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Saturday, December 10, 2016

week ending Dec 10

(preview)

Fed Officials Leaning Toward Bigger Is Better on Balance Sheet - While nearly all eyes are on the Federal Reserve’s likely decision to raise short-term interest rates next week, investors in the world’s biggest debt market say central bankers have already signaled a major change in another policy tool. Fed officials have indicated they may make their super-sized balance sheet of bond holdings and $2 trillion in excess reserves created during the last financial crisis a more permanent feature of the way they interact with financial markets. That would have a lasting impact on the way the central bank manages the short-term policy rate. Before the crisis, the Fed controlled it by intervening in federal fund markets to manage supply and demand of bank reserves. Now, with a huge supply of money created through quantitative easing, the Fed controls the market for its policy rate by paying interest on excess reserves and reverse repurchase agreements in money markets. Policy makers noted the new system was “relatively simple and efficient to administer” in minutes to their latest meeting in November. The Fed’s lean toward keeping a large balance sheet and the financial system flush with cash “is a fundamental game changer,” said Subadra Rajappa, head of U.S. interest-rate strategy at Societe Generale SA in New York. “What the Fed has learned over the last seven years is that a lot of reserves does not hurt the system, that it is not inflationary and in some respects it is not operationally intensive.”

This Chart Shows Why the Fed Will Be Tightening Monetary Policy Soon - Will policymakers at the Fed raise interest rates at their December meeting? Wall Street oddsmakers increasingly think they will. One simple chart shows why. The chart tracks the economy’s progress toward the central  bank’s target of “stable prices and maximum employment.”  The Fed’s rate-setting Federal Open Market Committee (FOMC) has operated under this so-called  dual mandate since Congress amended the Federal Reserve Act in 1977. In recent years, the Fed has interpreted “stable prices” to mean a rate of inflation close to 2 percent per year, as measured by the annual change in the price index for personal consumption expenditures (PCE). It interprets “maximum employment” to mean the highest level that is consistent with its 2 percent inflation goal, currently thought to be an unemployment rate of about 4.8 percent. We can use the two components of the dual mandate to draw a bullseye that the Fed is aiming for.  Here is how things are going, seven years into the recovery from the Great Recession.  As recently as the fourth quarter of last year, the Fed was missing the inflation target by a wide margin on the downside and the unemployment target by a smaller margin on the upside. Small wonder, then, that when the FOMC raised interest rates at its December 2015 meeting, many critics saw such an action as premature. That was especially true for those who hold the orthodox view that 2 percent inflation is a not an unconditional ceiling, but rather, a target that may acceptably be exceeded for a time after a long period of below-normal price increases. Over the past year, though, the situation has changed considerably. As the chart shows, over a five-year stretch starting in 2010, the economy followed a path running generally from Northeast to Southwest, with inflation and unemployment both falling. The slight uptick of inflation from 0.3 percent in the first quarter of 2015 to 0.4 at the end of that year did not, at the time, look like a real change of direction. Viewed together with the most recent data, however, we can see that the economy’s path may have begun turning toward the Northwest as long as a year and a half ago.  One reason for tightening now is that interest rates do not affect the economy immediately. More than half a century ago, Milton Friedman argued that monetary policy operates with long and variable lags. When asked about lags during a press conference in September of this year, Fed Chair Janet Yellen affirmed that Friedman’s view was still “one of the essential things to understand about monetary policy, and it has not fundamentally changed at all.” She went on to say that she was “not in favor of a ‘whites of their eyes’ sort of approach.” Instead, she said,

Fed May Struggle to Signal What Comes After December - WSJ: When Federal Reserve officials meet next week, agreeing to raise short-term interest rates will be the easy part. The trickier task could be debating the likely path of interest rates in the months and years ahead. Senior central bank officials, including Chairwoman Janet Yellen, have done nothing to dispel strong investor expectations they will raise their benchmark federal-funds rate by a quarter percentage point to a range between 0.50% and 0.75% when their two-day meeting concludes Dec. 14. The bigger challenge is communicating what comes next amid uncertainty over the outlook for government economic policy. President-elect Donald Trump and a Republican-controlled Congress take office in January, and he has pledged to cut taxes and boost spending, which could spur faster economic growth. Stock prices, bond yields and the dollar have all climbed since the election on market expectations of such stimulus. This has left many traders betting the Fed will have to raise interest rates more aggressively than previously planned to prevent the economy from overheating. Fed officials are likely to indicate they are sticking, for now, with their plan to raise rates gradually until the new government’s policies become clearer, according to interviews and their recent public comments. Some have said it is possible they might tighten policy more in response to fiscal stimulus, but others caution that it is still early days—that enacting new policies could take time, the final shape of the measures is far from clear, and their economic effects could be felt over several years.

 Jobs, Jobs, Jobs – Not Austerity -- William K. Black -- Bob Rubin and Alan Greenspan convinced the New Democrats, over a quarter-century ago, that the key to economic growth was to out-Republican the Republican Party in the fervency of their embrace of austerity.  This began the long war of the New Democrats against the working class that culminated in the loss of their candidate, Hillary Clinton, to Donald Trump.  The stranglehold that Bob Rubin and Alan Greenspan’s anti-worker dogmas continue to exert over the Democratic Party’s faux centrists’ policies even after Trump’s election is illustrated by a December 5, 2016 New York Times editorial entitled “How to Help Working People” and Larry Summers’ December 4, 2016 op ed entitled “Trump’s tax plans favour the rich and will hamper economic growth: The proposals would threaten to increase federal debt and interest rates.”  Summers is Rubin’s protégé.  Any plan by Democrats to “Help Working People” should begin with the word “jobs.”  But the creation of “jobs” funded by the federal government in its critical role of employer of last resort is not even an option when policy is in the grips of austerity fever.  New Democrats take the bizarre policy position that it is too expensive to pay people who want to work to do useful work, but fine to pay them extended unemployment insurance because there are not enough private sector jobs to employ them full-time. The NYT editorial is so mixed up that it never mentions either the primary problem – the devotion to self-destructive austerity of New Democrats and Old Republicans – and never mentions the essential policy that would transform our economy and win the devotion of the working class to whatever party puts the policy in place.  That policy is a dedication to permanent full employment by making the federal government the employer of last resort for any American who wants to and is able to work.  Instead, the editorial focuses on a number of desirable policies to help workers who are already fully employed.    But tens of millions of Americans are classified as “underutilized” by the Bureau of Labor Statistics.  Many were so discouraged by the job markets that they dropped out of the work force.  Worse, Americans in general and the working class in particular no longer believe that they have any meaningful job security – that our jobs could disappear without warning within months.  The federal employer of last resort would transform the workplace by restoring job security.

Goldman: Fiscal Boost: Mainly a 2018 Story -A few excerpts from a research piece by Goldman Sachs economist Alec Phillips: Fiscal Boost: Mainly a 2018 Story  We expect fiscal policy to become more expansionary next year, but the timing is uncertain. Our preliminary expectation is that the growth effects from looser fiscal policy would be concentrated in Q4 2017 and the first half of 2018. The timing depends mainly on how long it takes tax legislation to become law, and whether Congress legislates a prolonged phase-in or implements the full tax cut in the first year. ... Infrastructure and federal spending are also potential factors. On the former, the lags are often quite long ... On the latter, a boost to defense spending looks likely sometime between Q2 and Q4 2017, but this may be partly offset with cuts to non-defense spending in the same timeframe.
The effect of Obamacare “repeal and replace” is less clear, but seems likely to provide a modest net stimulus in the near term—potentially as soon as Q2 2017—as a result of the likely repeal of the taxes used to pay for some of the program. Other changes are likely but seem unlikely to be implemented until 2019.

Jill Stein says she'll 'escalate' Pennsylvania recount case after earlier plans to drop it - (CNN) Green Party presidential nominee Jill Stein said early Sunday she would "escalate" her statewide recount efforts in Pennsylvania through a federal lawsuit, after announcing she would drop it. Stein on Saturday cited a major cost placed on voters due to a state court ruling that says the voters requesting the recount must pay a $1 million bond. But shortly after midnight Sunday Stein tweeted about plans to continue on the recount bid. "On Monday, I will escalate #Recount2016 in PA and file to demand a statewide recount on constitutional grounds. The people deserve answers," she wrote.A statement from the Stein campaign shortly after said it will file a lawsuit in federal court Monday seeking a statewide recount. "Over the past several days, it has become clear that the barriers to verifying the vote in Pennsylvania are so pervasive and that the state court system is so ill-equipped to address this problem that we must seek federal court intervention," said Jonathan Abady, lead counsel to the Stein recount efforts. "As a result, on Monday the Stein campaign will escalate our campaign in Pennsylvania and file for emergency relief in federal court, demanding a statewide recount on constitutional grounds." Read More At press conference on Monday in New York City, the Stein camp defended its efforts to press forward with the recounts, saying they were taking their suit to federal court because of the "absolutely ridiculous and obscene form of bureaucratic obstruction" that Stein said was occurring in Pennsylvania. "It's clear that the fix was in against a verified vote in the state of Pennsylvania," the Green Party candidate said.

Rogue Republican Elector Warns Trump: "I Am Not The Only One Who Will Not Vote For You" - Last week a Republican member of the Electoral College, Christopher Suprun, published an op-ed in the NYT explaining why he would not be casting his vote for Donald Trump. Suprun is the same elector who the NY Post reported one month ago that he’s on track to vote as assigned for Donald Trump next month, despite reports saying he’d consider going rogue and voting for Hillary Clinton. Previously, Politico had quoted Suprun in August saying he found Trump so unpalatable, he’d consider going “rogue” and voting for Clinton. He then told the Post that he “always planned to vote for his party’s nominee” when Electoral College electors gather in their respective state capitals to finalize Trump’s presidency on Dec. 19. He lied, as his NYT op-ed made very clear: "The election of the next president is not yet a done deal,” Suprun wrote. “Electors of conscience can still do the right thing for the good of the country. Presidential electors have the legal right and a constitutional duty to vote their conscience.” "Trump lacks the foreign policy experience and demeanor needed to be commander in chief", Suprun also wrote, adding that Trump’s business dealings might pose unacceptable conflicts of interest, Suprun adds - a problem that could seem him “impeached in his first year given his dismissive responses." Yesterday, Suprun spoke to Jonathan Karl and Rick Klein on the Powerhouse Politics Podcast, and suggested that there are other Republican electors who will follow Suprun in not voting for Trump. "At this point there are people who have reached out to me. Again it wouldn’t be my place to name who they are," he said, though he indicated he was talking about Republican electors. "I am confident in saying, at this point," he continued,"I don’t think I will be the only one voting for someone other than Donald Trump who is carrying a Republican elector seat."

 Electronic Voting Machines and the Election: Three states are facing or currently undergoing a recount of votes cast, after a number of computer scientists reported some evidence of problems with the electronic voting. This finding was heavily disputed in the media, and seemingly little evidence was produced to support the conclusion that there was malfeasance in counties with electronic voting. Indeed, following the initial media response, the lead computer scientist backed down from initial reports, saying that there are flaws in electronic voting that could be easily exploited, and that an audit is important, but there isn’t direct evidence. We use our data to explore the claim that counties with electronic voting exhibited different voting patterns than their paper peers. What we find is definitely troubling: in some of the swing states, and specifically in states that were projected to vote Democratic at the top of the ticket, those with electronic voting had a decrease in the percent of the total vote going for the Clinton-Kaine campaign, and an increase for the Trump-Pence campaign. We try to determine if this is spurious by checking for patterns in other places with electronic voting, as well as during the 2012 election. We only find this correlation for swing states during the 2016 election. ...[…]... It’s tough to draw precise conclusions as to what these correlations mean. It’s still possible that there are other factors driving our results, other than electronic voting. But, what we do know is that results in key swing states differ in counties with electronic voting. Further, the patterns in these counties are not exhibited by other similar but not electorally important counties across the country. Additionally, electronic voting had no impact in swing states during the 2012 election. Taken together, it seems tough to dismiss the correlations that we have found in the data. While we don’t know how to interpret the findings practically, it certainly lends credence to the efforts to initiate recounts in several of the swing states.

Desperately Searching For A New Strategy, by Tim Duy: President-Donald Trump’s renewed call for a 35% import tax on firms that ship jobs out of the United States triggered the expected round of derision from an array of critics, both on the left and the right. The critics are correct. It is indeed a terrible idea. One sure way to discourage job creation in the US is to guarantee that firms will be punished if they need to layoff employees in the future. It is just bad policy, plain and simple. But if that’s your takeaway, I think you are making a mistake.Whether or not Trump can or should attempt to reverse the decline in manufacturing jobs is not the big story here. He can’t. The real story is that he continues to tap into the anger of his voters about being left behind. That will give him much more power than our criticisms will take away.Politicians, aided by economists, have long ignored the negative impacts of trade-induced structural change. Indeed, they have even cheered it on. After all, the process “releases resources” for use in other, more productive parts of the economy. Those workers are just “low-skilled” workers. The US needs more “high-skilled” workers anyway. Fact: Workers hate being referred to as “low-skilled.”How we respond to Trump is important. If we simply fall back on our standard numbers, we lose. If we confidently predict that TPP is a big win because it will add 0.5% to GDP by 2030, we lose. If we just use this as an opportunity to reiterate the importance of a college degree, we lose. We have been doing this for decades, and it helped deliver Trump to office. As an example, take Paul Krugman’s latest on trade. I don’t want to keep picking on Krugman, but he epitomizes traditional economic thinking on international trade. He concludes with this:  I’m not saying that the effects were trivial: Autor and co-authors [sic] show that the adverse effects on regional economies were large and long-lasting. But there’s no contradiction between that result and the general assertion that America’s shift away from manufacturing doesn’t have much to do with trade, and even less to do with trade policy. Nothing is wrong with the analysis here. But I think Krugman is downplaying the transition costs, especially regional impacts. Politically, that is the important part. Economists tend to just play lip-service to the negative effects as we seek what is perceived to be the bigger prize, the aggregate effects. Fundamentally. Krugman is looking for what we got right in trade theory, and he finds it in Autor et al.

Trump says he’ll cancel Obama’s ‘unconstitutional’ executive actions. It’s not that easy - WaPo - During the presidential campaign, Donald Trump pledged to “cancel every unconstitutional executive action, memorandum and order issued by President Obama.” The good news was that Trump did not simply use the phrase “executive order” to describe every administrative tool presidents can use. As regular Monkey Cage readers know, that simplification is inaccurate.  The bad news was that it wasn’t clear, then or now, which particular actions he deemed “unconstitutional.” Many of those he complained most about on the campaign trail — about gun control, for instance — had little substantive impact on gun ownership or use.   In any case, judging from his recent YouTube video announcing his own plans for “day one” of his administration, Trump sees executive actions exactly as other presidents have: as a means to show leadership and to push forward his policy preferences fast, without the tedium of the legislative process. (In his two-and-a-half minute video, Trump never used the word “Congress,” though other items from his campaign’s “100-day plan” would clearly need legislative approval.)  The items in his list range from things clearly within the president’s unilateral authority to those that will require a fair bit of cooperation from others. In the first category: asking departments to look at things. One of the less-touted Article II powers, after all, is the president’s ability to “require the opinion, in writing,” of his department heads.  Also easy to do: withdrawal from the Trans-Pacific Partnership, the trade deal that came in for bipartisan bashing during the presidential campaign. Since the TPP has not been sent to Congress for its approval, Trump can readily decide to continue not sending it. Replacing TPP with “fair” bilateral agreements is harder. The power “to regulate commerce with foreign nations” is given explicitly to Congress in Article I, Section 8, of the Constitution, but the negotiation of trade arrangements is indeed left to the president, usually through the Office of the U.S. Trade Representative. Congress renewed so-called “fast track” negotiating powers in 2015 until at least 2018. That makes legislative approval easier to get, but not inevitable. Trump’s ethics proposals, likewise, foresee a two-step process. He can certainly condition his job offers conditional on appointees (even the lobbyists) agreeing to sign a five-year or lifetime ban on lobbying after they leave the administration. But it won’t be legally enforceable unless that prohibition is put into statute, which of course requires Congress.

Deals With the Devil: Vulnerable Senate Democrats Rush to Slam Anti-Donald Trump Plans -- While congressional Democrats were certainly slow to come to grips with Donald Trump’s election and therefore appeared hesitant to back the calls for resistance that flooded the streets in major American cities in the immediate aftermath, they’ve since embraced their role as the loyal opposition. But even as most Senate Democrats gear up for confirmation battles with a whole host of questionable Trump Cabinet picks, some of their Democratic colleagues are already willing to kowtow to the president-elect’s most fundamental decisions.  Incoming Senate Democratic minority leader Chuck Schumer recently backed away from his early willingness to work with the incoming Trump administration, opting instead to endorse a strategy of committed opposition. “President-elect Trump promised that he was going to clean up the swamp,” Schumer told the New York Times this past weekend. “And a whole lot of his nominees have had their career in the swamp.” Just weeks earlier, the New York Democrat gathered stunned Senate Democrats by announcing, “When we can agree on issues, then we’re going to work with” Trump. But with Trump’s selection of billionaire charter school advocate Betsy DeVos to head the Department of Education, Goldman Sachs executive Steve Mnuchin to head the Treasury Department and a tycoon known as “the foreclosure king” to head the Commerce Department, Trump has energized most Senate Democrats to action. Several Democratic lawmakers told Politico that they could force as much as 30 hours of debate and procedural votes on each of Trump’s Cabinet nominees, which could take weeks off the Senate calendar and sap the momentum of Trump’s first 100 days: Still, nearly all the five Democratic senators facing re-election in 2018 in states that strongly supported Trump — by 19 percentage points or more — apparently disagree with their more progressive colleagues and have rushed to signal their willingness to cooperate with the new regime. “That’s just bullshit,” West Virginia Sen. Joe Manchin, whose state supported Trump by 42 percent, said of his fellow Democrats’ strategy of opposition. “I’m going to help [Trump] when I can.”

Trump Taps Dimon, Finance Experts to Advise on Econ Policy | American Banker: – President-elect Donald Trump announced Friday that he is assembling a team of top business executives to provide input on how regulations and government policies are impacting economic growth and job creation. "This forum brings together CEOs and business leaders who know what it takes to create jobs and drive economic growth," Trump said in a statement. "My administration is committed to drawing on private sector expertise and cutting the government red tape that is holding back our businesses from hiring, innovating, and expanding right here in America." The forum will be chaired by Blackstone CEO and co-founder Stephen Schwarzman and is set to have its inaugural meeting the first week of February at the White House. The Trump transition team released an initial list of 16 business executives who will participate in the forum, including JPMorgan Chase CEO Jamie Dimon; former Federal Reserve Board Gov. Kevin Warsh; and Paul Atkins, a former commissioner on the Securities and Exchange Commission who is also helping to lead the transition effort at the federal regulators. BlackRock CEO Larry Fink, who has been associated with former Secretary of State Hillary Clinton and was rumored to be in the running for a top spot in her administration if she had won, is also on the list.

Trump assembles a Strategic and Policy Forum to better hear the 1% -- No need to guess what comes next. Congratulate Trump for running as a populist, the most effective political con in US history. It is the inevitable next step as our elites explore and exploit our gullibility. This can inspire us to push for reform of American politics, while we still can. Elected as a populist, he prepares to rule as a ring-wing plutocrat, assisted by solid conservative majorities in both Houses of Congress — one of the largest political cons in US history. We need not guess what comes next. His executive appointees for domestic policy are mostly billionaires and far-right activists. In Washington people are policy. To make this even clearer, Trump created the Strategic and Policy Forum to advise him. Its 16 members include 9 corporate CEOs (active or retired, including GM, IBM, Disney, Boeing, JP Morgan, and Wal-Mart), 6 financiers, and one brilliant analyst. Two on the panel are unlike the rest. Dr. Toby Cosgrove is CEO of the Cleveland Clinic, and has a stellar profile as a doctor and health care innovator, combining brilliance plus long and broad experience. One dark detail: in 2014 Obama planned to appoint him as head of the VA. Cosgrove withdrew his nomination after Modern Healthcare wrote about the Cleveland Clinic’s record of safety problems (like this $600,000 fine), stone-walling investigations, leading to repeated threats by regulators to end its eligibility for Medicare funding. The other star on the panel is Daniel Yegrin. He has a Ph.D. in international relations and one of the world’s best records as an analyst of oil industry (debunking the 2003-2010 peak oil fears). His books are top-quality models of scholarship written for a general audience.

Hillary Clinton’s “Corrupt Establishment” Is Now Advising Donald Trump -- “The establishment,” Donald Trump famously said during his closing argument for the presidency, “has trillions of dollars at stake in this election.” He described “a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities.” He asked the country to be “brave enough to vote out this corrupt establishment.” Now, less than four weeks after riding that line to victory, he formally invited the establishment into his administration. On Friday, Trump announced the creation of a “Strategic and Policy Forum” that will serve to advise him on domestic economic matters. The list of advisers is a who’s-who of corporate elites. Here is the full list:

  • Stephen A. Schwarzman (forum chairman), chairman, CEO, and co-founder of Blackstone;
  • Paul Atkins, CEO, Patomak Global Partners, LLC, former commissioner of the Securities and Exchange Commission;
  • Mary Barra, chairwoman and CEO, General Motors;
  • Toby Cosgrove, CEO, Cleveland Clinic;
  • Jamie Dimon, chairman and CEO, JPMorgan Chase & Co;
  • Larry Fink, chairman and CEO, BlackRock;
  • Bob Iger, chairman and CEO, The Walt Disney Company;
  • Rich Lesser, president and CEO, Boston Consulting Group;
  • Doug McMillon, president and CEO, Wal-Mart Stores, Inc.;
  • Jim McNerney, former chairman, president, and CEO, Boeing;
  • Adebayo “Bayo” Ogunlesi, chairman and managing partner, Global Infrastructure Partners;
  • Ginni Rometty, chairwoman, president, and CEO, IBM;
  • Kevin Warsh, Shepard Family distinguished visiting fellow in economics, Hoover Institute, former member of the board of governors of the Federal Reserve System;
  • Mark Weinberger, global chairman and CEO, EY;
  • Jack Welch, former chairman and CEO, General Electric;
  • Daniel Yergin, Pulitzer Prize winner, vice chairman of IHS Markit;

Disney CEO Bob Iger co-hosted a Hollywood area fundraiser for Hillary Clinton in the summer of 2016. General Motors CEO Mary Barra was thought of so dearly by the Clinton campaign that she was considered as a possible vice presidential pick — according to hacked emails released by Wikileaks. Boeing CEO Jim McNerny has given thousands of dollars to top Democrats and lauded Clinton’s leadership at the State Department — which helped Boeing win contracts — while simultaneously funding the Clinton Foundation and helping sponsor paid speeches by former President Bill Clinton. These are precisely the people Trump warned about when he darkly declared that “those who control the levers of power in Washington, … they partner with these people that don’t have your good in mind.” Now they’re all working together.

Is Wall Street Trying to Rig Trump’s Business Advisory Panel? - On December 2 President-elect Donald Trump’s transition team sent out a press release advising that he had formed a business advisory panel “which is composed of some of America’s most highly respected and successful business leaders, will be called upon to meet with the President frequently to share their specific experience and knowledge as the President implements his plan to bring back jobs and Make America Great Again.” In fact, according to the Chair of the panel, Stephen A. Schwarzman, Chairman and CEO of Blackstone, a private equity/hedge fund/investment bank headquartered in New York City, it was Schwarzman who actually selected the members of the panel and Trump went with the full group he had selected. (See Schwarzman’s Bloomberg TV interview here.) Aside from being a disparate cacophony of voices from wildly different businesses ranging from Boeing, a commercial jet manufacturer, to the Cleveland Clinic with no representation at all from labor or consumers, the panel has an outsized representation from the financial sector with one particularly curious member. Daniel Yergin, an oil and energy expert who is Vice Chairman of a fascinating company known as IHS Markit. IHS merged with Markit Ltd. this year in a tax inversion, where it “officially” moved to London to avoid paying higher U.S. corporate taxes. But it’s the Markit part of the company that makes its inclusion on the business advisory group so interesting. IHS Markit employees 4200 people, which right off the bat makes its inclusion on this panel suspect. It’s going to be sitting next to the likes of Jamie Dimon, whose JPMorgan Chase employees 235,000 people and Doug McMillon, President and CEO of Wal-Mart Stores, that has an employee roster of 2.3 million people worldwide with 1.5 million of those in the U.S., according to the company’s web site. If you look at IHS Markit’s web site and the description of what it says it does for its customers, you will have no idea of what it’s talking about – unless you’re a trader on Wall Street or some other financial capitol around the globe. The most fascinating aspect of Markit is that it was created with funding and backing from some of the largest firms on Wall Street who provided the market pricing for the instruments known as Credit Default Swaps — the instruments that played a major role in blowing up the U.S. economy and century old financial institutions in 2008.

The rich are about to get a big tax cut. - Shortly after his nomination as Treasury Secretary was announced, Steven Mnuchin went on television to offer some tax-reform principles that would guide the new administration: Any reductions we have in upper income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class. There will be a big tax cut for the middle class, but any tax cuts we have for the upper class will be offset by less deductions that pay for it. This appears to be false, at least if Republicans follow through on their plan to repeal-and-delay the ACA. Although the bill that’s under discussion would only gut the ACA in 2019, it would immediately cut taxes on the very rich. How big is the tax break? According to CBO, the reconciliation bill that Republicans are using as a template would cut taxes by $623 billion over ten years. Of that, $123 billion would come from the repeal of the Medicare tax surcharge and $223 billion from the repeal of the tax on investment income. That $346 billion represents about $1,000 for every man, woman, and child in the United States. Every cent will go into the pockets of people making more than $200,000 per year—the “upper class” that Mnuchin says won’t be getting any tax cuts. To my knowledge, there has been no discussion of offsetting those cuts in the repeal-and-delay bill. Maybe offsets will come later, but you’ll forgive me for some skepticism. Also, where does this leave Republicans when they look to finance their version of health reform? If the party remains steadfast in its anti-tax commitment, the only options are savage budgets cuts or deficit spending. Neither option is appealing, which will complicate negotiations over any “terrific” replacement.

Buffett Wins Again: Berkshire To Get $29 Billion Boost Under Trump Tax Plan -- Something curious happened as Trump was "draining the swamp" - the man who by some accounts owns the swamp, Hillary Clinton's billionaire backer Warren Buffett, may be about to get some $29 billion richer, if only on paper, thanks to Trump's tax-rate cut policies which would boost the book value of Berkshire by as much as $29 billion.According to an analysis by Barclays, Berkshire may enjoy a $29 billion boost to its book value under Trump's proposed tax reform. “We would view this magnitude of increase as favorable for Berkshire shares since it is generally valued on price to book value,” Barclays analysts led by Jay Gelb said in a note to investors Monday first reported by Bloomberg. Berkshire’s book value was more than $270 billion as of Sept. 30.Joining in the overall market frenzy, Berkshire has jumped about 8% in New York trading since Trump won the November 8 election, helped by the increasing value of Buffett’sholdings in bank stocks as interest rates climbed, while the prospect of lower taxes has also helped.Gelb’s analyzed Berkshire's deferred tax liability of about $50 billion at the end of 2015, a figure that includes potential costs if Buffett sells investments that gained in value. The review doesn’t take into account the DTLs at some energy operations, where benefits wold be enjoyed by utility customers and not Berkshire shareholders. The value of the liability is based on the current 35 percent tax rate and would fall by about $22 billion at a 20 percent corporate tax rate and drop by $29 billion at 15 percent, Gelb wrote. Trump has called for cutting the business tax rate to 15 percent, while the House Republican “blueprint” for tax changes proposes 20 percent.Some more details from the note:

Trump’s tax plans favour the rich and will hamper growth - Larry Summers - Properly designed, revenue-neutral reforms could help to offset the dramatic increases in inequality that have taken place over a generation, repair a business tax system that globalisation has rendered dysfunctional, reduce uncertainty and promote growth. Unfortunately, what we know of the intentions of the president-elect and congressional leadership suggest that they risk pushing through the most misguided set of tax changes in US history. The proposals from the presidential campaign, reiterated last week by President-elect Donald Trump’s choice for Treasury secretary, will massively favour the top 1 per cent of income earners, threaten an explosive rise in federal debt, complicate the tax code and do little if anything to spur growth. Steven Mnuchin, Treasury secretary-designate, asserts there will be no absolute tax cut for the upper class because deductions would be scaled back. The rub is that totally eliminating all deductions for those with incomes over $1m would not even raise enough revenue to cover reducing their marginal tax rates from 39 to 33 per cent, let alone offset their benefit from huge rate reductions on business and corporate income, and the elimination of estate and gift taxes. Estimates of the Trump plan suggest that it will raise the average after-tax income of the 0.9 per cent of the population with incomes over $1m by 14 per cent, or more than $215,000. This contrasts with proposed tax cuts for those in the middle of the income distribution of $1,000, or about 2 per cent. The repeal of estate and gift taxes is especially problematic because it would provide a window for the very rich to use gift and trust structures to ensure that their wealth passes without tax not just to their children but to their grandchildren and great grandchildren, regardless of subsequent legislation.

Hey, here’s a crazy idea: Let’s not cut taxes! - Jared Bernstein --Crazy, IKR? I mean, President-elect Trump ran on a big tax cut, right? I know: To the winner goes the spoils, and I won’t belabor this argument, as rational analysis isn’t exactly in the driver’s seat. But humor me for a minute and consider the following:

  • —Trump ran on a populist agenda, but his tax plan pushes hard in exactly the other direction.Millionaires, who make up only 0.8 percent of the population, would receive nearly half of the total value of the tax cuts he’s proposed. Their average tax cut would be more than $300,000 compared with a $900 cut for middle-class families. As my Center on Budget and Policy Priorities colleagues note: “the top 0.1 percent of Americans – numbering about 350,000 people – would receive substantially more than the bottom 280 million people.” In what world is that populism? I know: Trump world, where such facts are not welcomed.
  • —Supply-side, trickle-down fairy dust doesn’t work. Team Trump assures us that its tax cut will have powerful growth effects. By cutting high-end income and corporate taxes, they claim it will boost capital investment and thus productivity growth, which in turn will rain down goodies on the middle class. But history belies these claims. I’ve looked under every rock for correlations between high-end tax cuts and growth in jobs, investment, productivity and growth. It’s not there. The current state of fiscal affairs in Kansas is Exhibit A in this failed experiment. What you find instead are battered budgets and greater after-tax income inequality.
  • –Tax cuts already helped send the budget deficit up in fiscal 2016 without help from Trump. Although a bipartisan tax deal at the end of 2015 contained some important improvements to the Earned Income Tax Credit and the Child Tax Credit, it also extended some big, wasteful tax breaks and enshrined some other ones into permanent law. Some of these breaks — the research and experimentation tax credit, “bonus depreciation”— would probably have kept getting extended on a bipartisan basis even without the deal. But that doesn’t change the fact that these wasteful tax breaks were unpaid for and thus helped pave the way for the first increase in the deficit since 2011, from -2.5 percent of gross domestic product in 2015 to -3.2 percent of GDP this year.

Trump Sold All His Stocks In June -- Following today's tweet and follow up suggesting that Trump is now targeting Boeing's contract pricing practices, questions emerged whether the President-elect wasn't engaging in a conflict of interest due to his numerous, existing shareholdings. However, according to Trump spokesman Jason Miller, Donald Trump sold all of his stockholdings in June, removing himself from positions in numerous U.S. companies. Miller made the revelation during a phone call with reporters on Tuesday morning. He was asked about Mr. Trump’s past holdings in Boeing Co., a company the president-elect had criticized earlier in the day for what he alleged were high costs for the next Air Force One, the WSJ reported.“The President-elect sold all of his stock back in June,” Miller said. He subsequently clarified he was referring broadly to all of Mr. Trump’s stock, not Boeing specifically.  As his publicly disclosed asset list reveals, Trump had at least two brokerage accounts that held roughly 150 separate corporate stock and bond investments, according to a filing he submitted to the U.S. Office of Government Ethics in May. These included investments in a wide range of well-known companies, including Amazon.com Inc., Apple Inc., Boeing and Visa Inc. Trump's stock portfolio was worth roughly $40 million as of December 2015. The President-elect had between $50,000 to $100,000 of Boeing Co. stock when he filed his personal financial disclosure on May 15.

Trump Interviewed: I Sold All Stocks In June Because "I Felt That I Was Very Much Going To Be Winning" - As the mainstream media continues to blast Trump with allegations of conflicts of interest related to his many real estate holdings around the world, at least one conflict they won't have to worry about anymore is his holdings of public stocks.  Per the Washington Post, a Trump spokesman told the press yesterday that Trump unloaded all of his public shares back in June. Then, in what was supposed to be an interview congratulating Trump for his Time Person of the Year award, Matt Lauer of the Today Show decided to grill the president-elect on his public stock holdings and why he decided to sell. "Well I've never been a big person for the stock market, frankly.  But, over the years I bought stocks.  And, I bought them when they were low and I saw what was going on with interest rates were so low that it almost seemed like it was easy to predict what was going to happen with the stock market." When pressed on why he chose June to dump all his shares, Trump responded simply that he felt "like I was very much going to be winning." "Because I felt like I was very much going to be winning.  And I think I would have a tremendous conflict of interest owning all these different companies." "I don't think it's appropriate for me to be owning stocks when I'm making deals for this country that maybe will effect one company positively and another negatively.  I just felt there was a conflict."

Trump’s ‘Unpredictable Starting Now’ Foreign Policy Is Here -- More than six weeks before his inauguration, President-elect Donald Trump is already carrying out his promise to make U.S. foreign policy less predictable with a series of moves that are keeping America’s adversaries, as well as its friends, off-balance. In the span of a week, Trump slammed China over currency and trade, had an unprecedented call with Taiwan’s leader, praised the Philippine president’s violent war on drugs and promised to visit Pakistan, effectively upending years of foreign policy. Even when new presidents want to change policies, they are usually careful to adhere to the strict and deliberately stilted language of diplomacy, which exists to prevent misunderstandings that can lead to unintended consequences. The president-elect is showing “a pretty dramatic departure” from traditional practice, said Aaron David Miller, vice president for new initiatives at the Wilson Center and a former adviser at the State Department. “When I look at what appears to be the emerging Trump foreign policy, I see a lot of unpredictability when it comes to process,” he said.What most concerns some critics is the possibility that Trump, who claimed to know more about Islamic State than the Pentagon’s generals, may be making decisions hastily or without thinking about the broader consequences of decisions such as taking the call from Taiwan. “In dismissing the significance of this exchange they failed to recognize that process and people are policy when you’re president of the United States,” said Mira Rapp-Hooper, a senior fellow at the Center for a New American Security and Asia policy coordinator for Hillary Clinton’s presidential campaign. “A phone call to interact with a particular figure, especially of this significance, is going to be interpreted as policy.”

"What You Should Know About the Professor Who Has Trump’s Ear on the Economy"  -- Peter Navarro, a professor and author who became known during the presidential campaign as the only academic economist directly advising the Trump campaign, continues to be one of the most public voices on economic matters for President-elect Donald J. Trump as he prepares to take office next month.Last Friday, Mr. Navarro gave the transition team’s official response to the latest federal jobs report (although unemployment continued to fall, he maintained that the level of job recovery "further demonstrates an urgent need for President-elect Trump’s America First economic plan"). And later that day, when Mr. Trump broke nearly 40 years of diplomatic protocol and spoke directly to the president of Taiwan, at least one account highlighted the likely role that Mr. Navarro’s get-tough-with-China influence may have had on the president-elect’s actions.Mr. Navarro, who is 67, is a Harvard-trained professor of economics and public policy who has been on the faculty of the business school at the University of California at Irvine since 1989. Before that, he spent two years as an assistant professor of business and government at the University of San Diego. His ties to Mr. Trump began years before the campaign, when Mr. Navarro produced a film in connection with his 2011 book, Death by China: Confronting the Dragon — A Global Call to Action (Pearson FT Press). He sent the film to Mr. Trump, and soon got back an endorsement from the real-estate developer that called the film "right on."  This past October, a column in the The New Yorker speculated that if Mr. Trump won, "Peter Navarro would likely become the single most powerful economic adviser in the United States." The author of the piece also said he found some of Mr. Navarro’s ideas on China and trade "so radical" that he couldn’t find another economist who fully agreed with them.

After 8 Years of Expanding Presidential War Powers, Obama Insists They Are Limited -- Anticipating that Donald Trump might try to fulfill his promises to “bomb the shit” out of terror groups and do a “hell of a lot worse than waterboarding,” President Obama released a report on Monday summarizing his administration’s views of the legal barriers and policies limiting the president’s military power.The 61-page report calls for trying terrorism suspects in civilian court and explains at length why no future president could legally torture detainees. It lays out the administration’s self-imposed limits on military operations — and declares that a 2001 resolution Congress passed in the wake of 9/11 is not a blank check to go to kill alleged terrorists wherever they are.“It clearly reads like an explanation, a textbook that’s left for the next person,” said Naureen Shah, director of the Security With Human Rights Program at Amnesty International. “Here are all the things you cannot do.”But in trying to defend Obama’s legacy, the report paints a picture of an administration far more restrained than it was in practice.The report comes just weeks before Trump will inherit bombing campaigns in seven countries, a legally unaccountable drone program, and an open prison at Guantanamo Bay. The new report is the latest in a series of public steps Obama has recently taken to give the appearance of reining his war powers. Over the summer, for instance, the White House released its internal guidelines for drone strikes outside of war zones and issued a new executive order calling for more transparency on casualties going forward.

Congress Member Introduces Bill to Stop Funding Terrorists - Congresswoman Tulsi Gabbard - a combat veteran, and member of the House Armed Services Committee - has just introduced a bill to stop funding terrorists: (video)  B-a-c-k-g-r-o-u-n-d.

Pentagon buries evidence of $125 billion in bureaucratic waste --The Pentagon has buried an internal study that exposed $125 billion in administrative waste in its business operations amid fears Congress would use the findings as an excuse to slash the defense budget, according to interviews and confidential memos obtained by The Washington Post.
Pentagon leaders had requested the study to help make their enormous back-office bureaucracy more efficient and reinvest any savings in combat power. But after the project documented far more wasteful spending than expected, senior defense officials moved swiftly to kill it by discrediting and suppressing the results.The report, issued in January 2015, identified “a clear path” for the Defense Department to save $125 billion over five years. The plan would not have required layoffs of civil servants or reductions in military personnel. Instead, it would have streamlined the bureaucracy through attrition and early retirements, curtailed high-priced contractors and made better use of information technology. For the military, the major allure of the study was that it called for reallocating the $125 billion for troops and weapons. Among other options, the savings could have paid a large portion of the bill to rebuild the nation’s aging nuclear arsenal, or the operating expenses for 50 Army brigades. But some Pentagon leaders said they fretted that by spotlighting so much waste, the study would undermine their repeated public assertions that years of budget austerity had left the armed forces starved of funds. Instead of providing more money, they said, they worried Congress and the White House might decide to cut deeper.  So the plan was killed. The Pentagon imposed secrecy restrictions on the data making up the study, which ensured no one could replicate the findings. A 77-page summary report that had been made public was removed from a Pentagon website.

The rules of the (Trump) game - Pepe Escobar -- Gen. James “Mad Dog” Mattis, chosen by President-elect Donald Trump to be the new head of the Pentagon, is a model functionary of the Empire of Chaos. His call sign is – what else – “chaos”. The Marine Corps Special Operations Command (MARSOC) even shared his regular accolade; “Saint Mattis of Quantico, Patron Saint of Chaos”. The Saint in his pop incarnation comes fully equipped with a grenade and a knife. Mad Dog may indeed be seen by the real world as, well, a mad dog; he was on the front line of the 2001 assault on Afghanistan; led the Marine assault on Baghdad during Shock and Awe in 2003; and masterminded the horrendous American destruction of Fallujah in late 2004. Widely hailed as a fine strategist, he retired as chief of CENTCOM in 2013.  The Saint may have been a purveyor of chaos across the Cheney regime-coined “Greater Middle East” – something that came with inevitable collateral damage; his creeping Iranophobia. Yet the key to his appointment is that it will focus on rebuilding the US military. William Hartung, at the Center for International Policy, A Pentagon Rising: Is a Trump Presidency Good News for the Military-Industrial Complex? notes how “Pentagon spending is one of the worst possible ways of creating jobs. Much of the money goes to service contractors, arms industry executives, and defense consultants (also known as ‘Beltway bandits’).” Moreover, “such spending is the definition of an economic dead end.”  Criticizing Trumponomics as “Reaganomics on steroids” – and that includes vast military spending – Hartung stresses that if Donald Trump really wants to create jobs, “he should obviously pursue infrastructure investment rather than dumping vast sums into weapons the country doesn’t actually need at prices it can’t afford.” To rebuild the appalling US infrastructure is one of the top Trump campaign promises. My aim with this column was to launch a debate on the possible Leninist role of White House strategist Steve Bannon. Trump, like all US presidents, is obviously no Leninist. But his chief strategist does cultivate the Leninist notion of a proletariat vanguard; call it the Angry Older White American Blue Collar Male contingent; call it haters of identity liberalism, which elevated selected minorities to the status of sacred victims; or call it simply “deplorables”.

U.S. defense elite rally behind Trump's unusual Pentagon pick | Reuters: Often fiercely divided over policy, Republican and Democratic national security elite gathering this weekend in California appeared to largely agree on one thing: President-elect Donald Trump's pick for defense secretary. James Mattis, a retired Marine general, is an unorthodox choice. Because he retired only in 2013, Mattis is technically ineligible for the job since he has not been a civilian for at least seven years. That means Congress would need to grant a waiver -- something it hasn't done since 1950. Democrat Leon Panetta, a former U.S. defense secretary critical of Trump, says it is worth it. He sees in Mattis a chance that a Trump administration would adhere to core alliances and principles, even ones challenged by Trump during his election campaign. That would include U.S. support for NATO and recognition of longstanding threats, including from Russia. "(Mattis) shares beliefs that have been at the heart and soul of protecting our national security for a long time," Panetta, who was also CIA director under President Barack Obama, told Reuters in an interview at the Reagan National Defense Forum. Mattis, a 66-year-old commander who is revered by Marines, is known for his tough-talk, wariness of Iran and combat experience in Afghanistan and Iraq. Although Trump has played up Mattis' "Mad Dog" nickname and tough-guy image, Marines and others who served with him portrayed Mattis as a scholar and strategist who would seek to avoid open conflict. "I’ve never met anybody who tried harder to win without fighting," said Marine Corps Commandant Robert Neller.

  Putin Says Trump Is "A Smart Man", Will Adapt To Responsibilities As "Unipolar World Model Fails" -- Following Trump's phone call on Friday evening with the Taiwan president, which led to scathing response by the US press and diplomatic corps, both of which were shocked to see Trump threaten the "One China" status quo by taking foreign policy matters into his own hands (the same media and diplomats who were just as shocked to see Trump win the presidential election) , on Sunday morning Trump got some words of encouragement from none other than Vladimir Putin, who in an interview with Russian NTV TV, said that Trump is "a clever man" and will quickly adapt to his new responsibilities and new role as president."Trump was an entrepreneur and a businessman. He is already a statesman, he is the head of the United States of America, one of the world's leading countries."“The fact that Trump managed to achieve success in business, suggests that he is a smart man,” Putin said in the NTV interview.  “And as he is smart, that means he will fully and quite quickly be aware of a different level of responsibility. We assume that he will be acting this way,” he added.Putin has spoken previously of his hope that Trump will help restore U.S.-Russia relations, and analysts said he was unlikely to want to dial up anti-Western rhetoric before Trump's inauguration in January."Because he achieved success in business, it suggests that he is a clever man. And if (he is) a clever man, then he will fully and quite quickly understand another level of responsibility. We assume that he will be acting from these positions," Putin said.

Trump gets one presidential intelligence briefing a week: sources | Reuters: President-elect Donald Trump is receiving an average of one presidential intelligence briefing a week, according to U.S. officials familiar with the matter, far fewer than most of his recent predecessors. Although they are not required to, presidents-elect have in the past generally welcomed the opportunity to receive the President's Daily Brief (PDB), the most highly classified and closely held document in the government, on a regular basis. It was not immediately clear why Trump has decided not to receive the intelligence briefings available to President Barack Obama more frequently, or whether that has made any difference in his presidential preparations. An official on the transition team said on Thursday that Trump has been receiving national security briefings, including "routine" PDBs and other special briefings, but declined to specify their content or frequency, saying these matters were classified. Trump has asked for at least one briefing, and possibly more, from intelligence agencies on specific subjects, one of the officials said. The source declined to identify what subjects interested the president-elect, but said that so far they have not included Russia or Iran. Indiana Governor Mike Pence, Trump's vice president-elect, has been receiving his own PDB at least six days a week, the sources familiar with the matter said. Former Central Intelligence Agency briefer David Priess, the author of a book about PDBs, said that traditionally, Trump and Pence's predecessors sat for "daily or near-daily intelligence briefings" between their elections and their inaugurations.

 House G.O.P. Signals Break With Trump Over Tariff Threat - The New York Times: — House Republican leaders signaled on Monday that they would not support President-elect Donald J. Trump’s threat to impose a heavy tax on companies that move jobs overseas, the first significant confrontation over the conservative economic orthodoxy that Mr. Trump relishes trampling. “I don’t want to get into some kind of trade war,” Representative Kevin McCarthy, Republican of California and majority leader, told reporters in response to Mr. Trump’s threats over the weekend to seek a 35 percent import tariff on goods sold by United States companies that move jobs overseas and displace American workers. Speaker Paul D. Ryan also pushed back against Mr. Trump on Monday in an interview with a Wisconsin reporter, saying an overhaul of the corporate tax code would more effectively keep companies in the United States than tax penalties. “I think we can get at the goal here,” he said, “which is to keep American businesses American, build things in America and sell them overseas — that can be properly addressed with comprehensive tax reform.” Mr. Trump’s economic positions clashed with traditional conservatives during the campaign, but now these differences — on trade, government spending on infrastructure, and tax policies — have set the incoming president on a perilous course with the lawmakers whose support he needs to keep his agenda on track.

In Split from Trump, GOP Leaders Emphasize Tax Overhaul Over Tariffs - Congressional Republicans split with President-elect Donald Trump Monday over whether to impose tariffs on U.S. companies that move production offshore, in the latest example of how GOP lawmakers are struggling to reconcile their loyalty to free-market ideology with Mr. Trump’s more freewheeling populist agenda. Republicans in both the House and Senate declined Monday to endorse Mr. Trump’s weekend tweet in which he threatened to impose consequences like a 35% import tariff on goods sold by U.S. companies that have moved jobs overseas and fired U.S. workers.Top House GOP leaders, including Speaker Paul Ryan of Wisconsin and Majority Leader Kevin McCarthy of California said they wanted to use a tax overhaul instead to make the U.S. a more competitive place to do business.“I do not want a trade war,” Mr. McCarthy told reporters Monday. “I believe in the free market. I don’t think government should be picking winners or losers.” Similarly, Mr. Ryan said in an interview with the Milwaukee Journal Sentinel that while Mr. Trump’s concern “is legitimate,” he offered a different approach to levying tariffs. “We believe comprehensive tax reform is the best way to get at the issue of whether or not a company chooses to stay in America or produce their products in America,” Mr. Ryan said.

Trump Advisor Says Administration Not Looking To "Rip Up NAFTA" Or Impose "Quote-Unquote Tariffs" -- After repeatedly referring to NAFTA as "the worst trade deal maybe ever signed anywhere" during the presidential campaign, the Trump administration seems to be softening it's protectionist rhetoric.  According to The Hill, in speaking to a group of concerned business leaders, Trump advisor Anthony Scaramucci said that the new administration isn't looking to "rip up NAFTA" but rather to "right-size it and make it fairer."  Anthony Scaramucci, a senior advisor on the Trump transition team, told a group of business leaders convened at a bipartisan meeting by the group No Labels that President-elect Trump is a free-trader who is looking to make trade deals more fair, not scrap them. “I don’t think we’re looking to rip up NAFTA as much as we are looking to right-size it and make it fairer,” he added. “He’s got a great relationship, by the way, with the Mexican president. They talk regularly,” referring to Trump and Mexican President Enrique Peña Nieto. Scaramucci said his homework on Trump’s economic team has been to study the impact of the North American Free Trade Agreement (NAFTA), which Trump called “the worst trade deal maybe ever signed anywhere” during the campaign. “I don’t think anybody in the administration from the top to the bottom is looking for protectionism. We understand the economic harm and the impact that would take,” he said. “I don’t think anybody in the administration is looking for quote-unquote tariffs, but I think they are a cudgel if you will to lay out there if we can’t get the trade deals to be right-sided to now benefit the American people.” All that said, the suggestion that no one within the administration "is looking for quote-unquote tariffs," would seem to slightly contradict tweets from the President-elect himself who has directly warned, as recently as yesterday, that companies looking to offshore manufacturing jobs should expect a 35% import tariff.

Trump Is Correct – Boeing Is Gouging The Taxpayer On The New Air Force One - The designation/callsign “Air Force One” has been around since around the time of WWII, with FDR being the first president to fly while in office.  Since 1943, with only a couple exceptions, the Air Force has been flying custom versions of Boeing commercial airliners for the presidential flight mission.  Most recently replaced in 1990, the president currently flies in a modified 747 with the military designation “VC-25”; two copies were produced for a cost of $325 million apiece, and the callsign “Air Force One” is only used when the president is onboard.Even though it is still extremely advanced, Air Force One is due for a replacement.  Currently, the operating cost for each VC-25 is $210,877 per hour; an extremely high figure, likely because of the dated nature and high maintenance costs of both the airframe and the avionics suite. However, with a total program cost estimated to be around $4 billion dollars, Boeing is clearly gouging the taxpayer.  The newest derivative of Air Force One will end up being over six times as expensive as the last one, which was built on the same airframe.  I guess Boeing just thought the higher price tag was going to slip through the cracks of a bloated DoD budget?

Trump follows Obama’s political blueprint - I’ll protect your livelihoods, the newly elected president promised factory employees whose jobs were in danger. I’ll save you money by rejecting a costly overhaul of my own aircraft, he told taxpayers a couple of weeks later. I’ll spend billions to repair the country’s crumbling roads and bridges, creating jobs in the process, he told Congress. I’ll sell my agenda by using the bully pulpit, he told the press, holding rallies around the country and shaming corporate greed that comes at the expense of ordinary people. And to do it all, he would set up a new political organization to pressure anyone who refused to play along. His opponents were horrified, and said he was abusing the power of the Oval Office. The year was 2009. The new president was Barack Obama. Flash forward to today: Donald Trump is following much the same political blueprint his predecessor and longtime adversary laid out years ago, signaling he’ll actively intervene in the U.S. economy while antagonizing free-marketeers who say his meddling will end in disaster. It’s a funhouse-mirror version of Obama’s early image of the presidency — the man of action for down-and-out Americans who desperately want to see that somebody is on their side.

Trump taps Ben Carson for HUD secretary - (CNN) Ben Carson will be nominated as the next secretary of the Department of Housing and Urban Development, the Trump transition team announced Monday. "I am thrilled to nominate Dr. Ben Carson as our next Secretary of the US Department of Housing and Urban Development," President-elect Donald Trump said in a statement. "Ben Carson has a brilliant mind and is passionate about strengthening communities and families within those communities." During their primary fight, though, Trump had derided Carson as "super low energy" and delivered a number of sharp attacks on Twitter, questioning Carson's temperament and qualifications for office. 5"With Ben Carson wanting to hit his mother on head with a hammer, stab a friend and Pyramids built for grain storage - don't people get it?" Trump tweeted in November of 2015, when he and Carson were still rivals. At a rally in Fort Dodge, Iowa, the same month, Trump had delivered a similarly blistering attack on Carson."If you're a child molester, a sick puppy, a child molester, there's no cure for that. There's only one cure, and we don't want to talk about that cure, that's the ultimate cure. No there's two, there's death and the other thing. But if you're a child molester, there's no cure, they can't stop you. Pathological, there's no cure," Trump said. Speaker of the House Paul Ryan praised Carson's nomination for HUD secretary. But Democratic Rep. Elijah Cummings, the Democratic ranking member of the House Oversight Committee, slammed the pick, calling Carson "woefully unqualified."

Carson Accepts Offer to Lead Housing Agency, Trump Team Says - Ben Carson accepted Donald Trump’s offer to lead the U.S. Department of Housing and Urban Development, according to a statement from the president-elect’s transition office Monday. Carson, a retired neurosurgeon who unsuccessfully sought the 2016 Republican presidential nomination before backing Trump, is the first of what is expected to be several Cabinet nominee announcements this week. Trump has filled several of the highest-profile Cabinet positions, pending Senate confirmation -- including former Goldman Sachs Group Inc. executive Steven Mnuchin for Treasury and retired Marine Corps General James Mattis for Defense -- while his search for a secretary of state broadens.The announcement caps what was apparently a lengthy consideration process for Carson. He said Nov. 22 on Fox News that the job was “one of the offers that’s on the table,” and that he’d think and pray about the matter over the Thanksgiving holiday. Carson "has a brilliant mind and is passionate about strengthening communities and families within those communities," Trump said in the statement, which cited Carson’s upbringing in Detroit as well as his medical career. "We have talked at length about my urban renewal agenda and our message of economic revival, very much including our inner cities." After this year’s bitter nomination contest, Trump also said, "He is a tough competitor and never gives up." Carson, 65, said in the statement he feels he "can make a significant contribution particularly by strengthening communities that are most in need. We have much work to do in enhancing every aspect of our nation and ensuring that our nation’s housing needs are met.”

