. Led by Southern, the companies opted to press ahead. But earlier this year, Southern said the costs had risen again, this time by $2.2 billion. This pushed the total cost estimate above $27 billion, more than twice the original estimate. Under the terms of the partnership, all three major partners needed to vote to continue work. If any voted to stop, the project would be canceled. Oglethorpe balked earlier this week, saying it didn’t want to pass along rising costs to its members, electric power cooperatives in mostly rural Georgia. The companies faced what amounted to a no-win proposition. If they walked away, they would have faced a political storm over who should pay for the massive sunk costs of the project, which wouldn’t generate any additional electricity but could require customers to pay higher electric rates. But staying meant taking on growing risk that the project’s budget would continue rising.
U.S. Makes Shortlist for Saudi Nuclear-Plant Deal – WSJ - Saudi Arabia has put the U.S. on its shortlist of potential partners competing to build nuclear-power plants in the kingdom, while the two countries negotiate how to do a deal without spreading nuclear weapons, Energy Secretary Rick Perry said. The kingdom has been hearing offers from several countries, including Russia, South Korea and China, for what could be the biggest new market for nuclear power. Mr. Perry told reporters Wednesday the kingdom recently made a decision that keeps U.S. businesses— foremost Westinghouse Electric Co.—in the mix for what could ultimately become a market worth tens of billions of dollars. But Mr. Perry said it remains a challenge to persuade Saudi leaders to accept the most stringent restrictions intended to prevent proliferation of nuclear weapons. U.S. lawmakers must review any accord to transfer U.S. nuclear technology, known as a 123 agreement, and have expressed concerns about allowing any deal that could enable the spread of nuclear weapons in the Middle East. “I shared that for the king and the crown prince to be perceived as being very, very strong on nonproliferation was a most important message, globally,” Mr. Perry said. “I don’t think [the negotiation is] going as fast as any one of us would like it to. But the good news is it is continuing.” The administration has felt pressure to help the U.S. nuclear industry land a deal for new business at a time when its domestic market is rapidly shrinking. The Saudis, for their part, have used the competition to try to drive better terms and protect their own right to enrich uranium or reprocess spent fuel. Critics say that if the U.S. offers more permissive standards for Saudi Arabia, it will send a dangerous signal at a time more countries across the volatile region aspire to acquire nuclear technology. But supporters of a deal with Saudi Arabia argue there are other ways to address nonproliferation concerns and that if the U.S. isn’t willing to sell nuclear technology, other nations will.
Local leaders lobby for more control over fracking brine disposal wells - (WKBN) - Local leaders are still lobbying the state to have more control over fracking brine disposal wells. Hubbard township officials are bitterly opposed to a plan to bring a waste brine disposal well to the township. Brine from Pennsylvania operations would be transported to an area near 62 and route 80 for disposal. Pa. has concerns over geology and contamination from the brine. "The irony is Pennsylvania doesn't allow them to put them in the ground because of that, but they will put it in the ground in Ohio. If it's poisonous and toxic in Pa., it's poisonous and toxic in Ohio," Trustee Tom Jacobs said.State law gives the Ohio Department of Natural Resources sole jurisdiction over the wells. "State law gives ODNR division of oil and gas sole and exclusive authority over all oil and gas operations throughout the state. So whether its an injection well or a producing well that all falls under our purview," said Steve Irwin of ODNR.The state does gather public opinion before permitting wells. But state Representative Glen Holmes says that's not enough. "It's very important. And they want the taxing structure, the regulations to stay similar throughout the state. But to do that without any local control is, not to embellish the situation, a social injustice," Holmes said.Holmes is currently lobbying his fellow lawmakers. He wants to see more regulation on where the wells can be located and more weight given to local opinion. Most of all, he wants to see fewer of the wells, there are dozens of them in his district. "I'd love to incentivize other technologies to deal with this fluid. It's not ecologically friendly," Holmes said.
Eliza Griswold, Journalist - The Oberlin Review - Award-winning journalist and poet Eliza Griswold visited Oberlin Sunday, Sept. 23 to discuss her book Amity and Prosperity: One Family and the Fracturing of America, which focuses on the impact of fracking on a small community in southwestern Pennsylvania. In addition to her work on fracking, Griswold has reported from the field on the “War on Terror,” written about the Christian-Muslim divide, and published a book of poetry. She spoke at Oberlin at a time when northeast Ohio — similar to the Pennsylvania communities in her recent book — is grappling with the impacts of fracking on public health, family life, and the economy. This interview has been edited for length and clarity.
Pennsylvania Lawmakers File to Intervene in DRBC Drilling Moratorium Lawsuit - Three Pennsylvania state senators who want the Delaware River Basin Commission’s (DRBC) moratorium on hydraulic fracturing eliminated have again filed to intervene in a federal lawsuit challenging the de facto drilling ban.*The motion comes after a federal appeals court in Philadelphia vacated the U.S. District Court for the Middle District of Pennsylvania’s 2017 decision to throw out the lawsuit that was filed by a small exploration and production company. The senators' previous effort to intervene was denied by the lower court after it found they had no standing. The Wayne Land and Mineral Group (WLMG) filed a lawsuit against the DRBC in 2016, arguing that the commission lacks authority under the Delaware River Basin Compact to review and approve natural gas development. The senators filed to intervene after a three-judge panel of the U.S. Court of Appeals for the Third Circuit remanded the case to the lower court for further fact-finding about exactly what projects the commission has authority to review under the 1961 compact that established it.Sens. Lisa Baker, Gene Yaw and Joseph Scarnati -- all Republicans that represent the north-central and northeast parts of the state where unconventional natural gas development has been heavy, or where it hasn’t been allowed to occur due to the moratorium -- want the court to invalidate the ban and prevent the DRBC from enforcing it. They argue the commission is violating the U.S. Constitution by preventing landowners from profiting from private property. They also claim the state is being thwarted in earning revenue from public land that could be leased for natural gas drilling in the basin. The senators said in their motion that the General Assembly, not the DRBC, has the authority to oversee and regulate such development.
Only 11 percent of Pennsylvania's natural gas pipelines are mapped for the public - Last week, a pipeline exploded in Beaver County, destroying one home and forcing dozens of people to evacuate. And much like the majority of natural gas pipelines in Pennsylvania, a map of it was not readily available to the public, according to reports from WESA.Of the three types of natural gas pipelines — large transmission lines, medium-sized gathering pipelines and small distribution lines — transmission lines are the only ones mapped and disclosed to the public by the federal government, WESA reports. And that makes up only 11 percent of the total pipelines in the commonwealth. Nils Hagen-Frederikson, press secretary for the Pennsylvania Public Utility Commission, told WESA that pipeline companies know where gathering and distributions lines are, but that information isn't required to be made publicly available on a map. "There were recommendations made several years ago by the state's Pipeline Infrastructure Task Force, recommendations that the [PUC] supported, in terms of developing a more centralized system in Pennsylvania for public access to mapping," Hagen-Frederickson said. "That's still a work in progress." To learn what the executive director of the Pipeline Safety Coalition had to say about the matter, click here.
Radioactive Wastes Come From the Action of “Slick Water” on Black Shale - Radioactivity in fracking wastewater comes from the interaction between a chemical slurry and ancient shale during the hydraulic fracturing process, according to Dartmouth College research. The study, detailed in twin papers appearing in Chemical Geology, is the first research that characterizes the phenomenon of radium transfer in the widely-used method to extract oil and gas. The findings add to what is already generally known about the mechanisms of radium release and could help the search for solutions to challenges in the fracking industry. As a result of fracking, the U.S. is already a net exporter of gas and is poised to become a net exporter of oil in the next few years. But the wastewater that is produced contains toxins like barium and radioactive radium. Upon decay, radium releases a cascade of other elements, such as radon, that collectively generate high radioactivity. “The stuff that comes out when you frack is extremely salty and full of nasties,” “The question is how did the waste become radioactive? This study gives a detailed description of that process.” In seeking to discover how radium is released at fracking sites, the research team combined sequential and serial extraction experiments to leach radium isotopes from shale drill core samples. For the study, the research team focused on rocks taken from Pennsylvania and New York locations of the Marcellus Shale. The geological feature is one of the major rock formations in the U.S. where fracking is being carried out to extract natural gas.The first research paper found that radium present in the Marcellus Shale is leached into saline water in just hours to days after contact between rock and water are made. The leachable radium within the rock comes from two distinct sources, clay minerals that transfer highly radioactive radium-228, and an organic phase that serves as the source of the more abundant isotope radium-226.The second study describes the radium transfer mechanics by combining experimental results and isotope mixing models with direct observations of radium present in wastewaters that have resulted from fracking in the Marcellus Shale. Taken together, the two papers show that the increasing salinity in water produced during fracking draws radium from the fractured rock. Prior to the Dartmouth study, researchers were uncertain if the radioactive radium came directly from the shale or from naturally-occurring brines present at depth in parts of the Marcellus Shale in Pennsylvania.
Study ties fracking to radioactive wastewater - The Dartmouth --Two Dartmouth studies recently established a link between fracking and the production of radioactive wastewater. Lead researcher and senior research scientist Josh Landis and his team found that the prevalent radioactive material in wastewater after hydraulic fracking comes from the interaction between slick water and black shale.“Prior to our work, everyone was assuming that the radium was from pre-existing [briny water] found underground,” Landis said.However, Landis added the study points to the controversial oil and gas extraction method as the cause of this radioactive waste.“We are able to argue pretty vigorously that the fracking itself is producing the fluid,” he said. “[This] shows that the frackers are responsible for its creation, and if you want to minimize its production, you have to do that through their process.” According to Sharma, radioactive wastewater cannot currently be treated. It is either mixed with fresh water and used to frack again, or it is sent away to be buried into the ground. For example, radioactive wastewater from fracking locations in Pennsylvania may be sent to Ohio, Sharma said. The team of researchers carried out experiments on rock samples taken from the Marcellus shale in Pennsylvania and New York. They found that the radium came from the rock, not pre-existing brine as previously thought, and the experiments focused on understanding the conditions needed for radium to be released from the rock itself.
NY Pension Chief Cashes in on Natural Gas - New York State’s former top pension investment officer was appointed to the board of a natural gas conglomerate after the pension system bought up the company’s bonds, rejected demands to divest from fossil fuels and supported multimillion-dollar pay packages for the company’s executives after the firm’s stock price had dropped. Vicki Fuller was appointed as a director of The Williams Companies on July 31st — the same week she left her position as the chief investment officer of the New York State Common Retirement Fund. The CIO job — appointed by State Comptroller Thomas DiNapoli — is considered one of the world’s most powerful financial positions, directing $207 billion of investments for a system responsible for safeguarding the retirement savings of more than a million current and former state employees and their beneficiaries. Fuller will be granted $275,000 worth of salary and company stock every year for the part-time position serving on Williams’ board. The move comes during an increasingly bitter policy debate between the comptroller’s office and environmental groups over whether the pension fund should divest itself from fossil fuel companies that contribute to climate change. In correspondence with DiNapoli over the last two months, major environmental groups have asked whether Fuller’s new position is a reward for her and DiNapoli’s ongoing opposition to selling off the fund’s fossil fuel holdings.
EQT Midstream Increases Mountain Valley Pipeline's Cost --EQT Midstream Partners recently announced that the Mountain Valley Pipeline project will likely cost more than what was expected earlier. The partnership bumped overall cost estimates of the project to $4.6 billion from prior expectation of $3.5 billion due to extended work stoppages in August, as well as prolonged and heavy rainfall. Recent preparations for hurricanes also hampered the project schedule, which eventually reflected in the cost.Work stoppages in the project were primarily caused by strong opposition from environmentalists, which resulted in increased costs. The partnership also had to incur costs related to enhancement and repairing of the devices that control erosion and sediment, owing to heavy rainfall in Virginia and West Virginia during summer. The proposed underground 303-mile pipeline connects northwestern West Virginia to southern Virginia. The pipeline, with 42-inch diameter, will collect natural gas from Marcellus and Utica shale plays and deliver it to the Mid-Atlantic and Southeast areas of the country, where demand for clean-burning natural gas is on the rise. Pittsburgh, PA-based EQT Midstream has lost 27% in the past year compared with 12.3% collective decline of its industry
MVP's latest cost increase -- a big one -- expected to eat into operator's returns — EQT Midstream Partners boosted the expected cost of its Mountain Valley Pipeline again, this time by about $1 billion, in the latest example of how bad weather, regulatory hurdles, schedule delays and environmental mitigation measures are affecting the US natural gas sector. The operator said late Monday that it has increased its overall project cost estimate to $4.6 billion. A spokeswoman said Tuesday that is up from the most recent estimate in July of $3.5 billion to $3.7 billion. When the project was announced in fall 2015, EQT Midstream had estimated the 2 Bcf/d pipeline would cost $3 billion to $3.5 billion to build. The cost overruns come as the market awaits more takeaway capacity out of the US Northeast's prolific Appalachian Basin. The approximately 300-mile pipeline is seen as a key conduit to serve downstream markets, including LNG exports. During an investor conference call at the time of the previous cost estimate, executives said expenditures above $3.5 billion would start to eat into expected investment returns. "The halting of construction due to court challenges from environmental opponents have caused lengthy project delays, material cost increases, and burdens for local communities and agencies; and have also impeded the delivery of low-cost energy resources to consumers and other end-user markets." the operator said in a statement. Approximately half of the latest cost increase is due to extended periods of work stoppage during August that triggered ongoing contractual charges and schedule changes, the operator said. MVP also blamed significant rainfall throughout the summer and recent hurricane preparedness actions that interrupted full-construction activities, as well as certain unanticipated construction cost overruns. Earlier this month, Hurricane Florence battered a large swath of the East Coast. MVP maintained its current target of full in-service during the fourth quarter of 2019.
Federal Court Again Stops Some ACP Construction - Work on the Atlantic Coast Pipeline (ACP) has again been delayed after the U.S. Court of Appeals for the Fourth Circuit on Monday stayed federal authorizations that could continue to slow a project that would move 1.5 Bcf/d of natural gas from Appalachian shale fields. The court’s decision prevents work that was poised to restart along 20 miles of the 600-mile route. It’s the third time in four months that the Fourth Circuit has vacated or stayed federal authorizations for the project. This time, the appeals court stayed decisions by the U.S. Forest Service (USFS) allowing tree clearing, blasting and trenching in the George Washington National Forest and the Monongahela National Forest in Virginia and West Virginia. The court stayed the authorizations to review a challenge filed in February by the Southern Environmental Law Center (SELC) and the Sierra Club on behalf of several regional environmental organizations. The stay was granted on Monday, a week after FERC lifted a stop worker order for the entire project that had been in effect for more than a month. The Federal Energy Regulatory Commission stopped all work in August after the Fourth Circuit vacated key permits issued by the U.S. Fish and Wildlife Service and the National Park Service. The Commission lifted the order once those agencies issued revised permits. Given the Fourth Circuit’s latest decision, ACP could face a similar situation affecting the entire project. The SELC filed at FERC on Tuesday asking the Commission to again suspend work along the entire route, noting that the project is no longer in compliance with its certificate because it does not have all authorizations required under federal law. Reaching for a possible precedent set by the first stop work order, the center pointed out that the court found that the environmental groups are likely to succeed on the merits of their challenge. SELC’s filing evoked FERC’s language, included in the August stop work order justifying the decision, to say that if its challenge were to be successful, the project’s backers may need “to revise portions of the ACP route after additional review by the Forest Service.” As FERC did last month, the SELC suggested that continued construction would unnecessarily expend resources for facilities that might ultimately be relocated.
Dominion does not expect US court order to hold up Atlantic Coast pipe (Reuters) - Dominion Energy Inc said on Tuesday it does not expect a court decision to stay a federal permit for part of its Atlantic Coast natural gas pipeline to delay construction of the $6-$6.5 billion project from West Virginia to North Carolina, which the company aims to complete by the end of 2019. On Monday, the U.S. Court of Appeals for the Fourth Circuit issued an order staying implementation of a permit from the U.S. Forest Service for the pipeline. That Forest Service permit authorized construction and operation of Atlantic Coast on national forest lands in Virginia and West Virginia. "While we respectfully disagree with the Court's ruling, it will not have a significant impact on our construction schedule," Dominion spokesman Aaron Ruby said in an email. "We will continue working in all other areas of West Virginia and North Carolina, where we are making significant progress," Ruby said. The Southern Environmental Law Center, which opposes the pipeline, asked the U.S. Federal Energy Regulatory Commission (FERC) on Tuesday to stop work on the entire project due to the court's latest ruling. The Fourth Circuit decision was the third time in four months the court has vacated or stayed federal authorizations for Atlantic Coast, the Southern Environmental Law Center said in its FERC filing. FERC regulates construction of interstate gas pipelines and has temporarily stopped work on parts of the Atlantic Coast project in the past due to prior Fourth Circuit court rulings. "Opponents' delay tactics will not stop this project. They will only drive up consumer energy costs, delay the transition to cleaner energy, and make it harder for public utilities to reliably serve their customers," Ruby said, noting "We will complete this project."
Mass. Gas Grid Blows Up, and Answers Are Elusive - The recent gas line explosions and fires in Massachusetts triggered a state of emergency, and a federal investigation into the behavior of the company at the center of the chaos. But no one, especially the utility provider-at-fault, seems to have an answer for what — or perhaps even who — caused this vital service to fail so spectacularly. The news was certainly attention-grabbing — 70 explosions, fires, and gas leaks across three Boston suburbs within the space of an afternoon, leaving one dead, 30 injured, and 8,500 evacuated. The event hit the national evening news; and cable news services like Fox News and MSNBC halted their usual programming and covered the explosions. The utility company whose customers were affected, Columbia Gas, was clearly overwhelmed with the scope of the disaster. Massachusetts Gov. Charlie Baker (R) said the company seemed to disappear — shirking its responsibility to update the public on the situation through press conferences; this dereliction of duty caused fear, uncertainty, and doubt to grow. Even the emergency services had little clue as to what caused the disaster and what Columbia Gas was doing about it. As a result, Gov. Baker initiated a state of emergency, taking control away from Columbia Gas and handing it to a larger utility player, Eversource. Three long days later, there was an announcement from Robert Sumwalt, the chairman of the federally operated National Transportation Safety Board (NTSB) — an “over pressure situation” had caused the disaster. That was the “how” answered, but “the real question for this investigation is to answer why this occurred,” Sumwalt continued. He has said that the NTSB’s probe will concentrate on the company culture at Columbia Gas, and their policies with regard to these kinds of black swan events — highly improbable yet very disruptive situations. It didn’t take long during this period of confusion for some to consider the possibility of sabotage. In a statement released in the confusing hours after the gas leaks, Allison McDowell-Smith, a professor at Nichols College in Dudley, MA, and director of the school’s counterterrorism studies graduate program, wrote, “We have to be aware that as a society, acts of terrorism can impact our utilities.” “If it was a utility worker who over-pressured the gas line, was it intentional?”
FERC Authorizes Service on Gulf Coast Expansion Project - FERC authorized service to commence on the first phase of Natural Gas Pipeline Company of America LLC's (NGPL) Gulf Coast Southbound Expansion Project. The project is designed to transport an additional 460,000 Dth/d on NGPL's Gulf Coast Mainline System to serve growing industrial and export demand via delivery points in South Texas [CP16-488].NGPL filed an application for the project with the Federal Energy Regulatory Commission two years ago, proposing constructing a 15,900 hp compressor station (CS 394) in Cass County, TX, along with a 4,000-foot, 30-inch diameter pipeline lateral connecting the station to NGPL's Amarillo to Gulf Coast Pipeline. NGPL would also abandon two existing compression units at its CS 301 compressor station, totaling roughly 5,600 hp, according to FERC. FERC issued a favorable environmental assessment for Phase 1 of the project in April 2017. The Gulf Coast expansion would transport natural gas from points in Illinois, Arkansas, Oklahoma and Texas to delivery points on the Cheniere Corpus Christi Pipeline (serving Cheniere Energy Inc.'s Corpus Christi Liquefaction project) in San Patricio County, TX, and on the NET Mexico Pipeline in Nueces County, TX.NGPL is targeting an October 2018 in-service date for Phase 1 of the Gulf Coast Southbound expansion. A second phase, which would provide an additional 300,000 Dth/d of firm southbound capacity, is under contract with a third party, according to NGPL. The projected in-service date for Phase 2 is mid-2021. NGPL is seeking non-binding solicitations of interest for a third phase of the project, which would provide 260,000 Dth/d of incremental firm southbound transportation service from existing or new interconnects on NGPL's system in Illinois and Iowa to growing markets along the Texas and Louisiana Gulf Coast.
Bayou Bridge pipeline threatens the riches of Louisiana's Atchafalaya Basin - Construction of the pipeline has cleared a path through one of the most environmentally sensitive areas of the state and created a vortex of controversy in the process.“They’re completely devastating this area,” They’re digging deep trenches, piling up mounds of dirt and grinding down our ancient cypress and tupelo trees, all of which is drastically altering the ecosystem.” Meche’s family has lived off the water for generations, but that lifestyle is becoming more difficult as the Army Corps of Engineers has greenlighted a network of pipelines now crisscrossing the swamps. The latest is the Bayou Bridge pipeline, which has been under construction since February. Its corporate parent, Energy Transfer Partners, will use it to carry up to 480,000 barrels of oil a day through the Atchafalaya Basin to crude oil refineries and export terminals, according to the permit application. When finished, the pipeline will stretch 162 miles, connecting to Energy Transfer Partner’s equally controversial Dakota Access pipeline. The project is estimated to cost $670 million. The Army Corps of Engineers is charged with examining the effects of projects that can potentially harm certain waterways. The permits and authorizations for the Bayou Bridge pipeline were signed by Col. Michael Clancy, the Corps’ New Orleans District commander. Earthjustice, a nonprofit environmental legal group, first filed a challenge in January to the project and the Corps in federal district court in Louisiana. The group is also representing the Standing Rock Sioux in their opposition to the Dakota Access pipeline and argues that the Corps, in regard to the Bayou Bridge pipeline, did not adequately consider the potential threat to wildlife and the environment that a spill or a catastrophic failure might cause.“In issuing these authorizations, the Corps declared that the Pipeline would not have a significant impact on the environment, and did not require a full environmental impact statement as mandated by the National Environmental Policy Act for federally permitted projects with significant environmental impacts,” reads the court filing by Earthjustice.
US PetroChemical Industry Becoming Dependent on Shale Fracking Activities - U.S. chemical and plastics industry investment linked to natural gas has now surpassed $200 billion, the American Chemistry Council (ACC) announced in September. Since 2010, 333 chemical industry projects cumulatively valued at $202.4 billion have been announced, with 53% of the investment completed or under construction and 41% in the planning phase. Fully 68% of the total is foreign direct investment or includes a foreign partner. Project types include new facilities and capacity expansions. “This is an exciting milestone for American chemistry and further evidence that shale gas is a powerful engine of manufacturing growth,” said ACC President and CEO Cal Dooley. “The U.S. remains the most attractive place in the world to invest in chemical manufacturing. We look forward to continuing to transform energy into a stronger economy and new jobs.” ACC analysis shows that $202.4 billion in capital spending could lead to $292 billion per year in new chemical and plastics industry output and support 786,000 jobs across the economy by 2025. A note of caution is in order however, the ACC warns. U.S. manufacturers often rely on inputs that are not available or made in the U.S. to create products that cost less yet perform at the high level downstream customers expect. “Protectionist trade policies such as tariffs and quotas unnecessarily raise the costs of those inputs, deter innovation and economic growth, and could ultimately weaken our country’s competitive advantage,” the ACC said.
Deepwater's Happy Days Almost Here Again -- Deep-sea oil drillers are once again riding the wave of investor enthusiasm that next year will be better for profits. But this time there seems to be a bigger chance it will actually happen, according to analysts at Credit Suisse Group AG and Morgan Stanley. Some of the world's biggest owners of rigs that drill oil wells in more than two miles of water, including Transocean Ltd., Ensco Plc and Diamond Offshore Drilling Inc., saw rallies in their shares near the end of 2016 and 2017, only to see their stocks tumble by the start of the following year as reality set in. "So here we are in mid-September and the trade beckons again," James Wicklund, analyst at Credit Suisse, wrote Monday in a note to investors. "This time, however, we are one year closer to a recovery after 4 1/2 years of decline, with the drilling contractors sounding more optimistic than in years, with small, light green shoots being seen." Offshore drillers have been among the most beaten-up names from the worst crude-market crash in a generation, due to an oversupply of their vessels and high operating costs. This year marks the lowest in projected offshore spending since oil prices first fell in 2014, according Morgan Stanley. Explorers are expected to boost spending 45 percent to $188 billion by 2022, the bank wrote Sept. 18 in a note to investors. Meanwhile, major oil trading houses are predicting the return of $100 crude for the first time since 2014. The rise of offshore drilling is also coming as shale work back on land is hitting a speed bump, according to Rystad Energy. The renewed interest in offshore is driven by a "steep reduction" in offshore costs that's allowing explorers to turn a profit at lower oil prices, Audun Martinsen, head of oilfield research at Rystad, said earlier this month in a statement. Shale spending is expected to reach $120 billion this year, short of Rystad's $160 billion estimated spending globally offshore. With more unused rigs still left to be scrapped around the globe, though, the higher utilization of deep-water vessels won't translate into significantly higher rental prices until late next year, Wicklund wrote.
EPA approved $292 million for Florida's oil spill cleanup -- — After five years of work, the Gulf Coast Consortium has approval from the Environmental Protection Agency to move forward with spending restore act funds.The EPA is directing $292 million to 69 projects across the 23 Florida counties affected by the Gulf oil spill.Officials say, the clean up projects were required to address environmental and economic impacts from the spill. In Escambia County, Florida work will be done to remove contamination from Bayou Chico. Santa Rosa County will also see improvement in the water quality at the Santa Rosa Sound. Officials will tackle five projects along the Okaloosa County waterways.
US to offer all available Gulf of Mexico waters for oil, gas leasing in March — The Trump administration this March will again offer 78 million acres in the Gulf of Mexico for oil and gas leasing, the Interior Department announced Tuesday. The lease sale will include all available unleased areas in the Gulf's federal waters, the agency said. It does not include eastern Gulf waters currently under congressional moratorium. The sale follows a Gulf sale in August which also offered all 78 million acres in the Gulf. That sale resulted in about $178 million in high bids on 144 tracts covering over 801,000 acres. The sale will include terms for a 12.5% royalty rate for leases in less than 200 meters of water depth and a royalty rate of 18.75% for all other leases. The 12.5% royalty rate is "in recognition of current hydrocarbon price conditions and the marginal nature of remaining Gulf of Mexico shallow water resources," Interior said in a statement. -
US to hold area-wide Gulf of Mexico lease sale- The US Bureau of Ocean Energy Management plans to offer 78 million acres in the Gulf of Mexico in a region-wide oil and gas lease sale, Deputy US Interior Sec. David Barnhart and BOEM Acting Director Walter D. Cruickshank jointly announced. The sale will include all available unleased areas there, they said on Sept. 25. OCS Sale No. 252, which will be streamed live from New Orleans, will be the fourth offshore sale under the 2017-22 Outer Continental Shelf Oil and Gas Leasing Program. Under the program, 10 region-wide sales are scheduled for the gulf, where resource potential and industry interest are high, and oil and gas systems are well established. Two gulf lease sales will be held each year and include all available blocks in the combined western, central, and eastern planning areas. The portion of the gulf, covering about 160 million acres, is estimated to contain about 48 billion bbl of undiscovered technically recoverable crude oil and 141 tcf of undiscovered technically recoverable natural gas, BOEM said. Sale No. 252 will include 14,696 unleased blocks, 3-231 miles offshore and in 9-11,115 ft of water. Excluded from the sale are blocks subject to the congressional moratorium established by the 2006 Gulf of Mexico Energy Security Act, blocks adjacent to or beyond the US Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap, and whole blocks and partial blocks within the current boundaries of the Flower Garden Banks National Marine Sanctuary. All terms and conditions for Sale No. 252 are detailed in the Proposed Notice of Sale information package, which will be available on Sept. 26 at www.boem.gov/Sale-252/.
The Return of Fracking in the Barnett Shale? - Fewer natural gas wells are being drilled in North Texas today, but it doesn't mean they're not coming back. "It's in hibernation," Steinsberger added. "There's over 20,000 Barnett wells drilled in the last 20-something years, but if the gas prices went up significantly, those rigs would start coming back." Today the price of natural gas is $2.83 per million BTU. Back in 2005, the price was $13.42. The returns just aren't worth the millions of dollars it takes to drill new wells. But down the road, new technology could lead to even bigger gains."I think the Barnett could come back and I could conceivably see where another 21,000 wells are drilled at some point in the future," Steinsberger added. "I think re-fracks in America, there will be a lot of them over the next 10 to 20 years, going back and re-fracking Barnett."
Texas Oil Output in July Nears 3 Million B/d, Natural Gas Production Chases 20 Bcf/d - Texas crude oil in July averaged nearly 2.90 million b/d, compared with 2.43 million b/d a year ago, while natural gas output averaged 19.76 Bcf/d, versus a year-ago average of about 17.25 Bcf/d, according to a preliminary tally by the Railroad Commission of Texas. The total volumes are based on production figures likely to be updated as late and corrected reports are received, the state’s oil and gas regulator noted. In July, operators said they produced about 90.026 million bbl of crude oil and nearly 612.513 Bcf of natural gas, the preliminary figures indicated. Reported oil production in July 2017 initially totaled 75.312 million bbl, which has since been updated to a current figure of 93.229 million bbl. Gas production preliminarily totaled for July 2017 was nearly 534.778 Bcf, since updated to a current figure of 692.430 Bcf. Between August 2017 and July, total reported output was 8.1 Tcf of natural gas and 1.164 billion bbl of crude oil. Crude oil production reported to state officials is limited to oil produced from oil leases and does not include condensate, which is reported separately by the commission. Texas production in July came from 180,434 oil wells and 91,025 gas wells, the commission said. As of last Friday (Sept. 21), the oil and gas rig count in Texas had risen to 531 from 453 a year ago, according to Baker Hughes, a GE company.
As pipeline shortage slows Permian output, sand miners take hit - Houston Chronicle - An influx of West Texas sand mines, coupled with a production slowdown in the booming Permian Basin resulting from pipeline shortages, has led to two companies suddenly idling five sand mining plants in the Midwest, eliminating hundreds of jobs, at least temporarily.The sand mining services hydraulic fracturing, or fracking, in oil and gas wells. However, the demand for sand is weakening as companies delay fracking operations until more pipeline capacity is built to bring their oil and gas to Gulf Coast markets. With pipeline projects unlikely to be completed until next year, many companies are drilling but not completing wells, opting to leave the oil and gas in the ground for now. The federal government estimates the number of drilled but uncompleted wells — known as DUCs — in the Permian has jumped more than 40 percent, from 2,500 at the beginning of this year to more than 3,600 at the end of August. The fracking slowdown coincides with companies opening several new sand mines within the Permian, creating an oversupply that led sand companies this summer to slash prices by almost 40 percent, energy analysts said. The ripple effects are now cutting jobs as far away as Wisconsin and Michigan. “I think there’s more idling and shut-ins to come,” s “The Permian is just now starting to crack.” On Wednesday, the Houston company Hi-Crush Partners said it is idling one of its Wisconsin sand mining plants. Thursday morning, Ohio’s Covia Corp. said it is temporarily shuttering four plants in four states — Minnesota, Missouri, Michigan and Illinois. Covia also is reducing its activity at its East Texas mine in Cleburne, and at two other plants in Missouri and Wisconsin. The sand, known in the industry as proppant, props open the fissures in fractured shale rock, helping oil and gas flow into the wells. Nationwide, the demand for frac sand skyrocketed from roughly 40 million tons in 2016 to about 100 million tons this year as oil prices rebounded and the volumes of sand per well continued to rise. Analysts initially projected that demand this year would rise to about 110 million tons, but Permian pipeline shortages led that estimate to be revised downward, O’Leary said. In addition, fracking activity has slowed in natural gas shale plays in the Northeast. That demand compares to about 150 million tons in U.S. sand production capacity by the end of this year.
Stakes High in New Mexico’s Permian as BLM Prepares Draft Resource Plan - The future of oil and gas development in New Mexico's portion of the Permian Basin hangs in the balance as the Bureau of Land Management (BLM) wraps up two weeks of public hearings to discuss a draft blueprint for resource development and environmental mitigation covering millions of acres in the state.Even if it hadn't been 30 years since federal land managers last wrote a new resource management plan (RMP) and accompanying draft environmental impact statement, the 1,500-page tome now being scrutinized in a series of eight public hearings ending Friday would command the oil and gas industry's attention. Comments will be taken until Nov. 5."The changes are in part due to continuing fluid and solid mineral extraction and energy developments in the area and new technologies being used to extract those resources," BLM officials said. "Concurrent extraction of both fluid and solid mineral reserves presents a management challenge not addressed adequately in the 1988 RMP and its amendments."More than 2.8 million acres of federal land and subsurface minerals are at stake, mostly in Lea and Eddy counties, the same jurisdictions that recently pulled in nearly $1 billion in a BLM oil and gas lease sale."We are currently reviewing the RMP and will be preparing comments for the BLM," said New Mexico Oil and Gas Association (NMOGA) spokesman Robert McEntyre. "The RMP is an important component of energy development in southeast New Mexico, and any plan should focus on allowing growth in the economy and energy production to continue." Oil and gas operators in the Permian have been waiting a long time for a new RMP from BLM's office in Carlsbad, NM, and the detailed document will be closely reviewed by the industry, "Companies and organizations like ours are combing through the document, paying great attention to details of different management scenarios, before providing official comments to the BLM,"
The Fracking Industry’s Water Nightmare: Injection Wells Damage Production Wells, Rising Disposal Costs Will Increase Industry Losses -- The U.S. Environmental Protection Agency (EPA) has clearly documented the multiple risks — despite repeated dismissals from the oil and gas industry — that hydraulic fracturing (fracking) poses to drinking water supplies. However, the tables may be turning: Water itself now poses a risk to the already failing financial model of the American fracking industry, and that is something the industry won’t be able to ignore.The U.S. is setting new oil production records as horizontal drilling and fracking open up shale deposits in places like North Dakota and Texas. One sign that the fracking industry is becoming concerned about water is that there are now societies and conferences dedicated to the topic of “produced water.” Produced water is the term for the toxic water that is “produced” over the life of a fracked oil or gas well. Gabriel Collins is a fellow in energy and the environment at Rice University, and in August he gave a presentation at the Produced Water Society Permian Basin 2018 event in Midland, Texas. There, Collins presented a business case for starting a large water processing company to service the fracking industry. In a story by Bloomberg News, Collins said he didn’t believe investors were aware of the risks that water poses to the fracking industry in the Permian Basin. “[Investors] aren’t as well apprised of some of the other risks and challenges that could be just as material, if not more so,” he told Bloomberg News. “I’d put water right at the top of that list.” Why should water top the list of potential financial challenges facing the fracking industry? According to a study by Wood MacKenzie and reported by the Wall Street Journal, the costs of water disposal for the fracking industry could add another $6 per barrel of oil produced.For the U.S. shale oil and gas industry, which has consistently lost money over the past decade, adding another $6 per barrel in costs represents a grim outlook.
Oklahoma Lawsuits Claim Link Between Fracking and Earthquakes - A group of lawsuits that link a cluster of earthquakes in Oklahoma to the disposal of wastewater from hydraulic fracturing are moving forward. On Sept. 11, Oklahoma District Judge Phillip Corley lifted a hold that had been placed on two class-action lawsuits involving a 5.0-magnitude earthquake in November 2016 near Cushing, Okla., pending federal action on related cases.On August 31, Steadfast Insurance Co., a subsidiary of Zurich Holding Company of America, sued seven oil companies in the U.S. District Court for the Northern District of Oklahoma.Meanwhile, members of the Pawnee nation filed a similar lawsuit in August. Tribal members claimed they had suffered nerve damage and other physical ailments as a result of a 5.8-magnitude September 2016 earthquake. According to Scott Poynter, attorney for the Pawnee litigants, Steadfast’s lawsuit marks the first time an insurance company has sued oil companies for earthquake-related damages. Steadfast paid $325,000 in claims related to the September quake. Now, it is trying to recover the funds from the energy companies. Oil and gas companies maintain that their methods of oil and gas extraction are safe.
Market shrugs as natural gas storage lags in US Midwest (podcast) S&P Global Platts senior pricing specialists John DeLapp and Veda Chowdhury discuss the changing natural gas storage picture in the Midwest. Listen now...
FERC Orders Northern Natural to Secure Kansas Wells, Allows Southern Star to Expand Gas Storage - FERC has given Northern Natural Gas Co. one month to secure access to several open or unplugged producing wells that could threaten a natural gas storage field in Kansas, and granted Southern Star Central Gas Pipeline Inc. permission to expand a separate gas storage field in Oklahoma.In an order issued Thursday, the Federal Energy Regulatory Commission said Northern Natural must file within 30 days a plan to avoid a loss of gas stored in the Cunningham storage field, which it operates [CP09-465]. Cunningham, which underlies about 40,320 surface acres in the Kansas counties of Kingman and Pratt, is authorized to store 62 Bcf in depleted oil and gas fields in the Simpson and Viola formations. In the field, the company operates 52 injection wells, 28 observation wells and a water disposal well."The plan shall include a near-term proposal to temporarily secure the wells within six months and a long-term plan to gain control of the wells and prevent access to the storage formations," FERC said.The order comes in response to an incident in April 2017, when a piece of farming equipment struck a gas well owned by Nash Oil & Gas Inc., and the well began venting gas. The Kansas Corporation Commission hired a Houston-based well control company to stop the leak after representatives for Northern Natural and Nash each denied responsibility for regaining control of the well. FERC authorized Northern Natural to expand a buffer zone around the Cunningham field by 12,320 acres in 2010, but as part of that authorization, the Commission ordered the company to maintain the integrity of the storage field. A federal district court judge granted access to Northern Natural to more than 9,000 acres and several producing oil and gas wells around the field in March 2012, allowing it to implement a 2011 plan to stop gas migration from the storage facility.
