Tuesday, June 21, 2016

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...
  • *FED: STOCKS' FORWARD P/E RATIOS WELL ABOVE THREE-DECADE MEDIAN
  • *FED: STOCKS VULNERABLE TO A TERM PREMIUM RETURN TO NORMAL
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

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