Trump to pick retired Gen. Kelly for Homeland Security: CBS: resident-elect Donald Trump plans to nominate retired Marine General John Kelly to lead the Department of Homeland Security, CBS News reported on Wednesday. Kelly, the former head of the U.S. Southern Command, has accepted the offer, CBS said, citing unidentified sources. Reuters has not independently confirmed the choice. Kelly, 66, would be the third general Trump has tapped for a high-level position in his administration. The Republican president-elect, who has no military experience, planned to nominate retired General James Mattis to lead the Department of Defense and picked retired Lieutenant General Michael Flynn to be his national security adviser. Kelly differed with Democratic President Barack Obama on key issues and has warned of vulnerabilities along the United States’ southern border with Mexico. As head of the U.S. Southern Command, his final leadership post in a 45-year military career, Kelly was responsible for U.S. military activities and relationships in Latin America and the Caribbean. Although Kelly’s military experience may give him insight into overseas threats, like drug trafficking or Islamic extremism, it will do little to prepare him for the legal and political complexities of grappling with a sprawling agency that oversees everything from airport security to protecting against cyber threats and responding to domestic crises.

Troubling op-ed in Trump in-law’s newspaper calls for FBI crackdown on anti-Trump protests: Jared Kushner’s newspaper, the New York Observer, ran an op-ed last week that called for a FBI crackdown on the anti-Trump protests that have swept the nation, AlterNet reports. Kushner, who is Donald Trump’s son-in-law and married to Ivanka, bought the Observer in 2006. Just last week, the paper was described as the “propaganda arm of the Trump administration,” by Mediaite contributor Justin Bargona. The Observer op-ed, written by Austin Bay — a former U.S. Army Reserve colonel and current adjunct professor at the University of Texas in Austin — calls on FBI Director James Comey to investigate “the violence and political thuggery that continue to mar the presidential election’s aftermath.” This includes a crackdown on protests and a thorough investigation into whether protest efforts have “ties to organizations demanding vote recounts.” Bay writes, “The hard left’s violent reaction to Donald Trump’s election is vile and dangerous. Peaceful protests? No, the demonstrators vandalize and destroy.” He also calls out several so-called Democratic Party operatives, such as political consultant Robert Creamer, whom Bay refers to as a “political terrorist.” Bay also calls out the Black Lives Matter movement, George Soros, and Jill Stein. He writes that there should be a thorough investigation into electorate intimidation across the country, noting that “members of the Electoral College are being harassed and threatened by angry, vicious (and likely Democratic Party) malcontents.”

Trump to pick foe of Obama climate agenda to run EPA -source | Reuters: Donald Trump will name Oklahoma Attorney General Scott Pruitt, an ardent opponent of President Barack Obama's measures to curb climate change, as head of the Environmental Protection Agency, a Trump transition team official said on Wednesday, a choice that enraged green activists and cheered the oil industry. Trump's choice of Pruitt fits neatly with the Republican president-elect's promise to cut back the EPA and free up drilling and coal mining, and signals the likely rollback of much of Obama's environmental agenda. Since becoming the top prosecutor for the major oil- and gas-producing state in 2011, Pruitt, 48, has launched multiple lawsuits against regulations put forward by the agency he is now poised to lead, suing to block federal measures to reduce smog and curb toxic emissions from power plants. He is also a leading figure in a legal effort by several states to throw out the EPA's Clean Power Plan, the centerpiece of Obama's climate change strategy that requires states to curb carbon output. In an interview with Reuters in September, Pruitt said he sees the Clean Power Plan as a form of federal "coercion and commandeering" of energy policy and that his state should have "sovereignty to make decisions for its own markets." Pruitt has also said he is skeptical of climate change. In an opinion piece in an Oklahoma newspaper this year, he wrote that he believes the debate over global warming is "far from settled" and that scientists continue to disagree on the issue.

Trump Picks Pro Wrestling Mogul Linda McMahon To Run Small Business Administration --While some of Trump's previous administration picks have raised an eyebrow or two in the past two weeks, his choice of Linda McMahon, pro wrestling mogul and wife of WWE legend Vince McMahon, to head the Small Business Administration will likely be his most scrutinized yet. McMahon had previously been floated as a potential appointee due to her ties to GOP causes and Trump personally, as well as Trump's history of appearances at WWE pro wrestling events. McMahon, who lives in Connecticut, is a veteran of the state's board of education. She also ran for Senate as a Republican in the state twice, losing to Sen. Richard Blumenthal (D) in 2010 and Sen. Chris Murphy (D) in 2012. Here is the full statement from the Trump team:President-Elect Donald J. Trump Intends to Nominate Linda McMahon to Serve as the Administrator of the Small Business Administration(New York, NY) — President-elect Donald J. Trump today announced his intent to nominate Linda McMahon to serve as the Administrator of the Small Business Administration, a cabinet-level position."My America First agenda is going to bring back our jobs and roll back the burdensome regulations that are hurting our middle class workers and small businesses. To help push our agenda forward, I am pleased to nominate Linda McMahon as the head of the Small Business Administration," said President-elect Trump. "Linda has a tremendous background and is widely recognized as one of the country's top female executives advising businesses around the globe. She helped grow WWE from a modest 13-person operation to a publicly traded global enterprise with more than 800 employees in offices worldwide. Linda is going to be a phenomenal leader and champion for small businesses and unleash America's entrepreneurial spirit all across the country."

Trump starts churning out Cabinet picks - POLITICO: It’s been a month since Donald Trump claimed an improbable White House victory, and the president-elect is briskly building out his Cabinet with tried-and-true conservatives eager to roll back President Barack Obama’s executive orders and regulations. The billionaire, who was named Time magazine’s person of the year, spent most of his address Wednesday to more than 800 donors at a private fundraising breakfast in New York regaling the crowd with tales about his emotions on election night. And he playfully jabbed so-called Never Trumpers who, in fact, are now supporting the president-elect. “They said Never Trump. Now they’re Only Trump,” he boasted to the room, prompting laughter and applause. Trump’s transition is far from all fun and games, though. Trump is cranking out decisions on his Cabinet appointments and other top positions, including emerging reports Wednesday of three more nominees — retired Marine Gen. John Kelly as homeland security secretary, Oklahoma Attorney General Scott Pruitt as EPA chief, Linda McMahon to head the Small Business Administration, and Iowa Gov. Terry Branstad as ambassador to China.The real estate mogul is also facing mounting pressure from Democrats eager to take him to task for the conflicts of interest that threaten to plague his presidency. Fortunately for him, Trump has majorities in both chambers of Congress on his side. And House Speaker Paul Ryan on Wednesday batted down any notion that he has concerns about Trump’s business ties as he prepares to take office. “This is not what I’m concerned about in Congress,” Ryan said during an interview on CNBC. “I have every bit of confidence he’s going to get himself right with moving from being the business guy that he is to the president he’s going to become.”

Trump chooses Puzder as labor secretary - President-elect Donald J. Trump has officially announced his pick to run the Department of Labor: Andy Puzder. Puzder is the CEO of CKE Restaurants, which included the Carl’s Jr. fast food chain. Trump said Puzder “has created and boosted the careers of thousands of Americans” and is well suited to serve as labor secretary. “He will save small businesses from the crushing burdens of unnecessary regulations that are stunting job growth and suppressing wages,” Trump said in a statement. Puzder said he was honored to be nominated and that he and Trump share a belief that the right policies can “result in more jobs and better wages for the American worker.” Puzder's selection suggests that Trump, despite his strong working-class backing, will favor management over labor at the Labor Department. In 2010 Puzder coauthored a book titled "Job Creation: How It Really Works And Why Government Doesn't Understand It." Indeed, Puzder has been drawing criticism from unions already. A Nov. 29 story posted on the website of the left-leaning American Prospect quoted Kendall Fells, organizing director for the SEIU-funded Fight for $15, saying, "Puzder as labor secretary is like putting Bernie Madoff in charge of the Treasury.”

Trump's Labor Dept pick sends early warning sign to worker advocates -  (Reuters) - President-elect Donald Trump will name fast-food executive Andy Puzder to head the U.S. Department of Labor, according to a source familiar with the matter, in an appointment likely to antagonize organized labor. Puzder, chief executive of CKE Restaurants Inc, which operates the Carl's Jr. and Hardee's fast-food chains, has been a vociferous critic of government regulation of the workplace. Puzder frequently publishes commentary and gives television interviews in which he argues that higher minimum wages would hurt workers by forcing restaurants to close, and praises the benefits of automation in the fast-food industry. Fast-food workers, who are largely not unionized, are engaged in a multi-year campaign known as the "Fight for $15," which is supported by labor unions, to raise minimum wages to $15 per hour. They have had state-wide successes in New York and California and in cities and municipalities such as Seattle. The selection of Puzder, first reported by the Wall Street Journal, was expected to be announced soon, the source said. The Labor Department regulates wages, safety and discrimination in the workplace. Trump transition spokesman Jason Miller, when asked on a daily briefing call about Puzder, did not address him directly but said there would be "additional cabinet information" released later on Thursday. Puzder declined to comment via a spokesman.

What Andy Puzder, Donald Trump’s Expected Labor Pick, Says on the Issues - President-elect Donald Trump’s expected pick for labor secretary, fast-food executive Andy Puzder, has been vocal about issues affecting the U.S. workforce, from overtime rules to the role of automation. The chief executive of CKE Restaurants Holdings Inc., the parent company of the Carl’s Jr. and Hardee’s burger chains, is a frequent opinion writer for The Wall Street Journal and other publications, as well as a regular guest on television news shows. He also served as an adviser to both the Trump and Mitt Romney presidential campaigns. Here’s what he has said about topics he would likely face as labor secretary.

  • Overtime Rules - “As with the Obama Administration’s other efforts to regulate their way to economic prosperity, it will not deliver as promised.…Turning highly sought-after entry level management careers into hourly jobs where employees punch a clock and are compensated for time spent rather than time well spent is hardly an improvement on the path from the working class to the middle class,” Mr. Puzder wrote in Forbes on May 18.
  • Obamacare - “The burden these increased health-care costs place on working and middle-class Americans is inexcusable. But Obamacare’s failure is having broader implications for economic growth. With GDP already averaging a mere 2% since the recession ended and hovering around 1.5% over the past four quarters, we should be making faster growth a political priority. That is not what the Affordable Care Act is doing,”
  • Minimum Wage - “These people [protesters demand at $15 an hour minimum] should really think about what they’re doing. There are solutions to this problem, and increasing the minimum wage is not the best solution. If we are going to increase the minimum wage at all, we’ve got to keep a lower minimum wage for entry-level workers, or these people are just going to be shut out of the workforce….
  • Automation  “Why the increased use of technology? The major reason is consumer preference. Research shows that many appreciate the speed, order accuracy and convenience of touch screens.  The other reason is costs. While the technology is becoming much cheaper, government mandates have been making labor much more expensive,” Mr. Puzder wrote in The Wall Street Journal on March 24.
  • Immigration - “Legal immigrants are an asset to the country. We believe that deporting 11 million people is unworkable, and we hope in the end Mr. Trump comes to this same conclusion. Deportation should be pursued only when an illegal immigrant has committed a felony or become a ‘public charge.’” Mr. Puzder wrote with fellow Trump adviser Stephen Moorein The Wall Street Journal on July 14.

Andrew Puzder fails every test for a Labor Secretary -- President-elect Donald Trump announced that he plans to nominate fast food CEO Andrew Puzder to head the Department of Labor (DOL). Puzder, who makes millions as a low-wage employer, fails every test for a Labor Secretary. DOL’s mission is to improve the wages and working conditions of working Americans, but Puzder wants to keep wages low and threatens to replace his fast food chain’s employees with robots if the minimum wage rises enough to crimp his profits. He’s opposed to the new overtime rule that gave the right to time and a half pay to millions of salaried employees earning less than $47,476 a year. Walmart has already raised its managers’ pay, as did about half of all big retailers, even before the rule was supposed to take effect on December 1. But Puzder wants to kill it so he can keep working low-paid employees without paying them a dime extra for their overtime hours.The Labor Secretary is in charge of reporting the employment numbers, but even there Puzder can’t be trusted. Either from ignorance or dishonesty, he claims the restaurant industry is in a recession, even though its employment has grown rapidly since the economy came out of the actual recession in 2010. He says Obamacare is to blame, but that’s baloney: the truth is that since the health insurance exchanges came on-line in January 2014, restaurant employment has grown by more than 12 percent, faster than the rest of the economy, where employment grew by about 7 percent.The Labor Secretary is the chief enforcement officer for wage and hour laws, the occupational safety and health act, and other employment laws, but the fast food chain Puzder runs has a long history of wage theft—cheating workers until they get caught by state or federal investigators or they’re sued in private lawsuits.Nothing in Puzder’s history of anti-worker and anti-government rhetoric indicates that he cares about or believes in the Labor Department’s mission. He would probably make a poor Secretary of Commerce, but he will be a disastrous Secretary of Labor.

What these Cabinet posts might mean for anti-poverty policy -- With the almost daily announcement of new Cabinet posts by President-elect Trump, his administration is starting to take shape. Still somewhat unclear, however, is his approach to anti-poverty programs. A critical appointment was Congressman Tom Price as Secretary of Health and Human Services, but more attention was paid to his positions on health care than anti-poverty policy, which he will also take part in overseeing. Along with the person he appoints as Assistant Secretary for the Administration for Children and Families, he will oversee 19 offices that provide programs and services to low-income Americans, ranging from family assistance (cash welfare), child care, Head Start, to child support. As the House Budget Chairman, Price released a FY 2017 budget that suggests that he views the current mix of programs for low-income Americans as duplicative and ineffective. The budget revealed some of his thinking on how policy in his Department of Health and Human Services might take shape. Expect Secretary Tom Price to pursue these goals aggressively. Principles from the FY 2017 Budget Resolution Text include:

  • Expect able-bodied adults receiving welfare to work or prepare for work in exchange for receiving benefits.
  • Get incentives right when people move from welfare to work.
  • Focus welfare programs on outcomes, not inputs.
  • Preserve welfare benefits for those most in need.

The Budget Resolution also stated: Finally, no set of government safety net programs can replace, or improve upon, nature’s safety net: the family. Government programs should recognize and support those who lose any connection to a family. At the same time, however, government should take care not to contribute to the dissolution of families. Government programs should aim to strengthen the family, the most important and enduring institution in society.

Democrats plot uphill fight against some Trump nominations | Reuters: U.S. Senate Democrats plan to fight some of President-elect Donald Trump's choices for top administration jobs, but history and the party's minority status in the chamber are not on their side. A simple majority of 51 votes is needed in the 100-member Senate to confirm nominations. Louisiana will select its newest senator on Saturday. If the Republicans, as expected, hold on to the seat, they will control at least 52 seats in the chamber next year. Senate Republicans said on Thursday they were confident of winning Cabinet confirmations early next year. Nonetheless, some Democrats said they hoped to persuade a few Republicans to help them block a Trump nominee or two, following the Republican Trump's inauguration on Jan. 20, when a newly installed Senate starts reviewing his nominations. That could be just brave talk from Democrats. The Senate has rejected only nine of 719 Cabinet nominations in U.S. history, not counting nominees who have withdrawn when facing certain defeat, according to congressional records. The last rejection was in 1989, when the Senate blocked Republican President George H.W. Bush's nomination of Senator John Tower to be defense secretary. In 2013, Democratic President Barack Obama had trouble getting Chuck Hagel confirmed as defense secretary, but he ultimately prevailed.This time around, Democrats said their top targets included U.S. Representative Tom Price as head of the Department of Health and Human Services, and Oklahoma Attorney General Scott Pruitt as Environmental Protection Agency administrator.

The March of the Billionaires: On Trump’s Bait and Switch -- Nomi Prins - Given his cabinet picks so far, it’s reasonable to assume that The Donald finds hanging out with anyone who isn’t a billionaire (or at least a multimillionaire) a drag. What would there be to talk about if you left the Machiavellian class and its exploits for the company of the sort of normal folk you can rouse at a rally?  It’s been a month since the election and here’s what’s clear: crony capitalism, the kind that festers and grows when offered public support in its search for private profits, is the order of the day among Donald Trump’s cabinet picks. Forget his own “conflicts of interest.” Whatever financial, tax, and other policies his administration puts in place, most of his appointees are going to profit like mad from them and, in the end, Trump might not even wind up being the richest member of the crew.  Only a month has passed since November 8th, but it’s already clear (not that it wasn’t before) that Trump’s anti-establishment campaign rhetoric was the biggest scam of his career, one he pulled off perfectly. As president-elect and the country’s next CEO-in-chief, he’s now doing what many presidents have done: doling out power to like-minded friends and associates, loyalists, and -- think John F. Kennedy, for instance -- possibly family.   Here, however, is a major historical difference: the magnitude of Trump’s cronyism is off the charts, even for Washington. Of course, he’s never been a man known for doing small and humble. So his cabinet, as yet incomplete, is already the richest one ever. Estimates of how loaded it will be are almost meaningless at this point, given that we don’t even know Trump’s true wealth (and will likely never see his tax returns). Still, with more billionaires at the doorstep, estimates of the wealth of his new cabinet members and of the president-elect range from my own guesstimate of about $12 billion up to $35 billion. Though the process is as yet incomplete, this already reflects at least a quadrupling of the wealth represented by Barack Obama’s cabinet.  It’s already obvious that, to Trump, “draining the swamp” means filling it with new layers of golden sludge, similar in color to the decorations that adorn buildings with his name, including the new Trump International Hotelon Pennsylvania Avenue near the White House where foreign diplomats are already flocking to curry favor and even the toilet paper holders in the lobby bathrooms are faux-gold-plated.

Trump defends wealthy Cabinet picks: I want people who ‘made a fortune’ - Trump's Cabinet picks could make it one of the wealthiest in US history — and that may have been by his own design.  On the third leg of his "Thank You" tour Thursday in Des Moines, Iowa, Trump defended his selection of millionaires and billionaires to join his administration, likening his picks to rich athletes.  “I want people that made a fortune because now they’re negotiating with you. It’s not different than a great baseball payer or a great golfer," Trump said.  Trump nominated billionaire investor Wilbur Ross as his Commerce Secretary, Betsy Devos, a billionaire activist, as his Education Secretary, and Wall Street banker Steve Mnuchin as his Treasury Secretary. Both Mnuchin and Ross have backgrounds in the financial industry and have worked for Goldman Sachs.  Trump's picks are particularly interesting as he vowed during his campaign to "drain the swamp" of Washington insiders and lobbyists in Washington DC who he claimed profited at the expense of hardworking Americans. Still, Trump insists that his picks would be devoted to serving America.   “These people have given up fortunes of income in order to make $1 a year and they’re so proud to do it,” Trump said. "In filling my cabinet, I’m looking for people who fully understand the meaning of service and who are committed to advancing the common good.  So far, only Trump has said he will decline his presidential salary and it is unclear whether some of his Cabinet members will do the same.

Donald Trump to Remain Executive Producer on ‘Celebrity Apprentice’ | Variety: Donald Trump will remain an exec producer on NBC’s “Celebrity Apprentice,” which is returning Jan. 2 after a two-year hiatus with new host Arnold Schwarzenegger.MGM confirmed to Variety that Trump has retained his EP credit on the series. The president-elect’s status on the 15th season of the reality series that made him a household name has been a question since Trump launched his presidential campaign in June 2015. In the credit sequence, Trump’s name will air after that of “Apprentice” creator Mark Burnett and before Schwarzenegger, who is also an exec producer of the new incarnation along with Page Feldman and Eric Van Wagenen.The larger issue for MGM, NBC, and the White House is the payment that Trump will receive for the series. It’s unclear what his per-episode fee is, but it is likely to be in the low five-figures, at minimum. NBC has ordered eight episodes of “The New Celebrity Apprentice.” Trump’s fees will be paid through MGM, the production entity on the show, not NBC. MGM declined to comment on the financial terms of Trump’s deal.Trump spokeswoman Hope Hicks confirmed that Trump has maintained a financial interest in “Apprentice.”

Trump Fires Adviser’s Son From Transition for Spreading Fake News — President-elect Donald J. Trump on Tuesday fired one of his transition team’s staff members, Michael G. Flynn, the son of Mr. Trump’s choice for national security adviser, for using Twitter to spread a fake news story about Hillary Clinton that led to an armed confrontation in a pizza restaurant in Washington. The uproar over Mr. Flynn’s Twitter post cast a harsh spotlight on the views that he and his father, Lt. Gen. Michael T. Flynn, aired on social media throughout the presidential campaign. Both men have shared fake news stories alleging that Mrs. Clinton committed felonies, and have posted their own Twitter messages that at times have crossed into Islamophobia.  But their social media musings apparently attracted little attention from Mr. Trump or his transition team before a North Carolina man fired a rifle on Sunday inside Comet Ping Pong, which was the subject of false stories tying it and the Clinton campaign to a child sex trafficking ring.  Hours after the episode, the younger Mr. Flynn, 33, went on Twitter to say that until “Pizzagate” was proved false, it remained a story. On Tuesday morning, after the post had attracted national attention and it was reported that Mr. Flynn had a transition team email address, Vice President-elect Mike Pence denied that Mr. Flynn had ever worked for the team, saying on MSNBC’s “Morning Joe” that he had “no involvement in the transition whatsoever.”  But later in the morning, Jason Miller, a transition spokesman, tacitly acknowledged that Mr. Flynn had worked for the transition, saying in a conference call that Mr. Flynn was now no longer involved.

Donald Trump's Cabinet Selections Signal Deregulation Moves Are Coming - Business leaders are predicting a dramatic unraveling of regulations on everything from overtime pay to power-plant emission rules as Donald Trump seeks to fill his cabinet with determined adversaries of the agencies they will lead. The president-elect’s pick Thursday to head the Labor Department, fast-food executive Andrew Puzder, is an outspoken critic of the worker-pay policies advanced by the Obama administration. Mr. Trump’s choice for the next administrator of the Environmental Protection Agency, Oklahoma Attorney General Scott Pruitt, is a primary architect of legal challenges on President Barack Obama’s environmental regulations. Other cabinet nominees critical of regulations advanced under Mr. Obama include Rep.Tom Price to lead the Department of Health and Human Services, financier Wilbur Ross Jr. at the Commerce Department and retired neurosurgeon Ben Carson at the Department of Housing and Urban Development. All will require Senate confirmation. Those picks suggest the Trump administration, backed by a Republican Congress, is determined to advance labor, environmental and financial regulatory policies more favorable to many American corporations, though not all will back his proposals. Appearing in Des Moines, Iowa, on Thursday as part of his postelection “thank you” tour, Mr. Trump said he will push to do away with regulations that are crimping job growth. “On regulations, we’re going to eliminate every single regulation that hurts our farms, our workers and our small businesses,” he said. Business leaders say all Americans stand to benefit from a lighter regulatory touch that would boost profits, growth and hiring, particularly for small and midsize businesses.

The Time Has (Finally) Come for a Single Regulator -  Regulatory relief is expected to be a top policy item for the incoming Trump administration, and nowhere is the need for relief more apparent than in the financial services industry. The place to start is to eliminate overlapping jurisdictions among the bank regulators. Disentangling the current regulatory web would not only result in significant direct budgetary savings to the government, but would also save the industry countless unproductive hours and expense. Consumers, meanwhile, would benefit from lower costs for financial services products. The time for consolidating the regulators is now. With control of the White House and both chambers of Congress, reform-minded Republicans have never been in a better position to simplify the regulatory structure. Virtually everyone agrees that more efficient regulation would provide much-needed budgetary savings and help invigorate economic growth. A "one bank, one regulator" approach does not imply leniency toward banks. Rather it would make regulatory oversight smarter and eliminate wasteful duplication of regulatory responsibilities. The current alphabet soup of regulators is dizzying. All banks are subject to supervision by a chartering agency. For national banks, this is the federal Office of the Comptroller of the Currency. A state-chartered bank answers to a state regulator, but is also assigned a federal regulator: state "members" of the Federal Reserve System are supervised by the Fed; state "nonmembers" by the Federal Deposit Insurance Corp. The Fed oversees any bank holding company, while the FDIC has "backup" supervisory authority for any institution with federally insured deposits.In addition, there is the Consumer Financial Protection Bureau, which was established by the Dodd-Frank Act. The CFPB sets policy for all institutions that offer consumer financial products; the bureau also supervises the activities of banks with over $10 billion in assets, as well as larger institutions in certain nonbank sectors. Publicly traded financial institutions are also subject to the scrutiny of the Securities and Exchange Commission. Add to that the various state regulators for insurance companies and securities dealers.

 Fed’s Dudley Says Financial Regulation Job Remains Unfinished - Federal Reserve Bank of New York President William Dudley said U.S. regulators, despite having made the financial system safer and less prone to panics, still had not eliminated the threat posed by institutions considered “too big to fail.” “This is work that we absolutely must complete,” he said in prepared remarks he’s scheduled to deliver Saturday at a conference on financial regulation in New York. “Without a well-functioning resolution process, the consequences of such a failure could still be catastrophic.” Dudley’s comments come amid uncertainty over how far the incoming administration of President-elect Donald Trump will go in dismantling rules designed to prevent a recurrence of the financial crisis of 2007-2009. Republicans in Congress are preparing legislation that would roll back much of the 2010 Dodd-Frank Act that included regulations designed to prevent a repeat of the meltdown. Dudley said the U.S. financial system was “much more resilient” than it was before the crisis, as reforms had made banks better able to absorb shocks and had removed structural issues that made the system more vulnerable. Still, banks had not yet done enough to allow for their own orderly resolution in an emergency, he said. “This requires having clean parent holding company structures, less corporate complexity, and essential service and support operations that are able to continue to operate even when the parent company becomes non-viable,” he said. Dudley also said banks had not done enough to encourage whistle-blowing to expose wrongdoing at an early stage. “Big problems can be nipped in the bud when people speak up and senior management responds appropriately,” he said.

 The Investment Firm Started by Trump’s Commerce Secretary Pick Was Accused in Fraud Case - During the presidential campaign, Donald Trump repeatedly cast himself as an anti-Wall Street populist and blasted an international cabal of bankers for supposedly screwing American workers. Yet, since being elected, he has turned to Big Finance titans to run his administration, and one of them—Wilbur Ross, Trump's pick for secretary of commerce—founded a giant private equity firm that was accused of committing fraud and deceit in a case the firm settled by paying a multimillion-dollar fine. In 2000, Ross founded WL Ross & Co., a private equity firm that specialized in taking over troubled companies. In August this year, the firm settled a case with the Securities and Exchange Commission regarding the firm not accurately disclosing fees it was charging investors, resulting in them paying excessive fees for nearly a decade. Ross had sold the firm in 2006, but the failure to properly disclose fees began in 2001 and continued until 2011. The settlement was part of a much larger crackdown by the SEC on how private equity firms charged fees to their investors. According to SEC documents in the case, WL Ross & Co. advised investment funds in exchange for management fees, but those fees were supposed to be offset by special "transaction fees" paid by some of the companies that were being invested in. But millions in those transaction fees were allocated to other funds, and investors ended up overpaying their management fees to WL Ross & Co. The SEC determined the firm had violated the law prohibiting firms from engaging "in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client." In August, the firm agreed to pay back $11.9 million in fees and a $2.3 million civil penalty, although it did not admit any wrongdoing.

 Auditor Deloitte Fined A Record $8 Million For Massive Fraud - Remember when auditors were, by their very definition, supposed to be the embodiment of credibility, trustworthiness and moral fiber? The Brazilian arm of Big Four auditing giant, Deloitte, forgot these  simple prerequisites and as a result the US auditing watchdog fined the firm a record $8 million for what amounts to massive fraud: falsifying audit reports, altering documents and providing false testimony during an investigation that unearthed what it described as its “most serious” finding of misconduct. The US Public Company Accounting Oversight Board, or PCAOB, also penalized or barred 12 former partners, including a national practice director, and auditors of the Brazil-based Deloitte Touche Tohmatsu Auditores Independentes.The Deloitte Brazil case is the first time the PCAOB has "charged a member of the Big Four auditing firms with fraud and for failing to co-operate with an investigation" according to the FT. Worse, unlike banks which resolve similar cases without admitting or denying guilt, in settling, Deloitte Brazil admitted it had violated quality control standards and failed to co-operate with the auditing board’s inspection and subsequent investigation.“This is the most serious misconduct we’ve uncovered. It’s cover-up after cover-up after cover-up,” Claudius Modesti, director of enforcement at the PCAOB, said. “As an investor you’re expecting that the audit was done properly and sufficiently and that wasn’t the case here.”Not only was that not the case, but the details read like straight out of a fictional account of third-world crime.As the FT details, the PCAOB alleges Deloitte knew that its client, low-cost airline Gol Linhas Aéreas Inteligentes, did not have enough evidence to support “a potentially material amount of the maintenance deposits” that it was reporting. Deloitte’s senior auditors also knew the books were being reviewed for potential material misstatements when it released its audit report and signed off on the accuracy of the financial statements.

 DERIVATIVES-CDS sellers pose bigger contagion risk than CCPs; OFR | Reuters: Central counterparty clearing firms do not constitute a major source of systemic risk, a new study from the US Treasury shows, but large counterparties that are heavy net sellers of credit default swaps could pose a threat to the financial system, irrespective of the health of the clearinghouse. A report on contagion in the CDS market by the Office of Financial Research found that CDS counterparties that are not direct members of CCPs, such as hedge funds, asset managers and insurers, pose the biggest risk to financial contagion, despite regulatory efforts to eliminate systemic risk by mandating vanilla contracts into central clearing. "More attention should be paid to firms that are very large and have highly unbalanced CDS positions, whose failure can trigger large systemic losses even when the CCP does not fail," say the report authors Mark Paddrik, Sriram Rajan, and H Peyton Young. Using data from the Depository Trust and Clearing Corporation, covering the 26 members of ICE Clear Credit - primarily dealers - and over 900 non-member firms including hedge funds, asset managers and insurance companies, the study found that the CCP's contribution to contagion under a stress scenario was lower than that of the largest member and non-member firms. Contagion risk is largest for net sellers of CDS contracts. Under a stress scenario that triggers a sharp spread widening, CDS sellers can quickly find themselves facing a shortfall as the amount of variation margin they are required to pay out - typically within a matter of hours - can dramatically outstrip the amount owed to them, leading to missed or reduced payments that become amplified through the system. "These payment deficiencies increase the stress on the firms' downstream counterparties, possibly leading them to reduce their payments too," said the report authors. "The upshot is network contagion."

Are All CLOs Equal? – NY Fed-- Asset securitization is an important source of corporate funding in capital markets. Collateralized loan obligations (CLOs) are securitization structures that allow syndicated bank lenders and bond underwriters to repackage business loans and sell them to investors as securities. CLOs are actively overseen by a collateral manager that has the responsibility to trade loans in the portfolio to benefit from gains and mitigate losses from credit exposures. Because CLOs include a diverse portfolio of loans, a single firm that commingles its lending role with the collateral management role can reap information advantages stemming from its “originate-to-distribute” activities.  In this post, we investigate the commingling of the lending and collateral management roles by investigating 230 cash-flow CLOs originated during the 2007-11 period. We are interested in examining whether these relationships that may give CLO managers better access to information compel them to trade differently. To that end, we investigate whether trading around the time of loan default is driven by the extent of the managers’ information relationship, if any, with the firms to whom the original loans were made. At one extreme is the case where the manager has no relationship information because it has never invested in that borrower before. At the other extreme, the manager has a close relationship with the borrower because the manager is affiliated with the bank that arranged the loan. Several possible cases fall between these extremes, such as when the manager or its affiliates has been a participant in the syndicate of the defaulting loan, or when the CLO underwriter has been an arranger or participant in the loan syndicate.

Insider Trading: Supreme Court Decision Enables Securities Law Theater -- naked capitalism by Jerri-lynn Scofield - 1hIn a unanimous decision Tuesday in Salman v United States, the United States Supreme Court upheld the insider trading conviction of Bassam Salman.  This was the Court’s first insider trading decision in more than two decades. Salman was convicted of federal securities-fraud crimes for trading on inside information received from a friend, who in turn, received the information from his brother, a former Citigroup investment banker (and Salman’s brother-in-law). The case turned on whether prosecutors needed to prove that the banker disclosed the information in exchange for a personal benefit.  The Court rejected Salman’s argument that he could not be held liable because his brother-in-law did not personally receive money or property in exchange for the tips he provided and thus this insider did not personally benefit from them. As Jon Eisenberg has written: Insider trading law has always been confusing when it comes to the liability of non-insiders, such as “friends” who trade based on information received from an insider. Until 1980, the Government took the position that anyone who trades while in possession of material nonpublic information violates the antifraud provisions of the federal securities laws. The Supreme Court, however, emphatically rejected the Government’s parity of information position first in Chiarella v. United States, 445 U.S. 222 (1980) and then again in Dirks v. SEC, 463 U.S. 646 (1983). Instead of focusing on anyone who trades or tips, the Court held that the appropriate test focuses on whether an insider benefitted—either by trading or by tipping in exchange for a benefit from the person to whom she tipped material nonpublic information. The case resolved a conflict in the correct interpretation of the Dirks between the United States Court of Appeals for the Second Circuit (including New York) and the United States Court of Appeals for the Ninth Circuit (including California), which heard Salman’s appeal.

Deutsche Bank Records Alleged to Show Silver-Price Rigging  - Bloomberg - Eight months after Deutsche Bank AG settled a lawsuit claiming it manipulated gold and silver prices, documents it disclosed as part of the accord provide “smoking gun” proof that UBS Group AG, HSBC Holdings Plc, Bank of Nova Scotia and other firms rigged the silver market, plaintiffs claim. The allegation came in a filing Wednesday in a Manhattan federal court lawsuit filed in 2014 by individuals and entities that bought or sold futures contracts. According to the plaintiffs, records surrendered by Deutsche Bank show traders and submitters coordinating trades in advance of a daily phone call, manipulating the spot market for silver, conspiring to fix the spread on silver offered to customers and using illegal strategies to rig prices. “Plaintiffs are now able to plead with direct, ‘smoking gun’ evidence,’ including secret electronic chats involving silver traders and submitters across a number of financial institutions, a multi-year, well-coordinated and wide-ranging conspiracy to rig the prices,” the plaintiffs said in their filing. The new scheme “far surpasses the conspiracy alleged earlier.” The plaintiffs are seeking permission to file a new complaint with the additional allegations. Their proposed complaint broadens the case beyond the four banks initially sued to include claims against units of Barclays Plc, BNP Paribas Fortis SA, Standard Chartered Plc and Bank of America Corp.

Deutsche Bank Provides "Smoking Gun" Proof Of Massive Rigging And Fraud In The Silver Market Back in April, when we first reported that Deutsche Bank had agreed to settle allegations it had rigged the silver market in exchange for $38 million, we revealed something stunning: "in a curious twist, the settlement letter revealed that the former members of the manipulation cartel have turned on each other", and that Deutsche Bank would provide docments implicating other precious metals riggers. To wit: "In addition to valuable monetary consideration, Deutsche Bank has also agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement. In Plaintiff’s estimation, the cooperation to be provided by Deutsche Bank will substantially assist Plaintiffs in the prosecution of their claims against the non-settling defendants." Overnight we finally got a glimpse into what this "production" contained, and according to documents filed by the plaintiffs in the class action lawsuit, what Deutsche Bank provided as part of its settlement was nothing short of "smoking gun" proof that UBS Group AG, HSBC Holdings Plc, Bank of Nova Scotia and other firms rigged the silver market. The allegation, asBloomberg first noted, came in a filing Wednesday in a Manhattan federal court lawsuit filed in 2014 by individuals and entities that bought or sold futures contracts.In the document records surrendered by Deutsche Bank and presented below, traders and submitters were captured coordinating trades in advance of a daily phone call, manipulating the spot market for silver, conspiring to fix the spread on silver offered to customers and using illegal strategies to rig prices.“Plaintiffs are now able to plead with direct, ‘smoking gun’ evidence,’ including secret electronic chats involving silver traders and submitters across a number of financial institutions, a multi-year, well-coordinated and wide-ranging conspiracy to rig the prices,” the plaintiffs said in their filing.

Bombshell Dropped in Federal Court: Proof of a Silver Market “Mafia” Among Big Banks -  Pam Martens - Lawyers representing traders who allege they were ripped off by a group of colluding global banks filed eye-popping evidence in a Manhattan Federal Court yesterday showing that even as global banks were being criminally probed for rigging currency markets, they continued to engage in rigging the silver market, with a UBS trader referring to the group as the “mafia.” In order to settle the charges against it in the matter, yesterday’s filing shows that the beleaguered Deutsche Bank turned over to the plaintiffs’ attorneys “more than 350,000 pages of documents and 75 audio tapes” that implicate other banks in a very serious way. In addition to banks previously named in the lawsuit (Deutsche Bank, HSBC, The Bank of Nova Scotia and UBS), trader conversations captured in the material provided by Deutsche Bank seriously implicate Barclays, Standard Chartered, BNP Paribas Fortis and Bank of America/Merrill Lynch. According to yesterday’s filing, a trader conversation on June 8, 2011 went like this:

  • UBS [Trader A]: im gonna sell a lil more we need to grow our mafia a lil get a third position involved
  • Deutsche Bank [Trader B]: ok calling barx10 [Barclays]

The plaintiffs lawyers writer further: “This coordinated manipulative conduct was intended to capitalize on the zero-sum nature of derivatives trading, including in COMEX silver futures contracts, and to extract illicit profits for Defendants from Plaintiffs and other Class members who held the opposite position. For example, as one UBS trader commented while planning a series of manipulative silver transactions with Deutsche Bank on April 1, 2011, ‘if we are correct and do it together, we screw other people harder.’ Thus, Defendants knew any profit resulting from their illegitimate trading activity flowed directly from harm caused to Plaintiffs and the Class.” Numerous trader conversations confirming the sharing of insider information among traders at global banks were provided to the court yesterday, including the following between traders at Barclays and Deutsche Bank on April 6, 2011 — where one trader suggests the collusion amounts to “one team one dream.” With the evidence filed yesterday, there is no longer any justification for the Justice Department to dawdle further. From Libor rigging, to currency exchange rigging, to precious metals, to the charges of stock market rigging made in the Michael Lewis book, Flash Boys, there is an overarching appearance that every market has been rigged against average investors. We need a Justice Department that will grab the reins to restore trust, transparency and honest dealing in U.S. markets.

  JPMorgan, HSBC, Credit Agricole "Bank Cartel" Fined $521 Million For Euribor Rigging -- With global bank stocks soaring on expectations - and hope - that financial sector regulation will be broadly swept away under Trump, today Europe did its best to show that, at least for now, the banks are not in the clear when the European Commission has fined JPMorgan, Credit Agricole and HSBC a total of €485 million ($521 million) for rigging the Euribor benchmark as European Union antitrust regulators wrapped up a five-year investigation into the scandal. The three banks colluded on euro interest rate derivative pricing elements, and exchanged sensitive information, in breach of EU antitrust rules, the European Commission said on Wednesday in an e-mailed statement. JPMorgan was fined 337.2 million euros, HSBC got a 33.6 million-euro penalty and Credit Agricole must pay 114.7 million euros. Margrethe Vestager, the EU’s competition policy chief, said banks “have to respect EU competition rules just like any other company operating in the single market.” Fine of €485 million to 3 banks - Credit Agricole, HSBC, JPMorgan Chase - for participating in cartel of euro interest rate derivatives. The aim of the cartel was to distort” Euribor, Ms Vestager said. The traders involved “tried to submit quotes to move the Euribor rate up or down”. The Commission found evidence in records from online messaging services of traders “congratulating each other on work well done,” she said adding that "The enforcement of competition rules brought to light widespread collusion between banks." The fines mark the final stage in what began as a far wider investigation into a cartel of banks that manipulated interest rate derivatives linked to the Euribor benchmark rate. Four other banks reached a settlement with the Commission concerning the same cartel back in 2013.

 Dimon's Political Stature Grows as He Takes Business Roundtable Chair | American Banker: Jamie Dimon, chairman and CEO of JPMorgan Chase, on Wednesday was named chairman of the Business Roundtable, further cementing himself as a key intermediary between the incoming Trump administration and the business community. The announcement came less than a week after Dimon was named co-chair of a White House panel on job creation, which will advise President-elect Donald Trump on economic policy. Steven Schwarzman will serve as co-chair. The selection puts Dimon, a vocal advocate for the industry, at the helm of one of the most powerful lobbying groups in Washington. He will serve a two-year term as chairman, ending on Dec. 31, 2018. He succeeds Doug Oberhelman, chairman and CEO of Caterpillar, who plans to retire from the Peoria, Ill., company at the end of the year. "With a new president and Congress soon to take office, there is a real opportunity for the Business Roundtable to be a positive influence and show how business plays a critical role in this growth," Dimon said in a statement announcing the new role. Dimon also said the group can help to "bridge the divide between political parties," with the goal of fostering economic mobility and economic growth. The Business Roundtable is made of up 192 CEOs from a range of industries. Dimon joined the group in 2009, and previously served on the executive committee. A spokesman for JPMorgan said that the new role has no impact on his job at JPMorgan, the nation's largest bank by assets. The announcement shows that Dimon's stature in the nation's capital is growing. His name was floated as a potential pick for Treasury secretary under the Trump administration, a job that ultimately went to Steven Mnuchin, a former banker and Trump's top fundraiser during his long-shot campaign.

Wells Fargo Killing Sham Account Suits by Using Arbitration - - In congressional hearing rooms and on national television, Wells Fargo has vowed to make things right for the thousands of customers who were given sham accounts. But in federal and state courtrooms across the country, Wells Fargo is taking a different tack. The bank has sought to kill lawsuits that its customers have filed over the creation of as many as two million sham accounts by moving the cases into private arbitration — a secretive legal process that often favors corporations. Lawyers for the bank’s customers say the legal motions are an attempt to limit the bank’s accountability for the widespread fraud and deny its customers their day in open court. Under intense pressure to meet sales goals, Wells employees used customers’ personal information to create unauthorized banking and credit card accounts in a far-reaching scandal that has rattled the San Francisco bank to its core, forcing the retirement of its longtime leader, John G. Stumpf, and enraging regulators and politicians of all stripes. The bank’s arbitration push in recent weeks is fanning those flames anew. “It is ridiculous,” said Jennifer Zeleny, who is suing Wells Fargo in federal court in Utah, along with about 80 other customers, over unauthorized accounts. “This is an issue of identity theft — my identity was used so employees could meet sales goals. This is something that needs to be litigated in a public forum.” In arbitration, consumers often find the odds are stacked against them. The arbitration clauses prevent consumers from banding together to file a lawsuit as a class, forcing them instead to hash out their disputes one by one and blunting one of most powerful tools that Americans have in challenging harmful and deceitful practices by big companies.

Fed Board to Vote on Final TLAC Rule | American Banker: — The Federal Reserve Board is slated to vote next week on a final rule meant to help regulators recapitalize a major U.S. bank if it should run aground, one of the last significant capital regulations that the agencies have yet to complete. The rule, known as Total Loss Absorbing Capacity, or TLAC, was proposed more than a year ago and is an instrumental part of the Basel III strategy for preventing taxpayer bailouts of failing major banks. The board will meet Dec. 15 to vote on the final rule. The plan would require the largest U.S. banks — known as global systemically important banks — to hold certain levels of unsecured debt. If the bank fails, that debt could then be converted into equity, thus turning the debtholders into stakeholders in a successor institution and giving the Federal Deposit Insurance Corp. a runway with which to seize and unwind the failed bank. Under the Fed's proposal, a G-SIB would have to hold either 18% of total risk-weighted assets or 9.5% of total leverage exposure in Tier 1 capital, in addition to a 1%-4.5% surcharge required as part of a separate rulemaking. The Fed estimated the funding cost of the rule to the G-SIBs at $680 million to $1.5 billion. The proposal would also require TLAC debt to be issued by a "clean" bank holding company, meaning the overall parent entity of a G-SIB or the U.S. subsidiary of a foreign G-SIB would be prohibited from issuing short-term debt to third parties, holding derivatives or other contracts with external counterparties, holding liabilities guaranteed by its subsidiaries or guaranteeing its subsidiaries in such a way that creates "disruptive default, set-off, or netting rights for subsidiaries creditors." Other noncontingent junior liabilities unrelated to TLAC or long-term debt would also be capped at 5% of the holding company's TLAC under the proposal.

Ending TBTF with Three Surgical Strikes | Bank Think - As the administration of President-elect Donald Trump takes shape, there is a lot of discussion about deregulation and rolling back the 2010 Dodd-Frank legislation. […]    Rather than seek to address these structural issues by imposing impractical levels of capital, the Fed and other regulators can make a ]few subtle changes to law and regulation that will force the shrinkage of the largest banks gradually over time. First, one little-discussed advantage large banks have is in how they settle deposits for periodic payments. Funds that a consumer "pays" for, say, a mortgage, or that a company sends to payroll, may linger on the paying bank's balance sheet for weeks before being processed with the receiving institution. Under current rules, the paying bank holds on to that cash as a deposit. With large banks dominating the market for fiduciary balances, this is just another factor inflating their balance sheet. If regulators no longer allowed the largest banks to use these in-process balances as deposits — putting them in a trust account, instead — it would gradually force the downsizing of such institutions. Smaller banks could be given greater leeway with respect to these transactional deposits, but banks above say $500 billion in assets should be entirely prohibited from using these in-process payments to support leverage. Unlike smaller lenders, big banks do not primarily intermediate credit, but instead take huge duration risk in government and agency securities, and prime mortgage loans. Second, all banks should be subject to far greater scrutiny as to how they characterize OBS transactions. While generally accepted accounting principles (GAAP) tend to give all U.S. firms greater leeway in terms of "true sales," U.S. regulators should impose on commercial banks a regime that is far closer to international standards. This would effectively force banks to move to an asset securitization model akin to covered bonds in Europe, where debt is issued to fund specific assets. This change would prevent banks from mischaracterizing asset securitizations as "true sales" and would reduce effective leverage in the banking system without requiring unrealistic levels of capital. The result of the second change would be to see the migration of asset securitization back to the nonbank sector, which is a necessary condition of limiting OBS exposures and the systemic risk of large banks. Well-capitalized broker-dealers and nonbanks in the mortgage sector, for example, would be a welcome counterpoint to commercial banks and would help to diversify the risk in the financial markets away from the TBTF banks.Finally, commercial banks should be prohibited from trading any cash debt securities or credit derivatives. The idea that a bank can act as a lender, on the one hand, while at the same time trading the cash debt or credit derivatives of the same issuer is obviously a gross conflict of interest. The Volcker Rule partially addressed this issue and should be expanded, not repealed.

Cleveland Fed's Mester on TBTF, Fintech and Interest Rates | American Banker: — A growing chorus of regulators are urging policymakers, including President-elect Donald Trump and Congress, to be careful not to throw out important safeguards when they set about a deregulatory agenda next year. Chief among them is Loretta Mester, the president of the Federal Reserve Bank of Cleveland, who argues that the system is better off than it was in the days leading up to the financial crisis, while acknowledging that regulators are already making needed changes to address concerns about compliance burden. "The Federal Reserve and the other regulators are trying to rightsize the regulation to meet where the risks are," she said. "Some of the changes that have come most recently are about calibrating the regulation to [address] the type of risk that's out there. So, for example, community banks — there have been some changes in sort of how we're approaching stress testing there." In a wide-ranging interview with American Banker — her second since heading the bank in 2014 — Mester talks about that as well as her views on reforming the Fed, capital levels, the future of the Basel committee and the effect of a Trump administration on financial services. Following is an edited transcript.

Regulator Will Start Issuing Bank Charters for Fintech Firms - WSJ: Firms offering online loans, smartphone payments and other financial-technology products would get new flexibility to expand and further shake up the U.S. banking industry under a proposed new federal policy. A top regulator said Friday that his agency would for the first time start granting banking licenses to “fintech” firms, giving them greater freedom to operate across the country without seeking state-by-state permission or joining with brick-and-mortar banks. The move could open the door to more competition between the old and new financial firms, and provide a bigger opening for some large tech companies to consider new ways to offer digital payments or other services. The announcement by Thomas Curry, head of the Office of the Comptroller of the Currency, was a significant move by regulators struggling to strike a balance between encouraging innovation while extending traditional protections to new financial products that have boomed since the financial crisis. “It will be much better for the health of the federal banking system and everyone who relies on those institutions, if these companies enter the system through a clearly marked front gate, rather than through some back door,” Mr. Curry said at a conference Friday at Georgetown University Law Center. Firms that receive the OCC charter would still not be able to accept government-insured deposits without separate approval from the Federal Deposit Insurance Corp. The proposed move was cheered by the tech sector that had long been seeking such an imprimatur, but jeered by financial institutions, some consumer groups and state regulators who see threats in the upending of the old order. Small banks in particular worry about new competition, while consumer advocates and others raised the specter of weaker protections for borrowers. “We believe consumers will be at risk,” the coalition of state banking supervisors said. The group also argued that “a federal fintech charter will distort the marketplace” and that the OCC was “expanding its mandate absent statutory authority.”

Free Ride or Firm Hand? Bankers Split on OCC's Fintech Charter | American Banker: – The Office of the Comptroller of the Currency's plan to offer a national charter for fintech firms immediately sparked a battle between consumer advocates and state regulators, who see it a dangerous move, and fintech firms and certain banks, which hailed it as the future. Yet many issues about how the charter will work – and what regulations fintech firms will have to agree to in order to be granted it – remain in limbo. Some observers predicted the OCC would ultimately devise a charter in which firms face many of the same rules with which national banks must comply. "The fintech charters will be subject to the full load of compliance, consumer compliance, safety and soundness regulation," said Julie Williams, a managing director at Promontory and former top official at the OCC. "There's no regulation-lite available for a fintech charter." As envisioned in an agency paper published Friday, the new charter would allow fintech companies – particularly those that do not seek to take deposits – to apply for a limited-purpose bank charter. As such, they will not be immediately subject to a number of traditional bank requirements, including the Community Reinvestment Act, but the OCC stressed that it would use its discretionary powers to ensure that the fintech companies would be well capitalized and appropriately supervised. Many bankers were split by the announcement. Some hoped that the agency would impose banklike requirements that ensure fintech firms are on a level playing field with financial institutions."They've been looking at the powers that come with being a bank for quite some time," said Rob Morgan, the vice president of emerging technologies at the American Bankers Association. But they are finding out now, he added, that "You can't have your dessert until you've eaten your veggies." But there were also concerns that the OCC will not follow through on its pledges. "Any limited fintech charter must hold these companies to the same standards of safety, soundness and fairness as other federally chartered institutions," said Camden Fine, the president of the Independent Community Bankers of America. "Our nation's fintech regulatory framework should be no less stringent than that which applies to insured depository institutions."

How the OCC Plans to Apply CRA-Like Requirements to Fintech Firms | American Banker: — The Office of the Comptroller of the Currency faces a challenging task as it attempts to add financial inclusion requirements to its pending fintech charter without following the exact blueprint of the Community Reinvestment Act. Consumer groups and industry observers acknowledge that in the era of digital banking, the 1977 law needs an overhaul. But figuring out how best to apply its spirit to these new products is easier said than done. "CRA is very obsolete," said Jo Ann Barefoot, a consultant to both fintech companies and government agencies. "Pretty much everyone appreciates that." In a paper issued Friday, the OCC outlined its authority for granting limited charters to fintech companies, laying out some of the criteria it would use to evaluate applications, including capital and liquidity requirements — and compliance with the goals of the CRA. "Because there are tremendous benefits that financial institutions have been able to make in the communities that they serve through the CRA, we would like to see those same opportunities from innovation benefit communities," Grovetta Gardineer, the OCC's senior deputy comptroller for compliance and community affairs, said in an interview. The OCC acknowledged that the CRA would not apply to most fintech companies eligible for the new charter, because institutions that do not take deposits and do not receive depository insurance from the Federal Deposit Insurance Corp. are not subject to the law.Yet the agency asked applicants to submit a financial inclusion plan that would identify their market; describe the services offered and processes for marketing and delivery; and explain how these would promote financial inclusion. Fintech companies will have "to show how the product and service that they are going to provide will not only be implemented in a safe and sound matter, but how it would meet the needs of the communities they are trying to reach," Gardineer said. "If you're going to serve communities and consumers, financial inclusion, fair access and fair treatment are fundamental responsibilities."

