The Fed's QE Unwind Reaches $285 Billion - The Fed released its weekly balance sheet Thursday afternoon. Over the four-week period from September 6 through October 3, total assets on the Fed’s balance sheet dropped by $34 billion. This brought the decline since October 2017, when the QE unwind began, to $285 billion. At $4,175 billion, total assets are now at the lowest level since March 5, 2014:During QE, the Fed bought Treasury securities and mortgage-backed securities (MBS). During the “balance sheet normalization,” the Fed is shedding those securities. But the balance sheet also reflects the Fed’s other activities, and so the amount of its total assets is higher than the combined amount of Treasury securities and MBS it holds, and the changes in total assets also reflect its other activities.The QE unwind was still in ramp-up mode in September, according to the Fed’s plan. For September, the Fed was scheduled to shed “up to” $24 billion in Treasuries and “up to” $16 billion in MBS.From September 6 through October 3, the Fed’s holdings of Treasury Securities fell by $19 billion to $2,294 billion, the lowest since March 5, 2014. Since the beginning of the QE-Unwind, the Fed has shed $172 billion in Treasuries: Though the plan calls for shedding “up to” $24 billion in Treasury securities in September, the Fed shed only $19 billion. Here’s what happened – and why this will happen more often going forward:When the Fed sheds Treasury securities, it doesn’t sell them outright but allows them to “roll off” when they mature; Treasuries mature mid-month or at the end of the month. Hence, the step-pattern of the QE unwind in the chart above.On September 15, no Treasury securities matured. On September 30, two security issues in the Fed’s holdings matured, totaling $19 billion. Those were allowed to “roll off” entirely without replacement. In other words, the Treasury Department redeemed them and paid the Fed $19 billion for them. The Fed then destroyed this money – in a reverse process of QE when it created this money with which to buy securities. But since only $19 billion in Treasury securities matured, only $19 billion could roll off, and the “up to” $24 billion cap could not be reached. This will happen again. For example, in October, $22.9 billion in Treasury securities will mature. In October the “up to” cap increases to the final cruising speed of $30 billion a month, but only $22.9 billion can roll off. In November, however, $50 billion in Treasury securities will mature. The Fed will let $30 billion roll off, maxing out the “up to” cap of $30 billion, and will replace the remaining $20 billion.
John Williams Warns The Fed Is Killing Off The Economy - Economist John Williams says the recent rate hikes mean the “Fed is killing off the economy.” Williams says, “I heard President Trump make some comments to that effect, and he’s right..." "The Fed is trying to raise rates. The idea is if you get higher rates, the banks will be able to make more profits on their lending. It will also encourage bank lending. Unfortunately, on the consumer end, it raises the consumers’ cost of borrowing as interest rates go up. It makes mortgages more expensive. It makes borrowing more expensive. Mortgages go up, people don’t buy as many houses. What you are seeing right now is effectively a recession in the housing market, in the construction area. Existing home sales have been down for six or seven months in a row, and it’s down year over year.” Williams says, “The Fed is trying to get the system back to normal.” In doing so, the Fed could kill the system. Williams says, “Well, that’s what they are doing. In many ways, it would have been easier if the banking system would have collapsed and had a banking holiday, and restructured it and reopened it back in 2007 and 2008. That would have been a very difficult time for the people who owned the banks, and again, the Fed owns the banking system.” So, they are trying to fix the banks, and to do that, they will simply screw the consumer? Williams says, “Well, they have an escape clause. Former Fed Head Janet Yellen said that if the economy falls back into recession, ‘we will just go back into quantitative easing’ (QE/money printing). I think that could easily happen here. When the economy goes down, it increases the liquidity stresses on the banking system. There is default on debt, and companies tend to go out of business. That will stress the bank earnings. QE was aimed at propping up the banks in tough times. The Fed is very open to QE, and from the Fed’s standpoint, I think we are going to end up in a perpetual state of quantitative easing, unless they let the banking system reorganize and get a new functioning system. It’s still not functioning.” John Williams has long said that this money printing orgy by the Fed will end in a hyperinflationary event. Williams says, “Unfortunately, it is unavoidable. It is only a matter of when. It can only be avoided if the U.S. can get its long term financial house in order.”
Fed Chair Powell Hints He May Soon Crash The Market - Speaking at an event at the Atlantic Festival in Washington, Jerome Powell's second public appearance of the week, the Fed chair took the opportunity to underscore just why he remains so complacent about the US economy, saying "it’s a remarkably positive set of economic circumstances,” and “there’s no reason to think it can’t continue for quite some time."Powell also praised the recent wage increases, saying some gains are welcome and noting that "the Phillips curve is not dead, just resting."The surprisingly confident Powell then put on the hawkish afterburners, and repeated what he said after the last week's FOMC announcement, saying that "interest rates are still accommodative" because "rates have just now, in real terms, moved above zero."And here is the reason why the dollar is surging after hours: Powell said that not only are rates far away from the neutral rate of interest - or the interest rate that neither stimulates nor holds back the economy - but the Fed may go past neutral as the tightening process continues:"interest rates are still accommodative, but we’re gradually moving to a place where they’ll be neutral - - not that they’ll be restraining the economy. We may go past neutral. But we’re a long way from neutral at this point, probably.” Why is this important? Because as Stifel analyst Barry Bannister - who correctly predicted the February correction - wrote three weeks ago, contrary to Powell's assessment, just two more rate hikes would put the central bank above the neutral rate. The Fed's long-term projection of its policy rate has risen from 2.8% at the end of 2017 to 2.9% in June. The September rate hike followed Bannister's note, so as of this moment just one more hike would be sufficient to push the fed funds rate beyond neutral.What Bannister said next was ominous:"Although some say the neutral rate is difficult to observe, stocks see the barrier quite clearly. A ‘maximum tolerable peak’ for the fed funds above the neutral rate has been associated with bear markets since the late-90s global-debt boom."
Fed Credit & The US Money Supply – The Liquidity Drain Accelerates - We last wrote in July about the beginning contraction in outstanding Fed credit, repatriation inflows, reverse repos, and commercial and industrial lending growth, and how the interplay between these drivers has affected the growth rate of the true broad US money supply TMS-2 (the details can be seen here: “The Liquidity Drain Becomes Serious” and “A Scramble for Capital”). Our friend Michael Pollaro recently provided us with an update on outstanding Fed credit. As there are no longer any outstanding reverse repos with domestic banks, the liquidity drain is accelerating of late, with growth in net Fed credit contracting at fairly rapid rate of 3.4% year-on-year in September, the fourth consecutive month of decline: The year-on-year contraction in net Fed credit accelerates. Since there are no longer any outstanding reverse repos with domestic financial institutions, the only force counteracting the negative effect on money supply growth is inflationary bank lending. Michael also sent us a chart comparing the monthly trend in total net Fed credit in the course of 2017 with the trend in 2018 to date. When “QT” started in September of 2017, outstanding Fed credit initially kept growing well into 2018, largely because reverse repos with US banks ran off faster than securities held by the Fed decreased – but that has changed quite noticeably in the meantime: Keep in mind that the reverse repos mainly served to alleviate growing delivery fails due to a shortage in certain off-the run treasury securities which banks needed as collateral. As the Fed has stopped reinvesting all proceeds from maturing treasuries and MBS, banks no longer need to borrow securities from its portfolio.The markets evidently never “missed” the liquidity tied up in these reverse repos, not least because high quality treasury collateral serves as a kind of secondary medium of exchange in repo markets, where it supports all kinds of other transactions. With net Fed credit actually decreasing, an important threshold has been crossed. The effect on excess liquidity is more pronounced, which definitely poses a big risk for overextended financial markets.
Trump Says He Doesn't Like What The Fed Is Doing , Is Considering Goldman's Powell For UN Ambassador - With the dollar spiking and rates surging to 7 years highs, President Trump doubled down on his criticism of the Fed and on his way to a rally in Iowa, said the Federal Reserve is moving too fast with interest rates increases, dismissing concerns about inflation."I don’t like what the Fed is doing", Trump told reporters at the White House. "I think we don’t have to go as fast" on rate hikes. "I like low interest rates," Trump said.Trump also said that rates are too high because there's no inflation, but said that he has not talked to Chair Powell about it because he doesn't want to get involved.I asked President Trump about interest rates a few minutes ago. He said he thinks they’re too high, particularly because there’s no inflation, but also said that he has not talked to Fed Chair Jay Powell about it because he doesn’t want to get involved. pic.twitter.com/bU8di5cjpE— Eamon Javers (@EamonJavers) October 9, 2018Trump’s comments echoed prior criticisms of the Fed. When the Fed announced its third increase of the year in September, Trump said he was “not happy” about it. Trump has publicly criticized the Fed's interest-rate increases on several occasions, breaking with more than two decades of White House tradition of avoiding comments on "independent" monetary policy. Some commented that this is another sly move by the president to preemptively shift blame on the Fed chair ahead of what may be a turbulent 2019 when rates are expected to keep rising, potentially resulting in a sharp slowdown in the economy and/or a stock market crash. Separately, hours after Nikki Haley announced her departure as US ambassador to the UN, Trump said he would consider Goldman's Dina Powell for the post
Trump Takes Swipe at Fed as Stocks Tumble – WSJ - President Trump put the Federal Reserve at the middle of Wednesday’s stock-market selloff just minutes after the White House issued a statement playing down the drop by pointing to solid economic fundamentals.“The Fed is making a mistake,” Mr. Trump told reporters in Erie, Pa., after stock markets suffered their biggest decline in more than seven months. “I think the Fed has gone crazy.” Mr. Trump has for weeks grumbled about the central bank’s campaign to gradually lift short-term rates, which the Fed has been doing to guard against inflation and economic overheating. Wednesday’s comments were the first time he said the Fed had been responsible for inflicting market losses. Of the stock market, he said, “Actually, it’s a correction that we’ve been waiting for, for a long time. But I really disagree with what the Fed is doing, OK?”The Fed has raised its benchmark short-term interest rate three times this year, most recently last month by a quarter-percentage-point to a range between 2% and 2.25%. Officials have indicated they expect another percentage point in rate increases will be needed to keep the economy on an even keel through 2019. Earlier Wednesday, the White House said in a statement that the “fundamentals and future of the U.S. economy remain incredibly strong,” and ticked off positive news on employment and other measures.Mr. Trump has regularly pointed to the stock market’s gains as validation of his economic policies. A Fed spokeswoman declined to comment on Wednesday. Fed Chairman Jerome Powellsaid last week the Fed’s nine-person rate-setting committee is guided solely by its reading of economic data when it fashions a consensus around where to set its policy rate. “This is just who we are and, I think, who we’ll always be,” he said, dismissing concerns that politics would enter into officials’ decision-making.
IMF chief defends rate hikes after Trump slams 'crazy' Fed - IMF chief Christine Lagarde on Thursday defended central bank rate hikes in a veiled rebuke to Donald Trump after the US president blamed "crazy" Fed policies for contributing to financial market turmoil. Lagarde's comments came as a global market sell-off rolled on following Trump's comments, underscoring rising financial volatility that the IMF will address at its annual meetings this week in Bali. Lagarde said central bank rate increases such as those by the policy-setting US Federal Reserve were justified by fundamentals. "It is clearly a necessary development for those economies that are showing much improved growth, inflation that is picking up... unemployment that is extremely low," she told a press briefing in Bali. "It's inevitable that central banks make the decisions that they make." Following a sharp Wall Street sell-off on Wednesday, Trump said the Federal Reserve "is making a mistake." "I think the Fed has gone crazy," he said. The IMF's latest report on world financial stability, released Wednesday, said global growth could be at risk if emerging markets deteriorate further or trade tensions escalate. Much of the global angst has been dominated by Trump's escalating tariff war with China and his disdain for world trading norms. But higher US interest rates have also helped send emerging market currencies into a tailspin, as countries that borrowed heavily in dollars race to pay back debt. On Wednesday, Lagarde said world leaders should fix global trading systems instead of tearing them down, in response to nationalist politicians pushing tariffs and protectionism. While defending justified rate hikes, Lagarde added on Thursday that uncoordinated rate increases in advanced economies were contributing to destabilising capital outflows from emerging markets.
Don’t Panic. Yet. Tim Duy’s Fed Watch - A bit of an unpleasant day in the stock market. Not unpleasant enough, however, to send much of a panic among Federal Reserve policy makers. In fact, quite the opposite – my sense is that Powell & Co. will be happier if the pace of equity gains moderated. Indeed, I would say that this is a lesser-mentioned goal of the tightening campaign. From their perspective, taking some of the steam off the stock market occasionally reduces the risk that financial instabilities grow and become a potential economic threat. What would be the beginning of the end? When the Fed starts to believe they can’t cut rates in the face of economic weakness due to inflationary pressures. We aren’t there yet. My interpretation is that fixed income traders had already processed the shifting policy environment; equity traders were a bit late to the party. What is that changing environment? Well, as I have documented over the past several weeks, the Fed has been slowly phasing out forward guidance, leaving market participants a bit more uncertain about the path of rates going forward. I think the Fed views this uncertainty as a policy feature, not a bug. Recall the criticism the Bernanke’s Fed contributed to market complacency by laying out so clearly the rate path. Powell may very well share that criticism (a good question for the December press conference). The Fed has focused attention away from r-star estimates (and forward guidance in general) to their forecasts instead. And therein lies the problem for market participants. The incoming data appears to confirm the forecast, policy makers appear to agree that the data confirms the forecast. That rate forecast is hawkish relative to market expectations that the Fed would soon pause in their rate hike campaign. Worst, that forecast suggests they keep hiking even after the impact of fiscal stimulus starts to wane. The upshot is that we need to incorporate both a higher path of rates and additional uncertainty about the path of rates into prices. On net, that should sap the equity markets of some strength. The Fed is not going to ride to the rescue here. There is no Powell-put for a 3% decline. Or even an extended decline like earlier this year. And Bloomberg caught this from New York Federal Reserve President John Williams last night:
Key Measures Show Inflation Decreased on YoY Basis in September -- The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.3% annualized rate) in September. The 16% trimmed-mean Consumer Price Index rose 0.1% (1.7% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (0.7% annualized rate) in September. The CPI less food and energy rose 0.1% (1.4% annualized rate) on a seasonally adjusted basis. Note: The Cleveland Fed released the median CPI details for September here. This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.7%, the trimmed-mean CPI rose 2.2%, and the CPI less food and energy rose 2.2%. Core PCE is for August and increased 1.96% year-over-year. On a monthly basis, median CPI was at 2.3% annualized, trimmed-mean CPI was at 1.7% annualized, and core CPI was at 1.4% annualized. Using these measures, inflation decreased on a year-over-year basis in September. Overall, these measures are at or above the Fed's 2% target (Core PCE is slightly below 2%)
10 & 30-Year Yields Surge, Yield Curve “Steepens,” Stocks Drop, as Fed Talks Up Rate Hikes in 2019 - Wolf Richter - Ironically, after having lamented the flattening yield curve for a year, soothsayers now lament the steepening yield curve. On Friday, capping a rough week in the US Treasury market, the 10-year yield closed at 3.23%, the highest since May 10, 2011, and stocks fell for the second day in a row. This is an unnerving experience for pampered equity investors who’ve come to take endless stock-price inflation for granted, who’d figured for years that interest rates would never rise, and as short-term interest rates began rising, figured that long-term interest rates would never rise – and now they’re rising too.To rub it in that this is a new world, similar to the old world before QE and before zero-interest-rate policy, another Fed heavy-weight discussed what’s coming: Quite a few more rate hikes.New York Fed president John Williams told Bloomberg TV on Friday that we’re witnessing a “Goldilocks economy” with strong labor market, earnings growth, “low and stable inflation,” etc. “We want to sustain this economy, we want to keep it in good balance, so we don’t want to see inflationary pressures pick up,” he said. And the topic came to “neutral” – the infamously theoretical short-term interest rate that is high enough to stop pushing the economy but is low enough to avoid slowing it.“Of course, we don’t really know what the neutral interest rate is,” he said, pointing out that the FOMC members on average peg it at “about 3%. “We’re just a little bit above 2% for the federal funds target, so we have a ways to go to get to some idea of what people think of as neutral. We don’t really know where that is…. We continue to get closer to the range of neutral over the next year.” This echoes Fed Chairman Jerome Powell’s pronouncements that “we’re a long way from neutral at this point” – and he’s thinking of taking rates beyond neutral [read… Powell Explains Just How Hawkish the Fed is Getting].
IMF cuts its global growth forecasts, citing trade tensions between the US and its trading partners -- The International Monetary Fund has cut its global growth forecasts as trade tensions between the U.S. and trading partners have started to hit economic activity worldwide.The IMF said the global economy is now expected to grow at 3.7 percent this year and next year — down 0.2 percentage points from an earlier forecast, according to the fund's latest World Economic Outlook report released on Tuesday.The report — published twice a year in April and October — is widely read by both public and private sectors globally for the IMF's assessment of the world economy. The latest edition was released as thousands of finance officials and professionals gather in Bali, Indonesia, for the IMF and World Bank annual meetings. Earlier projections now appear to be "over-optimistic" given that risks from "further disruptions in trade policies" have become more prominent, said Maurice Obstfeld, IMF chief economist, in a prepared speech."Two major regional trade arrangements are in flux — NAFTA (where a new trilateral agreement awaits legislative approval) and the European Union (with the latter negotiating the terms ofBrexit). U.S. tariffs on China, and more broadly on auto and auto part imports, may disrupt established supply chains, especially if met by retaliation," he said."The impacts of trade policy and uncertainty are becoming evident at the macroeconomic level, while anecdotal evidence accumulates on the resulting harm to companies. Trade policy reflects politics, and politics remain unsettled in several countries, posing further risks," he added.The fund also cut its forecasts for global trade volume: The total good and services flow is expected to grow by 4.2 percent this year and 4 percent next year — down 0.6 and 0.5 percentage points, respectively, from earlier estimates. And the two economies in the center of the ongoing tariff fight — the U.S. and China — are also expected to grow slower than initially projected. The IMF maintained that the U.S. and China will grow by 2.9 percent and 6.6 percent, respectively, this year but said both would slow more than expected to 2.5 percent and 6.2 percent, respectively, in 2019.
Q3 GDP Forecasts -- From Merrill Lynch: 3Q GDP tracking remains at 3.7% qoq saar. [Oct 12 estimate]. And from the Altanta Fed: GDPNow: The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2018 is 4.2 percent on October 10, up from 4.1 percent on October 5. [Oct 10 estimate] From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at 2.2% for 2018:Q3 and 2.8% for 2018:Q4. [Oct 12 estimate] CR Note: It looks like GDP will be in the 3s in Q3.
The US Spent A Record $523 Billion On Debt Interest In Fiscal 2018 - Earlier this week, when the US closed fiscal 2018 on September 30, we reported that US gross national debt jumped by $84 billion on September 28, the last business day of fiscal year 2018; with this last push higher, total gross national debt in fiscal 2018 rose by $1.271 trillion to an all time record of $21.52 trillion.What is more stunning, is that only six months ago, on March 16, it had for the first time risen above the $21-trillion mark, while a year ago, at the end of September 2017, it was just $20.2 trillion. The reason for the soaring debt total is, of course, the runaway US budget deficit, which while providing a temporary sugar rush to the US economy comes at a cost of explosive debt. As a reminder, one month ago, the CBO revised its forecast, and now expects the deficit will approach $1 trillion by the end of this fiscal year or one year sooner than disclosed in the CBO's most recent forecast; in April the agency didn’t expect the deficit to reach $1 trillion until 2020.Many have asked if any of this actually matters in the grand scheme of things. Last week Bloomberg published a piece titled "Skyrocketing Deficit? So What, Says New Washington Consensus" which explained that neither Republicans nor Democrats are bothered by the devastating long-term trajectory of US debt, effectively making deficit hawks an extinct species:In both parties, deficit spenders are gaining ground. That makes Year Two of the Trump administration look increasingly like end-times if you are, for example, the Committee for a Responsible Federal Budget. “The tax cuts really set off a spiral of irresponsible justifications for not caring about fiscal responsibility,’’ says Maya MacGuineas, president of the CRFB. The group gets funding from the Peter G. Peterson Foundation, a project of the late Wall Street billionaire, who advocated slashing social programs to balance the budget.
Hedge Fund CIO- After A Decade Of 0% Rates, Payback Time Is Just Starting - Eric Peters - “President Trump’s leadership is working. China wants a different American President,” declared Mike Pence, firing up his base into the mid-terms home stretch. “Chinese security agencies have masterminded the wholesale theft of American technology,” continued our VP. “Worst of all, China has initiated an unprecedented effort to influence American public opinion, the 2018 elections, and the environment leading into the 2020 presidential elections,” Pence explained. “Beijing is also using its power like never before. China now spends as much on its military as the rest of Asia combined, and is prioritizing capabilities to erode US military advantages on land, at sea, in the air, and in space,” he warned, without mentioning that America’s annual military budget exceeds the combined spend of China, Russia, Saudi Arabia, India, France, Britain and Japan. America’s 2018/2019 budget deficit is forecast at $985bln (22% of the $4.4trln federal budget). We’ll borrow those $985bln dollars, spend $610bln on our military, pay $390bln in interest on our $16trln debt, and still come up $15bln short. A decade of 0% interest rates allowed America to borrow without consequence. Payback time is just starting. Next year’s interest expense will be a stunning 50% higher than 2017 thanks to rising interest rates and still-expanding budget deficits. Interest payments on the US federal debt will overtake Medicaid expenditures in 2020 and our entire military budget in 2023. The CBO forecasts $915bln in annual interest expenses by 2028.
Pentagon report points to US preparations for total war - Over the past two weeks, with next to no media coverage, the United States has moved substantially closer toward open military confrontation with both Russia and China, the second- and third-ranked nuclear powers in the world. On October 3, the United States threatened, for the first time since the Cold War, to directly attack the Russian homeland. UN Ambassador to NATO Kay Bailey Hutchison accused the country of violating the Intermediate Range Nuclear Forces (INF) treaty by developing a nuclear cruise missile and said that Washington was preparing to “take out” the weapon with a US strike. This statement came just three days after a Chinese warship set a collision course with a US destroyer carrying out a so-called “freedom of navigation” operation in the South China Sea, forcing the American ship to maneuver to avoid a collision and the potentially deadliest military clash in the Pacific in decades. Behind such hair-raising incidents, the United States is undertaking serious, long-term preparations to restructure the American economy to fight a major war with a “peer” adversary, entailing radical changes to American economic, social and political life. This is the essential content of a 146-page document released by the Pentagon last Friday, titled “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States.” It makes it clear that Washington is preparing not just for isolated regional clashes, but rather for a massive, long-term war effort against Russia and China under conditions of potential national autarchy.
US, UK, Australia And Israel Suspend F-35 Fighter Jets - Following the crash of F-35B Lightning II in Beaufort, South Carolina, on Sept. 28, multiple nations, including the United States, grounded their fleets of F-35 fighter jets. “The U.S. Services and international partners have temporarily suspended F-35 flight operations while the enterprise conducts a fleet-wide inspection of a fuel tube within the engine on all F-35 aircraft,” the F-35 Joint Program Office announced in a statement Thursday morning. The office made it clear the fighter jets will be out of military service only as long as it takes to fix them. "If suspect fuel tubes are installed, the part will be removed and replaced. If known good fuel tubes are already installed, then those aircraft will be returned to flight status. Inspections are expected to be completed within the next 24 to 48 hours," the statement added. The U.S. military has bought 245 F-35 aircraft from Lockheed Martin so far and plans to buy a total of 2,456 F-35s, at an estimated cost of $325 billion in the near future. Currently, the Air Force is in possession of 156 units of the fighter jet, the Marine Corps has 61 and the Navy has 28, Military Times reported.
Accounting Authority Finalizes Policy for Withholding Classified Budget Numbers -It’s final. The Pentagon and other agencies whose programs draw from highly classified budgets may withhold certain numbers from standard-format financial statements, an accounting authority announced last week.Following months of controversy and consultation with affected parties, the Federal Accounting Standards Advisory Board implemented a final version of a statement released in draft this summer that disappointed critics who sought total transparency on spending for sometimes-controversial secret programs.In publishing the Oct. 4 final statement, advisory board chairman D. Scott Showalter called the board’s approach a “practical solution” for what are called General Purpose Federal Financial Reports “to accommodating user needs for federal financial reports in a manner that does not impede national security.”As of their Sept. 30 statements, the statement will permit:
- An entity to modify information required by other standards if the effect of the modification does not change the net results of operations or net position;
- A component reporting entity to be excluded from one reporting entity and consolidated into another reporting entity, and the effect of the modification may change the net result of operations and/or net position; and,
- An entity may apply interpretations of this statement, that allow other modifications to information required by other standards, and the effect of the modifications may change the net results of operations and/or net position.
Stronger requirements for making numbers public were favored by such critics of the draft statement as the Defense Department Office of the Inspector General and the accounting firm Kearney & Co.
Weapons Systems Cybersecurity: DOD Just Beginning to Grapple with Scale of Vulnerabilities (PDF) GAO - The Department of Defense (DOD) faces mounting challenges in protecting its weapon systems from increasingly sophisticated cyber threats. This state is due to the computerized nature of weapon systems; DOD’s late start in prioritizing weapon systems cybersecurity; and DOD’s nascent understanding of how to develop more secure weapon systems. DOD weapon systems are more software dependent and more networked than ever before (see figure). Embedded Software and Information Technology Systems Are Pervasive in Weapon Systems (Represented via Fictitious Weapon System for Classification Reasons) Automation and connectivity are fundamental enablers of DOD’s modern military capabilities. However, they make weapon systems more vulnerable to cyber attacks. Although GAO and others have warned of cyber risks for decades, until recently, DOD did not prioritize weapon systems cybersecurity. Finally, DOD is still determining how best to address weapon systems cybersecurity. In operational testing, DOD routinely found mission-critical cyber vulnerabilities in systems that were under development, yet program officials GAO met with believed their systems were secure and discounted some test results as unrealistic. Using relatively simple tools and techniques, testers were able to take control of systems and largely operate undetected, due in part to basic issues such as poor password management and unencrypted communications. In addition, vulnerabilities that DOD is aware of likely represent a fraction of total vulnerabilities due to testing limitations. For example, not all programs have been tested and tests do not reflect the full range of threats. DOD has recently taken several steps to improve weapon systems cybersecurity, including issuing and revising policies and guidance to better incorporate cybersecurity considerations. DOD, as directed by Congress, has also begun initiatives to better understand and address cyber vulnerabilities. However, DOD faces barriers that could limit the effectiveness of these steps, such as cybersecurity workforce challenges and difficulties sharing information and lessons about vulnerabilities.
Nearly All The Pentagon's Expensive New Toys Are Embarrassingly Easy To Hack, GAO Audit Finds - The Pentagon's next-gen weapons systems currently under development by the Department of Defense (DoD) are woefully vulnerable to cyberattacks, according to a Tuesday report by the US Government Accountability Office (GAO). GAO testers "playing the role of adversary" discovered "mission critical cyber vulnerabilities in nearly all weapon systems that were under development." "Using relatively simple tools and techniques, testers were able to take control of systems and largely operate undetected, due in part to basic issues such as poor password management and unencrypted communications," said GAO officials. In one case, it took a two-person test team just one hour to gain initial access to a weapon system and one day to gain full control of the system they were testing. In one case, the test team took control of the operators' terminals. They could see, in real-time, what the operators were seeing on their screens and could manipulate the system. They were able to disrupt the system and observe how the operators responded.Another test team reported that they caused a pop-up message to appear on users' terminals instructing them to insert two quarters to continue operating.Multiple test teams reported that they were able to copy, change, or delete system data including one team that downloaded 100 gigabytes, approximately 142 compact discs, of data. Despite years of repeated warnings, cybersecurity surrounding weapons systems has been surprisingly ignored. In 1991, the National Research Council reported "as computer systems become more prevalent, sophisticated, embedded in physical processes, and interconnected, society becomes more vulnerable to poor system design, accidents that disable systems, and attacks on computer systems. Without more responsible design and use, system disruptions will increase, with harmful consequences for society. " In 2013, the Defense Science Board warned that "in today's world of hyper-connectivity and automation, any device with electronic processing, storage, or software is a potential attack point and every system is a potential victim - including our own weapons systems."
Cyber tests showed ‘nearly all’ new Pentagon weapons vulnerable to attack, GAO says Passwords that took seconds to guess, or were never changed from their factory settings. Cyber vulnerabilities that were known, but never fixed. Those are two common problems plaguing some of the Department of Defense's newest weapons systems, according to the Government Accountability Office.The flaws are highlighted in a new GAO report, which found the Pentagon is "just beginning to grapple" with the scale of vulnerabilities in its weapons systems. Drawing data from cybersecurity tests conducted on Department of Defense weapons systems from 2012 to 2017, the report says that by using "relatively simple tools and techniques, testers were able to take control of systems and largely operate undetected" because of basic security vulnerabilities. The GAO says the problems were widespread: "DOD testers routinely found mission critical cyber vulnerabilities in nearly all weapon systems that were under development."When weapons program officials were asked about the weaknesses, the GAO says, they "believed their systems were secure and discounted some test results as unrealistic."The agency says the report stems from a request from the Senate Armed Services Committee, asking it to review the Pentagon's efforts to secure its weapons systems. The GAO did so by going over data from the Pentagon's own security tests of weapon systems that are under development. It also interviewed officials in charge of cybersecurity, analyzing how the systems are protected and how they respond to attacks. The stakes are high. As the GAO notes, "DOD plans to spend about $1.66 trillion to develop its current portfolio of major weapon systems." That outlay also comes as the military has increased its use of computerized systems, automation and connectivity. Despite the steadily growing importance of computers and networks, the GAO says, the Pentagon has only recently made it a priority to ensure the cybersecurity of its weapons systems. It's still determining how to achieve that goal — and at this point, the report states, "DOD does not know the full scale of its weapon system vulnerabilities."
Trump Tax Cuts: a Little Good Old-Fashioned Crowding Out - Dean Baker - The textbook story of what happens if the government runs a budget deficit when the economy is near its potential is that interest rates rise. Higher interest rates then reduce demand in interest sensitive sectors like residential construction, investment, and car purchases. Higher rates also lead to a higher valued dollar. This makes U.S. goods and services less competitive internationally, which means a larger trade deficit. That also reduces demand. The result is that much or all of the demand created by the deficit is offset by the reduction in demand from this crowding out effect. Of course the textbooks often underemphasize the intervening step. The Federal Reserve Board could act to prevent this sort of crowding out by committing to keep interest rates low. The risk of doing this is that if the economy is really near its potential, then the excess demand will quickly lead to higher inflation. It would have been desirable in my view if the Fed had taken this risk and kept interest rates at lower levels, to see how low we could get the unemployment rate. This is especially important since the additional employment would disproportionately benefit the most disadvantaged workers, African Americans, Hispanics, people with less education, and people with a criminal record. However, the Fed went the other way. It continued and likely accelerated its path of interest rate hikes. As a result, we have seen a sharp increase in long-term interest rates, with the 10-year Treasury bond rate rising from less than 2.2 percent a year ago to more than 3.0 percent in the most recent data. This has had the expected results. Existing home sales peaked last November at a 5.72 million annual rate. The annual rate has since fallen by almost 400,000. (There is typically a one to two month lag between when a contract is signed and the sale, which means the peak in contracts occurred likely occurred in September, before rates began to rise.) Pending home sales show a similar pattern, with the levels reported for August down by more than 5.0 percent from last fall’s peaks. Residential construction reflects the slower pattern in sales, with housing starts down by more than 7.0 percent from the peaks last fall. In addition to being a big factor in slowing sales, higher interest rates also reduce mortgage refinancing. In the most recent week’s data, refinancing was down more than 30 percent from year ago levels.
“Rising Inequality” Could Impact America’s AAA Credit Rating - Credit-analysis firm Moody’s Investors Service is sounding the alarm bells over “rising inequality” as the gap widens between America’s rich and poor, potentially threatening the country’s AAA rating.So much for that vision of a newly emboldened American working class …Instead, Trump’s $1.5 million in tax cuts, according to Moody’s, have helped make the rich richer, putting more of the onus of repaying the country’s debt on the poor.“Since 1995, the top 10% of US income earners have experienced an overall median net worth increase of close to 200%, while the bottom 40% of income earners have seen a decline. There has been a particularly sharp increase in wealth and income inequality ratios since the global financial crisis,” Moody’s noted in a report released on Monday."The global financial crisis exacerbated the effects of these trends by disproportionately affecting poorer overleveraged households and by reducing the mobility of households with negative home equity and, oftentimes, negative net wealth as a result," says Moody's Vice President William Foster. "Wealthier households with a higher concentration of equity market holdings in retirement savings plans and personal portfolio investments have disproportionately benefited from the significant gains in the US and global stock markets since the global financial crisis." In turn, that rising inequality “will exacerbate already material fiscal challenges on the horizon," Moody’s continued. "Should inequality go unaddressed, social tensions will continue to rise, leading to a more fractious political landscape that increases political risk, and with it a less predictable policy environment."
Pompeo, Kim agree to second U.S.-North Korea summit 'as soon as Pompeo says has good meeting with North Korea's Kim but more needs to be done (Reuters) - North Korean leader Kim Jong Un and U.S. Secretary of State Mike Pompeo agreed to arrange a second leaders summit “as soon as possible,” and discussed potential U.S. monitoring of Pyongyang’s steps toward denuclearization, South Korea’s presidential office said on Sunday. Pompeo said his latest, fourth trip to Pyongyang was “another step forward” to denuclearization and he had a “good, productive conversation” with Kim, but more needed to be done. South Korean President Moon Jae-in held talks with Pompeo in Seoul after the top U.S. diplomat met with Kim for more than three hours during a short trip to Pyongyang that was aimed at breaking a gridlock in their nuclear negotiations. Pompeo’s trip to Pyongyang happened amid negative signals from North Korea whose actions have fallen short of Washington’s demands for a complete inventory of its nuclear weapons and irreversible steps to give up an arsenal that potentially threatens the United States. Pompeo said he and Kim discussed denuclearization steps to be taken by the North and the issue of U.S. government monitoring of those actions, which Washington sees as vital, as well as the measures the United States would conduct in return, Moon’s office said. In a statement, State Department spokeswoman Heather Nauert said Kim had invited inspectors to visit the Punggye-ri nuclear test site to confirm it has been irreversibly dismantled. The statement did not provide further details. Pompeo and Kim also agreed to form a working group “at an early date” to discuss the denuclearization process and the second summit, which Kim proposed to U.S. President Donald Trump in a letter last month, according to Moon’s press secretary Yoon Young-chan. “Secretary Pompeo said he and Chairman Kim concurred that they will hold the second U.S.-North Korea summit as soon as possible,” Yoon said in a statement.
China-U.S. Tensions Flare During Testy Pompeo Visit to Beijing - U.S. Secretary of State Michael Pompeo cited “fundamental disagreement” with China’s foreign minister during a testy exchange in Beijing that highlighted rising tensions between the world’s two largest economies.Pompeo’s retort came after Chinese Foreign Minister Wang Yi accused the U.S. on Monday of escalating trade disputes, interfering on Taiwan and meddling in the country’s domestic affairs. “These actions have damaged our mutual trust, cast a shadow over China-U.S. relations, and are completely out of line with the interests of our two peoples,” Wang told his visiting American counterpart.“The issues that you characterized, we have a fundamental disagreement,” Pompeo said. “We have great concerns about actions that China has taken and I look forward to having the opportunity to discuss each of those today because this is an incredibly important relationship.”The exchange came as Pompeo arrived in the Chinese capital during an Asia trip focused on securing a disarmament deal with North Korea and maintaining international pressure against Kim Jong Un. The visit was the latest indication of deteriorating ties between the U.S. and China, as the two sides tussle over everything from trade to Taiwan and the South China Sea. China’s public show of displeasure also represented one of the strongest signs yet that the widening list of disputes between the U.S. and China could undermine their cooperation on North Korea. Beijing is Pyongyang’s biggest international benefactor and U.S. President Donald Trump has repeatedly suggested that his trade war with China was leading the country to relax pressure on the regime. Unlike a similar trip in June, Chinese President Xi Jinping granted no audience to the U.S. secretary of state. When asked earlier Monday whether Xi had declined a meeting because of disagreements between the two sides, Pompeo said, “I expect they’ll also raise the issues that they’re happy with.”
U.S.-China Tensions Break Out in Beijing - A rare public confrontation between the top U.S. and Chinese diplomats marked a new level in the worsening relations between the world’s two biggest economies and risked complicating an anticipated summit meeting between President Trump and North Korean leader Kim Jong Un. Secretary of State Mike Pompeo exchanged testy words with Foreign Minister Wang Yi in Beijing on Monday at a critical moment for U.S.-China relations, with trade negotiations stalled, military talks halted and both sides blaming each other for a recent close encounter between their warships in the South China Sea. The exchange followed a major speech last week in which Vice President Mike Pence outlined a shift in U.S. strategy from engagement to confrontation with China, accusing Beijing of undermining American interests on several fronts, including meddling in U.S. elections. It also came as the U.S. presses China—North Korea’s main ally, investor and trade partner—to persuade Mr. Kim to abandon his nuclear weapons program. Mr. Wang began his meeting with Mr. Pompeo by accusing the U.S. of escalating trade friction, causing trouble over Taiwan and unjustifiably criticizing China’s domestic and external policies. “We demand that the U.S. side stop this kind of mistaken action,” Mr. Wang said. Mr. Pompeo said the U.S. had a “fundamental disagreement” with Beijing on the issues Mr. Wang identified but that the relationship between the two countries was “incredibly important.” Mr. Pompeo also didn’t meet with Chinese President Xi Jinping, as he did in June during his first official visit to China as secretary of state. It was highly unusual for a visiting U.S. secretary of state not to meet with the Chinese president and to be publicly chastised by his host, said Daniel Russel, who served as the top State Department official on Asia during the Obama administration. “The confrontational approach that the Trump administration has taken is far more likely to cause China to dig in than to give in,” “It will reduce the likelihood that the Chinese will make common cause over North Korea policy,” he said. Monday’s frosty talks in Beijing came after South Korea’s president said earlier in the day that he expected Mr. Kim to soon meet the Chinese and Russian leaders, as Pyongyang courts support from its traditional partners.
Treasury Staff Confirm China Is Not A Currency Manipulator - As we were advised earlier, and following their face to face overnight, reports confirm that Treasury staff have advised Secretary Mnuchin that China is not manipulating its currency. In an interview with Bloomberg News on Thursday, Mnuchin declined to comment on the report.“We are concerned about the depreciation” of the yuan, he said, “and want to make sure that it’s not being used as a competitive devaluation.” The conclusion, if accepted by Mnuchin, would avert an escalation of the U.S.-China trade war and remove a source of anxiety for emerging markets. Mnuchin could issue a different finding.
New Evidence of Hacked Supermicro Hardware Found in U.S. Telecom -A major U.S. telecommunications company discovered manipulated hardware from Super Micro Computer Inc. in its network and removed it in August, fresh evidence of tampering in China of critical technology components bound for the U.S., according to a security expert working for the telecom company.The security expert, Yossi Appleboum, provided documents, analysis and other evidence of the discovery following the publication of an investigative report in Bloomberg Businessweek that detailed how China’s intelligence services had ordered subcontractors to plant malicious chips in Supermicro server motherboards over a two-year period ending in 2015.Appleboum previously worked in the technology unit of the Israeli Army Intelligence Corps and is now co-chief executive officer of Sepio Systems in Gaithersburg, Maryland. His firm specializes in hardware security and was hired to scan several large data centers belonging to the telecommunications company. Bloomberg is not identifying the company due to Appleboum’s nondisclosure agreement with the client. Unusual communications from a Supermicro server and a subsequent physical inspection revealed an implant built into the server’s Ethernet connector, a component that's used to attach network cables to the computer, Appleboum said.The executive said he has seen similar manipulations of different vendors' computer hardware made by contractors in China, not just products from Supermicro. “Supermicro is a victim -- so is everyone else,” he said. Appleboum said his concern is that there are countless points in the supply chain in China where manipulations can be introduced, and deducing them can in many cases be impossible. “That's the problem with the Chinese supply chain,” he said.Supermicro, based in San Jose, California, gave this statement: “The security of our customers and the integrity of our products are core to our business and our company values. We take care to secure the integrity of our products throughout the manufacturing process, and supply chain security is an important topic of discussion for our industry. We still have no knowledge of any unauthorized components and have not been informed by any customer that such components have been found. We are dismayed that Bloomberg would give us only limited information, no documentation, and half a day to respond to these new allegations.”
The Cybersecurity World Is Debating WTF Is Going on With Bloomberg’s Chinese Microchip Stories On Tuesday, Bloomberg doubled down on its bombshell report from last week, which alleged China had surreptitiously implanted tiny chips into the motherboards of servers to spy on US companies such as Apple and Amazon. If true, this would be one of the worst hacks in history.In its new story, Bloomberg reports that a US telecom discovered and removed “manipulated hardware” in its servers. The article does not name the telecom and the key claims are all attributed to one source, Yossi Appleboum, co-CEO of security consultant Sepio Systems. Bloomberg reports Appleboum provided “documents, analysis, and other evidence,” but does not publish those or provide more information about what types of documents or evidence it has.It is not clear in the article that Bloomberg knows which telecom is apparently affected; it notes that Appleboum is covered by an non-disclosure agreement. Motherboard has reached out to 10 major US telecom providers, and the four biggest telecoms in the US have denied to Motherboard that they were attacked: In an email, T-Mobile denied being the one mentioned in the Bloomberg story. Sprint said in an email that the company does not use SuperMicro equipment, and an AT&T spokesperson said in an email that "these devices are not a part of our network, and we are not affected." A Verizon spokesperson said: "Verizon's network is not affected.”A CenturyLink spokesperson also denied that the company is the subject of Bloomberg's new story. A Cox Communications spokesperson said in an email: "The telecom company referenced in the story is NOT us." Comcast also said it's not the company in the Bloomberg story.On Monday, Apple also doubled down, with a new strong denial sent to multiple Congressional committees. The company sent a letter refuting the first story, published in Bloomberg's Businessweek, which said China had planted hardware backdoors onto motherboards made by a company called SuperMicro used by multiple US companies, including Apple and Amazon. The letter is the strongest signal yet from a growing array of government agencies, companies, and technical experts who are calling the Bloomberg story into doubt. (The new story does not directly address these denials.)
China Exerting "Unprecedented Effort" To Influence American Opinions Amid "Pandemic" Of Cyber Threats: DHS Secretary - Department of Homeland Security (DHS) Secretary Kirstjen Nielsen on Wednesday sought to further clarify the US position on Chinese influence operations, after President Trump implied that Beijing might try and interfere in upcoming elections."They do not want me or us to win because I am the first president to ever challenge China on trade," Trump said during his UN speech last month, stoking speculation over election influence. Days later, Nielsen said that there is "currently no indication that a foreign adversary intends to disrupt our election infrastruture" - an opinion she repeated during Wednesday Senate testimony on election security threats. DHS Sec Nielsen clarifying remarks on China and influence operations: China is "absolutely exerting unprecedented effort to influence American opinion." But..."we have not seen to date any Chinese attempts to compromise (election) infrastructure. Testifying to Senate.— Ellen Nakashima (@nakashimae) October 10, 2018And while China is apparently off the hook insofar as "compromising election infrastructure" is concerned, Nielsen also warned that America is now facing a "pandemic" of threats from cyber-thieves and cyber-spies around the world. The "viral spread" of malicious software has created "a worldwide outbreak of cyberattacks and cyber vulnerabilities," she said in her opening remarks before a Senate panel, vowing that her department is doing everything it can to protect the upcoming midterm elections from foreign interference. -ABC"With weeks to go until the midterms, top of mind for most Americans is the Russian interference in our 2016 elections. This was a direct attack on our democracy," she said. "We should not, cannot, and will not tolerate such attacks, nor let them happen again." DHS will be deploying "security sensors" ahead of midterms to monitor state election infrastructure around the country, covering around 90 percent of registered voters, according to Nielsen. "And on Election Day, we will be out in full force and hosting a virtual, nationwide 'situation room' to assist our partners," she said.
New Report Says Trump Wants Chinese Parts Out Of American Weapons -- Top defense officials said last week that the Pentagon intends to invest in domestic manufacturing to reduce it over-reliance on Chinese and other foreign-made parts in American weapons.The Pentagon's reliance on China is a major topic discussed in a new report about the overall status of the defense industrial base that President Trump is scheduled to release. Some other areas include "accelerating workforce development efforts to grow domestic science, technology, engineering, mathematics, and critical trade skills," said Defense One. "This assessment recognizes the global nature of our supply chain and really addresses the need for strengthening alliances and partnerships so that we can jointly address industrial base risk," Ellon Lord, undersecretary for acquisition and sustainment, said Thursday evening during a press briefing at the Pentagon.Pentagon officials are expected to ask Congress for additional funding for mitigating efforts in its fiscal 2020 budget request to Congress early next year."We already have existing industrial-base mitigation tools," said Eric Chewning, the deputy assistant defense secretary for industrial policy, said during the briefing. "There's already money available to address some of these challenges."According to Defense One, the new report says China is the only manufacturer of various chemicals needed in missiles and bombs, Europe and Japan are the only supplies of certain carbon fibers used in missiles, satellites, and rockets; Germany is the sole supplier of high-tech vacuum tubes for night vision goggles.China is a major focal point in the report, mentioned more than 200 times, it seems US government agencies are rushing to halt weapon parts from the country. Some of the report's findings and recommendations on reworking supply chains are considered classified because they describe vulnerabilities in US supply chains.
US Increasingly Concerned About Recent Depreciation In China's Currency- Treasury - Last night, when commenting on the latest double whammy of Chinese economic data, which included both the biggest decline in Chinese FX reserves in 7 months, and Beijing's announcement of another 100bps required reserve rate cut, a step explicitly meant to ease financial conditions and - tangentially - devalue the Yuan even if the PBOC forcefully declared it was not engaging in devaluation, we noted that "the further the yuan drops the greater the offset to US import tariffs, and the more likely that the Trump administration will impose even greater sanctions in the future as it sees Chinese monetary policy as specifically targeted to undermine the impact of Trump's trade war including manipulating its currency."We didn't have long to wait for this to be validated and moments ago, a Treasury official said that the U.S. is "concerned about the recent depreciation in China’s currency and is monitoring developments."Speaking to the press, the TSY official also said that he is concerned about China’s turn away from market- oriented policies, and ominously warned that further details to come in Treasury’s FX policy report due the week of Oct. 14, where there is a modest possibility, if not probability, that the US could declare China a currency manipulator.Commenting on the Treasury's statement, economists at ING said that while they don't see legal grounds to formally name China a currency manipulator, they "are on high alert for Trump 'currency manipulation' cries" ahead of the Treasury's FX report on Oct 14.
US Says No Trade Talks At G-20 Unless China Makes Early Concessions- FT - In accordance with what has become a time-honored Trump Administration tradition, officials from within the administration - and presumably speaking on behalf of President Trump - told reporters at the Financial Times that the US won't talk trade with China at the G-20 summit unless Beijing produces a detailed list of possible concessions as gesture that his side is serious about finding a resolution that CEOs, the IMF and, increasingly, investors worry could dampen economic growth and finally trigger a correction in US stocks. The report comes four days after Larry Kudlow, Trump's top economic advisor, said talks at the G-20 were being discussed. "We have been negotiating on and off and it has been unsatisfactory thus far...maybe, I want to underscore maybe Jonathan, there might be a meeting between Trump and Xi down in Buenos Aires". Kudlow said he doubted there would be any talks before the meeting (China canceled what would have been the fifth round of talks last month). But since he spoke, the US-China relationship has only further unraveled as Vice President Mike Pence accused China of "meddling in American democracy" and blasted China's supposed "debt diplomacy", "currency manipulation" and "IP theft." And one day after a press conference with China's foreign minister morphed into an "unprecedented confrontation" when President Xi decided to snub Secretary of State Mike Pompeo during his latest visit to Beijing, Chinese officials reportedly said that, while they have a list similar to the one that the US has requested, they don't want to share it with the Trump administration until "a stable political climate" returns to Washington. This could be a reference to the Trump administration's chaotic approach to the trade dispute or possibly the upcoming midterm elections (or both). And in a sign that the Chinese have grown tired of Trump undercutting efforts by both Kudlow and Treasury Secretary Steven Mnuchin to revive talks, Beijing is also asking that Washington appoint a "point person" who has the authority to negotiate on behalf of the president.
Tighter US Foreign Investment Rules Aimed At China Start In November The federal government will tighten rules on foreign investment in sensitive industries like technology and telecommunications next month, the Treasury Department said on Wednesday, as it starts to enforce a law aimed at curbing Chinese investment in 27 sensitive sectors. The Committee on Foreign Investment in the United States (CFIUS) reviews mergers and stock purchases to ensure they do not harm national security. It was strengthened by legislation in the National Defense Authorization Act that was signed into law in August. Much of the panel's highest profile work focuses on Chinese companies, many with government links, which have tried to buy U.S. high-end semiconductor makers and other tech companies. The 27 industries include telecommunications and semiconductors as well as aircraft manufacturing, including engines and engine parts, aluminum production, computer storage devices, guided missiles and other military equipment. Investments in these sectors must be reported to the committee if the foreign investor's role would allow access to non-public information or afford power to nominate a board member or make other substantial decisions, the department said.
Trump and Xi Plan to Meet Amid Trade Tension – WSJ - With U.S. markets tanking and the trade battle with China intensifying, the White House decided to move ahead with plans for President Trump to meet with Chinese leader Xi Jinping at a multilateral summit in November to see if the two leaders can find a way out of the mess, according to officials in both nations. The White House has in recent days informed Beijing that it would proceed with the summit meeting, an encounter China has been hoping could provide an opportunity for both sides to ease the escalating trade tensions. The meeting is scheduled to take place at the Group of 20 leaders’ summit in Buenos Aires at the end of November. Pushing for the meeting on the U.S. side are Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow. The two men, who have worried about market reaction to the trade fight, have been trying to get negotiations on track for months, with little success. During this time, the U.S. has imposed tariffs on $250 billion of Chinese imports, about half of what China sends to the U.S. The NEC and Treasury take lead roles in the planning for the G-20 meeting, rather than administration hard-liners on China, most prominently U.S. Trade Representative Robert Lighthizer.Mr. Trump has sided with Mr. Lighthizer on tariffs, even when that has torpedoed talks with the Chinese. Carrying through on imposing more tariffs, as President Trump has threatened to do, could derail the summit plans as well. “I believe it’s always better to talk than not to talk,” said Mr. Kudlow on CNBC on Thursday. “But, thus far their response has been unsatisfactory to our asks.” In another nod toward easing relations, the U.S. Treasury is expected to find next week that China hasn’t acted as a currency manipulator, say government and industry officials. While the yuan has devalued by about 6.3% since the beginning of the year, Beijing has been fighting to keep the fall from being too precipitous. Chinese and U.S. negotiators in August had sought to map out talks to pave the way for the leaders’ summit, but the recent standoff cast doubt over whether the meeting would still move ahead as originally envisioned. The Chinese leadership scotched trade talks with Washington late last month after the White House announced new tariffs on $200 billion in Chinese products and Beijing retaliated with levies on $60 billion in U.S. goods. The hard-line faction in the White House, represented by Mr. Lighthizer and trade adviser Peter Navarro, has been trying to use the tariffs as leverage to get China to make fundamental changes in its industrial policies. They worry the U.S. will declare an end to the trade battle too early, eliminating pressure on Beijing.
China Sends Trump A Message- Fixes Yuan Sharply Weaker Than Expected For 3rd Day - A glimmer of hope for improvement in Sino-US relations emerged today after reports that President's Trump and Xi would meet at the G-20 summit and that the U.S. Treasury will avoid labeling China an FX manipulator. The glimmers were enough to send the offshore Yuan surging from 6.94 overnight to as low as 6.87 in hours. But were the rumors true, and was China willing to reciprocate to what appeared to be an olive branch by the Trump admin? Moments ago we got the answer. With China, and specifically it currency, now the fulcrum security in defining not only daily emerging market sentiment, but also telegraphing Beijing's day-to-day feelings toward the US president, traders were keenly focused on what the PBOC's Friday yuan fix would be, especially after two days of central bank fixes that were below the average analyst consensus. Well, moments ago the PBOC announced that the CNY would be fixed some 0.03% weaker to 6.9120; a 22 pip cut from Thursday's 6.9098 fix and the ninth straight day of weaker rate. More importantly, the fixing was sharply lower than the average of sellside forecasts of 6.9051 by 17 traders and analysts in a Bloomberg survey, with Bloomberg adding that the fixing was at the biggest discount to Bloomberg forecast since early February.
China Trade Data Suggests Trump Is Not Winning The 'War' - While most attention among global onlookers is focused on the almost unbelievable divergence between US and Chinese stocks this year, actual 'real' Chinese import and export data suggest President Trump is far from winning this trade war... in fact it's never been worse. Headline trade figures show China exports to the rest of the world grew at 14.5% YoY in USD terms (almost double expectations) and imports rose 14.3% YoY in USD terms (below expectations and well below August's 20% rise). However, all eyes were on the US-China interaction and that's where the fun and games begin... Chinese exports to the US rose 14.0% YoY in USD terms - the most since February - but, Chinese imports from the US actually dropped 1.2% YoY in USD terms
Warning shot? China sells US Treasury bonds amid trade war - China has sold $3 billion of sovereign dollar bonds. This is only the third such move by Beijing in the last 14 years, and the first involving bonds with a 30-year maturity. China sold $1.5 billion of five-year bonds at 3.25 percent, $1 billion of 10-year bonds at 3.5 percent, and $500 million of 30-year bonds at four percent, the Finance Ministry said on Friday, as quoted by Reuters. Beijing is the largest holder of US debt. As of July, China had $1.17 trillion invested in debt minted by the US Treasury.China has made the sale at a time when yuan has depreciated 10 percent against the dollar amid an escalating trade war with the US. “For any other normal corporate borrower the decision might have been to stand on the sidelines and wait for the market to stabilize a bit, but China is a little bit of a different animal,” a banker who worked on the deal told Reuters.“I don’t think people had concerns about China specifically, but it’s just a broader macro noise,” the person said.In the recent tat-for-tat trade punches, China stopped buying oil from the US. China’s crude oil imports from America reached an average of 334,880 barrels per day through August, making Beijing the second-largest buyer of US oil after Canada.So far, Washington has imposed tariffs on $200 billion of Chinese goods and Beijing retaliated with tariffs on $60 billion of US imports.
US in new global court showdown with Iran (AFP) - The United States will confront Teheran at the United Nations' top court on Monday (Oct 8) over billions in frozen assets, in a case that could deepen the Trump administration's rift with international justice. Iran had dragged Washington before the International Court of Justice in June 2016 to oppose a US Supreme Court ruling that the US$2 billion (S$2.8 billion) should go to victims of terror attacks blamed on the Islamic republic. Monday's hearing of US objections against Iran's appeal comes a week after the ICJ, in a separate case, ordered the US to ease sanctions reimposed after President Donald Trump pulled out of the 2015 nuclear deal with Iran. Both the assets and the sanctions cases are based on a 1955 "Treaty of Amity" between Washington and Teheran that pre-dates Iran's Islamic revolution. Last Wednesday the Trump administration announced it was not only tearing up the 1955 treaty but also that it was quitting the international accord relating to the UN top court's jurisdiction. It remained unclear how Washington will respond to the latest case before the court but US officials confirmed that its lawyers will be present at the hearing on Monday. The ICJ was set up after World War II to rule on disputes between UN member states. Its rulings are binding but it has no power to enforce them.
Lindsey Graham warns there will be 'hell to pay' if Saudi Arabia killed missing journalist Khashoggi - -- Sen. Lindsey Graham, R-S.C., said Wednesday that "there would be hell to pay" if missing journalist and Washington Post contributor Jamal Khashoggi was killed by the Saudi government, as Turkish officials have claimed.Graham told reporters at the Capitol that he would be speaking with the Saudi ambassador at 5:30 p.m. ET Wednesday. He cautioned that "we don't want to rush to judgment," but said that "the explanations I hear coming from Saudi Arabia make no sense.""I've never been more disturbed than I am right now," said Graham, a member of the Senate Armed Services Committee. "If this man was murdered in the Saudi consulate in Istanbul, that would cross every line of normality in the international community."The harsh words from the longtime lawmaker and close confidant of President Donald Trump, who discussed Khashoggi's disappearance shortly after Graham did, could indicate a forthcoming strain on the good will built between the U.S. and Saudi Arabia during the Trump administration."We are very disappointed to see what's going on. We don't like it. We don't like it at all. And we're going to get to the bottom of it," Trump said at a bill signing event Wednesday.A senior Turkish official told The New York Times that Khashoggi was murdered and gruesomely dismembered with a bone saw in the Saudi consulate in Istanbul. Saudi Arabia, however, insists that Khashoggi left the consulate shortly after he arrived. Khashoggi, a Saudi journalist who had criticized the kingdom's royal family and exiled himself to the United States, entered the consulate in Turkey on Oct. 2 and has not been seen outside it since, the Post reported.
US intercepts reportedly show Saudi crown prince ordered detention of journalist Khashoggi - U.S. intelligence intercepts show Saudi Arabian Crown Prince Mohammed bin Salman ordered that Jamal Khashoggi, a missing Washington Post columnist, be enticed to return from the United States to Saudi Arabia so that he could be detained, the Washington Post reported Wednesday.The newspaper, citing unidentified U.S. officials it described as familiar with the intelligence, said the information provides additional evidence of alleged official Saudi involvement in Khashoggi's disappearance last week after he entered the country's consulate in Istanbul, Turkey.The Washington Post report also said the intelligence suggesting Saudi Arabia planned to detain Khashoggi in the country has led to speculation among officials and analysts that his disappearance in Istanbul was perhaps a substitute plan that went awry.Khashoggi, a journalist and critic of the Saudi royal family, was last seen entering the consulate on Oct. 2. Turkish officials have claimed he was murdered and dismembered by a team of Saudi agents working under royal orders. Saudi Arabia is a close U.S. ally and the disappearance has sparked anger among U.S. lawmakers. In a letter to U.S. President Donald Trump on Wednesday, several senators triggered an investigation and potential sanctions over the disappearance under the Global Magnitsky Human Rights Accountability Act.
Crown prince sought to lure Khashoggi back to Saudi Arabia and detain him, U.S. intercepts show - WaPo - The crown prince of Saudi Arabia, Mohammed bin Salman, ordered an operation to lure Washington Post columnist Jamal Khashoggi back to Saudi Arabia from his home in Virginia and then detain him, according to U.S. intelligence intercepts of Saudi officials discussing the plan.The intelligence, described by U.S. officials familiar with it, is another piece of evidence implicating the Saudi regime in Khashoggi’s disappearance last week after he entered the Saudi Consulate in Istanbul. Turkish officials say that a Saudi security team lay in wait for the journalist and killed him.Khashoggi was a prominent critic of the Saudi government and Mohammed in particular. Several of Khashoggi’s friends said that over the past four months, senior Saudi officials close to the crown prince had called Khashoggi to offer him protection, and even a high-level job working for the government, if he returned to his home country.Khashoggi, however, was skeptical of the offers. He told one friend that the Saudi government would never make good on its promises not to harm him.The intelligence pointing to a plan to detain Khashoggi in Saudi Arabia has fueled speculation by officials and analysts in multiple countries that what transpired at the consulate was a backup plan to capture Khashoggi that may have gone wrong.A former U.S. intelligence official — who, like others, spoke on the condition of anonymity to discuss the sensitive matter — noted that the details of the operation, which involved sending two teams totaling 15 men, in two private aircraft arriving and departing Turkey at different times, bore the hallmarks of a “rendition,” in which someone is extralegally removed from one country and deposited for interrogation in another. But Turkish officials have concluded that whatever the intent of the operation, Khashoggi was killed inside the consulate. Investigators have not found his body, but Turkish officials have released video surveillance footage of Khashoggi entering the consulate on the afternoon of Oct. 2. There is no footage that shows him leaving, they said.
Turkey Provides New Links to Alleged Saudi Role in Dissident’s Killing - A team of alleged Saudi assassins flew to Istanbul on a Gulfstream jet controlled by the Saudi crown prince, Turkish officials say The Gulfstream jets that Turkish officials say ferried operatives who apprehended and likely killed a dissident Saudi journalist in Istanbul belong to a company controlled by Saudi Arabia’s crown prince, people familiar with the matter said. Turkish authorities also released on Wednesday the names and photographs of the 15 men they say were involved in Jamal Khashoggi’s suspected killing in the kingdom’s consulate in Istanbul on Oct. 2 before returning hours later to Saudi Arabia. They included a forensics expert and a man who in 2017 was pictured wearing a Saudi Royal Guard uniform. Saudi officials have denied involvement and say they are assisting the Turkish investigation into Mr. Khashoggi’s disappearance. Officials didn’t respond to requests to comment. Mr. Khashoggi, a Washington resident living in self-imposed exile, was in Istanbul to obtain documents to marry his Turkish fiancée when he disappeared, sparking a diplomatic crisis between Turkey and Saudi Arabia, two influential regional rivals that are both U.S. allies. President Trump said Wednesday he had spoken to Saudis “at the highest level” about Mr. Khashoggi and planned to find out what happened to him. The White House said that other top administration officials—national security adviser John Bolton, senior adviser Jared Kushner and Secretary of State Mike Pompeo—pressed Saudi Crown Prince Mohammed bin Salman about the issue by phone. “This is a bad situation,” Mr. Trump told reporters. “We cannot let this happen. To reporters, to anybody.” “We’re going to get to the bottom of this,” he added. Turkish investigators have focused on a pair of Gulfstream jets to expose Saudi involvement, Turkish officials say.
Saudi Writer Was Killed and Dismembered in Istanbul Consulate by Hit Squad Deployed by Saudi Leadership - Top Saudi leaders deployed a 15-man hit squad to lie in wait for dissident writer Jamal Khashoggi inside Riyadh's consulate in Istanbul, The New York Times said in an explosive story.Among the assassination team was a forensic expert who brought a bone saw to dismember Khashoggi's body after killing him, the Times reported on Tuesday, citing an unidentified "senior official" as saying.Al Jazeera could not immediately verify the news report.The hit squad finished the murder operation within two hours and departed Turkey for various countries, said the Times' source, citing information from "top Turkish officials"."It is like Pulp Fiction," the senior Turkish official was quoted as saying, referring to the graphically violent 1994 Hollywood movie by director Quentin Tarantino.Accusations the Saudi leadership directly ordered the alleged assassination of Khashoggi will put further pressure on the United States and other allies to demand a transparent investigation, with possible serious repercussions to bilateral relations if it does not come to fruition.Saudi officials have denied any involvement in Khashoggi's disappearance and alleged murder, saying he left the consulate on October 2. Turkey's President Recep Tayyip Erdogan has demanded that Riyadh prove his departure from the building.The Turkish government hasn't provided formal evidence that could back up the spate of anonymous allegations that the Saudi writer was killed inside the Istanbul consulate. Daily Sabah, a Turkish newspaper with close ties to the government, named and published photos on Tuesday of the alleged 15-member Saudi assassination team accused of travelling to Istanbul on the day Khashoggi disappeared. The suspects are wanted by Turkish authorities for questioning.
U.S. senators trigger human rights probe over missing Saudi journalist (Reuters) - Twenty-two U.S. senators on Wednesday forced a U.S. investigation of whether human rights sanctions should be imposed over the disappearance of Jamal Khashoggi, a Saudi journalist last seen as he entered the Saudi consulate in Turkey on Oct. 2. Pictures of Saudi journalist Khashoggi are placed on security barriers during a protest outside the Saudi Consulate in Istanbul, Turkey October 8, 2018. REUTERS/Murad Sezer In a letter, the senators said they had triggered a provision of the Global Magnitsky Human Rights Accountability Act requiring the president to determine whether a foreign person is responsible for a gross human rights violation. “Our expectation is that in making your determination you will consider any relevant information, including with respect to the highest ranking officials in the Government of Saudi Arabia,” they said. The Republican and Democratic leaders of the Senate Foreign Relations Committee, Senators Bob Corker and Bob Menendez, and their counterparts on the Appropriations subcommittee that funds the State Department, Lindsey Graham and Patrick Leahy, triggered the Magnitsky action. But the 18 others also signed the letter to send Trump a strong bipartisan message of support for a serious U.S. response to Khashoggi’s disappearance, Senate aides said. The Global Magnitsky Act requires a report within 120 days of the letter with a decision on the imposition of sanctions on anyone deemed responsible for a serious rights violation such as torture, prolonged detention without trial or extrajudicial killing of someone exercising freedom of expression. “The recent disappearance of Saudi journalist and Washington Post columnist Jamal Khashoggi suggests that he could be a victim of a gross violation of international recognized human rights,” the letter said. The 2012 Magnitsky Act imposed visa bans and asset freezes on Russian officials linked to the 2009 death in prison of Sergei Magnitsky, a 37-year-old Russian whistleblower. It became the Global Magnitsky Act in 2016 when it was expanded to cover rights abusers in any country.
Turks tell U.S. officials they have audio and video recordings that support conclusion Khashoggi was killed - The Turkish government has told U.S. officials that it has audio and video recordings that prove Washington Post columnist Jamal Khashoggi was killed inside the Saudi Consulate in Istanbul this month, according to U.S. and Turkish officials. The recordings show that a Saudi security team detained Khashoggi in the consulate after he walked in Oct. 2 to obtain an official document before his upcoming wedding, then killed him and dismembered his body, the officials said. The audio recording in particular provides some of the most persuasive and gruesome evidence that the Saudi team is responsible for Khashoggi’s death, the officials said.“The voice recording from inside the embassy lays out what happened to Jamal after he entered,” said one person with knowledge of the recording who, like others, spoke on the condition of anonymity to discuss highly sensitive intelligence.“You can hear his voice and the voices of men speaking Arabic,” this person said. “You can hear how he was interrogated, tortured and then murdered.” A second person briefed on the recording said men could be heard beating Khashoggi.The journalist has had long-standing ties to the Saudi royal family, but has written critically of the current government and Saudi Crown Prince Mohammed bin Salman. The existence of such evidence would explain why Turkish officials were quick to accuse Saudi Arabia of killing Khashoggi. But Turkish officials are wary of releasing the recordings, fearing they could divulge how the Turks spy on foreign entities in their country, the officials said. It’s not clear that U.S. officials have seen the footage or listened to the audio, but Turkish officials have described their contents to their American counterparts. Saudi officials have denied any involvement in the disappearance of Khashoggi, saying he left the consulate shortly after entering.
Trump Says Blocking Saudi Arms Sales Would Be "Hurting Us" When Asked About Khashoggi - It's not exactly a shocker, but does still serve to confirm just what interests actually drive American foreign policy - and no it has nothing to do with "sticking up for human rights" or "punishing rogue regimes".In fact a regime can literally lure a prominent journalist to its embassy, murder him and chop him up into pieces, and then cart the body out of a foreign country — as the fast mounting evidence increasingly confirms in the case of Saudi journalist and Washington Post columnist Jamal Khashoggi — and the US may not so much as bat and eyelash. President Trump told "Fox News Night" on Wednesday that he wants to know what happened to Khashoggi but expressed reluctance when it comes to blocking arms sales to the kingdom."I think that would be hurting us," Trump said."We have jobs, we have a lot of things happening in this country. We have a country that's doing probably better economically than it's ever done before." Ironically this all comes a mere days after on Trump last Sunday said the Saudi king wouldn't last "two weeks" without American support. The statements also come just as a bipartisan group of Congressional leaders are demanding a federal probe into Khashoggi's disappearance and alleged murder that could lead to sanctions on the longtime close US ally.
Jamal Khashoggi's fate casts a harsh light on Trump's friendship with Saudi Arabia – WaPo - On Oct. 2, Post contributor Jamal Khashoggi walked into the Saudi consulate in Istanbul. His Turkish fiancée waited outside for what should have been a routine appointment.She’s still waiting. Khashoggi hasn’t been seen since.The mystery lingers, but the mounting evidence points to a plot orchestrated by the Saudi government to silence one of its most prominent critics. The Turkish government claims to have evidence that a 15-member “assassination squad” arrived in Turkey to murder and dismember Khashoggi. The Turkish media has released images showing these 15 men, in what they say is clear evidence of the Saudi plot to ensure that Khashoggi would never write another Post column again. The Saudi government, as you’d expect, denies all allegations of wrongdoing.This harrowing saga has two main dimensions: Saudi brutality, certainly, but it also underscores the ways in which President Trump’s fawning dictator worship, his pervasive conflicts of interest and his attacks on the media have emboldened authoritarian regimes to viciously silence their critics. Let’s start with the obvious: Saudi Arabia is a pitiless and despotic regime. Homosexuality, atheism, adultery and “sorcery” are all still punishable by death. The authorities chop off the heads of dissidents who speak their minds. Many executions are carried out publicly, with heads bagged and hung alongside the corpse, which is nailed to a cross and displayed as a warning. The “lucky” ones are just abducted or arrested and left to rot in a jail cell.This is one of our closest allies. The stain is bipartisan: Democratic and Republican presidents have supported the Saudis, selling them hundreds of billions of dollars of weaponry – even as they slaughter civilians in their horrifying war in Yemen. Even if you’re a hard-nosed advocate of realpolitik, the cost to American soft power by being in bed with such barbarism creates greater long-term costs than the short-term gains are worth.Since Trump took office, the Saudi regime has become more brazen. Khashoggi’s disappearance reflects a strategic calculation: They think they can abduct or murder a journalist working for an American news organization without facing serious consequences. So far, they’re right – Trump has only called on them to investigate the disappearance. That weak response comes despite new evidence that “before Khashoggi’s disappearance, U.S. intelligence intercepted communications of Saudi officials discussing a plan to capture him.” Worse, it’s likely that Trump’s finances and his rhetoric contributed to Saudi Arabia’s decision to green-light their barefaced conspiracy to silence Khashoggi.
"Potentially Terrible Situation" - President Trump To Speak To Saudi King About 'Missing' Journalist - As Democratic and Republican lawmakers continue to demand that something must be done to hold Saudi Arabia accountable for the disappearance of journalist and Saudi insider-turned critic Jamal Khashoggi, President Trump said Friday that he hasn't spoke with King Salman about his whereabouts, despite a mounting pile of evidence produced by the Turkish government suggesting that Khashoggi was murdered by a team of Saudi hitmen inside the Kingdom's consulate in Istanbul.However, the president said he plans to call Salman soon to discuss the issue: "I will be calling, I will be calling at some point King Salman. I’ll be speaking to him yes," Trump told reporters in Ohio, where he is attending campaign events. Since Khashoggi's Turkish fiance notified Turkish officials about Khashoggi's disappearance after he walked into the consulate and never walked back out on Oct. 2, speculation that Saudi Crown Prince Mohammad bin Salman ordered Khashoggi's murder has morphed into a full-blown diplomatic crisis. When asked about what he would do if confronted with proof that Khashoggi was, in fact, murdered at the consulate - a scenario that appears more likely with each passing day amid relentless stonewalling by the Saudis - Trump told Fox News Night that he would be reluctant to block US arms sales to the Kingdom, as some lawmakers have demanded.
Secret deal with Turkey paves way for American pastor's release -— The White House expects North Carolina pastor Andrew Brunson to be released by the Turkish government and returned to the U.S. in the coming days, two years after he was detained, according to two senior administration officials and another person briefed on the matter.Under an agreement senior Trump administration officials recently reached with Turkey, Brunson is supposed to be released after certain charges against him are dropped at his next court hearing, currently scheduled for Friday, the senior administration officials and a person briefed on the matter said.The details of the deal are unclear, but those familiar with the discussions said it includes a commitment by the U.S. to ease economic pressure on Turkey.The Trump administration, however, isn't fully confident that Turkey will follow through with the Brunson agreement because Ankara was close to a commitment to release him several months ago but did not, one senior administration official said."We continue to believe Pastor Brunson is innocent, and the hearing on Friday is another opportunity for the Turkish judicial system to free an American citizen," a third senior administration official said.Two senior administration officials said the White House had not been notified of any change in Brunson’s Oct. 12 court hearing as of Thursday morning.A spokesperson for the Turkish embassy in Washington did not respond to a request for comment. The White House declined to comment on the record and the Brunson family said they are also not commenting at this time.The Turkish government has accused Brunson of helping terrorist groups, charges he has denied. The Trump administration has aggressively pushed for his release, saying he was wrongfully detained. In July, Turkey released Brunson from prison and moved him to house arrest. He faces a possible sentence of up to 35 years in prison if convicted.
The trouble with the saudis and the trouble with the Americans -- Roger Gathman - If I went to sleep in 2002 and woke up yesterday and read Tom Friedman's non-apology for kissing the ass of Saudi Arabia's young dictator - I would not know that it wasn't still 2002. The Middle Eastern "expert" clique is still morally corrupt and intellectually bankrupt, roll over Beethoven and give Grandma the news. Also relics of 2002 is the cry that the only reason we are allies with, or complicit with, or in bed with, or making passionate love to the Saudis is cause of oil.This is a half-truth. If you check, you'll notice that the level of American imports of oil from Saudi Arabia are at 1987 levels. We could easily do without that oil - we could substitute oil from Iran in one diplomatic turn, or Venezuela. But the truth of the chestnut is that, as a result of decades of oil sales, the Saudi royal house and its hangers on had trillions of dollars to invest. Since the seventies, one of the best places to park your money and see it grow has been in the American financial sector. Money followed the usual track, then, which is how Saudi money is mixed up in whatever giant enterprise or IPO is on tap at the moment. The Saudis were notoriously dumb about this in the seventies, and the princes are notoriously lazy, but the had some smart hangers on, and they were able to buy fleets of smart American MBA types, and so the learning curve and American foreign policy bent together. The Saudis definitely made a smart move by investing in American media - at one point, notoriously, al -waleed bin talal owned a hefty piece of Fox News, as well as bits of Times-Warner, et al., which didn't hurt. The money went out, as well, to think tanks, lobbyists, and the ivory towers. Oftentimes, this was touted as some multi-cultural opening to Middle East culture, with the subtext, that the opening would be subservient to Saudi sensibilities, being muted. Sometimes, as recently, it is just your open, convivial corruption, typical of the T-Rump era. As for instance Harvard and MIT's offering of their prestige to Bin Salman in return for a chance to get in on an academic gold rush. Even these modalities of Saudi influence would not explain the Saudi-American lockstep. To explain that on the political level, it is necessary to look at how the US (and the UK, and France) has used massive arms sales to the Saudis as an offset to the de-manufacturing policies they have generally pursued to keep consumer prices low and the return on investment for the wealthy high. Here, one must doff one's partisan hat: the status of the U.S. as the leading arms seller in the world became policy under Bill Clinton. Since then, it has been sealed in place through all the changes in the white house.
In Yemen, Trump Is Taking Tolerance for War Crimes to a New Level - Twenty days after Saudi Arabia and the United Arab Emirates (UAE) bombed a school bus full of children in Yemen this August, Defense Secretary James N. Mattis hosted officials from the two US allies at the Pentagon. They were all gathered as part of a meeting of representatives from the Gulf Cooperation Council, at which Mattis thanked them for their “regional leadership and years of close cooperation with the United States.” The US bears tremendous responsibility for the August attack, and for broader devastation and suffering in Yemen, where it is waging not one, but two wars. There is the first, ongoing war that started under President Bush — and was dramatically escalated under Obama — as part of the so-called “War on Terror.” Since 2002, the US has killed over 1,000 people in Yemen through drone strikes, cruise missile attacks and other activities involving Special Operations personnel — and has brought untold death and misery the world over under the banner of “counterterrorism.” The second war is the one that has garnered more headlines recently and has eclipsed the first in its destruction: The aerial siege prosecuted by Saudi Arabia and the UAE with extensive cooperation from the United States. The coalition has carried out over 16,000 air strikes since 2015, framing their operations as an intervention on behalf of Yemen’s nominal government since the country’s Houthi opposition seized the capital, Sanaa. Never miss another story Get the news you want, delivered to your inbox every day. Optional Member Code In this war, the Saudi and Emirati militaries are dropping the bombs, and the United States plays a critical role in every step of the operations. The coalition’s munitions are made in the US, as are the planes dropping them — all of which were sold to Saudi Arabia and the UAE in deals brokered by the US government. The US is supplying intelligence as the coalition selects its targets. And the US Air Force is running a program of fueling coalition aircraft midair, as they fly their deadly missions. With US personnel and US planes, the United States is literally fueling the war.
One Click Closer to Annihilation, by Philip Giraldi - The nuclear war doomsday clock maintained on the Bulletin of Atomic Scientists website has advanced to two minutes before midnight, the closest point to possible atomic apocalypse since the end of the Cold War. In 1995 the clock was at fourteen minutes to midnight, but the opportunity to set it back even further was lost as the United States and its European allies took advantage of a weakened Russia to advance NATO into Eastern Europe, setting the stage for a new cold war, which is now underway.It is difficult to imagine how the United States might avoid a new war in the Middle East given the recent statements that have come out of Washington, and, given that the Russians are also active in the region, a rapid and massive escalation of something that starts out as a minor incident should not be ruled out.President Donald Trump set the tone when he harangued the United Nations last Tuesday, warning that the United States would go it alone in defense of its perceived interests, with no regard for international bodies that exist to limit armed conflict and punish those who commit war crimes.Trump’s 35-minute speech featured an anticipated long section targeting Iran. He commented that:“Iran’s leaders sow chaos, death, and destruction. They do not respect their neighbors or borders, or the sovereign rights of nations. Instead, Iran’s leaders plunder the nation’s resources to enrich themselves and to spread mayhem across the Middle East and far beyond… We cannot allow the world’s leading sponsor of terrorism to possess the planet’s most dangerous weapons. We cannot allow a regime that chants ‘Death to America,’ and that threatens Israel with annihilation, to possess the means to deliver a nuclear warhead to any city on Earth.” There are a number of things exaggerated or incorrect in Trump’s description of Iran as well as in the conclusions he draws. The Middle East and other adjacent Muslim countries are in chaos because the United States has destabilized the region starting with the empowering of the Islamist Mujadeddin in the war against Soviet Afghanistan in the 1980s. It then invaded Afghanistan in 2001 followed by Iraq in 2003, enabling the rise of ISIS and giving local al-Qaeda affiliates a new lease on life, before turning on Damascus with the Syria Accountability Act later in the same year and then destroying the Libyan government under Barack Obama. These were, not coincidentally, policies promoted by Israel that received, as a result, bipartisan support in Congress. The emotional description of disrespecting “neighbors, borders and sovereign rights” fits the U.S. and Israel to a “T” rather than Iran.
Donald Trump: Crazy Like LBJ -- The reaction to Bob Woodward’s new book Fear has been almost completely devoid of historical context. The very folks who are trying to convince us, based on Woodward’s account, that Donald Trump is unhinged are ignoring the fact that Trump is hardly the first American president to have temperamental deficiencies. Many of Trump’s alleged personality-related problems are not new in presidential history. Presenting his eccentricities as evidence of a constitutional crisis reflects a clear bias of omission by those doing the reporting. Former CIA director John Brennan was among the earliest to call Trump “paranoid.” He was echoed by Senator Chris Murphy of Connecticut, who recently worried that an op-ed by an anonymous Trump administration staffer will make Trump even “more paranoid.” That op-ed used the term “erratic” to describe Trump. “Paranoid” and “erratic”—those terms have been used before, by top White House aides to describe another president: Lyndon Baines Johnson. Bill Moyers, who served as one of Johnson’s top special assistants and as White House press secretary, told historian Robert Dallek that Johnson was “paranoid” and “depressed,” as well as “morose, self-pitying, angry.” “He was a tormented man,” Moyers said, particularly after his decision to escalate the war in Vietnam in 1965. Professor Dallek, in a 1998 essay in The Atlantic, also used the word “erratic” to describe LBJ. Yet the reaction to the anonymous op-ed among journalists and pundits would suggest that erratic behavior in a president had never existed before now (other than in Nixon), leading to calls for the 25th Amendment to be invoked. But as Dallek noted: “I asked Moyers if Johnson was so continually depressed as to be incapable of rational judgments on Vietnam. ‘No,’ he answered. ‘Johnson was erratic. One day he would be down and the next he would be upbeat. But always when he returned to the subject of Vietnam, this cloud in his eyes and this predictably unpredictable behavior would recur.’” Moyers distinguished between erratic behavior and irrational behavior, a distinction that has merit.
My Private Oval Office Press Conference With Donald Trump, Mike Pence, John Kelly, and Mike Pompeo Around 12:20 p.m. on Tuesday, I was on my way out of the White House after a series of meetings in the West Wing. I was reporting on a question that has hung over this administration for months: How has Chief of Staff John Kelly managed to keep his job in spite of convincing and persistent rumors and reports that the president is unhappy with him, and he is unhappy in his job? I stopped to talk to another reporter, and then I began to walk toward the North Gate. As I walked, I noticed I had a missed call from a Washington number I didn’t recognize. It was Press Secretary Sarah Huckabee Sanders. She sounded very serious. She asked me if I had left yet. When I said no, she asked me to come back inside, and when she greeted me, she looked very serious. She implied she wanted me to go with her behind a door. I didn’t understand, maybe didn’t quite hear her. Then, she told me Trump wanted to speak to me. I walked to the Oval Office. I guessed that the president wanted to disabuse me of any notion that Kelly was about to be fired, or had almost been fired many times before. I was right, but my imagination was too limited. What ensued amounted to a private press conference — featuring a series of special guest stars from the highest echelon of the Trump administration — to try to get me to change my mind. “I just heard that you were doing a story on … this stuff,” the president said as he came into the Oval Office and sat down at the Resolute Desk. I sat in a chair across from him. Next to me were Sanders and communications director Bill Shine. “General Kelly’s doing a very good job,” Trump told me. “We have a very good relationship. The White House is running very, very smoothly. We’ve had a big week. We just got a Supreme Court justice on the bench. We have the USMCA, meaning the NAFTA replacement, and many other things. We had a great meeting with North Korea. It was a great meeting. The secretary of State’s coming just in ten minutes.” He went on, “But I want to tell you a couple of things: the chief is doing a very good job. I’m very happy with him, we have a very good relationship, number one. Number two, I didn’t offer anybody else the job. I didn’t talk to anybody about the job. And I’m not, I’m not looking. I think the rallies have, frankly, built up our poll numbers very greatly. What am I now in Rasmussen? 52?”
Nikki Haley leaving U.N. ambassador post at end of the year — live updates - Nikki Haley, U.S. ambassador to the United Nations, is leaving her post at the end of the year, President Trump announced in the Oval Office Tuesday morning. Haley's replacement is unclear, although Mr. Trump said he will likely select the new ambassador in the next two or three weeks. Haley told reporters she will not run in 2020 and instead campaign for the president, quashing speculation that she might chart her own political course challenging him. "I will say this for all of you that are going to ask about 2020 — no, I am not running for 2020," the ambassador told reporters. "I can promise you what I will be doing is campaigning for this one. So I look forward to supporting the president in the next election." Mr. Trump, meeting with Haley in the Oval Office, informed reporters Tuesday Haley had told him about six months ago that she wanted a break. The president said Haley has been "very special" to him, they hate to lose her, and the two will be in constant touch. Mr. Trump said hopefully Haley can come back to his administration, adding, "You can have your pick." Mr. Trump said a number of people would like to do Haley's job, and claimed it's a more "glamorous" position than it was a couple years ago. Haley, for her part, said the post had been an honor of a lifetime. Haley said the U.S. is strong again in a way the nation should be proud of. Haley also said nothing is set in terms of where she will land next. Haley said "there's no personal reason" for her impending departure, it's just "very important" for government officials to know when it's time to step aside and let someone else rotate in with renewed energy.
White House considers two female ambassadors to replace Haley at UN - The White House is adding two high-profile women, both confirmed ambassadors, to the list of candidates to succeed Nikki Haley at the United Nations, according to two senior administration officials: Jamie McCourt and Kelly Knight Craft. White House aides have said the president is inclined to select a woman for the post, and — while they stressed it’s still early in the process — that they are looking to tap somebody already in the administration. “It’s so hard to get a security clearance so there’s a bias to get someone who is already in the system,” said a senior administration official. An official at the State Department who declined to be identified because the process is still ongoing echoed that sentiment.“If you go picking somebody not in government, they would have to go through paperwork for background checks, financial vetting, and that can take awhile,” the official said. “The White House is definitely looking for somebody already working in government to make them more of a safe bet.” McCourt, the American ambassador to France and Monaco, is a former corporate attorney and CEO of the Los Angeles Dodgers whose 2009 divorce from former Dodgers owner Frank McCourt became tabloid fodder. She served as a California co-chair for the Trump campaign, and the president nominated her to serve in her current position in August of 2017. She was confirmed in November.
Bankrupt UN Budget- Who Hasn't Paid Their Dues- Having been accused of 'moral bankruptcy' by US officials, The United Nations appears to be heading for fiscal bankruptcy as, earlier this summer, UN chief Antonio Guterres has warned staff that the world body is running out of cash and urged member states to pay what they owe as soon as possible. But it appears Guterres' warnings went unheeded by many, as Statista's Sarah Feldman notes that as the United Nations concludes its two weeks of annual meetings in New York, some states remain timelier with their annual payments than others. By the end of the on-time payment period in February, only about a third of countries paid their dues in full. Seven months later about two thirds of member states have made their payment to the regular budget. All permanent members have made their full regular payments, except the United States. President Trump has routinely complained about the alleged skewed payment of United Nations dues system, where the U.S. pays 22 percent of the overall regular budget. All member states are legally required to make payments to both the regular budget and the peacekeeping budget, two separate budgets with two different payment calculations. The UN considers gross national income, population, and debt burden when coming up with its operational budget.
