Friday, June 24, 2016

Today's Links

1--Here’s What Fueled the Rally in Stocks since February

A huge force that’s going to fizzle.

We have another post-Financial Crisis record on our hands!
Share buybacks by S&P 500 companies during the three-month period of February through April soared 15.1% from a year ago, to $166.3 billion, according to FactSet, the highest since Q3 2007, which had set an absolute record of $178.5 billion, just as the Financial Crisis was cracking the glossy veneer of the banks....

The tech sector, whose revenues have been getting hammered by reality, was the biggest spender at $34.4 billion.
The healthcare sector was second. When insurers and Big Pharma aren’t busy buying each other in the ongoing mega-merger oligopoly or monopoly boom, they’re buying their own shares. Buybacks over the 3-month period soared to $33.2 billion, an all-time record for the sector, blowing away its prior record of $24.5 billion...

This table shows the top 10 buyback-spenders in the February-through-April period, along with the year-over-year reduction in shares outstanding, and the 1-year total return (including dividends) of the shares. Note the losers (red):

These 10 companies blew $51.6 billion in three months to prop up their own shares, much of it with borrowed money, rather than investing it in productive activities, preferably in the US, to move the economy forward. But no....

For the trailing 12 months, buybacks rose 8.7% to $602.8 billion!
Alas, earnings of S&P 500 companies have been falling on a trailing 12-months basis since Q4 2014, six quarters in a row! The result of soaring buybacks and slumping earnings? 72.9% of earnings were plowed into buybacks!....

At this rate of slumping earnings and soaring buybacks, companies will soon spend more on buybacks than their income.
But wait… that’s already happening: 146 companies spent more on buybacks during the trailing 12 months than they booked in earnings. Among these heroes: Target, Starbucks, McDonald’s, Microsoft, Oracle, Salesforce….....

Companies can borrow at ludicrously low rates (and even Apple has issued bonds to fund buybacks) to spend this money on their own shares. Those billions spent don’t show up as an expense. They just increase indebtedness and eat up equity. Buybacks hollow out balance sheets

2--Brexit: The Crisis Begins

Brexit is a crippling blow to the neoliberal order of unfettered trade and capital flows, and citizens being reduced to being consumers who have to fend for themselves in markets, and worse, increasingly isolated worker who are at the mercy of capitalists who are ever more determined to reduce labor costs and hoard the benefits of productivity gains for themselves. Whether they recognize it or not, and we’ll find out over the coming months and years how well different Leave voters saw the choice they made, they have chosen a lower standard of living as a price worth paying for a hope of more control over their destinies. Sadly, these voters are likely to realize the first part of that equation rather than the second.

What happens next is very much in play. In a radical departure from a failed prime minister stepping down immediately, Cameron plans to remain for 90 days to sort out party leadership. That sounds like a misguided set of priorities, and could possibly serve as cover for a rearguard effort to extract some concessions from the EU and try to schedule another referendum. Even if that is part of the plan, it seems unlikely to succeed, given that Cameron got almost nothing from his pre-referendum negotiations to extract waivers, and the German insistence that the British must be made to suffer as much as possible for this vote pour decourager les autres...

The British government is likely to lose its AAA rating, which also means higher funding costs for its banks, since their borrowing rates are at a premium to the local currency risk-free rate. A recession is almost certain, since the UK exports services and imports goods and many of its imports don’t have ready substitutes, while the US and European banks will be doing everything they can to poach both British bankers and their clients, denting the UK balance of trade even more. Richard Smith also points out that a Brexit could imperil Ireland’s ability to operate as a tax haven. And that raises the issue that both Scotland and Ireland supported Remain. Is a UK breakup in the offing?

3--This was the day the British people defied their jailers

...the circumstances of the referendum were not ripe for victory. David Cameron only called it to hold his own party together; and once it was called, he decided to turn the British and global establishment against it. Out came the Treasury, the IMF, even the President of the United States to argue that Britain had to stay. This was textbook politics, how things used to be done – and it worked back in 1975 when the UK voted overwhelmingly on good advice to stay in the Common Market...

What happens now? We drink. We be happy. We sing a song. Then we piece back the country and get on with the great project of building the British century. We voted the right way because we’re a nation with a sense of destiny. The world is ours now. Go get it.

4-- Is the US Pursuing a Rogue Policy by Waging Undeclared War Against Russia?

5--Finally…….Trumps Puts The Wood To Hillary, Appeals To Sanders Supporters, Too

Together, she and Bill made $153 million giving speeches to lobbyists, CEOs, and foreign governments in the years since 2001,” Trump said. “They totally own her, and that will never change including if she ever became president, God help us.”
Clinton does not have the temperament, “or, as Bernie Sanders said, the judgment, to be president. She believes she is entitled to the office,” Trump said.
“Her campaign slogan is ‘I’m with her.’ You know what my response to that is? I’m with you: the American people,” Trump said to applause. “She thinks it’s all about her. I know it’s all about you — I know it’s all about making America Great Again for All Americans.”...

“Her server was easily hacked by foreign governments — perhaps even by her financial backers in Communist China, I’m sure they have it — putting all of America in danger,” Trump continued. “Then there are the 33,000 emails she deleted. While we may not know what is in those deleted emails, our enemies probably do. So they probably now have a blackmail file over someone who wants to be president of the United States. This fact alone disqualifies her from the presidency. We can’t hand over our government to someone whose deepest, darkest secrets may be in the hands of our enemies....

Finally, courtesy of The Hill, here is his appeal to Sanders supporters.
“We will never be able to fix a rigged system by counting on the same people who rigged it in the first place. The insiders wrote the rules of the game to keep themselves in power and in the money,” Trump said during a campaign speech  in New York.”That’s why we’re asking Bernie Sanders’ voters to join our movement: so together we can fix the system for all Americans. Importantly, this includes fixing all of our many disastrous trade deals. Because it’s not just the political system that’s rigged. It’s the whole economy.”
So can he actually convince Sanders supporters to go his way?
While presumptive Democratic nominee Hillary Clinton and other Democrats are confident that Sanders supporters will unite under the party’s roof, a new Bloomberg poll found that almost half of his supporters would not vote for Clinton, with 22 percent breaking for Trump.
This 22% number is downright shocking. I thought it would be something like 10% or less. If that figure is anywhere near accurate, Hillary is in real trouble.

6--The next recession is already here—and there isn't much the Fed can do

7--House Republicans Think the Fed Is In Conspiracy With the Rich: Are They Right?

8--Why Brexit Is Such a Threat to the New World Order

9--A few observations on the vote withdraw the UK from the EU:
  • IMO this election result was driven by elitist/Borg visions of a Europe and eventually a world re-organized; without countries that are more than  a sentimental memory, a fully globalized economy governed by the principle of comparative advantage accompanied by the inevitable poverty of those dispossessed of prosperity by capitalist magnates who revel in their opportunism,  a world in which the ancient ethnic nations of Europe are expected to accept inundations of people alien to their cultures who would inevitably and irreversibly make, for example, France into a different country.
  • Resistance to this set of ideas is variously described as "traditional xenophobia,"  and the "ideas of the ignorant, elderly and unsophisticated."  These are characterizations heard today in American Borgist media.  Christopher Dickey referred on the air today from Paris to the French as "the present residents of France."

  • This must be a great blow to Obama, the prophet and organizing force in his imagined coming world utopia.  For Hillary Clinton, not so much, she will "go with the flow,"  but Obama's vision of a world increasingly globalized under American hegemony (leadership) is badly damaged in its prospects by the English decision to leave the EU. 