Fintech's Road to Regulatory Acceptance Is Just Starting | Bank Think: The last month has seen a variety of financial regulators articulating their views concerning fintech. Their interest signals greater regulatory certainty for innovative firms looking to have national platforms. But these firms may soon learn that regulatory acceptance is a mixed bag.  In just the last few weeks, the Office of the Comptroller of the Currency announced that it will craft a process for approving limited-purpose bank charters for fintech firms. The Securities and Exchange Commission held a fintech forum where SEC Chair Mary Jo White discussed the work of an agency working group on fintech issues. The Federal Reserve held a financial innovation conference where Gov. Lael Brainard discussed the Fed's ability to shape and regulate this developing market.. The agencies' statements have rightly been a careful blend of the need to foster market innovation with the obligation to maintain a safe and sound financial system. The OCC's announcement, in particular, represents the most tangible regulatory development for fintech companies. But whether this will be a panacea for fintech companies is still to be determined. Fintech is not a shiny new object attracting attention in 2016. Its fight for market and regulatory acceptance has played out over two decades. We are closer now to both market and regulatory acceptance. It took this long because consumers all have an emotional relationship with their money and changes in their financial habits occur over long periods of time. They also balance the cost and convenience of new technological products with consumers' confidence in them.

 Modify TLAC, Modernize FHA, Cut Taxes: Big Banks' Wish List for Trump | American Banker: Asked about their wish list for financial reforms under the incoming Trump administration, bankers sounded both optimistic and a bit overcome by the new possibilities. Speaking at an industry conference Tuesday, CEOs from several big banks — including Wells Fargo, JPMorgan Chase and PNC Financial Services Group — outlined a host of requests for President-elect Donald Trump and Republican leaders in Congress. Chief among them: focus on corporate tax reform, scale back the Volcker Rule and push the Federal Housing Administration to update its lending policies. The comments provided a glimpse at how some of biggest names in banking are thinking about the prospect of lighter financial regulation in the coming years. Though bankers varied in their requests, they shared a common theme: Keep the system safe, but, beyond that, the industry is overdue for some relief. "God, look," said JPMorgan Chase CEO Jamie Dimon, letting out a long and audible sigh after he was asked about the potential for amending Dodd-Frank. "We passed Dodd-Frank 100% partisan — there was no bipartisan support." While scrapping Dodd-Frank is not a good idea, it makes sense to "calibrate it," Dimon said. He added that when Congress passed the financial overhaul in 2010, Democrats told him they expected to amend it down the road. "When that happened way back then, we subjected our country to relitigating and relegislating the issue until its done bipartisan," Dimon said.

Rising Interest Rates Trigger Losses on Banks' Massive Bond Holdings - Rising interest rates have sent bank stocks soaring. But there is a dark side to this kind of market move—banks in the fourth quarter are likely to report losses on their massive bond portfolios. U.S. banks suffered a $6.5 billion unrealized loss on the value of securities they hold as investments as of Nov. 23, according to the most recent data from the Federal Reserve. This was the first time since 2014 that the Fed data for the banking system as a whole showed a loss on these securities. As recently as early July, banks had total unrealized gains on these portfolios of $33.8 billion. They key is that these losses, or gains, are unrealized and don’t hit earnings. While they do affect a bank’s book value, or net worth, the losses over time will be offset by increasing net interest income. When rates rise, the value of debt securities tends to fall because the relatively low rates on existing bonds will look unattractive compared with the higher rates of new bonds. The decline in bond prices brings the yields of similar bonds in line with each other. Banks classify a big portion of their bond holdings as investment holdings, or “available for sale,” distinguishing them from those held for trading purposes. These investment holdings were $2.66 trillion for U.S. banks at the end of the third quarter, or about 16% of total assets, according to data from the Federal Deposit Insurance Corp. As well, there is a smaller group of bonds banks classify as being held to maturity. When investment securities lose value, the losses are described as “unrealized” and don’t immediately diminish a bank’s profits. Instead, the losses go into a special bucket in shareholders’ equity called “accumulated other comprehensive income.” This cuts into banks’ book value as well some measures of regulatory capital. That can be a problem for banks with thin capital cushions. But with many banks comfortably above required minimum capital levels, this isn’t likely to be a cause for concern today.

Insiders Send Wrong Signal on Bank Stocks - WSJ Bank and industrial stocks have been among the biggest winners in the postelection stock rally, but some are swimming against the tide. Corporate insiders in these industries have been selling into the rally at an unusually strong pace, according to research firm InsiderScore. At first glance, it is easy to view this as bearish. If high-ranking executives are unloading stock, perhaps investors should consider doing the same. But there is more here than meets the eye. Financials have surged 18% since the election, making them the S&P 500’s best-performing sector. Right on cue, insiders at U.S.-listed banks, brokerages and financial-services companies are poised to set records for the sheer number of people selling stock and the dollar value of shares sold in the fourth quarter, based on data since 2003. Speaking with Heard on the Street for this week’s podcast, Ben Silverman, director of research at InsiderScore, said a similar pattern holds for industrials, up 9% over the past month. Donald Trump’s trillion-dollar infrastructure plan has prompted investors to pile into building materials and construction-related companies that have been red-hot, just as some insiders bolted. Insight from fund-flow data or sentiment surveys is often used as a contrarian indicator of what the market might do next. Insider activity is used similarly, except executives are seen as the smart money. But insiders might choose to sell their stock for reasons that don’t necessarily match the incentives of the typical individual investor. Some insiders could be locking in profits or exercising options that are close to expiration. Many banking executives in particular have held underwater options in the years following the financial crisis. Bank of America Corp. and Morgan Stanley, for example, have rallied back to mid-2008 levels. If this postelection rally was the first chance to sell, it is hard to argue against doing so no matter how they feel about the future. That activity differs from more-diversified mom-and-pop investors. The recent action contrasts with what took place at the beginning of the year, when banks witnessed heavy insider buying. J.P. Morgan Chase Inc. boss James Dimon bought $26 million of stock on Feb. 11. Perhaps not coincidentally, that also was the stock market’s low for the year. J.P. Morgan was a big beneficiary, with its shares rallying immediately afterward and now up 60% since.

U.S. Should Think Twice Before Jumping on Open Banking Bandwagon - With U.S. banks lagging behind in embracing the open banking movement, it would be worthwhile for them to monitor the progress in Europe carefully. There, the movement is well underway with separate open-banking proposals drafted by the United Kingdom and the European Union. But U.S. banks’ inaction is not a liability. Their reluctance to adopt a technology concept potentially harmful to customers is wise.In the U.K., progress on developing an open banking model — which involves using data portability and other technology to allow third-party access to a customer’s personal account — results from the U.K.’s determination to promote competition in a country where four retail banks dominate the market. Meanwhile, the EU directive on open banking is due to come into force in 2018. Despite Brexit, U.K. is still likely to move in concert with the Eurozone to adopt these proposals.Regardless of the goodies associated with a bank offer — such as cash inducements or better interest rates — U.K. bank customers have stubbornly refused to switch from one bank checking account to another. Even if consumers aren’t especially fond of their banks, convenience and inertia rule and few individuals change their accounts. Open banking is seen as a way to make switching banks easier. The U.K. government also sees service advantages for customers if banks let third parties access personal bank accounts — once customers have given their "informed consent." This openness, however, is a slippery slope. Once customers have given permission, third parties would be able to access consumers’ banking data, including investment records, transaction histories, and checking and savings account data. Third-party providers could also debit payments for their services directly from the customers’ bank accounts. And, the third parties’ ability to crunch the financial data to offer customers additional and/or competing products puts banks’ cross-selling opportunities at risk.

Banks Should Look in Mirror Before Preaching to Data Aggregators -- Last week, we released our analysis of the Consumer Financial Protection Bureau's request for information (RFI) on data-aggregation services. Like many CFPB initiatives, this one has been widely discounted on grounds that the CFPB will soon be disemboweled. Maybe so, but the data-aggregation debate isn't a typical one between financial institutions and consumer advocates. It's a critical battle between different industry sectors over the most precious asset owned now by every established financial services firm: its customer database. If third-party service providers unlock this door to targeted marketing and cross-sell cherry-picking, the fundamental structure of every diversified financial services company will be profoundly undermined.  Secure in the "stickiness" of consumer accounts because of the time it takes to change a financial services provider, most diversified financial companies have done little to make their consumers really happy or to effectively cross-sell (see my prior comment on cross-selling post-Wells Fargo for examples of failure here). CEOs don't have this comfort zone anymore. Consumer accounts aren't close to sticky because data aggregators have their WD40 readily at hand. The CFPB's RFI clearly thinks that allowing these nonbank service providers and cross-marketers into proprietary consumer data is — assuming consumer consent — a very good thing. The RFI is replete with CFPB observations about how data aggregation could promote financial inclusion — a sweet thought, but hard to accomplish unless aggregators are a good deal more philanthropic than I suspect them to be. The bureau also talks much about the benefits consumers would achieve if, for example, a third party reached into their data, saw a bit of cash lying around, and then proffered commercial products such as vacation packages.  Are big, diversified financial companies stalwart champions of the consumer data they now control? Of course not. Wells Fargo is a sad testament to the sorry state of cross-selling. However, it's important to recognize that the cross-sell scandal at Wells isn't the result of data use — it's the consequence of inappropriate incentive compensation.  What's to stop a third-party aggregator from establishing incentive structures that make Wells' look ladylike? No rules apply and startup business models almost surely mean that the heat will be on for sales, and lots of it.

New Legal Risk for Banks: Websites the Disabled Can't Access | American Banker: It will be at least two years before banks are required to upgrade their consumer websites to make them accessible to consumers with visual and hearing disabilities, but many are being advised to take action now or risk being sued. The Justice Department in 2010 announced plans to develop formal guidelines for how all companies, not just banks, must make websites accessible to the disabled. The guidelines will include steps such as adding audio for blind consumers and text alternatives for deaf consumers. The DOJ is expected to issue the guidelines in 2018. But the issue has taken on added urgency of late as some banks have faced legal challenges from plaintiffs' lawyers who claim their websites do not comply with the existing Americans with Disabilities Act. Bank of America, for example, reached an agreement in May with an attorney representing a blind consumer to make online mortgage documents accessible. The bank had previously offered to help disabled consumers by sending an employee to the consumer's house to read documents aloud. Technically, company websites are required to be compliant with the 26-year-old ADA now, but the guidelines are so murky many firms have opted to wait until the DOJ rules come out to make any meaningful changes. Many banks are stuck in a gray area, as they're waiting on DOJ's guidelines but don't want to be seen as running afoul of the law.

 Mere Threat of Debt Collection Suits Is Latest Headache for Banks | American Banker: Banks have faced an ever-growing number of lawsuits in recent years accusing them of violating consumer protection laws while trying to collect debts. But lawsuits can be costly and time-consuming for all parties, so many plaintiffs' attorneys are now trying to win quick settlements for their clients by simply threatening banks with debt collection lawsuits. It's the latest headache for banks when it comes to the unpleasant task of collecting unpaid debts. Many industry sources say the number of so-called pre-litigation demand letters has soared in recent months, with at least one plaintiffs' attorney admitting that he sends about 250 such letters per month. Banks and their own attorneys have varying ways they respond. Some say the best course of action is to ignore the letters and hope the trial lawyers target another institution. Often banks will decide to settle, if it turns out there's a legitimate basis for a complaint. But some attorneys say the best approach is to engage an attorney who has sent a letter, discern whether there's a problem and attempt to fix the bank's internal operations. That approach can actually help a bank beef up its compliance procedures, said Charity Olson, an Ann Arbor, Mich., attorney who represents banks in debt collection matters.

Trump vs. Cordray: The Battle Ahead | American Banker: The Consumer Financial Protection Bureau and its director Richard Cordray are on a collision course with President-elect Donald Trump in what may become a nasty legal and political showdown over the limits to executive power. A key question is whether Trump will attempt to fire Cordray soon after assuming the presidency next month even though there is a pending court appeal challenging his authority to do just that. "We're dealing with a situation where there is a lot of legal uncertainty about how this administration will act, so how this will unfold is unpredictable," said Scott Nelson, an attorney with Public Citizen Litigation Group, who has argued several cases before the Supreme Court. Following are four legal and political issues that could affect how long Cordray holds on to his job at the CFPB. Can Trump Fire Cordray? Many legal experts said there's sufficient legal wiggle room for Trump to fire Cordray, who has been a thorn in the side of congressional Republicans and the financial industry since he was confirmed for a five-year term on July 16, 2013. Up until recently, the prevailing analysis was that Cordray couldn't be removed until his term expired in 2018 unless he was fired "for cause." That changed in October, when a federal court said that the president did not need a reason to remove the CFPB director, arguing the language in the Dodd-Frank Act that created the agency was unconstitutional. That has fueled talk that Trump will move quickly once in office. "The transition team has been promising from day one that a lot of stuff will happen, and why not please a bunch of people on the right and in the business community?" said Daniel A. Crane, a senior professor at the University of Michigan Law School.

 Lawmakers Press CFPB on Payday Lending Plan Comments | American Banker: – House Republicans are urging the Consumer Financial Protection Bureau to process a deluge of comment letters on the bureau's proposal to restrict small-dollar lending. The agency's plan was published in June, and the public had until October to comment. The agency received nearly 1.4 million letters, though many were duplicates. Only 200,000 had been published, and the CFPB said that, absent duplicates, the true number is closer to 400,000. Consumer groups accused the small-dollar loan industry of intentionally flooding the CFPB with form letters in an effort to slow down the rulemaking because the bureau is required to publish all the letters before it comes out with its final determination. The lawmakers said in their letter that the CFPB isn't being transparent and requested more information on how it is processing the letters. "Since the comment portal opened, it has been brought to our attention that the majority of consumer comments submitted to the CFPB were not visible on the website, potentially leaving thousands of voices unheard, including those of our constituents," said the letter from Rep. Sean Duffy, R-Wis., and more than 40 other GOP lawmakers. "Is there intent to hide the comments of consumers who support the current state regulatory framework of legal licenses short term lending?" The lawmakers also expressed concern that the CFPB proposal would hurt consumers by reducing small-dollar credit availability. The agency has estimated that the industry could lose as much as 75% of its revenue, putting many lenders out of business.

 CFPB Aims to Finalize Arbitration Rule Early Next Year - The Consumer Financial Protection Bureau is planning to finalize its rulemaking on arbitration in early 2017, though it is unclear if the controversial regulation can be completed before President-elect Donald Trump takes office.The CFPB posted its semiannual rulemaking agenda on a blog late Friday with a time frame for the next steps it will take in several areas, including supervision of payday lenders, debt collectors and overdraft.The agenda has been closely watched by industry for years, but the bureau rarely meets its own timeline for rulemakings.It faces more internal pressure to do so this time around. The agency's plans on arbitration and payday lending may be in jeopardy with the change in administrations and continued GOP control of Congress."The CFPB is going to continue their efforts, but the market and the industries are going to discount the probability of [rulemakings] being finalized due to the election and pending changes," said Ed Mills, a policy analyst at FBR Capital Markets.Mills said it was "a bit of a stretch" to think the CFPB could finish writing the final arbitration rule soon. He said it is "months away" from being completed.The bureau has one team devoted to rule-writing, said Mills, so "there has to be some calculus out there that says let's finalize what we can finalize under the structure that we have. So there's probably been a priority shift post-election."The CFPB's arbitration plan released in May would allow consumers to form or join class actions. The plan would ban the use of mandatory arbitration clauses that prevent consumers from bringing claims for wrongdoing. Various industry groups, including the Chamber of Commerce, have vowed to fight the arbitration proposal, but they can only sue once it becomes a final rule. The proposal received 51,801 comments.

CFPB on Collision Course with Trump's Justice Department | American Banker: — The political independence of the Consumer Financial Protection Bureau may end not with a bang — after a protracted battle in Congress — but with a whimper, the victim of a bureaucratic rule that prevents the agency from appealing a pending court case to the Supreme Court. The D.C. Circuit ruled in October that the CFPB's single-director structure was incompatible with its status as an independent federal agency, finding that its leader would have to serve at the pleasure of the president to avoid violating the Constitution's separation of powers. Although the CFPB is appealing that decision, its ultimate ability to overturn it may hinge on whether the Justice Department allows it to move the case forward. With President-elect Donald Trump due to take the reins of Justice in January, there are growing doubts that the CFPB can prevail. "This is unprecedented, and there are a lot of people who are confused and I think a lot of speculation about what's going to happen," said Thaya Brook Knight, associate director of financial regulation studies at the Cato Institute. At issue is Title X of the Dodd-Frank Act, which establishes the CFPB. It gives the agency explicit authority to pursue its own litigation up to and including the Circuit Court level. But when it comes to the Supreme Court, the law says the CFPB must first file a written request to the U.S. Attorney General within a specified timeframe and that the "Attorney General concurs with such request or fails to take action within 60 days of the request." But Sen. Jeff Sessions, R-Ala., Trump's pick for attorney general, could conceivably withhold such concurrence. That would mean the Trump administration effectively blocks the CFPB's decision to appeal to the Supreme Court.

Congress Should Overturn Any Forthcoming CFPB Rules, Industry Groups Say | American Banker: Banking and credit union trade groups are urging Congress to consider repealing any upcoming Consumer Financial Protection Bureau rules governing arbitration, payday lending, debt collection and prepaid cards by using its authority under the Congressional Review Act. The law gives Congress the chance to reject any rule that is finalized in the waning days of an administration. The groups also again asked Congress to pass a bill that would create a five-member commission for the agency, replacing its current single-director structure. The CFPB's "sole director leadership model is fragile, uncertain, and leads to instability at the bureau," the groups wrote in a two-page letter to Senate GOP and Democratic leaders. A commission will "safeguard consumers and increase credit accessibility." The letter was signed by the heads of the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America, and the National Association of Federal Credit Unions. The letter also mentioned a district court ruling in a controversial case, PHH Corp. v. CFPB, that found in October that the bureau's single-director structure is unconstitutional. Though the CFPB has appealed the case, the trade groups said that ruling "makes it even more apparent what a whipsaw effect the single director model presents, inhibiting the ability for financial institutions to plan for the future, which in turn limits economic growth and hurts consumers."

CFPB Hits Three Reverse Mortgage Lenders for Deceptive Ads: The Consumer Financial Protection Bureau on Wednesday filed consent orders against three reverse mortgage companies, accusing them of deceptive advertising and misrepresentations. The companies all claimed in various ads that reverse mortgage borrowers could eliminate debt, make no monthly payments and live in their homes for the rest of their lives. "These companies tricked consumers into believing they could not lose their homes with a reverse mortgage," CFPB Director Richard Cordray said in a press release. "All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products." The companies each agreed to pay civil money penalties and to clearly and prominently disclose the fact that reverse mortgage borrowers must comply with a loan's terms, including paying property taxes, homeowner's insurance and maintenance. American Advisors Group, the largest reverse mortgage lender in the U.S., agreed to a civil money penalty of $400,000. Reza Jahangiri, the CEO of American Advisors in Orange, Calif., said in an email: "We take our regulatory responsibilities seriously and have made a significant investment in our compliance and legal infrastructure to ensure we fully conform to all marketing laws and rules — and better understand how they are interpreted." Reverse Mortgage Solutions, in Houston, agreed to pay $325,000. The CFPB also alleged that the company told borrowers their heirs would inherit the home, which can only happen by repaying the reverse mortgage or paying 95% of the assessed value of the home. Marc Helm, the former president and CEO of Reverse Mortgage Solutions, did not return calls seeking comment.

 Bank Real Estate Portfolios Face Rocky Future: KBRA: As favorable credit conditions, including low interest rates, begin to dissipate, banks could begin to experience more stress from their loan portfolios, including their real estate holdings, according to a report from Kroll Bond Rating Agency. "Although currently the credit picture regarding bank-owned real estate loans remains quite benign, the image is in many ways too good to be true," KBRA wrote in its fourth-quarter credit outlook report. Based on an analysis of Federal Deposit Insurance Corp. data, KBRA argued that the efforts made by the Federal Reserve to influence asset prices may have sown the seeds for future credit problems in the real estate sector. In particular, KBRA identified loss given default figures as a source of concern. For all real estate loans, loss given default has dropped to 37%, the lowest level recorded since the FDIC began collecting these statistics in the 1980s. For one- to four-family residential loans, loss given default again was below 50%. "As we've noted in previous missives, when banks are reporting negative credit costs on trillions of dollars' worth of real estate loans, we generally consider that to be a red flag regarding future credit performance of these portfolios," KBRA wrote. Overall, net loan losses rose $1.5 billion, or 16.9%, year over year to $10.1 billion, according to the FDIC. The agency also noted, per KBRA, that this is the fourth consecutive quarter with higher net charge-offs. While charge-offs fell for multifamily and residential real estate loans, bank-owned auto loans displayed higher charge-offs, with the net default rate rise to the highest level since 2011 at 0.75%. Defaults on commercial and industrial and credit card loans also rose.

 Trump Treasury May Mean Independence for Fannie and Freddie - Gretchen Morgenson: Steven Mnuchin, President-elect Donald J. Trump’s nominee to run the Treasury Department, electrified Fannie Mae and Freddie Mac shareholders on Wednesday when he signaled that the mortgage finance giants would finally be allowed to get out from under Washington’s thumb. “We got to get Fannie and Freddie out of government ownership,” he told Fox Business. “It makes no sense that these are owned by the government and have been controlled by the government for as long as they have.” Mr. Mnuchin is right. It has been more than eight years since the federal government took over Fannie and Freddie in the mortgage crisis; as such, they are the last big piece of unfinished business from that era.When the government changed the terms of their bailouts in the summer of 2012 and began expropriating all of Fannie’s and Freddie’s profits every quarter, it seemed as if that unsatisfactory setup would go on forever. After all, it is hard for the government to give up a honey pot that has returned over $60 billion more to the Treasury than the companies received from taxpayers during their troubles. Granted, Mr. Mnuchin said little about how the administration thinks the nation’s biggest “government-sponsored enterprises” should be structured. That is not surprising, given the complexity of the $6 trillion mortgage market. So why did Mr. Mnuchin’s comments jazz the markets? Because they revealed a seismic shift in the way these companies are viewed by the new administration. In place of the strident, anti-G.S.E. ideology that has dominated the conversation on both the left and the right since the bailout, it looks as if a more pragmatic and positive approach to the companies and their role in the mortgage market is on the way. What that means, in my view, is that the enterprises may be allowed to live a new day rather than continue to be diminished and drained of their profits.

 Don't Hold Your Breath on Fannie Mae and Freddie Mac -- Holders of shares in Fannie Mae and Freddie Mac were thrilled at comments by Donald Trump’s choice for Treasury secretary. They should calm down. Definitive action on these companies remains a long way off, and the interests of shareholders aren’t high on the agenda of policy makers. Steven Mnuchin said in a Fox Business Network interview Wednesday that he wants to restructure the companies and “get them out of government control.” The giants of housing finance were taken over in a $187 billion financial-crisis bailout.  Mr. Mnuchin’s comments sent their shares soaring 46% on Wednesday. The stocks have given up some of these gains since but have still more than doubled since the election.  These shares are basically speculative bets that the pair will be recapitalized and released from government conservatorship. They tend to move sharply on any news. What happens to the two companies could also have big implications for the nearly $14 trillion mortgage market since they, along with Ginnie Mae, account for nearly all new mortgage-bond issuance. This makes it a particularly complex problem to solve. In fact, Mr. Mnuchin’s comments were somewhat vague. He specified that the companies would have to be “restructured” so they are “absolutely safe.” This could mean a simple recapitalization or it could mean some broader reworking of the companies and their role that would require legislation by Congress.

GSE Risk-Sharing Deals Would Be Boosted Under New Bipartisan Bill | American Banker: — A bipartisan duo of House lawmakers introduced a bill Thursday that would push Fannie Mae and Freddie Mac to engage in more credit risk-sharing transactions. The bill, by Reps. Ed Royce, R-Calif., and Gwen Moore, D-Wis., would require the director of the Federal Housing Finance Agency, which controls the companies in conservatorship, to "engage in significant and increasing credit risk-transfer transactions." Fannie and Freddie started engaging in risk-sharing deals in 2013 in an effort to limit taxpayer losses and transition to a new housing finance system that will presumably eventually be approved by Congress. But lawmakers want investors to take on more of the initial losses on the securities they sell and for the government-sponsored enterprises to increase and diversify the types of risk-transfer transactions they develop. "Congress should encourage Fannie and Freddie to increase the amount and the types of credit risk transfer transactions to the maximum level that is economically and commercially viable. Doing so is not only compatible with housing finance reform, it eases the way for future action," said Royce in a press release. The risk-sharing deals are also thought to be a positive for price discovery and to gauge investor appetite. Investors have largely stayed away from mortgage-backed securities since the crisis unless they are guaranteed by the GSEs.The bill would require the FHFA director, a position currently held by former North Carolina Congressman Mel Watt, to start developing a plan to increase the volume of risk-sharing deals within a year of the bill's passage and to increase the types and amount each year. The legislation also calls for the deals to try and convince investors to take on 4% of the credit risk starting from the first-dollar loss. The bill would also require the FHFA to develop a pilot program for lenders with less than $10 billion in assets so smaller investors can also participate in the risk-sharing deals and it amends commodities rules so Fannie and Freddie could create credit-linked notes to transfer risk.

Fair Housing Group Sues Fannie Mae over Alleged Discrimination: The National Fair Housing Alliance and 20 local fair housing groups have filed a lawsuit in federal court against Fannie Mae over its maintenance and marketing of foreclosure properties. The lawsuit claims that Fannie Mae has engaged in housing discrimination by failing to maintain REO properties in Latino and African-American neighborhoods as well as it does in white neighborhoods, according to a news release Monday. This is not the first time that NFHA has alleged racial discrimination with regards to Fannie Mae's handling of foreclosure properties. In May 2015, the organization said it filed a complaint with the Department of Housing and Urban Development over the issue. The fair housing group has researched the issue since 2009 and claims to have found significant disparities between Fannie Mae's properties in African-American and Latino neighborhoods and the foreclosures in white neighborhoods. For instance, NFHA's research allegedly found that 41.5% of the REO properties in neighborhoods of color had a broken, boarded, or unsecured window, versus just 19.1% of the REO properties in white neighborhoods. NFHA said that it has presented its findings to Fannie Mae multiple times to little or no avail. "Fannie Mae executes its mission in predominantly white neighborhoods, but certainly the evidence in the complaint and the photographs illustrates that its foreclosures in middle- and working-class neighborhoods of color are not maintained as 'best in class' and they are not even close to 'market-ready,'" Shanna Smith, president and CEO of NFHA, said in the release. Fannie Mae roundly rejected the allegations made by NFHA in a statement.

The Doctor Is In at HUD: What Carson Pick Means for Lenders: — While the designation of retired neurosurgeon Ben Carson to run the Department of Housing and Urban Development appears like an unusual choice, lenders are hoping he can bring a fresh perspective to the industry. At the very least, some industry analysts said Carson's seemingly close relationship with President-elect Donald Trump could help bring more attention to housing issues. Their relationship will help "elevate the issue of housing," said Brian Montgomery, a former commissioner of the Federal Housing Administration who is now vice chairman of The Collingwood Group. "No doubt in my mind that President Trump values his relationship with Carson." Many compared Carson to President Reagan's selection of Samuel Pierce, a corporate lawyer who had little experience with housing, as head of HUD in 1980. At that time, the Reagan transition team also selected a Realtor and Home Builder to be Pierce's No. 2 and the head of the FHA. The team was credited with rejuvenating FHA by introducing a direct endorsement program in 1983. That leaves many in the housing industry waiting to see who is picked to back up Carson. "Carson does not have a background in this," said Jaret Seiberg, an analyst for Cowen and Co., in a note to clients. "That is why the team that the President-elect picks to surround Carson will be critical. So far, there are few hints on whom that will be."

Critics Worry Over How Ben Carson, Lacking Expertise in Public Housing, Will Lead It – NYTimes - Big-city mayors and housing experts are nervous about the idea of a billionaire real estate developer in the White House. Now President-elect Donald J. Trump has picked Ben Carson, a retired neurosurgeon with no housing experience, as his nominee for secretary of Housing and Urban Development — and high anxiety has set in. As The Times’s Mid-Atlantic bureau chief, I have spent a lot of time in Baltimore, Cleveland and Philadelphia, which are all run by Democrats. In those cities, and many others across the country, housing concerns are deeply intertwined with other poverty-related issues, including racial tensions with the police. To explore how a Trump-Carson housing agenda might play out, I reached out to two Philadelphia mayors — Jim Kenney, the incumbent, and Michael Nutter, his predecessor — and two housing experts, one in Philadelphia and one here in Washington. Here are some of their thoughts:

Trump’s pick of Ben Carson is beyond baffling - IT WAS less than a month ago that a spokesman for retired neurosurgeon Ben Carson told reporters that the erstwhile GOP presidential candidate would not be serving the Trump administration in anything but an unofficial advisory capacity. “Dr. Carson feels he has no government experience,” Armstrong Williams said, “he’s never run a federal agency. The last thing he would want to do was take a position that could cripple the presidency.” On that basis alone, President-elect Donald Trump’s announcement Monday that Mr. Carson would be his choice to head the Department of Housing and Urban Development was baffling. Add the fact that Mr. Carson has no relevant expertise whatsoever (secretary of health and human services, the previous job for which the highly accomplished physician was mentioned, might have been a different story) and Mr. Trump’s pick goes well beyond baffling.To be sure, HUD’s mission, in large part, is to help the urban poor through administering public housing, distributing rental-assistance vouchers and other programs; Mr. Carson’s Detroit boyhood certainly taught him what it is like to grow up poor in a segregated big city and to succeed against the odds. No doubt, too, the half-century-old HUD bureaucracy’s record is mixed at best, with more than a few scandals involving its various grants and subsidies. In that sense, a Republican administration could be expected to seek someone with fresh free-market-oriented policy alternatives. Mr. Carson, however, comes equipped with little more than the generalities about abolishing “dependency” that he spouted on the campaign trail. In an op-ed last year, he called new Obama administration regulations linking housing aid to more ambitious neighborhood desegregation efforts “government-engineered attempts to legislate racial equality” and suggested that they would be “downright dangerous.” As HUD secretary, he would be in charge of federal fair-housing enforcement  Mr. Carson’s nomination is the second puzzling sign about where housing policy might be headed under the Trump administration. The first was Treasury Secretary-designate Steven Mnuchin’s comment that “we’ve got to get Fannie [Mae] and Freddie [Mac] out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have.” That could mean Mr. Mnuchin will argue for a total overhaul of the government’s mortgage guarantee business that finally ends the system of private gain, public risk that prevailed before the government took over the failing Fannie and Fred in 2008.

What Ben Carson should learn about housing segregation - EPI - President-elect Donald Trump proposes to nominate Ben Carson to head the Department of Housing and Urban Development (HUD). Mr. Carson has expressed opposition to the Obama administration’s new HUD requirement that cities and suburbs develop plans to end their segregation or face possible loss of federal funds. He calls this “social engineering,” and says that such well-intentioned programs have unintended consequences that their proponents later come to regret. Instead, he says, emphasis should be placed on revitalizing distressed minority neighborhoods in central cities. What Mr. Carson’s view ignores is that the racial segregation of every metropolitan area in the nation is also the result of “social engineering”—the purposeful efforts of federal, state, and local governments to create and enforce the residential separation of the races. What the Obama administration has begun are plans to undo this social engineering. Failing to continue these plans doesn’t avoid social engineering—it perpetuates it. Mr. Carson has said that his experience growing up in Detroit gives him insight into the plight of distressed segregated urban neighborhoods, but he may not be familiar with how, in Detroit, those neighborhoods deteriorated. Here are some examples of facts he should know, to place decisions about whether to desegregate those neighborhoods in their proper context:

  Trump’s Immigration Policy Could Devastate the Housing Market -- Donald Trump launched his historic and controversial presidential campaign with a promise to end illegal immigration and a pledge to deport the estimated 11 million people who are in the U.S. without the appropriate legal documentation. Since his election, Mr. Trump has seemingly hedged this commitment by suggesting that he will initially focus on "getting rid of illegal aliens with criminal histories." This should not be a surprise. The whole deportation idea is far more complicated than most people realize. It is also highly political, so it's helpful to analyze the issue by taking a more market-driven approach.Housing is something everyone needs — and the business of housing is generally a simple case of supply and demand. Reducing the potential homebuyer pool by 11 million residents would mean substantially fewer transactions over time — potentially as many as 250,000 fewer per year. However, this only begins to tell the story. When you factor in that Hispanics currently account for 50% of all first-time homebuyers nationwide and that 80% of our undocumented population is Hispanic, the overall effect would almost certainly be greater. The effects of deportation extend far beyond the individuals who are facing ejection. Fully two-thirds of undocumented adults have been in this country for more than 10 years, almost two million of them are married to a U.S. citizen or a permanent resident, and 3.8 million have American-born children. This essentially means that if we were to take Mr. Trump's initial immigration promise literally, it would affect far more than the 11 million undocumented people. The impact would cascade to include as many as 20 million individuals and five million households, a third of whom already own a home.

  Housing Advocates Seek New Tax Credit to Renovate Run-Down Homes: Affordable housing advocates are seizing on President-elect Donald Trump's call for tax reform, hoping that a new tax credit program to revitalize run-down homes in distressed neighborhoods will be attractive to the incoming administration. The National Association of Affordable Housing Lenders is pushing an initiative to create the Neighborhood Homes Tax Credit, which will provide tax incentives for the renovation and construction of owner-occupied homes. "It is a strategy to revive distressed neighborhoods with significant poverty that have a lot of single-family homes that are in tough shape," said Buzz Roberts, president and chief executive of NAAHL. These are neighborhoods where it is difficult to renovate the housing stock because an appraisal generally won't support a construction loan. Such neighborhoods are not attracting capital because they have concentrations of poverty. The tax credit is designed to retain, as well as attract, middle-income homeowners to hard-hit neighborhoods. The proposal also has safeguards to prevent gentrification and the displacement the current residents. The tax credit would go to investors in sponsoring entities to raise capital for the renovations. It would transfer construction and market risks from the government to the private sector.

Black Knight October Mortgage Monitor -- Black Knight Financial Services (BKFS) released their Mortgage Monitor report for October today. According to BKFS, 4.35% of mortgages were delinquent in October, down from 4.77% in October 2015. BKFS also reported that 0.99% of mortgages were in the foreclosure process, down from 1.43% a year ago. This gives a total of 5.34% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: Post-Election Rate Jumps Eliminate 4.3 Million from Refinanceable Population, Push Home Affordability to Post-Recession Low. In the immediate aftermath of the U.S. presidential election, 30-year mortgage rates have spiked by 49 basis points (BPS) in just a few short weeks. This month, Black Knight examines the impact of these jumps on the population of borrowers who could both likely qualify for and have incentive to refinance as well as the wider matter of home affordability. From the 8.3 million borrowers who could both likely qualify for and had interest rate incentive to refinance immediately prior to the election, we’re now looking at a population of just 4 million total, matching a 24-month low set back in July 2015. While there are still two million borrowers who could save $200 or more per month by refinancing and a cumulative $1 billion per month in potential savings, this is less than half of the $2.1 billion per month that was available just four short weeks ago. These changes will likely have an impact on refinance origination volumes moving forward. And, since higher interest rates tend to reduce the refinance share of the market – specifically in higher credit segments – which typically outperform their purchase mortgage counterparts, they may potentially impact overall mortgage performance as well.  This map from Black Knight shows the monthly change in delinquency rate - and the impact of Hurricane Matthew on mortgage delinquencies. From Black Knight:  The hardest hit areas were along the coast, and correspondingly higher increases in delinquencies were observed in these areas as well.  In some of the hardest hit areas of South Carolina, delinquency rates rose by more than 20 percent from September to October.  Since the worst of the storm hit the southeast on October 7th and 8th, after the majority of borrowers would have made their mortgage payments, we could yet see further impact in November’s mortgage performance data   This graph from Black Knight shows the number of 90 day defaults.  This is back to normal. •Despite making up only 25 percent of all active mortgages, pre-recession vintages (2007 and prior) still account for 60 percent of all new defaults, even though these mortgages now have nine or more years of seasoning

 The foreclosure nightmare continues in New Jersey: The neighborhood's zombie has, at long last, made it through foreclosure and is on the market. A quick tour of the house, which was vacant for nearly 30 months, revealed few surprises. When water and electricity have been turned off for more than two years at a property, you always assume the worst. The good news is that the raccoon family living in the attic has moved. The bad news is that no one has yet dared to open the refrigerator in the kitchen, perhaps waiting until the Ghostbusters have a free moment.New Jersey has a lot of zombie homes. Perhaps that's not unusual for a state that seems to observe Halloween as a national holiday, preparing for more than two months, then celebrating in just two hours on Oct. 31. The state's number of zombie foreclosures is among the nation's highest. The reason is simple: It now takes an average of 1,262 days for a foreclosure to make it through New Jersey's congested legal system, the longest time in any state, according to Attom Data Solutions (formerly RealtyTrac). In September, for example, one in every 691 properties in New Jersey was in foreclosure, even as the national number was one in every 1,600 homes and foreclosure activity was the lowest since 2005, nearly two years before the housing bust began. In Atlantic City, the ratio was one in every 375 houses, Attom Data Solutions reported, a result of the decline of the casino industry and the effect it has had on other employment. "There is a tripling effect," said Patricia Hasson, president and executive director of Clarifi, the financial-counseling and education nonprofit, which has begun counseling troubled Atlantic City borrowers. "Casino employees lose jobs, they don't go out to eat, restaurants lay off employees," she said. While most states are processing recent foreclosures, New Jersey is working on a backlog of many years, which continues to hamper full recovery and lowers property values in many municipalities. So it stands to reason the state would resurrect its HomeKeeper program, started in 2011, with $115 million in new funding. It's much smarter to spend a little to keep someone in a home than to deal with even more foreclosures.

 CoreLogic: 384,000 borrowers moved out of negative equity in Q3 --From CoreLogic: CoreLogic Reports Home Equity Increased $726 billion in the Third Quarter Compared With a Year Ago CoreLogic ... today released a new analysis showing that U.S. homeowners with mortgages (roughly 63 percent of all homeowners) saw their equity increase by a total of $227 billion in Q3 2016 compared with the previous quarter, an increase of 3.1 percent. Additionally, 384,000 borrowers moved out of negative equity, increasing the percentage of homes with positive equity to 93.7 percent of all mortgaged properties, or approximately 47.9 million homes. Year over year, home equity grew by $726 billion, representing an increase of 10.8 percent in Q3 2016 compared with Q3 2015.In Q3 2016, the total number of mortgaged residential properties with negative equity stood at 3.2 million, or 6.3 percent of all homes with a mortgage. This is a decrease of 10.7 percent quarter over quarter from 3.6 million homes, or 7.1 percent of mortgaged properties, in Q2 2016 and a decrease of 24.1 percent year over year from 4.2 million homes, or 8.4 percent of mortgaged properties, in Q3 2015. .....Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009, based on CoreLogic negative equity data, which goes back to Q3 2009.“Home equity rose by $12,500 for the average homeowner over the last four quarters,” said Dr. Frank Nothaft, chief economist for CoreLogic. “There was wide geographic variation with homeowners in California, Oregon and Washington gaining an average of at least $25,000 in home equity wealth, while owners in Alaska, North Dakota and Connecticut had small declines, on average.”This graph shows the distribution of home equity in Q3 2016 compared to Q2 2016. Just over 2% of properties have 25% or more negative equity.  For reference, about four years ago, in Q3 2012, 9.6% of residential properties had 25% or more negative equity.

Homeowner s Equity Rises 11% from 2015 Levels: CoreLogic: The amount of equity homeowners hold grew by $726 billion, or 10.8%, in the third quarter of 2016 versus the year before, according to data from CoreLogic. On a quarterly basis, the equity in residential properties secured by mortgages rose by $227 billion, or 3.1%, CoreLogic reported Thursday. The increase pulled 384,000 borrowers out of negative equity. Altogether, 93.7% of all mortgaged properties are now in positive equity. The rise in home equity was mainly the result of price appreciation. "Home equity rose by $12,500 for the average homeowner over the last four quarters," Frank Nothaft, chief economist for CoreLogic, said in a news release. "There was wide geographic variation with homeowners in California, Oregon and Washington gaining an average of at least $25,000 in home equity wealth, while owners in Alaska, North Dakota and Connecticut had small declines, on average." As of the third quarter, Texas had the highest percentage of homes with positive equity of any state at 98.4%. Nevada had a greater share of its properties in negative equity than any other state at 14.2%.

Mortgage rates climb to highs not seen in more than two years - Mortgage rates increased for the sixth week in a row to highs not seen in more than two years.According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average climbed to 4.13 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.08 percent a week ago and 3.95 percent a year ago. The 30-year fixed rate hasn’t been this high since October 2014. It has climbed 66 basis points in six weeks. (A basis point is 0.01 percentage point.)The 15-year fixed-rate average edged up to 3.36 percent with an average 0.5 point. It was 3.34 percent a week ago and 3.19 percent a year ago. The five-year adjustable rate average crept up to 3.17 percent with an average 0.5 point. It was 3.15 percent a week ago and 3.03 percent a year ago.“The 10-year Treasury yield dipped this week following the release of the Job Openings and Labor Turnover Survey,” Sean Becketti, Freddie Mac chief economist, said in a statement. “As rates continue to climb and the year comes to a close, next week’s [Federal Reserve] meeting will be the talk of the town with the markets 94 percent certain of a quarter-point-rate hike.”The rapid rise in mortgage rates is due in part to rising long-term bond yields. The 10-year Treasury is one of best indicators of where rates are headed. When yields go up, rates go up.Although long-term bond yields have retreated a bit this week, they remain significantly higher than they were a month ago.

US Housing Market Reeling After Mortgage Rates Jump To Two Years Highs -- Ten days ago, we wrote that the "US Housing Market In Peril As "Increase In Mortgage Rates Has Shocked Consumers." Fast forward to today when the same "shocked consumers" referenced in the WSJ piece must be on the verge of a nervous breakdown because according to the Mortgage Brokers Association, rates on US fixed-rate mortgages rose to their highest levels in more than two years, sending weekly home loan application activity to its weakest since early January,  according to the latest MBA data. The Washington-based industry group said 30-year fixed-rate conforming mortgages averaged 4.27%, the highest level since October 2014. up from 4.23% the prior week. Likewise, interest rates on 15-year fixed-rate mortgages averaged 3.53%, their highest since September 2014. MBA's seasonally adjusted mortgage market index declined 0.7% in the week ended Dec. 2 to 414.1, the lowest since 398.5 in the week of Jan. 8.Home borrowing costs have climbed with a surge in U.S. 10-year Treasury bond yields, which hit their highest levels since July 2015 last week, following Donald Trump's U.S. presidential election victory. Traders have bet on faster economic growth and inflation if Trump and the Republican-controlled Congress enact big tax cuts and federal spending, together with stricter trade policies. The spike in 30-year mortgage rates, which have risen about 0.50 percentage point since the Nov. 8 election, has reduced refinancing activity, something we highlighted yesterday showing the collapse in the total poll of eligible refinance candidates.

The Dramatic Impact Of Surging Rates On Housing And Refis In One Chart --To visualize the impact the recent spike in mortgage rates will have on the US housing market in general, and home refinancing activity in particular, look no further than this chart from the October Mortgage Monitor slidepack by Black Knight. The chart profiles the sudden collapse of the refi market using October and November rates. As Black Knight writes, it looks at the – quite dramatic – effect the mortgage rate rise has had on the population of borrowers who could both likely qualify for and have interest rate incentive to refinance. It finds it was cut in half in just one month.Some more details from the source:

  • The results of the U.S. presidential election triggered a treasury bond selloff, resulting in a corresponding rise in both 10-year treasury and 30-year mortgage interest rates
  • Mortgage rates have jumped 49 BPS in the 3 weeks following the election, cutting the population of refinanceable borrowers from 8.3 million immediately prior to the election to a total of just 4 million, matching a 24-month low set back in July 2015
  • Though there are still 2M borrowers who could save $200+/month by refinancing and a cumulative $1B/month in potential savings, this is less than half of the $2.1B/ month available just four weeks ago
  • The last time the refinanceable population was this small, refi volumes were 37 percent below Q3 2016 levels

Which is bad news not only for homeowners, but also for the banks, whose refi pipeline - a steady source of income and easy profit - is about to vaporize. It's not just refinancings, however, According to the report, as housing expert Mark Hanson notes, here is a summary of the adverse impact the spike in yields will also have on home purchases:

  • Overall purchase origination growth is slowing, from 23% in Q3'15 to 7% in Q3'16.
  • The highest degree of slowing - and currently the slowest growing segment of the market - is among high credit borrowers (740+ credit scores).
  • The 740+ segment has been mainly responsible for the overall recovery in purchase volumes and in fact, currently accounts for 2/3 of all purchase lending in the market today.

 MBA: Mortgage Applications Decrease in Latest Weekly Survey -- From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey -Mortgage applications decreased 0.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 2, 2016. The prior week’s results included an adjustment for the Thanksgiving holiday.... The Refinance Index decreased 1 percent from the previous week. The seasonally adjusted Purchase Index increased 0.4 percent from one week earlier. The unadjusted Purchase Index increased 36 percent compared with the previous week and was 3 percent higher than the same week one year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since October 2014, 4.27 percent, from 4.23 percent, with points decreasing to 0.37 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.The first graph shows the refinance index since 1990.With the current level of mortgage rates, refinance activity will probably decline further.The second graph shows the MBA mortgage purchase index.  The purchase index was "3 percent higher than the same week one year ago".

CoreLogic: House Prices up 6.7% Year-over-year in October --The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 6.7 Percent in October 2016 Home prices nationwide, including distressed sales, increased year over year by 6.7 percent in October 2016 compared with October 2015 and increased month over month by 1.1 percent in October 2016 compared with September 2016, according to the CoreLogic HPI. ..“While national home prices increased 6.7 percent, only nine states had home price growth at the same rate of growth or higher than the national average because the largest states, such as Texas, Florida and California, are experiencing high rates of home price appreciation,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Home prices are continuing to soar across much of the U.S. led by major metro areas such as Boston, Los Angeles, Miami and Denver. Prices are being fueled by a potent cocktail of high demand, low inventories and historically low interest rates,” said Anand Nallathambi, president and CEO of CoreLogic. “Looking forward to next year, nationwide home prices are expected to climb another 5 percent in many parts of the country to levels approaching the pre-recession peak.” This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100. The index was up 1.1% in October (NSA), and is up 6.7% over the last year. This index is not seasonally adjusted, and this was another solid month-to-month increase. The index is still 4.6% below the bubble peak in nominal terms (not inflation adjusted). The second graph shows the YoY change in nominal terms (not adjusted for inflation). The YoY increase had been moving sideways over the last two years. The year-over-year comparison has been positive for fifty seven consecutive months since turning positive year-over-year in February 2012.

October 2016 CoreLogic Home Prices Year-over-Year Growth Rate Now Improved to 6.7%.: CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 6.7 % year-over-year year-over-year (reported up 1.1 % month-over-month). Last month's 6.3 % year-over-year gain was revised downward to 5.7 %. CoreLogic HPI is used in the Federal Reserves's Flow of Funds to calculate the values of residential real estate. CoreLogic has been revising their data significantly downward in the following month - I would not take the 6.7 % to the bank. However, I would be comfortable suggesting that next month we will discover that the 6.7 % was really 5.7 % (similar to what happened this month). Overall, home price growth trends seem to be flat (rate of increase nearly unchanged) - but how long this will last due to the insufficient home inventories. Dr Frank Nothaft, chief economist for CoreLogic stated: While national home prices increased 6.7 percent, only nine states had home price growth at the same rate of growth or higher than the national average because the largest states, such as Texas, Florida and California, are experiencing high rates of home price appreciation. Anand Nallathambi, president and CEO of CoreLogic stated: Home prices are continuing to soar across much of the U.S. led by major metro areas such as Boston, Los Angeles, Miami and Denver. Prices are being fueled by a potent cocktail of high demand, low inventories and historically low interest rates. Looking forward to next year, nationwide home prices are expected to climb another 5 percent in many parts of the country to levels approaching the pre-recession peak. ‘

A Third Of Homes Sold For The List Price Or More In August 2016: A greater share of homes are selling at or above their listing price as healthy housing demand continues to meet a tight inventory of homes for sale. The share of homes selling at or above list price has recovered to early 2006 levels. In August 2016 that share was more than one-third of total sales (33.7 percent), up from 31.2 percent in August 2015 and twice the level at the January 2008 trough (14.4 percent). Housing markets are different across the nation. Therefore, sales and listing patterns also vary geographically. Figure 2 shows the share of homes that sold at, above, or below their list prices in 16 CBSAs during August 2016. San Francisco had the largest share of homes - 70 percent - that sold for at least the list price. Seattle and Denver followed with 62 and 53 percent selling for the list price or more, respectively. Chicago had the lowest share - less than 22 percent - of homes selling at or above the list price in August 2016.

 Perils of Climate Change Could Swamp Coastal Real Estate… Real estate agents looking to sell coastal properties usually focus on one thing: how close the home is to the water’s edge. But buyers are increasingly asking instead how far back it is from the waterline. How many feet above sea level? Is it fortified against storm surges? Does it have emergency power and sump pumps? Rising sea levels are changing the way people think about waterfront real estate. Though demand remains strong and developers continue to build near the water in many coastal cities, homeowners across the nation are slowly growing wary of buying property in areas most vulnerable to the effects of climate change. A warming planet has already forced a number of industries — coal, oil, agriculture and utilities among them — to account for potential future costs of a changed climate. The real estate industry, particularly along the vulnerable coastlines, is slowly awakening to the need to factor in the risks of catastrophic damage from climate change, including that wrought by rising seas and storm-driven flooding. But many economists say that this reckoning needs to happen much faster and that home buyers urgently need to be better informed. Some analysts say the economic impact of a collapse in the waterfront property market could surpass that of the bursting dot-com and real estate bubbles of 2000 and 2008. ... Over the past five years, home sales in flood-prone areas grew about 25 percent less quickly than in counties that do not typically flood, according to county-by-county data from Attom Data Solutions, the parent company of RealtyTrac. Many coastal residents are rethinking their investments and heading for safer ground. ...

Home Construction Loan Volume Picks Up the Pace - WSJ: The volume of U.S. home construction loans grew at the fastest rate in more than two years in the third quarter, according to federal data, a sign that tight postrecession lending conditions might be easing for home builders. After the housing crash, banks that historically lent money for acquiring land and building new homes cut back significantly. Access to capital has been especially difficult for small private builders, who are responsible for nearly two-thirds of single-family home construction across the country. Analysts often cite the credit challenges as a prime factor in holding back the supply of new homes. A return of such lending could spark more home construction. Home prices have recovered from the housing crash and stood at record highs in September, according to the S&P CoreLogic Case-Shiller National Home Price Index. That is partly because the supply of homes is low, with construction about 25% below historical averages. Financing is critical because builders typically move forward on construction after receiving a deposit from an approved buyer, and don’t see the full home payment until after the project is completed.“There’s a fairly large financing hurdle,” said Robert Dietz, chief economist at the National Association of Home Builders, which studies federal lending data on home building and conducts surveys on the credit environment. “You’ve got to get most of that upfront.” Builders who historically worked with community banks that had on-the-ground knowledge of local real-estate markets now often have to seek equity partners who are more cautious, Mr. Dietz said. The latest quarterly data on home construction loans studied by the NAHB shows that the volume of outstanding loans increased by 4.8% in the third quarter, to $68.3 billion. That marks 14 consecutive quarters of growth for such loans.

Fed's Flow of Funds: Household Net Worth increased in Q3 --The Federal Reserve released the Q3 2016 Flow of Funds report today: Flow of Funds. According to the Fed, household net worth increased in Q3 compared to Q2: The net worth of households and nonprofits rose to $90.2 trillion during the third quarter of 2016. The value of directly and indirectly held corporate equities increased $494 billion and the value of real estate increased $554 billion. Household net worth was at $90.2 trillion in Q3 2016, up from $88.0 trillion in Q2 2016.  The Fed estimated that the value of household real estate increased to $22.7 trillion in Q3. The value of household real estate is now above the bubble peak in early 2006 - but not adjusted for inflation, and also including new construction.The first graph shows Households and Nonprofit net worth as a percent of GDP.  Household net worth, as a percent of GDP, is higher than the peak in 2006 (housing bubble), and above the stock bubble peak. This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations. This graph shows homeowner percent equity since 1952. Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.  In Q3 2016, household percent equity (of household real estate) was at 57.3% - up from Q2, and the highest since Q2 2006. This was because of an increase in house prices in Q3 (the Fed uses CoreLogic).  Note: about 30.3% of owner occupied households had no mortgage debt as of April 2010. So the approximately 50+ million households with mortgages have far less than 57.3% equity - and about 3 million homeowners still have negative equity.