Trump likes Dina Powell for U.N. job, but she could face some resistance within the White House - President Trump spoke with Dina Powell on Wednesday about replacing Nikki Haley as U.S. ambassador to the United Nations and has told some advisers that the former White House aide is his preferred choice for the job, according to White House officials and other people familiar with the matter.Powell, who served as deputy national security adviser and is now a senior executive at Goldman Sachs, is close with Trump’s daughter, Ivanka Trump, and son-in-law, Jared Kushner — who both serve as senior White House aides — and has maintained friendly ties with the president after leaving the White House at the beginning of the year.A senior official said Powell is one of two top candidates to replace Haley, but declined to name the other. Trump did not make a formal offer to Powell during the call Wednesday morning, the official said. The president also spoke with Powell once before Haley’s resignation was announced Tuesday.While Powell remains a top choice for Trump, she could face some opposition internally. She is disliked by White House chief of staff John F. Kelly, who privately criticized her performance in the administration and deemed her a sharp-elbowed operator who did not follow his protocols, according to three West Wing officials. Powell also has differed with national security adviser John Bolton on some policy issues and has a less hawkish worldview. When asked to comment on whether Powell is the front- runner for the U.N. job, White House press secretary Sarah Huckabee Sanders referred to Trump’s public comments. “She’s certainly being considered. She’s done a great job, she was with us, as you know, for a long time,” the president told reporters when he landed in Erie, Pa., Tuesday night for a campaign rally. “Been with me from the beginning. She’s certainly excellent. But she’s one of — we have four or five . . . that we’re looking at very seriously. It’ll be good. Nikki did a great job. We have four or five really great candidates.”
The “New NAFTA” and Its Revised Dispute Resolution Mechanisms - Ending with final bilateral negotiations between the US president and the Canadian prime minister that concluded September 30, the United States, Canada and Mexico have reached agreement on a revised version of the 1994 North American Free Trade Agreement (“NAFTA”). Implementation of the newly negotiated US-Mexico-Canada Agreement (“USMCA”) is pending ratification by all three countries' legislators. Well beyond its new name, the revised agreement includes a number of changes to applicable dispute resolution mechanisms, especially where Investor State Dispute Settlement (“ISDS”) is concerned. Below is a summary of major highlights. Most significantly, the USMCA eliminates ISDS arbitrations between Canadian parties invested in the United States and vice versa (i.e., US parties invested in Canada). This is in line with President Trump’s broader efforts to encourage US investors to spend in the United States rather than abroad and to prevent foreign investors in the United States from avoiding US courts. The USCMA does not include an ISDS provision between Canada and Mexico, but both Canada and Mexico are also parties to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”), which includes an ISDS provision. Thus, investors should be able to assert investor-state claims against those countries under CPTPP. The United States is not a party to CPTPP. President Trump withdrew the United States from that agreement on his first full day in office—January 24, 2017. The USMCA significantly narrows the circumstances under which US parties investing in Mexico or vice versa can bring ISDS actions. Most notably, the revised agreement prevents many US and Mexican investors from asserting claims under the “fair and equitable treatment” standard. That standard is a key protection included in most international investment treaties and is a frequent basis for ISDS claims. Generally, the doctrine obligates states to treat foreign investors and their investments equitably under international law, i.e., to afford reasonable due process. The USCMA also precludes many US and Mexican investors from asserting claims for indirect expropriation. Another common basis for ISDS claims, this protection prevents states from engaging in certain inequitable actions, e.g., denying permits required for a project. Similarly, these same US and Mexican investors will not be able to assert ISDS discrimination claims, i.e., claiming that, as a foreign investor, they were discriminated against in favor of a domestic competitor when attempting to secure an investment in a project.
The art of the overhype – POLITICO - President Donald Trump has touted his new North American trade deal with Canada and Mexico as a “landmark agreement” that “will send cash and jobs pouring into the United States and into North America.” But it’s possible — and perhaps even likely — that the deal will ultimately do little to help boost U.S. manufacturing employment or bring a “new dawn” for the U.S. auto industry that Trump has pledged.It’s not uncommon for U.S. presidents to try to oversell a deal their administrations negotiated — but for Trump, the risks could be greater, Pro Trade’s Doug Palmer reports this morning. From Doug: “He’s portrayed himself as a savior who is rescuing the working class from decades of ‘bad’ trade agreements, and voters looking for a quick boost in manufacturing employment could be disappointed.” Even if the new deal fails to fulfill any of the promises Trump is making, however, he has the benefit of a fiercely loyal base of supporters that is unlikely to question the claims he is making about how revolutionary the deal is and what sort of changes it will bring. “Oh sure, they’re going to follow him,” said Bill Reinsch, a senior adviser at the Center for Strategic and International Studies. “If he tells them it’s a good deal, they’re going to believe it’s a good deal.” Pros can read the full story here.
How the New NAFTA Text Measures Against Key Changes We Have Demanded to Stop NAFTA’s Ongoing Damage (PDF) Public Citizen Analysis: ‘The old NAFTA ISDS text, Chapter 11-B, is removed from the new text. ISDS between the U.S. and Canada is terminated, but this change does not go into effect until three years after the old NAFTA is replaced by the new deal. Going forward, U.S. and Canadian investors in the other country would only have recourse to domestic courts or administrative bodies to settle investment disputes with the other government. Terminating U.S.-Canada ISDS will eliminate 92 percent of U.S. ISDS liability under NAFTA and most U.S. ISDS exposure overall. This change will significantly limit future ISDS attacks. To date all but one of the NAFTA ISDS payouts implicating environmental and health issues have involved U.S. firms challenging Canadian policies. And all but three of the 58 NAFTA ISDS attacks on U.S. and Canadian policies have been brought by investors from the other country. However, even as this change will prevent many ISDS attacks over the long term, the three-year period before ISDS is terminated poses serious risks of more corporate attacks on environmental and health policies before the old NAFTA ISDS rules are terminated. With respect to Mexico ISDS is replaced by a new approach that reflects some longstanding progressive demands. Annex 14-D, “Mexico-United States Investment Disputes,” eliminates the extreme investor rights relied on for almost all ISDS payouts.” But more: “• What is otherwise real improvement on reining in the threats posed by ISDS is marred by a very problematic secondary U.S.-Mexico Annex (14-E) that should be eliminated. Ostensibly, it is to provide redress in the case of cancellation without cause of 13 contracts obtained by nine U.S. investors during the recent partial privatization of Mexico’s oil and gas sector by the outgoing government.” • Well worth a read, as is anything Public CItizen does on trade. From my perspective, “the new NAFTA” actually addresses my big issue with “trade deals,” whether NAFTA or the defunct TPP, which was always the surrender of national sovereignty to ISDS.
US–Mexico–Canada Trade Agreement A Win For All 3 Nations - After more than a year of negotiations, the three national governments, sometimes referred to as the “Three Amigos,” recently agreed in principle to change and rebrand NAFTA, which today regulates what has grown to more than $1.2 trillion yearly trade in goods and services. The new agreement is renamed the U.S.–Mexico–Canada Agreement (USMCA). The investor-state dispute provisions (Chapter 11), highly detrimental to Canada, have been removed. The U.S. attempt to remove protections for Canada’s cultural and media industries was abandoned. The three governments agreed to improve labor and environmental rights. Mexicans will be able to form unions more easily; their trucks crossing the U.S. border will have to meet tougher environmental standards. A joint committee to review the conduct of macroeconomic policy in the three countries has been introduced. Canada successfully fought off the U.S. attempt to remove NAFTA’s independent dispute-resolution mechanism (Chapter 19). The three countries may now challenge each other’s anti-dumping and countervail duties before panels of USMCA representatives, rather than in U.S. courts. American dairy farmers get improved access to the Canadian market—a victory for U.S. President Donald Trump. Canada has agreed to expand duty-free access to its domestic market—reportedly slightly more than was already offered in the renamed Pacific Partnership (TPP) negotiations with the Obama administration. In practice, this affects only a fraction of 1 percent of Canada’s total exports. The contentious class 6 and 7 milk products are normalized. Canadian dairy farmers are understandably displeased with the Trudeau government’s decision to let more American milk pass through the tariff wall that protects the supply-management system. While there will be subsidies for Canadian dairy farmers to compensate, the agreement will have little or no impact on consumer prices in Canada. The steel and aluminum tariffs Trump imposed on Canada under the pretense of U.S. national security have done damage to both economies. Ford Motor announced that the two levies cost it more than $1 billion last year alone.
POLITICO poll- Jury still out on USMCA - The trade deal formerly known as NAFTA — the U.S.-Mexico-Canada Agreement — may not be a slam dunk among voters, but it’s getting a slightly favorable reaction in a new POLITICO/Morning Consult poll released this morning.Of the 2,189 voters surveyed, 32 percent said the new pact would have a much better or somewhat better impact on U.S. consumers. Twenty-three percent of respondents said it would have no change, 12 percent said it would be worse or much worse and 32 percent had no opinion on the question.When it came to the new agreement’s potential impact on manufacturing workers, 38 percent said it would be much better or somewhat better. Only 8 percent thought it would be worse or much worse, 21 percent predicted no change and 33 percent had no opinion. A clear majority of 66 percent of respondents said they had seen, read or heard either a lot or some information about the USMCA. However, only 43 percent thought the deal was very or somewhat different from NAFTA. Twenty-four percent said it was not too or not at all different from the original deal, while 34 percent had no opinion. Read the results here and full crosstabulation results here. (Morning Consult is a nonpartisan media and technology company that provides data-driven research and insights on politics, policy and business strategy.)
Auto Makers Consider Shifting More Manufacturing to North America -- Foreign car makers are considering moving more of their manufacturing to North America following the recent U.S. trade deal with Canada and Mexico. Within days of the U.S. and Canada reaching a pact to replace the roughly 25-year-old North American Free Trade Agreement, executives at several foreign car makers said they are considering changes to their supply chains that would result in more auto-parts manufacturing in the U.S., Canada and Mexico. “We will allocate more U.S. production for the U.S. market,” BMW CEO Harald Krüger told reporters at the Paris Motor Show this week. He said the German car maker already sources many parts in the region, but the new trade pact will accelerate a shift in investment. .Daimler AG CEO Dieter Zetsche said at the same event the new agreement could force the company to move more engine manufacturing to the U.S., where it builds cars and sport-utility vehicles at a factory in Tuscaloosa, Ala. The impact on foreign auto makers’ North American operations from the newly named United States-Mexico-Canada Agreement, which still has to be approved by Congress, remains unclear. But many in the auto industry see the pact as evidence of President Trump’s tough approach to trade, at a time when he is threatening new tariffs on European and Japanese auto imports. Industry consultants say auto makers are growing increasingly nervous that more restrictions could emerge as Mr. Trump turns to trade talks with Japan and the European Union. “These companies are now seeing that there is an element of political risk to operating in the U.S.,”
U.S. Threatens to Block U.K. From Global Procurement Pact Bloomberg The U.S. is threatening to block the U.K. from a 46-nation public procurement agreement, a move that would deny British companies from accessing a near $2 trillion marketplace after leaving the European Union, according to two officials with knowledge of the situation.The U.K. will apply to rejoin the Government Procurement Agreement, a $1.7 trillion trade accord that governs global appropriation rules, since it will lose its membership after Brexit in March. U.S. negotiators have told their British counterparts that their application is outdated and needs to be revised, said the officials, who asked not to be identified because talks are ongoing.If blocked from the pact, U.K. companies such as Rolls-Royce Holdings Plc and Serco Group Plc could lose access to members’ procurement processes, including the $837 billion U.S. market. The U.K. will ask GPA participants to provisionally approve its final offer to join the accord during an Oct. 17 meeting, where any member can block the accession bid. The British side would still have time to improve its offer to allay members’ concerns.A majority of the accord’s members “support the U.K. continuing to be a part of it after we leave the European Union, which is in everyone’s interest,” according to an emailed statement from a spokesman for the U.K.’s Department of International Trade. “The U.K. is a huge part of this agreement and our continued membership will allow companies from other countries to maintain access to U.K. contracts worth 68 billion pounds a year.”A spokeswoman at the office of the U.S. Trade Representative didn’t respond to emails seeking comment.
US Senate elevates right-wing judge Brett Kavanaugh to Supreme Court --The US Senate on Saturday confirmed Brett Kavanaugh as associate justice of the Supreme Court in a near-party-line vote of 50 to 48. Kavanaugh was sworn in only a few hours later by Chief Justice John Roberts in a private ceremony with no press in attendance.Kavanaugh will take his seat on the high court when it resumes work Monday, shifting the nine-member body even further to the right. With his elevation, there is a solid bloc of five extreme right justices—Roberts, Kavanaugh, Clarence Thomas, Samuel Alito and Neil Gorsuch, President Donald Trump’s first nominee. All five were named by Republican presidents.The four-member minority of conservative-to-moderate liberals consists of Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan, all named by Democratic presidents. For the first time in modern US history, there will be no “swing” justice who oscillates to some extent between the two main factions. The seat now occupied by Kavanaugh was held from 1971 to 1987 by Lewis Powell, a conservative pro-business jurist who voted with the majority in Roe v. Wade. It was then held from 1989 to 2018 by Anthony Kennedy, another pro-business conservative who wrote several key gay rights decisions and supported abortion rights. Kavanaugh, equally right-wing on corporate interests and police powers, is an ultra-conservative Catholic who upholds Church doctrine on both abortion and gay rights.
Kavanaugh Is Sworn In After Close Confirmation Vote in Senate - NYT— Judge Brett M. Kavanaugh was confirmed to the Supreme Court on Saturday by one of the slimmest margins in American history, locking in a solid conservative majority on the court and capping a rancorous battle that began as a debate over judicial ideology and concluded with a national reckoning over sexual misconduct. As a chorus of women in the Senate’s public galleries repeatedly interrupted the proceedings with cries of “Shame!,” somber-looking senators voted 50 to 48 — almost entirely along party lines — to elevate Judge Kavanaugh. He was promptly sworn in by both Chief Justice John G. Roberts Jr. and the retired Justice Anthony M. Kennedy — the court’s longtime swing vote, whom he will replace — in a private ceremony. For President Trump and Senate Republican leaders, who have made stocking the federal judiciary with conservative judges a signature issue, the Senate vote was a validation of a hard-edge strategy to stick with Judge Kavanaugh, even after his nomination was gravely imperiled by allegations by Christine Blasey Ford that he had tried to rape her when they were teenagers. The president was exultant. “He’s going to go down as a totally brilliant Supreme Court justice for many years,” he told reporters, whom he had invited to join him in watching the vote on television aboard Air Force One. But Mr. Trump also derided the sizable protests against Judge Kavanaugh on the steps of the Supreme Court and the Capitol as “phony stuff,” and said it was a misnomer to imply that women were upset at his confirmation. “Women, I feel, were in many ways stronger than the men in this fight,” the president said. “Women were outraged at what happened to Brett Kavanaugh. Outraged.”
Grassley suggests absence of women on Judiciary due to committee’s heavy workload- Sen. Charles E. Grassley (R-Iowa) told reporters that the Senate Judiciary Committee’s inability to attract Republican women might be caused by its heavy workload, a remark the panel’s chairman tried to retract a few minutes later. “It’s a lot of work — maybe they don’t want to do it,” Grassley told the Wall Street Journal, NBC News and other outlets, as he headed toward the Senate floor for a speech by Sen. Susan Collins (R-Maine). The committee, which has turned into a partisan hotbed in the past five years, has never had a Republican woman serve on it, even as the Senate’s ranks have doubled from three to six female GOP senators in recent years. That omission drew more scrutiny during the second round of hearings for Judge Brett M. Kavanaugh’s nomination to the Supreme Court, during which committee Republicans hired a female prosecutor from Arizona to question Christine Blasey Ford about her allegations that Kavanaugh sexually assaulted her 36 years ago. Four of the 10 Democrats on Judiciary are women, including two former prosecutors, Sens. Amy Klobuchar (D-Minn.) and Kamala D. Harris (D-Calif.). Senate’s seniority rules raise questions when presidential succession is at stake Grassley was pulled off the Senate floor by an aide so that he could expand on his remarks, at which point he explained that the committee’s intense partisanship and heavy workload have made it a less glamorous post for any senator. “We have a hard time getting men on the committee. Do you know that we have got four people that are on the committee because the leader asked them to be there? Because they couldn’t fill the seats up,” Grassley said in that follow-up interview, suggesting Majority Leader Mitch McConnell (R-Ky.) has had to practically beg several Republicans to sit on the contentious panel. “It’s just a lot of work whether you’re a man or a woman,” Grassley added.
Trump: Kavanaugh sex assault claims were ‘all made up’ - US President Donald Trump has said the sex assault claims made against his new Supreme Court Justice Brett Kavanaugh were a "hoax" and "all made up". The Republican president condemned Democratic calls to impeach the judge as an "insult to the American public". The Democratic leadership has distanced itself from the calls by two of its rank-and-file lawmakers. Mr Trump joined Mr Kavanaugh and his family as the new justice swore an oath at the White House on Monday. President Trump hailed the "momentous" occasion, and started the ceremony by apologising to Mr Kavanaugh and his family for the "campaign of personal and political destruction based on lies and destruction" that he had been subjected to. The judge was confirmed by the Senate on Saturday, in a 50-48 vote that largely followed partisan lines. What did President Trump say? As he left the White House for an event in Florida on Monday, Mr Trump said: "So I've been hearing that now they're thinking about impeaching a brilliant jurist. "A man that did nothing wrong, a man that was caught up in a hoax that was set up by the Democrats using the Democrats' lawyers and now they want to impeach him." He added: "I think it's an insult to the American public."
Media Baffled By Trump's Claim That Some 'Paid' Protesters Haven't Gotten Their Checks - In what was likely a response to a Fox News interview with a Vice News editor who admitted that some professional protesters were paid to organize the demonstrations outside Capitol Hill and the Supreme Court over the weekend...clarification: I said there were some official organizations in the mix who have staff & consultants that were part of these protests. And some of them were helping individuals with tactics. That is not the same as ppl being paid to protest who don’t care about this issue. https://t.co/SZykSAj8Vt— Shawna Thomas (@Shawna) October 7, 2018...President Trump fired off a tweet Tuesday morning that was seemingly crafted specifically to elicit howls of outrage among liberals who have repeatedly insisted that Trump's claims that some of the individuals protesting Judge Brett Kavanaugh's confirmation vote had been paid by a nonprofit funded by George Soros. Trump said that the protesters are about to "REALLY protest because they haven't gotten their checks - in other words they weren't paid!"The paid D.C. protesters are now ready to REALLY protest because they haven’t gotten their checks - in other words, they weren’t paid! Screamers in Congress, and outside, were far too obvious - less professional than anticipated by those paying (or not paying) the bills!— Donald J. Trump (@realDonaldTrump) October 9, 2018 While it was unclear from where Trump was getting his information, the tweet was possibly a reference to Vice News editor Shawna Thomas' clarification that 'some' organizers were paid to help organize the protests, suggesting that a large portion of those who participated weren't paid.
The Susan Collins Excuse - I listened very carefully to Senator Collins as she detailed her excuses for letting Brett Kavanaugh become a Supreme Court Justice. Two aspects of her speech were particularly absurd and kind of appalling. Her claims that Kavanaugh is a moderate akin to Justice Stevens were beyond absurd. The most appalling aspect of her speech was how she dismissed the claims that Kavanaugh sexually abused women in high school and/or college: Some of the allegations levied against Judge Kavanaugh illustrate why the presumption of innocence is so important. I am thinking in particular not at the allegations raised by professor Ford, but of the allegations that when he was a teenager Judge Kavanaugh drugged multiple girls and used their weakened state to facility gang rape. This outlandish allegation was put forth without any credible supporting evidence and simply parroted public statements of others. That’s such an allegation can find its way into the Supreme Court confirmation process is a stark reminder about why the presumption of innocence is so ingrained in our a American consciousness. Mr. President, I listened carefully to Christine Blasey Ford’s testimony before the Judiciary Committee. I found her testimony to be sincere, painful, and compelling. I believe that she is a survivor of a sexual assault and that this trauma has upended her life. She believes Dr. Ford but then she went on and on like a defense attorney why she did not believe her when she clearly said it was Kavanaugh. But the real stunner was when she said this: I do not believe that the claims such as these need to be proved beyond a reasonable doubt. Nevertheless, fairness would dictate that the claims at least should meet a threshold of more likely than not as our standard. The facts presented do not mean that Professor Ford was not sexually assaulted that night or at some other time, but they do lead more to conclude that the allegations fail to meet the more likely than not standard.’
The Kavanaugh court is the one conservatives have worked decades to build WaPo - The Kavanaugh court will be the one conservatives have worked for decades to construct, experts say, with velocity the only question about the Supreme Court’s advance to the right. Expect re-energized efforts from social and religious conservatives to get their issues — gun control challenges, religious objections to gay rights — before a court where like-minded justices will make up the majority. On the other hand, the proliferation of lawsuits from blue-state officials objecting to President Trump’s efforts to loosen environmental standards and impose tougher sanctions on immigration could fizzle. Gone will be what one law professor called the “mushy middles” of Supreme Courts past, when justices such as Lewis F. Powell Jr., Sandra Day O’Connor and Anthony M. Kennedy held the key votes and sometimes abandoned their usual conservative colleagues to side with the left. The median justice now is much more likely to be conservative Chief Justice John G. Roberts Jr., who in his 13 years on the court has been on the losing side of 5-to-4 votes on environmental protection, abortion restrictions, affirmative action and same-sex marriage, to name just a few. “We’re headed for a whole new world,” said Irv Gornstein, executive director of the Georgetown Law Center’s Supreme Court Institute. “And the only questions, I think, are: How far are we going to go and how fast are we going to get there?”
The Democrats’ Little Bighorn - Patrick Buchanan - After a 50-year siege, the great strategic fortress of liberalism has fallen. With the elevation of Judge Brett Kavanaugh, the Supreme Court seems secure for constitutionalism—perhaps for decades.The shrieks from the gallery of the Senate chamber as the vote came in on Saturday, and the sight of that bawling mob clawing at the doors of the Supreme Court as the new justice took his oath, confirm it.The Democratic Party has sustained a historic defeat. And the triumph is President Trump’s. To unite the party whose nomination he had won, Donald Trump pledged to select his high court nominees from lists prepared by such judicial conservatives as the Federalist Society. Sharing the honors with Trump is Majority Leader Mitch McConnell. Throughout 2016, McConnell took heat for refusing to hold a hearing on Barack Obama’s nominee, Judge Merrick Garland, to fill the chair of Justice Antonin Scalia, who had died earlier that year. In 2017, McConnell used Harry Reid’s “nuclear option” to end filibusters for Supreme Court nominations, and then got Judge Neil Gorsuch confirmed 54-45. Last week, in one of the closest and most brutal court battles in Senate history, McConnell kept his troops united, losing only Senator Lisa Murkowski, to put Kavanaugh on the court 50-48. McConnell will enter the history books as the Senate architect of the recapture of the Supreme Court for constitutionalism. For the Democratic Party, the Kavanaugh battle was Little Bighorn, as seen from General Custer’s point of view. Unable to derail the judge during the regular confirmation process, they lay in the weeds until it was over, and then sandbagged the judge by leaking to the Washington Post a confidential letter that Dr. Ford did not want released.They thus forced a public hearing of charges of attempted rape against a nominee, demanded the FBI investigate all charges of sexual misconduct when Kavanaugh was a teenager, and ended up losing anyway. Then the Dems watched protesters dishonor the Senate in which they serve by screaming from the gallery. It was among the lowest moments in the modern history of the Senate, and it was the Democratic minority that took it down to that depth.
McConnell: Conservative revamp of the courts isn’t done yet - Mitch McConnell isn’t done with his “project” to revamp the nation’s courts. Hours before the Senate was set to approve Brett Kavanaugh to the Supreme Court, the Senate majority leader said in an interview Saturday that he plans confirmations of more lifetime justices before the November election. The Kentucky Republican plans to meet with Senate Minority Leader Chuck Schumer (D-N.Y.) about a package of nominees — and Schumer’s response could determine when or whether Schumer’s vulnerable members will be able to go home and campaign for their seats. ..“There are still tools that I have available, that’s why I canceled the August recess. And that’s something I’ll discuss with Sen. Schumer before we leave for the election,” McConnell said in a telephone interview, as he began an extended victory lap on Kavanaugh’s confirmation. He said “of course” more judges will be confirmed before Nov. 6, though Democrats may now be under enormous pressure to block as many judges as they can after the deflating loss on Kavanaugh. Kavanaugh’s ascension to the high court marks the 69th judicial confirmation of Donald Trump’s presidency under McConnell’s stewardship of the Senate. There are more than 30 lifetime District and Circuit court nominees ready for floor action in the Senate that McConnell could try to confirm before the election, though under Senate rules Democrats could delay them and would likely be able to narrow that list if the two parties try to strike a confirmation deal. Yet those battles will pale in comparison to Kavanaugh, which McConnell called “the toughest confirmation by far that I’ve been involved in.” He said the possibility of Kavanaugh withdrawing “never crossed my mind,” but admitted that his GOP members likely had “doubts” at times that Kavanaugh could be confirmed amid the airing of Christine Blasey Ford’s allegation that Kavanaugh assaulted her in 1982 and other sexual misconduct claims.
D.C. Circuit sent complaints about Kavanaugh’s testimony to Chief Justice Roberts - Chief Justice John G. Roberts Jr. has received more than a dozen judicial misconduct complaints in recent weeks against Brett M. Kavanaugh, who was confirmed as a Supreme Court justice Saturday, but has chosen for the time being not to refer them to a judicial panel for investigation. A judge on the U.S. Court of Appeals for the D.C. Circuit — the court on which Kavanaugh serves — passed on to Roberts a string of complaints the court received starting three weeks ago, said four people familiar with the matter. That judge, Karen LeCraft Henderson, had dismissed other complaints against Kavanaugh as frivolous, but she concluded that some were substantive enough that they should not be handled by Kavanaugh’s fellow judges in the D.C. Circuit. In a statement Saturday, Henderson said the complaints centered on statements Kavanaugh made during his Senate confirmation hearings. Under the law, “any person may file a misconduct complaint in the circuit in which the federal judge sits,” she said in the statement. “The complaints do not pertain to any conduct in which Judge Kavanaugh engaged as a judge. The complaints seek investigations only of the public statements he has made as a nominee to the Supreme Court of the United States.” People familiar with the matter say the allegations made in the complaints — that Kavanaugh was dishonest and lacked judicial temperament during his Senate testimony — had already been widely discussed in the Senate and in the public realm. Roberts did not see an urgent need for them to be resolved by the judicial branch while he continued to review the incoming complaints, they said.
Chief justice transfers Kavanaugh misconduct complaints to 10th Circuit -- Chief Justice John Roberts said in a letter on Wednesday that he had transferred judicial misconduct complaints related to Supreme Court Justice Brett Kavanaugh to the Judicial Council of the 10th US Circuit Court of Appeals for further review.Although the complaints were originally lodged with the US Court of Appeals for the District of Columbia Circuit, Kavanaugh's former court, the circuit executive of that court asked Roberts to transfer the matters to another circuit out of a "concern that local disposition may weaken public confidence in the process."The complaints relate to testimony that Kavanaugh gave last month during his confirmation hearings, according to a source familiar, and do not pertain to his conduct as a sitting judge. In a letter addressed to Judge Timothy M. Tymkovich, the chief circuit judge of the Denver-based 10th Circuit, Roberts said he had selected the court to review the identified complaints and "any pending or new complaints related to the same subject matter." Tymkovich can handle the complaints himself, dismiss them or appoint a special committee to examine them. According to the Rules for Judicial-Conduct and Judicial-Disability Proceedings, any person may file a misconduct complaint against a federal judge in the circuit in which the judge sits.
Kavanaugh’s first vote could be in Trump executive power fight - Justice Brett Kavanaugh’s first vote as a member of the Supreme Court could come as soon as Tuesday or Wednesday on a Trump administration request testing how much power courts should wield over top executive branch officials.The administration has already made one unsuccessful run at the high court on the issue: It asked Justice Ruth Bader Ginsburg last week to step in to block depositions of Commerce Secretary Wilbur Ross and Justice Department civil rights chief John Gore in lawsuits challenging Ross’ decision to put a question about citizenship on the 2020 U.S. Census.Ginsburg rebuffed the stay request, but Justice Department attorneys have indicated they plan to return to the Supreme Court with another emergency stay application within days unless they get full relief from lower courts, which seems unlikely.Justice Department lawyers argue the depositions of Ross and Gore ordered by a federal judge in New York City constitute an unwarranted intrusion into executive authority and could prove distracting to senior officials with important duties.
President Donald Trump’s winning streak - CNN - Only a re-election party on the night of November 3, 2020, could possibly offer the same vindication for America's most unconventional commander in chief as the 36 hours in which two foundational strands of his political career are combining in a sudden burst of history. Trump became an undeniably consequential President when Senate voted Saturday to confirm Brett Kavanaugh to the Supreme Court, consecrating the conservative majority that has long been the impossible dream of the GOP.On Friday, Trump had celebrated the best jobs data for 49 years as the unemployment rate dipped to 3.7%, offering more proof of a vibrant economy that the President says has been unshackled by his tax-reduction program and scything cuts to business regulations.While his 2016 election campaign was most notable for swirling chaos and shattered norms, Trump's vows to nominate conservative judges to the Supreme Court and to fire up the economy were the glue for his winning coalition. The struggle to confirm Kavanaugh split the country, deepened mistrust festering between rival lawmakers and threatens to further drag the Supreme Court into Washington's poisoned political stew. But Trump stuck with it and ground out a win. So he has every right to return to voters in the next four weeks ahead of the midterm elections to argue he has done exactly what he said he would do. He now has a strong message to convince grass-roots Republicans that it's well worth showing up at the polls. It's ironic that it was Trump, a late convert to conservatism -- not authentic Republicans like President Ronald Reagan, both Bush presidents and beaten GOP nominees Mitt Romney and John McCain -- who finally delivered the Supreme Court majority.Kavanaugh is Trump's second nominee to reach the court in less than two years, following Neil Gorsuch. Of course, the Supreme Court win is the culmination of decades of work by conservative activists and was masterminded by the cunning of Senate Majority leader Mitch McConnell. But Presidents get credit when they are in the Oval Office when things go well and Trump, whether it is his fault or not, has taken more than his share of criticism.
Ralph Nader: We Can’t Let Kavanaugh’s Confirmation Go - Brett Kavanaugh, the new Injustice of the Supreme Court of the United States, must be pleased by the leading news stories on Monday and Tuesday regarding his swift swearing-in Saturday. The multiple perjurer, corporate supremacist, presidential power-monger, and a past fugitive from justice (regarding credible claims of sexual assault), Kavanaugh saw critical media coverage become yesterday’s story. The mass media has moved on to other calamities, tragedies, superstorms, and celebrity outrages. Opponents of his nomination must persevere anew.The future of the Supreme Court looks grim considering Kavanaugh’s judicial decisions and involvement in war crimes and torture as Staff Secretary to President George W. Bush. It is likely that Kavanaugh will be the cruelest and most insensitive justice on the high Court. His support of corporate power will have few limits. That’s saying something, given the rulings of Clarence Thomas, Samuel Alito and Neil Gorsuch.Kavanaugh’s decisions and political statements are so off the wall, I’ve called him a corporation masquerading as a human being.Kavanaugh’s decisions and political statements are so off the wall, I’ve called him a corporation masquerading as a human being. Corporations’ uber alles is his pre-eminent core philosophy. Public Citizen’s analysis of his judicial record (apart from his extremist political ideology) showed that in split-decision cases (which are the most ideologically revealing cases), Kavanaugh ruled 15 times against worker rights and two times for worker rights. On environmental protection, he ruled 11 times for business interests and two times for the public’s interest. On consumer protection, he ruled 18 times for businesses and only four times for consumers. As for monopoly cases, he ruled two times for the corporation and zero times for market competition.Kavanaugh also likes to rule for government power when it is arrayed against the people–ruling seven times for police or human rights abuses and zero rulings for victims. On the other hand, governmental decisions that are protective of people interests will find Kavanaugh blocking the courtroom door more often than not. (See Public Citizen’s report).The Alliance for Justice report on nominee Kavanaugh summed up their research with these words: “He has repeatedly sided with the wealthy and the powerful over all Americans. He has fought consumer protections in the areas of automobile safety, financial services and a free and open Internet. Kavanaugh has also repeatedly ruled against workers, workplace protections and safety regulations.… Kavanaugh has repeatedly ruled against efforts to combat climate change and the regulation of greenhouse gases. He also repeatedly ruled against protections for clean air.”
Trump: "Angry Mob" of "Radical Democrats" Has Become "Too Extreme And Too Dangerous To Govern" - President Trump on Saturday touted a conservative victory after his Supreme Court nominee, Brett Kavanaugh, was confirmed as the 114th Justice after a contentious and dramatic assault from the left. Speaking in Topeka, Kansas, Trump framed the Democratic resistance to Kavanaugh as an attempt by an "angry mob" to hijack the proceedings "in their quest for power." "They threw away and threw aside every notion of fairness, of justice, of decency and of due process," Trump said of the anti-Kavanaugh efforts. "What he and his wonderful family endured at the hands of Democrats is unthinkable, unthinkable."TRUMP: "I want to thank our incredible Republican senators for refusing to back down in the face of the Democrats' shameless campaign of political & personal destruction... radical Democrats launched a disgraceful campaign to resist & demolish right from the beginning." pic.twitter.com/lIzj3TqCC9— Aaron Rupar (@atrupar) October 6, 2018"Just imagine the devastation they would cause if they of their obtained the power they so desperately want and crave," Trump added. "You don’t hand matches to an arsonist and you don’t give power to an angry left-wing mob, and that’s what they have become." Trump then used Kavanaugh's example to illustrate why conservatives need to vote during the midterm elections in four weeks so that Democrats don't take back the House: "You have to vote," Trump insisted. "On November 6 you will have the chance to stop the radical Democrats — and that’s what they have become — by electing a Republican House and a Republican Senate. We will increase our majorities. We need more Republicans. We need more Republicans." "The Democrats have become too extreme and too dangerous to govern," Trump continued. "Republicans believe in the rule of law not the rule of the mob."
McConnell calls opposition to Kavanaugh a ‘great political gift’ to Republicans --Senate Majority Leader Mitch McConnell said he never considered urging the White House to withdraw Brett M. Kavanaugh’s nomination to the Supreme Court and called opposition to the judge a “great political gift” for Republicans ahead of next month’s midterm elections.In an interview with The Washington Post hours before Kavanaugh’s near-certain confirmation on Saturday afternoon, the Kentucky Republican again underscored his confidence in Kavanaugh’s denials of allegations of sexual misconduct decades ago while decrying the protesters who have challenged senators for days.“I never thought Judge Kavanaugh would withdraw,” McConnell said during the interview with The Post. “When your integrity is attacked like his was, a withdrawal was certainly no solution to that, so we were in the fight to the finish.” McConnell, overseeing a razor-thin 51-49 GOP majority, said the GOP is already seeing a boost in polling in Senate races because of the Democratic opposition to Kavanaugh combined with the protests. Republicans are on offense in the fight for control of the Senate, with 10 Democrats seeking reelection in states President Trump won in 2016. “It’s been a great political gift for us. The tactics have energized our base,” he said, adding: “I want to thank the mob, because they’ve done the one thing we were having trouble doing, which was energizing our base.”
Sen. Cotton Suggests Kavanaugh Hit Job Was Schumer Political Operation With Bharara Connection -Senator Tom Cotton (R-AK) claims that a sexual assault allegation levied against Justice Brett Kavanaugh at the 11th hour of his confirmation hearings was orchestrated by Sen. Chuck Schumer (D-NY) and his "political operation" as far back as July. Cotton told nationally-syndicated radio host Hugh Hewitt that Schumer was behind the leak of Christine Blasey Ford's allegation "from the very beginning." Cotton noted that Ford's good friend, former FBI agent Monica McClean worked for former US Attorney Preet Bharara. McLean came under fire last week after a report emerged in the Wall Street Journal that she pressured her to change her story to "clarify" her story to claim that she "didn't remember" a party at which Ford claims Kavanaugh groped her, as opposed to claiming that the party never happened. Bolstering Cotton's assertion that Ford's claim was professionally curated for political ammunition is a leaked recording from July in which Democratic operative and PR guru Ricki Seidman - an adviser to Ford - can be heard discussing how Ford's accusation can be used to harm conservatives whether or not it's successful at dislodging Kavanaugh from his nomination. Cotton closes by suggesting that there will be a "consequence" at the polls for Democrats who have promised to try and impeach Kavanaugh. Listen (transcript below):
Senate leaders strike deal on 15 judicial nominees, setting up early recess Senate Majority Leader Mitch McConnell (R-Ky.) and Democratic Leader Charles Schumer (N.Y.) have struck a deal to vote on a package of 15 judges and recess the Senate until the Nov. 6 election. All of the nominees, including three circuit court nominees, are expected to pass despite opposition from liberal groups that fought an all-out-battle to block Supreme Court Justice Brett Kavanaugh earlier this month. The development is welcome news for vulnerable incumbents in tough races eager to get back home to campaign. The Senate had been scheduled to be in session until Oct. 26. Now most lawmakers likely won’t return to Washington until the week after the Nov. 6 election. The deal is a bigger help to Democrats, who have more members of their conference locked in tough races, but it also helps vulnerable Republicans, such as Sen. Ted Cruz (R-Texas).
Trump administration proposes tough rules on protests The Hill. The Trump administration is proposing to overhaul rules for protests in front of the White House and at other iconic locations in Washington, D.C., in an effort that opponents say is aimed at shutting down free speech.The National Park Service’s (NPS) proposal, for which public comments are due by Monday, would close much of the sidewalk north of the White House to protests, limit the ability for groups to have spontaneous protests without permits in that area and on the National Mall and open the door to potentially charging some demonstrating groups fees and costs for their events.The plan was released in August with little fanfare. But civil rights groups have been sounding alarm bells in recent days as the comment period comes to a close.In making the proposal, the NPS cites its mandate to protect land, saying that it wants to “provide greater clarity to the public about how and where demonstrations and special events may be conducted in a manner that protects and preserves the cultural and historic integrity of these areas.”But opponents see a connection to President Trump’s disdain for protesters, and congressional Republicans’ denunciations of recent demonstrations against new Supreme Court Justice Brett Kavanaugh as “mob rule.” They argue that the iconic places in Washington, D.C., that hosted Martin Luther King Jr.’s “I Have A Dream” speech in 1963 and the Occupy encampments in 2012 need to remain as welcoming as possible for the First-Amendment-guaranteed right to protest, not just for D.C. locals, but for people from around the country who travel to the nation’s capital.
Trump Is Mulling Candidates Who Could Succeed Jeff Sessions - WSJ - President Trump is considering as many as five candidates as his new attorney general on the assumption that Jeff Sessions will leave his post later this year, according to White House officials and outside advisers. The potential candidates include Health and Human Services Secretary Alex Azar, Transportation Department general counsel Steven Bradbury, former Attorney General Bill Barr, Deputy Secretary of State John Sullivan and Janice Rogers Brown, a retired appeals court judge from the District of Columbia Circuit, the people said. The five either didn’t return calls seeking comment or declined to comment. The president has spoken openly, and often sharply, about his desire to replace Mr. Sessions and his regret over installing the former Alabama senator as the nation’s top lawyer. While Mr. Trump has spent more than a year undercutting his attorney general, he has rarely spoken about successors, according to White House officials and people familiar with his thinking. His discussion of these candidates represents a shift, signaling for the first time that Mr. Trump is envisioning what his administration might look like without Mr. Sessions in the cabinet. Some White House officials and Trump allies urged caution about the president’s deliberations. For one thing, Mr. Sessions remains in his job, and there are no finalized plans to remove him from the position, even after the November congressional elections. Expectations in the West Wing and at the Justice Department are that Mr. Sessions will step down, officials said. Mr. Sessions isn’t currently planning to leave, but privately has said that he anticipates he may be asked to resign, according to people familiar with the matter. The attorney general, who was the first senator to endorse Mr. Trump during the presidential campaign, has told people the request may come on the president’s Twitter feed. “This is actually the dumbest thing I’ve been asked to comment on in a while,” said Justice Department spokeswoman Sarah Flores. A spokesperson for Mr. Trump declined to comment.
Warren responds to 'arrogant woman' insult: 'Was I tough on John Kelly? ... You bet I was' -- Sen. Elizabeth Warren (D-Mass.) on Friday fired back at White House chief of staff John Kelly over reports from the day before that he called her an "impolite arrogant woman" in a 2017 email. "Absolutely most insulting conversation I have ever had with anyone,”Kelly wrote, according to BuzzFeed News."What an impolite arrogant woman. She immediately began insulting our people accusing them of not following the court order, insulting and abusive behavior towards those covered by the pause, blah blah blah," he added, referring the Trump administration's travel ban. "Was I tough on John Kelly in that phone call? You bet I was. Apparently he thought I was an 'impolite arrogant woman,' " Warren tweeted. Was I tough on John Kelly in that phone call? You bet I was. Apparently he thought I was an “impolite arrogant woman.” “Blah blah blah” – that’s all he had to say when he was called out for breaking the law and destroying lives. — Elizabeth Warren (@elizabethforma) October 12, 2018. “There are some men who can only hear 'blah blah blah' whenever a woman’s talking. But there’s nothing impolite about people’s right to speak out and hold their government accountable. And sometimes, people are right to be angry,” she added. The email chain referred to a conversation Kelly and Warren had over Boston's Logan Airport regarding several of Warren’s constituents who were detained there under the travel ban despite having visas. I asked John Kelly for an office number I could use in the future to reach him more quickly. He tried to give me the main line listed on@DHSgov’s website (really). Let’s just say I persisted longer than he did – and eventually I got his cell phone number. — Elizabeth Warren (@elizabethforma) October 12, 2018
Checkpoint Nation - U.S. Customs and Border Protection (CBP) is the agency tasked with guarding America’s borders, as opposed to Immigration and Customs Enforcement (ICE), which investigates, arrests and deports undocumented people throughout the country. Over the past 18 months, as resistance to President Trump’s immigration crackdown has grown, most of the criticism has been directed at ICE, whose interior enforcement mission often targets long-term residents without criminal records. Immigrant rights groups have begun a campaign to defund or abolish the agency. “ICE is terrorizing American communities right now,” Angel Padilla, policy director of the Indivisible Project, told the Nation. “They’re going into schools, entering hospitals, conducting massive raids, and separating children from parents every day.”Increasingly, Padilla’s description applies to CBP as well. It turns out that the legal definition of “the border” is troublingly broad. Some 200 million people — nearly two-thirds of all Americans — live within the “border zone,” which is defined by the Justice Department as the area up to 100 air miles from any U.S. la nd or coastal boundary. Nine of the country’s 10 largest cities lie within the zone. It touches 38 states and encompasses all of Connecticut, Delaware, Florida, Hawaii, Maine, Massachusetts, Michigan, New Hampshire, New Jersey and Rhode Island. Within the border zone, Congress has granted CBP powers far beyond those of other law enforcement agencies. CBP, which largely consists of customs officers at ports of entry and Border Patrol agents who monitor the highways, has the authority to set up checkpoints almost anywhere within the 100-mile zone, and to search and detain people without a warrant as long as they feel they have “probable cause” to suspect that someone is in the country illegally or smuggling contraband. The Fourth Amendment of the Constitution protects citizens from “unreasonable searches and seizures,” but CBP operates with wide discretion, often using alerts from dogs as a reason to pull people aside for secondary inspection. Within 25 miles of any border, Border Patrol agents have even more expansive powers; they can enter private land without a warrant or the owner’s permission.Being a U.S. citizen doesn’t protect you from harassment by CBP. Even if you never leave the United States, you can encounter Border Patrol at the 35 fixed checkpoints and dozens of temporary checkpoints they operate deep in the interior. The locations of these checkpoints are not made public, but in a recent report, Cato mapped checkpoints as far as 80 miles from the border.
Feds to judge: We still think we can put GPS trackers on cars entering US - A top Homeland Security Investigations official has told a federal court that it remains the agency's policy that officers can install a GPS tracking device on cars entering the United States "without a warrant or individualized suspicion" for up to 48 hours. There is no such time limit, HSI Assistant Director Matthew C. Allen also told the court, for putting such trackers on "airplane, commercial vehicles, and semi-tractor trailers, which has a significantly reduced expectation of privacy in the location of their vehicles."Such an assertion comes over a month after a federal judge recently told the Department of Justice that such a practice—at least in one drug-trafficking case—is unconstitutional. His decision is based on a landmark 2012 Supreme Court ruling involving GPS tracking, known as Jones.Prosecutors had claimed that installing such a tracker was valid under the "border doctrine" exception to the Fourth Amendment, which finds that limited, warrantless searches at the border are allowed. US District Judge Jesus G. Bernal disagreed in an August 24, 2018 ruling.Allen continued, saying that HSI believes that its policy is "consistent" with both the Jones decision and a case from 2004 case known as Flores-Montano. In that instance, the Supreme Court ruled that there is a "diminished" expectation of privacy at the border.Legal experts find this newly disclosed HSI policy to be troubling. "It is hard to square with the [Supreme] Court's decision in Jones," "For starters, it ignores the fact that physical trespass was the basis for the Supreme Court's holding in Jones—the act of placing a tracker on a vehicle is itself a search, regardless of how long police track it."
US government may put separated immigrant children up for adoption - An Associated Press investigation revealed Tuesday that the US government has been secretly allowing US couples to adopt immigrant children separated from their parents. The AP investigation uncovered cases—many recent but some dating back to the 1980s—in which judges granted adoption requests even though the children’s actual parents were never informed. AP warns that roughly 200 immigrant children who remain separated from their parents as a result of the Trump administration’s “Zero Tolerance” policy are at heightened risk of being adopted. The report featured the story of one child, Alexa, who was separated from her Salvadoran mother, Araceli Ramos. When Alexa and Araceli were captured crossing the US-Mexico border trying to flee Araceli’s abusive ex-partner, Alexa was torn from her mother’s arms, and agents told her she “would never see her again.” “Alexa’s case began in November 2015 under the Obama administration,” AP writes, “years before Trump’s family-separation policy rolled out. Her 15-month separation from her mother exposes the fragile legal standing of children under the care of the federal Office of Refugee Resettlement and a flawed, piecemeal system that can change the course of a child’s life. “It took 28 minutes for a judge in a rural courthouse near Lake Michigan to grant Alexa’s foster parents, Sherri and Kory Barr, temporary guardianship. Alexa’s mother and the little girl’s immigration attorney were not even notified about the proceedings.” Such horror stories have been playing out for years, the AP reports, under Democratic and Republican administrations. In another case in Missouri, AP writes, “An American couple managed to permanently adopt a baby whose Guatemalan mother had been picked up in an immigration raid. That seven-year legal battle terminating the mother’s parental rights ended in 2014.” But today, AP says, the mass roundup of immigrant children means “the risk has grown exponentially” that further adoptions are on the horizon. There are 13,000 immigrant children detained in the US at present, many without their parents.
US Postal Service workers protest Trump’s privatization plans --On Monday, thousands of postal workers in more than 140 cities across America protested plans by the Trump administration to privatize the US Postal Service (USPS). The protests were organized by the four postal unions, including the largest one, the American Postal Workers Union (APWU), which has kept its 200,000 members on the job weeks after the expiration of their contract on September 20.In April, the White House created a task force led by the Office of Management and Budget to investigate the USPS’s finances and operations on the grounds that it is a “failing” governmental agency. In its report, the administration proposed to “restructure the U.S. Postal System to return it to a sustainable business model or prepare it for future conversion from a Government agency into a privately-held corporation.”The restructuring of the USPS or its outright privatization would accelerate the attack on the wages, pensions and health care benefits of an estimated 650,000 postal workers. It would also allow private investors to plunder the resources of the postal service for profit while increasing costs for consumers and reducing mail delivery services. “They want to privatize the postal service to make money and profits from us, pay us less, take our pensions and cut our jobs,” Postal workers have already faced decades of attacks on their living standards under Democratic and Republican administrations, with the complicity of the postal unions. Both parties have forced USPS into a race to the bottom with workers at Amazon, United Parcel Service (UPS), FedEx and other logistic giants. Rather than uniting USPS workers with their brothers and sisters throughout the industry, particularly 250,000 workers at UPS who are locked in a battle against the Teamsters union, the APWU has kept workers on the job past the contract expiration and pledged to submit to a federal arbitrator if no agreement on a new contract is reached with the government. According to the Trump administration report, “A private postal operator that delivers mail fewer days per week and to more central locations (not door delivery) would operate at substantially lower costs.” Such a plan would end the universal service obligation of the postal service to deliver mail to residents and businesses across 150 million addresses six days a week. It would also decimate rural postal services and force residents in poorer remote areas to travel many miles to pick up mail from consolidated post offices.
Trump Signs Landmark Music Bill Into Law - President Trump signed the eagerly anticipated Music Modernization Act into law at a ceremony at the White House on Thursday, in the most high-profile event for the music industry in several years. Mike Love and Kid Rock, two of Trump’s most visible supporters in the music community, were at the White House for the signing alongside Sam Moore of Sam & Dave, country singer John Rich and the Doobie Brothers’ Jeff “Skunk” Baxter.Intended to update music copyright law for the digital era, H.R. 1551 (formally the “Orrin G. Hatch-Bob Goodlatte Music Modernization Act”) accomplishes three key things: making sure songwriters and artists receive royalties on songs recorded before 1972; allocating royalties for music producers; and updating licensing and royalty rules for streaming services to pay rights-holders in a more streamlined fashion, via a new, independent entity. Under the act, many music creators will have a more reliable way of collecting the money that they’re due.“You like this legislation or do you hate it?” Trump asked Kid Rock. “I like it,” replied Kid Rock. “Everybody knows this business of music is a very dirty business,” Rock said after the signing. “There’s a lot more that needs to be done here. We need to go after the record labels next, and things like free goods. But this is a great start to protect songwriters, producers, engineers — the unsung heroes behind many of these songs that go out there. People like myself who are maybe more at the top of the food chain, it really doesn’t affect as much. But I know many people it does affect.”
Ajit Pai faces rare criticism from GOP senator on rural broadband failures- US Sen. John Thune (R-S.D.) yesterday blasted the Federal Communications Commission, saying it has failed to prevent budget cuts in funding for rural broadband. "It has been more than a year since Chairman [Ajit] Pai" and fellow commissioners appeared before the Senate Commerce Committee "and committed to conducting a thorough economic analysis of the impact of USF [Universal Service Fund] funding cuts on broadband deployment in rural areas before allowing any further reduction," Thune said. But Pai's FCC has failed to keep that promise, Thune said while delivering a statementat a hearing on rural broadband. Thune, the Commerce Committee chairman, continued: Since that time, however, the cuts resulting from the FCC's budget control mechanism have increased by almost 25 percent. 25 percent! There has been no economic analysis of what these cuts are doing to rural America—what they are doing to rural jobs, rural economic development, and the ability to live and learn, work, and play in communities like Pierre, South Dakota or Ocean Pointe, Hawaii; Yankton, South Dakota or Yakima, Washington. The FCC has not conducted an analysis of what insufficient and unpredictable funding is doing to the companies trying to deploy broadband under some of the most difficult circumstances in America. This is simply unacceptable. "These cuts could cause providers to halt or cancel broadband buildout, reducing the availability of broadband throughout rural America," Thune also said. "This could also cause an increase to the cost of service to those who already receive service, putting at risk investments already made."
Apple Tells Congress It Found No Signs Of Hacking Attack - Apple Inc's top security officer told Congress on Sunday that it had found no sign of suspicious transmissions or other evidence that it had been penetrated in a sophisticated attack on its supply chain.Apple Vice President for Information Security George Stathakopoulos wrote in a letter to the Senate and House commerce committees that the company had repeatedly investigated and found no evidence for the main points in a Bloomberg Businessweek article published on Thursday, including that chips inside servers sold to Apple by Super Micro Computer Inc allowed for backdoor transmissions to China."Apple’s proprietary security tools are continuously scanning for precisely this kind of outbound traffic, as it indicates the existence of malware or other malicious activity. Nothing was ever found," he wrote in the letter provided to Reuters. The letter follows statements on Friday by Britain's National Cyber Security Centre and on Saturday by the U.S. Department of Homeland Security that those agencies have no reason to doubt denials from Apple and Amazon.com Inc that they had discovered backdoored chips.Bloomberg said on Friday it stood by its story, which was based on 17 anonymous sources. Some allegations were based on fewer accounts or even a single unnamed source, Apple noted in its letter.
Google Exposed User Data, Feared Impact Of Public Disclosure - Google exposed the private data of hundreds of thousands of users of the Google+ social network and then opted not to disclose the issue this past spring, in part because of fears that doing so would draw regulatory scrutiny and cause reputational damage, according to people briefed on the incident and documents reviewed by The Wall Street Journal. As part of its response to the incident, the Alphabet Inc. unit on Monday announced a sweeping set of data privacy measures that include permanently shutting down all consumer functionality of Google+. The move effectively puts the final nail in the coffin of a product that was launched in 2011 to challenge Facebook and is widely seen as one of Google’s biggest failures. A software glitch in the social site gave outside developers potential access to private Google+ profile data between 2015 and March 2018, when internal investigators discovered and fixed the issue, according to the documents and people briefed on the incident. A memo reviewed by the Journal prepared by Google’s legal and policy staff and shared with senior executives warned that disclosing the incident would likely trigger “immediate regulatory interest” and invite comparisons to Facebook’s leak of user information to data firm Cambridge Analytica. Chief Executive Sundar Pichai was briefed on the plan not to notify users after an internal committee had reached that decision, the people said. The closure of Google+ is part of a broader review of privacy practices by Google that has determined the company needs tighter controls on several major products, the people said. In its announcement Monday, the company said it is curtailing the access it gives outside developers to user data on Android smartphones and Gmail. 5 Google discovered and fixed the glitch in March 2018. It found no evidence of misuse of data. Sources: People briefed on the incident and documents reviewed by The Wall Street Journal.The episode involving Google+, which hasn’t been previously reported, shows the company’s concerted efforts to avoid public scrutiny of how it handles user information, particularly at a time when regulators and consumer privacy groups are leading a charge to hold tech giants accountable for the vast power they wield over the personal data of billions of people. The snafu threatens to give Google a black eye on privacy after public assurances that it was less susceptible to data gaffes like those that have befallen Facebook. It may also complicate Google’s attempts to stave off unfavorable regulation in Washington. Mr. Pichai recently agreed to testify before Congress in the coming weeks.
Google did not disclose security bug because it feared regulation, says report CNBC. Google did not initially disclose a Google+ security bug when it first discovered it this spring because it feared regulatory scrutiny and reputational damage, according to a Wall Street Journal reportciting documents and people briefed on the incident.Google wrote in its own blog post on the incident that it determines when to notify users about privacy and security bugs based on the type of data involved, whether it can accurately identify who to inform, whether there is evidence of misuse, and whether there is any action that a user can take in response, and that based on that criteria it didn't immediately alert users of the Google+ bug.However, a memo prepared by Google's legal and policy staff and seen by the Journal shows that leadership was also concerned about causing a potential privacy scandal. The memo allegedly warned senior executives that news of the bug would cause "immediate regulatory interest" and draw comparisons to Facebook's Cambridge Analytica data scandal.It's been a rocky summer for big tech: In the past year, Google, Facebook, Twitter, and other technology companies have all testified before various House and Senate committees about theirdata and privacy practices, the risk of election meddling, and their possible conservative bias, among other topics. President Donald Trump has made critical comments about both Google and the other tech platforms, but the administration has not yet proposed any sort of actual regulation. Google has gotten in trouble overseas though: The European Union slapped the company with a $5 billion fine for antritrust abuse of its mobile operating system, Android. With this bug, the possibly exposed data included the names, email addresses, birth dates, profile photos, and gender of up to 500,000 Google+ accounts, though not any information related to personal communication or phone numbers. Google says that 438 apps may have used the application programming interface, or API, that made the private data available, but that it found no evidence that any developers misused the information.
Leaked Transcript of Private Meeting Contradicts Google’s Official Story on China - Gomes, who joined Google in 1999 and is one of the key engineers behind the company’s search engine, said he hoped the censored Chinese version of the platform could be launched within six and nine months, but it could be sooner. “This is a world none of us have ever lived in before,” Gomes declared, according to a transcript of his comments obtained by The Intercept. “So I feel like we shouldn’t put too much definite into the timeline.” It has been two months since The Intercept first revealed details about the censored search engine, code-named Dragonfly. Since then, the project has faced a wave of criticism from human rights groups, Google employees, U.S. senators, and even Vice President Mike Pence, who on Thursday last week called on Google to “immediately end development of the Dragonfly app that will strengthen the Communist Party’s censorship and compromise the privacy of Chinese customers.” Google has refused to answer questions or concerns about Dragonfly. On Sept. 26, a Google executive faced public questions on the censorship plan for the first time. Keith Enright told the Senate Commerce, Science and Transportation Committee that there “is a Project Dragonfly,” but said “we are not close to launching a product in China.” When pressed to give specific details, Enright refused, saying that he was “not clear on the contours of what is in scope or out of scope for that project.”Senior executives at Google directly involved in building the censorship system have largely avoided any public scrutiny. But on Sept. 23, Gomes briefly addressed Dragonfly when confronted by a BBC reporter at an event celebrating Google’s 20th anniversary.“Right now, all we’ve done is some exploration,” Gomes told the reporter, “but since we don’t have any plans to launch something, there’s nothing much I can say about it.”Gomes’ statement kept with the company’s official line. But it flatly contradicted what he had privately told Google employees who were working on Dragonfly — which disturbed some of them. One Google source told The Intercept Gomes’s comments to the BBC were “bullshit.”
Leaked Google document: Tech firms have shifted away from “free speech and towards censorship” - On Tuesday, the far-right news outlet Breitbart News published a leaked internal briefing by employees at technology giant Google that openly discusses political censorship.The document observes that “tech firms have gradually shifted away from unmediated free speech and towards censorship and moderation.” In the process, the document states, Google, Facebook and Twitter have sought to emphasize creating “well-ordered spaces for safety and civility” over “unmediated ‘marketplaces of ideas.’”Breitbart said Google did not deny the veracity of the document, but it wrote that “an official Google source said the document should be considered internal research, and not an official company position.”The leaked Google document quoted MIT Tech Review editor-in-chief Jason Pontin as saying, “On the global scale, the internet and the social platforms have been a wonderful boon for free speech. The internet has given platforms to billion (sic) of people to express themselves and has made it almost impossible for governments—even in highly controlled nations like China—to control people’s speech effectively.”But the next page of the briefing declares that “recent global events have undermined this utopian narrative.”The document explains the “shift towards censorship” by pointing to “commercial” and “government” demands. One aim of censorship is to “Protect advertisers from controversial content, [and] increase revenues,” it declares.The briefing adds that “Google might continue to shift with the times—changing its stance on how much or how little it censors (due to public, governmental or commercial pressures).”The document admits that there is a shift from the “American tradition that prioritizes free speech for democracy, not civility,” on the part of social media companies.
Fess Up To Reality - Former Google Exec Exposes Silicon Valley Hypocrisy In Scathing Essay - After overcoming the temptation to publish under a pseudonym, former Google PR executive Jessica Powell has finally dropped her long-awaited satirical novel/memoir "The Big Disruption" last week. In the highly anticipated book - and in an accompanying personal essay published on Medium - Powell offers what may be one of the most scathing critiques of Silicon Valley from a former executive at one of its biggest and most influential companies. Some of her claims are nothing short of shocking - like when she admitted in her essay that she quit Google last August (she was the company's top PR executive, reporting directly to CEO Sundar Pichai) not to go back to school to study creative writing, as was reported at the time, but because she "got tired" defending the company's unscupulous actions. In particular, she cited YouTube's argument to UK lawmakers that it couldn't censor all of the far-right and jihadist recruitment content posted on its platform because of the sheer volume of content - a claim that Powell said was an outright lie, per the Daily Mail. Memorably, there were some instances where Google even paid some of the accounts that posted terrorist content.Google has been widely criticised for allowing jihadists, far-Right extremists and other hate preachers to post content on its YouTube video platform. In some cases, it funnelled cash from advertisers to the extremists posting videos.But the firm has repeatedly told MPs it cannot stop problem content because of the sheer volume of videos that are uploaded to YouTube.Miss Powell was in charge of the company’s response to the criticism, reporting directly to Google’s chief executive Sundar Pichai.Her decision to quit the lucrative role in August last year surprised many in the industry. At the time, Miss Powell claimed she was leaving to go back to university to study creative writing. However, in her essay, published for free on the Medium website, she admitted she needed to ‘take a break from the issues that I got tired of defending at parties’. She said: ‘On the surface, things seemed really important and exciting. We were doing big things! Bringing the internet to the developing world! But also, on some level, it all felt a bit off, like when you go on vacation and find yourself wondering when it’s going to feel like the Instagram pics other people have posted.’
Facebook carries out massive purge of oppositional pages - On Thursday, Facebook removed some of the most popular oppositional pages and accounts on the world’s largest social media network, in a massive and unconstitutional assault on freedom of expression. With no public notice or accounting, over 800 pages and accounts have been summarily removed from the internet. The removed pages include Police the Police, with a following of over 1.9 million, Cop Block, with a following of 1.7 million, and Filming Cops, with a following of 1.5 million. Other pages targeted include Anti-Media, with 2.1 million followers, Reverb Press, with 800,000 followers, Counter Current News, 500,000 followers, and Resistance, 240,000 followers. Right-wing publications, including Right Wing News, were also removed. The move has no precedent in the history of the internet. Workers throughout the United States and the world must be put on notice: the ruling elite is meeting a growing strike wave by workers with the expansion of censorship and police state measures. In a blog post, Facebook announced that it was “banning… Pages, Groups and accounts created to stir up political debate,” referring to this as “coordinated inauthentic activity.” These pages use “sensational political content” to “build an audience and drive traffic to their websites.” Tellingly, the social media monopoly added that the pages “are often indistinguishable from legitimate political debate.” Facebook said the pages were targeted for their “behavior,” including operating “multiple accounts” and posting “clickbait.” These half-hearted efforts to deny that it is targeting oppositional Facebook pages with unsubstantiated allegations about their “behavior” are a transparent lie. In an instant, the world’s largest social media monopoly has removed avenues through which the American population learns about police criminality, state murder and other government crimes. An article in the New York Times on Facebook’s moves makes clear that the moves to censor the internet, which began under the pretext of combatting “Russian meddling” in the 2016 elections, are now openly targeting domestic political organizations.
Facebook purged over 800 U.S. accounts and pages for pushing political spam -- Facebook said on Thursday it purged more than 800 U.S. publishers and accounts for flooding users with politically-oriented spam, reigniting accusations of political censorship and arbitrary decision-making. In doing so, Facebook demonstrated its increased willingness to wade into the thorny territory of policing domestic political activity. Some of the accounts had been in existence for years, had amassed millions of followers, and professed support for conservative or liberal ideas, such as one page that billed itself as “the first publication to endorse President Donald J. Trump.” Facebook’s ability to monitor manipulation of users is under an intense spotlight in the weeks ahead of the U.S. midterm elections.But Facebook only named five of the hundreds of pages it removed. Two of the page operators said that they were legitimate political activists, not profit-driven operators of clickbait “ad farms,” as Facebook claimed in a blog post. They said were still unsure which Facebook rules they had violated or why they had been singled out for behavior that is standard in online organizing.“I would gladly abide by Facebook’s terms if I understood what they were,” said Chris Metcalf, the publisher of the left-leaning “Reasonable People Unite” which was shut down along with eight additional Facebook pages, which he said had a total of 2.25 million followers. “I am a legitimate political activist. I don’t have a clickbait blog. I don’t have a fake news website. And I haven’t been doing anything that all the other pages in this space aren’t doing.” In its post, Facebook described the pages, with names like “Nation in Distress” and “Reverb Press,” as largely domestic actors using clickbait headlines and other spam tactics to drive users to websites where they could target them with ads. The company said it was not taking issue with the nature of the content posted by the pages, but with the behaviors of the accounts, which used inappropriate tactics to artificially inflate their influence. Some of the pages and accounts had millions of followers.
Facebook, Twitter Purge More Dissident Media Pages In Latest Escalation Caitlin Johnstone --Facebook has purged more dissident political media pages today, this time under the pretense of protecting its users from “inauthentic activity”. In a statement co-authored by Facebook Head of Cybersecurity Nathaniel Gleicher (who also happens to be the former White House National Security Council Director of Cybersecurity Policy), the massive social media platform explained that it has removed “559 Pages and 251 accounts that have consistently broken our rules against spam and coordinated inauthentic behavior.” This “inauthentic behavior”, according to Facebook, consists of using “sensational political content – regardless of its political slant – to build an audience and drive traffic to their websites,” which is the same as saying they write about controversial things, and posting those political articles “in dozens of Facebook Groups, often hundreds of times in a short period, to drum up traffic for their websites.” In other words, the pages were removed for publishing controversial political content and trying to get people to read it. Not for writing “fake news”, but for doing what they could to get legitimate indie media news stories viewed by people who might want to view it. The practice of sharing your material around in Facebook groups is common practice for most independent media content creators; I did it myself a lot in late 2016 and early 2017, and pretty much all my indie media peers at the time did too. “For those of you who read what I write, you know that I did not violate any standards,” writes Terresa Monroe-Hamilton, whose personal profile and Facebook page for her political blog NoisyRoom.net were both deleted. “In fact, I don’t send out most of what I write. I send on big news links and a few memes. It was enough to get me banned and the pages are simply gone.” “Facebook took down my page with nearly 70,000 followers, labeling it as ‘spam,’ when I have spent 4 years working to build that page up and using it to post the articles I wrote and videos of my reporting,” tweeted RT America’s Rachel Blevins. “This is so incredibly wrong and is affecting hundreds of similar pages.” “And just like that 5 + years of hard work promoting ideas of peace and freedom have been erased,” wrote a Facebook user called John Liberty, who lost multiple pages about police accountability, cannabis legalization and libertarianism. Two of the most high-profile pages which were shut down have probably been seen at some point by any political dissident who uses Facebook; the Free Thought Project, which had 3.1 million followers, and Anti-Media, which had 2.1 million. I’ve found useful information on both sites before, and despite disagreeing with them ideologically in some areas have found them both vastly more legitimate than anything you’ll find on Google News.As if that wasn’t creepy enough, some of the accounts purged by Facebook appear to be getting censored on Twitter as well, bringing back memories of the August cross-platform coordinated silencing of Alex Jones.
Pages purged by Facebook were on blacklist promoted by Washington Post - Media outlets removed by Facebook on Thursday, in a massive purge of 800 accounts and pages, had previously been targeted in a blacklist of oppositional sites promoted by the Washington Post in November 2016.The organizations censored by Facebook included The Anti-Media, with 2.1 million followers, The Free Thought Project, with 3.1 million followers, and Counter Current News, with 500,000 followers. All three of these groups had been on the blacklist.In November 2016, the Washington Post published a puff-piece on a shadowy, and up to then largely unknown, organization called PropOrNot, which had compiled a list of organizations it claimed were part of a “sophisticated Russian propaganda campaign.”The Post said the report “identifies more than 200 websites as routine peddlers of Russian propaganda during the election season, with combined audiences of at least 15 million Americans.”The publication of the blacklist drew widespread media condemnation, including from journalists Matt Taibbi and Glenn Greenwald, forcing the Post to publish a partial retraction. The newspaper declared that it “does not itself vouch for the validity of PropOrNot’s findings regarding any individual media outlet.”While the individuals behind PropOrNot have not identified themselves, the Washington Post said the group was a “collection of researchers with foreign policy, military and technology backgrounds.” PropOrNot, which remains active on Twitter, publicly gloated about Facebook’s removal of the pages. “Russian propaganda is VERY VERY MAD about their various front outlets & fellow travellers getting suspended by @Facebook &/or @Twitter.” The tweet tagged The Anti Media and The Free Thought Project, and included a Russian flag emoji next to an emoji depicting feces.
Facebook cyber attack sees data stolen from 29 million accounts in its largest ever data theft Cyber attackers stole data from 29 million Facebook accounts using an automated program that moved from one friend to the next, the social media giant has revealed. But the company said that was less than the 50 million profiles it initially reported after investigators reviewed activity on accounts that may have been affected.Facebook said it would message affected users over the coming days to tell them what type of information had been accessed in the attack.Facebook isn't giving a breakdown of where these users are, but said the breach was "fairly broad".Facebook said third-party apps that use a Facebook login and Facebook apps like WhatsApp and Instagram were unaffected by the breach.The social media company said the FBI is investigating.Facebook vice president Guy Rosen told reporters that the FBI asked the company to limit descriptions of the attackers due to an ongoing inquiry. Although Mr Rosen did reveal that while the attackers' intent has not been determined, they did not appear to be motivated by the upcoming US mid-term Congressional election on November 6.
Is the Tide Turning on Regulating Facebook and Google - Let me start with two quotes, six months and a continent apart. The first is from the current chief executive of OFCOM, who told the Cambridge RTS Conference last year that while she believed that Facebook and Google were media companies, she didn’t “think regulation is the answer because I think it is really hard to navigate the boundary between regulation and censorship of the internet”. Six months later, in an interview with CNN, Facebook’s founder Mark Zuckerberg said “I’m not sure we shouldn’t be regulated“. There are good grounds for believing that we have witnessed a regulatory turn, that this has moved well beyond media policy, and that European regulatory proposals may become the ‘gold standard’ for global regulation. And there are signs that, even if Brexit happens, the UK will not be immune from the regulatory tide. The 2017 Conservative Manifesto, now being implemented through the Digital Charter, the Green Paper on Internet Safety and other measures, contained a series of proposals, including establishment of the regulatory framework in law. The manifesto was explicit in its emphasis: “Some people say that it is not for government to regulate when it comes to technology and the internet. We disagree.” Indeed, by July 2018, even Ofcom had arguably changed its position to support regulation. Today, the debate over the role of information intermediaries such as Facebook, following the Cambridge Analytica controversy and the revelations of abundant Russian election and referendum interference, revealed by painstaking investigative journalism and detailed academic research, encompasses a range of issues which fundamentally raise the role of state sovereignty and the political sphere of regulation. Facebook and Google are more than media companies. They are advertising engines, data controllers, information service providers and algorithm developers. And they are moving into a variety of new fields such as artificial intelligence and virtual or augmented reality, leveraging the revenues they are earning from advertising. Their corporate power is unprecedented. They have purchased early-stage ventures which might have turned out to threaten their position, and their dominance risks damaging innovation. In their main fields, they are arguably now natural monopolies. The role of network effects and economies of scale driven by Big Data consolidates and concentrates their power as first-movers. The entry costs for new suppliers are so high as to be prohibitive. Their ability to imitate and replicate at low cost the new services offered by competitors reduces the effects of competition. It is difficult for consumers to switch or exit when in the case of Facebook, most of their friends may be on the platform, and in the case of Google, its dominance of data makes it difficult for any other search engine to approach the quality of service it provides.
Solomon- DOJ Smoking Gun Redactions Due To National Embarrassment, Not National Security- The Department of Justice (DOJ) and the FBI have repeatedly pointed to concerns over national security in their refusals to declassify evidence in the Russia investigation. It is now clear, however, that the agencies are simply covering up embarrassing facts, according to The Hill's John Solomon. How do we know this? A previously minor footnote on Page 57, Chapter 3 of the House Intelligence Committee report on Russian interference notes that FBI general counsel James Baker met with an unnamed person in September 2016 who provided information on the Russia case, including email hacking and a possible link to the Trump campaign. And who was this person whose information, if released, would threaten national security? A top attorney for Perkins Coie, the Democratic National Committee's private law firm. It was the same DNC, along with Hillary Clinton’s presidential campaign, that funded the unverified, salacious dossier by a British intel operative, Christopher Steele, that became a central piece of evidence used to justify the FBI surveillance of the Trump campaign in the final days of the election.And it was the same law firm that made the payments for the dossier research so those could be disguised in campaign-spending reports to avoid the disclosure of the actual beneficiaries of the research, which were Mrs. Clinton and the DNC.And it was, in turns out, the same meeting that was so heavily censored by the intel agencies from Footnote 43 in the House report – treated, in other words, as some big national-security secret. -The HillSo the "big scary national security secret" was nothing more than a meeting between the FBI's former top attorney and a DNC attorney to discuss information the Committee had in the Russia investigation.
Ex-FBI Top Lawyer- Rosenstein Wasn't Joking About Recording, Removing Trump - Deputy Attorney General Rod Rosenstein wasn't joking when he told former FBI officials Andrew McCabe and Lisa Page that he wanted to secretly record President Trump and use the tapes to remove him from office, according to the FBI's former top lawyer. Fox News reports that James Baker, who served as the FBI's General Counsel before he was reassigned and then quit, told congressional investigators during a closed-door deposition last week that Page and McCabe relayed the same account of Rosenstein's remarks - and that he was absolutely serious at the time. "As far as Baker was concerned, this was a real plan being discussed," reports The Hill's John Solomon, citing a confidential source. "It was no laughing matter for the FBI," the source added. Solomon points out that Rosenstein's comments happened right around the time former FBI Director James Comey was fired. McCabe, Baker's boss, was fired after the DOJ discovered that he had leaked self-serving information to the press and then lied to investigators about it. Baker, meanwhile, was central to the surveillance apparatus within the FBI during the counterintelligence operation on then-candidate Trump. As the former FBI general counsel, Baker was a senior figure with a pivotal position who had the ear of the FBI director.Baker also is at the heart of surveillance abuse accusations, many from congressional Republicans. His deposition lays the groundwork for a planned closed-door House GOP interview with Rosenstein later this week. Baker, formerly the FBI's top lawyer, helped secure the Foreign Intelligence Surveillance Act (FISA) warrant on former Trump campaign adviser Carter Page, as well as three subsequent renewals. -Fox News
FBI Director Refuses To Say Whether Trump's Phone Conversations Are Being Collected - Federal Bureau of Investigation Director Chris Wray declined to answer a question as to whether the FBI or the National Security Agency is currently collecting the phone conversations of President Donald Trump. The question was posed by Senator Rand Paul (R-Kentucky) during a Senate committee hearing on national security issues. The Kentucky Senator asked, “Do you think that it’s possible that the president’s conversations with international leaders are in the [Foreign Intelligence Surveillance Act] database?” To which Wray replied, “I’m not sure there’s anything I could speak to in this setting.” Just after the hearing, Paul tweeted about the interaction: The FBI Director just testified in the US Senate. I asked him if @realDonaldTrump phone conversations are getting collected in the FISA database. He wouldn't answer. Is NSA or FBI listening in on our President? We know bad actors exist within intel community. REFORM NEEDED NOW— Senator Rand Paul (@RandPaul) October 10, 2018 Paul continued his line of inquiry:It’s been reported in the Washington Post about two years ago there were 1,500 times when the president–this is when Obama was president–was minimized meaning that, yes, you are gathering up so much information–you, the NSA, the intelligence community–that actually the president’s conversations are caught up in there. Do you think it’s possible that Congress–that members of Congress are in the FISA database if we talk to international leaders?Wray deflected again.“Well, senator, I am quite confident that we are conducting ourselves in a manner consistent with the law and the Constitution that’s subject to extensive oversight,” he said.“I don’t know that I can speak to every hypothetical about whether there have been [such] situations.”Paul then asked Wray whether journalists’ conversations were being possibly being scooped up by the intelligence community’s vast spying apparatus simply because they write stories about people with “terrorist name[s]” in them. Wray declined to answer again, saying, “I can’t speak to specific hypotheticals.” At this point, however, Paul cut off the FBI director, noting, “The answer is yes.”
Russia dossier author criticizes Trump, slams ‘strange and troubling times’ CNN - The retired British spy who wrote an explosive dossier about President Donald Trump's alleged ties to Russia broke his silence to criticize Trump and the "distorted" state of US politics.The former spy, Christopher Steele, wrote to Vanity Fair shortly after he was named to the magazine's "2018 New Establishment List." CNN reviewed a copy of Steele's email, which included his most political comments since his dossier gained international attention in January 2017."In these strange and troubling times, it is hard to speak unpalatable truths to power, but I believe we all still have a duty to do so," Steele said. "I salute those on your list, and otherwise, who have had the courage to speak out over the last year, often at great personal cost."Steele went on to say, "(A)t a time when governance is so distorted and one-sided, as I believe it currently is in the United States, the media has a key role to play in holding it accountable."The ex-spy also lamented that due to "the present legal and political situation," he could not attend a Vanity Fair summit in Los Angeles featuring many of the newsmakers on the list. Despite global intrigue with his story, Steele has avoided public events out of fear for his safety."I sincerely hope and trust that these circumstances will change soon," Steele added.The Vanity Fair list features business leaders, media moguls and other rising stars. Special counsel Robert Mueller was ranked at the top, despite the fact that he might be the least flashy person on the list, which includes social media maven Kylie Jenner and filmmaker J.J. Abrams.
California man who sold stolen identities sentenced to prison in Russia probe (Reuters) - A California man accused by U.S. Special Counsel Robert Mueller’s office of operating an online auction service for stolen identities was sentenced to one year of incarceration on Wednesday in a federal district court. Richard Pinedo, who pleaded guilty to one count of identity fraud in February, could serve half the sentence at home, U.S. Judge Dabney Friedrich said. The criminal charge against Pinedo was announced in February by Mueller’s office at the same time it announced an indictment against 13 Russians and three Russian companies on charges they adopted fake online personas to push divisive messages, traveled to the United States to collect intelligence and staged political rallies. The indictment against the Russians makes no mention of Pinedo by name. However, a source familiar with the case told Reuters he is referred to in the charging documents as the person who helped the Russian conspirators launder money, as well as purchase Facebook ads and pay for rally supplies, through PayPal Holdings Inc. Mueller’s investigation has issued several indictments and accepted guilty pleas as it investigates Russian meddling in the 2016 U.S. presidential election. Pinedo’s attorney, Jeremy Lessem, has said his client had no knowledge of the identities or the motivations of those who purchased the information he sold. According to the indictment against the 13 Russians, the defendants in 2016 used Social Security numbers and birth dates of real U.S. people to open PayPal accounts and to create fake driver’s licenses and open social media accounts.
Bikini Girls And Cyberwars - The Times claims to have identified the Kremlin’s latest secret weapon in Cyberwars – “Bikini Girl” @Organicerica. Except there is no evidence @Organicerica has any Russian links or promotes any Russian interests. It does appear likely that @Organicerica is a bot. The Times claims this is proven by the timing and regularity of the postings (interesting as they claim the same kind of activity pattern proves nothing in the case of Philip Cross). I am prepared to accept, for the sake of argument, that @Organicerica is a bot, or at best a young woman running an automated posting programme. But what is the output?
- Promotion of organic restaurants in Seattle.
- Environmental campaigning particularly against pesticides and genetically modified food.
- Nothing whatsoever on wider politics, foreign policy, Clinton.
- And nothing whatsoever related to Russia.
What kind of mindset do you need to have, automatically to equate a bikini-wearing opposition to Monsanto and to chlorinated chicken with being an agent of the Kremlin? Why is The Times publishing this absolute rubbish? It says something both about the quite hysterical Russophobia gripping the media and political class, and about the desire to delegitimise environmental activism, as witness the jailing of the anti-fracking protestors (against which jailing 1,000 academics have now signed a letter of protest).
Bullet Holes Discovered In Pilot's Body After Mysterious Helicopter Crash That Killed Russian Prosecutor Conspiracy theories about the mysterious death of Saak Albertovich Karapetyan, the Russian prosecutor responsible for investigations into the poisoning of former spy Sergei Skripal (along with the deaths abroad of other traitorous Russians, including 2006 death by poisoning of FSB defector Alexander Litvinenko) have abounded in the days since the deadly helicopter crash that killed Karapetyan and a handful of others during a hunting trip in the Kostroma region northeast of Moscow. One report from a local investigative journalist that was picked up by the Daily Mail claimed that body of the pilot who flew Karapetyan was found with two bullet holes, suggesting that the crash wasn't an accident, but rather a cover-up for an assassination of a man with close ties to Russian lawyer Natalia Veselnitskaya - the Russian lawyer who met Donald Trump Jr., Jared Kushner and Paul Manafort in June 2016 for a controversial meeting at Trump Tower that was set up under the pretense that Veselnitskaya would provide "dirt" on Hillary Clinton. According to the Daily Mail, Karapetyan's reportedly "overloaded" helicopter didn't crash, rather it was shot down by assassins in a shooting that was later covered up by investigators. The official version is that the 'overloaded' helicopter crashed after clipping trees in Kostroma region, killing Karapetyan, his nephew Areg Arutyunyan, 47, pilot Stanislav Mikhnov, and another passenger Viktor Kopteev, 54. But respected Moscow journalist Sergei Dorenko has bluntly accused the investigating authorities of a cover-up in seeking hide two bullet wounds to highly experienced 54-year-old pilot - and gun shot damage to the copter's blade.
GOP Operative Secretly Raised at Least $100,000 in Search for Clinton Emails WSJ - —A veteran Republican operative and opposition researcher solicited and raised at least $100,000 from donors as part of an effort to obtain what he believed to be emails stolen from Hillary Clinton, activities that remain of intense interest to federal investigators working for special counsel Robert Mueller’s office and on Capitol Hill. Peter W. Smith, an Illinois businessman with a long history of involvement in GOP politics, sought and collected the funds from at least four wealthy donors as part of the plan to obtain Mrs. Clinton’s stolen emails from hackers just weeks before election day in 2016, according to people familiar with the matter and documents reviewed by The Wall Street Journal. Mr. Smith’s effort to find what he believed were some 33,000 deleted emails Mrs. Clinton said were personal was first reported by the Journal in a 2017 story, but the extent of his planning went far beyond what was previously known. Mr. Smith died 10 days after describing his efforts to a reporter for the Journal. The documents and people familiar with the matter depict a veteran political operative with access to wealthy donors and deep connections in Republican politics on a single-minded quest to find incriminating information about Mrs. Clinton even after government officials warned of Russian involvement in U.S. politics. People familiar with the investigations described Mr. Smith’s activities as an area of expanding interest. Mr. Smith went to extraordinary lengths to ensure the privacy and secrecy of his projects, according to emails and court records reviewed by the Journal and a person familiar with the matter. One email showed the anti-Clinton funds referenced as donations that were to be sent to a Washington, D.C.-based scholarship fund for Russian students. Mr. Smith often communicated with associates using a Gmail account under the name “Robert Tyler” that both he and several others had access to, according to emails and a person familiar with the matter. He sometimes asked associates to communicate with him by writing a note and saving it the draft folder of the account, according to correspondence reviewed by the Journal. He also had one phone number that he used for sensitive matters and a commercially available encrypted email account. Hard drives that Mr. Smith’s estate turned over to federal investigators were also encrypted, according to people familiar with the matter. According to an email in the “Robert Tyler” account reviewed by the Journal, Mr. Smith obtained $100,000 from at least four financiers as well as a $50,000 contribution from Mr. Smith himself. People familiar with Mr. Smith’s financial transactions confirm there were donations.
Clinton's security clearance withdrawn at her request - The State Department has revoked former Secretary of State Hillary Clinton's security clearance after she requested that it be withdrawn, according to a letter released Friday by a top GOP senator. The State Department—in a letter dated Sept. 21 but publicly released Friday— told Sen. Chuck Grassley (R-Iowa), the chairman of the Judiciary Committee, that the security clearance was revoked on August 30 after Clinton requested that it be withdrawn. "We would like to provide you with an update on the status of former Secretary Clinton's security clearance and the ongoing administrative review pertaining to former Secretary of State Hillary Clinton and other current and former department officials," Charles Faulkner, the acting assistant secretary of legislative affairs, wrote to Grassley. The State Department added in the letter to Grassley that five of Clinton's aides had also had their security clearance revoked. Four of the names are redacted but one aide listed in the email is Cheryl Mills, who worked as Clinton's chief of staff. "As we previously informed the committee, these individuals had been granted access to classified information through a request made by Secretary Clinton designating them as researchers," Faulkner added. Clinton's security clearance has been a long-running sore spot for conservatives after the FBI, led by then-Director James Comey, found in 2016 that Clinton had been "extremely careless in their handling of very sensitive, highly classified information."
The OTC Derivatives Market Size is about to shrink via a CFTC proposal – Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo released a new paradigm for measuring the size of the global swaps markets, in a speech to DerivCon 2018 in New York.In his speech, Giancarlo said, “swaps have a problem of large numbers. We have known it for a long time. Sizing the global swaps markets in hundreds of trillions of dollars has done nothing to bring clarity to newspaper accounts, policy discussions in Congress, or regulatory policy setting in the decade since the financial crisis. Rather, it more often confuses the issue and hinders dispassionate consideration and sound policy setting.”In conjunction with this speech, CFTC Chief Economist Dr. Bruce Tuckman released a paper detailing the new paradigm for a more accurate measurement of the swaps market, specifically focused on its risk transfer function. In the paper, Tuckman explains why notional amount is not a good measure of the magnitude of risk transfer through the global interest rate swap (IRS) markets, and proposes the use of ENNs: Entity-Netted Notional Amounts. Read Tuckman’s paper <attached below>.Giancarlo’s full text of his speech is available below
Don’t Believe the Media Hype on Bank Stocks and Rising Interest Rates --The 10-year U.S. Treasury note touched a 7-year high in yield early this morning at 3.25 percent before falling back to 3.22 percent in mid-morning trading. As rates have risen over the past year, we’ve witnessed a growing chorus of business writers repeating the following mantra, or words to this effect: bank stocks will do well, even in a rising interest rate environment, because the spread will widen on what they pay to their depositors versus the rate that they earn on loans.When it comes to five of the mega Wall Street banks – JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley – you can throw that advice out the window. That’s because these are not so much banks as they are black holes of interconnected and concentrated interest-rate risk with trillions of dollars of derivatives sitting on their balance sheets. And since any blowup among these behemoths will taint the entire banking sector, this advice is also faulty for the entire sector.We can already hear the naysayers countering that these are smart banks that know how to hedge their interest-rate risk and derivatives risk. Not only do we have the 10-year anniversary of the greatest Wall Street bank crash since the Great Depression to remind us that this isn’t so, but we also have basic math to tell us otherwise.The basic math is this: for every derivative trade on the books of these banks, there has to be a counterparty taking the opposite side of the bet. There are simply not enough large financial institutions to serve as counterparties to these trades so the banks are counterparties to each other’s trades, along with the big U.S. insurance companies and a handful of big European banks – with Deutsche Bank being a key focal point of risk according to the IMF.