Thursday, June 23, 2016

Today's Links

Today's Quote: "the hardships experienced by workers across Europe are an inescapable product of the economic policies enforced by the EU."

1---Why is the US government hiding the details about the Orlando Massacre?    Man claiming to be lover of Orlando shooter casts further doubt on “terror” claims

In an exclusive interview Tuesday with the Spanish language television network Univision, a man who identified himself only as Miguel and who appeared with his face and voice disguised said that Mateen had attacked the gay nightclub not as an act not of terrorism, but of “revenge.”
According to his account, Mateen was enraged over a sexual encounter with two Puerto Rican men he had met at the Pulse nightclub, one of whom, he said, later acknowledged that he was HIV positive. He described Mateen as “terrified” of becoming infected with the virus.....

There is a clear political purpose behind the media’s selective reporting. The aim is to support the narrative that Mateen acted as a “domestically radicalized” Islamist terrorist, inspired to violence by the Islamic State of Iraq and Syria (ISIS), rather than, as with the far more typical mass shooter in America, driven by mental illness, perceived grievances and the toxic social atmosphere that prevails in a country dominated by unending war and deepening inequality.

The massacre in Orlando is being harnessed to a drive by the US ruling establishment to escalate war abroad and political repression at home. The mass killing has coincided with demands by US generals for the dispatch of more American troops to Iraq as well as a call by some 50 State Department officials for the redirection of the US intervention in Syria to more directly target the Russian-backed government of President Bashar al-Assad.

Meanwhile, the US Senate Wednesday narrowly defeated legislation that would further empower the FBI to troll through the Internet browsing histories, emails and social media activity of American citizens without the necessity of securing a court order. The measure represents a significant expansion of the warrantless searches authorized under the Patriot Act, which require only an administrative subpoena, called a “National Security Letter” (NSL). Over the past decade, the FBI has issued some 300,000 such letters.

While supposedly not including access to the content of emails, the legislation in the Senate would allow the FBI to track the web sites viewed by citizens and determine how long they visited them, as well as the “to” and “from” lines of emails and location information garnered from IP addresses...

Those backing the legislation have invoked the Orlando attack as the pretext for the further shredding of constitutional protections against unreasonable searches and seizures.

2--The Left and the EU: Why Cling to This Reactionary Institution?

The Crushing of Greece

One word should be engraved on the minds of those who, despite all the evidence to the contrary, persist in believing that the EU is an inherently progressive body: ‘GREECE.’ What the EU did to Greece should have dispelled forever the fanciful idea that such an institution has as its fundamental aim the material welfare of ordinary Europeans. But such is the power of the delusional thinking which holds sway amongst the ‘liberal’ apologists for ‘internationalism’ that nothing it seems, not even the destruction of an entire country, the decimation of its industries, and the despoliation of its people, can shake their belief in the manifest virtues of the EU....

Greece illustrates the failings of an economic policy that is being implemented over the objections of the great majority of Europe’s citizens. Indeed, in its unwavering support for neoliberalism the EU represents nothing less than an attempt to perpetuate an economic model which advantages European businesses, whilst eroding the living standards of most Europeans. Particularly in the countries of the eurozone, democracy has been eviscerated by the adamant insistence of the EU on more cuts to government spending. The Growth and Stability Pact effectively prevents large-scale public spending on vital social services to alleviate the effects of a recession, limiting deficits to 3% of GDP. As part of this neoliberal model, national governments are also required each year to submit their budgets to the Commission for its approval, which has increasingly demanded that the rights of workers take second place to paying off the debts accumulated by the financial sector. Whilst the desperate scenes in Greece are an extreme case, high unemployment and chronic poverty have become fixed features of the eurozone, with the number of jobless in Spain, for example, amounting to over 20% of the workforce. Moreover, employers have been given the freedom to disregard the rights of their employees in a bid to raise productivity, sparking a series of labour revolts by workers driven to the edge of despair. In France, to cite the most recent instance, the much hated El-Khomri law, which seeks to increase the working week to 46 hours and is currently being contested by striking unions, was originally based on the recommendations of the Commission...

The creation of pan-European institutions that would foster the growth of a single European market, which would trade freely with US corporations, was made a condition of Marshall Aid by the American architects of the new economic order, who greeted every significant move in the direction of greater European unity with satisfaction. In the military sphere, membership of NATO, the armed alliance of states that the US established to further its imperialist interests, required Western European countries to devote a significant part of their budgets to military expenditure and maintain an armed truce with the Soviet Union and its Eastern European satellites, effectively dividing the Continent into two hostile camps, constantly teetering on the edge of nuclear war, for much of the latter half of the twentieth century.

The roots of the EU are therefore to be sought not in the sentimental desire for peace felt by leading statesmen in the wake of war, though this was undoubtedly a desire expressed by masses of ordinary people, but in the essential fact of the post-1945 world that the US displaced Europe as the centre of global power and influence. Power politics not pacifism explains why there has not been another war between the major European states. ...

NATO. This military organisation, formed in 1949 with the supposed aim of defending Western Europe against the USSR, has since the collapse of the Soviet Union more than doubled in size, with many of the new additions former Communist countries situated on Russia’s periphery, revealing its true character as an alliance that exists to extend the global reach of the US...

The briefest look, however, at the destructive polices that have been imposed on the countries of the eurozone, and the chaos that has ensued from imperialist meddling in foreign affairs, is enough to counter the baseless assertion, constantly repeated by those in the remain camp, that in opposing Brexit people will be voting for a worthy attempt to replace nationalist discords with a shared identity based on a commitment to democracy and human rights. The EU is not internationalist in any sense that a genuine member of the left would support. It exists to advance the interests of the business class as against workers, and in its zeal to enrich corporations at the expense of ordinary people it has succeeded in creating such disaffection with the political establishment that fascism, the very phenomenon the EU was in theory designed to prevent, has once more become a formidable force in countries languishing in the grip of high unemployment and low wages....

a reforming Labour government may well assume the reins of government in the very near future. If it takes power in the context of a vote to remain, however, such a government would face real obstacles to implementing its programme in the form of the capitalist safeguards against reform that the EU has established. It would not be able to nationalise the railways, despite the overwhelming support of the public, because the EU has made public ownership of the railways illegal. A Labour government would find it difficult to increase expenditure on the NHS and other much needed public services because of the strict economies that the EU pressures member states to adopt by limiting the budget deficit to 3% of GDP. Furthermore, a social-democratic government of the kind that Corbyn could potentially head, with its commitment to decoupling the economy from its damaging dependence on financial services, would soon discover that competition rules forbid us from subsidising our manufacturing sector or even protecting our steel industry from Chinese dumping through raising tariffs on imports. In short, any government that seeks to overturn the neoliberal consensus will find that, within the confines of the EU, even limited reforms toward that end are a practical impossibility, liable to be struck down by the European Court of Justice as incompatible with EU law at any time....

As others have documented, most of the rights that are invoked by the mainstream left as a reason to vote remain were already in place when we joined the EEC in 1973, and they owe not to a beneficent bureaucracy of Eurocrats but to Britain’s working classes, who won these rights over the course of many years and after a series of hard-fought struggles with the capitalist class. Likewise, the retention of these rights will depend not on the good-will of a remote bureaucracy, which is actively undermining those same rights elsewhere, but on the determination of workers to band together in defence of their standard of living...

supporters of remain seem oblivious to the fact that the whole purpose of enshrining in various treaties the neoliberal principles on which the EU rests, treaties which once concluded cannot be repealed except through the agreement of all 28 member states, is to ensure that such weighty questions are forever removed from the sphere of democratic debate. The electorate of a particular country can vote their government out, but they cannot revoke the set of laws that this government agreed to, nor exercise any control over the unappointed Commission which is granted broad discretion to implement these laws.