October 2016 Consumer Credit Headlines Say Year-Over-Year Growth Rate Declined: The headlines say consumer credit rate of annual growth decreased from last month. Our analysis suggests the rate of loan growth is unchanged. Not only does this data set suffer from backward revision (moderate to significant enough to change trends), but the use of compounding (projecting monthly change as annual change) by the Federal Reserve to determine consumer credit growth rates exaggerates the monthly volatility in this data. This month the headlines showed slower growth - and our analysis is that the rate of growth is statistically the same. the default rate of consumer loans is now marginally growing year-over-year, that the amount of consumer credit outstanding relative to consumer expenditures is at all time highs, Household Debt Payments As A Percent of Disposable Income is near all time lows. Last month's headline said: Consumer credit increased at a seasonally adjusted annual rate of 7 percent during the third quarter. Revolving credit increased at an annual rate of 5-1/4 percent, while nonrevolving credit increased at an annual rate of 7-1/2 percent. In September, consumer credit increased at an annual rate of 6-1/4 percent. This month's headlines said: In October, consumer credit increased at a seasonally adjusted annual rate of 5-1/4 percent. Revolving credit increased at an annual rate of 3 percent, while nonrevolving credit increased at an annual rate of 6 percent. Overall takeaways from this month's data:

  • Student loan year-over-year growth rate has been decelerating gradually since the beginning of 2013.
  • Student loans growth rate (US Government owned) was down 0.5 % month-over-month and year-over-year growth is 10.4 % year-over-year.
  • Revolving credit (credit cards and this series includes no student loans) and has been slightly accelerating since 2010.

Congress Take Aim at Gag Clauses in Form Contracts - When Jennifer Palmer wrote an unflattering review of online merchant KlearGear on RipOffReport.com, KlearGear fired back with an unexpected response: a demand, according to Palmer, that she pay $3,500 for violating the company’s contractual clause prohibiting negative online reviews. After Palmer failed to pay, KlearGear allegedly notified several credit reporting agencies—a move that ensnared her and her husband in a six-year-long ordeal that all but destroyed their credit, leaving them unable to secure a needed car loan, obtain a credit card, or buy a furnace to heat their home during the cold winter months. Palmer’s story is not unique. She is just one of millions of people who have been subject to companies’ contractual “non-disparagement” or “gag” clauses, which prohibit consumers from making negative statements about the companies online. Alleged violators of these clauses, like Palmer, can face serious reprisals from the company, ranging from the imposition of hefty fines, to the near-ruin of consumers’ credit. But yesterday, the U.S. Senate took a forceful swing at this practice, unanimously passing a bipartisan bill, the Consumer Review Fairness Act, that would bar the continued use of gag clauses. The use of non-disparagement clauses has been a longtime practice, specifically in the context of severance and settlement agreements. This recently passed legislation, however, targets a new breed of gag clauses: those that are specifically aimed at thwarting ordinary consumers from writing negative online reviews. These gag clauses have proliferated in recent years in light of the increasingly influential role that online review sites, such as TripAdvisor and Yelp, have come to play in purchasing decisions.

Preliminary November Consumer Sentiment increases to 98.0 -The preliminary University of Michigan consumer sentiment index for December was at 98.0, up from 93.8 in November. Consumer confidence surged in early December to just one-tenth of an Index point below the 2015 peak—which was the highest level since the start of 2004. The surge was largely due to consumers’ initial reactions to Trump’s surprise victory. When asked what news they had heard of recent economic developments, more consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys. To be sure, an equal number volunteered negative judgments about prospective economic policies, but the frequency of those negative references was less than half its prior peak levels whereas positive references were about twice its prior peak. There were a few exceptions to the early December surge in optimism, mainly among those with a college degree and among residents of the Northeast, although no group has adopted a pessimistic outlook for the economy. The most important implication of the increase in optimism is that it has raised expectations for the performance of the economy. President-elect Trump must provide early evidence of positive economic growth as well as act to keep positive consumer expectations aligned with performance. Either too slow growth or too high expectations represent barriers to maintaining high levels of consumer confidence. Until specific policies are proposed, there is no reason to alter the 2017 forecast of 2.5% for real consumption. (see graph)

Michigan Consumer Sentiment: December Preliminary Highest Since Early 2015 -- The University of Michigan Preliminary Consumer Sentiment for December came in at 98.0, up from the November Final reading and its highest since January 2015. Investing.com had forecast 94.5.Surveys of Consumers chief economist, Richard Curtin, makes the following comments:Consumer confidence surged in early December to just one-tenth of an Index point below the 2015 peak—which was the highest level since the start of 2004. The surge was largely due to consumers’ initial reactions to Trump’s surprise victory. When asked what news they had heard of recent economic developments, more consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys. To be sure, an equal number volunteered negative judgments about prospective economic policies, but the frequency of those negative references was less than half its prior peak levels whereas positive references were about twice its prior peak. There were a few exceptions to the early December surge in optimism, mainly among those with a college degree and among residents of the Northeast, although no group has adopted a pessimistic outlook for the economy. The most important implication of the increase in optimism is that it has raised expectations for the performance of the economy. President-elect Trump must provide early evidence of positive economic growth as well as act to keep positive consumer expectations aligned with performance. Either too slow growth or too high expectations represent barriers to maintaining high levels of consumer confidence. Until specific policies are proposed, there is no reason to alter the 2017 forecast of 2.5% for real consumption. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

The Future is Uncertain, but So Is the Past - Carola Binder --In a recently-released research note, Federal Reserve Board economists summarize new survey results on consumers' inflation perceptions. The well-known Michigan Survey of Consumers asks consumers about their expectations of future inflation (over the next year and 5- to 10- years), but does not ask them what they believe inflation has been in recent years. In many macroeconomic models, inflation perceptions should be nearly perfect. After all, inflation statistics are publicly available, and anyone should be able to access them. The Federal Reserve commissioned the Michigan Survey of Consumers Research Center to survey consumers about their perceptions of inflation over the past year and over the past 5- to 10-years, using analogous wording to the questions about inflation expectations. As you might guess, consumers lack perfect knowledge of inflation in the recent past. If you're like most people (which, by dent of reading an economic blog, you are probably not), you probably haven't looked up inflation statistics or read the financial news recently. But more surprisingly, consumers seem just as uncertain about past inflation, or even more so, as about future inflation. Take a look at these histograms of inflation perceptions and expectations from the February 2016 survey data:

Do Rises In Oil Prices Mean Rises In Food Prices? - Prices for agricultural commodities have been rising over the past 10 years. During the same period, crude oil prices have also increased substantially. The simultaneous rise in the price for agricultural inputs and crude oil has raised new questions about whether an increase in oil prices translates to increased food prices, an occurrence called pass-through. How Can Oil Affect Food Prices? The most common explanation for oil price pass-through is related to energy policy. In 2005, U.S. energy policy changed to increase the use of biofuels in gasoline production, increasing demand for ethanol. Because gasoline is made primarily of oil and ethanol, corn competes with oil as an input. This means that increasing crude oil prices (the other main input into gasoline) could translate to higher corn prices. Corn is used not only to make food but also as animal feed, so the costs could transfer through grains, meat and dairy.However, there is also a case for causality in the other direction. Economists Christiane Baumeister and Lutz Kilian identified a case for increased food prices causing higher oil prices in a 2012 study.1 They pointed out that increasing agricultural activity in the developing world combined with increased farm income lead to higher demand for farm machinery and for oil to run the machinery. This increase in demand could raise prices of both agricultural commodities and crude oil. The figure below plots the cumulative change since 2006 in consumer food prices, global corn prices and global WTI crude prices. Oil and corn prices are measured relative to the headline consumer price index (CPI), and food prices are measured relative to core CPI, or CPI minus food and energy prices. Thus, we are examining the relative inflation of food, corn and oil to the overall inflation rate in the U.S. economy.

Record High Lease Returns Set To Wreak Havoc On Used Car Prices --About a month ago we warned that declining used car prices could spell disaster for subprime auto securitizations (see "Slumping Used Car Prices Spell Disaster For Subprime Auto Securitizations").  While it's always difficult to predict the exact timing of when bubbles will burst, a combination of record-high lease returns in 2017 and 2018, combined with rising interest rates could imply that the auto bubble is on the precipice.As Bloomberg recently pointed out, strong used car pricing is a critical component required to prop up the overall auto market.  While American's love their brand new cars, if used car prices become too soft then substitution can hurt new car sales.  Add to that the impact of falling residual values on the finance arms of the auto OEMs and you have all the ingredients required for an auto market meltdown.Thanks in part to low interest rates, leasing has become an increasingly popular way to drive away a new car. It accounts for almost a third of all new car transactions in the U.S. and it's also huge in the U.K., as I explained here.For BMW and Mercedes-Benz in particular, it's been a boon for sales.Typically a lease lasts about three years, after which the customer returns to the showroom for another vehicle -- which is when things could get difficult for the industry."There's going to be a lot of units coming back over the next several years," Ford Motor Co. warned last month. "They're going to get to levels that we have never seen on an absolute basis in the industry before".In 2017,  about one million more off-lease vehicles will be available in the U.S. compared with 2015. That additional volume will put downward pressure on used car prices.

The Effect of Hurricane Matthew on Consumer Spending – FRB - Severe weather events, such as blizzards and hurricanes, can temporarily disrupt economic activity. The imprints of these events on aggregate statistics can make it challenging for macroeconomists to analyze and forecast economic conditions. As one illustration, the minutes from March FOMC meetings in six of the past seven years cited unseasonable temperatures or winter storms as influencing economic activity. Weather events present an opportunity to observe how consumers adjust their spending in the face of unanticipated shocks. Thus far, however, there has been little analysis of the spending effects from weather events, partly due to a lack of data at both a sufficiently high frequency and a geographically detailed level. For example, official statistics, such as retail sales from the Census Bureau, are only estimated nationally at a monthly frequency. In this note, we take a step forward in this regard using a new dataset of transaction volumes to examine how consumers reacted to Hurricane Matthew, which struck the East Coast in October 2016.  Our results reveal that the hurricane significantly reduced consumer spending in the affected states (Florida, Georgia, South Carolina, and North Carolina) in early October. Although the level of spending after the storm quickly returned to normal, very little of the preceding shortfall appears to have been made up in the subsequent weeks, suggesting that, on net over the span of a few weeks, the hurricane had a negative effect on spending. The drop in activity was most apparent in the discretionary components of spending, such as restaurants, as opposed to necessities, such as grocery stores.2 The net negative effect on spending implies that inter-temporal smoothing through this temporary shock is either incomplete or slow to occur.

 Sears is on the brink of catastrophe as store closures loom and top execs flee the company - The company is shutting down dozens of Kmart stores this month and two of its highest-ranking executives left this week in the midst of the key holiday shopping season. This comes following speculation among Sears and Kmart employees, suppliers, and several banks that the retailer will soon go bankrupt — something Sears has repeatedly dismissed. Jeff Balagna, formerly Sears' executive vice president, left the company Wednesday, "in order to focus on his other business interests and pursue other career opportunities," Sears said in an SEC filing dated November 23. Balagna did not respond to a request for comment. Sears declined to comment beyond what was stated in the filing.Sears President and Chief Member Officer Joelle Maher also left the company this week, Sears confirmed to Business Insider. The company declined to give a reason for her departure. The timing of the departures — so close to Sears' upcoming third-quarter earnings report and in the middle of the holiday season — is "highly unusual," according to Mark Cohen, director of retail studies at Columbia Business School and the former CEO of Sears Canada. Cohen, who was fired from Sears in 2004, is an outspoken critic of the company and its CEO Eddie Lampert. He speculated that the timing of the departures could be indicative of something "catastrophic" in its upcoming earnings report.  The company declined to comment on Cohen's remarks. Sears will report its third quarter earnings on Thursday, and Wall Street is predicting a 14% revenue decline to $5 billion compared to the same period last year.

Satellite Imagery Reveals Sharp Retail Spending Slowdown After The Election -- According to various anecdotal reports, in addition to launching the stock markets on an unprecedented meltup, Trump's presidential victory has also boosted consumer confidence, leading to a spike in post-election spending. That, however, is not only not validated by the actual data, but according to evidence, retail spending - a key component of the Trump "hope" trade - has actually slowed down. One snapshot of what consumers did pre- and post-elections comes from the latest Bank of America credit and debit card data. The bank pulled daily card data and calculated “core control” sales which it defines as retail sales ex-autos, building materials, gasoline and groceries. It then indexed this spending on election day and compared it to the trends after the 2012 and 2008 elections. Noting the weekly pattern where sales pick up on the weekend, it finds that spending after the election was in line with the prior two election years.This year, sales accelerated a bit more as we approached the holiday season, however slowed down modestly in the days after. Overall, as BofA says, "there is little evidence of a particularly strong post-election boost in spending this year." A more interesting report, one which relies on satellite imagery to look at parking lot activity of multiple US retailers in the pre and post election season, as well as over the critical Thanksgiving and Black Friday period, comes from JPMorgan. The summary conclusion: the analysis suggests significant activity weakness at core US retail locations, as JPM finds "that Y/Y activity trends worsened post the election contrary to stock market moves and color from some management teams." Here are JPM's findings:

  • Leveraging Satellite big data. We are leveraging our own ability to manipulate and analyze large data sets against proprietary parking lot car count data from Orbital Insight. Orbital Insight collects satellite imagery and then applies proprietary machine learning based image recognition technology to count cars in parking lots on a daily basis. The data we are using here is comprised of over 280k daily datapoints spanning multiple years.
  • Big picture trends negative. We observe a deterioration of total car counts in aggregate that has taken place more post the election than prior to it. We find this interesting as it is counter to prevailing thought on Thanksgiving demand but consistent with weaker early Fall retail trends.
  • Retailing/Dept. Stores & Specialty takeaways. Larger picture, average Holiday traffic across our sample of 11 retailers under coverage has moved from positive low single digits in 2014 to flattish in 2015 to negative mid-single digits in 2016. Near-term and consistent with our field work, 4Q16-to-date has been a tale of two worlds with traffic down -6.0% in aggregate from Nov 1 through Dec 4 given the warmest November in 25 years improving to -3.2% in the week of Black Friday.

Backdoor accounts found in 80 Sony IP security camera models - Many network security cameras made by Sony could be taken over by hackers and infected with botnet malware if their firmware is not updated to the latest version.Researchers from SEC Consult have found two backdoor accounts that exist in 80 models of professional Sony security cameras, mainly used by companies and government agencies given their high price.One set of hard-coded credentials is in the Web interface and allows a remote attacker to send requests that would enable the Telnet service on the camera, the SEC Consult researchers said in an advisory Tuesday.The second hard-coded password is for the root account that could be used to take full control of the camera over Telnet. The researchers established that the password is static based on its cryptographic hash and, while they haven’t actually cracked it, they believe it’s only a matter of time until someone does.Sony was informed about the issue in October and released firmware updates for all affected camera models on Nov. 28. Users are advised to install these updates as soon as possible, because security cameras have recently been an attractive target for hackers.“We believe that this backdoor was introduced by Sony developers on purpose (maybe as a way to debug the device during development or factory functional testing) and not by an ‘unauthorized third party’ like in other cases,” the SEC Consult researchers said. The affected cameras can be attacked over the local network or over the internet if their Web interfaces are publicly accessible. A search via the Censys.io search engine revealed around 4,000 Sony security cameras connected to the Internet, but these are likely not all of them and it’s unclear how many are actually vulnerable.

These Toys Don’t Just Listen To Your Kid; They Send What They Hear To A Defense Contractor - Consumerist --Kids say a lot of random, unsolicited, or just plain personal things to their toys while playing. When that toy is stuffed with just fluff and beans, it doesn’t matter what the kid says: their toy is a safe sounding board. When their playtime companion is an internet-connected recording device that ships off audio files to a remote server without even notifying parents — that’s a whole other kind of problem.

• The My Friend Cayla and i-Que toys listen, record & send voice data to a defense contractor specializing in voice-recognition.
• The terms of service & privacy policies for these toys are difficult to find, and can be changed without notice.
• These practices may violate rules governing the collection & use of online data obtained from kids.
• Researchers claim that the devices are easily hacked to either intercept data or to turn the toys into remote listening devices.
• A coalition of consumer and privacy advocates have petitioned the FTC to investigate these toys and put an end to these practices.
More information about the #toyfail campaign can be found here.

According to a coalition of consumer-interest organizations, the makers of two “smart” kids toys — the My Friend Cayla doll and the i-Que Intelligent Robot — are allegedly violating laws in the U.S. and overseas by collecting this sort of voice data without obtaining consent. In a complaint [PDF] filed this morning with the Federal Trade Commission, the coalition — made up of the Electronic Privacy Information Center (EPIC), the Campaign for a Commercial-Free Childhood (CCFC), the Center for Digital Democracy (CDD), and our colleagues at Consumers Union — argue that Genesis Toys, a company that manufactures interactive and robotic toys, and Nuance Communications, which supplies the voice-parsing services for these toys, are running afoul of rules that protect children’s privacy and prohibiting unfair and deceptive practices.

Record High Lease Returns Set To Wreak Havoc On Used Car Prices --About a month ago we warned that declining used car prices could spell disaster for subprime auto securitizations (see "Slumping Used Car Prices Spell Disaster For Subprime Auto Securitizations").  While it's always difficult to predict the exact timing of when bubbles will burst, a combination of record-high lease returns in 2017 and 2018, combined with rising interest rates could imply that the auto bubble is on the precipice.As Bloomberg recently pointed out, strong used car pricing is a critical component required to prop up the overall auto market.  While American's love their brand new cars, if used car prices become too soft then substitution can hurt new car sales.  Add to that the impact of falling residual values on the finance arms of the auto OEMs and you have all the ingredients required for an auto market meltdown.Thanks in part to low interest rates, leasing has become an increasingly popular way to drive away a new car. It accounts for almost a third of all new car transactions in the U.S. and it's also huge in the U.K., as I explained here.For BMW and Mercedes-Benz in particular, it's been a boon for sales.Typically a lease lasts about three years, after which the customer returns to the showroom for another vehicle -- which is when things could get difficult for the industry."There's going to be a lot of units coming back over the next several years," Ford Motor Co. warned last month. "They're going to get to levels that we have never seen on an absolute basis in the industry before".In 2017,  about one million more off-lease vehicles will be available in the U.S. compared with 2015. That additional volume will put downward pressure on used car prices.Commerce Department Shows Strong Services and IT Revenue Trends in 2016 - 24/7 Wall St.: Most investors and economists pay attention to payrolls and unemployment, gross domestic product, retail sales, consumer sentiment and other major numbers when they evaluate the economy. Still, the United States is now a post-manufacturing economy, and some of the smaller economic readings offer keen insight into the economic picture. The U.S. Department of Commerce has released its service-sector growth reading for the third quarter of 2016. The report showed that revenue growth accelerated. As a reminder, the third quarter was prior to the election, so none of the November bumps will be part of this report.Selected services total revenue for the third quarter of 2016, which is not adjusted for seasonal issues, was up 1.6% to $3.5125 trillion from the second quarter of 2016. That figure is up 5.3% from the third quarter of 2015. Information revenue rose by 1.8% in the third quarter, and the second quarter report was revised to 0.0% from a preliminary view of −0.1%. The more appropriate reading to watch is the annual growth from the prior year, and that was up 4.9% in the third quarter of 2016 from the third quarter of 2015. The prior report was revised to 2.9% growth from 2.8% in the second quarter. The Census Bureau’s quarterly services survey generally focuses on information and technology services, but there are more services to consider. In the professional, scientific and technical services, the revenue growth was up 1.2% to $435.5 billion from the second quarter of 2016 and up 4.9% from the third quarter of 2015. Administrative and support and waste management and remediation services saw a combined gain of 2.1% to $219.5 billion in the third quarter of 2016 versus the second quarter. On an annual number, that was up 7.0% from the third quarter of 2015.

October 2016 Wholesale Sales Improved: The headlines say wholesale sales were up month-over-month with inventory levels up slightly and remaining at levels associated with recessions. Our analysis shows some improvement of the 3 month averages, and the three month averages are in expansion. We continue to be mystified in the wobble in this data set - there is something wrong with either data collection or methodology. The headlines said this sector improved this month. The big growth this month came from petroleum and electrical. Overally, I believe the rolling averages tell the real story - and they improved this month. Inventories remain at elevated levels - note that they declined from last year's level. To add to the confusion, year-over-year employment changes and sales growth do not match. This adds to me belief that the wholesale trade data set is flawed and must be ignored if one wants to get a feel of what is happening in the economy.Note that Econintersect analysis is based on the change from one year ago. Econintersect Analysis:

  • unadjusted sales rate of growth decelerated % month-over-month.
  • unadjusted sales year-over-year growth is down 0.8 % year-over-year (it was +0.5 % last month)
  • unadjusted sales (but inflation adjusted) down 0.5 % year-over-year
  • the 3 month rolling average of unadjusted sales accelerated 2.0 % month-over-month, and up 2.2 % year-over-year.

Wholesale Inventories Dip in October - The U.S. Census Bureau reported Friday morning that U.S. wholesale sales rose 1.4% in October to $452.2 billion from the revised September total and up 2.2% compared with October 2015. Inventories dipped 0.4% month over month to a value of $587.7 billion in October. Economists polled by Bloomberg expected an inventory drop of 0.4%. October sales of durable goods were up 1.1% from September and up 2.5% from their year-ago level. Sales of nondurable goods were up 1.6% month over month and up 1.9% from last October. Sales of petroleum and petroleum products were up 6.6% from last month, and sales of farm product raw materials rose 8.3%.Wholesale trade measures the dollar value of sales made and inventories held by merchant wholesalers. It is a component of all business sales and inventories, and Census Bureau data showed that the inventories/sales ratio for merchant wholesalers dipped to 1.30 from 1.32 a year earlier. The October reading is the lowest in two years. Durable goods inventories slipped 0.3% on an adjusted basis, with the biggest drops coming in metals and machinery, both down 1%. Furniture inventories rose 1.6% to post the largest gain in durable goods. While inventories in farm products posted the biggest gain in nondurable inventories (2%), that was only about half the gain posted in September. Year over year, farm product inventories rose 8.6% on an adjusted basis.

GDP Hope Fades As Wholesale Inventories Tumble Most In 8 Months - For the 3rd month in a row , wholesale inventories dropped year-over-year (tumbling 0.4% MoM in October, the most since February) casting modest shadows on the Q4 GDP hope. Sales surged however, jumping 1.4% in October (double the 0.7% increase expected). Overall this reduced the critical inventories-to-sales ratio but it remains at notable cyclical highs. The 3rd monthly decline in inventories YoY will not help GDP but wholesale sales surged most since Oct 2014... Pushing inventories to sales lower - but still in notably recessionary territory... The big question remains, what happens when the China credit impulse/US Govt spending flourish fades.

Rail Week Ending 03 December 2016: Finally A Positive Month: Week 48 of 2016 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. Long term rolling averages remain in contraction - but the 4 week rolling average remains in positive territory. The contraction in rail counts began over one year ago, and now rail movements are being compared against weaker 2015 data - and this is the cause periodic acceleration in the short term rolling averages. Still, rail is weak to very week compared to previous years.A summary of the data from the AAR: Carload traffic in November totaled 1,319,008 carloads, up 0.4 percent or 5,406 carloads from November 2015. U.S. railroads also originated 1,319,189 containers and trailers in November 2016, up 1.9 percent or 24,329 units from the same month last year. For November 2016, combined U.S. carload and intermodal originations were 2,638,197, up 1.1 percent or 29,735 carloads and intermodal units from November 2015. In November 2016, 11 of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with November 2015. These included: grain, up 18.6 percent or 20,209 carloads; chemicals, up 1.9 percent or 2,829 carloads; and crushed stone, gravel, and sand, up 2.5 percent or 2,714 carloads. Commodities that saw declines in November 2016 from November 2015 included: petroleum and petroleum products, down 15.4 percent or 9,813 carloads; coal, down 2 percent or 9,282 carloads; and motor vehicles and parts, down 3.5 percent or 3,134 carloads. Excluding coal, carloads were up 1.7 percent or 14,688 carloads in November 2016 from November 2015. Total U.S. carload traffic for the first 48 weeks of 2016 was 12,123,218 carloads, down 9 percent or 1,195,299 carloads, while intermodal containers and trailers were 12,478,621 units, down 2.5 percent or 322,386 containers and trailers when compared to the same period in 2015. For the first eleven months of 2016, total rail traffic volume in the United States was 24,601,839 carloads and intermodal units, down 5.8 percent or 1,517,685 carloads and intermodal units from the same point last year.

Trade Deficit at $42.6 Billion in October -- From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $42.6 billion in October, up $6.4 billion from $36.2 billion in September, revised. October exports were $186.4 billion, $3.4 billion less than September exports. October imports were $229.0 billion, $3.0 billion more than September imports.  The trade deficit was close to the consensus forecast. The first graph shows the monthly U.S. exports and imports in dollars through October 2016.Imports increased and exports decreased in October. Exports are 13% above the pre-recession peak and up slightly compared to October 2015; imports are up 1% compared to October 2015. It appears trade might be picking up a little. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $40.01 in October, up from $39.02 in September, and down from $40.12 in October 2015. The petroleum deficit has generally been declining (but has increased recently with the decline in oil prices) and is the major reason the overall deficit has declined a little since early 2012. The trade deficit with China decreased to $31.1 billion in October, from $32.9 billion in October 2015. The deficit with China is a substantial portion of the overall deficit, but the deficit with China has been declining.

October Trade Deficit Up $6.4B from Revised September -  The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $42.6 billion in October, up $6.4 billion from $36.2 billion in September, revised. October exports were $186.4 billion, $3.4 billion less than September exports. October imports were $229.0 billion, $3.0 billion more than September imports. The October increase in the goods and services deficit reflected an increase in the goods deficit of $6.3 billion to $63.4 billion and a decrease in the services surplus of $0.1 billion to $20.8 billion.Year-to-date, the goods and services deficit decreased $8.8 billion, or 2.1 percent, from the same period in 2015. Exports decreased $58.7 billion or 3.1 percent. Imports decreased $67.5 billion or 2.9 percent. Today's headline number of -42.60B was worse than the Investing.com forecast of -41.80B. The previous month was revised downward by 200M and revisions were made going back to April. This series tends to be extremely volatile, so we include a six-month moving average.

October 2016 Trade Data Mixed: A quick recap to the trade data released today shows a mixed picture (see analyst opinion below). Many care about the trade balance which degraded from last month. Trade was a mixed bag - with imports growing (good sign for the USA economy) but exports slowing (bad sign for global economy). There was insignificant backward revision. In any event, export trends seem to be generally improving whilst imports are jumping around and are difficult to accurately trend. No data point gives you a sense that international trade is on a rebound. Import goods growth has positive implications historically to the economy - and the seasonally adjusted goods and services imports were reported up month-over-month. Econintersect analysis shows unadjusted goods (not including services) growth accelerated 1.2 % month-over-month (unadjusted data) - down 1.7 % year-over-year (down 1.5 % year-over-year inflation adjusted). The rate of growth 3 month trend is flat (rate of change of growth is zero). Exports of goods were reported down, and Econintersect analysis shows unadjusted goods exports growth deceleration of (not including services) 1.2 % month-over month - down 1.3 % year-over-year (down 0.2 % year-over-year inflation adjusted). The rate of growth 3 month trend is accelerating.

  • The decline in seasonally adjusted (but not inflation adjusted) exports was attributed to food and industrial supply exports. Import decline was due to consumer goods.
  • The market expected (from Bloomberg) a trade balance of $-44.0 B to $-39.0 B (consensus $42.0 billion deficit) and the seasonally adjusted headline deficit from US Census came in at $42.6 billion.
  • It should be noted that oil imports were down 9 million barrels from last month, and down 20 million barrels from one year ago.
  • The data in this series is noisy, and it is better to use the rolling averages to make sense of the data trends.

The headline data is seasonally but not inflation adjusted. Econintersect analysis is based on the unadjusted data, removes services (as little historical information exists to correlate the data to economic activity), and inflation adjusts. Further, there is some question whether this services portion of export/import data is valid in real time because of data gathering concerns. Backing out services from import and exports shows graphically as follows:

Trade Deficit Grows More Than Expected As Stronger Dollar Pressures Exports - The U.S. monthly international trade deficit increased in October 2016 according to the U.S. Census Bureau, rising from $36.2 billion in September (revised lower from $36.4 billion) to $42.6 billion in October, higher than the $41.8BN consensus estimate, as exports decreased and imports increased which was to be expected following the recent surge in the US Dollar. The goods deficit increased $6.3 billion in October to $63.4 billion. The services surplus decreased $0.1 billion in October to $20.8 billion.Breaking down the main trade categories, exports of goods and services decreased $3.4 billion, or 1.8 percent, in October to $186.4 billion. Exports of goods decreased $3.5 billion and exports of services increased $0.1 billion.

  • The decrease in exports of goods reflected decreases in foods, feeds, and beverages ($1.4 billion), in industrial supplies and materials ($1.0 billion), and in consumer goods ($0.9 billion).
  • The increase in exports of services mostly reflected an increase in transport ($0.1 billion), which includes freight and port services and passenger fares.

At the same time, imports of goods and services increased $3.0 billion, or 1.3 percent, in October to $229.0 billion. Imports of goods increased $2.8 billion and imports of services increased $0.2 billion.

  • The increase in imports of goods mostly reflected increases in consumer goods ($2.4 billion) and in capital goods ($1.1 billion). A decrease in automotive vehicles, parts, and engines ($0.7 billion) partly offset the increases.
  • The increase in imports of services reflected an increase in transport ($0.2 billion).

Broken down by country, the October figures show surpluses, in billions of dollars, with Hong Kong ($2.6), South and Central America ($1.8), Singapore ($1.3), and Brazil ($0.1). Deficits were recorded, in billions of dollars, with China ($28.9), European Union ($12.9), Mexico ($5.8), Japan ($5.8), Germany ($4.7), India ($2.4), Italy ($2.2), OPEC ($2.1), Canada ($1.7), France ($1.6), South Korea ($1.4), Taiwan ($1.0), United Kingdom ($0.7), and Saudi Arabia ($0.2).

Trade, Factory orders, Redbook retail sales, Saudi pricing, Comments on Trump tactics - The Center of the Universe: Trade deficit moving back out. I expect a lot more to come this quarter and next. Oil is getting more expensive and the quantity imported is up as well. The ‘one time’ soybean export bulge is behind us, and global trade in general has slowed. Wouldn’t surprise me if Trump responds by having the US start buying foreign currencies, which would send the dollar lower to offset ‘foreign currency manipulation’. And, of course, he’d show a ‘profit’ in fx purchases as the dollar falls: Highlights: The nation’s trade deficit widened substantially in October, to a higher-than-expected $42.6 billion and reflecting a 1.8 percent decline in exports and a 1.3 percent rise in imports. The nation’s trade deficit in goods totaled $63.4 billion offset only in part by a small rise in the trade surplus in services to $20.8 billion. Goods exports were soft across the board including for foods/feeds/beverages (down $1.4 billion in the month) and also industrial supplies (down $1.0 billion). Exports of consumer goods fell $0.9 billion with exports of capital goods, barely in the plus column, held down by a $0.6 billion dip in civilian aircraft. The offset is services exports which at $63.3 billion is the highest on record and largely reflects global demand for the nation’s technical and managerial services. The import side of the data show heavy U.S. buying, at a $231.3 billion total in the month which the highest since August last year. Details show a $1.1 billion increase in capital goods which is a negative for the national accounts but a positive for the nation’s productive investment. Imports of consumer goods shot up $2.4 billion ahead of the holidays. By country, the gap with China narrowed by $1.4 billion to $31.1 billion reflecting unusually high U.S. exports to China. The gap with the EU widened to $13.1 billion, with Mexico to $6.2 billion and with Japan to $5.9 billion.

Follow the Money » The (No Longer) Almighty Soybean: The U.S. trade deficit rose in October. One reason (no surprise): Soybeans. Seasonally adjusted, monthly soybean exports are now $3 billion off their July and August peak. Actual soybean exports—in billions of dollars—rose in October. As they should. Soybeans have real seasonality: U.S. exports peak after the harvest. The seasonal adjustment seeks to smooth out this natural month-to-month volatility. The good news from the summer is now mostly behind us. Still, as a result of the out of season exports—and higher prices—the U.S. has already exported $7.5 billion more soybeans this year than last.I want to highlight two other points, both of which are—I fear—a sign of things to come. What I suspect is the beginning of a sustained—though modest by past standards—rise in the petrol deficit, and, more concerning, the growing U.S. deficit in high-end capital goods.I will not try to replicate Calculated Risk’s always excellent graphs. There is no doubt that the nominal petrol deficit has started to tick up, after big falls for several years (in nominal terms, the non-petrol deficit is back to where it was before the crisis, a shift that hasn’t gotten the attention it deserved). In real (volume) terms, the U.S. petrol deficit is also starting to rise. The large tailwind that rising oil production, falling oil imports, and falling prices provided for the the overall U.S. balance of payments in the past few years is in the process of turning into a modest headwind. More concerning, though, is the current weakness in U.S. capital goods exports. Capital goods are the complex big ticket items where advanced, technically sophisticated economies are supposed to excel. Aircraft, turbines, semiconductors, oil drilling equipment, telecommunications switching equipment, and the like. The U.S. now runs a deficit in capital goods—$60 billion in the first ten months of the year, which projects out to $70 billion for the full year. U.S. imports of capital goods also now exceed U.S. imports of consumer goods (data here, exhibits 6, 7 and 8). That is sometimes lost in the coverage of trade issues; the U.S. deficit right now isn’t all iPhones and other consumer goods.

Why Trade Deficits Matter, Jared Bernstein and Dean Baker: One of Trump’s economic goals is to lower the U.S.’s trade deficit—which is to say, shrink the discrepancy between the value of the country’s imports and the value of its exports. Right now, the U.S. currently imports $460 billion more than it exports, meaning it has a trade deficit that works out to about 2.5 percent of GDP. Given that the job market is still not back to full strength and the U.S. has been losing manufacturing jobs—there are 60,000 fewer now than at the beginning of this year, according to the Bureau of Labor Statistics—economists would be wise to question their assumption that such a deficit is harmless.  Trump’s intention in reducing the deficit is to boost factory jobs, since America’s trade imbalance exists almost exclusively in manufactured goods. Putting aside how the Trump administration might go about this, is it smart economic policy? Is the U.S. trade deficit a problem whose solution would help American workers? Trade deficits, even in times of strong growth, have negative, concentrated impacts on the quantity and quality of jobs in parts of the country where manufacturing employment diminishes. Even the economists who argue (incorrectly, we believe) that the trade deficit doesn’t affect the total number of jobs do admit that it affects the composition of jobs. There is, for example, a lot of research confirming that deindustrialization in the Rust Belt is partly a result of the fact that America meets its domestic demand for manufactured goods by importing more than it exports. One oft-cited academic study found that imbalanced trade with China led to the loss of more than 2 million U.S. jobs between 1991 and 2011, about half of which were in manufacturing (which worked out to 17 percent of manufacturing jobs overall during that time).* Further, the economist Josh Bivens found that in 2011 the cost of imbalanced trade with low-wage countries cost workers without college degrees 5.5 percent of their annual earnings (about $1,800). Far from a small, isolated group, these workers represent two-thirds of the American workforce.

Factory Orders Surged Most In 16 Months (Before The Election) --Despite all the uncertainty, all the chaos, all the headlines, and all the media angst, Factory Orders in America surged by the most in 16 months in October ahead of the election. Factory Orders rose 2.7% MoM (ahead of the 2.6% rise expected) led by am 11.9% spike in Capital Goods orders.. In case this seems odd to anyone, we remind them of what we wrote previously about the election cycle surge in government spending...Some pretty good economic reports have energized various parts of the financial markets lately. Consumer spending is up, GDP is exceeding expectations and even factory orders, that perennial downer, popped this morning.In response the dollar is soaring and interest rates are at breakingout of their multi-decade down-channel. The economy is clearly recovering, implying a return to normality. Right? Nah, it’s just the usual election year illusion.When the presidency is at stake the party in power always pumps up spending in an attempt to put people back to work and create the impression of a well-run country whose leaders deserve more time in the spotlight.After the election, spending returns to trend and the resulting bad news gets buried in “political honeymoon” media coverage.

October 2016 Manufacturing New Orders Improved: US Census says manufacturing new orders improved. Our analysis agrees. The rolling averages improved and are now in expansion year-over-year. According to the seasonally adjusted data, most areas of manufacturing showed strength. Our analysis agrees - but the data in this series is noisy so I would rely on the unadjusted 3 month rolling averages which say there was a moderate improvement this month.US Census Headline:

  • The seasonally adjusted manufacturing new orders is up 2.7 % month-over-month, and down 2.0 % year-to-date (last month was down 2.6 % year-to-date)..
  • Market expected (from Bloomberg / Econoday) month-over-month growth of 2.5 % to 3.4 % (consensus +2.7 %) versus the reported +2.7 %.
  • Manufacturing unfilled orders up 0.7 % month-over-month, and down 1.1 % year-over-year.

Econintersect Analysis:

  • Unadjusted manufacturing new orders growth accelerated 0.6 % month-over-month, and up 0.5 % year-over-year.
  • Unadjusted manufacturing new orders (but inflation adjusted) up 0.5 % year-over-year.
  • Three month rolling new order rolling averages accelerated 2.3 % month-over-month, and is up 0.5 % year-over-year.
  • Unadjusted manufacturing unfilled orders growth accelerated 0.6 % month-over-month, and down 1.1 % year-over-year
  • As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth accelerated 0.2 % month-over-month, and unchanged year-over-year.

In Tweetstorm, Trump Threatens "Retribution" For Companies That Leave The US -- President-elect Donald Trump fired off Sunday morning with a Tweetstorm (after again complaining about the "totally biased, not funny " Saturday Night Live), and in a series of six tweets threatened heavy taxes as "retribution" for U.S. companies that move their business operations overseas, fire US workers and still try to sell their product to Americans. Trump vowed he would slap a 35% tax on products sold inside the U.S. by any business that fired American workers and built a new factory or plant in another country. The president-elect tweeted that his administration will "substantially reduce taxes and regulations on businesses. But any business that leaves our country for another country," he added, "fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. ......without retribution or consequence, is WRONG!" Trump said there will be a 35 percent tax on the country's "soon to be strong border" for companies that leave and then want to sell their products back to U.S. consumers. "This tax will make leaving financially difficult, but.....these companies are able to move between all 50 states, with no tax or tariff being charged," the president-elect tweeted.

Trump warns US citizens: There will be ‘consequences’ for leaving the country on vacation - Donald Trump has warned US citizens that there will be ‘consequences’ for leaving the country on vacation. Overseas travel to places like Paris to see the Eiffel Tower takes jobs away from hard-working Americans in the domestic travel industry, according to the president-elect, who strongly encourages Americans to vacation in Las Vegas instead of Paris if they really have to see the Eiffel Tower (see photo above), so that we can keep travel spending and tourism-related jobs inside the U.S. Well, not really….  but as I asked in a recent CD post (before the Carrier debacle) “If you support tariffs on US companies relocating production overseas, do you support tariffs on overseas travel?” Here’s a key part of that post: Despite the widespread opposition to punitively taxing Americans traveling overseas, many Americans probably do inconsistently support the proposed policy of president-elect Trump to impose punitive tariffs on American companies that relocate production overseas. But is there really any material or significant difference? I say No, and to support punitive taxes on American companies relocating production overseas but reject punitive taxes on Americans traveling overseas is intellectually inconsistent. Trying to force companies to produce domestically what could be produced cheaper overseas should be just as objectionable as trying to force Americans to travel domestically when their first choice is to travel overseas.

Ford CEO Expresses Interest In Working With Trump; Says Less Regulation Is Key To Saving U.S. Jobs --With Carrier setting the precedent for what future negotiations with the Trump administration may look like, Ford CEO Mark Fields has come forward to layout potential policy changes that would be important to preserving auto jobs in the United States.  Not surprisingly, per an interview with Bloomberg, Fields' opening "ask" focused on less restrictive fuel economy standards, new currency-manipulation rules to promote free and fair trade and corporate tax reform.Ford Motor Co. was a target of Donald Trump’s criticism on the campaign trail for building cars in Mexico, and now that Trump will be president, Ford said it’s willing to work with him to keep jobs in the U.S. -- provided Trump puts the right policies in place, according to the automaker’s chief executive officer.“We will be very clear in the things we’d like to see,” Mark Fields said in an exclusive interview Friday at Bloomberg offices in Southfield, Michigan.Among them, according to Fields: currency-manipulation rules to promote free and fair trade, tax reform and safety guidelines for autonomous vehicles.Fields said that Ford plans to lobby the new president to soften U.S. and state fuel-economy rules. They hurt profits by forcing automakers to build more electric cars and hybrids than are warranted by customer demand, he said.“In 2008, there were 12 electrified vehicles offered in the U.S. market and it represented 2.3 percent of the industry,” Fields said in the interview. “Fast forward to 2016, there’s 55 models, and year to date it’s 2.8 percent.” Of course, Ford was a frequent target of Trump's during the 2016 campaigning cycle after they announced plans to move their small car production to a new facility in Mexico.  That said, Fields noted that Trump's policies "in terms of his economic policies, whether it’s tax reform or otherwise" have already gone a long way toward influencing Ford's decision to maintain the production of the Lincoln MKC at a plant in Louisville, KY.  

Trump Targets Second Indiana Company Planning To Outsource Jobs To Mexico -- Shortly after he launched two tweets to address the Taiwan Snafu on Friday evening, Trump concluded his night on Twitter by calling out another Indiana manufacturing company for planning to move 300 jobs to Mexico. “Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers. This is happening all over our country. No more!” Trump tweeted at 10:06pm on Friday. Empowered by his victory over Carrier which agreed last week to keep 1,100 workers in the US instead of outsourding them to Mexico in exchange for $7  million in tax breaks over a decade, Trump celebrated at a plant in the Indiana company on Thursday, warning other US companies there will be "consequences" for outsourcing jobs. He now appears to be focusing on Rexnord. Rexnord, which is based in Milwaukee, intends to move production of industrial bearings from Indianapolis to Monterrey, Mexico, according to the employee union. In mid-November,Rexnord confirmed that it would close its Indianapolis plant and move about 300 jobs to Mexico. The announcement ended a last-ditch effort among union officers and city officials to keep the Milwaukee-based manufacturer in Indianapolis. "It wasn't anything that shocked any of us," said Chuck Jones, president of United Steelworkers Local 1999, which represents Rexnord employees. Rexnord has said it expects to save $15.5 million during its first full year after moving Indianapolis operations to Mexico, Jones said, citing company figures shared with the union. That savings is expected to increase by $200,000 a year. Indianapolis employees would have had to cut their pay from an average of $25 an hour to about $5 an hour to compete, Jones said. "The law don't allow that," Jones said. "Our people wouldn't work for that wage, either."

What Trump is telling company bosses - Every hour, thousands of Americans leave jobs or start new ones. From that perspective, Donald Trump’s nudging and pressuring to save some 800 jobs at Carrier from being shipped to Mexico is trivial — other than to the workers themselves. But if Trump is going to keep up these micromanaging moves, even when he’s kicking back in the Oval Office, then it’s a very big deal.  And this could be a troubling, even chilling, development. Already Trump has moved on from Carrier to another Indiana manufacturing firm, tweeting, “Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers. This is happening all over our country. No more!” Think about what Trump is telling company bosses across America: Open a factory overseas and maybe President Trump will send a nasty tweet telling America to avoid your products. Or perhaps your parent company will lose a government contract. (Such a thought may have flashed through the minds of executives at United Technologies, Carrier’s corporate parent.) Worst-case scenario: Your products will face Trump’s big, fat tax when you ship them back into the country. Making a decent profit anytime is hard. Indeed, more American companies are dying than starting these days. Now imagine having to make products in a way that pleases your customers and the President of the United States. And think about one American company after another, year after year, attempting such a juggling act. It’s hardly a recipe for a prosperous and dynamic US economy.

Why Trump’s Carrier Deal Isn’t The Way To Save U.S. Jobs - The U.S. gained 178,000 jobs in November. But the only ones anyone seemed to be talking about last week were the roughly 1,000 jobs in Indiana that are no longer moving to Mexico.  In terms of direct economic impact, Donald Trump’s deal with Carrier, a manufacturer of air conditioners and furnaces, was clearly a sideshow. But it was symbolically important, representing a campaign promise kept — or at least partly kept, since Carrier still plans to outsource hundreds of other jobs to Mexico — before Trump even takes office. More importantly, the deal may provide some hints about how Trump plans to approach economic policy as president. Last week’s announcement suggests that Trump will approach governing much as he approached business — as a dealmaker. That’s good for grabbing headlines, but it won’t do much to address the underlying forces that are eroding blue-collar jobs. To understand why, it helps to ask why Carrier made the decision it made. Carrier itself offered two explanations: incentives offered by the state of Indiana and confidence that the new administration will improve business conditions. Trump, at least implicitly, offered a third possible explanation in his speech in Indiana on Thursday: “consequences” that could be coming once he’s in the White House for companies that outsource jobs. (He reiterated that threat on Twitter on Sunday morning.) It’s worth taking these one at a time.

New Poll Reveals Carrier Deal Wildly Popular With Voters - "Rarely Do We See Numbers That High" --As the talking heads of the mainstream media endlessly cogitate over the propriety of Trump negotiating one-off deals with companies like Carrier, the voters have seemingly made up their mind and are overwhelmingly supportive.  Per a new Politico poll, 60% of the overall electorate is supportive of the Carrier deal that saved 1,000 jobs from moving to Mexico in return for tax savings. While some conservatives and conservative groups — including The Wall Street Journal’s editorial board and former vice presidential nominee Sarah Palin — have decried the Carrier deal as “crony capitalism,” the Politico/Morning Consult poll shows it’s a political winner for Trump. Sixty percent of voters say Carrier’s decision to keep some manufacturing jobs in Indiana, where Pence is still serving as governor, gives them a more favorable view of Trump. That includes not only 87 percent of self-identified Republicans, but also 54 percent of independents and 40 percent of Democrats. “The Carrier announcement was big for Trump,” said Kyle Dropp, Morning Consult co-founder and chief research officer. “Rarely do we see numbers that high when looking at how specific messages and events shape public opinion.” Meanwhile, despite Sarah Palin blasting the Carrier deal as "crony capitalism" and "corporate welfare", voters also seem to be overwhelmingly supportive of launching direct negotiations with private companies and/or offering tax breaks in return for keeping jobs in the United States.

Trump Tweets Japan's SoftBank Will Invest $50 Billion In The US, Create 50,000 New Jobs -- On Tuesday afternoon, the billionaire founder and CEO of Japan's Softbank and was seen entering the Trump Tower, to meet with the President-elect. It appears that they had fruitful conversations, because just a few minutes later, Trump - who earlier in the day lambasted Boeing over charging too much for Air Force 1 sending its stock lower - tweeted some words of praise for the Japanese businessman. At 2:10pm eastern, Trump tweeted "Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs..." and in a follow up Tweet added "Masa said he would never do this had we (Trump) not won the election!"

Another Trump Win: Apple Supplier Foxconn Says It Is In Discussions To Expand US Operations --There is over a month left until Trump's inauguration, and the President-elect's hard-hitting negotiating style may have scored yet another economic victory: according to a statement issued by Foxconn, the world's largest contract electronics manufacturer and a major Apple Inc supplier, the company said it was in preliminary discussions to expand its operations in the United States. "While the scope of the potential investment has not been determined, we will announce the details of any plans following the completion of direct discussions between our leadership and the relevant U.S. officials," it said in a statement. Foxconn in its statement did not specify who its executives were in discussions with but said that any "plans would be made based on mutually-agreed terms." The news comes on the heels of what Masayoshi Son of Japan's SoftBank Group Corp saying he would invest $50 billion in the United States and create 50,000 new jobs, a move U.S. President-elect Donald Trump claimed was a "direct result of his election win."As Reuters adds, Foxconn's brief statement followed a report by broadcaster CNBC on Wednesday showing a snapshot of a page held by Son outlining the investment carrying the logos of SoftBank and Foxconn, formally known as Hon Hai Precision Industry Co. The page also showed an additional $7 billion investment and creation of a further 50,000 jobs.Trump has campaigned to bring manufacturing and jobs back to the U.S. Much of the global tech supply chain involves Taiwanese companies such as Foxconn, whose biggest operations are in China churning out the majority of Apple's iPhones. SoftBank's Son and Foxconn founder Terry Gou are considered close and have several business ventures together, including launching humanoid Pepper - which is manufactured by Foxconn - into several markets, and together investing in India.

Made in America: Asian Tech Giants Say They Will Expand U.S. Operations Under Trump - Japanese telecom company Softbank and Taiwanese electronics manufacturer Foxconn have announced that they plan to invest heavily in U.S. operations. Softbank’s CEO announced that the company will invest $50 billion in America, with plans to create 50,000 new jobs. His news was delivered in the lobby of Trump Tower in Manhattan, following a meeting with the president-elect. The money will come from a $100 billion investment fund that Softbank has established with Saudi Arabia’s sovereign-wealth fund. That announcement was swiftly followed by news from Foxconn—the company that manufactures devices for companies like Apple—explaining that it, too, plans to expand U.S. operations. In a statement, the company explained that “the scope of the potential investment has not been determined,” adding that final decisions will be made “following the completion of direct discussions between our leadership and the relevant U.S. officials.”  Donald Trump has already claimed credit for Softbank’s pledge. And it may be justified: its CEO mentioned increasing deregulation under Trump during his announcement. If that is the case, the news could be a significant victory for Trump. The president-elect previously stated that he wanted to invigorate the manufacturing industry in the U.S., promising to “get Apple to start making their computers and their iPhones on our land, not in China.” Apple is unlikely to shift production wholesale to the U.S., as China offers it cheap labor, a skilled workforce, and flexible factory facilities that domestic setups can’t currently match. But if Foxconn does expand operations in America, Apple may tempted to manufacture more of its goods on American soil. Indeed, its hand may be forced in the coming weeks. Trump is said to be inviting the Silicon Valley elite to a roundtable discussion next week. It’s not clear what will be on the agenda, or who exactly will attend—though chief executives of Oracle and Cisco Systems are confirmed. Whoever shows up, Trump will certainly try to convince attendees that they should be building their products in the U.S. It will be a meeting that could potentially shape the next four years of technological change—and where it’s made.

ISM Non-Manufacturing Index increased to 57.2% in November -- The November ISM Non-manufacturing index was at 57.2%, up from 54.8% in October. The employment index increased in November to 58.1%, from 53.1%. Note: Above 50 indicates expansion, below 50 contraction.  From the Institute for Supply Management:November 2016 Non-Manufacturing ISM Report On Business®  "The NMI® registered 57.2 percent in November, 2.4 percentage points higher than the October reading of 54.8 percent. This represents continued growth in the non-manufacturing sector at a faster rate. This is the 12-month high, and the highest reading since the 58.3 registered in October of 2015. The Non-Manufacturing Business Activity Index increased to 61.7 percent, 4 percentage points higher than the October reading of 57.7 percent, reflecting growth for the 88th consecutive month, at a faster rate in November. The New Orders Index registered 57 percent, 0.7 percentage point lower than the reading of 57.7 percent in October. The Employment Index increased 5.1 percentage points in November to 58.2 percent from the October reading of 53.1 percent. The Prices Index decreased 0.3 percentage point from the October reading of 56.6 percent to 56.3 percent, indicating prices increased in November for the eighth consecutive month at a slightly slower rate. According to the NMI®, 14 non-manufacturing industries reported growth in November. The Non-Manufacturing sector rebounded after a slight cooling-off in October. The majority of respondents' comments are positive about business conditions and the direction of the overall economy."This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. This was above the consensus forecast of 55.5, and suggests faster expansion in November than in October.  A strong report.

ISM Non-Manufacturing: November Growth, 12 Month High -  The Institute of Supply Management (ISM) has now released the November Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 57.2 percent, a 2.4 percent increase from last month's 54.8 percent and is its highest since October 2015. Today's number came in above the Investing.com forecast of 55.4 percent. Here is the report summary: "The NMI® registered 57.2 percent in November, 2.4 percentage points higher than the October reading of 54.8 percent. This represents continued growth in the non-manufacturing sector at a faster rate. This is the 12-month high, and the highest reading since the 58.3 registered in October of 2015. The Non-Manufacturing Business Activity Index increased to 61.7 percent, 4 percentage points higher than the October reading of 57.7 percent, reflecting growth for the 88th consecutive month, at a faster rate in November. The New Orders Index registered 57 percent, 0.7 percentage point lower than the reading of 57.7 percent in October. The Employment Index increased 5.1 percentage points in November to 58.2 percent from the October reading of 53.1 percent. The Prices Index decreased 0.3 percentage point from the October reading of 56.6 percent to 56.3 percent, indicating prices increased in November for the eighth consecutive month at a slightly slower rate. According to the NMI®, 14 non-manufacturing industries reported growth in November. The Non-Manufacturing sector rebounded after a slight cooling-off in October. The majority of respondents' comments are positive about business conditions and the direction of the overall economy." [Source] Unlike its much older kin, the ISM Manufacturing Series, there is relatively little history for ISM's Non-Manufacturing data, especially for the headline Composite Index, which dates from 2008. The chart below shows Non-Manufacturing Composite. We have only a single recession to gauge is behavior as a business cycle indicator.

Markit Services PMI Signals Robust Expansion in November -  The final November US Services Purchasing Managers' Index conducted by Markit came in at 54.6 percent, down 0.2 percent from the final October estimate. The Investing.com consensus was for 54.9 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: U.S. service providers experienced a robust expansion of business activity in November, helped by the fastest rise in new work for one year. Greater workloads and resilient business confidence led to a further upturn in the pace of job creation from the three-and-a-half year low recorded in September. Meanwhile, input cost inflation eased slightly during November, which contributed to the slowest rise in average prices charged by service sector companies since April. [Press Release] Here is a snapshot of the series since mid-2012.