Could Fracking Industry Debt Trigger a Financial Crisis? - Fracking companies are hot destinations for investors chasing yields and growth industries, especially private equity companies, in part because of the large appetite the capital intensive industry has for debt. However, several warning signs suggest the fracking industry not only may fall short of investor expectations, but also could actually help to precipitate the next financial crisis. Bethany McLean, a contributing editor at Vanity Fair magazine, explores those fears in her newly published book, Saudi America: The Truth About Fracking and How It’s Changing the World. She delved into those issues also in a recent op-ed article in The New York Times titled, “The Next Financial Crisis Lurks Underground.” The International Energy Agency earlier this year captured the significance of the U.S. shale industry in a report. “Global oil production capacity is forecast to grow to reach 107 million barrels per day by 2023,” it noted. “Thanks to the shale revolution, the United States leads the picture. Growth is led by the Permian Basin [in Texas], where output is expected to double by 2023.”“Fracking is a business built on attracting ever-more gigantic amounts of capital investment, while promises of huge returns have yet to bear out,” says an introduction to McLean’s book. In fact, North American exploration and production companies saw their net debt balloon from $50 billion in 2005 to nearly $200 billion by 2015, according to a recent research paper by Amir Azar, fellow at Columbia University’s Center on Global Energy Policy.Beyond the debt overhang, the fracking industry’s fortunes directly impact oil prices and the rest of the economy, while also being a significant job creator, according to McLean and Jyoti Thottam, The New York Times opinion editor for business and economics. McLean and Thottam drew parallels between the fracking industry’s lofty projections and the Enron scandal of 2001, which both of them had covered extensively as reporters. McLean warned that “at some point, investors want to see real profits and real returns,” while Thottam called for fracking industry watchers to look for early signs of danger. (McLean and Thottam discussed the fracking industry’s fortunes on the Knowledge@Wharton radio show on SiriusXM. Listen to the podcast at the top of this page.)
Fracking showdown heats up in Colorado --VOTERS IN COLORADO NEXT month will weigh in on what's shaping up to be the environmental showdown of the 2018 election cycle: whether to approve larger setbacks for oil and gas facilities that would make most of the state off limits to new fracking operations. The measure is one of a handful of environmental questions on state ballots this year, from a new carbon fee in Washington to higher renewable energy standards in Arizona and Nevada. But the Colorado proposal is the one that most directly pits residents against the oil and gas industry, potentially roping off 85 percent of non-federal land in Colorado from new drilling operations. It reflects a fundamental clash between an industry that's transformed Colorado into a top-10 oil producer in the U.S. and a booming residential population whose homes, schools and hospitals have crept ever closer to oil and gas sites. "Industry is hitting saturation point, and people are saying, 'This is good, but why are you putting this next to a school?" says Jim Alexee, director of the Colorado Sierra Club. "People are just getting fed up and are genuinely concerned. So oil and gas has a right to be worried." If approved, the measure would mark the first time in the U.S. that voters – not a legislature or governor – green-light statewide curbs on fracking operations, which use mixtures of water, chemicals and other materials to extract oil and gas from porous shale rock formations. The blow to the oil and gas sector, meanwhile, would be considerable, threatening – or promising, depending on one's view – to galvanize similar grassroots efforts across the U.S. Three states in the U.S. have banned fracking: New York and Vermont did so in 2012, and Maryland followed suit last year. The Colorado referendum, Proposition 112, would require new wells be at least 2,500 feet from occupied buildings such as houses and schools, as well as parks, fresh water sources and other green spaces "designated for additional protection." It would also grant state and local governments new powers to set yet more stringent setback requirements. Oil and gas sites are presently required to be at least 500 feet from residential buildings and 1,000 feet from high-occupancy buildings such as schools and hospitals. Those setbacks, however, were only instituted in 2013 – meaning Colorado residents may live as close as 150 feet to a well, compressor station, or other oil and gas site.
Sierra Club contests fracking development on Boulder County open space – The Colorado Oil and Gas Conservation Commission has decided it will allow the Sierra Club to submit written comment contesting Crestone Peak Resource's application to build a 140-well development on Boulder County open space.While the environmental advocacy group will not be able to call witnesses or cross-examine anybody during the Colorado Oil and Gas Conservation Commission's hearing at the end of October, the Sierra Club will be allowed to enter reports regarding the acute and chronic health impacts of the project."I think it's a very positive development because we get to put evidence in front of the commission showing just how serious the environmental and health impacts of this project are," said Eric Huber, the senior managing attorney with the Sierra Club's Environmental Law Program. "I'm glad that the record is finally going to get made and we look forward to our day in court."As of Thursday, the Sierra Club has three expert witnesses ready to submit reports. According to Huber a petroleum engineer will address concerns regarding the sheer size of the 140-well project, highlighting the fact that it will require more water, fracking chemicals, and solid fracking materials than used previously in all the existing 779 wells in the county and that the wells also will produce more flowback waste than all previous wells in the county combined. A hydrologist will attempt to show that the wells need more casing to protect the aquifers under the project, and an epidemiologist will address the acute and chronic health impacts of the project.
BLM Advances First Oil Shale Project in Utah - The U.S. Bureau of Land Management’s Utah office on Wednesday authorized the American unit of an Estonia-based company to build infrastructure needed to open an oil shale production plant in Uintah County. The project was originally proposed six years ago, and its backers told NGI's Shale Daily that construction is still "several years off." BLM Utah's record-of-decision (ROD) will allow Salt Lake City-based Enefit American Oil to create up to seven right-of-way corridors for pipelines, power lines and roads necessary for the extraction and processing of the oil shale, which has long been opposed by environmental groups. "This approval allows for industrial-scale utilities to cross federal land to the site of Enefit's planned oil shale project," said company spokesperson Brian Wilkinson. "We're in the engineering and permitting phase for what is a long-lead time greenfield project. The cost estimate for the project is not publicly available yet as it’s subject to final engineering review." BLM officials stressed that the project is consistent with President Trump's goal of U.S. energy independence."Right-of-way projects are tremendous economic drivers that involve critical coordination with our neighbors and stakeholders," said BLM Deputy Director Brian Steed. BLM's ROD enables Enefit to build 13.7 miles of water supply pipeline, 5.8 miles of buried natural gas pipe, 7.18 miles of buried oil product line, and two 138-kV power lines. It would also include upgrading five miles of a major road on public lands in the Vernal, UT, field office.
Keystone XL pipeline route would not harm environment: State Department --(Reuters) - The U.S. State Department on Friday issued an environmental assessment of a revised route for the Keystone XL crude pipeline that concluded it would not harm water or wildlife, clearing a hurdle for the project that has been pending for a decade. Even if the pipeline spilled crude oil along its revised route through Nebraska, a top concern of environmentalists, there would likely be no impact to groundwater, the nearly 340-page draft review said. “Prompt cleanup response would likely be capable of remediating the contaminated soils before the hazardous release reaches groundwater depth,” the review said. Last month a federal judge in Montana had ordered the State Department to conduct the review of a revised route of the project to take into account new information relevant to a permit it issued for the pipeline last year. The review also said implementing the revised route would have “no significant direct, indirect or cumulative effects on the quality of the natural or human environments.” U.S. President Donald Trump is eager to see the building of the pipeline, which was axed by former President Barack Obama in 2015 on environmental concerns relating to emissions that cause climate change. The project has galvanized environmentalists, tribal groups and ranchers in opposition to the $8 billion 1,180 mile (1,900 km) pipeline that would carry heavy crude from Canada’s oil sands in Alberta to Steele City, Nebraska. From there the crude would be sent to refineries and potentially for export. Canadian oil producers, who face discounts for their crude due to transport bottlenecks, U.S. refineries and pipeline builders, support the project. TransCanada Corp plans to start construction in 2019, spokesman Matthew John said. The company’s Chief Executive Russ Girling said last month that it could make a final investment decision on the project late this year or in early 2019, pending some regulatory approvals and court challenges.
KXL Pipeline Developer Plans to Start Construction in 2019 - Construction on the long-delayed Keystone XL (KXL) pipeline is planned for 2019, developer TransCanada said Monday. "Keystone XL has undergone years of extensive environmental review by federal and state regulators," TransCanada spokesman Matthew John told Omaha World-Herald. "All of these evaluations show that Keystone XL can be built safely and with minimal impact to the environment." The move comes after President Trump's State Department—in response to a judge's order—released a nearly 340-page draft review on Friday that said the pipeline's alternative route approved by Nebraska regulators in November will have "no significant direct, indirect or cumulative effects on the quality of the natural or human environments." "Prompt cleanup response would likely be capable of remediating the contaminated soils before the hazardous release reaches groundwater depth," the report also said. The KXL has been at the center of a contentious fight for a decade. If built, the $8 billion, 1,184-mile pipeline will transport heavy crude oil from Alberta's tar sands through Montana and North and South Dakota to connect with an existing Keystone pipeline in Nebraska. President Obama rejected the KXL in 2015 partly due to concerns about its contribution to climate change, but President Trump reversed the decision shortly after taking office.
US government might use counterterrorism tactics against Keystone pipeline protesters, documents show -The federal government is preparing an aggressive tactical response in anticipation of renewed Keystone XL Pipeline protests—similar to the response to direct action in Standing Rock, where activists fought efforts to construct the Dakota Access Pipeline—documents obtained by the American Civil Liberties Union and the ACLU of Montana show. In Standing Rock, camps set up to resist the pipeline were heavily surveilled and law enforcement used concussion grenades, tear gas, and rubber bullets against activists. Last year, leaked documents revealed that Energy Transfer Partners, the company building the Dakota Access Pipeline, hired a security firm called TigerSwan to oppose water protectors in collaboration with police in at least five states, The Intercept reported. Now, it appears activists are preparing for a similar, aggressive response if the Keystone Pipeline moves forward. One document showed the Department of Homeland Security and the Federal Emergency Management Agency organized a “field force operations” training to prepare for “riot-control formations” and “mass-arrest procedures.”The Trump administration renewed orders last year allowing construction of the Keystone Pipeline to continue. The pipeline would carry more than 800,000 barrels of oil daily, running near a number of Native American reservations. Remi Bald Eagle, who is the intergovernmental affairs coordinator of the Cheyenne River Sioux tribe, told the Guardian that based on “the level of [law enforcement] violence” residents saw at Standing Rock, “There’s a level of anxiety and fear because we don’t know what’s going to happen.” “Terrorism” and “extremism” have long been used by the US government to criminalize different forms of protest. In the past year, leaked FBI documents labeled anarchists as “domestic terrorists” and black leftists as “Black Identity Extremists.” Just this month, the president suggested in an interview with the Daily Caller—Fox TV anchor Tucker Carlson’s conservative outlet—that protests should be illegal.
'Treating protest as terrorism': US plans crackdown on Keystone XL activists - Angeline Cheek is preparing for disaster. The indigenous organizer from the Fort Peck reservation in Montana fears that the proposed Keystone XL pipeline could break and spill, destroy her tribe’s water, and desecrate sacred Native American sites.But environmental catastrophe is not the most immediate threat.The government has characterized pipeline opponents like her as “extremists” and violent criminals and warned of potential “terrorism”, according to recently released records. The documents suggested that police were organizing to launch an aggressive response to possible Keystone protests, echoing the actions against the Standing Rock movement in North Dakota. There, officers engaged in intense surveillance and faced widespread accusations of excessive force and brutality.“We have to stay one step ahead at all times,” said Cheek, a Hunkpapa and Oglala Lakota activist and teacher. “History is repeating itself.”The proposed TransCanada project would carry a daily load of 830,000 barrels of oil over 1,204 miles – from Alberta, Canada to Montana, South Dakota and Nebraska, linking to the existing Keystone pipeline and Texas refineries. The path of the project, which was revived by Donald Trump last year, would cross dozens of rivers and streams and run near a number of Native American reservations, sparking legal challenges and a judge’s recent order for a full environmental review. If the pipeline gets final approvals and construction advances in the coming months, some are anticipating massive demonstrations similar to the fight against the Dakota Access pipeline (Dapl). That conflict galvanized a global movement, but also led to FBI monitoring and the prolonged prosecution of hundreds of activists. Documents obtained by the ACLU of Montana and reviewed by the Guardian have renewed concerns from civil rights advocates about the government’s treatment of indigenous activists known as water protectors. Notably, one record revealed that authorities hosted a recent “anti-terrorism” training session in Montana. The Department of Homeland Security (DHS) and the Federal Emergency Management Agency also organized a “field force operations” training to teach “mass-arrest procedures”, “riot-control formations” and other “crowd-control methods”.
Trump Repeals Rule Meant to Prevent Oil-Carrying 'Bomb Trains' From Derailing and Exploding - In a move that outraged environmentalists and increased the chances of deadly and destructive accidents, the Trump administration's Department of Transportation (DOT) has repealed an Obama-era rule that mandated safety upgrades for "dangerous" oil tanker trains to reduce the possibility of derailments, explosions and spills. "This commonsense rule was put in place in response to a series of deadly accidents, and this shameless decision to repeal it will mean more workers and communities are put at risk," declared Sierra Club Beyond Dirty Fuels campaign director Kelly Martin.The rule required trains carrying oil and other flammable materials—sometimes called "bomb trains"—to install electronically controlled pneumatic (ECP) brakes that decrease the likelihood of derailment by 2021. While it was initially criticized by green groups that said it did not go far enough to protect communities, the Monday reversal was regarded as yet another move by the administration to appease polluters at the expense of the public."Apparently there's no limit to the lengths the Trump administration will go," Martin said, "to prioritize the desires of polluting industries over the health and safety of the American people."The repeal was initially proposed in December of 2017, but finalized by the DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) on Monday. PHMSA claimed that a congressionally-mandated analysis concluded "that the expected costs of requiring ECP brakes would be significantly higher than the expected benefits of the requirement." The change does not prevent railroads from using ECP brakes but the safety upgrade is no longer mandated."The electronically controlled brakes would have been a long-awaited safety improvement," Fred Millar, an independent consultant specializing in chemical safety and transport, told BuzzFeed News. By repealing the safety requirement, Millar added, "the cost will be borne by the people who die or are injured or who have terrible property damage."
Trump Rolls Back Train-Braking Rule Meant to Keep Oil Tankers from Exploding Near Communities - Trains that carry oil and other flammable material won’t have to install electronically controlled brakes that reduce the risk of train derailments and explosions after the reversal by Trump officials of an Obama-era safety rule.The Pipeline and Hazardous Materials Safety Administration (PHMSA) posted the rule change today at its Web site, arguing that the cost of installing these more sophisticated brakes outweighs the benefit. The reversal was first proposed in December 2017, around the time of a deadly Amtrak derailment in Washington State, and finalized today. The improved brakes had a 2021 deadline for installation until the industry-supported change. About 20 derailments of trains carrying oil and ethanol that have led to spills, fires, and, in some cases, evacuations have occurred since 2010 in the U.S. and Canada. Riverkeeper, a clean-water advocacy group, compiled video reports from many of the accidents.U.S. trains rely on pneumatic braking technology first invented in the 1860s, in which continuous air pressure linked from the front of the train keeps a brake from engaging on wheels on each car. When an engineer applies braking, it can take several seconds for pneumatic pressure to drop to the end of a 100-car train, and trains can be longer.Electronically controlled pneumatic (ECP) brakes still use air pressure, but each car has an individual braking control which receives an electronic signal simultaneously, reducing the danger of derailment when cars slam into the preceding ones before braking themselves. The seconds’ difference between regular and ECP brakes is where the battle lies for this regulations. The railroad industry claims it would cost more than $3 billion to install necessary ECP on trains used for flammable liquids, while the Federal Railroad Administration under President Barack Obama said it would be about half a billion.
Bakken operators facing shift to less prolific geography: study— North Dakota oil producers have broken output records already twice this year, with state regulators expecting further record-shattering output into late 2018. But as acreage within the Bakken Shale's core drilling areas in McKenzie, Mountrail, Williams and Dunn counties nears depletion, operators will move on to wells in what are now fringe areas, with outputs averaging a fraction of the play's more currently prolific wells, according to a study from the North Dakota Pipeline Authority.The study shows an epic shift in Bakken well performance could be nearing, as the majority of Bakken wells go from geology with a peak monthly performance of at least 1,000 b/d of crude to a majority of wells in geology that produces a peak monthly performance of less than 500 b/d, even in the study's higher case outcome.And while an output decline may still be decades away, producers may need to develop two or three times as many wells compared with current efforts in order to keep up the current production pace, the study indicates. Among the study's findings:
- Of the nearly 8,000 existing Bakken wells, 49% are located in geology with a peak monthly performance of over 1,000 b/d, with 18% in geology with peaks over 1,500 b/d. Just 14% of existing wells are located within geography with peak monthly performance below 500 b/d.
- Of the remaining, more than 31,100 Bakken wells, only 20% are located within geography with peaks above 1,000 b/d in the study's low case, which assumes that four wells will be drilled within a 1,280 acre spacing unit, and 23% in the study's high case, which assumes drilling eight wells in a spacing unit.
- Of the remaining Bakken wells, 44% are located in geography with peak performance below 500 b/d in the low case and 41% in the high case.
- While the majority of existing wells are located in geography with well performance of 1,000 b/d or more, the majority of remaining wells will likely be located in geography with well performance below 500 b/d.
Is The Bakken Close To Breaking- - While the Permian has experienced a drilling boom and has received tons of media attention, a lesser-known but still remarkable revival has been underway in the Bakken this year. At the same time, the increased rates of drilling in North Dakota are starting to reveal signs of strain on the basin, as drillers are increasingly forced into less desirable locations.The Bakken was hit harder than the Permian during the oil market downturn that began in 2014, with rigs and capital diverted away from North Dakota and rerouted to West Texas. Oil production hit a temporary peak in late 2014 at 1.26 million barrels per day (mb/d), declining for much of the next two years. However, production began to rise again in early 2017 before accelerating this year. In October, the EIA expects Bakken production to hit 1.33 mb/d, a new record high. The Bakken took over as the most profitable place for shale drillers on average this summer, at least temporarily surpassing the Permian. That may not last as the steep discounts for WTI in Midland drags down the profitability of the Permian, a situation that will resolve itself over the next few years as pipelines come online. But the improved outlook for the Bakken is notable nonetheless.However, despite the resurgence in the Bakken, the basin is starting to suffer from its own strains. Production is still rising, but the crowded field is increasingly pushing shale E&Ps onto the periphery. The result is that the average well in the Bakken is producing less oil at its peak performance, as fringe areas are dragging down the average. S&P Global Platts reported on the findings, noting that absolute decline is not necessarily likely in the near-term, but that the shale industry will have to ramp up drilling activity by two or three-fold to keep growing production.
Move Over, Permian. Bakken's Making a Comeback - North Dakota oil production reached a record high in July and the Bakken is primed for growth.After months of being the red-headed stepchild to the Permian, the Bakken shale play is getting a resurgence. Crude oil production in North Dakota reached an all-new high for the second time this year in July, averaging 1.27 million barrels per day, according to the most recent figures available. Monthly oil production in July was 39.35 million barrels.Wood Mackenzie broke down some key factors that are attracting investments to the Bakken and nearby Three Forks formation (located just below the Bakken).“Operators are planning to spend $5 billion in planned CAPEX this year in these areas,” Pablo Prudencio, research analyst for WoodMac’s Lower 48 region, told Rigzone. “Operators are expected to spend more than $40 billion in the play over the next five years.”In August, shale producer Continental Resources said it was allocating $200 million this year to increased drilling and completion activity, with a third of that focused on the Bakken, Reuters reported.Prudencio said the investments will be significantly less than the Permian due in part to activity levels and rig count. WoodMac’s analysis further included the following:
- Rise in Gas Production: Operators are focusing on the core of the play, which tends to be gassier. Gas production is also continuing to rise, and gas processing plants are being built to meet North Dakota’s flaring limits.
- Oil Production: Bakken and Three Forks production contributes an average of 13 percent to the U.S. Lower 48 production outlook.
- Crude Takeaway: Long-term oil production growth is slowed by pipeline takeaway capacity. Oil production is expected to peak at about 1.5 million barrels per day and plateau after.
- Sluggish M&A: Recent years have shown lackluster M&A activity relative to the size of the play. Key themes include Private equity-backed operators entering the play and public E&Ps selling Bakken assets to focus on other plays such as the Permian.
Kinder Morgan Unit Eyeing Natural Gas Capture Pipe for Bakken Flaring - In the heart of the prolific Bakken Shale in the far northwest corner of North Dakota, a unit of Kinder Morgan Inc. is pursuing a natural gas pipeline link between existing compression and gathering infrastructure that may offer compelling economic benefits despite the system’s relatively small scale. Kinder's Hiland Partners Holdings LLC’s Bakken Missouri River Crossing Project would be a 10-mile gas pipeline from the Brogger compressor station in Williams County to its gas gathering system in McKenzie County. "It is important for their system to capture the gas north of the river, move it south and get it to its processing plants," said North Dakota Pipeline Authority Director Justin Kringstad. "It is a small length compared to numerous other projects, but it is still very important for their particular system," Kringstad told NGI's Shale Daily. He said for all of the gas gathering systems in the Bakken there is a "tremendous amount" of intra-state pipeline work.Williams County this year has been experiencing "a lot of tension" in takeaway capacity to keep up with increased production, he said. Higher oil prices have increased a return to drilling in noncore areas of the county."The amount of takeaway capacity up there is not adequate for the amount of drilling activity and new completion technologies that is now focused on that area," Kringstad said.Projects like the river crossing would help alleviate some of the congestion and aid in gas capture needs in Williams County, he said.A roughly 2.5-mile portion of the new pipeline would be run under part of the Missouri River and the man-made Lake Sakakawea. Kinder plans to use horizontal directional drilling to continue the linkage. According to Kinder's analysis, construction of the crossing project would spawn up to 80 jobs during peak construction activities next spring and provide "positive economic impacts" for the region.
OGCI Sets First Collective Methane Target - The Oil and Gas Climate Initiative (OGCI) has set its first collective methane target for member companies. The new target aims to reduce, by 2025, the collective average methane intensity of the group’s aggregated upstream gas and oil operations by one fifth to below 0.25 percent. Achieving the agreed intensity target of 0.25 percent by the end of 2025 would reduce collective emissions by 350,000 tons of methane annually, compared to the baseline of 0.32 percent in 2017. To reduce the OGCI’s collective methane emissions intensity, member companies will target “key emissions sources,” according to an OGCI statement. “OGCI members are also engaging with other companies in the industry to help ensure that methane emissions are addressed across the full gas value chain,” the statement added. In a statement on its Twitter page, OGCI said the commitment to its joint methane target relays its collective and unwavering commitment to reduce methane emissions in alignment with the Paris Agreement. The announcement of the new methane target follows OGCI’s news last week that it had welcomed Chevron Corporation, Exxon Mobil Corporation and Occidental Petroleum into its international membership. These three companies together represent five percent of global oil and gas production, OGCI highlighted. In addition to the announcement of the new methane target, OGCI revealed that China National Petroleum Corporation (CNPC) and OGCI Climate Investments (Climate Investments) had announced a partnership to create an investment fund focused on China. The major founding investors of the fund will be CNPC Assets Management and Climate Investments. The OGCI aims to increase the ambition, speed and scale of the initiatives undertaken by its individual companies to help reduce manmade greenhouse gas emissions, in particular from the production and use of oil and gas in power, heating, industry and transport. Launched in 2014, OGCI is now made up of 13 oil and gas companies comprising BP, Chevron, CNPC, Eni, Equinor, ExxonMobil, Occidental, Pemex, Petrobras, Repsol, Saudi Aramco, Shell and Total.
EIA reports first weekly U.S. crude supply climb in six weeks - The Energy Information Administration reported that domestic crude supplies rose by 1.9 million barrels for the week ended Sept. 21. The EIA had reported declines in each of the previous five weeks. That defied expectations for a fall of 2.2 million barrels from analysts surveyed by S&P Global Platts, but the increase was smaller than the climb of 2.9 million barrels reported by the American Petroleum Institute on Tuesday, according to sources. Gasoline stockpiles rose 1.5 million barrels for the week, while distillate stockpiles fell by 2.2 million barrels, according to the EIA. The S&P Global Platts survey had shown expectations for supply increases of 256,200 barrels in gasoline and 667,000 barrels in distillates. November crude fell 48 cents, or 0.7%, to $71.80 a barrel on the New York Mercantile Exchange. That's little changed from $71.78 before the supply data.
U.S. crude oil stocks build as refiners sharply cut runs (Reuters) - U.S. crude oil stockpiles rose last week as refineries sharply reduced output for seasonal maintenance, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday. After five consecutive weeks of drawdowns to the lowest levels since February 2015, crude inventories rose 1.9 million barrels to 396 million barrels in the week to Sept. 21. The build was unexpected as analysts forecast a decrease of 1.3 million barrels. Refinery crude runs fell by 901,000 barrels per day, EIA data showed. Refinery utilization rates fell by 5 percentage points to 90.4 percent, the lowest since May, driven by seasonal declines in Midwest and East Coast refining activity. “The drop in refinery runs was pretty substantial, which shows maintenance season is kicking into high-gear. The drop in distillates is very supportive because that is the soft spot that people are focused on,” said Phil Flynn, an analyst at Price Futures Group in Chicago. Oil prices held relatively steady following the data. U.S. crude oil futures were down 35 cents to $71.93 a barrel, while Brent dropped 27 cents to $81.60 a barrel. The two benchmarks have been on the rise of late due to swifter-than-expected declines in Iranian exports and notable declines in U.S. crude inventories. Distillate stockpiles, which include diesel and heating oil, fell 2.2 million barrels, versus expectations for a 752,000-barrel increase, the EIA data showed. In response to the data showing the drawdown in diesel and heating oil stocks, distillate cracks, an indication of refining margins, rose 1 percent to $15 a barrel. Net U.S. crude imports fell last week by 495,000 bpd. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 461,000 barrels, EIA said. Gasoline stocks rose by 1.5 million barrels, compared with analyst expectations in a Reuters poll for a 788,000-barrel gain.
US petroleum demand in August reached 20.8 million b/d - According the latest monthly statistics report from the American Petroleum Institute, US petroleum demand in August, led by motor gasoline, distillate, and refinery feedstocks, increased to 20.8 million b/d, up 250,000 b/d from July. This was the strongest demand for any month since August 2007 and reflected solid economic growth, industrial activity, and consumer confidence, API said. Year-to-date through August, petroleum demand averaged 20.3 million b/d. This was an increase of nearly 500,000 b/d over the first 8 months of 2017. Consumer gasoline demand, as measured by total motor gasoline deliveries, was 9.7 million b/d in August. This was 0.8% below that of August 2017 but the third-highest demand for the month of August on record since 1945. “The two highest years were 2016 and 2017, which suggests the increase in crude oil and gasoline prices this year may have suppressed some demand growth despite the strong economy,” API said. The average price of regular-grade gasoline was $2.91/gal in August, which was down by 1.4¢/gal from July, but up by 42¢/gal compared with August 2017 and 63¢/gal vs. August 2016. In August, distillate deliveries of 4.1 million b/d increased by 3.4% from July and 2% from August 2017. This was the highest distillate demand since 2007, both for the month of August and cumulatively through the first 8 months of the year. About 96% of distillate demand in August was for ultralow-sulfur distillate (ULSD), which is driven by road freight transportation activity. The US Bureau of Labor Statistics’ Producer Price Index for freight trucking increased 8.4% year-over-year in August at the same time as discussion has increased about America’s shortage of truck drivers. [Native Advertisement] The remaining demand was high-sulfur distillate fuel (HSD), which is a heating fuel in the residential and commercial sectors and a marine fuel when blended to upgrade heavy fuel oil.
U.S. gasoline consumption stalls as higher prices take toll: Kemp (Reuters) - The volume of traffic on U.S. highways has stopped growing, and with it gasoline consumption, as rising prices curb driving behaviour. Traffic volumes in July were 0.3 percent lower than a year earlier, after seasonal adjustments, according to the Federal Highway Administration.Traffic growth has been negative in two months so far this year, the first readings below zero since the start of 2014, ("Traffic volume trends", FHWA, September 2018).Volumes were up by less than 0.3 percent in the three months from May to July compared with the same period a year earlier, down from annual growth of 2-3 percent throughout 2015 and 2016.There has been a correlation between traffic volumes and the cyclical rise and fall in oil and gasoline prices since at least the early 1990s (https://tmsnrt.rs/2MZsg2d).The sharp decline in oil prices between the middle of 2014 and early 2016 provided a tremendous fillip to vehicle use.But as oil prices recovered over the last 30 months, that stimulus has faded and traffic growth has slowed to a crawl.The average cost of gasoline purchased by U.S. motorists surged by more than 55 percent between February 2016 and September 2018. U.S. government data on gasoline consumption shows a similar stabilisation as higher prices encourage motorists to curb their fuel use.Gasoline consumption rose by just 18,000 barrels per day in the first half of 2018 compared with the same period a year earlier, despite strong economic growth and substantial job creation. The U.S. Energy Information Administration predicts consumption will decline by around 10,000 barrels per day this year ("Short-Term Energy Outlook", EIA, September 2018).
U.S. will not tap oil reserve as Iran sanctions loom: Perry (Reuters) - The Trump administration is not considering a release from the U.S. emergency oil stockpile to offset the impact of looming Iran sanctions, and will instead rely on big global producers to keep the market stable, Energy Secretary Rick Perry said on Wednesday. “If you look at the Strategic Petroleum Reserve and you were to introduce it into the market, it has a fairly minor and short-term impact. The numbers I’ve seen do anyway,” Perry told reporters at the Department of Energy, explaining the administration’s thinking. Oil analysts have speculated for months that the Trump administration could tap the U.S. Strategic Petroleum Reserve (SPR) in an effort to tame rising prices ahead of the Nov. 6 midterm elections. High oil prices are a political risk for President Donald Trump and his fellow Republicans. The SPR currently holds about 660 million barrels of mostly sour grade crude in underground caverns in Texas and Louisiana. Under U.S. law, the government can sell up to 30 million barrels of oil, or about the amount of petroleum the United States uses in 36 hours, from the reserve over a number of weeks. Perry said that, while price spikes are possible in the short-term, “I’m comfortable that the world supply can absorb the sanctions that are coming.” Up to 300,000 barrels per day (bpd) of oil could reach markets if Iraq allows it to flow from the Kurdistan region in the north, Perry said. He also said up to an additional 300,000 bpd could soon come to market from an oilfield in the Neutral Zone that Saudi Arabia and Kuwait share, if they come to agreement.
Crude oil tops petrol exports in first half of 2018 - Crude oil took over the top spot in national petroleum exports during the first half of 2018, a spot that was most recently held by hydrocarbon gas liquids, which includes natural gas. According to the U.S. Energy Information Administration, 1.76 million barrels of crude oil were exported per day between January and June, with China importing 376,000 barrels of crude oil per day from the U.S. Other notable importers of American crude were: Canada, 334,000 barrels per day; Italy, 165,000 barrels per day; the United Kingdom, 138,000 barrels per day; the Netherlands, 122,000 barrels per day; and South Korea with 111,000 barrels per day. Hydrocarbon gas liquids, including natural gas, totaled 1.57 million barrels per day exported in the first half of 2018. While being surpassed by crude oil, that figure still represents an increase over the second half of 2017. Canada was the largest importer of American hydrocarbon gas liquids with an estimated 316,000 barrels imported per day. Japan imported just over 200,000 barrels a day, with Mexico importing 136,000 barrels per day and South Korea importing 118,000 barrels per day. The Marcellus and Utica Shale areas of the Appalachian Basin represented 29 percent of the nation's total production of natural gas in July, with the Appalachia region showing the greatest increase in natural gas production since July 2016, more than double the increase of region with the second largest increase.
Crude oil was the largest U.S. petroleum export in the first half of 2018 - Crude oil surpassed hydrocarbon gas liquids (HGL) to become the largest U.S. petroleum export, with 1.8 million barrels per day (b/d) of exports in the first half of 2018. U.S. crude oil exports increased by 787,000 b/d, or almost 80%, from the first half of 2017 to the first half of 2018 and set a new monthly record of 2.2 million b/d in June. Much of this crude oil went to destinations in Asia and Oceania such as China, South Korea, and India. Europe was the second-largest market for U.S. crude oil exports, led by Italy, the United Kingdom, and the Netherlands. Canada was the only major U.S. crude oil export destination where exports decreased, down slightly in the first half of 2018 compared with the same period in 2017. The United States exported 7.3 million barrels per day (b/d) of crude oil and petroleum products in the first half of 2018, the largest amount of crude oil and petroleum product exports ever for the first six months of a year. During this period, exports of crude oil and HGL set record monthly highs. U.S. exports of crude oil, HGLs, and motor gasoline grew in the first half of 2018 compared with the same period in 2017, while distillate exports decreased. HGLs—including propane, ethane, butanes, and natural gasoline—were the second-largest petroleum export from the United States in the first half of 2018 at 1.6 million b/d. As with crude oil, destinations in Asia and Oceania such as Japan, South Korea, China, and India were also the primary recipients of U.S. HGLs. These countries have expanded petrochemical facilities that import U.S. HGLs as a feedstock. Overall U.S. HGL exports set a new monthly record at 1.7 million b/d in May. In the first half of 2018, the United States exported 1.3 million b/d of distillate, primarily to destinations in Central and South America. The decline in U.S. distillate exports in the first half of 2018 compared with the first half of 2017 was mostly the result of lower exports to a number of destinations in Central and South America and in Europe. However, U.S. distillate exports are typically higher in the second half of the year. Compared with other petroleum exports, U.S. distillate exports go to the most destinations: 49 different destinations received at least 1,000 b/d of U.S. distillate in the first half of 2018.
U.S. shale on track to deliver 1.5 million bbl/d oil growth in 2018 - Tight oil production in the United States has been growing steadily over the past years, and the volumes from horizontal wells are projected to reach over 8 million bbl/d by the end of next year. This article examines the fundamental drivers behind this growth: well performance improvements and breakeven price trends, focusing on the top U.S. oil plays. Figure 1 shows historical and forecasted U.S. light oil production from horizontal wells by month and life cycle. Reporting visibility is sufficient until June 2018, while production growth is estimated for the subsequent months based on expected well performance and drilling and completion activity trends. As of June 2018, U.S. shale light oil production has increased by 1.85 million bbl/d year-over-year. The current activity levels are sufficient to achieve additional growth of 0.5 million bbl/d between June and December 2018. Moreover, the current inventory of drilled uncompleted wells secures production growth through the end of the year, while strong contribution from new drilling is needed from the first half of 2019. The Permian Basin tight oil plays, both on the Delaware and Midland side, show the highest additions since 2016, while the more mature Bakken and Eagle Ford shale plays show stable production profiles. Total U.S. shale light oil production from horizontal wells is estimated to reach 8.3 million bbl/d by December 2019, 1.5 million bbl/d higher than the current level. Figure 2 depicts the development in average 30-day production rate for horizontal wells during 2015-2018 for key U.S. shale basins: Bakken, Permian, Eagle Ford, DJ Basin, and Mid-Continent. The values are based on well-by-well reported production data, and thus the well results for 2018 are subject to change based on more production data becoming available as we progress through the year. Since 2015, we have seen a notable increase in well performance across all major shale plays. U.S. shale producers transitioned to drilling longer laterals, enhanced completion techniques (e.g. increased average proppant loading per perforated lateral foot) and focused more of the activity in the core areas of the acreage. In our selection, Bakken stands out as the play that exhibited the highest IP rates historically and so far in 2018.
OPEC Believes US Shale Boom Won’t Last Long -- OPEC is predicting that competition with the U.S. will drop significantly in less than five years, allowing members of the world’s largest oil cartel to keep dominating the market. During a meeting in Algiers, Algeria, members of the Organization of the Petroleum Exporting Countries (OPEC) predicted Sunday that U.S. shale growth would “slow significantly” after 2023, triggering renewed demand for their own oil. OPEC, according to The Wall Street Journal, expects U.S. output to top off at 14.3 million barrels a day around 2027 and then drop to an average of 12.1 million barrels a day by 2040. The oil cartel predicted in a report published Sunday global appetite for OPEC oil will grow as American supply steadily declines. “Thereafter, a gradual decline in non-OPEC liquids supply, coupled with moderate, but sustained global demand growth, leads to a steady increase in demand for OPEC crude, which rises to nearly 40 million barrels a day by 2040,” the report forecasted. The cartel, however, also acknowledged how explosive growth in the U.S. has currently upended the global market. “Declining demand for OPEC crude is a result of strong non-OPEC supply in the 2017–2023 period, most notably from U.S. tight oil,” OPEC said of its long-term outlook. “The U.S. remains by far the most important source of medium-term supply growth, contributing … two-thirds of new supply, driven by surging tight oil output.” American oil producers have experienced unprecedented growth in recent years, largely thanks to the implementation of hydraulic fracturing, which has unlocked fossil fuel reserves long believed as uneconomical to extract. The U.S. has now surpassed both Saudi Arabia and Russia in becoming the world’s largest producer of crude oil. However, this has not shielded U.S. consumers from OPEC’s manipulation of oil price. In a coordinated effort to keep prices up in the face of strong U.S. output, OPEC has worked to keep production low.