3-- GOP Business Leaders Are Backing Clinton

More than 50 business executives, including several longtime Republicans, will endorse Hillary Clinton for president on Thursday as her campaign seeks to capitalize on discomfort with Republican Donald Trump.

They include Jim Cicconi, senior executive vice president at AT&T Services Inc., and Dan Akerson, who held top positions at General Motors Co. and Nextel Communications Inc. A Clinton campaign aide provided the list and said it would be distributed widely on Thursday.

The endorsements reflect continuing unease among some Republicans with the presumptive Republican presidential nominee despite his romp through the primary contest.

Mr. Cicconi, who worked in the White House for Presidents Ronald Reagan and George H.W. Bush, said he has backed every GOP presidential candidate since 1976. “But this year I think it’s vital to put our country’s well being ahead of party,” he said in a statement provided by the campaign. “Hillary Clinton is experienced, qualified, and will make a fine president. The alternative, I fear, would set our nation on a very dark path.”...

On Wednesday, Brent Scowcroft, a national security adviser for two Republican presidents, endorsed Mrs. Clinton, saying her experience, judgment and understanding of the world prepare her for the job of commander in chief. His support comes a week after Richard Armitage, another longtime Republican foreign-policy hand, said he would back Mrs. Clinton if, as expected, Mr. Trump is the GOP nominee.

4--US wages and jobs decline, inequality rises

The report found that income inequality declined in every state from 1928 until 1979. From 1979 through 2013, by contrast, economic inequality has risen in every state, and in many states it has now reached the level of 1928, the height of the stock market boom before the Great Depression.

Under the Obama administration, economic inequality has grown worse, and the growth is accelerating. In 15 states, the top 1 percent captured all of the income growth between 2009 and 2013. In 10 of these, the top 1 percent captured more than 100 percent of all income growth, with the result that incomes of the bottom 99 percent actually fell....

For the US as a whole, the top 1 percent captured 85.1 percent of all income growth for that five-year period. The average income of the top 1 percent grew 17.4 percent from 2009 to 2013, while the average income of the bottom 99 percent grew only 0.7 percent. The result is that by 2013, the average income of the top 1 percent was 25.3 times the average for the bottom 99 percent.

5--Brexit’s Real Impact Would Be Gradual and Global

Brexit would be the starkest repudiation yet of the postwar consensus favoring ever-deeper global integration. That consensus is already fraying in the face of growing protectionism and anti-immigrant sentiment world-wide. A further unraveling would undermine global growth prospects already clouded by aging populations and miserable productivity....

Indeed, it is rare for any country to deliberately withdraw from a trade pact except to join a better one. Since the World Trade Organization’s inception in 1948 (as the General Agreement on Tariffs and Trade), 162 countries have joined and none have left....

The soft underbelly of this economic success is its fragile political legitimacy. Brexit advocates have long chafed at the EU’s interference in British affairs. Yet international treaties like the EU and the WTO are by their nature undemocratic insofar as they compel signatories to bind their own hands for the common good. British firms grouse about EU meddling in their markets but benefit when that meddling knocks down barriers on the continent.

6--Boris Johnson’s closing speech was the defining moment of the campaign

Lowering his voice, he returned, ‘We say they are woefully underestimating this country and what it can do.’ He pointed out the powers and the money we can take back and said we can speak up for ‘the democracy that is the foundation of our prosperity’. He added that ‘if we stand up for democracy, we will be speaking up for hundreds of millions or people around Europe who agree with us but who currently have no voice.’ Suddenly voting leave became about democracy, self-belief and those who were denied a voice. The idea of leave became aspirational and even heroic. Making his hand into a fist of resolution, he declared that if we vote leave tomorrow and take back control, ‘I believe that this Thursday can be our country’s independence day!’

7--UK and Europe face Mutual Assured Destruction if they botch Brexit

We are told too, with the gun of moral blackmail held to our temples, that Europe's strategic order will unravel if we pick at the EU thread, but this an evasion. The EU is unraveling already because the status quo is intolerable and a failed currency project is sapping its credibility.  It is far from self-evident that this supranational venture should be saved in anything like its existing form.

We are seven years into this global cycle and signs of ageing are too obvious to ignore, not least the collapse in US bond yields to depression levels. "More Economic Signs Point to a US Recession", warned a front-page headline across the Wall Street Journal this week. The labour market has buckled. Car sales have slipped. Business investment and profits are both falling...

This may be a false alarm but what is slightly chilling is the sudden ideological pivot by the St Louis Fed, which has come close to suggesting that the US authorities may not be able to  restore the economy to equilibrium.  We face a daunting world where central banks have used up their ammunition, and there is no political consent anywhere for a fiscal New Deal or the nuclear option of helicopter money.
But whether we vote Leave or Remain will not change any of this. All we can do when the next global recession hits is to fall back on Britain's tested institutions and our own elected Parliament to protect us. The EU certainly can't

8---IMF warns the US over high poverty

The US has been warned about its high poverty rate in the International Monetary Fund's annual assessment of the economy.
The fund said about one in seven people were living in poverty and that it needed to be tackled urgently.
It recommended raising the minimum wage and offering paid maternity leave to women to encourage them to work.
The report also cut the country's growth forecast for 2016 to 2.2% from a previous prediction of 2.4%...

However Ms Lagarde warned that "not only does poverty create significant social strains, it also eats into labour force participation, and undermines the ability to invest in education and improve health outcomes".
"Our assessment is that, if left unchecked, these four forces - participation, productivity, polarisation and poverty - will corrode the underpinnings of growth and hold back gains in US living standards," she added.
The report called on the US to invest more in education, as well as implement better social programmes such as childcare to help poorer Americans get jobs

9--Erdogan wants to be ‘sultan of Islamic state,’ former model-turned-fighter tells RT

10--'Heroin epidemic': US users at 20yr high - UN

In addition to heroin deaths, the US has also seen a surge in deaths caused by fentanyl, a synthetic opioid 50 times stronger than heroin and 100 times stronger than morphine, according to the Centers for Disease Control and Prevention. Fentanyl was the drug that killed pop singer Prince just two months ago

11--State Dept "dissent memo", video (Crosstalk)

12--The Brexit referendum: A turning point in European politics

Never before has there been such a concerted intervention of leading figures from the Armed Forces and the security services MI5 and MI6 into political life. Both sides proclaim their commitment to NATO and its ongoing offensive against Russia and China. The Remain camp argues that British membership of the EU and the EU in general strengthen NATO, while the Leave camp maintains that British membership ties the UK to plans, pushed above all by Germany, to create a European Army, which will undermine NATO and raise the spectre of Germany establishing its unchallenged hegemony over the continent...

The Brexit referendum is a product of the deepening antagonisms produced by the drive of the rival imperialist powers to dominate the world’s markets and strategic resources. It is this conflict that has fatally undermined all efforts to unify the continent economically and politically on the basis of capitalism. Unless the working class intervenes, this will end in the Balkanisation of Europe and a rapid descent into the conditions that gave rise to two world wars.

13--Omar Mateen: takes one to know one

In 2013 Mateen threatened a court officer with a claim that he knew al Qaeda operatives. According to local law enforcement the FBI then attempted to lure Mateen into a phony terror plot but he “did not bite.”