Has The Derivatives Volcano Already Begun To Erupt - The cure for the last crisis always turns into the cause of the next one... The economies of southern Europe – Greece, Italy, Spain and Portugal – nearly collapsed in 2011, and Europe’s monetary authorities responded with negative interest rates. So did Japan. Europeans and Japanese pay to hold cash or own 10-year German government bonds, which means that every pension fund and insurer will fold in a finite time horizon. They responded by exporting more, saving more, and buying American assets that still pay a positive, if low, real yield. Hedging the foreign exchange risk in this half-trillion-dollar per year business has exhausted the balance sheet of the global banking system. That explains a large part of the jump in the US 10-year note yield to 3.2% last Friday from 2.85% in early September. Hedging the foreign exchange risk in these massive flows created a derivatives mountain, and it has started to spew smoke and lava. Banks are rationing foreign-exchange swap lines, making hedges so expensive that German and Japanese investors can no longer afford to buy US bonds. If the foreign bid for US debt dries up, the cost of financing America’s $1 trillion annual budget deficit will rise, and so will interest costs around the world. The mechanics of hedging trillions of dollars of capital flows are complex, but the economics are simple. Germany and Japan together export half a trillion dollars a year of goods and services more than they import. America imports more than half a trillion dollars of goods and services more than it exports. Germany and Japan have negative real interest rates, so their investors buy American bonds at positive real interest rates. But Germans and Japanese have to pay out Euros and yen, not dollars. They go to their banks to swap dollar income into local-currency income. The banks borrow dollars in the United States, sell them in the forward market and receive Euros and yen. European banks are running out of borrowing capacity. After five years of negative short-term rates, their profitability is low, their stock prices are falling and their credit is deteriorating. They can no longer borrow the dollars required to construct the hedges that local investors need. Foreign exchange derivatives form the biggest mountain of obligations in the world financial system – a notional amount of about $90 trillion, up from $60 trillion in 2010. The BIS economists led by Robert McCauley note that non-US banks now owe $10.7 trillion in US dollars, most of which reflects the hedging requirements of these global flows. The banks don’t report foreign exchange swaps with their customers on their balance sheets, but the BIS estimates that these obligations amount to $13 or $14 trillion.
Goldman Sachs’ seedy underbelly exposed in shocking tapes --Fresh dirt has spilled at Goldman Sachs — and this time it has been caught on tape.David Solomon, who took the helm of the Wall Street giant from Lloyd Blankfein last week, once blew off criticism of Goldman’s double-dealing in a big energy merger as a matter of “perception” — a cheeky dismissal that came despite a class-action lawsuit against the deal that eventually cost Goldman $20 million in fees.That’s among the cringeworthy quotes that Carmen Segarra claims she secretly recorded behind closed doors for her new book “Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street.” The 340-page exposé expands on her previous claims that Goldman Sachs has long exploited an improperly cozy relationship with Wall Street regulators.Segarra was a former bank examiner who looked into Goldman Sachs for the Federal Reserve Bank of New York, and claims she got fired in 2012 after making too much noise about Goldman’s alleged conflicts.The New York Fed has often been blasted for its lackadaisical approach to overseeing banks leading up to the 2008 financial crisis. Its last president, William Dudley, was named in 2009 after spending 21 years at Goldman. But Segarra’s book claims that the problem persisted for years after the crisis, with regulators happy to act on the banks’ behalf.
BankThink Dear regulators: Don’t cut big banks’ capital - The U.S. banking agencies are proposing that the eight U.S.-based global systemically important banks should reduce their capital by $121 billion — that the banking system would be stronger and more resilient with this reduction in capital. This would be the result of a plan, first introduced this spring, to ease leverage ratio requirements for the country’s largest institutions. In other words, 10 years after the financial panic, the banking agencies now appear to believe the stronger capital requirements that were implemented in response to the financial crisis should be reduced. What in the world are they thinking? When I speak with banking agencies in Washington, I have suggested to them that banking supervision should return to the basics of safety and soundness as the foremost priority. Protection of the Deposit Insurance Fund was at one time the battle cry of banking. Those who were around in the late 1980s and early 1990s when oil went to $10 a barrel and the bottom fell out of real estate values can remember the special assessments banks and thrifts paid to prop up the funds that were being depleted by closing banks and thrifts.I argue that compliance has now taken too much of those federal banking agencies’ attention — and we have lost the overriding importance of a safe and sound bank as the priority. The Federal Deposit Insurance Corp. is divided into two divisions — risk management supervision, which focuses on safety and soundness, and depositor and consumer protection, which focuses on consumer compliance. Organizationally, these two appear to have equal footing. During the debate on the Dodd-Frank Act and the creation of a new mandate and agency dedicated solely to consumer protection, many critics feared that consumer compliance could trump safety and soundness. Many would argue that has happened.
Senator Bernie Sanders’ Banking Bill and the Kavanaugh Confirmation - Pam Martens - Last week when Senator Bernie Sanders introduced a new banking bill to break up the mega banks on Wall Street, he had this to say: “In our nation today, we are moving toward an oligarchic form of society where a small number of very wealthy individuals and large corporations have enormous control over our economic and political life. Today, we are in a country where three people, three of the wealthiest people, own more wealth than the bottom half of American society and 52 percent of all new income is going to the top 1 percent.” Sanders made this statement on October 3.Just three days later, on October 6, a thoroughly discredited nominee for the U.S. Supreme Court, Brett Kavanaugh, who had the financial backing of a front group funded by billionaires Charles and David Koch, Americans for Prosperity, was installed on the U.S. Supreme Court. Sanders’ Senate bill, which has a companion bill introduced in the House of Representatives by Democratic Congressman Brad Sherman of California, would cap the size of the largest financial institutions so that a company’s total assets are no more than 3 percent of U.S. Gross Domestic Product (GDP), or about $584 billion. Mega Wall Street banks currently have in excess of a trillion dollars in assets. Under the bill, six of the largest Wall Street banks would be broken up: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley. The bill would also impact mega insurance companies, which are counterparties to Wall Street’s derivatives, such as Prudential Financial, MetLife and AIG. As Wall Street On Parade has previously reported, these interconnected financial relationships pose a potential nightmare scenario in the next Wall Street implosion. Whether it’s oligarchs rigging capital formation on Wall Street, or oligarchs stacking the highest court in the land, or oligarchs using the Federal Reserve as their personal ATM machine, the democratic underpinnings of America are facing the greatest peril in modern history. Wall Street veteran and brilliant author, Nomi Prins, explains what’s at stake for the average American in the video below.
Wall Street Is Booming Under Trump. But Many of Its Donors Are Embracing Democrats. NYT - When Charles Myers, the chairman of a financial advisory firm, hosted four relatively unknown Democratic congressional candidates at his Midtown Manhattan home last month, he netted more money than he can remember collecting from an event that wasn’t headlined by a presidential candidate.“More than ever in my 26-year career on Wall Street, donors are willing to look way beyond concerns of overregulation from Democrats,” said Mr. Myers, a longtime Democratic fund-raiser. They just want to elect “Democrats to serve as a check” on President Trump.The stock market may be booming. Unemployment is hitting record lows. Republicans pushed through $1.5 trillion in tax cuts.But despite all that, for the first time in a decade, the broader financial community is on pace to give more money to Democratic congressional candidates and incumbents than their Republican counterparts, according to data from the Center for Responsive Politics, a nonpartisan group that tracks campaign donations. Some of the same grass-roots energy coursing through the Democratic Party — House candidates from Kentucky to Montana to New York are reporting record sums of small donations — has spilled into the corporate boardrooms of American finance, even amid increasingly hostile rhetoric from Democrats in Washington and on the campaign trail toward Wall Street.“When one party controls all the levers, it is a lot easier for the opposing party to motivate donors,” said Marc Short, the former Trump White House director of legislative affairs, who has deep relationships in the donor world. “It’s both money and activism. But obviously much of the money comes from Wall Street.”
Banks back Democrats in bid to rebuild bipartisan support (Reuters) - Banks are going to bat for Democrats in the U.S. November midterm congressional elections as part of an ambitious strategy to rebuild the bipartisan support they enjoyed before the 2007-2009 financial crisis. Commercial banks have so far donated a total of $2.5 million to U.S. Senate Democrats in the 2018 election cycle, the largest sum since 2008, according to data from the Center for Responsive Politics. The backing of Democrats marks a shift for banks, which have kept a low profile in Washington since the crisis. Democrats had all but abandoned the financial industry in the aftermath, wary of appearing to do favors for Wall Street. But some moderate Senate Democrats in May backed the first easing of financial rules since the crisis and now are seeing a boost to their campaign coffers as the sector seeks to broaden its support on Capitol Hill. Of the 20 Senate candidates receiving the most money from banks during the 2018 cycle, 15 are Democrats, according to the Center for Responsive Politics data which tracks donations made by political action committees and individuals. When those seats were last up for election in 2012, only seven Democrats were in the top 20. Senators Heidi Heitkamp, Jon Tester and Joe Donnelly, moderates who helped pushed through the May legislation easing rules on community banks introduced by the 2010 Dodd Frank law, are the top three recipients, the data shows. Representatives for Senators Tester, Heitkamp and Donnelly did not respond to requests for comment. All three senators are locked in tight contests on Nov. 6. Analysts predict Democrats are likely to gain control of the House of Representatives but have a more narrow path to taking back the Senate. The other 12 Senate Democrats, some of whom also voted for the bank rule-easing bill, are also moderates. The exception is Ohio Senator Sherrod Brown, whose position as ranking member on the Senate Banking Committee makes him an important stakeholder for the industry. The sector hopes boosting moderates will constrain the big bank-bashing wing of the Democratic Party, including Senator Elizabeth Warren, a likely presidential candidate in 2020, and Representative Maxine Waters, who is poised to chair the committee overseeing banks if Democrats win the House. Rebuilding broad bipartisan support will be challenging, consumer advocates say. Big banks continue to be a sensitive issue within the Democratic Party, which was bitterly divided over the May legislation, and among voters.
Bonds in $916 Billion Wipeout Spark Fear of Worst Run Since 1976 - Global bonds are hitting fresh milestones of misery.Strong U.S. data, a tighter-than-expected monetary trajectory, rising commodity prices and brewing wage pressures are conspiring to push Treasury yields to cycle-highs, hitting money managers of all stripes.The value of the Bloomberg Barclays Multiverse Index, which captures investment-grade and high-yield securities around the world, slumped by $916 billion last week, the most since the aftermath of Donald Trump’s election victory in November 2016. American high-grade obligations are down 2.53 percent in 2018 -- a Bloomberg Barclays index tracking the debt has dropped in just three years since 1976.“Bond investors have rarely seen losses like this over the past 40+ years,” Ben Carlson, director of institutional asset management at Ritholtz Wealth Management, wrote in a blog post. “Any further moves higher in rates could lead to the worst year since 1976 in terms of overall bond returns.”The 10-year Treasury benchmark closed at 3.23 percent Friday, the highest since May 2011, while core European and Japanese bond prices have fallen as investors bet the era of ever-looser monetary policy is firmly over. “Interest-rate risk hits all high-quality bonds,” . “Higher growth means higher nominal and real rates.”
Hedge Funds Retreat as Markets Advance - Three hedge funds have closed in less than a week as investors question a once-highflying industry plagued by weak returns. Tourbillon Capital Partners LP on Monday told clients it would return money and close its main fund. Last week, Highfields Capital Management and Criterion Capital Management announced they would return billions of dollars to clients. The closures are the latest in a multiyear re-evaluation of such investment vehicles by managers and investors. Some funds have closed as skepticism has increased about the value of paying hedge fund’s famously high fees. Hedge funds often charge a 2% management fee and a 20% cut of performance gains. Others have been hurt by poor performance relative to a stock market that has notched nearly a decade of gains. This year, through September, stock hedge funds on average returned 1.9% according to industry research firm HFR. By comparison, the S&P 500 had an average return of 10.6% over that period, including dividends, according to Dow Jones Market Data. Tourbillon, which managed about $4 billion in 2016, had been losing money for some time. The firm’s flagship fund was down about 3.2% this year through Sept. 28, according to information reviewed by The Wall Street Journal. The firm had assets of about $2 billion as of earlier this year. When funds underperform, hedge-fund managers must make a choice. “In the end, you make the decision to close the fund or the investors are going to do it for you,” said Tim Ng, the chief investment officer at consulting firm Clearbrook Global Advisors. Hedge funds can close at any time of the year, but around October many start to receive redemption notices from some clients and re-evaluate their future business plans. Instead of closing, some funds have lowered their fees. The industry controls about $3.2 trillion in assets, according to data provider HFR. Some hedge funds have blamed low interest rates for their problems. As rates have stayed low and stocks have rallied, so-called passive funds have come to dominate inflows as everyone from pension funds and endowments to middle-class Americans have pushed into these low-cost funds. Still, hedge funds abound. In the first half of this year, more hedge funds launched than closed, with 270 closures compared with 306 startups, according to HFR. There were 8,413 hedge funds as of the end of the second quarter, down slightly from a peak of 8,474 in 2015, according to the research firm. More recent figures aren’t available.
Stocks Just Suffered Their Worst Loss in Months. Here’s Why — U.S. stocks are plunging toward their worst loss in six months on Wednesday as technology companies continue to take sharp losses. The Dow Jones Industrial Average fell 700 points in afternoon trading.The losses were widespread as bond yields remained high after steep increases last week. Companies that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines.The S&P 500 index sank 73 points, or 2.5 percent, to 2,807 as of 3:30 p.m. Eastern time. It’s on track for its fifth straight drop, which hasn’t happened since right before the 2016 presidential election. Nasdaq composite, which has a high concentration of technology stocks, tumbled 244 points, or 3.2 percent, to 7,495. It’s fallen 6.3 percent over the last five days.The Dow Jones Industrial Average gave up 738 points, or 2.8 percent, to 25,686. The Russell 2000 index of smaller-company stocks shed 37 points, or 2.3 percent, to 1,584.Microsoft dropped 4 percent to $107.82. Amazon skidded 4.8 percent to $1,781.21. Industrial and internet companies also fell hard. Boeing lost 4 percent to $370.04 and Alphabet, Google’s parent company, gave up 3.2 percent to $1,109.08.After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged.Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence, said investors are concerned about the big increase in yields, which makes it more expensive to borrow money. She said they also fear that company profit margins will be squeezed by rising costs, including the price of oil.Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour. Berkshire Hathaway dipped 4.1 percent to $214.64 and reinsurer Everest Re slid 4.6 percent to $218.97.Luxury retailers tumbled. Tiffany plunged 9.5 percent to $111.28 and Ralph Lauren fell 7.3 percent to $118.42.The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks.
Dow plunges more than 800 points in worst drop since February, Amazon and tech shares lead the rout - Stocks sank on Wednesday as a steep decline in tech shares and worries of rapidly rising rates sent Wall Street on pace for its worst day in eight months.The Dow Jones Industrial Average closed 831.83 points lower at 25,598.74 as Intel and Microsoft fell more than 3.5 percent each. The Nasdaq Composite plummeted 4 percent to 7,422.05. The Dow also closed near its lows of the day. The S&P 500 dropped 3.3 percent to 2,785.68, with the tech sector underperforming. The broad index also posted a five-day losing streak — its longest since November 2016 — and fell below its 50-day and 100-day moving averages, widely followed technical levels. Both the Dow and S&P 500 posted their biggest one-day drops since early February, while the Nasdaq notched its largest single day sell-off since June 24, 2016.Stocks have fallen sharply this month. For October, the S&P 500 and the Dow are down more than 4.4 percent and 3.3 percent, respectively. The Nasdaq, meanwhile, has lost more than 7.5 percent.Rising rate fears and a pivot out of technology stocks have made it a rough last few days. The Dow has dropped four of the last five sessions.Shares of Amazon declined 6.2 percent on Wednesday, while Netflix slid 8.4 percent. Facebook and Apple also fell more than 4 percent each. These stocks are top performers for the year and for most of the bull market. For the overall tech sector in the S&P 500, it was the worst day in seven years, dropping 4.8 percent."People are getting out of the high-flying tech names right now," said Larry Benedict, CEO of The Opportunistic Trader. "I think people are under-hedged; there could be more pain ahead."Worries about a sharp rise in interest rates also pressured equities. The 10-year Treasury note yield traded around 3.23 percent a day after hitting its highest level since 2011. The two-year yield, meanwhile, reached its highest mark since 2008. The speedy rise in yields has sent worries through Wall Street that higher borrowing costs will slow down the economy. "Portfolio managers tend to move to the sidelines in a skittish tape out of fear of suffering from a quick and sharp pullback," Rates rose on Wednesday after the U.S. government released data showing a rebound in producer prices last month. The producer price index rose 0.2 percent in September and is up 2.8 percent on a year-over-year basis. The index is a widely followed metric of inflation.
Dow tumbles over 500 points, bringing 2-day losses to more than 1,300 points -- Stocks fell sharply on Thursday in a second straight scary day on Wall Street as investors dumped equities around the globe because of fears of rapidly rising interest rates, a possible global economic slowdown and overly ambitious tech valuations.The Dow Jones Industrial Average closed 545.91 points lower at 25,052.83, bringing its two-day losses to more than 1,300 points. The S&P 500 dropped 2.1 percent to 2,728.37 and posted its sixth straight decline. The broad index also closed below its 200-day moving average for the first time since April. The Nasdaq Composite pulled back 1.3 percent to 7,329.06 and briefly entered correction territory at its lows on Thursday.The Dow fell as much as 698.97 points at its lows of the day. The indexes bounced after a report said President Donald Trump and Chinese President Xi Jinping would meet at next month's G-20 summit, briefly giving traders hope a full-blown trade war with the country could be avoided.October, a month known for major market sell-offs in the past, has been a brutal month for investors so far. The S&P 500 has lost 6 percent during the month so far and is now higher by just 2 percent for 2018. The financials sector was the second-worst performer on the S&P 500, dropping nearly 3 percent. J.P. Morgan Chase fell 3 percent, while Citigroup dropped 2.2 percent. Wells Fargo slipped 1.9 percent. Treasury yields pulled back from multiyear highs, with the benchmark 10-year yield sliding to 3.13 percent. The two-year yield also fell to 2.84 percent. The iShares 20+ Year Treasury Bond ETF (TLT) jumped 1.2 percent as investors clamored into bonds for safety.
US Treasury yields jump as stocks try to bounce back - U.S. government debt yields rose on Friday as equities bounced back from a steep sell-off that has shaken Wall Street this week.The yield on the benchmark 10-year Treasury note was higher at around 3.17 percent, while the yield on the 30-year Treasury bondtraded at 3.34 percent. Bond yields move inversely to prices. Equity markets reclaimed some ground after posting solid losses over the last two sessions. The Dow Jones Industrial Average rose more than 250 points in volatile trading and gained as much as 414 points.Yields dipped from multiyear highs on Thursday, as investors sought safety from the stock market's rout in the previous session. "Fed policy is a long way from being restrictive, but the U.S. economy is overheating: the rate hiking cycle will persist," they said. "The U.S. is far ahead of the other major economies in terms of inflation risks. ... Even with a firm dollar, the Fed has little leeway to pause its rate cycle absent a significant financial market debacle. Slowing its rate hiking path would only increase the chances of entrenching inflation and, thus, force a more rapid rate rise down the road."Sentiment around the globe was rocked in recent sessions, as investors grew nervous over the rise in interest rates. President Donald Trump has recently criticized the U.S. Federal Reserve for the decline in stock markets, saying on Wednesday that he wasn't happy with how the central bank continued to raise interest rates. "The problem I have is with the Fed. The Fed is going wild. I mean, I don't know what their problem is that they are raising interest rates and it's ridiculous," Trump said during a telephone interview on Wednesday with Fox News. Trump went onto blame the Fed for the stock market decline on Thursday, but added that while he wasdisappointed, he wouldn't remove Jay Powell as Fed chair.
Tesla Has 143 Days To Defuse Its $11.5 Billion Ticking Debt Bomb - The debt maturity countdown is officially on for Elon Musk and Tesla. As of today, the company has 143 days until material amounts of debt start coming due according to regulatory filings and a new report by Bloomberg. While that may seem like a long time for the company to figure out a solution, Tesla will likely be sweating that the rising rate environment will be ratcheting up the pressure even more.Over the course of the next 13 months, Tesla has more than $1.5 billion in debt coming due. This represents a little more than 10% of Tesla's total outstanding debt of $11.5 billion. Although Tesla has a smaller maturity due in November of this year, March of next year is where it has to deal with the $920 million convertible bond that it won’t be able to convert to equity unless the stock is back over $360 per share. As of right now, with the stock over $100 lower, it looks like a debt to equity conversion is unlikely, which would make the company obligated to pay it back in cash. For now, it doesn’t seem that anybody participating in either the bond market or the equity market is too concerned with Tesla being able to meet its obligations. The equity still trades with a valuation north of $40 billion and Tesla's 2025 bonds have been yielding between 8% and 9% – an aggressive coupon, but not one that suggests that a default is imminent. Which brings up a litany of related questions: is Musk going to be able to, over the course of 143 days, finalize his lawsuit settlement, make peace with the Securities and Exchange Commission, implement the settlement's required changes and continue to sell vehicles at a rate that would indicate to financiers that there is no extraordinary risk in rolling out these maturities? While third-quarter production and delivery numbers met the companies' expectations, we still don’t have any indication as to how the company fared financially during the quarter and whether it was, as Musk promised, profitable. Meanwhile, bond investors are getting nervous, and Tesla CDS have quietly risen to an all time wide: it now costs nearly $2 million to insure $10 million worth of Tesla bonds from default over five years. Two months ago, that cost was less than $1.3 million.
SEC Chair Jay Clayton Says Quarterly Reporting Won’t Change ‘Anytime Soon’ WSJ - —In the near term, public companies won’t get a break from quarterly earnings reporting, an idea that President Trump asked U.S. regulators to study. The Securities and Exchange Commission may weigh the idea of moving to six-month reporting for smaller firms, but “I don’t think quarterly reporting is going to change for our top names anytime soon,” SEC Chairman Jay Clayton said Thursday. In August, Mr. Trump asked regulators to review the decades-old requirement that public companies release earnings quarterly, a change some executives support to promote longer-term planning. But some investors worry such a move could reduce transparency into corporate performance. Mr. Trump had said the change would help ease regulatory costs and spur growth. He said the idea came from a prominent chief executive: PepsiCo Inc.’s Indra Nooyi. She raised the issue at a dinner Mr. Trump held with 13 corporate executives at the president’s golf course in Bedminster, N.J., in the context of improving growth, people familiar with the matter said at the time. The White House didn’t immediately respond to a request for comment.
Crypto is the Mother of All Scams and (Now Busted) Bubbles While Blockchain Is The Most Over-Hyped Technology Ever, No Better than a Spreadsheet/Database (PDF) Nouriel Roubini, Testimony for the Hearing of the US Senate Committee on Banking, Housing and Community Affairs On “Exploring the Cryptocurrency and Blockchain Ecosystem.”
Analyzing the Effects of CFPB Oversight – NY Fed - The Consumer Financial Protection Bureau (CFPB), created in 2011, is a key element of post-crisis U.S. financial regulation, as well as the subject of intense debate. While some have praised the agency, citing the benefits of consumer financial protection, others argue that its activities involve high compliance costs, increase uncertainty and legal risk, and ultimately reduce the availability of financial services for consumers. We present new evidence on whether the CFPB’s supervisory and enforcement activities have significantly affected the supply of mortgage credit, or had other effects on bank risk-taking and profitability. The CFPB, established as part of the Dodd-Frank Act, opened its doors in July 2011 with a consumer financial protection mandate and with broad authority over both banks and nonbanks. In addition to rule-making authority, the CFPB has the power to supervise and conduct examinations of financial firms and pursue enforcement actions for breaches of federal consumer financial protection law. Since its founding, the CFPB has actively exercised its supervisory and enforcement authority—conducting examinations on a wide range of topics, undertaking more than 200 public enforcement actions, and recovering more than $12 billion in relief to consumers. Supporters argue that robust supervision and enforcement are critical for ensuring compliance with consumer financial protection laws. Criticshave argued that the CFPB’s approach amounts to “regulation by enforcement,” creating legal uncertainty among firms and reducing the availability of financial services. They also argue that CFPB supervision is burdensome and diverts firms’ resources, particularly for smaller financial institutions. In a recent research paper, we aim to measure the effects on banks of CFPB supervision and enforcement activities, which we refer to as CFPB “oversight.” We make use of the fact that small depository institutions with $10 billion or less in total assets are generally exempt from direct CFPB examinations and enforcement actions. Instead, compliance with consumer financial protection laws is primarily overseen by the firms’ prudential supervisor (for example, the Office of the Comptroller of the Currency in the case of national banks and national savings associations). Unlike the CFPB, these prudential supervisors generally focus on overall issues of safety and soundness rather than consumer financial protection alone.
Pentagon, others baffled by CFPB plan to cease military lending exams -- The Consumer Financial Protection Bureau's decision to stop examining financial firms for compliance with the Military Lending Act has sparked pushback not only from lawmakers and consumer advocates but also from the Defense Department and every major group representing military service members. Acting CFPB Director Mick Mulvaney's claim that the Dodd-Frank Act does not give the bureau statutory authority to enforce the Military Lending Act is a major reversal from the Obama administration. As reported by several news outlets, Mulvaney has argued further legislation is needed to provide that authority.But roughly 30 military and veterans groups are opposed to the supervisory rollback. The Department of Defense says it was not consulted on the bureau’s decision and remains committed to the current law, which imposes a 36% annual percentage interest rate cap for active-duty military members and their dependents. "The Department [of Defense] believes that the full spectrum of tools, including supervisory examinations, contribute to effective industry education about, and compliance with, the MLA,” wrote Stephanie Barna, the acting assistant secretary of defense for manpower and reserve affairs, in a September letter to Sen. Bill Nelson, D-Fla. Bloomberg News "The Department believes that the full spectrum of tools, including supervisory examinations, contribute to effective industry education about, and compliance with, the MLA,” wrote Stephanie Barna, the acting assistant secretary of defense for manpower and reserve affairs, in a September letter to Sen. Bill Nelson, D-Fla. Experts say the CFPB’s stance runs counter to the broad bipartisan support for the MLA both during and after its passage.“To roll back a series of well-thought-out protections allows for the potential of great harm to military members that cannot be remedied by enforcement and regulations later on,”
HSBC to pay $765 million to settle crisis-era mortgage probe -HSBC will pay $765 million to settle allegations that it sold defective residential mortgage-backed securities in the run-up to the financial crisis, resolving one of the London-based bank's last significant legal challenges with the U.S. government.The sum, announced Tuesday by U.S. Attorney Bob Troyer in Colorado, is substantially lower than the billions paid by other banks to resolve misconduct linked to these toxic securities. HSBC wasn't a major player in the market. With Wells Fargo's agreement in August to pay $2 billion and Royal Bank of Scotland's deal to pay $4.9 billion that same month, the U.S. Department of Justice is now near the end of its decade-long effort to extract penalties for the conduct that led to the financial crisis of 2008.The biggest settlements, struck in 2013 and 2014, called for JPMorgan Chase and Bank of America to pay $13 billion and $17 billion, respectively, to resolve their cases.Unlike the prior settlements with banks during the Obama administration over similar conduct, this one doesn't impose consumer relief or other requirements on the bank other than the financial penalty. HSBC entered into the agreement without admitting liability or wrongdoing, according to an emailed statement from the bank. "We are pleased to put this investigation related to activity that occurred more than a decade ago behind us," HSBC's U.S. chief executive officer, Patrick Burke, said in the statement. The HSBC securities related to the probe were sold between 2005 and 2007.
Wells Just Reported The Worst Mortgage Number Since The Financial Crisis - When we reported Wells Fargo's Q1 earnings back in April, we drew readers' attention to one specific line of business, the one we dubbed the bank's "bread and butter", namely mortgage lending, and which as we then reported was "the biggest alarm" because "as a result of rising rates, Wells' residential mortgage applications and pipelines both tumbled, sliding just shy of the post-crisis lows recorded in late 2013."Then, a quarter ago a glimmer of hope emerged for the America's largest traditional mortgage lender (which has since lost the top spot to alternative mortgage originators), as both mortgage applications and the pipeline posted a surprising, if modest, rebound.However, it was not meant to last, because buried deep in its presentation accompanying otherwise unremarkable Q3 results (modest EPS miss; revenues in line), Wells just reported that its 'bread and butter' is once again missing, and in Q3 2018 the amount in the all-important Wells Fargo Mortgage Application pipeline shrank again, dropping to $22 billion, the lowest level since the financial crisis. Yet while the mortgage pipeline has not been worse in a decade despite the so-called recovery, at least it has bottomed. What was more troubling is that it was Wells' actual mortgage applications, a forward-looking indicator on the state of the broader housing market and how it is impacted by rising rates, that was even more dire, slumping from $67BN in Q2 to $57BN in Q3, down 22% Y/Y and the the lowest since the financial crisis.
Fannie Mae: Mortgage Serious Delinquency rate decreased in August, Lowest since Sept 2007 --Fannie Mae reported that the Single-Family Serious Delinquency rate decreased to 0.82% in August, down from 0.88% in July. The serious delinquency rate is down from 0.99% in August 2017.These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.This is the lowest serious delinquency for Fannie Mae since September 2007.
Black Knight Mortgage Monitor for August --Black Knight released their Mortgage Monitor report for August today. According to Black Knight, 3.52% of mortgages were delinquent in August, down from 3.93% in August 2017. Black Knight also reported that 0.54% of mortgages were in the foreclosure process, down from 0.76% a year ago. This gives a total of 4.06% delinquent or in foreclosure.Press Release: Black Knight: 474,000 Mortgaged Properties in FEMA-Declared Disaster Areas Resulting from Hurricane Florence; VA Loans Disproportionately Represented . This month, in light of the devastating flooding experienced in North and South Carolina as a result of Hurricane Florence, Black Knight examined the potential mortgage-related impact that could follow. Looking at the 34 counties in those states declared disaster areas by the Federal Emergency Management Agency (FEMA) as of Sept. 28, and using last year’s hurricanes as a model, Black Knight’s analysis shows approximately 474,000 mortgaged properties in the impacted zone. As Ben Graboske, executive vice president of Black Knight’s Data & Analytics division explained, if the post-storm trajectory follows that of Hurricanes Harvey and Irma, thousands of Americans affected by Hurricane Florence could become past-due in the coming months.“As those affected by the storm begin recovery efforts, recent history suggests many will have some difficulty remaining current on their mortgages. Of the nearly 1.2 million properties in the 34 counties in the Carolinas thus far declared disaster areas by FEMA, approximately 474,000 have at least one mortgage. The majority – 80 percent – of these properties are in North Carolina, and account for more than 20 percent of the homes in that state. The remainder are in South Carolina. In general, while average home prices in these areas run $100,000 below the national average, they tend to be more heavily leveraged. Here is a graph from the Mortgage Monitor showing mortgage payment to income ratio.
Mortgage delinquencies from Florence could hit VA loans hardest - Delinquencies will be on the rise and Veterans Affairs loans have greater density within FEMA-declared disaster zones from Hurricane Florence, according to Black Knight. While the scope of the damage still develops, an estimated 474,000 mortgaged properties are affected across North Carolina and South Carolina, with about 80% of those in the Tar Heel State. VA loans account for about 5% of overall mortgages on a national scale, but in the veteran-heavy impacted locations like Fort Bragg, Camp Lejeune and surrounding areas, VA loans take up more than 20% of mortgages. "In the wake of Hurricanes Harvey and Irma last year, the data showed the increase in the VA delinquency rate in affected areas was 40% higher than among conventional mortgages," Ben Graboske, executive vice president of Black Knight's data and analytics division, said in a press release. "If the per-capita impact of Florence matches last year's storms, more than 5,400 veteran homeowners with VA loans would be among the nearly 25,000 borrowers who could become past due over the next three months." The mortgage delinquency rate fell to 3.52% in August, dropping year-over-year from 3.93% and from 3.61% in July, representing the largest decline between those two months on record. Typically, delinquencies peak in December at the conclusion of hurricane season. "In general, while average home prices in these areas run $100,000 below the national average, they tend to be more heavily leveraged. Nationally, the average combined loan-to-value ratio is 51%, while in these FEMA-declared areas the average is 63%. As a whole, the area also had a higher-than-average delinquency rate of 4.4% going into the storm, as compared to the national average of 3.5%," Graboske said.
Even after Harvey, Houston keeps adding new homes in floodplains -- One in five new homes permitted in Houston in the year after Hurricane Harvey is in a flood plain — some on prairie developed for the first time after the storm — even as new rainfall data showed existing flood maps understate the risk posed by strengthening storms.The city Planning Commission also approved 260 plats in Houston's floodplains during the same period, signing off on developers' requests to redraw property lines to create hundreds more parcels awaiting development in flood-prone areas, a Houston Chronicle analysis found.About 615 of the home construction permits were issued in the 100-year floodplain, the area deemed to have a 1 percent chance of being inundated in any given year, city data show. Another 600 were approved in the 500-year floodplain, the area deemed to have an annual 0.2% chance of inundation, according to the Chronicle analysis. Many of these permits were issued to homeowners razing and elevating their flooded homes; more than 300 of the homes were approved on lots for which a demolition permit was issued after the storm. Others were issued to builders, many of whom tore down existing bungalows and replaced them with clumps of townhomes, packing more families into the floodplain. Still others were issued to developers building brand new subdivisions in areas that previously were open fields.In many cases, the homes complied with new city regulations designed to better protect life and property only when builders did so voluntarily. That's because the rules the city council approved in April — which extended regulations from the 100-year floodplain to the broader 500-year floodplain and required new homes built in those areas to sit higher off the ground — didn't take effect until Sept. 1, more than a year after Harvey came ashore.
Over $400M in mortgage applications at risk from Hurricane Michael - Hurricane Michael is putting mortgage transactions with a combined value of over $400 million in jeopardy, according to ClosingCorp estimates.While servicers and homeowners linked to disaster-affected properties explore relief options, often overlooked are transactions set to close that are also at risk.More than 1,600 "in-flight" mortgage applications in progress are in jeopardy as a result of Hurricane Michael. These loans, with closing dates between now and the end of the year, are being originated by more than 100 lenders for properties in 13 Florida counties. Though some homes may seem to be at low or moderate risk for damage, storm surge can spread to adjacent areas and wreak havoc. Oftentimes, new appraisals will be required before mortgages can be approved and sales be completed. Damage can cause substantial delays and deals to come undone. Companies like ClosingCorp are notifying lender clients of pending transactions within at-risk counties. Applications in the following Florida counties are in jeopardy: Bay, Calhoun, Escambia, Franklin, Gulf, Jefferson, Leon, Liberty, Okaloosa, Santa Rosa, Taylor, Wakulla and Walton.Affected homeowners and servicers linked to properties with mortgages already in place can exhaust a number of relief options. Homeowners can halt payments for up to 12 months without incurring late fees or being reported to the credit bureaus, according to Fannie Mae guidelines for single-family mortgages. Servicers can also suspend or reduce mortgage payments for up to 90 days without having to contact the homeowner. Servicers must also suspend foreclosure and legal proceedings on affected properties.
The mortgage market is back after the credit crisis — with new risks - A decade after the credit crisis, investors are returning to where it all began. The U.S. mortgage sector, blamed in large part for the near-collapse of the global financial system, is now seen by many as a high-quality market forged by fire. Yet along with new players, new worries are emerging.The mortgage-backed securities market, now mostly supported by U.S. government agencies, is undeniably safer than it was 10 years ago. Lending standards have improved as the share of riskier nonagency issuance has plunged. Meanwhile, the market has strengthened as more buyers seek stability — and opportunity — in a sector once tarnished by the housing-market implosion. Yet as the overall market grows to a record size, participants remain on guard against signs of weakness. The Federal Reserve is retreating from the sector it rescued, raising concerns about a potential uptick in volatility. And as the housing recovery and rising interest rates have eroded affordability, and the administration looks for more ways to loosen regulations, some worry that lenders will revive the previous era's bad practices."Certainly we've seen underwriting quality deteriorate" among government-sponsored enterprises, said Bryan Whalen, a portfolio manager at TCW Group Inc. in Los Angeles. Whalen favors nonagency bonds, particularly relative to high-yield corporate debt, given the "as-attractive if not better return profile, the direction of credit fundamentals is positive and supply is attractive."
MBA: Mortgage Applications Decreased in Latest Weekly Survey -- From the MBA: Mortgage Applications Decline in Latest MBA Weekly Survey Mortgage applications decreased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 5, 2018... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 2 percent higher than the same week one year ago. ...The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since February 2011, 5.05 percent, from 4.96 percent, with points increasing to 0.51 from 0.49 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Mortgage application activity declines as interest rates top 5% - Mortgage applications fell last week as rates for the 30-year fixed conforming loan topped 5% for the first time since 2011, the Mortgage Bankers Association reported.The MBA's Weekly Mortgage Applications Survey for the week ending Oct. 5 found that activity fell by 1.7% from the previous week.Consumers' negative perceptions for entering the housing market are being driven by rising interest rates, a recent Fannie Mae study found.Refinance application volume fell by 3% and the share decreased to 39% of total applications from 39.4% the previous week.The seasonally adjusted purchase index decreased 1% from one week earlier, while the unadjusted purchase index decreased 1% compared with the previous week and was 2% higher than the same week one year ago.Adjustable-rate loan activity increased to 7.3% from 7.1% of total applications, while the share of Federal Housing Administration-guaranteed loans increased to 10.5% from 10.2% the week prior.The share of applications for Veterans Affairs-guaranteed loans remained unchanged at 10% and the U.S. Department of Agriculture/Rural Development share of total applications increased to 0.8% from 0.7% the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased 9 basis points to 5.05%. This is the highest point since February 2011.For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 6 basis points to 4.99%, the highest since July 2011.The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 3 basis points to 4.98%, the highest since April 2011. For 15-year fixed-rate mortgages the average reached its highest since April 2010, with a 5 basis points increase to 4.44%. The average contract interest rate for 5/1 ARMs increased to its highest level since the series began in 2011, 4.29%, from 4.24%.
Mortgage Rates Hold Above 5% - From Matthew Graham at Mortgage News Daily: Mortgage Rates Improve Slightly Today, But Risks Remain Mortgage rates recovered a small portion of their recent losses today, but the average loan applicant might not even notice. The 2 key ingredients of a mortgage rate (for the purposes of tracking their movement) are the rate itself (the "note rate") and the upfront costs tied to that rate. The note rate and associated costs make up what many refer to as an "effective rate" (a number, expressed in interest rate form, that adjusts the actual note rate based on the implications of upfront cost changes. It takes big market movement to change note rates, largely because lenders tend to offer rates in 0.125% increments. As such, bond yields such as 10yr Treasuries need to be moving by about that much in order to see a similar change in mortgage rates. That was the case last week as 10yr yields moved up nearly 0.25% in just a few days last week. The average mortgage lender also moved up 0.25% on 30yr fixed rate quotes. If rates took the elevator up, they're taking the stairs down. Most borrowers will see a small adjustment toward lower upfront costs with the same interest rate they would have seen on Friday afternoon. [30YR FIXED - 5.0-5.125%]
Mortgage Rates Surge The Most Since Trump's Election, Hit New Seven Year High - With US consumers suddenly dreading to see the bottom line on their next 401(k) statement, they now have the housing market to worry about.As interest rates spiked in the past month, one direct consequence is that U.S. mortgage rates, already at a seven-year high, surged by the most since the Trump elections.According to the latest weekly Freddie Mac statement, the average rate for a 30-year fixed mortgage jumped to 4.9%, up from 4.71% last week and the highest since mid-April 2011. It was the biggest weekly increase since Nov. 17, 2016, when the 30-year average surged 37 basis points. With this week’s jump, the monthly payment on a $300,000, 30-year loan has climbed to $1,592, up from $1,424 in the beginning of the year, when the average rate was 3.95%.Even before this week's spike, the rise in mortgage rates had cut into affordability for buyers, especially in markets where home prices have been climbing faster than incomes, which as we discussed earlier this week, is virtually all. That’s led to a sharp slowdown in sales of both new and existing homes: last month the NAR reported that contracts to buy previously owned properties declined in August by the most in seven months, as purchasing a new home becomes increasingly unaffordable.“With the escalation of prices, it could be that borrowers are running out of breath,” said Sam Khater, chief economist at Freddie Mac.“Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand,” Khater told Bloomberg, adding that while rates are still historically low, "the primary hurdle for many borrowers today is the down payment, and that is the reason home sales have decreased in many high-priced markets." Meanwhile, lenders and real-estate agents say that, even now, all but the most qualified buyers making large down payments face borrowing rates of 5%. And while rates have been edging higher in recent months, “the last week we’ve seen an explosion higher in mortgage rates,” said Rodney Anderson, a mortgage lender in the Dallas area quoted by the WSJ.Meanwhile, the WSJ reports that once-hot markets are showing signs of cooling down. Bill Nelson, president of Your Home Free, a Dallas-based real-estate brokerage, said that in the neighborhoods where he works, the number of homes experiencing price cuts is more than double the number that are going into contract.
Values soar for homes foreclosed on during housing bust: Zillow -- Property values for homes that were foreclosed on during the Great Recession are outpacing the nation's average house price appreciation, according to Zillow. Home values for properties foreclosed during the crisis shot up 10.3% over the past year, while the price of a typical property is only growing at an annual rate of 6.5%. Foreclosed homes gained 74.5% in value since the recovery, compared to 46% for all properties. Nearly half of the homes foreclosed on during the recession were low-end homes. And as these otherwise more affordable houses continue growing in value, entry-level housing, which has been in particular short supply during the nation's housing drought, is pushed further out of reach for first-time homebuyers. This presents a challenge for lenders, as millennials comprise the nation’s largest cohort of house shoppers. Homeowners who were unable to hold onto their home during the housing bust also missed out on seeing substantial growth in their house's value, which could've put them in a much better financial position in a market where affordability remains a top issue. "While the overall market is facing growing headwinds, homes that were foreclosed upon during the bust are picking up steam, speaking to the enduring appeal of affordability. For families who lost their homes during the housing bust and were locked out of the market for several years thereafter, this was a critical lost opportunity," Aaron Terrazas, Zillow's senior economist, said in a press release. Homes that were foreclosed on during the recession gained the most value in Detroit, where prices shot up 18.2%.
US Home Prices Hit Peak Unaffordability As Prospective Buyers Better Off Renting - With unaffordability reaching levels not seen in decades across some of the most expensive urban markets in the US, a housing-market rout that began in the high-end of markets like New York City and San Francisco is beginning to spread. And as home sales continued to struggle in August, a phenomenon that realtors have blamed on a dearth of properties for sale, those who are choosing to sell might soon see a chasm open up between bids and asks - that is, if they haven't already. While home unaffordability is most egregious in urban markets, cities don't have a monopoly on unaffordability. According to a report by ATTOM, which keeps the most comprehensive database of home prices in the US, of the 440 US counties analyzed in the report, roughly 80% of them had an unaffordability index below 100, the highest rate in ten years. Any reading below 100 is considered unaffordable, by ATTOM's standards. Based on their analysis, one-third of Americans (roughly 220 million people) now live in counties where buying a median-priced home is considered unaffordable. And in 69 US counties, qualifying for a mortgage would require at least $100,000 in annual income (Assuming a 3% down payment and a maximum front-end debt-to-income ratio of 28%). As one might expect, prohibitively high home prices are inspiring some Americans to relocate to areas where the cost of living is lower. US Census data revealed that two-thirds of those highest-priced markets experienced negative net migration, while more than three-quarters of markets where people earning less than $100,000 a year can qualify for a mortgage experienced net positive migration. ATTOM illustrated this correlation between home affordability and net migration in the chart below:
Half Of American Renters Struggle With Unaffordable Housing Costs, Study Finds - With economists expecting another frothy core-CPI print north of 2% when the BLS releases its September update on consumer prices later this week, shelters costs - and particularly rent - are expected to be a major contributor to these gains (particularly since the price impact from the Trump administration tariffs hasn't materialized yet). As we pointed out over the weekend, home prices, according to at least one study, have reached peak unaffordability, as a lack of supply (and already exorbitant household debt) inflates prices and constrains consumers' ability to buy. As more members of the middle class have chosen to rent instead of becoming homeowners, the average national rent has soared, with housing costs rising across the US, particularly in costly urban markets clustered along the coasts. One consequence of this renting boom is that households that rent have become increasingly burdened by these higher costs. And in a report published this week, Apartment List analyzed publicly available Census data to determine how the cost burden of rents has shifted over the past decade.What it found is that, while the percentage of US renters who qualify as "cost burdened" - ie those who spend more than 30% of their total income on rent - has ticked lower since peaking in 2014 (it currently stands at 49.5%), a trend that was largely the result of higher-income professionals choosing to rent instead of buy, the total number of cost-burdened renters has increased by more than 3 million since 2007. Despite this meager improvement, roughly half of US renters are spending more than 30% of their income on housing costs, while nearly one in four are spending more than half their income on rent.
"I've Never Seen A Slump Like This That Didn't Spread To The Whole Country" - Rana Fooroohar - Dark clouds gather over the US housing market - If the fall we are seeing at the top spreads, the impact could be significant. The US economy is white hot. Consumer confidence is higher than it has been since the 1990s. Unemployment just hit its lowest level since 1969. Using amazingly bold language for a central banker, US Federal Reserve chairman Jay Powell says he is “very happy” about the “ remarkably positive” outlook which he predicts may continue “for quite some time”. So why, amid all this good news, is the US housing market slowing? It is a hugely important question, because housing is still where the majority of Americans keep most of their wealth, and it has been a traditional bellwether for economic trends. Nationwide, sales and building permits are down. Several once soaring markets, including New York City, the San Francisco area, and Denver, have been softening. Construction activity has been slowing, too, which is a concern given the disproportionate role that home building plays in US economic growth.The problem is, ironically, the growth of the housing market itself, which has been bifurcated and has outpaced the ability of most consumers to pay for shelter. Just as there is now a “superstar” effect of winner-takes-all in countries, industries, and even companies, so too is there one in the housing market. If you look at the 20-city Case-Shiller index of home prices as a whole, there would seem to be little cause for concern — it is just 2.4 per cent above its 2006 peak. And yet, there is a huge divide between the winners and the losers. Ten cities have set new highs and their prices are 23 per cent higher on average. The best performer, Denver, is a whopping 54 per cent above its pre-recession peak. Meanwhile, prices in 10 laggard cities are an average of 11 per cent below their pre-recession peaks. In housing, as in all else, the US is incredibly divided. In some luxury markets, such as Manhattan, price increases have also been damped by increased federal scrutiny of foreign buyers, a trend that will probably continue given the nationalistic stance of the current administration in the White House. Because the aggregate statistics are so skewed towards the high-end markets, those shifts are worth paying attention to. “I’ve lived through four economic cycles, and I’ve never seen a slump like we’re seeing in the New York City market that didn’t spread to the rest of the country,” says investment banker Daniel Alpert, who teaches at Cornell University.
Homebuilders Hammered Into Bear Market As Mortgage Rates Top 5% - For the first time since Feb 2011, US 30Y mortgage rates have topped 5.0%, according to Mortgage News Daily.As CNBC reports, the average rate on the 30-year fixed loan sat just below 4% a year ago, after dropping below 3.5% in 2016. It just crossed the 5% mark. That is the first time in eight years, and it is poised to move higher. Five percent may still be historically cheap, but higher rates, combined with other challenges facing today's housing market could cause potential buyers to pull back. "Five percent is definitely an emotional level inasmuch as it scares prospective buyers about how high rates may continue to go," said Matthew Graham, chief operating officer of MND. US Homebuilder stocks have tracked dismal housing data lower for much of the year but the last few days have seen them accelerate lower (amid a record losing streak) amid The Fed's increasingly hawkish testimony... Higher rates, however, could throw cold water on today's overheated home prices, as sellers see demand fall off and their houses sit on the market longer. The number of price cuts is rising quickly, signaling that sellers, and their expectations, are in fact coming back down to earth."The economy seems to be coasting upward. But this kind of complacency, this kind of confidence can be volatile," Robert Shiller, co-creator of the S&P CoreLogic Case-Shiller Home Price Indices, said in an interview on CNBC's "Squawk on the Street.""The question is, is this a turning point in the housing market. I'm a little bit worried about that but not ready to call that." As we noted yesterday, in some luxury markets, such as Manhattan, price increases have also been damped by increased federal scrutiny of foreign buyers, a trend that will probably continue given the nationalistic stance of the current administration in the White House. Because the aggregate statistics are so skewed towards the high-end markets, those shifts are worth paying attention to.
House Prices to National Average Wage Index --Bill Mcbride - One of the metrics we'd like to follow is a ratio of house prices to incomes. Unfortunately most income data is released with a significantly lag, and there are always questions about which income data to use (the average total income is skewed by the income of a few people).And for key measures of house prices - like Case-Shiller - we have indexes, not actually prices. But we can construct a ratio of the house price indexes to some measure of income.For this graph I decided to look at house prices and the National Average Wage Index released today for 2017 from Social Security.Note: For a different look at house prices and income, see this post (using median income).This graph shows the ratio of house price indexes divided by the National Average Wage Index (the Wage index is first divided by 1000).This uses the annual average National Case-Shiller index since 1976.As of 2018, house prices were somewhat above the median historical ratio - but far below the bubble peak. Going forward, I think it would be a positive if wages outpaced, or at least kept pace with house prices increases for a few years.Note: The national wage index for 2018 is estimated using the median increase over the last several years.
Hotels: Occupancy Rate Declined Slightly Year-over-year -- From HotelNewsNow.com: STR: US hotel results for week ending 6 October The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 30 September through 6 October 2018, according to data from STR.In comparison with the week of 1-7 October 2017, the industry recorded the following:• Occupancy: -0.9% to 70.9%
• Average daily rate (ADR): +2.4% to US$134.03
• Revenue per available room (RevPAR): +1.5% to US$95.05
Houston, Texas, experienced the steepest declines in occupancy (-26.7% to 62.8%) and RevPAR (-31.5% to US$67.08). Houston’s hotel performance was lifted in the weeks and months that followed Hurricane Harvey in 2017 as properties filled with displaced residents, relief workers, insurance adjustors, media members, etc. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.
Some advertisers are moving half of their search budget from Google to Amazon, say ad industry sources - Amazon's ad business is booming. Some advertisers are moving more than half of the budget they normally spend with Google search to Amazon ads instead, amounting to hundreds of millions of dollars, according to execs at multiple media agencies. Some of these execs requested anonymity as they are not authorized to discuss their clients' expenditures in public.Amazon's growing success could pose a rare threat to Google parent company Alphabet, which generated $95.4 billion in ad revenues last year, 86 percent of its total revenue. Google is the dominant digital advertising platform in the U.S., and will take in an estimated 37 percent of digital ad budgets in 2018. Although Alphabet does not disclose the breakdown of its ad revenue, most estimates believe the vast majority comes from search ads — approximately 83 percent in the year to date, according to research from eMarketer.Alphabet has remained somewhat insulated from the threat so far, and its overall ad revenue growth actually accelerated in the first half of 2018 compared with last year. Not all categories of brands are shifting money to Amazon — most of the movement is coming in consumer packaged goods, while huge and lucrative advertising categories such as automotive and travel are not yet moving to Amazon. Also, while Google search may be flattening, advertisers are moving parts of their ad spend from other media to different Google properties, particularly YouTube.Nonetheless, Amazon appears to be emerging as the most credible threat to Google's cash cow advertising business since Facebook conquered mobile advertising beginning shortly after its 2012 IPO.Amazon and Google did not respond to requests for comment. However, a manager in Google's ad sales organization, speaking on condition of anonymity, said that he's not seeing clients shift search budgets to Amazon, but is increasingly seeing clients come up with separate brands to sell exclusively on Amazon. "Leadership is definitely concerned, but [it's] not a huge threat right now," this person said.
After Torrid Growth, US Trucking Faces A Sharp Slowdown - Despite transport stocks recently hitting highs and intermodal shipping attracting more business due to the tight trucking market, experts believe that the recent feverish growth in trucking is now in the rearview mirror."Peak trucking has passed," stated a recent FreightWaves report. And at a recent Stifel trucking conference, Larry Gross, a principal at Gross Transportation Consulting, went on record saying that North America is past the worst of the trucking shortage and that rates in the industry will start to moderate: “Going forward the industry is in the process of correcting and adding the people and adding drivers. The industry is going to get their driver cohort right sized, which is not to say that it's going to be easy to recruit drivers, but it won't continue to be as difficult and and wages will continue to have to go up but not to the extent that we've seen recently."At the same time, truck transportation employment was up for the fifth straight month, as it added 4900 jobs to payrolls in September, accelerating from one year ago today. Rates for trucking peaked at 20% year-over-year growth early this year, but as new drivers join the workforce, and with difficult comparables, these numbers are expected to slow next year. Gross continued:"In terms of rates, contract rates have been rising quite rapidly this year, but we do expect that rate of increase to drop back down. Not necessarily down to zero, but certainly the rate of increase will up will slow down as we go forward here through 2019 and into 2020." With trucking rates through the roof, intermodal volumes were at their best levels in four years, according to statistics provided by the Intermodal Association of North America. Year to date revenue for intermodal shipping is up 6.5%, the strongest gain in two years. Big names in the industry are expected to report strong growth this year. Schneider National's is expected to grow revenue 6.8% and JB Hunt is expected to grow intermodal revenue between 7.5% and 11%.
All auto supply chains lead to America - Auto and auto-parts companies that are examining their supply chains in the wake of the new North American trade deal are likely reaching a similar conclusion: The United States is a safe bet.Companies would probably prefer to pay the tariff — currently at 2.5 percent — for autos and parts that don’t comply with new rules rather than change their suppliers or relocate plants. But embedded in the text is a provision that leaves open the possibility of the U.S. raising its baseline rate. For U.S. Trade Representative Robert Lighthizer, it’s mission accomplished. “Some businesses and some Wall Street guys will have to figure out another way to make a fortune,” he said last week on the “Laura Ingraham Show.”Even if Mexican wages rise and auto-parts suppliers in Canada see more business, the unpredictability of future tariffs could prompt some shifting of operations. “If I wanted to be absolutely sure that I could access 17 million annual U.S. car buyers, Canada is a safe bet, Mexico is now a safe bet,” said Flavio Volpe, president of the Canadian Automotive Parts Manufacturers' Association. “But the only guarantee is the U.S.” Pros can read the full story this morning here.
Tracking Trump's trade wars: inventories and intermodal traffic - Here's something I thought I would start to track: looking for evidence of the effects of Trump's trade wars on manufacturing and distribution. Producers and distributors aren't simply going to sit back and wait to absorb new tariff expenses: we should expect them to engage in as much "front-running" as possible, importing the goods and commodities likely to be affected by the tariffs early, and building up inventories that can be sold at the lower, pre-tariff prices. Once the tariffs kick in, the front-running would end, leading to a reversal of the pattern. Two places we would expect that front-running to show up are in manufacturers and wholesalers inventories, and in the intermodal units that are typically used for cross-ocean shipping. Let's take them in order. First, as a general rule sales lead inventories. Sales peak first going into recessions, and bottom first coming out. It is likely the very fact that sales turn that is the signal for producers to add or subtract from inventories. Here's that relationship for wholesalers over the past 25+ years: Front-running would differ from that, because we would continue to see increased sales, but we would see an even bigger increase in inventories. Here are the monthly percentage changes in sales (red) and inventories (blue) for manufacturers over the past several years: And here, with the red and blue reversed (sorry!) for wholesalers: For manufacturers, only the very last month fits the patterns, and could easily represent catching up from the big inventory drawdown the month before. But for wholesalers, the last three months fit the pattern. as sales increase, but inventories increase more. Secondly, a good way to track intermodal traffic is via the weekly railroad report, which breaks traffic down into intermodal units and non-intermodal carloads. Here's what intermodal traffic over the last several years looks like: We have seen big YoY gains in intermodal traffic in the last 6 months, but not particularly more than the YoY gains from 2016 to 2017 - except possibly in the last 2 weeks of September. And here is the data for the latest week, just out today. We have suddenly gone from 10% YoY gains in both intermodal and carloads to gains of less than 2%:
Consumer Price Index: September Headline at 2.28% -- The Bureau of Labor Statistics released the September Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.28%, down from 2.70% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.17%, down from the previous month's 2.28% and above the Fed's 2% PCE target.Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in September on a seasonally adjusted basis after rising 0.2 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.3 percent before seasonal adjustment.The shelter index continued to rise and accounted for over half of the seasonally adjusted monthly increase in the all items index. The energy index declined 0.5 percent in September after rising in August. The food index was unchanged in September, as an increase in the index for food away from home offset a decline in the food at home index.The index for all items less food and energy rose 0.1 percent in September, the same increase as in August. The shelter index increased 0.2 percent, and the indexes for apparel, motor vehicle insurance, recreation, and airline fares also rose. The medical care index increased as well, though its components were mixed. The index for used cars and trucks, which fell sharply, and the new vehicles index were among the indexes that declined in September. [More…] Investing.com was looking for a 0.2% MoM change in seasonally adjusted Headline CPI and 0.2% in Core CPI. Year-over-year forecasts were 2.4% for Headline and 2.3% for Core. The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.
Core CPI Misses As Used-Car Prices Plunge Most In 15 Years - Ahead of today's CPI report, and in the aftermath of yesterday's historic market rout, consensus forecast was for yet another +0.2% M/M increase for the core print for the 36th successive month. Commenting on the number, Deutsche Bank's Jim Reid said that before the recent risk-off, he would have automatically said that the downside risks to the market from an upside inflation print were much larger than the upside market risks from a downside surprise. However, he notes, given the recent risk sell-off, there is scope for a decent relief rally on a softer number - i.e. a return to goldilocks - while medium-term though, signs of higher inflation would be much worse for risk than softer inflation would be positive. So with that in mind, moments ago the BLS reported that in what may be welcome relief for investors, goldilocks indeed re-emerged when CPI followed yesterday's disappointing PPI, and printed softer than expected, with the headline CPI printing at 0.1% M/M (0.059% unrounded), below the 0.2% expected, and up 2.3% Y/Y - the lowest since February - and below the 2.4% consensus, and a steep drop from the 2.7% reported a month ago. The core CPI likewise missed, printing 0.1% M/M (0.116% unrounded), below the 0.2% expected, and up 2.2% Y/Y, also below the 2.3% consensus. The headline drop was mostly the result of lower oil prices as the energy index declined 0.5% in September after rising in August. The food index was unchanged in September, as an increase in the index for food away from home offset a decline in the food at home index. Looking deeper at the core inflation print, it reflected a 3% monthly drop in prices for used cars and trucks following increases in each of the last 3 months, and the biggest drop in 15 years...
Subdued September inflation means real hourly and aggregate wages grow Courtesy of subdued gas price increases this year vs. one year ago, overall consumer prices rose only 0.1% in September vs. 0.5% one year ago (and 0.3% over the last two months vs. 0.9% one year ago). As a result, YoY CPI growth is down to 2.3% vs. 2.9% several months ago, and that means that "real" wages increased, despite no movement in growth nominally YoY. With that background, let's update real average and aggregate wages. Since nominal wages for non-managerial workers are up 2.7% through September, this means that real wages, which had been flat, have grown in the last few months by +0.4% YoY: In the last 2 1/2 years, real wages had been essentially flat. The last couple of months moves the needle a little bit: Further, because employment and hours have increased, real *aggregate* wage have continued to grow: Real aggregate wages -- the total earned by the American working and middle class -- are now up 26.2% from their October 2009 bottom. Finally, because consumer spending tends to slightly lead employment, let's compare YoY growth in real retail sales, first measured quarterly (red), with that in real aggregate payrolls (blue): Here's the monthly close-up on the last 9 years : Retail sales won't be reported until next week. They grew +1.9% nominally last September, igniting some very good YoY comparisons that have been reflected in an acceleration of YoY employment growth as well. I am expecting a substantial downshift in retail sales next week, which in turn is likely to lead to a substantial downshift in employment reports beginning in a few months.
The Post Office wants to raise the fees it charges Amazon and other shippers The U.S. Postal Service has proposed a 9 to 12 percent increase in fees for the shipping service used by Amazon, just months after President Donald Trump criticized the USPS, saying it gives Amazon too good of a deal.The parcel select service, which is also used by United Parcel Service and FedEx, is the last and typically the most expensive step in the shipping process that gets the packages to customers' doorsteps. The USPS proposed a 9.3 percent increase on this service for packages weighing over one pound and a 12.3 percent increase on lighter packages.Trump issued an executive order in April to set up a task force to examine the USPS, claiming that it was on an "unsustainable financial path." He's also tweeted that the USPS is Amazon's "delivery boy" and doesn't make money from Amazon's business.A USPS spokesperson said these proposed changes are not a response to Trump's criticism."The price increases reflect the best judgment of the Postal Service Governors, who are seeking to establish new rates that will keep the Postal Service competitive, while also providing the Postal Service with much needed revenue," the spokesperson said.The USPS also proposed a 3.9 percent increase on priority mail express, a 5.9 percent increase on priority mail and a 10 percent increase on first-class stamps. These changes, if approved by regulators, will go into effect on Jan. 27, 2019.
Cost of Living Adjustment increases 2.8% in 2019, Contribution Base increased to $132,900 --With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2019. From Social Security: Social Security Announces 2.8 Percent Benefit Increase for 2019Social Security and Supplemental Security Income (SSI) benefits for more than 67 million Americans will increase 2.8 percent in 2019, the Social Security Administration announced today.The 2.8 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 62 million Social Security beneficiaries in January 2019. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2018. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $132,900 from $128,400.Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (2.8% increase) and a list of previous Cost-of-Living Adjustments.The contribution and benefit base will be $132,900 in 2019.The National Average Wage Index increased to $50,321.89 in 2017, up 3.5% from $48,642.15 in 2016 (used to calculate contribution base).
Social Security increase is a boon for value retailers like Dollar General -- The 2.8% Social Security increase announced this week is good news for value retailers like Big Lots Inc. Dollar Tree Inc. and Dollar General Corp., according to Raymond James analysts. The hike is the biggest since 2012. "As a reminder, the core customer for Dollar General and Family Dollar has an annual household income of $35K or less," analysts led by Dan Wewer wrote. "The marginal propensity to consume for low-income families is ~100%, therefore, some of the Social Security benefit increase should find its way into a value retailers' store." Raymond James rates Dollar General strong buy with a $122 price target; Dollar Tree is rated outperform with a $90 price target; and Big Lots is rated outperform with a $48 price target. Dollar General shares have gained 12.7% for the year to date, Dollar Tree stock has fallen 24.7%, and Big Lots shares are down about 24% for the year to date. The S&P 500 index is up 3.5% for 2018 so far.
Sears Creditors Push For Bankruptcy Liquidation As Vendors No Longer Paid -- Amid recent reports that Sears is set to file for bankruptcy as soon as this weekend ahead of a $134 million debt payment due on Monday, the only question is whether the filing will be a Chapter 11 debt for equity reorganization or a Chapter 7 liquidation. And contrary to the desires of Sears CEO and biggest creditor, Eddie Lampert, who would like to preserve the core business, others are pushing for an outright liquidation. According to the WSJ, a group of Sears' biggest lenders, including Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., are pushing for the company to liquidate its assets under a chapter 7 bankruptcy filing, as opposed to reorganizing the business under chapter 11, this person said.The consensus reportedly emerged after Sears met with its lenders Wednesday night to discuss emergency financing for the embattled retailer. The meeting ended without an agreement that would keep Sears operating as a going concern, the WSJ reports.At Wednesday’s meeting, Sears proposed a restructuring plan to shrink its store base dramatically, at which point it expected to be profitable, the person said. But the banks argued the safest way for them to recoup their money is to sell all of the remaining stores and liquidate the inventory, the person said.The meeting Wednesday night in New York City included dozens of bankers, lawyers and advisers, but broke up after about an hour with no agreement reached.The banks are the principal lenders on the company's $1.5 billion asset-backed credit line secured by store inventory, as well as credit-card and pharmacy receivables. Their interest in a liquidation is simply so they get repaid instead of getting primed by even more secured debt. As a reminder, asset-backed lenders are typically first in line to be repaid in full, often with the proceeds of liquidation sales in retailer bankruptcy cases.What is odd is that with a bankruptcy filing looming, Sears, which has been working with advisers on restructuring efforts, still has not lined up a DIP loan, i.e., a bankruptcy financing.Meanwhile, hedge fund manager Edward Lampert, who controls Sears, and who has repeatedly bailed out the struggling retailer with short-term loans, doesn’t plan to lend the company money to make Monday’s payment, according to people familiar with the matter.
Import and Export Prices October 12, 2018 - At plus 0.5 percent, the headline for September import prices would appear to show pressure but the details don't. When excluding a 4.1 percent monthly upswing in prices of imported petroleum, import prices come in unchanged. The strength of the dollar together with discounting by foreign sellers are keeping prices of finished goods dead flat, unchanged in the month for both vehicles and capital goods and down 0.1 percent for consumer goods. Year-on-year rates underscore the lack of imported price pressure, unchanged for capital goods, up 0.1 percent for vehicles, and up 0.6 percent for consumer goods. Total year-on-year import prices, inflated by a 32 percent jump in petroleum, are up 3.5 percent. Without petroleum, import prices are up only 0.6 percent on the year. One of the few areas to show any upward pressure is the price of imported foods which jumped 2.0 percent in September. The export side shows a contrast with agricultural prices down 1.4 percent in the month. Total export prices were unchanged in the month for a yearly 2.7 percent rate in contrast to agricultural prices which are down 2.3 percent. Export prices of finished goods match those on the import side, all dead flat. By country of origin, import prices from China edged 0.1 percent lower for a third straight month with the yearly rate at plus 0.4 percent. Import prices from the European Union fell a monthly 0.2 percent with this yearly rate at plus 2.2 percent. In contrast, import prices from Canada and Mexico both show pressure, up 0.7 percent for Canada at a yearly 9.5 percent and up 0.9 percent for Mexico with this yearly rate, however, up only 0.5 percent. Cross-border price inflation, outside of the monthly ups and downs for oil, remain subdued and with import prices, because of the strength of the dollar and despite the early effects of tit-for-tat tariffs on U.S. goods, posing no immediate threat to domestic price stability.
U.S. import prices increase 0.5 percent on jump in fuel (Reuters) - U.S. import prices jumped faster than expected in September amid resurgent energy prices but prices excluding fuels were unchanged. The Labor Department said on Friday import prices rose 0.5 percent last month. That was the largest increase since May and followed a revised 0.4 percent decrease in August. Import prices were previously reported to have fallen 0.6 percent in August. Economists polled by Reuters had forecast import prices rising 0.2 percent in September. In the 12 months through September, import prices rose 3.5 percent after a 3.8 percent increase in the 12 months through August. Last month, prices for imported fuels and lubricants rose 3.8 percent, the largest increase since May, after falling 2.2 percent in August. Food prices advanced 2 percent in September after rising 0.3 percent in the prior month. Excluding food and fuels, prices fell 0.1 percent in September. These so-called core prices fell 0.2 percent in August and were down in July and June as well. The weakness in core import prices likely reflects ongoing dollar strength. The dollar has gained more than 6 percent this year against the currencies of the United States’ main trade partners. Dollar strength is expected to offset some of an anticipated increase in prices as the Trump administration presses ahead with tariffs on nearly all Chinese imports. U.S. President Donald Trump imposed tariffs on nearly $200 billion of Chinese imports last month and then threatened more levies if China retaliated. China then hit back with tariffs on about $60 billion of U.S. imports. On Thursday, Trump warned there was much more he could do that would hurt China’s economy. U.S. Treasury yields briefly rose after the data. The dollar was trading slightly higher. The import price data excludes duties. In September, import prices for non-fuel industrial supplies and materials fell 0.4 percent after falling 0.9 percent in August. The cost of imported capital goods was unchanged. Imported motor vehicle prices were also unchanged in September and have been virtually unchanged since May. The cost of consumer goods excluding automobiles fell 0.1 percent after being unchanged in August. Prices for goods imported from China fell 0.1 percent in September for the third consecutive month. Prices for Chinese imports were up 0.4 percent in the 12 months through September. The report also showed export prices were unchanged in September after declining 0.2 percent in August. Prices for agricultural products fell 1.4 percent last month, with prices for oilseeds and grains falling 6.9 percent.
Port of Long Beach: Record Traffic for Fiscal Year - From the Port of Long Beach: Port Moves 8 Million TEUs in Fiscal Year -- The Port of Long Beach closed out the 2018 fiscal year having handled 8,000,929 twenty-foot equivalent units (TEUs) during the previous 12 months, the most ever, representing a 10.7 percent increase over fiscal year 2017. The Port's fiscal year is Oct. 1 to Sept. 30.“We are poised to break our calendar year record at the end of December,” said Port of Long Beach Executive Director Mario Cordero. “Despite the tariffs imposed by Washington and Beijing, international trade is showing resilience, and at our Port we are providing a conduit for commerce that’s efficient for our customers and getting their cargo to destinations faster, saving them money.”“The Port of Long Beach moved 701,204 TEUs last month, the second-busiest September in our 107-year history,” said Long Beach Harbor Commission President Tracy Egoscue. “That's a good thing for our economy. Trade flowing through the Port of Long Beach supports 1.4 million jobs across the United States, including more than 300,000 jobs in Southern California.” Trade traffic remains strong even with the tariffs, at least so far.
China's September trade surplus with U.S. widens to record $34.13 billion (Reuters) - China’s trade surplus with the United States surged to a record high of $34.13 billion in September, compared with $31.05 billion in August, Chinese customs data showed on Friday. The September surplus with the U.S. was larger than China’s overall trade surplus of $31.69 billion for the month. For January-September, China’s trade surplus with the United States was $225.79 billion, compared with about $196.01 billion in the same period last year. China’s large trade surplus with the United States has long been a sore point with Washington and is at the center of an increasing bitter dispute between the world’s two biggest economies. The United States and China imposed new tit-for-tat tariffs against each other’s goods in late September, the latest escalation in a heated trade war between them.
An ISIS-inspired tactic is raising concerns in US ports - The US Coast Guard has a number of threats it needs to worry about when dealing with boats and their crews on US waterways, but boats without crews are adding a new wrinkle to the problem. "There is an emergence in the Middle East with ISIS of using unmanned remotely controlled vessels that are packed with explosives, and that would pose a significant challenge," Lt. Cmdr. Devon Brennan, the commander of the Coast Guard's Maritime Safety and Security Team in New York, said on Friday during a use-of-force demonstration. The Coast Guard's MSSTs are tasked with security operations in US harbors and waterways. They were created in 2002, primarily to provide rapid-response anti-terrorism capability, protecting shipping, vessels, and infrastructure. Unmanned vessels present something of an asymmetric threat, however. "Usually our tactics are developed around the fact that we can get an individual to stop and comply, but if it's just a vessel that's being remotely controlled, and that person [controlling it] obviously has no fear for their life, it creates more of a difficult situation for us," Brennan said during an interview aboard the Coast Guard cutter Sikinak. "We have the tactics in place to target that type of vessel," Brennan added. But such an encounter "would be of significance," he said, "particularly if there are explosives on board and we're firing rounds at the vessel. Potentially that thing is going to explode."
September Producer Price Index- Core Final Demand Up 0.2% MoM - Today's release of the September Producer Price Index (PPI) for Final Demand came in at 0.2% month-over-month seasonally adjusted, up from last month's -0.1%. It is at 2.6% year-over-year, down from 2.8% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) also came in at 0.2% MoM, up from -0.1% the previous month and is up 2.5% YoY NSA. Investing.com MoM consensus forecasts were for 0.2% headline and 0.2% core.Here is the summary of the news release on Final Demand:The Producer Price Index for final demand increased 0.2 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices declined 0.1 percent in August and were unchanged in July. (See table A.) On an unadjusted basis, the final demand index advanced 2.6 percent for the 12 months ended in September.In September, the rise in the final demand index can be traced to a 0.3-percent increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.1 percent.The index for final demand less foods, energy, and trade services moved up 0.4 percent in September, the largest rise since a 0.5-percent increase in January. For the 12 months ended in September, prices for final demand less foods, energy, and trade services advanced 2.9 percent.More… The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates. As this (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.
Wholesale Inventories Surge The Most In 5 Years - After two consecutive months of disappointing wholesale business data, with both inventories and sales reporting disappointing prints in June and July, the August wholesale data surprised strongly to the upside, confirming that the trade war-impacted summer lull may have been a one-time event. With expectations for an unchanged 0.8% print in wholesale inventories, the latest number came in stronger than expected, printing at 1.0%, and the biggest monthly jump since October 2013. Meanwhile, alongside the rebound in inventory accumulation ahead of what businesses believe will be a strong Q4, wholesale sales also ticked up, rising from an upward revised 0.2% (originally 0.0%) to 0.8%, also beating the consensus print of 0.5%, and indicating that US businesses are once again humming. And so while much of the rest of the economy continues to hum along, gliding on Trump's fiscal stimulus, after two disappointing months of wholesale data, the recent weakness appears to have faded into the rearview mirror as business ended summer with a bang, and numbers which will provide an upward revision to Q3 GDP, while pouring even more gasoline on the Fed's tightening narrative.
Business Prices Firmed Up in September – WSJ - A gauge of U.S. business prices showed signs of bouncing back in September after a slowdown over the summer.The producer-price index, a measure of the prices businesses receive for their goods and services, increased a seasonally adjusted 0.2% in September from a month earlier, the Labor Department said Wednesday.The rise in September prices came after two months of sluggishness and was propelled by a hefty increase in transportation prices.Prices excluding the often-volatile food, energy and trade-services categories were up a robust 0.4% in September, the largest monthly increase since January.From a year earlier, overall producer prices rose 2.6% in September. Producer-price inflation measured on a 12-month basis peaked at 3.4% in June, but has since weakened each subsequent month.So-called core prices, though, have been stronger. Excluding food, energy and trade, prices rose 2.9% on the year in September after gradually moving upward this year. In the longer term, annual gains in the overall index have risen since the beginning of 2016, while the core measure has also drifted higher.The producer-price index usually follows the same trends as other broad inflation gauges, though it doesn’t always translate into what consumers pay. Signs of easing inflationary pressures have emerged in other recent reports. The core personal-consumption-expenditures price index, which excludes food and energy products, was flat in August from July, the Commerce Department said. Despite historically low unemployment, inflation hasn’t shown signs of breaking out in a worrisome way, Federal Reserve officials have said.Fed officials foresee a jobless rate below 4% over the next three years, but don’t expect inflation will rise much above 2%.
Small Business Optimism Index decreased slightly in September -- CR Note: Most of this survey is ideological noise, but there is some information, especially on the labor market and the "Single Most Important Problem". From the National Federation of Independent Business (NFIB): September 2018 Report: Small Business Optimism Index: The NFIB Small Business Optimism Index continued its historic 23-month positive trend, with a reading of 107.9 in September, the third highest reading in the survey’s 45-year history. .. A record net 37 percent of owners reported raising overall compensation, as reported in last week’s NFIB monthly jobs report. This surpasses the previous record of a net 35 percent in May 2018. Twenty-four percent plan to increase total compensation at their firm and six percent plan reductions. Sixty-one percent of owners reported hiring or trying to hire, with 87 percent of those reporting few or no qualified workers. Thirty-eight percent of owners reported job openings they could not fill in the current period, unchanged from last month. … Twenty-two percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, down 3 points but historically very high.
Weekly Initial Unemployment Claims increased to 214,000 --The DOL reported: In the week ending October 6, the advance figure for seasonally adjusted initial claims was 214,000, an increase of 7,000 from the previous week's unrevised level of 207,000. The 4-week moving average was 209,500, an increase of 2,500 from the previous week's unrevised average of 207,000. The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.Logistics Hiring Soars; Parceling Out Teamster Votes; Auto Factory Shift - Online fulfillment needs are driving logistics hiring for the holiday season. Warehousing and transportation companies added 23,800 jobs in September, WSJ Logistics Report’s Jennifer Smith writes, the fastest monthly hiring pace in a year amid strong signs that retailers are aligning operations to meet e-commerce demands. Warehousing, parcel delivery and trucking together accounted for 18,400 new jobs last month, adding new workers in sectors strongly tied to digital commerce distribution. Warehousing has added more than 50,000 jobs in the past year and truckers have hired 33,000 workers in 12 months even as the industry speaks of recruiting difficulties. The latest logistics expansion came as retail businesses overall cut payrolls by 20,000 workers. Retailers are projecting holiday sales won’t grow as fast this year as last year, and the focus on distribution centers signals they expect the biggest share of the growth will come online, not in physical stores. United Parcel Service Inc. and the Teamsters union are going back to the bargaining table. Voting on a series of contracts covering parcel and freight workers ended in muddled results, the WSJ’s Paul Ziobro reports, with a five-year contract for the package business ratified even though a majority of voting members rejected the terms. The union says the tally, with 54.3% of the votes cast opposed to the deal, wasn’t big enough to derail the pact because fewer than half the members voted. Members of the UPS Freight trucking business rejected their separate contract and other pacts and riders also fell. The votes add a layer of uncertainty as UPS heads into the critical peak shipping period. The company says it will meet with Teamsters leaders “to discuss next steps regarding the agreements.” With so much opposition among members, the union leadership faces its own big stakes in any talks.
Elon Musk Wants Tesla Gigafactory Employees to Live on Site in Mobile Homes Claiming poor housing infrastructure in towns nearby, Musk discussed building 'high-quality' mobile homes. Tesla's Nevada-based Gigafactory could be undergoing a massive expansion which has the potential to include on-site accommodations for employees, reports the Las Vegas Review Journal. In a recent conversation with Nevada Governor Brian Sandoval at the state's first annual technology summit, CEO Elon Musk discussed the automaker's plans to hire more than 20,000 new workers for its manufacturing facility.Currently, the manufacturing facility, coined Gigafactory 1, employs around 7,000 workers and produces the bulk of battery cells and packs found in Tesla vehicles. Despite producing an annual energy storage capacity output of 20 GWh, Tesla has acknowledged the need for batteries is virtually insatiable in order to meet the increasing demand for electric vehicles.The facility is around 30 percent complete and will continue to grow in order to meet the automaker's future needs, but according to Musk, this growth has been stymied by the continued problems with the region's rocky housing market.“The biggest constraint on growth here is housing and infrastructure." said Musk according to the Review, "We’re looking at creating a housing compound on site at the Gigafactory, using kind of high-quality mobile homes."A tiny Tesla town could help to alleviate the automaker's concerns of the local housing market and provide incentives to draw in new employees.. Over the past six years, the average monthly rent in the surrounding area increased a staggering 50 percent, topping $1,300.
Amazon built an AI to hire people, but reportedly had to shut it down because it was discriminating against women - Amazon worked on building an artificial-intelligence tool to help with hiring, but the plans backfired when the company discovered the system discriminated against women, Reuters reports.Citing five sources, Reuters said Amazon set up an engineering team in Edinburgh, Scotland, in 2014 to find a way to automate its recruitment.The company created 500 computer models to trawl through past candidates' résumés and pick up on about 50,000 key terms. The system would crawl the web to recommend candidates."They literally wanted it to be an engine where I'm going to give you 100 résumés, it will spit out the top five, and we'll hire those," one source told Reuters.A year later, however, the engineers reportedly noticed something troubling about their engine — it didn't like women. This was apparently because the AI combed through predominantly male résumés submitted to Amazon over a 10-year period to accrue data about whom to hire.Consequently, the AI concluded that men were preferable. It reportedly downgraded résumés containing the words "women's" and filtered out candidates who had attended two women-only colleges.Amazon's engineers apparently tweaked the system to remedy these particular forms of bias but couldn't be sure the AI wouldn't find new ways to unfairly discriminate against candidates.Gender bias was not the only problem, Reuters' sources said. The computer programs also spat out candidates who were unqualified for the position. Remedying algorithmic bias is a thorny issue, as algorithms can pick up on subconscious human bias. In 2016, ProPublica found that risk-assessment software used to forecast which criminals were most likely to reoffend exhibited racial bias against black people. Overreliance on AI for things like recruitment, credit-scoring, and parole judgments have also created issues in the past.
Driving across the US gave me a different perspective on the American economy Larry Summers - Economists like me see the world through the prism of models, fit to statistical data and tested against market realities. Economic models provide powerful perspective: I have used them to argue that, had the economy been left to itself and policymakers not heeded the lessons of history and theory, the 2008 financial crisis might have led to another depression. But there are other ways of gaining understanding about an economy and its workers. This was brought home to me last month when I accompanied my wife on a trip different from any I had ever taken. We drove for two weeks on two-lane roads from Chicago to Portland, Ore., across the Great Plains and Rocky Mountains. The larger cities we passed through included Dubuque, Iowa; Cody, Wyo.; and Bozeman, Mont. Driving across America, as opposed to looking down from a plane, makes clear how much of this vast country is uninhabited. Again and again, we encountered signs warning us to check our gas because it would be 50 miles to the next station. I’m sure there were moments when we were 250 miles from any place where I could have purchased an iPhone charger. Often there was no cellphone service to be had, either. Much of the land we saw not only was uninhabited but also seemed to be put to little economic use — valleys too arid to farm or even to support ranching; mountain ranges too rugged to support year-round economic activity. We drove past some romantic ghost towns but more abandoned cafes, gas stations and hotels. We were also struck by how remote the concerns of the coasts seemed. Televisions in bars and restaurants were rarely turned to news channels. No one seemed terribly concerned with the controversy over then-Supreme Court nominee Brett M. Kavanaugh. We saw 15 roadside signs opposing abortion for every other political sign of any kind. When we visited one university and spoke with some of its recruiters, they told us about the ambivalence of parents in their rural state. Many ranchers and Native Americans wanted to see their children educated but feared they would lose their attachment to the family way of life. The phrase “way of life” is, I have come to think, an idea that those concerned with political economy could usefully ponder. What I saw on my trip was how many profoundly different ways of life there are within the United States. I began to understand better than I had those who live as their parents did in smaller communities closer to the land.
GOP’s Brian Kemp Purged 1 in 10 Georgia Voters: I’ve Got the Names - Greg Palast - My lawyer had to threaten Georgia Secretary of State Brian Kemp with a federal lawsuit to force him to turn over the names of over half a million voters whose citizenship rights he quietly extinguished.This past week, I released the name of every one of these Georgia voters Kemp flushed from voter rolls in 2017. If you’re a Georgia resident, check the list. If your name is on it, re-register right now. You only have through tomorrow (October 9).It’s no coincidence that Georgia’s Purge’n General is also running for Governor: The Republican candidate is fighting a dead-even race against Stacey Abrams, Democratic House Minority Leader. Abrams, if she wins, would become the first Black woman governor in US history. Suspiciously, Kemp sent no notice to these citizens after he took away their voting rights. If they show up to vote on November 6, they’re out of luck — and so is Georgia’s democracy. I brought in one of the nation’s top mailing database experts, Mark Swedlund, and his team to go through the list, name by name. Among the voters purged are thousands who supposedly left the state but remain in Georgia. Thousands more are people who moved from one end of town to another and lost their vote — and we even found one who simply moved from one apartment to another in the same building. These registration cancellations are therefore dead wrong and, say voting law experts, coldly break the law.That is why Gerald Griggs, counsel for the Atlanta NAACP, and voting rights attorney Nse Ufot, executive director of the New Georgia Project (a nonpartisan voter registration initiative), are joining in my suit against Kemp. We’ll be hauling Kemp into federal court to force him to open the records to which the public is entitled under the National Voter Registration Act of 1993 — provisions meant to prevent just this type of voter roll shenanigan. In particular, we’re forcing him to disclose the complete detailed process that led to each voter’s removal.
"Inequality in and across Cities" - An interesting article by Jessie Romero and Felipe F. Schwartzman at the Richmond Fed: Inequality in and across Cities Inequality in the United States has an important spatial component. More-skilled workers tend to live in larger cities where they earn higher wages. Less-skilled workers make lower wages and do not experience similar gains even when they live in those cities. This dynamic implies that larger cities are also more unequal. These relationships appear to have become more pronounced as inequality has increased. The evidence points to externalities among high-skilled workers as a significant contributor to those patterns.
Another train derailment in New York strands thousands -- Last week, a New Jersey Transit (NJ Transit) train, carrying nearly 1,000 people, derailed as it left Penn Station in Manhattan.Fortunately, there were no injuries in what NJ Transit labeled as a “slow-speed derailment.” The cause of the accident is unidentified, but a problem with the train tracks has been ruled out by investigators. Amtrak spokesman Jason Abrams said, “We are still investigating, but have ruled out any issue with the infrastructure and are working with NJ Transit to investigate other potential causes.”The derailment happened as the train entered the Hudson River Tunnel and was crossing over track switches. This is the same site where Amtrak—the owner of Penn Station—implemented emergency repairs in the summer of 2017 after several other train derailments. The last such derailment happened on August 23.Last week’s incident occurred at 6:20 p.m. during a workday, creating a nightmare for tens of thousands of commuters. While NJ Transit was able to resume most of services at around 8:00 p.m., there were still several delays and cancellations. As commuters fled Penn Station in search of other means of returning home, they clogged streets and entrances to other transit routes to New Jersey, just over the Hudson River from New York, such as the PATH (a light-rail link between New Jersey and New York City) and the Port Authority Bus Terminal (a large hub of commuter buses). Midtown Direct Line trains, which service one of Manhattan’s two central business districts, were redirected to Hoboken, New Jersey. The Friday morning after the derailment also saw train delays of 30 minutes or more, because the removal of the derailed train from the tracks created a ripple effect on the functioning of other trains.