OPEC Sees Competition With U.S. Shale Oil Subsiding After 2023 - —U.S. shale oil production will peak by the late 2020s, triggering renewed demand for OPEC crude after an expected decline and stagnation, the oil cartel said Sunday. In its latest forecast on the global oil landscape, the Organization of the Petroleum Exporting Countries said it expects U.S. shale growth to “slow significantly” after 2023, before peaking at 14.3 million barrels a day between 2027 and 2028. Output should then fall to an average of 12.1 million barrels a day by 2040, according to OPEC. Shale was largely behind a glut of American oil that flooded the market over four years ago, leading oil prices to fall to $30 a barrel from more than a $100 a barrel in late 2014. In 2018, U.S. shale production is growing faster than it did during the boom years of 2011 to 2014, the International Energy Agency said earlier this year. The IEA has forecast that U.S. shale oil production will plateau in the late 2020s, while total non-OPEC production should decline. OPEC projects that “the strongest annual increases are seen in the near-term, in which total U.S. tight oil increases by an average of 1.4 million barrels a day” annually from this year to 2020. The world’s appetite for OPEC crude, meanwhile, should fall to 31.6 million barrels a day in 2023, compared with 32.6 million barrels a day in 2017, before again rising to current levels when U.S. shale supply peaks, the cartel said. “Thereafter, a gradual decline in non-OPEC liquids supply, coupled with moderate, but sustained global demand growth, leads to a steady increase in demand for OPEC crude, which rises to nearly 40 million barrels a day by 2040,” the OPEC report noted. More broadly, OPEC on Sunday also said it expects global demand for oil to increase by an average of 1.2 million barrels a day in the medium-term, reaching 104.5 million barrels a day by 2023. But the cartel said it expects growth to “decelerate over time,” reaching 111.7 million barrels a day in 2040. That’s up from its forecast last year for 2040 of demand of roughly 107.5 million barrels a day. The cartel has said it doesn’t expect global demand for oil to peak before 2040. That’s largely in line with the forecast of the International Energy Agency, which has argued that global oil demand will grow slowly past 2040. However some international oil majors, including Royal Dutch Shell PLC and Norway’s Equinor, predict demand could reach its high as soon as 2025 or 2030.
Analysis: SoCal Gas system restrictions could lead to winter price spikes — The Southern California Gas Company's system has been heavily restricted all summer and continues to cause price volatility in Southern California. The volatility is likely to continue this winter if capacity restrictions continue along with the lower-than-normal levels of gas in storage in the region, according to S&P Global Platts Analytics. Recent notifications have impacted both the short-term and longer-term dynamics of the system. Not only has SoCal Gas announced the Aliso Canyon storage facility will limit injections this week due to full inventories, but it has also implemented further Southern Zone restrictions that will limit flows through the zone by an additional 156 MMcf/d. In early July, the California Public Utilities Commission allowed SoCal Gas to increase the Aliso Canyon storage field's working gas capacity by 10 Bcf, bringing the facility's total capacity to 34 Bcf. Platts Analytics expects SoCal Gas in storage will enter the winter season close to its total capacity of 84 Bcf. Prior to the leak at the facility from October 2015 to February 2016, the Aliso Canyon field by itself had a working gas capacity of 86 Bcf and was the largest storage facility in the US Energy Information Administration's Pacific region. This winter, storage inventories will be roughly 17 Bcf more than the start of last winter. Despite levels being slightly higher year over year, current pipeline receipt capacity is about 600 MMcf/d below what it was entering last winter. This will cause SoCal Gas -- if no changes occur to the current restrictions -- to rely much more heavily on storage withdrawals through the winter in order to meet on-system demand, which has averaged 2.8 Bcf/d over the last five years. SoCal Gas' restriction on the Southern Zone line 2001, which will cut capacity in the zone by an additional 156 MMcf/d, is slated to end on October 3. Total Southern Zone capacity was previously limited to 729 MMcf/d and the additional restriction reduces total capacity to 572 MMcf/d. SoCal Gas cited "necessary remediation due to safety related conditions" for the restriction. Current flows through the Southern Zone have averaged 760 MMcf/d this September prior to the restriction. Volatile prices can be expected to continue through October 3, especially if on-system demand reaches more than 2.3 Bcf/d, which is the current pipeline receipt capacity on the SoCal Gas system.
Canada ordered to fix spill plan for Washington state oil line - The Canadian government as owner of the Trans Mountain Pipeline has been ordered to correct deficiencies in the oil spill contingency plan for a 64-mile crude oil pipeline on Puget Sound in Washington state, Kallanish Energy reports. The order came Monday from the Washington Department of Ecology. “We expect Canada to adhere to the high standards Washington has worked so hard to achieve that protect our environment, economy and the health of our communities,” said state spokesman Dale Jensen, in a statement. Trans Mountain Corp., a newly formed Crown corporation, said it will respond in a timely way, The Canadian Press reported. Ottawa is involved because the federal government paid C$4.5 billion ($3.45 billion) to Kinder Morgan to purchase the Trans Mountain Pipeline that runs from Edmonton, Alberta, to Burnaby, British Columbia. The Puget Sound leg of the pipeline transports crude oil to four refineries in Washington state. It has been in service since the 1950s. In 2017, the pipeline moved 2.6 billion gallons of crude oil in Washington state, moving 180,000 barrels per day. The state regulatory agency said the Canadian government must correct “deficiencies in critical areas” of the oil spill contingency plan. The pipeline operator, Trans Mountain Pipeline (Puget Sound) LLC had submitted a plan to the state for review. The state agency has given the company and Ottawa 60 days to provide more information on topics including endangered killer whales, salmon and other natural resources that could be harmed by oil spills. It also wants the parties to detail how each would respond to a spill of heavy oils that may sink to the seafloor, initial steps that would be taken after a spill is discovered and procedures to notify emergency contacts after a spill occurs.
Prices Surge On Bullish Physical Pipeline Data And Low Storage Levels - Kyle Cooper - Highlights of the Natural Gas Summary and Outlook for the week ending September 21, 2018 follow. The full report is available at the link below.
- Price Action: The October surged 21.0 cents (7.6%) to $2.978 on a 21.9 cent range ($2.991/$2.772).
- Price Outlook: Prices surged despite a larger than expected EIA storage injection as physical data turned very bullish and suggested a very low injection next week. While some of the increase was power related as nuclear output fell, there was also a longer term structural component that has longer lasting bullish implications. . CFTC data indicated a (25,024)contract reduction in the managed money net long position as longs liquidated and shorts added. This is the lowest long position since January 5, 2016. This is the largest short position since July 31, 2018 . Total open interest rose 83,522 to 3.937 million as of September 18. Aggregated CME futures open interest fell to 1.650 million as of September 21. The current weather forecast is now cooler than 6 of the last 10 years. Pipeline data indicates total flows to Cheniere’s export facility were at 3.0 bcf. Cove Point is net exporting 0.0 bcf.
- Weekly Storage: US working gas storage for the week ending September 14 indicated an injection of +86 bcf. Working gas inventories rose to 2,722 bcf. Current inventories fall (686) bcf (-20.1%) below last year and fall (575) bcf (-17.4%) below the 5-year average.
- Supply Trends: Total supply fell (0.3)bcf/d to 79.8 bcf/d. US production rose. Canadian imports fell. LNG imports fell. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (2). Oil activity decreased (1). Natural gas activity was unchanged +0. The total US rig count now stands at 1,053 .The Canadian rig count fell (29) to 197. Thus, the total North American rig count fell (31) to 1,250 and now exceeds last year by +95. The higher efficiency US horizontal rig count fell (2) to 919 and rises +129 above last year.
- Demand Trends: Total demand fell (2.6) bcf/d to +68.0 bcf/d. Power demand fell. Industrial demand rose. Res/Comm demand fell. Electricity demand fell (7,119) gigawatt-hrs to 79,597 which exceeds last year by +4,346 (5.8%) and exceeds the 5-year average by 722 (0.9%%).
The cooling season is now entering its final stretch. With a forecast through October 5 the 2018 total cooling index is at 5,568 compared to 4,779 for 2017, 5,483 for 2016, 4,322 for 2015, 3,420 for 2014, 4,807 for 2013, 7,205 for 2012 and 6,706 for 2011.
Shell CEO Considers New Natural-Gas Bet – WSJ -- Shortly after Ben van Beurden took over as chief executive of Royal Dutch Shell, he bet the company on natural gas, with a roughly $50 billion takeover of rival BG Group PLC and its global LNG business, focused on shipping the fuel around the globe.The acquisition, made at the depths of an energy price crash in early 2016, made Shell the world’s dominant competitor in LNG, and gave it a big position in the nascent business of delivering U.S. shale gas overseas. Now he is preparing to double down. Mr. van Beurden said Tuesday that a consortium led by the Anglo-Dutch energy giant will decide before year-end whether to move forward with a $30 billion, liquefied-natural-gas export terminal in western Canada. “We postponed the decision previously when the project wasn’t ready in terms of economic fortunes,” he told The Wall Street Journal on the sidelines of the Oil and Gas Climate Initiative’s meeting in New York. “But there are only so many times you can postpone and recycle and revisit. The moment of truth will come in the next few months.” The export terminal is intended to gather cheap natural gas extracted from remote parts of western Canada, chill it to liquid form known as LNG and load the fuel into special tankers to transport it to Asia where it fetches much higher prices. Shell holds the largest stake in the project alongside partners PetroChina , Mitsubishi Corp. of Japan, Korea Gas Corp. and Malaysia’s Petroliam Nasional Bhd. .The Canadian LNG project could take five years to construct should the consortium move forward with its final investment decision, Mr. van Beurden said. President Trump’s trade wars are having unintended consequences on another of Shell’s gas plays, however. Steel bound for a multibillion-dollar petrochemical plant that Shell is building outside of Pittsburgh was held by U.S. Customs and Border Protection at a California port in June after quotas for Brazilian steel were filled. Shell only received the steel recently after getting Mr. Trump to sign a presidential proclamation ordering the shipment released. The Pennsylvania chemical complex, which converts ethane extracted from the nearby Marcellus and Utica shales into polyethylene, a component of plastics, is ahead of schedule and within budget, Mr. van Beurden said. But there could be lengthy delays and added costs if steel parts ordered years ago are unable to be delivered. “It’s not fatal but it is something that can really disrupt the flow of construction and the continuity of employment and it can bring significant costs in the project itself if it is not managed properly,” he said.
Natural Gas Surges Past $3 As Traders Focus On Low Storage Levels - We expect a +62 Bcf change in the storage report for the week ended September 21. A storage report of +62 Bcf would compare with +58 Bcf last year and +81 Bcf for the five-year average. It doesn't matter until it matters. That's how one trader described the current natural gas set-up to us. For the natural gas bulls, the breakout above $3/MMBtu came on the heels of lower and lower injection estimates that pushed the natural gas storage forecast for the start of winter heating season to 3.27 Tcf. For the most part of the summer gas trading period, natural gas traders ignore the low EOS as elevated production levels kept the market amply supplied, but as one trader quipped to us this week, "It doesn't matter until it matters." Now that the injection season is just six weeks away from ending, natural gas traders are once again reassessing what the low storage means for natural gas fundamentals. For us, the increase in lower 48 production presented a bear case on fundamentals, but following our exit yesterday at the open due to a stop-loss being triggered, traders warned that the market may be re-pricing the trading band once again before the start of heating season. This comes at a time where natural gas storage is expected to finish at 3.27 Tcf at the start of November. And even though lower 48 production is just inches away from breaking above ~85 Bcf/d, the market does not care about that at the moment. Looking ahead, the market is going to become very volatile again with the weather models dominating a large part of the daily moves. For the time being, the ECMWF-EPS long-range outlook shows cooler than normal temperatures across lower 48 by the third week of October. This would give heating demand an early start and suppress natural gas storage builds even more. For now, we are not trading the market and will be waiting on the sidelines. Our current winter gas band is $2.50 to $3.50/MMBtu.
Survey calls for below-average US gas storage build — Analysts expect a natural gas storage injection of 61 Bcf to have been made last week, which would push the deficit versus the five-year average back above 600 Bcf as the typically larger builds of the shoulder season are not showing up this year. According to a survey of analysts by S&P Global Platts, the US Energy Information Administration is expected to report the 61 Bcf build on Thursday morning for the week ended September 21. Responses to the survey ranged from builds of 55 Bcf to 71 Bcf. A 61 Bcf injection would be less than the 64 Bcf build in the corresponding week last year and less than the five-year average build of 81 Bcf. S&P Global Platts Analytics forecast larger builds over the next two weeks, but they still measure at or below the five-year average as only about seven more injections remain before the flip to withdrawal season. An injection within analysts' expectations of 61 Bcf would increase stocks to 2.783 Tcf. The deficit versus the five-year average would expand to 606 Bcf while the deficit versus last year would increase slightly to 675 Bcf. Warm weather returned after average US temperatures the week prior hit the lowest levels since at least June. The high volatility in temperatures -- particularly during the time of year when people fluctuate between heating and cooling their homes -- makes the offsetting errors in residential and commercial demand and gas-fired power generation difficult to nail down. The week also featured the effects of Hurricane Florence, which adds further difficulty in predicting this week's build as it could lead to an overestimation in demand by up to 300 MMcf/d, according to Platts Analytics. While most storage regions in the US sit below the five-year minimum, north of the border, inventory levels at the Dawn Hub in Ontario are on track to exceed historical maximums as early as mid-October. The arrival of incremental volumes reaching the Dawn Hub, primarily from TransCanada Pipeline Mainline and to some extent from Rover Pipeline and the impending startup of flows on NEXUS Gas Transmission, mean Dawn storage may be on track to not only enter October with higher-than-normal inventories but also to continue to see above-average injections through the end of the injection season.
Natural Gas Price Jumps After Small Storage Addition - The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 46 billion cubic feet for the week ending September 21. Analysts were expecting a storage injection of around 62 billion cubic feet. The five-year average for the week is an injection of 81 billion cubic feet, and last year’s storage increase for the week totaled 58 billion cubic feet. Natural gas inventories rose by 86 billion cubic feet in the week ending September 14. Natural gas futures for November delivery traded up about six cents in advance of the EIA’s report, at around $3.02 per million BTUs, and rose to nearly $3.06 after the report was released. For the period between September 27 and October 3, NatGasWeather.com predicts “moderate” demand and offers the following outlook: High pressure will dominate the West and Southeast with highs of 80s and 90s. A cool front extends from the east-central US to the South, with heavy showers. A stronger cool front will push into the north-central US the next few days with lows of 30s and 40s, locally 20s. Much of the US will return above normal next week with highs of 80s to lower 90s over the southern US and upper 60s to lower 80s across the northern US. Locally cooler exceptions next week will be near the Canadian border. Earlier this week the EIA reported that U.S. energy-related carbon dioxide emissions fell by 0.9% last year. That’s a drop of 476 million metric tons, from 5,189 million in 2016 to 5,142 million in 2017. The agency attributed the decline to a 1.1% drop in the carbon intensity of the nation’s energy supply, a 2% decline in energy intensity, and a 3.1% decline in overall carbon intensity of the U.S. economy. Carbon dioxide emissions have declined for seven of the past 10 years, and energy-related carbon dioxide emissions are now 14% below 2005 levels. Total U.S. stockpiles dipped week over week to 20% below last year’s level and fell to 18.3% below the five-year average. The EIA reported that U.S. working stocks of natural gas totaled about 2.768 trillion cubic feet at the end of last week, around 621 billion below the five-year average of 3.389 trillion cubic feet and 690 billion below last year’s total for the same period. Working gas in storage totaled 3.458 trillion cubic feet for the same period a year ago.
U.S. Rig Count Steady as Natural Gas Drilling Activity on the Rise -- The U.S. natural gas rig count climbed three units to 189 for the week ended Friday (Sept. 28) as a decline in oil drilling kept the overall domestic count steady, according to data from Baker Hughes, a GE Company (BHGE).The United States ended the week with 1,054 total rigs, with the three natural gas rigs that returned to the patch offsetting the exit of three oil rigs. The addition of one “miscellaneous” rig helped tip the balance, leaving the domestic tally up one unit week/week and up 114 rigs from 940 running a year ago.Three horizontal units were added to offset the loss of two vertical rigs. Land drilling saw a small net gain for the week as activity held steady in the Gulf of Mexico, which finished with 18 rigs (down from 22 a year ago).Canada’s rig count, meanwhile, saw a sharp decrease for the second straight week, falling by 19 units (13 oil and six gas) to 178, down from 213 active rigs in the year-ago period. The combined North American rig count ended the week at 1,232 rigs, versus 1,153 rigs a year ago, according to BHGE. Among plays, BHGE’s latest weekly report saw the prior week’s declines in the Cana Woodford quickly reverse, as the Oklahoma play picked up seven rigs to end at 67, beating its year-ago tally of 62. A detailed breakout of BHGE data by NGI’s Shale Daily shows the STACK (aka, the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) picking up six rigs, and the SCOOP (South Central Oklahoma Oil Province) added one rig for the week. Also among plays, the Haynesville Shale added two rigs to make it an even 50 (up from 44 a year ago), while the Denver Julesburg-Niobrara and Ardmore Woodford added a rig a piece. The Permian Basin -- the most active U.S. onshore play by far but also one dealing with some nasty basis differentials this shoulder season -- saw two rigs pack up for the week, dropping its count to 486 (385 a year ago). The Granite Wash dropped one rig to finish flat year/year at 13.
The Next Cycle of LNG Investments Is Set to Start - Royal Dutch Shell Plc and its partners are set to announce a final investment decision on their C$40 billion ($31 billion) liquefied natural gas terminal in western Canada as early as next week, Bloomberg reported Wednesday. This would be the first FID for a greenfield, onshore project since Corpus Christi LNG in May 2015, according to Fauziah Marzuki, an analyst at Bloomberg NEF. “We think 2019 could be the biggest year of LNG FIDs ever,” Nicholas Browne, an analyst with Wood Mackenzie Ltd., said by email. The decision may be the start of a wave of investments for major gas export projects after a supply glut and a price collapse forced the three-year hiatus. Booming demand growth means that 11 projects, including LNG Canada, are likely to receive FID by the end of 2019, according to BNEF. “The sanctioning of LNG Canada would mark a potential turning point in the LNG market, signaling the industry’s appetite to invest has returned,” Saul Kavonic, Credit Suisse Group AG’s director of Asia energy research, said by email. “Even new large scale greenfield projects are back on the agenda, after a dearth of project FIDs over the last few years.” LNG Canada’s decision was put off twice in 2016, but the outlook for LNG has brightened. Demand is expected to grow rapidly due to an uptick in consumption from Asian nations, led by China. The market, which had been oversupplied for the last few years, is seen flipping to a deficit as soon as 2022 absent new projects, according to Sanford C. Bernstein & Co. The LNG Canada investors -- Shell, Mitsubishi Corp., Malaysia’s Petroliam Nasional Bhd., PetroChina Co. and Korea Gas Corp. -- are set to make a final decision soon, and preparations are underway for an Oct. 5 announcement and event in Kitimat, British Columbia, the site of the proposed project, said people with direct knowledge of the activities, who asked not to be identified.
Is LNG impacted by the trade war? --- CNBC–video interview -- Chinese and American tariffs haven't made an impact yet but supply side issues are more of a problem, explains Janet Kong of BP.
Canadian Shale Is Hitting The Wall - Plunging Canadian prices have been depressing oil producers’ realized prices and revenues, even though the U.S. benchmark and the international Brent Crude prices have rallied year to date.But it’s not only oil sands producers that have been coping with wide price differentials between Canadian crude oil prices and WTI this year.Canada’s shale drillers have also started to face widening differentials between the Canadian benchmark for light oil delivered at Edmonton and WTI, due to—unsurprisingly—insufficient pipeline infrastructure to transport the light oil to the market.The Edmonton sweet crude discount to WTI slumped to US$16 a barrel earlier this month—the widest spread since Bloomberg began compiling the data in June 2014.Not that Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta—has been doing any better. The WCS discount to WTI has been more than US$20 this year, and even US$30 at one point. This resulted in Canada Natural Resources saying in early August that it was allocating capital to lighter oil drilling and is curtailing heavy oil production as the price of Canadian heavy oil tumbled to a nearly five-year-low relative to the U.S. benchmark price.Higher oil prices this year have encouraged more Canadian light tight oil and condensate drilling and production, but takeaway capacity—the weakest link of Canada’s oil industry—is maxed and has already started to affect the realized prices of shale drillers, similar to the widening discount for Midland crude from the Permian in the United States.To be sure, Canadian shale producers are still making money, even with a wider discount, because WTI is now at $70 a barrel, analysts tell Bloomberg. Yet, signs have begun to emerge that a glut has started to pile up, as shale and condensate production has been growing when pipeline infrastructure has not.
'Dumbest Policy in the World': Report Details How Canada's Massive Fossil Fuel Subsidies Undermine Climate Action - "What's the dumbest policy in the world? Public cash for oil and gas!"That's according to Patrick DeRochie, Climate & Energy program manager for the Canadian group Environmental Defence, who wrote Monday about a new report that aims to shed light on the Canadian government's hundreds of millions dollars in subsidies to the fossil fuel industry."Actually, the final figure is likely much higher, but a lack of transparency from the federal government makes many subsidies to climate polluters difficult to quantify," DeRochie added, calling on the Canadian government to disclose just how much it's doling out to polluters. Public Cash for Oil and Gas (pdf), produced by the #StopFundingFossils coalition—which includes the International Institute for Sustainable Development (IISD), Environmental Defence, Climate Action Network, Équiterre, and Oil Change International—emphasizes that Canada's "handouts" of taxpayer money to oil and gas producers "undermine" actions that aim to address the human-caused global climate criss. Pointing to "strong evidence that the federal government's plan to meet Canada's 2030 climate target is 'highly inefficient' (Climate Action Tracker, 2018), necessitating greater efforts in the oil and gas sector," the report explains: On the supply side, fossil fuel companies are most likely to react to international market price signals, such as the current upward trend in the value of WCS, and to the option to claim deductions of several of their current and past expenses now and in the future as long as their activities are profitable. Subsidies serve to promote the production of fuels at the same time that carbon pricing and climate action programs and policies are designed to reduce demand. To put it another way, combining carbon pricing and fossil fuel subsidies is like trying to bail water out of a leaky boat. If you don't fix the leak (the subsidies) you are never going to fix the problem (growing GHG emissions from the oil and gas sector. While the report details hundreds of millions of dollars in tax breaks, fiscals supports, and direct grants for oil and gas production, it does not include the government's recent—and widely ridiculed—purchase of Kinder Morgan's Trans Mountain Pipeline.
Canada orders new regulatory review of Trans Mountain oil pipeline (Reuters) - The Canadian government on Friday directed its National Energy Board (NEB) regulator to conduct a new review of its application to nearly triple the capacity of the Trans Mountain oil pipeline, taking into account the impact of additional marine traffic. Expansion of the pipeline, which the government bought last month from Kinder Morgan Canada Ltd, has become a political liability for Prime Minister Justin Trudeau and Alberta Premier Rachel Notley, ahead of federal and provincial elections next year. Delays have frustrated Albertans, prompting Notley to withdraw from Trudeau’s national plan to curb carbon emissions. The NEB must report to cabinet within 22 weeks, Natural Resources Minister Amarjeet Sohi said in Halifax, Nova Scotia. Canada’s Federal Court of Appeal last month overturned the Liberal government’s 2016 approval for expanding the pipeline, which runs from Alberta’s oil heartland to the British Columbia coast. The timeline for the review, stretching to late February 2019, allows the government to potentially restart construction before the expected spring election in Alberta. Sohi declined to say when construction could resume. “We are not focused on election cycles. We are focused on what needs to be done right,” he said. Trans Mountain expansion faces opposition from the British Columbia government, environmental groups and some municipalities and aboriginal communities, who fear the impact of spills and expanding oil production. Canada’s oil producers say the expanded pipeline is critical to addressing bottlenecks that have led to steeply discounted prices for their crude. Sohi said the government would appoint a marine adviser to the NEB, and will ask the regulator to consider its actions to protect killer whales. The government will announce shortly whether it will appeal the appellate court’s decision to Canada’s Supreme Court, and how it will consult indigenous people
First Nations leader suggests moving Trans Mountain pipeline terminal to Delta — The national chief of the Assembly of First Nations says the federal government would find it easier to get the Trans Mountain pipeline built if it moves the route and the marine shipping terminal to avoid Indigenous communities that are oppose the project. Perry Bellegarde said many Indigenous communities believe in the need to diversify export markets for Canadian resources through work to transition to a clean energy economy. However, he acknowledged there are some communities along the coast, notably the Squamish First Nation and the Tsleil-Waututh Nation, that will never support the pipeline, which in its current format affects a marine terminal in the traditional territory of the Tsleil-Waututh, and would bring additional oil tankers through traditional waters of the Squamish. “So why not move (the terminal)? Why don’t you move it to Tsawwassen?” Bellegarde said in a wide-ranging interview Monday with The Canadian Press. “They’re not going to change their mind, so why not find a different outlet? It might take a little longer, but it’s a win-win-win.” Bellegarde said he spoke to chiefs who support of the idea of a terminal near Tsawwassen — but Tsawwassen First Nation Chief Bryce Williams said Monday he is not one of them. His community neither supports the pipeline nor the idea of moving the terminal to land that abuts his community, Williams said. In 2015, Alberta Premier Rachel Notley pushed the idea of the Tsawwassen terminal in Delta, B.C., arguing it might get more local support than the plan to expand the existing Westridge Marine Terminal in Burnaby, B.C. The latter would see another six or seven oil tankers each week try to navigate the tricky Burrard Inlet and Vancouver Harbour, while the Tsawwassen location poses environmental risks from those additional tankers to the Fraser River Estuary.
Pemex Signs Landmark Offshore Deal -- Petróleos Mexicanos (Pemex) and a three-way joint venture (JV) have struck what is reportedly the first pre-unitization agreement (PUA) ever signed in Mexico. The two-year PUA that Pemex signed with the Block 7 Consortium – comprising U.S.-based Talos Energy LLC, Mexico-based Sierra Oil and Gas and UK-based Premier Oil Plc – clears the way for both parties to form a working group of legal and technical personnel, Talos said in a written statement Friday. The working group will share information tied to the JV’s offshore Zama discovery, located in Block 7 in the Southeast Basin in the Bay of Campeche, and Pemex’s neighboring Amoca-Yaxche-03 allocation, the company explained. The PUV “also sets a clear path for the signing of a Unit Agreement and Unit Operating Agreement in the event a shared reservoir is confirmed, as it establishes a defined process based on international practices to determine the resulting participation of each party in the potential overall development,” Talos stated Friday. On its website, Premier describes Zama-1 – drilled in 2017 – as a “world class oil discovery.” According to the company, initial estimates of the gross oil-in-place volumes for the Zama structure range from 1.2 to 1.8 billion barrels and the gross oil-bearing interval in Zama-1 exceeds 1,100 feet (335 meters). In addition, it states that estimated recoverable reserves – including volumes in Pemex’s neighboring block – range from 400 to 800 million barrels.
UK Jails First Environmental Activists in 86 Years Over Fracking Protest --Environmental activists were sentenced to prison Wednesday for their anti-fracking demonstrations in northwest England.Roscoe Blevins, 26, and Richard Roberts, 36, were given 16 months in prison. Richard Loizou, 31, was given 15 months. The three were found guilty of public nuisance offense by a jury in August, The Guardian reported. A fourth protester, Julian Brock, 47, received a 12-month suspended custodial sentence. He pleaded guilty for the same offense at a separate hearing.In July 2017, the four men—also known as the Frack Free Four—climbed on top of trucks carrying drilling equipment in order to block the convoy from entering a fracking site in Lancashire operated by UK shale gas firm Cuadrilla Resources. The men camped on the vehicles for roughly 100 hours between and had supporters aiding them with food, water and blankets.Judge Robert Latham of Preston Crown Court ruled that the protests "caused costs and disruption" to Cuadrilla "but their other victims were the many members of public who were nothing to do with Cuadrilla," according to the BBC.While the judge noted that environmental matters are to be taken seriously, he believes that the men "provide a risk of re-offending.""Each of them remains motivated by unswerving confidence that they are right. Even at their trial they felt justified by their actions," he said. "Given the disruption caused in this case, only immediate custody can achieve sufficient punishment." The men are likely the first environmental activists in 86 years to receive jail sentences, the Guardian reported. Back in 1932, five men were jailed for their part in the mass trespass of Kinder Scout in Derbyshire over their "right to roam" on private land.
Fracking protesters saw public as collateral damage, says judge -- Three protesters jailed for causing “significant” disruption when they clambered on to lorries during a four-day protest outside a fracking site saw members of the public as “collateral damage”, a judge said.Judge Robert Altham told Simon Blevins, 26, from Sheffield; Richard Roberts, 36, from Putney, London; and Rich Loizou, 31, originally from Devon, they remained “motivated by unswerving confidence that they are right” about the perils of fracking.He explained he could not suspend the 16-month jail terms for Blevins and Roberts, and the 15–month sentence for Loizou, because the length of their stand-offs with police at Preston New Road in Little Plumpton, Lancashire, had “vastly increased” their culpability and the harm caused.They were all convicted by a jury of causing a public nuisance but a fourth defendant, Julian Brock, 47, from Torquay, did walk free from court after he pleaded guilty at an earlier hearing to the same offence and received a 12-month jail term, suspended for 18 months.The protest cost energy firm Cuadrilla an estimated £50,000 but the judge said it heavily impacted on local residents and businesses who depended on using the surrounding busy main road.Jailing the trio at Preston Crown Court, he said: “In this case the defendants caused costs and disruption to Cuadrilla but their other victims were the many members of public who were nothing to do with Cuadrilla… and were viewed by these defendants as necessary and justified collateral damage.”
Jailed anti-fracking activists release defiant video message --Three environmental activists jailed for their part in an anti-fracking protest have released a video message promising they will win the battle against fracking.The men became the first to receive a custodial sentence for environmental protests against shale gas extraction this week. Simon Roscoe Blevins, 26, and Richard Roberts, 36, were given 16 months in prison and Richard Loizou, 31, was sentenced to 15 months in jail on Wednesday after being convicted of causing a public nuisance by a jury at Preston crown court in August.In a message that has been released as the men wait in Preston prison to be moved to jails elsewhere in the country, Loizou said he would miss everything about his life outside while serving his sentence. But he added: “I think we will win, because this is a last-ditch attempt to squeeze the remaining fossil fuels from the earth. It is like industry clinging on to an old paradigm of the way things operate.” In the message, Roberts recounted his part in a four-day protest that blocked a convoy of trucks carrying drilling equipment from entering the Preston New Road fracking site near Blackpool. He said he was wearing shorts and a T-shirt when he climbed on to a truck, where he remained for four days. “The only reason I was able to stay up there for three days and nights was because local people handed up clothing, sleeping bags, food…”
German industry defends Nord Stream 2 gas pipeline Business --The Federation of German Industry (BDI) on Monday defended the controversial Nord Stream 2 project that will expand Russia's natural gas supplies to Germany while bypassing Poland and Ukraine.In July, US President Donald Trump accused Germany of being a "captive" of Russia due to its energy reliance and urged Berlin to halt work on the $11 billion (€9.4 billion), Russian-led gas pipeline to be built in the Baltic Sea."I have a big problem with a third country interfering in our energy policy," BDI President Dieter Kempf told the German daily Süddeutsche Zeitung on Monday, adding that establishing a link between dropping the project and buying US liquefied gas instead was unacceptable."German industry needs Nord Stream 2 to enhance energy supply safety," Kempf argued, saying that liquefied gas from the US was not competitive on the German market right now and would simply cost too much. German business leaders have frequently rejected charges of their country being too dependent on Russian energy. Kempf said Germany was open to diversifying its sources, but added that purchases "would ultimately be determined on economic grounds."Despite the current row, US companies said earlier this month they expected to begin delivering liquefied natural gas (LNG) to Germany in four years at the latest and would challenge Russia which now accounts for 60 percent of German gas imports. "US liquefied natural gas is coming to Germany — the question is not if, but when," Deputy US Energy Secretary Dan Brouilette told Germany's Bild newspaper in mid-September.
Analysis: Yamal LNG cargoes set to stay in Europe on high hub prices, firm shipping rates— LNG produced from Russia's Yamal LNG project look set to stay in Europe in the short term on the back of high European natural gas hub pricing allied to firmer shipping rates due to tight Atlantic tonnage, an analysis by S&P Global Platts Analytics showed. The key NBP October contract broke above the $10/MMBtu mark on Monday, the first time the rolling month-ahead contract had done so since March 2014, Platts data showed, slightly more than $1/MMBtu below the JKM November period. Atlantic basin spot shipping rates jumped at the end of last week, rising to $110,000/day in the Atlantic, as assessed by Platts, having been at $45,000/day this summer, making transporting LNG volumes from Europe to Asian markets much more expensive for players without sunk shipping costs. That was the highest the Atlantic shipping rate has been assessed since it hit similar levels in September 2013. With rates that high, delivery costs into Northeast Asia from Northwest Europe transshipment or reload ports have been hovering around the $3.50/MMBtu mark. Yamal project vessels are also unable to deliver further than the Spanish port of Bilbao when the North Sea Route is closed in the winter, increasing the likelihood that cargoes could remain in Europe. However, Yamal volumes could face competition from other Atlantic production for as long as the arbitrage to Northeast Asia remains closed. At current shipping rates, the netback for deliveries from Nigeria into the UK's NBP November contract stood at $9.341/MMBtu, while the netback against November JKM was $8.30/MMBtu, making deliveries into Northwest Europe more attractive.
Gina Rinehart-backed Lakes Oil loses bid to have Victorian fracking ban overturned A company part-owned by Australian mining magnate Gina Rinehart has failed to have the Victorian government’s fracking ban overturned or to be awarded $2.7bn in damages. Between 2002 and 2013 two subsidiaries of Lakes Oil, of which Rinehart is the second-largest shareholder, obtained four exploration permits and two retention leases under Victoria’s Petroleum Act 1998. A retention lease grants the right to any petroleum discovered during the permit period. Some of the petroleum exploration intended by the Lakes Oil involved hydraulic fracking, a technique used to extract unconventional gas found in coal seams, shales and tight sandstones. The companies also planned to explore for conventional gas. In August 2012 the Victorian government announced a moratorium on hydraulic fracking with immediate effect, and this was implemented through government policy rather than through changes to the Petroleum Act. But in 2014 the government widened the moratorium to include conventional onshore exploration, and in 2017 amended the Petroleum Act to enforce the ban to 2020. Lakes Oil argued that the fracking ban did not prevent its subsidiaries from carrying out minimum work requirements to prepare for fracking once the moratorium was lifted. The permits applied to sites in south-western Victoria and Gippsland. Lakes Oil also argued the government’s moratorium before the 2017 legislative change was unlawful. The government should not have pre-emptively refused to consider or accept operation plans for petroleum gas exploration from Lakes Oil before the legislation had taken effect, the company argued. In its 2017 Annual Report, Lakes Oil asserted that the then resources minister was “with one hand, granting exclusive rights and obligations to carry out exploration operations but, with his other hand, taking away the means of doing so”. The damages Lakes Oil sought included $92m in past expenditure at the sites and $2.6bn of lost future earnings. But on Friday afternoon in Victoria’s supreme court Justice Cameron Macaulay rejected Lakes Oil’s claims. He found the legislation banned all petroleum exploration work, including preparatory work.
Charges laid over Darwin oil spill -- Charges have been laid against the master and the owners of a cargo ship, which is alleged to have spilled oil into Darwin Harbour in 2016. The Department of Environment and Natural Resources says the legal action follows a complex, two-year investigation of the incident which resulted in a large spill of heavy, dark fuel oil. The master of the cargo ship Antung has been charged with two counts of discharging oil into coastal waters, with failing to notify authorities and with failing to record the event in the oil record book. The owners of the vessel face two counts of discharging oil. "We will allege that the master and owners of the Antung caused or permitted oil to be discharged into Darwin Harbour as it was departing East Arm Wharf," the department’s director of environmental operations Peter Vasel said in a statement on Thursday. "In line with expert evidence no other vessel could have been responsible for the oil spill into Darwin Harbour on this particular day, and this will be laid out further in the Northern Territory Local Court." The department said the parts of the environment exposed to the oil included mangroves, intertidal mudflats and coastal zones that provided habitat for various marine and bird species such as turtles, mud crabs, spawning fish and the critically endangered Far Eastern Curlew.
Shell CEO says $80 oil supports energy infrastructure investment, even as steel quotas raise costs -- The Trump administration's steel quotas present a challenge to building new oil and gas infrastructure in the United States, but rising crude prices help fuel investment, Royal Dutch Shell CEO Ben van Beurden tells CNBC.International benchmark Brent crude hit a nearly four-year high above $81 a barrel on Monday as the market braces for U.S. sanctions on Iran that threaten to wipe about 1 million barrels a day off the market. Brent's multiyear high came after OPEC, Russia and other oil producers declined to boost output to tackle rising prices. While van Beurden says the market is not running out of oil, he believes supplies are getting tight as crude stockpiles fall to normal levels after several years of oversupply and as oil producers get closer to pumping at maximum capacity. Oil buyers typically lament rising prices, but van Beurden says $80 oil is not "unreasonable" and could benefit the market in the long run. "I think we need to have slightly elevated prices, to bring new supply on, which is going to be the main challenge," van Beurden said in an interview with CNBC's Brian Sullivan."We should be able to balance the market at that sort of oil price level, but of course bringing on new production is not a short-term event," he said. "It takes years to bring on new production."Energy companies sharply pulled back capital spending in recent years during a prolonged oil price downturn. The lack of investment has raised concerns about supply shortfalls that will lead to another cycle of boom and bust for oil prices.Van Beurden said the Trump administration's decision to impose tariffs on steel and aluminum imports are "generally not a good thing." According to the CEO, quotas limiting imports of steel from Brazil, South Korea and Argentina are beginning to impede some of Shell's construction projects in the United States. However, he said the trade barriers have not forced Shell to cancel any future investments yet.
