Saturday, August 13, 2016

Today's Links

1--Hillary Clinton's state capitalism, Rob Urie


The day after Election Day will be like any other in the sense that the problems of looming environmental catastrophe, gratuitous wars and long-term economic decline will remain profit-generating ‘opportunities’ in the realm of official concern...

Upon election Barack Obama did essentially the same thing claiming a fiscal emergency in 2010 that required cutting Social Security and Medicare as he spent $6 trillion – $14 trillion to save Wall Street. That unlimited funds were found for Wall Street but none could be found to restore the fortunes of the victims of Democratic ‘trade’ agreements and the predatory finance of Wall Street renders evident the class-war being perpetrated by the Democrats....

Bill Clinton and / or Barack Obama could have created government jobs programs to employ dispossessed workers at living wages just like FDR did. They could have even claimed the economic emergencies they helped create as reasons for doing so. Mainstream economic theory has ‘free-trade’ beneficiaries compensating those displaced by it. However, the Clintons and Mr. Obama chose instead to promote the right-wing lie of a binding budget constraint to limit and / or preclude increased social spending more effectively than the old-line Republican misery squad could have ever imagined possible. So the question for Hillary Clinton is: will she prove her husband and Barack Obama to be ruling class tools for lying about Federal budget constraints on social spending or will she maintain the lie to renege on her promise of creating ten million jobs?

2--The central bank bubble and the suspension of reality


In the middle of a prolonged period of negative real interest rates and loose monetary policy aimed at managing inflation and helping economies, fears are rising that asset bubbles are being created.

"We've lost our way so we look to central banks, who give us massively loose monetary policy and that's the little bubble we're living in," David Bloom, head of currency strategy at HSBC, told CNBC.

New records are constantly being set in the markets, with Thursday's close of the S&P, up 0.47 percent at 2,185.79, yet another new top. This is happening despite low productivity and growth in the U.S. economy

3--Here’s Why Americans Are Mad as Hell at Wall Street and Washington


Given these facts on the ground, another President who takes a hands off approach to Wall Street while installing Wall Street cronies in the cabinet, will leave this nation terminally financially crippled.....

Tens of millions of Americans clearly understand that an entrenched system of corruption such as this, perpetuated through a revolving door between Wall Street and Washington, while enshrined by a political campaign finance system that recycles a portion of the plunder to ensure greater plunders, will inevitably leave the nation’s economy in tatters — again. That’s because systemic corruption and legalized bribery within the financial arteries of the nation can only create grossly perverse economic outcomes.

The actual role of Wall Street is to fairly and efficiently allocate capital to maximize positive economic outcomes for the nation. Under the current model, Wall Street is focused solely on maximizing profits in any manner possible, including fraud and collusion, to maximize personal enrichment. When Senator Bernie Sanders said during his campaign stops and a presidential debate that “the business model of Wall Street is fraud,” there was a long, substantive archive of facts to back up that assertion....

After the 2001 collapse of Nasdaq, nothing materially changed to stop the systemic corruption model. In fact, corruption accelerated. Instead of allocating capital to build new industries and new jobs to ensure America’s future, Wall Street allocated capital to unsound derivatives and to subprime borrowers, whom it knew from its own internal reports, did not have the ability to repay the loans. Wall Street then offloaded its derivatives risk to AIG and suckered Freddie Mac and Fannie Mae into buying its toxic subprime debt. All three institutions collapsed under the weight of this Wall Street corruption and, jointly, received over $367 billion in taxpayer bailouts

4--Tick, Tick, Tick.  Citi timebomb set to blow???  Big Banks and Big Insurers Send Scary Signals


Using its insured bank’s balance sheet as ballast, Citigroup’s bank holding company now ranks as the largest holder of all derivatives in the U.S. According to the Comptroller of the Currency, the very bank that blew itself up in 2008 and received the largest taxpayer bailout in history, now holds $55 trillion in notional amount of derivatives.

But far more alarming is the type of derivatives Citigroup appears hell bent on gaining market share in trading. Last week we reported that Citigroup is plowing into credit default swaps, the very derivatives that blew up the big insurance company, AIG, in 2008 and forced a government bailout of AIG to the tune of $185 billion. We noted on August 4:

“According to the data, Citigroup now has $2.08 trillion in Credit Derivatives (the vast majority of which are Credit Default Swaps). Only JPMorgan is bigger with $3.1 trillion in credit derivatives. Equally frightening, the vast majority of these are private contracts between financial institutions (Over-the-Counter) where regulators lack the granular details of the deals. President Obama falsely promised the American people that derivatives would be moved onto exchanges with proper capital and transparency following the Dodd-Frank financial reform legislation in 2010. That has not happened. The vast majority of all derivatives are still traded in the dark.