Limo in crash that killed 20 owned by FBI terror “sting” operative - Additional details continue to emerge about Saturday’s limousine crash in upstate New York, highlighting extreme negligence and indifference to human life from the limo operator and the state and federal governments. The crash, which killed 20 people, was the deadliest US transportation incident since a 2009 plane crash that killed 50 people. Among the most shocking revelations is that the owner of the limo company was Shahed Hussain, a key former informant and agent provocateur for the FBI, who was sent to troll mosques in order to entrap a number of individuals in “sting” operations involving fake terror plots that were of his and the FBI’s own making.This included the infamous “Newburgh Four” frame-up in 2010, in which four gullible young men were lured with promises of large amounts of cash into a phony plot to bomb a synagogue and Jewish community center. The judge in the case, while claiming she had no choice in handing down 25-year prison sentences, acknowledged that the government “came up with the crime, provided the means, and removed all relevant obstacles.”On October 6, the limo owned by Hussain’s company was carrying 17 passengers. It failed to stop at an intersection in Schoharie, New York, driving into the parking lot of Apple Barrel Country Store, a popular tourist destination. The limo struck two people in the parking lot and an unoccupied parked car, before colliding with an earthen embankment. The 17 passengers, the driver and the two people in the parking lot were all killed.It has since emerged that the limo had failed an inspection last month, should not have been on the road and had unregulated aftermarket modifications that likely made it a death trap for its 17 passengers. Moreover, the limo driver did not have the proper license and the limo company had failed multiple inspections in recent years.
Challenged by Long Island Lawmakers, Police Will Look Into Treatment of Immigrant Families Who Reported Missing Children - At the behest of county lawmakers, the Suffolk County Police Department said Thursday it will look into what went wrong when Latino families came to the department in 2016 and 2017, desperate for help finding teenage children who had disappeared, only to have their concerns ignored and their children labeled runaways. It turned out that many of the missing had been murdered by members of the gang MS-13, some of them buried in Suffolk County woods known as the gang’s “killing fields.” The county executive and the head of the Police Department also have agreed to meet with advocates for immigrant and Latino Long Islanders in the coming days. The developments came in response to radio, text and video reporting from ProPublica, Newsday and This American Life that outlined how police bias against Latinos hindered the department’s ability to stop a wave of MS-13 murders. “This whole entire body has seen the video and read the article, and it’s very disturbing,” Legislator Monica Martinez, who chairs the Legislature’s Public Safety Committee, said during the hourlong discussion at a public meeting. “There is commitment from both the commissioner and the executive to meet with advocates and legislators to discuss this further. This is an investigation going on and therefore certain things cannot be said.” Martinez said she called police Commissioner Geraldine Hart over the weekend to discuss the reporting. She said that, among other things, the police will look into the case of high school freshman Miguel Moran, who disappeared in early 2016, and the case of a 15-year-old girl who went missing with boys affiliated with the gang around the same time. Moran’s remains were found that September. Parents of both teenagers say the police appeared to dismiss their requests for help because they were immigrants. The father of the 15-year-old girl secretly recorded detectives as they threatened his daughter and ignored his requests for interpretation.
Lawmakers buy industry fix to protect schools from guns AP - Security companies spent years pushing schools to buy more products — from “ballistic attack-resistant” doors to smoke cannons that spew haze from ceilings to confuse a shooter. But sales were slow, and industry’s campaign to free up taxpayer money for upgrades had stalled. That changed last February, when a former student shot and killed 17 people at a Florida high school. Publicly, the rampage reignited the U.S. gun-control debate. Privately, it propelled industry efforts to sell school fortification as the answer to the mass killing of American kids.Since that attack, security firms and nonprofit groups linked to the industry have persuaded lawmakers to elevate the often-costly “hardening” of schools over other measures that researchers and educators say are proven to reduce violence, an Associated Press investigation shows.The industry helped Congress draft a law that committed $350 million to equipment and other school security over the next decade. Nearly 20 states have come up with another $450 million, and local school districts are reworking budgets to find more money.Most everyone agrees that schools can be more secure with layers of protection, such as perimeter fencing, limited entrances and hiding spaces inside classrooms.But there’s no independent research supporting claims that much of the high-tech hardware and gadgets schools are buying will save lives, according to two 2016 reports prepared for the U.S. Justice Department. As with high-profile shootings in the past, that has not stopped industry representatives from rushing in, some misusing statistics on school violence to stoke fears that “soft target” schools could be victims of terrorist attacks or negligence lawsuits.
The Teachers Strike Wave in Washington - Fifteen districts started the school year on strike in Washington state — the latest to ride the West Virginia wave. Evergreen teachers walked for almost two weeks before agreeing to raises averaging 11.5 percent, considerably more than the district’s initial 1.9 percent offer. Battle Ground and Tumwater were the last to settle, after more than two weeks out.Educators were demanding salary increases in line with the implementation of the state Supreme Court’s McCleary decision. In 2012 the court ruled that the state was not meeting its constitutional obligation “to make ample provision for the education of all children residing within its borders without distinction or preference on account of race, color, caste, or sex.” The decision required the state to come up with a plan to address the chronic underfunding of public schools. But the legislature kept stalling. Teachers launched rolling strikes in 2015 to push for the additional funding. Three years ago, the court held the state in contempt and issued fines of $100,000 a day for failure to comply with its ruling. Finally, six years after the initial ruling, the legislature has addressed the last of the court requirements and approved a budget that included an additional $2 billion in funding specifically for educators’ salaries. Contracts for both teachers and support staff were opened statewide to bargain for these increases. Locals bargain individually. Across the state there was a wide disparity in initial offers, from 1.9 percent in Evergreen to as much as 30 percent in some districts. The formula to distribute the $2 billion was based on local salaries and property values. That meant suburban districts got more of the new funding, while poor and urban districts got less. The Washington Educators Association, which represents the vast majority of K-12 educators in the state, encouraged members to demand significant raises — upwards of 15 percent for teachers
America’s teacher shortage -On the first day of the 2016–17 school year, the San Francisco Unified School District was short 38 teachers. That meant about 6 percent of the district's classroom vacancies had gone unfilled, forcing the district to rely on substitutes. Since then, SFUSD has turbo-charged its recruitment and retainment efforts, working to attract existing teachers and launching a number of new programs to establish a robust, predictable pipeline of qualified teachers."This was our deliberate response to the teacher shortage," says Daniel Menezes, SFUSD's chief human resources officer. "We realized that you have to do two things at once: You need to have a traditional, robust, meat-and-potatoes recruitment program ... and on the programming end, we also have to invest in a teaching pipeline portfolio that basically delivers a predictable number of teachers every year."Thanks to the district's two-pronged approach, SFUSD schools opened this fall with 99 percent of the district's classroom vacancies filled.As a recent report from the Learning Policy Institute, a non-profit research organization, makes clear, SFUSD is not alone in its proactive response to vacancies. In the wake of cuts to education funding (and teacher salaries) during the Great Recession, school districts across the country continue to struggle to recruit and retain educators. More than 100,000 classrooms around the country started last school year with a teacher not "fully qualified to teach," and educators say the shortages continue this year. In subjects like mathematics, science, and special education, almost every state is experiencing teacher shortages. Districts across the country are facing two problems. First, the number of newly credentialed teachers entering the field every year is not keeping up with demand — there are simply not enough young people deciding they want to be teachers. In a report published back in 2016, LPI found that enrollment in teacher education programs fell 35 percent between 2009 and 2014, from 691,000 to only 451,000. The decline, the report noted "amounts to a decrease of almost 240,000 professionals on their way to the classroom in the year 2014, as compared to 2009."
Million public servants counting on broken PSLF program -- Credit Slips -- This week we learn from the GAO that more than 1 million public servants have applied to certify their work and their student loan payments as qualifying for Public Service Loan Forgiveness. The number seems to be growing by about 300,000 annually. These teachers, child care workers, firefighters, soldiers, police officers, nurses, prosecutors, and public defenders, are facing a gauntlet of needlessly complex and exacting rules to receive the debt relief Congress promised them. According to the GAO report, 40% of the tens of thousands of rejected applicants were found not to have made the required 120 monthly payments. The Department of Education's regulations for the program, 34 CFR 685.219, require that there be 120 "separate" monthly payments, that every payment be made within fifteen days of the due date, in the required amount, and under a qualifying repayment plan. This creates all sorts of problems, for example, when a servicer delays posting a timely payment until day 16, or a borrower has an emergency and makes 2 payments in a lump sum, or especially for borrowers who receive employer or law school assistance in making their payments. The "every month by day 15" rule was not written by Congress. The statute, Section 455(m) of the Higher Education Act, requires only that public servants have made 120 monthly payments under a qualifying plan. A less procrustean payment rule would be an easy regulatory fix.Only Federal Direct loans qualify, not private or guaranteed loans. However, borrowers can use a Direct Consolidation loan in many cases to convert ineligible student loans into eligible loans. The statute also requires that the public servant have been in a qualifying full-time job "during the period in which the borrower makes each of the 120 payments. . . ." This requirement has also been interpreted strictly by the Department, and may create problems for public servants changing jobs or job assignments, teaching for only part of the year, and so forth. It also appears that some simple technology fixes could go a long way towards fixing the problems.
DeVos will no longer seek to delay Obama-era student loan regulations The Hill - The Education Department announced Friday that it would not seek a further delay of an Obama-era student loan regulation, the Associated Press reported.The announcement comes one month after a federal judge ruled against Education Secretary Betsy DeVos's decision to roll back the Obama-era Borrower Defense to Repayment rule, which was meant to protect students from predatory student loan practices. U.S. District Court Judge Randolph Moss sided with 19 Democratic state attorneys general and the District of Columbia, who argued in a lawsuit that the department violated federal law by scrapping the rule. The court ruled last month that DeVos's actions were "unlawful" and "arbitrary and capricious," with Moss writing in the ruling that the delay was "otherwise invalid without negotiated rulemaking, notice, and an opportunity for public comment."Liz Hill, a spokesperson for the department, told the AP that DeVos "respects the role of the court and will defer to its judgment in whether parts of the 2016 rule will go into effect.”DeVos initially sought to delay the implementation of the rule until July 1, 2019 to give her department more time to rewrite the rules, saying last year that it was “time for a regulatory reset.” For-profit institutions have argued that the Obama-era regulation was unfair. The program set up automatic triggers requiring a school to put up a large sum of money each time a lawsuit is filed against it to protect taxpayers, should the institution fail.
Ending the Evil of Student Loans - naked capitalism - Yves here. I don’t pretend to have a magic bullet for the student loan problem. At a bare minimum, student loans should be dischargeable in bankruptcy and servicers should not be able to garnish Social Security payments to satisfy student loans. Another step in the right direction would be to end default interest rates, which rapidly compound the amount owed when borrowers miss payments, which can readily happen due to job loss or a medical or personal emergency (having a car is critical to being employed in most parts of the US, so a transmission failure can wreak havoc for someone whose finances are on the edge).Once you go beyond measures like those, you get into the complicated terrain of whose debt to write down, and how much. I’m frankly surprised that a Main Street coalition for student debt relief hasn’t sprung up, since low household formation rates among the young are due to a significant degree to the student debt peonage. After all, people buy lots of stuff when they move out of their parents’ home or quit living in apartments with roommates.Writeoffs mean losses to the government on Federally guaranteed student loans, which constitute over 93% of the amount outstanding. Now as Michael Hudson is wont to say, debt that can’t be paid won’t be paid, so this is arguably an exercise in loss recognition (the losses exist, as in marking many of the loans to fair market value would result in writedowns). However, the current draconian repayment requirements mean that debt moralists will argue that reducing or writing off principal is a gimmie. One way to refocus this argument is to marshall evidence of how colleges often acted as predatory lenders. For instance, students were often shown data about the earnings of recent graduates that was unrepresentative (as it didn’t allow for how many completed degrees, nor did it show incomes by major). Provisions to require lenders (meaning schools) who have a high level of defaults and/or engaged in deceptive marketing to pay significant penalties would help politically. But while that will (deservedly) put a lot of for-profit colleges out of business, measures like this should not be limited to them. Otherwise, we will have yet another two-tier system in which respectable-seeing institutions get away with bad conduct.However, it’s hard to see ideas like this coming from anything to the right of the Sanders wing of the Democratic party. Student loans have subsidized a huge income transfer to college and universities, particularly to highly paid administrators. Academics and higher education bureaucrats have a high propensity to vote Democrat, so the party is not going to attack one of its strongholds, as attested by Elizabeth Warren’s timid student loan reform proposals. Maybe we need to start talking up prosecuting college administrators who knowingly devised misleading student loan marketing materials to raise the baseline. Another important set of measures would be to greatly strengthen the laws against predatory servicing and assign large penalties.
Medicare Advantage Plans Shift Their Financial Risk To Doctors; Do Patients Win or Lose? - Keeping patients healthy and out of the hospital is a goal for any physician. For Rao, a family doctor in this retiree-rich city 100 miles north of Miami, it’s also a wise financial strategy.Rao works for WellMed, a physician-management company whose doctors treat more than 350,000 Medicare patients at primary care clinics in Florida and Texas. Instead of being reimbursed for each patient visit, WellMed gets a fixed monthly payment from private Medicare Advantage plans to cover virtually all of their members’ health needs, including drugs and physician, hospital, mental health and rehabilitation services.If they can stay under budget, the physician companies profit. If not, they lose money. This model — known as “full-risk” or “global risk” — is increasingly used by Medicare plans such as Humana and UnitedHealthcare to shift their financial exposure from costly patients to WellMed and other physician-management companies. It gives the doctors’ groups more money upfront and control over patient care. As a result, they go to extraordinary lengths to keep their members healthy and avoid expensive hospital stays.WellMed, along with similar fast-growing companies such as Miami-based ChenMed, Boston-based Iora Health and Chicago-based Oak Street Health, say they provide patients significantly more time with their doctors, same-day or next-day appointments and health coaches. These doctors generally work on salary. ChenMed doctors encourage their Medicare patients to visit their clinic every month — for no charge and with free door-to-door transportation — to stay on top of preventive care and better manage chronic conditions. If patients are not feeling well after-hours, ChenMed even will send a paramedic to their home.
Creating National Biometric System for Patient Matching Will Threaten Privacy and Security CCHF. The Pew Research Center last week released a new public opinion report on “patient matching,” a term which is simply a less-offensive moniker for “national patient ID,” says Citizens’ Council for Health Freedom (CCHF). Pew led off the study with this dubious claim about developing a national system of patient identification: “Enhanced Patient Matching Is Critical to Achieving Full Promise of Digital Health Records.” However, problems abound with both the idea of pushing a national patient ID strategy to link patient data and the proposed use of a national infrastructure to collect and store the biometrics of Americans, such as their DNA, fingerprints or iris scans. At an event with the study’s authors, Pew claimed “many of the participants agreed that getting organizations to settle on one unified national strategy for records matching is more crucial than agreeing on one technology,” Politico’s “Morning eHealth” newsletter reported. However, CCHF president and co-founder Twila Brase doubts the methodology and questions the extremely small size of the survey group—just 95 respondents in 11 focus groups in five cities—especially for a topic so significant and having so much impact on patient privacy and consent rights. “Why such a large claim from the opinions of such a small group of Americans?” Brase asked. “Studies show Americans want privacy and are concerned they have none. As reported in ‘Big Brother in the Exam Room,’ a Black Book survey of 12,090 consumers in late 2016 found 87 percent unwilling to comprehensively divulge all of their information to their doctors due to privacy concerns and 81 percent concerned that information on chronic conditions is being shared beyond their chosen doctor and payer. Their concerns are valid. Under the HIPAA disclosure rule, their consent is not required for most data-sharing, unless a stronger state law exists. The Black Book survey mimics the concerns found in the 2000 Gallup survey of 1,000 people. Imagine how much greater the intrusion, if every patient medical record from birth to death could be linked through a national identifier.
How capitalism ruined our relationship with bacteria -There are many rational reasons that motivate consumers to spend US$65 billion annually on household cleaning products. But non-rational mechanisms are nevertheless still at work in the cleaning products market, as in all others.Advertisements for domestic hygiene products usually follow the same simple yet powerful structure: the threat of bacterial contamination looms large, but anti-bacterial gels, soaps, fluids, powders or foams can offer protection against it. We are encouraged to think of bacteria as entities that threaten our secluded, sovereign cleanliness. This has led us to a limited, and dangerous relationship with bacteria. Consider how bacteria is portrayed visually. Although it is possible to take photographs of bacteria – and there are some great pictures out there – these images are generally found only in scientific and medical contexts. For the rest of us, bacteria do not appear in a realist way. Instead, they come to us through the filter of advertisements for antibacterial products. And it’s quite a filter. Our analysis of advertising images of bacteria from 1848 to the present day finds four broad conventions. Understanding these conventions shows how our relationship with this essential dimension of earth’s biome is subject to the aims and desires of the manufacturers of cleaning products.
Dual studies question impact of artificial sweeteners on gut bacteria - Two new studies have reawakened a debate over the safety of artificial sweeteners, suggesting the chemicals may cause significant alterations in the make-up of out gut microbiome. Both studies took very different approaches to the research, and while they ultimately reached similar conclusions – that artificial sweeteners have a negative effect on gut bacteria – some experts are not convinced the research can be accurately applied to human subjects.Debates over whether or not artificial sweeteners are entirely safe for human consumption have raged for decades, but as sugar has become a big health villain in recent years, more people are switching to products with artificial sweeteners every year. These two new studies are homing in on the effects of artificial sweeteners on one of the big medical research topics of the moment – the gut microbiome. The first study, conducted by researchers at Ben-Gurion University of the Negev (BGU) in Israel and Nanyang Technological University in Singapore, set out to analyze the general toxicity of six popular artificial sweeteners on bacteria designed to be representative of the broad complex microbial system living inside our gut. The results showed that all six artificial sweeteners did indeed damage the bacteria but each individual compound had its own unique effects. Some compounds resulted in DNA damage to the bacteria, while others resulted in protein damage. The research was revealed to the world with a reasonably hyperbolically titled press release suggesting, "Artificial sweeteners have toxic effects on gut microbes." The second new study was presented recently at the annual meeting of the European Association for the Study of Diabetes. . A combination of sucralose and ace-k was administered, in capsule form, three times a day for two weeks. The researchers note the volume of artificial sweetener studied was equivalent to about 1.5 liters of diet soda a day. After two weeks, the researchers discovered two major changes in the gut bacteria of those subjects consuming the artificial sweetener. A significant decrease in the abundance of a bacterium associated with positive gut health and an increase in 11 "opportunistic gut pathogens," not normally present in healthy individuals. The study also found that after just two weeks of consistent artificial sweetener consumption the subjects displayed changes in how their bodies responded to glucose. In the presented study abstract the researchers write, "The observed decrease in fermentative bacteria populations and changes in the pathways used by bacteria to harvest energy predicted a deterioration in the body's ability to regulate glucose."
Rare Polio-Like Disease Hits Children In 16 States - Children's hospitals across the country are reporting the spread of a rare polio-like illness which has affected 38 people across 16 states this year. The rare but serious disease known as Acute Flaccid Myelitis or AFM first made headlines in 2014. Since then, the CDC has tracked 362 cases almost entirely confined to children. There is no vaccine for AFM - which is defined as an "inflammation of the spinal cord" which results in "limb, facial, oral or eye weakness" which can vary from subtle to severe. Recently, a 2-year-old girl from Batavia, Julia Payne, was placed on a respirator and fed intravenously after being unable to swallow on her own. In Pittsburgh, three cases of AFM were reported by the UPMC Children's Hospital - which said in a statement: "UPMC Children’s Hospital of Pittsburgh is taking care of three children with suspected Acute Flaccid Myelitis. The patients are currently undergoing diagnostic procedures and treatments. Isolation protocols and infection control procedures are in place and we are working with the CDC and the Allegheny County Health Department to further monitor and evaluate the patient conditions." Researchers are unclear on how AFM is contracted, however the CDC has suggested it may be contracted through the polio virus, non-polio enteroviruses, West Nile virus and adenovirus. Disease investigators think that the 2014 outbreak was linked to a respiratory illness in children caused by enterovirus D 68. In rare cases, AFM can cause respiratory failure and death.
Alarm as Red Cross Workers Attacked in Congo Ebola Efforts — The international community is sounding new alarm after three Red Cross workers were attacked while trying to contain the latest deadly Ebola outbreak in Congo.The U.N. Security Council seeks an immediate end to hostilities as it leaves for a Congo visit Thursday. Human Rights Watch urges an investigation into massacres that have killed over 200 civilians this year in Beni, where Ebola efforts are based.The International Federation of Red Cross and Red Crescent Societies says the attack occurred Tuesday as workers carried out a safe Ebola burial in the northeastern city of Butembo.The organization says two were seriously wounded. The World Health Organization says the outbreak is at a "critical point." Armed groups are active in the region and fearful residents have been aggressive toward health workers.
Organic Farming With Gene Editing: An Oxymoron or a Tool for Sustainable Agriculture? - A University of California, Berkeley professor stands at the front of the room, delivering her invited talk about the potential of genetic engineering. Her audience, full of organic farming advocates, listens uneasily. She notices a man get up from his seat and move toward the front of the room. Confused, the speaker pauses mid-sentence as she watches him bend over, reach for the power cord, and unplug the projector. The room darkens and silence falls. So much for listening to the ideas of others. Many organic advocates claim that genetically engineered crops are harmful to human health, the environment and the farmers who work with them. Biotechnology advocates fire back that genetically engineered crops are safe, reduce insecticide use, and allow farmers in developing countries to produce enough food to feed themselves and their families.Now, sides are being chosen about whether the new gene editing technology, CRISPR, is really just "GMO 2.0" or a helpful new tool to speed up the plant breeding process. In July, the European Union's Court of Justice ruled that crops made with CRISPR will be classified as genetically engineered. In the U.S., meanwhile, the regulatory system is drawing distinctions between genetic engineering and specific uses of genome editing. I am a plant molecular biologist and appreciate the awesome potential of both CRISPR and genetic engineering technologies. But I don't believe that pits me against the goals of organic agriculture. In fact, biotechnology can help meet these goals. And while rehashing the arguments about genetic engineering seems counterproductive, genome editing may draw both sides to the table for a healthy conversation. To understand why, it's worth digging into the differences between genome editing with CRISPR and genetic engineering.
Rewriting reproduction: With stem cells and CRISPR, scientists breed mice with same-sex parents -- For the first time, scientists said Thursday that they had bred mice with two genetic fathers, steering around biological hurdles that would otherwise prevent same-sex parents from having offspring. The researchers also bred mouse pups with two genetic mothers. Those pups matured into adults and had pups of their own, outpacing previous efforts to create so-called bimaternal mice. “This research shows us what’s possible,” Wei Li, a senior author of the study, said in a statement. Li conducted the work with colleagues at the Chinese Academy of Sciences. But for now, the notion of reproducing the experiment in humans is more a matter of science fiction than science. The new study, which appeared in Cell Stem Cell, does not indicate that researchers can now or could anytime soon pull off a similar feat with people. The cells used to make the mouse embryos were profoundly manipulated. The vast majority of the embryos made did not result in births. And none of the bipaternal mouse pups — those with two genetic fathers — survived to adulthood.Instead, outside researchers said, the study sheds light on the underlying biology that foils mammals from spinning off offspring without sexual reproduction — unlike some reptiles, fish, and amphibians, which are capable of asexual reproduction. “It really opens your imagination for what you can do in mammals,” said Dr. Nissim Benvenisty, the director of the Azrieli Center for Stem Cells and Genetic Research at the Hebrew University of Jerusalem.
Scientists Raise Alarm Over U.S. Bio-Weapon Programs Recent evidence about deadly tests of biological substances in Tbilisi, Georgia raised alarm about U.S. biological weapon research in foreign countries. European scientist are extremely concerned about a dubious research program, financed by the Pentagon, that seems designed to spread diseases to crops, animals and people abroad. The creation of such weapons and of special ways to distribute them is prohibited under national and international law. The U.S. is running biological weapon research across the globe: Bio warfare scientists using diplomatic cover test man-made viruses at Pentagon bio laboratories in 25 countries across the world. These US bio-laboratories are funded by the Defense Threat Reduction Agency (DTRA) under a $ 2.1 billion military program– Cooperative Biological Engagement Program (CBEP), and are located in former Soviet Union countries such as Georgia and Ukraine, the Middle East, South East Asia and Africa. Until the mid nineteen-seventies the U.S. military tested biological warfare weapons on U.S. people, sometimes over large areas and on specific races. After a Congress investigation revealed the wide ranging program such testing was moved abroad. Last month the Bulgarian journalist Dilyana Gaytandzhieva reported of one of these U.S. controlled bio-laboratories: The US Embassy to Tbilisi transports frozen human blood and pathogens as diplomatic cargo for a secret US military program. Internal documents, implicating US diplomats in the transportation of and experimenting on pathogens under diplomatic cover were leaked to me by Georgian insiders. According to these documents, Pentagon scientists have been deployed to the Republic of Georgia and have been given diplomatic immunity to research deadly diseases and biting insects at the Lugar Center – the Pentagon biolaboratory in Georgia’s capital Tbilisi. Al Mayadeen TV broadcasted a video reportage about the laboratory and its deadly effects on Georgian 'patients'. Last week the Russian Ministry of Defense and the Russian Foreign Ministry accused the U.S. of illegal biological weapon research in the Tbilisi laboratory: The documents record the deaths of 73 people over a short period of time, indicating a test of “a highly toxic chemical or biological agents with high lethality rate,” said Igor Kirillov, commander of the Russian military branch responsible for defending troops from radiological, chemical and biological weapons. The U.S. rejects the claims but it does not explain the documents, what kind of research is done near Tbilisi, and the unusual secrecy and security around the laboratory. It is not only the Russians and Georgians who are concerned about secret U.S. biological warfare research. German and French scientists recently raised alarm over another dubious Pentagon research project.
Russian Military- US Killed Dozens By Bioweapon Disguised As Drug Research - The Russian Defense Ministry is accusing the United States of killing dozens of Georgians with a biological weapon after disguising it as drug research. Documents recorded the deaths of 73 people over a short period of time, indicating a test of “a highly toxic chemical or biological agents with high lethality rate.” According to RT, the question of what really might have taken place at the secretive United States-sponsored research facility hosted by Russia’s southern neighbor Georgia was raised by the Russian military on Thursday after they studied files published online by a former Georgian minister. Igor Kirillov, commander of the Russian military branch responsible for defending troops from radiological, chemical and biological weapons said that it was not drug research, but a chemical or biological weapon that killed the 73 Georgians. The documents relating to the secret lab were published last month by former Georgian minister for state security Igor Giorgadze, who says he obtained 100,000 pages of data pointing to questionable US practices.Kirillov has doubts that the tests, which were carried out by the Richard Lugar Center for Public Health Research near the Georgian capital Tbilisi and were said to involve clinical trials of a drug called Sovaldi, which is meant for the treatment of Hepatitis C, were actually done on the drug. The producer of the drug is Gilead Sciences, a California-based biomedical firm that recruited former US defense secretary Donald Rumsfeld as a board member in 1988, in between his two tenures as head of the Pentagon.“The documents showed many lethal outcomes among the patients. Despite the deaths of 24 people in December 2015 alone, the clinical trials were continued in violation of international standards and the wishes of the patients,” Kirillov claimed according to a report by RT. “This led to the deaths of 49 more people.”US-funded medical facility in Georgia could be a cover for bioweapons lab used for disturbing experiments that banned in US https://t.co/9N3UnbCQ3K — RT (@RT_com) September 16, 2018
Monsanto Seeks to Undo $289M Roundup Verdict as 8,700 Similar Lawsuits Await -- Monsanto will ask a San Francisco judge on Wednesday to throw out a jury's $289 million award to a former school groundskeeper who claimed the company's glyphosate-based weedkillers, Roundup and Ranger Pro, caused his non-Hodgkin lymphoma.Superior Court Judge Suzanne Bolanos, who oversaw the trial, has the power to overturn the verdict, reduce the award amount or order a new trial.The plaintiff, Dewayne Johnson, was the first among 8,700 people in the U.S. who have made similar cancer claims against Monsanto, which is now owned by Germany's Bayer.The Associated Press reported: Attorneys for the company say Johnson failed to prove that Roundup or similar herbicides caused his lymphoma, and presented no evidence that Monsanto executives were malicious in marketing Roundup. Bolanos was not expected to rule immediately. Regulators around the world have concluded on "multiple occasions" that the active ingredient in Roundup — glyphosate — is not a human carcinogen, the attorneys said in court documents. They called the jury verdict "extraordinary" and said it requires "exceptional scrutiny." A judgement in favor of the company could discourage the other lawsuits and allow Bayer to avoid a "rush to trial after trial," Bloomberg reported. More trials over the controversial herbicide are scheduled for February.
Judge: Groundskeeper Failed to Show Monsanto Acted with ‘Malice’ in Landmark Case - A California judge opened the door Wednesday to a do-over of the landmark trial that awarded California groundskeeper DeWayne Johnson $289 million in damages from agri-chemical giant Monsanto after he claimed constant use of the company's Roundup weed-killer caused his cancer.San Francisco Superior Court Judge Suzanne Bolanos issued a tentative ruling ordering a new trial, arguing that Johnson did not present "clear and convincing evidence of malice or oppression" on the part of Monsanto, The Associated Press reported.The jury had awarded Johnson $39 million in compensatory damages and $250 million in punitive damages. It is the second award, based on the assumption that Monsanto deliberately withheld information about the safety of Roundup, that might be subject to a new trial. Bolanos said Johnson had not produced evidence that Monsanto employees believed the Roundup he was using would cause cancer. Bolanos further said she may also reduce the $39 million to $31 million if she upholds the ruling that exposure to Roundup did indeed cause Johnson's non-Hodgkin lymphoma.Bolanos asked for written arguments from the lawyers for both sides by Friday and will issue her final ruling once she has reviewed them. "There's nothing that I heard that suggested the judge was persuaded otherwise on the question of punitive damages, so that tentative ruling is likely going to stand," said University of California Hastings Prof. David Levine told ABC 7. Johnson said nothing during the two-hour hearing Wednesday.
EPA Considers 300,000-acre Expansion for Bee-Toxic Pesticide - The Center for Biological Diversity Thursday urged the U.S. Environmental Protection Agency to deny Bayer CropScience's request to allow the highly bee-toxic pesticide flupyradifurone to be sprayed on tobacco in states like Kentucky and North Carolina.Although flupyradifurone is known to harm pollinators like bees and freshwater invertebrates like mussels, the pesticide maker is asking the EPA to approve its use across more than 300,000 acres in areas that are home to more than three dozen protected species."Expanding use of this dangerous chemical will threaten many endangered species, as well as bees already battered by neonicotinoid pesticides," said Tara Cornelisse, a senior scientist with the Center for Biological Diversity. "Pollinators and many aquatic invertebrates across the Southeast are already struggling. Approval of yet another highly toxic pesticide for tobacco will add to their toxic load and likely result in further losses."Flupyradifurone is a systemic pesticide with the same mode of action—and potential for harm—as neonicotinoid pesticides, a leading cause of pollinator declines. While the pesticide industry has touted flupyradifurone as a replacement for neonicotinoid pesticides, it poses many of the same risks to non-target species as neonicotinoids.For example, flupyradifurone impairs learning, memory and affinity for nectar rewards in honey bees. Further, flupyradifurone is highly water soluble and decreases the viability of freshwater mussel larvae; it also negatively impacts aquatic mayfly larvae survival at levels comparable to neonicotinoid pesticides like imidacloprid and clothianidin.Because flupyradifurone's negative effects worsen with increased dosage, its use on tobacco would compound the harm already caused by widespread use of other neonicotinoids on corn and soy in tobacco-growing counties. "Approval of this harmful neurotoxin would create a dangerous double-whammy for bees and freshwater mussels already suffering from exposure to neonics," Among the 38 threatened and endangered species living in areas where tobacco is grown are 17 species of freshwater mussels that play essential water-purifying roles in aquatic ecosystems.
FDA Bans Use of 7 Synthetic Food Additives After Environmental Groups Sue - Ever heard of these food additives? Synthetically-derived benzophenone, ethyl acrylate, methyl eugenol, myrcene, pulegone, or pyridine?These compounds can help mimic natural flavors and are used to infuse foods with mint, cinnamon and other flavors.You've likely never seen them on food labels because food manufacturers are permitted to label them simply as "artificial flavors."Now, the Food and Drug Administration has announced these compounds will no longer be allowed to be used as food additives. The FDA is giving manufacturers time to remove them from the food supply.The decision comes in response to a petition brought by environmental and consumer groups, including the Natural Resources Defense Council, the Center for Food Safety, and the Center for Science in the Public Interest. "Our petition laid out the science" linking these flavoring chemicals to cancer in animals, says Erik Olson of the Natural Resources Defense Council.. "The law is very clear that any chemical that causes cancer is not supposed to be added to our food supply," Olson told us.The FDA had concluded that these flavoring compounds do not pose a health risk to consumers. "The synthetic flavoring substances that are the subject of this petition are typically used in foods available in the U.S. marketplace in very small amounts and their use results in very low levels of exposures and low risk," concludes an FDA statement on the petition. "While the FDA's recent exposure assessment of these substances does not indicate that they pose a risk to public health under the conditions of their intended use, the petitioners provided evidence that these substances caused cancer in animals who were exposed to much higher doses," the FDA statement says.
FDA Bans 7 Cancer-Causing Food Additives Found in Popular Foods - Under pressure from the Environmental Working Group (EWG) and other environmental and public health groups, the Food and Drug Administration (FDA) has banned seven substances used in artificial flavors that have been linked to cancer in animals."Chemicals that could cause cancer should never have been allowed in our food in the first place, especially not hiding behind the confusing label of 'artificial flavors,'" said Melanie Benesh, EWG's legislative attorney. "The FDA finally did the right thing by taking this important step to better protect consumers."These food additives are most commonly used to enhance the flavor of baked goods, ice cream, candy, chewing gum and beverages. The newly banned flavors are benzophenone, ethyl acrylate, eugenyl methyl ether, myrcene, pulegone, pyridine and styrene."Consumers will never know which foods were made with these chemicals, since manufacturers have been allowed to hide these ingredients behind the vague term 'flavor,'" said Dawn Undurraga, EWG's nutritionist. "This is a positive step forward, but the FDA should empower consumers to make their own fully informed decisions by requiring full ingredient disclosure."The ban on styrene was also supported by a petition from the food industry. But the FDA acted on the other six after public interest groups filed a lawsuit in the U.S. Court of Appeals for the Ninth Circuit petitioning the FDA to make a final decision whether to prohibit the seven cancer-causing artificial chemicals from use in food. Earthjustice represented the petitioners, including Breast Cancer Prevention Partners, the Center for Environmental Health, Center for Food Safety, the Center for Science in the Public Interest, Environmental Defense Fund, the Environmental Working Group, Natural Resources Defense Council, and WE ACT for Environmental Justice.
Lead at some Detroit schools 50 times the allowable federal level -- This week, Detroiters learned that at least two district public schools have lead-in-water levels over 50 times the allowable federal guidelines. Tests also showed that one school’s water contained copper at 29 times the limit established by the Environmental Protection Agency (EPA). Detroit Public Schools Community District (DPSCD) Superintendent Nikolai Vitti belatedly reported that testing conducted last spring showed that there were elevated levels of lead and copper found in water testing at 16 out of 24 schools. Parents, students and teachers immediately voiced outrage, keenly aware of the still ongoing lead-in-water crisis in Flint, only 70 miles away. All water spigots were turned off throughout the DPSCD and bottled water was supplied. From August to September, more schools were added to the list. In the middle of September, another 33 schools were added, bringing the total number of schools tainted with lead or copper to 57, or more than half the schools in the district. Mason Elementary and Mark Twain School for Scholars had lead levels over 50 times the allowable federal guidelines established by the EPA (54.2 and 53.8 times, respectively), and Bethune Elementary had a copper water level that was 29 times the allowable level. These levels surpass those recorded in Flint schools during the height of the crisis in 2015. Ten of the 57 DPSCD schools had lead levels 10 times the allowable level, 7 schools were above 20 times the allowable level and 3 were above 40 times the allowable level. Fully 24 schools had elevated copper levels in the tested drinking water. Four schools had copper levels that were 10 times the allowable limit and one, Bethune Elementary-Middle School, had a level close to 30 times the federal standard. Eight schools had both high lead and copper levels. The other half of the Detroit school system—94 charter schools, many of them for-profits—have not been tested. The charter schools are predominantly housed in former DPS buildings and are therefore likely affected in the same proportion as DPSCD schools. According to the EPA, 15 micrograms per liter of lead in water (15 parts per billion) is toxic. The EPA limits copper to 1,300 micrograms per liter. Lead and copper have devastating effects on children. The EPA says that even low levels of lead in the blood of children can result in lower IQ, learning and behavioral problems, slowed growth, anemia and hearing problems. Copper in water causes adverse health effects, including vomiting, diarrhea, liver or kidney damage, and stomach cramps. The American Academy for Pediatrics says there are no safe blood lead levels in children. They assert that exposure causes irreversible cognitive and behavioral problems.
Nationwide Class Action Lawsuit Targets DuPont, Chemours, 3M, and Other Makers of PFAS Chemicals --A class action lawsuit against 3M, DuPont, and Chemours was filed this week on behalf of everyone in the United States who has been exposed to PFAS chemicals. The suit was brought by Kevin Hardwick, an Ohio firefighter, but “seeks relief on behalf of a nationwide class of everyone in the United States who has a detectable level of PFAS chemicals in their blood.” Hardwick is represented by attorney Robert Bilott, who successfully sued DuPont on behalf of people in West Virginia and Ohio who had been exposed to PFOA from a plant in Parkersburg, West Virginia. In addition to 3M, DuPont, and its spinoff, Chemours, the suit names eight other companies that produce the toxic chemicals, which are used to make firefighting foam, nonstick cookware, waterproof clothing, and many other products. While much of the litigation around PFAS has focused on PFOA and PFOS, this suit targets the entire class of PFAS chemicals, including “the newer ‘replacement’ chemicals, such as GenX.” Rather than suing for cash penalties, the suit seeks to force the companies to create an independent panel of scientists “tasked with thoroughly studying and confirming the health effects that can be caused by contamination of human blood with multiple PFAS materials.” Such a panel would parallel the C8 Science Panel, which was created by the earlier class action litigation in West Virginia. That panel, overseen by epidemiologists approved by lawyers from both sides in the suit, found six diseases to be linked with PFOA exposure, including testicular cancer and kidney cancer. “With multiple PFAS chemicals now contaminating the blood of people all over this country, it should be possible to build upon and expand the C8 Science Panel model to encompass a comprehensive, nationwide investigation of the impact of multiple PFAS chemicals,” Bilott said in a press release.Critically, the settlement creating the C8 Science Panel stipulated that DuPont was unable to contest the links found by the C8 Science Panel in court, which helped lead to multiple verdicts in which the company was held liable. To date, DuPont has paid more than $1 billion in penalties as a result of the earlier PFOA litigation. The primary goal of the new lawsuit is the creation of a national study that would be similarly binding.
Humans, Fish and Other Animals Are Consuming Microfibers in Our Food and Water -- Lab studies have found that microplastics can harm small aquatic organisms that eat them — including plankton, a hugely important food source for aquatic organisms. These harms include decreased ability to feed and reproduce. Zooplankton given food laced with microplastics in a lab had decreased nutrition and poorer health than the control group. And pearl oysters fed polystyrene microbeads had less energy. Microfiber researcher Chelsea Rochman, assistant professor in the Department of Ecology & Evolutionary Biology at the University of Toronto, and other researchers hypothesize that the physical shape of synthetic fibers might affect organisms. For example, they could increase the likeliness of blockages in the digestive tracts of some organisms that consume them, depending on the fiber’s size and the animal’s size, they say. A small number of lab studies have sought to analyze how ingesting fibrous microplastics affects aquatic organisms. For a 2015 study, European researchers embedded 1- to 5-millimeter (0.04- to 0.2- inch) microfibers from polypropylene rope in food given to crabs for four weeks. The crabs that were fed the fiber-laced food ate less overall than the control group and had less energy available for growth. After moving through the digestive tracts, the fibers were balled up, so they did not seem to cause physical blockages.But in a lab study published last year, Australian researchers found that microfibers harmed Ceriodaphnia dubia, a freshwater crustacean, more than microbeads did. Complete mortality occurred at lower concentrations of microfibers than of microbeads; at sublethal concentrations, the crustaceans showed more severe stunted growth and reduced reproduction when exposed to fiber than when exposed to beads. The researchers hypothesized that the beads harmed the organisms by filling their guts without providing nutrition, while the fibers entangled, exhausted, immobilized and deformed them. In his experiments, Cole also has shown that copepods — crustaceans that are found in marine and nearly all types of freshwater and serve as a key food source for small fish — readily ingest microfibers. There is concern about impacts due to chemicals that attach themselves to microfibers, too. Rochman fed fish microplastic pellets that had absorbed toxins via prolonged exposure to seawater near San Diego. The fish accumulated the chemicals — which included polycyclic aromatic hydrocarbons (PAHs), polychlorinated biphenyls (PCBs), and polybrominated diphenyl ethers (PBDEs), all known carcinogens — and suffered liver toxicity and other pathological changes.
More than a quarter of fish near the River Thames have ingested plastic, study reveals -- A new study has painted a "shocking" picture of the effects of plastic pollution on marine life.The research, published on Tuesday, shows that 28 percent of fish in the Thames Estuary have ingested microplastics. In Scotland's Firth of Clyde Estuary, 39 percent of fish have been affected.The study was carried out by scientists from the University of London's Royal Holloway, The Natural History Museum and the University of the West of Scotland.It further found that, altogether, roughly one third of 876 fish and shrimp examined from both estuaries had ingested microplastics. According to the National Oceanic and Atmospheric Administration (NOAA), microplastics are small pieces of plastic less than five millimeters long. They can, the NOAA states, "be harmful to our ocean and aquatic life."The Marine Conservation Society has said that microplastics in the marine environment can carry toxins that could, potentially, be passed into animal tissue and then carried up the food chain to humans."People have started to really take note of the severity of plastic pollution and our research further demonstrates why this is such pressing issue," Alexandra McGoran, the PhD student who led the research, said in a statement."Both rivers are extremely diverse ecosystems, home to hundreds of different species," she added. "To see this large number of species that our plastic waste is putting in danger is actually rather shocking."
Trash Geyser Spews Garbage In Yellowstone National Park - Geyser eruptions are known as one of the most beautiful events to occur in nature. Not anymore! On September 15, Yellowstone Park’s Ear Spring geyser erupted, belching not just rocks and scalding hot water into the air, but dozens of pieces of human trash that were cooked for decades in incredibly hot water. Nice!The National Park Service shared a picture of some of the artifacts recovered, which it claims are “clearly historic” and may end up in Yellowstone’s archives. The picture clearly shows a baby pacifier, a Solo Jazz cup, a plastic spoon, and some sort of tablet-like electronic device destroyed beyond recognition. There also seems to be a large slab of concrete or a cinder block.“Foreign objects can damage hot springs and geysers,” representatives from the National Park Service said in a Facebook post. “You can help by never throwing anything into Yellowstone's thermal features!”You would think it goes without saying, but yes, please do not hurl your trash into a scalding hot spring in the largest National Park in the country. If you’re thinking “Maybe I’ll throw just a little trash into the geyser,” No. Do not throw even a little trash into the geyser. The National Park Service shared a photo of several dozen coins that were thrown into the geyser and were consequently scorched beyond recognition. Throwing your currency into a geyser will not bring you good luck. Do not throw your coins into a geyser. If you would like to behold the mighty geyser sputtering human trash through the air, a video of the eruption is included below.
Huge rise in US plastic waste shipments to poor countries following China ban - Exports of plastic waste from the US to developing countries have surged following China’s crackdown on foreign waste imports, new research has shown. Nearly half of plastic waste exported from the US for recycling in the first six months of 2018 was shipped to Thailand, Malaysia and Vietnam, according to analysis of US census bureau data by Unearthed, Greenpeace’s investigative arm. The previous year, the US sent more than 70% to China and Hong Kong. This year’s ban on foreign waste imports by China, previously the world’s biggest importer of plastic waste for recycling, has left western countries scrambling to offload its extra plastic waste.. The US, along with Britain, Germany, Japan and Mexico, is among the biggest exporters of scrap plastic to China. Campaigners said the analysis, which Unearthed shared with the Guardian, shows the US is exploiting developing countries where there is no regulatory framework to ensure plastic waste is processed in an environmentally friendly way. “Instead of taking responsibility for their own waste, US companies are exploiting developing countries that lack the regulation to protect themselves,” s The waste, some of which consists of household recycling produced in the US, includes single-use plastic bottles, plastic bags and food wrappings, said Hocevar. It can, however, contain toxic materials. “It’s a problem for the US and other developed countries to produce, often, toxic material which they can’t or won’t take care of themselves.” Hocevar said that China’s decision to no longer accept waste has revealed the scale of the global plastic waste crisis: “Which is that we are producing an enormous amount of plastic material that we don’t know how to handle. “The average person when they put a piece of plastic in a [recycling] bin, they assume it is being recycled, not being shipped to China or now to south-east Asia, where it will possibly be incinerated or landfilled.” The data, obtained by Unearthed through the US census bureau, shows that in the first half of 2018, US exports of plastic waste dropped by a third compared with last year, from 949,789 metric tonnes to 666,780. Exports to China dropped by 92%, while those to Hong Kong dropped by 77%. At the same time, US exports of plastic waste to Thailand shot up by almost 2,000% this year, to 91,505 metric tonnes. US exports of plastic waste to Malaysia rose by 273%, to 157,299 metric tonnes, while those to Vietnam rose by 46%, to 71,220 tonnes.
Waste Watch: US Dumps Plastic Rubbish in Southeast Asia - naked capitalism by Jerri-lynn Scofield -Nearly a year has passed since China barred imports of most plastic waste for recycling. From 1992 until that date, 45% of all plastic waste went to China, according to a June article in Science Advances, The Chinese import ban and its impact on global plastic waste trade.Where is that discarded plastic going now?Answer: Southeast Asia, according to a report Greenpeace released last week, US plastic waste is causing environmental problems at home and abroad, as part of its UNEARTHED journalism project.The Chinese ban caused US exports of plastic scrap to a decline by about a third in the first six months of 2018, from 949,789 metric tonnes to 666,760 metric tonnes. Waste firms found other destinations for US plastic garbage. According to Greenpeace:
- In the first six months of 2017, a little over 4,000 metric tonnes of America’s plastic went to Thailand, but the country took in 91,505 metric tonnes of America’s scrap in the same period this year. That’s an increase of 1,985%.
- Malaysia experienced a similar increase, a rise of 273% to 157,299 metric tonnes.
- Vietnam also saw a significant rise, to 71,220 metric tonnes in the first six months of this year.
- Exports to Turkey and South Korea also rose significantly in the same period, to 11,224 metric tonnes and 14,760 metric tonnes, respectively.
- Despite the China ban, Asia remains the main destination for American waste exports. In the first six months of this year, 81% of plastic waste exports from the US went to Asia, a 7% drop on 2017.
The following charts convey this information visually. Source: US plastic waste is causing environmental problems at home and abroad
When yesterday's agriculture feeds today's water pollution - A study led by researchers at Université de Montréal quantifies for the first time the maximum amount of nutrients—specifically, phosphorus—that can accumulate in a watershed before additional pollution is discharged into downriver ecosystems. That average threshold amount is 2.1 tonnes per square kilometre of land, the researchers estimate in their study published today in Nature Geoscience. "Beyond this, further phosphorus inputs to watersheds cause a significant acceleration of (phosphorus) loss in runoff."This amount is shockingly low, the researchers say; given current nutrient application rates in most agricultural watersheds around the world, tipping points in some cases could be reached in less than a decade. Phosphorus, an element in fertilizer, is essential to the growth of plant food. But the mineral is also harmful when overused. When it gets into surface water, it can lead to excessive plant growth in lakes and rivers and proliferation of toxic algae, harmful to human and animal health.Focusing on 23 watersheds feeding the St. Lawrence River in Quebec, the researchers reconstructed historic land-use practices in order to calculate how much phosphorus has accumulated on the land over the past century.The two main sources of phosphorus to watersheds, the land adjacent to tributaries, come from agriculture (fertilizers and animal manure) and from the human population (through food needs and sewage). Since the watersheds they studied had different histories—some had been used intensively for agriculture for decades whereas others were forested and pristine—this method allowed the researchers to establish a gradient of different phosphorus accumulations among sites. In so doing, they were able to see at what point the watershed "tipped" or reached a threshold and began to leak considerably more phosphorus into the water. "Think of the land as a sponge," Maranger said. "After a while, sponges tha t absorb too much water will leak. In the case of phosphorus, the landscape absorbs it year after year after year, and after a while, its retention capacity is reduced. At that point historical phosphorus inputs contribute more to what reaches our water."
Florida's annual King Tide could bring hazardous red tide closer to shore --The beaches in Florida continue to stink. As the Gulf Coast of Florida has found itself in the longest red tide outbreak in over a decade, the dead fish and animals have piled up, causing issues for beach goers and residents. The soon-to-arrive King Tide could make things even worse. Red tide is a harmful growth and concentration of microscopic algae, a natural occurrence in bodies of water around the world. In the Gulf of Mexico, the red tide is caused by Karenia brevis (K. brevis), a native species to the Gulf. The algal blooms can turn the water reddish brown and often kills fish and other marine animals, such as dolphins and manatees. King Tide is the nickname for the point in the year when the high tide is at its highest. With the red tide already wreaking havoc, some fear the King Tide could bring the destruction even closer inland. “King Tide is a very high, high tide that occurs when the sun, moon and Earth are aligned and the moon is at its closest to Earth,” Stephanie Kettle, a spokesperson from the MOTE Marine Labratory and Aquarium, said. "Although the King Tide would affect the Atlantic coast more so than the Gulf Coast, the increase in tidal range will still result in a larger volume of gulf water entering the estuaries, and that could push populations of K. brevis further into the estuaries and bays. This would also increase salinity of estuaries and bays." Along with the terrible smell, red tide also brings respiratory concerns for residents, particularly those with asthma. Symptoms of the respiratory irritations include an itchy throat and coughing, which has become known as the "red tide tickle." "Skin contact with contaminated waters may also lead to rash or skin sensitivity in some people," Florida International University professor Dr. Rebecca Toonkel said. "People with chronic lung disease... are at the greatest risk for health concerns related to red tide. Airborne toxins from the algae that cause red tide can lead to shortness of breath, cough and other manifestations of acute exacerbation in these people."
Toxic red tide could sicken people as Hurricane Michael pushes it ashore -Hurricane Michael could push this season’s toxic red tide inland, exposing more people to the dangerous health effects of a record algae bloom that has bedeviled much of Florida’s coast. The hurricane is expected to generate a storm surge as great as 14 feet along parts of the Florida Panhandle, where it made landfall early Wednesday afternoon. That part of the coast that has seen some of the worst concentrations this year of red tide, a variety of algae that kills fish and releases toxins that cause respiratory symptoms in humans similar to tear gas. Hurricane Michael could carry that algae past the beaches and into neighborhoods, scientists warn. “A storm surge or king tide could bring red tide up onto land,” Larry Brand, a professor in the Department of Marine Biology and Ecology at the University of Miami, said by email. “The toxin would get into the air and people would be breathing it.” Red tide is made up of Karenia brevis, an organism that can trigger attacks in people with asthma, according to Richard Pierce, program manager and senior scientist at the Mote Marine Laboratory & Aquarium in Sarasota. Even people who don’t have asthma can suffer from choking, coughing and stinging eyes. Some have reported lingering headaches and flu-like symptoms.
Florida Panhandle battered by record-breaking Hurricane Michael (Reuters) - Hurricane Michael, the fiercest storm to hit Florida in more than 80 years and the third-most powerful ever to strike the U.S. mainland, battered the state’s Gulf coast on Wednesday with roof-shredding winds, raging surf and torrential rains. Michael, whose rapid intensification as it churned north over the Gulf of Mexico caught many by surprise, made landfall early in the afternoon near Mexico Beach, about 20 miles (32 km) southeast of Panama City in Florida’s Panhandle region, with top sustained winds reaching 155 miles per hour (249 kph). The storm came ashore as a Category 4 hurricane on the five-step Saffir-Simpson wind scale, the biggest storm on record to strike by Florida Panhandle. Its sustained winds were just 2 mph (3.2 kph) shy of an extremely rare Category 5. The storm’s intensity waned steadily as it pushed inland and curled northeasterly into Georgia after dark. It was downgraded to a Category 1 storm, with top sustained winds diminishing to 75 miles per hour (120 kph), about nine hours after it made landfall. The governors of North and South Carolina urged residents to brace for more heavy rain and storm-force winds as Michael plows northward up the Atlantic seaboard. The Carolinas are still reeling from severe flooding in the aftermath of Hurricane Florence less than a month ago. The National Hurricane Center said Michael would pass through the Carolinas as a tropical storm on Thursday, dumping as much as 8 inches of rain in some areas. Up to a foot (30 cm) of rain was forecast in Florida.
"I'm so scared": These Florida trailer park residents couldn't afford to evacuate --Florida trailer park manager Robert King spent most of Tuesday going door-to-door across the 53 homes he oversees, warning residents to heed evacuation orders and flee Panama City ahead of the monster hurricane hurtling toward the Florida Panhandle. But that turned out to be easier said than done: More than half told him they didn’t have the means to get out of town. King, who manages the Pines/Palm Haven Mobile Home Park in Panama City, told them to hunker down and try to ride out the area’s worst storm in a century as best they could. Worried about leaving his tenants alone, he decided to stick out Hurricane Michael too, from his home about 10 miles away. By Wednesday afternoon, he told VICE News, the mobile home park had already lost power and he has been fielding calls from worried residents ever since. “The people I talked to inside the park they just can’t afford it,” King told VICE News in a phone interview Wednesday. That’s the plight for a lot of residents near Panama City, Florida, where Hurricane Michael made landfall as a devastating Category 4 storm Wednesday afternoon. The median household income there is $38,397, according to U.S. Census data,while the state’s overall median income is closer to $49,000. In Bay County, where Panama City is located, about 13,600 residences — 13.5 percent of all housing units — are mobile homes, according to government data. Parts of the county were put under an evacuation order early Tuesday morning, along with parts of Wakulla and Gulf counties. In all, more than 375,000 Floridians are under evacuation orders across dozens of counties. Further evacuation orders are in place across Georgia and Alabama, which are also in the hurricane’s path. Jennifer Rousseau, who lives in the county’s unincorporated community of Southport and is disabled, said she wasn’t able to get out in time since she doesn’t have a car. Because she lives in a mobile home, she said she’s terrified of the storm. She’s not alone: 14 other people on her road, spread across four mobile homes, were forced to stay behind, too, she said. One of her neighbors has a seizure disorder, she said, and some of the children can’t swim.
Hurricane Michael leaves trail of death and destruction in southeastern US - As the remnants of Hurricane Michael push out to sea, images of the catastrophic destruction are only beginning to appear. Six people are confirmed dead as of late Thursday, spanning Florida, Georgia and North Carolina. The death toll will almost certainly rise as emergency personnel gain access to more communities devastated by the storm. The eye of Michael made landfall Wednesday near Mexico Beach, Florida as a category four hurricane with top sustained wind speeds of 155 miles per hour. The National Hurricane center estimated a peak storm surge of nine to 14 feet along the Florida coast. Michael was the first recorded category four storm to hit the Florida Panhandle and the third most intense, measured by minimum pressure in the eye, of any hurricane to make landfall in the continental United States.Entire towns throughout the region have been wiped out, with homes, schools, shopping centers and other structures reduced to rubble. Drone footage from Mexico Beach shows a sea of debris, houses lifted off their foundations, torn apart, leaving only the concrete slabs behind.Emergency crews continued to search for victims, though many roads remain closed from downed trees, power lines and collapsed roadbeds. Much of Interstate 10, the region’s main expressway, was closed Thursday for debris removal. The coastal route, US-98, and numerous other roads inland were impassible.Power is out for more than one million people across Florida, Alabama, Georgia, South Carolina, North Carolina and Virginia. In the hardest hit areas, utilities warned that restoration will take weeks.Approximately 375,000 people in Florida were warned to evacuate prior to the storm, but the state and national governments provided no significant resources for the mass evacuation. Left to fend for themselves, many stayed behind. Officials also refused to evacuate institutional residents. At Chattahoochee’s main mental hospital, the storm damage has cut off all land access to the facility. Officials were forced to begin air dropping supplies Thursday. The Florida Panhandle, southern Alabama and Georgia are home to some of the country’s highest poverty rates. Many do not have the means to evacuate even if they wanted to.
8 Killed As Michael Treks Through Southeast Leaving Florida Beach Towns in Ruins, Flooding Parts of North Carolina, Virginia Towns -- The extent of Hurricane Michael's widespread devastation in Florida became clearer Thursday as the storm continued to wreak havoc across the Southeast, knocking down trees and power poles, stranding motorists, and spawning tornadoes and flash flood emergencies. Eight people have died.Michael made landfall as a high-end Category 4 storm on the Florida Panhandle Wednesday smashing towns to rubble. On Thursday, the Carolinas and Georgia saw trees knocked down, hundreds of thousands without power, and roads closed by standing water. Evacuations were needed in Irmo, South Carolina, after multiple homes took on water. Tropical Storm Michael's downpours in Virginia also flooded homes and led to water rescues and at least four flash flood emergencies later in the day. One tornado was confirmed. Four people were killed in Florida's Gadsden County, according to Sheriff's Office spokeswoman Anglie Hightower. One of them was Steve Sweet, 44, who died when a tree slammed into his Gretna home. Details were not available on the other three deaths. In southern Georgia, an 11-year-old girl was killed when a carport hit her home in Seminole County. The county coroner later identified her as Sarah Radney. A North Carolina man was killed Thursday after a tree fell on his car in Iredell County, north of Charlotte, the Associated Press reported. In Florida, from Panama City through Mexico Beach — where the storm made landfall — and into Apalachicola, houses were swamped or blown apart, roofs were ripped off, boats sank and trees toppled in the high winds. Aerial images at Mexico Beach Thursday morning showed extreme damage, with homes swept completely off their foundations and destroyed and few properties left standing along the coast. Two more deaths were confirmed Friday morning in Danville, Virginia, in separate flooding incidents. As of 7:30 p.m. EDT Thursday, the total number of customers without power in Florida, Georgia, the Carolinas, and Virginia was more than 1.4 million, according to PowerOutage.us.Images from Mexico Beach showed widespread devastation with homes reduced to kindling and roofs lying in the middle of U.S. 98. Storm surge lapped at roof eaves. State officials said as many as 285 Mexico Beach residents chose not to obey evacuation orders ahead of the storm. The National Guard was able to rescue about 20 people overnight, but it was unknown how many residents were missing, or if there were any deaths.
Hurricane Michael flattens beach town like ‘mother of all bombs’ - Hurricane Michael has landed on a Florida beach town like the "mother of all bombs", almost wiping it off the map, officials say. The storm smashed into the state's north-west coast near Mexico Beach on Wednesday with 155mph (250km/h) winds. The hurricane, one of the most powerful in US history, has killed 16 people, with fears the toll will rise. Rescuers "still haven't got to some of the hardest-hit areas", emergency management officials say. Mexico Beach is yet to report any fatalities, but rescuers working there have yet to carry out a thorough search of the devastated area. Meanwhile, more than 1m homes remain without power in Florida, Alabama, Georgia, Virginia and the Carolinas. Michael, which fell just 2mph short of a top-level category five, ripped apart entire neighbourhoods before moving out to sea by Friday morning. The hurricane's shrieking winds and wall of water swept beachfront homes off their foundations, snapped boats in two and knocked over 30-tonne freight rail cars like toys. The sheer force of Hurricane Michael has been well analysed, but it's only when you see the everyday stuff of people's lives crushed, broken, smashed to pieces, that you realise they will be living with this long after we have gone. One weeping resident of Mexico Beach pictured on CNN struggled to even find her street, let alone her home. Tom Bailey, the town's former mayor, told the New York Times: "The mother of all bombs doesn't do any more damage than this."
Hurricane Michael brings death, devastation to US Southeast --Hurricane Michael moved off the US Atlantic coast Thursday night as a post-tropical cyclone, leaving behind a trail of death and destruction from Florida to Virginia. As of Friday afternoon the death toll stood at 13. That number is expected to rise as authorities begin the grim job of combing through the wreckage left behind by the storm. More than a million people remain without electricity across seven states.Michael made landfall Wednesday in the Florida Panhandle as a Category 4 hurricane, charging ashore with 155 miles per hour winds and a storm surge as high as 13 feet. The storm, the strongest on record to hit the area and the third strongest to hit the continental US in recorded history, left in its wake crushed and flooded homes and residents reeling from the loss of their homes and possessions.Hardest hit was Bay County, Florida and the city of Mexico Beach. Federal Emergency Management Agency (FEMA) personnel were assessing the damage in the small seaside town on Friday. Nearby Panama City was also badly hit. Mexico Beach, known for its pristine beaches, fishing and boating, resembles a war zone, with the vast majority of its structures demolished. Cars, boats, furniture and debris were lifted by the winds and storm surge and slammed into houses far from their original locations. The fire department said that 95 percent of structures were uninhabitable. There is no power and little food. FEMA head Brock Long told reporters in Washington that those who had evacuated the Panhandle coast should not return to their homes. “It’s still not safe to return, particularly to Bay County, Florida,” he said. “There is no infrastructure there to support you and quite honestly it’s a dangerous area to go back into.” He said it would be “a long time before they’re actually able to go back and return to those places because it was heavily damaged.”
I Have No Words - Aerial Footage Shows Trail Of Devastation Left By Hurricane Michael -- Florida search-and-rescue teams are searching for survivors after Hurricane Michael carved a path of devastation through several communities. According to FEMA administrator Brock Long, Mexico Beach "took the brunt' of Michael's carnage, adding "That's probably ground zero," adding "Power is not going to be on for a while."The latest developments, per the New York Times:
- • At least four deaths were linked to the storm in Gadsden County, west of Tallahassee, according to Lt. Anglie Hightower, a spokeswoman for the sheriff’s office. The victims included a man who died when a tree crashed down on his home in Greensboro.
- • An 11-year-old girl, Sarah Radney, was killed on Wednesday when a carport was torn away and was sent hurtling into the modular home she was in, said Chad Smith, the coroner of Seminole County, Ga. “She was sitting right next to her grandmother,” said Mr. Smith, who described the girl’s death as a “horrible accident.”
- • Emergency officials rushed to evacuate more than 300 patients from storm-damaged hospitals in Panama City. In total, four hospitals and 11 nursing facilities were closed in Florida. A nursing facility in Georgia was also closed.
- • Much of the coast of the Florida Panhandle, including parts of Panama City and Mexico Beach, was left in ruins. The area is dotted with small, rural communities, some of them among the poorest in the state. Evacuation was difficult. Read more about how the storm was hard on people without the means to evacuate.
- • At 11 a.m. on Thursday, Michael was about 25 miles south of Greensboro, N.C., heading northeast with sustained wind speeds of up to 50 miles per hour. Now a tropical storm, it is moving relatively quickly, at 23 m.p.h., and is expected to speed up as it crosses the Carolinas and blows out to sea by early Friday. Click on the map below to see the storm’s projected path.
- • More than 1.1 million homes and businesses were without electricity on Thursday, state agencies and utility companies said.
- • “The big problem with this hurricane was the tremendous power,” President Trump said on Thursday, adding that “we’ve not seen destruction like that for a long time.”
‘You Just Realize It’s All Gone’: Hurricane Michael’s Heavy Toll - Ashlee and B. Cody Shields bought a house in June and the remodeling was about half complete when Hurricane Michael roared ashore.They rode out the storm with Mr. Shields’s parents, then emerged into the debris-strewn streets and threaded their way through a tangle of fallen trees to reach their property. It had blown apart.The roof was gone, the windows shattered and insulation lay everywhere. All that remained was a slab of concrete and some brick siding.Many of their neighbors’ homes also were ravaged. There were collapsed roofs and caved-in walls. Trees fell onto houses and cars. Sheds burst apart. All across Panama City, the destruction was overwhelming. A large church was missing its facade. Warehouses crumpled like tinfoil. Some homes were sliced open, displaying their insides like doll houses. A pet store’s roof collapsed. A clothing store lost its windows, leaving sodden racks of merchandise. “It looks apocalyptic,” said Mr. Shields, who was born and raised in Panama City but no longer recognizes much of it. Hurricane Michael—one of the most powerful storms to ever strike the U.S.—erased entire neighborhoods and leveled communities. It destroyed most of Mexico Beach, a laid-back Gulf Coast town of about 1,000. An official there called it “a death”; another resident said she can’t stop crying because “you just realize it’s all gone”People across six states—Florida, Alabama, Georgia, North and South Carolina and Virginia—felt the effects. The storm killed at least 14 people, and the death toll is expected to rise. It also damaged the power grid and, in Florida, closed four hospitals and 11 nursing homes. On Thursday night, almost 2,900 people stayed in as many as 37 Red Cross and community evacuation centers across Florida, Georgia and Alabama. More than one million people were without power.The simple routines of daily life—placing a phone call, finding gas, buying groceries—have become a struggle.Michael ranked as the strongest storm to hit the Panhandle since at least 1851, when record-keeping began, according to the National Hurricane Center. Federal Emergency Management Agency Administrator Brock Long on Friday told many people it was too soon to go home. “It’s still not safe to return, particularly to Bay County, Florida,” he said. “There is no infrastructure there to support you, and quite honestly it’s a dangerous area to go back into.” For people who evacuated Mexico Beach and are in shelters, he said, “it’s going to be a long time before they’re actually able to go back and return to those places, because it was heavily damaged.”
Warm Gulf waters spawned Hurricane Michael’s intensity: scientists (Reuters) - When Hurricane Michael barreled into the Florida Panhandle on Wednesday with 155-mph (249-kph) sustained winds, it defied forecasts made just two days beforehand, its wind speeds doubling since Monday and coming in just short of the highest category of intensity. Michael was not the only tropical cyclone in recent years to undergo what scientists refer to as “rapid intensification,” defined as an acceleration of wind speeds of at least 35 mph (56 kph) in 24 hours or less. The phenomenon has become more serious as sea waters have warmed with climate change. “It is most likely that the very warm water in the Gulf ... is likely contributing to the intensity and the intensification that we have seen,” said Jim Kossin, an atmospheric scientist with the U.S. National Oceanic and Atmospheric Administration. Rapid intensification is dangerous because it gives businesses, industry and people on the ground less time to take appropriate precautions ahead of hurricanes like Michael that hit shore with far more furious winds than originally expected. Several factors can contribute, but warmer waters increase the potential for a storm becoming stronger, climate scientists have said. Climate change means that warmer ocean temperatures are being seen more often, said Jennie Evans, a professor of Meteorology at Pennsylvania State University. “Since we’ve got warm temperatures in the Gulf now, a hurricane has a much better chance to reach its maximum possible intensity, which appears to be what Michael is doing,” she said. In some cases, high-altitude winds can put a cap on a storm’s ability to draw power from moist sea air. But in Michael’s case, that brake was not in place. Rapid intensification happens about 5 percent of the time and is difficult to predict. Last year, in the Atlantic basin, forecasters correctly forecast six of 39 such instances, according to Michael Brennan, branch chief of the hurricane specialist unit at the U.S. National Hurricane Center.
North Carolina Farmers Learned Nothing From Previous Hurricanes as Over 4 Million Animals Drown During Florence - There are roughly 9 million pigs in North Carolina––the same number as people. There are also a multitude of poultry farms containing 819 million chickens and 33.5m turkeys and there is even a thriving fish farm industry in North Carolina.Many thought after Hurricane Matthew in 2016 and Hurricane Floyd in 1999 drowned thousands of hogs and millions of birds, farmers would question the wisdom of situating concentrated animal feeding operations (CAFOs) in flood plains. But apparently not. At least 5,500 hogs drowned during Hurricane Florence and 4.1 million birds, representing 57 farms and 211 poultry houses. In some cases the animal death toll from Florence was double that of previous hurricanes. Video footage shows “hogs wading neck- deep through floodwaters and dead chickens floating like dirty pillows in the dark water,” reported Indy Week. When the force of Hurricane Florence became known, animal welfare activists pleaded with meat producers to open barn doors to give animals a “fighting chance” to no avail. “No doubt, until their last minutes, they [the animals] did everything possible to keep their heads above water in a relentless struggle to preserve their own lives. They probably cried out in panic for relief that would never come,” wrote one web site. Sanderson Farms admitted to 1.7 chicken lost so far and Butterball said “many of our North Carolina-based processing plants, hatcheries and feed mills have been impacted by the storm, and we continue to see flooding and power outages throughout the region.” But the identities of most CAFOs with thousands of drowned animals are hidden. “In North Carolina, farm level data is protected information,” Heather Overton, Assistant Director of told me, referring me to the 1979 confidentiality state statute § 106-24.1. which states, “All information published by the Department of Agriculture and Consumer Services pursuant to this Part shall be classified so as to prevent the identification of information received from individual farm operators.” Such confidentiality laws protect more than the animal toll from Hurricane Florence. They are likely also why the identities of farms with millions of cases of bird flu and porcine epidemic diarrhea virus in recent years were kept secret even as the public continued to buy their products and neighbors and the surrounding environment were jeopardized.Only a handful of photos of bird-flu poultry being “depopulated” and dead piglets dropped into landfills reached the unwitting, deceived public. That is why Overton denied my request to send a photographer to document the disposal of the Hurricane Florence carcasses. (Were they even disposed of or were they sold as “food” some cynics have asked.)
Widespread fish kills predicted to continue for weeks in NC, experts say. Here’s why. Widespread fish kills have been reported in 15 North Carolina coastal rivers and lakes; the state Wildlife Resources Commission predicted this week that the trend will continue, perhaps for weeks. An investigation is underway, but biologists said in an Oct. 4 report that they believe the deaths are due to flooding produced by Hurricane Florence, which brought up to 35 inches of rain to some parts of the state. Their conclusion is that fish kills “will persist for several more weeks,” said the report. Among the best known of the fish kills is one reported Sept. 23 by the Charlotte Observer, involving thousands of fish spread across Interstate 40 in Pender County. Firefighters used hoses to push the fish off the road after the floodwater receded, the Observer reported. “These fish kills, while unfortunate, are naturally occurring events that typically follow a major hurricane,” said a statement issued by Chad Thomas, the commission’s coastal fishery supervisor. The cause is not floodwater contaminants or pollution, the state report said. It’s a lack of oxygen in the water and it has spread beyond rivers to streams, canals, lakes and even private ponds, officials said. The same phenomenon occurred after Hurricane Irene in 2011 and Hurricane Isabel in 2003, state officials said on NCWildlife.org. “As water levels recede, a flushing effect occurs. The result is a significant drop in dissolved oxygen in the main stem rivers and creeks.” The fish trapped in such areas “became lethargic,” then gasped at the surface of the water before dying, said the report. Thomas says the problem will resolve itself only after “water levels return to normal and water temperatures begin to cool.” “These coastal systems are resilient and with time, the fish populations in the impacted waters will recover, as they did after Hurricane Irene in 2011,” Thomas said in a statement. Fish kills have been reported along some of the largest rivers in eastern North Carolina, including the Cape Fear, Lumber River, Waccamaw River and Neuse River, said in the release.
El Niño set to return before end of the year: Kemp - (Reuters) - El Niño conditions are developing across the Pacific Ocean, with meteorologists now putting the probability of a full event developing by the end of the year at almost 75 percent.Sea surface temperatures are warming counter-seasonally across much of the equatorial Pacific and trade winds are slackening, both common precursors of an El Niño episode.The principal impacts of El Niño (and its opposite weather pattern La Niña) are felt in Southeast Asia, Australia and South America, where it can have a major effect on temperatures and rainfall, with a big effect on agriculture.The impacts on North America are more complicated and variable, but it has an effect on both total heating demand and its regional distribution in the winter months.El Niño conditions alter the position of the polar jet stream, typically bringing warmer temperatures to Canada and the northern United States during the northern hemisphere winter from December to February.But El Niño also results in a stronger and more persistent Pacific jet stream into the southwestern United States, bringing more rain, snow, storms and cooler temperatures to California and other southern states. As the ocean warms, government forecasters in the United States and Australia estimate there is now triple the normal chance of El Niño occurring this winter, though it is likely to be a relatively weak episode.
Fortresses of mud: how to protect the San Francisco Bay Area from rising seas - There’s something apocalyptic about this pond on the east side of San Francisco Bay, California. The legacy of a salt industry that has moved elsewhere, it has subsided a couple of metres below the level of neighbouring marshland. Algae paints red swirls in the brown water, and the pond’s edge is crusted hard with sparkling salt. Over the next decade, government officials plan to fill many such depressions with sediment and then open them up to the tides. Eventually, cordgrass, pickleweed and other marsh vegetation will take root, restoring this crucial marsh ecosystem. The goal is to try to create a natural buffer to protect the heavily populated waterfront, by sapping energy from storm surges and blocking the highest tides. San Francisco Bay’s salt ponds are part of a much broader story. After a century of human development destroyed most of the area’s wetlands, the region did an about-face in the 1970s. It became a leader in marsh restoration, moving into high gear after a groundbreaking plan published in 1998. In recent years, local leaders have tackled these efforts with a new-found sense of urgency. Sea levels here could rise by as much as 2.1 metres by 2100, the California Natural Resources Agency estimates, and that would threaten electricity plants, transportation infrastructure and drinking-water facilities in the region — many of which lie low and close to the bay. Marshes have a superpower in the fight against sea-level rise. Unlike artificial barriers such as sea walls and levees, they can evolve, growing progressively higher as they trap more sediment and their vegetation decomposes and regrows. “Marshes are in a dynamic equilibrium with the water level,” says John Bourgeois, executive manager of the South Bay Salt Pond Restoration Project, a public–private partnership that manages wetlands restoration in Eden Landing and other sites in the South Bay. “It’s been clearly shown that, even at pretty high rates of sea-level rise, if there’s enough suspended sediment, they can keep pace.”
California Enters Peak Fire Season With Delaware-Sized Burn Scar Bloomberg California is poised to set an annual record it never wanted to break: the amount of earth scorched by wildfires. Blazes have already ripped through enough acres to blacken the entire state of Delaware, and what’s typically California’s worst month for fires is just beginning. At least 11 people have died this year from wildfires that shut down Yosemite National Park, drove thousands from their homes and destroyed more than 2,000 buildings. And forecasters say prospects for rain are slim. “We are going into a difficult period of the year,’’ said Scott McLean of Cal Fire. And unlike in past years, when blazes were more intermittent, “the fires just haven’t stopped” in 2018, he said. Eleven of California’s 20 deadliest fires occurred in previous Octobers, along with 11 of its most destructive, according to Cal Fire. They include last year’s Tubbs fire, which was the most destructive on record. Parched grasses and brush are providing ample fuel for more fires to start. About 88 percent of California was abnormally dry as of Oct. 2, and almost half of it was in some stage of drought, according to the U.S. Drought Monitor in Lincoln, Nebraska. A year ago, only 8.2 percent of the state was in drought. “The landscape is definitely dry and we’re definitely having fire issues continue,’’ said Mike Anderson, California’s state climatologist. “For the second year in a row we’re setting records for the size of fires, that is definitely not a good trend.’’ More than 600,000 acres went up in flames on land under the jurisdiction of state and local fire agencies in the first nine months of the year, according to Cal Fire statistics. That’s 2.5 times more than during the first nine months of 2017 and 22 percent higher than the full-year total. About 1.36 million acres have burned on both state and federal lands through September, compared with 1.25 million in all of 2017. The possible repercussions are huge: Insured losses from wildfires that tore through the state in October and December last were about $12 billion, according to the California Department of Insurance. State utilities PG&E Corp. and Edison International face billions of dollars in potential liabilities.
Wineries, vineyards clash over how to handle grapes affected by wildfire smoke -Along the West Coast, grape growers and wineries are locked in bitter disputes over what to do with wine grapes that may have been tainted by smoke from the summer’s wildfires. Wine producers are refusing to pay growers for smoke-tainted grapes, leaving many small-scale farmers in dire financial situations. Now many are calling for change: Why should vineyards, and not wineries, assume all the risk when wildfire strikes? And how, exactly, should smoke taint be determined? The conflicts began in late August, when Lake County growers reported that Constellation Brands — the global wine company that owns brands like the Prisoner and Robert Mondavi — had rejected all of the Sauvignon Blanc it had contracted to buy in the county, estimated at the equivalent of about 100,000 cases of wine. Clay Shannon of Shannon Ridge Vineyards received Constellation’s letter on Aug. 29. “Due to the impact of excessive heat, ash and smoke caused by the Mendocino Complex Fires, and after careful analysis and a visit to the vineyard, we have determined that the grapes do not and will not meet the applicable Quality Standards and other requirements as set forth in our contract,” it read, signed by Ollie Davidson, vice president for vineyard operations. Constellation proceeded to reject more fruit from Shannon. Two other major clients, Treasury Wine Estates and Domaine Chandon, followed. In total, the wineries rejected 1,146 tons of Shannon’s fruit, representing $2 million in revenue. By late September, a similar saga began to unfold in southern Oregon’s Rogue Valley. After conducting smoke-taint tests, California-based winemaker Joe Wagner rejected all of the fruit from his 35 contracted vineyards in Rogue Valley — about $4 million worth of grapes. California’s North Coast wine industry harvested $1.5 billion in grapes in 2017, Oregon $192 million. Growers in both Lake County and Rogue Valley are scrambling to try to recoup the financial loss, either by selling off the grapes to another buyer or by filing insurance claims. For many growers, neither is an option. By the time some were notified of the rejections, their fruit was too ripe to pick. “There are vineyards that are going to go out of business over this,” says Michael Moore, owner of Rogue Valley’s Quail Run Vineyards.
Scientists say halting deforestation 'just as urgent' as reducing emissions - The role of forests in combating climate change risks being overlooked by the world’s governments, according to a group of scientists that has warned halting deforestation is “just as urgent” as eliminating the use of fossil fuels.Razing the world’s forests would release more than 3 trillion tons of carbon dioxide, more than the amount locked in identified global reserves of oil, coal and gas. By protecting and restoring forests, the world would achieve 18% of the emissions mitigation needed by 2030 to avoid runaway climate change, the group of 40 scientists, spanning five countries, said in a statement.“We must protect and maintain healthy forests to avoid dangerous climate change and to ensure the world’s forests continue to provide services critical for the well-being of the planet and ourselves,” the statement reads.The intervention comes as the UN’s Intergovernmental Panel on Climate Change gathers in South Korea ahead of Monday’s release of an eagerly awaited report on how the world can avoid warming of 1.5C (2.7F) beyond pre-industrial levels, an aspirational target of the landmark Paris climate deal in 2015. It is expected the report will focus on required changes to the energy system, rather than forests. “In responding to the IPCC report, our message as scientists is simple: Our planet’s future climate is inextricably tied to the future of its forests,” the scientists’ statement pointedly concludes.Trees and other vegetation currently absorb around a quarter of the CO2 humans are adding to the atmosphere, softening the potential impact of climate change. While the world won’t lose all of its trees, large tracts of tropical forests, which hold a vast amount of carbon, are still being lost in the Amazon, central Africa and Indonesia. Warming temperatures are also fueling huge fires in forests in higher latitudes, as witnessed this summer when much of northern Sweden was aflame.“The forest piece of the conversation is often lost and I don’t think the IPCC report will highlight it enough,” . “We almost take forests as a given but we lose forest every year, which means we are diminishing them as a carbon sink.
High CO2 levels cause plants to thicken their leaves, could worsen climate change effects -- Plant scientists have observed that when levels of carbon dioxide in the atmosphere rise, most plants do something unusual: They thicken their leaves. And since human activity is raising atmospheric carbon dioxide levels, thick-leafed plants appear to be in our future.But the consequences of this physiological response go far beyond heftier leaves on many plants. Two University of Washington scientists have discovered that plants with thicker leaves may exacerbate the effects of climate change because they would be less efficient in sequestering atmospheric carbon, a fact that climate change models to date have not taken into account.In a paper published Oct. 1 in the journal Global Biogeochemical Cycles, the researchers report that, when they incorporated this information into global climate models under the high atmospheric carbon dioxide levels expected later this century, the global "carbon sink" contributed by plants was less productive—leaving about 5.8 extra petagrams, or 6.39 million tons, of carbon in the atmosphere per year. Those levels are similar to the amount of carbon released into the atmosphere each year due to human-generated fossil fuel emissions—8 petagrams, or 8.8 million tons. "Plants are flexible and respond to different environmental conditions," said senior author Abigail Swann, a UW assistant professor of atmospheric sciences and biology. "But until now, no one had tried to quantify how this type of response to climate change will alter the impact that plants have on our planet."
WATCH: Less Than 30 Vaquitas Remain. Sea Shepherd Is Determined to Save World's Most Endangered Marine Mammal -- Sea Shepherd will soon launch the White Holly vessel from Fernandina Beach, Florida to Mexico's Sea of Cortez in an effort to advance their latest campaign, Operation Milagro V. The campaign is focused on saving the the vaquita porpoise—the world's most endangered marine mammal.EcoWatch teamed up with Sea Shepherd in this exclusive Facebook live video below to hear about their mission to save the vaquita. Asia's wildlife blackmarket is on track to driving the vaquita to extinction. Poachers causing the crisis are not actually after the vaquita, but the totoaba fish, as one totoaba bladder sells for $20,000 USD in China's blackmarket. As a result vaquitas are tragically getting trapped in illegal nets and dying at rapid rates.Scientists reported two years ago that there are less than 30 vaquitas alive. Capt. Lockhart "Locky" MacLean, Sea Shepherd's director of marine operations explained in a press release the proven methods they use to help save the vaquita:There is work to do to ensure the vaquita survives. Sea Shepherd will start removing inactive totoaba fishing gear, also known as ghost nets and we will come across occasional active nets this early in the season. We are also ensuring no fishing is taking place inside the protected area and preventing poaching activities by patrolling the area with our partner agencies from the Mexican Government on-board.Working with the Mexican government and navy is crucial to helping mitigate Sea Shepherd's risk factors. Poachers have shot down a drone and fired shots at one of the ships."Luckily we have senior crew members on board like our experienced captains that provide all the training we need to act accordingly in threatening situations," said Ship Manager Rebecca Benjamin-Carey. "For a lot of us, we have dedicated our lives to protecting the oceans and face these situations head on."
Indonesia's fickle quake spares some, destroys others at epicentre (Reuters) - Just 500 metres from the epicentre of the earthquake that triggered a wave of destruction in Indonesia, a modest wooden home built on hollow concrete foundations in Lende Induk village stands completely and remarkably unscathed. A few kilometres away, along the main road of its sister village, Lende Tovea, scores of homes - many built with reinforced concrete - were completely destroyed by the violent shaking, leaving a mess of rubble neatly covered by fallen tin roofs. The contrasting scene in the hamlets nestled between the coast and lush hills visited by Reuters on Saturday illustrate the fickle effects of the major 7.5 magnitude quake and ensuing tsunami that battered Palu, a coastal city 78 km (48 miles) to the south, on Sept. 28. More than 66,000 buildings were badly damaged and at least 1,649 people were killed in the disaster but neither the quality of building construction nor proximity to the quake explain why some areas were destroyed and others nearby left relatively untouched. Zainar, 38, who lives in the intact house closest to the epicentre, was inside when the quake struck. While the house built a year ago held strong, she said everything inside was broken. Mudrik Rahmawan Daryono, an earthquake expert from the Indonesian Institute of Sciences who did his doctorate on the geology around Palu, said an unusual web of fault lines that intersect the area helped explain the discrepancies. There are four main interconnected fault lines active in the area and a multitude of smaller ones that radiate from them. The immense energy created by the slippage of the tectonic plates underneath Lende Induk tracked the ruptures. "It is clear based on the satellite image that one of the major fault lines, the Palu segment, is responsible for the quake," he said. "It goes through the city and the sea." He said earthquakes cause greater damage where the soil is softer with higher saturation levels from groundwater. At its extreme during powerful quakes, the soft, wet soil produces liquefaction, turning the ground into a roiling, muddy liquid. In Balaroa and Petobo, two sub-districts in the south of Palu hit by extensive liquefaction, hundreds of people were killed and countless homes destroyed, many sucked into the churning quagmire. Rescuers retrieved dozens of bodies from the areas at the weekend. Many victims are believed to be buried under metres of mud and debris.
Aid begins to reach remote communities after double disaster - Much-needed aid is trickling through to remote communities on Indonesia's ravaged Sulawesi Island for the first time since a massive earthquake and tsunami struck last Friday, leaving at least 1,649 dead. When the earthquake hit a village in Sigi district, mud from 15 metres underground came to the surface and started to drag homes and people into the earth in waves of mud and rock. Some items and bodies were found 4km from their original location. "Rescuers here tell us they don't even know where to start digging," said Al Jazeera's Jamela Alindogan, reporting from the scene. "They fear half of the population here is dead." Now, a pile of rock and mud is all that is left of their homes, schools and other buildings.Aid workers have delivered food, drinking water and other essential items to the community, which is still struggling to come to terms with the scale of the disasters, but longer-term help will also be required. "Kid's can't go to school. Their school collapsed because of the earthquake. Their teachers have also left and are displaced," said Nur Aini, a local survivor. Aid efforts are now ubiquitous across Palu, Sulawesi's main city, but the slow pace of relief has caused anger. Husni Husni, a spokesman for the International Federation of the Red Cross, said logistical issues have delayed the delivery of humanitarian assistance. "The major challenge has been access to Sulawesi itself," he told Al Jazeera. "The ships from Jakarta to Makassar (a port on Sulawesi) take three days and then from Makassar to Palu takes more than 24 hours, and that's the major challenge right now." Safe drinking water is the most urgent need in Palu, according to Husni, who said relief agencies are planning long-term assistance for those affected.