November 2016 ISM and Markit Services Index Mixed: The ISM non-manufacturing (aka ISM Services) index continues its growth cycle,and improved from 54.8 to 57.2 (above 50 signals expansion). Important internals were mixed. Markit PMI Services Index also released today again improved and remains in expansion.. Analyst Opinion of the ISM and Markit Services Survey One survey up and one slightly down. The ISM survey improved much more but an important internal declined. The Markit survey seemed more upbeat but its index was lower.  For comparison, the Market PMI Services Index was released earlier - and improved from 52.3 to 54.8. From Markit:

  • Robust and accelerated rise in new work
  • Business activity growth holds close to October's 11-month peak
  • Job creation edges up again in November
  • U.S. service providers experienced a robust expansion of business activity in November, helped by the fastest rise in new work for one year. Greater workloads and resilient business confidence led to a further upturn in the pace of job creation from the three-and-a-half year low recorded in September. Meanwhile, input cost inflation eased slightly during November, which contributed to the slowest rise in average prices charged by service sector companies since April.
  • The seasonally adjusted final Markit U.S. Services Business Activity Index registered 54.6 in November, to remain above the 50.0 no-change value for the ninth consecutive month. Although the latest reading was fractionally lower than in October (54.8), the rate of growth remained stronger than at any time in the first half of 2016. Survey respondents noted that improved client confidence and a favourable domestic economic backdrop had helped to boost business activity in November.

 3Q2016 (Final): Headline Productivity Improves: A simple summary of the headlines for this release is that the growth of productivity improved while the labor costs grew less than productivity (headline quarter-over-quarter analysis). The year-over-year analysis gives one the opposite view. Although many times the data is significantly revised between releases - it did not happen in this release. But IF I believed this data, costs are rising significantly whilst productivity is in the toilet (as I only look at year-over-year data - the headline compounding distorts the view). The headlines from the press release: Nonfarm business sector labor productivity increased at a 3.1-percent annual rate during the third quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 3.6 percent and hours worked increased 0.5 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The quarterly increase in nonfarm business sector labor productivity was the first increase after three consecutive declines in the measure. From the third quarter of 2015 to the third quarter of 2016, productivity was unchanged. (See chart 1) Unit labor costs in the nonfarm business sector increased 0.7 percent in the third quarter of 2016, reflecting a 3.8-percent increase in hourly compensation and a 3.1-percent increase in productivity. Unit labor costs increased 3.0 percent over the last four quarters. (See chart 2) The headlines annualize quarterly results (Econintersect uses year-over-year change in our analysis). If data is analyzed in year-over-year fashion, non-farm business productivity was unchanged year-over-year, and unit labor costs were up 3.0 % year-over-year. Bottom line: the year-over-year data is saying that costs are rising faster than productivity. Please note that the following graphs are for a sub-group of the report nonfarm > business.

Why a Protectionist Shock Would Do More to Harm Than to Help the Job Market - Dramatic promises to restrict international trade were a signature element of Donald Trump’s presidential campaign. So far, he seems to be following through, with an early reaffirmation of his intent to withdraw US participation in the Trans-Pacific Partnership (TPP).
An aggressive stance on trade played a key role in gaining the support of working class voters in Midwestern manufacturing states, where upset wins swept him into the White House.  What is more, trade is one area in which Trump, as President, will have the power to act on his own without action by Congress. As Gary Clyde Hufbauer of the Peterson Institute has explained, both the US Constitution and past acts of Congress give the President ample authority to do things like withdraw from the TPP or NAFTA, label China a currency manipulator, or impose retaliatory tariffs on any country he sees as a threat to US economic security. But how would American workers actually fare under a protectionist regime, especially older workers, and those with few skills and little education, who voted for Trump by wide margins? Not well. Here is why a protectionist shock could do more to harm than to help the US job market.

 More U.S. Factory Workers Are Saying ‘I Quit’ - About 157,000 U.S. workers quit a manufacturing job in October, the highest level in more than eight years and a reminder of the massive churn across the labor market. Falling factory employment has been running theme of 2016, and President-elect Donald Trump has made those jobs a priority. Underneath the long-term slide in employment is a more dynamic picture of people quitting and getting laid off while companies post hundreds of thousands of job openings each month. In manufacturing, there were 271,000 hires, 157,000 quits, 94,000 layoffs and 21,000 “other” separations (a category that includes retirement, death, disability and transfers to other locations of the same firm) in October, according to the Labor Department’s Job Openings and Labor Turnover Survey, known as Jolts. People tend to quit a job when they think they have better prospects elsewhere. The number of voluntary departures has outpaced the number of layoffs fairly consistently since 2011 and the gap between quits and layoffs is now the widest since  2007. The divide between the number of manufacturing job openings, meanwhile, has widened versus the number of hires since 2012. That suggests companies are struggling to find workers—perhaps because they don’t have required skills—or aren’t trying that hard to fill positions.

BLS: Job Openings "little changed" in October --From the BLS: Job Openings and Labor Turnover Summary The number of job openings was little changed at 5.5 million on the last business day of October, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.1 million and 4.9 million, respectively....The number of quits was little changed in October at 3.0 million. The quits rate was 2.1 percent. Over the month, the number of quits was little changed for total private, and decreased for government (-26,000). The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.Jobs openings decreased in October to 5.534 million from 5.631 million in September.  Job openings are mostly moving sideways at a high level. The number of job openings (yellow) are up 2% year-over-year.

Job Openings & Labor Turnover: Clues to the Business Cycle - The latest JOLTS report (Job Openings and Labor Turnover Summary), data through October, is now available. The first chart below shows four of the headline components of the overall series, which the BLS began tracking in December 2000. The time frame is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular Nonfarm Employment (PAYEMS) series goes back to 1939. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends. The chart below shows the monthly data points four of the JOLTS series. They are quite volatile, hence the inclusion of six-month moving averages to help identify the trends. For the last eighteen months, the moving average for openings has been above the hires levels as seen in the chart below. The most closely watched series is the one for Total Nonfarm Job Openings, the blue line in the chart above. The moving average peaked in mid-2007 and began rolling over to its trough a few months after Great Recession ended. The Openings moving average then trended upward, surpassing its mid-2007 peak in the late summer of 2014. The Hires series has risen at a slower pace. Its moving average had nearly reached its pre-recession peak earlier this year but is now off its post-recession high. Quits have been steadily trending upward and are close to the pre-recession high; they are generally thought to show an economy that supports the flexibility to leave or change jobs. The Layoffs and Discharges series, the red line, has been been essentially flat since early 2013, but as of September has hit an all time low. For comparison, here is the monthly BLS Employment Situation Summary charted with JOLTS data:

October JOLTS and Labor Market Conditions Index positive but meh --The JOLTS Survey and the Labor Market Conditions Index are two metrics with great promise, but like those surveys, but suffer by not having a long enough real-time history to use with full confidence. In the case of the JOLTS survey, there is now a clear divergeance between the pattern during this expansion and the only full sample of the prior expansion.  Here's job openings (blue),  hires (red), and quits (green, right scale) since the first bottom in 2003: n the one and only complete cycle since the series began, hires and quits peaked first, while openings continued to increase until shortly before the onset of the 2008 recession. During this cycle, hires have gone sideways for over a year, while openings continued to rise until recently, and now appear to be rolling over. Meanwhile quits, while down this month, are still at a new high on a 3-month rolling average. So, In the last cycle, YoY job openings held up until nearly the end. This time around, it appears at least for now that openings may be turning before quits. Unless job openings make new highs in the months ahead, this cycle will not match the last one. We just don't have enough history with the JOLTS series to know which resolution is more likely. In the past, employment growth (which is the net of hiring over firing) decelerates markedly before layoffs begin to increase. JOLTS now breaks that down into hiring and discharges, shown below: Hiring looks like it shows late cycle deceleration, but this has not translated into any increase in layoffs and discharges. Here's a close-up of the last year from the graph above Turning to the Labor Market Conditions Index, the problem is backfitting, since the underlying data goes back half a century, but the index itself was only created a few years ago. We need to see how it performs in real time. Earlier this year there were some poor, negative readings leading some Doomers to holler "recession!" but these have largely been revised away:

 Weekly Initial Unemployment Claims decrease to 258,000 -- The DOL reportedIn the week ending December 3, the advance figure for seasonally adjusted initial claims was 258,000, a decrease of 10,000 from the previous week's unrevised level of 268,000. The 4-week moving average was 252,500, an increase of 1,000 from the previous week's unrevised average of 251,500. There were no special factors impacting this week's initial claims. This marks 92 consecutive weeks of initial claims below 300,000, the longest streak since 1970.  The previous week was unrevised.  The following graph shows the 4-week moving average of weekly claims since 1971.

The Ratio of Part-Time Employed Remains High, But Improving -- Let's take a close look at the latest employment report numbers on Full and Part-Time Employment. Buried near the bottom of Table A-9 of the government's Employment Situation Summary are the numbers for Full- and Part-Time Workers, with 35-or-more hours as the arbitrary divide between the two categories. The source is the monthly Current Population Survey (CPS) of households. The focus is on total hours worked regardless of whether the hours are from a single or multiple jobs. The Labor Department has been collecting this since 1968, a time when only 13.5% of US employees were part-timers. That number peaked at 20.1% in January 2010. The latest data point, over five years later, is only modestly lower at 18.3% last month. If the pre-recession percentage is a recovery target, significantly more full-time employment is needed. Here is a visualization of the trend in the 21st century, with the percentage of full-time employed on the left axis and the part-time employed on the right. We see a conspicuous crossover during the Great Recession. Since July of 2015, the two cohorts have oscillated in a narrow range around the crossover point.Here is a closer look since 2007. The reversal began in 2008, but it accelerated in the Fall of that year following the September 15th bankruptcy of Lehman Brothers. In this seasonally adjusted data, the reversal peaked in January of 2010. The two charts above are seasonally adjusted and include the entire workforce, which the CPS defines as age 16 and over. A problem inherent in using this broadest of cohorts is that it includes the population that adds substantial summertime volatility to the full-time/part-time ratio, namely, high school and college students. Also the 55-plus cohort includes a subset of employees that opt for part-time employment during the decade following the historical peak earning years (ages 45-54) and as a transition toward retirement. The next chart better illustrates summertime volatility by focusing on the change since 2007 in full- and part-time employment for the 25-54 workforce. Note that the government's full-time/part-time data for this cohort is only available as non-seasonally adjusted. To help us recognize the summer seasonality, the June-July-August markers are shown in a lighter color. These months are more subject to temporary shifts from part-time to 35-plus hours of employment. The 12-month moving averages for the two series help us identify the slope of the trend in recent years. The moving averages are, so to speak, moving in the right direction, but they have yet to meet.

 U.S. Job Creation Index Maintains Strong Pace in November | Gallup: WASHINGTON, D.C. -- Job creation in the U.S. stayed strong in November. Gallup's U.S. Job Creation Index, a measure of hiring activity that began in January 2008, tied its high of +33 and remained similar to October's score of +32. After collapsing from its inaugural measure of +26 in January 2008 to -5 in February 2009, the index mostly increased over the next six years, reaching a new high of +32 in May 2015. Since then, the index has been steady at this level, with all but two of the past 18 months registering between +30 and +33. Gallup's Job Creation Index is based on employed U.S. adults' perceptions of their companies' hiring and firing activity. Gallup asks a random sample of employed adults each day whether their employer is hiring new people and expanding the size of its workforce, not changing the size of its workforce, or letting people go and reducing the size of its workforce. The resulting index -- computed by subtracting the percentage of employers letting workers go (10%) from the percentage hiring (43%) -- is a nearly real-time indicator of the nation's employment picture across all industry and business sectors. All four of the nation's major regions had a Job Creation Index score at +30 or above last month, with only the South showing some growth. The South went from having the lowest regional index score (+30) in October to having the highest score (+35) in November. The South's index score also increased the most from its November 2015 score.

The Labor Market Conditions Index Up in November - Following another positive jobs report for November, the latest update of the Labor Market Conditions Index continues its positive streak. The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. The latest LMCI update came in at 1.5. The previous month was revised upward to 1.4 (previously 0.7). The cumulative index (discussed below) peaked elevent months ago in December 2015.  The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976. Here is a linear view of the complete LMCI. We've highlighted recessions with callouts for its value the month recessions begin and for the latest index value.

 Fed Labor Market Conditions Index Contracts For 5th Straight Month --Despite a small rise MoM, The Fed's own Labor Market Conditions Index has now deteriorated year-over-year for 5 straight months, despite significant upward revisions over the last 6 months, most notably in September and October. It seems a Trump win managed to improve the last six months of data...While the index itself is at 8-month highs, this is still the 5th straight month of contraction year-over-year in LMCI... As we noted previously, that's only the eighth time in nearly 40 years the index was down on a year-over-year basis, Deutsche Bank Chief U.S. Economist Joseph LaVorgna wrote in a note to clients today. Of the seven previous occasions, LaVorgna wrote, "four were soon followed by recession."(In the three other cases, two were false alarms, in 1986-87 and 1995-96, and in 1981 the recession began shortly before the annual change in the LMCI turned negative.)LaVorgna said the weakness in the LMCI indicates a rising possibility of recession."The upshot is that the economic outlook remains fragile despite the ostensible robustness of the labor market," he wrote.But then again, everything is different and dreamy in the post-Trump world.

 US Productivity Suffers First Two-Quarter Annual Decline Since 1993 - US Productivity rose a disappointing 3.1% in Q3 (missing expectations of a 3.3% rise). However, on a year-over-year basis, Q3 saw a second consecutive decline - the first two-quarter decline in US productivity since 1993. Unit labor cost growth slowed in Q3 to 3.00% (with QoQ growth tumbling from 6.2% in Q2 to just 0.7% in Q3). Actually if one looks at the official table US productivity has notr risen YoY since Q4 2015 - (Q1 0.0%, Q2 -0.3%, Q3 -0.05%) But, as Fed-induced investment in buybacks crowds out capex, real-worker productivity is collapsing (but buy back productivity is soaring!!).*  *  *How can this be?? The mainstream media 'economists' are stunned. As we explained previously, there are a few reasons... Even Alan Greenspan has warned that America is "in trouble basically because productivity is dead in the water..." There are numerous reasons for this plunge in worker-productivity, from perverted inventives not to work to unintended consequences of monetary policy enabling zombies, but perhaps the most critical driver is exposed in the following dismal chart... 51% of total time spent on the Internet is on mobile devices - in 2015, first time ever mobile is #1 - to make a total of 5.6 hours per day snapchatting, face-booking, and selfying...

Older workers in Rust-Belt States have been economic losers since Reagan (6 graphs) The Bureau of Labor Statistics (BLS) today reported a 3.5% unemployment rate for workers age 55 and older in November, a decrease of 0.2 percentage points from October. While “Older Workers at a Glance” shows steady growth in real earnings for older workers, national averages mask long-run stagnation and decline in the four rust-belt states - Michigan, Ohio, Pennsylvania, and Wisconsin - that unexpectedly voted for Donald Trump after voting for President Obama in 2012.  Before Reagan, older workers in these four states received higher wages than older workers in the rest of the country. Now they are doing worse. In 1979, rust-belt older workers were making $3,600 more than their counterparts elsewhere. In 2015, they were earning $4,000 less. Between 1979 and 2015, the median real wage for older workers in the four rust-belt states that flipped to Trump increased only 1% compared to 17% in the rest of the U.S. Stagnant and declining real wages erode workers’ ability to save for retirement and increase their reliance on Social Security. To address the economic insecurities of working families, the Trump administration needs to create a path to a secure retirement by expanding Social Security and providing universal access to secure retirement plans through Guaranteed Retirement Accounts.

Still falling short on hours and pay: Part-time work becoming new normal - Economic Policy Institute 

  • What this report finds: An ongoing structural shift toward more intensive use of part-time employment by many employers is driving the elevated rate of involuntary part-time work. Over six years into an economic recovery, the share of people working part time because they can only get part-time hours remains at recessionary levels. The number working part time involuntarily remains 44.6 percent higher than it was in 2007. This growth is being driven mainly by a few industries.
  • Why it matters: 6.4 million workers want full-time jobs but are working only part-time hours. Involuntary part-time workers are not only earning less income than they would prefer, but suffer because part-time jobs offer relatively lower wage rates and benefit coverage, and have more variable and unpredictable work schedules.
  • How we can fix the problem: In addition to traditional expansionary policies that would heighten demand for more hours of labor, here are seven policies that would help curb the excessive use of part-time employment and address the harmful effects of involuntary part-time working.

Introduction and key findings:

Only 51% of 30-year-olds are making more money than their parents did -  The percentage of young adults earning more than their parents has dropped precipitously. Barely half of 30-year-olds earn more than their parents did at a similar age, a research team found, an enormous decline from the early 1970s when the incomes of nearly all offspring outpaced their parents. Even rapid economic growth won’t do much to reverse the trend. Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream, and found the dream was fading. They identified the income of 30-year-olds starting in 1970, using tax and census data, and compared it with the earnings of their parents when they were about the same age. In 1970, 92% of American 30-year-olds earned more than their parents did at a similar age, they found. In 2014, that number fell to 51%. “My parents thought that one thing about America is that their kids could do better than they were able to do,” said Raj Chetty, a prominent Stanford University economist who emigrated from India at age 9 and is part of the research team. “That was important in my parents’ decision to come here.”

Trump’s Labor Pick, Andrew Puzder, Is Critic of Minimum Wage Increases - President-elect Donald J. Trump on Thursday chose Andrew F. Puzder, chief executive of the company that franchises the fast-food outlets Hardee’s and Carl’s Jr. and an outspoken critic of the worker protections enacted by the Obama administration, to be secretary of labor. “Andy Puzder has created and boosted the careers of thousands of Americans, and his extensive record fighting for workers makes him the ideal candidate to lead the Department of Labor,” Mr. Trump said in a statement. Mr. Puzder, 66, fits the profile of some of Mr. Trump’s other domestic cabinet appointments. He is a wealthy businessman and political donor and has a long record of promoting a conservative agenda that takes aim at President Obama’s legacy. And more than the other appointments, he resembles Mr. Trump in style. He seems to delight in bashing elites — he complained that “big corporate interests” and “globalist companies” were supporting Hillary Clinton in the presidential election — and is prone to the occasional streak of political incorrectness. On policy questions, he has argued that the Obama administration’s recent rule expanding eligibility for overtime pay diminishes opportunities for workers, and that significant minimum wage increases would hurt small businesses and lead to job losses.He has criticized paid sick leave policies of the sort recently enacted for federal contractors and strongly supports repealing the Affordable Care Act, which he says has created a “government-mandated restaurant recession” because rising premiums have left people with less money to spend dining out.  Speaking to Business Insider this year, Mr. Puzder said that increased automation could be a welcome development because machines were “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”  And on the political incorrectness front, Mr. Puzder’s company, CKE Restaurants, runs advertisements that frequently feature women wearing next to nothing while gesturing suggestively. “I like our ads,” he told the publication Entrepreneur. “I like beautiful women eating burgers in bikinis. I think it’s very American.”

Trump Department of Labor pick is a foreign labor exec who’s brought “over 40,000” cheap workers to the USA - Veronica Birkenstock is Practical Employee Solutions, a company that boasts of having brought "over 40,000" cheap H-2B workers from 80 countries to the USA to work in "hospitality, landscaping, welding, and construction" for companies like Marriott and Starwood Hotels, for whom it is the "preferred vendor." Veronica Birkenstock is also part of Trump's Department of Labor transition team.The H-2B program has come under criticism for helping suppress wages of domestic workers. The Economic Policy Institute, which Trump frequently cited on the campaign trail, believes that the program leaves “workers vulnerable to low pay and abuse.”PES advertises videos on its website from the H-2B Workforce Coalition, a coalition of mostly business groups who lobby Congress to protect this visa option.In one of these videos, owners of landscaping firms testify that they can’t find domestic workers, and that’s why they have to utilize H-2B visas.  Birkenstock has spent the last 20 years working at PES and helping employers find cheap labor. Needless to say, that isn’t America First.

Immigration Hard-Liners Question Trump's Homeland Security Pick --Immigration hard-liners had been routing for Trump to appoint Kansas Secretary of State Kris Kobach as head of the Department of Homeland Security.  Kobach was generally viewed as the candidate most likely to draw the hardest line on illegal immigration after helping to draft one of the toughest pieces of immigration law in the country, Arizona's SB 1070, which requires law enforcement officers to demand to see the immigration papers of anyone they suspected of being in the country illegally.By choosing Marine General John Kelly, immigration experts fear that the Trump administration will focus more on border security, as it relates to terrorist threats, but will not emphasize the deportation of the millions of illegal citizens already in the country. Before retiring last winter, Kelly served as the head of U.S. Southern Command, where, among other things, he oversaw Guantánamo Bay.  According to The Hill, Kelly built a reputation as a blunt critic of the Obama administration and was often accused to taking actions intended to obstruct the administration's efforts to close Guantánamo.  John Kelly's son, Robert, was killed in combat in Afghanistan. While Trump supporters have no doubt that a Kelly-run Homeland Security Department will be tough on terrorism and border security they're a bit skeptical on immigration-specific policies.

California State Senator Files Legislation To Create "Safe Zones" For Illegal Immigrants -  California State Senator Kevin de Leon has introduced a bill, SB-54 or the"California Values Act" (because if you disagree with this legislation then you're obviously just an immoral, racist asshole), that explicitly prohibits "state and local law enforcement agencies" from investigating, detaining, detecting, reporting or arresting people for "immigration enforcement purposes."  Moreover, the bill would force "public schools, hospitals, and courthouses" to establish "safe zones" that "limit immigration enforcement on their premises." Per SB-54: This bill would, among other things, prohibit state and local law enforcement agencies and school police and security departments from using resources to investigate, detain, detect, report, or arrest persons for immigration enforcement purposes, or to investigate, enforce, or assist in the investigation or enforcement of any federal program requiring registration of individuals on the basis of race, gender, sexual orientation, religion, or national or ethnic origin, as specified. The bill would require state agencies to review their confidentiality policies and identify any changes necessary to ensure that information collected from individuals is limited to that necessary to perform agency duties and is not used or disclosed for any other purpose, as specified. The bill would require public schools, hospitals, and courthouses to establish and make public policies that limit immigration enforcement on their premises and would require the Attorney General, in consultation with appropriate stakeholders, to publish model policies for use by those entities for those purposes.

Trump’s Mexico Border ‘Wall’ Vanishing as GOP Lawmakers Bolt -  The Mexican border wall that Donald Trump promised in the campaign doesn’t really have to be a wall, says Representative Dennis Ross, a member of the president-elect’s transition team. “The ‘wall’ is a term to help understand it, to describe it,” says Ross, a Florida Republican, adding that it “really means ‘security.’ It could be a fence. It could be open surveillance to prevent people from crossing. It does not mean an actual wall.” Even the president-elect’s closest allies in Congress are working to redefine Trump’s top campaign promise, which many view as too costly and impractical for securing the 1,933-mile border with Mexico. Most illegal immigration can be halted with fencing, more Border Patrol agents and drones, they contend. House Speaker Paul Ryan on Sunday suggested using approaches that simply make the most sense. “Conditions on the ground determine what you need in a particular area,” Ryan said in an interview on CBS’s “60 Minutes.” House Homeland Security Chairman Michael McCaul said Wednesday, “We are going to build the wall. Period.” But he also described his plan, which he plans to propose next year, as a “historic, multi-layered defense system so that drug cartels and terrorists don’t skip through the cracks.” “That means more Border Patrol agents, new authorities, aerial surveillance, sensors and other technology to protect our territory,” said McCaul of Texas at the Heritage Foundation in Washington.

Trump's Plan to 'Impound' Remittances Is Bad for Business - Nothing says "Make America Great Again" like manipulating the financial system. Despite campaigning to end "intrusive regulations," President-elect Trump now threatens to commandeer businesses to enact social policy.  Back in April, Trump revealed a plan to "pay for the wall" on the U.S.-Mexico border. But as The Washington Post noted, the proposal relies more on perverting payments systems than on allocating funds. Specifically, Trump has promised to "impound" remittances — money immigrants send home — when senders can't prove lawful presence in the United States. In Trump's mind, at least, U.S. remittances to Mexico — worth approximately $24 billion last year, according to the World Bank — are so crucial that such a clampdown would force the Mexican government to finance his wall.Now, it's uncertain if Trump intends to deliver on his threat. He has retracted his prediction that Mexico will pay up front. But he might still attack remittances as an anti-immigration strategy in-and-of-itself.  Indeed, the supposed architect of the remittances plan, Kris Kobach, now sits on the transition team. If by "impound," Trump means he'll somehow actually seize remittances, he'll have to overcome stiff legal obstacles. But regulatory pressure, taxation and fines provide somewhat easier avenues, all of which end poorly for the industry.  Both firms and their customers should take this danger seriously, even if the details of the design are currently unclear. Financial institutions stand to lose significant revenue. According to World Bank data collected as of July, the average consumer cost of a $200 U.S.-to-Mexico remittance was $12.71, and $22.47 for a $500 remittance. To enact the April plan, Trump would likely need to amend the U.S. Patriot Act and corresponding regulations. Section 326 of the statute requires the Treasury to establish minimum standards for verifying customer identification. Banks and money services businesses like Western Union must collect sender ID for transactions above $3,000. They must also cross-check terrorist lists and report suspicious activity. But as of now, they need not screen users for immigration status.

  In new lawsuit, Instacart shoppers say they were regularly underpaid - Instacart cuts fees paid to delivery drivers by as much as 63 percent.   On Thursday, 12 Instacart “shoppers” across 11 states filed a proposed US federal class-action lawsuit against the San Francisco startup, alleging a breach of state and federal labor laws. The Instacart lawsuit is one of several currently targeting so-called “sharing economy” startups, and they all get at the same question: can workers be accurately classified as independent contractors, or should they properly be designated as employees? In Instacart’s case, customers order groceries online, but those groceries are then picked up and delivered by the company’s shoppers. So, should those shoppers be treated as employees?Classifying such workers as employees rather than contractors would entitle them to a number of benefits under federal law. This includes unemployment benefits, workers’ compensation, the right to unionize, and, most importantly, the right to seek reimbursement for mileage and tips. This reclassification would also incur new and significant costs for Instacart and other affected companies, including Uber and Lyft. An on-demand cleaning service, Homejoy, shut down last year just months after it was hit with a similar labor lawsuit. The three labor law experts with whom Ars spoke agreed that this underlying sharing economy issue would not be resolved anytime soon. It may, they said, have to be taken up by the Supreme Court at some point.

A Dilemma for Humanity: Stark Inequality or Total War -  Last year the typical American family experienced the fastest income gains since the government started measuring them in the 1960s. But the top 1 percent did even better, raising their share of income higher than it was when President Obama took office. Mr. Obama has led the most progressive administration since Lyndon B. Johnson’s half a century ago, raising taxes on the rich to expand the safety net for the less fortunate. Still, by the White House’s own account, eight years of trench warfare in Washington trimmed the top 1-percenters’ share, after taxes and transfers, to only 15.4 percent, from 16.6 percent of the nation’s income. It increased the slice going to the poorest fifth of families by 0.6 percentage point, to a grand total of 4 percent. The policies also helped push the Republican Party even further to the right, leading to the Tea Party — whose rabid opposition to government redistribution still shakes American politics. They did nothing to salve — and perhaps even added to — the stewing resentment of white working-class Americans who feel left out of the nation’s advancements, producing the electoral victory for Donald J. Trump, who has proposed a tax plan that amounts to a lavish giveaway to the rich. The point is not that President Obama should have done better. He probably did the best he could under the circumstances. The point is that delivering deep and lasting reductions in inequality may be impossible absent catastrophic events beyond anything any of us would wish for. History — from Ancient Rome through the Gilded Age; from the Russian Revolution to the Great Compression of incomes across the West in the middle of the 20th century — suggests that reversing the trend toward greater concentrations of income, in the United States and across the world, might be, in fact, nearly impossible.

 War On The Homeless: Cities Across America Are Making It Illegal To Feed And Shelter Those In Need -- If you want to be a “Good Samaritan” to the homeless in your community, you might want to check and see if it is legal first.  All over the country, cities are passing laws that make it illegal to feed and shelter the homeless.  For example, in this article you will read about a church in Maryland that was just fined $12,000 for simply allowing homeless people to sleep outside the church at night.  This backlash against homeless people comes at a time when homelessness in America is absolutely exploding.  In a previous article, I shared with my readers the fact that the number of homeless people in New York City has just set a brand new all-time high, and the homelessness crisis in California has become so severe that the L.A. City Council has formally asked Governor Jerry Brown to declare a state of emergency.  Sadly, instead of opening up our hearts to the rapidly growing number of Americans without a home, way too many communities are trying to use the law to force them to go somewhere else.For nearly two thousand years, churches have been at the forefront of helping the poor and disadvantaged, but now many communities are trying to stop this from happening.  Earlier today, I was absolutely stunned when I came across an article that talked about how a church in Dundalk, Maryland has been fined $12,000 for allowing the homeless to sleep outside the church at night…“I showed up Wednesday morning to find a citation on the door that said we’re going to be fined $12,000 and have a court date because we have unhoused homeless people sleeping outside the church at night,” said Reverend Katie Grover with the Patapsco United Methodist Church.Grover added that the men and women who sleep outside their doors do so because they have nowhere else to go and because they feel safe there.“We feel we here as a church that it’s scriptural mandate that’s it an imperative to care for the least, the last, the lost, the poor, the hungry,” she said. The authorities in Dundalk say that the church is running a “non-permitted rooming and boarding house”, and the severity of this fine is likely to put the church in significant financial difficulty if it is forced to pay it.  You can watch a local news report discussing this story on YouTube right here

2015 FBI data: Jews were nearly 3X more likely than blacks, 1.5X more likely than Muslims to be a hate crime victim - Members of which of these groups were most likely to be a victim of a hate crime in 2015: Muslims, Blacks or Jews? Based on media coverage, you would have to say Muslims or Blacks. According to a Google news search for the term “hate crimes” along with the name of each of those three groups, there are 164,000 results for “hate crimes” + black, 134,000 results for “hate crimes” + Muslims and only 36,400 results for “hate crimes” + Jews. Based on news reports, you would think that blacks were 4.5 times more likely than Jews to be the victim of a hate crime and that Muslims were almost 4 times more than likely than Jews to be a hate crime victim.  And yet recently released hate crime data from the FBI for 2015 reveal that there were 1,745 African-American victims of hate crimes last year, 664 Jewish victims of anti-religious hate crimes and 257 Muslim hate crime victims. Adjusting for the population size of each group (42.75 million blacks, 5.7 million Jews and 3.3 million Muslims), the hate crime victimization rates last year per 100,000 population were 11.6 for Jews, 7.8 for Muslims and 4.1 for blacks (see chart above). Therefore, American Jews were nearly three times more likely than blacks to be a victim of a hate crime last year, and 1.5 times more likely than a Muslim to be a hate crime victim. The FBI data for 2015 on anti-religion hate crimes also reveal that of the 1,244 victims of anti-religious hate crimes last year in the US, 664 were Jewish (53.4% of the total) and 257 were Muslim (20.7% of the total). Obviously, since more than half (53.4%) of the anti-religious hate crime victims in 2015 were Jewish, there were more Jewish victims last year of anti-religious hate crimes (664) than victims of all other religious groups combined (580).

The gap between the number of black inmates in New York granted parole versus white inmates is stunning -- Black inmates who go before the New York State Board of Parole have a dramatically lower chance for release than white inmates, a recent New York Times investigation found. As part of a broader analysis into racial disparities in the New York state prison system, the Times reviewed three years' worth of parole decisions for male inmates, and found that one in four white inmates are released at their first parole hearings, while fewer than one in six black or Latino inmates are released. Between 2013 and 2016, the board released 30% of white inmates who were convicted of property crimes, but just 18% of their black peers. The disparity is even more obvious among young inmates — with 30% of white inmates under 25 being released, and just 14% of black and Latino inmates.  On Monday, New York Gov. Andrew Cuomo called the Times' investigation "disturbing" and announced he would order an investigation into the racial disparities within the state prison system.

 S&P warns CT: Surging debt costs could lower bond rating | The CT Mirror: While legislators learned Wednesday how surging debt costs would hamper the next state budget, a major Wall Street credit rating agency downgraded its outlook for Connecticut for the same reason. With Connecticut expected to issue bonds later this month, S&P Global Ratings assigned a “negative outlook” to the state’s bond rating. This is a warning that the state could face a rating downgrade — and possibly higher borrowing costs in the next year or two. “The outlook revision reflects our view that projected growth in fixed costs could rise to a level we believe could comprise a substantial proportion of the state budget and thereby hamper Connecticut’s budget flexibility as the state addresses large out-year budget gaps,” said David Hitchcock, a credit analyst with S&P. Retirement benefit costs and payments on bonded debt are expected to equal nearly 33 percent of General Fund revenue in the 2017-18 fiscal year. By comparison, those costs represented about 12 percent of the General Fund 20 years ago. Analysts are predicting those costs — and particularly required contributions to the pension funds for state employees and for teachers — will continue to rise steadily through the early-to-mid 2030s. Most of the problems tied to surging retirement benefit costs stem from inadequate savings habits that go back seven decades.

 Virginia Schools Ban 'To Kill A Mockingbird,' 'Huck Finn' Over Racial Slurs --A Virginia school has temporarily banned "The Adventures of Huckleberry Finn" by Mark Twain and "To Kill A Mockingbird" by Harper Lee,after a parent complained that her high school-age son was negatively impacted by racial slurs contained in the books. As The Independent reports, both To Kill a Mockingbird and Mark Twain?'s Adventures of Huckleberry Finn were temporarily banned pending a committee review, with the parent - Marie Rothstein-Williams, the mother of a mixed race child - suggesting a board made up of other parents and teachers from diverse cultural backgrounds determines a list of books that are inclusive for all students.“I keep hearing, ‘This is a classic, This is a classic’,” the mother said at a school board meeting on 15 November, according to WPXI. “I understand this is a literature classic. But at some point, I feel that children will not – or do not – truly get the classic part – the literature part, which I’m not disputing. “This is great literature. But there [are so many] racial slurs in there and offensive wording that you can’t get past that.”  She claimed her son couldn’t get past a page of Adventures of Huckleberry Finn that includes the N-word seven times.  “So what are we teaching our children? We’re validating that these words are acceptable, and they are not acceptable by (any) means,” the parent said,perhaps overlooking the role of the teacher in instructing pupils what words are right and wrong to employ. “There is other literature they can use.” The suspension of the books is a part of the standard procedure outlined in the district’s policy manual which says that after a formal complaint is filed, the principal, the library media specialist, complainant and teacher should gather to discuss the materials. But as The LA Times reports, the suspension of the books didn't sit will with some residents of Accomack County, dozens of whom protested outside the county courthouse in the town of Accomac, reports Delmarva Now.

Junk-rated Chicago schools plan new kind of bond issue (Reuters) - Chicago's public school (CPS) system plans to sell a new type of bond issue in an attempt to separate the debt from the district's severe financial woes and protect it in a potential bankruptcy filing, according to a document released by the district on Tuesday. The preliminary prospectus for the debt indicates the Chicago Board of Education will issue $500 million of bonds secured solely by a capital improvement property tax and not by the district's general obligation pledge. That pledge currently covers about $6.8 billion of existing bonds that are rated junk by Moody's Investors Service, S&P, and Fitch Ratings. CPS, the nation's third-largest public school system, is struggling with pension payments that will jump to about $720 million this fiscal year from $676 million in fiscal 2016, as well as drained reserves and debt dependency - factors that have pushed its GO credit ratings deep into the junk category and led investors to demand fat yields for its debt. Illinois Governor Bruce Rauner last week vetoed a bill to give CPS a one-time $215 million state payment to help cover pension costs. Ratings for the new bonds, backed by a $45 million a year property tax levy approved by the Chicago City Council in 2015, were not available. Because that tax revenue can only be used to fund capital projects and not operations, CPS is hoping bondholders will consider the debt a safer bet than the district's GO bonds.

Chicago school board approves revised budget with $215 million hole (Reuters) - The Chicago Board of Education on Wednesday approved a revised fiscal 2017 budget that accommodates a new teachers' contract, but contains a $215 million funding gap for pensions. The spending plan for the fiscal year that began on July 1 was increased by $55 million to $5.5 billion to reflect an additional contribution of surplus tax increment financing money from the city of Chicago. That money will cover higher costs from a new four-year contract with the Chicago Teachers Union that the board ratified on Wednesday. Chicago Public Schools (CPS), the nation's third-largest public school system, is struggling with pension payments that will jump to about $720 million this fiscal year from $676 million in fiscal 2016, as well as drained reserves and debt dependency. The fiscal woes have pushed credit ratings on the district's $6.8 billion of general obligation bonds deep into the junk category and led investors to demand fat yields for its debt. Illinois Governor Bruce Rauner last week vetoed a bill to give CPS a one-time $215 million state payment to help cover pension costs. CPS officials on Wednesday blasted Rauner's action, while contending there is still time to pressure the governor and state lawmakers to restore the money. "We will not allow Chicago students, most of them poor and minority, to be held hostage," said CPS Chief Executive Officer Forrest Claypool. If the effort fails, School Board President Frank Clark said the district was prepared to deal with the budget gap in January. The board also reaffirmed its approval for issuing up to $840 million of bonds backed by a new $45 million a year property tax levy earmarked solely for capital expenses.

Some Oklahoma school staff’s entire paychecks go to healthcare: Some Oklahoma school staff members are getting paychecks for hundreds of dollars, but they are not even making it into the bank.Those people's entire paychecks are going to pay for healthcare. They are having to pay their districts to stay employed. We're talking about paraprofessionals in the classroom who help the children, the people who drive them to school and feed them while they're there. “Our support employees barely make a livable wage, if they even make a livable wage,” said Alicia Priest, President of the Oklahoma Education Association. Priest said the rising cost of health insurance is putting school workers in a bind. “We hear stories all the time of our support professionals, our janitors and school secretaries, having to write a check back to their school district because their insurance costs are over what they would bring home in a month,” Priest said. Under state law, the worker's insurance is covered. But adding their family, it could add up to $1,600 a month. “Minimum wage to about $12 an hour is what a support professional makes,” Priest said. Next year their pay stays the same, but the costs are going up. A school worker with a family for four will pay more than $1,700 a month for insurance.

U.S. now ranks near the bottom among 35 industrialized nations in math -  The math achievement of American high school students in 2015 fell for the second time in a row on a major international benchmark, pushing the United States down to the bottom half of 72 nations and regions around the world who participate in the international test, known as the Program for International Student Assessment or PISA.  Among the 35 industrialized nations that are members of the Organization for Economic Cooperation and Development (OECD), the U.S. now ranks 31st. Both reading and science scores were steady, with U.S. students scoring near the international average in both subjects. “We really are doing a lot worse in math than we are in science and reading,” said Peggy Carr, the acting commissioner for the National Center for Education Statistics, who had early access to the PISA results, which were released to the public on Tuesday. Carr emphasized that the 2015 PISA results showed that students across the board, from bottom to middle to top performers, were doing worse in math. It wasn’t just one segment of students who brought the national average down. The weak math performance echoed the results of a second national exam, the National Assessment of Education Progress (NAEP), on which 4th and 8th graders also posted lower math scores on the 2015 test. The PISA test is administered every three years around the world to measure what 15-year-old students know in math, reading and science before the end of compulsory schooling. In the United States, it’s primarily taken by 10th graders. The U.S. has never been a strong performer globally, but has generally scored near the average since the test began in 2000.  In 2012 math scores deteriorated a few points. Now, with the 2015 results in, it’s a clear downward trend.

Three thoughts on the ugly new PISA results - AEI - On Tuesday, the 2015 Program for International Student Assessment (PISA) results were released. The news wasn’t good.  Compared to the international averages, US performance was middling in science, poor in math, and above-average in reading. US math performance has dropped precipitously since 2012, after dropping noticeably from 2009 to 2012. Peggy Carr, acting commissioner of the National Center for Education Statistics (NCES), drily noted that, compared to the international average, “we also have a higher percentage of students who score in the lowest performance levels … and a lower percentage of top math performers.” U.S. performance in reading and science has also declined (slightly but steadily) since 2009, by three points in reading and six points in science. You can peruse the NCES report for yourself here, if so inclined. I don’t want to belabor things, so I’ll just offer three reflections. One, I’m generally not a fan of using test results to assess the validity of a presidential administration’s educational efforts. Washington shenanigans are supposed to be peripheral to what happens in America’s schools, and, thankfully, that’s mostly the case. It’s hard to forget, however, that the Obama administration was cherry-picking test results to justify its machinations — back when it could find results to pick. Two, Obama’s spinners have spent a lot of time talking up the steady increase in the US graduation rate.  The thing is, if more students are graduating high school even as they are faring worse on reputable assessments, it raises questions about just what those graduation rates mean. After all, diplomas are just pieces of paper — they don’t necessarily mean that students have mastered essential knowledge or skills. Three, I often wish people were a little more reticent about racing to insist that the latest round of test results or graduation rates proves this or that. Much of the fevered discussion of the PISA results suffers from a pretty big flaw — which is that most observers don’t really understand what these international tests measure. That makes it difficult to know what one ought to make of the results.

 What America Can Learn About Smart Schools in Other Countries -- Every three years, half a million 15-year-olds in 69 countries take a two-hour test designed to gauge their ability to think. Unlike other exams, the PISA, as it is known, does not assess what teenagers have memorized. Instead, it asks them to solve problems they haven’t seen before, to identify patterns that are not obvious and to make compelling written arguments. It tests the skills, in other words, that machines have not yet mastered. The latest results, released Tuesday morning, reveal the United States to be treading water in the middle of the pool. In math, American teenagers performed slightly worse than they usually do on the PISA — below average for the developed world, which means they scored worse than nearly three dozen countries. They did about the same as always in science and reading, which is to say average for the developed world. But that scoreboard is the least interesting part of the findings. More intriguing is what the PISA has revealed about which conditions seem to make smart countries smart. In that realm, the news was not all bad for American teenagers. Like all tests, the PISA is imperfect, but it is unusually relevant to real life and provides increasingly nuanced insights into education for researchers like Andreas Schleicher, who oversees the test at the Organization for Economic Cooperation and Development. After each test, he and his team analyze the results, stripped of country names. They don’t want to be biased by their pre-existing notions of what teenagers in Japan or Mexico can or cannot do. They can’t, for example, assume that countries that spend the most will do the best (the world’s biggest per-student spenders include the United States, Luxembourg and Norway, none of which are education superpowers). Nor can they guess based on which countries have the least poverty or the fewest immigrants (places like Estonia, with significant child poverty, and Canada, with more immigrant students than the United States, now top the charts). All those factors matter, but they interact with other critical conditions to create brilliance — or not. Here’s what the models show: Generally speaking, the smartest countries tend to be those that have acted to make teaching more prestigious and selective; directed more resources to their neediest children; enrolled most children in high-quality preschools; helped schools establish cultures of constant improvement; and applied rigorous, consistent standards across all classrooms.

Public-sector compensation should be a model for the private sector—instead, it’s under attack - With a raised hand, my daughter’s teacher can magically line up 20 kindergarteners who are running circles around a loud gym. She’s at school when I drop my daughter off in the morning and still on the job—calling us and other parents from the subway—as my family sits down to dinner. She says she never wanted to do anything else in her life besides teach, and her enthusiasm is infectious: my daughter wants to be a teacher when she grows up. I encourage my daughter’s aspirations, even though teachers are underpaid and their jobs are challenging, especially in today’s high-stakes testing environment. But teachers have good insurance if they get sick or become disabled, and they are able to enjoy their hard-earned retirements. My daughter’s teacher and principal would be materially better off if they had chosen private-sector careers, even those with less generous benefits. Generally speaking, college-educated workers are compensated less and non-college-educated workers are compensated more in the public sector, so the public sector grows the middle class from both ends of the educational spectrum. The higher pay of non-college-educated workers and lower pay of college-educated workers roughly cancel each other out, but taxpayers still come out ahead after factoring in a compensation structure that reduces turnover and does not burden safety net programs. In short, most public-sector jobs are secure middle-class jobs that attract educated workers willing to work for less in exchange for meaningful work and secure benefits. That is, these are good middle-class jobs unless conservative think-tanks and the billionaires who fund them have their way. Already, teachers’ pay has declined significantly relative to their private-sector peers and they and other public-sector workers’ benefits have been slashed, though you wouldn’t know this to read reports from the American Enterprise Institute, the Arnold Foundation, and countless others claiming that public-sector pay and benefits are hugely inflated.

How U.S. Colleges Sell Enrollment to the Highest Bidders -- This past Friday, Reuters published one of the most important articles I’ve read in a while relative to the attention being paid to the issue. It details a streamlined practice through which Chinese “education” companies essentially bribe college admissions officers at top U.S. universities to accept tuition paying Chinese students. It’d be bad enough if these students were actually qualified, but in many cases these companies complete the entirety of the applications for the students, including writing their essays. It’s not uncommon for these student-clients to never see their own applications. Naturally, these companies couldn’t pull off their sleazy scam without willing American partners. Enter Thomas Benson and Stephen Gessner, two eager-beaver members of our nation’s celebrated — earn as much money as possible however possible without regard to the negative consequences to your fellow Americans — class. The entire story will make you sick, and it’s just further proof of how cronyism, bribery and a complete lack of ethics has fully penetrated into virtually every single facet of American life. It’s symptomatic of the debased, crooked Banana Republic economy we have become. Without further ado, here are some excerpts from the must read article, How Top U.S. Colleges Hooked Up With Controversial Chinese Companies: Over the past seven years, Benson and Gessner have worked as consultants for three major Chinese companies. They recruited dozens of U.S. admissions officers to fly to China and meet in person with the companies’ student clients, with the companies picking up most of the travel expenses. Among the schools that participated: Cornell University, the University of Chicago, Stanford University and the University of California, Berkeley. Two companies Benson and Gessner have represented – New Oriental Education & Technology Group Inc and Dipont Education Management Group – offer services to students that go far beyond meet-and-greets with admissions officers. Eight former and current New Oriental employees and 17 former Dipont employees told Reuters the firms have engaged in college application fraud, including writing application essays and teacher recommendations, and falsifying high school transcripts. The New Oriental employees said most clients lacked the language skills to write their own essays or personal statements, so counselors wrote them; only the top students did original work.

 Rich Colleges’ Endowments Targeted by Trump Backer in U.S. House --Wealthy U.S. colleges must spend more of their endowment gains on aid for middle-class families or lose their prized tax-exempt status, a Republican U.S. House member and a vice chair of President-elect Donald Trump’s transition team proposed Monday. Rich schools have long been a target of Congressional Republicans who accuse them of skewed spending priorities that are bankrupting families with frivolous amenities while enriching administrators. In little-noticed remarks during the campaign, Trump himself endorsed this view.  Along with new endowment spending rules, U.S. Representative Tom Reed’s proposal would also require all universities receiving federal aid to provide more disclosure about administrative salaries and perks. In addition, colleges would have to file “cost-containment plans” to keep tuition increases below the inflation rate. The federal government would take money away from those who fail to curb costs -- and give it to those who do.“It’s time to disrupt this area and really put the attention necessary to it to get the costs going in the right direction, and that is down,” said Reed, who is the youngest of 12 children and wrapped his own $110,000 in college and law school debt into a mortgage. “We truly are entering the crisis phase.” For years, colleges have beaten back similar proposals, saying their endowments have limited legal flexibility to spend money from gifts because of donor restrictions. Elite schools say they are already providing tuition breaks to low-income and middle-class families, making their $60,000-plus sticker prices seem more daunting than reality. On its website, Harvard, the richest U.S. college, says families earning as much as $200,000 a year are eligible for aid -- and, in some cases, even more.

I’m on the ‘professor watchlist.’ It’s a ploy to undermine free speech - The release of the professor watchlist, purporting to expose professors who discriminate against conservative students, is anything but that. I should know: I’m on it. As one of a handful of religion professors in the US who study, write and teach about conservative Christianity and politics, I am all too aware of the real meaning of the list, and of its purpose. Promoted by Turning Point USA, the list is not simply designed to expose professors who discriminate; it is designed to silence and smear. And it helps feed information and screeds to similar sites like the College Fix and Campus Reform, which states that they are “a watchdog to the nation’s higher education system” to “expose bias and abuse on the nations college campuses”.  Charles Kirk, a young leader in conservative politics, who is the publisher of the list and co founder of Turning Point USA, stated that he hopes that the professor watchlist will change campus culture by highlighting previously reported incidences and statements. It very well might. Turning Point USA has chapters on over 300 college campuses across the United States, and even more on high school campuses.  For a group claiming to be a watchdog to higher education, the organization is training students from high school in how to not engage their education critically, but to combat anything or anyone that does not promote or teach with a conservative viewpoint. It is an all-out bid to control not only academic freedom in the university setting, but to create a hostile climate for free speech and academic freedom.  Rightwing organizations like Turning Point USA or Leadership Institute spend considerable amounts of money and time to train students with conservative values how to “fight back”. Their efforts on campuses not only promote conservative values but also feed the large right-wing media complex – sites like Town Hall and Breitbart. Many of the articles that are published by College Reform end up being reported by other outlets within hours, and in some cases, picked up by Fox News. Professors targeted remain blissfully unaware until their inbox fills with hate mail, and the administration has to field calls from media outlets and disgruntled conservatives.  Many professors and university officials do not know that these organizations, populated by their own students, exist. They are left flatfooted when lists like the Professor Watchlist appear, because these organizations are not only about promoting the idea that university education is hostile to conservatism, but also to get the maximum amount of exposure for their beliefs.  For tenured professors like myself, the Professor Watchlist is an annoyance that takes away from research, teaching and time with students. For professors on the tenure track, or lecturers who are trying to keep a contract job, being named on the professor watchlist could mean diminished opportunities for their careers if colleges and universities do not understand the purpose and nature of these groups.

Private Student Lenders Got a Huge Boost from Trump's Victory | American Banker: No corner of the banking industry has gotten a bigger near-term boost from Donald Trump's election than private student lenders. And that's saying something. Since Nov. 8, a widely watched index of bank stocks has risen by 21%, to the delight of banking executives and investors. But the celebrations may be particularly boisterous at SLM Corp., the student loan giant known as Sallie Mae. The Newark, Del.-based firm's stock price has climbed a whopping 59% since Election Day, amid changing perceptions about the regulatory climate for private student lending. "Stocks don't generally move 50% in a month," noted Ed Mills, an analyst at FBR Capital Markets. U.S. student lending is dominated by the federal government, which accounts for more than 90% of the $1.36 trillion student loan market. But within the private sector, Sallie Mae is considered a bellwether for the industry, since its business focuses heavily on education lending, whereas its main competitors have more diversified banking operations. Industry analysts said this week that the recent surge in Sallie Mae's stock may be more of a reaction to Hillary Clinton's defeat than it is a reflection of likely policy changes under the Trump administration. Under a potential Clinton administration, bank lenders might have had to contend with the expansion of federal student loan programs, which are generally where borrowers turn first to finance higher education. In addition, Clinton campaigned on the idea that community colleges should be free to attend, and that every student should be able to graduate from a public college in their state without taking on debt.

 Stanford Study Reveals California Pensions Underfunded By $1 Trillion Or $93k Per Household --Earlier today the Kersten Institute for Governance and Public Policy highlighted an updated pension study, released by the Stanford Institute for Economic Policy Research, which revealed some fairly startling realities about California's public pension underfunding levels.  After averaging $77,700 per household in 2014, the amount of public pension underfunding for the state of California jumped to a staggering $92,748 per household in 2015.  But don't worry, we're sure pension managers can grow their way out of the problem...hedge fund returns have been stellar recently, right?Stanford University’s pension tracker database pegs the market value of California’s total pension debt at $1 trillion or $93,000 per California household in 2015. In 2014, California’s total pension debt was calculated at $77,700 per household, but has increased dramatically in response to abysmal investment returns at California’s public pension funds that hover at or below zero percent annual returns.The Pension Tracker database (www.pensiontracker.org) is maintained by the Stanford Institute for Economic Policy Research (SIEPR) and is intended to help localize pension data by providing the ability to look up the market value of pension debt in any locality in California.Looking back to 2008, the underfunding levels of California's public pension have skyrocketed 157% on abysmal asset returns and growing liabilities resulting from lower discount rates. Perhaps this helps shed some light on why CalPERS is having such a difficult time with what should have been an easy decision to lower their long-term return expectations to 6% from 7.5% (see "CalPERS Weighs Pros/Cons Of Setting Reasonable  Return Targets Vs. Maintaining Ponzi Scheme")...$93k per household just seems so much more "manageable" than $150k.