“Not only are Citigroup’s Federal regulators allowing it to engage in this high risk trading but they are actually allowing Citigroup to purchase the high risk positions of a deeply troubled bank – Deutsche Bank. Risk Magazine reports… that Citigroup bought $250 billion of Credit Default Swaps from Deutsche Bank in 2013. Bloomberg News also reported on the $250 billion Citigroup purchase from Deutsche Bank.”

The ink was barely dry on our article when the very next day, Bloomberg News reporters Jeff Voegeli and Donal Griffin wrote that Citigroup had “purchased a portfolio of credit-default swaps from retreating rival Credit Suisse Group AG” which had a notional value (face amount) of $380 billion

5--Erdogan closes border crossing at Bab al-Hawa


Of course, that is Stratfor's version," the journalist noted. "I, you will understand, have my own. Factually, following the reconciliation with Russia, Turkey closed the famous border crossing at Bab al-Hawa. It was through this area that the militants constantly crossed back and forth between Turkey and Syria. Only after this did a Syrian-Russian humanitarian operation in Aleppo become possible – an operation which, most likely, will soon enter a military phase."

"And the bitter truth for the US is the fact that the situation in Syria is no long under their control. Moreover, after the liberation of Aleppo, the war which Washington has long supported and nourished will come to an end."

Ultimately, Ikonnikova noted, "Russia has no illusions about any 'inseparableness' with Turkey, no matter how much President Erdogan may call Putin a 'dear friend'. But so long as one side is ready for concessions and convergence, we will use these circumstances. And our American partners shouldn't concern themselves about it."


6--Turkish PM says Ankara sees no compromise with the US over Gülen extradition


Turkey's prime minister said on Aug. 13 that Ankara could not compromise with the United States over its request for the extradition of Islamic preacher Fethullah Gülen which it accuses of orchestrating the July 15 failed coup attempt.

“The U.S. stance is getting better,” Prime Minister Binali Yıldırım told a group of Turkish journalists after announcing that U.S. Vice President Joe Biden would visit Turkey on Aug. 24.

“The U.S. cannot ignore our demand, it is crystal clear that FETÖ [Fethullahist Terrorist Organization] is behind the failed coup,” said Yıldırım, adding that he and President Recep Tayyip Erdoğan decided to “fight till death” on the night of the coup attempt


7--"Obama admin blocked FBI probe of Clinton Foundation corruption" Washington Times


8--Record US share prices amid economic slump and social decay


US corporations, flush with cash extorted through the slashing of wages and benefits and the imposition of speedup, are hoarding $1.9 trillion. They refuse to invest in new plants and equipment that could provide decent jobs and address the decay of the country’s bridges, roads, schools and housing because the profit margins are too low, preferring instead to speculate on the market and buy back their own stock to increase the take of big investors and inflate the bonuses of top executives.

More negative news on the state of the US economy released Friday barely impacted the stock market. US retail sales for July were unchanged on the month, falling short of the 0.4 percent rise predicted by analysts. In addition, producer prices fell by 0.4 percent from June, the biggest monthly decrease in ten months, reflecting the mounting deflationary pressures in the US and globally.

The markets for the most part brushed off the new indices of slump, even welcoming them for decreasing the likelihood of an increase in interest rates by the US Federal Reserve or other major central banks

9--Signs of slowdown in US auto industry


10-US sabotage continues: -Plan for Joint Venture to Build Gas Pipeline From Russia to Germany Falters

Poland hailed the decision. “This will stop the deal,” Marek Niechial, the president of Poland’s antitrust authority, said on Friday.
But in a joint statement, the consortium of Gazprom, Shell, Wintershall, French utility Engie SA, ENGI 0.78 % Austria’s OMV AG OMVKY 1.51 % , and a unit of German utility E.ON SE EONGY -0.51 % said the decision wouldn’t affect the project, which has had strong backing from German Chancellor Angela Merkel .