Indonesia mulls leaving quake-flattened villages as mass graves - More bodies were unearthed from the earthquake-and-tsunami-ravaged Indonesian city of Palu on Saturday, as authorities move closer to calling off the search for the dead trapped under flattened communities and declaring them mass graves. Officials said Saturday the death toll had climbed to 1,649, with more than a thousand feared still missing in the seaside city on Sulawesi island. More than 82,000 military and civilian personnel, as well as volunteers, have descended on the devastated city, where relief groups say clean water and medical supplies are in short supply. After days of delays, international aid has slowly begun trickling into the disaster zone where the UN says almost 200,000 people need humanitarian assistance. But hopes of finding anyone alive a full eight days later have all but faded, as the search for survivors morphs into a grim gathering of the dead. At the massive Balaroa government housing complex, where the sheer force of the quake turned the earth temporarily to mush, soldiers wearing masks to ward off the stench of death clambered over the giant mounds of mud, brick and cement. Vast numbers of decomposing bodies could still be buried beneath this once-thriving neighbourhood, the search and rescue agency said. Two soldiers who are part of the search emerged from a ditch with a body bag sagging in the middle but looking too light to be a corpse -- they said they had found the heads of two adults and one child. "There are no survivors here. We just find bodies, every day,"
Indonesia says 5000 now missing after quake and tsunami - The number of people believed missing after earthquakes and a tsunami hit Indonesia's Sulawesi island late last month has risen dramatically to 5,000, the country's disaster management agency said on Sunday.The agency said it had so far recovered 1,763 bodies as the death toll from the 7.5-magnitude earthquake continues to rise.Rescuers continued to search for victims on Sunday with little hope of finding survivors 10 days after the September 28 disaster, but authorities said efforts to retrieve bodies would end on October 11. Those unaccounted for were mostly from Petobo and Balaro, two of the hardest-hit neighborhoods in the badly affected city of Palu. People there may have been engulfed after the ground beneath them turned liquid in a phenomenon known to geologists as soil liquefaction. "Based on reports from the (village) heads of Balaroa and Petobo, there are about 5,000 people who have not been found," a spokesman for the disaster agency said."It is not easy to obtain the exact number of those trapped by landslides, or liquefaction, or mud," the spokesman, Sutopo Purwo Nugroho, told reporters. The government has been considering declaring the two areas to be mass graves and leaving them untouched.
Indonesia Asks Foreign Aid Workers To Leave As Tsunami Death Toll Surpasses 2,000 - It has been nearly two weeks since a 7.5 magnitude earthquake rocked central Sulawesi and triggered a deadly tsunami, and now that the bodies have been buried and at least some of the rubble has been cleared, local authorities are getting a better idea of just how many people lost their lives in the disaster.According to TASS, "more than 10,600 residents suffered injuries, 2,500 of them are in critical condition." said Sutopo Purwo Nugroho, Indonesia's disaster management chief. Most of the more than 2,000 deaths attributed to the disaster occurred in the city of Palu, the provincial capital of the province. More than 74,000 people were displaced. More than 400 aftershocks have rocked the island in the hours after the quake, which struck directly offshore at a shallow depth of less than 10 miles, which amplified its power.Meanwhile, new footage of the tsunami's impact and immediate aftermath has emerged on social media. The footage shows a shocking wall of water smashing through trees and homes:Though roughly 5,000 people remain missing, the Indonesia government has ordered foreign NGOs to "retrieve their personnel" immediately and leave the island, causing some to worry that Indonesia's intolerance of the NGOs could lead to further loss of life. Tim Costello, the chief advocate for charity World Vision, called the announcement by the government "very odd" and said it meant that overworked and traumatised Indonesia staff and volunteers were not able to be supported and relieved by fresh foreign staff. "Foreign journalists are free to walk around and report, but humanitarian workers who are foreign and are bringing both the experience and the relief to our staff who lived through the tsunami [are not]," he told the ABC. "They’re demoralised, they’re knocked about, so this is what’s very strange." Locally registered NGOs have been allowed to remain. Government rescue agencies have been criticized for what some said was a sluggish response to the disaster. It took the government days to move supplies and workers to the devastated city of Palu, and even longer to reach remote areas where the disaster knocked out communications. In the aftermath of the disaster, the city of Palu went days without power and clean water, leading to reports of looting, long queues for fuel and desperate scenes at the city’s airport, per the Guardian.
Search called off in Indonesian quake-tsunami: Official The search for those killed in Indonesia's quake-tsunami disaster was called off on (Oct 11) Thursday, despite there being around 5,000 people still missing. The magnitude 7.5-quake and a subsequent tsunami razed whole swathes of Palu to the ground on Sep 28. More than 2,000 bodies have been recovered since the twin disaster on Sulawesi island. But authorities fear 5,000 more could be buried beneath the ruined city, where entire villages were swallowed. Rescuers had struggled to find remains in the twisted wreckage, a job made worse as mud hardened and bodies decomposed in the tropical heat. "The search and rescue (SAR) operation for the victims will end this Thursday afternoon," SAR field director in Palu, Bambang Suryo, told AFP. The government earlier indicated these hard-hit areas would be left untouched as mass graves. Parks and monuments are planned at three of these worst-hit areas - Balaroa, Petobo and Jono Oge - to commemorate the possibly thousands of dead who will never found. Those zones were all but destroyed by liquefaction, a phenomenon where the brute force of a quake turns soil to quicksand. Humanitarian assistance has poured into the disaster-ravaged city but the recovery ever been criticised as moving too slowly. On Wednesday, Indonesia clarified that its policy on foreign assistance, aid workers and volunteers is "not intended" to prevent them from entering quake-hit Sulawesi. In a statement, Indonesia's foreign ministry explained that foreign aid workers must first coordinate with the national team, local agencies or non-governmental organisations leading the rescue and recovery effort.
From London to Shanghai, world's sinking cities face devastating floods - London, Jakarta, Shanghai and Houston and other global cities that are already sinking will become increasingly vulnerable to storms and flooding as a result of global warming, campaigners have warned ahead of a landmark new report on climate science. The threat to cities from sea level rises is increasing because city planners are failing to prepare, the charity Christian Aid said in the report. Some big cities are already subsiding – the ground beneath Shanghai, for instance, is being pressed down by the sheer weight of the buildings above – and rising sea levels resulting from global warming will make the effects worse. The cities named in the report are sinking for a variety of reasons. Jakarta is thought to be subsiding by 25cm a year largely because of groundwater extraction, and Houston is sinking as the oil wells beneath it are depleted. Bangkok’s skyscrapers are weighing it down, while London is slowly sinking for geological reasons: Scotland is slowly rebounding after having been weighed down by glaciers during the last ice age, which is pushing southern England downwards like a see-saw.The warning comes as the world’s leading climate scientists meet this week in South Korea to finalise a comprehensive study setting out whether and how the world can avoid temperature rises of 1.5C above pre-industrial levels. The Intergovernmental Panel on Climate Change (IPCC), the body of scientists convened by the UN, has been asked to examine the consequences of such a rise and assess what progress can be made to limit greenhouse gas emissions. The world has already warmed by roughly 1C from pre-industrial levels, and sea levels could rise by 40cm if that increases to 1.5C, previous science from the IPCC has suggested. Sharp brakes on greenhouse gas production are expected to be needed to halt the rise.Under the 2015 Paris agreement on climate change, governments pledged to hold warming to no more than 2C, with an aspiration not to surpass 1.5C, based on previous IPCC advice. The new IPCC report, to be published on Monday, is expected to show that remaining within the 1.5C limit is still possible but only with strong action to reduce carbon in the atmosphere.
Climate Change Sea Level Rise Will Be Worse Than Imagined - Hurricane Michael, the third most intense storm on record to make landfall in the U.S., has caused widespread destruction, turning places like Mexico Beach, Florida, into a hellscape of broken homes and overturned cars. It will be a while before we learn the full extent of the damage — and the human suffering and death — caused by the storm’s 155 mph winds and the 14-foot storm surge that swamped the coastline. Bad as the hurricane was, imagine the damage and destruction if that storm surge had been 15 feet or so higher. And if instead of receding, that wall of water never went away. That is what we could be facing in the not-so-distant future if we don’t dramatically cut fossil-fuel pollution. If that sounds alarmist, watch this short video. In it, you’ll see a scientist named Richard Alley in a Skype discussion with students at Bard College, as well as with Eban Goodstein, director of the Graduate Programs in Sustainability at Bard. It would be just another nerdy Skype chat except Alley is talking frankly about something that few scientists have the courage to say in public: As bad as you think climate change might be in the coming decades, reality could be far worse. Within the lifetime of the students he’s talking with, Alley says, there’s some risk — small but not as small as you might hope — that the seas could rise as much as 15-to-20 feet.Let’s pause to think about what 15-to-20 feet of sea-level rise in the next 70 or so years looks like. I’ll put it bluntly: It means not just higher storm surges from hurricanes, but the permanent drowning of virtually every major coastal city in the world. Miami, New Orleans, large parts of Boston and New York City and Silicon Valley, not to mention Shanghai, Jakarta, Ho Chi Min City, Lagos, Mumbai — all gone. And I don’t mean “sunny day flooding,” where you get your feet wet on the way to the mall. I mean these cities, and many more, become scuba diving sites. There are not enough economists in the world to calculate the trillions of dollars worth of real estate that would be lost in a scenario like this. Nor are there enough social scientists to count the hundreds of millions of people who would be displaced. You think the world is a chaotic place now? Just wait.
Losses from natural disasters have surged over last 20 years, U.N. says – The U.N. office for disaster risk reduction said Wednesday that worldwide reported economic losses from earthquakes, volcanic eruptions, floods, hurricanes and other climate-related disasters surged to total nearly $2.9 trillion over the past 20 years. UNISDR, as the office is known, said the reported loss of resources and assets like homes, factories and farms due to more frequent and widespread climate-related disasters rose 151 percent compared to the previous 20-year period. “There is a very sharp increase in the number of climate-related events, which are actually creating 77 percent of the total direct economic losses caused by disasters,” said Ricardo Mena, a UNISDR official. “This is really very alarming information.” Climate-related disasters — such as from the impact of floods, droughts, and heat waves — accounted for $2.25 trillion of the total. That was up from $895 billion reported between 1978 and 1997. The rest of the total came primarily from tsunamis and earthquakes — so-called geophysical disasters. The U.S. topped the list at over $944 billion — nearly twice the figure from China, in second. Japan, India and Puerto Rico completed the top five. The agency cautioned Wednesday that the 1998-2017 figures rely on official reports, so more economically powerful countries are generally overrepresented. Insurance is less widespread in developing countries.
Freezing season has started, or has it? -- Arctic Sea Ice by Neven - We tend to focus on the end of the melting season, also known as the minimum, because that's when the ice covers the least amount of water. That's all fine and dandy, but of course, it's just an arbitrary measuring point. For instance, this year's minimum for the JAXA sea ice extent data set was 6th lowest on record, but flash forward to the first week of October and this year's trend line is third lowest on record and could soon be second lowest on record:This, as always, had to do with the weather, which has been pretty crazy the past two weeks. First, fierce winds pushed back against the ice edge in most of the Arctic Ocean, delaying the ice pack's expansion, while at the same time continuing to melt that last, stubborn sliver of ice extending towards the East Siberian Sea. The result has been a continuing decline of sea ice extent in the Arctic Basin, and to a lesser extent in the East Siberian Sea, where, normally, the trend line should have been going up already (image courtesy of Wipneus, ASIG Regional graphs): Another factor that has come into play these past few days, is heat. It's mostly coming from the Pacific, where sea surface temperatures are running quite hot again, as can be seen on these DMI sea surface temperature anomaly maps, comparing this year's start of October with those of 2016 and 2017: When winds blow over the zone of red colours, as is happening right now, it is bound to have an effect on surface air temperatures. In fact, it has already led to an excursion into record territory on the DMI SAT map for the region north of 80°, as can be seen Zack Labe's version of the DMI graph: We have become more or less accustomed to these extreme spikes, but usually they're caused by Arctic waters releasing their heat so that they can start to freeze over. Given that they're freezing over relatively slowly right now, it's clear that the heat comes from elsewhere. This may be about to end, and when it does, the waters will start to release that heat, causing the spike to keep going for a while, setting new daily records north of 80° along the way. It has led NOAA PMEL to project freeze onset on the Chukchi Sea continental shelf northwest of Icy Cape at a record late date, 47 days later than the long-term mean (1981-2016):
Nobel Prizes in Economics, Awarded and Withheld (Climate Change Politics Edition) -- Most of the commentary today on the decision to award Nobel prizes in economics to William Nordhaus and Paul Romer has focused on the recipients. I want to talk about the nonrecipient whose nonprize is perhaps the most important statement by the Riksbank, the Swedish central bank that decides who should be recognized each year for their work in economics “in memory of Alfred Nobel”. Nordhaus was widely expected to be a winner for his work on the economics of climate change. For decades he has assembled and tweaked a model called DICE (Dynamic Integrated Climate-Economy), that melds computable general equilibrium theory from economics and equations from the various strands of climate science. His goal has been to estimate the “optimal” amount of climate change, where the marginal cost of abating it equals the marginal cost of undergoing it. From this comes an optimal carbon price, the “social cost of carbon”, which should be implemented now and allowed to rise over time at the rate of interest. In his first published work using DICE, from the early 1990s, he recommended a carbon tax of $5 a tonne of CO2, inching slowly upward until peaking at $20 in 2085. His “optimal” policy was expected to result in an atmospheric concentration of CO2 of over 1400 ppm (parts per million) at the end of this planning horizon, yielding global warming in excess of 3º C. (Nordhaus, 1992) But Nordhaus is not the only climate economist on the block. In fact, he has been locked in debate for many years with Harvard’s Martin Weitzman. Weitzman rejects the entire social-cost-of-carbon approach on the grounds that rational policy should be based on the insurance principle of avoiding worst-case outcomes. His “dismal theorem” demonstrates that, under reasonable assumptions, the likelihood of tail events does not fall as rapidly as their degree of catastrophe increases, so their expected cost rises without limit—and this applies to climate scenarios. (I explain this graphically here.) Not surprisingly, Weitzman’s work is often invoked by those who, like me, believe much more aggressive action is needed to limit carbon emissions. Because of this, whenever economists speculated on who would win the econ Nobel, the Nordhaus scenario was always couched as Nordhaus-Weitzman. (For a recent example, see Tyler Cowen, who adds Partha Dasgupta, here.) It seemed logical to pair a go-slow climate guy with a go-fast one. But as it happened, Nordaus was paired not with Weitzman but Paul M. Romer for the latter’s work on endogenous growth theory. The reality is this is a nonprize for Weitzman, an attempt to dismiss his approach to combating climate change, even though his position is far closer to the scientific mainstream than Nordhaus’. An example of the enlistment of the uncritical media in this enterprise is today’s New York Times, where Binyamin Appelbaum writes:
A major climate report will slam the door on wishful thinking --The leading international body of climate change researchers released a major report Sunday night on the impacts of global warming and what it would take to cap rising temperatures at 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, above preindustrial levels — a goal that’s exceedingly difficult, but not impossible.The report is from the Intergovernmental Panel on Climate Change, an international consortium of hundreds of climate researchers convened by the United Nations. Authorspresented their findings in Incheon, South Korea after a week of discussion.Why examine the prospects for limiting global warming to 1.5°C? Because under the Paris agreement, countries agreed that the goal should be to limit warming to below 2°C by 2100, with a nice-to-have target of capping warming at 1.5°C.The report finds that it would take a massive global effort, far more aggressive than any we’ve seen to date, to keep warming in line with 1.5°C. Without such effort, we will continue at our current trajectory toward 3°C of warming. What’s more, even if we hit the 1.5°C goal, the planet will still face massive, devastating changes. So it’s pretty grim. But the report is also a thunderous call to action, laying out what tools we have at our disposal (we have plenty) to mitigate global warming and to accelerate the turn toward cleaner energy. Let’s walk through the basics.
Literally no country is doing enough to meet the Paris Accord --Well, this is depressing... I tend to be an optimist. When Donald Trump decided to pull the United States out of the Paris Climate Accord, I argued that the global momentum and political will was such that progress would continue regardless. I still believe this is true. From entire countries banning gas and diesel car sales to giant corporations embracing 100% renewable electricity, I do believe that the general direction of travel has now been set and the only real question remaining is whether we'll get there fast enough to stave off the worst impacts of climate change. But here, my optimism gets more shaky. While progress is being made on several important fronts, a new report from consulting giant PwC pulls absolutely zero punches in terms of whether or not we are moving fast enough to solve the problem: There seems to be almost zero chance of limiting warming to well below two degrees (the main goal of the Paris Agreement), though widespread use of carbon capture and storage technologies, including Natural Climate Solutions, may make this possible. Each year that the global economy fails to decarbonise at the required rate, the two degree goal becomes more difficult to achieve. Even the UK and China—economies which are leading the way in terms of reducing carbon intensity—are not doing enough to meet the 2 degree target. Specifically, the report says that the gap between the current rate of decarbonization and the rate needed to reach even the 2 degree limit to warming (let alone the more ambitious goal of 1.5 degrees!) is widening, with it currently standing at 6.4% decarbonization per year for the rest of the century. And every year we delay action, the steeper rates of decarbonization we need to achieve in every year that follows.
U.N. Panel Warns Drastic Action Needed to Stave Off Climate Change - Rapid, far-reaching changes to almost every facet of society are needed to avoid catastrophic climate change, reforms far beyond anything governments are currently either doing or planning to do, according to a report from a United Nations-led scientific panel.The Intergovernmental Panel on Climate Change made the pronouncement as part of its assessment of climate change and efforts to mitigate its negative impact. The study came as a response to the more than 190 signatory nations to the 2015 Paris climate accord, which at the time included the U.S. The Trump administration announced last year its intent to pull out of the accord. A failure by countries to meet voluntary targets to limit global warming to “well below” two degrees Celsius, or 3.6 degrees Fahrenheit, would be devastating for some ecosystems and raise sea levels to flood many major cities and some entire countries, among other risks, the report says. The IPCC’s process brings together several scientists as lead authors to assess the scientific, technical and economic data available on whatever climate-change-related topic they’re covering. Some of that is peer-reviewed research, but the work also includes some non-peer-reviewed work by governments and industry. Typically, hundreds of scientists review the drafts IPCC authors put together, and government negotiators also have a say in their conclusions, a practice that has drawn criticism from scientists in the past. While a large body of scientific work concludes emissions cause global warming, some dispute those conclusions. The IPCC report finds meeting the carbon-reduction goals would require dramatic changes in how citizens get energy, how industries make everyday products, and how cities are designed. It would put governments in the middle of routine decisions like how people use land. Renewable energy and improved efficiency are catching on, but avoiding catastrophic climate change would require much more effort, including unproven and risky attempts to extract carbon already in the atmosphere, the report says. To meet the goals of the Paris agreement and reduce other risks, 2010 levels of global carbon dioxide emissions would need to be halved by 2030, and effectively end by around 2050, the IPCC report says. Global emissions are not shrinking, and rose last year to record levels after several years of remaining flat—despite emissions cuts in the U.S., U.K. and some other countries, according to the International Energy Agency.
Summary for Policymakers of IPCC Special Report on Global Warming of 1.5°C approved by governments - IPCC, Incheon, Republic of Korea, October 8 – Limiting global warming to 1.5°C would require rapid, far-reaching and unprecedented changes in all aspects of society, the IPCC said in a new assessment. With clear benefits to people and natural ecosystems, limiting global warming to 1.5°C compared to 2°C could go hand in hand with ensuring a more sustainable and equitable society, the Intergovernmental Panel on Climate Change (IPCC) said on Monday. The Special Report on Global Warming of 1.5°C was approved by the IPCC on Saturday in Incheon, Republic of Korea. It will be a key scientific input into the Katowice Climate Change Conference in Poland in December, when governments review the Paris Agreement to tackle climate change. "With more than 6,000 scientific references cited and the dedicated contribution of thousands of expert and government reviewers worldwide, this important report testifies to the breadth and policy relevance of the IPCC," said Hoesung Lee, Chair of the IPCC. Ninety-one authors and review editors from 40 countries prepared the IPCC report in response to an invitation from the United Nations Framework Convention on Climate Change (UNFCCC) when it adopted the Paris Agreement in 2015. The report's full name is Global Warming of 1.5°C, an IPCC special report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty.
UN report warns of catastrophic consequences of climate change within 20 years - The United Nations Intergovernmental Panel on Climate Change (IPCC) released a special report Monday calling for “rapid, far-reaching and unprecedented changes in all aspects of society” in order to limit human-induced global warming to 1.5 degrees Celsius above pre-industrial levels. “If the current warming rate continues,” the report states, “the world would reach human–induced global warming of 1.5°C around 2040.” Avoiding the disastrous consequences of climate change, the report stated, requires transforming the world economy in a way that has “no documented historic precedent.”The report, prepared by 91 scientists from 44 countries, is the latest UN paper reviewing the scientific evidence of climate change and its current and projected impact on every ecosystem on Earth. It contrasts the changes to the environment that would occur in a scenario where warming is limited to 1.5 degrees versus of 2 degrees Celsius. Human activity has already caused approximately 1 degree Celsius of warming. The last three years—2015, 2016 and 2017—were the three warmest years on records going back to 1880, and 17 of the 18 warmest years have occurred since 2000.Global warming has contributed to a series of ecological disasters, including larger forest fires, longer heat waves, stronger hurricanes and more torrential typhoons. Even a limited further warming will have far reaching consequences. The report states that if warming reaches 1.5 degrees, food shortages will multiply poverty in every country. The Arctic Ocean will be totally free of sea ice at least once a decade, potentially causing the extinction of the myriad of animals that rely on that ice to flee from predators and raise young. Coral reefs will decline by 70–90 percent, wiping out the habitat that about a quarter of the ocean’s creatures rely on to survive. Weather across the globe will become more damaging and deadly. The report estimates that if warming reaches the projected levels, it will cause damages of between $54 and $69 trillion dollars worldwide.
Michael Mann: We Are Even Closer To Climate Disaster Than IPCC Predicts -- Real News Network interview and transcript - A new report from the world’s leading body on climate change warns that in just 12 years, rising global temperatures could cause irreversible damage like mass extinctions and severe droughts. Just 12 years. The report from the International Governmental Panel on Climate Change, or the IPCC, says if temperatures keep increasing at their current rate, global warming is likely to reach 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, above pre-industrial levels between 2030 and 2052. To avoid a disaster, the IPCC says governments must take “rapid, far-reaching, and unprecedented changes in all aspects of society.” Now joining us to talk about this is seminal climate scientist Michael Mann. Michael Mann is a distinguished professor and director of the Earth Science Systems Science Center at Penn State University. He’s the author of several books, perhaps most famously in 2012 The Hockey Stick and the Climate Wars, and most recently The Tantrum that Saved the World, a children’s book on climate change which he coauthored with Megan Herbert. .
Campaigners Respond to 'Game Changing' IPCC 1.5°C Report - The Intergovernmental Panel on Climate Change (IPCC) has released a report that outlines the “unprecedented” changes necessary to prevent the world warming by more than 1.5°C. Climate campaigners have called the report “game-changing”.While the target may be ambitious, the IPCC scientists say there are “significant” benefits to holding warming to that level, and outline a number ways it can be achieved with current and new technologies.The report emphasise the significant benefits of preventing an additional 0.5°C of warming, including:
- Global sea level rise would be 10 cm lower by 2100 with global warming of 1.5°C compared with 2°C;
- The likelihood of an Arctic Ocean free of sea ice in summer would be once per century with global warming of 1.5°C, compared with at least once per decade with 2°C;
- And coral reefs would decline by 70 to 90 percent with global warming of 1.5°C, whereas “virtually all” would be lost with 2°C.
Here's how campaigners reacted to the report. We'll be updating throughout the day.
The IPCC Special Report – mountain or molehill? - According to a number of media sources the just-released IPCC Special Report confirms that climate change is about to fry us (We need massive changes to avoid climate hell says Wired Magazine). In fact it adds nothing of significance to what the IPCC concluded in its 2014 Assessment Report (AR5) and provides no new evidence to support the claim that climate change will fry us when warming reaches 1.5 – 2°C above pre-industrial levels. Effectively all it says is that the impacts of 2°C of warming will be greater than the impacts of 1.5°C of warming. In short, it’s a molehill. Or maybe just a medium-sized cow pat. The IPCC Special Report: …. responds to the invitation for IPCC ‘… to provide a Special Report in 2018 on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways’ contained in the Decision of the 21st Conference of Parties of the United Nations Framework Convention on Climate Change to adopt the Paris Agreement. It will be a key scientific input into the Katowice Climate Change Conference in Poland in December, when governments review the Paris Agreement to tackle climate change. The results of the report are presented in:
- A four-page press release
- A three-page summary of “headline statements”
- A 33-page Summary for Policymakers, and
- Complete texts of Chapters 1 through 5, amounting to some hundreds of pages.
Here I address only the first three documents. The Chapters are a little too long for a brief review.
How high does carbon need to be? Somewhere from $20-$27,000 - The idea that carbon markets can help rein in greenhouse gas emissions got fresh momentum this week from a panel of scientists convened by the United Nations. But whether the idea gains more political currency this time depends on the price that policymakers set for emitting Earth-warming carbon dioxide into the atmosphere. The UN panel set out a number of scenarios, suggesting that markets alone won’t solve the problem. “A complementary mix of stringent policies is required,” scientists said in the report. The market has the potential to shave 10 billion tons off global emissions by 2030, a 25 percent reduction from current levels. Another dividend: money collected from carbon pricing could be used to soften the blow of higher energy prices. The panel stopped short of recommending a price. Instead, it said the price required depends on the goal policy makers want to hit and what other rules and regulations they impose. The idea is that a market together with regulations and taxes will provide both incentive and penalties for polluters to roll back their emissions. Carbon prices would probably need to be 20 times higher than current levels in Europe to rein in fossil fuel emissions if that was the main policy mechanism in place, the Intergovernmental Panel on Climate Change said in its report. After assessing peer-reviewed academic research, it concluded:
- Prices need to average between $140 to $590 a ton from 2030 to 2100 to keep global temperatures from rising more than 1.5 Celsius above levels seen before the industrial revolution
- For a less ambitious target of keeping temperatures from rising 2 degrees, average carbon prices could average from $20 to $150 over the same period
- For the more ambitious limit, prices may need to jump above $1,000 sometime before 2030 and perhaps reach as much as $27,000 by the end of the century
United Nations- A $240 Per Gallon Gas Tax Is Needed To Fight Climate Change - The United Nations has declared that a $240 per gallon gasoline tax is “needed” to fight climate change. To limit global warming, the UN’s report says that $27,000 per tonne of gasoline will need to be stolen from the public by the year 2100. For Americans, that’s the same as a $240 per gallon tax on gasoline in the year 2100, should such a recommendation be adopted. In 2030, which is only 12 years away, the report says that the carbon tax would need to be as high as $5,500, and the equivalent to a $49 per gallon gas tax, reported The Daily Caller. The constant fear mongering of, and theft from, the public in the name of climate change has not dwindled much in the past ten years, and if anything, it has gotten worse. No amount of money will ever be enough to satisfy the ruling class elitists that expect us to just accept that they will continue to steal from us in the name of any agenda they try to scare us about. This is no longer about climate change, but about the desire to steal from those on the very bottom of the economic ladder by those who believe themselves to be superior with authority over everyone.Hopefully, this is an unlikely scenario, but with more and more humans demanding their own slavery at the hands of other humans, who knows. This huge tax is, however, what the Intergovernmental Panel on Climate Change’s report, released Sunday night,sees as a policy option (normal people see it as egregious theft) in the name of reducing emissions enough to keep projected global warming below 1.5 degrees Celsius, according to The Daily Caller. The IPCC’s report is meant to solidify political support for the Paris climate accord ahead of a U.N. climate summit scheduled for December. The report calls for societal changes that are “unprecedented in terms of scale” in order to limit future global warming to below 1.5 degrees Celsius, the stretch goal of the Paris accord. But, according to their own report, there is very little evidence that global warming has caused many types of extreme weather events to increase.
Not Just CO2: These Climate Pollutants Also Must Be Cut to Keep Global Warming to 1.5 Degrees - Countries won't be able to limit global warming to 1.5 degrees Celsius above pre-industrial levels, considered by some scientists and policymakers to be the "safe" limit of climate change, without immediate and rapid reductions in a wide range of greenhouse gases, not just carbon dioxide, according to a new United Nations report. The report, released Oct. 8 by the Intergovernmental Panel on Climate Change, sums up the research into how 1.5°C of warming will affect the world and how global warming can most effectively be stopped. The planet has already warmed about 1°C since the start of the industrial era, and that's likely to reach 1.5°C between 2030 and 2052 if emissions continue at their current rate, the IPCC says. It describes how recent warming has been accompanied by a trend toward more intense and frequent climate, temperature and weather extremes, and how those risks will rise with the temperature. The warming can be stopped, the IPCC writes in its summary for policymakers. Doing so will require countries to reduce global net emissions of carbon dioxide to zero by around 2050 and to also significantly reduce short-lived climate pollutants, including methane, black carbon and hydrofluorocarbons, or HFCs. That emphasis on reducing short-lived climate pollutants, which are many times more potent than CO2 but don't last as long in the atmosphere, is stronger than what has been written into past international agreements. That's partly because, with the clock running out before the world busts through its carbon budget, curtailing short-lived pollutants can buy valuable time. Groups that are encouraging reducing short-lived climate pollutants emphasize that doing so reduces health hazards at the same time. For example, black carbon, also known as soot, can damage the lungs and cause heart problems, particularly for people who live or work around sources of it, such as diesel engines or wood- or coal-burning cookstoves. "If you reduce things like black carbon emissions from the tailpipes of vehicles, for example, you are providing these important air quality improvement benefits which is going to help local populations as well,"
What climate change is actually expected to do - One thing I’ve noticed over the years as I’ve written about climate change is that the actual predicted effects of a warmer world often aren’t well known. People understand that the planet is getting hotter, a change that is both easy to understand and directly familiar to almost everyone.But the effects of the increased heat are much broader than simply higher temperatures. In an effort to delineate what scientists expect to see as the world warms, I spoke with Alex Halliday, director of the Earth Institute at Columbia University.Here are the negative repercussions scientists expect to see in a warmer world.
- Increased health risks. One of the most immediate effects of higher temperatures is an increased threat of health risks such as heat stroke. As noted above, this is probably the most easily understood risk.
- Drought. There will be more droughts. For one thing, higher temperatures will lead to faster evaporation of surface water. For another, they will mean less snowfall, as precipitation will be more likely to fall as rain. In some regions, like much of the Southwest, flows of water through the spring and summer are a function of snow melting in the mountains. Reduced snowpack means less water later in the year.
- Wildfires. Higher temperatures and drier conditions in some places will also help wildfires spread and lengthen the wildfire season overall.
- Broader spread of some diseases. One of the benefits of living in a colder-weather climate is that winter kills insects such as mosquitoes. As temperatures stay warmer, mosquitoes will be more likely to survive. Diseases that are commonly associated with the tropics will become more common farther north.
- Big precipitation events will be even rainier and snowier. Warmer air holds more moisture. So when there are large precipitation events, such as major storms, there’s more water in the air that can fall to the ground. This is one of the reasons that people point to the role of climate change in the development of Hurricane Harvey last year in Houston.
- Warmer temperatures. Atmospheric moisture itself helps trap heat, making the problem of climate change itself worse.
- Increased flooding. The increase in precipitation in some places will lead to more inland flooding. New York and parts of New England were devastated by flooding after Hurricane Irene made landfall in 2011.
- Rising sea levels. The more obvious flooding risk comes from rising sea levels. This increase is already well-documented. Parts of southern Florida now flood frequently enough that it barely makes the national news.
Are people really concerned about climate change? What the polls tell us --review of recent public opinion polls reveals that the public, when asked only about climate change, will agree overall that it’s a serious problem that demands action. When asked to rank climate change against other concerns, however, it comes well down the list. The implication is that the public really isn’t worried about climate change. Certainly the high level of public support that would be needed to implement an aggressive and highly disruptive transition to low-carbon energy, such as that called for by the Paris Agreement, does not exist. The climate change lobby is in fact losing the public support battle. As illustrated in the inset, politicians pay a lot more attention to the results of climate change opinion polls than they do to climate change science. And since politicians are responsible for setting climate change policy a review of what climate change polls tell them becomes important. In this post I review the results of climate change polls from four countries – the US, the UK, Canada and Australia – along with two global polls. We begin with the global polls.
The Nihilism of Trump’s Climate Policy -- The Washington Post dove deep into a draft statement issued by the National Highway Traffic Safety Administration last week and found buried within it a startling admission.Planet Earth, the agency’s analysts observed, is currently on track to warm by approximately 4 degrees Celsius by the end of the century. But that’s not the startling thing I’m referring to. This is: The statement’s authors were passing along this bit of news in order to lend support to the administration’s decision to weaken fuel efficiency standards for cars and light trucks built after 2020.That’s right: The United States government is basically making the argument that reducing carbon pollution from cars can’t save us—so why bother? This is, to put it mildly, a twist on the usual rules of engagement between those who advocate for climate action and those who don’t. We’re used to fighting skepticism. But outright nihilism? That’s a new one. We’ve been rebutting climate change deniers—and their faulty data and conspiracy theories—for years, and as disturbing as it is to see their ilk installed in the executive branch, we at least have a template for fighting back: Lead confidently with the science, never let a bogus claim go unchallenged, and have faith that truth will ultimately win the day. But how are you supposed to respond when those who oppose climate action actually do accept the science behind global warming, and do understand that climate change poses an existential threat to humankind . . . but simply don’t care?
Australian government backs coal in defiance of IPCC climate warning --The Australian government has rejected the Intergovernmental Panel on Climate Change report’s call to phase out coal power by 2050, claiming renewable energy cannot replace baseload coal power. The deputy prime minister, Michael McCormack, said Australia should “absolutely” continue to use and exploit its coal reserves, despite the IPCC’s dire warnings the world has just 12 years to avoid climate change catastrophe.He said the government would not change policy “just because somebody might suggest that some sort of report is the way we need to follow and everything that we should do”.The Labor leader, Bill Shorten, also did not commit to the total phase-out of coal, but called for more renewable energy.Since the former prime minister Malcolm Turnbull abandoned the emissions reduction component of the Coalition’s national energy guarantee, Australia has been left without a policy to reduce greenhouse gas emissions beyond 2020, when the renewable energy target will expire.The prime minister, Scott Morrison, has claimed Australia will meet its Paris climate agreement targets of reducing emissions by 26% to 28% on 2005 levels by 2030 “in a canter”. The claim is contradicted by environment department figures showing emissions are rising and advice from the Energy Security Board that Australia will fall short under a business-as-usual scenario.The IPCC report held particularly sobering news for Australia, that holding warming to 1.5C rather than 2C would probably be the difference between the survival of some Great Barrier Reef coral and its complete decline.On Monday McCormack told Sky News coalmining was “very, very important” because it provided 60% of Australia’s electricity, 50,000 jobs and was Australia’s “largest export”. Iron ore will be Australia’s biggest exporter earner in 2018-19.McCormack said he “understands the concerns” expressed in the IPCC report, but admitted he hadn’t read it yet. “I’ll certainly consider what it has to say. But the fact is, coalmining … and coal-fired power stations do play an important part of our energy mix in Australia and will do so going forward.” The deputy prime minister said that he hadn’t “seen anything that’s going to replace coal in the near future”, predicting it would be an important part of the energy mix “for more than just 10 years”.
How Brazil’s presidential election could eff up the planet for everyone - As the vast Brazilian rainforest steadily dwindles, so do our chances of limiting global warming to 1.5 degrees Celsius. And with the possible election of Jair Bolsonaro, the so-called “Trump of the Tropics” and far-right frontrunner in the Brazilian presidential election, a crucial part of the planet’s carbon emission-curbing toolkit might be in jeopardy. Bolsonaro has indicated he may open Indigenous areas up to mining, even potentially introducing a paved highway through the Amazon. The environmental impact of those policies would be “the biggest threat to the Amazon since Brazil was under a dictatorship,” said Doug Boucher, Scientific Advisor for The Union of Concerned Scientists’ Tropical Forests and Climate Initiative. “It’s a threat to the climate of the entire planet.” From 2005 to 2012, deforestation decreased by about two thirds under the Luiz Inácio Lula da Silva administration — from 20,000 kilometers per year before Lula was elected to about 6,000 square kilometers per year. Since then, deforestation has basically remained at the same comparatively low levels, reducing Brazil’s CO2 emissions by more than half, according to Boucher. Any shift in the country’s administration could endanger that progress — Presidential elections in Brazil tend to coincide with higher deforestation rates, regardless of the candidate. But Bolsonaro’s vision for handling environmental matters is uniquely jarring. Known for his homophobic, racist, and misogynistic views, the controversial politician also has a long track record of opposing an environmental agenda. He’s against taking action on climate change at all, pledging to follow President Trump’s lead by jettisoning the Paris Climate Agreement. Bolsonaro has also made his views on race blatantly clear: He has criticized the Brazilian government’s commitment to preserving vast swaths of the Amazon for Indigenous people, promising that he will “not to give the Indians another inch of land.” Moreover, Bolsonaro has allied himself with the right-wing ruralista bloc, which represents the interests of agribusinesses and large landholders, and has been trying to strip away environmental protections against deforestation for many years.
Renewable energy is growing too slowly to meet climate goals, International Energy Agency warns - The world needs to ramp up adoption of renewable energy, especially beyond the electric power sector — or else it will fall behind in the battle against climate change, the International Energy Agency said on Sunday.In a new report, the Paris-based policy adviser forecasts that renewable energy sources will provide 30 percent of the world's total electric power generation by 2023. But electricity is just one piece of the pie: Five years from now, renewables will only account for 12.4 percent of the world's total energy demand, the IEA said.IEA Executive Director Fatih Birol said the low penetration of renewables for transportation and heat in homes and industry — where most of the world's energy is consumed — is a major "blind spot" that needs to be addressed."Indeed, their role in heat and transport is often overlooked even though decarbonising these sectors is a key priority to achieve our long-term climate and sustainability goals," Birol wrote in the IEA's 2018 report on renewable energy.At the current pace of development, renewables will only account for 18 percent of the energy the world uses by 2040. That is far short of the 28 percent threshold the IEA believes is necessary to mitigate the impacts of climate change, produce cleaner air and provide access to modern energy around the world.IEA says renewable energy could grow 25 percent faster, if governments enact policies and regulations that give companies and investors confidence to invest in clean energy.The group now expects renewables to meet 40 percent of new global energy demand between 2018 and 2023. By 2023, China is forecast to surpass the European Union as the world's top consumer of renewable energy, thanks to policies aimed at decarbonizing the energy sector and cutting the country's notoriously high pollution levels. The nation will account for 40 percent of the growth in renewable energy over the next five years alone, the agency predicted.
How Are We Doing on a ‘Green New Deal?’- naked capitalism; Yves here. I know grand-sounding ideas like a Green New Deal are made with the best of intention, but reading this post confirms my view that our collective goose is cooked. A big push towards green energy 30 years ago could have made a big difference, but we need more radical, faster impact measures now. Emphasis on green energy diverts attention from the fact that individuals and businesses need to cut their energy use in a big way, now. The article does mention ideas for cutting some big energy uses, like beef and single use plastics but is hesitant about restrictions. I see no proposals for cutting air transportation. And don’t get me started on the misguided concern about hyperinflation. By contrast, during the oil shock, people did way more in the way of energy conservation than I see now. Office buildings turned their summer temperatures to 77 degrees. The every-other-day gas system (and long lines at pumps) led to a lot more car pooling. Do we see anyone now sharing rides or trying to cut back on car use? Instead we have Uberization, which means more cars running around with one person in them. The article also fails to mention issues NC readers often raise, first, that these green technologies often use scarce or nasty inputs, like rare earths, so they have high non-carbon environmental costs. Second, the greenhouse gas cost of creating green infrastructure is seldom factored into the equation. It takes lots of moving of stuff, which these days entails using fossil fuels. Of course, one thing that would cut government energy expenditure meaningfully, a major downsizing of the US military, is guaranteed not to happen. By Edward Robinson; Originally published at openDemocracy - As the IPCC publishes its new report on global warming of 1.5 degrees, we need a political and economic stock-take…
Exxon Puts Up $1 Million to Promote Carbon Tax – WSJ - Exxon Mobil Corp. , once a powerful skeptic of global warming, will now be among the first oil companies to put money into the fight to make climate change a political priority in Washington. The U.S.’s largest energy producer will commit $1 million over two years to promote a national tax on carbon as a way to address the environmental issue. The funding will back an initiative designed to appeal to the Republicans who now control Washington, and may open the door for Exxon’s peers in the oil industry to follow. As warnings over the dangers of climate change have grown, governments around the world have pursued increasingly stringent regulation of fossil-fuel companies. Exxon’s move is an attempt to manage such pressure in the U.S. in ways it hopes will simplify requirements on the oil industry, according to a person familiar with the company’s thinking. Exxon sees a carbon tax as an alternative to patchwork regulations, putting one cost on all carbon emitters nationwide and eliminating regulatory uncertainty hovering over Exxon’s business in states that might seek to target oil companies, the person said. Exxon’s contribution will go to Americans for Carbon Dividends, a new group, one of whose co-chairmen is former Senate Majority Leader Trent Lott. It is promoting a carbon tax-plus-dividend policy first proposed by two former U.S. secretaries of state, James Baker III and George Shultz, last year. All three men are Republicans. The initiative’s goal is to discourage companies from emitting carbon through the tax, while minimizing additional cost to consumers. Funds raised by the tax would be channeled to Americans through what the group calls a “carbon dividend” that it estimates could be as much as $2,000 annually per family. Monthly payments would go directly to the recipients. The tax would be “revenue-neutral,” having no net effect on government receipts.
EIA's Electric Power Monthly - August 2018 Edition With Data For July - The EIA released the latest edition of their Electric Power Monthly on September 25th, with data for July 2018. The table above shows the percentage contribution of the main fuel sources to two decimal places for the last two months and the year to date.For the month of July, the total amount of electricity generated was the second-highest amount generated for any single month since January 2013 at 410,148 GWh, 2,302 GWh less than the amount generated in July 2016. Coal and Natural Gas fueled almost 68.5% of US electricity generation in July and while the contribution from Coal increased from 27.36% in June to 28.18% in July, the contribution from Natural Gas also increased by slightly more than five percentage points, reaching an unprecedented 40.28% up from 35.02% in June. Nuclear power generated 72,456 GWh, 3.97% more than it did in June but, due to the increase in total generation, the percentage contribution to the total actually declined to 17.67% from 18.77% in June.In July, the contribution from All Renewables at 13.01% fell further below that from Nuclear at 17.67%, similar to July 2017 when the ramp-up of total generation resulted in the percentage contribution from All Renewables falling further below that from Nuclear. The absolute contribution from Solar declined from its all-time high in June of 10,880 GWh to 10,049 GWh, with the corresponding percentage contribution declining to 2.45% as opposed to 2.93% in June. The amount of electricity generated by Wind decreased by almost 35%, from 24,411 GWh to 15,897 GWh and coupled with the increased total generation, the percentage contribution declined from 6.58% to 3.88% in July. The contribution from Hydro decreased 13.53% from 27415 GWh in June to 23706 GWh, resulting in the percentage contribution decreasing from 7.39% in June to 5.78%. The combined contribution from Wind and Solar decreased to 6.33% from 9.51% in June. Consequently, the contribution from Non-Hydro Renewables also decreased to 7.23% from 10.48%. The contribution of zero emission and carbon neutral sources, that is, nuclear, hydro, wind, solar, geothermal, landfill gas and other biomass decreased to 30.68% from 36.64% in June. The graph below helps to illustrate how the changes in absolute production affect the percentage contribution from the various sources.The chart below shows the total monthly generation at utility scale facilities by year versus the contribution from solar. The left-hand scale is for the total generation, while the right-hand scale is for solar output and has been deliberately set to exaggerate the solar output as a means of assessing its potential to make a meaningful contribution to the midsummer peak. The scale on the y axis has been adjusted to display TWh instead of GWh as suggested by Dennis (Coyne) earlier this year to make the comparison a little easier. In July 2018, the output from solar at 10,049 GWh was 3.64 times what it was four years ago in July 2014. Solar energy appears to have peaked in June, the month of the summer solstice, so it is looking like the peak monthly output for 2018 is likely to be 10,880 GWh, barring the remote chance that more is generated in August.
Mass. DPU orders halt of work, review of National Grid safety practices after pressurization issue - National Grid crews have shut off gas to hundreds of properties in Woburn after a gas technician introduced “excess gas” into the system, officials said, and state officials have ordered the utility company to stop all work until safety practices can be reviewed.A crew performing routine maintenance on a regulator station in the area of Wyman and Hart streets about 11:30 a.m. Monday “inadvertently introduced excess gas” into the system, according to a National grid spokesperson.The issue was quickly recognized and the crew has since reduced the system to normal operating pressures.“ There is no apparent damage to the system, which feeds approximately 300 homes through three miles of pipe,” the spokesperson said. “In addition, pressure-control devices at each property function as an extra safety measure to limit the flow of gas to safe and normal levels.” But Monday afternoon, officials with the Department of Public Utilities — which has authority over the state’s gas distribution system — ordered “a moratorium on all work, except for emergency and compliance work, across the company’s entire service territory pending the results of DPU’s review of National Grid’s safety practices.” The state is also requiring that National Grid have an inspector on hand for all work involving pressurization. The department says it will hire an “Independent Evaluator” to review the state’s pipeline infrastructure. Before the gas is turned back on, National Grid says technicians will be going door-to-door to turn off meters and assess the system. Christine Milligan, a spokesperson for National Grid, said that last month’s incident in Merrimack Valley was “completely unrelated to National Grid” and Woburn residents are not in danger.
One of the Most Important Agencies You've Never Heard of Is Being Taken Over by Trump -Most Americans probably don't know that an independent—and up to now nonpartisan—government agency has played a key role in our nation's transition to cleaner energy technologies. Under the radar and hidden beneath a layer of technical jargon, the Federal Energy Regulatory Commission (FERC) has shepherded changes to electricity market rules that have gradually allowed the superior economics of clean energy technologies to out-compete clunky, old fossil fueled power plants. And it has done this for decades, under both Democratic and Republican administrations.Now the Trump administration is poised to tip FERC's balance by appointing a fossil fuel advocate as one of five commissioners—putting all that bipartisan clean energy progress under threat. However, because few people have heard of the important work done by this small, technocratic agency, this potential appointment could move forward without much opposition. This has to change. A healthy, livable climate depends on it.Bernard McNamee is the Trump administration's pick to fill Robert Powelson's recently vacated seat on FERC. McNamee currently leads the Office of Policy at the Department of Energy, where he helped to roll out Energy Sec. Rick Perry's failed attempt to bail out the coal and nuclear industries.His resume reads like a who's who in the fossil fuel industry and the far-right political crowd.McNamee has deep ties to the Texas Public Policy Foundation, the Koch-funded organization that has provided a pipeline of Trump nominees, including the former nominee to the Council For Environmental Quality that even Republicans agreed was unqualified for the job. It was there that McNamee spearheaded "Life: Powered," a project launched by the group in 2015 "to combat the Obama-era Clean Power Plan," according to TPPF's 2017 annual report. He also served as a senior advisor and counsel to Sen. Ted Cruz (R-TX). By all accounts, he's decidedly political and unabashedly an advocate for dirty energy.
Trump Moves to Allow More Ethanol in Gasoline – WSJ —President Trump is moving to allow year-round sale of gasoline containing a higher percentage of ethanol, satisfying campaign promises he made to the Farm Belt, while likely provoking a battle with the oil industry. Mr. Trump has endorsed pushing the maximum to 15% and views it as a way to expand biofuels and help farmers, according to a senior White House official. The directive wouldn’t require refineries to increase their blends, but could spur sales of ethanol and give the ethanol industry more of a grip on the market. Mr. Trump is to make the policy announcement Tuesday, the White House official said. Afterward, Mr. Trump will travel to Iowa, the leading corn- and ethanol-producing state, for a political rally alongside Republican candidates eager to campaign on the issue. As a concession, Mr. Trump also is proposing changes to a credit program which allow oil refiners to buy and sell credits for using ethanol, the White House official said. But those moves are unlikely to win the oil industry’s support. Refineries are required to blend fuels with about 10% percent plant-based ethanol or purchase credits from rivals to satisfy obligations. E15, the term for gasoline with 15% ethanol, is currently banned in summer months due to smog concerns. Mr. Trump’s action would direct the Environmental Protection Agency to allow E15 sales year-round. The goal is to have the policy in effect for the 2019 summer driving season, the official said, though the rule-making process and court challenges could complicate the timeline, the White House official said. Year-round E15 has faced fierce opposition from the oil industry, which has complained about costly regulations driven by the required ethanol use, and environmental groups concerned about air quality and a rapid expansion of cropland to grow the corn for ethanol. “Gasoline with more ethanol produces more smog, which can harm the health of people—especially children and the elderly. That’s why the Clean Air Act makes it illegal to sell generic E15 gasoline in the summer,”
European environment ministers agree 35 percent car emission cut by 2030 - European Union lawmakers have hammered out a deal to cut vehicle emissions by 35 percent by 2030, offering a further boon to the development of electric and hybrid cars.Germany, which had insisted on a maximum 30 percent cut, relented after winning a concession to carry out an interim review of the rules. Germany's stance had been backed by other car producing nations including Bulgaria, the Czech Republic, Hungary, Poland and Slovakia.The group of environment ministers said the 35 percent reduction of carbon dioxide gas emitted must be from recorded levels in 2020. It also should include an intermediate target of a 15 percent reduction by 2025.Last week, the European parliament voted for a more ambitious 40 percent reduction by 2030.Ministers from the 28 nations will meet Wednesday onward with representatives from the European Parliament to work towards translating the recommendation into law.One global forecast on energy has predicted that almost all new sales of cars across Europe to be electric or hybrid within 20 years. The report, titled the Energy Transition Outlook, says for the United States, a similar situation will be in place by the 2040s. Automakers in Europe have been less effusive about a rapid transition away from traditional combustion engines. In September, the European Automobile Manufacturers' Association (ACEA) said fewer workers will be required to build or repair all-electric vehicles.
Rick Perry warns of cyberattack risk, could come from 'some kid sitting in a basement' -- Energy Secretary Rick Perry said Thursday he has a “healthy concern” about the threat of cyberattacks by adversaries, including targeting of the electricity grid. “Healthy concern is always good in this business,” Perry said at the Atlantic Festival in Washington. “One of my great concerns is to make sure the grid is resilient and it's reliable.” But Perry said the private sector is working with the Energy Department’s national labs to fend off attacks. “This is truly one of those where the private sector is very, very important to our ability to be successful to defend against the nefarious activities of nation states, of terrorist groups, of some kid sitting in a basement somewhere trying to hack into a system." "I worry not just about the Chinese or the Russians or the Iranians hacking in," Perry added. "We know they are doing it. You can read the newspaper and see they are actively involved in that, and becoming more and more sophisticated.” Perry’s comments came just weeks after he scolded Russia for its continued attempts to hack the U.S. power grid. He suggested Moscow has not stopped its hacking efforts after the Department of Homeland Security said in March that Russian hackers gained access to the U.S. electrical grid last year. Pipelines can face cybersecurity threats, especially with the use of more digital sensors, controls, and even drones to remotely access and monitor pipeline facilities.
Solar Plant Opens at Uninhabitable Chernobyl Nuclear Site - Ukraine opened a solar plant on Friday in Chernobyl, a little more than 100 yards from the power plant that caused the world's worst nuclear disaster in 1986, AFP reported."Today we are connecting the station to the power system of Ukraine," Ukrainian-German company Solar Chernobyl head Yevgen Varyagin said at the opening ceremony.The site of the Chernobyl disaster, which killed thousands and forced hundreds of thousands to evacuate, is surprisingly ideal for renewable energy. The 1,000 square miles surrounding the plant won't be safe for humans for 24,000 years, but the site is already connected to the power grid, Fortune pointed out."It's not just another solar power plant," Varyagin told reporters, according to Reuters. "It's really hard to underestimate the symbolism of this particular project."The undamaged Chernobyl power plants generated energy until 2000, when they were shut down. It looked as though the site's days as an energy source were over."But now we are seeing a new sprout, still small, w eak, producing power on this site and this is very joyful," head of the Chernobyl nuclear plant Valery Seyda said, according to Reuters.
Australia to 'Absolutely' Exploit and Use Coal Despite IPCC Warning - Australia's coal-loving lawmakers dismissed the Intergovernmental Panel on Climate Change's (IPCC) warning to phase out the polluting fossil fuel by 2050.In a recent interview with SkyNews, deputy prime minister Michael McCormack said Australia will "absolutely" continue to use and exploit its coal reserves regardless of what the IPCC report says.Australia is particularly vulnerable to the effects of climate change, with relentless drought, deadly wildfiresand devastating bleaching at the iconic Great Barrier Reef. At the same time, Australia is one of the world's largest coal exporters, accounting for 37 percent of global exports.In the major United Nations report on Sunday, the world's top climate scientists said that limiting global temperature rise to 1.5°C will stop catastrophic global warming and help prevent Australia's imperiled coral reefs from destruction.However, McCormack insisted to SkyNews that the government will not change its policies "just because somebody might suggest that some sort of report is the way we need to follow and everything that we should do."Coal mining, McCormack said, is very important to Australia because it provides 60 percent of the country's electricity, 50,000 workers and is its largest export.He added that he has not "seen anything that's going to replace coal in the near future" and maintained that coal will be an important part of the energy mix for more than 10 years.Environment minister Melissa Price, who used to work for the mining industry, further advocated for coal and suggested the 91 scientists behind the IPCC report were wrong in their findings. "I just don't know how you could say by 2050 that you're not going to have technology that's going to enable good, clean technology when it comes to coal," she told ABC's AM program. "That would be irresponsible of us to be able to commit to that."
Greenpeace activists scale German embassy in London to protest against coal (Reuters) - Activists from environmental group Greenpeace scaled the German embassy in London on Monday, unfurling a giant green banner which called for an end to the use of coal. At least five activists scaled the building on Belgrave Square with a banner which read: “Exit Coal - Protect Hambach Forest,” according to a Reuters photographer at the scene.
Russia to construct 6 nuclear power plant units in India - Moscow and New Delhi have agreed to extend their peaceful nuclear energy business. Russia’s Rosatom will build new sites in India, according to an agreement signed during Russian President Vladimir Putin’s visit to India. “The parties plan, in particular, to develop the project on construction of six Russia-designed nuclear power plant units in India at the new site, to expand cooperation in third countries and cooperation in new promising areas in the nuclear power industry,” the press release from Rosatom said.The agreement was signed by Rosatom CEO Aleksey Likhachev and Indian Atomic Energy Commission Chairman Kamlesh Nilkanth Vyas on the sidelines of the Russian-Indian summit in New Delhi on Friday. The site for new NPP units is not named, but previously it was reported that it may be located in the Indian state of Andhra Pradesh.Russia is one of India’s key partners in nuclear energy. Russia built the single largest nuclear power station in India, Kudankulam NPP, which was first agreed back in 1988 with the Soviet leadership. The construction began in 2002, and the NPP was launched in 2013. Since then, the plant has been expanded, and Russia is building units 3 and 4 at the plant with plans to build units 5 and 6 in the next two years.“We are satisfied with our strategic cooperation with India, where the Russian designed nuclear power units are operating and being constructed at Kudankulam site. We expect to start implementation in the near future serial construction of new units at a second site in India,” Rosatom’s Likhachev said. President Putin said during his meeting with Indian Prime Minister Narendra Modi on Friday that the countries could expand their energy cooperation to other spheres. “We are ready to consider the possibility of cooperation in the framework of such programs as Far East LNG, Arctic LNG-2, as well as other projects for the development of natural resources of Siberia, Yamal and the continental shelf in the Russian Federation,” Putin told Modi.
Reliable One Resources Announces Purchase of Ohio Disposal Well Facility --- Reliable One Resources, Inc. today announced the purchase of an existing, operating, water disposal and injection facility in Athens County, Ohio, a key milestone in the company’s strategy to collect and treat produced and flowback water for oil and gas operators throughout the United States. The purchase was made by Reliable One’s wholly-owned Reliable Enterprises, Inc. subsidiary, which does business in the state as Reliable Enterprises Ohio, Inc.The Athens County facility has current contracts with oil and gas producers and water haulers in the Marcellus Shale region. As a result, an existing supply of water is already committed to the site, and operations at the facility will be maintained throughout the ownership change. Existing management has agreed to stay on to ensure a seamless transition with uninterrupted operations at the site.The location of the facility is considered ideal due to its proximity to operators in the Marcellus Shale as well as those in the Utica Shale and adjoining oil and gas producing areas.Near-term plans for the facility include expanding water storage with the installation of additional tanks, which is projected to increase capacity by 30%, followed by the drilling of a second well that will allow for even faster processing of incoming water supplies. The company’s broader operational plan includes securing larger amounts of produced and flowback water for delivery to the Athens County facility as well as for processing at Reliable One’s future water recycling facility in the Marcellus region. To that end, Reliable One also expects to complete the pending purchase of multiple trucking companies that currently haul produced and flowback water from Marcellus-area oil and gas operations.
Ohio Residents Fed Up With Fracking Wastewater - Much of the wastewater from Pennsylvania’s fracking industry is trucked across the border to Ohio. Last year, Pennsylvania and West Virginia contributed nearly half of the more than a billion gallons of frack waste that were injected into underground wells in Ohio. Residents in at least one county say they’ve had enough. Michelle Garman remembers News Years Eve 2011, when a 4.0-magnitude earthquake shook nearby Youngstown, Ohio. Around a dozen smaller quakes followed. The state determined that the quakes were caused by an injection well. And one in New Castle, Pennsylvania was linked to fracking as well. The well believed to have caused the Youngstown quakes has been closed permanently. She didn’t know much about fracking then, let alone frack waste injection wells. But Garman’s view changed in 2013 when an injection well was built on the property next door. “Where your looking at tanks and cement and fencing, it was trees and deer and turkey. And blue jays…and I never see them anymore,” she said. Garman describes big trucks carrying chemical-laced wastewater that squeal into the site at all hours. She can hear the pump from her yard. And Garman fears for her family. “How does it affect our health, my son’s health?” she wondered. “I mean, it is toxic. Plain and simple, that’s poison that they’re pumping into the ground.” Garman says her concerns didn’t get much response from the Ohio Department of Natural Resources (ODNR), the agency with authority over injection wells. In Ohio, there’s no local control of the oil and gas industry. And few leaders in her town would criticize the local company, Kleese Development Associates, that built the well next to her property. Then, in April of 2015, a waste oil spill caused a slew of dead animals and a polluted nearby wetlands. It was caused by another injection well owned by Kleese. Garman says neighbors contacted her for help. “People were scared,” she said. “[The were asking], ‘can I drink the water, can I bathe my children in it, can I cook with it?” On a recent evening, leaders from townships in Trumbull County gathered at the gazebo in the Brookfield town square. Brookfield Township trustee Gary Lees coached people on how to send letters to their representatives in Columbus asking them to consider legislation that would stop more injection wells in Trumbull County. Trumbull County already has 17, among the most in the state, and 6 more are in the works. In Hubbard Township, Bobcat LLC has applied to the Ohio Department of Natural Resources for an injection well.
Fracking begins at Cabot Oil's Ashland County site - The Columbus Dispatch - — Drilling on Cabot Oil and Gas’ third well pad site in northeastern Ohio is beginning just as fracking has commenced on the company’s first site, in Ashland County’s Green Township.Cabot has said it plans eventually to have five exploratory wells built in the Ashland, Richland, Wayne Holmes and Knox County region.Locations for two additional well-pad sites in addition to the pads in Green, Mohican and Vermillion townships in Ashland County have not yet been nailed down, according to George Stark, director of public affairs for the Houston-based company.Stark said two possible sites for well pads are south of Loudonville off County Road 529, or in Richland County’s Monroe Township, near Malabar Farm.“After (the site on state Rt.) 511, we don’t have a place,” he said. “There’s a few locations off of (state Rt.) 39 and we’re just working the permits.“There’s a lot (of locations) on the drawing board, some farther along than others. Soon we need to pull the trigger. Construction season is something we will be mindful of.” Stark said the company is working with landowners to get leases signed so they can apply for the necessary permits from the state.While the company is planning its next steps, the first three wells are in various points in the production process.A drilling rig was placed at the Vermillion well pad on Rt. 511 at the beginning of last week. The rig previously had been at the first well pad site on Green Township off Township Road 2375 and, over the last month at the Mohican Township site on Township Road 257. The well at Township Road 2375, identified as Kamenik Pad 1 by Cabot, was first drilled toward the end of June. Once the rig moved to the Mohican Township pad, containers for water were placed in Green Township to prepare for horizontal hydraulic fracturing, or fracking.
Enbridge puts part of Ohio TEAL natgas pipe project into service (Reuters) - Canadian energy company Enbridge Inc (ENB.TO) said on Tuesday it put part of its Texas Eastern Appalachian Lease (TEAL) natural gas pipeline project in Ohio into service, according to a company filing with U.S. federal energy regulators. TEAL is one of several gas pipelines designed to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the United States and Canada. The U.S. Federal Energy Regulatory Commission (FERC) approved Enbridge’s request to put the 0.95-billion cubic feet per day (bcfd) TEAL project into service on Sept. 12. One billion cubic feet of gas is enough to fuel about 5 million homes for a day. TEAL was designed to provide additional supplies for the $2.6 billion NEXUS gas pipeline from Ohio to Michigan. NEXUS is a partnership between Enbridge and Michigan energy company DTE Energy Inc (DTE.N). Enbridge projected it would be able to put both TEAL and NEXUS into service in the third quarter of 2018. Enbridge asked FERC for permission to put part of NEXUS into service in September but is still waiting for that approval. Once it enters service, the 255-mile (410-kilometer) NEXUS project will carry up to 1.5 bcfd of gas from the Marcellus and Utica shale fields to U.S. Midwest and Gulf Coast and Ontario inCanada. New pipelines built to remove gas from the Marcellus and Utica basins have enabled shale drillers to boost output in the Appalachia region to a forecast record high of around 29.4 bcfd in October from 24.2 bcfd during the same month a year ago. That represents about 36 percent of the nation’s total dry gas output of 81.1 bcfd expected on average in 2018. A decade ago, the Appalachia region produced just 1.6 bcfd, or 3 percent of the country’s total production in 2008
Ohio Supreme Court rules to keep anti-fracking initiative off the ballot - The Columbus Dispatch --The Ohio Supreme has denied an effort by the environmental group, Columbus Community Bill of Rights, to get a measure to ban oil and natural gas extraction and waste disposal in Columbus on the Nov. 6 ballot.Voters won’t be deciding next month whether there should be oil and natural gas extraction and waste disposal in Columbus.The Ohio Supreme Court has denied an effort by environmental group Columbus Community Bill of Rights to get the issue on the ballot after it filed a motion for reconsideration in September.“We are discussing many tactics to face the issue of frack waste in our watershed, as well as the roadblocks to initiatives that many communities and efforts are experiencing,” said Carolyn Harding, a member of Columbus Community Bill of Rights.This marks the third attempt the environmental group has made to get the measure on the ballot. The group was hoping to gain voter support to establish a “bill of rights” for residents related to quality water, soil, and air protection as well as ban oil and gas extraction activities within the city. It's unclear if the group will try to get the item on a future ballot.In 2015 and 2017, there were not enough signatures collected. However, in this latest effort the group collected 12,134 signatures, far surpassing the 8,990-signature requirement. The city of Columbus signed off on the initiative on July 30. In August, the Franklin County Board of Elections questioned the proposed ballot measure’s legality. The Supreme Court ruled in favor of the Board of Elections.
Permitting drops in Pennsylvania amid strong production, tighter purse strings — Half as many natural gas drilling permits were issued during September in Pennsylvania compared with a year ago, indicating a producer response to high production levels and operators' desire to live within their cash flow. This could be in response to continuing robust gas production in the region, which threatens to drive prices down, as well as an effort to live within cash flow. Pennsylvania only issued 134 permits to drill gas wells in September 2018, a big drop compared with September 2017, when 264 permits were issued, according to state Department of Environmental Protection data. The year-on-year decline in Pennsylvania permits issued reflects a general decline in permitting activity across the US Northeast, which could indicate that the years-long Appalachian drilling boom is on the verge of slowing. Gas drilling in Pennsylvania is focused largely in two opposite corners of the state -- the northeast, which overlies the dry-gas window of the Marcellus Shale, and the southwest, which is situated in the wet-gas segment of the play. Among the counties in the state with the most permitting activity in September were two in the southwestern corner -- Washington, with 24 permits; and Greene, which snagged 17 drilling permits for gas wells. Seven permits were issued for wells in nearby Allegheny County. The northeastern corner of the state trailed in the number of permits issued, with Lycoming County receiving five and Susquehanna being awarded four permits. This compares with more robust permitting activity seen in September 2017, particularly in the southwestern part of the state, when 100 permits were issued in Washington County, 33 in Greene County and 22 in Allegheny County. September 2017 also saw more permitting activity in the northeastern counties of Susquehanna, which received 23 permits, and Lycoming, with 10. The year-on-year decrease in the number of drilling permits issued might reflect producers' commitment to maintain capital discipline. Recent earnings statements show that instead of chasing prices, producers are planning for manageable growth within their cash flow.The spot price at Dominion Transmission South, a key Pennsylvania pricing point, has paced well above $2/MMBtu for much of the past 11 months, averaging $2.415/MMBtu since November 7, 2017, Platts pricing data shows. Prices for Dominion South could see more of an upward push heading into the winter as pipeline buildout has provided more optionality for Appalachian gas.In addition, the use of improved drilling technology, such as the drilling of longer-lateral wells, has enabled operators to maintain strong levels of production without having to drill a large number of new wells.
E&Ps Commit to Leidy South Expansion to Boost Appalachian Takeaway - Just days after Williams reached the finish line on its Atlantic Sunrise project, Transcontinental Gas Pipe Line Co. (Transco) has secured 15-year commitments for 100% of the proposed Leidy South expansion, another Marcellus and Utica shale takeaway project designed to serve East Coast markets.Williams said Tuesday it has binding commitments from Seneca Resources Co. LLC and Cabot Oil & Gas Corp. for the full 580,000 Dth/d of designed capacity on Leidy South, which could start up by the end of 2021.The project, comprising compression and looping of existing Transco facilities in Pennsylvania, would further expand the pipeline’s ability to deliver Northeast production volumes from the Leidy Hub and Zick interconnects to points downstream in its Zone 6 market area. “Since 2013 the Transco pipeline’s design capacity has grown by 62%, while its Marcellus takeaway capacity has increased by approximately 3 Bcf/d,” said Williams’ Frank Ferazzi, senior vice president (SVP) of the Atlantic-Gulf operating area. “The Leidy South project allows Williams to continue to grow our strategic footprint in the gas-rich Marcellus region, creating a unique opportunity to expand Transco by leveraging recent expansions on Williams’ Northeast Gathering & Processing assets in Pennsylvania.”
Shell Hits Milestone at Pennsylvania Site - The largest piece of equipment at the world-scale petrochemicals facility Shell is building along the Ohio River northwest of Pittsburgh is now in place. In a statement emailed to Rigzone Wednesday morning, Shell announced that its Shell Chemical Appalachia LLC subsidiary successfully installed the quench tower Oct. 7 at its Pennsylvania Petrochemicals Complex in Monaca, Pa. The company noted that the heavy lift operation represents an important milestone in the project, will use ethane from the Marcellus and Utica basins to produce 1.6 million tonnes of polyethylene (PE) per year. “Eleven months into main construction, I’m delighted with the progress we’re making in Pennsylvania,” Graham van’t Hoff, executive vice president for Shell’s global chemicals business, said in the written statement. “It’s great to see our world-class complex taking shape. The project is providing more economic opportunities in Pennsylvania and the region.” The installation of the approximately 87-meter-tall, 2,000-tonne quench tower followed a nearly four-week journey up the Mississippi and Ohio rivers, Shell stated. Upon arrival at the project site, the large quench tower was unloaded onto a specially designed dock and transported down a newly created road, the company added. Water circulating through the quench tower will cool down cracked gas, condense heavy hydrocarbons and remove coke and tar particles, the company explained.
CPV announces fracked gas power plant is in operation. -After years of fierce community opposition, Competitive Power Ventures (CPV) announced on October 1, 2018 that their fracked gas power plant in Orange County, New York is in operation. ”The announcement came less than a week after the New York Department of Environmental Conservation (DEC) held a session for public comments for an Air State Facility (ASF) permit for the fracked gas power plant. The New Yorkers who commented provided a starkly different view of the plant than the positive image CEO Lambert tried to paint in his statement. Many residents of Orange County told the DEC that when the CPV plant was testing on diesel the region was blanketed in air pollution. One man said he could see the pollution emitted from the stacks hanging over the area and coming right up to his front door. The community is worried that with the plant now running on fracked gas that the pollution will be less visible, but still there. A brand new fracked gas plant not far from CPV in Jessup, PA malfunction on August 29, 2018 and released 3 times the legal limit of poisonous nitrogen oxide. Fracked gas is a precursor for smog, and residents of Orange County are worried the volatile organic compounds, nitrogen oxide and PM2.5 emitted from the CPV power plant won’t dissipate because of the soup bowl formation of the region. New Yorkers also traveled to the hearing from other parts of the state to ask the DEC to deny CPV the ASF permit because of the greenhouse gas emissions from the fracked gas plant. They asked the DEC to take into account the total life cycle of greenhouse gas emissions from the gas burned in the plant.
Overpressurized Pipes Faulted in Massachusetts Blasts - —A series of fires and explosions in Massachusetts last month was likely triggered by an error that caused a natural-gas pipeline system to become overpressurized, sending fuel into people’s homes, a preliminary federal probe has found. The National Transportation Safety Board determined that a contractor for Columbia Gas, a unit of NiSource Inc., was replacing a century-old cast-iron pipe with a new plastic pipe just before the fires began. After shutting down the old pipe, Columbia Gas continued to monitor a gas sensor on it instead of switching the sensor to the new pipe. That sensor registered low pressure, leading Columbia Gas to release a large amount of gas into the new plastic pipe to ensure it was fully pressurized. The pressure inside the plastic pipe exceeded its limit, and gas began leaking into homes, triggering dozens of fires that killed an 18-year-old man and injured at least 21 people. The preliminary findings are in line with remarks made by NTSB Chairman Robert Sumwaltshortly after the incident that improper pipe pressure appeared to have caused the blasts. NiSource said on Thursday said that it wouldn’t discuss details of the investigation until the NTSB, which investigates major pipeline accidents as well as transportation incidents, has completed its work.
US Approves Part Of TransCanada Mountaineer Gas Pipe For Service - U.S. federal energy regulators on Oct. 5 approved a request by TransCanada Corp.’s (NYSE: TRP) Columbia Gas Transmission unit to put part of its $3 billion Mountaineer XPress natural gas pipeline project into service in West Virginia. Mountaineer is one of several pipelines designed to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the United States and Canada.Specifically, the U.S. Federal Energy Regulatory Commission (FERC) approved Columbia’s request to put Mountaineer’s Elk River compressor station into service.The 2-billion cubic feet per day (Bcf/d) Mountaineer project is designed to increase gas capacity in West Virginia. The project includes construction of 170 miles of new pipeline in the state.One billion cubic feet is enough gas to power about 5 million U.S. homes for a day.New pipelines built to remove gas from the Marcellus and Utica basins have enabled shale drillers to boost output in the Appalachian region to a forecast record high of around 29.4 Bcf/d in October from 24.2 Bcf/d during the same month a year ago. That represents about 36 percent of the nation’s total dry gas output of 81.1 Bcf/d expected on average in 2018. A decade ago, the Appalachia region produced just 1.6 Bcf/d, or 3% of the country’s total production in 2008.
Three Appalachian Gas Pipeline Projects Advanced by FERC - FERC last week issued letter orders to advance a trio of natural gas pipeline projects in the Appalachian Basin. The Federal Energy Regulatory Commission on Friday granted Columbia Gas Transmission LLC (CGT), a TransCanada Corp. affiliate, permission to enter the Elk River Compressor Station into service to support its Mountaineer XPress Project [CP16-357]. Elk River, in Kanawha County, WV, was constructed as part of CGT's WB XPress Project [CP16-38], and was given authorization by the Commission to enter service for the latter project on Thursday. FERC approved a CGT request to increase the initial monthly incremental recourse reservation rate on Mountaineer XPress last August, and issued a certificate of public convenience and necessity for the project in January. It is expected to enter service late this year. In a second letter order, FERC approved a variance request by Rover Pipeline LLC for 0.3 acres of temporary workspace in Monroe County, OH, to repair an off-right-of-way slip and to retrieve sediments associated with the Rover Pipeline Project [CP15-93]. The workspace is along the 42-inch diameter Seneca Lateral. Last month, Rover asked for FERC authorization to start service on two final supply laterals, Sherwood and CGT, to support the 3.25 Bcf/d Appalachian takeaway project. FERC gave authorization for two additional Rover laterals, Burgettstown and Majorsville, to enter service last August. FERC also approved, in a third letter order, a request by Dominion Energy Transmission Inc. to use 0.24 acres in Doddridge County, WV, as additional temporary workspace for truck turn-arounds at its 1.5 million Dth/d Supply Header Project (SHP) [CP15-555]. SHP includes about 37.5 miles of pipeline looping and modifications to existing compressor stations in West Virginia and Pennsylvania, and is related to work on the embattled Atlantic Coast Pipeline.
West Virginia Supreme Court to Hear Nuisance Case Against Antero - The West Virginia Supreme Court is scheduled to hear oral arguments in a case being appealed by a group of Harrison County landowners that claims Antero Resources Corp.’s operations have created a nuisance and ruined the quality of the area.The case could have far reaching implications, according to the landowners’ attorneys, who wrote in court documents that hundreds of similar cases are pending against the natural gas industry in courts across the state. The scale of unconventional gas drilling and the infrastructure build out that comes with it, the landowners say, has amounted to the “industrialization of rural West Virginia.”Landowners allege that Antero’s operations have caused significant damage that has prevented them from enjoying their lives, homes and property. They complain of heavy truck traffic, diesel fumes, vibrations, damage to trees and other vegetation, and excessive lights, noise, dust and disrespectful behavior from the company’s crews.The case was filed in 2013. Last year, the Circuit Court of Ohio County ruled in favor of Antero, finding that the company is entitled to benefit from the surface and subsurface rights it has obtained from the landowners, along with other agreements for things like road use and pipeline easements. The lower court found that the plaintiffs failed to offer admissible evidence to show that using their properties exceeded the agreements they signed with Antero. Justices will hear the case at a time when the state Supreme Court is facing a crisis of sorts. The state House of Delegates over the summer adopted articles of impeachment for four current and former justices amid a scandal about court spending. Justice Allen Loughry, who faces fraud and obstruction charges, only recently began his criminal trial. Complicating matters, the landowners filed a motion requesting that Justice Evan Jenkins, who was sworn in on Oct. 1, disqualify himself from hearing their appeal.
Pipelines Stop and Go as Court Rules Permits Issued In Haste — Construction on two huge gas pipelines through West Virginia and Virginia has repeatedly stopped and restarted, as the 4th federal circuit court stalls permits. Last week the court vacated a Clean Water Act permit for the Mountain Valley Pipeline. The court had also stopped Atlantic Coast Pipeline work on national forest land. Agencies and the companies are pressing for the permits to be reissued. Charlottesville, Virginia, attorney David Sligh is working with some of the conservation groups that have challenged the permits. He said they are pleased to see the court step in to stop permits that critics say should never have been issued. "But a lot of damage is going on out there on the ground,” Sligh said. “And the more of that that happens, the more leverage there will be for the companies to say, 'Hey, you can't really stop us. It's too far along now.'" The pipeline companies argue that the multi-billion-dollar projects to bring natural gas from West Virginia to eastern markets can be built with minimal environmental and landowner impact. Construction has been at times ongoing in West Virginia, but less so in Virginia. A thicket of separate federal and state agencies have a say on the projects. Sligh said many of the technical experts at the agencies understand that building pipelines through the "extreme" mountain landscapes will cause serious problems. But he said the experts charged with studying those impacts and requiring detailed plans from the company to deal with them are often pushed aside under political pressure. "In some cases, agencies avoid those kinds of studies because they don't like the answers that will emerge from those studies,” he said. “And those technical folks get overridden."
Enviros Battle Tree Clearing as Another Tactic to End ACP Construction - Environmental groups are stepping up their calls for FERC to stop all construction of the Atlantic Coast Pipeline (ACP) after the U.S. Court of Appeals for the Fourth Circuit last month stayed federal authorizations allowing the project to work in two national forests.The Southern Environmental Law Center (SELC) said a filing last week from ACP backer Dominion Energy Transmission Inc. requesting a limited notice to proceed (NTP) with tree clearing in Virginia should not be granted because the project now lacks all the necessary authorizations required by the Federal Energy Regulatory Commission certificate to proceed with any construction.Instead, SELC urged FERC to issue a complete stop work order for the entire 600-mile route and said it should require ACP to make public confidential tree felling and environmental constraint maps that were included in the limited NTP request and for all future requests.The Fourth Circuit 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 SELC and the Sierra Club on behalf of several regional environmental organizations.SELC immediately called on FERC to halt work on the project, citing the Commission’s decision in August to stop all construction on the pipeline for more than a month after the Fourth Circuit vacated key permits from the U.S. Fish and Wildlife Service and the National Park Service. FERC said at the time that it was forced to issue the order because the project did not have all the necessary authorizations to continue. FERC lifted the order once those agencies issued revised permits. SELC said in its filing last week that the same logic behind the August stop-work order applies to the Fourth Circuit’s latest decision.
Prices Rise Despite A Higher Than Expected EIA Storage Injection As Absolute Storage Levels Remain Relatively Very Low Highlights of the Natural Gas Summary and Outlook for the week ending October 5, 2018 follow. The full report is available at the link below.
- Price Action: The November contract rose 13.5 cents (4.5%) to $3.143 on a 26.0 cent range ($3.261/$3.001).
- Price Outlook: Prices continued higher and established a new weekly high for the 3rd consecutive week. New pipeline projects are commencing operation and pipeline data will be closely scrutinized for new flows across the gird. The next two weeks represent a chance for +100 bcf injections, but current data suggest a triple digit injection will not occur.
- Weekly Storage: US working gas storage for the week ending September 28 indicated an injection of +98 bcf. Working gas inventories rose to 2,866 bcf. Current inventories fall (642) bcf (-18.3%) below last year and fall (596) bcf (-17.2%) below the 5-year average.
- Storage Outlook: The EIA weekly implied flow was 6 bcf from our EIA storage estimate. Although our weekly storage error has been somewhat disappointing, over the last 5 weeks the EIA has reported total injections of 362 bcf compared to our 349 bcf estimate and that is more tolerable. The forecasts use a 10-year rolling temperature profile past the 15- day forecast. Our joint publication with RBN updates storage projections daily.
- Supply Trends: Total supply rose 0.8 bcf/d to 82.0 bcf/d. US production rose. Canadian imports rose. LNG imports rose. LNG exports fell. Mexican exports fell. The US Baker Hughes rig count fell (2). Oil activity decreased (2). Natural gas activity was unchanged +0. The total US rig count now stands at 1,052 .The Canadian rig count rose +4 to 182. Thus, the total North American rig count rose +2 to 1,234 and now exceeds last year by +89. The higher efficiency US horizontal rig count fell (3) to 919 and rises +127 above last year.
- Demand Trends: Total demand fell (4.5) bcf/d to +68.6 bcf/d. Power demand fell. Industrial demand fell. Res/Comm demand rose. Electricity demand fell (8,328) gigawatt-hrs to 75,251 which trails last year by (3,439) (-4.4%) and exceeds the 5-year average by 1,345 (1.8%%).
- Nuclear Generation: Nuclear generation fell (2,089)MW in the reference week to 83,219 MW. This is (7,473) MW lower than last year and (5,060) MW lower than the 5-year average. Recent output was at 82,508 MW.
The cooling season is now entering its final stretch. With a forecast through October 19 the 2018 total cooling index is at 5,625 compared to 4,789 for 2017, 5,485 for 2016, 4,402 for 2015, 3,451 for 2014, 4,811 for 2013, 7,212 for 2012 and 6,709 for 2011.
Prices Soar As Natural Gas Inventories Hit Decade Low --- Natural gas prices have spiked over the last few weeks as U.S. inventories run low ahead of the peak winter heating season.Nymex natural gas prices have jumped nearly 15 percent over the past month, rising to roughly $3.30 per million Btu (MMBtu). The market has clearly grown a little concerned about adequate supplies heading into the winter and that is reflected in natural gas prices rising to their highest point since the beginning of the year.For the week ending on September 28, natural gas inventories stood at 2,866 billion cubic feet (Bcf), or 636 Bcf lower than at the same point a year earlier, as well as 607 Bcf below the five-year average. Inventories dropped to extraordinarily low levels last winter as much of North America became enveloped in exceptionally cold weather. As tens of millions of people cranked up the heat, the U.S. burned through record levels of natural gas. That stood in stark contrast to the year earlier, when a much milder winter led to above-average levels of gas in storage.Natural gas markets are cyclical, with a buildup in storage between April and November – the so-called “injection season” – and steep drawdowns during the winter. The stockpiling during injection season is necessary to provide enough supply to consumers for winter heating needs. But the problem is that the U.S. is currently on track to finish up the injection season with the lowest level of gas sitting in storage in 13 years. Even though demand sees seasonal peaks and valleys, consumption is rising on a structural basis as more coal plants shut down and more gas is exported in the form of LNG. That trajectory has been clear for much of 2018, but up until only recently, traders were not concerned about shortages. Natural gas production continues to soar, and several new pipelines in the Appalachia region are expected to unlock new markets, allowing drillers to produce eve more natural gas. For example, just days ago, the Atlantic Sunrise pipeline came online, connecting more Marcellus shale gas to the U.S. south. Investors saw this as a boon to natural gas drillers – Cabot Oil & Gas saw its share price jump on the news since it can now ship more gas out of the Marcellus.
October 11 Natural Gas Storage Report: Is There Anything The Market Has Not Already Priced In? - This Thursday, we expect EIA to report 2,956 bcf of working gas in storage for the week ending October 5.We anticipate to see an injection of 90 bcf, which is 9 bcf larger than a year ago, but exactly in line with 5-year average.The key now is to figure out what exactly the market hasn't priced in already. Last week, the number of total degree-days (TDDs) increased by around 9% w-o-w, as cooling demand went up - particularly, in the Central and Southwest parts of the country - while heating demand was still too feeble across the country. We estimate that total energy demand (as measured in total degree-days - TDDs) was no less than 17% above last year's level. Please note that during this time of the year, heating degree-days (HDDs) are starting to have an effect on natural gas consumption. Cooling degree-days (CDDs) are important, but their weight is diminishing. In fact, in the latest weather models, projected CDDs have essentially disappeared.This week, the weather conditions cooled down significantly. We estimate that the number of CDDs will plunge by 20% w-o-w in the week ending October 12, while the number of HDDs will surge by no less than 60% w-o-w. Total energy demand (measured in TDDs) should be some 12% above last year's level. Next week, the weather conditions are expected to cool down even more. The number of HDDs is currently projected to more than double in the week ending October 19. At the same time, CDDs will decline by 60% and will essentially disappear. On balance, total energy is projected to rise by a whopping 32.0% w-o-w (see the chart below). The latest numerical weather prediction models are showing above normal HDDs and TDDs over the next 15 days (October 10-October 25). Consumption-wise, the latest weather models are bullish in absolute terms. Total demand is expected to average 76.8 bcf/d over the next 15 days (some 25% above 5-year average). Natural gas consumption is also supported by a number of non-degree-day factors such as higher nuclear outages. As of Wednesday, there were a total of 20,900 MW of nuclear power generation offline (-100 MW from Tuesday, +18% vs 5-year average). Although the deviation of nuclear outages from the historical norm has been moderating lately, the absolute figures are still high.
EIA Delivers on Target NatGas Storage Data, but Price Damage Already Done - The Energy Information Administration (EIA) reported a 90 Bcf injection into natural gas storage inventories for the week ending Oct. 5, on target with market expectations that clustered around a build in the high 80s Bcf to low 90s Bcf.After the last two wild weeks, with a low miss then a high miss canceling out, Bespoke Weather Services said it has a stronger read on balance again “as it is clear the market has loosened over the past couple weeks.“This fits with our reading of burns loosening off a bit and production continuing to grow with Canadian imports returning last week. The print did come in just below our expectations, so we may not see as much selling initially and could bounce on any colder weather models, especially with production shut-ins from Hurricane Michael and lower Canadian imports off the British Columbia pipeline explosion, Bespoke chief meteorologist Jacob Meisel said.Nymex futures prices were already significantly lower ahead of the report on warmer risks in long-range weather outlooks, and the storage news added slightly more pressure to the market. The November contract was trading more than 9 cents lower at $3.19 just before the EIA’s 10:30 a.m. ET release, then slipped to $3.18 immediately afterward. By 11 a.m. ET, the prompt month was trading at $3.215, down about 7 cents on the day.“I’m still dumbfounded by lack of demand talk, all about production still,” said Corey Lefkof, CEO and meteorologist of CLWS.But Bespoke’s Meisel said the structural growth in power burns appears more impressive than in the residential/commercial sector, which makes the demand story more impressive in summer than in winter, barring extreme winter temperatures. Thursday’s reported 90 Bcf build lifted inventories to 2,956 Bcf, 627 Bcf below year-ago levels and 607 Bcf below the five-year average. Broken down by region, the Midwest injected 35 Bcf, the East injected 27 Bcf and the South injected 25 Bcf, including 10 Bcf into salt dome facilities and 15 Bcf into non-salt facilities.