The FBI has a long and ignoble history of entrapping people, and hundreds have been convicted based on the work of informants. There is at least one other instance of a man targeted to become an informant who instead lashed out and performed an act of terror on his own....

At a time of increased U.S. violence and surveillance his disturbed son comes in contact with law enforcement who attempt to include him in their long list of naïve and/or mentally ill victims. If Omar Mateen was inspired by ISIS it is worth pointing out that this group is strongest in places where the U.S. has intervened...

Mateen was obviously in need of mental health care but that doesn’t let the government off the hook for inspiring him to act. He might have ended up killing people somewhere else, just like the lone wolf, self-radicalized, psychotic Americans who kill in schools, universities, and movie theaters. But his madness played out under the influence of American foreign policy and the government shares responsibility for the carnage carried out on this occasion.

While Mateen was surely a sick individual he knew other terrorists when he saw them. He enjoyed taking photos of himself in NYPD clothing. It takes one to know one.

14--The Fraudulent Case for a Syrian Escalation

Assad’s government “possesses significant wells of legitimacy,” Cambanis writes, “his rule has maintained some degree of buy-in from millions of Sunni Arabs, as well as thousands of Kurds. . . .

“Conversations suggest there are plenty more, perhaps numbering in the millions, who do not like the way Assad runs Syria but prefer his secular, pluralistic dictatorship to the alternative they believe the rebellion offers: violence, anarchy, or a Sunni theocracy. . . . The alternative, in their view, is the kind of unchecked sectarianism they have heard about in areas controlled by Islamic State, Nusra, Ahrar, . . .  even supposedly moderate Free Syrian Army-branded groups.”

So here you have it: Millions of Syrian support Assad, or prefer him to the alternative. His armed opponents are mainly radical Islamists, varying only in their willingness to make tactical compromises. All previous U.S. efforts to rally an effective force of “moderates” have failed utterly.

So what exactly makes interventionists think that doubling down on a failed strategy will produce a different and better outcome? In light of these failures, how dare they claim the moral high ground? What gives them the right even to be taken seriously as foreign policy experts? It’s time to call most of these armchair warriors what they are: frauds.

Wednesday, June 22, 2016

Today's Links

1--Brexit—Cameron’s Faustian Bargain

The Brexit vote is therefore a protest vote—against economic conditions and failed monetary and fiscal policies of the UK elite since 2009, gainst too rapid and unregulated immigration and cultural change, and against the loss of representation and sovereignty as un-elected supra-national institutions created by the treaty function outside voters’ control largely to the benefit of pan-European economic elites.
Brexit Does Not Mean Leaving the EU
Should an exit vote occur on the 23rd the more likely scenario is that little will change in the short term.  That is because a vote by the UK electorate does not mean an actual ‘exit’ follows.  An exit requires a vote by the British parliament to leave.  That would activate what is called Article 50 of the EU Treaty, the treaty’s hereto unused ‘exit’ clause.....

Global financial speculators have reaped trillions of dollars in profits and capital gains since 2009. In the US alone, more than $5 trillion has been distributed to investors and wealthy households by corporations in the form of stock buybacks and dividend payouts. Add in the rest of the global economy, and markets for derivatives, foreign exchange, real estate speculation, and the like, and the total is easily more than $15 trillion.  Trillions more remain tied up in financial assets as investors await the Brexit—prepared to quickly cash in the rest if there’s a ‘leave the EU’ vote or to double down in financial speculation if the vote is to ‘remain’.   In the worse scenario, June 23 could augur in a worldwide major correction in financial asset prices, with dire consequences for a global economy already in retreat along a number of economic fronts.

Brexit Is About Growing Opposition to Free Trade
Many UK voters have become ‘euroskeptic’. The EU is a ‘customs treaty’, i.e. a Free Trade zone.  Many UK workers and businesses see little benefit from membership in the EU free trade zone and, in many cases, feel they have experienced significant economic harm from the free trade arrangements. In that growing skepticism of the benefits from free trade—which is what the EU in fact is—they share similar views with a growing number of voters across Europe.  Free trade brings great benefits to corporations, bankers and wealthy investors, but delivers questionable results for workers, small businesses, and domestic producers.  In the media debates and discussions on Brexit this fundamental connection to rising discontent with Free Trade is often overlooked, and not by accident by the media.
But then again, maybe not. Maybe nothing happens....

Immigration is perceived by voters as having had negative impact on UK jobs and wages, especially in the industrial areas of the middle of the country, according to polls.
In addition to economic, immigration and cultural reactions, it has become increasingly apparent to many voters that membership in the EU has meant the loss of representational democracy.

2--Nervous global investors revisit 1930s playbook

A study published by the Centre For Economic Policy Research shows this paltry pace of trade growth is also below the 4.2 percent average for the past 200 years.
Foreign direct investment growth of 2 percent of world output is also at its lowest since the 1990s, while the hangover from the credit crunch has seen annual growth rates in cross-border bank lending grind to a halt from some 10 pct in the decade to 2008....

Morgan Stanley goes on to draw a parallel with the global response to 2008's crash and subsequent world recession.
Waves of monetary and fiscal easing by 2009 underpinned economic activity, but government budgets have again tightened quickly and before inflation expectations or private investment spending and capital expenditure have been restored.
The second world recession in a decade is now seen as a threat, but with a heavier starting debt burden, historically low inflation and interest rates, stalled trade and a worsening demographic profile. That could mean another global government spending stimulus is needed to re-energize private firms.
"The effective solution to prevent relapse into recession would be to reactivate policy stimulus," Morgan Stanley said.
Success in preventing a new recession without the cataclysm of a world war would be a profound lesson learned. Political extremism, isolation and protectionism make the task far harder

3--Some 66 million Americans have ‘zero’ emergency savings

4--Fed Warns of Vulnerabilities Building in Commercial Real Estate

5--Federal Reserve says U.S. stocks have gotten expensive

Even the Federal Reserve is weighing in on valuations in the U.S. stock market.
In its monetary policy report submitted to the Congress ahead of Federal Reserve Chairwoman Janet Yellen’s testimony, the central bank acknowledges that stock values have grown somewhat richer since the beginning of 2016. Here’s how they put it:

“Forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades. Although equity valuations do not appear to be rich relative to Treasury yields, equity prices are vulnerable to rises in term premiums to more normal levels, especially if a reversion was not motivated by positive news about economic growth.”...

Going back to mid-1990s, former Fed Chairman Alan Greenspan sounded the alarm on tech stocks too. But his famous “irrational exuberance” comments didn’t pop the tech bubble when he delivered them in 1996. It would take another four years before the air rushed out.
Others have made the case that today’s stocks are a touch rich. According to FactSet, 12-forward non-GAAP price-to-earnings ratio for the S&P 500 is 16.8. That is above its 10-year average of 14.6.
Read: By this measure, U.S. stocks are more expensive than ever
Stocks also are pricey based on another measure. The cyclically-adjusted Shiller PE, which factors price-to-earnings ratios based on average inflation-adjusted earnings from the previous 10 years, is at 26.2, representing its highest level since 2007.

As the Fed alludes in its comments, investors have been driven into stocks because low and negative-interest yielding assets emerging in many parts of the world aren’t offering better options.
But just because stocks are registering as pricey by some measures doesn’t mean that investors should necessarily sell. Stocks can always head higher despite being expensive.