With Gazprom in the lead, the others said they would find “alternative ways to contribute.”
“It has no impact,” said Steffen Ebert, a spokesman for Nord Stream 2 AG, which is wholly owned by Gazprom. “We are still working and we are on track.”
...
(The EU needs the gas but Russian control undermines US hegemony)
The additional volumes of gas are roughly what Gazprom has been piping to the EU through Ukraine, raising concerns that the new route would allow Russia to strip Kiev of much of its remaining economic leverage and an important source of income.
The EU has in recent years moved to weaken state-controlled Gazprom’s power. The EU opened an antitrust suit against the company and regulators thwarted another pipeline project known as South Stream, while EU countries have built terminals for liquefied-natural-gas deliveries


10--Japan’s Central-Bank Moves Hit Home on Housing   -- Mortgage rates plunge and home loans soar in the wake of negative interest rates in Japan


After a three-year struggle to bolster Japan’s economy, the Bank of Japan 8301 -1.93 % is finally making headway in one area: mortgage refinancing and home loans.

Since the BOJ announced a negative-interest-rate policy at the end of January, mortgage rates in Japan have dropped to record lows. At the nation’s three largest banks, the number of applications for mortgage refinancing have nearly doubled in the year through July to 32,426, according to bank data. Home-loan applications have risen 42%.

“The current interest-rate environment is a plus for people who are investing for profit using money borrowed from the bank,” said Yukio Nakamura, a Tokyo office worker who recently refinanced two loans in investment properties he owns in Yokohama and Tokyo. He now pays 0.9% interest, down from 1.9%....

Most of that hasn’t happened. Overall lending growth hasn’t picked up and weak consumer spending continues to restrain growth. Meanwhile, Japan’s currency, which might have been expected to fall on the monetary easing, actually strengthened, hurting the nation’s exporters.
But, just as the textbooks would predict, the lower price of getting a mortgage is generating more demand...

The loan activity could spread to the broader economy if it generates a boom in new-home construction or if consumers take the savings from refinancing mortgages and spend it. MFS Inc., a Tokyo mortgage-refinancing consultancy, said a survey of people using its mobile-phone application found many could save more than $10,000 with a refinancing.
So far, there isn’t much evidence of a spillover effect. Retail sales and consumer spending fell in the three months through June....

We expect it to take until after the summer this year to confirm a real increase in residential investment,” said Mitsubishi MSBHY 0.71 % UFJ Morgan Stanley MS -0.71 % economists in a recent note. “It will take some time until the negative interest-rate policy will push up the real economy.”

Nobuyuki Hirano, president of Mitsubishi UFJ Financial Group Inc., MTU -1.69 % pointed to the rise in home loans in May and said the BOJ’s negative interest rates might help in that area, but overall he was critical of the effects of negative rates.
“There is still uncertainty about the outlook for finance,” Mr. Hirano said. “There is a decline in retail customers’ desire to invest, and they put money into saving. Companies are also cautious about investing.”
The July BOJ loan-officer survey showed that demand for corporate loans declined for the second straight quarter.


11---The provocation in Crimea and the threat of world war


The Financial Times of London bluntly characterized the situation in an editorial, declaring, “Ukraine and Russia stand once again on the brink of open war.” The newspaper added that “the Ukraine situation remains the biggest threat to European peace since 1945.” In keeping with the bellicose policies of both the Obama administration and the British Tory government of Prime Minister Theresa May, the newspaper advocated a further escalation of threats against Russia.

The evidence presented by Moscow points to an utterly criminal operation staged by the US-backed regime in Kiev. Special operations squads made two attempts to cross into Crimea between August 6 and August 8, backed by supporting fire from Ukrainian regular forces. One member of the Russian security services and a Russian soldier were killed in the attacks.

The Ukrainian commandos carried improvised explosives, land mines, grenades and assault weapons. Russian state television broadcast part of the confession given by one of the operatives, who said they had aimed to blow up a ferry, an oil refinery and a chemical factory, as well as other targets...

For Russia, the fate of Crimea is an existential question, bound up with its access to the Black Sea as well as the Mediterranean....

The confrontation being provoked over Crimea is not separate from these wars. It is bound up with US frustrations over the debacle of its regime-change operation in Syria, where Russian backing for the government of President Bashar al-Assad has succeeded in driving back the Al Qaeda-linked militias that served as Washington’s proxy forces on the ground. This crisis of American policy has been compounded by the failure of last month’s US-backed coup against Turkish President Recep Tayyip Erdoğan and the subsequent deepening of rapprochement between Ankara and Moscow.








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