EIA: US Natural Gas Storage Entering Winter At Lowest Level Since 2005 - The U.S. Energy Information Administration (EIA) forecasts that U.S. natural gas inventories will reach 3,263 billion cubic feet (Bcf) at the end of October in its recently released October Short-Term Energy Outlook (STEO), the lowest end-of-October level for U.S. natural gas inventories since 2005. Lingering cold temperatures in April 2018, the coldest April in the past 21 years, delayed the start of the natural gas storage refill season by about four weeks. Coupled with heavy natural gas withdrawals in January 2018, the delayed start to the refill season led to storage levels that have remained lower than the previous five-year minimum. However, late-season injections during the past four weeks have been close to their five-year averages, with injections averaging 81 Bcf compared with the five-year average of 82 Bcf. Natural gas storage is used to balance seasonal fluctuations in production and consumption. The greatest fluctuations in U.S. natural gas consumption are in the residential and commercial sectors, where natural gas is used as a heating fuel. Across all sectors, U.S. consumption of natural gas during winter months tends to be about 30% to 35% higher than in the spring and fall months, when temperatures are relatively mild. Natural gas is withdrawn from storage facilities throughout the United States during times of high demand and injected into storage facilities during times of low demand. Traditionally, the injection season lasts from the beginning of April through the end of October, though natural gas is now regularly injected through October and into early November in the United States. In 2018, relatively cold winter weather led to more withdrawals from storage, and inventories transitioned from being near the previous five-year average to being lower than average. By mid-July, inventory levels fell to lower than the previous five-year range for that time of year. Increases in U.S. domestic production of natural gas and the buildout of infrastructure to deliver it to consumers may have reduced the need for operators to store as much natural gas. EIA projects that U.S. dry natural gas production will average a record 82.7 Bcf/d in 2018, an 11% increase from 2017. EIA expects U.S. gross exports of natural gas to average 10.1 Bcf/d in 2018, a 16% increase from the previous year, with most of the growth in exports of liquefied natural gas.
U.S. Natural Gas Growth Said Shifting Supply Dynamics for Global Petrochemicals - The United States is poised to return to prominence as a low-cost region for petrochemical production thanks to the unconventional natural gas revolution, the International Energy Agency (IEA) said.In the global energy watchdog’s 132-page report, “Future of Petrochemicals” issued last week, IEA said increasing global competition is being driven by “new supply dynamics” for chemical feedstocks.“Today, the United States is home to around 40% of the global capacity to produce ethane-based petrochemicals,” researchers said. Saudi Arabia and Iran still help the Middle East keep its crown as the low-cost champion for key petrochemicals, however, with a host of new projects announced across the region.Overall, petrochemicals are poised to become the largest driver of global oil consumption and eat up another 56 bcm of natural gas by 2030, equivalent to around half of Canada’s total consumption today, IEA reported. Petrochemical demand should account for more than one-third of oil demand growth by 2030 and nearly half to 2050, eclipsing consumption by vehicles, aviation and shipping.“Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves,” IEA Executive Director Fatih Birol said. “Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends. In fact, our analysis shows they will have a greater influence on the future of oil demand than cars, trucks and aviation.”The United States and the China should see the largest near-term petrochemical capacity additions, with longer term growth led by Asia and the Middle East.“The United States is expected to increase its global market share for ethylene (steam cracking) to 22% by 2025, up from 20% in 2017,” researchers said. “Along with the Middle East, the United States has a feedstock advantage in its access to low-cost ethane owing to its abundant natural gas supplies. This advantage allows both regions to gain the lion’s share of ethane-based chemical exports in the short and medium term.”
Michael shuts 812 MMcf/d of offshore gas production; prices remain robust - — Hurricane Michael slammed into the Florida Panhandle as a Category 4 storm early Wednesday afternoon, causing disruptions to gas supplies from the offshore Gulf of Mexico and threatening to dampen gas demand and drive down prices in the region along its path. The most immediate impact of the storm is expected to be on gas supplies from the offshore Gulf producing region, as a total of 812 MMcf/d of production, representing about 32% of total Gulf production, was shut in, the US Bureau of Safety and Environmental Enforcement said in a statement. Prices in the Southeast region Wednesday were robust, driven by the significant production declines in the Gulf as well as expectations for warm weather on Thursday in areas on both sides of Hurricane Michael's path. The Louisiana benchmark Henry Hub continued to set this year's highs dating back to the end of January. It gained modestly, adding 1 cent to trade at $3.375/MMBtu. "As most of the offshore production across Mississippi and Alabama has been shut in as a result of the storm, the next big question to answer will be: how soon will that production return after it moves up and out of the Gulf?" While details of the storm's impacts to onshore natural gas infrastructure were not readily accessible on Wednesday afternoon, Michael is expected to destroy demand across the US Southeast as a result of lower temperatures and power outages. The core of Michael was forecast to move inland across the Florida Panhandle on Wednesday afternoon and across southeastern Alabama and southwestern Georgia Wednesday night, BSEE said that personnel have been evacuated from 89 offshore production platforms, 13% of the 687 manned platforms in the Gulf. In addition, staff have been evacuated from three non-dynamically positioned rigs equivalent to about 14% of the rigs of this type currently operating in the Gulf. Four dynamically positioned rigs have moved off location out of the storm's path as a precaution, representing about 24% of the rigs of this type currently operating in the Gulf. About 719,000 b/d of crude oil production, representing about 42% of the Gulf's crude output, was shut in as the rigs were evacuated or moved in advance of the storm's approach, BSEE said.
Factbox: Hurricane Michael impact turns from production loss to demand destruction — Hurricane Michael made landfall at the Florida panhandle as a Category 4 hurricane Wednesday with 155 mph winds, quickly destroying demand for power, natural gas and refined oil products. Shut-in oil production rose modestly from Tuesday to over 700,000 b/d, but the storm has stayed east of much of the region's production, which means supply should be back online quickly. Meanwhile, the severity of the storm has surprised to the upside, which could a mean longer lasting and more severe impact on demand for power, natural gas, refined products and ultimately crude oil."We expect the impact on refined products demand to be below that of previous hurricanes in the Gulf Coast such as Harvey in 2017, as the region impacted by Michael has lower population density than Houston ... Nevertheless, the impacts are favoring the high side of our estimates given the sheer severity of the storm," said Claudio Galimberti, Head of Demand and Refining at S&P Global Platts Analytics.As of 7 pm EDT, the eye of Michael was moving over southwestern Georgia with maximum sustained winds still at 100 mph, according to the National Hurricane Center. The storm is expected to move northeast across the Carolinas before heading back out to sea Friday morning. Here are the key takeaways across commodities:
- **As of 11:30 am EDT Wednesday, 718,877 b/d of all production had been shut in, according to the Bureau of Safety and Environmental Enforcement, representing 42.3% of total Gulf of Mexico production.
- **After more than doubling from Monday to Tuesday, shut-in production was up just 7% from Tuesday to Wednesday.
- **Assuming most fields resume production by the end of the week, the cumulative lost oil production for the month of October will be 90,000-100,000 b/d, according to Platts Analytics.
- **The demand impact for products is expected to be 30,000-50,000 b/d for gasoline, 10,000-15,000 b/d for distillate and 10,000-20,000 b/d for jet fuel for the next five weeks. Those impacts are favoring the high side of estimates given the intensity of the storm so far.
- **The US Coast Guard declared port status Yankee for the port of Savannah, Georgia and the port of Charleston, South Carolina, preventing ships from entering the ports, and requiring ships seeking to depart to "arrange immediate departure." The USCG declared X-Ray for Wilmington, North Carolina, keeping the port open, but requiring departing vessels to "do so within 12 hours of gale-force winds." The three ports are key regional bunkering centers.
- **The port of Panama City, Florida, where Chevron has a petroleum products terminal, and the port of Pensacola are closed.
EIA says US gasoline exports set October record - — US exports of gasoline in the week ended October 5 averaged 1.029 million b/d, which set a new record high for that month, Energy Information Administration data showed Thursday. The data shows that the previous high for October exports occurred in the week ended October 20, 2017, when they averaged 906,000 b/d. Last week was just the seventh time US exports averaged above 1 million b/d for weekly data going as far back as 2010. Among other factors, exports appear to be supported by brimming US gasoline inventories. Last week they were reported at 236.172 million barrels, which is more than 14 million barrels above their level from the year-ago week. US gasoline exports have also been supported this year by suboptimal gasoline production in Latin America, most notably in Mexico and Venezuela. Data from SENER, Mexico's Energy Secretariat, shows that gasoline production in that country has been below historic norms all year. In Mexico, this output drop is intentional. Pemex has said it wishes to shore up margins at its midstream refining unit, which it can accomplish by only processing crude when it is economically attractive. This allowed Pemex's refining division to turn a profit in 2017 for the first time in years, even as it processed less crude oil. In Venezuela, many refineries have been running below historic norms this year, which, in contrast to Mexico, has been largely unplanned. Venezuela's entire oil sector has been rocked in 2018 by a combination of political instability, economic turmoil, and hyperinflation.
"We were here first’: Tribes say Line 5 pipeline tunnel ignores treaty rights - Michigan officials have spent the past year pursuing a plan to tunnel an oil pipeline beneath the Straits of Mackinac while ignoring the 182-year-old treaty rights of Native Americans, multiple tribal leaders say.While the Snyder administration formally met with tribes three times over the past year under a State-Tribal Accord, tribal chairpersons say these consultations were little more than an “airing of grievances” for them.The last meeting between tribes and Gov. Rick Snyder happened on September 27, less than a week before the state announced an agreement with Enbridge to pursue a $500 million tunnel for the company’s Line 5 pipeline. In other meetings, officials have been unwilling to share information from Enbridge or modify any agreements, tribes say.“They more or less told us to pound sand,” said Bryan Newland, chairperson of the Bay Mills Indian Community in the Upper Peninsula. “Our objective is not to show up and shake our fist at the state. It’s to propose solutions.”Thurlow “Sam” McClellan, chairperson of the Grand Traverse Band of Ottawa and Chippewa Indians, called the September 27 meeting with Gov. Rick Snyder a “formality.”“As far as consulting, negotiating or looking at what’s best for the tribe in this situation, that’s not what we see or hear,” McClellan said.The five tribes making up the Chippewa Ottawa Resource Authority are particularly frustrated because they retained fishing rights in the area under a treaty in 1836, while Line 5 was built by Enbridge in 1953. Their criticism aligns with others who have called the tunnel plan a sweetheart deal for Enbridge made behind the scenes that would keep Line 5 operating in the Straits while the tunnel is built, which could take up to 10 years. The Detroit Free Pressreported last week that members of the Mackinac Bridge Authority, an independent state agency that would own the tunnel, weren’t even consulted about the plan.
US onshore, offshore rig count totals 1171 this week, down five - US combined oil and gas rigs totaled 1,171 this week, down five, with the biggest swings seen in the Permian and Williston Basins, S&P Global Platts data showed Thursday. The total US rig count is up from 1,048 a year ago as the industry has recovered from a three-year oil price collapse that began in late 2014. But the pace of new activity is slowing as E&P operators exhaust capital budgets for the year. Domestic rigs drilling for oil totaled 933, down nine on the week but up from 811 during the same week a year ago. Rigs chasing natural gas totaled 221, up four on the week, and up three from last year. Rigs drilling for both oil and gas totaled 17, unchanged from last week and down a bit from 20 this same week in 2017. Permian rigs in West Texas and New Mexico inched up by four this week to 480, while Williston Basin rigs, largely in North Dakota, dropped five to 59. In other major basins, the rig count remained flattish. Of total active rigs this week, 954 were horizontal, down two from the prior week, and 139 were vertical, down by seven. The remaining rigs were directional at 78, up four. In specific oil-prone plays, Eagle Ford Shale rigs working in the South Texas play fell by three to 95 this week, while SCOOP-STACK rigs in Oklahoma were down one to 105. And in Colorado's DJ Basin, the number of rigs stood at 31 this week, unchanged. Despite the decrease in rigs this week, the Eagle Ford has gained rigs in recent months as activity in the Permian, which is facing a crunch in available pipeline takeaway capacity, has slowed. That has allowed some operators with existing Eagle Ford leases to temporarily transfer capital there. The play's 95 rigs this week compares to 80 the first week of 2018. And even though rigs fell this week in the Williston - home to the giant Bakken Shale oil reservoir - the basin has become more active this year from the roughly 50 rigs at the start in 2018, as oil prices have risen to around the mid-$70s/b. That is up nearly 50% from a year ago. Also, rigs drilling for gas were largely stable this week. The Marcellus Shale basin, centered mostly in Pennsylvania, inched up by one rig to 55, while the Utica Shale chiefly in Ohio and the Haynesville Shale in East Texas/Louisiana were both flat week-on-week at 17 (for the fourth consecutive week) and 56, respectively. While rigs have been fairly stable in the Marcellus over the past year, their number in the Haynesville has ramped up from the high 40s a year ago as drilling has become more economic there. Internal return rates were about 9% in September 2017, but are currently about 21%, according to Platts' Well Economics Analyzer. The other two gas plays have higher current IRRs also, as drilling efficiencies have continued to evolve in well completions and costs, although the increase is not as dramatic as the Haynesville. Drilling permits also increased by 8% this week to 1,135. That is up from 997 during the same week in 2017, as oily basins across the US have gained traction with higher crude prices.
Michael shuts nearly 40 percent of U.S. Gulf of Mexico oil output (Reuters) - Nearly 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael. Oil producers - including Anadarko Petroleum Corp, BHP Billiton, BP and Chevron Corp - have since Monday evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday on the Florida Panhandle. The country’s largest privately owned crude terminal, the Louisiana Offshore Oil Port LLC, said on Tuesday it had halted operations at its marine terminal. The facility is the only port in the United States capable of fully loading and unloading tankers with a capacity of 2 million barrels of oil. Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement (BSEE). The evacuations affected about 11 percent of the occupied platforms in the Gulf, it said. U.S. crude futures CLc1 settled up less than 1 percent at $74.96 per barrel, reflecting the declining importance of the Gulf of Mexico in output because of the growth of production from the nation’s onshore shale fields. Crude output lost in the two days of storm shut-ins represents about 9 percent of the U.S. production of 11.1 million barrels per day, according to data from the Energy Information Administration. In addition to shutting in wells, oil producers also halted most offshore drilling operations by evacuating three drilling rigs and moving eight others out of the storm area, BSEE said. Coastal and onshore energy businesses also started preparations for what is expected to become a Category 3 storm packing winds of at least 111 miles per hour (178 km per hour).
Factbox: Oil and gas production losses crest as Tropical Storm Michael moves across Southeast — While Tropical Storm Michael has left hundreds of thousands without power, shut-in oil and gas production was already beginning to come back online Thursday. Michael's impact contributed to price declines for crude oil, refined products and natural gas on the day. The storm will likely have a short-lived impact on oil and gas production, but be a longer term headwind for demand for energy commodities given the severe and widespread damage."Similar to Tropical Storm Gordon, Michael's path was east of the bulk of offshore production facilities ... Most production should restart by the end of the week and the average volume loss for October will amount to 90,000-100,000 b/d," said Connor Wiik, analyst with the oil Supply and Production team at S&P Global Platts Analytics. As of 8 pm EDT Thursday, Michael was north of Raleigh, North Carolina near the border with Virginia, according to the National Hurricane Center. The storm is expected to head back out to sea by Friday morning. Here are the key takeaways across commodities: Click here for full-size image
- **As of 11:30 am EDT Thursday, 680,107 b/d of oil production was shut in, 40% of US Gulf of Mexico production, down from 718,877 b/d Wednesday, according to the Bureau of Safety and Environmental Enforcement.
- **Assuming most fields resume production by the end of the week, the cumulative lost oil production for the month of October will be 90,000-100,000 b/d, according to Platts Analytics.
- **The demand impact for products is expected to be 30,000-50,000 b/d for gasoline, 10,000-15,000 b/d for distillate and 10,000-20,000 b/d for jet fuel for the next five weeks. Those impacts are favoring the high side of estimates given the intensity of the storm so far.
- **In North Carolina, the ports of Wilmington and Morehead City have been closed and all operations have been suspended, according to the US Coast Guard. The port of Charleston, South Carolina was open, with normal operations taking place, while the port of Savannah, Georgia, was open with some restrictions.
Gulf Coast Crude Export Capacity Another Looming Challenge, Says Raymond James -- Permian Basin takeaway constraints may draw today’s headlines, but the next potential challenge could be opening the spigot on the Gulf Coast for more U.S. crude exports, Raymond James & Associates said Monday. Because the U.S. refining system overall is set up to run large amounts of heavy sour crude, and shale/tight formations mostly produce light sweet oil, the industry has no choice but to expand exports, said analysts Justin Jenkins and J.R. Weston. “We have already seen exports increase meaningfully since last summer, and that ramp will only continue over the next decade,” analysts said. Given the expected growth in Gulf Coast oil exports, some bottlenecks are likely to emerge. Year-to-date through July, domestic oil exports surged 50% from 2017 to an average of more than 1.8 million b/d. “Incredibly, the U.S. has exported a whopping 2 million b/d-plus over the past three months,” analysts wrote. “This compares to an average of 1.2 million b/d in 2017 and represents a huge structural shift to the global oil market in the wake of the shale revolution and lifting of the oil export ban in December 2015.” Analysts expect the recent trend to continue as discounts for U.S. crude and production growth from capacity constraints lead to more exports. Over the next 12-18 months, “we may well need to push exports to 4 million b/d-plus, simply to keep pace with U.S. production growth.”
Deep Water, Part 5 - More Plans For Offshore Crude Oil Export Terminals Along The Gulf Coast - Just as midstream companies are in a fierce competition to build new crude oil pipelines from the Permian to the Gulf Coast, there’s a race on to develop what would be the first Gulf Coast terminal in a generation capable of handling fully laden Very Large Crude Carriers. There’s a lot at stake. Currently, 2-MMbbl VLCCs can be filled to the brim without reverse lightering only at the Louisiana Offshore Oil Port (LOOP), and even if U.S. crude production continues to rise at a fast clip, it’s unlikely that more than another one or two high-capacity, VLCC-ready terminals would be needed over the next five years. And, assuming there’s not an overbuild situation, the project or projects that ultimately advance would be expected to be in-demand and highly utilized — VLCCs are the preferred mode of transporting crude to Asia and other far-away markets, and being able to fully load VLCCs saves the considerable cost and time associated with reverse lightering these supertankers in deep water. Today, we conclude our series on the fast-paced efforts to develop export terminals in waters deep enough to float VLCCs chock-full of oil. This is the fifth episode in our series. In Part 1, we discussed the ongoing boom in U.S. crude oil exports, which have been rising steadily since the 40-year ban on most exports was lifted in December 2015. Crude exports averaged 590 Mb/d in 2016, 1.1 MMb/d in 2017, and more than 1.8 MMb/d so far in 2018. While 2-MMbbl VLCCs are by far the most cost-efficient way to haul crude to Asia, their very large physical dimensions restrict the number of land-based terminals they can use. A typical VLCC is about 1,100 feet long, with a beam (or width) of nearly 200 feet and a fully loaded draft of 72 feet. And even those land-based terminals that can accommodate VLCCs can only load these supertankers part-way — “reverse lightering” out in deeper, open waters is required to fill a VLCC to the brim. (LOOP — green diamond in Figure 1 — is the only facility along the Gulf Coast that can fully load a VLCC today.)
As oil and gas exports surge, West Texas becomes the world’s “extraction colony” - Midland — Drilling booms have come and gone in this oil town for nearly a century. But the frenzy gripping it now is different. Overwhelming. Drilling rigs tower over suburban backyards. There’s a housing crunch so severe that rents are up 30 percent in the last year alone. Tax-averse city officials raised fees this spring just to keep basic services afloat.This boom is engulfing the rest of West Texas, too, extending to areas that drilling hasn’t touched before. As communities welcome the jobs and the new business, they’re struggling with an onslaught of problems that include spikes in traffic accidents and homelessness.What’s happening is unprecedented. In December, companies in the Permian Basin — an ancient, oil-rich seabed that spans West Texas and southeastern New Mexico — were producing twice as much oil as they had four years earlier, during the last boom. Forecasters expect production to double again by 2023. Texas Gov. Greg Abbott and others say the drilling spree is ushering in a new era of American energy independence, but American demand isn’t driving it. Foreign demand is.In late 2015, Congress cut a deal to lift 40-year-old restrictions on the export of crude oil. That opened the floodgates. The U.S. sold 230 million more barrels of crude to other countries in the first half of this year than it did three years earlier — a surge made possible by a virtually identical spike in Permian production. The U.S. just surpassed Russia as the world’s top oil producer. The International Energy Agency predicts that American oil — most of it from the Permian — will account for 80 percent of the growth in global supply over the next seven years. That’s bringing big profits to oil companies as well as lung-searing pollution to places where drilling has skyrocketed, while threatening to exacerbate climate change. U.S. refineries built for heavier varieties of oil than the Permian produces can’t handle the enormous new quantities of Texas light crude. Instead, companies are shipping it abroad and finding lucrative new markets. “Every single molecule from here on out has to be exported,” . American crude is now sold to countries from South Korea and India to Italy and Colombia. Even the oil-rich United Arab Emirates buys some. The lifting of the export restrictions “is tantamount to one of the most important things that’s ever been done for the industry,” But the country is not “energy independent” in the way most Americans would conceive of the idea. That’s because the U.S. is still importing oil. Substantially less than the high point in 2005, but plenty: 1.4 billion barrels in the first half of this year alone, a third of which came from the foreign oil cartel known as OPEC, whose membership includes political minefields like Saudi Arabia and Venezuela.
Oil exports will continue to grow - and only price swings are likely to stop it - The U.S. has fundamentally changed the global energy market in the last decade, becoming the world’s largest oil producer in 2018 when it surpassed first Saudi Arabia and then Russia.But a growing share of that oil production is flowing overseas, with Department of Energy data showing that crude oil exports hit a record 2.2 million barrels a day in June. Through July, U.S. crude oil exports have averaged more than 1.8 million barrels a day out of an average production of 10.5 million barrels a day. In other words, one in six barrels of oil were shipped out of the country. So why isn’t more oil being consumed at home in the U.S? The answer goes back decades, when refiners in Texas and Louisiana Gulf Coasts looked at declining U.S. oil production rates and retooled their refineries to run heavier, denser crude oils produced in places like Mexico, Venezuela, and the Middle East region.What American refiners weren’t ready for was the rapid development of unconventional shale oil and gas reserves in West and South Texas, North Dakota and other states, made possible by the combination of horizontal drilling techniques and hydraulic fracturing.The Bakken of North Dakota and Eagle Ford shale of South Texas were reborn as large oil and gas producing fields. The Permian Basin in West Texas followed soon after, reversing years of declining production to become the largest oil field in the U.S. by oil production. It’s natural gas production is second only to the Appalachia region, home to the Marcellus and Utica shale formations.U.S. refiners have, according to analysts, absorbed as much of the new U.S. crude oil — which is lighter and less dense than imported oil — as they can. Chevron Corp., which operates refineries in California and Mississippi, said Wednesday that it is looking for opportunities to buy or build a new refinery in the Houston area to process its own growing production out of the Permian.Chevron’s proposal may be an anomaly. As U.S. crude oil production continues to ramp up — the Energy Department predicts U.S. production will reach nearly 12 million barrels a day in 2018 — most companies plan to put that oil out on the global market. S&P Global Platts and Raymond James expect crude oil exports to be around 4 million barrels a day by 2020, and companies up and down the Gulf Coast are investing billions to move the growing volumes to foreign markets.
Permian basin pipeline constraints to limit 2019 production -- A lack of pipelines to carry oil and natural gas out of the Permian basin in West Texas and southeastern New Mexico will limit exploration and production and weaken realized prices until late 2019, when new pipeline capacity comes online, Moody’s Investors Service said in a recent report. The surge in Permian development over the past 2 years has constrained labor resources, proppant supplies, infrastructure, and pipeline takeaway capacity for oil, natural gas liquids, and gas. According to the report, pipeline takeaway capacity for oil and gas to markets outside the Permian is likely to be insufficient for the region’s strong growth in oil and gas production for much of 2019. New pipelines will likely go into service at various times in second-half 2019, alleviating the bottleneck, but until then capacity constraints will likely limit producers’ activities. Some E&P companies in the Permian lack firm direct transportation contracts with pipelines, raising their risk of capacity shortfalls, and leaving them vulnerable to any price drop, the report says. Pioneer Natural Resources Co., Concho Resources Inc., and Diamondback Energy Inc. all hold contracts that cover all or most of their anticipated production for 2019, but smaller Permian-focused producers Laredo Petroleum Inc., Jagged Peak Energy LLC, and Endeavor Energy Resources LP have only limited transportation contracts in hand for 2019. Though they can still sell their products through other means and hedge the basis differentials, a lack of contracted capacity can leave producers vulnerable to capacity shortfalls, as anticipated in 2019, or any stress on realized prices. The potential shortfall in takeaway capacity from the Permian, however, will not have significant negative credit implications for most of the rated E&P companies operating there, says Moody’s.
Peak Permian Basin? What the bulls and bears say - CNBC video -CNBC's Brian Sullivan reports from the Permian Basin in Texas on the state of the oil market.
Colorado's Weld County Tweaks Oil/NatGas Pipeline Permitting Process - After more than a year of stakeholder discussions, the Weld County Board of Commissioners has unanimously approved a new administrative process for oil and natural gas pipelines in the heart of Colorado's Denver-Julesburg (DJ) Basin.The changes, which take effect Feb. 1, apply to pipelines that are 12-inch diameter or larger and have received mixed reviews from the industry, landowners, and government officials.The Colorado Oil and Gas Association (COGA) supports the changes. A landowner told local news media that he’s concerned the changes don’t go far enough because they don’t cover smaller pipelines.County officials emphasized that the commissioners' action was limited to switching to an administrative process after years of using a "special review" process. The administrative approach would find planning staff interacting more with pipeline officials, but critics said that leaves little room for more public participation.County planning officials said that the new requirements include a location assessment for pipelines (LAP) in response to landowner concerns. Under the new approach, operators are required to provide information on how they would mitigate conflicts with irrigation ditch companies or ditch easement owners who have land that is crossed by pipelines. The former special review process did not include such a requirement."Over the past year, COGA has worked closely with its membership and with Weld County to advance the newest portion of the county code -- the location assessment, or LAP," said COGA CEO Dan Haley."We are grateful to Weld County leadership for giving us the opportunity to participate as a stakeholder," Haley said. "It can be lengthy and at times a difficult process, but Weld County serves as a model of how local governments can create win-win scenarios through strong stakeholder discussions when drafting new regulations." Landowners contend that their concerns have always been about getting early notification from pipelines and an attempt by them to get agreements with the private property owners before they start the public process of getting local governmental permits.
Valve Turners on Trial: Judge Acquits Three Climate Activists Who Shut Down Tar Sands Pipelines - Democracy Now! video & transcript - A month before the 2016 election, anti-pipeline activists staged an unprecedented coordinated action to shut down the flow of oil from Canada to the United States. On October 11, 2016, activists in North Dakota, Washington, Montana and Minnesota turned the manual safety valves on four pipelines, temporarily halting the flow of nearly 70 percent of the crude oil imported to the United States from Canada. They came to be known as the “valve turners.” What followed was a lengthy legal battle that ended with some of the activists in jail. But on Tuesday, three valve turners who broke into an oil pipeline facility in Minnesota on that day in 2016 were acquitted. We speak with the valve turners themselves, Annette Klapstein and Emily Johnston, about their acquittal. Johnston is a poet and co-founder of 350Seattle.org, and Klapstein is a retired attorney for the Puyallup Tribe and member of the Raging Grannies. We also speak with their attorney, Kelsey Skaggs.
Poll: Most Montanans Want Natural Gas Companies to Fix Leaks – Montanans and other westerners overwhelmingly want oil and gas companies to stop operational gas leaks, according to a new poll. That puts them at odds with recent moves by the Trump administration. According to a Center for Western Priorities survey, 92 percent of Montana voters support requiring companies operating on public lands to detect and repair gas leaks in their equipment. Last week, the Interior Department rolled back an Obama-era methane waste rule and the U.S. Environmental Protection Agency has proposed doing the same. Rick Potts, interim executive director of Montana Conservation Voters, says this is troubling on many fronts, and could cost Montanans jobs."The oil and gas companies, in order to do these inspections and maintenance and repair of their oil and gas facilities, are going to require labor,” he points out. “And that means there's good-paying jobs in the oil and gas fields that are being eliminated by the rollback of these protective regulations and rules." Potts says wasted methane at these operations is costing oil and gas companies in lost revenue and notes that methane is a powerful greenhouse gas that is harmful to the environment. The survey also polled voters in Arizona, Colorado, New Mexico and Nevada and found 89 percent of people overall support waste prevention. The Trump administration says the rules are burdensome, especially on small drilling operations.
Leaking pipe spills crude oil at Torrance Refinery - Nearly 1,900 gallons of crude oil leaked from a ruptured pipe over the weekend at the Torrance Refinery, though none of it left the site, fire department officials said Monday, Oct. 8. The leak of 44 barrels of oil was discovered about 9:30 a.m. Saturday, said Assistant Fire Chief Steve Treskes, who was also the platoon commander on the incident. The oil seeped through a one-inch crack in an eight-inch diameter pipe, Treskes said. It’s unknown how long it took for the leak to be discovered, but a temporary clamp was attached to the pipe to stop it. “It was leaking into a concrete containment area so it didn’t leave the site,” Treskes said. “We were able to get a vacuum truck to vacuum up the material and dispose of it.” Torrance Refinery spokeswoman Gesuina Paras confirmed the incident Monday, but did not disclose what caused the leak. The hazardous materials spill was reported to the Governor’s Office of Emergency Services as required. The refinery has been under greater scrutiny in the community since a February 2015 explosion almost caused a “catastrophic” leak of highly-toxic hydrofluoric acid that could have killed and injured thousands, federal officials said. Since then, a series of incidents — including excessive flaring that has led to millions in fines by the regional air quality watchdog — have occurred.
'Major incident' confirmed at Canada's largest refinery after reports of explosion - Irving Oil confirmed a "major incident" at Canada's largest refinery following reports of an explosion at the facility, a critical source of fuel for the U.S. Northeast market.The explosion reportedly rocked the neighborhood around the Irving Oil refinery in Saint John, New Brunswick. It was not immediately clear what facilities at the plant were impacted.@irvingoil: We can confirm that a major incident has occurred at our Saint John refinery this morning. We are actively assessing the situation at this time and will share more information when available.The plant has the capacity to refine 320,000 barrels per day of gasoline, diesel heating oil, jet fuel and other petroleum products. Irving Oil exports more than half of that supply to the United States. Photos of Irving's Saint John refinery posted to social media showed flames and black clouds against a blue sky. Residents reported that a blast shook homes. The refinery employs 1,400 workers and is situated on a 780-acre plot in an area with "thousands" of neighbors, according to Irving Oil's website. Irving Oil tweeted that all employees and contractors have been accounted for. Several contractors were being treated for non-life threatening injuries related to the incident, the company said. Crude oil and gasoline futures moved higher after the reports. The refinery is likely the most important in terms of fuel imports to the U.S. Northeast market, according to Tom Kloza, global head of energy analysis at Oil Price Information Service. We probably import more gasoline from that single refinery than any other single refinery around the world," he said.
Risk of power outages in Puget Sound after Canadian pipeline explosion cuts off natural-gas supply - Seattle Times - A pipeline explosion in British Columbia on Tuesday cut off the flow of Canadian natural gas into Washington, raising the risk of power outages around the state. Puget Sound Energy (PSE), Avista Corp. and Cascade Natural Gas said Wednesday that their gas supplies had been disrupted due to the explosion that occurred a day earlier and asked their customers to reduce consumption. The three companies serve almost 2.4 million customers combined, mostly in Washington, according to the companies’ websites. The explosion caused no injuries, The Canadian Press reported. Enbridge Inc., the company that owns the pipeline on the Canadian side, shut down the ruptured pipeline and a parallel pipeline Wednesday. The company received government approval to reopen the parallel pipeline, the company said in a statement at 9:25 p.m. Enbridge has now begun a “multi-hour process” to return the parallel pipeline to service. The company has not said when the ruptured pipeline may reopen.
Gas prices soar in Northwest, Canadian crude sinks to record low - A natural gas pipeline rupture in British Columbia forced refineries in Washington to cut output, pushing gasoline prices higher in the Pacific Northwest. Enbridge Inc.’s WestCoast Mainline ruptured near Prince George late Tuesday. The fire has been extinguished, Michael Barnes, a company spokesman, said Wednesday in an emailed statement. The line, along with an adjacent one, has been depressurized, and he said the company “cannot speculate about how long it will take to resolve the situation.” Canada’s National Energy Board issued an order late Wednesday local time allowing Enbridge to restart the adjacent line at reduced pressure, the regulator said in a statement on its website. The company can later apply to resume full pressure. The company will only be allowed to restart the damaged line when the regulator is satisfied it can be operated safely.
Gas Flows Resume After Canada Pipe Rupture Hits Oil Refiners - -- Natural gas has begun flowing again on a pipeline in British Columbia after a rupture on an adjacent line forced oil refineries in Washington to cut output and sent gasoline prices soaring up and down the West Coast. An explosion Tuesday on Enbridge Inc.’s Westcoast Mainline gas system rippled through energy markets in the Pacific Northwest. Late Wednesday, Canadian regulators OK’d Enbridge’s plan to pump gas through a 30-inch (76-centimeter) line that is in the same right of way as the 36-inch line that exploded. The smaller line, shut as a precautionary measure after the rupture, will be returned to about 80 percent of its capacity, Enbridge said in a statement. Wholesale gasoline in Portland, Oregon, jumped 19 cents to 55 cents a gallon over New York-traded futures contracts, the highest level in five years, according to data compiled by Bloomberg. San Francisco prices climbed 6 cents to the highest premium in more than a year. Heavy Canadian crude traded at a record $52.40 discount to West Texas Intermediate, the U.S. benchmark. Fortis Inc., a Canadian company that distributes gas from the system, said in a statement Thursday that the line has begun flowing, but it asked customers to “avoid non-essential use of gas until the situation is completely resolved” because supplies are still tight. Williams Cos. said it’s working with local distribution companies to supply residential and other “critical gas users” with fuel shipped on its Northwest Pipeline. Starting Thursday, the Williams line will be able to draw up to 1.2 billion cubic feet per day of gas from a storage facility in southwest Washington, which is being placed back into service after it underwent scheduled maintenance. The Enbridge pipeline is part of its Westcoast Energy network, and carries as much as 2.9 billion cubic feet of gas a day -- supplying half of the demand from Washington, Oregon and Idaho -- from the Fort Nelson processing plant in northern British Columbia to the U.S. border. The 1,751-mile (2,818-kilometer) line connects to gas fields as far north as the Yukon and Northwest Territories.
Trans Mountain pipeline shut down after possible oil spill —The Trans Mountain pipeline has been shut down as a precautionary measure after a possible oil spill in Surrey.In a statement, the company said it is investigating the source of a “gasoline-like substance” found in a ditch near the pipeline. Trans Mountain has shut down its oil pipeline due to a possible spill discovered late Saturday, Oct. 6, 2018, in Surrey, B.C. (Darryl Dyck / The Canadian Press)“At this time, we have found no evidence that the source of the product is the pipeline,” the company said. Surrey fire department assistant chief Shelley Morris said fire crews deployed a hazardous-materials team to the scene on Douglas Rd. around 11 p.m. Saturday. A petroleum product was discovered in a rainwater ditch near the pipeline, but there’s no indication as to how much petroleum was in the ground as some petroleum could have seeped into soil. Morris said Trans Mountain shut down the pipeline as soon as it was notified by the fire department. Since then, Trans Mountain’s own teams have taken over the investigation to determine the source of the spill. By Sunday afternoon, Morris said the pipeline had deployed four spill cleanup trucks and was using vacuums to clean the area around the ditch. The Trans Mountain pipeline has been shut down as a precautionary measure after a possible oil spill in Surrey . . .
Enbridge Pipeline Explosion Forces First Nations Community to Flee - A 36-inch natural gas transmission pipeline owned and operated by Enbridge exploded around 5:45 p.m. in rural land north of Prince George, British Columbia on Tuesday, the Canadian pipeline company said in amedia release. The blast forced 100 people to evacuate from the nearby Lheidli T'enneh First Nation as a precaution, Enbridge said. "I was able to see it very clearly from the hill," Prince George resident Dhruv Desai commented to theCanadian Press. "It was huge even from this distance."There are no reports of injuries as a result of the blast and most residents have been allowed to return home. The line has been shut down and an investigation has been launched to determine the cause of the incident, the company said.Chief Dominic Frederick of Lheidli T'enneh First Nation, who posted video footage of the explosion onto Facebook, told CBC News that the explosion happened only about 2 kilometers (1.2 miles) from the reserve."We sort of trained for it ... because of the wildfires," Frederick added about the speedy evacuation. "Everything was just left behind."Frederick told the Associated Press that Enbridge contacted him soon after the explosion."They had told me there was gas building up in the underground. For some reason or another the gas had stopped flowing and it built up and it just exploded," he said.The blast may lead to a natural gas shortage to homes in British Columbia as well as bordering American states. According to the Associated Press, the damaged Enbridge pipeline connects to the Northwest Pipeline system, which feeds Puget Sound Energy in Washington State and Northwest Natural Gas in Portland. On Wednesday, Enbridge said in a media release that it received the National Energy Board's approval to restart its 30-inch line located in the same right of way as the impacted 36-inch line.
B.C. tribe sues U.S. barge company over 2016 spill - A First Nations tribe in British Columbia is suing the operator of a U.S. fuel barge that spilled thousands of gallons of diesel near the tribe’s reserve nearly two years ago. Heiltsuk First Nations member Kelly Brown got close enough in his boat to make out the name of a grounded tug in the Inside Passage. “Nathan E. Stewart has sunk,” Brown says in the video. “There’s fuel just flowing out of the boat – you can see it from here.” Brown shared video of the encounter in the Seaforth Channel that was re-posted by the Vancouver Sun. Fortunately the tug’s accompanying fuel barge had already delivered its load in Ketchikan and was nearly empty.Still, around 26,000 gallons of diesel and other oils from the southbound tug Nathan E. Stewart spilled that morning. An NTSB investigation later found the crew member standing watch had fallen asleep.The First Nations tribe says its subsistence clam beds were contaminated and haven’t been harvested since.Nearly two years later to the day, the Heiltsuk Tribal Council filed a lawsuit against the B.C. and Canadian governments.The suit also names crew members and their employer: Kirby Offshore Marine which regularly ships fuel from Washington State to ports in Southeast Alaska.“Our law has been violated and the legal action we are taking in the B.C. Supreme Court today is our attempt, our bid to hold industry and government accountable for this negligence,” Heiltsuk First Nations hereditary chief Frank Brown told reporters in Vancouver on Wednesday. The Kirby Corporation released a short statement admitting no wrongdoing.
As Canadian pipeline plans falter, more oil is moving by rail — prompting familiar fears — For years, Canadians have heard a common refrain: If a new pipeline doesn’t materialize to get their oil to market, the oil will just travel a different way — by rail. It’s a trade-off that can inspire fear in a country where an oil-by-rail disaster killed 47 people just five years ago. Environmentalists have sometimes described the rail option as a threat or “boogeyman” looming over the pipeline debate. But now the prediction appears to be coming true, as the volume of oil traveling by rail out of Canada — to the United States — has surged in the past few months as the country’s latest pipeline project foundered. The problems around the Trans Mountain pipeline project have led to increasing pessimism among oil producers and an increasing willingness to invest in rail capacity. That means Canadians are preparing for even higher oil-by-rail volumes over the next few years while sorting out how their fears stack up against reality. “It’s a storm that’s been brewing for a while,” said Kent Fellows, an economist at the University of Calgary, in the heart of Canada’s oil country. “The risks of spills are higher [by rail], but the fact that this stuff needs to get to market because people are buying it means it’ll search out the lowest-cost pathway,” he said. The spike is dramatic. Before 2012, little oil was shipped by rail out of Canada. This past June, the country’s energy regulator announced a record-breaking average of 200,000 barrels per day exported that way. The Paris-based International Energy Agency estimates that the 2019 annual average will reach 390,000 barrels per day. But the oil world had been preparing before this summer. Imperial Oil decided to build a new rail terminal in Edmonton in 2013. “At the time, we said it would be a bit of an insurance policy if market access — i.e. new pipelines — did not come about in the needed time frame,” Imperial Oil CEO Rich Kruger said during a public conference call in late July. “Like any insurance policy, our hope was that we did not have to use it too much. Over time . . . we have increased volumes at it.”
Western Canadian Select (WCS) crude topples to 10-year low. - The price of northeastern Alberta’s key crude oil benchmark, Western Canadian Select (WCS), has been dropping like a rock. Last week, the heavy, sour blend of crude fell to a $45/bbl discount against U.S. benchmark West Texas Intermediate (WTI) — the biggest differential in at least 10 years. With an unplanned summertime outage at a Syncrude upgrader now over, Alberta production rising and pipeline takeaway capacity static — at least for now — the value of Canada’s crude may have even bleaker days ahead, despite a recent global rally in oil prices. Today, we explain why Western Canada’s oil producers are facing the prospect of mile-wide spreads for months to come.Pipeline capacity constraints out of prolific oil-producing regions have played an oversized role in North American crude pricing this year. Not only are takeaway constraints an issue in Alberta, but they’ve also wreaked havoc in the Permian Basin in West Texas. Those two regions, West Texas and Alberta have a few things in common — weather not included — and the lament of limited crude pipeline space to match growing output is one of them. Without enough capacity to remove oil from the producing market, the value of the commodity suffers as supplies pile up. (This blog will focus on Western Canada, but if you want to get your Permian fix on this issue, dive into the All Dressed Up With Nowhere to Go series.) The Western Canadian Sedimentary Basin (WCSB) has more than 4 MMb/d of crude pipeline takeaway capacity, but it’s simply not enough to match production in the region, which is seen rising to 5 MMb/d by 2025. (See our "The Shape I'm In" Drill Down Report for more on current and projected production.) The pipelines in the area actually operate at a lower level than that nameplate capacity, so space is quite limited. This same problem afflicts Permian producers, too, but there’s hope on the horizon: pipeline permitting approvals are easier to get in Texas, and producers there are looking forward to the completion of a multitude of projects aimed at relieving constraints and assuaging the current price discount. That’s not the case in Western Canada, where the spotlight on pipeline companies burns brighter and environmental backlash is much stronger. The years-long (going on a decade-long) battle over TransCanada’s Keystone XL project is the quintessential example. Now the Trans Mountain Expansion (TMX) Project is under fire, too.
Mexico Facing 'Perfect Storm' on Reduced Natural Gas Production, Pipeline Imports - Concern is growing in Mexico over supplies of natural gas to industry, and the leader of the powerful lobby of Monterrey industrialists, Juan Ignacio Garza, told the daily Reforma last week that "a perfect storm" is brewing in the country. Garza is president of the Monterrey-based Cámara de la Industria de Transformación de Nuevo León (Caintra), the Manufacturing Chamber of the state of Nuevo Leon. He said while gas production by state-owned Petroleos Mexicanos (Pemex) is falling, so too are imports from the United States, largely because of community protests against pipelines, and liquefied natural gas imports have consequently doubled. The upcoming conclusion of the undersea Sur de Texas-Tuxpan pipeline between Texas and Mexico is critical, Garza said. If it is delayed, problems will only grow worse, he said. Ironically, however, Mexico has more natural gas resources than the United States in per capital terms, Hector Moreira, a member of the upstream regulator, Comision Nacional de Hidrocarburos (CNH) explained recently at the regulator’s presentation on the nation's natural gas sector. At present, proven gas reserves stand at 10.02 Tcf, down from 16.82 Tcf in 2010. Of prospective resources, by far the largest are those in the Gulf of Mexico (GOM) deepwater, with about 43 Tcf, of which about 40% is dry gas. However, the resources remain untapped. The others are the Sabinas and Burro Pichacos basins, where almost all the prospective reserves are of dry gas, as are those of Tampico-Misantla, Veracruz, and the Southeast basins. Together they have prospective reserves of about 20 Tcf. Burgos Basin, across the border from Texas, has prospective resources of around 13 Tcf, about 90% of which is wet gas.
Gas fracking to start in England next week after seven-year halt (Reuters) - Shale gas developer Cuadrilla Resources expects to start gas fracking in northwest England next week, seven years after its first attempt to hydraulically fracture a well led to earth tremors, public protests and an overhaul of regulations. The process, behind a surge in U.S. gas production, involves fracturing rock deep under ground using a mixture of water, sand and chemicals to encourage the flow of hydrocarbons from shale, a dense and tightly-packed sedimentary rock. It has draw criticism from the public and campaigners concerned about the environmental impact of fracking and the pollution caused by fossil fuels. Protests against the practice led to work at Cuadrilla’s site being halted in 2011. But the government, keen to cut Britain’s reliance on gas imports which soared to more than 50 percent of gas supplies, has tightened regulations and earlier this year gave consent for Cuadrilla to go ahead again. Cuadrilla Chief Executive Francis Egan told Reuters that fracking of two wells and associated work would test gas flows. The industry’s future in Europe may hinge on the outcome. Although fracking has grown rapidly in the United States, it has not been proved viable in Europe despite several attempts, including projects that failed in Poland five years ago. Fracking has been banned in France, Germany and several other European countries. The British Geological Survey estimates shale gas resources in northern England alone could amount to 1,300 trillion cubic feet (tcf) of gas, 10 percent of which could meet the country’s demand for almost 40 years. Britain has just 6.5 tcf in proved reserves and last year pumped 1.5 tcf, according to the BP Statistics Review. Proved reserves are the strictest calculation of oil and gas that can be commercially extracted. They change as discoveries are made.
It Once Caused Earthquakes. Now a Driller in Britain Tries Fracking Again - NYT — In a farmer’s field in northwestern England, a decade-old energy company hopes to overcome its decidedly rocky history of shale drilling in the United Kingdom. Seven years after earthquakes followed its first attempt at hydraulic fracturing, that company, Cuadrilla Resources, has returned with a government-enforced go-slow approach. It has set up a chain of seismic monitors three miles beyond its dig to gauge tremors. Contractors from Schlumberger, the oil field services firm, plan to pace themselves and spend up to three months stimulating the wells using the process known as fracking. In the United States, a similar effort would take just a few days. Francis Egan, the chief executive of Cuadrilla, will be monitoring closely when the first gush of water, sand and chemicals cracks the shale bed called the Bowland basin. So will wary homeowners and environmentalists who have battled Cuadrilla in court. On Friday, a judge in London rejected the latest bid to delay the drilling, and Cuadrilla promptly announced it would start work on Saturday. This plot of land outside the city of Blackpool, where cows graze and anti-fracking activists have set up camp nearby, may decide the future of fracking in Britain and other parts of Europe. Mr. Egan, in an interview last week, said his own business calculation could be reduced to a simple truth: “It’s all down to the rocks.” In a country that has long valued a robust oil industry, fracking has been an exercise in frustration for energy explorers. Britain has been ambivalent about the innovative water-blasting method even as it has transformed the United States into a major petroleum exporter.The central government of Prime Minister Theresa May has supported shale exploration, in part because of the declining output from oil and gas fields in the North Sea. But local councils have been far more critical of possible environmental and community costs. Their skepticism matters because they have a large sway over land use. A series of small earthquakes in 2011, when Cuadrilla drilled in another site, was documented by the British Geological Survey and stoked discontent with fracking. The controversy stirred demands for more stringent safety measures as well as debate over the risk to water and green space in the English countryside.
Protesters march in Preston for jailed anti-fracking activists - Hundreds of supporters of the three environmental activists who became the first people to be jailed for an anti-fracking protest have demonstrated outside the prison where they are being held after an appeal against their imprisonment was lodged. Protesters marched across Preston chanting “Free the three”, “Protest is not a crime”, and “We said no”, in reference to the local council’s decision to ban fracking in the county that was later overturned by Sajid Javid. Simon Blevins, Richard Roberts and Rich Loizou were jailed for more than a year each at Preston crown court last week after being convicted of public nuisance following a protest outside energy firm Cuadrilla’s site in Lancashire in July 2017. Organisers said that about 500 people came from across the country to demonstrate against their “inappropriate imprisonment”. “It is an outrage and a scandal that three men are currently sat behind bars for the supposed crime of public nuisance for sitting quietly on top of a lorry,” said Leigh Coghill, an activist from the campaigning group Frack Free Lancashire. “This is an emergency: fracking is imminent, our opposition has been broad and unrelenting, and individuals such as the frack-free four decided to take civil disobedience because democracy has been exhausted. Their imprisonment is inappropriate, not in the public interest, and an appeal is ongoing.” Among the supporters were Loizou’s parents Sharron and Platon. Mr Loizou said things had been difficult since his son had been sentenced, and added: “We’re very sad for what’s happened. We never believed it would come to a prison sentence. We were shocked.”
Judge who jailed Fracking Three has family links to oil and gas firms- The judge who jailed three anti-fracking campaigners for climbing on lorries at a drilling site has family links to the oil and gas industry, it was claimed today. Judge Robert Altham jailed the trio on September 26 after they spent days illegally sitting on top of lorry cabs to try to disrupt controversial shale gas drilling at a Cuadrilla site in Lancashire. But the married father-of-three's family's business JC Altham and Sons is said to supply offshore gas and oil platforms. And his sister Jane Watson, has backed an open letter promoting fracking, which said 'it's time to give shale a chance' - claiming that it would create jobs. Ms Watson, 54, is listed on Companies House as managing director of the firm - based in the Lancashire ferry port of Heysham – while the judge's parents John, 86, and Linda, 84, are directors. The company, which supplies food, tools, rigging equipment and clothes to ships' stores, says online that it is a 'specialist supplier to offshore gas and oil platforms'. However, it is not known which companies it supplies.
Analysts Bearish on UK Shale Prospects -Analysts at Fitch Solutions Macro Research have announced that they remain “widely bearish” on the prospects of UK shale gas in a new report. “Despite hydraulic fracturing of two wells expected within days, the first fracturing in the UK for seven years, we remain widely bearish on the prospects of UK shale gas,” the analysts stated in the report, which was sent to Rigzone. “For shale gas to be commercially produced in the UK, extensive drilling work must be carried out to better understand the potential resource base, the social and political scope for which we believe remains small,” the analysts added. “The proposed review of regulation of shale drilling and fracking regulation is likely to prompt a significant political and social fallout. Subsequently, we do not expect the proposed measures to offer much upside to the development of the unconventional sector in the UK,” the analysts continued. Cuadrilla announced Friday that it expects to start hydraulically fracturing the shale rock around the first of its two horizontal shale gas exploration wells at its UK Preston New Road site in Lancashire in the next week. The company currently has eight sites, including Preston New Road, in its Lancashire Bowland shale gas exploration license area, according to its website. Cuadrilla states on its website that it believes “at least” 200 trillion cubic feet of natural gas is trapped in the shale rock in its license area.
UK government looks to weaken tremor standards after fracking starts – Unearthed - The UK’s energy minister has suggested the government could weaken seismic activity standards at fracking sites, according to documents obtained by Unearthed. In a letter sent to Conservative MP Kevin Hollinrake in July, Claire Perry said the traffic lights system (TLS) the government currently uses to issue alerts of seismic activity is “set at an explicitly cautious level but, as we gain experience in applying these measures, the trigger levels can be adjusted upwards without compromising the effectiveness of the controls”.This comes as Cuadrilla looks to start fracking in Lancashire this week, days after the UN’s scientific body on climate change delivered a special report that warned global carbon emissions need to be halved by 2030 in order to meet the ambition set by the landmark Paris Agreement. In order to achieve this, it suggested natural gas use would have to fall sharply without the rapid and widespread deployment of untested carbon capture technology.Government advisers have previously warned that new onshore oil and gas extraction could jeopardise the country’s legally-binding climate targets. The traffic light system came into effect in 2014 following a series of earthquakes linked to early fracking efforts. The policy is widely-regarded as stringent, with drillers required to ‘proceed with caution at reduced rates’ in the event of any seismic activity, no matter how small, and to stop fracking immediately if activity exceeds 0.5 on the richter scale. Activity at this level would be imperceptible to households. Hollinrake, MP of the Thirsk and Malton constituency in North Yorkshire, who has supported fracking if well regulated, declined to back the government’s proposal, claiming it was premature. “At this point in time I think we need to know a lot more before I’d support that position. The Traffic Light System is there for a reason,” he told Unearthed.
Fuel spill feared as cargo ships collide off Corsica - A cargo ship rammed into another freight vessel near the French Mediterranean island of Corsica early Sunday, causing no injuries but causing a leak which officials say is most likely fuel. The Ulysse, operated by the Tunisian operator CTN, struck the Cyprus-based CLS Virgina while it was anchored about 30 kilometres off the northern tip of the island at around 7:30 am, the regional naval authority said. According to the CTN's published shipping schedule, the Ulysse was travelling from Genoa in Italy to the Tunisian port at Rades near Tunis. The Virginia was not carrying any cargo at the time. "The collision caused considerable damage, with an opening several metres long in the CLS Virginia's hull," the naval authority said, adding that the leaking liquid was spread over "several hundred metres". Officials said they had not yet identified the liquid, but a source close to the inquiry said it was probably leaking "from one of the fuel tanks". The cause of the accident was not yet known, though weather conditions are not thought to have been a factor, with relatively calm seas and good visibility in the area at the time. The Tunisian ship "was maybe going too fast compared to its ability to react," the source told AFP. A tugboat has been dispatched to the scene and the French navy has also sent a vessel specialised in containing and cleaning up pollution spills. Italy has also offered its assistance as part of the Ramogepol accord between France, Italy and Monaco to jointly intervene in cases of maritime pollution.
11 Tcf Discovery Made in Russia - PJSC Novatek has announced the discovery of a new gas field in the Ob Bay area, which is estimated to hold natural gas reserves of more than 11 trillion cubic feet. The discovery was made via an exploration well in the North-Obsk license area. “The discovery of a new field is an important starting point for the start of one of our future Arctic LNG projects,” Leonid Mikhelson, chairman of the board of Novatek, said in a company statement posted on Novatek’s website, which was translated into English. “Its favorable geographical location, a huge resource base and our accumulated experience suggest good prerequisites for the successful implementation of the new LNG project,” he added. Wood Mackenzie flagged the discovery on its Russia upstream focused Twitter account. Novatek’s subsidiary, LLC Arctic LNG 3, started drilling the North Obsk license area well in July this year. Drilling was carried out using the “self-lifting floating drilling rig ‘Amazon’ of the contractor LLC ‘Gazprom Fleet,’” Novatek revealed in a translated statement on its website.
Russia to resume gas imports from Turkmenistan — The head of Russia's giant state-controlled gas company says it plans to resume imports from Turkmenistan after a three-year break over a pricing dispute. Gazprom chief Alexei Miller said in televised remarks while visiting Turkmenistan that the company expects to start buying gas from the Central Asian country starting Jan. 1. Miller said he discussed the prospect of renewed imports with Turkmen officials on Tuesday, but volumes and other details are yet to be worked out. Russia was the main importer of Turkmenistan's gas before it stopped buying it at the start of 2016 amid a slump in global prices, citing alleged contract violations. Turkmenistan then halted shipments of natural gas to Iran, citing Iran's debt for previous supplies, and was left with China as its sole customer.
Larry Kudlow Says American Energy Can Upend Russia's Influence - President Donald Trump’s chief economic adviser said the U.S. is capable of upending Russia’s “hegemony” in the international energy market. “Some of the things we’re talking about do focus on the energy sector,” Larry Kudlow said during an interview with Hill.TV that aired Monday. “We are the dominant energy power. We will be producing 15 million barrels of oil per day in a couple of years. We’re passing the Saudis. We’re passing Russia.” Kudlow, who currently serves as director of the National Economic Council, bragged that there is so much natural gas coming out of the Permian Basin, for example, American producers don’t even know what to do with it. Numerous regions across the U.S. are experiencing a natural gas boom, thanks in large part to the implementation of hydraulic fracturing. “So what does that mean? Means we have to have infrastructure for pipelines, east, west, west, east. Get this stuff to the northeast, get this stuff to Europe and challenge Russia’s hegemony on nat gas and LNG [liquified natural gas],” he said. “This is doable. We have to really focus on the energy sector. Most of this stuff can be done privately.” Kudlow ended the segment by explaining that the government simply has to “speed up” the permitting process and deregulate the industry in order to unlock the country’s full energy potential. This approach, of course, has been the bedrock of the Trump administration’s agenda. Since entering office, Trump has made moves to roll back a number of Obama-era environmental regulations, including the Clean Power Plan, Waters of the United States, and has withdrawn the U.S. from the Paris climate accord. More recently, Trump has rolled back more rules that have hindered the fossil fuel industry, such as methane, mercury and offshore drilling regulations.
Bipartisan group of senators forward plan to break Russia’s ‘energy stranglehold on Europe’ - Aiming to break Russia’s “energy stranglehold on Europe” and the Kremlin propaganda efforts it fuels, a bipartisan group of senators has introduced a proposal to fund $1 billion worth of energy projects across the continent.Chairman of the Senate Foreign Relations Subcommittee on Europe and Regional Security Cooperation, Ron Johnson, Wisconsin Republican, and the panel’s top Democrat, Chris Murphy, Connecticut, have introduced the European Energy Security and Diversification Act to provide “new tools for the United States to combat malign Russian influence and create economic opportunities at home and abroad,” according to a subcommittee statement.Russia is the largest exporter of oil and natural gas to the European Union. Recent years have seen it accused of using energy pipeline shutdowns to intimidate and blackmail governments that the Kremlin targets in disputes.In a bid to diversify its energy sources. EU officials have also investigated the Russian state-owned energy company, Gazprom, for stifling competition in Central and Eastern European.“Russia uses its dominance of the energy market, along with bribery, corruption and propaganda to undermine Western institutions and install pliant governments that are unable or unwilling to counter Russia or its president, Vladimir Putin,” the subcommittee said on Wednesday.
Trump Rerouting World's Oil Tankers-- U.S. President Donald Trump is redirecting global oil flows. West African and Latin American producers are sending ever-growing volumes of crude to China. America’s exports to the Asian country have slumped in favor of its neighbors. There’s an urgent global need to find replacement barrels for Iran’s, whose exports might just collapse next month. The thing that connects the shifting flows is Trump’s foreign policy. China’s slumping purchases of American crude -- and its extra buying from elsewhere -- have coincided with a trade war between the U.S. and the Asian country. Likewise, reimposed sanctions on Iran, which start Nov. 4, have increased the need for the type of heavy, sour crude that the Persian Gulf state sells. “If you combine the impact of U.S. sanctions on Iran and the U.S. trade war with China, it is Trump’s foreign policy which is reshaping oil flows,” said Olivier Jakob, managing director of consultancy Petromatrix GmbH. “The U.S. is becoming a great energy power and they will use that, we are starting to see the implementation of that in different parts of the energy scene, part of that is being seen today in the oil flows.” Oil markets are also grappling with record U.S. output, fueled by shale production, and America’s removal in late 2015 of longstanding crude-export limits. Those shipments -- just a few hundred thousand barrels a day a few years ago -- now consistently top an average of 2 million barrels a day each month. American crude increasingly flows to markets in Asia, Europe and Latin America, data from the U.S. Energy Information Administration show. But there have been recent changes in precisely where those barrels are going. China, the world’s largest energy consumer, in August didn’t import any U.S. crude for the first time since September 2016, according to the most recent data from the U.S. Census Bureau. That compares with almost 12 million barrels in July, when China was the second-largest recipient. Shipments to South Korea soared to a record 267,000 barrels a day in August -- a 313 percent year-on-year increase, according to Bloomberg calculations from Census data. Volumes to Japan and India rose by 198 percent and 165 percent, respectively. Exports to the U.K., Italy and the Netherlands have also surged this year. “The pattern of trade does look as though it’s going to ebb away from a focus on China to other Asian countries, and Europe,”
Is The U.S. Using Force To Sell Its LNG To The World? The Trump Administration trade policy is nowhere so clear as in the energy area. For years it was thought that the younger Bush Administration was one of the most energy industry friendly in history. But the Trump Administration has gone far beyond that. Hiring Ray Tillerson, the former CEO of ExxonMobil, as U.S. Secretary of State, sent a strong signal to the entire industry, even though his tenure proved to be temporary. Prior to that, the Administration withdrew from the Paris Climate Agreement, a long-held priority of Exxon and the entire oil industry. Following hard upon that, the Environmental Protection Agency (EPA) has reduced or eliminated regulations limiting carbon and other pollutants. Going further, the Trump Administration has removed and reduced regulations that hampered the industry expansion, including allowing drilling on both ocean coast, while easing safety regulations that were brought into effect after BP’s Gulf of Mexico disastrous spill, the worst in U.S. history. Government protected nature preserves are being opened to exploration and drilling for the first time in generations. Added to that was the dropping of regulations that for many years prohibited export of U.S. crude. The Administration currently plans to rescind and lower fuel efficiency standards for autos and trucks. That is likely to encourage increased purchase of larger SUVs, increased oil consumption, and rising gasoline prices. The Administration corporate tax cut, one of the largest in U.S. history, also strongly benefitted the energy industry, as it did other industries. . Increasingly, Trump has become the top promoter for increasing exports of U.S. Liquid Natural Gas (LNG) to world markets. He openly threatened to place economic sanctions on Germany if it went ahead with the deal for Russia’s new Nordstream 2 pipeline, that would nearly double natural gas supplies from Russia, Germany’s largest supplier. As most observers noted, the U.S. sanction threat was accompanied by the offer of U.S. LNG to Germany and Europe, as a replacement of Russian gas. No doubt that Trump’s bullying offended European sensibility, but despite the German protest regarding outside interference in its domestic economic affairs, and its intention to complete the Russian pipeline, Germany is quietly building up LNG importing facilities, "as a gesture to American friends." It's no accident that sanctions are aimed at the U.S. largest energy competitors, Russia and Iran, nor is it coincidence that the largest energy importers, Europe, China, Japan, south Korea are also under threat of U.S. tariffs or sanctions.Instead, it clearly shows that the U.S. is using the threat of economic warfare and possible military conflict as leverage to open markets to the newest player on the world's energy market, American LNG. If the U.S. is successful in these deals, it's likely that in future, there will be a parallel attempt to make inroads for US crude export to the very same oil importing countries, relying upon the very same LNG game plan.
Qatar Petroleum CEO warns of upcoming,'very big' LNG shortage - — The head of Qatar Petroleum, Saad al-Kaabi, on Tuesday warned there would be a significant shortage of LNG on global markets sooner than expected as he reaffirmed the company's plans to reach a final investment decision on its domestic LNG expansion project by end-2019. Speaking at the Oil & Money conference in London, al-Kaabi also said Qatar Petroleum would be able to reach a FID on the expansion project without binding LNG sales agreements. Qatar Petroleum revealed in July last year plans to raise the country's LNG production capacity from 77 million mt/year to 100 million mt/year with the construction of three new mega-trains. Last month, it committed to a fourth train, bringing its planned capacity to 110 million mt/year. First LNG production from the new trains is due online by the end of 2023. Al-Kaabi was optimistic on future LNG demand given the current state of the market. "We think the shortage will come much sooner than people anticipate and there is going to be a very big shortage in the market," al-Kaabi said. Industry officials expect the LNG market to tighten significantly in the period after 2021 due to a lack of FIDs for new production projects globally over the past few years. Al-Kaabi said Tuesday that tenders for the FEED contract for the major expansion project have already been released and the process would end in March, followed by the release of an EPC tender. "We are at the tendering stage for all the rigs and the costs, we will have a good handle on the costs next year," al-Kaabi said. A decision on the structure of the project's financing has not yet been decided, but Qatar Petroleum may choose to finance the expansion entirely through its own balance sheet. "We will finance it all from our own financing if we need to, we do not need outside investment," he said.
Egypt to Receive First Israeli Gas as Early as March -- Egypt will begin importing natural gas from Israel under a $15 billion deal as early as March if an undersea pipeline connecting the Mediterranean neighbors is found to be in good condition, moving the country closer to its goal of becoming an energy-exporting hub. Mohammed Shoeib, chief executive officer of East Gas Co., a major Egyptian partner in the pipeline, said supplies would begin at 100 million standard cubic feet of gas per day in the first quarter of 2019 and gradually rise to a maximum of 700 million scf a day. “We expect the pipeline is in good condition,” he told Bloomberg in an interview. “We aim to reach the pipeline’s full capacity or maximum flow rate within three years.” East Gas and the companies developing Israel’s largest natural gas fields agreed last month to buy 39 percent of the East Mediterranean Gas Co., which owns the pipeline connecting southern Israel to Egypt’s Sinai peninsula, clearing the main legal obstacle to the 10-year export contract signed in February. East Gas separately made a deal to buy a further 9 percent from MGPC. The EMG pipeline was originally built to export Egyptian gas to Israel, but has been idle for about six years.
Shell’s oil spill polluted over 113 hectares in Bayelsa -- Leakage from an oilfield operated by Shell Petroleum Development Company (SPDC) at Aghoro community in Bayelsa has discharged some 1,114 barrels of crude oil into the environment. The leakage has adversely affected the fishing vocation of residents who had withdrawn from fishing to pave way for clean-up. The resulting oil spill impacted and polluted an estimated area of 113.03 hectares, according to a joint Investigation Visit (JIV) report of the incident obtained by News Agency of Nigeria (NAN) in Yenagoa on Monday. Community leaders, who participated in the JIV to determine the cause of the spill, reportedly refused to sign the report. The refusal was attributed to wide disparity between the impacted areas claimed by Shell and the community, but Bamidele Odugbesan, the Media Relations Manager at SPDC, said that the grey areas had been sorted out. The report indicated that only 247.5 out of the 1,114 of SPDC’s crude blend had been recovered at the spill site, while the remaining were yet to be accounted for. According to the spill incident report, the oil leak was reported on May 17, but the joint visit could not be immediately conducted until June 23. The report said the spill was caused by equipment failure resulting from weak integrity of the 24 inch Trans Ramos Pipeline giving rise to cracks on the pipeline at Aghoro in Ekeremor Local Government area of Bayelsa State.NAN gathered that repair work on the leaking pipeline is underway, while recovery of spilled oil from the site is still ongoing. Reacting to the development, Mr Odugbesan expressed regret about incessant spills on the Trans Ramos Pipeline, saying that although the May 17 spill was traced to equipment failure, other leaks were predominantly caused by sabotage.
Why China may soon regret its tariffs on US natural gas - Beijing's tariffs on U.S. liquefied natural gas threaten to raise prices for buyers throughout Asia and deal a self-inflicted wound to China's state-owned energy companies. The import tax on American LNG essentially removes U.S. suppliers from consideration at trading desks across China's growing LNG market. There are plenty of supplies elsewhere in the world, but in closing the door to U.S. LNG, China is throwing a wrench into the market and giving sellers an opportunity to hike prices. In the year through June, China was the second biggest buyer of U.S. LNG, according to energy research firm Wood Mackenzie. China is trying to shift from coal to cleaner-burning natural gas as the government aims to reduce air pollution. But the country's domestic gas production and pipeline imports are not growing fast enough to meet demand, so China is turning to LNG, a form of natural gas super-chilled to liquid form and transported by sea in massive tankers. Despite its dependence on LNG, Beijing nevertheless imposed a 10 percent tariff on U.S. supplies last month, retaliating after the Trump administration slapped a 10 percent import tax on $200 billion of Chinese goods. The world's two largest economies play an influential role in the on-demand market for LNG — China as a buyer and the United States as a seller. Their trade dispute promises to redirect LNG trade routes and reverberate throughout the market. It also comes ahead of winter, when demand is highest and LNG customers are vulnerable to price spikes. "The market has been balanced to tight this year," said Bob Ineson, IHS Markit executive director for global LNG. "You're probably going to be in a fairly strong pricing environment through the winter." Chinese buyers have already moved to limit the impact by purchasing most of the LNG they'll need to meet demand this winter, according to Wood Mackenzie. The firm estimates that China will need to buy about 8 million tons of LNG on the spot market, where commodities are purchased for immediate delivery or shipment in the near future.
The Perfect Storm Bringing China And Russia Together - Relations between Russia and the West are at their lowest point since the Cold War due to the crisis in Ukraine and the annexation of Crimea in 2014. Despite the EU’s reliance on Russian gas, which is a third of its annual consumption, Moscow’s dependence on European gas demand is much more severe, with the bulk of its gas exports heading West. This overdependence caused Russia to speed up negotiations on a gas pipeline to China and its ‘pivot to the east’ after relations with the West deteriorated. The result of this pivot was the $400 billion deal concerning the Power of Siberia pipeline. Despite Moscow's claims, it can hardly be called a game changer as the capacity, 38 bcm annually, is just a fraction of Russia’s gas export to Europe, almost 200 bcm in 2017. However, negotiations have been ongoing for years on a second pipeline via the western route or the Altay pipeline. Moscow would prefer to provide both Europe and China with natural gas from production areas in Western Siberia due to its lower costs because of partially existing infrastructure. China originally opposed this option as gas is needed in its more densely populated northeast and domestic production already provides for the local needs in the northwest. The trade war between the U.S. and China has led to a strategic recalculation. Beijing’s approach to Trump has gone through three phases: first, a state visit was organized full of ceremonial displays of respect in an effort to appease the U.S. president. Trump’s increasing bellicose language showed that it hadn’t worked, which led to a period of strategic patients. The escalating trade war, however, has made Beijing reconsider its passive strategy and growing energy relations with the U.S.Until recently, negotiations between Russia and China on a second pipeline concerned a direct connection between the countries through the Altay region. However, during the Eastern Economic Forum in Vladivostok in September 2018, the Presidents of Russia, China, and Mongolia hinted at an alternative route through Mongolia. This makes sense in two ways. First, constructing a giant pipeline through the steps of Mongolia is much cheaper and easier to achieve than through the pristine Altay region which is designated as a world heritage site by UNESCO at an elevation of 2,650 meters or 8,690 feet. Second, gas would be delivered to densely populated areas in the east instead of the west, which Beijing would prefer. Moscow is happy with both scenarios as long as gas is exported from fields in Western Siberia which also serve Europe.
Oil storage tank explodes, burns in Goyang (Yonhap) – The explosion of an oil storage tank in Goyang, northwest of Seoul, caused a massive fire on Sunday, though no casualties were reported, authorities said. The tank, owned by the state-run Daehan Oil Pipeline Corporation (DOPCO) in Goyang, Gyeonggi Province, caught fire at 11 a.m. and exploded with a roaring sound at around noon, Goyang fire station said. The blaze has sent fumes and toxic gas to nearby areas, even noticeable in some parts of Seoul on Sunday afternoon, according to several witnesses. The tank contained about 4.4 million tons of gasoline and is surrounded by a wall with a thickness of 60 centimeters, which prevented the fire from spreading in other areas, Goyang fire station said. No casualties were reported because no employees were at the site at the time of the explosion. Oil mist in the tank was suspected to have caused the fire, authorities said, noting an in-depth analysis is currently underway to figure out the exact cause of the accident. Kim Kwon-un, the chief of Goyang fire station, said it took longer than expected to extinguish the fire because of a large pool of oil kept in the storage, adding that another large explosion is unlikely. DOPCO CEO Choi Joon-sung offered an apology for the accident, noting the fire is expected to put out around 11 p.m.
ONGC plans to buy 27 rigs for up to Rs 3,500 cr --Oil and Natural Gas Corp is planning to purchase 27 drilling rigs to replace nearly half of its ageing onland rigs in a deal that could cost Rs 3,000-3,500 crore. The state-run explorer has floated a tender seeking bids from interested suppliers by November 14. ONGC had initially planned to purchase nearly 50 rigs but later curtailed it to 27. Fresh purchases will help partly replace its ageing fleet of 67 drilling rigs that’s currently operating at its onshore fields, a company executive said. “Most of our onshore rigs are old and that have an impact on the quality of operation. Which is why we are trying to replace them. New rigs will make things more efficient,” a company executive said. ONGC has traditionally owned onshore rigs, instead of hiring them, due to scarce availability of quality onshore rigs, the executive said. For offshore, however, the rigs are always hired due to their adequate availability, he added.
India will keep buying Iranian crude despite the threat of US sanctions, oil minister says - Two Indian oil companies have placed orders to import Iranian crude next month, Oil Minister Dharmendra Pradhan said Monday, defying a call from President Donald Trump's administration for countries to completely cut-off the Islamic republic. U.S. sanctions targeting Iran's crude oil exports come into force from November 4, with Washington ratcheting up the pressure on governments and companies around the world to slash their Iranian oil imports to zero.However, Oil Minister Pradhan said India would continue to purchase Iranian crude in November, according to Reuters.Speaking at the "The Energy Forum" in New Delhi on Monday, he said the world's third-largest oil importer did not know whether it would receive a waiver from U.S. sanctions.Pradhan also added the country was considering evolving a different payment system to buy Iran's oil and that it could pay using Indian rupees. This would signal an attempt to bypass U.S. sanctions on Iranian transactions using the dollar — the dominant currency in global oil trade.U.S. Secretary of State Mike Pompeo said in India last month that the White House would only consider waivers for Iran's oil buyers if they vowed to eventually bring their imports to zero. Indian refiners imported around 10 million barrels of Iranian crude in October, although its November shipments are likely to be lower.
India to keep buying Iranian oil despite U.S. sanctions: sources (Reuters) - India will buy 9 million barrels of Iranian oil in November, two industry sources said, indicating the world’s third-biggest oil importer will continue purchasing crude from the Islamic republic despite U.S. sanctions coming into force on Nov. 4. “Refiners have placed November nominations to lift 1.25 million tonnes (about 9 million barrels) of oil from Iran,” one of the sources said. Indian Oil Corp will lift 6 million barrels of Iranian oil and Mangalore Refinery and Petrochemicals Ltd 3 million barrels, the source told Reuters. The United States plans to impose new sanctions targeting Iran’s oil sector on Nov. 4 to try to stop the country’s involvement in conflicts in Syria and Iraq and bring Tehran to the negotiating table over its ballistic missile program. The sources declined to be identified as they were not authorized to speak to the media. Indian Oil and Mangalore Refinery did not immediately respond to a request for comment. “India is continuing with its relationship with both its key energy partners Iran and the U.S.,” a second source said. A U.S. government official said the Trump administration is “in the midst of an internal process” of considering waivers for countries that are reducing imports of Iranian crude. The official spoke on the condition of anonymity. U.S. Secretary of State Mike Pompeo said in India last month that the Trump administration would consider waivers for Iranian oil buyers such as India but they must eventually bring the imports to zero. Indian refiners imported around 10 million barrels of Iranian oil in October, and its November shipments are expected to be lower. In the previous round of sanctions from 2012 to 2015, India continued to buy Iranian crude although it had to cut purchases significantly to protect its wider exposure to the U.S. financial system. India’s foreign minister said in May it abides only by sanctions imposed by the United Nations and not those imposed by any other country. With the European Union considering the creation of a “special purpose vehicle” before November to facilitate trade with Iran, India hopes to find a way to settle payments to Tehran. “Previously there was no European channel,” the second source said. “This time Europe is not working with the U.S., so we intend to evolve a mechanism.” India, Iran’s top client after China, has close diplomatic ties with Iran, where it is building a strategic port called Chabahar that is expected to be operational by 2019. At the same time, India is closely working with the United States to further its strategic interests. “It is still early to say how India will settle its trade with Iran,” the first source said, adding that India could consider paying Iran for crude with the rupee currency.
Moscow offers New Delhi access to oil-&-gas-rich northern sea route - Russia, that holds significant part of resource-rich Arctic region, has offered India access to the Northern Sea Route that connects Europe with the Pacific Rim including additional supplies of natural gas and joint development of gas fields to meet New Delhi’s growing energy needs. Russian President Vladimir Putin made this announcement here on Friday in the presence of Prime Minister Narendra Modi while addressing a business summit. “…the Prime Minister and I discussed this earlier today; we welcome our Indian partners to join the work in the Arctic as well. This is a very promising, long-term and very serious project that looks decades ahead, one with good investment and good return. As the climate continues to change — in some places, this is good, and elsewhere perhaps not so good —the Northern Sea Route offers growing opportunities,” Putin said in his address. “We are building a nuclear-powered fleet, eight nuclear-powered ships, which will be steadily put into operation. This work is in progress. This will ensure reliable LNG supplies to the Indian and world markets. So this could be very interesting joint work,” he said.
U.S. actively considering waivers on Iran oil sanctions (Reuters) - The Trump administration is actively considering waivers on sanctions it will reimpose next month for countries that are reducing their imports of Iranian oil, a U.S. government official said on Friday. The administration withdrew from a deal over Tehran’s nuclear program in May and is unilaterally reimposing sanctions on Iran’s crude oil consumers on Nov. 4. The sanctions aim to force Tehran to stop its involvement in conflicts in Syria and Iraq and halt its ballistic missile program. Iran says it has abided by the 2015 nuclear deal, which was struck with five other world powers, besides the United States. The administration is “in the midst of an internal process” of considering exceptions called SRE waivers, or significant reduction exemptions, said a government official, who spoke on the condition of anonymity. It was the first time a U.S. official said the administration was in the process of considering waivers. Secretary of State Mike Pompeo said in India last month that the administration would consider waivers and that some buyers of Iranian oil would take a “little bit of time” to unwind their trade with Iran. White House National Security Adviser John Bolton said on Thursday that the administration’s objective was that there be no waivers and “exports of Iranian oil and gas and condensates drops to zero.” He added that the administration would not necessarily achieve that. The administration is “prepared to work with countries that are reducing their imports on a case-by-case basis,” the official said. The comments followed news that India, Iran’s No. 2 oil customer after China, will buy 9 million barrels of Iranian oil in November. It was an indication that India will continue purchasing crude from Iran, despite the Trump administration’s push to get countries to stop their purchases.
Saudi Arabia to supply extra oil cargoes to India in November as Iran sanctions loom (Reuters) - Saudi Arabia, the world’s biggest oil exporter, will supply Indian buyers with an additional 4 million barrels of crude oil in November, several sources familiar with the matter said on Wednesday. The extra cargoes indicate a willingness by Saudi Arabia to increase crude supply to make up the shortfall once sanctions by the United States on oil exports from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), start up on Nov. 4. India is Iran’s top oil client after China, though several refiners have indicated they will stop taking Iranian barrels because of the sanctions. Reliance Industries Ltd, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemicals Ltd are seeking an additional 1 million barrels each in November from Saudi Arabia, the sources said. Three of the companies did not immediately reply to an email from Reuters seeking comment. MRPL replied “no comments” when contacted by email. State-owned oil producer Saudi Aramco was not immediately available for comment. Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions. Refiners in the country have placed orders to buy 9 million barrels from Iran in November. One of the reasons for the additional demand for Saudi oil is that the crude arbitrage from the United States is shut so the Indian buyers have to turn to Middle Eastern barrels, said one of the sources. India, the world’s third biggest oil importer, is grappling with a combination of rising oil prices and falling local currency, which makes imports of dollar-denominated oil more expensive. Retail prices for gasoline and diesel fuel in India are at record highs and the government has cut its excise tax on fuel to ease some of the pain for consumers.
Saudi Crown Prince to Trump: We've Replaced All Iran's Lost Oil -- Saudi Arabia’s crown prince, facing U.S. pressure to tame surging oil prices, insisted that the kingdom is fulfilling promises to make up for Iranian crude supplies lost to American sanctions. “The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that,” Mohammed Bin Salman, heir to the Saudi throne, said in an interview. “And that happened.” Yet the action appears lost on President Donald Trump, who continues to attack the Organization of Petroleum Exporting Countries for letting prices rally while he seeks to choke off supplies from Iran, a political antagonist of the Saudis. On Wednesday the State Department urged OPEC to tap its reserve supplies. The Saudis’ efforts have also failed to prevent crude hitting a four-year high above $86 a barrel in London this week. Oil traders are concerned that the kingdom isn’t ramping up quickly enough, and that it may not have enough capacity to fully cover Iran’s losses. Yet a coalition of producers from OPEC and beyond has recently boosted output by 1.5 million barrels a day, double the 700,000-barrel decline suffered so far by Iran, according to the crown prince. “We export as much as two barrels for any barrel that disappeared from Iran recently,” Prince Mohammed said. “So we did our job and more.” Saudi Arabia is now pumping about 10.7 million barrels a day -- close to a record -- and can add a further 1.3 million “if the market needs that,” the prince said. However, many analysts doubt that 12 million barrels a day can be reached quickly, or maintained for an extended period. “Near-term spare capacity is effectively maxed out,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said last week. Prince Mohammed said that the kingdom could push capacity beyond 12 million barrels a day with additional investment, and that extra supplies are also available from Saudi Arabia’s allies. The so-called OPEC+ coalition spans other Gulf producers like the United Arab Emirates, as well as countries outside OPEC such as Russia.
Iran's oil minister reiterates Saudi Arabia will not be able to fill looming oil supply gap — Iranian oil minister Bijan Zanganeh on Monday dismissed claims by Saudi Crown Prince Mohammed bin Salman that Saudi Arabia was prepared to make up for any oil market shortfall caused by US sanctions on geopolitical rival Iran. "It seems that such remarks were made under US pressure on Saudi authorities," Zanganeh said, according to oil ministry news service Shana. "Otherwise in reality, neither the Saudis nor any other countries could replace Iran's exports." Iran's crude and condensate exports fell by 11.5% to 1.7 million b/d in September from 1.92 million b/d in August, their lowest in at least two-and-a-half years, an S&P Global Platts analysis of trade flow data found Monday. Platts Analytics expects Iranian crude and condensate exports to fall to 1.1 million b/d by October loadings, and to 800,000 b/d by Q4 2019, down from 2.91 million b/d in April. But shipping and trading sources say clandestine deliveries may be occurring, as Iran attempts to continue shipments to key buyers without being detected by US authorities. In an interview with Bloomberg News published Friday, the Saudi crown prince said the kingdom and its allies in an OPEC/non-OPEC coalition have recently boosted output by some 1.5 million b/d, more than doubling the 700,000 b/d loss in Iranian supplies. "We export as much as two barrels for any barrel that disappeared from Iran recently," Prince Mohammed said. "So we did our job and more." Saudi Arabia has been under pressure by the US to pump more barrels to prevent oil prices from overheating. Platts first reported Wednesday that the US State Department accused OPEC of withholding some 1.4 million b/d in spare production capacity from the market. Prince Mohammed, in his interview, said the US had only asked Saudi Arabia to replace shut-in Iranian barrels, not to flood the market with extra crude. "The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that," he said. "And that happened." Zanganeh, however, reiterated his skepticism that Saudi Arabia has enough spare capacity to keep the market sufficiently supplied to prevent any price spike caused by US sanctions. Saudi Arabia has never pumped higher than 10.7 million b/d across an entire month, the level that Saudi energy minister Khalid al-Falih last week said the kingdom would average in October. But it claims to be able to produce 12 million b/d at will.
Lukoil to start production at Iraq's newest massive discovery in 2021 -- Lukoil's massive new discovery in southern Iraq -- part of the Russian firm's sizable growth plans in the Middle Eastern country -- will start production in 2021, the head of Iraq's regional state-run oil company said. Aggressive exploration continues at Block 10, Dhi Qar Oil Company Director General Ali Warid said in a statement emailed to S&P Global Platts, following Lukoil's announcement earlier this year that "recoverable reserves in excess of 2.5 billion barrels of crude" from the Eridu-1 well was the biggest find in Iraq in 20 years. "The Chinese Bohai company has started to drill the 4th well in the 10th exploration block," Warid said. "The drilling work comes along the same time of the 3D scan conducted by the (Iraqi state-run) Oil Exploration Company." He added: "I predict that the actual production of the field will start in 2021 according to the plans made by Lukoil in coordination with the Oil Ministry." Lukoil won Block 10 in a 2012 bidding round. It's located mostly in Dhi Qar province, west of Lukoil's 400,000 b/d West Qurna-2 project, located in the Iraqi oil capital of Basra province. Yaroslav Okulov, the chief financial officer of Lukoil Mid East, said at a conference in Istanbul on Tuesday that Eridu was a "very promising discovery" and appraisal work was ongoing. "I believe that once we finish the appraisal, reserves will come to life, so it will bring additional capacity for oil production," he said. Lukoil is a significant foreign investor in Iraq's oil sector. The West Qurna-2 field, signed in 2010, has reached 400,000 b/d capacity, with an additional 50,000 b/d to 100,000 b/d expected by the end of 2019. Ihsan Ismaael, the director general of the state-run Basra Oil Company, said at the Istanbul conference that the 800,000 b/d production plateau target might be increased by "20% because there are new opportunities to develop." Okulov said the next phase of the project will be to drill additional wells for a water injection system to boost reservoir pressure, and "expand capacity of the oil treatment and water treatment facilities."