$11 Trillion Needed in Oil Sector to 2040 - In the period to 2040, the required global oil sector investment is estimated at $11 trillion. That’s according to the latest OPEC World Oil Outlook report, which was launched on September 23 in Algiers, Algeria. The report outlines that total required upstream capital expenditure related to oil amounts to $8.3 trillion. It is projected that downstream capacity additions will require another $1.5 trillion and midstream investments will require another $1 trillion of investment globally, according to the report. “Given the demand and supply outlook, there is evidently the need for significant investments across the entire industry,” Mohammad Sanusi Barkindo, OPEC secretary general, said in the report’s foreword. “While investments picked up slightly in 2017 compared to the previous two years, and the expectations are for higher levels again in 2018, it is vital that as an industry we ensure there is timely and adequate investment so as not to lead to a supply shortage in the future,” he added. Oil is expected to remain the fuel with the largest share in the energy mix throughout the forecast period to 2040, according to the report, which highlighted that there is no expectation for peak oil demand over the period. The report also outlined that demand for OPEC crude is projected to increase from 32 million barrels per day (MMbpd) in 2018 to around 40MMbpd in 2040 and that long-term oil demand has been revised upward for the second consecutive year, with total demand at over 111.7MMbpd in 2040.
Asia's Oil Market Torrid Amid Iran Sanctions and Mega-Refineries (Bloomberg) -- When the Navarin, an oil supertanker carrying 2 million barrels of Middle East crude, docks at the Malaysian port of Pengerang on Monday, the arrival will signal the start of a torrid time for Asia's oil market. The ship is delivering the first cargo to a new mega-refinery, one of three scheduled to come on line in the region in the next few months. They'll add a total of 1.1 million barrels a day of processing capacity, enough to swallow the entire output of OPEC member Libya. The extra demand comes just as physical oil supplies are made scarcer by U.S. sanctions on Iran. "Refiners will have to buy whatever crude they can get their hands on," The first plant to start up is the 300,000 barrel-a-day Refinery and Petrochemicals Integrated Development, or Rapid, a venture between the state-owned companies of Saudi Arabia and Malaysia in Pengerang, less than 15 miles from Singapore. Rapid will be followed by two giant 400,000 barrel-a-day projects in China: Rongsheng Petro Chemical Co.'s plant in Zhejiang, and the Hengli Petrochemical Co.'s refinery in Dalian. The two refineries will come online between the first and second quarters of next year. All three refineries have started buying crude, both under long-term contracts and on the spot market, traders familiar with the matter said, asking not to be named because the information isn't public. In the process, they're helping to send premiums for low-quality, highly sulfurous oil -- known as heavy, sour crude -- in Asia sharply higher. It's exactly the type of oil Iran had supplied in abundance. On top of the new refiners, the Asian market is already contending with a plant that just came on-stream over the last few weeks after several delays: the 200,000 barrel-a-day Nghi Son Refinery and Petrochemical facility in Vietnam. The refinery is consuming a diet of mostly Kuwaiti crude. As oil refiners from India to South Korea scramble to find alternative supplies to Iranian crude, they are pushing up the prices of crudes that can substitute for lost shipments. For many in the physical trade in Asia, the regional market is on fire.
South Korea's Iranian crude imports tumble in August but more US barrels arrive— South Korea's crude oil imports from Iran tumbled in August with the November deadline for US sanctions on Tehran approaching fast, while shipments from the US and Algeria rose sharply as Seoul continues to seek alternative sources, industry officials said Thursday. Asia's fourth-biggest energy consumer has imported 2 million barrels of crude from Iran last month, down 84.2% from 12.63 million barrels received a year ago, latest data from state-run Korea National Oil Corp. showed.This marks the 10th consecutive decline since November last year when imports from Iran fell 26.8% year on year to 10.37 million barrels. The August imports were also down 67.7% from 6.2 million barrels received in July.The August shipment of 2 million barrels was the smallest monthly import volume since December 2015 when South Korea received 1.78 million barrels from the Persian Gulf producer during the previous US-led sanctions on Tehran.Over January-August, Iranian imports fell 42.1% year on year to 58.2 million barrels, compared with 100.44 million barrels in the year-ago period. Following the US decision to re-impose sanctions on Tehran in May, South Korea has since been trying to pare back crude oil shipments from Iran in a bid to secure US exemption. In order to make up for the loss of Iranian barrels, South Korean refiners and petrochemical companies have sharply increased their feedstock intakes from the US and Algeria.South Korea's imports of US crude jumped almost sixfold to 7.31 million barrels in August, compared with just 1.28 million barrels a year ago, which made the US South Korea's fourth-biggest crude supplier last month overtaking traditional Middle Eastern sources such as the UAE, Iran and Qatar. South Korean end-users' US crude purchases mostly consisted of light sweet grades like WTI Midland, Bakken, Eagle Ford crude and condensate.South Korean refiners seem to have purchased more US condensate in August to help fill the loss of Iranian South Pars condensate supply, industry sources said.
Russia's Biggest Oil Producers Enjoy Record Production and Ruble Rally -- Russia’s oil and gas companies are living through the best of times, simultaneously enjoying record production and the highest prices ever in the local currency. An index of the companies this month hit an all-time high in rubles and reached levels not seen since June 2014 in dollars. Russian crude producers are raking in cash as the rally in dollar-denominated oil prices is amplified by a weakening ruble, helping the industry achieve record-breaking revenues and shrink debts. But there’s a cloud on the horizon. There’s a risk that the U.S. could toughen sanctions on Russia in connection with this year’s chemical weapons attack in the U.K or continued allegations of election interference. "All investors are asking themselves -- OK, the Russian companies look attractive right now, but what about the next six months, what about the next 12 months?" said Alexandre Dimitrov, head of Emerging Europe EQ Funds at Erste Sparinvest Kap Mbh. "Everyone is looking at November, when we have mid-term U.S. Congress elections and the new sanctions against Russia." An agreement between the Organization of Petroleum Exporting Countries and its allies in June to relax output curbs has allowed Russian oil companies to resume production growth. They’re doing it so actively that the industry is said to have set a new post-Soviet record this month.
Russia says it has 'significant potential' to hike oil production after Iran sanctions -- Russia stands ready to hike its oil output after the implementation of U.S. sanctions on Iran, the country's energy minister told CNBC on Sunday.President Donald Trump's administration is set to impose fresh sanctions on Iran targeting the country's crude industry on November 4. The U.S. is reimposing sanctions on the Middle Eastern nation as part of its withdrawal from the 2015 Iran nuclear deal."I don't think we can discuss the exact number at this point but what I can tell you for sure is that we have significant potential to increase our production," Russian Energy Minister Alexander Novak told CNBC's Steve Sedgwick at the Joint Ministerial Monitoring Committee (JMMC) in Algiers on Sunday. "So we can restore production to October 2016 levels and we cannot go above that but we would be looking at the overall supply-demand balance before we take any decisions." Earlier in the month, Novak criticized U.S. sanctions on Iran as "unproductive" and "wrong," and said there "will be consequences." Companies that rely on access to Iran's oil market have been steadily cutting off their buying of Iranian crude as the State Department has warned firms to cease purchases by early November. Europe has been calling for concessions to exempt certain industries from the wide-ranging levies. But U.S. Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin have rejected these pleas, saying the sanctions are aimed at maximizing economic pressure on Iran..
Russia Looks to Shore Up New Role as Oil Heavyweight – WSJ - Since joining forces two years ago with Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, Russia has helped the group re-establish its once-powerful hold on global oil prices. The cartel for decades has raised or lowered output to balance supply and demand, and support prices. That hold was challenged several years ago, when U.S. shale flooded global markets, sending prices hurtling. OPEC, which pumps more than one of every three barrels the world consumes, appeared powerless to lift markets. That is, until it enlisted Russia and a group of non-OPEC producers including Azerbaijan and Mexico to join in output cuts two years ago. “It has been a surprise to see Russia up there, shaping the oil markets, but changing times are resulting in new alliances and new leaders,” said Andrew Lipow, a veteran oil analyst in Houston. “The Russians are using their diplomacy and their swing production capacity to keep prices high.” In June, the same group opened up the spigot again, adding production to keep prices from getting too high. Russia took on a key negotiating role across from Saudi Arabia. Of the 600,000 barrels a day of new crude that OPEC and the Russia-led group agreed to pump, about 200,000 barrels has come from Russia. That Russia was so quickly able to add production—and theoretically shut it all off again—lifts Moscow’s credibility as a global oil markets heavyweight, a role it hasn’t held for decades. Saudi Arabia, which exports far more than any other country, is still essentially the central bank of oil, but Russian oil policy now matters to the rest of the world.
Iran Truck Drivers Go On Strike, Crippling Oil Infrastructure - Oil truck drivers in Iran have started a new strike demanding improved working conditions, and the industrial action has resulted in large lines forming at gasoline stations in Iran, The Middle East Monitor reports, quoting the Anadolu Agency and local media. The strike is the second that truck drivers in Iran have staged this year, after a prolonged strike action in May in which they protested against rising costs for insurance, repairs, spare parts, and tolls, while their wages were stagnant. Back in May, the government has reportedly agreed to raise the pay for truckers by 15 percent, VOA reported. According to The Middle East Monitor, nothing has been done yet to meet the truckers’ demands from May.The latest industrial action by oil truckers in Iran comes less than two months after the first set of U.S. sanctions on Iran snapped back, and just six weeks before the second round of sanctions, including on Iran’s key revenue source—oil exports—kick in. Over the past few months, Iran’s economy has faltered, and its currency, the rial, hit a new low this week against the U.S. dollar on the unofficial exchange rate. According to data compiled by U.S. economist Steve Hanke of Johns Hopkins University, Iran’s annual inflation rate as of Monday was 293 percent—an all-time high. The economic hardships are causing a surge in the price of goods, including diapers. Shortages of goods also abound, with Iranian authorities conducting raids to confiscate illegal hoards of rare and costly items such as diapers. The sanctions on Iran’s oil are now expected to remove more than 1 million bpd from the oil market, compared to earlier projections of around a 500,000-bpd loss, before the United States started to show signs that waivers would be given sparingly, if at all. Although Iran’s oil exports are unlikely to drop to zero, they could halve to 1 million bpd-1.3 million bpd, Ben Luckock, co-head of oil trading at commodity trader Trafigura, told S&P Global Platts this week.
Iran sends out ghost tankers as US oil sanctions loom - A supertanker called Happiness is carrying 2m barrels of trouble for Iran. The crude vessel filled up at a terminal operated by Iran’s national oil company on Kharg Island at the start of this month, before setting off on a journey for Asia, according to ship tracking data. But it was sailing into a global market where Iranian oil is acquiring pariah status. When Happiness I — its official name — exited the Strait of Hormuz the tanker turned off the system that allows traders to track its movements. As the US prepares to reimpose sanctions on Tehran’s energy sector in November, the vessel joins a fleet of ghost ships that symbolises the pressure growing on Iran to hide the identity of its buyers. Following President Donald Trump’s withdrawal from a nuclear deal Iran signed with world powers, he is seeking to cripple the Iranian economy with sanctions that impose severe financial penalties on any party involved in trading its crude. Iran cannot easily abandon the lucrative export business that generates much needed government revenues. There are growing signs of the country reverting to an old playbook of selling in secret. Happiness I is one of at least seven tankers carrying Iranian oil that are no longer broadcasting their position. The tanker “has not sent a signal since” turning off its transponder on September 16, said Matt Smith, director of commodity research at ClipperData, which is tracking the vessels filled with Iranian oil.
EU and Iran agree on new payment system to skirt US sanctions -- In a major snub to the United States, the European Union has decided to set up a new mechanism to enable legal trade with Iran without encountering US sanctions. The EU will create new payment channels to preserve oil and other business deals with Iran, Federica Mogherini, the bloc's foreign policy chief said late on Monday, in a bid to evade US punitive measures.US President Donald Trump withdrew from a 2015 nuclear deal in May and re-imposed sanctions on the country. Mogherini's announcement came after a meeting with foreign ministers from Britain, France, Germany, Russia, China, and Iran on the sidelines of the United Nations General Assembly in New York. "In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world," she told reporters after the closed-door meeting. The EU, along with Russia and China, said in a joint statement that the so-called "Special Purpose Vehicle" will "assist and reassure economic operators pursuing legitimate business with Iran". The statement added that the six countries signatory to the 2015 nuclear agreement "reconfirmed their commitment to its full and effective implementation in good faith and in a constructive atmosphere".
Trump's Blow to Iranian Oil Sparks Curious Price Divergence -- The relationship between two major oil benchmarks is charting an unexpected course as U.S. sanctions take Iranian crude out of the market. As demand for alternative Middle Eastern supply increases, regional marker Dubai crude has reason to strengthen. Yet it’s weakening against London’s Brent -- an oil grade with very different chemical characteristics that’s used to price barrels from Europe to Africa. Brent’s gaining more because futures and derivatives linked to it are accessible to an array of financial investors and traders via a highly liquid market, compared with relatively niche over-the-counter and clearing-house platforms for Dubai. So broader concerns over a potential supply crunch are being reflected to a greater extent in the London marker. “With the disappearance of Iranian oil, Dubai should be stronger but Brent is outperforming,” said John Driscoll, the chief strategist at JTD Energy Services Pte. “Speculators such as funds, index managers, traders and even oil majors could be taking positions in the Brent complex that includes physical and derivative instruments. If you’re going to play big, this is the market to do it.” Investors’ bullish bets on Brent have risen more than 35 percent over the past month in the lead up to the U.S. renewal of sanctions on Iran’s crude exports, according to ICE Futures Europe exchange data. Prices are up about 40 percent in the past year and are near $80 a barrel. While U.S. measures targeting Iranian exports will go into effect only on Nov. 4, the impending restrictions are already succeeding in forcing buyers to curb purchases. That’s creating demand for similar-quality medium- sour crudes, which have a relatively high sulfur content and lower API gravity. Dubai has traditionally been the benchmark for such supply.
Hedge funds bet on shortage of Brent oil: Kemp (Reuters) - Hedge fund managers made only minor adjustments to their overall position in petroleum futures and options in the latest week but continued their rotation out of West Texas Intermediate into Brent. Hedge funds and other money managers raised their combined net long position in the six most important petroleum contracts by just 3 million barrels to 1.049 billion barrels. Fund managers boosted their net position in Brent (+28 million barrels) and U.S. gasoline (+4 million) but cut positions in U.S. heating oil (-4 million), European gasoil (-9 million) and WTI (-16 million barrels). Diverging attitudes towards Brent and WTI have become the most notable short-term trend among hedge funds (https://tmsnrt.rs/2xBIs4T ). Portfolio managers have boosted their net position in Brent by 143 million barrels in the last four weeks, an increase of 44 percent, including by 51 million barrels in the two most recent weeks. At the same time, fund managers have trimmed their net position in NYMEX and ICE WTI by 44 million barrels in the last fortnight. Hedge funds hold nearly 16 bullish long positions in Brent for every bearish short one, up from a ratio of 6:1 at the end of May, and far ahead of the ratio of 9:1 in WTI. Fund managers are betting the introduction of sanctions on Iran will result in a shortage of seaborne crude on international markets even while the landlocked U.S. inland market remains plentifully supplied.
OPEC raises forecast based on US oil production - The OPEC oil cartel raised its global production forecast this weekend based on higher-than-predicted US output in a report outlining a long-term rise in net demand, particularly in developing countries. In its annual World Oil Outlook, the Organisation of Petroleum Exporting Countries forecast world supply of all hydrocarbons (primarily oil and liquified natural gas) would rise from a current 98.4 million barrels per day (mbd) to 104.5 million by 2023, and 111.9 million by 2040. The figures are higher than last year's forecast, with rising production in non-cartel states led by the United States a major factor. Non-member production overall is forecast to rise by 8.6 mbd to 66.1 mbd by 2023 on higher global demand, the report added, but a relative tapering off from 2020 will see cartel members' crude production shrug off a medium-term trend fall, OPEC predicted. The body said demand would continue rising despite electric-powered vehicles taking an increasing market share and political moves to champion renewable energy. Even so, OPEC predicted a dip in demand growth between 2035 and 2040. While viewing high demand as healthy, the organisation noted that the trend was fuelled by developing countries undergoing major demographic and general economic expansion. In contrast, OPEC said demand for oil in OECD countries would fall from the early 2020s, but would still be the number one source of energy through to 2040.
Saudi Arabia Worries Oil Crunch Could Push Up Prices -—Saudi Arabia is running low on its most prized grade of crude, people familiar with the matter said, a development that could push oil prices higher. After coming under pressure from the Trump administration over rising oil prices, Saudi Arabia is set to use an oil-producers’ summit in Algiers on Sunday to reassure oil markets that it can fill any shortages that arise as U.S. sanctions restricting Iranian oil sales begin in November. But state-run oil giant Saudi Arabian Oil Co., known as Aramco, is telling potential buyers that its most highly prized crude will be in short supply in October after it underestimated the demand in advance of Iranian sanctions. And in the longer term, officials estimate Aramco wouldn’t have the capacity to meet future demand if Iran is no longer delivering oil, according to people familiar with the matter. The scarcity could push prices above $80 a barrel, potentially putting a strain on U.S. consumers as they decide whether President Trump’s Republican Party will remain in control of both houses of Congress in November’s midterm elections.With the combination of Iran sanctions and Saudi Arabia’s supply limitations, “we are heading to a price spike, likely $90 to $100” per barrel, one oil trader said. “It’s not just Iran that will suffer. It’s going to have a boomerang effect with rising gasoline prices” in the U.S. Aramco’s Arab light crude has been in high demand from buyers ahead of Iran sanctions, one potential buyer said he was told this week, and as a result, supplies have been fully allocated for October. The buyer says he was offered Aramco’s less popular medium and heavy oil.
Putting a dollar value on one of oil’s biggest subsidies: military protection- Vox - One of the pretenses of right-wing energy policy is that conservatives support a “level playing field,” upon which energy sources can compete without subsidies. Let the market decide! As I have written many times, this is a juvenile notion. Markets are powerful tools for directing private capital and innovation, useful in the right circumstances. But the idea that there ever has been, or ever can be, an open, unbiased, “free” market for energy sources is a fantasy that should stay in the college library with the Ayn Rand novels. It is analytically inert; it does nothing to illuminate whether current markets are working or help us decide how best to use markets to serve our greater goals. The fundamental reason the “free market” ideal is unhelpful in energy is that it’s impossible to ever truly settle what is and isn’t a market-distorting subsidy. Some subsidies, like explicit cash grants or tax breaks, are easy enough to identify, but beyond that there is a whole complex world of implicit subsidies.If an energy source has negative impacts that are not incorporated in its market price (negative “externalities,” in the jargon), that means other people are paying for those impacts. The source is implicitly subsidized.Here’s the thing: Every energy source and energy industry has both positive and negative externalities. Deciding which ones “distort markets,” which ones count as implicit subsidies (or implicit taxes) virtually always comes down to a subjective judgment.And the implicit subsidies dwarf the explicit subsidies, so arguing about the latter while unable to agree on the former is uniquely pointless. In practice, most political disputes over subsidies just end up obscuring values-based arguments about what kind of future we want behind a veil of pseudo-objective economic jargon. One’s own favored energy sources receive commonsense support; the other side’s energy sources are on corporate welfare. And so it goes. Various oil subsidies that oil fans don’t consider subsidies. (OSI) This week brought an excellent example, in the form of a new paper from Securing America’s Future Energy (SAFE), a clean-energy advocacy group composed of retired military and business leaders. It attempts to put a number on one of the great, neglected implicit subsidies for oil: the costs to the US military of defending oil supplies, everything from guarding shipping lanes to maintaining troop commitments in key oil-producing nations.The number, it turns out, is high: $81 billion a year at the low end, which is almost certainly conservative.But is that a subsidy for oil? It is certainly one way oil dependence has shaped the country, its history, and its institutions — one of countless ways — but does putting a dollar figure on it and calling it a “market distortion” clarify anything or convince anyone? We will ponder those questions in a moment, but first, a quick look at the study.
Analysis: Saudi Arabia's untested claims of spare capacity may be put to the test — Saudi Arabia has tried to dispel any fears of a coming supply squeeze by touting its spare production capacity. The kingdom says it holds the ability to pump 1.5 million b/d above its current output of some 10.4 million b/d -- crude that could be needed with US sanctions set to cripple Iranian supplies starting in November and Venezuela continuing on its economic freefall. But many market watchers are skeptical that Saudi Arabia has the full amount of its claimed spare capacity actually available, casting doubt on whether OPEC's largest producer can prevent a price spike from a supply shortage. The country, OPEC's largest producer by far, has never produced above 10.7 million b/d and state oil company Aramco has not allowed a full audit of its capabilities to be made public. "If we define spare capacity as available in 30 days and sustainable and definitely without reserve damage, which is our definition, then we think there is well below 1.5 million b/d today," said Bob McNally, president of consultancy Rapidan Energy. The US Energy information Administration, using the definition described by McNally, estimates that all 15 of OPEC's members hold a combined spare production capacity of 1.42 million b/d. Other assessments are more generous. The International Energy Agency defines spare capacity as production that can be "reached within 90 days and sustained for an extended period." As such, it estimates Saudi spare capacity at 1.62 million b/d and total production capacity at 12.04 million b/d. The figures are being closely watched, as 1 million b/d or more of Iranian crude could be shut in by US sanctions and Venezuela's production is expected to decline by some 300,000 b/d by the end of the year, according to some forecasts. Even if Saudi Arabia and other producers are able to offset those losses, their ability to respond to any other market disruptions would be severely limited. "If Saudi production enters uncharted territory in Q4 18, markets could react nervously, especially if further supply outages take place," Saudi energy minister Khalid al-Falih insisted that Saudi Aramco is able to produce 12 million b/d at will, and once negotiations with Kuwait are complete, fields in the Neutral Zone shared by the two countries could add another 500,000 b/d. "Show me the customer that needs [oil] and I assure you we will bring the production that is needed," he said. Already the kingdom's output in September will be higher than August's 10.4 million b/d, he said, and October "will be even higher." If Saudi Arabia is unable to pump the volumes needed, it will have to draw barrels from storage. Domestic inventories have been falling sharply in the past year, with Saudi crude stocks in July standing at 229 million barrels, the lowest since October 2009, according to figures the country reported to the Joint Organizations Data Initiative. But Falih said Saudi Arabia has been building crude inventories in Aramco storage tanks in Japan, Egypt and the Netherlands to better address customer needs, though he did not provide any statistics.
OPEC, Russia rebuff Trump's call for immediate boost to oil output - (Reuters) - OPEC’s leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, ruled out on Sunday any immediate, additional increase in crude output, effectively rebuffing U.S. President Donald Trump’s calls for action to cool the market. “I do not influence prices,” Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost. Benchmark Brent oil LCOc1 reached $80 a barrel this month, prompting Trump to reiterate on Thursday his demand that the Organization of the Petroleum Exporting Countries lower prices. The price rally mainly stemmed from a decline in oil exports from OPEC member Iran due to fresh U.S. sanctions. “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump wrote on Twitter. Falih said Saudi Arabia had spare capacity to raise output but such a move was not required at the moment and might not be needed next year as, according to OPEC’s projections, a stellar rise in non-OPEC production could exceed global demand growth. “The markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it,” Falih said, adding that Saudi Arabia could raise output by up to 1.5 million barrels per day (bpd) if needed. “Given the numbers we saw today, that (an output increase in 2019) is highly unlikely unless we have surprises on the supply and demand,” Falih added. The statement from Trump, meanwhile, was not his first criticism of OPEC. Higher gasoline prices for U.S. consumers could create a political headache for Republican Trump before mid-term congressional elections in November. Iran, OPEC’s third-largest producer, has accused Trump of orchestrating the oil price rally by imposing sanctions on Tehran and accused its regional arch-rival Saudi Arabia of bowing to U.S. pressure.
Pressed by Trump, OPEC Fears Oil Glut’s Return – WSJ - Crude rose to $80 a barrel days after President Trump chastised OPEC delegates in a tweet about “higher and higher oil prices.” But in the aftermath of the cartel’s gathering in Algiers this past weekend, Mr. Trump—along with the rest of the world—may have to live with somewhat high prices. That is because producers are expressing a new worry: fear of a glut. If the Organization of the Petroleum Exporting Countries and its nonmember allies including Russia pump too much oil into the marketplace to make up for expected shortfalls from coming sanctions on Iran, those actions could bring back the same oversupply problem the cartel just conquered in April. Many in OPEC also fear it could also expose the real limitations of the group’s production capacity. At the Algiers meeting, OPEC decided not to act—committing only to hold output caps steady. Most OPEC delegates don’t want prices above $80 a barrel, one OPEC official said. But the group “is worried about over edgingsupply” because it expects demand for its oil to fall in the first half, he added. The reason for this cautious attitude, according to people who attended the consultations over the weekend, is mounting concern that Iranian oil losses may be offset by lower demand for the cartel’s oil early next year. During the meeting, the group’s secretariat gave a gloomy picture of the first quarters of 2019. .With consumption weaker than expected because of economic uncertainty and U.S. shale production still rising, the group also sees demand for its own oil declining sharply in the first half in 2019, OPEC secretariat officials told delegates. Data from the group’s latest report show the world will need 600,000 barrels a day less of its crude in the first half of 2019 than it pumped in August. The International Energy Agency, which advises energy consumers and tends to have a more optimistic view of OPEC’s requirements, sees demand for its crude falling by 100,000 barrels a day during the same period. From its data, OPEC drew a clear warning to delegates: “If you start ramping up too fast, the glut could return,” one attendee said, raising fears of a new price crash.
Brent crude surges to $80.72/b after OPEC fails to reassure market; WTI at $72.09/b— Crude oil futures continued to surge during the European morning session Monday, approaching the highs of late 2014, with the market questioning whether OPEC and its partners have done enough to keep the market well supplied and with impending Iranian sanctions still spurring sentiment. At 1024 GMT Monday, the November ICE Brent crude futures contract was up $1.92/b from Friday's settle to $80.72/b, while the NYMEX November light sweet crude contract was up $1.31 at $72.09/b. The last time the front-month ICE Brent contract crossed $80/b during intraday trading was in late May, data from S&P Global Platts showed. The front-month contract was last assessed higher at the 16:30 London time close on November 12, 2014, when it reached $81.16/b. "This is the oil market's response to the 'OPEC+' group's refusal to step up its oil production," analysts at Commerzbank said in a note Monday. OPEC and its non-OPEC partners gathered in Algiers over the weekend for a meeting of their Joint Ministerial Monitoring Committee, although talk of keeping the market well supplied remained thin on detail. US President Donald Trump called on OPEC to help curtail the rise in oil prices in a tweet last week. Saudi energy minister Khalid al-Falih said Sunday that the oil market is balanced, thanks to efforts by OPEC and its partners in boosting production over the last few months. "Whatever takes place between now and the end of the year in terms of supply changes will be addressed," he told reporters. "The market is reasonably steady, and we should just be dynamic and responsive and responsible." Further output increases could be seen, though he declined to commit to any explicit volumes nor to any firm timeline.
Oil prices at highest levels in 4 years after OPEC says it won't raise output - Oil prices were at their highest levels since 2014 in trading Monday, after the Organization of Petroleum Exporting Countries decided not to raise output. In a meeting Sunday in Algiers, OPEC rejected U.S. President Donald Trump's call to open the taps, with both Saudi Arabia and Russia saying they won't produce significantly more oil. For consumers, that could mean higher gas prices on the way, but it's good news for Canadian oil producers. On Monday morning, Brent crude, the main European futures contract, rose 3.3 per cent to $81.42 US a barrel at the close of trading. WTI crude, the benchmark North American contract, was up 2.1 per cent at $72.26 US a barrel. Those are the highest prices since December of 2014, just before oil began its slide that took it down to $40 US a barrel in 2015, discouraging investment in the oil patch. Oil prices have risen 20 per cent this year alone, pushing up the cost of gasoline and home heating oil. JPMorgan predicts they will go even higher, perhaps above $90 US a barrel, in the near term. U.S. sanctions against Iran, the OPEC member that most wants to boost production, take effect Nov. 1 and could further tighten supply. But Todd Hirsch, chief economist at ATB Financial, says he believes the price spike is short-term and could sink back by the end of the year. "It's a bit of concern over global supply," he told CBC News. "I don't think it will stay in that range for long."
Oil rises as markets tighten ahead of Iran sanctions -- Oil prices jumped more than 2 percent to a four-year high on Monday after OPEC declined to announce an immediate increase in production despite calls by U.S. President Donald Trump for action to raise global supply.Benchmark Brent crude hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 percent, before easing back to around $80.65. U.S. light crude was $1.25 higher at $72.03."This is the oil market's response to the OPEC+ group's refusal to step up its oil production," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.OPEC leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, on Sunday ruled out any immediate extra increase in output, effectively rebuffing a call by Trump for action to cool the market."I do not influence prices," Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.Trump said last week that OPEC "must get prices down now!", but Iranian Oil Minister Bijan Zanganeh said on Monday OPEC had not responded positively to Trump's demands."It is now increasingly evident, that in the face of producers reluctant to raise output, the market will be confronted with supply gaps in the next 3-6 months that it will need to resolve through higher oil prices," BNP Paribas oil strategist Harry Tchilinguirian told Reuters Global Oil Forum.Commodity traders Trafigura and Mercuria said on Monday that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once U.S. sanctions against Iran are fully implemented from November. J.P. Morgan said U.S. sanctions on Iran could lead to a loss of 1.5 million bpd, while Mercuria warned that as much as 2 million bpd could be knocked out of the market.
JP Morgan sees Brent at $85 by Q4 -- CNBC–video interview --Oil markets are tight due to a combination of geopolitical risk and supply-side issues, according to Abhishek Deshpande of J.P. Morgan.
Lower for Longer's Days May Be Numbered -- The commitment to live with "lower for longer" oil might not last that long after all. The ubiquitous mantra during life after the price crash hasn't been uttered once this quarter on analyst or earnings call for 22 major energy companies, according to a Bloomberg analysis of company transcripts. That's the first time since early 2015, shortly after the phrase was coined. Its demise, not surprisingly, coincides with a rally to the highest in almost four years as production cuts, geopolitical tensions and U.S. infrastructure issues drained a global glut. The disappearance, though certainly a frivolous detail, underscores something serious about the oil industry. It's suffered more than a century of boom and bust cycles and "lower for longer" was a promise that this time executives had learned their lessons and would keep spending in check to survive, or even thrive, at reduced prices. After cratering below $28 a barrel in early 2016, prices of global benchmark Brent have rallied, recently popping back above $80 as fresh sanctions on Iranian crude loom and members of OPEC hesitate to increase output. Leaders of top oil traders Trafigura Group and Mercuria Energy Group Ltd. said Monday at an energy conference in Singapore that within the next few months prices could rise to $100 a barrel for the first time since 2014. Trafigura's co-head of oil trading, Ben Luckock, called the end of the lower-for-longer period at the same conference last year and said Monday that he's been proven correct. "Is the era of "˜lower for longer' over? I think it is,'' Luckock said. "It's really now just a question of how high do we go, and what does that mean and when does it happen." The saying appears to be first used by Total SA's Chief Executive Officer Patrick Pouyanne in October 2014, when Brent was trading at $87 a barrel: "So to share the situation today, it is clearly not business as usual," he said in the French firm's quarterly earnings call. "And in the event that oil prices remain lower for longer, we'll have to adapt."
Oil demand remains high despite tariff woes: S&P Global Platts --- CNBC–video interview - Oil demand is unlikely to be impacted by trade tariffs, unless they spur a wider economic downturn, according to Martin Fraenkel, President at S&P Global Platts.
Return of $100 Oil Seen by Top Traders -- Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as the market braces for the loss of Iranian supplies because of U.S. sanctions. Mercuria Energy Group Ltd. co-founder Daniel Jaeggi said prices may spike to over $100 a barrel in the fourth quarter because the market doesn’t have much capacity left to replace more than 2 million barrels a day of Iranian exports that could be lost to sanctions. Trafigura Group co-head of oil trading Ben Luckock sees $90 oil by Christmas and $100 in early 2019. Key Takeaways:
- Such a price rally would mark the first time since the summer of 2014 that oil would return to the $100-a-barrel level that became the norm in the early part of this decade.
- Such prices made oil companies like Exxon Mobil Corp. the world’s most valuable firms and spurred investment in risky billion-dollar oil projects.
- The talk of $100 crude comes just hours after OPEC and its allies rebuffed pressure from U.S. President Donald Trump to immediately boost production to lower oil prices.
- It could prompt Washington to consider extraordinary measures, including the use of the Strategic Petroleum Reserve, to cool down fuel prices ahead of the U.S. mid-term elections.
“The market does not have the supply response for a potential disappearance of 2 million barrels a day in the fourth quarter,” Jaeggi said in a speech at the S&P Global Platts Asia Pacific Petroleum Conference (APPEC) in Singapore. “In my view, that makes it conceivable to see a price spike north of $100 a barrel.” When Trump in May announced plans to reimpose sanctions on Iran’s oil exports, the market estimated a cut of about 300,000 to 700,000 barrels a day, according to Trafigura’s Luckock. However, the consensus has now moved to as much as 1.5 million barrels daily as the U.S. is “incredibly serious” about its measures, he said.“It’s going to be significantly less than it was, and probably lower than most people expected when the sanctions were announced -- hence the higher prices,”
What Will Trigger The Next Oil Price Crash? Are we nearing another financial crisis? The supply-side story for oil prices is heavily skewed to the upside, with production losses from Iran and Venezuela causing a rapid tightening of the market. But the demand side of the equation is much more complex and harder to pin down. The Trump administration just took its trade war with China to a new level, adding $200 billion worth of tariffs on imported Chinese goods. That was met with swift retaliation. Trump promised another $267 billion in tariffs are in the offing. JPMorgan said that after scanning through more than 7,000 earnings transcripts, the topic of tariffs was widely discussed and feared. Around 35 percent of companies said tariffs were a threat to their business, JPMorgan said, as reported by Bloomberg. The Federal Reserve is steadily hiking interest rates, making borrowing more expensive around the world and upsetting a long line of currencies. Currency problems could morph into bigger debt crises, as governments struggle to repay debt, and companies and individuals get crushed by dollar-denominated liabilities. Finally, the economic expansion is very mature, now about a decade old. Another downturn is only a matter of time. The icing on the cake could be high oil prices. The supply losses from Iran and Venezuela are tightening the market, draining inventories and forcing Saudi Arabia to cut into spare capacity levels. High prices could trim demand growth, but that hasn’t happened in a big way just yet. “[B]y 2020, the conditions will be ripe for a financial crisis, followed by a global recession,” Nouriel Roubini and Brunello Rosa wrote in a recent piece for Project Syndicate. JPMorgan mostly agreed, arguing recently that another financial crisis is possible by 2020, and the lack of monetary and fiscal firepower to respond to such a crisis creates a “wildcard” on how severe the downturn might be. Roubini and Rosa worry that backed against a wall, politically-endangered Trump administration might lash out against Iran in order to “wag the dog,” a scenario that would have catastrophic consequences. “By provoking a military confrontation with that country, he would trigger a stagflationary geopolitical shock not unlike the oil-price spikes of 1973, 1979, and 1990,” they argue. “Needless to say, that would make the oncoming global recession even more severe.”
Brent Crude Tops $80, Closes at Highest Level Since 2014 – WSJ - Global oil prices surged to their highest close in nearly four years on Monday after OPEC left production steady over the weekend, fueling fresh bets that U.S. sanctions against Iran and outages in Venezuela will lead to supply shortages. The decision by members of the Organization of the Petroleum Exporting Countries and major producers like Russia to hold supply constant comes amid a rebound in investor confidence in the global economy. Analysts said that combination, with many anticipating compromises on global trade policy and a stabilization in emerging-market assets, lifted oil prices after months of rangebound trading. .“The supply issues are real,” said Chris Kettenmann, chief energy strategist at New York–based Macro Risk Advisors. “The U.S.-Iran economic sanctions are only compounding the fact that buyers need to look elsewhere for delivery of barrels.” Oil’s surge marks a reversal after Brent crude wobbled in recent months, as President Trump pressured OPEC to ramp up output and traders worried about a possible slowdown in demand. Brent futures rose $2.40, or 3%, to $81.20 a barrel Monday, piercing $80 for the first time since May and logging their highest settle since November 2014. U.S. crude futures closed up $1.30, or 1.8%, at $72.08 a barrel at their highest level since early July. Despite this summer’s volatility, oil has been one of the market’s best-performing assets this year, with Brent prices now up 21% in 2018. Shares of energy producers around the world also climbed Monday, with the S&P 500 energy sector adding 1.5%. Exxon Mobil closed up 1.7%, while French oil giant Total SA rose 1.1% in a fifth straight session of gains.
Brent Oil Breaks Its Post-Crash High - Oil prices burst out of the gates on Monday with strong gains, pushing WTI over $70 and Brent over $80 per barrel. Over the weekend, OPEC+ decided to take no further action to increase production even as Iran continues to lose supply at a torrid pace. Saudi Arabia said it would likely increase output in October but declined to offer specifics. The inaction was met with fears of a supply crunch from the market, pushing Brent up to its highest level in years. A growing number of analysts see higher prices as likely, perhaps even as high as $100 per barrel. The European Union said on Monday that it would setup a special financial vehicle to allow Iran to evade U.S. sanctions. The “special purpose vehicle” would allow European companies to continue to do business with Iran while insulating them from the wrath of the U.S. Treasury. The announcement comes as U.S. President Trump will address the UN General Assembly this week, and the EU decision will put the two sides at odds. Iran’s oil supply losses are mounting, and it is unclear to what extent the EU financial vehicle will stem the tide. A group of the world’s largest oil companies agreed to lower methane emissions from their operations over the coming years. The Oil and Gas Climate Initiative (OGCI) calls for a reduction of methane emissions by a fifth by 2025. ExxonMobil and Chevron recently joined the initiative and said they would limit methane emissions to 0.25 percent of total production, compared to 0.32 percent in 2017. The OGCI pledge calls for a reduction to 0.20 percent. The OGCI consists of companies accounting for a third of global oil and gas production, and includes BP, Royal Dutch Shell, Total and national oil companies in China, Mexico, Brazil and Saudi Arabia. The Trump administration is in the midst of rolling back limits on methane emissions from the oil and gas industry, a move that could boost small marginal wells. Stripper wells, which produce less than 15 barrels of oil equivalent per day, could be one of the biggest beneficiaries from the deregulation, according to S&P Global Platts. While miniscule on their own, stripper wells collectively account for around 10 percent of U.S. oil production.