Yellen & Co. aren’t sounding any alarm bells just yet, but the central bank’s comments on stock values is in the spirit of focusing on the stability of financial markets. Inflated valuations can lead to bubbles and that can be a problem.

To be sure, the lack of better-returning assets is partially a problem borne out of the Fed and other central banks, which have been implementing a raft of quantitative easing measures to boost sluggish economies, which have created some distortions in the market, including those negative yielding sovereign bonds

6-- From the "liberal" Nation???

Despite expressing strong anti-Assad sentiments,” a study from the Brookings Institution released last year found, “the bottom line is that Americans remain strongly opposed to American military operations against Assad’s army in Syria, with 72% opposing and 25% supporting such operations.” Those views held across party lines. In a poll released in February, Gallup found that, while a third of Americans want more military involvement, more than half want no escalation of our intervention there.

 The diplomats should not be scorned for their dissent—it is entirely appropriate that they advise top officials of their thinking—and, though the question of leaking the memo to the general public is more complicated, ultimately our democratic process in deciding whether to intervene is strengthened by having more diverse perspectives. None of that, however, means that the dissenting diplomats, Hillary Clinton, or anyone else advocating a broader US war in Syria should escape the hard questions that our nation so often avoids before military adventures. Syria is too dangerous to make that mistake again.

7--Trolling for War with Russia, Pat Buchanan (Today's "must read")

Some 50 State Department officials have signed a memo calling on President Obama to launch air and missile strikes on the Damascus regime of Bashar Assad.
A “judicious use of stand-off and air weapons,” they claim, “would undergird and drive a more focused and hard-nosed U.S.-led diplomatic process.”

In brief, to strengthen the hand of our diplomats and show we mean business, we should start bombing and killing Syrian soldiers.

Yet Syria has not attacked us. And Congress has not declared war on Syria, or authorized an attack. Where do these State hawks think President Obama gets the authority to launch a war on Syria?
Does State consider the Constitution to be purely advisory when it grants Congress the sole power to declare war? Was not waging aggressive war the principal charge against the Nazis at Nuremberg?

8--Why Brexit would be a history-defining, irreversible mistake, Lawrence "chicken little" Summers


9--Putin: Russia will respond to 'aggressive NATO rhetoric'

10--Daesh 'Takeover': What Will Happen to Syria If Washington Overthrows Assad

Should the SAA fall, "the most radical elements would quickly overpower the alleged moderates that the United States perhaps erroneously believes that it is supporting, leading to even more atrocities directed against religious non-conformists and minority groups," he detailed....

"Apparently the 51 'diplomats' who have been unable to practice much diplomacy in the real world somehow believe that bombing the Syrian government can be accomplished with Moscow sitting idly by, too terrified by Washington's show of force to respond," he noted. "It would be a mistake to think that."

11--Existing Home Sales Highest Since Feb 2007 As Prices Hit Record High

12--Deadly heatwave hits US Southwest

At least 17 records were shattered on Sunday, as temperatures reached 120 degrees Fahrenheit in Yuma, Arizona; 118 degrees in Phoenix, Arizona; and 109 degrees in Burbank, California. However, most places reached their peak temperatures on Monday, when many records were also broken: 121 degrees in Palm Springs, California; 112 degrees in Lancaster, California; and 131 degrees in Death Valley, California...

The extreme temperatures in the Southwest are the result of a meteorological phenomenon referred to as a “heat dome.” This phenomenon occurs when a high-pressure system is formed in the upper atmosphere, forcing hot air back down. These heat domes are frequently deadly. In August 2015, a heat dome resulted in temperatures of up to 165 degrees Fahrenheit in parts of the Middle East, killing dozens and sparking protests.

Many experts are saying that the current heat wave is being exacerbated by the ongoing effects of climate change. According to National Climatic Data Center meteorologist Jake Crouch, heat domes “are expected to happen more often in the future.” He added that the increase in global temperatures due to man-made global warming is the leading contributing factor

13---Record heat wave fuels wildfire in southern California

14--Seventy-five years since the Nazi invasion of the Soviet Union

Seventy-five years ago today, in the early morning hours of June 22, 1941, Nazi Germany launched Operation Barbarossa, a massive, undeclared invasion of the Soviet Union. Over the course of the operation, some 4 million soldiers of the Axis powers attacked the USSR along an 1,800-mile front, the largest invasion force in the history of warfare.
Operation Barbarossa was, in the words of the German state, a Vernichtungskrieg, a war of annihilation. Its aim was not simply the conquest of territory and seizure of human and natural resources, it was the physical liquidation of the Soviet Union and extirpation of all traces of the 1917 Russian Revolution....

The Generalplan Ost (General Plan East), adopted in 1940, included a “Hunger Plan” that envisioned the deliberate, targeted starvation of 30 million people in western and northwestern Russia—18 percent of the Soviet population.
On the orders of Hitler and the general staff, all basic tenets of international and military law were to be ignored. The so-called Commissar Order issued in advance of the invasion decreed: “In this battle it would be a mistake to show mercy or respect for international law toward such elements… The barbaric, Asiatic fighting methods are originated by the political commissars… Therefore, when they are picked up in battle or resistance, they are, as a matter of principle, to be finished off immediately with a weapon.”

General Erich Hoepner told the 4th Panzer Group that “the struggle must aim at the annihilation of today’s Russia and must therefore be waged with unparalleled harshness… No adherents of the present Russian-Bolshevik system are to be spared.”...

Stalin thereby eliminated virtually the entire military cadre that had emerged from the Revolution and the 1918-1921 Civil War, and been trained and educated under the leadership of Leon Trotsky, co-leader with Lenin of the Russian Revolution and the creator and commander of the Red Army in the early years of the regime. In total, some 30,000 Red Army personnel were executed, including high percentages of division, corps and army commanders

15--The Brexit referendum and the struggle for socialism

The SEP is an implacable opponent of the EU.
The EU is an instrument of the ruling classes of Europe for the imposition of brutal austerity measures—most directly on the workers of Greece, of Spain, Portugal and Ireland, but also on workers in the UK, France and Germany. Our own prime minister, Cameron, has even proclaimed an “Age of Austerity” as his government imposes cuts of £210 billion, (€263 billion), equivalent to over 10 percent of Britain’s GDP, at the cost of the destruction of 20 percent of all public sector jobs, millions more in the private sector and the decimation of vital services.

The EU is second of all an instrument of military aggression. It is a vital ally of NATO in its escalating conflict with Russia and China as the US and European powers seek to control all of the world’s markets and resources—including vital oil and gas riches commanded by the Putin regime in Moscow and the giant production platform manned by billions of super-exploited workers led by President Xi Jinping in Beijing.

Finally, the EU is an instrument for erecting and policing Fortress Europe. It bears responsibility for the horrific treatment of hundreds of thousands fleeing the impact of wars in which the UK, Germany, France, etc., are all complicit—in Libya, Iraq and Syria—including the deaths of thousands drowned in the Mediterranean and the imprisonment, in what are effectively concentration camps, of tens of thousands more....

. A report by the Brookings Institution in the US states:
“Brexit would lead to a global fall in equity prices as investors fear the impact the vote could have on Britain's economy, and could spell the first falling domino of European Union disintegration... It is also not hard to imagine that Scotland might vote to secede from the UK, as it has tried in the past, and that it would impact Northern Ireland which has enjoyed a rare period of relative peace—in addition to setting off other European regional succession movements.”
Not just the break-up of the European Union, but the fracturing and break up of nation states is posed. Angel Gurria, secretary-general of the Organisation for Economic Cooperation and Development, concurs, warning, “Brexit could threaten both the unity of the UK and the unity of the European Union.”...