 Austin, Dallas, Houston and San Antonio facing massive pension shortfalls: According to a new report from credit rating and financial analysis firm Moody’s, the Lone Star state’s four largest cities - Austin, Dallas, Houston and San Antonio - collectively face $22.6 billion worth of pension fund shortfalls. Here’s the story so far: • Dallas' police officer and firefighter retirement fund has long been plagued with problems. According to the Dallas Morning News, it lost $196 million in 2014 in “risky real estate investments” during a “disastrous plunge into speculative development ventures.” Last week, Dallas Mayor Mike Rawlings called for a halt to lump-sum withdrawals from the fund, following what some viewed as a "run on the bank" situation. And on Saturday, city officials announced a plan to save the fund which would target Dallas police and firefighters who got rich from the system. • Houston faces a $10 billion shortfall, according to the report. That amount - fourth-highest in the country - is more than four times that city’s annual operating revenues. However, the city may turn to the public to partially shore up their shortfalls. Houston Mayor Sylvester Turner wants to use $1 billion in bonds to infuse that city's funds. According to the Houston Chronicle, Turner recently oversaw a pension reform package that will have to head to the legislature for approval which would partially rely on $1 billion in bonds to solve the problem.• Austin ranked 14th on the Moody’s list with unfunded pension liabilities of $2.7 billion and San Antonio ranked 22nd with a $2.3 billion shortfall. But despite projected pension shortfalls, the two cities maintain AAA ratings from Moody’s - meaning they are judged to be of the highest quality and subject to the lowest level of credit risk.

 Senate Republicans are not on board with privatizing Medicare -- House Republicans have the D.C. press onboard with the idea that they're going to push through "Repeal and Delay" in the first weeks of the Trump administration and Medicare phaseout later in the year.  But in an interview with the Portland Press Herald, Susan Collins seems like lukewarm or a no on both. (Lauren Fox has more on the story here.)  Without making a hard commitment, Collins told the paper she is not inclined to support plans to 'privatize' Medicare. Collins said plans to privatize Medicare – which have been proposed by Price and House Speaker Paul Ryan – have many problems, and she’s voted against similar ideas. Privatizing Medicare would provide skimpier benefits and be more costly to seniors, critics say. “Suffice it to say I have a number of reservations,” Collins said Friday during an interview by phone. “A complete upending of a program (Medicare) that by and large serves seniors well is not something that appeals to me.”  Just as interesting, she seems like a no on "repeal and delay". Note that she has not and does not support Obamacare. But her focus is not on repeal but on safeguarding the health insurance of people who gained it under Obamacare. Collins said her “number one” goal for any ACA repeal effort would be to protect people who have purchased Affordable Care Act marketplace insurance. That group includes about 10 million people, while Medicaid expansion covers an additional 15-18 million. Maine is one of 19 states that has not expanded Medicaid. The uninsured rate has plummeted in the U.S. since the ACA took effect.  “You can’t just drop insurance for 84,000 people,” Collins said, referring to people who have signed up for ACA insurance in Maine.

Tom Price for Healthcare and Human Services - For those of you who may have missed it, Rep. Tom Price (R-Georgia) is Pres. Trump’s pick to be the head of the Department of Health and Human Services. Price is an Orthopedic Surgeon (former?) and has been in the House for 12 years now and a member of the Congressional Healthcare Caucus. It appears he has all of the required qualifications to be the head of the Department of Health and Human Services. The minority representative American Medical Association for doctors has endorsed Tom Price as an excellent choice. AMA “strongly supports the nomination of Dr. Tom Price to become the next secretary of Health and Human Services (HHS). His service as a physician, state legislator and member of the U.S. Congress provides a depth of experience to lead HHS. Dr. Price has been a leader in the development of health policies to advance patient choice and market-based solutions as well as reduce excessive regulatory burdens that diminish time devoted to patient care and increase costs,” said AMA Board of Trustees Chair Dr. Patrice A. Harris.” The choice of Tom Price is a no brainer for Pres. Trump as he is also in line with Republicans wanting to repeal the PPACA and put in its place vouchers for healthcare, Medicare, and Medicaid. Paul Ryan and Mitch McConnell’s jobs suddenly became easier. Mr. Price’s 2009 bill “would allow refundable, age-adjusted tax credits with amounts tied to average insurance for people who buy insurance on the individual market and don’t have access to a government or employer plan.” One can see the widow-peaked Paul Ryan smiling all the way to the House floor. The AMA in 2012 represented ~17% of all practicing doctors and students. Overall numbers have been in a downward slide over the years. Does the AMA represent the majority view of doctors and how they view the PPACA?   “Only 26 percent of all primary care physicians viewed the law ‘very unfavorably’. So it might be said that just one out of four primary care physicians “hate” Obamacare.” Indeed, all the scare tactics of decreased care put forth by the opposition about the PPACA have failed to materialize (Kaiser).  A growing number of doctors have come out in opposition to the AMA as led by Doctor Manik Chhabra, Navin Vij and Jane Zhu on their new blog Clinician Action. At the time (December 1, 2016) of Neil Versel’s article “Pushback begins against controversial HHS pick Tom Price”, 2500 doctors had signed their petition. As of December 4, 2016; >4600 doctors have signed the petition in opposition.

 Health care costs reach $3.2 trillion - Times Union: The nation's health care tab grew at the fastest rate in eight years in 2015, driven by the coverage expansion in President Barack Obama's law and by costly prescription drugs, the government said Friday. The growth of 5.8 percent in 2015 boosted total health care spending to $3.2 trillion. That's an average of $9,990 per person, although the vast share of that money is spent caring for the sickest patients. Health spending grew about 2 percentage points faster than the overall economy in 2015, said the report from nonpartisan economic experts at the Department of Health and Human Services. That's a problem because it makes it harder for government programs, employers, and individuals to afford the level of health care that Americans are used to having. The report was disappointing news for the outgoing Obama administration, which had enjoyed a long stretch of historically low increases in health care spending, and had sought to credit its 2010 health care overhaul for taming costs. It's a reality check for President-elect Donald Trump, who did not focus much on health care during his campaign and implied that problems could be easily fixed. America has struggled for decades to balance health care cost, access, and quality. Obama's law made significant strides to expand access, and the report found nearly 91 percent of U.S. residents now have coverage. But the problem of costs has re-emerged. That's partly because people with health insurance use more medical care than the uninsured, who tend to postpone going to the doctor. Some of the newly insured turned out to be sicker than those who were already covered.

US health care tab hits $3.2T; fastest growth in 8 years - AP— The nation's health care tab grew at the fastest rate in eight years in 2015, driven by the coverage expansion in President Barack Obama's law and by costly prescription drugs, the government said Friday. The growth of 5.8 percent in 2015 boosted total health care spending to $3.2 trillion. That's an average of $9,990 per person, although the vast share of that money is spent caring for the sickest patients. Health spending grew about 2 percentage points faster than the overall economy in 2015, said the report from nonpartisan economic experts at the Department of Health and Human Services. That's a problem because it makes it harder for government programs, employers, and individuals to afford the level of health care that Americans are used to having. The report was disappointing news for the outgoing Obama administration, which had enjoyed a long stretch of historically low increases in health care spending, and had sought to credit its 2010 health care overhaul for taming costs. It's a reality check for President-elect Donald Trump, who did not focus much on health care during his campaign and implied that problems could be easily fixed. America has struggled for decades to balance health care cost, access, and quality. Obama's law made significant strides to expand access, and the report found nearly 91 percent of U.S. residents now have coverage. But the problem of costs has re-emerged. That's partly because people with health insurance use more medical care than the uninsured, who tend to postpone going to the doctor. Some of the newly insured turned out to be sicker than those who were already covered.

Boom goes the ACA? --Republicans may have the votes pass a reconciliation bill that will hollow out the ACA in a few years. They pinkie swear that, at that point, they’ll pass some kind of replacement.But for that to work, they’ll need Democratic support. Chuck Schumer is already saying they won’t get it: “We’re not going to do a replacement. If they repeal without a replacement, they will own it. Democrats will not then step up to the plate and come up with a half-baked solution that we will partially own. It’s all theirs.” Maybe this is bluster. But I don’t think so: the 2016 election offered a lesson to Democrats about the political spoils of obstruction and brinksmanship. Repeal and delay could just be … repeal. In that vein, Chris Koller has a must-read op-ed over at Politico. As the health insurance commissioner for Rhode Island, he oversaw a market for individual insurance that prohibited insurers from discriminating against the sick, but didn’t compel anyone to participate. It didn’t work so well:

 Life in Obamacare’s Dead Zone - At 56, Foy was broke, jobless and living with her older sister in public housing in Kansas City, Mo., and she didn’t feel much like singing anymore. Recently, she had been told by a manager at a Victoria’s Secret that there was no need to leave her résumé. But not too long ago, she wanted me to know, she was pulling in $1,000 a week at a Merle Norman makeup store, helping other people look and feel their best. But then she took in her brother to try to help him overcome an addiction, and soon she was pulled under financially as he spiraled out of control. She would show up to work too overwhelmed and exhausted to make any sales, and had to dip into her savings until that was gone. She begged to borrow against her next paycheck but eventually lost her apartment and moved into a friend’s spare room. How are you holding up? people would ask. I’m good, girl, she would say. Praise the Lord! But inside, she felt like the sci-fi movies she had seen in which “a person becomes encapsulated,” suspended between consciousness and oblivion. Finally, on the phone with her sister one night, she broke down: I’m not right, I feel like I am dying.“I tried to get Obamacare,” Foy recalls. “I called the number, and when the woman told me what it would cost me, I just about dropped the phone. She told me I’d needed to make at least $12,000 a year for there to be any help to make it something I might be able to afford. Which still doesn’t make a lot of sense to me, even now, that having no money meant I got no help when I really needed it.” She also learned that she could not expect any help from Medicaid, which in her home state remained available only if you fit the criteria sometimes known by the shorthand “poor and” — poor and pregnant, poor and disabled. As a single childless woman, she could forget about it. There was no going to a doctor, even if she felt, as she put it, “like I was falling to pieces inside.”

Hospitals warn Trump: Price’s plan to repeal ACA will cost us $165 billion - Leading hospital groups teamed up to warn President-elect Trump this week that repealing the Affordable Care Act could spark an “unprecedented public health crisis,” and cost the hospital industry billions of dollars.The two hospital trade groups—the American Hospital Association (AHA) and the Federation of American Hospitals (FAH)—even commissioned a study by an outside economics consulting firm to put real numbers to the losses. Their study, conducted by the Dobson | DaVanzo firm, modeled what would happen if the government enacted the ACA-demolishing legislation introduced by Trump’s nominee for Secretary of Health and Human Services, Tom Price (R-Ga.); the legislation was vetoed by President Obama in January. The study’s verdict: 22 million people would lose insurance by 2026, which would cost hospitals $165.8 billion. And, because the legislation wouldn’t undo certain payment cuts created by the ACA, hospitals would lose an additional $102.9 billion. In a letter sent this week to Trump, AHA President and CEO, Rick Pollack, and FAH President and CEO, Chip Kahn, wrote: “Losses of this magnitude cannot be sustained and will adversely impact patients’ access to care, decimate hospitals’ and health systems’ ability to provide services, weaken local economies that hospitals help sustain and grow, and result in massive job losses.” To avoid this dire scenario, Pollack and Kahn implored the President-elect to only repeal the ACA if there’s a ready replacement that will guarantee coverage to the millions who gained it. Trump said during his campaign that he intended to swiftly repeal and replace the massive law once he took office. However, he has not provided a plan for how to do that or released any draft legislation for a possible replacement. And Republicans are themselves torn on what a replacement should look like.

“What The Fuck Just Happened?” -- Millwood Hospital is part of America’s largest psychiatric hospital chain, Universal Health Services, or UHS. Its more than 200 psychiatric facilities across the country admitted nearly 450,000 patients last year. The result was almost $7.5 billion in revenues from inpatient care last year and profit margins of around 30%. More than a third of the company’s overall revenue — from both medical hospitals and psychiatric facilities — comes from taxpayers through Medicare and Medicaid. A yearlong BuzzFeed News investigation — based on interviews with 175 current and former UHS staff, including 18 executives who ran UHS hospitals; more than 120 additional interviews with patients, government investigators, and other experts; and a cache of internal documents — raises grave questions about the extent to which those profits were achieved at the expense of patients. Current and former employees from at least 10 UHS hospitals in nine states said they were under pressure to fill beds by almost any method — which sometimes meant exaggerating people’s symptoms or twisting their words to make them seem suicidal — and to hold them until their insurance payments ran out.  A state-funded 2011 report on one Chicago hospital found “woefully inadequate” staffing levels, a “repeated and willful failure by UHS officials to ensure that their staff were properly trained,” and a pattern of admitting more patients than it had room for “in an effort to maximize financial profit.” Investigators also flagged broader concerns, citing “troubling reports suggesting a pattern of quality of care issues, harm to patients, or major healthcare fraud charges involving UHS-operating facilities in a dozen other states.”

Saturated fat could be good for you, study suggests -- A new Norwegian diet intervention study, performed by researchers at the KG Jebsen center for diabetes research at the University of Bergen, raises questions regarding the validity of a diet hypothesis that has dominated for more than half a century: that dietary fat and particularly saturated fat is unhealthy for most people. The researchers found strikingly similar health effects of diets based on either lowly processed carbohydrates or fats. In the randomized controlled trial, 38 men with abdominal obesity followed a dietary pattern high in either carbohydrates or fat, of which about half was saturated. Fat mass in the abdominal region, liver and heart was measured with accurate analyses, along with a number of key risk factors for cardiovascular disease. "The very high intake of total and saturated fat did not increase the calculated risk of cardiovascular diseases," says professor and cardiologist Ottar Nygård who contributed to the study. "Participants on the very-high-fat diet also had substantial improvements in several important cardiometabolic risk factors, such as ectopic fat storage, blood pressure, blood lipids (triglycerides), insulin and blood sugar." Both groups had similar intakes of energy, proteins, polyunsaturated fatty acids, the food types were the same and varied mainly in quantity, and intake of added sugar was minimized. "We here looked at effects of total and saturated fat in the context of a healthy diet rich in fresh, lowly processed and nutritious foods, including high amounts of vegetables and rice instead of flour-based products," says PhD candidate Vivian Veum. "The fat sources were also lowly processed, mainly butter, cream and cold-pressed oils." "Our findings indicate that the overriding principle of a healthy diet is not the quantity of fat or carbohydrates, but the quality of the foods we eat," says PhD candidate Johnny Laupsa-Borge.

Caesarean births 'affecting human evolution' - BBC News: The regular use of Caesarean sections is having an impact on human evolution, say scientists. More mothers now need surgery to deliver a baby due to their narrow pelvis size, according to a study. Researchers estimate cases where the baby cannot fit down the birth canal have increased from 30 in 1,000 in the 1960s to 36 in 1,000 births today. Historically, these genes would not have been passed from mother to child as both would have died in labour. Researchers in Austria say the trend is likely to continue, but not to the extent that non-surgical births will become obsolete. Dr Philipp Mitteroecker, of the department of theoretical biology at the University of Vienna, said there was a long standing question in the understanding of human evolution. "Why is the rate of birth problems, in particular what we call fetopelvic disproportion - basically that the baby doesn't fit through the maternal birth canal - why is this rate so high?" he said. "Without modern medical intervention such problems often were lethal and this is, from an evolutionary perspective, selection. "Women with a very narrow pelvis would not have survived birth 100 years ago. They do now and pass on their genes encoding for a narrow pelvis to their daughters."

Life Expectancy In U.S. Drops For The First Time In Decades - "This Is A Big Deal" -- For the first time in two decades, according to a new study released by the U.S. Department of Health and Human Services, the life expectancy of the average American declined in 2015.  Of course, with America's obesity epidemic spiraling out of control it probably shouldn't be a surprise that the occurrence of deaths related to America's number 1 killer, heart disease, is on the rise (see "FatLivesMatter: At Least 1 Out Of Every 5 People Are Obese In All 50 States"). While the life expectancy rate ticked down only marginally to 78.8 versus 78.9 in 2014, the fact that it reversed course from a multi-decade rise is "a big deal" according to Philip Morgan, a demographer at the University of North Carolina, Chapel Hill.  Per NPR: So the news out of the federal government Thursday is disturbing: The overall U.S. death rate has increased for the first time in a decade, according to an analysis of the latest data. And that led to a drop in overall life expectancy for the first time since 1993, particularly among people younger than 65. "This is a big deal," says Philip Morgan, a demographer at the University of North Carolina, Chapel Hill who was not involved in the new analysis. "There's not a better indicator of well-being than life expectancy," he says. "The fact that it's leveling off in the U.S. is a striking finding."

US Life Expectancy Declines in 2015: Unintentional Injuries Rise -- naked capitalism by Jerri-lynn Scofield - Just in case daily news headlines haven’t already convinced you that all’s far from well in these United States, the National Center for Health Statistics (NCHS) yesterday released a depressing set of statistics, Mortality in the United States, 2015. These show that for the first time in 23 years, overall life expectancy declined in the US in 2015, as compared to 2014, for total population, males, and females. Overall life expectancy at birth for the total U.S. population– comprising both males and females– declined from 78.9 years in 2014 to 78.8 years in 2014 (as shown in Figure 1 below). For females, life expectancy dropped from 81.3 years in 2014 to 81.2 years in 2015, whereas for males, life expectancy decreased from 76.5 years in 2014 to 76.3 years in 2015. From 2014 to 2015, the 10 leading causes of death– heart disease, cancer, chronic lower respiratory diseases, unintentional injuries, stroke, Alzheimer’s disease, diabetes, influenza and pneumonia, kidney disease, and suicide– remained the same as in 2014 (as shown in Figure 3 below [Jerri-Lynn here: I have retained the original numbering for these figures]). More than 74% of all deaths in the United States in 2015 are due to these 10 leading causes. From 2014 to 2015, death rates increased for 8 of 10 leading causes of death while declining for  only 1: cancer, decreasing by 1.7%. For influenza and pneumonia (a combined category), the  death rate remained essentially unchanged. With respect to each of the eight others, the rate increased 0.9% for heart disease, 2.7% for chronic lower respiratory diseases, 6.7% for unintentional injuries, 3.0% for stroke, 15.7% for Alzheimer’s disease, 1.9% for diabetes, 1.5% for kidney disease, and 2.3% for suicide. The Washington Post reports that the pop in the death rate for Alzheimer’s disease– up 15.7% from 2014 to 2015– may be largely due to improved reporting. What jumps out at me here is the pronounced increase in unintentional injuries, from 40.5 per 100,000 of population in 2014 to 43.2 in 2015, a rate of increase of 6.7%, second only to that for Alzheimer’s disease. As The Post reports: A year ago, research by [Princeton economist Anne] Case and Angus Deaton, also an economist at Princeton, brought worldwide attention to the unexpected jump in mortality rates among white middle-aged Americans. That trend was blamed on what are sometimes called diseases of despair: overdoses, alcoholism and suicide. The new report raises the possibility that major illnesses may be eroding prospects for an even wider group of Americans. Its findings show increases in “virtually every cause of death. It’s all ages,”

Big Pharma and Distracted Driving Are Killing Americans Early - The life expectancy for Americans has declined for the first time in 23 years. Data from the National Center for Health Statistics shows that the average life expectancy for a U.S. man fell from 76.5 years in 2014 to 76.3 in 2015. For women, it fell from 81.3 to 81.2. Disease certainly plays the biggest part. There was a 0.9 percent rise in deaths due to heart disease, which is by far the nation’s biggest killer. And the number of people dying from Alzheimer's jumped by 15.7 percent, though experts tell the Washington Post that the surge is likely due to improved reporting, rather than a dramatic increase in incidence. But Jiaquan Xu, the main author of the new report, told Stat that he’s particularly concerned by the increase in unintentional deaths. “Motor vehicle accidents have gone up 6 percent,” he explains. “Accidental poisoning increased 13 percent. And 97 percent of accidental poisoning was from drug overdoses and alcohol,” he added, citing the opioid epidemic as a particular problem. Opioid abuse has become a serious public health issue in the U.S., with addiction to the drugs leading to greater risk of overdose. Precise figures for opioid-related deaths aren’t included in the report, but they accounted for 28,000 lost lives in 2014, and Xu clearly worries that an appreciable chunk of the rise in accidental poisoning may be attributed to them. While people are working to develop drugs that could end the problem, for now common opioids like Oxycontin are still being prescribed regularly. Meanwhile, statistics from the National Highway Traffic Safety Administration recently showed that 35,092 people died in crashes on U.S. roads during 2015, up from 32,744 in 2014. Accidents where distracted driving—the result of, say, texting on a cell phone or fiddling with the car stereo—was cited as a reason rose by 8.8 percent year-on-year. While autonomous cars may go some way to solving that in the long-term, experts have warned that semi-autonomous vehicles may yet cause the figures to rise in the near future.

The top 10 leading causes of death in the US - With the alarming news that US life expectancy rates went down last year, here are the causes.  Lenny Bernstein from The Washington Post reports: Overall, life expectancy fell by one-tenth of a year, from 78.9 in 2014 to 78.8 in 2015, according to the latest data. The last time U.S. life expectancy at birth declined was in 1993, when it dropped from 75.6 to 75.4, according to World Bank data. The overall death rate rose 1.2 percent in 2015, its first uptick since 1999. More than 2.7 million people died, about 45 percent of them from heart disease or cancer. The new data comes from the National Center for Health Statistics, which concludes that death rates rose across the board. (Though one bit of good news, cancer rates dropped.) “I think we should be very concerned,” says Princeton economist Anne Case. “This is singular. This doesn’t happen.”Last year Case and another researcher sounded the alarm about a surprising increase in mortality rates for white middle-aged Americans – thanks to a phenomenon poignantly referred to as the “diseases of despair” – overdoses, alcoholism and suicide. The new numbers point to the possibility that a wider group of Americans are becoming prone to major diseases. “This is unusual, and we don’t know what happened,” says lead author of the study, Jiaquan Xu. “So many leading causes of death increased.” Here are the top causes for 2015 according to the report, ranked high to low; numbers represent deaths per 100,000 of the standard population:
1. Heart disease: 168.5
2. Cancer: 158.5
3. Unintentional injuries: 43.2
4. Chronic lower respiratory diseases: 41.6
5. Stroke: 37.6
6. Alzheimer’s disease: 29.4
7. Diabetes: 21.3
8. Influenza and pneumonia: 15.2
9. Kidney disease: 13.4
10. Suicide: 13.3

As Bernstein notes, other Western nations are not sharing this unfortunate increase in mortality, “suggesting an urgency to determine what is unique about health, health care and socioeconomic conditions in the United States.”

Guns Don't Kill People, Heroin Does - The epidemic of heroin and opioid related deaths in the US continues to grow, surpassing gun homicides in 2015 for the first time ever. As RT reports, a new Centers for Disease Control and Prevention report shows. Nearly 5,000 more people died from opioids in 2015 than in 2014. Both heroin and opioid use have exploded in the US, after decades of doctors over-prescribing painkillers in the 1990s and 2000s. A report from the CDC released Thursday found that the drug problem has become so deadly that heroin deaths outnumbered gun fatalities last year for the first time in US history. Until 2007, gun deaths outnumbered heroin deaths five to one, according to the Washington Post. But 2015 saw 12,989 people die from heroin and 12,979 die from gun homicides. (video) The 21st Century Cures Act passed on Wednesday will allocate $1 billion to fight the opioid epidemic through addiction treatment and prevention. Funding did not arrive a day too soon, as the rate of deaths from both heroin and other opioids, including synthetics such as fentanyl, have nearly quadrupled since 1999, according to the CDC.

Antibiotic Resistant Infections Kill 23,000 Americans Each Year, Sicken 2 Million --There's something the farm lobby doesn't want you to know: how much their use of antibiotics in livestock poses a risk to you and your children.  Drug resistant infections are on the rise, according to the Review on Antimicrobial Resistance, "with numbers suggesting that up to 50,000 lives are lost each year to antibiotic-resistant infections in Europe and the U.S. alone. Globally, at least 700,000 die each year of drug resistance in illnesses such as bacterial infections, malaria, HIV/Aids or tuberculosis."  In the U.S., according to the Center for Disease Control and Prevention, at least 2 million people are sickened by antibiotic-resistant infections every year and at least 23,000 die.  "Livestock use of antibiotics is contributing to a public health crisis of antibiotic resistance," said Natural Resources Defense Council (NRDC) senior health officer and physician David Wallinga, MD. "It's you, me and the people we love who will suffer the consequences when the medications we rely on to treat common illnesses no longer work." Sales of antibiotics for use in food animal production account for 70 percent of total medically important antibiotic sales. That's an increase of 23 percent just since 2009. In 2012, more than 32.2 million pounds of antibiotics were given to farm animals. And while a doctor's prescription is needed for you to get an antibiotic, farmers give virtually all antibiotics to live turkeys, chicken, cattle and hogs without a veterinarian's supervision. Ohio State University researchers conducted a meta-analysis of medical and scientific studies on antibiotic use in food animals and concluded that "in existing studies, neither the risks to human health nor the benefits to animal production have been well studied."  But, Scientific American said, the farm industry itself is stifling needed research in this area. 

Missouri's Largest Peach Farmer Sues Monsanto for Losses From Illegal Herbicide Use --Missouri's largest peach grower is suing Monsanto over claims that dicamba drift caused widespread damage to the farm's peach trees. This is Monsanto's first lawsuit over the illegal spraying of the herbicide on itsgenetically modified (GMO) cotton and soy that's suspected of causing extensive damage to non-target crops across America's farm belt.The lawsuit, Bader Farms, Inc., et al v. Monsanto Company, Case No. 16DU-CC00111 , was filed in Dunklin County, Missouri on Nov. 23. Bill Bader of Bader Farms in Campbell, Missouri claims that more than 7,000 peach trees were damaged by the drift-prone and extremely volatile herbicide in 2015, amounting to $1.5 million in losses. This year, the farm said it lost more than 30,000 trees, with financial losses estimated in the millions .The complaint accuses Monsanto of knowingly selling dicamba-tolerant cotton and soybean seeds to farmers before securing federal approval for the herbicide designed to go along with it. Bollgard II XtendFlex cotton was introduced in 2015 and Roundup Ready 2 Xtend soybeans was introduced earlier this year. However, the U.S. Environmental Protection Agency only approved the corresponding herbicide, XtendiMax with VaporGrip Technology, last month. Even though the biotech company warned growers against illegal dicamba use on the crops, many farmers allegedly sprayed older versions of dicamba on the crops anyway to stop weeds. However, while Monsanto's crops are genetically engineered to tolerate sprays of dicamba, other crops cannot. And since dicamba is extremely prone to drift, it can be picked up by the wind and land on neighboring fields, crops and native plants. In the fall, 10 states reported horrific damage on thousands of acres of peaches, tomatoes, cantaloupes, watermelons, rice, cotton, peas, peanuts, alfalfa and soybeans.

Washington Becomes First State to Sue Monsanto Over PCBs, Accused of Knowing Its Toxicity for Decades - Monsanto is facing yet another lawsuit over its alleged negligent handling of PCBs (polychlorinated biphenyls), a banned and highly toxic group of chemicals that the company manufactured decades ago. But this time it's not another city suing the biotech giant—it's an entire state.Washington is suing Monsanto over widespread PCBs contamination, the first U.S. state to take such an action. Gov. Jay Inslee and Attorney General Bob Ferguson announced the lawsuit, filed in King County Superior Court, at a press conference in Seattle on Thursday.According to the Associated Press , Washington is seeking damages on several grounds, including product liability for Monsanto's alleged failure to warn about the dangers of PCBs; negligence; and trespass for injuring the state's natural resources.Before switching operations to agriculture, Monsanto was the sole manufacturer of the compound, which was used to insulate electronics, from 1935 until 1977. The U.S. Environmental Protection Agency (EPA) banned PCBs in 1979, due to its link to birth defects and cancer in laboratory animals. PCBs can also have adverse skin and liver effects in humans. Not only that, the chemical also lingers in the environment for many decades. "PCBs have been found in bays, rivers, streams, sediment, soil and air throughout Washington state, with more than 600 suspected or confirmed contamination sites from Puget Sound to the Wenatchee River, Lake Spokane to Commencement Bay," Ferguson said .

USDA Gives Monsanto and Scotts' Glyphosate-Resistant Grass Green Light --The U.S. Environmental Protection Agency released a final environmental impact statement Wednesday giving the green light to genetically engineered (GE) creeping bentgrass , a highly invasive grass genetically engineered by Monsanto and Scotts to withstand what would nrmally be a fatal dose of the herbicide glyphosate .  Decades-old outdoor experiments have proven the novel grass impossible to control, as it escaped from "controlled" plots and invaded irrigation ditches, river banks and the Crooked River National Grassland, crowding out native plants and the wildlife that depends on them. Despite more than a decade of efforts and millions of dollars, the U.S. Department of Agriculture (USDA), Scotts and Monsanto have been unable to exterminate the escapes. Now the USDA has granted the industry's request that it relinquish any authority over the GE grass. "USDA's approval of this genetically engineered grass is as dangerous as it is unlawful," said George Kimbrell, a senior attorney for the Center for Food Safety . "The agency is giving Monsanto and Scotts a free pass for the harm their product has already caused farmers and the environment and is irresponsibly gambling future harm on nothing more than their empty promises."  The GE bentgrass has already illegally contaminated at least three counties and the ultralight grass seeds and pollen have proven impossible to eradicate. Farmers and noxious weed experts in eastern Oregon have been outspoken critics of the proposal to approve the grass. In response to widespread contamination, GE creeping bentgrass was declared a noxious weed in Malheur County in 2016. With this approval responsibility for controlling the contamination now shifts from USDA, Scotts and Monsanto to become solely the problem of individual farmers and landowners.  "The USDA has ignored the concerns of farmers in the areas affected by the existing contamination. I just can't believe that they will turn this loose and let Scotts and Monsanto walk away from what they did here."

Monsanto Says Next Breakthrough for Farmers Is a Friendly Fungus - Monsanto Co., a lightning rod for critics of modern agricultural techniques, is introducing a new feature next year for its genetically modified corn seeds that it says will not only boost yields but cut down on fertilizer use and carbon-dioxide emissions. The seed giant, together with Danish company Novozymes A/S, has developed a coating for seeds made from a friendly fungus that helps corn plants in their earliest growth stages. St. Louis-based Monsanto, which earlier this year agreed to be acquired by Germany’s Bayer AG, is hailing the product as a breakthrough for microbial technology, in which scientists look to fungi and other organisms such as bacteria to help farmers.Corn crops treated with the new Monsanto-Novozymes microbial -- officially known as Acceleron B-300 SAT -- had better yields than those without the treatment, the companies said in a statement Monday. The product stays on seeds longer and is compatible with other chemical treatments, unlike previous versions. It could be applied to more than 90 million acres (36 million hectares) by 2025. The seed treatment could “become one of the biggest biological products in the ag industry,” said Colin Bletsky, vice president for Novozymes’ BioAg unit. “Harnessing the power of nature’s microbes, farmers will be able to produce more crops.”

With Food Rations Halved in Kenya, Concerns for Refugees’ Health Arise - Food rations to more than 400,000 refugees in Kenya have been halved due to severe funding shortages, and existing supplies will run out completely at the end of February, the UN said on Tuesday. Kenya hosts 434,000 refugees from 21 countries, mainly from war-torn neighbouring South Sudan and Somalia, in two overcrowded camps on its northern borders. “We are very worried about the impact of this on the refugees,” Challiss McDonough, a spokeswoman for the World Food Programme (WFP), told the Thomson Reuters Foundation. “There is a chance, particularly if (the food ration cuts) go on for a long time, of health consequences, of deterioration in people’s nutritional status.” People may also start skipping meals and go into debt by borrowing money to eat, she said. Many of the refugees are women and children, including children living alone who fled without family members, she said. Refugees in Kenya are supposed to receive two-thirds of the 2,100 calories they need each day in monthly rations of cereals, pulses, oil and flour and one-third in cash. Mobile money transfers of $2 to $5 per person per month allow them to buy fresh food from nearby markets, while also supporting the local economy in Kenya‘s impoverished, arid north. Monthly food rations were halved at the start of December to eke out supplies and cash transfers will run out at the end of January, WFP said.

Famine Continues to Stalk Yemen - Fergal Keane of the BBC reports on the worsening conditions in Yemen: Barely 50% of the funding promised by donors has actually been delivered.The senior UN official in the country, Jamie McGoldrick, is clearly exasperated at the international response.“The politics of the situation has overcome the humanity,” he says.“The humanity doesn’t work anymore here. The world has turned a blind eye to what’s happening in Yemen… right now we are so under-resourced for this crisis, it’s extraordinary.” Yemen is suffering one of the greatest man-made humanitarian catastrophes of this century, and the lives of tens of millions of people are at risk. Three million people are displaced, a million and a half children under the age of five are severely malnourished, and at least 80% of the country’s population needs humanitarian aid. The coalition blockade, the coalition bombing of critical ports, roads, and bridges, the Hadi government’s decision to move the central bank, and the war as a whole have all contributed to the disaster unfolding in Yemen. The Saudi-led intervention supported by the U.S. and Britain has undeniably made the conflict far worse and has inflicted enormous harm on the civilian population. Even when the war is over, Yemen will be suffering from the damage done to public health, infrastructure, and development for decades to come. The U.S. is not just “standing by” while this happens, but has actively supported the wrecking and starvation of Yemen for over twenty months. Unless something changes very soon, Yemen’s plight will get even worse: Yemen will run out of food within months and its people are “at risk of catastrophic hunger”, according to international charity Oxfam.

Giraffes suffer 'silent extinction' in Africa: Red List report | Reuters: Giraffe numbers have declined by as much as 40 percent since the 1980s in a "silent extinction" driven by illegal hunting and an expansion of farmland in Africa, the Red List of endangered species reported on Thursday. Populations of the world's tallest land creature fell to about 98,000 from an estimated 152,000-163,000 in 1985, according to the List compiled by the International Union for Conservation of Nature (IUCN). The Red List rated the giraffe "vulnerable" to extinction on current trends for the first time, against a previous rating of "least concern". It said the plunge in numbers in large parts of sub-Saharan Africa had gone largely unnoticed. "Whilst giraffes are commonly seen on safari, in the media and in zoos, people – including conservationists – are unaware that these majestic animals are undergoing a silent extinction," Julian Fennessy, an IUCN giraffe specialist, said in a statement. Giraffes are at risk from the expansion of farmland to feed a rising human population and from killings for their meat, often in areas of conflict such as South Sudan, according to the IUCN, which groups scientists, governments and activists. "People are competing for fewer and fewer resources and the animals are worse off ... especially with civil strife," Craig Hilton-Taylor, head of the Red List, told Reuters. Drought and climate change are aggravating factors, he said. Among other changes on the list, the African gray parrot - famed for its skill in mimicking human speech - was rated endangered, one step worse than its earlier category as vulnerable. Trapping for the pet trade has driven down numbers.The list also found that 11 percent of more than 700 other species of bird newly assessed were at risk of extinction, such as the Antioquia wren in Colombia, which is under threat from a hydro-electric dam.

Thousands of snow geese die in Montana after landing on contaminated water - Several thousand snow geese have died after a snowstorm forced large flocks to take refuge in the acidic, metal-laden waters of an old open pit mine in Montana. Mark Thompson, environmental affairs manager for mine company Montana Resources, said witnesses described the pit as like “700 acres of white birds” on 28 November. Along with Atlantic Richfield, Montana Resources is responsible for Berkeley Pit in Butte. Since 28 November, employees of MR and Arco had used spotlights, noise makers and other efforts to scare or “haze” the birds off the water and prevent others from landing. The companies estimated that more than 90% of the birds had been chased off by 29 November, Thompson said. Workers received some advance notice about the incoming flock from an off-duty Montana Resources employee about 25 miles away, who called to report there were about 25,000 geese in the air in Anaconda, Thompson said. “I can’t underscore enough how many birds were in the Butte area that night,” Thompson said. “Numbers beyond anything we’ve ever experienced in our 21 years of monitoring by several orders of magnitude.” Typically, Butte sees between 2,000 and 5,000 birds all year, including spring and water migration, Thompson said. The estimated death toll is based on drone and aircraft flights over the pit, which holds about 45bn gallons (175bn litres) of water. Thompson said federal and state agencies were still confirming the number of dead geese. Nonetheless the company expected the total would be many times more than the 342 that died in 1995, prompting a mitigation effort that seeks to protect birds from the toxic water. The companies would investigate to try and determine what circumstances led to “this kind of perfect storm”, with thousands of birds making a late migration and then facing a snowstorm at a time that Berkeley Pit had the only open water in the area.

Tiny Snail Defeats Donald Trump in Battle Over Irish Sea Wall - Of all President-elect Donald J. Trump’s rivals over the past year, the tiny narrow-mouthed whorl snail must be the smallest. Sometimes, though, less is more. Mr. Trump’s real estate organization had planned to build a long sea wall off the Irish coast to protect its golf course in County Clare. But the wall faced opposition from environmental groups who said they feared that it would threaten the two-millimeter-long whorl snail, or vertigo angustior, which lives in the area, as well as coastal dunes. Both are protected by European Union rules. Now it appears that the snail has prevailed. Mr. Trump’s representatives said at a meeting at the club this week that they would replace the planned sea wall with two much smaller barriers. “The simple reason for these changes is time,” Joe Russell, general manager at the resort, said in an interview. “The original proposal was going to take too long to push through. I don’t have that time. I have the Atlantic Ocean coming at me.” Mr. Russell said Eric Trump, one of Mr. Trump’s sons, had overseen the process on behalf of the Trump family.  “This had nothing to do with the Trump election,” he said. “The Atlantic Ocean doesn’t have any idea that an election is going on.”

The Planet Is Heating up Faster Than Species Can Migrate - Visitors to the Santa Catalina Mountains just outside Tucson, Arizona will encounter a very disturbing sight: patches of dead alligator junipers scattered across hillsides at the base of the range. Wildfires did not destroy these trees — climate change did. The trees can’t survive where it’s hot, so many have moved to higher elevations, where it is cooler. But if the heat keeps rising, they will die there too, and eventually no longer exist. “They can’t cope with the conditions,” says John J. Wiens, professor of ecology and evolutionary biology at the University of Arizona. “They simply can’t change fast enough.” What is far worse, however, is that this is no isolated example. The plight of the alligator juniper is but one obvious piece of a frightening pattern of local extinction currently underway “everywhere, all over the planet,” Wiens says, “It is happening among birds, plants, animals, in the ocean and in the freshwater environment.”Climate change could doom numerous species irreversibly, including those that people depend on for resources and food. “If it’s happening a little now, it will happen a lot in the future,” Wiens says. “We have a moral imperative to be sure that the future does not play out.” The trend is especially troubling in tropical and subtropical environments, lowland places like the rainforest, where climate-threatened species have nowhere else to go. “For plants and animals that can’t move, they’re dead,” Wiens says.

Scientists have long feared this ‘feedback’ to the climate system. Now they say it’s happening --At a time when a huge pulse of uncertainty has been injected into the global project to stop the planet’s warming, scientists have just raised the stakes even further.In a massive new study published Wednesday in the influential journal Nature, no less than 50 authors from around the world document a so-called climate system “feedback” that, they say, could make global warming considerably worse over the coming decades.That feedback involves the planet’s soils, which are a massive repository of carbon due to the plants and roots that have grown and died in them, in many cases over vast time periods (plants pull in carbon from the air through photosynthesis and use it to fuel their growth). It has long been feared that as warming increases, the microorganisms living in these soils would respond by very naturally upping their rate of respiration, a process that in turn releases carbon dioxide or methane, leading greenhouse gases.It’s this concern that the new study validates. “Our analysis provides empirical support for the long-held concern that rising temperatures stimulate the loss of soil C to the atmosphere, driving a positive land C–climate feedback that could accelerate planetary warming over the twenty-first century,” the paper reports.This, in turn, may mean that even humans’ best efforts to cut their emissions could fall short, simply because there’s another source of emissions all around us. The very Earth itself.“By taking this global perspective, we’re able to see that there is a feedback, and it’s actually going to be massive,”

Destruction of the Amazon is speeding up — just when the planet can least afford it -  Brazil’s National Institute for Space Research, or INPE, released new data on the ongoing deforestation of the country’s portion of the Amazon rainforest this week, based on satellite measurements.  And the news is very bad. From August of 2015 through July of this year, the enormous forest lost nearly 8,000 square kilometers of area to clear cutting, representing a 29 percent increase over a year earlier (when 6,207 square kilometers were lost). That’s an area considerably larger than the state of Delaware. This means that since 2012, when deforestation hit a historic low after many years at high rates, it is now bouncing back again — and doing so at a time when researchers say protecting tropical forests, and allowing them to regrow, is one of the most effective short-term ways of fighting climate change. “This is a big deal,” said Daniel Nepstad, an Amazon expert and senior scientist at the Earth Innovation Institute. “It is the highest deforestation number since 2008. Compared to the lowest deforestation number, in 2012, it means an extra 150 million tons of CO2 went up into the air through forest destruction.” “It seems that we are facing a new trend of deforestation,” added André Guimarães, the executive director of Brazil’s Amazon Environmental Research Institute (IPAM). “It has increased two years, it’s now close to 8,000 square kilometers. We left behind the level of 5,000 square kilometers, which was stable for three years.” The loss of tropical forests is a crucial factor in the warming of the planet. Deforestation and the degradation of forests accounts for between 8 and 15 percent of the globe’s total emissions.

Business not yet doing enough to stop commodities destroying forests | Reuters: - Global companies that produce and use commodities such as palm oil and soy are moving too slowly to cut deforestation, suggesting international goals to protect forests will not be met, groups that monitor business efforts said on Monday. Agricultural products - including beef and paper - account for over two thirds of tropical deforestation worldwide, said the Global Canopy Programme. Its third annual assessment - tracking the policies of 500 companies, governments and financial institutions that have the most influence on tropical forests - suggests that ambitious 2020 and 2030 goals to protect those forests are unlikely to be achieved. "More needs to be done to increase the rate of change, and uptake of these policies," said Tom Bregman, who manages the "Forest 500" project. "You're not even getting to the policies being in place, let alone implementation by 2020, so clearly there is still a long way to go." The 2014 New York Declaration on Forests set a goal to at least halve the rate of loss of natural forests globally by 2020, and strive to end it by 2030. The declaration also pledged to help the private sector eliminate deforestation from the production of agricultural commodities by 2020. The results of the 2016 Forest 500 assessment show that 57 percent of the 250 companies tracked have either weak policies or no policies at all to curb deforestation in their operations. In the last three years, the number of companies with policies to cut deforestation in the production of each forest-related commodity they use increased by only 5 percent. Bregman said that unless more companies apply such broad policies, "you're not going to get to the holistic, deforestation-free planet we desire".

The World Bank's Forest Carbon Partnership Facility "has not saved a single hectare of forest” - The World Bank’s Forest Carbon Partnership Facility is supposed to help countries in the Global South reduce emissions from deforestation and forest degradation. It was launched at COP 13 in Bali in 2007. The Fund capital stands at US$850 million, of which US$1.12 billion is for the Readiness Fund, and US$750 million is for the Carbon Fund. But after nine years, the FCPF cannot point to a single country in which it has actually reduced deforestation. Norway is the largest contributor to the FCPF. Over the years, Norway has handed over a total of about US$275 million. A recent article in the NORAD-funded Bistandsaktuelt questions the effectiveness of all this generosity.  The article quotes Rainforest Foundation UK’s criticism that the FCPF has spent too much money on operations, consulting, methodological support and administration, while the concrete results in terms of forest conservation and purchase of carbon offsets are on hold. From the beginning, the FCPF was supposed to “jump-start a forest carbon market”.Rainforest Foundation UK calculates that almost two-thirds of the money spent under the FCPF since 2009 has gone on the World Bank’s own administration, consulting expenses and transaction costs. Simon Counsell, Executive Director of the Rainforest Foundation UK told Bistandsaktuelt that all this money, “has not saved a single hectare of forest or prevented a single gram of CO2 from being released into the atmosphere”.

The world’s biggest forest destroyers don’t even know which forests they’re destroying   - Here’s a conundrum faced by everyone who wants the world’s forests to be preserved. When you pick up a bottle of shampoo or a takeaway meal, how can you make a choice that isn’t going to spur deforestation? We know growing palm oil, to take one much-used example, can and does lead to rainforest devastation, but any information linking that with the chocolate or toothpaste on a supermarket shelf (both of which often contain palm oil or its derivatives) seems so opaque, the supply chains so endless and twisting. Turns out the company selling and even making that product probably doesn’t know either. According to a report released today by CDP, a UK-based non-governmental organization that promotes corporate transparency on climate-related risks, only 30% of manufacturers and retailers that reported on their deforestation risks could pinpoint where their supply chains began. CDP has been asking companies to answer questions on their links to forest destruction, and what they’re trying to do about it, since 2009. This year, in part thanks to pressure from shareholders which CDP says represent $22 trillion in worth, more companies than ever disclosed data: 200 from a cohort assessed to be the “largest and most impactful” when it comes to deforestation globally, and including brands like Starbucks, Nestlé, and MacDonald’s.

Fall 2016: The Warmest in U.S. Weather History -  Bob Henson -The autumn of 2016 was the warmest ever observed in records going back to 1895 for the 48 contiguous U.S. states, according to data released Wednesday by NOAA's National Centers for Environmental Information (NCEI). The nation's average September-to-November temperature of 57.63 F was a full 1.05 F above the previous autumn record, set way back in 1963 and it was 4.08 F above the 20th-century average (see Figure 1). The record-setting margin of more than 1 F is a hefty one for a temperature record that spans an entire season and a landmass as large as the 48 contiguous states. For comparison, the second, third, fourth, fifth, sixth and seventh-warmest U.S. autumns are all clustered within 1 F of each other, as are the six coldest autumns on record.  Pushing this past autumn to the top of the temperature pack were the third-warmest October and third-warmest November on record, along with the ninth-warmest September . Eight states along a swath from New Mexico to Michigan saw their warmest autumn on record, and every contiguous state except for California, Nevada, Oregon and Washington had a top-ten warmest autumn (see Figure 2).  Although it wasn't the warmest November on record, last month transcended all other months in modern U.S. weather history by the outsized presence of record highs to record lows. According to preliminary NOAA data compiled through Wednesday, November saw 4,544 daily record highs set or tied and just 94 daily record lows set or tied—a ratio of more than 48 to 1! This is the largest such ratio for any month in U.S. data going back to the 1920s, according to independent meteorologist Guy Walton, who has tracked U.S. records for many years. Because many U.S. reporting stations came on line in the 1890s, the occurrence of records did not stabilize until around the 1920s.

8 charts that show the toll climate change will take on Boston - City officials this week released a report that included updated projections of how climate change is expected to impact Boston and outlined ways the city can prevent and brace for the potentially devastating effects. “Boston residents are already impacted by extreme heat, rain, snow and flooding,” Austin Blackmon, the city’s chief of environment, energy and open space said in a statement. The report “shows that these trends are expected to continue, and now we have a better understanding of what we need to do to prepare.”The following charts highlight some of the key projected impacts detailed in the report.
1. The number of very hot days will increase.
2. Sea levels in Boston will continue to rise.
3. Rainfall from storms will increase.
4. The number of heat-related deaths each year in Boston will triple.
5. Stormwater flooding will inundate thousands of structures.
6. Increasingly large sums of money will be lost each year due to flooding damage, interruption of business activity, and other climate change impacts.
Above is a breakdown of annualized losses based on a 36-inch rise in sea level. Above is a map showing yearly financial loses per building, based on a 36-inch rise in sea level.
7. Thousands of city residents will be affected.
8. Some city neighborhoods will be hit harder than others. The city report proposed that flood-protection interventions be taken at the nine spots identified in the map below:

Climate change could render Sudan 'uninhabitable' - Sudan's ecosystems and natural resources are deteriorating. Temperatures are rising, water supplies are scarce, soil fertility is low and severe droughts are common. After years of desertification, its rich biodiversity is under threat and drought has hindered the fight against hunger. This burden is affecting not only the country's food security and sustainable development, but also the homes of many Sudanese families. Dust storms -- known locally as "Haboob" -- have also increased in this region. Moving like a gigantic thick wall, it carries sand and dust -- burying homes, increasing evaporation to a region that's struggling to preserve water supplies, as well as eroding valuable fertile soil. Experts say that without quick intervention, parts of the African country -- one of the most vulnerable in the world -- could become uninhabitable as a result of climate change."North Africa is already hot and is strongly increasing in temperature. At some point in this century, part of the region will become uninhabitable," Jos Lelieveld, a climate scientist from the Max Planck Institute for Chemistry, told CNN. "That will string from Morocco all the way through to Saudi Arabia," he said.

Thin Air: Cattle farts are no joke -- California is one of those states that is on the leading edge of important cultural phenomena that affect the lives of everyone. I mean, where would we be without Hollywood, Silicon Valley, and Arnold Schwarzenegger? Recently, the state of California has struck a major blow against a global problem that is first on everyone’s list of things that we are all worried about. I’m referring to, of course, cow flatulence. It turns out that California is a major source of cow flatulence in the United States. You probably always suspected as much.  California now produces one fifth of our milk supply and has become, in more ways than one, America’s giant cow udder. Of course, with great lactation comes great responsibility. What’s the point of having a major industry if you can’t tax it and regulate the heck out of it? Cow milk doesn’t create CO2 emissions or harm endangered species, so the people of the Golden State had to get creative. Californian’s have concluded that the best way to destroy their own evil CEO-run milk industry is to regulate the methane emissions from the cows. With new wind…strike that…GROUND-breaking legislation, the State of California seeks to reduce methane emissions from its cows by 40 percent by 2030.  Methane, as you know, is one of the clear, naturally occurring, trace elements in the atmosphere that is causing global climate change. The problem is, how do you reduce methane emissions from cows? Apparently, no one in the California legislature peered down the rabbit hole deep enough to realize that no technology exists for reducing cow flatulence. Looks like it is time to put on the ole brain-storming hat again. Here are a few possibilities:

  • 1) Install catalytic converters on all the cows. Catalytic converters are used on cars to convert toxic gasses in the exhaust into less toxic gasses. Why not use this same technology on cows? One drawback is that the emissions come from both ends of the cow, so you’d have to install two catalytic converters on each cow. A catalytic converter with a five-year warranty costs about $186. Multiply that by two and then by 1.8 million dairy cows and it makes for some expensive milk.
  • 2) Teach the cows to eat meat. Methane is produced by the breakdown of organic material by bacteria in an environment with little or no oxygen — like a cow’s stomach, for instance. If the cows eat meat instead of grass, methane will no longer be produced. Problem solved. There could be a glitch, though, if all the cows start eating one another and then develop mad cow disease. Although, good premise for a horror movie.
  • 3) Deport 40 percent of the cows for being “illegal.” This seems like an easy solution except that the Californians would probably start setting up sanctuary cities to prevent them from being deported.
  • 4) Install methane collection bags on the cows to capture the emissions. A tube would be inserted through the side of the cow, directly into the cow’s stomach. The methane collection bag would be strapped to the cow’s back so that it could be easily removed and harvested for use as an alternative fuel.

 Fish found to thrive in high levels of CO2 --British scientists have identified a paradox in research on the impact of extra carbon dioxide on the world’s oceans. There is no doubt that along with global warming the oceans are becoming more acidic, and that this badly affects fish, corals and shellfish. But researchers have found that “closed system” fish farmers who recycle the same water are already keeping fish healthy at carbon dioxide concentrations higher than predicted for climate change.    So, argue Robert Ellis and Rod Wilson of the UK’s University of Exeter, and Mauricio Urbina of the University of Canterbury in Christchurch, New Zealand, in the journal Global Change Biology, there are new questions to be resolved. Can ocean fish adapt to ocean acidification? Or is the species selected as suitable for fish farming just naturally more tolerant of the conditions that the world will face by the close of the century? Aquaculture may provide an ‘accidental’ long-term experiment that can help climate change predictions,”  Atmospheric concentrations of CO2 were historically around 280 parts per million, and they are now 400ppm. Independent teams of researchers have established acidification as a threat to coral reefs and to shellfish larvae, and as an environmental factor that seems to affect the physiology, sensory systems and even the survival mechanisms of some adult fish. Even shrimps in the south of Australia have started to signal increasingly noisy responses to changing ocean conditions.   But, the Exeter scientists say, fish farms that recirculate their water – in the way that domestic aquariums filter and recycle the same water – are already successfully keeping fish at water chemistries considerably higher than those expected at the end of the century. There are differences: salmon, sea bream and cod in fish farms face no natural predators, their health is constantly monitored and food arrives whenever they need it. Whereas, wild species are overfished, their waters are polluted, their habitat degraded and the climates in which they evolve are changing. So the lessons from aquaculture don’t answer questions: they raise even more.

Factcheck: Newspaper claim about global temperature is ‘deeply misleading’ --It is all but certain now that 2016 will shatter historical records to be the warmest year ever by a wide margin. It was helped along the way by a large El Niño event, which tends to be associated with warmer temperatures globally. But, even without El Niño, 2016 would likely still be the warmest year ever. Now that the El Niño is fading, temperatures are dropping modestly down to around where they were before the El Niño started.Recently, journalist David Rose published a deeply misleading article in the Mail on Sunday, a UK tabloid, claiming, “Global average temperatures over land have plummeted by more than 1C”.He also argued that 2016 (and 2015) would not have been particularly warm years in the absence of El Niño, and that El Niño might be responsible for much of recent warming. These claims are incorrect. They are prefaced on cherry-picking an obscure temperature record, whose creator suggests it “should be used with caution” and which disagrees with other estimates by independent groups.  In reality, 2014, 2015 and 2016 have been the three warmest years on record not because of a large El Niño, but because of a long-term warming trend driven by human emissions of greenhouse gases. The modest decline in temperatures in recent months from the peak of the El Niño event is completely in line with what has happened during past large El Niño events and was expected by scientists. To better understand what’s going on with the Earth’s temperature, lets take a look at the various temperature records and what they tell us.