OPEC is 'ripping off' US, rest of world: Trump — In a speech before the United Nations, US President Donald Trump took aim at OPEC for increasing global oil prices while benefiting from US military security. "OPEC and OPEC nations are, as usual, ripping off the rest of the world and I don't like it, nobody should like it," Trump said, claiming that the US defends many OPEC nations "for nothing." "We want them to stop raising prices, we want them to start lowering prices and they must contribute substantially to military protection from now on," Trump said. Brent crude briefly touched $82.55/b, but pulled back to around $82.18/b soon after in the wake of the strong language from Trump calling on OPEC to lower prices. WTI, which had been trading as high as $72.78/b during morning US trade, briefly fell back below Monday's settle following Trump's remarks, trading as low as $72.05/b before recovering slightly. Trump also touched on sanctions on Venezuela, Iran and North Korea. "The Iran deal was a windfall for Iran's leaders," Trump said. The US continues to press Iran's oil customers to halt their crude and condensate imports before sanctions resume November 5. Trump said the US was working with these customers to "cut their purchases substantially." Crude futures moved to intra-day highs on the back of Trump's remarks calling for continued isolation of Iran. In his speech, Trump stressed American sovereignty and US energy security. "In America we believe strongly in energy security, for ourselves and for our allies," Trump said. "The United States stands ready to export our abundant, affordable supply of oil, clean coal and natural gas."
Oil firm as OPEC, Russia resist calls to raise output as Iran sanctions loom -- Crude oil prices shot to a four-year high on Tuesday, catapulted by imminent U.S. sanctions on Iranian crude exports and the apparent reluctance of OPEC and Russia to raise output to offset the potential hit to global supply. Brent crude futures were up 81 cents, or 1 percent, at $82.01 a barrel by 9:46 a.m. ET (1346 GMT), having touched a session peak of $82.20, the highest price since November 2014. The oil price is on course for its fifth consecutive quarterly increase, the longest stretch of gains since early 2007, when a six-quarter run led to a record high of $147.50 a barrel. U.S. West Texas Intermediate crude futures were up 50 cents at $72.58 a barrel, close to their highest since mid-July.The United States will target Iran's oil exports with sanctions from Nov. 4, with Washington applying pressure on governments and companies around the world to fall into line and cut their purchases."Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap," Mohammad Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), said in Madrid on Tuesday that it is important for OPEC and its partners, including Russia, to cooperate to ensure they do not "fall from one crisis to another." The International Energy Agency forecasts strong oil demand growth of 1.4 million barrels per day (bpd) this year and 1.5 million bpd in 2019, and said in its most recent report that the market was tightening.U.S. President Donald Trump has demanded that OPEC and Russia increase oil supplies to make up for the expected fall in Iranian exports. Iran is the third-largest producer in OPEC. OPEC and Russia, however, have so far rebuffed such calls. The so-called "OPEC+" group, which includes the likes of Russia, Oman and Kazakhstan, met at the weekend to discuss a possible increase in crude output, but the upshot of the gathering was that the group was in no rush to do so.
Oil jumps, then pares gains as Trump pressures OPEC again (Reuters) - Oil prices rose Tuesday on global supply concerns following U.S. sanctions on Iran’s oil exports, with benchmark Brent surging to a four-year high, then retraced gains to settle just slightly higher after U.S. President Donald Trump called again on OPEC to boost crude output. In a speech before the United Nations, Trump reiterated calls on the Organization of the Petroleum Exporting Countries to pump more oil and stop raising prices. Earlier, oil prices had surged on worries about global supply after U.S. sanctions on Iran’s oil exports take effect Nov. 4. Brent LCOc1 hit $82.55 per barrel, its highest since Nov. 10, 2014. “It’s hard to believe that the Saudis won’t answer the call at some point, especially if prices tick much higher,” said John Kilduff, a partner at Again Capital in New York. “He’s going to be unrelenting in pressuring them.” The so-called “OPEC+” group, which includes Russia, Oman and Kazakhstan, met over the weekend to discuss a possible increase in crude output, but the group was in no rush to do so. Mohammad Barkindo, OPEC secretary general, said in Madrid on Tuesday OPEC and its partners should cooperate to ensure they do not “fall from one crisis to another.” Brent crude futures settled up 67 cents at $81.87 a barrel. U.S. crude futures CLc1 rose 20 cents to $72.28 a barrel, close to the highest since mid-July. Global benchmark Brent is on course for its fifth consecutive quarterly increase, the longest stretch since early 2007, when a six-quarter run led to a record high of $147.50 a barrel. Trump also said in his speech that Washington will put more sanctions on Iran following oil sanctions in November. The sanctions are expected to have an immediate impact on exports from OPEC’s third largest producer. “Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap,”
WTI Drops After Surprise Crude, Gasoline Build - WTI extended gains today after OPEC signaled it may not replace Iranian oil that’s disappearing from global markets as U.S. sanctions loom, but slumped off its highs of the day after Trump slammed OPEC for "ripping off the world."As Bloomberg noted, OPEC shrugged off the threat to Iranian supplies over the weekend, spurring some of the world’s most-sophisticated traders to forecast a return to $100-a-barrel oil. At such prices, crude demand “will be annihilated,” Petromatrix GmbH’s Olivier Jakob said. “The market is assuming that OPEC will behave as they claimed they will at this meeting, but I don’t think that’s necessarily something that will be long-lived,” . A big reduction in Iranian exports “will cause the market to tighten up.” Trump said OPEC is "ripping off the world," in an address to the United Nations today. API
- Crude +2.903mm (-1.5mm exp)
- Cushing +260k (-150k exp)
- Gasoline +949k
- Distillates -944k
A surprise crude build and Cushing stocks rose... . “Brent and WTI have been some of the better performing commodities over the last week, so you’re definitely going to have fund managers jumping on board trying to ride that wave a little bit higher.” The bulls are levering up too, as Bloomberg notes that the total number of options traded on Brent crude surged on Monday to about 274,000 contracts, the highest ever, data showed.
Art Berman- Don't Believe The Hype - Oil Prices Aren't Going Back To $100 - The breakout in Brent crude prices above $80 this week has prompted analysts at the sell side banks to start talking about a return to $100 a barrel oil. Even President Trump has gotten involved, demanding that OPEC ramp up production to send oil prices lower before they start to weigh on US consumer spending, which has helped fuel the economic boom over which Trump has presided, and for which he has been eager to take credit.But to hear respected petroleum geologist and oil analyst Art Berman tell it, Trump should relax. That's because supply fundamentals in the US market suggest that the recent breakout in prices will be largely ephemeral, and that crude supplies will soon move back into a surplus. Indeed, a close anaysis of supply trends suggests that the secular deflationary trend in oil prices remains very much intact. And in an interview with MacroVoices, Berman laid out his argument using a handy chart deck to illustrate his findings (some of these charts are excerpted below).As the bedrock for his argument, Berman uses a metric that he calls comparative petroleum inventories. Instead of just looking at EIA inventory data, Berman adjusts these figures by comparing them to the five year average for any given week. This smooths out purely seasonal changes. And as he shows in the following chart, changes in comparative inventory levels have precipitated most of the shifts in oil prices since the early 1990s, Berman explains. As the charts below illustrate, once reported inventories for US crude oil and refined petroleum products crosses into a deficit relative to comparative inventories, the price of WTI climbs; when they cross into a surplus, WTI falls.
Even the people with the most to gain from $100-a-barrel oil have a lot to lose: analyst - Brent crude was pushing $82 a barrel early Tuesday, extending its climb to a four-year high from Monday. Gains came after a weekend meeting of major oil producers failed to yield any promises on higher production, something POTUS has been pounding the table over lately. Helping out prices is the fact an oil-supportive Iran embargo also grows closer by the day. Amid the fresh enthusiasm, some have even been talking about a return to $100-a-barrel oil.Careful what you wish for, says our call of the day from Fitch Solutions Macro Research. They warn that sentiment for crude right now is so bullish it could leave the market “heavily exposed should risk-off sentiment spill over into oil.”Fitch analysts explain that while there are plenty of reasons for oil to move higher tied to further tightening on the supply side,” that comes amid more challenging macroeconomic conditions. “Much of this revolves around the escalating U.S.-China trade dispute and fears of contagion among emerging markets (EMs), but also ties into underlying trends in oil prices, the dollar, and global liquidity,” explain the analysts.Here’s a chart from Saxo Bank’s Ole Hansen showing that net long positions on oil have just reached a 10-week high. Further caution was heard this morning from Commerzbank analysts, who noted a couple of pretty bullish calls from commodities traders laying out the case for $100-a-barrel oil by early 2019, driven by the loss of up to 2 million barrels of oil a day from Iran once November sanctions kick in.“We regard this as the extreme scenario, which would require all countries apart from China to completely stop buying Iranian oil, which we believe is unlikely,” said a team of Commerzbank analysts led by Eugen Weinberg, who say China could respond to U.S. tariffs by buying even more Iran oil. More cold water: “If the price were to surge to such an extent, the U.S. would probably grant exemptions to the sanctions and/or release strategic oil reserves, as such a high price would hardly be in its interests given the development of its own economy,” says Commerzbank, noting that emerging market demand would take a hit and U.S. producers probably couldn’t boost production fast enough in response.
Don't Underestimate The Trade War Impact On Oil Demand -A squeeze on oil demand is looming as a result of the U.S.-China trade war, a senior BP executive told Reuters. Acknowledging the bullish effect of U.S. sanctions on Iran in the short term, Janet Kong, BP’s chief executive of oil trading operations in Asia, said this effect will be short-lived as the market absorbs the shock and moves on to other concerns.“Going into 2019, I worry about the impact of the U.S.-China trade war, manifesting itself slowly,” the executive said. “The trade war impact has not really shown up in the data anywhere, but it will show up gradually over time. So the supply shock is very sharp and prompt, while the impact from trade war is boiling over slowly.”There have been voices warning that the trade war will affect oil demand as it affects economic growth in China, but official oil demand forecasts have yet to factor it in, it seems. OPEC’s latest Monthly Oil Market Report, however, did revise the cartel’s forecasts for oil demand in 2019 down by 20,000 bpd to 1.41 million bpd, warning that global economic growth may slow.The International Energy Agency, on the other hand, has kept its 2019 demand forecast unchanged in the latest fundamentals update, at 1.5 million bpd, up from this year’s projected 1.4 million bpd. Yet the agency noted that demand could be stronger were it not for the trade war and signs of stalling economic growth in emerging economies. While general economic growth patterns are dependent on a host of different factors, the U.S.-China trade war is outside the normal course of events and, according to Kong, likely to drag on for quite a while, which would extend the duration of its negative effect on oil prices.
Oil prices drop, Brent moves further away from 4-year high -- Oil prices eased on Wednesday after U.S. data showed a surprise build in domestic crude inventories, but an impending drop in Iranian exports kept Brent futures above $80 a barrel and on track for a fifth straight quarterly gain.Brent crude futures were down 39 cents at $81.48 a barrel by 2:26 p.m. ET, after rising to its highest since November 2014 in the previous session. U.S. crude futures ended Wednesday's session down 71 cents, or 1 percent, at $71.57 a barrel.U.S. crude inventories rose by 1.9 million barrels in the week to Sept. 21, according to U.S. Energy Information Administration (EIA) data. Analysts had expected a decrease of 1.3 million barrels.Refinery crude runs fell by 901,000 barrels per day, EIA data showed."A renewed rise in Cushing, Oklahoma, inventories and a rise in domestic crude oil production added to the bearish tone of the report," said John Kilduff, a partner at Again Capital in New York.Still, the oil market is bracing for a hit to global supplies from renewed U.S. sanctions on Iran. Brent remains on course for its fifth consecutive quarterly increase, the longest stretch since early 2007 when a six-quarter run led to a record-high price of $147.50 a barrel.Several big buyers of Iranian crude, such as a number of Indian refiners, have signaled they will wind down their purchases, yet the exact impact of the loss of Iranian barrels on the global market balance is not clear.U.S. officials, including President Donald Trump, are trying to assure consumers and investors that enough supply will remain in the oil market while requesting producers raise their output."We will ensure prior to the re-imposition of our sanctions that we have a well supplied oil market," Washington's special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly on Tuesday evening. In an earlier speech at the UN, Trump reiterated calls on OPEC to pump more oil and stop raising prices. He also accused Iran of sowing chaos and promised further sanctions on the country.
Trump is relying on OPEC to tame oil prices, but analysts say that's a mistake - President Donald Trump has repeatedly ordered OPEC to tamp down rising oil prices, but his Twitter barbs might be wasted on the world's oil cartel.Analysts say OPEC's ability to drive down the cost of crude will be limited until it gets the opportunity to prove it can fill the gap left by falling Iranian exports. Shipments from OPEC's third largest producer are widely expected to fall by roughly 1 million barrels a day in the coming months as U.S. sanctions bite.The upshot is that no matter what OPEC does, prices may keep bubbling up ahead of two major events: Trump's Nov. 4 deadline for oil buyers to stop importing Iranian crude and U.S. midterm elections two days later.This week, OPEC and its allies rebuffed Trump's latest demand to hike output. The 15-nation cartel, Russia and several other producers opted instead to stick to their earlier decision to only gradually increase supply.@realDonaldTrump: We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!On Tuesday, Trump told the UN General Assembly OPEC is "ripping off the rest of the world" by pushing up prices.Trump blames OPEC for the rally because the cartel has been limiting its output since January 2017 in order to balance the market after a punishing oil price downturn. In June, OPEC and its allies agreed to increase output by about 1 million barrels day after cutting more than they intended.However, prices have remained elevated since then and the national average gasoline price remains stuck near $2.85 per gallon as the market braces for the impact of sanctions on Iran.
Iran sanctions to cut oil supply by 1.7 million barrels per day by year-end: Platts -- Jeff Mower of S&P Global Platts discusses the outlook for crude oil production and prices as fresh sanctions against Iran are coming into effect.
Oil Price Spike Could be Short-lived-- Oil bulls cheered by the prospect of $100 oil beware. A rally in prices may be short-lived. That's according to Janet Kong, who heads energy giant BP Plc's trading business in Asia. Any spike on the loss of Iranian supply due to U.S. sanctions probably won't be sustainable in the long run, she said. That's because the negative impact on demand from a trade war between the world's two biggest economies hasn't been priced into crude yet. Kong's comments stand in contrast to views from officials at major oil-trading firms Trafigura Group and Mercuria Energy Group Ltd., who see a looming supply crunch driving global benchmark Brent crude to $100 a barrel for the first time in four years. In recent weeks, prices have largely shrugged off escalating U.S.-China trade tensions, with speculation over the impact of American sanctions on Iran dominating investor sentiment. "The market is very fixated on the loss of barrels on the supply side," said Kong, the chief executive officer of Eastern Hemisphere integrated supply and trading at BP. "The market has overlooked the results of the U.S.-China trade war, how that might impact the global economy, China's growth and the regional economy in Asia," she said in an interview in Singapore on Monday. Brent climbed above $80 a barrel on Monday after OPEC and its allies signaled less urgency to boost output despite pressure from U.S. President Donald Trump to temper prices. Crude's recent rally has spurred a divergence from other commodities like copper, which have been dragged down on fears that global growth will be eroded by a trade war that's showing no signs of easing. Brent futures for November settlement traded at $81.41 a barrel on the ICE Futures Europe exchange, up 21 cents, at 6:48 a.m. in London. Some $200 billion of Chinese products became subject to increased U.S. tariffs from noon Beijing time on Monday, on top of $50 billion in goods imposed earlier this year. The Asian nation said it won't hold trade talks with America unless Trump stops his threats.
Oil Falters as Trump Ups Pressure-- Oil traded near $82 a barrel after President Donald Trump resumed his attack on OPEC while Goldman Sachs Group Inc. poured cold water on forecasts for $100 crude. Brent futures in London were little changed. In a speech at the United Nations, Trump ratcheted up pressure on OPEC nations with a threat to demand payment for U.S. military protection after they ignored his call last week to reduce prices. In contrast to trading-giant bulls, Goldman Sachs said catalysts beyond Iranian sanctions are needed for a meaningful rally. A surprise gain in American crude inventories also weighed on sentiment. Oil prices rose on Monday after the Organization of Petroleum Exporting Countries signaled it won’t rush to release more oil into the market, shrugging off pressure from Trump who has been calling on the group to do more to temper gains. The prospect of tightening supplies due to a steep drop in Iran’s exports, Venezuela’s slumping output, and production bottlenecks in U.S. prompted trading giants Mercuria Energy Group Ltd. and Trafigura Group to warn oil could surge back above $100 a barrel. “Trump demanded in a very strong tone at the United Nations that OPEC push down crude prices, triggering profit taking,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp. Still, “as investors aren’t convinced Trump’s latest call can force OPEC to change its course, prices will unlikely keep falling.” Brent for November traded at $82.03 a barrel, up 16 cents, on the ICE Futures Europe exchange at 3:59 p.m. in Tokyo, after settling Tuesday at the highest level in almost four years. The global benchmark traded at a $9.74 premium to West Texas Intermediate.
Oil Down, Snapping Rally, After Surprise Rise in US Crude Stockpiles - Crude prices fell on Wednesday after weekly data showed a build in U.S. stockpiles as the summer driving season came to a close, tripping up market bulls who had bet on an inventory drop and an uninterrupted price rally on fears over sanctions placed on Iranian oil. Brent crude, the U.K.-traded global benchmark for oil on the Intercontinental Exchange, saw its December contract drop by 0.6%, or $0.47, to $80.79 a barrel . On Tuesday, Brent hit its highest level since November 2014, reaching $82.55. Crude oil WTI futures for November slid 0.9 %, or $0.66, to $71.62. The U.S. Energy Information Administration (EIA) said in its weekly report that domestic crude oil inventories rose by 1.852 million barrels during the week ended Sept. 21. Market analysts had expected a decline of 1.279 million barrels instead. The American Petroleum Institute, which collects data independently from the industry, reported on Tuesday an increase of 2.903 million barrels for the week in review. Closer examination of the EIA data showed the build in crude stocks came amid a huge drop of 901,000 barrels per day (bpd) in refining demand as the end of summer signaled less need for gasoline and time for refineries to get maintenance done. Gasoline stocks jumped by 1.5 million barrels, vs. forecasts for a rise of 788,000 barrels. “A meteoric drop in refining activity … as refinery maintenance season gets into full swing,” said Matthew Smith, director of commodity research at Clipper Data, a New York-headquartered tracker of oil cargoes. Smith said the inventory build came despite oil imports into the U.S. falling during the week in review and U.S. crude exports rising to 2.6 million bpd. International demand for U.S. crude has been on the rise due to WTI’s widening discount to Brent, now at around $10 per barrel. The EIA said that supplies at Cushing, Oklahoma, the key delivery point for delivery of WTI, increased by 461,000 barrels last week. While gasoline stockpiles rose, inventories of distillates, which included diesel, unexpectedly fell by 2.24 million barrels vs. forecasts for a rise of 752,000 barrels. That indicated that trucking and other commercial transportation activity remained strong despite a drop in leisure road travel.
Oil Surges on Prospects of Supply Crunch -- Oil surged on prospects of a supply crunch after the U.S. ruled out the release of emergency crude reserves, adding to concerns over potential losses in Iranian supplies. Futures in New York climbed as much as 1.4 percent. Prices on Wednesday pared declines after U.S. Energy Secretary Rick Perry said releasing oil from the nation’s Strategic Petroleum Reserve to prevent a price spike would have “a fairly minor and short-term impact.” That helped the market shrug off a surprise gain in American crude inventories, which rose for the first time in six weeks. The U.S. benchmark is nearing four-year highs after the Organization of Petroleum Exporting Countries signaled they are in no rush to boost output to counter output losses in Iran and elsewhere, drawing repeated criticism from President Donald Trump. The outlook for tightening supplies prompted top trading houses to predict the return of higher oil prices last seen in 2014, and banks including Bank of America Corp. and JPMorgan Chase & Co. lifted their forecasts. “The U.S. using the strategic reserves as an emergency-response tool to control oil prices was a bit of a stretch, given the history of how it was released in the past for war or hurricanes,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda Corp. “While the U.S. oil inventory data counts, the fact that the markets could still be underestimating the supply crunch from Iran sanctions has many oil investors running with the bulls.” West Texas Intermediate crude for November delivery rose as much as 98 cents to $72.55 a barrel on the New York Mercantile Exchange and traded at $72.43 at 2:21 p.m. in Singapore. The contract settled 71 cents lower at $71.57 on Wednesday. Total volume traded was 4 percent below the 100-day average. Brent for November settlement gained as much as 93 cents to $82.27 a barrel on the London-based ICE Futures Europe exchange before trading at $82.21. The global benchmark crude was at a $9.78 premium to WTI. The U.S. government isn’t considering a release from the country’s emergency oil stockpiles to prevent prices from surging when American sanctions on Iranian crude are implemented in early November. Other producers can offset losses from the Persian Gulf state, he said.
Oil prices rise 1 percent ahead of US sanctions against Iran - Oil prices rose towards four-year highs on Thursday, driven by the prospect of a shortfall in global supply once U.S. sanctions against major crude exporter Iran come into force in just five weeks' time. U.S. President Donald Trump last week demanded that OPEC raise production to prevent further price rises ahead of key congressional elections in early November. Analysts say the Organization of the Petroleum Exporting Countries and partner Russia appear unlikely at this point to respond immediately to Trump's demands, while U.S energy secretary Rick Perry has also ruled out using U.S. strategic crude reserves as a means of lowering the price. The most-active December Brent crude futures contract was up 59 cents at $81.96 a barrel at 8:49 a.m. ET (1249 GMT, just off Tuesday's four-year high of $82.55. The front-month November contract expires on Friday. U.S futures were up 84 cents, or 1.2 percent, at $72.41 a barrel. "On paper, you could argue that the technical and fundamental perspective points to higher prices, so I think that will carry on into next week and further out," Saxo Bank senior manager Ole Hansen said. "$100 dollars barrel, I am struggling to see that. Already at $80, we are seeing emerging-market local oil prices pretty close to where we peaked a few years ago ... the race to protect consumers from further price rises from here could potentially impact demand growth sooner than would otherwise have been expected." Estimates of how much Iranian crude could disappear from the market once U.S. sanctions come into force on Nov. 4 vary widely among the analyst community, from anywhere from 500,000 barrels per day (bpd) all the way to 2 million bpd. At its 2018 peak in May, Iran exported 2.71 million bpd of crude oil, equivalent to nearly 3 percent of daily global consumption.
High oil prices after the United States refused to release its oil reserves -- Oil prices rose on Thursday, even after weekly data from the US Energy Information Administration (EIA), which unexpectedly showed an increase in US stocks. But the United States' exclusion of the release of the crude oil reserves in emergency situations has raised fears of potential losses in Iranian supplies Where the US government is not thinking of releasing emergency oil stocks in the country to prevent prices from rising when US sanctions are applied to Iranian crude in early November after the US Energy Secretary said that the reserve will not have a significant impact. The United States is close to a four-year high after the Organization of the Petroleum Exporting Countries (OPEC) said it was not rushing to increase production to counter production losses in Iran and Venezuela, which announced it may announce force majeure to postpone some of its oil exports. Earlier this week, Trump accused OPEC of "dismantling the rest of the world" after the group stopped providing additional crude oil. The US Energy Information Administration (EIA) said in its weekly report that domestic crude inventories rose by 1.852 million barrels during the week ending on September 21. as such . The US Petroleum Institute, which collects data independently of the industry, reported Tuesday an increase of 2.903 million barrels during the week under review.
Saudi Arabia in short-term oil fix, fears extra U.S. supply next year (Reuters) - Saudi Arabia will quietly add extra oil to the market over the next couple of months to offset a drop in Iranian production but is worried it might need to limit output next year to balance global supply and demand as the United States pumps more crude. The kingdom, OPEC’s top producer, came under renewed pressure last week from U.S. President Donald Trump to cool oil prices ahead of a meeting in Algiers between a number of OPEC ministers and allies including Russia. Two sources familiar with OPEC policy said Saudi Arabia and other producers discussed a possible production increase of about 500,000 barrels per day (bpd) among the Organization of the Petroleum Exporting Countries and non-OPEC allies. But Riyadh decided against pressing for an official increase now as it realized it would not secure agreement from all producers present at the talks, some of which lack spare production capacity and would be unable to boost output quickly. Such a move would have unsettled relations among producers, the sources said, with the Saudis keen to maintain unity among the so-called OPEC+ alliance in case Riyadh wants to change course in future and seek their collaboration on an output cut. “There are only two months left until the end of the year, so why create tensions now between Saudi Arabia, Iran and Russia?” one source familiar with the Algiers discussions said. Saudi Energy Minister Khalid al-Falih said on Sunday he was concerned that oil production gains, mainly from the United States, could outstrip a projected increase in oil demand and result in an inventory overhang globally. Oil prices rose to their highest since 2014 above $80 per barrel this week on fears that a steep decline in Iranian oil exports because of new U.S. sanctions will deepen an oil deficit, along with production declines in Venezuela. However, OPEC’s latest report released at the weekend forecast that its non-OPEC rivals led by the United States would increase output by 2.4 million bpd in 2019 while global oil demand should grow by just 1.5 million bpd. That, Saudi thinking goes, could create a large surplus of crude next year, especially if a stronger dollar and weaker emerging market economies reduce global demand for oil.
Saudi Aramco to have more oil output capacity from two fields in fourth quarter: source (Reuters) - State oil giant Saudi Aramco will bring new crude output capacity of some 550,000 barrels per day (bpd) online in the fourth quarter from two fields - Khurais and Manifa - giving it the ability to boost production if there is demand, a source said. The expansion of crude output capacity from Khurais field, which produces light sour crude, will add around 250,000-300,000 barrels per day boosting the field potential to 1.5 million bpd, one source familiar with the matter said. The resumption of production from the giant Manifa field, which pumps heavy sour oil, after resolving some maintenance issues will add another 300,000 bpd to Aramco’s crude output capacity, the source said. Saudi Aramco declined to comment. Saudi Arabia, the world’s largest oil exporter, is the only major producer with oil output capacity of about 12 million bpd. The additional output increase will not raise Aramco’s capacity above the current 12 million bpd. But that would give the company more flexibility to boost supplies and reach higher production levels sooner than before. Saudi Arabia currently pumps around 10.5 million bpd and will quietly add extra oil to the market over the next couple of months to offset a drop in Iranian production. Saudi Energy Minister Khalid al-Falih said last week that production from Manifa would return to 900,000 bpd soon after a pipeline issue has been resolved which has caused output decline from the field over the past months. The Khurais expansion project is crucial to help Saudi Arabia sustain its spare capacity and help reduce pressure on ageing fields, long seen by the market as a crucial cushion that can balance the market during times of oversupply or shortage. Spare capacity is the kingdom’s tool to allow it to raise output quick enough in case of any sudden supply outage or to keep oil prices in check.
Oil prices edge up amid uncertainty over fallout from Iran sanctions - Oil prices rose on Friday as U.S. sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production.Global crude oil benchmark Brent was up 86 cents, or 1.1 percent, at $82.58 a barrel by 10:35 a.m. ET (1435 GMT), hitting a new a four-year high. It has gained around 4 percent this quarter.U.S. light crude was $1.03, or 1.4 percent, higher at $73.15 a barrel, rising above the $73 level for the first time since July. It is up about 4.5 percent this month, but down about 1.5 percent since the end of June.A new round of U.S. sanctions on Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, kick in on Nov. 4. Washington is demanding that buyers of Iranian oil cut imports to zero to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East."The fall in Iranian production is set to intensify once the second round of U.S. sanctions come into effect in November," said Abhishek Kumar, senior analyst at Interfax Europe Ltd.Other OPEC countries have been increasing production in recent months but global inventories have been falling as supply tightens, analysts say.Saudi Arabia is expected to add extra oil to the market over the next couple of months to offset the drop in Iranian production. Two sources familiar with OPEC policy told Reuters Saudi Arabia and other producers had discussed a possible production increase of about 500,000 barrels per day (bpd) among OPEC and non-OPEC producers.
The upward march of oil prices shows few signs of stopping -- Brent oil, the world standard, relentlessly climbed from a low of $30 per barrel early in 2016 to above $80 per barrel today. A year ago, when Brent was around $55 barrel, some pundits foresaw a return to the 2016 lows; others saw the price languishing in the $50-$60 per barrel range. Bearish forecasts reflected a tepid outlook for the world economy and expectations of fracking on an ever-larger scale coupled with new finds from deep-water drilling. Few observers reckoned that Brent might again exceed $100 per barrel, as it did between 2011 and 2014, or even reach $80. Several factors combined to upset these bearish forecasts. On the demand side, massive tax cuts, taking effect in 2018, sparked the U.S. economy with global spillovers. Meanwhile, easy monetary policy in all advanced countries further promoted global growth. On the supply side, the fracking rig count dropped dramatically when oil prices plunged in 2015 and has recovered only slowly since then. Fracking makes a much larger contribution to natural gas than to oil supply. U.S. oil production continues to grow, but at a modest pace. Meanwhile, the major oil producers have been cautious about betting $3 billion or more on deep-water drilling off the coast of Brazil or Africa. President Trump’s renewed sanctions may reduce Iranian oil exports by as much as 1 million barrels a day as European buyers reluctantly cut their purchases. This shock gives Russia and Saudi Arabia even stronger control of world oil supply.Make no mistake: Higher oil prices bring joy to multiple influential actors. Russia and Saudi Arabia, obviously, but also Texas, Oklahoma and other energy states, plus all the conventional oil and fracking firms. Even Iran has reason to be happy: Its oil exports will perhaps be cut from 3 million to 2 million barrels per day, but the 50-percent rise in Brent means that Iran is just as well off financially.
US crude sanctions against Iran could push oil prices above $100 a barrel, strategists say - President Donald Trump's sustained bid to sanction Iranian crude exports could trigger a dramatic shortfall in global supply, strategists told CNBC on Thursday, amid renewed worries oil prices could soon rally up to triple digits. Earlier this week, Trump urged OPEC to ramp up production levels in order to prevent further price rises ahead of the mid-term elections in November. But OPEC and non-OPEC producers were thought to be unlikely to immediately respond to Trump's demands, after Saudi Arabia and its allies decided against pressing for an official increase at a meeting in Algeria last week."The unwillingness of the 25 producing nations to declare their intention to ramp up production in their effort to replace Iranian barrels all of the sudden produced a very tight supply and demand balance for the fourth quarter of this year," Tamas Varga, senior analyst at PVM Oil Associates, said in a research note published Thursday."As a result, the talk is now (of) Brent reaching $100 a barrel this year," he added.International benchmark Brent crude traded at around $81.87 on Thursday, up around 0.65 percent, while U.S. West Texas Intermediate (WTI) stood at $72.32, more than 1 percent higher.The U.S. is scheduled to impose targeted crude sanctions against OPEC's third-largest oil producer in just five weeks' time. And the sanctions are widely expected to have an immediate impact on Iran's oil exports, although estimates of exactly how much of the country's oil could disappear from November 4 vary widely.Some energy market analysts expect around 500,000 barrels per day (bpd) to disappear once U.S. sanctions against Iran come into force, while others have warned as much as 2 million bpd could come offline over the coming months. At its 2018 peak earlier this summer, Iran exported around 2.7 million bpd of crude oil — that's the equivalent to almost 3 percent of daily global consumption.
The $100 Oil Debate - WTI and Brent held onto their gains during early trading on Friday and look set to close out the week strongly up. The tension between dwindling Iranian supply and the extent to which Saudi Arabia will increase production is sure to dominate the market narrative over the next few weeks. The mood at the Asia Pacific Petroleum Conference (APPEC) in Singapore was highly bullish on oil prices in the short-term, largely because of the supply losses from Iran. Bloomberg also noted that the number of Brent options has surged to its highest ever, “driven by record call trading, including bets on $100.” Oil traders Mercuria and Trafigura see global production losses of about 2 million barrels per day and 1.5 mb/d, respectively, mostly related to Iran. . The “special purpose vehicle” to help Iran continue to do business with European companies may not have much of an impact on the oil trade. Buyers are not likely to be entirely protected from U.S. secondary sanctions. “I think it is a welcome development,” Daniel Martin, a partner and sanctions expert at Holman Fenwick Willan in London, told Bloomberg. “But oil is not the arena it is going to be tested and used first.”. Total CEO Patrick Pouyanne says $100 oil is possible but isn’t excited about it. “I’m not sure it’s a good news” he told Bloomberg. “Even for the oil industry, because you know, when price goes too high then you open the door to your competitors” while demand will likely decline, he said.. OPEC+ decided against further production gains last weekend, although Saudi Arabia has indicated it would increase production in September and October. However, Saudi Arabia is also wary about creating a new supply glut, as the market will see a seasonal dip in demand in the winter. Riyadh is running the risk of a supply crunch in the fourth quarter, but Saudi officials fear the opposite problem if they increase production too much.
'Show me the barrels': Oil prices set to spike as OPEC and Trump go head-to-head, analysts say -- OPEC producers and President Donald Trump are both embracing a "show me" attitude to energy market uncertainty, analysts told CNBC on Friday, as traders speculate about the possibility of $100 a barrel before year-end."The market and certainly the U.S. president is saying to OPEC and Saudi Arabia: 'Show me the barrels,'" Herman Wang, OPEC specialist at S&P Global Platts, told CNBC's "Street Signs" on Friday."And Saudi Arabia and OPEC have kind of turned around and said: 'Well, show me the demand,'" he added.Earlier this week, Trump urged OPEC to ramp up production levels to prevent further price rises ahead of the mid-term elections in November.Trump's calls for the Middle-East dominated cartel to raise global production levels comes as the U.S. prepares to impose targeted crude sanctions against Iran in around five weeks' time. Further to this, Washington is also asking buyers of Iranian oil to slash imports to zero to force Tehran to negotiate a new nuclear agreement.OPEC and non-OPEC producers were initially expected to be reluctant to immediately respond to heightened pressure from the Trump administration, but Saudi Arabia is now expected to quietly add additional barrels of oil to the market over the next couple of months.When asked whether OPEC and non-OPEC producers were likely to have the capacity to ramp up production levels in order to offset any potential supply disruptions, Wang replied: "That is the big question in the market right now."Saudi Arabia has claimed to have around 1.5 million barrels per day (bpd) that they can add to the market if required.Yet, external observers warn Riyadh's claim has never been tested before and even if the kingdom was able to significantly ramp up production, the OPEC kingpin could then be in a weaker position to offset any further other disruptions in the market.U.S. sanctions against Tehran are widely expected to have an immediate impact on Iran's oil exports, although the estimates of exactly how much of the country's oil could disappear from November 4 vary widely.Some energy market analysts expect around 500,000 bpd to disappear once U.S. sanctions against Iran come into force, while others have warned as much as 2 million bpd could come offline over the coming months.
Baffling Surge In Oman Crude Price Sends Oil Market Into Turmoil - While oil traders have been generally punting to the "November Iran sanctions" as the reason why in recent weeks a bevy of $100 oil forecasts have emerged (even if Goldman disagrees), a more immediate cause for the prevailing oil price bullishness has emerged in recent days and it has to do with Oman oil - a low-quality crude - which this week turned into the world’s costliest oil benchmark, "confounding traders and throwing the market into turmoil" according to Bloomberg. Traditionally an obscure, little used benchmark, Oman oil which trades on the Dubai Mercantile Exchange and which will play a key role when Saudi Arabia sets the cost of its shipments to Asia next month, is now more expensive than New York’s West Texas Intermediate and London’s Brent. In fact, earlier this week, the Oman futures contract rose above $90 a barrel making it one of the costliest grades in the world.On Wednesday, Oman briefly traded as high as $90.90 a barrel on the DME., although after some profit taking by the end of Singapore trading at 4:30 p.m., it was at $88.96 a barrel, still materially higher compared to $82.15 for Brent, and $72.36 for WTI.According to Bloomberg's Javier Blas, the dramatic 2-day gain of 11% reverberated around the annual Asia Pacific Petroleum Conference in Singapore -- one of the biggest gatherings of the global oil-trading industry. “Have you seen Oman?” replaced “Good evening” for many in the cocktail circuit. Adding to the mystery is that Oman is considered a sour crude due to its high sulfur content, making it more difficult to refine into petroleum products such as gasoline and diesel. That means it usually trades at a discount to lower-sulfur, or sweet benchmarks Brent and WTI. But not this week. Here, again, Iran emerges as a key culprit because among the reasons suggested to justify the price surge includes lower supply of similar-quality barrels from Iran due to U.S. sanctions, coupled with growing purchases by top crude importer China.