We side with neither wing of the criminal parasites who have wrecked the lives of millions and who lead the referendum campaign. We insist that the ally of the British workers are the workers of Germany, Europe and internationally.

16--Yellen: Recession Unlikely, but Long-Run Growth Could Be Slow

17--Not Just the 1%: The Upper Middle Class Is Larger and Richer Than Ever

Research shows the number of upper middle class households has more than doubled since 1979

The latest piece of evidence comes from economist Stephen Rose of the Urban Institute, who finds in new research that the upper middle class in the U.S. is larger and richer than it’s ever been. He finds the upper middle class has expanded from about 12% of the population in 1979 to a new record of nearly 30% as of 2014.
“Any discussion of inequality that is limited to the 1% misses a lot of the picture because it ignores the large inequality between the growing upper middle class and the middle and lower middle classes,” said Mr. Rose. The Urban Institute is a nonpartisan policy research group.

Tuesday, June 21, 2016

Extra Links

1--Hillary was behind the war in Syria

It was then Secretary of State Hillary Clinton who, along with CIA director David H. Petraeus, developed a plan of arming and training Syrian rebels to overthrow Syrian President Assad in 2012. Will Clinton kick off an all-out war against the Syrian leader if she assumes the presidency?

US proponents of a muscular foreign policy in Syria are pinning their hopes on presidential candidate Hillary Clinton and with good reason: since the very beginning of the Syrian turmoil then Secretary of State Clinton had advocated tough approach towards Damascus.

Michael R. Gordon and Mark Landler of the New York Times narrated that back in 2012 then Secretary of State Hillary Clinton privately teamed up with CIA director David H. Petraeus to develop a plan of arming "the Syrian resistance" to topple Bashar al-Assad — the Syrian legitimate leader.

"The idea was to vet the rebel groups and train fighters, who would be supplied with weapons. The plan had risks, but it also offered the potential reward of creating Syrian allies with whom the United States could work, both during the conflict and after President Bashar al-Assad's eventual removal," the journalists wrote in February 2013, adding that the plan was rebuffed by Barack Obama as a risky one.

However, after she had left the White House Clinton continued to call for more assertive and aggressive US foreign policy in Syria.

For instance, she propagated the creation of a so-called "no-fly zone" in Syria in 2015.

"I personally would be advocating now for a no-fly zone and humanitarian corridors to try to stop the carnage on the ground and from the air, to try to provide some way to take stock of what's happening, to try to stem the flow of refugees," Clinton told NBC affiliate WHDH in Boston.

It is worth mentioning that NATO's airstrikes that bombed Libya into chaos were preceded by the implementation of a strikingly similar no-fly zone in the region.
Furthermore, in late September 2015 Hillary Clinton told NBC News that she regarded defeating Daesh and toppling Bashar al-Assad as equally top priorities.

2--Keynes explains why the economy won't rebalance (fix itself)--The true meaning of “In the long run we are all dead”

The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.

Keynes wrote this in one of his earlier works, The Tract on Monetary Reform, in 1923. It should be clear that he is not arguing that we should recklessly enjoy the present and let the future go hang. He is exasperated with the view of mainstream economists that the economy is an equilibrium system which will eventually return to a point of balance, so long as the government doesn’t interfere and if we are only willing to wait. He later challenged that view in his most important work The General Theory of Employment, Interest and Money (1935). arguing that the economy can slip into a long term underemployment equilibrium from which only government policy can rescue it.

Unemployment is the great scourge of economic life. It is far more pervasive than the hyperinflation that Fergusson and others worry about. Hyperinflation is very rare and usually occurs following wars or other major dislocations. We know how it can be stopped e.g. Bolivia’s 1985 hyperinflation was stopped in ten days – this was one of the few 20th century hyperinflations not to be caused by war or revolution. It is a very damaging but rare disease.

Unemployment causes enormous harm to individuals and families, reduces long term potential output as people lose their skill and motivation and can last for many years. The appalling rates of unemployment in southern Europe are doing great damage right now, as well as storing up serious political problems for the future (once again I have to cite the fact that the Nazis achieved power in Germany on the back of mass unemployment, not inflation). It is in this sense that economists should not let themselves off the hook by saying that these countries will somehow eventually return to full employment if we are just patient. This is both immoral and incorrect.

3--There is no conspiracy. The EU is completely open about its superstate plan

Today's Links

“People feel no danger and that is alarming for me. Why can’t we see that we are dragging the world into an utterly new dimension? This is the problem. I am not interested in laying blame now. I simply want to say that if this policy of unilateral actions continues and if steps in the international arena that are very sensitive to the international community are not coordinated then such consequences are inevitable.” Vladimir Putin

1--Study Finds Drinking Alcohol Associated With Heart-Rhythm Disorder

A study comparing hospital admissions in “wet” versus “dry” counties in Texas offers a surprising new perspective on how alcohol consumption may affect the health of your heart.

The analysis found that people living in dry counties, where sales of alcoholic beverages are prohibited, had a higher risk of being hospitalized for a heart attack or congestive heart failure than people living in wet counties, where such sales are allowed. But residents of wet counties were at elevated risk for a heart rhythm disorder called atrial fibrillation

The report, published last week in the British Medical Journal, or BMJ, is the latest to address a long-running controversy in heart-disease prevention: Does alcohol contribute to, or protect against, heart disease?

Researchers took advantage of the legacy of Prohibition-era laws in Texas to compare heart-related illnesses where access to alcohol had been curbed for decades with illnesses where alcoholic beverages have been commonly available.
The upshot: “It’s not so simple that alcohol is good for you or alcohol is bad for you,” says Gregory Marcus, associate professor of medicine at University of California, San Francisco and senior author of the study. “Rather it depends on the individual.”

Chronic heaving drinking is strongly associated with a host of medical conditions, including alcoholic liver disease, cognitive decline and heart-related problems, such as high blood pressure and alcoholic cardiomyopathy, a precursor to heart failure.

Studies also link excessive drinking or occasional binge drinking to an increased risk of atrial fibrillation, a quivering of the heart that can cause blood to pool in its upper chambers, increasing risk of stroke.

“It’s very clear that dumping a whole lot of alcohol on the heart can lead to rhythm disturbances like afib,” says Kenneth Mukamal, associate professor of medicine at Harvard-affiliated Beth Israel Deaconess Medical Center, Boston.
But a significant body of research suggests that when it comes to heart attacks, people who drink moderately—generally, up to a drink a day for women and two drinks for men—are at lower risk than even people who refrain from drinking. ...

Dr. Marcus, who treats patients with atrial fibrillation, adds, “It’s always hard for me to answer that question.” The effect of moderate drinking on afib isn’t clear....

Differences in heart-related effects between wet and dry counties were modest. Prevalence of atrial fibrillation was about 5% higher in wet counties, while prevalence of heart attacks was 17% lower. New hospitalizations for afib during the study were 7% higher in wet counties while those for heart attack were 9% lower.

In counties that switched from dry to wet during the study period, the risk of new cases of atrial fibrillation was also 7% higher, the researchers found, while heart-attack admissions were similar before and after the change. That a higher risk of afib was found in both the longtime and recently-converted wet counties “was the most consistent and we think most robust finding” in the study, Dr. Marcus says

2--The Slow Death of the Syria Cease-Fire Brings a Hybrid War With Russia Closer

(Never trust Washington--Obama cheats Iran) I’ve heard directly from banks in Europe that they’ve been visited by U.S. Treasury officials and warned in clear terms that any substantive trade cooperation with Iran is closed off. Iran is not being integrated into the financial system. U.S. sanctions remain in place, the Europeans have been told, and the U.S. will implement fines against those who contravene these sanctions. Financial institutions are fearful, particularly given the size of the fines that have been imposed — almost $9 billion for the French bank BNP a year ago.