The House (Anti-)Science Committee Strikes Again --The House Committee on Science, Space, and Technology is, ironically but shocking to no one who understands the majority party, quite anti-science. For years now, the committee and its chairman, Lamar Smith, R-Texas, have been merciless in their attacks on both climate scientists and the National Oceanic and Atmospheric Administration. Smith—who receives a large amount of funding from fossil fuel interests—has been subpoenaing NOAA staff and data repeatedly in what is a transparent attempt both to create a chilling effect and to directly prevent them from doing their very important research into human-generated global warming. The committee’s Twitter account often reflects this ideology. And Thursday afternoon, to the dismay of many, they tweeted a climate-denying “news” story from Breitbart. .@BreitbartNews: Global Temperatures Plunge. Icy Silence from Climate Alarmists https://t.co/uLUPW4o93V — Sci,Space,&Tech Cmte (@HouseScience) December 1, 2016 Yes, that Breitbart, the racist, misogynistic über-right-wing site that calls itself a voice for the “alt-right” movement, which is—as my Slate colleague Jeremy Stahl says—composed of “neo-Nazis in suits and ties.” The content of this tweet is the same sort of thing you’d get if you fed a bull 20 kilos of Ex-Lax and stood behind it for a while. Global warming, of course, is real. The Breitbart article in question is written by James Delingpole, a flat-out climate change denier who has a history of writing grossly misleading articles about global warming. He gets this information from yet another climate change denier, David Rose, who wrote an article for the execrable Daily Mail claiming that global temperatures have dropped by an entire degree Celsius since this summer. Contrary to what the Daily Mail might have to say, global temperature is indeed increasing.

Note to Breitbart: Earth Is Not Cooling, Climate Change Is Real and Please Stop Using Our Video to Mislead Americans – The Weather Channel - Global warming is not expected to end anytime soon, despite what Breitbart.com wrote in an article published last week. Though we would prefer to focus on our usual coverage of weather and climate science, in this case we felt it important to add our two cents — especially because a video clip from weather.com (La Niña in Pacific Affects Weather in New England) was prominently featured at the top of the Breitbart article. Breitbart had the legal right to use this clip as part of a content-sharing agreement with another company, but there should be no assumption that The Weather Company endorses the article associated with it.The Breitbart article – a prime example of cherry picking, or pulling a single item out of context to build a misleading case – includes this statement: "The last three years may eventually come to be seen as the final death rattle of the global warming scare." In fact, thousands of researchers and scientific societies are in agreement that greenhouse gases produced by human activity are warming the planet’s climate and will keep doing so.

Greenland Ice May Melt Quicker Than Scientists Thought -- Two studies published in Nature Wednesday show seemingly contradictory visions for Greenland's past and the future of its ice sheet, but actually describe different aspects of the ice.One study finds that Greenland's ice sheet may have melted almost completely and repeatedly during the last 1.4 million years, suggesting the ice is more sensitive to warming than currently thought. The second concluded that the ice on the very easternmost coast has been stable over a 7.5 million year period. Scientists working on both studies say that their results could be compatible: both demonstrate the volatility of the ice sheet, both show that more research is needed, and that while the majority of the island's ice has melted multiple times, the high altitude east coast has remained icy. Determining the ice sheet's response to warming is crucial, because its melting could raise global sea levels by up to 24 feet . For more: Time , Gizmodo , AFP , Christian Science Monitor , US News & World Report , Scientific American ,InsideClimate News , Phys.org

Arctic sea ice hits record monthly low for 7th time in 2016: (AP) — Though this is when the Arctic is supposed to be refreezing, scientists say sea ice there hit record low levels for November. In the crucial Barents Sea, the amount of floating ice decreased when it would be expected to grow. Arctic sea ice extended for 3.5 million square miles (9.1 million square kilometers). That's 309,000 square miles (800,000 square kilometers) below the record set in 2006 — a difference larger than state of Texas. The National Snow and Ice Data Center says it was the seventh month this year to set a record low. "There's crazy stuff going on up there. It's bad," said Rutgers University marine scientist Jennifer Francis. The data center calculated that ice in the Barents Sea, just outside Norway, shrank by 19,300 square miles (50,000 square kilometers) during what is supposed to be a cold month, but wasn't. That area is important because recent research links sea ice there to changes in extreme weather in lower latitudes, though scientists have not come to a consensus on that link yet. "Almost certainly there will be unusual weather events this winter," Francis said. The sea ice reached levels not seen since satellites started to monitor the region in 1979. Some Arctic air was 18 degrees warmer (10 degrees Celsius) than normal and seawater was 7 degrees (4 degrees Celsius) above normal, preventing sea ice from forming. Data center scientist Julienne Stroeve blamed natural weather patterns and man-made global warming.

Growing Pains: Arctic Sea Ice at Record Lows : Image of the Day - NASA - Every northern fall and winter, cooling ocean and air temperatures cause the floating cap of Arctic sea ice to grow from its annual minimum extent toward a maximum between February and April. So far in 2016, though, the Arctic Ocean and neighboring seas have been slow to freeze, setting both daily and monthly record lows.  “The October freeze-up was very slow and that continued through much of November,” said Walt Meier, a sea ice scientist at NASA’s Goddard Space Flight Center. The first map shows the average concentration of Arctic sea ice for November 2016. Opaque white areas indicate the greatest concentration, and dark blue areas are open water. All icy areas pictured here have an ice concentration of at least 15 percent (the minimum at which space-based measurements give a reliable measure), and cover a total area that scientists refer to as the “ice extent.” In November, the sea ice extent averaged 9.08 million square kilometers (3.52 million square miles)—the lowest November extent in the satellite record. The yellow line shows the median extent from 1981 to 2010, and gives an idea of how conditions this November strayed from the norm. Years with sea ice above and below the median are displayed in the grid view. The eight panels show the November extent roughly every five years since 1978, when satellites started monitoring sea ice. Every November is different, as freeze-up is influenced by factors such as water temperature, air temperature, and wind patterns. All three factors played a role in the November 2016 record low. The progression of the freeze-up is detailed in the next graph, which charts the daily extent of sea ice in 2016 and every year since 1979. After reaching the annual minimum on September 10 (the second-lowest on record), sea ice started to quickly refreeze during the latter part of the month. October was a different story; ice growth slowed substantially and started setting record daily lows. Freezing picked up again, but it was not enough. The sea ice extent in October 2016 was the lowest of any October in the satellite record.

Polar sea ice the size of India vanishes in record heat | Reuters: Sea ice off Antarctica and in the Arctic is at record lows for this time of year after declining by twice the size of Alaska in a sign of rising global temperatures, climate scientists say. Against a trend of global warming and a steady retreat of ice at earth's northern tip, ice floating on the Southern Ocean off Antarctica has tended to expand in recent years. But now it is shrinking at both ends of the planet, a development alarming scientists and to which a build-up of man-made greenhouse gases, an El Nino weather event that this year unlocked heat from the Pacific Ocean and freak natural swings may all be contributing. "There are some really crazy things going on," said Mark Serreze, director of the U.S. National Snow and Ice Data Center (NSIDC) in Boulder, Colorado, saying temperatures in parts of the Arctic were 20 degrees Celsius (36°F) above normal some days in November. Worldwide, this year is on track to be the warmest on record. Combined, the extent of polar sea ice on Dec. 4 was about 3.84 million square kilometers (1.48 million square miles) below the 1981-2010 average, according to NSIDC satellite measurements. That is roughly the size of India, or two Alaskas.John Turner of the British Antarctic Survey said chilly westerly winds that sweep around the continent, perhaps insulating it from the effects of global warming, were the weakest for November in two decades. That may have let more heat seep south, he said. A recovery of the high-altitude ozone layer over Antarctica, which led to cooler air over the continent when it was damaged by now-banned industrial chemicals, may also be a factor. But Turner said it was hard to pinpoint exactly what was happening.

Polar Sea Ice the Size of India Vanishes in Record Heat, Scientists Say -- The sea ice covering Earth's two poles are at record lows amidst exceptionally warm global temperatures. The eight panels show the November sea ice extent in the Arctic roughly every five years since 1978, when satellites started monitoring sea ice. NASA Earth Observatory Citing satellite measurements from the U.S. National Snow and Ice Data Center (NSIDC), Reuters reported that the extent of sea ice off Antarctica and the Arctic on Dec. 4 was 1.48 million square miles below the 1981-2010 average. To visualize just how much has vanished, the news service explained we've lost area of sea ice as big as India or two Alaskas.  "There are some really crazy things going on," Mark Serreze, NSIDC director told Reuters, adding that parts of the Arctic experienced temperatures 36 degrees Fahrenheit warmer than normal on certain days last month.  This season's polar sea ice is the smallest ever recorded, according to NSIDC data. Arctic sea ice hit a record low of 3.96 million square miles early December, below the 2006 record for the same time of year.  NASA's Earth Observatory also found that Arctic sea ice extent averaged 3.52 million square miles in November—the lowest November extent in the satellite record.

NSIDC: Arctic and Antarctic Sea Ice News for November 2016 -- lowest extent on record for November by large margin Average Arctic sea ice extent for November set a record low, reflecting unusually high air temperatures, winds from the south, and a warm ocean. Since October, Arctic ice extent has been more than two standard deviations lower than the long-term average. Antarctic sea ice extent quickly declined in November, also setting a record low for the month and tracking more than two standard deviations below average during the entire month. For the globe as a whole, sea ice cover was exceptionally low.  Arctic:High-resolution image  In November 2016, Arctic sea ice extent averaged 9.08 million square kilometers (3.51 million square miles), the lowest November in the satellite record. This is 800,000 square kilometers (309,000 square miles) below November 2006, the previous lowest November, and 1.95 million square kilometers (753,000 square miles) below the 1981 to 2010 long-term average for November. For the month, ice extent was 3.2 standard deviations below the long-term average, a larger departure than observed in September 2012 when the Arctic summer minimum extent hit a record low. At this time of year, air temperatures near the surface of the Arctic Ocean are generally well below freezing, but this year has seen exceptional warmth. The overall rate of ice growth this November was 88,000 square kilometers (34,000 square miles) per day, a bit faster than the long-term average of 69,600 square kilometers (26,900 square miles) per day. However, for a brief period in the middle the month, total extent actually decreased by 50,000 square kilometers, or 19,300 square miles—an almost unprecedented occurrence for November over the period of satellite observations. A less pronounced and brief retreat of 14,000 square kilometers (5,400 square miles) occurred in 2013. Antarctic:  High-resolution image This year, Antarctic sea ice reached its annual maximum extent on August 31, much earlier than average, and has since been declining at a fairly rapid pace, tracking more than two standard deviations below the 1981-2010 average. This led to a new record low for the month of November over the period of satellite observations (Figure 5a). Average extent in November was 14.54 million square kilometers (5.61 million square miles). This was 1.0 million square kilometers (386,000 square miles) below the previous record low of 15.54 million square kilometers (6.00 million square miles) set in 1986 and 1.81 million square kilometers (699,000 square miles) below the 1981 to 2010 average. For the month, Antarctic ice extent was 5.7 standard deviations below the long-term average. This departure from average was more than twice as large as the previous record departure from average, set in November 1986.

NASA Photo Reveals a Startling 300-foot-wide Rift in Antarctic Ice Shelf  - The breakup of the massive Larsen C Ice Shelf in Antarctica is getting closer and will eventually produce an iceberg the size of Delaware prowling the Southern Ocean, according to new NASA data.  On Friday, NASA released an astonishing new image taken by researchers flying above the ice shelf on Nov. 10 showing the crack is getting longer, deeper and wider. Scientists think it will eventually cause a large section of the shelf to break off. The scientists associated with a NASA field campaign known as Operation IceBridge measured the Larsen C fracture to be about 70 miles long, more than 300 feet wide and about a third of a mile deep.  "The crack completely cuts through the Ice Shelf but it does not go all the way across it – once it does, it will produce an iceberg roughly the size of the state of Delaware," NASA said in a press release.   When this iceberg calving event happens,  likely within the next decade, it will be the largest calving event in Antarctica since 2000, the third biggest such event ever recorded and the largest from this particular ice shelf, scientists say.  Larsen C lies next to a smaller ice shelf that disintegrated in 2002 after developing a crack similar to the one now growing in Larsen C. Ice shelves breaking off into icebergs don't directly increase sea levels, since their ice is already resting in the ocean like an ice cube in a glass.   However, because they act like doorstops to the land-based ice behind them, when the shelves give way, the glaciers can begin moving into the sea. This adds new water to the ocean and therefore increases sea levels.

Eyes in the sky: Cutting NASA Earth observations would be a costly mistake - Donald Trump’s election is generating much speculation about how his administration may or may not reshape the federal government. On space issues, a senior Trump advisor, former Pennsylvania Rep. Bob Walker, has called for ending NASA earth science research, including work related to climate change. Walker contends that NASA’s proper role is deep-space research and exploration, not “politically correct environmental monitoring.” This proposal has caused deep concern for many in the climate science community, including people who work directly for NASA and others who rely heavily on NASA-produced data for their research. Elections have consequences, and it is an executive branch prerogative to set priorities and propose budgets for federal agencies. However, President-elect Trump and his team should think very carefully before they recommend canceling or defunding any of NASA’s current Earth-observing missions.  We can measure the Earth as an entire system only from space. It’s not perfect – you often need to look through clouds and the atmosphere – but there is no substitute for monitoring the planet from pole to pole over land and water. These data are vital to maintaining our economy, ensuring our safety both at home and abroad, and quite literally being an “eye in the sky” that gives us early warning of changes to come. To paraphrase Milton Friedman, there’s no free lunch. If NASA is not funded to support these missions, additional dollars will need to flow into NOAA and other agencies to fill the gap.

Gutting NASA's Earth Science Division Would Send Research Back to the Dark Ages --Norm Nelson is interested in what makes the oceans tick. As a biological oceanographer at UC Santa Barbara, his research draws connections between sunlight and phytoplankton, the tiny green microbes that power the marine carbon cycle. There are plenty of outstanding questions Nelson wants to pursue—but after 30 productive years, his days as a scientist may be numbered.  That’s because Nelson gets upwards of 80 percent of his funding from NASA’s Earth science division, which members of the Trump transition team would like to see gutted. Former Congressman Robert Walker made this fact crystal clear in an interview with The Guardian last week, when he said that NASA should stop doing Earth-centric research, and instead focus on exploration of deep space. The not-so-subtle subtext? Walker wants to eliminate research on human-caused climate change, a topic which he says has become “heavily politicized.”On the chopping block along with climate change—a subject which, by its very nature, is embedded into nearly every branch of Earth science—would be research on a wide range of topics from oceanography to volcanology. Also at risk are millions of data products used by scientists, forecasters, and urban planners.“Ending NASA’s Earth science research division would basically put an end to my research,” Nelson told me in an email. “I have no expectation that other agencies would be able to fill in the gaps. Some of my colleagues are in a similar position.”

Trump Meets With Al Gore on Climate Change While House G.O.P. Rebuffs Tariff Plan -  Al Gore thought he would be bending the ear of the adviser Mr. Trump trusts most, his daughter Ivanka. Instead, the man bearing “The Inconvenient Truth” went straight to the source: the president-elect himself. “I had a lengthy and very productive session with the president-elect,” Mr. Gore, the former vice president, told reporters at Trump Tower. “It was a sincere search for areas of common ground. I had a meeting beforehand with Ivanka Trump. The bulk of the time was with the president-elect, Donald Trump. I found it an extremely interesting conversation, and to be continued.” Hundreds of scientists are also telling Mr. Trump in a new letter that climate change is real and needs to be addressed: “We urge you to decide if you want your presidency to be defined by denial and disaster, or acceptance and action,” says the new letter, which will be sent on Tuesday and has already been signed by 700 scientists and academics from related disciplines. The letter lists six steps the president-elect can take to help protect the nation’s “economy, national security, and public health and safety.”  Getting Mr. Trump, who has called climate change a hoax perpetrated by the Chinese, to turn around on the issue might not be as unlikely as his public statements would make it seem. It may come down to who has his ear last.

Donald Trump met with Al Gore to discuss “climate issues.” We have many, many questions. -- Every concrete indication we have so far suggests that Donald Trump is going to be a disaster for climate policy. He’s surrounded by advisers who want to ramp up fossil-fuel development and don’t care even a bit about global warming. He’s tapped Myron Ebell, one of Washington’s most prominent climate deniers, to lead his EPA transition team. He’s pledged to withdraw from the Paris climate deal — the most significant global effort to date to tackle rising temperatures. And Trump himself has called global warming a “hoax” and “bullshit.” But now comes word that both Trump and his daughter Ivanka met on Monday with Al Gore to discuss “climate issues.” This after a vaguely sourced Politico story suggesting that Ivanka might want to make global warming her signature issue these next four years. (She reportedly arranged the meeting.) “I had a lengthy and very productive session,” said Gore after meeting with Trump. “It was a sincere search for areas of common ground.” The former vice president turned climate advocate added: “I found it an extremely interesting conversation and to be continued. And I’m just going to leave it at that.” Now, the cynical view is that this was just a meaningless publicity stunt that will have zero impact on a Trump administration’s actual energy and climate policies.  But in the spirit of inquiry, here are a few questions about today’s meeting:

  • 1) Will Gore’s views on climate change carry more weight with Trump than those of his actual energy advisers? After all, if you’re looking for clues on future policy, it seems significant that Trump’s main energy adviser, Rep. Kevin Cramer (R-ND), thinks that concerns about global warming are “grossly exaggerated.” Or that Trump’s transition team is filled with veterans of oil-industry-funded think tanks that are lobbying to eliminate all clean-energy subsidies.
  • 2) Will anything tangible come out of Trump’s meeting with Gore? Like: Is Trump going to hire different advisers? Or consider different Cabinet appointments for the EPA, Energy, or Interior departments? If not, it’s hard to get too excited here. Trump’s EPA transition team is still being led by Myron Ebell, who says that global warming is “nothing to worry about.” His rumored EPA appointees are all officials staunchly opposed to tighter environmental regulation. These appointments are still where the real action is.
  • 3) Will Trump consider modifying any of his policies? Recall that Trump has promised to: Open up vast new tracts of the United States to oil drilling, dismantle Obama’s climate policies, make it easier to run coal plants, and withdraw from the Paris climate deal. Energy policies matter far more than Ivanka “speaking out” on climate.

Leonardo DiCaprio Meets Donald Trump to Talk Green Jobs -- Leonardo DiCaprio and Terry Tamminen, the CEO of the Leonardo DiCaprio Foundation (LDF), met withDonald Trump and his advisors including daughter Ivanka Trump on Wednesday at Trump Tower in New York to discuss how green jobs can revitalize the economy. “We presented the President-elect and his advisors with a framework—which LDF developed in consultation with leading voices in the fields of economics and environmentalism—that details how to unleash a major economic revival across the United States that is centered on investments in sustainable infrastructure," Tamminen said in a statement to EcoWatch. "Our conversation focused on how create millions of secure, American jobs in the construction and operation of commercial and residential clean, renewable energygeneration.""These programs are attainable—and include energy efficiency upgrades that pay for themselves with savings, waste reduction projects that can turn every city into a source of new materials and fuels, and transportation projects that will support global trade while reducing traffic and air pollution and make America a leader in sustainable fuel and vehicle technologies," he added.The meeting took place on the same day that Trump announced his controversial choice of Oklahoma Attorney General Scott Pruitt as head the U.S. Environmental Protection Agency (EPA). Trump's pick was met with unprecedented criticism by environmental and health organizations nationwide, who consider Pruitt a "puppet" of the fossil fuel industry. Pruitt, who believes the science behind climate change is unsettled and believes the EPA's regulations are a war on energy, has spearheaded numerous lawsuits against the Obama administration and the agency he will likely be heading.

Trump Picks Scott Pruitt, Climate Change Denialist, to Lead E.P.A. - NYTimes: President-elect Donald J. Trump has selected Scott Pruitt, the Oklahoma attorney general and a close ally of the fossil fuel industry, to run the Environmental Protection Agency, signaling Mr. Trump’s determination to dismantle President Obama’s efforts to counter climate change — and much of the E.P.A. itself. Mr. Pruitt, a Republican, has been a key architect of the legal battle against Mr. Obama’s climate change policies, actions that fit with the president-elect’s comments during the campaign. Mr. Trump has criticized the established science of human-caused global warming as a hoax, vowed to “cancel” the Paris accord committing nearly every nation to taking action to fight climate change, and attacked Mr. Obama’s signature global warming policy, the Clean Power Plan, as a “war on coal.” Mr. Pruitt has been in lock step with those views. “Scientists continue to disagree about the degree and extent of global warming and its connection to the actions of mankind,” he wrote in National Review earlier this year. “That debate should be encouraged — in classrooms, public forums, and the halls of Congress. It should not be silenced with threats of prosecution. Dissent is not a crime.” A meeting on Monday between the president-elect and former Vice President Al Gore may have given environmental activists a glimmer of hope that Mr. Trump was moderating his campaign stance. Mr. Trump told New York Times editors and reporters that he does think there is some connectivity” between human activity and a warming planet.With the choice of Mr. Pruitt, that hope will have faded.“During the campaign, Mr. Trump regularly threatened to dismantle the E.P.A. and roll back many of the gains made to reduce Americans’ exposures to industrial pollution, and with Pruitt, the president-elect would make good on those threats,” said Ken Cook, head of the Environmental Working Group, a Washington research and advocacy organization. “It’s a safe assumption that Pruitt could be the most hostile E.P.A. administrator toward clean air and safe drinking water in history,” he added.

Trump Picks Scott Pruitt, 'Puppet of the Fossil Fuel Industry,' to Head EPA -- Donald Trump has appointed Oklahoma Attorney General Scott Pruitt to head the U.S. Environmental Protection Agency (EPA). The conservative Republican has close ties to the fossil fuel industry and has waged numerous legal wars against the EPA and President Obama's environmental regulations, including the president's signature Clean Power Plan. Pruitt, who was elected as Oklahoma's top legal officer in November 2010, states on his own LinkedIn page that he "has led the charge with repeated notices and subsequent lawsuits against the U.S. Environmental Protection Agency for their leadership's activist agenda and refusal to follow the law." Although the president-elect will not be able to completely cancel Obama's historic carbon emissions standards for power plants, having a legally experienced EPA head can help "substantially weaken, delay or slowly dismantle them," the New York Times reported. Trump's latest appointee falls in line with his other cabinet picks who deny the overwhelming scientific consensus that human activity is causing climate change . Pruitt once wrote an editorial questioning "the degree and extent of global warming and its connection to the actions of mankind." Keith Gaby, the senior communications director of the Environmental Defense Fund, noted that since 2002, Pruitt has "received more than $314,996 from fossil fuel industries." In 2014, Pruitt was infamously caught sending letters to President Obama and federal agency heads asserting that the EPA was overestimating the air pollution from drilling for natural gas in Oklahoma. Turns out, the letter was by lawyers for one of state's largest oil and gas companies, Devon Energy. Harold G. Hamm, the chief executive of Continental Energy, was also co-chairman of Pruitt's 2013 re-election campaign. Pruitt's appointment has been met with unprecedented criticism by environmental and health organizations nationwide.

Trump EPA Pick: Scott Pruitt as EPA Head Signals Agency Will Ignore Climate Change - naked capitalism - Jerri-Lynn here: President-elect Trump has already mastered the art of headfaking in one direction– by meeting with Al Gore earlier this week, at the instigation of Trump’s children— and proceeding full speed ahead with his intended agenda. Trump’s nomination of Oklahoma state Attorney General to serve as administrator of the Environmental Protection Agency (EPA) is a textbook example of such tactical savvy.  I should draw the attention of readers to Pruitt’s seminal role in spearheading lawsuits filed in conjunction with other state attorneys general to block various Obama administration climate change initiatives, including its Clean Power Plan and rule-making undertaken under authority of the Clean Water Act. Both measures have been suspended, pending the outcome of ongoing litigation in federal court. Pruitt is well-versed in legal and regulatory measures that could be speedily undertaken (or not undertaken) to unwind or otherwise vitiate existing climate change policy and commitments. The WSJ reported: m“We’re very accustomed to the naysayers and the critics,” senior Trump adviser Kellyanne Conway said when asked by reporters about criticism of Mr. Pruitt’s selection. “Attorney General Pruitt has great qualifications and a good record as AG of Oklahoma and there were a number of qualified candidates for that particular position that the president-elect interviewed. We look forward to the confirmation hearings.” Note that I provide only my edited version of author Graham Readfearn’s complete biography below. My apologies if I have inadvertently omitted some key qualification, writing, or achievement; interested readers can find a more complete version on DeSmogBlog here.

The Billionaire Energy Investor Who Vetted Trump’s EPA Pick Has Long List of EPA Violations – Steve Horn - Asked for his take on President-elect Donald Trump's appointment of Oklahoma Attorney General Scott Pruitt to head the U.S. Environmental Protection Agency (EPA), multi-billionaire investor and Trump business partner Carl Icahn told Bloomberg that Pruitt is “going to really be a breath of fresh air.” Given Icahn's business ties, that statement is steeped in accidental irony.  Icahn, owner of the holding company Icahn Enterprises and a major donor to Trump's presidential campaign, was instrumental in choosing Pruitt — a man who as state prosecutor actively opposed most federal environmental regulations and denied the science of climate change — for the nation's top environmental job. As reported by The Wall Street Journal, Trump allowed Icahn, the 26th most wealthy man on the planet, to vet and interview finalists for high-levelEPA jobs even though Icahn owns business assets impacted by current EPA regulations.In addition, a DeSmog investigation shows that Icahn Enterprises owns oil industry assets based in Oklahoma, which are involved in EPA enforcement violations, and does business with TransCanada's Keystone pipeline system.  In his interview with Bloomberg, Icahn made clear his lack of affinity toward the EPA and environmental regulations. “The EPA, in my opinion, has gone way too far, has sort of run amok with these crazy regulations,” Icahn said. “I've spoken to Scott Pruitt I'd say four or five times and gotten to know him and I really think he's a great pick.”Pruitt, he told Bloomberg, “feels pretty strongly about the absurdity of these obligations,” and Pruitt believes that “it's very bad in this country to have more than several good refineries on the brink of disaster and the brink of bankruptcy, which the EPA has made to come about.” It turns out that one of those refineries Icahn was referring to is actually owned by his holding company and based in Pruitt's home state of Oklahoma: the Wynnewood Refining Company. In 2005, Koch Industries helped build an expansion project for Wynnewood, which boosted its refining capacity from 55,000 barrels per day to its current capacity. According to a story published by UPI, that expansion allowed the site to “process heavy, high-sulfur crude oil,” otherwise known as tar sands crude. Koch Industries has given Pruitt $10,000 in campaign contributions throughout his political career in Oklahoma.

And the impact of fifty years of nonmarket valuation magically disappears -- Poof: A conservative group is pushing the next Congress to take several steps to undo President Obama’s climate work.  The Competitive Enterprise Institute ... on Thursday said the GOP-controlled government taking power next year should pursue an aggressive deregulation agenda domestically and pull the United States out of international climate change work. In a memo outlining the group’s 2017 agenda, CEI’s energy team said lawmakers should repeal EPA rules and regulatory power, end the use of the “social cost of carbon," a metric federal departments use to assess impacts on the climate, halt the federal renewable fuels mandate and oppose any proposal to tax carbon emissions. The U.S., the group said, should pull out of the Paris climate agreement reached last year and stop federal funding for the United Nations Framework Convention on Climate Change, the underlying global climate treaty. “Increasing the affordability of both U.S. and global energy is an important economic and humanitarian objective,” CEI officials wrote in their report. “Policymakers heeding the time-honored healer’s maxim, ‘First, do no harm,’ should reject policies to tax and regulate away mankind’s access to affordable energy.”

Trump's EPA pick may struggle to dismantle Obama's environmental legacy | Reuters: Scott Pruitt, Donald Trump's pick to head the U.S. Environmental Protection Agency, has fought President Barack Obama’s measures to curb climate change at every turn as attorney general of Oklahoma. Now he is hoping to take apart Obama's environmental legacy from the inside out, a task that could prove tougher than it sounds. Legal experts and former EPA officials said Pruitt could score some early easy wins in January, killing regulations the Obama administration rushed through during his final months in office, such as the agency's rule to curb methane emissions from the oil and gas industry. That is because a little-used law called the Congressional Review Act allows Congress to erase such 'midnight' rules with a simple majority vote, something that should come easily in the Republican-controlled Congress. But regulations that have been on the books for longer, most of those Obama ushered through during his two four-year terms, will be more difficult to reverse, experts on both sides of the political divide said. For these regulations, which include the Clean Power Plan that requires states to cut carbon output, along with vehicle emissions standards, Pruitt will have just a handful of options, none of them easy, and nearly all of them triggering drawn out legal battles against well-funded environmental groups and attorneys general from Democratic Party-controlled states. The outcomes of these battles will have broad impacts on American industry, air and water quality, and the country's role in global climate change, which an overwhelming majority of scientists say is causing sea level rise, increased droughts, and more frequent violent storms.

Canada set to meet Paris climate commitments under plan to be announced Friday - Politics - CBC News: Prime Minister Justin Trudeau and the provincial and territorial leaders are expected to agree Friday on a national climate change plan that will see Canada meet its commitments under the Paris agreement. Sources with knowledge of the plan said it, along with previously announced measures, will together see the federal and provincial governments cut the country's annual emissions by around 291 million tonnes by 2030 — which will have the same effect as taking almost 62 million cars off the road. The federal government has already announced some of the key parts of the Pan-Canadian Framework on Clean Growth and Climate Change. They include setting a national price on carbon, phasing out coal-fired power plants, reducing methane emissions from oil and gas and developing cleaner standards for fuel. The federal government is negotiating individual agreements with most provinces to help them move towards clean energy. This deal will be significant because it means that, for the first time, Canada could be on track to meet its global pledge to cut carbon emissions by 30 per cent below 2005 levels by 2030. "We have a plan to achieve that," says one source familiar with the plan. "It's a milestone, but the big challenge will be implementing it."

Canada Wonders, if U.S. Balks, Is Carbon Pricing Still the Answer? - The New York Times: When Prime Minister Justin Trudeau meets on Friday with the leaders of Canada’s provinces and territories to work out a national carbon pricing plan, Donald J. Trump will also be in the room, in a manner of speaking. The president-elect has expressed skepticism about climate change, support for the fossil fuel industry and a desire to pull the United States out of the Paris climate accord. That has raised a big question for Canada: Can it move forward with a carbon policy if America is headed in the opposite direction? Mr. Trudeau certainly wants to push ahead. His government wants every province and territory to adopt a plan to reduce carbon emissions by putting a price on them — either through a tax on fossil fuels or a cap-and-trade system of emission allowances for industry. If they refuse to do one or the other voluntarily, he has warned, the national government will impose a plan on them. Many of Mr. Trudeau’s political rivals argue that it would be irresponsible to move ahead now with carbon pricing in Canada if the United States will not be doing the same thing. But carbon-tax proponents say the opposite, that Canada could gain a competitive advantage by acting before its much larger neighbor. Continue reading the main story AdvertisementContinue reading the main story The only regional leader who has balked publicly is Brad Wall, the premier of Saskatchewan. He has emerged as the effective head of an informal group that says having Mr. Trump in the White House must mean no carbon taxes in Canada.

Trump impact on emissions ‘pretty small’  - Donald Trump has sent his clearest message yet about his plans for reshaping US policy on global warming by choosing a chief environmental regulator who has questioned the science of climate change But leading experts say the nomination of Scott Pruitt, Oklahoma’s attorney-general as head of the Environmental Protection Agency and the policy he pursues, may have less effect than many imagine on global greenhouse gas emissions. Mr Pruitt has spent much time fighting the agency he has been nominated to lead over its Clean Power Plan, a hallmark of the Obama administration’s efforts to cut greenhouse gas emissions from the electricity sector. He has also raised doubts about climate change, writing in May that the debate over global warming “is far from settled” and claiming scientists continue to disagree about “its connection to the actions of mankind”. His nomination suggests that Mr Trump, who has called global warming a hoax, is likely to follow through on his campaign pledge to pull the US out of the Paris agreement that commits almost every nation to take some form of action on climate change.  Analysis by PwC, the financial services firm, shows G20 countries need to reduce their carbon intensity — the amount of carbon dioxide they emit for every dollar of GDP they produce — by an annual average of 3 per cent to meet their Paris agreement targets. Even if the US abandoned the deal it would have a limited direct impact on the overall G20 effort. If all other countries stayed on track to meet their carbon targets, but the US returned to business as usual, the average annual cut for the G20 as a whole would only fall slightly, from 3 per cent to 2.8 per cent. That is chiefly because of market developments such as the US shale gas boom that has squeezed out coal, the dirtiest fossil fuel, a situation some think unlikely to change no matter what Mr Trump does.

Electric Cars May Take an OPEC-Sized Bite From Oil Use - A boom in electric vehicles made by the likes of Tesla Motors Inc. could erode as much as 10 percent of global gasoline demand by 2035, according to the oil industry consultant Wood Mackenzie Ltd.  While battery-powered cars and trucks today represent less than 1 percent of total vehicle sales, they are expected to take off after 2025 as governments move to tackle pollution and costs fall, the Houston-based analyst said. By 2035 so-called EVs may remove 1 million to 2 million barrels a day of oil demand from the market -- in the range of the production cut OPEC and its allies agreed this week in order to end a three-year crude surplus.  “Anything that reduces the demand for transportation has an impact on the oil market,” Alan Gelder, vice president of refining, chemicals and oils markets at Wood Mackenzie, said in an interview in London. “The question is how big is it going to be and what’s the time frame.” Wood Mackenzie’s view echoes the International Energy Agency, which last month forecast global gasoline demand has all but peaked because of more efficient cars and the spread of EVs. The agency expects total oil demand to keep growing for decades, driven by shipping, trucking, aviation and petrochemical industries. That’s more conservative than Bloomberg New Energy Finance’s forecast for EVs to displace about 8 million barrels a day of demand by 2035. That will rise to 13 million barrels a day by 2040, which amounts of about 14 percent of estimated crude oil demand in 2016, the London-based researcher said. Electric cars are displacing about 50,000 barrels a day of demand now, Wood Mackenzie said.

The trolling of Elon Musk: how US conservatives are attacking green tech -- Electric-car evangelist is the target of concerted negative online campaign linked to influential right-wing network. He is the charismatic Silicon Valley entrepreneur who believes his many companies – including the electric car manufacturer Tesla Motors, solar power firm Solar City, and SpaceX, which makes reusable space rockets – can help resist man-made climate change. South African-born Elon Musk is a billionaire green evangelist, a bete noire of the fossil fuels industry who talks about colonising Mars and believes it may be possible that we’re living in a computer simulation.  But having been feted by the Obama administration, he now faces an extraordinary barrage of attacks from rightwing thinktanks, lobbyists, websites and commentators. The character of the assault says much about which way the political wind is blowing in Washington – something that will have consequences that stretch far beyond the US.  One of Musk’s most trenchant critics has been the journalist Shepard Stewart, who writes for a clutch of conservative online news sites. In several articles in September, not long after a SpaceX rocket exploded, Stewart attacked Musk for receiving billions in government subsidies “to make rockets that immediately self destruct” and branded him “a national disgrace”. As Musk fought back on Twitter, it became apparent that Stewart was an invention. Even his photo byline had been doctored from a LinkedIn profile of a tech entrepreneur. “Definitely a fake,” Gavin Wax, editor-in-chief of the Liberty Conservative, one of the websites that published Stewart, admitted to Bloomberg. The revelation triggered several theories: that Stewart was created by speculators shorting shares in Musk’s companies, or that he was invented by rival rocket companies keen to bring SpaceX down to earth. But Musk may be reassured to learn that Stewart’s attacks on him weren’t that personal. Rather, they appear to be part of a wider agenda against big government, the environmental lobby and liberals in general – an agenda reinvigorated by the prospect of a Donald Trump presidency.

Auto group tries to block EPA from finalizing vehicle rules | Reuters: A major auto trade group is making a last-ditch effort to block the U.S. Environmental Protection Agency from finalizing tough fuel economy standards through the 2025 model year. The Alliance of Automobile Manufacturers, a trade group representing General Motors Co, Toyota Motor Corp, Ford Motor Co, Volkswagen AG and Daimler AG, late Monday urged congressional negotiators to include language in a short-term budget resolution that would bar the Obama administration from finalizing the rules before it leaves office next month. "EPA's sudden and controversial move to propose auto regulations eight months early - even after Congress warned agencies about taking such steps while political appointees were packing their bags - calls out for congressional action to pause this rulemaking until a thoughtful policy review can occur," said Gloria Bergquist, a spokeswoman for the group. An EPA spokesman declined to comment on Monday. Automakers face an uphill battle getting the language attached to the funding bill, which could be made public as early as Tuesday. Even if Congress approves the rider, President Barack Obama would get to decide whether to sign or veto any funding bill. Automakers had appealed to President-elect Donald Trump last month, who has been critical of Obama's climate change policies, to review the rules requiring them to nearly double fleet-wide fuel efficiency by 2025, saying they impose significant costs and are out of step with consumer preferences.

Why electric cars are only as clean as their power supply - Electric cars have never been closer to the mainstream, the market pushed ahead by California subsidies for electric car buyers, and a wide array of new models from established car firms such as Toyota and Chevy. Tesla’s focus on luxury, high-performance vehicles has also broadened their appeal; electric cars are no longer purely an environmental statement, but a tech status symbol too. Yet the “zero emissions” claim grates on some experts, who have continued to argue over whether electric cars are really more environmentally friendly than gas guzzlers, once the manufacturing process for the vehicles and their batteries are taken into account. Electric cars rely on regular charging from the local electricity network. The power plants providing that energy aren’t emission-free; even in California, 60% of electricity came from burning fossil fuels in 2015, while solar and wind together made up less than 14%. “I couldn’t bear to hear them say the words ‘zero emissions vehicle’ one more time,” says Joshua Graff Zivin, who advised one of California’s three main utilities, San Diego Gas & Electric, on electric cars. Graff Zivin is a professor of economics and public policy at the University of California, San Diego. “How you incentivize them to charge could really matter,” Zivin says about electric vehicle owners. “Utilities haven’t thought through it.” More than 1.2m electric vehicles were sold in 2015, the intergovernmental group International Energy Agency estimates, while campaign group Transport & Environment expects 2m electric vehicles to be on the road by the end of 2016. The world’s biggest markets for electric cars are the United States and China, though electric vehicles have a larger market share in some European countries such as the Netherlands and Norway. California’s electric vehicles can plug into a greener grid than most regions of the world – especially China, where coal generated 72% of all power in 2014 according to the International Energy Agency (IEA). The US gets about a third of its electricity from coal-fired power, IEA says, and more than 40% of total electricity worldwide comes from burning coal.

Leaked Memo Outlines Trump’s Energy Agenda -- President-elect Donald Trump is set to gut U.S. environmental regulations, open up federal lands for fossil fuel extraction and quit the Paris climate agreement , according to documents seen by Energydesk .  A memo penned by Thomas Pyle, head of the Department of Energy transition team, and obtained by the Center for Media and Democracy , lists 14 key energy and environment policies the incoming Trump administration is expected to enact.   The note—part analysis of Trump's statements, part fossil fuel industry wish list—was sent on Nov. 15, just days before Pyle was brought on board by the Trump team.   It appears to reflect what Pyle wants from a future Trump administration—though little has yet emerged by way of formal energy policy.   Pyle is president of the Institute for Energy Research and the American Energy Alliance, which count among their major donors ExxonMobil , Peabody Energy and Koch Industries . He was also a top lobbyist for Koch Industries between 2001 and 2004.

Trump team’s memo hints at broad shake-up of U.S. energy policy   - Advisers to President-elect Donald Trump are developing plans to reshape Energy Department programs, help keep aging nuclear plants online and identify staff who played a role in promoting President Barack Obama’s climate agenda. The transition team has asked the agency to list employees and contractors who attended United Nations climate meetings, along with those who helped develop the Obama administration’s social cost of carbon metrics, used to estimate and justify the climate benefits of new rules. The advisers are also seeking information on agency loan programs, research activities and the basis for its statistics, according to a five-page internal document circulated by the Energy Department on Wednesday. The document lays out 65 questions from the Trump transition team, sources within the agency said. On the campaign trail, Trump promised to eliminate government waste, rescind "job-killing" regulations and cancel the Paris climate accord in which nearly 200 countries pledged to slash greenhouse gas emissions. Trump, though, hasn’t detailed specific plans for federal agencies. The document obtained by Bloomberg offers clues on where his administration may be headed on energy policy, based on the nature of questions involving the agency’s research agenda, nuclear program and national labs. In response to news of the document, Senator Ed Markey, a Democrat from Massachusetts, sent a letter to Trump warning that any punishment of agency workers carrying out policies his administration doesn’t agree with “would be tantamount to an illegal modern-day political witch hunt, and would have a profoundly chilling impact on our dedicated federal workforce.”

Trump administration could be a bend in the road for biofuels blending - (Platts podcast)  Total renewable fuel is slated to be more than 10% of the US fuel supply in 2017, breaking through the so-called blendwall. But how will a new presidential administration affect targets for the Renewable Fuel Standard? Senior oil editors Meghan Gordon and Brian Scheid talk to ClearView Energy partners analyst Tim Cheung about implications of biofuel piercing the blendwall and scenarios for how the Trump administration might try to change the RFS. Platts biofuels editor Josh Pedrick also joins to discuss how RINs prices have surged since the EPA announced the 2017 targets.

New EU Energy Goals Are Just What Trump Aims to Avoid - The European Union has announced an ambitious new set of goals that it hopes will help it meet the targets of the Paris climate agreement.  With the climate pact now in effect, nations are working out how to keep their promise: to reduce emission enough to limit average global temperature rises to less than 2 °C above preindustrial levels. The EU’s goals fill a hefty 1,000 pages, according to the Guardian. But the newspaper points out two headline ambitions for the Union: cut coal subsidies and reduce energy use by 30 percent by 2030. Elsewhere, it also plans to encourage the use of renewables and place limits on the use of bioenergies that are deemed unsustainable.Those are ambitious aims, to be sure. But even so, they may yet prove insufficient. A recent UN report (PDF) warned that the emissions pledges being proposed by most countries don’t go far enough, suggesting that they would actually put the world on track to warm by 3.4 °C by 2100. Still, they’re a far cry from the environmental policies we’re likely to see under the Trump presidency.Let’s compare the two main EU goals with Trump’s stated aims. First, the EU plans to phase out coal subsidies. In comparison, consider Donald Trump’s message to a West Virginia crowd of coal miners: “Get ready because you’re going to be working your asses off.” Clearly, he plans to try and reinvigorate the coal industry. In reality he’ll find the market forces of natural gas make that a difficult promise to keep, but he certainly intends to give it a go.As for decreasing energy use? In a video setting out his intentions for his first 100 days in office, Trump declared that he plans to “cancel job-killing restrictions on the production of American energy, including shale energy and clean coal.” That suggests that an America under his presidency will not go wanting for electricity, however it’s made.Of course, the president-elect may not be as bad for the climate as many people believe, at least in part because he’ll find it a struggle to reverse policies that are already set in action. And in the meantime, President Obama will be doing all he can to ensure that U.S. climate action heads in the right direction. But for the next four years, it’s unlikely to be as ambitious as the EU’s efforts.

For China, climate change is no hoax – it’s a business and political opportunity - In mid-November, while Americans were preoccupied with election returns, China sent some of its clearest signals yet that it will continue to pursue an international leadership role on issues including climate. At an international climate change summit in Marrakech, the Chinese government reasserted its commitment to reduce its greenhouse gas emissions. The government announced that its aggregate emissions will peak by 2030 or earlier, and that its emissions per dollar of economic output will decline sharply. For 25 years I have taught my economics students that climate change represents the ultimate “free rider problem.” To slow global climate change, we need to reduce aggregate global emissions. Yet each individual nation’s efforts are too small to “solve” the problem, so it has only weak incentives to take costly mitigation actions, and strong incentives to “free ride” on the benefits of emission reductions by other countries.From this perspective, President-elect Trump’s pledges to “cancel” the Paris Agreement and dismantle President Obama’s carbon mitigation initiatives follow standard economic logic. If the United States backs out of commitments to reduce national emissions, it still benefits from other countries’ efforts.  Why, then, is China is pressing ahead with low-carbon initiatives? My research suggests several motives. Chinese leaders want to improve the quality of life in their nation’s cities by reducing air pollution; win large shares of promising export markets for green technologies; and increase China’s “soft power” in international relations. Taking aggressive action to cut carbon emissions helps China in all three areas.

US, China, EU, others fail to reach environmental goods deal (AP)— Forty-six countries including the U.S., China and European Union nations failed Sunday to agree on a list of "environmental goods" like solar-powered air conditioners or LED light bulbs that could see lower tariffs. The two-day meeting at World Trade Organization involved a bid to agree on reducing tariffs on over 200 environment-friendly goods worth around $1 trillion in trade annually, part of a process that EU trade commissioner Cecilia Malmstrom called important "to show that trade and the environment can go hand in hand." She and other officials said China's presentation of a late list of goods to include threw a monkey wrench into the weekend negotiations. The talks amounted to just a step in a broader process on the Environmental Goods Agreement that was already facing uncertainty about how the incoming administration of U.S. president-elect Donald Trump will approach it. "In the last seconds, China proposed a list that was not studied enough," Turkish Economy Minister Nihat Zeybekci told The Associated Press on Sunday. "Many countries, they have concerns about the list." Zeybekci cited other concerns about sustainable-development lumber between Canada and New Zealand on one side and Japan and Taiwan on another. The United States and the European Union, who chaired the talks, said in a joint statement that envoys would return home to consider the next steps, but did not provide any timetable.

India’s GDP emissions reduced by 12 per cent - The Hindu: India’s emission intensity of GDP has reduced by 12 per cent between 2005 and 2010, according to the country’s first biennial update report submitted at the crucial UN climate summit recently, Rajya Sabha was told on Monday.Environment Minister Anil Madhav Dave said that India in 2009 had pledged to reduce the emission intensity of its GDP by 20 to 25 per cent by 2020 over 2005 levels despite having no binding obligations under United Nations Framework Convention on Climate Change.“As per India’s first biennial update report submitted to UNFCCC in 2016, the emission intensity of GDP has reduced by 12 per cent between 2005-2010.“The United Nations Environment Programme (UNEP) Emission Gap report 2015 has recognised India as one of the country on track to achieve the voluntary pre-2020 pledge,” he said in a written reply.He said that as per the Nationally Determined Contributions (NDCs) submitted by India to UNFCCCC in October last year, India is committed to reduce GHG emission intensity of its GDP by 33-35 per cent by 2030 from 2005 levels.“The government has launched National Action PLan on Climate Change (NAPCC) comprising of eight missions in specific areas of solar energy, enhanced energy efficiency, habitat, water, sustaining himalayan ecosystems, forestry, agriculture and strategic knowledge for climate change to achieve climate goals,” he said.

How Obama's climate change legacy is weakened by US investment in dirty fuel -President Barack Obama has staked his legacy on the environment, positioning his administration as the most progressive on climate change in US history. However, an obscure agency within his own administration has quietly spoiled his record by helping fund a steady outpouring of new overseas fossil fuel emissions – effectively erasing gains expected from his headline clean power plan or fuel efficiency standards. Since January 2009, the US Export-Import Bank has signed almost $34bn worth of low-interest loans and guarantees to companies and foreign governments to build, expand and promote fossil fuel projects abroad. That’s about three times more financing than the taxpayer-backed bank provided during George W Bush’s two terms, and almost twice the amount financed with loans and guarantees under the administrations of Ronald Reagan, George HW Bush and Bill Clinton – combined. The bank, which operates within Obama’s administration, provides US exporters with financing to sell goods and services overseas. Bank officials say it supports US jobs and fills a financing gap by allowing companies to access funding when private lenders will not. Since 2009, it has financed 70 fossil fuel projects. When they are all completed and operating at full capacity, the bank estimates they will push 164m metric tons of carbon dioxide into the atmosphere every year – about the same output as the 95 currently operating coal-fired power plants in Ohio, Pennsylvania and Oklahoma.

Utah counties sue over halt to new coal leases on fed land : (AP) -- Two Utah counties have filed a lawsuit challenging a federal halt to granting new coal leases, arguing the moratorium is blocking a mine expansion that could pump millions of dollars into the local economies. The suit marks the first challenge to the moratorium ordered in January by the Obama administration, attorney Peter Stirba, who represents Kane and Garfield counties, said Monday. The counties claim the moratorium was an arbitrary move that could force the mine to close. The halt is expected to last at least three years while the U.S. Department of the Interior weighs whether the fees charged to mining companies provide a fair return to taxpayers and reflect coal's impact on the environment. President-elect Donald Trump has vowed to rescind the moratorium. The leases were halted amid concerns about climate change and other issues linked to the $1 billion-a-year coal leasing program. There have been some limited exceptions to the moratorium, said Amanda Degroff, a spokeswoman for the Department of the Interior. She declined to comment on the lawsuit. Utah, Wyoming, Montana, Colorado and New Mexico are among the states most impacted by the halt. More than 40 percent of U.S. coal production, or about 450 million tons a year, comes from public lands in those Western states. Even before the moratorium, a weak market for coal in the U.S. and abroad slowed the push by companies seeking new reserves.

New England has enough electricity production for the winter, although natural gas supplies raise concern - The organization that runs New England’s power grid says electricity supplies should be sufficient to meet demand this winter, but just in case it will pay power plants that burn oil or liquefied natural gas so they will stock up on fuel in advance. ISO New England, the operator of the region’s power system, said in a release Monday that it has implemented what it calls the Winter Reliability Program to “help protect overall grid reliability.” The program gives financial incentives to power plants that burn oil or LNG so they will buy and store fuel, enabling them to step in if gas-fired power plants can’t get enough natural gas during a cold snap, or if the spot price of the gas climbs so high that they can’t afford it. The program was created after a cold snap three winters ago pushed New England close to brownouts when plants that burn fuels other than gas didn’t have supplies on hand. The dominance of cheap gas-fired electricity has made it too expensive to store oil and other fuels, which might only be needed for a few days each winter. Overall, however, supplies of power production is plentiful. In its annual winter prediction released Monday, ISO-NE said at least 31,000 megawatts of electricity generation is available in the six-state region, far more than the 22,000 MW of demand forecast even if “extreme winter weather” hits. A megawatt, or 1,000 kilowatts, is power needed to run roughly 1,000 homes. There are complications, however, including 3,450 MW of gas-fired power plants that ISO-NE says are “at risk of not being able to get fuel when needed” because too much of the gas brought in via pipelines is being used for heating. Further, ISO-NE said, “New England has relied on (ocean) cargoes of liquefied natural gas (LNG) in recent winters, but these LNG tankers follow global market spot prices and may elect to go elsewhere, depending on price.”

Lawmakers end veto session with vote to keep nuke plants open — The holidays will be much happier for families of 1,500 workers at Exelon Corp.’s Clinton and Quad Cities nuclear power plants after the Illinois General Assembly voted Thursday to approve an energy policy overhaul that will keep the plants open for another decade. On the final day of their fall veto session, the House voted 63-38 and the Senate voted 32-18 in favor of a massive package that will funnel $235 million in annual ratepayer subsidies to the unprofitable nuclear power plants and increase investments in renewable power and energy efficiency. Gov. Bruce Rauner said he will sign the bill when it reaches his desk. “For jobs, for ratepayers, for the state of Illinois, this is a good bill,” Sen. Neil Anderson, R-Rock Island, said when the bill came to the upper chamber Thursday evening. Exelon had said it would take official steps toward shutting down the Clinton plant on June 1 if lawmakers didn’t approve the bill during the veto session. The Quad Cities plant was set to close a year later. The two plants together employ about 1,500 full-time workers and generate millions of dollars in property tax revenue for schools and local governments in their areas.

Illinois Gov. Rauner signs bill sparing 2 nuclear plants : (AP) -- Illinois Gov. Bruce Rauner approved a plan Wednesday that will provide billions of dollars in subsidies to Exelon Corp. to keep two unprofitable nuclear plants from closing prematurely. The Republican appeared at Riverdale High School in Port Byron to sign legislation he said will save thousands of jobs by rewarding Exelon for producing carbon-free energy. In addition to $235 million a year for Exelon to prop up nuclear plants in the Quad Cities and Clinton, the plan provides hundreds of millions of dollars in energy-efficiency programs and assistance to low-income energy users. "I was unwilling to gamble with these communities, gamble with thousands of good-paying jobs and gamble with our energy future," Rauner said in a statement. "While this legislation isn't perfect, it allows us to protect jobs, ratepayers and taxpayers." The law ensures the plants in Cordova and Clinton stay open for 10 years and allows for expansion of alternative power generators, such as wind and solar. It caps the increase in ratepayer bills at an average of 25 cents a month for the 13-year life of the deal for ComEd customers in northern Illinois and 35 cents a month for Ameren users in central and southern Illinois. But both companies assert that costs should go down, at least initially.