EU, UK, Russia, & China Join Together To Dodge US Sanctions On Iran - The UN General Assembly (UNGA) in New York is a place where world leaders are able to hold important meetings behind closed doors. Russia, China, the UK, Germany, France, and the EU seized that opportunity on Sept. 24 to achieve a real milestone. The EU, Russia, China, and Iran will create a special purpose vehicle (SPV), a “financially independent sovereign channel,” to bypass US sanctions against Tehran and breathe life into the Joint Comprehensive Plan of Action (JCPOA), which is in jeopardy. "Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran's exports, including oil," they announced in a joint statement. The countries are still working out the technical details. If their plan succeeds, this will deliver a blow to the dollar and a boost to the euro.The move is being made in order to save the 2015 Iran nuclear deal. According to Federica Mogherini, High Representative of the European Union for Foreign Affairs and Security Policy, the SPV will facilitate payments for Iran’s exports, such as oil, and imports so that companies can do business with Tehran as usual. The vehicle will be available not just to EU firms but to others as well. A round of US sanctions aimed at ending Iranian oil exports is to take effect on November 5. Iran is the world's seventh-largest oil producer. Its oil sector accounts for 70% of the country's exports. Tehran has warned the EU that it should find new ways of trading with Iran prior to that date, in order to preserve the JCPOA. The SPV proposes to set up a multinational, European, state-backed financial intermediary to work with companies interested in trading with Iran. Payments will be made in currencies other than the dollar and remain outside the reach of those global money-transfer systems under US control. In August, the EU passed a blocking statute to guarantee the immunity of European companies from American punitive measures. It empowers EU firms to seek compensation from the United States Treasury for its attempts to impose extra-territorial sanctions. No doubt the move will further damage the already strained US-EU relationship. It might be helpful to create a special EU company for oil exports from Iran.
Oil Market Shocked As China’s Top Refiner Halves Iranian Oil Imports -- China’s top refiner Sinopec is halving its oil imports from Iran as of September, bowing to pressure from the United States, which is seeking to bring Iranian oil exports down to zero with the sanctions returning in November, Reuters reported on Friday, quoting people familiar with the issue.Sinopec will reduce its imports from Iran to around 130,000 bpd, based on Reuters calculation on the prevailing supply contracts between the Chinese company and the National Iranian Oil Company (NIOC).China has previously stated that it would not stop buying Iranian oil despite U.S. efforts to have the Iranian exports down to zero. But Beijing is also said to have agreed not to increase its oil purchases from Iran. Iran, for its part, is keen to keep its single biggest oil customer—China—when U.S. sanctions on Iranian oil exports kick in.Analysts have so far assumed that China will keep buying Iranian oil and be pretty much the only certain meaningful customer of Iran, because the other major buyer, India, is even more hard-pressed by the United States to wind down purchases from Tehran.Sinopec—listed in Hong Kong, but more importantly, also in New York—is now facing direct pressure from the United States to curtail Iranian oil imports. According to one of Reuters’s sources, U.S. officials visited Sinopec in Beijing in August and demanded steep reductions of oil imports from Iran.
US Rig Count Sees Modest Increase Amid Soaring Oil Prices - Baker Hughes reported an increase of a single oil and gas rig in the United States this week, bringing the total number of active oil and gas rigs to 1,054 according to the report, with the number of active oil rigs decreasing by three to reach 863 and the number of gas rigs increasing by three. The miscellaneous rig count increased by one rig.The oil and gas rig count is now 114 up from this time last year.At 12:22pm. EDT on Friday, WTI Crude was trading up 1.72 percent at $73.36—up over $3 per barrel up from this time last week, while Brent Crude was trading up on the day by 1.98 percent at $82.99—up more than $5 per barrel from this time last week.Prices climbed this week as OPEC failed to agree to a production increase at their weekend meeting juts days ago, intensifying fears that the oil market may find itself undersupplied in the wake of Iranian and Venezuelan supply disruptions.Japan and South Korea have both ceased all oil trading with Iran, and India and even China’s Sinopec have drastically reduced oil volumes from the country that finds itself on the wrong end of US sanctions. Reports that Saudi Arabia, Iraq, and a handful of OPEC members have unofficial plans to increase production have done little to assuage the fears that the market may slip to a deficit. Russia has hit a new oil production high for the month of September, Reuters sources say, averaging 11.347 million bpd, but this, too, has failed to cut the oil price increases.Canada’s oil and gas rigs for the week lost 19 rigs this week after losing 29 rigs last week, bringing its total oil and gas rig count to 178, which is 35 fewer than this time last year, with a 13-rig decrease for oil for a second week in a row, and a 6-rig decrease for ga s.On the production side, the EIA’s estimates for US production for the week ending September 21 were for an average of 11.10 million bpd—a new high for the United States.
Oil prices tally a second straight monthly gain - Oil futures rallied Friday on signs of tightening supplies, tallying a second monthly gain in a row, with global crude prices settling at another four-year high. “Until sizable supply is offered up by OPEC and with pandemic market chatter raging about the $100 per barrel market, its hard [not] be blatantly bullish,” said Stephen Innes, head of trading at Oanda, in emailed comments. November West Texas Intermediate crude the U.S. benchmark, climbed $1.13, or 1.6%, to settle at $73.25 a barrel on the New York Mercantile Exchange, the highest since July 10. Global benchmark November Brent picked up $1, or 1.2%, to expire at $82.72 a barrel on the ICE Futures Europe exchange. The December Brent contract which is now the front month, added $1.35, or 1.7%, to $82.73. For the week, based on the front-month contracts, Brent crude was up 5%. It saw a monthly gain of around 6.8% and a quarterly advance of 4.1%, according to Dow Jones Market Data. U.S. WTI oil saw a weekly climb of 3.5% and a monthly rise of roughly 4.9%. For the quarter, however, based on the settlement of $74.15 for the front-month contract at the end of June, it ended down 1.2%. Prices saw a sudden, late-morning jump to intraday highs. Phil Flynn, senior market analyst at Price Futures Group, attributed that climb to technical trading. He also said prices seemed to find support from reports that China is cutting back on Iranian oil purchases, as well as talk that the U.S. has no plans to tap its Strategic Petroleum Reserve to make up for Iranian oil barrels lost amid U.S. sanctions.Overall, the market has been bolstered by declining Iranian crude exports ahead of U.S. economic sanctions against the Islamic Republic’s oil industry, set to take effect Nov. 4, analysts say.
The Biggest Wildcard In The Iran Sanctions Saga - In the last 24 hours there have been two fascinating media reports about the Iran sanctions: one is a Bloomberg story saying Indian refiners will not buy any Iranian crude in November; the other is a Reuters story quoting a government official as saying New Delhi has not told refiners to stop buying Iranian crude. These two stories don’t just offer two different perspectives. They demonstrate exactly how confusing the situation is and how much more confusing it could become. And meanwhile, the truth remains out there. Bloomberg’s sources from several of India’s largest refiners—and biggest Iranian crude buyers—may be telling the truth or they may be saying something that the United States wants to hear. If they are telling the truth, shipping data would support this soon enough: if they stop buying Iranian crude they will have to find a replacement for those 577,000 bpd that they had been importing from Iran as per Bloomberg shipping data.There is no mention of alternative supplies in the story. What there is, however, is the caveat that it is basically too early to say if these refiners will import Iranian crude: final decisions are only due early next month. Put simply, these statements from refinery officials could be nothing more than much ado about nothing. Shipping data will tell.Reuters’ story comes from a government official who has remained unnamed but who has made a point of telling the agency there has been no decision by New Delhi to halt imports. That shouldn’t be a surprise. An earlier statement from another government official had this to say: "We want to make the point that India is heavily reliant on oil imports for its consumption needs and 83 percent of its oil comes from external sources." hAnd here’s another statement from last week: Indian refiners may start paying for Iranian crude in rupees from November on as the sanctions kick in.
Iran Starts Air Force Drills Near The World’s Crucial Oil Chokepoint -- Iran’s Air Force and the Islamic Revolution Guards Corps began on Friday fighter jet drills over the waters near the world’s most important oil chokepoint, the Strait of Hormuz, Iran’s IRNA news agency reported on Friday.Aircraft including nine F-4, six Sukhoi, and four Mirage started the war games in the Persian Gulf and the Sea of Oman waters, IRNA said.The maneuver is a warning that Iran’s enemies will face a “stern response” if they show ill-will toward Tehran, the AP quoted the official Iranian news agency as saying.Earlier this year, Iran threatened to close the Strait of Hormuz for all tanker traffic if the U.S. drives Iranian oil exports to zero.As the first round of U.S. sanctions on Iran kicked in last month and the second round of sanctions—including on Iranian oil exports—is set to snap back in early November, the Islamic Republic has recently stepped up rhetoric about controlling the most vital oil flow chokepoint in the world. U.S. Secretary of State Mike Pompeo rebuffed Iran’s claims saying in a statement posted on Twitter: “The Islamic Republic of Iran does not control the Strait of Hormuz.” The Strait of Hormuz is the world’s most important chokepoint, with an oil flow of 18.5 million bpd in 2016, the EIA estimates. The Strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea and is the key route through which Persian Gulf exporters—Saudi Arabia, Iran, Iraq, Kuwait, Qatar, the UAE, and Bahrain—ship their oil. Only Saudi Arabia and the UAE have pipelines that can ship crude oil outside of the Persian Gulf with additional pipeline capacity to bypass the Strait of Hormuz, which is a route of more than 30 percent of the daily global seaborne-traded crude oil and petroleum products and more than 30 percent of the liquefied natural gas (LNG) flows.
Iran’s Rouhani fumes at US after Ahvaz parade attack - Iranian President Hassan Rouhani has fiercely criticised the US following a deadly attack on a military parade. Gunmen opened fire at Revolutionary Guard troops in the south-western city of Ahvaz on Saturday, in an attack claimed by both an anti-government Arab group, and Islamic State militants. Mr Rouhani said the "bully" US and the Gulf states it backed had enabled the attack. The US has denied this and says it condemns "any terrorist attack". Mr Rouhani will face Donald Trump at the UN General Assembly this week. Saturday's attack killed 25 people, including 12 soldiers, civilians watching the parade, and a four-year-old girl. Ahvaz National Resistance, an umbrella group that claims to defend the rights of the Arab minority in Iran's Khuzestan Province, said the group was behind the bloodshed, while IS also claimed the attack. Neither group provided evidence to show it was involved.
Iran’s Revolutionary Guard vows to avenge Ahvaz attack - Iran's Revolutionary Guard has vowed to revenge the attack on a military parade that killed 29 people, including the four attackers, and wounded 70 others.The Iranian elite force, in a statement on Sunday, said that those behind Saturday's attack will face a "deadly and unforgiving revenge in the near future".Iranian officials blamed two Gulf states and the United States for the attack, accusing them of backing the Arab separatist al-Ahvaziya armed group which claimed responsibility for the attack.President Hassan Rouhani vowed to deliver a "crushing response", while Iran's Supreme Leader Ayatollah Ali Khamenei linked the attack with the US and its "allies in the region".The country's foreign minister, Mohammad Javad Zarif, said "regional terror sponsors" were responsible for the attack, adding he held "their US masters accountable". While Iranian officials have not directly named the Gulf states, their comments are believed to be directed at Saudi Arabia, the UAE and Israel, which all have hostile relations with Iran and have promised to counter its influence in the region, including inside the country.
Saudi, UAE officials call for regime change in Iran at US summit - The foreign minister of Saudi Arabia, the ambassador of the United Arab Emirates to Washington, and the director of Israel's Mossad spy agency have joined ranks in pushing for regime change in Iran. Speaking alongside US National Security Adviser John Bolton and US Secretary of State Mike Pompeo, Saudi Arabia's Foreign Minister Adel al-Jubeir called for the overthrow of the Iranian government, saying the Islamic Republic was unlikely to change on its own volition. "Unless the pressure internally is extremely intense, I don't believe they will open up," al-Jubeir said at the United Against Nuclear Iran (UANI) conference in New York City, which was attended by states that opposed the 2015 nuclear deal with Iran. "How can we negotiate with a state that wants to kill us," Jubeir said in remarks carried by UAE newspaper The National.Saudi and Emirati officials welcomed Washington's decision to abandon the 2015 Iran deal - known as the Joint Comprehensive Plan of Action (JCPOA) - under which Iran agreed to curb its nuclear programme in exchange for sanctions relief, it reported.But Yousef al-Otaiba, the UAE's ambassador to the US, said external pressure was needed and would be key in changing Iran's course. "I think any recalibration of Iranian foreign policy will come from external policy," said Otaiba, who added the isolation of Tehran must be backed up by European powers, Asian nations, as well as the United States."If a missile is launched at Saudi Arabia and the UAE what will the reaction be and how will we be defended?" he said.Iran Warns Saudis Of Red Lines And Threatens US Bases Will Not Be Safe - Iran has issued a number of threats on Friday following official charges made by leaders in Tehran that Saudi Arabia and the UAE funded a terrorist attack on a military parade in a southwest district last Saturday which killed 25 people, including members of the elite Iran’s Revolutionary Guards (IRGC).Iranian military officials declared "red lines" against the two Gulf countries, threatening war, while in a separate statement a senior cleric said US regional bases will not be safe if "America does anything wrong". "If America does anything wrong, their bases around Iran would not remain secure," Ayatollah Mohammadali Movahedi Kermani was quoted as saying by Mizan news agency while leading Friday prayers in Tehran. And simultaneously the Fars news agency quoted Brigadier General Hossein Salami, deputy head of the IRGC, as saying in reference to the Saudis and Emirates: “If you cross our red lines, we will surely cross yours. You know the storm the Iranian nation can create.”
US Evacuating Consulate In Iraq, Citing Threats From Iran - On Friday the State Department announced it is evacuating all non-essential personnel from the US consulate in Basra, Iraq. The drastic move comes after a month of heavy anti-Iran and anti-Iraqi government protests that have gripped the southern city, which has led to sectarian rioting and the burning of Shia militia buildings, as well as the torching of the Iranian consulate early this month. During the first week of September the US embassy in Baghdad's green zone also came under attack by mortar fire, which US officials and military analysts blamed on Iran-backed militias. Secretary of State Mike Pompeo cited threats from Iran as the reason for ordering the Basra consulate evacuation, and in a separate statement a senior US official confirmed to CNN that the "ordered departure" was due to "security threats from Iran." "US Embassy Baghdad will continue to provide consular services to US citizens in Basra," the State Department said in its statement referencing the massive and highly fortified US compound in Iraq's capital, which the Basra consul staff will evacuate to. It also issued an updated travel advisory for Iraq noting the removal of non-essential personnel from Basra. Pompeo explained the evacuation order further as, "Threats to our personnel and facilities in Iraq from the Government of Iran, the Islamic Revolutionary Guard Corps Quds Force, and from militias facilitated by and under the control and direction of the Quds Force leader Qasem Soleimani have increased over the past several weeks."
Once Iraq's Venice, Basra's waters have now turned deadly (Reuters) - Once dubbed the “Venice of the Middle East” for its canals, Iraq’s crumbling port city of Basra is slowly dying of thirst. Crisscrossed waterways that earned it comparisons with the Italian city are now filthy pools of stagnant water. Its vibrant freshwater lifeline, the Shatt-al-Arab river that runs through it, is now so polluted it threatens the lives of the more than 4 million inhabitants of Iraq’s second city. “It now causes death. It is highly polluted. Different pollutants can be found in the river, including germs, chemicals, toxic algae coupled with unprecedented concentrations of salt almost like that of seawater, rather, it is indeed seawater,” said Shukri al-Hassan, Marine Science lecturer at Basra University. According to Hassan, contamination levels of Shatt-al-Arab have increased four-fold over the past 10 years and are increasing, putting more and more people at risk. L Daily life also features open sewers and streets filled with fetid piles of garbage. In response, furious residents recently staged some of the biggest protests in years. Many contrast their impoverishment with the oil wealth the province provides to the federal government’s coffers. State officials blame a public funding crisis wrought by years of low oil prices for the hardship in a city that was a magnet for Middle Eastern tourists until the early 1980s. Located where the Euphrates and Tigris rivers merge near the Gulf at Iraq’s marshy southern tip, Basra is one of the few cities in the Middle East without an effective water treatment system. It had an advanced sanitary infrastructure in the 1960s but that broke down decades ago, turning waterways into cesspools whose stench is compounded by the hot desert climate. Basra residents say salt seeping into the water supply has made it undrinkable and sent hundreds to hospital. Some 90,000 people have been admitted to hospital, according to the head of Basra’s health department, Riyadh Abdull Amir, with as many as 4,000 a day seeking treating this month.
Libya Urges United Nations To Take Concrete Action To Halt Chaos In Tripoli - More than seven years after NATO launched a regime change war in Libya on the side of anti-Gaddafi rebels, the West is again being asked to intervene as the country further descends into civil war. Except this time it's the internationally recognized government since installed in Tripoli that is at war with itself, and the death toll from inter-factional fighting since August has now reached over 100 and is growing as street battles in Tripoli suburbs rage, causing leaders to urge the United Nations to act. The UN-backed Government of National Accord (GNA) issued a statement late Friday calling on the U.N. to take "concrete and effective" action to protect civilians and halt fighting near the capital. The GNA urged the UN mission to "present the Security Council with the reality of the bloody events in Libya so that it can... protect the lives and property of civilians". On Friday alone clashes in Tripoli left 15 dead and dozens more wounded, according to official health ministry statements. According to international reports, some of the feuding militias have come mostly from Libya's third city Misrata and the town of Tarhouna southeast of the capital; however, the early weeks of fighting were driven mostly by rival factions within the GNA itself. Since fresh fighting again erupted in Tripoli on August 26 (there's been internecine battles in the capital for years), whole sections of the city have been shut down, especially the southern suburbs where initial street battles began, which has witnessed the shelling of residential areas, street-to-street fighting, and tanks in the streets — all reminiscent of the 2011 war which eventually led to a NATO air campaign and forcible removal and assassination of Libya's longtime leader Muammar Gaddafi.
Deadly Yemen famine could strike at any time, warns UN boss - A famine inflicting “huge loss of life” could strike at any time in Yemen, as food prices soar and the battle rages over the country’s main port, the UN humanitarian chief, Mark Lowcock, has warned. Lowcock said that by the time an imminent famine is confirmed, it would be too late to stop it. Accelerating economic collapse has caused prices of staples to increase by 30% at a time many millions of Yemenis were already finding it hard to feed their families. Meanwhile, fighting over the port of Hodeidah has limited its capacity, shut down its grain mills and closed the main road inland towards the capital, Sana’a, threatening a lifeline that has allowed aid agencies to reach 8 million people and stave off famine so far this year. “One of the things about what happens in famines is there’s a sudden collapse of which you get no notice,” Lowcock, the UN under-secretary for humanitarian affairs, told the Guardian on the eve of a UN general assembly meeting on Monday to discuss the Yemeni crisis. “When the collapse happens, it’s too late to do anything. There’s a huge loss of life very, very quickly. So that’s the issue we’re flagging.” The offensive on Hodeidah is being led on the ground by forces from the United Arab Emirates (UAE) with Saudi air support. They are fighting Houthi rebels who have held the port since 2014. Before the latest offensive, Hodeidah’s population was about 600,000, but Lowcock said it was unclear how many were still in the heavily bombed port city. UN agencies recently delivered food aid for 42,000 families in danger, which Lowcock estimated represented about a quarter of a million people. The veteran British aid official said he thought it unlikely there would be a direct assault on the city centre but was concerned about the impact of the battle on supplies reaching further inland, in a country that is 90% dependent on food imports.
Yemen is undeniably the world's worst humanitarian crisis: WFP- The World Food Programme (WFP) has said there "very well could be" famine in remote areas of Yemen where the UN's food agency does not have access, painting a bleak picture of the hunger crisis gripping the country."Yemen is a disaster and I don't see any light at the end of the tunnel right now," WFP's Executive Director David Beasley told reporters at a closed briefing during the UN General Assembly in New York City on Thursday.The WFP has warned that Yemen is on the brink of a full-blown famine, with 18 million of its 29 million population food insecure, 8.4 million severely so.The country's civil war further worsened in the wake of Saudi-led military intervention in 2015, which has ravaged the country's economy and caused the Yemeni riyal to collapse, depreciating 180 percent.The cost of food has increased by 35 percent in the last 12 months and if trends continue the riyal will reach an exchange rate of 1,000 to the US dollar, putting 12 million at risk of starvation, UN officials have warned. "Yemen is undeniably the world's worst humanitarian crisis by far," said Beasley
US military document reveals how the West opposed a democratic Syria - US military documents from 2011 and 2016 reveal that although officials wanted a Syrian regime change in theory, they thought it was highly unlikely to actually happen — and hoped that if President Bashar al-Assad was overthrown, he would not be replaced by an opposition-led Syrian democracy but, rather, the same Alawite-Baathist ruling structure would continue. The end result was to be the decimation of the democratic opposition, the consolidation of Islamist forces and regime preservation.‘The US has given up on the overthrow of Assad in Syria’, wrote Robert Fisk this summer. Indeed, as the Russian-backed Syrian army prepared to execute its final offensive on Idlib, western governments appeared to signal their acceptance of a bloody victory for Assad, despite the ritual denunciations.But at the last minute, Russia and Turkey agreed a truce to ward off a Russian-led attack for at least a month, and establish a buffer zone to protect 3 million civilians. The deal will involve hashing out how to remove extremist rebels from the buffer zone, and Turkey has announced it will send more troops into Idlib.As the Idlib offensive loomed, the West, curiously, did little of substance in any particular direction. According to two newly uncovered US military documents, western reticence might be because that the US was never really committed to overthrowing Assad, due to a self-serving strategy that has been wildly misunderstood. The documents suggest that both early on and toward the later phase of the conflict, senior US military officials had not given any credence to the democratic aspirations of Syrian protestors, but had merely sought to use them as a tool to sideline expanding Iranian influence. Toppling the regime was dismissed as a highly improbable scenario, with officials indicating they believed the survival of an authoritarian Baathist governing structure — with or without Assad — was inevitable.
The ceasefire agreed by Russia and Turkey proves how far Putin has come out on top in Syria - Patrick Cockburn - Pundits are predictably sceptical about the agreement reached by Russian president Vladimir Putin and Turkish president Recep Tayyip Erdogan in Sochi on Monday to head off an imminent offensive by President Bashar al-Assad’s forces directed againstrebels in Idlib province. This is the last enclave of the armed opposition in western Syria which has lost its strongholds in Aleppo, Damascus and Daraa over the past two years. Doubts about the accord are understandable because, if it is implemented, the anti-Assad groups in Idlib will be defanged militarily. They will see a demilitarised zone policed by Russia and Turkey eat into their territory, “radical terrorist groups” removed, and heavy weapons ranging from tanks to mortars withdrawn. The rebels will lose their control of the two main highways crossing Idlib and linking the government held cities of Aleppo, Latakia and Hama. There is a striking note of imperial self-confidence about the document in which all sides in the Syrian civil war are instructed to come to heel. This may not happen quite as intended because it is difficult to see why fighters of al-Qaeda-type groups like Hayat Tahrir al-Sham should voluntarily give up such military leverage as they still possess. The Syrian government has said that it will comply with the agreement but may calculate that, in the not so long term, it will be able to slice up Idlib bit by bit as it did with other rebel enclaves. What is most interesting about the agreement is less its details than what it tells us about the balance of forces in Syria, the region and even the world as a whole. Implementation of the Putin-Erdogan agreement may be ragged and its benefits temporary, but it will serve a purpose if a few less Syrians in Idlib are blown apart. The Syrian civil war long ago ceased to be a struggle fought out by local participants. Syria has become an arena where foreign states confront each other, fight proxy wars and put their strength and influence to the test.The most important international outcome of war so far is that it has enabled Russia to re-establish itself as a great power. Moscow helped Assad secure his rule after the popular uprising in 2011 and later ensured his ultimate victory by direct military intervention in 2015.
Trump claims credit for halting Assad regime’s attack on Syria’s Idlib, after learning about province from a rally - President Donald Trump has claimed credit for saving “millions” of lives in Idlib, Syria despite only learning about the area recently, because he said he successfully halted a brutal regime offensive via a tweet.Mr Trump said Wednesday he convinced Syria and its main allies, Russiaand Iran, to hold off an anticipated attack on the northwestern province, home to 3 million people and one of the last rebel strongholds in the country. Speaking on the sidelines of the United Nations General Assembly, Mr Trump explained that a message to his top team to “not let it happen” and a 4 September tweet, declaring Syria would be making a "grave humanitarian mistake”, saved the day. However, he also admitted he had only recently heard about the province because a woman brought it up at a rally last month. The US president said the woman had told him that Iranians, Russians and Syrians had surrounded Idlib and were going to “kill millions of people in order to get rid of 25,000 or 30,000 terrorists.”. "I said that's not going to happen. I didn't hear of Idlib province. I came back and picked up the Failing New York Times and opened it up,” he continued. Mr Trump said the story had indicated the offensive could start in the coming days and so he wrote his Twitter post. He gave orders to top officials, including Secretary of State Mike Pompeo and White House national security adviser John Bolton, to "not let it happen." “Nobody is going to give me credit but that's OK because the people know,” Mr Trump added.
Russia Beefs Up Syria’s Air Defenses – Tells “Hotheads” To Cool Down The Russian Minister of Defense today announced some of the measures to be taken in Syria in response to last weeks destruction of its electronic warfare plane with 15 airmen on board. Yesterday the Russian MoD held Israel responsible for the incident. Shortly after the event happened we noted: On Netanyahoo's personal request Russia had stopped the delivery of original Russian S-300 long range air-defense missiles to the Syrian military. These would have been less likely to veer off towards the wrong target. In consequence an Iranian 747 was damaged and 15 Russian soldiers were killed. Netanyahoo can forget about any further such 'favors' from Moscow. Yesterday we added: The incident will have consequences on several levels. For one - the airspace along the Syrian coast will now be off limits for Israeli flights ... The Syrian air defense will be further strengthened and modernized. Its personal will get more specialist training. But the probably worst issue for Israel's military will be cooled down relations with the Russian forces. There will be no more freebies, no more looking aside and direct Russian fire on Israeli forces should they again try such stunts. These predicted measures are exactly the ones Defense Minister Shoigu announced today. Syria will get the S-300, its air defense will be further updated, Syria's coast will be more heavily defended: MOSCOW, September 24. TASS - Within two weeks, the Syrian army will get from Russia S-300 air-defense missiles to strengthen its combat capabilities following the downing of a Russian Ilyushin Il-20 aircraft in Syria, Defense Minister Sergei Shoigu said on Monday
Bolton Warns Russian Missile Sale To Syria Would Be Significant Escalation- It appears Israel has paid a huge price for last week's attack on Syria which led to the accidental "friendly" fire downing of a Russian reconnaissance plane with 15 personnel on board as the door could now be forever shut on striking targets in Syria with impunity. The Russian Ministry of Defense (MoD) has announced plans to deliver its advanced S-300 air defense system to Damascus within two weeks. Prior plans to deliver the system, which is considered vastly more effective and can strike at a greater range than Syria's current S-200 and others, were nixed after Israeli threats that delivery would constitute a "red line" for which Israel must act. The Russian MoD acknowledged this and said the situation has "changed" upon announcing its intent to follow through on what Syria has already purchased: “In 2013 on a request from the Israeli side we suspended the delivery to Syria of the S-300 system, which was ready to be sent with its Syrian crews trained to use it,” the MoD statement said. Defense Minister Sergei Shoigu said early Monday, "A modern S-300 air defense missile system will be supplied to the Syrian Armed Forces within two weeks. It is capable of intercepting air assault weapons at a distance of more than 250 kilometers and hit simultaneously several air targets."U.S. National Security Adviser John Bolton said on Monday that the Russian plans to supply Syria with a S-300 missile system would be a “significant escalation” by Moscow and hopes it will reconsider. His statement follows the Russian announcement from early Monday that Russia will supply the surface-to-air missile system to Syria in two weeks, one week after Moscow blamed Israel for indirectly causing the downing of a Russian military plane in Syria, despite strong Israeli objections.
Russia moves S-300 missiles, jamming gear to Syria - - MOSCOW has rejected outright Israel’s argument that its combat jets were nowhere near the reconnaissance plane shot down by Syrian air defences last week. Now it says it will deliver — and deploy troops for — an advanced new missile system to the war-torn region, and shoot down any attackers.Defence Minister Sergei Shoigu said President Vladimir Putin ordered new security measures to protect its military in Syria, including supplying the Syrian army with an S-300 air defence system and jamming radars following the downing of a Russian plane last week.A Syrian Soviet-era S-200 missile shot down the Russian surveillance plane by mistake, killing 15 in an accident Moscow blames on Israel’s fighter jet having used the surveillance plane to ‘hide’ behind.But the new moves make the likelihood of similar events much greater — with the all-encompassing threat by Russia to jam the navigation and communications systems of all foreign combat aircraft flying over Syria, and to shoot on anything it perceives as a threat. “This has pushed us to adopt adequate response measures directed at boosting the security of Russian troops” in Syria, Shoigu said in a televised statement. “(Russia will) transfer the modern S-300 air defence system to the Syrian armed forces within two weeks.”
Leaked Photos Show Russian Military Likely Delivered Advanced S-300 To Syria Already - On Tuesday a series of leaked photos were posted online showing that the S-300 missile defense system may have already been delivered to Syria despite the Russian Ministry of Defense previously suggesting a roughly two week timeline. As Al Masdar News reports, at least three photos were posted by Uralinform.Ru, showing the arrival of the Krasukha 4 electronic suppression of navigation and communication systems, touching down via Russian transport aircraft inside Syria on Monday night. According to the author of the Russia-based publication, the Russian military has already delivered the S-300 hardware to Syria via a Russian-made aircraft from Mozdok Airport in the North Ossetian region. Likely the "leaked" photos are intentionally meant as public signalling to Israel that advanced S-300 deterrence is already fast being established.
Russia’s S-300 Play in Syria Is Creating Geopolitical Waves - The National Interest Russia says it will supply Syria with a version of the S-300 air and missile-defense system, despite objections from Washington and Tel Aviv. The Kremlin made the decision to supply Damascus with the potent air-defense system after a Syrian S-200 surface-to-air missile battery mistakenly shot down a Russian Ilyushin Il-20M Coot-A intelligence, surveillance, and reconnaissance (ISR) aircraft during an Israeli raid on Assad regime forces on September 17.“A modern S-300 air defense missile system will be supplied to the Syrian Armed Forces within two weeks,” Russian defense minister Sergei Shoigu said on September 24, as reported by the state-owned TASS news agency . “It is capable of intercepting air assault weapons at a distance of more than 250 kilometers and hit simultaneously several air targets.” The Kremlin has decided to supply the Syrian regime with the potent S-300 because Moscow blames Israel for the downing of its Il-20M despite the fact that it was a Syrian-operated weapon that brought the four-engine turboprop down. The Russians accuse Tel Aviv of using the lumbering ISR plane as cover during an air raid by four Israeli F-16 fighters on a Syrian regime target. “I will underscore—at the request of the Israeli side, in 2013 we suspended the delivery of S-300 systems that were ready for the dispatch, while the Syrian military had undergone training,” Shoigu said. “Now the situation has changed, and we are not to blame.”Indeed, while Russian president Vladimir Putin initially put the blame for the incident on the fog of war, more recently the Kremlin has said that it blames Israel for the loss of its aircraft. “The information presented by the Israeli military on the operation of their aircraft over Syrian territory differs from the conclusions of the Russian Defence Ministry,” the Kremlin said in a statement . “Russia proceeds from the premise that the actions of the Israeli Air Force were the main cause of the tragedy.”
U.S. Pulling Some Missile-Defense Systems Out of Mideast - The Pentagon is removing some U.S. missile systems from the Middle East in October, U.S. military officials said, a move that will leave American allies with fewer defenses as the White House ramps up its rhetoric against what it says are threats posed by Iran. Defense Secretary Jim Mattis is pulling four Patriot missile systems out of Jordan, Kuwait and Bahrain next month in a realignment of forces and capabilities as the military steps up its focus on threats from China and Russia, multiple senior military officials said. The relocation of the systems out of the Middle East, which hasn’t been previously disclosed, is one of the most tangible signs of the Pentagon’s new focus on threats from Russia and China and away from the long-running conflicts in the Middle East and Afghanistan. Two Patriot missile systems will be redeployed from Kuwait, and one each from Jordan and Bahrain, officials said. Patriots are mobile missile systems capable of shooting down missiles and planes. .The four systems have been taken offline and will be redeployed by next month, officials said. There are no plans for any of them to be replaced, and they are being returned to the U.S. for refurbishing and upgrades, an official said. Although some Patriot systems will remain in the region, officials said the removal of the four batteries amounts to a major drawdown of the capability Patriots provide in the region. Patriots are designed as a missile-defense system, but can be used offensively if needed to protect not only U.S. bases and installations in those countries but also as an effective defense for allies. Their removal comes as the White House intensifies its rhetoric against Iran and amid an increasingly complex battlefield in Syria. The State Department on Tuesday issued a 48-page report that detailed threats posed by Iran, including its missile programs. The report said Iran maintains “a stockpile of hundreds of missiles that threaten its neighbors in the region.”
Netanyahu claims Israel has found Iran’s ‘secret atomic warehouse’ - Benjamin Netanyahu has claimed that Israel had identified a “secret atomic warehouse” in Tehran, containing nuclear equipment and radioactive material.Israel’s prime minister called for new sanctions against Iran and accused European leaders of “appeasement” for opposing them.In a speech to the UN general assembly on Thursday, Netanyahu said he was revealing the existence of the “atomic warehouse” for the first time in public.As he has in past presentations, Netanyahu brought visual aids to illustrate his claims.He held up a satellite image which he said showed where the warehouse was located in Tehran, and a photograph of a nondescript wall and metal gate, which he said showed of the exterior of warehouse.Netanyahu described the facility as a “secret atomic warehouse for storing massive amounts of equipment and materiel from Iran’s secret nuclear weapons programme”, but gave no further details, other than to allege that government officials had spread 15kg of the radioactive material around the streets of Tehran in an attempt to dispose of it. He said a nearby rug cleaning business should check its wares for radioactivity.Tehran is party to a 2015 agreement curbing its nuclear activities in return for sanctions relief. As part of the Joint Comprehensive Programme of Action (JCPOA) it dismantled uranium-enriching centrifuges and a reactor and exported most of its stockpile of enriched uranium. It is not clear, even if some surplus equipment was stored in a Tehran warehouse, whether it would represent a violation of the JCPOA. Dismantled centrifuges were to be stored in specified locations under international monitoring, but there not specific stipulations on the storing of other ancillary pieces of hardware.
Official Israeli Document Denies Existence of Palestinian Refugees– IMEMC News - “Israel Hayom” newspaper, on Wednesday, unveiled an official Israeli document, issued by the Israeli Ministry of Foreign Affairs, which denies the existence of millions of Palestinian refugees.The document affirms the need for settling the refugees residing in Jordan. It also claims that there are links between the UN Relief and Works Agency for Palestine Refugees (UNRWA) and Hamas, saying that the agency is exaggerating the number of refugees and blurring the facts, in order to keep the refugee issue instead of resolving it.According to the PNN, the document considers that the “refugee” classification applies to a very limited number of Palestinians, the same position expressed by the US administration in a report, recently, which states that there are only “tens of thousands of Palestinians refugees” only, instead of the 5.3 million refugees registered with UNRWA.The document referred to UN General Assembly Resolution 149, which states that refugees should be returned, claiming that the resolution is non-binding and that the General Assembly does not have the capacity to commit to decisions, but only recommendations. Through the document, Israel called on the European countries to amend what it called a “historical mistake” of granting UNRWA a mandate related to Palestinian refugees and their attachment to the United Nations refugee agency.
After meeting Bedouins whose homes are being destroyed, I can’t see how a Palestinian state can ever happen -- Robert Fisk - Abu Yussef Abu Dahuk is 60 years old. But of course he looks around 75 or 80, because he is a Bedouin and lives under a corrugated iron roof and sheets tied together with string, and because he owns just 120 goats which belong to his 17 children. And because the Israeli cops and soldiers a couple of hundred feet away are ready to demolish his little slum and drive him away. The Palestinian had two wives – the first died 18 years ago, and the second serves us the usual scalding hot tea on this scalding hot morning – and has been expelled from his grazing lands three times; first from Tel Arad near the Israeli town of Beersheva and then again after the 1967 Israeli occupation of the West Bank; and then in 1974. Now the Israeli High Court of Justice – and yes, let justice indeed be its name – has decided that the 180 members of the Bedouin Jahalin tribe should be dispossessed once more. They must be moved to an area in Abu Dis not far, as the residents point out, to a garbage dump. Not that you can be dispossessed of rags and a mud school or bits of rusting metal that prop up a plastic roof over shacks. But it’s not that simple. We all know – the Israelis know, the EU which has given €315,000 to Khan al-Ahmar knows, and the Palestinians know – that this is no chance demolition. Just over the hills to the north peep the red rooftops of the Kfar Adumim Jewish colony, and the destruction of Khan al-Ahmar will give its Israeli inhabitants room to move – high court permitting, needless to say – down to the highway and thus destroy the last of the Palestinian villages beside the road to Jerusalem. Another circle of Israeli concrete around the city will be complete. Abu Yussef Abu Dahuk knows all too well what this means. “The settlement continues to be built and so they must move us out. Now we are not allowed to cross the valley behind us with our goats or the settlers will take our goats. We are not allowed to build proper homes and so we have to use these metal structures. The settlers can build a villa, with electricity and a water source and a garden – and for us in the winter, we can build nothing. We put plastic on top of the metal to stop the water falling on us when we are sleeping.”
UN says 21 Afghan civilians killed in separate air strikes - Two separate air strikes over the weekend killed at least 21 civilians in Afghanistan, including 14 children, the UN said. In a statement late on Tuesday, the UN Assistance Mission in Afghanistan (UNAMA) said the 21 dead included 12 members of a family, as US and Afghan forces ramp up aerial bombings against armed groups.Citing "preliminary findings", UNAMA said the 12 family members were killed on Sunday in an air strike in the eastern Maidan Wardak province during an Afghan military operation. "Ten of those killed were children whose ages ranged from six to 15," including eight girls, it said, adding it was unclear whether the air strikes were carried out by Afghan or NATO forces.The latest civilian deaths were reported after UNAMA said it had "credible" reports of nine members of a family killed in an air raid at the home of a teacher in Tagab district in the Kapisa province on Saturday.Afghan defence ministry spokesperson Ghafor Ahmad Jawed said the operation in Maidan Wardak freed eight Afghan soldiers allegedly abducted by the Taliban and killed 11 fighters.He said the ministry is investigating both the incidents. There was no immediate comment from Afghan officials on the reported air strike in Kapisa province, according to The Associated Press.
