Tuesday, June 28, 2016

1--Mario Draghi hints at global central bank intervention and helicopter money?

Both Janet Yellen and Mark Carney may have previously announced they would withdraw from the ECB's Forum in Sintra, Portugal (due to pressing market stabilization issues), but it was what Mario Draghi said here that has captured the market's attention this morning. The head of the ECB avoided mentioning the U.K.’s vote to leave the European Union but instead called for greater alignment of policies globally to mitigate the spillover risks from ultra-loose monetary measures

“We can benefit from alignment of policies,” Draghi said at the ECB Forum in Sintra, Portugal. “What I mean by alignment is a shared diagnosis of the root causes of the challenges that affect us all; and a shared commitment to found our domestic policies on that diagnosis...

Most didn't read between the lines, and assumed that "alignment of policies" was simple code for the ECB demanding another global intervention (More tinkering with the previously free market to produce the desired outcomes) ...

“We have to think not just about the composition of policies within our jurisdictions, but about the global composition that can maximize the effects of monetary policy so that our respective mandates can best be delivered without overburdening further monetary policy,” Draghi said. “This is not a preference or a choice. It is simply the new reality we face."
(What we're doing isn't working so we must all agree to coordinate a new policy together...This hints at fiscal stimulus provided by central banks?)

2--The all-encompassing gloom; Wolf Richter sounding as pessimistic as ever--How Vulnerable is the Shaky US Economy to Brexit Fallout and European Bank Meltdown?

the mood on Wall Street is suddenly souring.

“We have never seen a set of analysts’ notes as negative and scary as these,” Business Insider explained.” Before the Brexit vote, “economists at the major banks expected the UK to continue growing, albeit at a slower pace, into the foreseeable future.” But… “‘Recession,’ ‘contagion,’ and ‘stagflation’ are the words they’re using now.”

Here are some tidbits from BI’s report:
Barclays’ Fabrice Montagne figured that the UK “is likely to enter a period of stagflation,” and that Brexit would “exacerbate current elevated levels of uncertainty and thus amplify already slowing economic momentum.”

Barclays’ Philippe Gudin fretted that a “clear and coordinated strategy to safeguard the rest of the EU and the euro area does not look to be present.” So they expected “uncertainty to spread and euro area confidence and domestic demand to fall.”
Deutsche Bank’s George Saravelos wrote that the “extreme market reaction in GBP” – the crash of the pound – “is right” and that “a period of exceptional uncertainty now starts for the UK.”...

During the Financial Crisis, as the Fed was bailing out banks, Corporate America, and everyone holding assets, there was the notion that these asset bubbles would create demand. The “wealth effect,” it was called. This has never happened, and as a consequence, the Fed and other central banks that played the same game have lost their credibility: It’s now clear to everyone that central banks cannot create demand. All they can create are asset bubbles.

And even in that department, they’ve lost credibility, given the crash in European and Japanese stocks over the past year. Thus even more uncertainty.

With the Brexit vote, the veneer of confidence – what little remained – has come off the economy, globally. The uncertainties that have been beneath it all along have suddenly appeared on the surface. And given how lethargic the US economy has been for years, any loss of confidence and any increase in uncertainty are going to weigh on it, and on the markets.

3--("Must read") Israel should be deeply disturbed by the Brexit vote -

The UK’s exit from the EU is further evidence of the unraveling of an old order from which Israel has long prospered

Globalisation, on the other hand, is premised on a different and very narrow kind of internationalism: one that protects the rights of the super-rich to drive down wages and workers’ rights by demanding the free movement of labor, while giving this economic elite the freedom to hide away their profits in remote tax-havens.

Globalisation, in other words, switched the battlefield of class struggle from the nation state to the whole globe. It allowed the transnational economic elite to stride the world taking advantage of every loophole they could find in the weakest nations’ laws and forcing other nations to follow suit. Meanwhile, the working and middle classes found themselves defenseless, largely trapped in their national and regional ghettoes, and turned against each other in a global free market.

The old order is breaking down because it is so thoroughly discredited, and those who run it – a political and economic elite – are distrusted and despised like never before. The EU is very much part of the old order.

4--The neoliberal prison

The Brexit vote is a huge challenge to the left to face facts. We want to believe we are free but the truth is that we have long been in a prison called neoliberalism. The Conservative and Labour parties are tied umbilically to this neoliberal order. The EU is one key institution in a transnational neoliberal club. Our economy is structured to enforce neoliberalism whoever ostensibly runs the country.
That is why the debate about Brexit was never about values or principles – it was about money. It still is.

5--Reality Check: Does the UK have to trigger Article 50?

The UK does not have to start the formal process of leaving the EU until a time of its choosing.
Reality Check verdict: There is no legal limit on how long the UK can wait before it invokes the article. The article states that the exit negotiations would take up to two years but can be extended if all the EU countries agree unanimously that they need more time.

In his first public statement since the referendum result, Chancellor George Osborne said "Only the UK can trigger Article 50. We should only do that when there is a clear view about what new arrangements we are seeking with our European neighbours."

6--Six More Countries Want Referendums to Exit EU

7--"The Greatest Battle" Hassan Nasrallah

8--The Brexit and Article 50: CNBC Explains

9--Brexit: What does it mean?   trickle-down economics has betrayed many people.