Kuwait Stops Shipping Oil to US for First Time Since 1990-1991 Gulf War - Kuwait has all but stopped shipping crude to the U.S. for the first time since the aftermath of Saddam Hussein’s invasion in 1990, eroding an economic link between Washington and the Arab petro-monarchy. The halt is the latest sign that booming demand for oil in Asia, particularly as the U.S. re-imposes sanctions on Iran, and rising supplies from America on the back of the shale revolution are re-drawing petroleum trade routes. U.S. imports of Kuwaiti crude fell to zero over four weeks through late September, the first time that shipments have completely stopped since weekly data became available in June 2010, according to the U.S. Energy Information Administration. Based on monthly data, Kuwaiti shipments to the U.S. haven’t stopped since May 1992, when the OPEC producer was still recovering from oil-field fires ignited by retreating Iraqi troops in the first Gulf War. Kuwait is diverting its barrels instead into the more lucrative Asian market, where prices are higher for the type of high-sulfur crude the small Middle Eastern nation pumps, according to a person familiar with the matter, who asked not to be identified because the matter isn’t public. Kuwaiti oil fetches about $80 a barrel in Asia compared with about $79 in the U.S., according to Bloomberg calculations based on benchmark prices and the country’s official selling prices. Kuwaiti crude sells at about $76 a barrel in Europe. “Iranian sanctions are providing a chance for others to sell more into Asia where prices are better than for sales into the U.S.,” Andy Lipow, president of consultant Lipow Oil Associates LLC, said in Houston. While its shipments to the U.S. have plunged, Kuwait faces limits on its production due to a dispute with Saudi Arabia over shared oil fields along their border where both nations in the past pumped as much as 500,000 barrels a day. The shared fields in the so-called neutral zone halted production more than three years ago, though the two governments are in talks to reactivate them. Kuwait Petroleum Corporation’s reduction of crude exports were "coordinated with U.S. and European clients," the company said in a statement on Kuwait News Agency (KUNA) website. The American market is "strategically important" and its supply contracts are "functional", the state-owned oil producer said.
Libya’s crude oil output slips again -- Libya's crude oil output has dipped again due to the deteriorating security situation around its largest oil field, Sharara, sources said Tuesday. Sources with knowledge of Libya's production said an increase in local militia activity in the past week led to some oil workers evacuating fields. Crude output in Libya had recently touched five-year highs at a critical time for global markets ahead of the imposition of US sanctions on Iran. By the end of last week, the Sharara field was producing around 250,000 b/d. However, output is expected to have dropped over the last two days because of security concerns. In September, Sharara was producing around 300,000 b/d. Concerns over security around the field come as international oil companies BP and Eni alongside National Oil Corporation (NOC) announced their intention to resume exploration activities in the war-torn country. Sharara -- a joint venture between state-owned NOC and a consortium of Total, Repsol, Statoil and OMV -- has seen several closures over the past few years due to worker protests and attacks on export pipelines. Meanwhile, sources indicated to S&P Global Platts that the situation remains tense around Sharara and security issues have hindered travel arrangements to and from the fields. NOC shut Sharara mid-July after gunmen entered a substation and kidnapped four staff members. The state producer also declared force majeure on crude oil exports from Zawiya at the time. Representatives at NOC were unavailable for comment.
OPEC oil output to average 32.46 million b/d in 2018, 32.14 million b/d in 2019: EIA - The US Energy Information Administration on Wednesday boosted its Brent and WTI crude oil price forecasts on uncertainty over the impact of the looming re-imposition of US sanctions on Iranian crude exports. In its Short-Term Energy Outlook, which was delayed a day because Monday was a holiday in the US, EIA forecast Brent to average $74.43/b in 2018, up $1.59 from last month's forecast, and WTI at $69.56/b in 2018, up $2.53 from last month. The agency forecasts Brent to average $75.06/b and WTI to average $69.56/b in 2019, up $1.38 and $2.20, respectively, from last month's forecast. The jump in the price forecast was caused by "uncertainty about the amount that Iranian crude oil production could decline, and how much of the decline can be offset by other supplier," EIA said in the report. Iranian oil output averaged 3.4 million b/d in September, down 120,000 b/d from the August EIA outlook and the country's lowest output since February 2016. The latest S&P Global Platts OPEC supply survey estimated Iranian output at 3.5 million b/d in September. The US is expected to re-impose sanctions on Iranian crude November 5, which caused oil prices to rise to four-year highs in the second half of August and could lead to additional price increases, the agency said. "If the reduction in Iranian crude oil production and exports is larger than expected, the disruption to the crude oil market in the fourth quarter of 2018 could result in price increases," EIA said. Along with Iran, Venezuelan oil output also continued to fall, declining to 1.23 million b/d in September, down about 30,000 b/d from August and down 1.17 million b/d from December 2015, when the monthly output decline began. But some OPEC members, along with Russia, have "largely offset production decreases" in Venezuela and Iran, EIA Administrator Linda Capuano said Wednesday in a statement. Saudi oil production averaged 10.52 million b/d in September, up 100,000 b/d from August and the highest output level since November 2016, EIA said. Total OPEC oil production is expected to average 32.46 million b/d in 2018, down 220,000 b/d from 2017, EIA said. Total OPEC oil production is expected to continue to fall to 32.14 million b/d in 2019, EIA said. EIA Wednesday also raised its forecast for US oil output, which it said will average 10.74 million b/d in 2018 and 11.76 million b/d in 2019. Those forecasts were up 80,000 b/d and 260,000 b/d, respectively, from last month's forecast.
Oil Demand and Supply Close to New Peaks - Both global oil demand and supply are now close to new, historically significant peaks at 100 million barrels per day, according to the International Energy Agency. Both global oil demand and supply are now close to new, historically significant peaks at 100 million barrels per day (MMbpd) “and neither show signs of ceasing to grow any time soon,” according to the International Energy Agency (IEA). “Fifteen years ago, forecasts of peak supply were all the rage, with production from non-OPEC countries supposed to have started declining by now. In fact, production has surged, led by the US shale revolution, and supported by big increases in Brazil, Canada and elsewhere,” the IEA said in a statement published on its website Friday. “In future, a lot of potential supply could come to the market from places like Iran, Iraq, Libya, Nigeria and Venezuela, if their various challenges can be overcome,” the IEA added. “There is no peak in sight for demand either. The drivers of demand remain very powerful, with petrochemicals being a major factor,” the IEA continued. The IEA said it is an “extraordinary achievement” for the global oil industry to meet the needs of a 100 (MMbpd) market but announced that twin peaks for demand and supply have been reached “by straining parts of the system to the limit”. “Recent production increases come at the expense of spare capacity, which is already down to only 2 percent of global demand, with further reductions likely to come,” the IEA said. “This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy,” the IEA added.
Rising use of plastics to drive oil demand to 2050 – IEA (Reuters) - Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said on Friday. Despite government efforts to cut pollution and carbon emissions from oil and gas, the Paris-based agency said it expected the rapid growth of emerging economies, such as India and China, to propel demand for petrochemical products. Petrochemicals that are derived from oil and gas feedstocks form the building blocks for products that range from plastic bottles and beauty products to fertilisers and explosives. Oil demand for transport is expected to slow by 2050 due to the rise of electric vehicles and more-efficient combustion engines, but that would be offset by rising demand for petrochemicals, the IEA said in a report. "The petrochemical sector is one of the blind spots of the global energy debate and there is no question that it will be the key driver of oil demand growth for many years to come," IEA Executive Director Fatih Birol told Reuters. Petrochemicals are expected to account for more than a third of global oil demand growth by 2030 and nearly half of demand growth by 2050, according to the world's energy watchdog. Global demand for petrochemical feedstock accounted for 12 million barrels per day (bpd), or roughly 12 percent of total demand for oil in 2017. The figure is forecast to grow to almost 18 million bpd in 2050. Most demand growth will take place in the Middle East and China, where big petrochemical plants are being built. Oil companies such as Exxon Mobil and Royal Dutch Shell plan to invest in new petrochemical plants in the coming decades, betting on the rising demand for plastics in emerging economies. In the Middle East, major producers such as Saudi Arabia and Kuwait are also investing in large petrochemical plants because in some cases they can make more money by converting crude oil directly into plastics rather than oil products such as gasoline and diesel, Birol said. Plastics use has come under increased scrutiny as waste makes its way into the oceans where it harms marine life, prompting several countries to ban, partly ban or tax single-use plastic bags. But the IEA report said government efforts to encourage recycling in order to curb carbon emissions would have only a minor impact on petrochemical growth. "Although substantial increases in recycling and efforts to curb single-use plastics take place, especially led by Europe, Japan and Korea, these efforts will be far outweighed by the sharp increase in developing economies of plastic consumption," it said.
Forget cars, plastics could soon become the 'single most important driver' of oil demand --Petrochemical products like plastics will become the most prominent driver of oil demand over the coming years, the executive director of the International Energy Agency (IEA) told CNBC Monday."When we discuss oil demand, peak oil demand (and) oil market dynamics, the focus is solely on cars — which is completely wrong," Fatih Birol, executive director at the IEA, told CNBC's "Street Signs" Monday."When we look at the next 10 to 15 years, the single most important driver of global oil demand growth is petrochemicals," Birol said.In a report published late last week, the IEA said it expects robust growth in emerging economies — such asIndia and China — to propel demand for plastics and other petrochemical products.Meanwhile, oil demand for transport is projected to slow by 2050 because of the meteoric rise of electric vehicles and more efficient combustion engines, the IEA said. The Paris-based agency added this would then be offset by rising demand in petrochemicals.Petrochemicals that are derived from oil and gas feed-stocks form the building blocks for products that range from plastic bottles and beauty products to fertilizers and explosives. Oil companies such as Exxon Mobil and Royal Dutch Shell both plan to invest in new petrochemical plants over the coming decades, betting on the explosive demand for plastics in emerging economies.
The Next Pillar Of Oil Demand Growth -- The debate about peak oil demand always tends to focus on how quickly electric vehicles will replace the internal-combustion engine, especially as EV sales are accelerating. However, the petrochemical sector will be much more difficult to dislodge, and with alternatives far behind, petrochemicals will account for an increasing share of crude oil demand growth in the years ahead. Petrochemicals don’t receive much attention in the media, but its fingerprints are everywhere. They are used in plastics, fertilizers, packaging, clothing, dyes, cleaning products, cosmetics, medicines, tires – a seemingly limitless number of end-uses. They are so ingrained and embedded into modern life that they are almost unnoticeable. Producing the zillions of consumer and industrial products coming from petrochemicals requires huge volumes of feedstocks. Needless to say, as the name suggests, the feedstocks are derived from petroleum – oil and gas. Moreover, demand for petrochemicals is soaring, as hundreds of millions of people in emerging markets move into the middle class. A new report from the International Energy Agency positions the petrochemical industry as one of the driving forces behind oil demand growth for the next few decades. “The growing role of petrochemicals is one of the key ‘blind spots’ in the global energy debate,” the IEA wrote. “The diversity and complexity of this sector means that petrochemicals receive less attention than other sectors, despite their rising importance.” The IEA says that the petrochemical sector could account for more than a third of oil demand growth to 2030, and nearly half to 2050, “ahead of trucks, aviation and shipping.”
Brent falls as fund managers take profits after rally: John Kemp (Reuters) - Hedge fund managers started to take some profits after the strong rally in crude oil prices, even before details emerged last week of output increases from Saudi Arabia and sanctions waivers by the United States. Hedge funds and other money managers cut their combined net long position in the six most important petroleum futures and options contracts by 19 million barrels to 1.081 billion barrels in the week to Oct. 2. Portfolio managers cut their net long position in NYMEX and ICE WTI by 13 million barrels to the lowest level for almost a year, according to exchange and regulatory records (tmsnrt.rs/2Pmbr3E). More significantly, funds cut their net long position in ICE Brent by 14 million barrels, the first reduction in six weeks, after increasing it by 172 million barrels since Aug. 21. Elsewhere, there were minor increases in net length in U.S. gasoline (+6 million barrels) and U.S. heating oil (+7 million barrels) but a small offsetting reduction in European heating oil (-4 million barrels). The shift from accumulation to liquidation in Brent was especially notable because the fund managers had previously built the largest net long position since late May. Fund managers had accumulated long positions amid fears U.S. sanctions on Iran would leave the market short of seaborne crude, pushing Brent prices to their highest in almost four years. Brent long positions had outnumbered short ones by a near-record margin of 19:1 before long liquidation and some fresh shorting trimmed the ratio to 15:1. But the very stretched hedge fund position in Brent by the end of September significantly increased the risk of a reversal in prices, even before Saudi Arabia, Russia and the United States issued statements to cool the market. U.S. officials have revealed they are actively considering sanctions waivers for at least some of Iran’s customers, which should ease fears about a potential supply crunch. And Saudi officials have confirmed the kingdom plans to raise its exports even further in October and November to relieve any shortfall from Iran.
Crude Touches One-Week Low as Iranian Shortage-- Oil slipped to a one-week low amid signs that Iranian supply disruptions may not be as severe as expected. Futures declined 5 cents a barrel on Monday after last week touching the highest since 2014. U.S. government officials were said to be in talks with countries seeking exemptions from American sanctions that will ban crude purchases from Iran within weeks. Saudi Arabia and allied producers already have raised output to mitigate any drop in Iranian exports. Absent clear indicators of fundamental supply and demand trends, so-called technical signals followed by chart-watching traders may hold sway. The next bearish threshold is the 20-day moving average just below $72 a barrel. “Oil is going to do one of two things -- make another leg higher after this little pullback, or it’s likely to retest $71-72,” said Josh Graves, senior market strategist at RJO Futures in Chicago. Oil has rallied since early September on concerns that OPEC and other major producers wouldn’t raise output enough to make up for the squeeze on Iranian shipments. Major buyers of crude from the Islamic Republic have been shunning or scaling back purchases as a Nov. 4 cutoff date set by the Trump administration approaches. Meanwhile, Hurricane Michael is poised to hit the Florida Panhandle and is forecast to become the second hurricane to make landfall in the U.S. in a month. Offshore oil and natural gas producers have begun shutting down installations on the Gulf of Mexico, taking 19 percent of the Gulf crude production offline. West Texas Intermediate for November delivery settled at $74.29 a barrel on the New York Mercantile Exchange, the lowest close since Sept. 28. Brent for December settlement fell 24 cents to $83.91 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.74 premium to WTI for the same month.
Oil Climbs as Storm Halts Output -- Crude traded near $75 a barrel as storm Michael in the U.S. strengthened and shut some oil output, while American inventories were predicted to have risen for a third week. Futures in New York rose 0.7 percent after slipping 0.1 percent on Monday. Nationwide crude stockpiles as well as those at the key storage hub of Cushing, Oklahoma, gained last week, according to a survey of analysts and a Bloomberg forecast. Meanwhile, Michael -- currently a category 1 storm on the Saffir-Simpson scale -- is poised to head toward Florida after shutting about 19 percent of oil production in the Gulf of Mexico. Crude has gained more than 20 percent this year as volatility surged on uncertainty over a potential supply crunch. U.S. sanctions on Iranian oil exports are set to be implemented next month, while other producing nations such as Venezuela and Libya saw disruptions to output and America struggled with a pipeline bottleneck. Meanwhile, tensions flared between the world’s top two economies as U.S. Secretary of State Michael Pompeo cited “fundamental disagreement” with his Chinese counterpart in a testy exchange in Beijing. Disruptions to oil supply as well as “the hurricane will provide a near-term fillip to crude prices, but the other and more worrying thing is the American inventory build-up, especially in Cushing,” said Stephen Innes, Singapore-based head of Asia Pacific trading at Oanda Corp. “While the market wasn’t overly sensitive to the increase last week, this week could be different given the supply concerns back in the fore.” Prices Steady West Texas Intermediate for November delivery was 54 cents higher at $74.83 a barrel on the New York Mercantile Exchange at 2:45 p.m. in Singapore. The contract lost 5 cents to $74.29 a barrel on Monday. Total volume traded was about 15 percent above the 100-day average. Brent for December settlement added 63 cents at $84.54 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.83 premium to WTI for the same month. Fast-moving storm Michael is poised to slam the Florida panhandle as a hurricane, the second to make landfall in the U.S. in a month. The impact is already being seen in the energy sector, after operators evacuated 10 platforms, moved five rigs out of the storm’s path and shut in 19 percent of oil and 11 percent of natural gas production in the Gulf of Mexico, according to the Interior Department.
Oil prices fall as US may grant some waivers on Iran crude sanctions - Oil prices fell on Monday, pressured by expectations that some Iranian oil exports will keep flowing despite U.S. sanctions, easing a strain on supplies.Two companies in India, a big buyer of Iranian oil, have ordered barrels in November, India's oil minister said on Monday. The Trump administration is considering waivers on sanctions, a U.S. government official said on Friday."One way or another, it looks as though India is going to take some Iranian crude," said Olivier Jakob of Petromatrix, adding that the development was helping oil to "retrace some of the price surge we saw last week."Oil prices pared losses after Irving Oil confirmed a "major incident" at Canada's largest refinery in St. John, New Brunswick following reports of an explosion.Brent crude, the international benchmark, was down 74 cents to $83.42 per barrel at 10:43 a.m. ET (1443 GMT). It hit a four-year high of $86.74 last week.U.S. crude was down 55 cents at $73.79, slipping further from last week's four-year high at $76.90.U.S. sanctions will target Iran's crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero."This is one of the single biggest supportive factors for crude," said analysts at JBC Energy of the U.S. re-imposition of Iran sanctions. "Having said that, it may well be that we are already in the most supportive phase coming from this change and the effect will soon begin to ease."Oil also dropped as investors focused on rising output from other producers, such as top exporter Saudi Arabia, to compensate for lower Iranian supplies.Saudi Arabia said last week it plans to raise production in November from October output of 10.7 million barrels per day (bpd), indicating Riyadh will be boosting its supply to the highest ever level."Chatter that Saudi Arabia has replaced all of Iran's lost oil" is weighing on prices, said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore. Concern that the U.S.-Chinese trade war could slow down economic growth and hit oil demand also weighed on the market, traders in Asia said. Chinese equities fell sharply on Monday. Oil has been supported by concern that the Iranian export loss will leave a thinner margin of unused production capacity to deal with supply shocks. The bulk of spare capacity is held by Saudi Arabia.
Oil prices fall 1% as US considers granting some waivers on Iran crude sanctions - Brent crude oil prices fell by more than 1 percent on Monday after Washington said it may grant waivers to sanctions against Iran’s oil exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran. International benchmark Brent crude oil futures were at $83.25 per barrel at 0115 GMT, down 91 cents, or 1.1 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were down 57 cents, or 0.8 percent, at $73.77 a barrel. U.S. sanctions will target Iran’s crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero. However, a U.S. government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil. Hedge funds cut their bullish wagers on U.S. crude in the latest week to the lowest level in nearly a year, data showed on Friday. Further weighing on prices, Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said there was also “chatter that Saudi Arabia has replaced all of Iran’s lost oil”. But Innes warned that limited spare production to deal with further supply disruptions meant “the capacity is quickly declining due to Asia’s insatiable demand”. The U.S. oil drilling rig count fell for a third consecutive week, as rising costs and pipeline bottlenecks have hindered new drilling since June. Drillers cut two oil rigs in the week to Oct. 5, bringing the total count down to 861, energy services firm Baker Hughes said in its weekly report on Friday.
Refinery explosion, approaching hurricane push refined products higher - Refined products futures settled higher Monday as the market weighed news of a refinery explosion in New Brunswick, Canada, and the potential impact of an approaching hurricane in the Gulf of Mexico. Early on Monday reports of a fire and explosion at Irving Oil's 300,000 b/d Saint John refinery sent product futures higher. The refinery is a major supplier of gasoline to Atlantic Canada and New England, and futures contracts moved higher in the immediate aftermath of the news emerging.But the market impact was partially muted by planned work being underway at the refinery, sources said. Futures prices slid into negative territory later in the session as the market weighed how much supply the incident could take offline.A source familiar with refinery operations said the fire was in the hydrogen unit. Several sources said the plant had been carrying out a turnaround, with one adding that the crude distillation unit, residue fluid catalytic cracker and gasoline desulfurization units were shut October 1. There have been intermittent problems with the gasoline-making units in recent weeks, sources noted,Product inventories in New England are ample. Regional gasoline stocks rose 306,000 barrels in week ended that September 28 to 4.638 million barrels, according to the latest US Energy Information Administration data. Diesel stocks rose to 6.327 million barrels, according to EIA, 2.417 million barrels above the year-ago level and the highest level seen since the agency began recording data in April 2004.The potential for a demand bump ahead of Hurricane Michael's landfall later added support for prices. The storm was expected to enter the Gulf of Mexico on Monday evening and is forecast top make landfall along the Florida Gulf Coast as a major hurricane late on Wednesday.The storm was also bullish for US crude futures. Although current forecasts show the storm avoiding major production and refining centers, any hurricane in the Gulf adds uncertainty to markets. BP and ExxonMobil said Monday they were evacuating personnel from key Gulf of Mexico producing platforms that may be at risk due to Hurricane Michael. NYMEX November WTI settled 5 cents below its open at $74.29/b, and ICE December Brent was down 25 cents at market close at $83.91/b.
Crude oil futures firm on Hurricane Michael, Iranian sanctions; ICE Brent up at $84.64/b, NYMEX WTI $74.79/b Crude oil futures were higher at midday in Europe Tuesday, supported by concern about the effect of Hurricane Michael on US Gulf Coast infrastructure and by renewed worries about the impact of Iranian sanctions on global supply. At 1107 GMT, December ICE Brent crude futures were up 73 cents/b at $84.64/b, while the NYMEX November light sweet crude contract rose 50 cents/b to $74.79/b. Despite the US announcing possible waivers on the impending sanction on Iran, crude remained supported on falling oil exports from Iran which hit a new low in September. Total estimated export volumes on Aframaxes, Suezmaxes and VLCCs from Iranian ports fell 11.5% month on month to 1.7 million b/d in September, according to data from Platts cFlow, trade flow software. Meanwhile, BP and ExxonMobil were evacuating personnel from key producing platforms that may be near the path of Hurricane Michael as the storm moves through the Gulf of Mexico toward landfall, which was anticipated in the Florida panhandle later this week, the companies said. ExxonMobil said it was removing crews from the Lena platform, which was undergoing decommissioning, and also keeping staffing of its Mobile Bay operations offshore Alabama at "minimal" levels. BP was, meanwhile, evacuating crews and has shut in production from its four operated platforms: Atlantis, Mad Dog, Na Kika and Thunder Horse, the company said. The impact on prices of Iranian sanctions and Hurricane Michael seemed to prevail over expectations of a stock rise in this week's US inventory data. Analysts surveyed by S&P Global Platts Monday were looking for US crude inventories to have increased by 1.61 million barrels in the week ended Friday, October 5, amid lower refinery utilization rates and weak export activity. Analysts expected refinery runs to have dropped by 0.45 percentage point to 89.95% of total capacity last week. Total refinery utilization has been above 90% since early March.
Oil prices rise on signs that Iranian crude exports fall further --Oil prices rose on Tuesday on growing evidence of falling crude exports from Iran, OPEC's third-largest producer, before the imposition of new U.S. sanctions and a partial shutdown in the Gulf of Mexico due to Hurricane Michael.Benchmark Brent crude was up 43 cents at $84.34 a barrel by 10:01 a.m. ET (1401 GMT), having fallen as low as $82.66 on Monday. Brent hit a four-year high of $86.74 last week.U.S. West Texas Intermediate crude was up 30 cents at $74.59. WTI hit $76.90, a nearly four-year high, last week."The oil market mood is exceptionally bullish, with fears growing that the U.S. demands for an Iran oil embargo could cause a significant supply shortfall," said Julius Baer commodities research analyst Carsten Menke.Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers sought alternatives ahead of U.S. sanctions that take effect on Nov. 4.Iran exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. An industry source who also tracks exports said October shipments were so far below 1 million bpd. That is down from at least 2.5 million bpd in April, before President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions. The figure also marks a further fall from 1.6 million bpd in September.
Oil Prices Rise On Iran, Hurricane Outages - The slump in oil prices, which began last week, came to an end on Tuesday on renewed fears of supply outages in Iran, combined with disruptions in the Gulf of Mexico related to Hurricane Michael. “The oil market mood is exceptionally bullish, with fears growing that the U.S. demands for an Iran oil embargo could cause a significant supply shortfall,” said Julius Baer commodities research analyst Carsten Menke, according to Reuters. President Trump is expected to announce a lift on the ban on using E15 for year-round sales on Tuesday, hoping to heal a rift with farm country that caused by the tenure of former EPA Administrator Scott Pruitt. Pruitt’s EPA offered a series of waivers to oil refineries that allowed them to escape their obligations to purchase ethanol, which hurt ethanol prices and enraged the corn and ethanol industries. Tuesday’s announcement will allow sales of higher-concentrated E15 ethanol during summer months, something that has been off limits to date. BP and ExxonMobil evacuated personnel from the Gulf of Mexico as Hurricane Michael intensified at the start of the week. BP shut in four platforms and Exxon removed staff from its Lena platform, but said production won’t be affected. Equinor and BHP Billiton also removed staff from some platforms. As of now, it appears that around 20 percent of the region’s production has been temporarily idled. The IEA pleaded with OPEC and other major oil producers to increase production. “We should all see the risky situation, the oil markets are entering the red zone,” IEA Executive Director Fatih Birol said Tuesday, according to Bloomberg. “We should try to comfort the markets all together because it may be bad news for the consumers, importers today, but I believe it may well be bad news for the producers tomorrow.” Birol went on to add that “if there are no major moves from the key producers, the fourth quarter of this year is very, very challenging.” He noted that the run up in oil prices is occurring at a time when more red flags regarding the global economy are emerging, something that will ultimately spell trouble for the oil industry if it leads to demand destruction.
Oil Over $74 on Concerns Storm May Worsen Supply Risk -- Oil traded above $74 a barrel on concerns Hurricane Michael in the U.S. may exacerbate a supply crunch, while the International Energy Agency warned higher prices may put the world economy at risk. Futures were little changed in New York after gaining 0.9 percent on Tuesday. OPEC and other key producers need to boost output as the oil market is entering a “red zone,” and high prices are inflicting damage on the global economy, IEA Executive Director Fatih Birol said in an interview. Adding to supply risks is Hurricane Michael, which curtailed production in the Gulf of Mexico by 40 percent as it heads to Florida. “The oil market remains overly bullish on the dwindling spare capacity argument,” said Stephen Innes, Singapore-based head of Asia Pacific trading at Oanda Corp. Still, the IEA’s comment suggests “prices are peaking at the most opportunistic time given the waning global growth narrative.” Crude has climbed more than 15 percent since mid-August as uncertainties remain on whether the Organization of Petroleum Exporting Countries can replace shrinking supplies from Venezuela to Iran. While Russian President Vladimir Putin says impending U.S. sanctions on the Persian Gulf state is to blame for the gains, his American counterpart Donald Trump has attacked OPEC for letting prices surge. West Texas Intermediate for November delivery was at $74.82 a barrel on the New York Mercantile Exchange at 7:55 a.m. in London, down 14 cents. The contract rose 67 cents to $74.96 a barrel on Tuesday. Total volume traded was about 23 percent below the 100-day average. Brent for December settlement was 5 cents lower at $84.95 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 1.3 percent to $85 on Tuesday. The global benchmark crude traded at a $10.27 premium to WTI for the same month.
Oil prices gain as Iranian crude exports fall, Hurricane Michael nears (Reuters) - Oil prices rose about one percent on Tuesday on growing evidence of falling Iranian crude exports before the imposition of new U.S. sanctions, as well as a partial production shutdown in the Gulf of Mexico because of Hurricane Michael.Brent crude futures rose $1.09 to settle at $85.00 a barrel, a 1.30 percent gain. The global benchmark hit a four-year high of $86.74 last week but slipped as low as $82.66 on Monday.U.S. West Texas Intermediate (WTI) crude futures rose 67 cents to settle at $74.96 a barrel, a 0.90 percent gain.Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers sought alternatives ahead of U.S. sanctions that take effect on Nov. 4.Iran, OPEC's third-largest producer, exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. An industry source who also tracks exports said October shipments so far were below 1 million bpd.That is down from at least 2.5 million bpd in April, before U.S. President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and re-imposed sanctions. The figure also marks a further fall from 1.6 million bpd in September.
Expect 'extreme volatility' for oil prices due to the Iran sanctions, BP CEO says -- Uncertainty surrounding Iran's oil industry ahead of forthcoming U.S. sanctions could prompt "extreme volatility" for oil prices, BP's chief executive told CNBC Wednesday."I think it's going to be 45 days of extreme volatility, it could spike up, it could also go the other way," he told CNBC's Steve Sedgwick in London.Dudley's comments come at a time when oil market players are closely watching what happens when U.S. sanctions on Iran's oil industry come into force on November 4.It's hard to be precise over how much of Iran's production will be affected by the sanctions. It largely depends on whether the country's oil-buying customers are afraid of secondary sanctions from the U.S. if they do business with Iran. BP's competitor Total announced in August that it was pulling out of a giant oil and gas project in the Islamic republic.But BP and Serica Energy were granted a new license Tuesday to run a North Sea gas field partly owned by Iran showing the U.S. is willing to make some exemptions to the reach of the sanctions. "If waivers were granted to others, to big oil consuming countries, you could see it (the price) go down, there's a lot of uncertainty right now," Dudley said.Some analysts predict as much as 1.5 million barrels per day could be removed from the market, an event that could cause prices to rise further. On Wednesday, Brent crude futures were trading at $84.96 per barrel while U.S. West Texas Intermediate was trading at $74.92.Dudley didn't see demand falling as a result of high prices due to global GDP growth (seen at 3.7 percent in 2018 and 2019 by the International Monetary Fund) still being robust. "It's still growing, demand, it might be a little bit off but we don't see that destruction yet," he said."You look at the GDP (gross domestic product) growth in the world and that's a very indicator on the demand growth for oil and it has been for decades and decades so … If you start to see half a percent come off GDP growth around the world, it might be a 200,000 barrel a day drop in demand, the way our economists view it, and it's not that much," he said.
Goldman Sachs on oil prices: 'We don't have a problem today, but we potentially have one tomorrow' -- Iran's crude export numbers are falling much faster than many analysts anticipated ahead of planned U.S. sanctions on the country's oil sector on November 4. Still, we don't have an oil price problem today, if Goldman Sachs' global head of commodities is to be believed — but we may have one tomorrow.As OPEC's third largest oil producer sees its customers shrink away for fear of U.S. penalties, some market watchers predict oil surpassing $100 a barrel. Late September saw Brent crude break $80 a barrel, its highest level since 2014. The benchmark commodity is up 26.6 percent year-to-date, while WTI crude is up 24 percent in the same time period.Jeff Currie, global head of commodities for Goldman Sachs, is less bullish about oil prices for now. Speaking to CNBC's Street Signs Europe on Tuesday, he expressed skepticism about the triple-digit forecasts."It's definitely not our base case. I'm not saying it cannot happen, but it would require a sustainable outage in Iranian exports going down to zero plus another disruption someplace like Venezuela," he said. "The way we're seeing it is long dated oil prices are rising, the front-end is weakening which is telling you that hey, we don't have a problem today, we potentially have a problem tomorrow."Data from this week showed Iran exported 1.1 million barrels per day (bpd) in first week of October — down from 1.6 million in September and a far cry from its high of 2.6 million bpd in April of this year. That was one month before President Donald Trump announced U.S. withdrawal from the Iran nuclear deal, which lifted economic sanctions on Iran in exchange for curbs on its nuclear program. But giving an accurate call for oil prices once the sanctions officially come down is impossible at this point, Currie stressed, particularly because we don't yet know how many barrels will ultimately vanish from the market.
Oil dips as IMF lowers global growth outlook; eyes on US hurricane -- Oil prices fell on Wednesday after the IMF lowered its global economic growth forecasts, raising concerns that demand for oil products may slump as well. Brent crude futures were down $1.31, or 1.5 percent, at $83.69 a barrel by 10:52 a.m. ET (1452 GMT), after a 1.3 percent gain on Tuesday. U.S. West Texas Intermediate (WTI) crude was down by $1.18, or 1.6 percent, at $73.78 a barrel, after rising nearly 1 percent in the previous session. The International Monetary Fund downgraded its global economic growth forecasts for 2018 and 2019 on Tuesday.Trade wars and rising import tariffs have been taking a toll on commerce, while emerging markets struggle with tighter financial conditions and capital outflows, the IMF said.But supply concerns are keeping the market on edge.In the United States, nearly 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael.Michael has strengthened into an "extremely dangerous" Category 4 hurricane, according to the latest advisory from the U.S. National Hurricane Center.Oil producers evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday in Florida.Companies had turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, Several of the world's biggest trading houses expect U.S. sanctions on Iran to keep oil prices high with crude staying above $65 and possibly breaking above $100 in the medium term.Jeremy Weir, chief executive of Trafigura, told an oil conference in London on Wednesday he would not be surprised to see oil trade over $100 next year. Alex Beard, chief executive for oil and gas at Glencore, said at the same event he forecast a mid-term oil price of $85-$90 per barrel.
WTI Slumps To 2-Week Lows After Biggest Crude Build In 20 Months - After holding around $75 yesterday amid storm news as Hurricane Michael shut more offshore oil platforms and the International Energy Agency warned that the global market is entering a “red zone," today saw risk-off sentiment slam it lower, back below $73 ahead of tonight's API data.Globally, supplies from Iran and Venezuela have been shrinking, creating a “risky situation” for the world economy, said IEA Executive Director Fatih Birol.Gulf operators shut 718.9k b/d of oil production (around 42%), 89 platforms evacuated amid Hurricane Michael, BSEE says in notice."Yesterday there was some concern about more extensive losses of production due to Hurricane Michael," said John Kilduff, partner at Again Capital LLC. "Now that the oil infrastructure is in the clear, this weeks EIA report will help ease concerns once we see a build printed. API:
- Crude +9.75mm (+2.5mm exp) - biggest build since Feb 2017
- Cushing +2.3mm (+800k exp) - biggest build since March 2018
- Gasoline +3.4mm - biggest build since June 2018
- Distillates -3.5mm - biggest draw since May 2018
Storm-related impact should not be present in this data but after last week's huge crude build we saw another massive crude build... Bloomberg notes that sanctions on Iranian oil exports are hitting much harder than most people predicted as the Trump administration takes a tough line on enforcement, said executives from the world’s largest energy traders. However, Saudi Aramco will supply about 4 million barrels of additional crude to Indian customers for November, according to a person familiar with the matter. That’s on top of their monthly contractual supplies from Aramco.
Crude oil futures slump more than 1% on US stock build, EIA report — Crude oil futures were lower in mid-morning trade in Asia Thursday after a larger-than-expected build in US crude stocks and a bearish US production and demand forecast. At 10:30 am Singapore time (0230 GMT), December ICE Brent crude futures were down $1.21/b (1.46%) from Wednesday's settle at $81.88/b, while the NYMEX November light sweet crude contract was down 89 cents/b (1.35%) at $72.18/b. US crude inventories rose 9.75 million barrels in the week ended October 5, according to data released by the American Petroleum Institute to analysts Wednesday. "The biggest build since February 2017," The PRICE Futures Group analyst Phil Flynn said in a note. Analysts surveyed Monday by S&P Global Platts had been expecting a more modest 1.61 million-barrel build. The API also reported US gasoline inventories were up 3.4 million barrels in the week ended October 5, while US distillate inventories were down 3.5 million barrels, analysts said. The official report on last week's US inventory levels is due for release by the US Energy Information Administration later Thursday. Prices were also pressured down Thursday by bearish factors reported in the EIA'S Short-Term Energy Outlook released Wednesday. "A bearish EIA monthly report, along with a risk-off tone of the market, weighed on crude oil prices," ANZ analysts said in a note Thursday. EIA raised its forecast for US oil output to an average 10.74 million b/d in 2018 and 11.76 million b/d in 2019, up 80,000 b/d and 260,000 b/d respectively from last month's forecast. It forecast US oil production, which crossed 11 million b/d in August, to exceed 12 million b/d by October 2019. "On the other hand, US oil demand growth has been revised lower by 20,000 b/d to 450,000b/d," the ANZ analysts added.
Oil extends losses as other markets fall, inventories rise - Oil prices slumped to two-week lows on Thursday as global stock markets fell, with investor sentiment made more bearish by a report showing U.S. crude inventories rising more than expected.Crude inventories climbed by 6 million barrels in the week to Oct. 5, the U.S. Energy Information Administration reported, compared with analyst expectations for an increase of 2.6 million barrels.Brent crude fell $1.55, or 1.9 percent, to $81.54 a barrel by 10:53 a.m. ET (1453 GMT), off the session low of $81.14, its weakest since Sept. 26. Brent lost 2.2 percent on Wednesday. On Oct. 3, it hit a four-year high of $86.74.U.S. light crude dropped $1.42, or 1.9 percent, to $71.75 after hitting a low of $71.63. The contract lost 2.4 percent in the previous session."Oil bulls are bearing the brunt of another bruising session as yesterday's selling frenzy intensifies," said Stephen Brennock, analyst at London brokerage PVM Oil. "At the heart of the price malaise are concerns that oil demand will be adversely impacted by a myriad of downside risks facing the global economy." Stock markets in Asia plunged to a 19-month low on Thursday after Wall Street's worst losses in eight months led to broader risk aversion, a rise in market volatility gauges and concerns over overvalued stock markets in an environment of rapidly rising dollar yields. "The clear risk-off mode that we are seeing across all markets is also hitting oil," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
Oil price extend losses as other markets fall, stockpiles climb - Oil prices fell to two-week lows on Thursday as it extended big losses from the previous session amid a rout in global stock markets, with prices also hit by an industry report showing U.S. crude inventories rose more than expected. Supply worries also eased as Hurricane Michael likely spared oil assets from significant damage as it smashed into Florida, even as it caused at least one death, injuries and widespread destruction. Brent crude futures were down $1.32, or 1.6 percent, at $81.77 a barrel by 0543 GMT. They earlier touched their lowest since Sept. 27 at $81.35, after closing 2.2 percent lower on Wednesday. U.S. West Texas Intermediate (WTI) crude futures were down by $1.10, or 1.5 percent, at $72.07, having fallen to their lowest since Sept. 28. They dropped 2.4 percent in the previous session. Stocks on major world markets slid to a three-month low on Wednesday, with the benchmark S&P500 stock index falling more than 3 percent, its biggest one-day decline since February. Technology shares tumbled on fears of slowing demand and concerns about U.S.-China tensions. Japan’s Nikkei 225 was down more than 4 percent on Thursday. “The clear risk-off mode that we are seeing across all markets is also hitting oil and those previous supply concerns have simply evaporated,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. Volumes for Brent are four times the average for the Asian timezone, while WTI contracts were about 75 percent above typical turnover, McCarthy said. “So there is real commitment in the selling ... adding to the idea that we are seeing a turn in the market,” he said. U.S. crude stockpiles rose more than expected last week, while gasoline inventories increased and distillate stocks drew, industry group the American Petroleum Institute said on Wednesday. Crude inventories climbed by 9.7 million barrels in the week to Oct. 5 to 410.7 million, compared with analyst expectations for an increase of 2.6 million barrels.
WTI Crude Oil Falls 3% | Rigzone -The bears reigned in crude oil markets Thursday.November West Texas Intermediate (WTI) crude oil futures slid 3 percent, falling $2.20 to settle at $70.97 a barrel. During Thursday’s session, the WTI peaked at $72.76 and bottomed out at $70.51. The front-month Brent contract price sustained a 3.4-percent decline, losing $2.83 to settle at $80.26 a barrel.As a Bloomberg article earlier Thursday indicated, fears tied to the ongoing U.S.-China trade war as well as reduced fuel demand in the U.S. Southeast – curtailed by Hurricane Michael – contributed to the bearish sentiment. Michael, which slammed into the Florida Panhandle Wednesday as a strong Category 4 hurricane on the Saffir-Simpson scale, had weakened into a tropical storm and made its way across Georgia and into the Carolinas by 4 p.m. Central time on Thursday.Like the major crude oil benchmarks, the price of a gallon of reformulated gasoline (RBOB) for November delivery ended the day lower. RBOB lost nearly 9 cents to settle at $1.93.On Wednesday, November Henry Hub natural gas futures managed to rally – unlike the other benchmarks that Rigzone tracks on a daily basis. Gas did not extend its midweek rally on Thursday, falling 6 cents to settle at $3.22.
Oil Set for Worst 2-Day Drop Since July-- Oil headed for the biggest two-day drop since July, with fuels from diesel to gasoline also declining as fears over a worsening trade war rattled markets across the board. Futures dropped as much as 1.9 percent in New York, after sliding 2.4 percent Wednesday. As trade tensions between the U.S. and China escalate, investors are shunning risk assets from equities to oil on fears over slowing growth. The S&P 500 Index slumped the most since February while the Nasdaq 100 Index had its worst day in seven years. Meanwhile, Hurricane Michael became the strongest storm to hit the U.S. mainland since 1992 as it made landfall in Florida, slashing fuel demand in the Southeast. “It’s a typical spillover effect and oil’s been hit by the widespread sell-off in risk assets as the intensifying trade row stokes concerns over sluggish global demand,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. “If it were not for the trade dispute, the oil market probably would have kept its momentum on lingering supply risks.” Crude had surged to a four-year high earlier this month with impending American sanctions against Iran set to curtail exports from the OPEC’s third-largest producer. U.S. President Donald Trump has repeatedly demanded the Organization of Petroleum Exporting Countries pump more to temper prices. While the rally has eased, traders continue to speculate whether the cartel and its allied producers can offset dwindling supplies from Iran to Venezuela. West Texas Intermediate for November delivery declined as much as $1.37 to $71.80 a barrel on the New York Mercantile Exchange, and was at $72.37 at 7:55 a.m. in London. Prices are on course for the worst two-day slide since July 17 after closing at the lowest level since Sept. 27 on Wednesday. Total volume traded was about 77 percent above the 100-day average. Brent for December settlement was 93 cents lower at $82.16 a barrel on the London-based ICE Futures Europe exchange, after falling $1.91 on Wednesday. The global benchmark crude traded at a $9.90 premium to WTI for the same month. In equity markets, both the S&P 500 Index and the Dow Jones Industrial Average slipped more than 3 percent, while the Nasdaq 100 Index fell as much as 4.5 percent. The rout continued into Asian hours, with equity benchmarks from Japan to Hong Kong plunging.
Oil prices shed more than 5% during two-day stock market sell-off -- Last week, $100 oil was the talk of Wall Street. This week, a broad market sell-off has made that chatter seem like distant noise. Brent crude oil, which last week rocketed above $86 a barrel for the first time in nearly four years, now sits at a three-week low just above $80. The international benchmark lost nearly $5 a barrel, or 5.6 percent, in the two days that saw the Dow Jones Industrial Average shed more than 1,300 points.U.S. oil did not fare much better. Over the two days, West Texas Intermediate crude is down $4 a barrel, or 5.3 percent, to $70.97, also a three-week low. Last week, it nearly hit $77 a barrel, posting its best level since November 2014.Both benchmarks slipped from those highs immediately, before clawing back some gains on Tuesday. But the fear factor in the market after heavy selling on Wednesday and Thursday has many investors getting rid of risk-oriented assets like oil, said Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions."There was a fare amount of bullish momentum and potentially froth in the oil market, so I think there was room to come down," she said. "If you think about it from a market technicals perspective, pullbacks are often around 5 percent."To be sure, on Thursday the market also got a bearish report showing U.S. crude stockpiles rose by 6 million barrels and gasoline inventories jumped 1 million barrels. Earlier in the day, OPEC reported that its members are so far offsetting production declines in Iran and Venezuela, helping to alleviate some of the concern about supply shortages that have pushed up oil prices.The stock market sell-off is also exacerbating fears about slower global growth and weakening oil demand amid trade tensions, said Andrew Lipow, president at Lipow Oil Associates. Crude oil is also a highly liquid asset, making it a good candidate to offload in a sell-off for many traders, he said."If you had a day like yesterday and today where the market is going down and you're leveraged, then you're sitting there with a margin call and you're looking at things you can sell," Lipow told CNBC. However, the main story driving the oil market remains the loss of Iranian crude exports ahead of the full renewal of U.S. sanctions on Nov. 4, Lipow said. That deadline is still looming large over the market and could help push oil prices back up.
Oil prices hold ground, but are set for 4 percent weekly fall -Oil prices rose on Friday, slightly reversing two days of steep declines in the previous sessions, though a closely watched forecaster said the outlook for crude demand is weakening. Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.S. inventories and fading concerns for now that looming U.S. sanctions on Iran will cut supplies significantly. Oil found support on Friday from a gain in world stocks. A drop in equities amid wider risk-off investor sentiment had pressured crude on Wednesday and Thursday. "A rebound in equity markets would help Brent to rebound from $80," said Olivier Jakob, analyst at Petromatrix, adding that a dip below $80 on Thursday did not clearly break that level as a source of technical support.Brent crude futures rose 80 cents, or 1 percent, to $81.06 a barrel by 9:04 a.m. ET (1304 GMT), havingdropped by 5.6 percent over the previous two sessions.U.S. West Texas Intermediate (WTI) crude futures were up 83 cents, or 1.2 percent, at $71.80 a barrel, after falling 5.3 percent during the two-day sell-off.Brent was on track for a weekly loss of 3.7 percent, while WTI was set to drop 3.4 percent this week.The monthly report by the International Energy Agency (IEA) on Friday said the market looked "adequately supplied for now" and trimmed its forecasts for world oil demand growth this year and next."This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data," said the IEA, which advises industrialized countries on energy policy.The IEA report is the latest government assessment to predict weaker demand ahead and conclude that supply is adequate. The Organization of the Petroleum Exporting Countries (OPEC) made a similar move on Thursday.
Baker Hughes data show U.S. oil-rig count up for first time in 4 weeks - Baker Hughes (BHGE) on Friday reported that the number of active U.S. rigs drilling for oil (http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview ) climbed by 8 to 869 this week. That was the largest weekly rise since the week ended Aug. 10. The oil-rig count had posted declines in each of the past three weeks. The total active U.S. rig count, which includes oil and natural-gas rigs, was also up by 11 at 1,063, according to Baker Hughes. November West Texas Intermediate crude was up 9 cents, or 0.1%, at $71.06 a barrel from Thursday's finish, compared with $70.97 before the rig data Friday. Saudi Crown Prince Discusses Trump, Aramco, Arrests: Transcript - Bloomberg’s Senior Executive Editor for Economics, Stephanie Flanders, and five other Bloomberg journalists spoke to Saudi Arabia’s Crown Prince Mohammed bin Salman Al Saud Wednesday night at a royal compound in Riyadh. In the wide-ranging interview, the prince spoke about his relationship with Donald Trump, his commitment to IPO Aramco, plans to invest a further $45 billion in Softbank, energy markets and the recent arrests in the kingdom. Below is a full transcript of the interview.
Permian Paces Gains in U.S. Onshore as BHGE Rig Count Up 11 - The United States added 11 rigs, mostly oil-directed, for the week ended Friday (Oct. 12), led by gains in the Permian Basin, according to data from Baker Hughes, a GE Company (BHGE).The U.S. rig count finished the week at 1,063 as eight oil rigs and four natural gas rigs returned to the patch, offsetting the departure of one miscellaneous rig. Eight horizontal units and four directional units returned to action, while one vertical rig packed up shop, according to BHGE.All of the net drilling gains in the United States for the week were on land. Rig activity in the Gulf of Mexico, which sawproduction shut-ins during the week because of Hurricane Michael, held steady at 22 rigs, up from 20 running a year ago.Canada saw 13 rigs return to the patch, including eight oil and five natural gas. But the Canadian rig count continues to lag its year-ago tally, finishing at 195 rigs as of Friday, down from 212 active rigs at this time last year. The combined North American rig count ended the week at 1,258, up from 1,140 in the year-ago period.Among plays, the biggest mover on the week was the Permian, which added four rigs to climb to 489 active units, well above its year-ago tally of 384. According to a detailed breakout of BHGE data by NGI’s Shale Daily, the Permian’s Delaware sub-basin added three rigs for the week, while the Midland sub-basin saw two rigs return to action. Those gains offset the loss of one rig from the “Other Permian” category.Meanwhile, the Cana Woodford saw two rigs depart on the week. The Shale Dailybreakout of BHGE data shows the SCOOP (aka, the South Central Oklahoma Oil Province) adding one rig, with the STACK (Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) dropping three units.Also among plays, the Arkoma Woodford and Denver Julesburg-Niobrara each added one rig, while the Eagle Ford and Utica shales each dropped one, according to BHGE.The two states underlying the Permian unsurprisingly posted strong gains for the week. Texas added eight units to grow its tally to 532, while New Mexico added three rigs to 102 (up from 69 a year ago). Louisiana added two rigs, while Colorado and Wyoming each added one. Ohio and Oklahoma each finished the week with one less rig.While the domestic rig count increased for the week, declines could be imminent after U.S. oil and gas drilling permits slid in September, down 21% sequentially and 27% from a year ago, according to analysts with Evercore ISI.
Oil prices rise, but still set for weekly fall amid equities rout(Reuters) - Oil prices rose on Friday slightly reversing two days of declines in the previous sessions driven by sharp falls in equity markets and indications that supply concerns have been overblown, but were still on track for a weekly fall. Brent crude LCOc1 futures rose 33 cents, or 0.4 percent, to $80.59 a barrel by 0256 GMT. The contract fell 3.4 percent on Thursday, dropping to as low as $79.80, its weakest since Sept. 24. It is heading for a 4.2 percent decline this week, the first weekly drop in five. U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 26 cents, or 0.4 percent, at $71.23 a barrel, after falling 3 percent in the previous session to the lowest since Sept. 21. WTI is on track for a 4.2 percent decline this week, also the first weekly drop in five. Wall Street extended its slide into a sixth session and a global equity index fell to a 1-year low on Thursday as investors feared an escalating U.S. trade war with China and risks from a recent climb in interest rates. Japan’s Nikkei .225 was down 0.5 percent on Friday. On the oil front, U.S. crude inventories USOILC=ECI rose by 6 million barrels last week, the Energy Information Administration said, more than double analysts’ expectations of a 2.6 million-barrel increase. [EIA/S] The Organisation of the Petroleum Exporting Countries (OPEC) cut its forecast of global demand growth for oil next year for a third straight month, citing headwinds facing the broader economy from trade disputes and volatile emerging markets. OPEC sees the oil market as well supplied and is wary of creating a glut next year, the group’s secretary-general said on Thursday. “We still estimate oil demand growing at 1.2 million to 1.5 million barrels per day for this year, and see the risk of a slowdown in 2019 if trade tension escalates,” ANZ Research analysts said in a report.
U.S. oil benchmark gains for the session, but weekly loss is first in five weeks - Prices for the U.S. oil benchmark edged higher Friday as investors assessed the next leg of a volatile stock market, but signs of rising crude supplies contributed to an overall weekly loss of 4%. “While there are risks of Middle East conflicts and further outages in production, growing output from the U.S., Saudi Arabia and Russia is likely to keep markets reasonably supplied,” said Rob Haworth, senior investment strategist at U.S. Bank. Also helping to keep prices in check were “fears of an economic slowdown, which could damage [oil] demand growth,” he said. November West Texas Intermediate crude rose 37 cents, or 0.5%, to settle at $71.34 a barrel on the New York Mercantile Exchange. It suffered a weekly loss about 4%. The global benchmark, Brent crude for December delivery on the ICE Futures Europe exchange, added 17 cents, or 0.2%, to $80.43 a barrel after briefly dipping as low as $79.23. It posted a weekly decline of roughly 4.4%. Both benchmarks, which registered their first weekly declines in five weeks, shed some 3% Thursday. They were moving in step with a two-day selloff across global stock markets — a move that raised concerns about economic resiliency and eventual energy consumption. Global equities climbed and benchmark U.S. stock indexes were moving higher on Friday, however. Overall, production data remain the overarching driver of market sentiment. A monthly report from the Organization of the Petroleum Exporting Countries released Thursday revealed a rise in OPEC and Russian crude-oil production in September, more than making up for a continuing decline in Iranian output ahead of the implementation of U.S. sanctions on Iran’s oil industry. Earlier this week, the Energy Information Administration boosted its forecast for U.S. oil production, which added another headwind. OPEC lowered its global oil demand growth forecast for this year and next, the third month in a row for a downgrade. On Friday morning, the International Energy Agency shared that view, saying global oil demand will grow at a slower pace than initially expected this year and next amid economic risks stemming from trade tensions and higher oil prices.
BP Chief- Saudi Arabia Is Holding Back Production “I think Saudi Arabia does have capacity that can bring to the market,” BP’s chief executive Bob Dudley told CNBC on Wednesday on the sidelines of the Oil & Money Conference in London. “But on the other side of it you have very unpredictable circumstances in Venezuela and of course, with the Iran sanctions,” Dudley noted, commenting on the current market forces driving the oil prices. As the start date of the U.S. sanctions on Iran’s oil is less than four weeks away, the market is jittery and prone to emotional reactions regarding the two key uncertainties over the next couple of months—how much Iranian oil will be lost to the U.S. sanctions, and how much spare capacity Saudi Arabia can bring (or is willing to bring) to offset possible steep losses. Analysts are estimating that the sanctions on Iran will remove at least 1 million bpd from the market, with some predicting losses could be as large as 2 million bpd. The only really large spare capacity is in Saudi Arabia, but the issue with this is that it has never been tested, because Saudi Arabia has never pumped more than 10.72 million bpd, its all-time high record from November 2016. Last week, the Saudis hastened to inform the market that they are currently pumping 10.7 million bpd - just shy of the all-time record high - and could even tweak that 10.7 million “slightly higher” next month. In view of those uncertainties, BP’s Dudley told CNBC that he expects in terms of oil prices that “it’s going to be 45 days of extreme volatility, it could spike up, it could also go the other way.” “If waivers were granted to others, to big oil consuming countries, you could see it (the price) go down, there’s a lot of uncertainty right now,” Dudley said. Asked about whether oil prices at $85 have already resulted in demand destruction, Dudley told CNBC, “we don’t see that destruction.” Volatility in prices won’t be permanent and we’ll get back to the fundamentals, BP’s chief executive said, noting that the UK supermajor is keeping disciplined spending by budgeting at oil prices at $60 to $65 a barrel.
Saudi Women Who Fought for the Right to Drive Are Disappearing - As recently as a year ago, Loujain al-Hathloul and those like her held out hope that the state-endorsed push for reform could create conditions for progress on other issues, such as the rights of political prisoners and the kingdom’s male guardianship laws, which subject women to the will of their male “custodians” in various areas of social and civil life. “We weren’t sure how serious the government was about its promises, but we thought, maybe we can work within the system and use their own words to push for change now,” said one woman activist, speaking of last year. “We thought we could present ourselves as allies, to support their work, and maybe they would accept us.” For al-Hathloul, this hope would be short-lived. Beginning on May 15, 2018, just weeks before the end of the ban on female drivers, the government began a series of arrests targeting prominent activists. Al-Hathloul was among the first to disappear into custody, along with Eman al-Nafjan and Aziza al-Yousef, fellow advocates for human rights and reform. Simultaneously, photographs of the women began to circulate on local media and online, accompanied by state accusations of treason and collusion with foreign governments. A hashtag, #AgentsofEmbassies, went viral, as did speculations that al-Hathloul was a Qatari operative intent on harming the Saudi state. The arrests were the latest example of a new and expanding tactic in Saudi Arabia of the state using anti-terrorism laws to silence dissent. “In the past few years, there has been an increasing trend of using nationalist rhetoric and accusations of terrorism to squelch anyone who might question the state,” said Zayadin. Such allegations allow for the authorities to hold people for months without trial and prosecute them in the so-called Specialized Criminal Court, where they could face heavy sentences for nonviolent crimes. “We’ve seen it used against conservatives and liberals alike,” Zayadin added, citing a slew of arrests in September 2017 during which the government rounded up a group of clerics, academics, and journalists under similar charges of treason. (The Saudi embassy in Washington did not respond to a request for comment.)
U.S. Soldiers Secretly Fighting Saudi Arabia's War in Yemen, Report Says - U.S. Army Special Forces have been covertly aiding in Saudi Arabia's war against Zaidi Shiite Muslim insurgents in neighboring Yemen, where the rebels control the capital and often fire ballistic missiles, according to a new report by The New York Times.Citing information provided by U.S. officials and European diplomats, the Times reported Thursday that about a dozen Green Berets were deployed to Saudi Arabia's border with Yemen in December, a month after the Houthi rebels fired a Burkan-2 ballistic missile at Riyadh's international airport. Saudi Arabia claimed to have intercepted the November attack with its U.S.-built MIM-104F Patriot missile defense system, but analysts have cast doubt on this official version of events.Saudi Arabia's Crown Prince and Defense Minister Mohammed bin Salman reportedly reached out to the U.S. for help in locating and destroying Houthi missile launch sites shortly after, opening what may be a new shadowy front for the Pentagon's operations in the Middle East.Yemen's current unrest began with the ouster of longtime President Ali Abdullah Saleh amid a wave of regional protests in 2012. Saleh was replaced by his deputy Abed Rabbo Mansour Hadi, who himself faced growing dissent as well as dueling Shiite Muslim and ultraconservative Sunni Muslim insurgencies. The former, allied with Saleh loyalists, stormed Sanaa in 2014 and took control early the following year. Saudi Arabia accused the Houthis of being a proxy for the kingdom's top regional rival, Iran, and gathered a coalition of Arab allies to begin bombing the rebels and attempt to restore Hadi's rule, which was relegated to the southern port city of Aden. Three years later, Saudi Arabia has helped its local allies gain some ground, but the conflict remains mostly in a stalemate, even after two major schisms within the warring alliances.
Trump-Mattis Shambles in Yemen - General Mattis is rabidly anti-Russian and hostile to a great many other countries, people and organizations. It is now almost forgotten that he is the man who replied to a question in 2005 about the US war in Afghanistan by uttering the psychotic pronouncement that “Actually it’s quite fun to fight them, you know. It’s a hell of a hoot. It’s fun to shoot some people. I’ll be right up there with you. I like brawling.” He is obviously a person who can bring balance and sympathetic understanding to international affairs.As recorded in the New Yorker, “on January 22nd, two days after President Trump was inaugurated, he received a memo from his new Secretary of Defence, James Mattis, recommending that the United States launch a military strike in Yemen.” Yemen is in a state of civil war. The country has nothing to do with the United States, but in 2017 the intelligence community in the US said they had discovered that a group of alleged anti-American terrorists were in a village called al-Ghayil and it was decided by the Best and the Brightest in Washington to attack the place. The operation Mattis wanted the president to authorize was intended to kill a supposed leader of Al Qaeda, so Mattis and the National Security Adviser, General Michael Flynn, and the Chairman of the Joint Chiefs of Staff, General Joe Dunford had dinner with President Trump, who then decided to go ahead with what turned out to be a totally disastrous military operation. It was a tragic farce. As reported in the Washington Post, instead of a clean quick special forces’ attack on the village, “a massive firefight ensued, claiming the life of an American sailor and at least one Yemeni child, and serving as an early lesson for President Trump’s national security team about the perils of overseas ground operations. An elite Special Operations air regiment was then sent in to pull the team and its casualties out of the fray, banking into the night under heavy fire to link up with a Marine quick-reaction force that had taken off in MV-22 Ospreys from the US ship Makin Island floating offshore.” In the course of the operation, Chief Petty Officer Ryan Owens, a navy commando, was killed, and one of the $75 million Ospreys was destroyed. And the Bureau of Investigative Journalism reported Zabnallah Saif al Ameri, a villager who lost nine family members, five of whom were children, as saying “It is true they were targeting Al-Qaeda but why did they have to kill children and women and elderly people?
Qatar blockade ‘has been a catalyst for change for the entire nation,’ says investment chief An economic blockade on Qatar that's being upheld by its Middle Eastern neighbors has forced the country to step up reforms and its quest for foreign inflows, an investment head told CNBC on Thursday. "We are seeing a shift in Qatar economics and the entire region. As you know, Qatar is currently going through a blockade from neighboring countries but that hasn't been all that bad," Yousuf Al-Jaida, chief executive of the Qatar Financial Centre, a key agent for attracting foreign direct investment (FDI) to the state, told CNBC's Nancy Hungerford. "It's been a catalyst for change for the entire nation," Al-Jaida added. Qatar is still experiencing a Saudi Arabian-led blockade of the country after a high-profile diplomatic rift with its influential and powerful neighbors. The Saudi Kingdom, along with Bahrain, the United Arab Emirates and Egypt imposed an economic blockade on (and severed diplomatic ties with) the small Arab state in June 2017, accusing it of supporting terrorism. Qatar vehemently denies the accusations. The blockade has impacted air travel, shipping and trade routes and media, among other sectors. However, the economic impact of the blockade has been seen as short-lived, the International Monetary Fund said in May. "Growth performance remains resilient. The direct economic and financial impact of the diplomatic rift between Qatar and some countries in the region has been manageable," the IMF said in its recent report published earlier this week on the country in May, predicting respectable gross domestic product (GDP) growth of 2.6 percent in 2018.
Is Saudi Arabia the Middle East’s Next Failed State? -Reports are growing that Muhammad bin Salman, Saudi Arabia’s hyperactive crown prince, is losing his grip. His economic reform program has stalled since his father, King Salman, nixed plans to privatize 5 percent of Saudi Aramco. The Saudi war in Yemen, which the prince launched in March 2015, is more of a quagmire than ever while the kingdom’s sword rattling with Iran is making the region increasingly jumpy.Heavy gunfire in Riyadh last April sparked rumors that MBS, as he’s known, had been killed in a palace coup. In May, an exiled Saudi prince urged top members of the royal family to oust him and put an end to his “irrational, erratic, and stupid” rule. Recently, Bruce Riedel, an ex-CIA analyst who heads up the Brookings Institution’s Intelligence Project, reported that the prince is so afraid for his life that he’s taken to spending nights on his yacht in the Red Sea port of Jeddah. Some 800,000 foreign workers have left the country while capital is fleeing in the wake of last November’s mass roundup in which hundreds of princes and businessmen were herded into the Riyadh Ritz-Carlton and forced to turn over billions in assets. Foreign direct investment has plummeted from $7.5 billion to $1.4 billion since 2016 while a series of super-splashy development projects are in jeopardy now that Saudi Aramco privatization, which MBS was counting on as a revenue source, is on hold. While granting women permission to drive, MBS has imprisoned women’s rights advocates, threatened a dissident cleric and five Shiite activists with the death penalty, and cracked down on satirical postings on social media. He preaches austerity and hard work, yet plunked down $500 million for his yacht, $450 million for a painting by Leonardo da Vinci, and $300 million for a French chateau. The hypocrisy is so thick that it’s almost as if he wants to be overthrown. As for the lean and hungry fundamentalists whom Ibn Khaldun said would administer the final blow, there’s no doubt who fits that bill: ISIS and al- Qaida. Both are fierce, warlike, and pious, both inveigh against a Saudi regime drowning in corruption, and both would like nothing more than to parade about with the crown prince’s head on a pike.
Saudi journalist ‘killed inside consulate’ – Turkish sources - Turkish officials believe that missing Saudi journalist Jamal Khashoggi was killed inside the Saudi consulate in Istanbul and his body later driven from the compound. Authorities say they believe Khashoggi’s death was premeditated and that Saudi officials had travelled to Istanbul from Riyadh after receiving word that the high-profile critic of the current Saudi leadership planned to visit the consulate. In an evening of quickfire developments, following four days of silence since his disappearance, officials in Ankara pledged to on Sunday release evidence that they say supports claims that the journalist was killed shortly after he entered the consulate to sign divorce papers. The evidence is expected to include video footage and focus on a black car. Two Turkish officials claimed to Reuters that Khashoggi, 59, had been killed. The Reuters claim was circulated by a government spokesman, and confirmed by numerous other officials, some of whom claimed to have knowledge of how the body had been disposed of. Several officials alleged, without tabling evidence, that Khashoggi had first been tortured. Officials believe that a team of 15 Saudis arrived on Tuesday to conduct the killing, then left the country soon afterwards. The president, Recep Tayyip Erdoğan, is expected to release a statement about the incident on Sunday. Aside from summonsing the Saudi ambassador in Ankara, senior officials had remained mute about Khashoggi’s fate, leading to speculation that he had been smuggled out of the country with Turkish consent. The dramatic Turkish claim instead squarely focuses attentions on Riyadh, in particular Crown Prince Mohammed bin Salman, who on Friday denied any knowledge of Khashoggi’s whereabouts. “If he was here, I would know about it,” the 33-year-old heir to the throne told Bloomberg. “My understanding is, he entered and he got out after a few minutes or one hour,” said Prince Mohammed. “I’m not sure. We are investigating this through the foreign ministry to see exactly what happened at that time.
How the disappearance of a journalist and a humiliating remark by Trump shows Saudi Arabia’s weakness Patrick Cockburn. - Over the past half century, critics have often predicted the fall of the House of Saud or emphasised the fragility of its rule. They were invariably proved wrong because the Saudi monarchy enjoyed limitless oil revenues, had the support of the US, and avoided becoming a front-line combatant in Middle East crises. Saudi strengths and weaknesses may have been long debated but the Kingdom’s vulnerabilities have seldom been so starkly on display as they were last Tuesday because the coincidence of two very different events. Before a rally in Mississippi, President Trump stated – brutally and without qualification – the dependence of the Saudi monarchy on US support and the price it must pay for such backing. “We protect Saudi Arabia,” Trump told the cheering audience. “Would you say they’re rich? And I love the King, King Salman. But I said ‘King – we’re protecting you – you might not be there for two weeks without us – you have to pay for your military’.” Outbursts by Trump tend to be more calculated than they sound and he only humiliates allies in this way when he knows he can get away with it.Trump’s contemptuous reference to the instability of Saudi Arabia was given greater significance by another dramatic event which happened a few hours earlier some 6,000 miles away in Istanbul. The prominent Saudi journalist and critic of his country’s government, Jamal Khashoggi, failed to emerge from the Saudi consulate where he was doing some paperwork relating to his divorce and impending marriage. Khashoggi has not been seen since. The Turkish authorities, no doubt delighted to be able to present themselves as defenders of journalistic freedom, say he is still inside the consulate. Saudi officials claim that he left the building, though surveillance cameras prove he did not do so on foot, so, if he did leave, it was presumably in a diplomat’s car, possibly in the boot. Khashoggi’s fiance was left waiting disconsolately outside the consulate gates. The fate of Khashoggi, whatever the outcome of the present furore, carries an important message about the present state of Saudi Arabia. If he has been forcibly detained, as the Turkish government says, then it is a self-harming act of stupidity. It elevates him from being a minor irritant to a cause célèbre and a continuing mystery about his whereabouts ensures that the story is not going to go away.
Turkish president calls Jamal Khashoggi’s disappearance ‘very, very upsetting’ - WaPo — Turkish President Recep Tayyip Erdogan on Sunday called the disappearance of Saudi journalist Jamal Khashoggi “very, very upsetting” but stopped short of confirming reports that Khashoggi had been killed inside Saudi Arabia’s consulate in Istanbul last week. “I am following this issue, pursuing it, and whatever the result, we will be the ones to tell the world,” Erdogan told reporters. The Washington Post reported Saturday that Turkish investigators had concluded that Khashoggi, a critic of the Saudi leadership, had been killed inside the consulate Tuesday by a team sent from Saudi Arabia. A person familiar with the investigation called it a “preplanned murder.” A U.S. official confirmed that Turkey’s government had determined that Khashoggi was probably killed inside the consulate by a team that arrived on two private jets. Turkish officials further concluded that his body was probably dismembered, removed in boxes and flown out of the country, the official said. Saudi Arabia has denied the accusations, calling them “baseless,” and said that Khashoggi, 59, left the consulate soon after he arrived. The suspected murder of Khashoggi, a contributor to The Washington Post’s Global Opinions section, could flare tensions between Saudi Arabia and Turkey, two regional powers whose rivalry has played out across the Middle East. Saudi Arabia is wary of Turkey’s expanding military power in the Persian Gulf, its support for political Islamists and its cooperation in the Syrian war with Iran, Saudi Arabia’s archrival. Turkey was alarmed by the Saudi leadership’s support for a military coup against former Egyptian president and Muslim Brotherhood leader Mohamed Morsi in 2013. Erdogan, who spoke to reporters Sunday after a speech in the capital, Ankara, said that Khashoggi was “actually a journalist I have known for a long time, a friend of ours.” He added, “God willing, we will not come face to face with a situation that we do not desire.”
Erdogan Believes Saudi Arabia Ordered Brutal Killing Of Missing Dissident At Istanbul Consulate -- As we suggested on Saturday, the suspected extrajudicial torture, murder and dismemberment of a Washington Post columnist inside the Saudi consulate in Istanbul is already straining tensions between Riyadh and Ankara. To wit, on Saturday, Turkish prosecutors officially launched an investigation into the disappearance of Jamal Khashoggi, according to Turkey's official Anadolou news agency, after a "Turkish security team" was allowed inside the consulate by Saudis (presumably under the assumption that they would produce a clean bill of health). Meanwhile, a handful of anonymous Turkish officials reportedly tipped off the Washington Post and Reuters about the murder. Commenting on the potential fallout form this latest diplomatic crisis, the BBC's Mark Lowen said Saturday that if these reports are accurate, the clandestine state-sponsored murder on Turkish soil of a high-profile dissident would further strain already deteriorating relations between Turkey and the Saudis. Tensions between the two countries date back to 2011, when Ankara encouraged the Arab Spring uprisings that helped plunge Syria into a brutal civil war, and also prompted a crackdown by the Saudi government on its own brush with domestic unrest. And in the latest hint that Khashoggi's disappearance is becoming a national issue, Turkish President Recep Tayyip Erdogan has confirmed to Reuters that Turkish authorities believe Khashoggi was murdered inside the Saudi consulate in Istanbul last week, in an example of KSA's deliberate targeting of a prominent dissident. Erdogan added that Turkish authorities were looking into all camera records and monitoring incoming and outgoing air transit, but cautioned that Turkey would "await the results of the investigation." Khashoggi's fiance, who was reportedly waiting for him outside the Consulate, said he simply never left the building. What's more, Erdogan said that he would "personally" would be involved in the case (though he said he is holding out hope for a positive outcome). Saudi officials have vehemently denied even detaining Khashoggi and have repeatedly said he freely left the embassy not long after he entered. Saudi Crown Prince MbS himself on Friday invited Turkish authorities to enter the building, saying "We are ready to welcome the Turkish government to go and search our premises."
Erdogan Demands Saudis Produce Proof That Missing Journalist Left Consulate Alive As 'Murder' Pr It has been nearly a week since renowned Saudi journalist and Washington Post columnist Jamal Khashoggi walked into the Saudi consulate in Istanbul on Oct. 2 and never walked back out. In the ensuing days, the Western media has become incensed by reports that the Saudis sent a 15-man "hit squad" to the consulate to carry out the "preplanned" torture and murder of Khashoggi. Afterwards, they reportedly dismembered his body and smuggled his remains out of the building, all while Khashoggi's Turkish fiance waited outside in her car. After sending a "security team" to the consulate to look for the missing dissident, Turkish investigators launched an investigation into Khashoogi's disappearance on Friday - an investigation for which Turkish President Recep Tayyip Erdogan has pledged his "personal involvement". After anonymous officials shared suspicions that Khashoggi had been murdered inside the consulate with Western journalists, Turkish investigators said publicly that they believe Khashoggi is alive inside the building. Saudi officials have maintained that he left a short while after arriving. But as a condition of the investigation, Erdogan demanded that Saudi Arabia "prove" that Khashoggi (who in addition to being a journalist once served as an advisor to Saudi's intelligence chief) left the consulate alive. "We have to get an outcome from this investigation as soon as possible. The consulate officials cannot save themselves by simply saying 'he has left,'" Erdogan told a news conference in Budapest, where he is on an official visit. "If he left, you have to prove it with footage." According to media reports, the consulate's surveillance cameras didn't capture Khashoggi leaving the embassy, Reuters reported. And in the latest escalation that threatens to expose Saudi Crown Prince Mohammad Bin Salman for his flagrant human rights abuses, Turkey requested on Sunday that investigators be allowed to search the Saudi consulate, a request that was made during a Sunday evening meeting with the Saudi ambassador in Ankara, per the Washington Post.
Crown prince's silence on journalist Khashoggi's disappearance could derail the Saudi reform agenda - For many months, Trump administration officials have worried privately that Saudi Arabia's young princeMohammed Bin Salman – in whom President Donald Trump and his son-in-law Jared Kushner had invested so much – was through rash actions endangering his own historic project of a more religiously moderate, socially open and economically diverse Saudi Arabia.Yet these officials had held fire and damped their public criticism, as had many other Saudi friends including me, because of what seemed the larger prize. MBS, as the 33-year-old Saudi crown prince is known, could act impulsively, emotionally and repressively, but the larger, strategic stakes of his efforts to transform his country were of historic and global significance. By his own admission, the crown prince was an autocratic representative of an ancient monarchy, but he had in his cross-hairs the austere Saudi Arabia that had emerged in the years after the Grand Mosque seizure by militants in 1979. It was a worthy target as it had become the midwife and financer of an extreme and puritanical vision of Islam that seeded the 9/11 terrorist attacks, killing some 3,000, and al-Qaeda, ISIS and much more. That was the larger context when Saudi journalist Jamal Khashoggi disappeared 10 days ago. Reports now are more convincing, in addition to being more persuasive and gruesome, that he was murdered by Saudi agents. So, it soon may be time to mourn even more than the tragic and grisly passing of this intelligent, honorable and principled individual, whom I had known for years as a fellow journalist. It may also mark the death of the crown prince's best ambitions, if not handled far more decisively and transparently than has been the case thus far. What's at risk is a Saudi shift that had geopolitical, geo-economic and, most of all, geo-religious consequences. Given those stakes, President Trump has been understandably reluctant to condemn his Saudi partners, but he missed the primary danger with his concerns about the $110 billion US defense sales, a few more billion in Saudi investments in the United States, and the US jobs they may spawn. The religious and cultural stakes are far more significant. That's because the Saudi turn after 1979, along with the Iranian revolution of the same year, altered the course of history by setting back the modernization efforts that previously were blossoming across the region.
Jamal Khashoggi case: All the latest updates - Al Jazeera - US and Turkish officials told The Washington Post there are audio and video recordings proving Khashoggi was tortured and murdered inside the Saudi consulate in Istanbul.Video recordings show a Saudi assassination team seizing the journalist after he walked in on October 2. He was then killed and his body dismembered, the officials told the Post - the newspaper that Khashoggi wrote for as a columnist.The audio was particularly gruesome, the sources said. "The voice recording from inside the embassy lays out what happened to Jamal after he entered," said one official speaking anonymously because the intelligence is classified. "You can hear his voice and the voices of men speaking Arabic. You can hear how he was interrogated, tortured, and then murdered." Another unnamed official confirmed men could be heard beating Khashoggi on the recording. It was unclear how the Turkish and American officials obtained the recordings. David Katz, CEO of Global Security Group, told Al Jazeera the intelligence officials quoted by The Washington Post likely have audio and video that clandestinely recorded Khashoggi's killing. "There is clearly tension between the Saudis and the Turkish government, so that suggests Turkey is going to be directing its very considerable intelligence apparatus at everything to do with the Saudi government in Turkey for sure," said Katz. "So it's very possible that they do in fact have audio and video recordings of things that have gone on inside the consulate, whether that was bugs planted or electronic intercepts. So you wouldn't really need full forensics if you have evidence of that nature. And if the report in The Washington Post is correct, that's apparently what they have."Katz said spies have "robust electronic devices" that can allow them to listen to what's going on inside buildings from outside."You'll actually hear what happened, you'll hear the voices. There was a suggestion there was an interrogation followed by a very brutal murder. If that's the case - and if that's on audio and/or videotape - you don't need anything else. That's the case right there."
Joint Turkish-Saudi team to investigate journalist's disappearance (Xinhua) -- Turkey and Saudi Arabia agreed to set up a joint team to investigate the disappearance of Saudi journalist Jamal Khashoggi, Turkish presidential spokesman Ibrahim Kalin said Thursday. Kalin told reporters that the agreement was reached upon Riyadh's request. "A joint working team between Turkey and Saudi Arabia will be formed to investigate the case in all its aspects," he said. Khashoggi, a journalist and columnist for The Washington Post, has been missing since he entered the Saudi consulate in Istanbul on Oct. 2 to get documents for his marriage. Turkish prosecutors have launched a probe into the whereabouts of the Saudi journalist. Turkish police said that 15 Saudis, including several officials, arrived in Istanbul on two planes and entered the consulate while Khashoggi was inside. Eight out of the 15 suspects linked to the missing Saudi journalist have been identified by Turkish police. Unconfirmed reports said that Khashoggi was likely killed inside the compound, which was dismissed by Saudi authorities as "baseless". Saudi Arabia on Tuesday invited Turkish experts and officials to visit the consulate after Turkey demanded to search the building.
Commentary: How Khashoggi’s disappearance could change Middle East politics --The disappearance and possible murder of Saudi journalist Jamal Khashoggi has cast a long shadow over Saudi Arabia’s global image. If the Saudi government did in fact kill or kidnap him, the crime would have significant implications for Middle East politics. Human rights activists and friends of Saudi journalist Jamal Khashoggi hold his pictures during a protest outside the Saudi Consulate in Istanbul, Turkey October 8, 2018. REUTERS/Murad SezerA high-profile critic of Saudi Crown Prince Mohammed bin Salman and a self-exiled Washington Post columnist, Khashoggi disappeared after entering the Saudi consulate in Istanbul on October 2. He has not been seen or heard from since, according to his friends and fiancée. Turkish authorities believe he has been killed and his body, possibly dismembered, has been transferred out of the building. A security source also told Reuters that a group of 15 Saudi nationals, including some officials, arrived in Istanbul in two planes and entered the consulate on the same day Khashoggi was there, then later left the country. A Turkish pro-government newspaper has said it had identified the members of that group. A Saudi source at the consulate has denied that Khashoggi has been killed or abducted at the mission, and dismissed the accusations as baseless. If the Turkish claims are correct, a Saudi state-sponsored murder of Khashoggi would send ripples throughout the region. It would also provoke renewed criticism of Prince Mohammed, who since assuming office in June 2017 has overseen a crackdown on dissent, including frequent arrests of religious leaders, intellectuals, activists as well as royals critical of his rule.
The Cruelty and Stupidity of Iran Sanctions - Esfandyar Batmanghelidj warns that stricter U.S. sanctions will be a boon for the Islamic Revolutionary Guard Corps (IRGC) while the rest of the population suffers: Importantly, the evidence that sanctions line the pockets of the IRGC is stronger than the evidence that sanctions relief benefits Iran’s proxies. In his May 2017 testimony before the Senate Committee on Armed Services, Lt. Gen. Vince Stewart, then-director of the Defense Intelligence Agency, gave his assessment of Iran’s use of its proceeds from sanctions relief, telling the committee that “the preponderance of the money [has] gone to economic development and infrastructure.” To this end, the Trump administration’s characterization of its sanctions policy is dishonest, at least in its presentation of the intended and unintended consequences of the policy. If limiting the financial means of the IRGC and its proxies were the intended consequence of the sanctions policy, the current strategy would be falling short while very demonstrably having the unintended consequence of unduly harming the Iranian people through economic hardship. In this formulation, the administration is failing to achieve its stated goals despite the ample evidence that its chosen strategy will not work. But if you flip the intended and unintended consequences, a more likely explanation becomes clear. The boon for the IRGC is the unintended consequence of a strategy that is designed foremost to put pressure on the Iranian economy at large. It should come as no surprise that reimposed sanctions will work to the IRGC’s benefit, because this is just what happened before the nuclear deal. Regime insiders are able to take advantage of the difficulties created by sanctions and use their connections to enrich themselves while the rest of the country is impoverished. When legal trade is restricted or cut off, those that profit from illicit trade are in a position to gain the most. As Batmanghelidj says: The IRGC and its proxies are enriched by smuggling and enabled by sanctions. The Trump administration seems all too eager to feed this seven-headed dragon. Iran hawks have wrongly portrayed sanctions relief under the nuclear deal as a boost for the IRGC when the exact opposite is the case. Punitive sanctions help Iran’s hard-liners, and it is the civilian population that endures the collective punishment that the U.S. is meting out. Strengthening Iran’s hard-liners at the expense of the population is a cruel and stupid policy, but it is consistent with an administration that seeks confrontation with the regime and has nothing but contempt for the people.
US Officials Say Russia To Seize Syria's Oilfields As Moscow Presses Europe On Reconstruction - Russia is attempting to woo European countries like Germany into a program of reconstruction cooperation in Syria, where broad swathes of the country have been destroyed through seven years of grinding proxy war; however, Pentagon officials have charged Russia with wanting to "seize" Syria's oil and gas resources. This comes as the United States has resolved to keep its over 2,000 troops in the east of Syria while vowing zero reconstruction aid so long as Iranian troops and advisers are present in the country. This week a top US military official even went so far as to accuse Russia of seeking "to take advantage in any way they could" and that a "great power competition" for Syria will continue to shape its post-war future. Air Force Brig. Gen. Leah Lauderback, who served as director of intelligence for Operation Inherent Resolve until June, told an Army conference that “Great power competition was an objective by Russia,” and that specifically they are looking to "seize" oilfields in Syria. But a Russian official has slammed the US and Europe as living in a "fantasy land" if they still have removal of Assad on the table as "radicals will take over that will slit people’s throats’’ should regime change happen. Gen. Lauderback said of Russia in the context of discussing US anti-ISIS operations at an Army conference in D.C. this week: “Economically, they wanted to seize oilfields, they wanted bids and contracts to develop Syria for infrastructure in order to stabilize Syria over the long term,” she said according to Al-Monitor news.
Settlers destroy 40 olive trees in village near Ramallah - Israeli settlers on Sunday morning have cut and destroyed about 40 olive trees in the town of Turmusaya, north of Ramallah, in the West Bank. According to local sources, farmers who went ot their lands today found out that over 40 olive trees in their own lands near the settlement outpost “Adi Aad” have been cut down and destroyed. This is the second consecutive attack on olive trees in the area during this week. This month is the season for “olive picking” in Palestine, known for its quality product of olives and olive oil.
Israeli mass murder of Gazans targets children --The Israeli army opened fire on Palestinian protestors in the Gaza Strip Friday, killing three people, including a 12-year-old boy.Fares Hafez al-Sersawi died along with Mahmud Akram Mohammed Abu Samane, aged 24, after being shot in the chest during demonstrations east of Gaza City, while Hussein al-Rakab, aged 28, died after being shot in the head near the southern city of Khan Yunis. A further 376 people were wounded, seven of whom remain in a critical condition.The previous Friday, following a relatively quiet period as Israel and Hamas discussed a now-stalled agreement brokered by Egypt, the Israel Defense Forces (IDF) escalated its slaughter of unarmed civilians, shooting and killing seven Palestinians demonstrating near Gaza’s border with Israel, and injuring 500.The seven murdered included 12-year-old Naser Azmi Musbeh and 14-year-old Mohammed Naif al-Houm, while 90 children, four medics and four journalists were among those wounded by live fire. Not a single Israeli was hurt during this bloodbath.According to Gaza’s Ministry of Health, Friday’s toll brings the total number of Palestinians killed to 197 and the number injured to at least 21,600 since the March of Return protests began on March 30. According to the United Nations, 77 Palestinians have required amputation, including 14 children and one woman, while 12 people have been left paralysed due to spinal injuries. The most powerful military force in the Middle East faces an impoverished and essentially unarmed population. In the most brutal and cowardly fashion, it is slaughtering civilians who have faced an economic siege, the destruction of their livelihoods, repeated bombardments, and military assaults over the last 11 years.
Netanyahu says army prepping for possible military campaign against Gaza - The Israeli Prime Minister Benjamin Netanyahu has reportedly informed his cabinet that the army is preparing for a possible military campaign against the blockaded Gaza Strip in case the situation was not improved, according to Israeli media. “If the reality of civil distress in Gaza is diminished, that is desirable, but that is not certain to happen, and so we are preparing militarily — that is not an empty statement,” Netanyahu said. For the past six months, Palestinians have been protesting on the border of Gaza as part of the “Great Return March” in which 190 Palestinians have been killed, 64 of whom were killed on the day the US moved its embassy from Tel Aviv to Jerusalem. In 2014, Israel waged a devastating 51-day military onslaught on the Gaza Strip, in which more than 2,300 Palestinians were martyred and tens of thousands injured.
Wife of Israeli prime minister goes on trial for fraud (Reuters) - Israeli Prime Minister Benjamin Netanyahu’s wife, Sara, appeared in court on Sunday for the first hearing in the fraud trial against her, in which she is alleged to have misused state funds in ordering catered meals. According to the indictment, Sara Netanyahu, along with a government employee, fraudulently obtained from the state more than $100,000 for hundreds of meals supplied by restaurants, bypassing regulations that prohibit the practice if a cook is employed at home. Netanyahu denies any wrongdoing. She was charged in June with fraud and breach of trust and of aggravated fraudulent receipt of goods. If convicted, Sara Netanyahu could face up to five years in prison. Looking tense, Netanyahu made no comment to reporters who had packed the tiny courtroom. She sat on a bench behind her lawyers. “Can we ask them to move the cameras away?”, she asked the lawyer for the other defendant, who replied: “You’re used to it.” “Not like this,” Netanyahu answered. She shook her head as the prosecutor described the gravity of her case. The session, however, dealt mainly with procedural matters. The judge set a meeting with the prosecutors and the defendants’ lawyers for Nov. 13 in which he said he hoped all sides could narrow their differences “or even resolve the case”. But a settlement at this stage appears remote because the prosecutors would likely demand Netanyahu plead guilty, something her lawyer has ruled out. She was not asked at the hearing to enter a plea. Netanyahu’s lawyers contend the indictment does not hold up because the regulations for ordering meals were legally invalid and a household employee had requisitioned the food despite Netanyahu’s protestations. The prime minister, who himself is embroiled in corruption investigations, has called the allegations against his wife absurd and unfounded.