In western Afghanistan, villagers are fleeing not just war but drought - Between a sandy cliff and cracked riverbed on the edge of this small provincial capital, 380 families are camped in a cluster of hand-sewn, sun-bleached tents, waiting for rain and peace to let them return to their ancestral villages. But across drought-stricken, war-torn Badghis province in far-western Afghanistan, the wait will not end soon. Chronic drought, the result of a severe lack of rain and snowfall in many recent years, has now spread to 20 of the country’s 34 provinces, where nearly 15 million people depend on agriculture. This year, aid officials said, nearly 45 percent of Afghans are facing food shortages due to drought and other factors, a sharp increase from 33 percent last year. Close to a half-million have been receiving emergency food aid since July, and officials plan to assist at least 1.4 million as winter approaches. The worst-hit areas are five northwestern provinces, where more than 300,000 people received extra food aid last month, and conditions in Badghis are especially desperate. “This is the epicenter of food insecurity and drought,” Zlatan Milisic, country director for the World Food Program, said during a recent visit to the camps outside Qaleh-ye Now, where the agency is providing wheat flour, cooking oil and other food staples. He noted that poor farmers in this desolate region of low brown hills depend almost exclusively on rain to irrigate their crops. Last winter, aid officials reported, precipitation was so low in Badghis that the wheat harvest this spring fell by 60 percent. Aid officials hope to persuade some of the displaced families to return to their villages by offering to send extra aid there. They worry that the newcomers will overwhelm towns with no facilities for them and become too dependent on donations at a time of dwindling foreign support.
US To Start Disrupting North Korean Oil Smuggling -- An international coalition of American allies will start “detecting and disrupting” North Korean oil smuggling operations at sea, reports the Washington Examiner.“The United States has deployed aircraft and surface vessels to detect and disrupt these activities,” State Department spokeswoman Heather Nauert said in a news release.Japan, Australia, and New Zealand, announced Friday they would aid “monitoring and surveillance activities against illicit maritime activities,” with a particular focus on ship-to-ship transfers of oil.Make no mistake these are the neocons at work in the Trump administration.According to the Examiner, Anthony Ruggiero, who joined the White House National Security Council’s Korea desk in July, said at the time that “more aggressive” measures should include a plan to “start to interdict these vessels” at sea.Ruggiero, before joining the White House, was a senior fellow at the Foundation for Defense of Democracies.The leadership council of the FDD includes crazed neocon warhawk Joseph Lieberman and Gen. Michael Hayden, a former Director of the CIA and former Director of the NSA. This, by the way, will also increase tensions with Russia and China, since both are likely providing oil to North Korea.
China summons US ambassador and recalls naval chief over sanctions move - China summoned America’s ambassador and recalled its naval chief from the US on Saturday to protest sanctions Washington slapped on Chinese entities for procuring military equipment from Russia, and threatened to follow through with additional measures by its military. Beijing also postponed a three-day bilateral military dialogue in Beijing, which was to begin on Tuesday, and warned of possible further measures if Washington does not withdraw the sanctions, according to reports by China’s state broadcaster CCTV.The meeting was to be the second of its kind, part of a series of multi-track bilateral dialogues started after US President Donald Trump took office last year. China’s government called on the US to “immediately correct its mistake, revoke the sanctions, and the Chinese military reserves the right to take further countermeasures”, according to the CCTV report.China’s response to the sanctions is the latest escalation in tensions between the two countries, and negotiation break-downs, playing out on multiple fronts.The US State Department announced on Thursday that the Chinese defence ministry’s Equipment Development Department (EDD) violated US sanctions on Russia by buying the country’s jets and missile equipment. Both the EDD and its director, Li Shangfu, were named in the sanctions.The US Department of State said the sanctions were invoked under Section 231 of the Countering America’s Adversaries Through Sanctions Act of 2017 “for engaging in significant transactions with persons on the [List of Specified Persons]”.
Trade war escalation may trigger financial crisis in China, study warns - A further escalation of the trade war between Washington and Beijing to include sanctions on financial products or transactions could trigger a financial crisis in China, researchers warned in a report. The study – released on Saturday by Renmin University’s National Academy of Development and Strategy – looked at a series of possible additional retaliatory steps the US could take in the trade war to constrain, or even try to directly destroy, China’s financial markets, financial assets and its currency. While some of the scenarios seem fanciful, and would clearly do the world economy great harm if they were ever implemented, the fact that the think tank chose to examine them suggests concern that the US will stop at nothing to win the trade conflict. So far, the tit-for-tat trade war between the world’s two largest economies has focused entirely on commercial goods, with both sides having levied 25 per cent tariffs on US$50 billion worth of each other’s imports in July and August. The trade war intensified on Monday after Washington imposed a 10 per cent tariff on US$200 billion worth of Chinese imports, with the tariff rate set to rise to 25 per cent on January 1 next year if China does not make trade concessions. China promised to retaliate with tariffs on US$60 billion worth of US goods. On Saturday, China rejected the US offer to hold more talks to try to resolve the trade dispute. The lack of negotiations has increased uncertainty and put a dent in international investors’ confidence in China’s financial markets, according to the report.
Digital Dictatorship- China Exerts Control Over Population Through Social Credit System - China is developing a digital dictatorship to exert control over its 1.4 billion citizens. For some, "social credit" will bring great opportunities — for others, punishment. The Communist Party’s plan is to monitor its citizens 24/7 and rank them on their behavior, as the dystopian social ranking system will be fully operational by 2020. According to Australian Broadcasting Corporation (ABC), an active pilot program has already assigned a score out of 800 to millions of people across the country. More than 200 million surveillance cameras are currently using artificial intelligence and facial recognition software that adds or subtracts social points based on physical and digital behavior. The data collected from the vast network of cameras is blended with information collected from individuals’ government records, medical, financial, and even internet browsing histories. People's scores can oscillate from good to bad in "real time" dependant on the person’s behavior, but also the people they associate with can affect scores as well. "If your best friend or your dad says something negative about the government, you’ll lose points too," the ABC reports.
Chinese millennials are buying hamburgers on installment, fuelling micro loan industry - For Chinese millennials these days, instalment payments are not just for big purchases. Feel like a hamburger? Want to buy a movie ticket? Buy now and pay later – much later in some cases.Widely accepted in developed countries, the practice of paying by instalments has grown in popularity in China because high property prices mean most people pour all their money into housing and have little left over for discretionary spending.The trend is especially pronounced among millennials, whose earning power is lower, giving a boost to the growth of online micro lenders like Lexin Fintech.Lexin, founded in 2013 by former Tencent Holdings employee Jay Xiao Wenjie, operates the online shopping centre Fenqile – which roughly translates as “happy instalment” – offering a wide range of products from mobile phones and computers to snacks and cosmetics that can be funded by micro loans. A small layer cake can be had for as low as 0.46 yuan per month for three years, or there’s lipstick for only 1.93 yuan (3 US cents) per month for two years. Interest rates differ based on the product price and repayment period but some loans are offered interest free.“Paying by instalment is becoming a habit among young Chinese [born after 1990],” said Xiao, who took the Shenzhen-based Lexin public on Nasdaq last year. “They prefer instalments because they are more interested in trying innovative things [and] don’t have much money, but are still very optimistic about the future.” The instalment trend is a stark contrast to previous generations of Chinese who resisted borrowing money, especially for smaller items, only taking out loans for homes, cars and similar major purchases.
China To Cut Import Tariffs On Some Goods Starting November 1 - China announced it would cut import tariffs on 1,585 items from November 1, China National Radio reports, citing a State Council meeting chaired by Premier Li Keqiang. The tariff cuts involve machinery, textile, building material, paper products and electromechanical device and would lower costs for consumers and companies as a trade war with the U.S. deepens.The overall tariff rate will be lowered to 7.5% from last year’s 9.8%, and the cuts are expected to reduce tax burdens for companies and consumers. The move follows on from similar cuts announced in July, and is a step with China’s pledge to support more imports.It’s not yet clear how the planned reduction would affect imports from the U.S., if at all, including Chinese retaliatory tariffs on American products amid the trade war. Those details may only emerge once the government outlines which products will enjoy lower tariffs. Any reduction of tariffs usually must be offered to all countries equally under World Trade Organization rules.Commenting on the previous import tariff cut news, Nicholas Lardy, a China expert at the Peterson Institute for International Economics in Washington said that "this is in line with China’s longstanding strategy of opening. It has the additional advantage that it will make U.S. firms complain more loudly that Trump’s strategy is blocking their access to the China market.""The timing of the cut would suggest the tariff tool is being used as a tactic in the trade war, taking into account both domestic and international considerations" said Bloomberg economist Chang Shu who adds that cuts across most trading partners, including the U.S., "would signal an effort by China to ease tensions."“By further cutting import taxes, China is sending a message that it will keep opening up and reform no matter how the trade war goes. It’s more like a commitment to both domestic and international audience. It’s a gesture,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. According to Bloomberg, China’s most-favored nation average tariff stands at 9.8%. The MFN rule requires all countries to be treated equally unless specific exceptions are agreed, and the U.S. is also covered by MFN status.
Trump’s Tariffs May Hurt, but Quitting China Is Hard to Do - The worsening trade war between the United States and China has intensified pressure on companies to leave China and set up factories in places like Cambodia, a verdant country of 16 million people with low wages and high hopes. But anybody who moves here may have to deal with the water buffalo.They are not the only potential obstacles. At quitting time, factory workers heading home on foot and motorbikes clog the road.For factory owners on deadline, those crowded roads can mean frustrating delays.President Trump’s tariffs on Chinese products, which expanded to an additional $200 billion worth of goods on Monday, are prompting many companies to rethink their supply chains. As tariffs begin to make China look more expensive, many companies are considering cheaper places to make their products, like Vietnam, Cambodia, Bangladesh and Ethiopia. Already, companies with significant American business like Steve Madden, the fashion designer, and Puma, the German sports brand, have said they will look to shift production out of China. But China will be hard to quit. From zippers and rivets on jackets and jeans to the minerals used in iPhones, China makes or processes many of the ingredients that go into today’s consumer goods. It has a dependable source of workers who know how to hold down factory jobs. It has reliable roads and rail lines connecting suppliers to assembly plants to ports. Countries like Vietnam and Cambodia, by contrast, lack China’s vast supplier base and dependable roads. More workers have to be trained. Many companies have to start from scratch.
US sends B-52 bombers ripping through the contested South China Sea twice in less than a week as tensions soar - The US Air Force sent B-52H Stratofortress heavy long-range bombers through the South China Sea twice this week, sending a message, intentional or not, to challengers in the region. A single B-52 bomber assigned to the 96th Expeditionary Bomb Squadron conducted training in the South China Sea and Indian Ocean on Sunday, Pacific Air Forces Public Affairs told Business Insider on Wednesday. Two days later, another B-52 bomber conducted a training mission in the South China Sea. "U.S. Indo-Pacific Command's Continuous Bomber Presence (CBP) operations have been ongoing since March 2004," PACAF told BI, adding that these recent missions are "consistent with international law and United States's long-standing and well-known freedom of navigation policies.""The United States military will continue to fly sail and operate wherever international law allows at a times and places of our choosing," Pentagon spokesman Lt. Col. Dave Eastburn told Business Insider on Tuesday.
China-Japan Maritime Crisis Would Threaten Belt and Road Initiative , PLA Warns - Kyodo News has published an internal document from China's People’s Liberation Army (PLA) that specified a military crisis at sea between China and Japan would severely threaten Beijing’s strategy of peaceful development and its "Belt and Road initiative" (BRI). The internal report, authored by two military officials at the Naval Military Research Institute and Dalian Naval Academy, suggested the probability of a significant military crisis at sea between both countries is rapidly increasing due to disputes over the sovereignty of the Senkaku Islands, maritime demarcation in the East China Sea, and the development of marine resources in the region. Last week, a Japanese submarine war drill was conducted in the South China Sea. The Maritime Self-Defense Force (MSDF) said in a rare statement that one submarine and three other vessels performed aggressive maneuvers to deter China's militarization in the region. The PLA report, which was published for internal use only in April 2017, warns that a minor misjudgment of the above issues could deteriorate bilateral relations between both countries and lead to a maritime crisis. As a result, the disruption could jeopardize Beijing’s BRI or the Silk Road Economic Belt and the 21st-century Maritime Silk Road, a series of trade routes that connect China by land, air, and sea to Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa. The second region in focus for a potential trigger point between China and Japan is the East China Sea, in particular, the Japan-owned Senkakus Islands, which are also claimed by China, where the land masses are known as the Diaoyu, and Taiwan, which calls them Tiaoyutai. In late 2012, a private Japanese landowner sold the group of uninhabited islands to the Japanese government, infuriating Beijing and leading to a brief but acute diplomatic war between the two nations. "The Diaoyu clearly possess economic and sovereign value, but its military significance is even more evident," the PLA report states. "Its location is strategically important if we choose to take Taiwan by force. It is also important in competing with Japan for maritime rights." The third potential region where a military crisis could emerge between both countries is the Taiwan Strait and the South China Sea.
Taiwan Can Win a War With China -- The invincibility of Chinese arms in the face of Taiwanese “separatists” and the inevitability of reunification are constant Chinese Communist Party themes. At its base, the threat made by Xi is that the People’s Liberation Army has the power to defeat the Taiwanese military and destroy its democracy by force, if need be. Xi understands the consequences of failure here. “We have the determination, the ability and the preparedness to deal with Taiwanese independence,” he stated in 2016, “and if we do not deal with it, we will be overthrown.” China has already ratcheted up economic and diplomatic pressure on the island since the 2016 election of Tsai Ing-wen and the independence-friendly Democratic Progressive Party. Saber-rattling around the Taiwan Strait has been common. But China might not be able to deliver on its repeated threats. Despite the vast discrepancy in size between the two countries, there’s a real possibility that Taiwan could fight off a Chinese attack—even without direct aid from the United States. Two recent studies, one by Michael Beckley, a political scientist at Tufts University, and the other by Ian Easton, a fellow at the Project 2049 Institute, in his book The Chinese Invasion Threat: Taiwan’s Defense and American Strategy in Asia, provide us with a clearer picture of what a war between Taiwan and the mainland might look like. Grounded in statistics, training manuals, and planning documents from the PLA itself, and informed by simulations and studies conducted by both the U.S. Defense Department and the Taiwanese Ministry of National Defense, this research presents a very different picture of a cross-strait conflict than that hawked by the party’s official announcements.
India in talks to join US global development partnership countering China’s belt and road plan -- The US government’s international finance development agency is in talks with India to include the South Asian country in a partnership that Washington has formed with its allies in the region to counter China’s “Belt and Road Initiative”. After signing agreements with the overseas finance development arms of Japan and Australia, the Overseas Private Investment Corporation (OPIC) is “in discussions with India right now” to reach a memorandum of understanding with India, OPIC President and CEO Ray Washburne told the South China Morning Post on Monday. If concluded, the agreement “will reflect very much like the ones we have with Japan and Australia”, Washburne said.Those partnerships allow the three countries to streamline the process of joint investments in energy, transport, tourism and technology infrastructure. The investments are also meant to attract private capital to the projects – investments that are, in some cases, many times larger than those of the three governments. OPIC’s influence in the Indo-Pacific region is set to grow after the passage of a bill that would give the agency authority to invest equity in development projects instead of just providing loans. The “Better Utilisation of Investments Leading to Development Act of 2018” (Build Act), which was passed by the US House of Representatives in July, has been included in “must-pass” Federal Aviation Administration (FAA) legislation expected to be voted on by the Senate this week. If the bill is passed and signed into law by US President Donald Trump, OPIC would be renamed the US International Development Finance Corporation (USIDFC) and amount of money the agency could put toward infrastructure projects would more than double, with a cap of US$60 billion. The trilateral partnership OPIC has with Japan and Australia is part of what US Secretary of State Mike Pompeo recently called an “Indo-Pacific Economic Vision”, an open challenge to China’s growing influence in Asia.
India’s Modi faces calls for resignation over French jet deal - Indian Prime Minister Narendra Modi faced calls for his resignation over allegations of corruption in a military jet deal with France after former French president Francois Hollande was quoted as saying New Delhi had influenced the choice of a local partner. Indian political parties have been gunning for Modi over the 2016 purchase of 36 Rafale planes from Dassault Aviation estimated to be worth $8.7 billion, saying he had overpaid for the planes and had not been transparent. In recent months, the opposition has questioned the government on the choice of billionaire Indian businessman Anil Ambani's Reliance Defence as Dassault's local partner instead of a state-run manufacturer with decades of experience. On Friday, Hollande, who cleared the intergovernmental deal when he was in office, was quoted as saying New Delhi had put pressure on Dassault to choose Reliance. "We had no choice. We took the interlocutor that was given to us," he was reported as telling the French news service Mediapart, fueling a political storm in India. Under Indian defense procurement rules, a foreign firm must invest at least 30 percent of the contract in India to help it build up its manufacturing base and wean off imports. For that, the French firm picked Reliance and not Hindustan Aeronautics Limited, the state-run giant that has been producing planes for decades, most of them Russian under licence. "The PM personally negotiated and changed the Rafale deal behind closed doors. Thanks to François Hollande, we now know he personally delivered a deal worth billions of dollars to ...Anil Ambani," Rahul Gandhi, the president of the main opposition Congress party, said in a tweet. "The PM has betrayed India."
Adultery Is No Longer a Crime in India - India’s highest court has struck down a century-old law that made adultery a criminal offense, the BBC reports.In a unanimous ruling, the judges declared extramarital sex can no longer serve as grounds for arrest, although it remains a cause for divorce.According to the 158-year-old colonial-era law, a man who has sex with a married woman, without the permission of her husband, can face a maximum of five years in prison. Critics of the law called it sexist. Under the provision, Section 497 of the Indian Penal Code, only husbands could file complaints, and only against another man. Women were not given the same potential legal recourse, and also could not be punished. The law also “indirectly discriminates against women by holding an erroneous presumption that women are the property of men,” said Joseph Shine, who petitioned the Supreme Court to strike it down.
India’s Top Court Limits Sweep of Biometric ID Program NYT - — In a landmark ruling on Wednesday, India’s Supreme Court placed strict limits on the government’s national biometric identity system while also finding that the sweeping program did not fundamentally violate the privacy rights of the country’s 1.3 billion residents.A five-justice panel of the court decided by 4-1 to approve the use of the program, called Aadhaar, for matters involving the public purse, such as the distribution of food rations and other government benefits and the collection of income taxes.But the panel struck down Prime Minister Narendra Modi’s efforts to require the digital ID for other purposes, including verifying the identity of students taking exams, and established new protections meant to prevent the government from misusing the data in the name of national security.The justices also threw out a powerful provision in the 2016 Aadhaar Act that had allowed private companies like banks and cellphone companies — sometimes at the government’s behest — to use the ID to verify customer identities. That was at least a temporary blow to the dreams of technology billionaires, like Nandan Nilekani and Vinod Khosla, who saw the system as crucial to a new generation of digital businesses like online vehicle insurance and pre-employment background checks.
A year after Jharkhand girl died of starvation, Aadhaar tragedies are on the rise - Exactly one year ago, 11-year-old Santoshi Kumari died in Jharkhand’s Simdega district, while asking her mother for rice. The girl, a Dalit, had barely eaten for eight days, because her destitute family had not received their quota of subsidised foodgrains for six months. This was not the first starvation death caused by the failure of India’s public distribution system. Under the National Food Security Act passed in 2013, the government must provide five kilos of subsidised foodgrains to 75% of India’s rural population. But the identification of beneficiaries under the new law has been imperfect, with many poor people not making it to the revised PDS lists. The child’s death, however, highlighted another silent disruption underway: even those who were listed as beneficiaries were being denied rations because of the government’s decision to link the public distribution system to Aadhaar. Santoshi’s family was struck off the PDS list as “ghosts” or non-existent beneficiaries because they had failed to furnish their 12-digit biometrics-based identification numbers.Santoshi’s death caused a national furore, but little has changed in the year since she died. At least 37 starvation deaths have been recorded in the past 12 months. According to the Right to Food campaign, which has investigated the deaths, 13 are related to Aadhaar.This is a sobering statistic in light of the Supreme Court’s verdict this week. On Tuesday, four judges in a majority judgement upheld the constitutional validity of Aadhaar, allowing the government to make it mandatory for citizens drawing benefits from government welfare schemes. The Right to Food campaign has released a list of 57 starvation deaths in nine Indian states from 2015 to now. Activists who are part of the campaign have investigated these deaths, some of which were first reported in the media. The data has been compiled by economist Reetika Khera who works with Right to Food campaign and activist Siraj Dutta.
India cancels talks with Pakistan, threatens military action -- Indian Army Chief Bipin Rawat threatened military action against Pakistan Saturday, while applauding the Indian government’s sudden about-face on accepting a Pakistani offer for their respective foreign ministers to meet on the sidelines of this week’s UN General Assembly.“We’ve made no bones about the fact that talks and terrorism can’t go hand in hand. Pakistan needs to curb (the) menace of terrorism,” General Rawat told reporters. On Thursday, India’s government, which is led by Narendra Modi and his Hindu supremacist Bharatiya Janata Party (BJP), had accepted an offer of talks from Pakistan’s newly-minted prime minister, Imran Khan. But less than 24 hours later, New Delhi scuttled the planned meeting between India’s External Affairs Minister Sushma Swaraj and her Pakistani counterpart, Shah Mahmood Qureshi.As justification, India cited the killing of three policemen, who had been abducted by anti-Indian Kashmiri insurgents from their homes in Jammu and Kashmir Thursday evening, and the alleged mutilation of the corpse of an Indian soldier killed earlier in the week in firing across the Line of Control (LoC) that separates Indian- and Pakistani-held Kashmir. A third reason cited by India was the Pakistani post office’s publication of a series of stamps commemorating Burhan Wani, the 21-year-old commander of an Islamist Kashmiri insurgent group whose July 2016 killing sparked mass protests in Indian-held Kashmir. In his remarks Saturday, General Rawat, who was reportedly promoted over more senior officers because of his readiness to pursue an aggressive policy against India’s nuclear-armed rival, went beyond supporting the government’s hardline and declared India should inflict “pain” on Pakistan. “We need to take stern action to avenge the barbarism that terrorists and the Pakistan Army have been carrying out. Yes, it’s time to give it back to them in the same coin, not resorting to [a] similar kind of barbarism. But I think the other side must also feel the same pain.”
GDP Growth Helps Poor Countries More Than Those That Are Already Rich – Ed Dolan - My favorite measure of overall prosperity is the Social Progress Index (SPI), which has just been updated for 2018. The SPI is a comprehensive measure of human flourishing that draws on a broad set of indicators of public health, education, safety, human rights and personal freedoms. It purposely omits purely economic indicators such as GDP, inflation, or income distribution, which makes it especially well-suited to address the question of how GDP is related to noneconomic indicators of prosperity. The following chart shows the relationship between the SPI and GDP for the 146 countries in the SPI database. The horizontal axis measures 2018 GDP per capita using estimates from the July 2018 update of the IMF’s WEO database, expressed I 2011 constant dollars at purchasing power parity. Clearly, there is a strong association between higher GDP per capita and the SPI measure of prosperity. The fit is especially close for countries with lower incomes. For a country like, say, Rwanda, with per capita GDP around $2,000, a couple thousand dollars more could make a big difference for the quality of life of the average citizen.But how much do richer countries like the United States benefit from still more GDP growth? The answer is not so clear.Consider the following chart, which shows the United States in relation to its closest peers, the high-income members of the Organisation for Economic Cooperation and Development (OECD), an invitation-only club of developed democratic countries. The 21 countries in the chart all have per capita GDP of $35,000 or higher. They represent all of the early members that joined the OECD before 1975, with the exception that the chart substitutes high-income, late-joiner South Korea for the low-income original member Turkey. Clearly, the relationship between per capita GDP and the SPI is weak for these countries. The trend line has a slight upward slope, but the correlation between the variables is not statistically significant. Interestingly, the United States has the lowest SPI score of any of the wealthy OECD countries. A check of subcomponents of the SPI shows that the United States performs especially poorly on measures related to population health, such as undernourishment, child and maternal mortality, and deaths from infectious diseases, life expectancy at age 60, deaths from noncommunicable diseases, and access to health care services. It is also an underperformer on indicators of environmental quality, personal safety, and access to basic knowledge.
Argentina Gets Record $57 Billion As IMF Boosts Bailout, Creates No Intervention Zone For The Peso - Just a few months after the IMF announced in June what was a record-setting $50 billion, 36-month bailout agreement with Argentina, the International Monetary Fund said it would expand the credit line to $57 billion in an attempt to halt the economic and financial crisis that has sent the country's currency plunging over 50% this year, and pummeled the third-largest Latin American economy. In exchange, Argentina will set a "no intervention" zone for the peso from 34 to 44, meaning the exchange rate will be flexible but not floating. The revised standby agreement is "aimed at bolstering confidence and stabilizing the economy," IMF chief Christine Lagarde said Wednesday in a joint statement with Argentine Economy Minister Nicolas Dujovne.The agreement, which is subject to IMF Executive Board approval, "front loads IMF financing, increasing available resources by US$19 billion through the end of 2019, and brings the total amount available under the program to US$57.1 billion through 2021,” according to statement.Argentina had started renegotiating the terms of the bailout deal last month when it became obvious that the original funds would be insufficient, and when President Mauricio Macri asked to speed up payments in the original agreement. Meanwhile, as part of the deal, Argentina would be required to fulfill certain stipulations under the agreement, which would need congressional approval by way of the 2019 budget. In exchange, the IMF would cover a significant portion of Argentina's financing through next year, according to Moody's. As part of the government's efforts to cut its debt, which is projected to reach 70% of GDP next year. Macri and finance minister, Nicolas Dujovne unveiled economic reforms earlier this month, including highly unpopular spending cuts and export tax increases demanded by the IMF. However, balancing the budget as Buenos Aires has promised, will prove difficult for Macri as elections near and the program will be frowned upon by all local politicians. According to the local media, with an approval rating that tumbled below 40% this year, there's a possibility the conservative, whose campaign focused on free-market reforms, may not be re-elected.
President-Elect of Mexico’s Bombshell: Economy in “Situation of Bankruptcy” - Around 200 central bank employees, including 20 senior executives, have left their posts at the Bank of Mexico (Banxico) since presidential elections on July 1 handed a resounding victory to populist Andrés Manual Lopez Obrador (or AMLO). Unsurprisingly, their sudden departure has a lot to do with money.One of AMLO’s manifesto pledges was to slash salaries for senior government officials and bureaucrats as part of sweeping cost-cutting measures. So far, he’s kept to his word. Last week, Congress, now under the majority control of his party, Morena, passed a law that will make it impossible for any state employee to earn more than the president. The gross monthly salary of the current president, Enrique Peña Nieto, is 209,135 pesos ($11,700). AMLO has pledged to cut the salary in half when he takes over the post on December 1.The law will come into force in January and will apply to all three federal branches of government as well as regional and local government institutions. This could be a major problem for employees of Banxico, since all of them are considered public officials and many of them earn more than the current president. The average monthly salary of a Banxico board member is 365,000 pesos ($19,400), around 70% more than Peña Nieto’s and over 230% higher than the salary AMLO has pledged to pay himself.Banxico has refused to comment on the matter but it’s safe to assume that the gathering exodus of central bank employees has at least something to do with AMLO’s plan to slash their salaries. Mexico’s central bank workers, it seems, are less enthralled by the austerity principle when it’s applied to their own income rather than others’. Naturally, many of the officials leaving Banxico will slot seamlessly into better paid jobs in the private sector, where their expert knowledge and lists of handy contacts will be put to excellent use. The departure of hundreds of central bank workers could also be a sign of how relations may evolve between Mexico’s new government and its top financial regulator and lender-of-last-resort. The president elect has already ruffled feathers at Banxico with a fiery speech during his “Thank-you Tour” of Mexico last week. While vowing not to impinge on the central bank’s much vaunted independence — independence from the interference of politicians, not banks — he also warned that if economic problems do emerge in the future, it will not be his or his government’s fault.
NGO Migrant Ship Has Registration Revoked; No More Libya-Europe Runs - Panama has revoked the registration of the NGO migrant transport ship Aquarius 2, which was the last remaining charity rescue vessel operating in the central Mediterranean area. It is currently at sea with 58 refugees on board. The move by the Panama Authority (PMA) means that once the Aquarius 2, operated in part by SOS Mediterranee, arrives into port it will be deflagged and barred from operating. As such, there are no more NGO vessels able to transport people from the Libyan coast in the near future unless the ship can find a new flag to sail under. SOS Mediterranee, one of the charities that operates the Aquarius, said in a statement it was reeling from news of the revocation, which it said followed pressure from the Italian government. “On Saturday ... the Aquarius team was shocked to learn of an official communication from the Panamanian authorities stating that the Italian authorities had urged the PMA to take ‘immediate action’ against the Aquarius,” it said. –Reuters Italy's interior minister Matteo Salvini denied that the Italian government applied pressure on Panama. He has previously accused SOS Mediterranee and similar groups of acting as a Mediterranean "taxi service" for migrants, and that the Aquarius 2 had hindered the work of the Libyan coast guard by ignoring instructions.
Why China buying up ports is worrying Europe - There is rising concern about whether China will use its commercial acquisitions of overseas ports for military purposes, under its drive to put civilian technology and resources to military use. Under its trillion-dollar “Belt and Road Initiative” – a blueprint announced in 2013 to boost trade and connectivity in Asia, Africa, Europe and beyond – China has significantly increased its global investments, particularly in maritime infrastructure. Pioneering Chinese companies such as Cosco Shipping Ports and China Merchants Port Holdings are on a march to acquire shares or sign deals to build terminals at seaports overseas. Cosco began operating a container port in Piraeus in Greece in 2008, when the Greek government was near bankruptcy. Beijing has since become a big player in the European port business. China has gained a foothold in Europe’s three largest ports: respectively Euromax in Rotterdam, the Netherlands, of which it owns 35 per cent; Antwerp in Belgium, in which it holds a 20 per cent stake; and Hamburg, Germany, where it is to build a new terminal. A flood of Chinese investment helped to rejuvenate some of these ports. In Piraeus, for example, Chinese investment in 2016 led to increased trade: Piraeus was ranked seventh in Europe in 2017 by container throughput – up from eighth the year before – and recorded a 92 per cent increase in pre-tax profits. But it is not always smooth sailing when Beijing reaches out to ports overseas with its deep pockets. In Israel, China is building two new ports, in Haifa and Ashdod. Local academics have urged the Israeli government to assess how much China can be involved in its economy without compromising its security interests.
'Fort Trump' Offer Given Serious Consideration- Poland To Host US Military Base - Actually, there is nothing new about Polish President Andrzej Duda urging President Donald Trump during a joint news conference on Sept. 18 to deploy more American troops and military equipment in Poland, suggesting that the US establish a permanent military base to be named "Fort Trump." According to Politico, “This proposal outlines the clear and present need for a permanent US armored division deployed in Poland, Poland's commitment to provide significant support that may reach $1.5-2 billion by establishing joint military installations and provide for more flexible movement of US forces."Poland has been pushing for a larger US permanent presence for a long time. The suggestion of a base was made in late May by the Defense Ministry. The US didn’t take it too seriously until President Duda’s visit to Washington and his talks with President Trump. It’s a change of attitude that’s truly new, because this time the US president said he was open to the idea, on the condition that Poland pay — something it is obviously willing to do. Warsaw has already offered more than $2 billion to set up a base on Polish soil. Donald Trump promised that the offer was being taken “very seriously." He said Washington is “in discussions with numerous countries” about paying for American military bases. In his words, "We're looking at that more and more from the standpoint of defending really wealthy countries." This is the first time the issue has been raised during a summit and actually publicly approved by the US administration, at a time when President Trump is ordering a review of the costs of basing US troops in Germany. He has complained about the expense of the American military presence in Germany and South Korea. The US administration appreciates Poland’s contributions of over 2% to NATO, its decision to purchase American Patriot air-defense systems, and its staunch opposition to the Russian-European Nord Stream 2 undersea gas pipeline. In a clearly pointed gesture, Moscow’s expected reaction was not mentioned, but the presidents agreed that Russia was “aggressive.” “Russia has acted aggressively,” the US president said at the news conference, adding, “They respect force, they respect strength, as anyone does.”
EU and Iran agree to create ‘special vehicle’ to maintain trade despite US sanctions - The remaining signatories of the Iran nuclear deal announced on Monday that they would establish a channel to facilitate payments for Iran's exports, including oil, as well as its imports. The decision was reached after high-level closed-door talks at the UN in New York. "Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran's exports, including oil," Britain, China, France, Germany, Russia and the EU announced in a joint statement. The members' stated intent is "to protect the freedom of their economic operators to pursue legitimate business with Iran."The SPV could breathe life into the 2015 Joint Comprehensive Plan of Action (JCPOA), the Iran nuclear deal, and was sought by Tehran in order to counter the reimposition of sanctions triggered by the US's exit from the deal. The European Union has struggled to devise a workable legal framework to shield its companies from the effects of US sanctions, which are set to come into effect in November, and has tried to deter firms from pulling out of Iran.
Europe Finally Has an Excuse to Challenge the Dollar --With more and more European companies fleeing Iran following the re-imposition of U.S. sanctions, it may be tempting for Americans to write off Europe’s efforts to save the Iran nuclear deal. It would be wiser to resist the temptation. A new plan by Germany, France, Britain, China and Russia to create special financial infrastructure to work with Iran could be a credible challenge to the U.S. dollar’s long global dominance. Federica Mogherini, the European Union’s top foreign-policy official, said in New York on Monday that the plan to create a “special purpose vehicle” for trade with Iran “will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran, and this will allow European companies to continue trade with Iran.” The technical details are still to be worked out, but her wording provides some useful hints on how the scheme will work. In a July 2018 report, Axel Hellman of the European Leadership Network think tank and Esfandyar Batmanghelidj of the Iranian company Bourse & Bazaar proposed “a new banking architecture” in response to the U.S. sanctions, relying on the existing system of “gateway banks,” such as the Hamburg-based Europaeisch-Iranische Handelsbank, and the European branches of private Iranian bank. Mogherini indicated that Germany, France and the U.K. would set up a multinational state-backed financial intermediary that would deal with companies interested in Iran transactions and with Iranian counter-parties. Such transactions, presumably in euros and pounds sterling, would not be transparent to American authorities. European companies dealing with the state-owned intermediary technically might not even be in violation of the U.S. sanctions as currently written. The system would be likely be open to Russia and China as well. Europe would thus provide an infrastructure for legal, secure sanctions-busting — and a guarantee that the transactions would not be reported to American regulators.
Beware The Zombies- BIS Warns That Non-Viable Firms Are Crippling Global Growth -- Ten years after central banks unleashed a period of record low interest rates, the central banks' central bank is warning that this may not have been the smartest move. In the latest quarterly review from the Bank of International Settlements, the Basel-based organization that oversees the world's central banks warned that decades of falling interest rates have led to a sharp increase in the number of “zombie” firms, rising to an all time high since the 1980s, threatening economic growth and preventing interest rates from rising. Zombie firms are defined as companies that are at least 10 years old, yet are unable to cover their debt service costs from profits, in other words the Interest Coverage Ratio (ICR) is less than 1x for at least 3 consecutive quarters. These types of companies, which first gained attention in Japan decades ago and have since gained prevalence in Europe and, increasingly, the United States. According to a second definition, a requirement for a "zombie" is to have comparatively low expected future growth potential. Specifically, zombies are required to have a ratio of their assets’ market value to their replacement cost (Tobin’s q) that is below the median within their sector in any given year. According to authors Ryan Banerjee and Boris Hofmann, zombie firms that fall under the two definitions are very similar with respect to their current profitability, but qualitatively different in their profitability prospects, which may be a function of how central banks have "broken" the market. Graph 1 below shows that, for non-zombie firms, the median ICR is over four times earnings under both definitions. As the majority of zombie firms make losses, the median ICRs are below minus 7 under the broad measure and around minus 5 under the narrow one, so this is hardly a surprise. A striking difference between the broad and narrow zombie measure emerges, however, with respect to expected future profitability, as measured by Tobin’s q. Under the broad measure, the median Tobin’s q of zombie firms is higher than that of non-zombies. That means that investors are optimistic about the future prospects of many of these zombie firms, more so than that for the non-zombies! As this group includes such "tech" and "story" names as Netflix and Tesla, it is easy to see why the market tends to reward the zombies.
One of Global Finance’s Biggest Doctors Warns: The World Economy Is About to Get Very Sick - Marshall Auerback - When Claudio Borio speaks, the big bankers and investors, the economics profession, and senior policymakers listen quite carefully—even if his sentiments don’t reach the shores of the popular media. Borio, the chief economist for the Bank for International Settlements (BIS), the central bankers’ central bank, recently remarked on the fragility of the global economy, and suggested that we were on the verge of a significant relapse similar to the global crash experienced 10 years ago. Among the parallels he perceives: the proliferation of “collateralized loan obligations (CLOs), which are ‘close cousins’ of the infamous instruments known as collateralized debt obligations, or CDOs, and securities backed by residential mortgages,” the prevalence of which helped to crater the credit system in 2008. Mindful as central bankers have been about the ready availability of liquidity, they have (as I have written before) omitted to “proactively... [charging] private market participants variable risk premiums commensurate with the risk of the underlying activity they are undertaking when providing credit.” Furthermore, Borio implies that the monetary and fiscal authorities expended excessive efforts toward restoring the status quo ante, instead of directing policy toward broader job creation and income generation, which would place the economy on sounder footing when the next downturn inevitably comes. Finally, the BIS’s chief economist also publicly mooted whether additional “medicine” of the kind that we used last time will be in sufficient supply to respond adequately when the next crisis emerges. So is Dr. Borio correct in both his diagnosis and concomitant concern about the lack of readily available cures for the prevailing illness? And are there any key omissions in his analysis that could help to mitigate the inevitable relapse that he forecasts?