In principle, sanctions have been lifted. But in practice, even though its sales of crude are reaching pre-sanctions levels, Iran has found that, financially, it remains substantially hobbled. America apparently achieved a double success: It circumscribed Iran’s nuclear program, and the U.S. Treasury has hollowed out the nuclear agreement’s financial quid pro quo, thus limiting Iran’s potential financial empowerment, which America’s Gulf allies so feared.....
Some Iranian leaders feel cheated; some are livid. Others simply opine that the U.S. should never have been trusted in the first place.

(Never trust Washington) 
As Pat Lang, a former U.S. defense intelligence officer, wrote last week:

The Russians evidently thought they could make an honest deal with [U.S. Secretary of State John] Kerry [and President] Obama. Well, they were wrong. The U.S. supported jihadis associated with [Jabhat al-Nusra, al Qaeda’s Syria wing] ... merely ‘pocketed’ the truce as an opportunity to re-fit, re-supply and re-position forces. The U.S. must have been complicit in this ruse. Perhaps the Russians have learned from this experience.

Lang goes on to note that during the “truce,” “the Turks, presumably with the agreement of the U.S., brought 6,000 men north out of [Syria via the] Turkish border ... They trucked them around, and brought them through Hatay Province in Turkey to be sent back into Aleppo Province and to the city of Aleppo itself.” Reports in Russian media indicate that Nusra jihadists, who have continued to shell Syrian government forces during the “truce,” are being commanded directly by Turkish military advisers. And meanwhile, the U.S. supplied the opposition with about 3,000 tons of weapons during the cease-fire, according to I.H.S. Jane’s, a security research firm....

In brief, the cease-fire has failed. It was not observed. The U.S. made no real effort to separate the moderates from Nusra around Aleppo (as Russian Foreign Minister Sergei Lavrov has affirmed). Instead, the U.S. reportedly sought Nusra’s exemption from any Russian or Syrian attack

3--Mutiny at the State Department; Fifty-one Foreign Service Officers Can't be Wrong

4--Democrats determined to torpedo Dodd Frank  Wall Street owns them all

what is this H.R. 5424 to which I referred? Well, let’s turn to Yves Smith’s Naked Capitalism to get a good read on what Wall Street lobbyists, the Republican Party and these corrupt Democrats called the “investment Advisers Modernization Act.” If it passes and Obama signs it, it “would allow the hedge fund and private equity industry, which are rich enough to pay for the few parking-ticket-level fines the SEC hands out, to escape from virtually all enforcement efforts. Worse, it would considerably weaken protections meant to stop Madoff-type frauds, and leave retail investors exposed.”....

To make a bad situation worse, the SEC retreated from its tough enforcement talk within months, and more recently, has been trying to fool the chump public into believing that its weak enforcement actions are having an impact when private equity form ADV filings with the SEC reveal the reverse, that many firms are continuing to engage in precisely the same conduct that the SEC has deemed to be a securities law violation....

As professor Jennifer Taub stated in her testimony on the bill last month:
Just when private equity funds are in the sunlight thanks to Dodd-Frank and many have been exposed in SEC examinations as in violation of the law, you are now proposing that they be able to hide their tracks. Instead of encouraging a culture of compliance, this bill would provide a loophole for investment adviser recordkeeping requirements. Subjecting communications to confidentiality agreements or keeping them in-house would allow advisers to destroy critical investment records…
The Investment Advisers Modernization Act of 2016 is misnamed. Instead of ushering in modernity, it would send the SEC and investors back to the Dark Ages....

Like the other bills today, it is misaligned with the hearing’s title, “Legislative Proposals to Enhance Capital Formation, Transparency, and Regulatory Accountability.” This bill would not enhance capital formation. Instead it would undermine investor protection and trust, which could inhibit or drive up the cost of capital. It would not promote transparency, but allow certain private equity advisers and other private fund advisers that have been exposed as lacking in recent SEC examinations to hide their tracks. It would not encourage regulatory accountability. Instead it would punish regulatory success, depriving the SEC of the information and tools it has been using to monitor system-wide risks, identify firm-specific risk, investigate fraud, and enforce the law.

5--It’s Not Just Millennials Who Aren’t Buying Homes

homeownership among young Generation Xers has fallen by a bit more than the millennial generation since the housing peak—declining 11 percentage points since 2005 compared with a decline of 9 percentage points for those under 35 years old.

Another interesting point of comparison is the mid-1980s to mid-1990s, a period in which the United States had a relatively stable share of owner-occupied housing of around 64.0 percent. During the subsequent housing boom, the homeownership rate climbed to a peak of 69 percent in 2004, only to fall back down to 63.7 percent in 2015, a level similar to that prevailing before 1995. However, each age group under age 65 has a somewhat lower homeownership rate than their same-aged peers had during the 1986–94 period...

The fact that the average U.S. homeownership rate is close to rates seen in the mid-1980s and mid-1990s while homeownership rates within age groups (under 65) are currently lower than their respective averages in the mid-1980s to mid-1990s suggests that factors other than age may be affecting the average person’s decision to buy or rent....

So how do we interpret the fact that the overall homeownership rate is close to its average in the 1986 to 1994 period? Are millennials to blame? Yes. But so is everyone else under the age of 65. The data suggest that whatever is affecting millennials’ homeownership decisions is applicable to older individuals as well.

6--Why is it so hard to have student debt forgiven?

Outstanding student loan debt in the United States reached a record US$1.35 trillion in March, up six percent from a year earlier.
About 10 million people who borrowed from the government’s main student loan program – 43 percent – are currently behind or no longer making payments, with more than a third of them in default. Some students are especially at risk, such as those who attended for-profit institutions.

Meanwhile, the loan default rates widely reported by the U.S. Department of Education fail to account for borrowers who default more than three years after repayment begins. These rates also fail to account for the millions of borrowers who are struggling or unable to repay their loans but aren’t included in the numbers because they’ve claimed an economic hardship deferment....

The ‘undue hardship’ issue

While individuals with debt they cannot repay often turn to bankruptcy, this discharge option is frequently unavailable in the case of student loans. Such debtors must first demonstrate “undue hardship,” an exacting standard few borrowers are able to satisfy and one not applied to most types of unsecured debt in bankruptcy....

Evidence suggests no widespread pattern of abuse existed, but Congress directed in 1976 that federally guaranteed loans could not be discharged in bankruptcy during the initial five years of the repayment period, absent a showing of undue hardship. Congress extended the undue hardship requirement to seven years in 1990, and in 1998 made the standard applicable throughout the loan’s life. And in 2005, Congress also extended the undue hardship standard to private student loans not guaranteed by the federal government.

Congress did not define the term undue hardship, leaving it to the bankruptcy courts to interpret its meaning. Most courts have adopted the so-called Brunner test (named after a famous court ruling), which requires student loan debtors to make three showings. First, they must prove that they cannot pay off their student loans and maintain a minimal standard of living. Second, they must show additional circumstances that make it highly unlikely they will ever be able to repay their student loans. And finally, debtors must demonstrate that they have made a good faith effort to pay their student loans.....