The wilful ignorance of the affluent, educated and cosmopolitan on how divided and polarised British society has become is striking. The voting patterns mirrored divisions along the lines of class, economic standing, education, age, residence and ethnicity.
The debate was always between economics and sovereignty (in the guise of immigration and border control). Exaggerated claims of economic losses, based on macro-economic models which have failed repeatedly over recent years, to engender fear were rejected....

the vote against the EU was in part a protest vote against the long term changes in economic structure of the UK economy which has destroyed many working and middle class lives.
Insofar as the decision represents a retreat to economic nationalism and closed borders, it may highlight the diminishing appeal of globalisation. Free movement of goods and services, lowering of trade barriers and cheaper foreign labour has not benefitted everybody. Conservative American politician Pat Buchanan’s observation in Pittsburgh Post Gazette on 3 January 1994 remains uncomfortably accurate: “…it is blue collar Americans whose jobs are lost when trade barriers fall, working class kids who bleed and die in Mogadishu…the best and brightest tend to escape the worst consequences of the policies they promote…This may explain …why national surveys show repeatedly that the best and wealthiest Americans are the staunchest internationalists on both security and economic issues…”

history will have to decide whether the vote was simply a mutiny on H.M.A.S Britannia or an influential one on the shape of the modern world, the structure of society and values which resonates and leading to change in other countries. If the latter proves correct, then the event will prove truly significant..

The prospects of meaningful reform within the EU also seems remote...

In essence, for those who believe they are born to rule, Brexit signals the need to limit democracy to ensure that important decisions are left to self-certified experts. European Parliament President Martin Schultz was refreshingly clear: “It is not the EU philosophy that the crowd can decide its fate”.

10--How Brexit Threatens to Turn the UK Into “Borisland”

The referendum result reflects a deep-seated anger and anxiety amongst large sections of the population who are disenfranchised and feel ignored, and who can no longer bear the economic burden of living in the Thatcherite free-market wasteland (alternatively known as Cameron’s “Big Society”) that Britain has become – sadly reinforced by the New Labour governments that began with Tony Blair. Media-savvy and facts-free politicians like Boris Johnson and Nigel Farage have tapped into this anger and frustration, playing immigration and antagonism towards “Brussels-bureaucracy” as their trump cards. For many Leave-voters, if not most, Brexit was the only way to express and articulate their protest against a failed system that has left them behind....

The truly saddening denouement of the Leave vote, however, is that the sovereignty regained at the cost of deeply dividing the nation is unlikely to produce the more socially just and economically inclusive Britain that many voters sought – and that’s not because of a serious (or not so serious) recession being triggered by Brexit.
Rather, the hopes of progressives are likely to be betrayed as Britain is turned into “Borisland” – a deindustrializing nation dependent on trickle-down finance-led growth, but suffering from sluggish productivity growth, growing in-work poverty and rising inequalities and dualisms, and with government in permanent austerity mode...

The bigger threat from the Brexit referendum is not to Britain, however, but to the rest of the European Union. Across the continent, there is a very similar anger and anxiety about jobs, austerity economics, affordable housing, pensions and inequality, and a worryingly similar democratic disenfranchisement of large alienated and voiceless sections of society is creating fertile soil for populist-nationalist left-wing but mostly right-wing movements led by the likes of France’s Marine Le Pen, the Netherlands’ Geert Wilders, Austria’s Norbert Hofer, Finland’s Timo Soini, Belgium’s Filip Dewinter and Germany’s Frauke Petry. Brexit is just the most recent manifestation of the growing strength of Euroscepticism, which found earlier expression in the Dutch rejection of the Ukraine-European Union Treaty in April (by a margin of 61% against and 38%) and the narrow defeat of the right wing Freedom Party’s candidate in Austria’s presidential elections in May (Norbert Hofer’s final score was 49.7% against 50.3% for the Green Party’s Alexander van der Bellen).

Polls show that between one quarter and one third of citizens across the 28 member states are now deeply hostile to the E.U. project, and there is fear that Brexit will fuel similar Leave-Remain referenda elsewhere – there is serious talk about Nexit (in the Netherlands), Auxit (in Austria) and Frexit (in France), framed and pushed mostly by the anti-immigration, anti-Islam populist-nationalist extreme right. Regardless of whether these referenda will be held (which looks unlikely), the extreme right will capitalize on the anger, frustration, anxiety and anti-elitist resentment of voters who feel they cannot live in the current system.

It would be a tragic mistake to read this resentment against the E.U. as only anti-migrant, racist or bigoted, because the racism and bigotry have grown in conditions of economic austerity, artificial job scarcity and crisis, rising unemployment, rising job insecurity, and exploding inequalities as social protection for workers, pensioners and families have been scaled down in favour of an expanded social safety net for TBTF banks and corporations. Almost everywhere in the E.U. — as in Britain — there is a polarization of the income distribution into a large number of low-income households and a much smaller number of very rich, while the middle classes have shrunk. There is a segmentation of employment into low-wage, unprotected and precarious jobs, mostly in low-tech services, and high-wage and protected jobs in high-tech manufacturing, finance, legal services and government....

The responsibility for the economic and political mess in Britain, the E.U. and beyond weighs heavily on the shoulders of economists who insist there is no alternative to a globalized market economy (TINA!), with freedom for the rich and wealthy and unfreedom for the rest, and who out-of-hand reject serious progressive programmes to reform the system and make it more democratic and humane.

11--Europe’s Banking Bloodbath—–Shares Of Top 8 Banks Down 35%-70% In Past Year

12--Dining Out Falls Victim to Economy

Restaurant visit growth has completely stalled in the last three months, signaling that consumers, jittery over economic uncertainties, are retrenching.
Visits to fast-food restaurants had been growing at a quarterly clip of 2% since September 2015, but haven't grown at all in March, April or May, according to as-yet-unpublished data from market research firm NPD Group Inc.
When fast-food growth comes to a halt, “that’s a red flag because it’s been an area of growth and it’s 80% of the industry,” NPD restaurant analyst Bonnie Riggs said

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