Deutsche Bank ordered to do more to prevent money laundering (Reuters) - Germany’s financial watchdog has ordered Deutsche Bank (DBKGn.DE) to do more to prevent money laundering and “terrorist financing,” and has appointed a third party to assess progress. BaFin said on Monday this was the first time it had made such an appointment at a bank related to money laundering. European regulators are stepping up their scrutiny of banks’ dealings with their customers following a series of scandals. The head of Danske Bank resigned last week after Denmark’s biggest bank said an investigation had shown that many of the 200 billion euros ($236 billion) of payments through its small Estonian branch were suspicious. Last year, Deutsche Bank was fined nearly $700 millihere for allowing money laundering. Germany’s biggest bank said in a statement it agreed with BaFin that it needed to improve its processes to properly identify clients. Neither BaFin nor Deutsche Bank gave details of the new measures the bank would adopt. In August, Reuters reported that Deutsche Bank had uncovered further shortcomings in its ability to fully identify clients and the source of their wealth. BaFin said it had appointed KPMG as its special representative for a three year period to assess Deutsche Bank’s progress. The intervention is another blow to the bank’s reputation. Deutsche Bank has made management changes and announced a strategic overhaul that includes thousands of job cuts and scaling back its global investment bank as it battles to recover from three consecutive years of losses. In January 2017, Deutsche Bank agreed to pay U.S. and British regulators $630 million in fines over artificial trades between Moscow, London and New York that authorities said were used to launder $10 billion out of Russia. The U.S. Federal Reserve fined the bank an additional $41 million in May 2017 for failing to ensure its systems would detect money laundering.
VW may join other German companies scuttling out of Iran - Volkswagen seems to be the latest heavyweight German company pressured to withdraw its operations from Iran. The carmaker joins a slew of household names including BASF, Daimler, Deutsche Bahn, Deutsche Telekom, Munich Re and Siemens. They have left since the summer, and the retreat appears to be far from over.Such news is not usually hard to confirm but is eagerly tweeted by Richard Grenell, the United States ambassador to Germany. He told the Jerusalem Post: “Volkswagen has told us they will comply with US sanctions on Iran. We are pleased with this decision because Iran diverts its economic resources away from its people to support the Assad regime and spread violence and instability across the globe.” Mr. Grenell told Bloomberg that after weeks of talks, he reached an agreement with VW for the company to abide by the US sanctions.On Friday, reports emerged that VW has yet to withdraw from Iran. The company said it continues to abide by applicable laws and is monitoring the political situation. A spokesperson wrote that the carmaker is “considering possible implications in connection with the reimposition of US sanctions,” in a statement to Handelsblatt Global.Nonetheless, Mr. Grenell is unstinting in his encouragement of German companies to stop their business with Iran ever since his first day in Berlin when he tweeted: “German companies doing business in Iran should wind down operations immediately”. Ever since, he has reported each company withdrawal with the hashtag #sanctionsareworking. Responses to those tweets have been mixed, from support to questioning of this policy. The embassy in Berlin confirmed that ever since he took the post, Mr. Trump’s envoy has been talking to individual companies to persuade them to stop working with Tehran. “US Ambassador Grenell has been speaking to CEOs and industry leaders for quite some time urging them to comply with US sanctions,” Christina Higgins, an embassy spokeswoman, told AFP.
Rebellion In Germany: Merkel Suffers Huge Blow After Her Candidate For Parliamentary Leader Is Unexpectedly Voted Out - Just days after a scandal involving Germany's top spy threatened to tear apart Angela Merkel coalition, moments ago Germany's chancellor suffered another major blow to her reputation, when her ally, and preferred candidate for Bundestag Caucus Leader, Volker Kauder was unexpectedly voted out of office as the influential head of the CDU/CSU parliamentary group after 13 years on the job. He was defeated by deputy leader Ralph Brinkhaus in a 125 to 112 vote. A journalist from Der Spiegel commented: "Merkel era slowly coming to an end". Merkel era slowly coming to an end. Her ally and favorite for majority leader Kauder was just voted out by CDU party MPs against Merkel’s will. https://t.co/vCuKB7MTAO— Mathieu von Rohr (@mathieuvonrohr) September 25, 2018 No back to business in political Berlin: Germany’s governing conservatives @CDU just voted on their parliamentary leader - a standard procedure that took a dramatic turn as incumbent and Merkel loyalist Volker Kauder was challenged and lost to his deputy Ralph Brinkhaus. — Maximiliane Koschyk (@MaxKoschyk) September 25, 2018 As of now, it is unclear what the consequences will be for Merkel and her ruling coalition, but if there is one thing Europe does not need, it is even more political chaos, especially in the country that has - so far - kept the rest of Europe together.
Opinion: German Chancellor Angela Merkel’s time coming to an end – DW - Parliamentary group leaders are most successful when their work gains little public attention. In the German political system, they are responsible for organizing majorities within their party for their respective leaders. If the party leader happens to also be the current chancellor, they ensure the head of government can do their job with as little friction as possible. Theoretically.But nothing is running all that smoothly in Germany's current federal government. The lengthy coalition talks were accompanied by intrigue, resignations and the ever-present threat of new elections. And now, almost exactly one year to the day after the federal election, it's only a matter of time until the ruling coalition crumbles and Germany has to go in search of a new government. It's not only because the governing parties quarrel with each other like cats and dogs, nor because they have lost their remaining credibility with the public over the course of their internal power struggles. Now Angela Merkel has lost the majority in her own camp. Her longtime confidant and parliamentary group leader, Volker Kauder, has been voted out of office in a palace revolt that can only end in one way: new elections without Merkel — the woman who has shaped the fate of Germany and Europe for the last 13 years. The fact that the election of largely unknown financial expert Ralph Brinkhaus coincided with US President Donald Trump's speech at the United Nations, where he yet again verbally attacked Germany , casts a particularly bizarre light on the state of Europe's largest economic power. Too many members of the current German parliament seem like they haven't grasped the gravity of the situation. The citizens chose them to work for the good of the country — not to suspend government for weeks to argue about trivialities and details, further strengthening the right-wing populist Alternative for Germany (AfD) party.The only reliable leader among them was, until this historic Tuesday, Merkel. It was she who had obfuscated the deep divisions in the governing coalition and in her own ranks. And now it's over. The members of her conservative Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), have not only voted Kauder out. In these shaky times, they have publicly damaged the chancellor. So the question now is not whether Merkel's end is imminent, but only how fast it will be upon us.
Hundreds of neo-Nazis chant anti-Semitic slogans in Dortmund, Germany -- On Friday evening, several hundred Neo-nazis marched through a residential area in the working-class German city of Dortmund. They waved black-white-red imperial flags and roared neo-Nazi slogans. Their main slogan was, “Those who love Germany are anti-Semitic”. They also chanted, “Police, democracy, you’ll never break us” and “National Socialism [Nazism] now!” The police left the Nazis undisturbed and did not intervene.That same day, radical right-wingers once again marched through the city in Chemnitz. According to media reports, followers of the “Pro Chemnitz” alliance attacked the offices of the Left Party, where many members of the Saxony state legislature are based. A journalist was also said to have been attacked during the right-wing march. On Saturday, in the Bavarian city of Bamberg, a so-called “anchor centre” for refugees was burnt down. It took several hours for the fire to be extinguished and to evacuate hundreds of asylum-seekers. The police said the cause of the fire was unclear, and that there was no evidence of arson or a xenophobic attack.The anti-Semitic character of these right-wing attacks has caused outrage around the world. At the end of August, a dozen neo-Nazis had attacked the Jewish restaurant “Shalom” in Chemnitz with stones, bottles and steel pipes and verbally abused the owner. In New York, a spokesman for the World Jewish Congress called on the German government to intervene against the rise of anti-Semitic attacks.But the German government is the wrong address for such demands. That today—85 years after the seizure of power by the Nazis and the subsequent fascist terror in Europe, which cost the lives of 6 million Jews—Nazi gangs are again marching through the streets and chanting anti-Semitic slogans under the eyes of the police is the product of the policy of the German government. The grand coalition of the Christian Democrats (CDU/CSU) and Social Democrats (SPD) is responsible for the return of the Nazi hordes.
Emmanuel Macron's Popularity Plunges To 29% As Migrant Crisis Worsens - In the latest sign that the French government is headed for a devastating political and economic crisis thanks largely to the government's embrace of open borders, French President Emmanuel Macron has seen his approval rating plummet to just 29%, the lowest level since his presidency began in the summer of 2017, according to a recent Ifop poll, as voters have rebelled against Macron's attempts to push through badly-needed pro-business reforms and his unwillingness to stem the tide of migrants pouring into the country from North Africa and the Middle East. That's a remarkable turnaround for Macron, who was elected in May 2017 amid a wave of popular enthusiasm for his his "En Marche" movement that promised to revive France's moribund economy with "pragmatic" economic reforms that straddled the left and the right. Macron swept into the Elysees Palace at the age of 39, making him the youngest French leader since Napoleon. Still, after less than 18 months at the helm, voters have already turned on Macron, continuing a trend that also afflicted Macron's two most recent predecessors, Socialist leader Francois Hollande and Republican leader Nicolas Sarkozy. By comparison, Hollande had an inferior rating of 23 percent at the same time of his term and Sarkozy had a rating of 34 percent. According to Yahoo News, voters are dissatisfied with Macron's policies, which have failed to bolster the French economy or provoke a significant decline in unemployment. However, several high-profile gaffes have made Macron appear blundering and incompetent in front of the French public. Earlier this year, Macron belatedly dismissed a bodyguard who beat up a student protester at a rally earlier this year. And just this month, Macron was criticized for sounding out-of-touch when he recommended to an out-of-worker gardener that the man try harder to get a job, and maybe look into finding work in the restaurant industry or construction.
Slovak Police Arrest Suspects In Mafia Hit That Nearly Brought Down Government - Seven months after Slovak investigative journalist Jan Kuciak and his girlfriend Martina Kusnirova were assassinated in what's believed to have been a paid hit organized by an Italian organized crime group with deep ties to the Slovakian government, local police have finally arrested eight who were suspected of being involved with the killings, according to Reuters. The killings triggered a massive public backlash, as Kuciak had been working on a major story linking corrupt government officials, including former Prime Minister Robert Fico, to members of the 'Ndrangheta, an organized crime group based in the Southern Italian region of Calabria. Thousands of Slovaks took to the streets to demand justice for Kuciak and Kusnirova, who were murdered in their apartment outside Bratislava back in February. The street demonstrations - the largest witnessed in the country since the 1989 revolution that brought down the former Communist regime - eventually forced Fico, his Interior Minister Robert Kalinak and police chief Tibor Gaspar from office. However, the three-party ruling coalition led by Fico's Smer party has managed to hang on to power, with Fico still serving as party chief. Police confirmed reports of the arrests to Reuters, which was initially notified via a statement from a lawyer working for Kuciak's family
EU Justice Commissioner Quits Facebook In Disgust, Doubles Down On Regulatory Threats - The European Commissioner for "justice, consumers and gender equality" abruptly closed her Facebook account this week, describing her account on the social media platform as a "channel of dirt" after she told a Brussels news conference that she received an "influx of hatred" on the network, reports Euractiv. Vera Jourová noted that her decision to leave Facebook was not to avoid criticism by the public - as her mailbox is already filled with critical comments. "I don’t want to avoid communication with people, even with critical people," she said, adding that she responds to critics who don't use vulgar language. "This is my nature, I speak to everybody who wants normal, honest, decent communication."Jourová’s comments came as she announced that Facebook is also facing the prospect of heavy sanctions if it does not fall in line with EU consumer rules.A February communication from the Commission informed Facebook that it needed to adjust how its users are informed of possible content removal and also said that its presentation of user contracts is not transparent enough. -Euractiv"My patience has reached its limit," Jourová said. "While Facebook assured me to finally adapt any remaining misleading terms of services by December, this has been ongoing for too long. It is now time for action and no more promises. If the changes are not fully implemented by the end of the year, I call on consumer authorities to act swiftly and sanction the company."
Don't Share This! EU's New Copyright Law Could Kill The Free Internet - It's basically a battle between billionaires Axel Springer SE and Google. But it is ordinary internet users who will fall victim to the EU's new copyright law, which urgently needs modification. It's good to share. But the European Parliament clearly doesn't think so. Its new copyright legislation, passed last week, clamps down quite severely on sharing things online. The dynamism of the internet is at threat. When Tim Berners-Lee, the creator of the World Wide Web, warns us of the dangers the new law poses, we should all sit up straight and pay attention.For a start, the legislation shifts the responsibility for the uploading of copyright material to the internet platforms themselves. Beforehand it was the job of the companies who thought their copyright was infringed to do this. Many don't bother, and are happy to see their material uploaded to sites like YouTube as they know it promotes an artist's work and boosts sales. But all that is likely to change.Under Article 13, platforms would have to install “upload filters”.YouTube could be shorn of much of its content. Big sites would probably survive but, as ZDNet warns here, smaller sites could easily be put out of business by “copyright trolls”.Not that there's anything wrong of course, with sensible protection of copyright. As a prolific five-articles-a-week writer and author I can't tell you how frustrated and angry I feel when I see my work “pirated”by a commercial website which hasn't even asked my permission to reprint it, let alone offer me payment. Copyright law needs reform for the digital age. There needs to be an easy way for creators of content to receive payment from those who have stolen their work. The trouble is, the EU has used a sledgehammer to crack a nut. Look at the way the ability to link to, and quote from, other work without payment, is threatened by the directive.
Italy Defies Europe, Agrees On 2019 Budget Deficit At 2.4% Of GDP - Despite the resistance of Italy's finance minister Giovanni Tria who had pushed back against demands by the League and the Five Star Movement to push Italy's budget deficit above 2% in 2019, demanding a hard stop at 1.6%, moments ago the Italian budget negotiations reached a successful conclusion, when Italy's Deputy Premier Matteo Salvini, and League leader, said that agreement had been reached on the 2019 deficit to be at 2.4% of GDP, as he and Di Maio demanded in recent days to fund what had emerged as key sticking point, namely Universal Basic Income for the people.Commenting on the outcome, Italy's other deputy premier Luigi Di Maio, said he had succeeded in a "budget for the people" adding that the budget cancels poverty thanks to "citizen’s income," at a cost of €10 billion. He added that other measures include reform of job centers, pension reform, and a €1.5 billion fund for victims of bank crises.Salvini and Di Maio said that Italy's government is united on the budget goal, although it was unclear if Finmin Tria would stay on after his "fiscally prudent" position had been rejected although Bloomberg reports that according to a League official, Tria had agreed with the 2.4% budget deficit target.Attention now turns to how Brussels will respond as it will certainly not be excited. Ahead of the decision, EU Commissioner Moscovici was quoted in la Stampa, saying that Italy’s deficit must stay below 2%, while the final number is 0.4% above this. For now, there has been little reaction in assets, with Italian debt yields unchanged on the news after getting hit earlier, while EURUSD dipped slightly and continuing to trade near session lows.
Brexit: a lot to answer for - With virtually every national newspaper yesterday referring to Mrs May's "humiliation" in Salzburg, it is perhaps significant that the BBC's political editor chose to describe her experience at the hands of the EU leaders as an "embarrassment".If anything, it illustrates the flexibility of political language, where words are not only used in a descriptive sense but also to define the stance of their authors. But what the use of the word "embarrassment" doesn't do is convey with any accuracy the nature of what transpired at the informal European Council. Had it done so, one might have thought that Mrs May's self-indulgent statement would have been necessary. After all, the woman routinely embarrasses herself – as with her dancing displays in Africa – and we didn't have the BBC called in to hear statements each time she does so. On balance, therefore, I think we need to stick with "humiliation", but I would stop short at suggesting that this was something visited on her by the "EU leaders". This is something she inflicted on herself by going to Salzburg and insisting against all logic that her Chequers plan was "the only serious and credible proposal on the table".The only thing remarkable about the action of the EU-27 was the timing. That they would publicly reject the Chequers plan at the Salzburg European Council simply wasn't expected. But one should recall that it has only been in deference to Mrs May's political difficulties that they didn't reject it out of hand in July. The only real criticism one can have is that they took so long to do the inevitable. That said, if the EU – or, more specifically, Michel Barnier – is to be criticised, it is in blurring the issues between the Single Market and the Customs Union and his insistence that the only way frictionless trade can be secured is through a combination of the internal market and the customs union. Technically, of course, he is right about Norway's rules of origin within the framework of the EEA Agreement – as set out in Protocol 4 to the Agreement. But implementation of that Protocol does not require border checks. The system is based on a system of certificates proving origin and verification checks are undertaken by the customs authorities of the exporting countries, usually by auditing the certificate holders' processes at their places of business.
AstraZeneca CEO warns of medicine shortages after Brexit: Sunday Times (Reuters) - Britain could see widespread medicine shortages if there is no deal to prevent friction at the border with the European Union after Brexit, the AstraZeneca chief executive told the Sunday Times. The company said in July it would stockpile drugs as a Brexit safety net, and CEO Pascal Soriot told the Sunday Times in an interview that the complexity of the supply chain in pharmaceuticals meant that delays would be likely. “We have products that go back and forth between the UK and Europe at different stages of manufacturing,” he was quoted as saying. “If drugs are stuck, you have a problem.” Separately, the Sunday Times reported that Jaguar Land Rover was considering following BMW’s lead and bringing forward its annual summer factory shutdown to coincide with Britain’s departure from the EU in case there is no deal, but added no decision had been taken.
Brexit: a state of chaos -- Pre-eminent amongst the madness which has descended upon us is a Cabinet with a majority determined to dragooning Mrs May into proposing a Canada-style deal for our exit settlement, despite Dominic Raab's warning that this would leave Northern Ireland "subject to a wholly different economic regime".With the oaf blathering so inanely it is painful to read, we find we are to be treated today with some more insanity from "Snake oil" Singham, courtesy of the increasingly sinister IEA, supported by those intellectual titans, Johnson and David Davis. I am not going to critique this fully until I have seen it, but the previews are sufficient for me to expect the worst. The only thing likely to be in its favour is that it will be so mad that not even Mrs May's government would be quite so stupid as to take it to Brussels. That will not, of course, relieve us from the waste of time involved in assessing it, but then that is a feature of this Brexit so-called "debate", where we expend massive amounts of time on lunacy while perfectly good proposals largely ignored by the media and politicians. Nevertheless, some of the more sensible issues are still being aired while the sterling Peter Hitchens talks more sense in one article than any thousand I have read elsewhere.The more the idiots thrash around ignoring the issue, trying to devise an ever madder range of alternatives, the more obvious it becomes that the so-called Norway option is the only way to manage a sensible Brexit. What we need to be aware of, though, is that the EEA Agreement is what Pete dubbed an adaptive framework. There is no single agreement – each of the three Efta states which are party to it have adapted it to suit their own specific requirements. The UK too will need to make its own adaptations and, because it is a far more complex (and bigger) economy – with more sophisticated needs – the adaptations will have to be considerable. Thus, in my advocacy for the Efta/EEA option, the biggest mistake I made in the early days was to argue that it was an "off-the-shelf" arrangement. It isn't, and the process of negotiating the necessary adaptations would doubtless take a long time, with the expenditure of considerable diplomatic effort
Labour officially says it will vote down Theresa May's Brexit deal - — Labour is formally planning to vote down Theresa May's Brexit deal, the party's Brexit spokesperson Sir Keir Starmer said on Tuesday, paving the way for an almighty parliamentary battle. Starmer told Labour party conference it is "increasingly likely" that whatever deal May brings back from Brussels will not meet Labour's six Brexit tests, and Labour MPs will be instructed to vote against it. Labour's six tests demand that the UK government's Brexit deal must deliver "the exact same benefits" of the EU's single market and customs union, as suggested by former Brexit Secretary David Davis in 2017. "I know that people want clarity on where we stand on the deal now," Starmer told Labour conference. "Because some have said Labour could vote for any deal the Tories reach. Some have said we may abstain. Some have said we may support a vague deal - a "blind Brexit" - that gives no detail about the terms of our future relationship." "So, let me be very clear —right here, right now: If Theresa May brings back a deal that fails our tests - and that looks increasingly likely — Labour will vote against it. No ifs, no buts." Significantly, Starmer warned May that Labour will not vote for a deal which is vague on the UK's future relationship with the EU — also known as a "blind" Brexit — amid suggestions that Labour would accept that. "And if the Prime Minister thinks we'll wave through a vague deal asking us to jump blindfolded into the unknown she can think again. You can't meet Labour's tests by failing to provide answers. We will vote down a blind Brexit," he said. Starmer's announcement will add to May's fears that a disastrous parliamentary defeat on her Brexit deal is a real possibility, with Conservative MPs from the pro-Brexit and pro-EU wings of the party set to vote down the deal. There is also a feeling that defeat on such a defining issue would force May to consider her leadership, amid speculation that those around her are secretly preparing for another snap general election. The Conservatives accused Labour of "playing political games" and "trying to frustrate" the 2016 referendum result.
Britain is humiliating itself - For all the talk of Theresa May being ‘humiliated’ at Salzburg, the more fundamental truth is that Britain is humiliating itself, with May’s facilitation. To say this is, absolutely, not to be unpatriotic. On the contrary, any failure of patriotism lies with those who have brought us to this woeful pass. For as I pointed out in a post last October, humiliation has been ensured by the way that the government has approached Brexit.That the Chequers Proposal was never going fly with the EU was obvious from the start, and it is entirely disingenuous to claim that it has been rejected out of the blue and with no reasons given. It could – and probably still will – form the basis for further negotiation, but May compounded the inevitability of its rejection by insisting that it was the only, and non-negotiable, plan*.This set the stage for what she clearly found a distressing and infuriating rebuff to which she has reacted with ill-judged anger. Ill-judged, at least, if the aim is anything other than gleeful headlines from the dangerously irresponsible Brexiter press and, perhaps, a slightly easier ride at her party conference. But such short-termist, domestically focussed tactics are precisely what have prevented serious, strategic engagement with the complexities Brexit. If that is an example of May’s poor judgment, discussed in my previous post (which was quoted and expanded upon by James Blitz in yesterday’s Financial Times [£]), it’s important to re-state the fact that what happened in Salzburg grows out of the much deeper failure of the British government to get real about Brexit. If Brexit was to be done, it could never be done in the way the government has tried. In brief, the core failure has been a refusal to acknowledge the binary choice between single market membership and non-membership. That has been evident in every twist and turn of the government’s position – quite as much (albeit in different ways) in the Lancaster House approach, which Brexiters say they supported, as in the Chequers Proposal, which they don’t. These, and other variants, seek in some way to mix and match elements of membership with elements of non-membership.
Theresa May rejects calls for a general election over Brexit - Theresa May has rejected Labour's demands for an early general election, saying a snap vote "would not be in the national interest".Mrs May was speaking to reporters on a flight to New York ahead of the 73rd United Nations General Assembly on Tuesday.The Labour leader Jeremy Corbyn believes a general election would be the best way to resolve the political crisis enveloping the Brexit negotiations, after EU leaders rejected the prime minister's Chequers plan in Salzburg last week. Senior Conservative Brexiteers are piling pressure on her to ditch the proposal in favour of a Canada-style deal, as advised by the Institute for Economic Affairs (IEA). Mrs May said on Tuesday: "What I'm doing is working to deliver a good deal with Europe in the national interest, it would not be in the national interest to have a general election."Downing Street aides were weighing up the possibility of calling a snap election after the Chequers plan was snubbed, according to The Sunday Times.The Brexit Secretary Dominic Raab said the idea was "for the birds" and was "not going to happen".The prime minister will attempt to reassure business leaders on Wednesday that the UK services industry and London's role as a financial centre will stay "the envy of the world" after Brexit.Mrs May is expected to tell the Bloomberg Global Business Forum in New York that "post-Brexit Britain will be an unequivocally pro-business Britain". She will go on to say she has a plan for an economy that is "knowledge-rich, highly-innovative, highly-skilled and high quality but with low tax and smart regulation". The prime minister is expected to say: "Whatever your business, investing in a post-Brexit Britain will give you the lowest rate of corporation tax in the G20. "You will access service industries and a financial centre in London that are the envy of the world, the best universities, strong institutions, a sound approach to public finance and a consistent and dependable approach to high standards but intelligent regulation."
Hard-Brexit Lobbyists Demand UK Roll-Back Environmental Standards to Strike Free Trade Deals with India, China and US -- Hardline Brexiters are calling on the UK government to cut EU environmental regulations to secure free-trade deals with the US, China and India after Brexit. Environmental NGOs said the plans were not credible if the UK was to fulfil its own environmental commitments, warning that the Brexit vote was not a mandate to lower standards.The alternative Brexit plan, which is backed by former Brexit secretary David Davis and former foreign secretary Boris Johnson and was published today by the Institute of Economic Affairs (IEA), claims that if the UK continues to strengthen its regulatory environment, it will lead to “wealth destruction” and will “push people into poverty”. The report slams the EU as saddling the UK with regulations that are “damaging to growth” and singles out environmental protection rules as one of the areas where EU regulation is “moving in an anti-competitive direction”. It argues that if the UK harmonises its regulatory environment with the EU’s after Brexit, it would make independent trade deals with countries such as the US, China and India impossible.The plan was produced by Shanker Singham, director of international trade and competition unit at the IEA. A former lobbyist in the US, Singham is now one of the most powerful people pushing for a hard Brexit inside Westminster.The IEA is a free-market think-tank working out of 55 Tufton Street, a hub for right-leaning organisations which include the climate science deniers group the Global Warming Policy Foundation (GWPF).The IEA and the GWPF are among nine organisations which have been accused of mounting a coordinated campaign to push for a hard-Brexit while promoting a deregulation agenda.The 147-page report entitled “Plan A+: Creating a prosperous post-Brexit UK”, aims to offer an alternative plan to Theresa May’s Chequers Plan, which was rejected by the the EU at the Salzburg summit last week. The IEA recommends the UK government seeks free-trade deals with countries outside of the EU as leverage to force the bloc to give Britain a better trade deal when it leaves the EU next March.
Jeremy Corbyn names his price for backing Brexit deal — Jeremy Corbyn made continued membership of the EU’s customs union his price for backing any final Brexit agreement struck by Theresa May, as he set out an alternative negotiating strategy at the party’s annual conference in Liverpool Wednesday.In a speech lasting just under an hour, Corbyn called for party unity to force the Conservative Party from power, giving Labour the chance to finish the job of negotiating Britain’s exit from the EU. He branded the prospect of a no-deal Brexit a “national disaster.”In a strikingly conciliatory tone distancing the party from hard-line Remainers who are pushing for a second referendum with the option to remain in the EU, Corbyn said he wants to “reach out” to the prime minister to offer his support in the final vote on the terms of Britain’s Brexit divorce. But that support would only come if the deal keeps Britain inside the EU’s customs union, while meeting a series of other demands on maintaining standards.“Brexit is about the future of our country and our vital interests,” he told the packed auditorium in Liverpool. “I say this to her in all sincerity and helpfulness. If you deliver a deal that includes a customs union and no hard border in Ireland, if you protect jobs, people’s rights at work and environmental and consumer standards — then we will support that sensible deal. A deal that would be backed by most of businesses in world and trade unions.” The offer is not new in substance — mirroring five of Labour’s long-trumpeted “six tests” — but is far more conciliatory in tone than the original demand that any Brexit deal must achieve “the exact same benefits” of both single market and customs union membership. Corbyn said that if May could not negotiate continued customs union membership “you need to make way for a party that can and will.”
Brexit is already damaging European science - The series of briefings — the latest batch was released earlier this month — discuss the possible consequences should Britain fail to agree terms with the EU on how to remove itself from the bloc. In those circumstances — the ‘no deal’ scenario — Britain would be ejected from a raft of shared laws and regulations, including those governing the free movement of people, goods and services across borders in the EU. With regulatory systems on either side of the English Channel out of step, experts have warned, the worst-case scenario could see chaos and disruption to supply chains, transport and daily life. Scientists are among those who have been anxiously scanning the government notices. The documents include predictions of the effects on research funding (bad), access to satellite-navigation systems (minimal) and warnings about dangerous space debris (cross fingers and hope for the best). Government spokespersons have been at pains to play down the negatives highlighted by their own analyses, but in each case the attempt at reassurance has been the same: ‘It won’t come to that. We’re trying very hard to agree a deal.’ But question marks hang over a string of issues, including how the United Kingdom should manage its nuclear research outside the EU, and whether the import of scientific equipment and reagents will be affected.A sensible assessment of the situation says that the consequences of no deal are simply so bad that neither Britain nor the EU will let it happen. Some sectors are rightly making arrangements for a no-deal scenario. The UK Office for Nuclear Regulation, for example, says it is training staff and developing the IT infrastructure needed to work outside Euratom, the EU umbrella body. And some UK universities are strengthening links with overseas institutions in the hope that this will keep them plugged into European funding streams. Regardless of whether or not a deal is done, many scientists are already seeing and feeling the impact of Brexit, as we report in a News Feature this week. Although it might seem on the surface that it is business as usual until key decisions are made, science and scientists in Britain are suffering as a result of the uncertainty. Researchers are less likely to get collaborators on projects, because academics in Europe view them as a risky bet and are teaming up with universities elsewhere. Some are finding it harder to fill key positions. Others feel unable to apply for EU funding, and the country is losing its reputation as an international hub of excellent research. Many scientists are feeling tired and disappointed. The uncertainty is taking a personal and emotional toll.
UK nationals would suffer under skills-based immigration, EU tells Javid The home secretary, Sajid Javid, has been warned by Brussels that the UK’s own nationals will suffer if it introduces a post-Brexit immigration system that discriminates between European citizens according to their skills. The policy is likely to be unveiled at the Conservative party conference, which begins on Sunday. Following a meeting this week with the prime minister and Javid in Whitehall, Guy Verhofstadt, who represents the European parliament in the Brexit negotiations, has – in a letter obtained by the Guardian – given warning of a tit-for-tat response. Verhofstadt, a former prime minister of Belgium, tells Javid that any discrimination among EU nationals on the basis of nationality or employment “would apply reciprocally to UK citizens moving to the EU 26”. By EU 26 he means all the the member states excluding Ireland, which is in a common travel area with the UK. The conclusion is understood to be supported by EU officials and diplomats representing the member states. Theresa May’s cabinet agreed in principle on Monday that EU citizens should face the same immigration rules as people from the rest of the world if they want to live or work in the UK. The cabinet decided that “skills, not nationality” would be the test for people seeking to move to the UK. Such a system would most likely be phased in after the 21-month transition period, during which the UK will abide by EU rules, including the free movement of people.
Boris Johnson sets out his ‘Super Canada’ Brexit plan - BBC - Boris Johnson has set out his own plan for Brexit, arguing that the UK should "chuck Chequers" and negotiate a "Super Canada" free trade deal instead. The ex-foreign secretary, who quit over Theresa May's Chequers Brexit plan, called her strategy "a moral and intellectual humiliation". He said his vision would not lead to a hard Irish border, with any checks carried out away from the crossing. But environment secretary Michael Gove urged the party to unite behind the PM. And ex-attorney general Dominic Grieve, who backs a new referendum on Brexit, told the Evening Standard up to 40 Tory MPs were prepared to vote against any Canada-style deal if Mrs May ultimately opted for it. BBC deputy political editor John Pienaar said Mr Johnson's 5,000 word article, published two days before the start of the Conservative Party conference, was a reminder that the PM's plan had very little support in the party and it was going to be a difficult week for her in Birmingham. The UK is due to leave the EU on 29 March 2019. The two sides are seeking to negotiate the terms of exit, as well as an outline agreement on future cooperation. Parliament is to vote on any withdrawal deal. In an article for the Telegraph entitled "a better plan for Brexit", Mr Johnson wrote there had been a "collective failure of government, and a collapse of will by the British establishment, to deliver on the mandate of the people". He said the Chequers proposals - which would keep the UK closely aligned with the EU in trade in goods - represented "the intellectual error of believing we can be half-in, half-out" of the EU. UK firms would be exposed to EU regulations that could disadvantage them, and free trade deals would be made more difficult. This, he said, was a "democratic disaster" and would "cheat the electorate" if implemented.
Brexit: Plan Oaf for oblivion -Just when you think the Telegraph as a newspaper can't sink any lower … it does. Today's edition parades on its front page a mad contribution from the oaf Johnson entitled My plan for a better Brexit.The online copy of what would be better called "Plan Oaf for oblivion" runs to 4,600 words, lodged firmly behind the paywall. But the section setting out the actual plan is less than a thousand words, positioned away from the prying eyes of non-subscribers. However, it is enough – if any UK government was stupid enough to try it out – to ensure that we would leave the EU without a deal. Perhaps that is Mr Johnson's intention. In what amounts to a six-point plan, under the heading: "Here is what we should do", Johnson's first idea is dispensed with in a mere two lines. "First, chuck Chequers, and stop wasting time on a solution that can never be in the long term interests of this country" he says. With that much we can agree. But that is all. In the next paragraph, he kills any possibility of us reaching a deal with the EU, by saying we should tell "our EU friends" that the Irish "backstop" arrangement is no longer operative and no longer acceptable to this country. Instead, he argues that we should negotiate a different Withdrawal Agreement, "stating that the Irish border question will be settled as part of the deal on the future economic arrangements, and that both sides are committed to avoiding a hard border". Completely lacking anything even approaching self-awareness, he then adds: "I recognise that this would be a difficult step". He fails entirely to acknowledge that this approach has already been roundly rejected by the EU, which is refusing to budge on the principle of a separate "backstop". Technically, therefore anything of Johnson beyond this point is not worth considering. Even if he was given a free hand to negotiate, the talks would grind to a halt on this point – where they have been ever since December last. For the record, though, we should note that Johnson, for his third point, wants us to agree a political declaration by early 2019, in parallel with the Withdrawal Agreement, "which sets out the intention of both sides to use the implementation period to negotiate and bring into force a SuperCanada-type free trade agreement".
Brexit: Boris Johnson refuses to rule out Theresa May challenge Boris Johnson has repeatedly refused to rule out challenging Theresa May for the Tory leadership as he warned of "political and economic disaster" if she stuck by her Brexit strategy. Asked four times by the BBC's Laura Kuenssberg to rule out a challenge, the ex-foreign secretary said: "My job is to speak up for what I believe in." Mrs May would stay in office "as long as she feels it necessary," he said. But, he added, her Chequers plan was "simply intolerable" and must go. "My duty now is to make the case for freedom again," added the Tory backbencher, who was a leading figure in the campaign to get Britain out of the EU. A government source said Mr Johnson was "regurgitating ideas", not coming up with any new answers. Mr Johnson quit the cabinet in July in protest at Mrs May's plan for future economic co-operation with the EU, which he says will curb the UK's sovereignty and betray the 2016 referendum vote. His latest attack on Mrs May's policy, which would see the UK sign up to a common rule book for trade in goods, comes two days before the start of the Conservative Party conference. In an article for the Daily Telegraph on Friday, Mr Johnson claimed the Chequers plan was "a moral and intellectual humiliation" for the UK and it was not too late for Mrs May to back a "super Canada" deal, which is favoured by many Tory Brexiteers. Speaking to the BBC's political editor, in his first interview since quitting the cabinet, he rejected suggestions he was simply trying to make life difficult for the prime minister, describing Theresa May as a "remarkable person". "As she said to us herself and she said to the country...she will go for as long as she feels it necessary."
May under microscope as EU searches for signs of Brexit cooperation The general rule in Brussels is that what goes on at a party conference stays at the party conference. Rhetorical fireworks from politicians playing to the crowd are regarded as part and parcel of the political cycle, to be safely disregarded as a bit of theatre. But with six months to go until Brexit, the normal rules do not apply. Every cough and spit in the British debate at this stage is attracting the closest attention, and much of it is causing great anxiety in the EU quarter of the Belgian capital. Jeremy Corbyn was first up, with his leader’s speech in Liverpool. To say it was forensically examined and discussed by EU officials and diplomats does not do it justice. EU officials liked bits of it. They chortled in the European commission at Corbyn’s line that the government envisioned a “Britannia that both rules the waves and waives the rules”. They thoroughly approve of Labour’s policy on negotiating a customs union with the EU, and have had this message passed on to the Labour leader. But the central thrust of Corbyn’s speech worried them deeply. Corbyn has made it clear he is sticking with his “six tests” as the criteria for judging whether Labour will back the government in the meaningful vote on a deal in parliament. The six tests – not least the one insisting that a deal must offer “the exact same benefits” of single market and customs union membership – are designed to help Labour vote down whatever May brings home. Certainly Labour members are clear that they would vote down a free trade agreement of a so-called Canada+++ nature (the pluses are increasing in ratio to the desperation in Brussels for it to be accepted). It might cover lots of sectors, from fisheries to aviation, and avoid tariffs, but it would leave Northern Ireland in the EU’s customs territory and do little to protect Britain’s manufacturing base from checks, red tape and worse. The former home secretary Amber Rudd has said 40 Tory MPs would join Labour in the “no” lobby. The EU’s executive senses danger, and it has started disregarding some diplomatic norms to try to mitigate against it. On Thursday Corbyn was in Brussels for the inauguration of Place Jo Cox in honour of the Labour MP murdered a few days before the 2016 EU referendum. On hearing that Corbyn would be in town and likely to visit Michel Barnier, the commission’s all-powerful secretary-general, Martin Selmayr, known as the “monster of Berlaymont” for his tactical nous and work ethic, let it be known he would like to talk to the Labour leader.
No comments:
Post a Comment