Beheadings, roadside bombs and airstrikes: one day in Afghanistan - The first death happened soon after midnight, a policeman killed on night watch near the Tajik border. The bloodshed continued as the sun rose, and as night fell again. Three beheadings at a school, and an airstrike after 11pm were the last of the conflict-related violence recorded in Afghanistan on the first day after a three-day ceasefire, these incidents were the culmination of a day of murder and maiming, shootings, explosions, aerial bombardments and one unclaimed political assassination.For everyone except the injured survivors and families of the dead, it was an unexceptional day in a conflict that much of the world appears to have forgotten. There were no such attacks in big cities, no key battles, just the ceaseless grind of war. On 7 October, it will be 17 years since US troops launched Operation Enduring Freedom to topple the Taliban government in Kabul. In the intervening years, foreign troop numbers have surged and been cut back again; leaders in the US and the UK have declared “our war” in Afghanistan over, and their “mission accomplished”.Yet the Taliban have kept fighting and a regional affiliate of Isis has joined them on the battlefield. Today, insurgents control or threaten more territory than they have done since 2001, and civilian casualties are setting grim records. In a bid to illustrate the relentless nature of violence, the Bureau of Investigative Journalism and the Guardian and Observer have compiled a list of all attacks reported on a single day – using unpublished official documents and on-the-ground reporting to give a snapshot view of the war. This timeline details the death of at least 60 people, and the wounding of over a dozen more, in over 30 different attacks across 16 provinces – or nearly half the country.
China Blinks First In LNG Face-Off With US - Amid the ongoing trade war between the U.S. and China, it seems that Beijing may be getting the short end of the stick already. On Sunday, the People’s Bank of China said it was cutting the reserve requirement ratio for most banks by 100 basis points, which will result in an injection of 750 billion yuan ($109.2 billion) in cash into China’s banking system. The move is intended to provide easier lending and more liquidity in China's economy as the impact of U.S. sanctions start to hit manufacturing and the overall economy. Several analysts are claiming that the ratio move shows China is getting nervous about a protracted trade war with the U.S. However, if China is getting the jitters, the official tone coming out of Beijing is more stiff lipped defiance. The government claims in a 71-page paper that it’s not afraid of a trade war and that its economy is “heavily resilient.”Fraser Howie, an independent analyst and China watcher told CNBC on Monday that "China is probably facing its worst period since the global financial crisis.”“All news is against it,” he said. "They certainly want to play down any talks of panic or near panic ... but they're clear it's not business as usual in China.”Bloomberg News said in a report that the Bank of China move was understandable as a short-term response to a more challenging growth environment, but it risks being another attempt to crank up an old economic- model whose effectiveness has declined and whose unfavorable side effects could increase. The bank move also could be a preemptive step to avoid massive outflows of investor money from its financial system if the trade war continues. On the energy front, China has already blinked, maybe even twice or thrice (if that is a word).
- First, it conceded in August by removing U.S. oil imports from a list of possible duties. Two months earlier, China - perhaps trying to either intimate U.S. oil producers (who have been largely supportive of Trump’s policies thus far) who would in turn pressure President Trump, or either by pressuring Trump directly, indicated it would levy a 25 percent duty on U.S. oil imports.
- Second, since China is the largest buyer of American crude, Beijing likely discarded one of its strongest bargaining chips in the trade war so far. Some reports claim that U.S. oil imports to China are worth $8 billion all by themselves, so erasing oil from the tariff list reduced the value of sanctioned goods by roughly one-third.
- As far as Beijing’s LNG tariff threats are concerned, the reduction from an earlier 25 percent duty to 10 percent could also be considered another blink on China's part. Beijing, though it does have a host of other gas and LNG suppliers, at the end of the day still needs American LNG as the country continues to pivot away from dirtier burning coal needed for power production in favor of cleaning burning natural gas. By 2020, per government mandate, gas is earmarked to make up at least 10 percent of China’s energy mix, with further earmarks by 2030.
China central bank moves to pump extra US$110 billion into economy - China on Sunday announced a big cut in the amount of cash commercial banks have to put aside at the central bank, a move that will make an extra US$110 billion available for lending as Beijing works to shore up confidence in its economy and markets.The People’s Bank of China said it would cut the reserve requirement ratio by one percentage point from October 15 as a way to ensure reasonable credit growth and support economic development. As a result, banks will be handed 1.2 trillion yuan, of which 450 billion yuan (US$65 billion) will be used to repay their own borrowings from the central bank and the rest for lending.While the central bank said the move did not represent a change to its “prudent” monetary policy stance, analysts said it was a signal Beijing was becoming increasingly worried about the domestic economic situation amid the trade war with the United States.“This is a sign of policy easing to counter [the effects of] the US-China trade war, and shows [Beijing’s] determination to maintain growth,” said Liao Qun, chief economist of China Citic Bank International. Zhang Ming, a researcher with the Chinese Academy of Social Sciences (CASS), said the move was a response to China’s decelerating growth as a result of the headwinds caused by the trade tensions.“A deepening trade row with the US will weaken the role of trade in growth,” he said in a note. “If exports slow due to trade disputes, the impact will in turn spread to investment in manufacturing.” Zhang said he expected China’s headline gross domestic product growth to slow to 6.6 per cent in the third quarter, from 6.7 per cent in the previous three months, and to 6.4 per cent in the final quarter of the year.
Benefits of the US-China Trade War - The “benefits” of the trade war are manifold. First, it enables us to see that during the unprecedented era of international transition, the United States, as the No. 1 hegemony, still has the capacity to exert maximum pressure and deterrence on catch-up countries. . Often the country will maintain its hegemony for quite a long time and still retain dominance over other countries in many ways. This tells those radicals, who could hardly wait to change dynasties, that various predictions such as, so-called “No. 2” to replace the “No. 1” is far from the reality in the near future. The “benefits” of this trade war, in particular, lie in rendering the Chinese better aware of their country’s development status quo and its role on the world stage. On the one hand, please don’t have any illusions that China will recoil in this trade war. “Fighting to the end” is probably most Chinese unswerving attitude. Objectively speaking, China’s total economic volume is 82 trillion RMB and the foreign trade just accounts for about one-tenth. For the 8 trillion foreign trade, Sino-US trade only accounts for about one-third. The impact of this war for China’s overall national economic growth rate is about 0.2% to 0.5%. The Chinese are able to manage this zheteng, which means “much ado about nothing”. On the other hand, the Chinese are better aware that first, China’s economy is still “developing”, leaving a big gap with the international cutting-edge technology. For the core industry, there is still much to do as well. In addition, there are many tasks, including poverty alleviation, to accomplish. To tell the truth, China cannot have the slightest sense of complacency. Second, only when China remains steadfast and more determined to push forward with the reform and opening up policy, can Chinese economy stand a greater test. For example, China’s macro-taxation burden has reached a level which needs to be changed. The expansion and opening-up of the domestic market is urgently required. The reform and internationalization of China’s financial system has already become the world’s big concern. Third, among all the emerging countries, China may be the most distant country away from the mainstream of world civilizations for several hundred years. In a pluralistic era, it is imperative both to give full play to its advantages among diverse civilizations, and to strive with other emerging and old industrial countries to reach the forefront of the world’s civilized progress. This, for China, is especially a rather tough test, which cannot be neglected. Compared with many world powers, including Russia, China still needs to learn and accumulate experience in dealing with global issues. In this sense, this trade war also teaches the Chinese a very good lesson. Our Chairman Mr. Mao Zedong once said, “China has made so many efforts to learn from the West, but unfortunately we have been beaten by the teacher again and again.” The trade war obviously cannot stand for the whole relationship between China and the West, and Trump cannot represent the entire West either. But this time, the Chinese already get a very clear picture, that is, even the most sophisticated, the most advanced and the most powerful Western country inevitably has some intermittent disorder.
China, Aiming to Borrow as Cheaply as Apple and Microsoft, Launches U.S. Dollar Debt Offering - WSJ - China on Thursday sold $3 billion in U.S. dollar bonds, raising money as cheaply as some of America’s strongest companies at a time of heightened tensions with its largest trading partner and in the midst of a global markets selloff. The successful sale shows foreign investors remain confident in China’s ability to repay debt, even though economic growth is slowing and the country is trying to keep a lid on corporate-debt levels. But because China is an infrequent issuer of U.S. dollar bonds, the new securities have a scarcity value that makes them attractive to investors. Beijing is also trying to defuse its trade conflict with the U.S., with Chinese leader Xi Jinpingpreparing to meet with President Trump in late November. The sovereign bond sale—China’s second U.S. dollar bond sale in a year and only its third since 2004—included securities maturing in five, 10 and 30 years. The offering drew strong interest from investors in Asia, Europe and other parts of the world, fetching orders in excess of $17 billion, according to a banker involved in the deal. The demand enabled China to price its $1.5 billion in five-year bonds at a yield of 3.33%, just 0.3 percentage point above yields on comparable U.S. Treasury notes. The country sold $1 billion in 10-year bonds at a yield of 3.63%, versus the 3.18% yield on 10-year Treasurys. China also sold its first 30-year dollar bonds in more than two decades, pricing a $500 million issue at a yield of 4.055%, or 0.7 percentage point above 30-year Treasurys. Spreads on the bonds—the gap between yields on China’s and U.S. debt—were roughly similar to recent trading in outstanding bonds of companies such as Apple Inc. and Microsoft Corp. , according to data from bond-trading platform MarketAxess. China didn’t pay major credit-rating firms to rate its new bonds. China’s bond offering was launched earlier Thursday, shortly after markets across Asia opened sharply lower and experienced heavy selling in technology stocks and Chinese equities. By the close of trading in Asia, China’s benchmark Shanghai Composite stock index had fallen 5.2% and its technology-heavy Shenzhen market had dropped 6.5%, their worst one-day declines since February 2016. Credit-market conditions were also not ideal, with spreads widening earlier in the day in Asia following a U.S. market selloff overnight.
Interpol chief Meng Hongwei resigns after detention in China -France has received the resignation of Meng Hongwei as president of Interpol with immediate effect, according to the international police agency.The development came on Sunday shortly after China said Meng, who went missing 12 days ago, was under investigation for unspecified violations of Chinese law.The National Supervisory Commission, which handles corruption cases involving public servants, said in a statement that Meng "is currently under investigation on suspicion of violating the law."Earlier on Sunday, Meng Hongwei's wife, Grace, said her husband sent her an image of a knife before he disappeared during a trip to their native China.Making her first public comments on the issue, Grace Meng told reporters in Lyon, France, that she thought the knife was her husband's way of trying to tell her he was in danger. She said she has had no further contact with him since the message that was sent on September 25. Grace also said four minutes before Meng shared the image, he had sent a message saying: "Wait for my call." Grace Meng would not speculate on Sunday on what might have happened to him. Asked if she believed that he has been arrested, she said: "In China, what happened, I'm not sure." She read a statement during her press conference in Lyon, but would not allow reporters to show her face, saying she feared for her own safety and the safety of her two children. Meng is a senior Chinese security official as well as president of the International Criminal Police Organisation. The Lyon-based international police agency said on Saturday it has used law enforcement channels to inquire with China about Meng's status.
China confirms Interpol chief Meng Hongwei is under investigation - SCMP. The Chinese head of Interpol – who vanished last month after returning to his homeland – was under investigation for possible criminal activity, China announced late on Sunday, as the world police organisation said he had resigned. The revelations came as Meng Hongwei’s wife voiced concern for his life after receiving a final text message from his phone with a knife emoji. Meng, 64, was reported missing last week by his wife in Lyon, France, where Interpol is based. Grace Meng said she had not heard from her husband since September 25, according to a statement from the French interior ministry. While Beijing did not provide any further information about Meng’s detention, analysts said that the fact it was willing to jeopardise its diplomatic relations by snatching a high-profile official in such a way suggested the stakes were high. Meng is also a Chinese deputy public security minister. The National Supervisory Commission said in an unusually terse statement just before midnight local time that Meng was being investigated for suspected violations of unspecified state law, confirming the Post’s report last week. Interpol said in a statement on Sunday that Meng had resigned “with immediate effect”. In Lyon, Grace Meng spoke to the news media just before Beijing issued its statement, pleading with national governments to intervene, saying she feared that her husband’s life was in danger, Agence France-Presse reported. Meng said the last social media message she received from her husband came on September 25, saying “wait for my call,” followed by a knife emoji.
S. Korea walks back on possibly lifting sanctions on North — South Korea on Thursday walked back on a proposal to lift some of its unilateral sanctions against North Korea following U.S. President Donald Trump’s blunt retort that Seoul could “do nothing” without Washington’s approval. Foreign Minister Kang Kyung-wha had said on Wednesday that Seoul was considering lifting measures applied after a deadly attack in 2010 that killed 46 South Korean sailors. She cited the intent to create more diplomatic momentum for talks over North Korea’s nuclear program. South Korean conservatives reacted with anger as well, and Kang’s ministry downplayed her comments later, saying in a statement that the government has yet to start a “full-fledged” review of sanctions, meaning no decision was imminent. Unification Minister Cho Myoung-gyon told a parliamentary audit on Thursday there has been no serious consideration given to lifting the sanctions and that doing so would be hard unless North Korea acknowledges responsibility for the 2010 attack. North Korea has fiercely denied it sank the Cheonan warship. Liberal South Korean President Moon Jae-in hopes that progress in nuclear diplomacy will allow him to advance his ambitious plans for engagement with North Korea, including joint economic projects and reconnecting inter-Korean roads and railways. These projects have been held back by the sanctions against North Korea. While arguing that improved inter-Korean relations could possibly facilitate progress in larger nuclear negotiations between the U.S. and North Korea, Cho said Seoul isn’t ready yet to campaign for reduced pressure against its rival.
Putin arrives in India for arms deal worth billions of dollars - Russian President Vladimir Putin has arrived in India for a two-day visit during which Moscow is expected to ink a weapons deal worth billions of dollars, despite threat of sanctions by the United States.Indian Prime Minister Narendra Modi on Thursday evening welcomed Putin in capital New Delhi and the two headed off to an informal dinner. Official talks are expected to begin on Friday, when nearly 20 bilateral agreements will be signed in areas such as defence, nuclear energy, space exploration and economy. The Kremlin said the "key feature" of a deal with India would be the signing of a $5bn deal for the S-400 air defence system, despite a US law that sanctions any country that trades with Russia's defence and intelligence sectors. On the eve of Putin's arrival, the US poured cold water on India's efforts to obtain a waiver to avoid sanctions put in place under the Countering America's Adversaries Through Sanctions Act (CAATSA).Upgrades in arms systems "including the S-400 air and missile defence system" would be a particular focus for CAATSA, a US State Department spokesperson was quoted as saying by India's PTI news agency."The S-400 is attracting attention due to the US-Trump overhang. With the US' domestic legislation discouraging countries like India from engaging in 'significant' trade with Russia, there is a high-visibility political subtext about how this deal will impact the India-US bilateral," said Commodore (retired) Uday Bhaskar, director at The Society for Policy Studies."The US response will be evident by November 5, when both the trade with Russia and the hydrocarbon imports from Iran will come to a tipping point. If the US decides to go ahead with its domestic legislation and invoke penalties/sanctions against New Delhi, it would test the resilience of the India-US bilateral," he said.
How India Walked a Tightrope to Ink the S-400 Missiles Deal With Russia - The signing of the S-400 Air Defence Missile System (ADMS) deal is good news for India and its military. However, the uncertainty that dogged the inking of the contract till the last moment – it was not clear until this morning if this would happen – was suggestive of the looming shadow of the United States on India’s foreign policy. This cannot be good for the future of India’s bilateral engagements with other countries, especially Russia. But first, the military criticality of S-400 for India. India has bought five regiments/units or 40 launchers (each regiment/ unit will have two batteries with four launchers each), and about 1,000 missiles. Interestingly, 70% of purchased missiles are of very long range (400 km) and long range (350 km) category and the rest have lower ranges of 300km and 250km. The S-400 surveillance radar with the range of 600 km and 360 degree coverage can track 70 targets. The S-400 is not an upgraded version of S-300 ADMS – this was offered to India in 1998 – as is commonly believed, but has an entirely different technology, radar capability and missiles.While S-400 will have no transfer of technology or defence offsets, Russia has agreed to set up maintenance facilities in India; help integrate the S-400 with India’s indigenous Akash surface to air missile system (which was made with Russian hand-holding and is still not more than 40% accurate); expedite procurement despite having a full order book till 2022; and consider the transformational S-500 system (with capability to kill low-earth satellites) currently under trial, for sale to India. Interestingly, the Indian Air Force (IAF) intends to use S-400 in the ‘offensive air defence’ role rather than its designed role of protecting high-value targets like Delhi, for which it was originally proposed. Through ‘offensive air defence’, the IAF wants S-400 to take out enemy Airborne Early Warning and Control Systems (AWACS) — an airborne radar meant to control the battlespace by helping direct fighter aircraft to their targets. The AWACS — a major force-multiplier — would be extremely threatened within S-400’s 400km range. Once enemy AWACS have difficulty in command and control of the battlespace, enemy aircraft would not be able to operate at all altitudes, making them vulnerable inside Indian airspace.
India’s U-Turn Destroys Trump’s Anti-Chinese ‘Quad’ Strategy -- A change in India's foreign policy last week disintegrated the Trump administration's strategy against Russia and China. U.S. media pronouncements about India will now change. The Indian government under Narendra Modi will come under heavy propaganda fire.Two weeks ago the MoA Weekly Review mused about the corrupt Rafale fighter jet deal India's Hindu-fascist President Modi had arranged: In short: The previous government signed a contract with France' Dassault to buy 126 Rafale jets for $10.6 billion. Thirty percent of the price would flow back from Dassault to the Indian state owned aviation manufacturer HAL, which would assemble most of the planes.Modi flew to Paris and changed the deal without the knowledge of his cabinet and the country's military. India will get only 36 Rafales but pay $8.7 billion for them. Thirty percent of the money would flow back to a private Indian company belonging to the largely bankrupt, privately held Reliance Group for unrelated projects and without any know-how transfer.How much Reliance, owned by the once very rich Ambani family, would hand over to Modi and his party is yet unknown. There are calls for Modi to step down which he is unlikely to do.The writing was based on and credited to the legwork Caravan Magazine had done.Today the New York Times picked up the story - With ‘Fishy’ Jet Deal, India’s Opposition Finally Lands a Blow on Modi.The 'paper of the record' is two weeks late with the story, adds nothing new to it and does not even credit Caravan which uncovered the details of the corrupt deal. The question thus is: Why was this published now?
Is India on Its Way Out of Poverty? - naked capitalism - Jerri-Lynn here: In this Real News Network interview, Jayati Ghosh, professor of economics at Jawaharlal Nehru University in New Delhi, discusses a recent UNDP report showing that poverty in India has halved in the last 10 years, and the newly unveiled healthcare plan for the bottom 40% of the population, nicknamed “Modicare.” Ghosh calls Modicare “a scam that is going to benefit private healthcare companies” by providing healthcare insurance, based on the US model “instead of expanding a public health system which could actually provide [health care] much more cheaply, much more equitably and much more efficiently.” (Real News Network video and transcript)
Punya Prasun Bajpai: ‘India is witnessing social collapse’ - CJR - IN EARLY AUGUST, Punya Prasun Bajpai, a veteran journalist and primetime anchor on ABP News, the network’s flagship Hindi news channel, resigned. Milind Khandekar, the channel’s managing editor, did the same. Soon after, Bajpai published a blow-by-blow account of how “invisible forces” in the government, led by Prime Minister Narendra Modi and his Bharatiya Janata Party, had put intense pressure on Master Stroke, the hour-long show he anchored at 9pm every weeknight. More than 800 million Indians have access to TV. Hindi-language television news is especially influential in densely populated and electorally significant states of the north, such as Uttar Pradesh. Like most newsrooms in India, TV channels remain dependent on ad revenue. Primetime news has largely come to mean hectoring anchors, talking heads, and cacophonic panels—“daily cockfights,” as one observer put it. But when Bajpai joined ABP News, he adopted a somewhat different approach: Master Stroke featured field reports from around the country and the voices of citizens, in particular the rural poor, were foregrounded. Most controversially, in the eyes of the government, Modi’s claims, and those of his colleagues, were fact-checked. The show’s ratings were strong, and rising.In July, Master Stroke aired a report upending a claim by Modi that his government’s policies had doubled a farmer’s income. The episode received extreme pushback. BJP politicians, including central ministers and state chief ministers, launched an attack on the story in near-similar tweets. In response, Bajpai’s team returned to the farmer and interviewed others in her village. The war escalated.According to Bajpai’s telling, in a meeting later that month, Atideb Sarkar, the CEO of ABP, praised the episode but directed him to not mention Modi’s name in any further reportage. Then came a demand to not show images of him—a near-impossible task, Bajpai wrote, especially given how much power has been concentrated under Modi’s authority.Master Stroke continued its critical reportage, yet advertisers were compelled to drop out. And then came a final blow—the channel’s satellite transmission was disrupted every night during the Master Stroke timeslot. When the show aired on August 2, Bajpai was no longer part of it. Bajpai spoke with CJR about the censorship he experienced and why he believes the crisis in India runs well beyond press freedom. The following conversation has been edited for length and clarity.
Pakistan To Request IMF Bailout Over US Opposition -- The long-running speculation whether Pakistan will follow in Argentina's footsteps and demand an IMF bailout was answered this morning. As a reminder, U.S. Secretary of State Mike Pompeo warned against providing an International Monetary Fund bailout for Pakistan's new government that includes funding to pay off Chinese lenders. In an interview on CNBC on July 30, Pompeo said the United States looked forward to engagement with the government of Pakistan's expected new prime minister, Imran Khan, but said there is "no rationale" for a bailout that pays off Chinese loans to Pakistan. Pakistan's urgent need for the emergency cash came as a result of a currency crisis that saw a devaluation of the Pakistan Rupee, as Pakistan burned through a third of its reserves in the past year...... forcing the central bank to institute soft capital controls and increasing the amount of red tape needed to access dollars. It has also presented the new government with its biggest challenge to date. Many analysts have recently said they expect that another IMF bailout, the second in five years, will be needed to plug an external financing gap. Also notably, much of this carnage accelerated since the start of January which coincided with Pakistan's decision to ditch the dollar (following Trump's remarks) and get closer to China. Furthermore, as we reported in December, Pakistan has been contemplating the move since last month's formal launch of the Long Term Plan for the China-Pakistan Economic Corridor (CPEC), signed by the two sides on November 21. The CPEC is a flagship project of China's Belt and Road initiative - the 3,000 km, over $50 billion corridor which stretches from Kashgar in western China to Gwadar port in Pakistan on the Arabian sea. Then, in early August, China did just that, when Beijing agreed to a reported $2 billion loan just days after the election of a new Pakistani premier and cricketing legend Imran Khan. China stepped up to reinforce a geopolitical alliance that shapes the South Asian nation’s policies toward the U.S. and India.
Pakistani Poker- Playing Saudi Arabia Against China - Desperate for funding to fend off a financial crisis fuelled in part by mounting debt to China, Pakistan is playing a complicated game of poker that could hand Saudi Arabia a strategic victory in its bitter feud with Iran at the People’s Republic’s expense. The Pakistani moves threaten a key leg of the USD60 billion plus Chinese investment in the China Pakistan Economic Corridor (CPEC), a crown jewel of Chinese President Xi Jinping’s Belt and Road initiative.They also could jeopardize Chinese hopes to create a second overland route to Iran, a key node in China’s transportation links to Europe. Finally, they grant Saudi Arabia a prominent place in the Chinese-funded port of Gwadar that would significantly weaken Iran’s ability to compete with its Indian-backed seaport of Chabahar.Taken together, the moves risk dragging not only Pakistan but also China into the all but open war between Saudi Arabia and Iran.Pakistan’s first move became evident in early September with the government’s failure to authorise disbursements for road projects, already hit by delays in Chinese approvals, that are part of CPEC’s Western route, linking the province of Balochistan with the troubled region of Xinjiang in north-western China.In doing so, Pakistan implicitly targeted a key Chinese driver for CPEC: the pacification of Xinjiang’s Turkic Muslim population through a combination of economic development enhanced by trade and economic activity flowing through CPEC as well as brutal repression and mass re-education. The combination of Pakistani and Chinese delays “has virtually brought progress work on the Western route to a standstill,” a Western diplomat in the Pakistani capital of Islamabad said.Pakistani Railways Minister Sheikh Rashid, in a further bid to bring Pakistani government expenditure under control that at current rates could force the country to seek a $US 12 billion bailout from the International Monetary Fund (IMF), has cut $2 billion dollars from the US$8.2 billion budget to upgrade and expand Pakistan’s railway network, a key pillar of CPEC. Mr. Rashid plans to slash a further two billion dollars. “Pakistan is a poor country that cannot afford (the) huge burden of the loans…. CPEC is like the backbone for Pakistan, but our eyes and ears are open,” Mr. Rashid said.
Fascistic candidate Jair Bolsonaro places first in Brazilian presidential election -- The Brazilian general elections held on Sunday resulted in the most right-wing Congress since the end of the 1964-1985 US-backed military dictatorship and gave the fascistic former Army reserve captain Jair Bolsonaro a wide lead in the presidential contest.Failing to win an outright majority of the ballots, Bolsonaro faces a run-off on October 28 against Workers Party (PT) candidate Fernando Haddad. Bolsonaro won 46 percent of the vote, barely 4 percent short of a first-round victory. Haddad, a former mayor of Sao Paulo, came in a distant second, with 29 percent, corresponding to roughly 30 million votes. Abstention and spoiled ballots were at a record high, at 40 million votes, a significant figure considering that voting is mandatory in Brazil and repeated abstention is punished by fines, withholding of passports and, most importantly, exclusion from civil service.Twelve percent voted for Ciro Gomes, of the Democratic Labor Party, the oldest functioning bourgeois party in Brazil, which is the heir of the 1937-1945 corporatist politics of dictator Getúlio Vargas and is associated with bourgeois opposition to the 1964-1985 military regime.Geraldo Alckmin, of Brazil’s former traditional right-wing party, the Brazilian Social Democracy Party (PSDB), saw his party’s electoral obliteration, dropping from 48 percent of the vote in the 2014 run-off against the PT to only 5 percent in Sunday’s balloting. Marina Silva, a former PT environmental minister who since 2010 commanded the support of sections of big business such as the powerful heir to Brazil’s largest private bank, Neca Setúbal, saw her vote collapse from 21 percent in 2014 to only one percent. The PT’s main self-declared “left” opposition, the pseudo-left Morenoite-Pabloite alliance, the Socialism and Liberty Party (PSOL), won just 0.6 percent of the vote, down from 1.6 percent in 2014 and a far cry from its first election in 2006, in which it won 7 percent of the vote based on its criticism of the PT’s neoliberal policies.
Brazil’s far-right candidate falls short of election stunner (AP) — A far-right former army captain who expresses nostalgia for Brazil's military dictatorship won the first round of its presidential election by a surprisingly large margin Sunday but fell just short of getting enough votes to avoid a runoff against a leftist rival. Jair Bolsonaro, whose last-minute surge almost gave him an electoral stunner, had 46 percent compared to 29 percent for former Sao Paulo Mayor Fernando Haddad, according to figures from Brazil's Superior Electoral Tribunal with 99.9 percent of the vote counted. He needed over 50 percent support to win outright. Polls predicted Bolsonaro would come out in front on Sunday, but he far outperformed expectations, blazing past competitors with more financing, institutional backing of parties and free air time on television. Despite the sizable victory, polls have shown the two candidates are neck-and-neck for the Oct. 28 runoff, and much could shift in the coming weeks. Two other candidates, one center-left and one center-right, said they would decide in the coming days if they would endorse anyone. Ultimately, Bolsonaro's strong showing reflects a yearning for the past as much as a sign of the future. The candidate from the tiny Social and Liberal Party made savvy use of Twitter and Facebook to spread his message that only he could end the corruption, crime and economic malaise that has seized Brazil in recent years — and bring back the good old days and traditional values.
Brazil is set to elect a fascist as president, and business is on board -- "Despite misgivings,” reads the headline from Associated Press, “Brazil’s business community begins coalescing around far-right candidate”. Jair Bolsonaro may believe black people should not reproduce, want to expel environmental NGOs from the Amazon and have a record of inciting rape and advocating torture, but that is apparently not a problem for Brazil’s financial elite. Unless a major reversal takes place in the presidential run-off, Brazil – the world’s ninth largest economy – will become the first major country to vote fascist in the 21st century. As justification, the bewildered commentators of the liberal centre will point to the Workers Party, whose last leader was impeached for corruption and whose figurehead, former president Lula, is in jail. Lula redistributed wealth downwards and pursued policies of social inclusion towards slum dwellers, indigenous people and ethnic minorities. Like the rest of Brazil’s political elite, he tolerated corruption and police violence – but that’s not really why the Brazilian business class rushed to support Bolsonaro. In his march towards power, Bolsonaro ditched any remnants of the statist economics that traditionally attaches to the far right, hiring ultra-neoliberal economist Paulo Guedes as his advisor, and toured Wall Street to drum up support. Guedes, a Chicago-trained economist, advocates privatising the whole of Brazil’s public sector. In case of trouble, the rest of the Bolsonaro government will be made up of former generals. Bolsonaro’s running mate, former general Hamilton Mourão, told a TV interviewer in September that, if civil society resists Bolsonaro’s programme, the incoming president could “self-coup” – calling the army in to run the government.
The People Give The Orders And The Government Obeys - The sign below is located in the state of Chiapas in Mexico. In English, it says, “You are in the territory of Zapatista in Rebellion. Here, the people give the orders and the government obeys.” Well, of course, what that really means is that the Zapatistas give the orders, not the people as a whole. Still, the people generally regard the Zapatistas as being more representative of their wishes (and less parasitical) than the government. Mexicans are further along than, say, Europeans or Americans in understanding the true role of government. The mask has been off for some time and the people understand that the government does notexist to serve them; it exists to enslave them – that is, to rob them of the fruits of their labour through taxation, whilst doing as little as possible to benefit them. They understand that this is the norm for all governments and elections do little more than remove one parasite and replace it with another. The Zapatistas have been more successful than they would have been, had they been operating in, say, the US. This is partly due to the fact that the Federal government in Mexico is not as well-funded as in the US and is therefore not as powerful. This, in addition to the contempt in which the Federales are held by Mexicans in general, particularly the campesinos – the poor, assures greater success for the Zapatistas. Since 1994, their strength and breadth have grown steadily. At present, they dominate Guerrero, Oaxaca and Chiapas states, shown below in purple. But, recently, it is in Michoacán (the easternmost yellow state) that the most interesting development has occurred. The people of the town of Cherán became fed up with the struggle as to who rules over them and decided to take charge of their town themselves. In 2011, led by local women (including one granny), the population of 20,000 removed the bureaucrats, the police, the talamontes (the local mafia) and the rebels, and are now running their town themselves with volunteer citizens. They’re not professing to be libertarian and yet, through common sense, they’ve established a form of rule that is remarkably libertarian. The basic principle is that they make no laws. The citizens may do whatever they wish, as long as they do not aggress against other citizens or their property. Political parties have been banned. Like a mediaeval European town, the three entrance roads are guarded by a militia, who stop anyone seeking to re-establish dominance over the town.
Russia opens criminal probe after rocket malfunction forces emergency landing -- Russian investigators said they had opened a criminal probe into a failed rocket launch that caused a two-man crew to make an emergency landing soon after blasting off to the International Space Station on Thursday. “An investigative group has been formed and officials are currently examining the launch site, documents are being seized,” the Investigative Committee said in a statement.The probe would try to determine whether safety regulations had been violated during construction, leading to massive damage, the statement said.American Nick Hague and Russian Alexey Ovchinin landed safely without any injuries after an “anomaly with the booster” prompted the ascent to be aborted, Nasa head Jim Bridenstine said in a statement. Russia’s space agency Roscosmos tweeted video of the two getting on a plane back from the crash site.
Global Growth Plateaus as Economic Risks Materialize - Maurice Obstfeld, IMF - The latest World Economic Outlook report projects that global growth will remain steady over 2018–19 at last year’s rate of 3.7 percent. This growth exceeds that achieved in any of the years between 2012 and 2016. It occurs as many economies have reached or are nearing full employment and as earlier deflationary fears have dissipated. Thus, policymakers still have an excellent opportunity to build resilience and implement growth-enhancing reforms.Last April, the world economy’s broad-based momentum led us to project a 3.9 percent growth rate for both this year and next. Considering developments since then, however, that number appears over-optimistic: rather than rising, growth has plateaued at 3.7 percent.And there are clouds on the horizon. Growth has proven to be less balanced than hoped. Not only have some downside risks that the last WEO identified been realized, the likelihood of further negative shocks to our growth forecast has risen. In several key economies, moreover, growth is being supported by policies that seem unsustainable over the long term. These concerns raise the urgency for policymakers to act. Growth in the United States, buoyed by a procyclical fiscal package, continues at a robust pace and is driving US interest rates higher. But US growth will decline once parts of its fiscal stimulus go into reverse. Notwithstanding the present demand momentum, we have downgraded our 2019 US growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China’s retaliation. China’s expected 2019 growth is also marked down. Domestic Chinese policies are likely to prevent an even larger growth decline than the one we project, but at the cost of prolonging internal financial imbalances. Overall, compared with six months ago, projected 2018–19 growth in advanced economies is 0.1 percentage point lower, including downgrades for the euro area, the United Kingdom, and Korea. The negative revisions for emerging market and developing economies are more severe, at -0.2 and -0.4 percentage point, respectively, for this year and next year.
EU harbors fears about China’s maritime Silk Roads At times, the European Union makes a tortoise look like a Toyota. Speed has never been a quality associated with the EU. After all with 27-member states, once the United Kingdom leaves next year, it takes time to reach a consensus.Still, the rapid expansion of Chinese investment in the world’s largest integrated economic and political bloc has raised alarm bells in Brussels.Last year, in his annual State of the Union address, the EU President Jean-Claude Juncker spelled out the dangers.“Let me say once and for all – we are not naive free traders,” he said. “Europe must always defend its strategic interests. This is why today we are proposing a new EU framework for investment screening.“If a foreign, state-owned company wants to purchase a European harbor [such as the Greek port of Piraeus], part of our energy infrastructure or a defense technology firm, this should only happen in transparency, with scrutiny and debate,” he added. “It is a political responsibility to know what is going on in our own backyard so that we can protect our collective security if needed.”Nearly a year later, European leaders decided to call on both executive arms of the EU, the European Council and the European Parliament, to thrash out guidelines before next year’s elections. The issue has become critical.
Tusk makes scathing attack on Russian influence — Vladimir Putin’s Russia represents a major threat to the unity of the European Union, President of the European Council Donald Tusk said Saturday. Tusk used his speech at a conference on the future of the European Union to express concern about Russia’s attempts to influence the direction of politics in Europe, and said Saturday’s election in Latvia could provide a clear signal that the strategy is working. “Our problem is Russia, which is undermining whatever it can undermine in Europe,” Tusk told the conference, hosted by the Pontifical University of John Paul II in Kraków in southern Poland. “I can provide numerous examples to prove that Russians will not refrain from any means to weaken European unity.” Stating he is “anxious” about the result of Latvia’s national election, Tusk said it could “be a turning point for that region — a moment which was planned in the Kremlin and not in Europe.” The final polls showed the pro-Russian Harmony party poised to win the biggest share of votes. Tusk also referenced “very clear traces of Russia’s engagement in the Brexit referendum campaign” and in Catalonia’s conflict with Madrid, and cited the poisoning of ex-spy Sergei Skripal and the cyberattack on the Organisation for the Prevention of Chemical Weapons as examples of unwelcome interference. Tusk claimed he has no “anti-Russian obsession,” but said: “If there is [a nation] somewhere whose main political priority is to disintegrate Europe, this certainly is Russia.” Meanwhile, Tusk warned fellow EU leaders not to “fool” themselves over the state of relations between Europe and the United States.
Greece To Claim €280 Billion In War Reparations From Germany -- Greece is about to launch a campaign to claim €280 billion ($323 billion) in war reparations from Germany, reports Der Spiegel. The German magazine notes that as long as Greece was dependent on EU support, Prime Minister Alexis Tsipras had avoided raising the issue. But now, after the end of the third bailout program, Athens is ready to take initiatives to claim the money, it says. The issue is resurfacing a few days before the official visit of Germany’s President Frank-Walter Steinmeier to Athens where he will meet the President of the Republic Prokopis Pavlopoulos and Tsipras. Der Spiegel says it is no coincidence that the two highest ranking Greek politicians have both raised the issue in the last few days. It marks the beginning of a long campaign, which, according to the German magazine, will start in November. The Greek Parliament will endorse an audit report ready since August 2016, according to which Greece is entitled to €269.5 billion of repairs from the Second World War. In addition, Greece demands the repayment of a €10.3 billion occupation loan. The report remained under wraps throughout the last two years, but Tsipras seems ready to bring it back to the surface and start a campaign for war reparations, says Der Spiegel. In the second phase, Greece intends to present its arguments at world organizations such as the European Parliament, the European Council, and the UN. In the third phase, Greece plans to call on Germany to negotiate war reparations. For its part, the German government is expected to reject the request. Already in the past, it has made it clear that Greece has no legal right to claim damages for the Second World War. In the opinion of some Greek lawyers, this German denial may open the way for the case to be brought before the International Court of Justice in The Hague, says the German magazine.
Italy’s Debt Crisis Flares Up, Banks Get Hit, as Showdown with the EU Intensifies -- Don Quijones: A serious showdown is brewing in the Eurozone as Italy’s anti-establishment coalition government takes on the EU establishment in a struggle that could have major ramifications for Europe’s monetary union. The cause of the discord is the Italian government’s plan to expand Italy’s budget for 2019, in contravention of previous budget agreements with Brussels.The government has set a public deficit target for next year of 2.4% of GDP, three times higher than the previous government’s pledge. It’s a big ask for a country that already boasts a debt-to-GDP ratio of 131%, the second highest in Europe behind Greece. To justify its ambitious “anti-poverty” spending plans, proposed tax cuts, and pension reforms, the government claims that Italy’s economic growth will outperform EU forecasts.Brussels is having none of it. EU Commission President Jean Claude Juncker urged Italy’s Economy Minister Giovanni Tria to desist. “After having really been able to cope with the Greek crisis, we’ll end up in the same crisis in Italy,” he said. “One such crisis has been enough… If Italy wants further special treatment, that would mean the end of the euro. So you have to be very strict.”On Wednesday ECB President Mario Draghi held a private meeting with Italian President Sergio Mattarella in Rome, at which he reportedly raised concerns about Italy’s public finances, the upcoming budget bill, and related stock-exchange and bond-market turbulence.The meeting evoked memories of the backroom machinations that Draghi, together with his predecessor, Jean Claude Trichet, undertook to engineer the downfall of Italian premier Silvio Berlusconi in 2011 and his replacement with technocrat Mario Monte, after Berlusconi had posited pulling Italy out of the euro during Europe’s sovereign debt crisis.But such a drastic ploy is unlikely to work this time, since it would mean having to replace an entire democratically elected government. And Italian voters, already disenchanted with the EU, are unlikely to accept having a new technocratic government thrust upon them. But that doesn’t mean the EU doesn’t have aces up its sleeves. Brussels knows that Italy’s banking sector, despite receiving hundreds of billions of euros of monetary support and virtually free loans from Draghi’s ECB, is extremely fragile. The longer the feud with Rome goes on, the more fragile it will grow. The Achilles’ heel for Italy’s populists is the chronically weak banking sector, whose massive holdings of Italian sovereign bonds make them particularly vulnerable to an economic downturn.
Italian Stocks, Bonds Collapse After EU Rejects Rome's Budget Plans - Italian stocks tumbled with the FTSE MIB dropping 2.3% - the worst performer among major European markets on Monday - and hitting its lowest level since April 2017, while the country's bonds plunged to the lowest level since February 2014 amid what now appears to be an inevitable showdown between Italy and the EU, after the European Commission said Italy’s budget plans are in breach of common rules.Over the weekend, the European Commission told Italy it is concerned about its budget deficit plans for the next three years since they breach what the EU asked the country to do in July, but a defiant Rome insisted on Saturday it would “not retreat” from its spending plans.In a letter to Italy’s Economy Minister Giovanni Tria, the Commission said that with a planned headline deficit of 2.4 percent of GDP in 2019, Italy’s structural deficit, which excludes one-offs and business cycle effects, would rise by 0.8 percent of GDP. Under EU rules Italy, which has a public debt to GDP ratio of 133 percent and the highest debt servicing costs in Europe, should cut the structural deficit every year until balance.“Italy’s revised budgetary targets appear prima facie to point to a significant deviation from the fiscal path” commonly agreed by European Union governments, EU Commissioners Valdis Dombrovskis and Pierre Moscovici wrote in a letter to Italian Finance Minister Giovanni Tria. “This is therefore a source of serious concern,” the commission’s finance chiefs said in their letter Friday responding to a note sent by Tria the day before.“We call on the Italian authorities to ensure that the Draft Budgetary Plan will be in compliance with the common fiscal rules,” the letter added at the same time as the council of EU ministers asked Italy in July to reduce that structural deficit by 0.6% of GDP next year, which means the deficit would be 1.4 points off track, Reuters reported. The criticism was shrugged off by Italian Deputy Prime Minister Luigi Di Maio, who said his government will stick to its deficit targets before next year’s EU Parliament elections usher in lawmakers fed up with austerity and ready to relax budget rules.
Italy’s New Fiscal Plans: The Options of the European Commission --The Italian government has announced an increase of its deficit for 2019, breaking the commitment from the previous government to decrease it to 0.8% next year. This blog post explores the options for the European Commission and the procedures prescribed by the European fiscal framework in this case. On September 27th, Italy’s ruling coalition surprised markets and its European partners when it announced its plan to increase the Italian public deficit to 2.4% of GDP in 2019, even though the previous government had promised a decline of the deficit to 0.8% for that same year. Moreover, this first announcement foresaw a 2.4% deficit in 2020 and 2021 too. The pressure from the European Commission and its European partners, as well as the strong reaction from the bond market, forced the government to partially reconsider its plans. On October 4th, Prime Minister Conte announced that the government had amended its plan and that, although the deficit would still reach 2.4% in 2019, it would be reduced to 2.1% of GDP in 2020, and to 1.8% in 2021 (see Figure 1). Also on October 4th, the government revealed the details of its budget plan in its ‘economic and financial document’ for 2019, as well as in a letter to the European Commission. As expected, these documents show that the deficit increase is intended to finance the tax cuts promised by the League, a version of the citizen’s income promised by the Five Star Movement, a loosening of the previous government’s pension reform (as promised by both parties in the new coalition), as well as an increase in public investment.The headline deficit numbers announced for the moment are not dramatic per se (and should still be smaller than, for example, the French deficit figure), but the stock of public debt was already as high as 131.2% of GDP at the end of 2017. So, how will the new Italian fiscal plans affect the path of its debt-to-GDP ratio? According to the new documents published on October 4th, given the predictions of the government (i.e. a real growth rate of 1.5% for 2019, 1.6% for 2020 and 1.4% for the year after), Italy’s public debt as a share of GDP is supposed to fall over the forecast horizon to 124.6% in 2021 (see Figure 2).However, these forecasts might be too optimistic. They appear at odds not only with the European Commission’s own forecasts (1.1% real growth for 2019), but with the perceived reduced growth prospects for 2019 at the global level and, more importantly, with the potential negative impact coming from the recent strong increase in Italian bond yields and the resulting tightening of financial conditions for the real economy.Even if the increased deficit should have some short-term stimulating effect on an Italian economy that is still operating below potential, the government growth forecasts thus appear to be quite optimistic.
Why Hysteria Over the Italian Budget Is Wrong-Headed - Nothing stirs the souls these days like a new fiscal plan. If that plan belongs to the (maybe second) most controversial government in the European Union, the Italian Five-star and Lega coalition government, commotion is guaranteed.On September 27th, Italian finance minister Giovanni Tria communicated to the European Commission the intention to make changes to the budgetary plans set by the previous government. “The new plan would generate a deficit to GDP ratio of 2.4% in 2019, implying a structural budget balance to GDP ratio of -0.8%, that is a projected deviation of 1.4% from the target.Financial markets and the media reacted sharply. Pierre Moscovici, European Commissioner for Economic and Financial Affairs, and European Commission President Jean Paul Juncker both expressed dismay, while the 10-year bond yields rose above 3.5% for the first time in four years. The Deputy Prime Minister and leader of the Five-star movement, Luigi Di Maio, commented that “there are some European institutions which, with their statements, are playing at terrorism on the markets.” On October 5th, the official letter of the European Commission responding to the minister expressed “serious concern” about the planned changes, generating further market turmoil. On October 9th, the International Monetary Fund (IMF) and the Italian central bank joined the chorus with new negative warnings.Italian government leaders responded fiercely that they would not retrench from their plan, and directly and openly criticized the European establishment. Even the moderate face of the coalition, the Italian Premier Giuseppe Conte, stepped up to question the priorities of the European Commission, the Bank of Italy, and the IMF: He assured that his government remains committed to containing the public debt and maintaining fiscal stability, but claimed that goal is impossible to achieve without economic development. The minister for European affairs, economist Paolo Savona, said that, in fact, a higher deficit-to-GDP ratio than 2.4% would be helpful. The heated reactions to the new fiscal plan are unjustified. In fact, the estimated targets that the new fiscal plan would (minimally) breach are unreliable and based on wrong macroeconomic principles. Moreover, despite accusations of profligacy, Italy has in fact been running large primary surpluses (the budget balance minus interest payments), and will keep doing so even if the government confirms its plans (see figure 1).
Salvini Resists German Plan To Return Asylum Seekers By Threatening To Close Airports - While the Italian ruling coalition's steadfast defiance of the European Commission's dictats regarding their plans to swell the Italian budget deficit have been garnering most of the headlines, the government in Rome risked reviving the controversy surrounding Italy's decision to close its borders to migrants by refusing to bow to Germany's demands that the country accept several plane loads of migrants. In response to reports in German media that the southern state of Bavaria was preparing to send back rejected asylum seekers to Italy via chartered flights (in accordance with the so-called Dublin rules), Italian Deputy Prime Minister Matteo Salvini has threatened to close the country's airports, just like Italy closed its ports to rescue ships sent by international aid agencies. Responding to reports about Germany's plans in a tweet, Salvini warned that "if anyone, from Brussels or Berlin, thinks to send dozens of immigrants to Italy via chartered flights without authorization, know that there is not, and there won't be, any available airports. We will close the airports like we closed the ports!" Se qualcuno, a Berlino o a Bruxelles, pensa di scaricare in Italia decine di immigrati con dei voli charter non autorizzati, sappia che non c’è e non ci sarà nessun aereoporto disponibile. Chiudiamo gli aeroporti come abbiamo chiuso porti.#aeroportichiusi https://t.co/XvYgELGTML— Matteo Salvini (@matteosalvinimi) October 7 Salvini made his threats in response to reports in DPA that Berlin had planned to begin returning rejected asylum-seekers to Italy via chartered flights, with the first flight expected to leave Tuesday, and a second scheduled for Oct. 11. The migrants, mostly Nigerians who had entered Europe via Italy, had reportedly already been informed of their impending deportation via a letter. The Dublin rules, a controversial EU regulation, assign responsibility for migrants to the country where they initially entered.
France's Le Pen Joins Salvini, Severs Ties With Bannon's 'Movement'- He's Not European - In a relatively clear severing of ties, French far-right leader Marine Le Pen is distancing herself from former White House strategist Steve Bannon's 'Movement', saying only Europeans will save the continent. This is quite a shift from her remarks in July, when we noted that Bannon was looking to establish a populist stronghold within European Parliament which could gain as many as a third of the lawmakers following next May's Europe-wide elections. As the Beast pointed out,A united populist bloc of that size would have the ability to seriously disrupt parliamentary proceedings, potentially granting Bannon huge power within the populist movement.Depending on electoral law in individual countries, the foundation may be able to take part in some campaigns directly while bolstering other populist groups indirectly. -Daily Beast “I didn't get the idea until Marine Le Pen invited me to speak at Lille at the Front National,” recalled Bannon. “I said, ‘What do you want me say?’”Le Pen responded: “All you have to say is, ‘We're not alone.’”But now, as AP reports, Le Pen said Monday, at a meeting in Rome, that she wanted to clarify “lots of conjecture” about Bannon’s reported plans to set up his foundation.Le Pen said Bannon is not European, but rather an American who wants to create a think tank. She said:“But we, and we alone, are the ones who will shape the political force that is born from the European elections, because we are attached to our liberty, attached to our sovereignty and we together......the representatives of the different peoples of Europe, are the ones who will shape the political forces that aim specifically to save Europe.”
Golden visas sold by EU countries open the door to the criminal and corrupt --The so-called golden visas offered by numerous European Union countries open the door to criminal and corrupt elements by giving residency permits to non-EU citizens who can pony up enough cash. This warning from international corruption watchdogs Transparency International and Global Witness came in a special report on the practice of 14 EU countries to give visas or even passports to those able to pay. Due diligence on criminal backgrounds is often insufficient, the groups say, and the permits allow recipients to live freely anywhere in the bloc.“By their very nature, golden visa schemes are an attractive prospect for the criminal and corrupt,” the report said. “If you have a lot of money that you acquired through dubious means, securing a new place to call home far away from the place you stole from isn’t just appealing, it’s sensible,” said Naomi Hirst at Global Witness. “Golden visa schemes offer a safe haven from authorities who might be looking to seize your stolen assets, and the freedom to travel without raising suspicion.” Greece is among the cheapest, selling its golden visas for just €250,000 while Austria is willing to sell a passport for €10 million. Cyprus, Malta and Bulgaria are the three others that sell passports. Germany offers neither visas nor passports for money. It is a flourishing business. In the past decade, EU countries have sold some 6,000 passports and 100,000 residence permits, getting €25 billion in direct investments in return. Spain, Hungary, Latvia, Portugal and Britain lead the pack with more than 10,000 visas each. Greece, Cyprus and Malta are right behind. (Hungary has since terminated its program.) The impact for a small country is evident in the case of Cyprus. Since 2013, the island republic, well-known for the growing influence of the Russian mafia, has taken in €4.8 billion for selling passports and visas. By way of comparison, tourism last year drew in €2.6 billion.It has become a business sector all its own, with hundreds of law firms, notaries and consultants helping with the process.
German government organises mass deportations of refugees to Kabul --The louder the protests of working people, the more deliberate and mercilessly the government pursues its right-wing policies. The most recent collective deportations to Kabul in war-torn Afghanistan were carried out on “German Unity Day,” of all days.On the same day, October 3, 40,000 people took to the streets in the Bavarian state capital to protest against increased police powers and the “politics of fear.” A few days earlier, more than 30,000 people had demonstrated in Hamburg. In September alone, mass demonstrations against racism and xenophobia took place in Cologne, Berlin, Frankfurt, Chemnitz and other cities.Despite this, the grand coalition of the Christian Democrats (CDU/CSU) and Social Democrats (SPD) is accelerating the pace of its deportation operations. The state governments in which the Greens and Left Party hold office are also continuing to carry out deportations unabated. .Seventeen people were flown to Afghanistan in the latest collective deportation. Eight of them came from Bavaria, the other nine from Baden-Württemberg, Hamburg, Lower Saxony, Rhineland-Palatinate, Schleswig-Holstein and Saxony. Sixty-three federal and four Bavarian state police officers are said to have accompanied them. With this deportation to a war zone, the state and federal interior ministers are trampling on basic democratic rights, such as the right of asylum and the Geneva Convention on Refugees. Afghanistan is anything but a “safe country of origin.” On average, about 35 members of the security forces die there every day in fighting and attacks by radical Islamists, as the NGO International Crisis Group has reported. Overall, the number of people killed through violence in Afghanistan in 2018 could reach a new high of well over 20,000.
‘Don’t complain – you’re lucky’ Macron tells French after pension cuts - French president Emmanuel Macron has urged citizens to moan less, telling pensioners: “We don’t realise how lucky we are.” The country would be better off if people emulated wartime leader Charles de Gaulle, he said after being harangued by voters worried about cuts to pensions. The French government has forced pensioners to make higher social security contributions amid budget cutbacks, prompting protests. On a visit to the northeastern village of Colombey-les-Deux-Eglises, de Gaulle’s home and burial place, Mr Macron spoke to pensioners who complained they had a low income. The president said he had learnt from de Gaulle’s grandson that the famed general lived by the principle: “You may speak very freely but the one thing you have no right to do is complain.” “I think the general had the right idea. The country would be different if everyone did the same,” Mr Macron told his audience. “We don’t realise how immensely lucky we are. We are seeing more and more elderly people in our country in good health,” he added. Last week the government unveiled billions of euros in tax relief for businesses and households, alongside budget cuts.
French PM Resignation Imminent As Macron Approval Hits All Time Low - For all the discussion about Donald Trump's (dis)approval rating, the western media has been surprisingly quiet over the collapse in popularity of Europe's golden boy, French president Emmanuel Macron who last year triumphantly defeated nationalist Marine Le Pen with 66.1% of the vote as the youngest French president, and was repeatedly cited as Europe's "liberal ideal" heir to Angela Merkel. Fast forward one year, when things haven't quite panned out as expected for the former Rothschild banker.At the end of September, Macron has been hit with his lowest ever approval rating as his popularity continues to tumble with only 29% of French citizens saying they were satisfied with Mr Macron, according to a new Ifop poll – the lowest figure recorded by the firm during his presidency. The leader’s rating has fallen from 34% in August and 39% in July.Macron's fall from grace follows a series of high-profile departures from his government and a summer scandal over the firing of his bodyguard; the president was also heavily criticized in September week for telling an unemployed man he could easily get a job simply by “crossing the street”.While the former investment banker pledged to modernize the French economy, many voters have complained that Macron is arrogant, out of touch, that his labor reforms have benefited only the country’s largest businesses and have grown impatient with the sluggish pace of economic growth and job creation.And now, amid a plunge in approval, Macron will be force to undergo his first major restructuring of his cabinet just days after the resignation of his interior minister, as allies press for a broad rejig to draw a line under a tumultuous few months.According to the French media, Prime Minister Edouard Philippe will submit his government’s resignation to Macron as early as today. Macron would then ask Philippe to form a new government, on which parliament, dominated by Macron’s ruling party, would hold a vote of confidence according to Reuters.
Macron makes overtures to UK car firms as Brexit talks enter critical week President Macron has stepped up attempts to attract UK-based carmakers to France with a private dinner at the Elysée Palace, following their growing concerns about a botched Brexit deal. The heads of Renault Nissan, Vauxhall and Jaguar Land Rover are understood to have been among executives invited to a dinner last week, where the president warned against growing nationalism around the world and said he was making France more business friendly. It is the latest sign Macron is trying to attract firms nervous about the uncertainty created by Brexit. Three French ministers also took part in the dinner, with the organisers ensuring that companies with major UK operations were represented. Macron’s charm offensive emerges before a crucial fortnight that could make or break Theresa May’s hopes of securing a comprehensive Brexit deal. Some ministers are still understood to be considering resigning should May concede further ground to Brussels, such as limiting Britain’s ability to strike trade deals with other countries. A week of frenzied diplomatic activity will see the prime minister’s key Brexit adviser, Olly Robbins, head to Brussels on Monday, with the Brexit secretary, Dominic Raab, holding talks there on Thursday. An impasse over how to keep the Irish border open after Brexit remains, with much riding on whether May can give ground while retaining the support of Northern Irish DUP MPs. Jean-Claude Juncker, the president of the European Commission, talked up the chances of a deal on Saturday, saying he had “reason to think the rapprochement potential between both sides has increased in recent days”. However, the EU is expected to unveil its vision for a future agreement with the UK on Wednesday that falls short of May’s demand for “frictionless trade” – a major blow to UK exporters, who have warned any disruption will hit the productivity of their UK plants. Macron’s administration has been attempting to lure financial services staff and companies based in London for some time. Industry insiders said his dinner for car executives, held to coincide with the Paris motor show, was an attempt to make the case for France as a manufacturing location as companies decide where to build a new generation of electric cars.
Europe is closing a trading loophole that banks were relying to cope with Brexit -- The European Central Bank reportedly wants to crack down on a practice that many in the City believe would have helped London retain its European financial crown after Brexit.The ECB has written to major financial institutions to urge them to decrease their reliance on the use of the so-called "back-to-back" booking of trades and loans, according to a report in the Financial Times on Monday.The process effectively sees banks and other institutions carry out business in one market, but book that activity in another. For example, a bank might carry out a piece of business in Paris, but transact it in London.Many financial institutions have reportedly been planning on using back-to-back booking as a means of continuing to centralize many of their European activities in London even after the UK loses its financial "passporting" rights during Brexit.The ECB, however, appears to be pouring cold water on these plans. The FT's report suggests that the ECB will give financial institutions until 2022 to "limit their reliance" on the use of the practice.This hard stance on back-to-back trades from the ECB, which is now the ultimate arbiter of European banking regulations, seems to be at odds with the words of Andrea Enria, the head of the European Banking Authority.Banks "may use back-to-back transactions or intragroup transactions to transfer a part of the risks to a non-EU-EEA entity,"Enria said in an interview with the FT in September, adding that there would be "no ban" on back-to-back booking.The ECB's apparent clampdown on back-to-back booking could be bad news for major financial institutions that were planning on using the system as a means of keeping large sections of their EU business in operation from the UK after Brexit, and could increase the number of staff banks need to move from London.
Brexit: closer to the mainstream - I really don't feel inclined to take the bait on the current speculation. Rumours abound and you can have any outcome you like – ranging from a deal within weeks to crashing out whenever you like.The BBC version is quite entertaining, with "top EU officials" expressing optimism that a deal can be struck by the end of the year. We then have Juncker saying that the chance of a deal has increased in the last few days and agreement could be reached by November. Tusk, on the other hand, is looking to the end of 2018, while Varadkar says there is still "a fair bit of work to be done".Just to keep us entertained, though, Saturday's Times wanted us to know that the EU was set to reject Theresa May's plan for frictionless post-Brexit trade. I've lost track of what that plan is, but Sabine Weyand, Barnier's deputy has told a meeting of EU ambassadors: "Things have started moving. We are ready to do whatever we can to bring this to a close".Mirroring Varadkar 's concern, however, another EU figure has cautioned that new backstop proposals, tabled informally by the government this week, raised "fundamental issues" that required work on both sides. There is no chance of breaking through this noise. The players will act out their allotted parts, the media will report what they are told, and the merry-go-round will go round and round. And, in the unlikely event that the EU and the UK negotiating teams have already stitched up a deal, we will be told all about it in due course. Meanwhile, the Sunday newspapers are all over the place, illustrating the febrile nature of current developments. The Telegraph is taking an upbeat line, with the claim that "leading Brexiteers" have backed a package of concessions to help unlock a Canada-style trade deal with Brussels. Senior members of the ERG, including Iain Duncan Smith and Jacob Rees-Mogg are saying that they would support EU officials being stationed at UK ports after Brexit if it would help break the impasse with Brussels. They also suggest that they would support the Government enforcing EU rules on goods exported to the bloc by firms in this country. By contrast, the Sunday Times reports that these self-same ERG members have issued a last-ditch threat to vote down the budget and destroy the government unless Mrs May takes a tougher line with Brussels.
Brexit Crunch: Is the EU Trying to Save the UK from Itself? Is That Even Possible? -- Yves Smith - The UK press is all over the map on the state of Brexit. That makes making sense of things even harder than usual.At a minimum, it show that the EU’s thumping of May at last month’s Salzburg conference has led to an uptick in activity, as the EU27 leaders set an earlier deadline for the UK to serve up something realistic than the UK had previously thought it had (October versus November).But it’s far from clear that all the thrashing around and messaging amounts to progress. As we’ll discuss, some press reports claim the EU is showing more flexibility, but the changes appear to be almost entirely cosmetic. If so, it would represent a cynical calculation that MPs are so illiterate about technical details that adept repackaging will get the dog to eat the dog food. Another thing to keep in mind is that negotiators are always making progress until a deal is dead. The appearance of momentum can create actual momentum, or at least buy time. But here, time is running out, so the question is whether either side has made enough of a shift so as to allow for a breakthough. One thing that may have happened, and again this is speculative, is that more key players in the EU are coming to realize that a crash out will inflict a lot of damage on the EU. A transition period is actually much more beneficial to the EU than the UK. It would not only allow the EU more time to prepare, but also enable it to better pick the UK clean of personnel and business activities that can move to the Continent in relatively short order. By contrast (and not enough people in the UK appear to have worked this out), the UK will crash out with respect to the EU in either March 2019 or the end of December 2020. There’s no way the UK will have completed a trade deal with the EU by then, unless it accedes to every EU demand. Recall that the comparatively uncomplicated Canada trade agreement took seven years to negotiate and another year to obtain provisional approval. And Richard North points out another impediment to negotiations: “….the Commission has to be re-appointed next year and, after Brexit, it will not be fully in operation until the following November.” Now there are still some important advantages to securing a transition agreement, and they may be mainly political (who wants to be caught holding that bag?) but the differences may not be as significant for the EU as the UK. The UK will wind up having the dislocations somewhat spread out, first having to contend with falling out of all the trade deals with third countries that it now has through the EU in March 2019, and then losing its “single market” status with the EU at the end of 2020. But will the UK also be so preoccupied with trying to stitch up deals with the rest of the world that it loses its already not great focus on what to do with the EU?
Brexit: internalizing the issue Reporting of the key issue of our times gets more bizarre by the day. The latest contribution to the cacophony is the Telegraph, telling us that Ministers are in talks with as many as 25 Labour MPs "to force through Theresa May's Chequers Brexit deal". That approaches are being made to Labour MPs is not news, but the idea that attempts to sell them the Chequers deal confounds recent indications that the prime minister is preparing to roll out "Chequers II", with enough concessions to allow the Commission to conclude a withdrawal agreement. If we are looking at such a new deal, then it cannot be the case that anyone is attempting to convince Labour MPs of the merits of the old deal. And, even if Ministers succeeded in such a task, it would be to no avail. Chequers, as such, will never come to parliament for approval because it will never form the basis of a deal that can be accepted by Brussels. That should consign the Telegraph story to the dustbin now piled high with incoherent speculation, joining the steady flow of reports which are struggling – and failing - to bring sense to Brexit. Here, there is no shame or weakness in conceding that one doesn't have the first idea of what is going on. When the situation is in flux, when there are no official statements to work on, and the key players are staying schtum, those who claim to have an inside track (not that many do) are simply deluding themselves. Interestingly, according to the Guardian (which you can take or leave, according to your own preferences), Brexit is not even on the agenda for the upcoming cabinet meeting, scheduled for this week. Discussion, we are told, will be dominated by preparations for the Budget. This, of course, could mean anything. At one extreme, it could signify that HMG is engaged in talks so secret and so sensitive that even (or especially) cabinet ministers cannot be told about them. Alternatively, it might be possible that the government is so devoid of ideas, with the talks so lacking in progress, that there is simply nothing to report.
Brexit Derivatives Risk: Did the City Overplay Its £38 Trillion Hand? -- Yves Smith - It’s not pretty seeing members of the financial services industry in a tizzy over the difficulties and risks of moving £38 trillion in notional amount of derivatives agreements to which EU members are a party, out of the London clearinghouse that dominates interest rate swaps, including euro-denominated ones, to someplace else. Provisions that made it seamless for EU denizens to conduct business happily in the City go poof in a crash out. As we’ll discuss in short order, this does look like it will be quite a mess, and IMHO an unnecessary mess. This process is operationally taxing and how to do it is being sorted out at the 11th hours. At a very simplified level, first, both parties to the trade will have to agree to the novation. Second, it will be impossible to assure that the termination of the first contract and the creation of the replacement contract elsewhere will be on identical terms. Prices move and there can even be small price difference between different venues at the same time. So how do you prevent one party from profiting unfairly (whether by accident or design) from this type of mismatch? A letter to the Financial Times’ editor by Scott O’Malia, Chief Executive, International Swaps and Derivatives Association, outlines the issues: Philip Stafford, in his Tail Risk column of June 28, correctly points out that existing derivatives contracts between UK and EU entities will not instantly become void once Brexit occurs. Firms will be able to carry out contractual obligations already agreed on cross-border contracts, like payments and settlements. But many other critical actions that take place during the life of a derivatives trade will be disrupted. These so-called lifecycle events include material amendments to contractual terms, the rolling over of trades and trade compression. These occur on a daily basis and are vital to the efficient functioning of the derivatives market. In fact, some — like trade compression — are important risk management techniques required by EU regulation. Firms need to be authorised in the UK and EU to conduct these activities, but may no longer have the necessary permissions in the other jurisdiction after Brexit. That means a UK-domiciled firm would no longer be able to perform these lifecycle events on existing contracts with EU counterparties, and vice versa. Without action by both EU and UK legislators, the only way these legacy contracts could continue as before would be to transfer them to a locally authorised entity. Hopefully readers who are up on the specialist derivatives press or follow regulatory updates can fill in more detail, but from what I have inferred from occasional stories in the Financial Times, the late action on derivatives has at least something, and perhaps a lot, to do with it having become a political football. Recall that the morning after the Brexit vote, banks started looking into, and even in some cases applying, for licenses in places like Ireland so as to be able to set up or expand operations in the EU27. And at least one Financial Times reader, in a June 2018 comment, claimed that some banks were already on top of this issue:
U.K. Plays Down Talk of Brexit Breakthrough - The U.K. hinted that a breakthrough in Brexit talks may not be that imminent, as it insisted the European Union must make the next move on what Britain’s future ties with the bloc will look like.Brexit Secretary Dominic Raab had been expected to go to Brussels this week, but government spokesman James Slack declined to confirm he would. He also said the government would “in due course” set out its proposal for the post-Brexit border with Ireland -- a key sticking points in talks.“There is a difference between people talking optimistically about a deal and a deal being done,” Slack told reporters in London on Monday. “There can be no withdrawal deal without a precise future framework.”The U.K is working hard toward getting a deal in the fall, said Slack. There’s no timetable for the government to present its revised plan to the EU, he said.
Theresa May warns EU that Britain won’t sign up to a £39billion ‘blind Brexit’ deal – as PM demands any future trading is clearly spelled out -- Theresa May last night warned she will not sign a £39billion Brexit divorce cheque unless the EU resolves ‘big issues’ on future trade links. Downing Street played down the prospect of a breakthrough at next week’s Brussels summit, saying there would be no deal without ‘movement on the EU’s side’. And it dismissed the idea that Mrs May could sign up to a ‘blind Brexit’ – saying the terms of a future trading partnership would have to be spelled out in ‘precise’ detail. After months of stalling, senior EU figures have made positive noises about the summit, described by EU president Donald Tusk as the ‘moment of truth’. As the lights came up at a summit, Mr Juncker swung his arms around and grinned broadly After months of stalling, senior EU figures have made positive noises about the summit, described by EU president Donald Tusk as the ‘moment of truth’. Ireland’s deputy prime minister, Simon Coveney, claimed at the weekend that a deal was 90 per cent there. But Mrs May has privately warned allies she does not expect to strike a deal until next month at the earliest. Her official spokesman said she would not sign off on the ‘withdrawal agreement’ – which includes a £39billion ‘divorce’ payment – until the EU agrees the terms of a future trade deal. This appears designed to allay the concerns of some MPs that EU leaders may agree a ‘blind Brexit’. That would mean Parliament being asked to approve the withdrawal agreement – including guaranteed rights for expats and a new arrangement for the Irish border – with no clear idea of future EU-UK relations in areas such as trade and security. Asked about the positive noises emerging from the EU, Mrs May’s spokesman said: ‘There is a difference between people talking optimistically about a deal, and a deal – including both a withdrawal agreement and a future framework – actually being agreed. ‘There remain big issues to resolve and, as the Prime Minister has said, this will require movement on the EU’s side. There can be no withdrawal agreement without a precise future framework.’
Downing Street says there will be no Brexit deal at next week’s summit unless EU leaders concede ‘major ground’ - The SunEurope’s leaders have spent days talking up the chances of an agreement at theBrussels meeting next week, which they have dubbed the “moment of truth”, in a bid to bounce Britian.Theresa May has said that she will walk away from next weeks summit if the EU doesn't concede 'major ground'But in a surprise move yesterday with just nine to go, the angry PM threw talks into go-slow mode and accused the EU of being the block.“Big issues” still remain to be resolved and that still “requires movement on the EU side”, No10 insisted. Mrs May is holding out for “a precise future framework” from Brussels over the shape of the UK-EU trade deal to avoid a ‘blind Brexit’.It has emerged that EU negotiators want to fob her off with a brief list of aspirations as short as three pages long.Brexit Secretary Dominic Raab has had his visit to Brussels suspended by the PM until the EU agrees to budgeA second sticking point is the EU’s failure to accept a UK wide customs solution as abackstop to keep the Irish border open.And until that changes, The Sun understands No10 will refuse to put forward a fresh proposal on regulations to seal agreement on the backstop.In a move that will infuriate Brussels, the PM’s official spokesman also refused to commit to forging a deal at the October summit, only pledging to strike one “this autumn”.The spokesman added: “There is a difference between people talking optimistically about a deal, and a deal - including a withdrawal deal and a future framework - actually being agreed”.
Brexit Chaos --Yves Smith - If you can make sense of the Brexit press you are a better man (metaphorically speaking) than I am. The rumors over the last week were hopeful but bizarrely non-convergent, with verbal mini-bouquets from Donald Tusk and Jean-Claude Junkcer matched by cheery rumors from unnamed sources who supposedly knew what was up on the UK side. The EU was supposedly making concessions. Wellie, those concessions might simply mean the EU would let the UK have a pretty-close-to-content-free “future relationship” section. Theresa May was very secretly working on Chequers II. And the DUP’s Arlene Foster was wobbling just a little bit. That was two days ago. Bloomberg reported, with no specifics, that the UK indicated a breakthrough was not nigh. Then the Sun said May was digging in her heels and demanding the EU make major concessions and give “a precise Brexit framework.” And she insisted the EU “accept a UK wide customs solution as a backstop to keep the Irish border open” and said she won’t propose anything else. Today, the Financial Times, consistent with earlier reports, said that as many as 30 Labour MPs might join the Tories to back May’s Brexit agreement….assuming she gets one. This story is silent on whether the Tories are whipping Labour members or wether the Labour MPs have concluded on their own that they don’t want to vote for a no deal outcome. If they are being solicited by No. 10, that would suggest that May is not on to Chequers II, since it would be exceptionally bad form to give Labour members an information lead over Tories, and you’d expect to see some leaks about what Chequers II might be if May were trying to get backing for it.Consistent with the talks gridlocking again, Barnier put off releasing a report scheduled for October 10.According to RTE (hat tip PlutoniumKun): Senior officials have played down the prospects of the EU’s chief negotiator, Michel Barnier, bringing forward a text to be approved by the European Commission at its weekly meeting…It had been widely expected that the commission would adopt its version of that blueprint, known as the Joint Political Declaration, on Wednesday….However, officials have stressed that Mr Barnier would be more likely to produce an “annotated” document, containing little more than headings, and even then that may not be formally adopted by the College of Commissioners on Wednesday… A number of high-ranking sources in Brussels have, however, played down the optimism that was expressed over the weekend that a deal was imminent. Oh and Arlene Foster had a thing or two more to say about the Irish border matter, and the DUP’s old red lines are very much in place.
‘It’s all kicking off’ - "It's all kicking off," an MP texts tonight. It's not surprising given what's at stake, and that we are seven days away from a critical EU summit. But it's not a drama that can easily be dismissed. The government's backers the DUP are threatening to pull support if the PM doesn't bend to their position on Brexit. Don't be in any doubt, that could in theory mean the government collapsing because they can't get anything done. Rather than pulling back from the threat, the DUP will in the next 24 hours be trying to turn the pressure up even further. And to make the threats real the small Northern Irish party has already tonight decided not to back the government in a vote in the Commons - a reminder that the government's vulnerability in the Commons is real, it's not some theoretical threat. It's a warning - not an obscure abstention on a little-noticed piece of legislation. And remember, remember December. It was the DUP (and some very strong Brexiteer voices too) who sank the prime minister's original Brussels agreement, humiliating her before she snatched victory from the jaws of defeat a few days later. As we enter the next phase of this drama, catch up on the last big denouement here. In Brussels, contrary to some reports, there has not been some sudden breakthrough on the clashes across the negotiating table. Well-placed sources on both sides tell me that while the "show is on the road", and officials have been "working well" in the last three days, neither Team Barnier nor Team Robbins are buckling and bending. So, it follows, neither Team Barnier nor Team Robbins can claim victory, and more importantly, neither Team Barnier nor Team Robbins can say at this moment with complete confidence that the progress they hope for to allow Theresa May to move closer to a Brexit deal has been achieved.
DUP threatening to bring down May’s government if Brexit red lines breached Sammy Wilson last night warned Theresa May that the DUP would bring her government down if she leaves Northern Ireland “languishing in the stifling embrace of the EU”. The 10 DUP MPs who prop up the Conservative government are preparing to vote against Mrs May’s Budget if the Prime Minister breaks their Brexit red lines. The radical move is one of the options being considered by the DUP if attempts to nail down a deal with Brussels include any proposals that would leave Northern Ireland being treated differently to the rest of the UK, it is understood. In a move seen by some as a warning shot, DUP MPs failed to back the Government in voting against a Labour amendment to an Agriculture Bill outlining post-Brexit reforms last night. Despite their abstention, it was still defeated by 59 votes. But losing DUP support in the Commons would mean possible defeat for the Government on the Budget and a no-confidence vote. And in a Daily Telegraph article, DUP MP Sammy Wilson warned: “If the Government decides in the face of EU belligerence to cut and run and leave part of the UK languishing in the stifling embrace of the EU, then that would be totally unacceptable to us and many others in the House of Commons. “It would have implications not just for Brexit legislation — 50% of which would not have passed without DUP support — but also for the Budget, welfare reform and other domestic legislation.”
EU considering dual certification for goods produced in NI - European Union officials are considering a dual certification system so that goods produced in Northern Ireland will be able to circulate freely in both the EU and UK markets, RTÉ News understands. Another proposal is that goods moving from Britain to Northern Ireland could be checked at Dublin Port for EU customs and regulatory compliance before continuing on northwards, as a way of limiting checks and controls at British ports. Both ideas are among a range of possibilities that the EU Task Force is considering as part of the ongoing effort to "de-dramatise" the backstop. If the Irish backstop to avoid a hard border on the island of Ireland comes into effect, then customs and regulatory checks would have to be carried out on goods moving from Britain to Northern Ireland, because those goods would then be able to circulate freely throughout the EU’s single market, due to the lack of land border. Sources close to the negotiations have confirmed that Task Force officials have been exploring such ideas as they redraft the Irish Protocol within the Withdrawal Agreement. Under a dual certification scheme, goods produced in Northern Ireland would be deemed compliant with both EU and UK standards, so that they could move freely through the island of Ireland and beyond to the single market, and throughout the UK. The scheme could be implemented by private operators and would be similar to the CE marking that affirms that goods circulating throughout the European Economic Area comply with high safety, health and environmental protection standards.
Theresa May’s Brexit backstop breakthrough - I am hearing that the PM’s Brexit advisor Olly Robbins has made meaningful progress in talks with the EU’s negotiator Michel Barnier on that contentious “backstop”, or insurance policy to keep open the border between Northern Ireland and the Republic of Ireland pending agreement on a permanent long-term trading relationship that achieves the same. Depending on who I talk with, there’s either been a breakthrough or things are moving in the right direction. My sense therefore is that it would be premature to crack open the champagne bottles, but maybe a half-bottle should be on ice. The most important development would be that the EU seems close to agreeing that the backstop would apply to the whole UK and not just to Northern Ireland, as it originally demanded – or at least it would apply to the whole UK for customs. That would represent a big victory for the PM – although there is a nightmarish tinge for her, because her Brexiter colleagues see this backstop as a backdoor to keep the UK in the customs union forever and thus prohibited from doing trade deals with other countries. Under pressure from May, via Robbins, Barnier is undertaking to find a way to convincingly present the backstop as temporary – even though he will never actually agree a legally binding end date to it.
Brexit: grilled pain A couple of days ago, I was remarking that the media coverage of the latest instalment of the Brexit soap opera didn't make sense. It doesn't make much more sense now, but at least we have another speech from Michel Barnier to work on. Much of what he said at the closing session of Eurochambre's European Parliament of Enterprises was familiar ground. But the fact that much of what he had to offer was unchanged told us something. The Commission in large areas of its work has reached the end of the road. There have been some concessions but there are to be no more. The crunch is what it has always been. The UK wants to leave the Single Market and the Customs Union and that means that there must be checks of goods between the EU and the UK. That is unarguable and is not up for discussion. Interestingly, Barnier lists customs and VAT checks. I may be wrong but I cannot recall him ever having specifically referred to VAT checks. I wonder if its dawning on the Commission that cross-border VAT issues could end up being as big a problem as the rest combined. Anyhow, Barnier then addresses the crucial question. Both the EU and the UK are agreed that checks will not take place at the border between Northern Ireland and Ireland, so the matter to be resolved is where those checks will take place. On offer are some administrative devices to make the checks in the least intrusive way possible, but there is no compromise on the fundamental point that checks must take place. And the sticking point is going to be what Barnier calls "health and phytosanitary checks" for animals and products of animal origin.
Brexit and the Age of Incoherence --Sometimes you just have to stand back from what is going on and reflect on it. I am trying to do a bit of that right now.It is not greatly encouraging. Such reflection must be spiced and informed by reality, of course. This morning the news that the government plans that a second motorway is to be used as a lorry park in the event of Customs chaos after 29 March adds that input. That I actually had to check where the motorway in question was did not matter. What did was that we have reached the stage where the government appears to be responsible by planning for economic chaos that is entirely of its own creation. And, despite the obvious absurdity of that situation, this government still seems to have as much popular support as the Opposition, at least in England.We live in surreal times. The danger is we have become used to them. But worse, we live in a time when government has ceased to have any direction at all. I say that because the reality is that no one really knows what Brexit is actually about. We can speculate endlessly as to why people voted to leave. The truth is every answer may be true. And so none is collectively. But we are doing it anyway. Because apparently that is what democracy demanded, even though we do not know why.Hence, bluntly, the mess. The Tories can’t agree. The Cabinet is hopelessly divided – with no sign of any solution.Labour still has at least four Policy options it might adopt and no one seems clear which might prevail.Only the SNP of the major groupings in Parliament seems to know what it might do. And no one is paying them much attention.In the meantime, chaos ensues because no one ever knew what Brexit was about and no one still does, but we are doing it anyway.
Theresa May abandons pledge for ‘time limit’ on UK’s stay in customs union as part of Brexit deal Theresa May has abandoned her pledge that a deal to keep the UK in the EU customs territory must be “time-limited”, paving the way for likely cabinet resignations. The prime minister’s spokeswoman refused – four times – to say the “backstop” agreement, to avoid a hard border in Ireland, would have a strict end date, the assurance she set out four months ago. Instead, No 10 said only that it must be “temporary”, a much looser word that - pro-Brexit ministers fear – will leave the UK locked into an effective customs union for many years to come. The Independent revealed today thatAndrea Leadsom, the Commons leader, is prepared to resign if the compromise is made, with other cabinet ministers believed to be ready to follow her. Asked if the reworked customs proposals, being negotiated in Brussels, would have “an end date”, Ms May’s spokeswoman said only that it “would be temporary”.She attempted to head off a backlash by adding: “The prime minister would never agree to a deal which could trap the UK in a backstop permanently.”
Tory Commons leader Andrea Leadsom ready to quit over Theresa May’s Brexit plans - Tory Commons leader Andrea Leadsom is prepared to resign if Theresa May compromises further on her Brexit plan, The Independent understands. The cabinet member’s decision to consider her future follows a meeting of senior government ministers on Thursday evening, when the prime minister revealed some details of her new proposals to break the deadlock over the Irish border. Ms Leadsom, an arch-Brexiteer, is understood to be ready to leave the cabinet if Ms May backs any plan that could keep the UK in the EU’s customs territory permanently and is currently “considering discussions that have taken place”. It came as the prime minister held a meeting with senior members of the government, including Jeremy Hunt, the foreign secretary, and Sajid Javid, the home secretary. She was reportedly warned she would face a backlash unless she ensured Britain did not sign up indefinitely to the EU’s “backstop”.Since then, various reports have also emerged that Esther McVey, the work and pensions secretary, and Penny Mordaunt, the international development secretary, neither of whom attended the meeting, are also considering their positions.
Revealed: secret Brexit plans to appease DUP with transition extension Guardian. Secret plans to allow an extension of the transition period in the Brexit withdrawal agreement could result in the UK living under all EU rules well beyond the 21 months so far negotiated, the Guardian can reveal. The expected offer of an extension is designed to convince Arlene Foster, the leader of the Democratic Unionist party, that the “backstop” plan to avoid the creation of a hard border on the island of Ireland will never come into force. A longer transition period would mean the whole of the country would be locked into a prolonged period of what EU diplomats have previously described as a state of “vassalage”, with the House of Commons being forced to accept Brussels regulations without having any say on them. The revelation came as EU ambassadors were informed at a meeting on Friday evening that, following further concessions by the UK, good progress was being made on a Brexit deal in the negotiations and results could be made public as early as Monday should extra ground be made on the Irish border issue over the weekend. Sabine Weyand, the EU’s deputy chief negotiator, told the 27 member states that the state of play would be assessed by the negotiating teams on Sunday evening. EU officials remain wary, however, that developments in the UK could still derail the deal. In current plans, the backstop, under which the whole of the UK would stay in a customs union while Northern Ireland alone effectively stayed in the single market, would be enacted in December 2020 if a bespoke technological solution or trade deal could not be reached by then. Foster has insisted she will not accept any Brexit deal under which Northern Ireland is treated differently to the rest of the UK.
Government claims it will lose dozens of trade deals in ‘no deal’ Brexit — Britain will lose access to dozens of trade agreements if it crashes out of the EU without a deal in March next year, the U.K. government confirmed in a “no-deal” planning notice published Friday.The paper, drawn up by the Department for International Trade, says “around 40 free trade agreements with over 70 countries” will no longer apply to the U.K. if it leaves the European Union without a withdrawal agreement.The paper says these free-trade deals cover around 12 percent of the U.K.’s total trade currently.It is part of a batch of 28 documents published Friday afternoon covering a wide range of areas including the status of existing EU free-trade agreements, international sanctions policy, chemicals, rail safety standards, and commercial fishing. They take the total number of technical notices and other no-deal documents published to 105.With fewer than six months to go until the U.K.’s planned departure date of March 29, 2019, a no-deal outcome remains a significant risk, with a final deal with Brussels on the Withdrawal Agreement yet to be struck, and deep political divisions within the U.K. parliament threatening the ratification process that would follow any U.K.-EU Brexit deal.“We have now published over 100 technical notices, giving individuals, businesses, public bodies and NGOs information and guidance in the unlikely event of no deal,” said Dominic Raab, secretary of state for exiting the EU.“Securing a good deal with our EU partners remains our top priority. But, if the EU doesn’t match the ambition and pragmatism we’ve showed, we have the plans in place to avoid, mitigate or manage the risk of no deal — and make a success of Brexit. ”
UK would lose rebate if it stayed in EU - The EU’s Budget Commissioner has confirmed that Britain would lose its budget rebate in the highly unlikely scenario that the UK stays in the EU. Gunther Oettinger made it clear that the UK would not keep the “mother of all rebates” if it held a second referendum and decided to stay in the EU:“Even if, in the improbable but pleasant case if the UK were to Remain… the gradual exit from the rebate would still be kept. I think that it is something that is no longer appropriate…”Spendthrift Eurocrats have had their sights set on the UK’s rebate ever since it was created – losing it would mean over £5 billion more of UK taxpayers’ money going to the EU every year. Vote Leave always insisted that the rebate should be included in the UK’s contributions as it was not a fixed entity and was continuously at risk of being demanded back by the EU. They have been proved right…
DUP leader says would prefer no Brexit deal to ‘annexation’ of Northern Ireland (Reuters) - The head of the Northern Irish party that props up Prime Minister Theresa May’s government said on Saturday she would prefer no Brexit deal to a bad deal, saying the current proposal would permanently annex Northern Ireland from the rest of the United Kingdom. Writing in the Belfast Telegraph newspaper, Arlene Foster also said she wanted a deal that would work for the Republic of Ireland and said she would travel to Dublin for talks on Monday
University ‘dual nationality’ plan for Brexit - A top UK university is planning a "unique" post-Brexit arrangement with a German university in which staff will be appointed jointly by both institutions, with the aim of keeping access to EU research funding for UK academics. Imperial College London, ranked as one of the top 10 universities in the world, has signed a partnership with the Technical University of Munich. The agreement will create academic posts jointly recruited and shared by the UK and German universities, with these staff having a form of academic dual nationality. Both universities specialise in science and technology and the shared research will be in areas such as computer science, medical science, bioengineering, physics and aerospace. The intention is for these "shared" academics - whether German or from the UK, and whether based in London or Munich - to continue to be eligible for EU research projects, through the Technical University of Munich's access to EU funding. The German university says it will "send a strong signal against the dangers of new barriers in the European scientific area". University leaders in the UK have been worried about losing access to research networks which are often organised and funded on an international basis. Imperial College and the Technical University of Munich have previously worked together on 21 European-funded research projects. Image caption The university in Munich will recruit staff in a joint process with Imperial in London The top four biggest individual recipients of EU research cash are all from the UK - Oxford, Cambridge, University College London and Imperial College. In the current EU research funding round, Imperial has received 161m euros (£141m). But UK universities are concerned that after Brexit they will not be able to join the next even bigger research round, worth about 100 billion euro (£88bn).
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