In perhaps the most well-known example, a panel of judges reviewing a bankruptcy decision discharged the student loan debts of Janet Roth, a 68-year old woman with chronic health problems who was subsisting on Social Security income of $780 a month.

Roth’s creditor argued that she could not pass the good-faith prong of the Brunner test because she had never made a single voluntary payment on her student loans. But the panel rejected this argument on the grounds that Roth had lived frugally and had never earned enough money to pay back her student loans in spite of her best efforts to maximize her income.

The panel also rejected the creditor’s arguments that Roth should be placed in a long-term income-based repayment plan that would extend for 25 years. Roth’s income was so low, the creditor pointed out, that she would not be required to pay anything on the student loan anyway. Nevertheless, a remote possibility existed that Roth’s income would rise in the future, permitting her to make at least token payments.

In the court’s view, putting Roth on a long-term repayment plan seemed pointless. Applying a common law principle of basic fairness, the court stated “that the law does not require a party to engage in futile acts.”

One of the judges in the Roth case filed a separate opinion agreeing with the judgment but suggesting that courts should abandon the Brunner test altogether. He argued courts should replace it with a standard in which bankruptcy judges “consider all the relevant facts and circumstances” to determine whether a debtor can afford to repay student loan debts “while maintaining an appropriate standard of living.”

Such a standard would be more closely aligned with how most other types of debt are eligible for discharge in bankruptcy.

So far, federal appeals courts have not taken up the suggestion to scrap the Brunner test, although several lower courts have begun applying it more humanely. The Brunner test, however, is a subjective standard, and debtors experience widely different outcomes when they attempt to discharge their student loans in bankruptcy....

In the case of private student loans, the Obama administration has urged Congress to make such loans no longer subject to the undue hardship standard.
Courts and federal agencies can help to humanize interpretation and application of the undue hardship standard and make discharge a more realistic option for some borrowers. Ultimately, however, authority rests with Congress to make any substantive changes to the treatment of student loan debt in bankruptcy

7--Germany's natural ally is Russia, not Washington

Speed the day when the world unites to conduct military exercises on America’s borders and introduces economic sanctions against an empire that makes its Roman predecessor appear benign by comparison.
Speed the day.....

What “they” describe as Russian aggression is in truth Russian defense against Western aggression and NATO expansionism, driven by a strategy to deny Russia its legitimate rights and by extension the rights of all non-Westernized nations to parity of esteem in a multipolar world. Instead the West – by which we mean Washington and its various allies/satellites – is determined to retain the economic, resource, geopolitical, cultural, and military imbalance of the unipolarity it has enjoyed since the Soviet bloc left the stage of history between the late 1980s and early 1990s.

8--'Never mind the US, Russia’s the one losing patience over Syria ceasefire chaos' - Chief of Staff 

Russia has for months been urging Washington to produce a shared map of the positions of fighting forces to avoid incidents and prevent targeting those groups fighting IS and Jibhat Al Nusra in Syria. The US hasn’t shared those coordinates.
"As a result, terrorists in Syria are actively regrouping and tensions are soaring again. It cannot continue this way indefinitely," Grasimov said, adding that the Russian Defense Ministry has supplied the US with a list of its terrorist targets for three months.

9--Hawkish Statecraft: US Diplomats Now Want Pentagon to 'Clean Up' in Syria

10--German foreign minister distances himself from the United States

Speaking of the Iraq war, he states, “Not only did the Bush administration fail to reorder the region through force, but the political, economic, and soft power costs of this adventure undermined the United States' overall position.” He adds, “The illusion of a unipolar world faded.” Further on, he stresses, “Our historical experience has destroyed any belief in national exceptionalism—for any nation.”...

“What we should not now do is inflame the situation by loud sabre-rattling and war cries,” Steinmeier told the newspaper. “Anyone who thinks symbolic tank parades on the eastern border of the alliance create more security is fooling himself. We are well advised not to provide a pretext for a new confrontation…”
It would be “fatal now to narrow our gaze to the military and seek salvation in a policy of deterrence alone,” warned the German foreign minister. History teaches that the mutual readiness to defend must always go along with the readiness for dialogue and offers of cooperation, Steinmeier said. There should be an interest in “engaging Russia in a partnership that takes international responsibility.”...

Ex-Chancellor Gerhard Schröder (SPD)—Steinmeier was his closest collaborator for many years—spoke out at the weekend. In an interview on the 75th anniversary of the German attack on the Soviet Union, he recalled the “epochal crime” that had been committed by Nazi Germany when it invaded the Soviet Union with the aim of “wiping it out, enslaving its people and destroying them.”
Schröder said he considered Bundeswehr participation in the NATO maneuvres “a great mistake, against the background of our history.” He supported the “attempt by Foreign Minister Steinmeier to progressively remove the sanctions (against Russia).” He explicitly defended his own friendship with Russian President Vladimir Putin, saing, “We're friends, it stays that way.”

The former chancellor pointed the finger at the US. It was “not only Russia that caused crises,” he said. The Iraq war of George W. Bush was “a decisive cause of the wars and civil wars in the Middle East, not least of the emergence of IS.” Nevertheless, Schröder said, “there are people in the federal government who regard America as the font of political wisdom...

The leader of the Left Party, Sahra Wagenknecht, also supported Steinmeier and portrayed him as a champion of peace. “The provocative NATO war games near the Russian border are an irresponsible threat to peace in Europe,” she said.
Neither Steinmeier nor Schröder are concerned about peace. Schröder, whose chancellery Steinmeier headed, was the first German head of government since 1945 to send German soldiers into combat—first in Yugoslavia and then in Afghanistan. And Steinmeier himself is a pioneer of German militarism, having announced at the Munich Security Conference in 2014 that Germany was “too big merely to comment on world affairs from the sidelines,” and that “Germany must be ready for earlier, more decisive and more substantive engagement in the foreign and security policy [i.e., military] sphere.”

Rather, Steinmeier's foray makes clear that the wars for the redivision of the Middle East and Africa, together with the encirclement of Russia and China, lead to conflicts between the imperialist powers themselves. Although allies, the US and Germany have competing economic and political interests. The disintegration of the European Union, which will accelerate if Britain leaves, and the rise Donald Trump in the US will exacerbate these conflicts.
Steinmeier, who enjoys considerable support in German big-business circles, speaks for the wing of the German elites who want greater political and military independence for German imperialism—especially from the United States

11--Fed says stocks overvalued

In what we are sure will be aggressively spun by the mainstream media, The Fed's full monetary policy report dropped a notable tapebomb this morning...
Remember, "don't fight The Fed" unless of course she says "sell."
As The Fed explains:
Valuation pressures have generally stayed at a moderate level since January, though they rose for a few asset classes. Forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades.

Although equity valuations do not appear to be rich relative to Treasury yields, equity prices are vulnerable to rises in term premiums to more normal levels, especially if a reversion was not motivated by positive news about economic growth.
It appears The Fed has been reading:
Finally, the chart below shows the median price/revenue ratio of S&P 500 component stocks, which recently pushed to the highest level in history, exceeding both the 2000 and 2007 market peaks. In recent quarters, the broad market has deteriorated, even in the most reasonably valued decile of stocks, but the most richly valued decile has held up for a last hurrah, as it did near the peaks of previous bubbles. This dispersion has created a headwind for hedged-equity strategies in U.S. stocks, particularly value-conscious strategies, but investors should understand that beneath the surface of this short-term outcome is singularly the most extreme point of overvaluation for the median stock in history