German Court Upholds Nuclear Exit but Orders Compensation for Power Companies -  Germany’s highest court on Tuesday upheld the government’s decision in 2011 to shut its nuclear reactors ahead of schedule, but it ruled that power companies must be compensated for losses incurred as a result of that decision. The ruling by the Federal Constitutional Court in Karlsruhe brings to an end a long, bitter dispute between the government of Chancellor Angela Merkel and German power companies on the decision in 2011 to abandon nuclear power in the wake of the nuclear disaster in Fukushima, Japan. In 1988, Germany began transforming its energy sector to one powered largely by renewable sources like wind, solar and biomass. Progressively shutting down the country’s nuclear reactors over time had been part of the original plan. In the months before Fukushima, Ms. Merkel’s center-right government had extended the life of several reactors, citing their use as a so-called bridge technology to ensure a stable flow of power through the grid. But the government changed course after the Fukushima disaster in March 2011, taking eight reactors out of service and accelerating plans to close the remaining nine by 2022, earlier than originally scheduled. The energy companies E.On, RWE and Vattenfall sued the government for compensation estimated at 19 billion euros, or about $20.2 billion at current exchange rates, for losses incurred as a result of the decision to move up the deadline, and they questioned the legality of the decision.

Decades after Chernobyl disaster, engineers slide high-tech shelter over reactor (see video) On Tuesday, officials from all over the world gathered about a football field away from the Chernobyl disaster site in Ukraine. They were there to celebrate the final placement of a massive, high-tech shelter over reactor 4, which exploded in April 1986. The shelter, called the New Safe Confinement (NSC), is a feat of engineering. Because it was too dangerous to assemble the NSC over the original shelter that was built in the weeks after the explosion, the NSC was instead built at a distance and moved—slowly, over days—on a pair of tracks parallel to the original shelter. But even that was no simple task. The NSC is 354ft (108m) tall and 843ft (257m) wide, making it the largest mobile metal structure in the world. Thirty years ago, when the reactor exploded, plumes of radioactive debris spread across what are now the countries of Ukraine, Belarus, and Russia. Soviet authorities evacuated a 30-kilometer radius around the explosion site, but tens of thousands of kilometers outside that zone also experienced contamination. Workers were called in to encase the reactor in a sarcophagus to minimize contamination. Ultimately at least 28 people died as a result of the accident, according to the World Nuclear Association, and another 237 workers involved in the cleanup and shelter construction were later diagnosed with acute radiation poisoning, with 134 of those cases being confirmed later. Unfortunately but understandably, the structure encasing reactor 4 was hastily built and risked corrosion and leaking that could lead to renewed contamination of water or air at any time. By the late '90s, parts of the structure risked “imminent collapse” according to the European Bank for Reconstruction and Development (EBRD), which has funded the new high-tech shelter that will encase the original one. Emergency repairs were made, but it wasn’t until 2004 that the site received the necessary equipment to do biomedical screening and conduct construction activities in a way that would minimize harm to workers. To make matters worse, according to EBRD, radioactive water was present in the shelter basement and concerns were growing that the contaminated water would leak into the nearby Dnipro Basin. In 2010, an automated monitoring system was added to keep tabs on the water situation.

Critics: Jobs will be in jeopardy if Ohio energy bill becomes law | Midwest Energy News: On the same day that a new study reported that more than 300 companies in Ohio are part of the supply chains for the wind and solar industries, lawmakers voted a bill out of committee that would make compliance with the state’s clean energy standards voluntary until 2020. If House Bill 554 becomes law, critics say the state would lose out on business opportunities and jobs. In their view, the bill would also discourage competition, keep electricity prices high and promote pollution that causes health problems and contributes to climate change. “We’re either going to move in a clean energy direction that produces new jobs related to solar and wind and efficiency,” said Rob Kelter of the Environmental Law & Policy Center, which released the supply chain report on Nov. 30. “Or we’re going to let other states and other countries manufacture these new products.” According to the supply chain report, 207 Ohio companies supply the solar energy industry, 134 manufacture things for the wind energy industry, and 20 serve as suppliers for both industries. For example, the report notes, Art Iron in Toledo fabricates steel supports for solar canopies and wind turbine main frames. Dyson Corporation in Painesville makes hardware that can be used in wind turbines. Dupont’s facility in Circleville makes Tedlar film, which is used in backsheets for solar panels. Rittal Corporation in Urbana provides enclosures that protect equipment for solar and wind energy from the elements.

‘Giveaway’ for utilities included in bill to make Ohio energy standards voluntary | Midwest Energy News: An energy bill that would make compliance with the state’s clean energy standards voluntary until 2020 now heads to the Ohio Senate with a new provision that critics call an added “giveaway” for utilities. House Bill 554 passed in the Ohio House of Representatives yesterday by a vote of 56 to 41. The bill now now heads to the Ohio Senate’s Energy and Natural Resources Committee for committee testimony this afternoon at 4 p.m. EST and tomorrow morning at 9 a.m. A vote by the full Senate could take place as early as tomorrow afternoon. “Ohio’s residential and business consumers should be concerned with energy legislation passed by the Ohio House today,” said Ohio Consumers’ Counsel Bruce Weston in a statement released yesterday. “The proposed law would cost consumers many millions of dollars in charges for higher utility profits without a corresponding public benefit.” The bill, which would delay the return of enforceable renewable energy efficiency and renewable energy provisions for three more years, has already been the target of extensive criticism from environmental groups and advocates for the wind and solar industry. Opponents have noted that the current freeze on Ohio’s clean energy standards has already had a negative effect on investments in the state’s renewable energy industry and makes the state less attractive to companies in other industries as they look to site new facilities. If either HB 554 or a companion Senate version were to pass, critics say the bill would also cost the state jobs, while increasing pollution and causing continuing health costs.

Federal Government Will Auction Public Land in Ohio to Oil and Gas Drillers - The Bureau of Land Management will auction leasing rights to 1,676 acres of the Wayne National Forest via online auction on Dec. 13. It’s not quite like eBay, though; this land is earmarked expressly for oil and natural gas drillers — private companies that will use the forest for non-renewable energy production.The news signals a deep and ongoing commitment among Ohio politicians and the federal government to inextricably tie the state’s public (and private) land to fossil fuel production and infrastructure. The BLM’s stance manages to shoe-horn the word “sustainable” twice into its public explanation: “The oil and gas leasing program managed by the BLM encourages the sustainable development of domestic oil and gas reserves which reduces the dependence of the United States on foreign sources of energy as part of its multiple-use and sustainable yield mandate.”  Still, though, the impending loss of acres in Ohio’s only national forest (distinct from a national park) has prompted environmental advocacy groups across the state to fight back. “This fall, we’ve been continuing to try and educate the public and influence the forest supervisor, Kathleen Atkinson,” says Heather Cantino, member of the Athens County Fracking Action Network, one of the most active groups working against drilling in southeast Ohio. Based on recent BLM auctions, an acre of federal public land can sell for as little as $1.50. But average U.S. residents can’t just sign in and bid on these acres; these properties are meant only for private mineral extraction.  Environmental advocates have successfully placed bids in other federal auctions, only to have their leases revoked. A Utah man spent 21 months in prison for placing the winning bids on 14 parcels of land in that state. The concerns don’t end on auction day, however.The idea, also, is that the lease rights will open up access to private land in the vicinity — access to mineral rights that will now be easier for energy companies to negotiate. (Fracking companies need contiguous access to get at specific underground natural gas supplies. The process is also known as “horizontal drilling,” so one might easily imagine how vast swaths of shale can be reached from one particular drilling location.) “Those are cumulative impacts that are not addressed at all in the EA [environmental assessment],” Cantino says of the scope of this inevitable drilling.

B.G. city council rejects NEXUS pipeline plans - Toledo Blade — In a slam dunk for Ohio pipeline activists, the Bowling Green City Council rejected Spectra Energy’s request to build part of its NEXUS Gas Transmission pipeline on city-owned land by a 7-0 vote tonight. The vote came one day after activists in North Dakota scored a major victory when the Army Corps of Engineers denied a permit for the construction of a key section of the 1,172-mile Dakota Access Pipeline just north of the Standing Rock Sioux Reservation. That project is a much different one, in that would transport oil — not natural gas — and was in close proximity to Native American land where protestors had demonstrated for months. In Bowling Green, the city council was asked by Spectra to grant easement access to a portion of 29 acres of city-owned land several miles northwest of Bowling Green.The request was made to accommodate plans for a 255-mile pipeline Spectra and other companies want to build between southern Ohio and southwest Ontario to move natural gas fracked from Ohio’s Marcellus and Utica shale. The land, on State Rt. 64 and King Road north of Haskins, Ohio, was acquired by Bowling Green in 2015. Spectra offered $151,000, and was willing to follow existing utility easement where power lines exist. Now, the company will likely either reroute that segment of its proposed pipeline, or seek to acquire the Bowling Green-owned land it wants through eminent domain. The Bowling Green council rejected the offer to a standing-room only crowd so large the state fire marshal's office had about 30 people listen from another floor in the building, and another 30 listen from outside while standing in the cold. Joe DeMare, a Green Party candidate for U.S. Senate in the most recent election, was escorted out of the meeting by security when he objected to Council President Mike Aspacher's decision to take a vote without more public comment. Only council members spoke.

Tallgrass's REX set to boost northeast gas takeaway capacity. - Takeaway capacity out of the Marcellus/Utica shale producing region is about to get another significant boost. Tallgrass Energy’s Rockies Express Pipeline (REX) expects to bring the first 200 MMcf/d of its 800-MMcf/d Zone 3 Capacity Enhancement project (Z3CE) in service any day now, and ramp up to the full 800 MMcf/d by end of the year. Moreover, the pipeline operator has hinted that it may be able to eke out incremental Zone 3 operating capacity over and above the new design capacity in the near future. The Z3CE expansion will mark the third time in as many years that REX will increase westbound takeaway capacity out of the Marcellus/Utica region. With each capacity boost, Northeast production volumes have risen to the occasion and the capacity has filled up. Today we examine this latest expansion and what it will mean for U.S. gas production. U.S. natural gas production growth in recent years has gone hand-in-hand with takeaway capacity additions out of the Northeast region, and the reversal of flows on REX—originally built for west-to-east flows out of the Rockies—has played no small part in that. REX began reversing flows on its eastern-most sections of its Zone 3 segment—from Clarington, OH in Monroe County west to Moultrie County, IL—back in mid-2014, initially providing small volumes (about 0.25 Bcf/d) of backhaul capacity to move production received from new interconnects in the Marcellus/Utica region, west along the pipe to interconnects with other long-haul pipes that were also in the process of reversing flows. By early 2015, that westbound capacity on REX was expanded to 0.6 Bcf/d, and later in 2015, that was followed up by the East-to-West (E2W) expansion, which allowed a full 1.8 Bcf/d in westbound forward-haul capacity starting in August 2015 (see Waiting For a REX Like You). At first, there wasn’t sufficient interconnect capacity to receive incremental production on the eastern end. But with each expansion, new receipt points were added near the eastern terminus and the new bidirectional capacity allowed Marcellus/Utica gas supply to move farther west along Zone 3—with that last expansion reaching as far west as Moultrie County, IL. As the graph in Figure 1 shows, since that last mainline expansion in August (2015), operating receipt capacity (blue line) has increased from about 1.4 Bcf/d to about 3.1 Bcf/d, allowing flows (green area) to ramp up to the mainline capacity of 1.8 Bcf/d (black line).

State report: Shale oil production falls again; natural gas rises - Columbus Dispatch Ohio oil production continued to suffer in the third quarter, while natural gas production had a small increase according to shale energy figures issued today by the state.Oil production was 3.95 million barrels, down 18 percent from the prior quarter and down 34 percent from the third quarter last year. Gas production was 361 billion cubic feet, up 8 percent from the prior quarter and up 46 percent from a year ago.The results, from the Ohio portions of the Utica and Marcellus shale, show that oil production is seeing the effects of low market prices.Gas prices continue to grow despite low prices, largely because energy producers are shifting their resources to areas that are rich with gas, such as Belmont and Monroe counties along the Ohio River.Sixteen counties reported at least some shale oil production, led by Harrison County. Seventeen counties had gas production, led by Belmont. Portage County reported some gas production but no oil.All of the production can be found in a band of counties in the eastern and southeastern parts of the state. A total of 1,464 shale wells reported some production for the quarter.

 Letter from Pennsylvania: Allegheny County's Shale Gas Reserves are Huge But 'Forced Pooling' Should Be Off the Table - Simply put, the numbers are stunning: In Allegheny County, Pa., alone, estimates of “totally technically recoverable reserves” of shale natural gas exceed 150 trillion cubic feet. “This is nearly five times the minimum required for classification as a super-giant gas field and enough natural gas to provide all of America’s needs for more than five years,” recently wrote Gregory Wrightstone and Justin Skaggs in Oil and Gas Investor.  “the total value of this resource exceeds $400 billion and the value of potential royalty payments to landowners in (Allegheny County) is more than $60 billion.” The Keystone State’s Allegheny, Washington and Greene counties are situated within the “core of the core” of the recently named Appalachian Mega-Giant Gas Field, they note. “Each county has recoverable natural gas reserves likely ranking them at or near the highest county natural gas reserve base in the nation,”  Of the three counties, Allegheny provides the greatest challenges primarily due to its majority urban/suburban nature, they say.   Only 4 percent of Allegheny County’s acreage appears to have “viable” drilling locations, they note.  One part of the solution, the authors argue, would be to allow for “forced pooling” in Pennsylvania’s Marcellus shale play, which currently is not permitted.  In forced pooling, those mandated to participate in the production unit are compensated (though, some argue, to a lesser degree than those who willingly have negotiated), in a process akin, loosely, to eminent domain. But instead of government taking your property (with “just” compensation) for a “public purpose,” a forced pooling law would allow a private concern to, with compensation, frack your property to benefit those who have willingly allowed fracking. “With no forced pooling in Pennsylvania,” Wrightstone and Skaggs say “an operator would be required to acquire a lease agreement with each owner that a lateral would cross, requiring the leasing of possibly hundreds of leases for each proposed lateral drilled.” Forced pooling by a private entity to benefit another private entity (or entities) is an unlawful taking. It must remain incumbent upon fracking operators to gain voluntary cooperation with property owners -- or to develop new fracking techniques that make forced pooling a non-issue-- and not the state to determine whose property rights are more pre-eminent.

 New England natural gas pipeline capacity increases for the first time since 2010 - Spectra Energy Corporation has almost completed the first two natural gas pipeline projects in New England since 2010. On November 1, Spectra placed part of the Algonquin Incremental Market (AIM) project into service, following the late-October approval from the Federal Energy Regulatory Commission (FERC). The remainder of the project is expected to be completed this month. Spectra placed another pipeline project—Salem Lateral—into service on November 1, according to PointLogic Energy, but it is not expected to be used until June 2017. The $972 million AIM project will bring additional natural gas from the Appalachian Basin into New England. The project is the largest pipeline project since 2007 to transport natural gas into New England from outside the region. The pipeline will provide an additional 342 million cubic feet per day (MMcf/d) of pipeline capacity to the New England market. The $63 million Salem Lateral Project will provide capacity for the Salem Harbor Power Plant, a converted coal-to-gas electric power plant due to be in service in June 2017. Once completed, the 674 megawatt power plant will use up to 115 MMcf/d of natural gas to generate electricity for New England consumers. The AIM project entered commercial service in November 2016 and added capacity to a constrained New England pipeline infrastructure system ahead of upcoming winter demand and ahead of the anticipated increase in demand from the Salem Lateral project. The increase in pipeline capacity is expected to continue offsetting decreasing natural gas imports into New England. Liquefied natural gas (LNG) imports into New England have typically met a significant portion of natural gas demand, but they have declined because of a variety of market conditions, including demand for LNG from other markets, and the expiration of previous long-term LNG contracts. LNG shipments to the Algonquin Northeast Gateway Lateral project (built in 2007 to deliver regasified LNG into the metropolitan Boston and New England market) and shipments to the LNG terminal in Everett, Massachusetts (built in 1971) have decreased over the past several years.

 NYMEX January gas settles at $3.603/MMBtu, down 3.2 cents -  After trading in positive territory for much of Wednesday, the NYMEX January natural gas futures contract slid 3.2 cents to settle at $3.603/MMBtu as the market consolidates ahead of the US Energy Information Administration's weekly gas storage report. The January contract peaked 11.3 cents above Tuesday's settle, trading between $3.581/MMBtu and $3.748/MMBtu. Wednesday marked the second most active trading day for the January contract with an estimated volume of 223,133 Dth, the most active being Tuesday's trading session with 233,251 Dth. The initial upward movement in the market was attributed to what Timothy Evans, energy futures specialist with Citi Futures, notes as a "firming back up [of the natural gas market] on what looks like an even more intense cold weather pattern" than previously thought. The latest National Weather Service eight- to 14-day outlook lent additional credence to this trend by projecting a high probability of below average temperatures over the Upper Midwest and Northeast markets, supporting Platts Analytics' Bentek Energy latest national demand projections of 100.8 Bcf/d over the next eight-14 days.However, projections for a below-average injection in the upcoming US EIA weekly gas storage report may have weighed on the prompt-month contract. According to a consensus of analysts surveyed by S&P Global Platts, the upcoming report will show a withdrawal of 40 Bcf, significantly below both the 69 Bcf withdrawn during the same time period in 2015 and the five-year average of 61 Bcf. Further along the curve, the February contract slid 3.7 cents to $3.589/MMBtu, the third day in a row the February contract traded at a discount to the prompt-month. Backwardation persists throughout the remainder of the winter contracts, with a 5.3 cents spread between March and January.

Jeff Sessions, Trump’s Attorney General Pick, Introduced First Bill to Exempt Fracking from Drinking Water Rules - U.S. Senator Jeff Sessions (R-AL), President-elect Donald Trump's nominee for U.S. Attorney General, introduced the first so-called “Halliburton Loophole” bill back in 1999 before it was ever known as such.Sessions co-sponsored the bill (S.724) with the climate change-denying Senator James Inhofe (R-OK). The bill called for theU.S. Environmental Protection Agency (EPA) to exempt enforcement of the Safe Drinking Water Act as it relates to hydraulic fracturing (“fracking”).The bill's language eventually became a provision in the Energy Policy Act of 2005, known today as the “Halliburton Loophole” because the company's ex-CEO and then-Vice President Dick Cheney headed up the industry-loaded Energy Policy Task Force which helped pen the bill's language.S.724 was introduced in 1999, in the middle of the years-long Legal Environmental Assistance Foundation (LEAF) v. EPA legal battle, which was heard in the U.S. Court of Appeals for the 11th Circuit.LEAF v. EPA centered around whether fracking should be regulated by the EPA as a form of “underground injection” as defined by the Safe Drinking Water Act. The oil and gas industry, which had legal intervenors, including Halliburton, in the LEAF v. EPA case, saw Sessions and Inhofe's Senate bill as a congressional remedy for the sticky legal situation. Contamination of drinking water originally spurred the lawsuit for LEAF, a now-defunct pro-environmental law firm run at the time by the Florida-based attorney David Ludder.  “At least a dozen Alabama residents complained that coalbed methane production activities have caused a degradation in the quality of the water produced from their drinking water wells,” continued Ludder. “To silence others, landowners often evicted or threatened to evict those that complained.”

US Gulf Coast gasoline soars to six-month high on scheduling day - Outright prices for US Gulf Coast gasoline shot to a six-month high Monday, the last day of trading for Colonial Pipeline's 66th cycle. Conventional gasoline was assessed at $1.5775/gal, its highest price since June 1, as a strong front-month futures contract combined with a cash price that climbed 8.25 cents/gal on the day. The benchmark's cash differential was assessed at NYMEX January RBOB plus 2 cents/gal, the first time it held a premium to the futures contract since mid-October. Scheduling day for Colonial often spurs a buying spree as traders look to secure barrels to meet their commitment and maintain shipper status on the perpetually full pipeline.Market sources provided mixed reasons for the spike other than scheduling day, including a lack of offers in the spot market and traders looking to buy pipeline barrels after sending out gasoline cargoes. Value for space on Colonial's Line 1, which typically has an inverse relationship to gasoline prices, fell 3 cents/gal to be assessed at plus 3 cents/gal, a one-month low.

 Front-month LOOP sour crude storage hits seven-month high of 63 cents/b in auction - Oil | Platts News Article & Story: Storage at Louisiana Offshore Oil Port's Clovelly Hub was valued at 63 cents/b for January, a seven-month high for the front-month contract, according to Tuesday auction results published by Matrix Markets, which hosts the auction in partnership with LOOP and CME. The auction results showed a willingness to pay more for storage at the US Gulf Coast terminal on a monthly basis versus during the November auction. Several scheduled refinery turnarounds have encouraged increased physical crude storage, as refiners take less crude to accommodate seasonal maintenance periods. Quarterly strip prices also experienced modest gains. Second-month physical forward agreement storage was 65 cents/b, up from 55 cents/b in November. Third-month physical forward agreement storage, however, was down by 6 cents/b to 50 cents/b. The front strip (Q2 2017) was up 2 cents/b to 33 cents/b, and the second strip (Q3 2017) was 4 cents/b higher at 28 cents/b. The total volume auctioned Tuesday was 6.8 million barrels for January 2017 to March 2017 and for the second-, third- and fourth-quarter 2017 strips. The auctionable total is fixed ahead of time.The storage contract, launched in March 2015, is based on crude storage capacity at LOOP's Clovelly Hub, which has roughly 72 million barrels of storage. Each capacity allocation contract auctioned gives the buyer the right, but not the obligation, to store 1,000 barrels of LOOP sour crude at the facility, which is north of Louisiana's Port Fourchon.

Oklahoma regulators looking at new earthquake protocols for energy companies - NewsOK.com Oklahoma regulators for the first time are expected to release industry guidelines on the small number of earthquakes possibly linked to hydraulic fracturing, a departure from their recent focus on the connections to wastewater disposal wells used in oil and gas development. The hydraulic fracturing plan is expected to be released along with tougher, new directives on wastewater disposal wells linked to seismic activity near Cushing and Pawnee, Corporation Commission spokesman Matt Skinner confirmed to The Oklahoman on Thursday. Recent earthquakes south and west of the Oklahoma City area prompted scientists and regulators to look again at possible links to hydraulic fracturing. Those areas fall outside two regional wastewater reduction plans for disposal wells unveiled earlier this year by the Oklahoma Corporation Commission. Four earthquakes ranging from magnitude 3.4 to 3.0 struck south and southwest of Blanchard this summer. In Canadian County, three earthquakes of magnitude 3.3 and 3.1 hit south of Calumet in November. Both areas are in the fast-growing SCOOP and STACK plays.  "The bulk of our concern is obviously up in the main earthquake areas like Cushing and Pawnee. But we have been providing data and working with the Oklahoma Geological Survey on the issue of hydraulic fracturing and seismicity. It is something we hope to complete work on soon, but quite frankly, our highest priority is up in the main earthquake area." Skinner said regulators want to take a proactive approach to the possibility of earthquakes related to hydraulic fracturing in the SCOOP and STACK areas of the state. The enhanced regulatory response on hydraulic fracturing comes after Oklahoma officials, scientists and industry representatives have worked for the past couple of years to keep the seismic focus on wastewater disposal wells. A growing body of scientific research has linked the increase in seismicity in Oklahoma to higher volumes of wastewater disposal into the deep Arbuckle formation.

Oklahoma Oil Regulators Adding Limits on Fracking to Earthquake-Reduction Plan - Oklahoma’s oil and gas regulator for the first time will issue guidelines designed to reduce earthquake activity linked to hydraulic fracturing.To date, the state’s earthquake response has centered around curtailing earthquakes linked to wastewater injection wells. Hydraulic fracturing — the well-completion technique known as “fracking” — is known by researchers to trigger earthquakes, both in Oklahoma and in oil and gas fields around the world. But scientists and officials believe the potential size and scale of fracking-related earthquake activity is significantly smaller than that posed by wastewater injection.“Frack-quakes are very short-lived and they’re only possible when the frack is going,” says Matt Skinner, spokesperson for the Oklahoma Corporation Commission. “It sometimes lasts for a day, sometimes it lasts for several days, but that’s it. If there is seismicity related to fracking it stops when the fracking stops.”The commission is preparing to release the fracking guidelines along with a new package of restrictions on wastewater injection wells crafted to reduce earthquakes in and around Pawnee and Cushing, where 5.8 and 5.0-magnitude quakes caused minor injuries and widespread damage in September in November. A string of earthquakes ranging from 3.0 to 3.4-magnitude that shook over the summer and fall near Blanchard and Calumet spurred the fracking-related guidelines, The Oklahoman’s Paul Monies reports. One potential complication for the energy industry: The epicenters of the suspected fracking-related earthquakes are located in the SCOOP and STACK, currently the most active and promising oil and gas plays in Oklahoma:

The Bakken: How Things Stand Near The End Of The Year, 2016 -- December 4, 2016 -- IN PROGRESS - Both Whiting and Oasis consider 900,000 boe EURs the new norm, and are on track to go significantly higher, to 1.5 million boe EURs.  Drilling times:

  • two huge changes since the beginning of the boom
  • the first change, of course, is the huge decrease in time it takes to drill a two-mile horizontal; at the beginning of the boom, 45 - 65 days. 
  • the second change: the way some operators are measuring drilling times. Whiting tracks the time from spud-to-spud: the clock starts ticking when the first well is spud, and continues to tick, until the rig is moved to the next well, and the next well is spud. Whiting has that spud-to-spud time down to 14 days or so; in the Niobrara, Whiting has it down to 7 days. In the old days it could take a week or so just to "tear down" rig once a well had been cmopleted, load it on a truck and move it to the next location, and then set it up again. During the muddy season -- spring thaw -- roads were closed and rigs did not move. Now, even in the spring thaw, rigs can continue pad drilling
Cost per completed well:
  • costs have come way, way down, but there is a twist
  • some operators are "advertising" the costs to complete a DUC, in effect not providing the sunk costs in drilling the well to TD; costs to complete a DUC are in the range of $3.8 million total costs are in the range of $6.8 million
  • I remember at the beginning of the boom, talking about $10 million wells -- and some of those were short laterals.

No plans to hedge Continental oil output yet, half of gas covered: Hamm - Continental Resources has no plans at the moment to lay on hedges for its crude oil production, but it is keeping an eye on market values and may do some hedging in the future, chairman and CEO Harold Hamm said Thursday. The US producer has no oil production hedged at the moment, and has covered around half of its gas production through forward derivatives trades, said Hamm. Hamm noted that there is relatively limited liquidity in oil futures beyond two years forward, which has been a factor when thinking about covering forward sales through trades in the futures market.While he stressed that he did not have a specific price target in mind when thinking of possible oil hedges, Hamm noted that WTI crude futures are generally trading below $55/b further forward along the curve, whereas he believes OPEC appears to be targeting benchmark crude prices of $50-$65/b through its recently agreed production cuts. Continental produced on average 208,000 boe/d of oil and gas in the third quarter from its US production assets, down from about 219,000 boe/d in Q2 and 228,000 boe/d in Q3 2015, according to company results issued in November.

EPA orders $2.1 million fine in air pollution settlement | North Dakota News | bismarcktribune.com: The U.S. Environmental Protection Agency has issued a $2.1 million fine for air pollution at oil and gas wells primarily on the state’s Fort Berthold Indian Reservation. But the settlement against Slawson Exploration Co. announced Thursday stems from just one of many enforcement actions underway against state operators for air quality violations. Slawson agreed to pay the fine under a settlement agreement after the EPA claimed the company violated the Clean Air Act by not properly controlling emissions at 170 well pads in the state. The violations primarily stem from storage tanks that were releasing volatile organic compounds into the atmosphere, first observed by EPA inspectors in 2014. The EPA said VOCs are a pollutant that irritates the lungs, exacerbates diseases such as asthma and can increase susceptibility to respiratory illnesses. The company also agreed to spend about $4.1 million on system upgrades, monitoring and inspections and at least $2 million to fund environmental mitigation projects under the settlement with the EPA and the Department of Justice. The improvements ordered in the settlement, including monitoring of emissions using infrared cameras, will significantly reduce air pollution in the state, the EPA said.

Video by New York Times reporter shows just how massive the Standing Rock protest camp is -  The camp housing protesters of the Dakota Access Pipeline have come to resemble a small city with "streets" crisscrossing the prairie between the tents, teepees, and quickly-erected shacks where the protestors have dug themselves in, according to photos and videos posted by reporters on the ground.  Thousands of protesters have gathered in Cannon Ball, North Dakota since August to protest the building of the Dakota Access Pipeline, a proposed 1,172-mile pipeline enabling North Dakota-produced oil reach refining markets in Illinois. USA Today estimates that there are between 1,000 and 3,000 protestors living in the camp. Another 2,000 veterans are set to join the protestors, as well as relieve those who have endured weeks of sub-zero temperatures.  Here's New York Times reporter Jack Healy's video from the camp: jack healy @jackhealyNYT The "streets" are a grid of ice. Sounds of generators, drumming, chainsaws. Parades of arriving cars adding to thousands already here. The federal government announced in November that they would close public access to the area on December 5, but authorities have since said they don't have plans to forcibly remove activists.

Veterans Travel to Standing Rock to Join Protesters, Lend Aid | Military.com: -- Hundreds of veterans will arrive at Standing Rock Indian Reservation this weekend to join the months-long protest of the Dakota Access Pipeline, bringing with them an influx of resources and attention. The movement, called "Veterans Stand for Standing Rock," will last from Dec. 4 through Dec. 7. The veterans are going with the goal of "protecting the protesters," said Anthony Diggs, a Marine Corps veteran who is acting as a spokesman for the group. As of Monday afternoon, the group had raised more than $495,000 that Diggs said will go toward establishing services at the protest camps, such as medical and supply tents, secure lines of communication and heating systems to help protesters through the winter. Diggs confirmed hundreds of veterans from across the United States were registered to participate, and the number could reach up to 2,000 -- a cap set by organizers. Veterans are a good fit for the job, Diggs said, because they're organized and know how to handle emergency situations and extreme weather. There's also a "symbolic value" in veterans taking a stand, he added. "There is a lot of power in veterans from all over, from all branches of the military, coming together to create a protecting front against the police, who are militarized themselves," Diggs said.

Thousands of Veterans Arrive at Standing Rock to Act as 'Human Shields' for Water Protectors - As tensions grow in North Dakota, with multiple eviction orders facing the Standing Rock Sioux Tribe in their battle against the Dakota Access Pipeline , U.S. military veterans begin arriving at the Oceti Sakowin protest camp. The 2,000 veterans , which include Rep. Tulsi Gabbard (D-Hawaii), plan to act as an unarmed militia and peaceful human shields to protect the Indigenous activists from police brutality. "I signed up to serve my country and my people and I did that overseas," Indigenous U.S. Navy veteran Brandee Paisano told the CBC. "I didn't think I'd have to do it here, on this land, so here I am. This is what I need to be doing." The "deployment" is officially planned for Dec. 4-7, but veterans who have arrived early have already taken their stand in front of the militarized police blockade stopping traffic into and out of the camp: The "Veterans Stand for Standing Rock" action has garnered widespread support, with the National Nurses United (NNU) union sending $50,000 to fund their expenses and a popular fundraiser surpassing $1,000,000 Sunday morning.  "We salute the brave veterans who are standing up for the rights of the water protectors, and all of us who support this critical defense of the First Amendment right to assemble and protest without facing brutal and unwarranted attacks," said NNU co-president Jean Ross. 

Sense of Duty Draws U.S. Veterans to Dakota Pipeline Protest - In the back reaches of the Dakota Access Pipeline protest camp, U.S. military veterans, armed with saws, hammers and other tools, are quietly building barracks, an infirmary and a mess hall. Despite the bitter cold and an evacuation order from the U.S. Army Corps of Engineers, the veterans hope to erect enough space to house at least several hundred peers making their way into the Oceti Sakowin Camp here in Cannon Ball. Veterans interviewed by Reuters gave a plethora of motives for traveling here. Some felt it was their patriotic duty to defend protesters, especially since Native Americans have historically had an active presence in the U.S. military. For others, coming here offers a sense of purpose they have lacked since returning to civilian society. For all, the camaraderie with those who have also shared military service was important. “Our commitment has not expired because we took off the uniform,” said Charles Vondal, 51, an Army veteran and Native American from Turtle Mountain, N.D. “We understand what it means to put our lives on the line.” The response last month to a call for 2,000 veterans to act as a barrier between activists and law enforcement was much swifter than expected – with organizers having to stop accepting volunteers. The veterans arriving say their presence will make it less likely that police will resort again to aggressive tactics, after water cannons and tear gas were used on a group of protesters in sub-freezing temperatures two weeks ago. More than 500 activists have been arrested over the last several months. “I felt it was our duty to come and stand in front of the guns and the mace and the water and the threat that they pose to these people,” said Anthony Murtha, 29, from Detroit, who served in the U.S. Navy from 2009 to 2013. Local law enforcement said the specter of having thousands of military-trained veterans in the area was of concern, but they were not expecting any melees.

 US Army Corps of Engineers denies DAPL easement for Lake Oahe - The US Army Corps of Engineers has denied the final permit of the Dakota Access Pipeline. Some outlets are reporting the denial is to allow for a full environmental impact study and a possible reroute.  In a statment, Standing Rock Tribal Chairman Dave Archambault II says, “Today, the U.S. Army Corps of Engineers announced that it will not be granting the easement to cross Lake Oahe for the proposed Dakota Access Pipeline. Instead, the Corps will be undertaking an environmental impact statement to look at possible alternative routes. We wholeheartedly support the decision of the administration and commend with the utmost gratitude the courage it took on the part of President Obama, the Army Corps, the Department of Justice and the Department of the Interior to take steps to correct the course of history and to do the right thing.  Rep. Kevin Cramer, R-N.D., responded to the news, saying in a statement, "“I hoped even a lawless president wouldn’t continue to ignore the rule of law. However, it was becoming increasingly clear he was punting this issue down the road. Today’s unfortunate decision sends a very chilling signal to others who want to build infrastructure in this country. Roads, bridges, transmission lines, pipelines, wind farms and water lines will be very difficult, if not impossible, to build when criminal behavior is rewarded this way.Sen. Heidi Heitkamp, D-N.D., says in a statment, "“It’s long past time that a decision is made on the easement going under Lake Oahe,” said Heitkamp. “This administration’s delay in taking action -- after I’ve pushed the White House, Army Corps, and other federal agencies for months to make a decision -- means that today’s move doesn’t actually bring finality to the project. The pipeline still remains in limbo. The incoming administration already stated its support for the project and the courts have already stated twice that it appeared the Corps followed the required process in considering the permit. For the next month and a half, nothing about this project will change. Gov. Jack Dalrymple, R-N.D., says in a statement, "“The decision today by the Obama Administration to further postpone any action on the easement for the Dakota Access Pipeline is a serious mistake. It does nothing to resolve the issue, and worst of all it prolongs the serious problems faced by North Dakota law enforcement as they try to maintain public safety. The administration’s lack of action also prolongs the dangerous situation of having protesters camping during the winter on U.S. Army Corps of Engineers’ property.

US Army Corps denies easement to Dakota Access Pipeline, calls for new review -  The US Army Corps of Engineers said Sunday it would not issue an easement for the Dakota Access Pipeline to cross Lake Oahe in North Dakota and urged the company to look at alternate routes. Jo-Ellen Darcy, the army's assistant secretary for civil works, said in a statement that a full-scale environmental review was the best way to consider alternate routes across the Missouri River. In a longer memo to the company, Darcy gave a timeline of the Army Corps' review and said several documents from the company's environmental assessment related to potential oil spills were marked as confidential and were withheld from the public and the Standing Rock Sioux Tribe. The tribe has been at the heart of protests against the project for months, arguing the pipeline crossing half a mile north of its reservation puts its drinking water source at risk.The Army Corps met for five hours Friday with the company and the tribe to discuss concerns about pipeline spills and possible conditions that could be added to the federal easement to reduce the risk of accidents. They reached no agreement. Darcy said the project should undergo an environmental impact statement under the National Environmental Policy Act, which looks at the entirety of the project, alternatives and mitigation strategies. "I have concluded that a decision on whether to authorize the Dakota Access Pipeline to cross Lake Oahe at the proposed location merits additional analysis, more rigorous exploration and evaluation of reasonable siting alternatives, and greater public and tribal participation and comments," Darcy said. The memo did not rule out the possibility that the current route could again emerge as the best option after a more rigorous review. Representative Kevin Cramer, Republican-North Dakota, said in a statement that the decision has no legal basis and rewards criminal activity by protesters. Cramer was an energy adviser to President-elect Donald Trump during the campaign and has been floated as a potential appointee to his cabinet. Cramer said Trump would "restore law and order" when he takes office in January.

North Dakota Tribes, Activists Win After US Denies Permit Needed To Complete Dakota Access Pipeline - After months of protests by the Standing Rock Sioux Tribe of North Dakota, among others, the U.S. Army Corps of Engineers today effectively shut down the project by refusing to approve the last remaining permit required to complete a segment running under Lake Oahe.  PerReuters, the permit denial was heavily celebrated by protesters in Cannon Ball, North Dakota but means that Energy Transfer Partners will have to go back to the drawing board to identify a new route for the last segment of the 1,172 mile pipeline that is largely already complete.The U.S. Army Corps of Engineers said on Sunday it turned down a permit for a controversial pipeline project running through North Dakota, in a victory for Native Americans and climate activists who have protested against the project for several months.A celebration erupted at the main protest camp in Cannon Ball, North Dakota, where the Standing Rock Sioux tribe and others have been protesting the 1,172-mile (1,885-km) Dakota Access Pipeline for months.The line, owned by Texas-based Energy Transfer Partners LP, had been complete except for a segment planned to run under Lake Oahe, a reservoir formed by a dam on the Missouri River.That stretch required an easement from federal authorities, which delayed a decision on the permit twice, in an effort to consult further with the tribe."The Army will not grant an easement to cross Lake Oahe at the proposed location based on the current record," a statement from the U.S. Army said.

Standing Rock Celebrates as Army Corps Denies Key Permit, Halts Project -- The Obama Administration and the Army Corps of Engineers officially denied the easement to cross under Lake Oahe in North Dakota after a many months-long campaign by the Standing Rock Sioux Tribe and allies against the Dakota Access Pipeline . The Army Corps will undertake an environmental impact statement (EIS) to look at potential alternative routes for the pipeline. "Although we have had continuing discussion and exchanges of new information with the Standing Rock Sioux and Dakota Access, it's clear that there's more work to do," Assistant Sec. of the Army (Civil Works) Jo-Ellen Darcy said in a statement . "The best way to complete that work responsibly and expeditiously is to explore alternate routes for the pipeline crossing." Standing Rock Sioux Tribal Chairman Dave Archambault II celebrated the news. "We wholeheartedly support the decision of the administration and commend with the utmost gratitude the courage it took on the part of President Obama, the Army Corps, the Department of Justice and the Department of the Interior to take steps to correct the course of history and to do the right thing," he said. "The Standing Rock Sioux Tribe and all of  Indian Country will be forever grateful to the Obama Administration for this historic decision. We want to thank everyone who played a role in advocating for this cause. We thank the tribal youth who initiated this movement. We thank the millions of people around the globe who expressed support for our cause. We thank the thousands of people who came to the camps to support us, and the tens of thousands who donated time, talent and money to our efforts to stand against this pipeline in the name of protecting our water. We especially thank all of the other tribal nations and jurisdictions who stood in solidarity with us, and we stand ready to stand
with you if and when your people are in need."

The Lesson from Standing Rock: Organizing and Resistance Can Win – Naomi Klein - The climate movement already knew that mass organizing could get results. We learned it, most recently, in the Keystone XL fight and the resistance to Shell’s Arctic Drilling. Victories usually come incrementally, however, and at some delay after mass action.Standing Rock is different. This time the movement was still out on the land in massive numbers when the news came down. The line between resistance and results is bright and undeniable. That kind of victory is rare precisely because it’s contagious, because it shows people everywhere that organizing and resistance is not futile. And as Donald Trump moves closer and closer to the White House, that message is very important indeed. The youngest person here is someone many people credit with starting this remarkable movement: 13-year-old Tokata Iron Eyes, a fiercely grounded yet playful water-warrior who joined with her friends to spread the word about the threat the pipeline posed to their water. When I asked her how she felt about the breaking news she replied, “Like I got my future back”—and then we both broke down in tears.Everyone here is aware that the fight is not over. The company will challenge the decision. Trump will try to reverse it. “The legal path is not yet clear, and the need to put financial pressure on the banks invested in the pipeline is more crucial than ever,” says Chase Iron Eyes, Standing Rock Sioux Tribe attorney and member (and a recent congressional candidate).  Nor does today’s victory erase the need for justice and restitution for the string of shocking human-rights violations against the mainly Indigenous water protectors—the water cannons, the dog attacks, the hundreds arrested, the grave injuries inflicted by supposedly non-lethal weapons.  Still, there is more physical and psychic relief in this room than I have witnessed in my life. As Cody’s father, Don Two Bears, says when he arrives at the house, “It’s not over, but it’s a good day.”

Sioux chief asks protesters to disband, Trump to review pipeline decision | Reuters: A Native American leader asked thousands of protesters to return home after the federal government ruled against a controversial pipeline, despite the prospect of President-elect Donald Trump reversing the decision after he takes office. A coalition of Native American groups, environmentalists, Hollywood stars and veterans of the U.S. armed forces protested the $3.8 billion oil project. They said construction would damage sacred lands and any leaks could pollute the water supply of the Standing Rock Sioux tribe. The tribe still wants to speak with Trump about the Dakota Access Pipeline to prevent him from approving the final phase of construction, Standing Rock Sioux Chairman Dave Archambault told Reuters. "The current administration did the right thing and we need to educate the incoming administration and help them understand the right decision was made," he said.Trump's transition team said on Monday it would review the decision to delay completion once he takes office Jan. 20. "That's something that we support construction of and we'll review the full situation when we're in the White House and make the appropriate determination at that time," Trump spokesman Jason Miller said at a transition team news briefing. Archambault said nothing would happen over the winter before Trump takes power, so protesters should leave. Many had dug in for the harsh winter of the North Dakota plains, where a blizzard hit on Monday and 40 miles-per-hour (64 kmh) winds rattled tipis and tents. "We're thankful for everyone who joined this cause and stood with us," he said. "The people who are supporting us ... they can return home and enjoy this winter with their families. Same with law enforcement. I am asking them to go."

As blizzard mounts, Dakota Access Pipeline protesters 'not going anywhere'— As blizzard conditions mounted, a representative of the protest camps just south of the Dakota Access Pipeline construction zone issued a clear message Monday, Dec. 5. “As water protectors, we have a responsibility to be stewards of the water,” said John Bigelow, head of the camp’s media committee and a member of the Standing Rock Sioux. “We declare here today, we are not going anywhere.” Bigelow spoke at an afternoon press conference held in the large central dome used as a gathering and meeting hall by protesters in the Oceti Sakowin camp based at the confluence between the Missouri and Cannonball rivers north of the Standing Rock Sioux Reservation. His declaration came on the heels of a victory for protesters following the Sunday decision by the Army Corps of Engineers to deny an easement to Energy Transfer Partners — the Texas-based company building the pipeline — to drill beneath the Missouri River to provide a crucial crossing for the near-complete infrastructure project. Bigelow described the easement denial as “one battle in a larger movement against injustice” and said he found it unlikely that President-elect Donald Trump, who has voiced support for the pipeline, would prioritize enforcement of the Corps decision. He also doubted the Trump administration would apply punitive action if Energy Transfer Partners defied the Corps and drilled beneath its intended route below the Lake Oahe reservoir on the Missouri River without an easement. A statement from Energy Transfer Partners issued in response to the Corps decision stated the denial will not change its plans and the company will not consider rerouting the pipeline. Earlier Monday, Standing Rock Sioux Chairman David Archambault said protesters should leave the camps, Reuters reported. Archambault anticipated that no additional construction work would go forward over the winter season and said he would focus efforts on communications with Trump.

Dakota Access Pipeline operator lashes out at decision to halt construction -The operator of the Dakota Access Pipeline said this week that it remains committed to completing a section of the project that would run near the Standing Rock Sioux reservation, despite the US government’s decision to pursue alternative routes. In a sharply worded statement released early Monday, Energy Transfer Partners and Sunoco Logistics Partners criticized what it described as a “political” decision from the Army Corps of Engineers, suggesting that it will seek to complete the original route once President Obama leaves office.  “The White House’s directive today to the Corps for further delay is just the latest in a series of overt and transparent political actions by an administration which has abandoned the rule of law in favor of currying favor with a narrow and extreme political constituency,” the statement reads. The decision to halt construction on the contentious section of the Dakota Access Pipeline was welcomed by the Standing Rock Sioux tribe and environmental activists who have been protesting the project for months. The Sioux and other Native American groups have opposed construction of the pipeline under a part of the Missouri River known as Lake Oahe, amid concerns that it would contaminate drinking water and run through sacred burial grounds.  The Army Corps last month delayed a decision that would have allowed Energy Transfer Partners to access and drill under the reservoir, saying that additional study was needed to determine its environmental impact. Sunday’s decision brings construction to a halt and calls for environmental impact studies of alternative routes, though President-elect Donald Trump could seek to complete the original route when he takes office.  Trump, who owns stock in Energy Transfer Partners, has said he supports completing the project, though his transition team has insisted that his support has nothing to do with his personal investment. It appears Energy Transfer Partners is pinning its hopes on a more favorable position from the incoming administration.

Ryan blasts decision to block Dakota Access pipeline route | Fox News: House Speaker Paul Ryan called the U.S. Army Corps of Engineers’ decision Sunday to deny a government permit for the Dakota Access oil pipeline in southern North Dakota “big government decision-making at its worst.” Ryan, R-Wis., tweeted out his displeasure hours after the decision was made. He added that he looks "forward to putting this anti-energy presidency behind us." The decision handed a victory to the Standing Rock Sioux tribe and its supporters, who argued the project would threaten the tribe’s water source and cultural sites. Ryan comments echoed the sentiments of other North Dakota leaders. Gov. Jack Dalrymple called it a “serious mistake” that prolongs the dangerous situation” of having several hundred protesters who are camped out on federal land during the bitter winter season. U.S. Rep. Kevin Cramer said it's a "very chilling signal" for the future of infrastructure in the United States. The company building the pipeline, Dallas-based Energy Transfer Partners, slammed President Obama’s administration in a statement, calling the move political. The company said the decision was "just the latest in a series of overt and transparent political actions by an administration which has abandoned the rule of law in favor of currying favor with a narrow and extreme political constituency."

Trump Supports Dakota Access Pipeline. Did We Mention He’s Invested in It? -  President-elect Donald Trump favors completing the Dakota Access Pipeline, not because of his stock ownership in the companies building it but because it’s good policy, according to an aide’s memo to supporters.  Trump’s support for the divisive pipeline “has nothing to do with his personal investments and everything to do with promoting policies that benefit all Americans,” according to the memo this week reported by The Associated Press, Reuters and other news outlets.  “Those making such a claim are only attempting to distract from the fact that President-elect Trump has put forth serious policy proposals he plans to set in motion on Day One,” according to the memo to supporters and congressional staff. Trump’s extensive financial portfolio has raised worries that he will find it difficult to separate personal business from the national interest. He had pledged to remove himself from his company to avoid conflicts of interest, yet he hasn’t provided details on how the arrangement will work. The incoming Republican president has a multitude of business interests, and one sliver of his pie included investing in the companies behind the 1,172-mile pipeline that will link the North Dakota oil fields with existing energy infrastructure in Illinois. In May 2015, according to campaign disclosure reports, Trump owned between $500,000 and $1 million worth of shares of Energy Transfer Partners, the pipeline’s lead developer, but had less than $50,000 invested when he sold off the remainder of his shares this summer, according to The Washington Post.

The companies behind the Dakota Access Pipeline don't think they”ve lost - On Sunday, the Army Corps of Engineers seemed to hand a victory to the Standing Rock Sioux and their fellow protesters, who have been campaigning to stop the construction of an oil pipeline in North Dakota. After delaying a decision on Nov. 14, a week after the election, the Army Corps has now said it won’t grant an easement for the pipeline to travel beneath a dammed portion of the Missouri River. The parties behind the Dakota Access Pipeline should look into alternative routes, the corps said. But the saga is far from over. In fact, the reaction by the two companies constructing the pipeline, Energy Transfer Partners and Sunoco Logistics Partners, was telling. Dismissing the ruling as a “purely political action” that was part of the Obama administration’s desire to avoid making a final decision on the project, the companies insisted it would have no bearing on their plans whatsoever. They said they are “fully committed to ensuring that this vital project is brought to completion and fully expect to complete construction of the pipeline without any additional rerouting in and around Lake Oahe. Nothing this Administration has done today changes that in any way.” In other words, the companies believe that they, not the government nor the Native American tribes whose land could be impacted by the pipeline, make the decision. They’ve deemed the ruling illegitimate because it was made by an administration with which they disagree, and they signaled they will move ahead regardless. Investors seem to agree. The stock of Energy Transfer Partners only fell about 2 percent in early trading. There’s good reason to believe the companies’ analysis of the situation isn’t just posturing—and their confidence is downright terrifying. There are two possible reasons the Army Corps issued this decision. First, it could be that the corps, which is tasked with managing the health of large internal waterways and infrastructure projects, really believes that it is a bad idea to put a crude oil pipeline underneath a dammed portion of the Missouri River. Second, it’s possible that Obama political appointees higher up the chain of command leaned on the bureaucracy to issue a last-gasp environmental protection effort. Either way, it’s easy to see how this could be reversed in a matter of months. President-elect Donald Trump said last week that he favors the pipeline. The fact that Trump owns shares in some of the companies backing the pipeline company doesn’t seem to be a disqualifying issue for him.

The Standing Rock Sioux Will Be Ready To Take a Trump Challenge to Courts --In the wake of the Obama administration’s surprise decision to block a portion of the Dakota Access Pipeline, company reps seem confident they need only wait for President-elect Trump to keep building. But the lawyer who represents the Standing Rock Sioux says it won’t be so easy to overcome the legal hurdles.  “If an agency decides that a full environmental review is necessary, it can’t just change its mind with a stroke of a pen a few weeks later,” EarthJustice attorney Jan Hasselman told Grist. “That would be violation of the law, and it’s the kind of thing that a court would be called upon to review. It doesn’t mean they’re not going to try.”  Trump could force the pipeline through along the dispute route at Lake Oahe. He technically could ignore the Corps’ decision to fulfill a public Environmental Impact Statement with his newfound executive powers, but that might not be wise. “He could in the sense that you can rob a bank, but you’d get in trouble,” Hasselman said.If that were the case, Standing Rock would be prepared to take the matter to courts again, their lawyer told Grist. “Circumventing the environmental assessment now that the agency has determined it’s the right course of action shouldn’t pass muster under legal standards,” he added. For example, the Ninth Circuit has ruled that federal agencies can’t just flip on a dime on settled rulemaking that is based on facts because a new administration has taken over. The Supreme Court this year declined to take up the case, leaving the Circuit’s decision standing that the Bush administration couldn’t exempt the Tongass rainforest in Alaska from a conservation rule, when the agency’s fact-finding found otherwise. Unless a conservative Supreme Court reverses course, then Standing Rock still has that advantage in a Trump era. Going further to weaken environmental regulations overall would require a more robust change to the law with congressional action. With the law on their side for now, environmental justice advocates could challenge administration decisions just as they did in the Bush administration. (Talk about government interference: Trump is reportedly also considering privatizing oil-rich Native American land to boost oil companies.) Energy Transfer Partners has its share of options, too — even if Trump didn’t reverse the decision, it could still sue to maintain the current route.

“We beg for your forgiveness”: Veterans join Native elders in celebration ceremony (video of forgiveness ceremony) Wes Clark Jr., the son of retired U.S. Army general and former supreme commander at NATO Wesley Clark Sr., was part of a group of veterans at Standing Rock one day after the Army Corps announcement. The veterans joined Native American tribal elders in a ceremony celebrating the Dakota Access Pipeline easement denial.Lakota spiritual leader and medicine man Chief Leonard Crow Dog and Standing Rock Sioux spokeswoman Phyllis Young were among several Native elders who spoke, thanking the veterans for standing in solidarity during the protests. Clark got into formation by rank, with his veterans, and knelt before the elders asking for their forgiveness for the long brutal history between the United States and Native Americans: “Many of us, me particularly, are from the units that have hurt you over the many years. We came. We fought you. We took your land. We signed treaties that we broke. We stole minerals from your sacred hills. We blasted the faces of our presidents onto your sacred mountain. When we took still more land and then we took your children and then we tried to make your language and we tried to eliminate your language that God gave you, and the Creator gave you. We didn’t respect you, we polluted your Earth, we’ve hurt you in so many ways but we’ve come to say that we are sorry. We are at your service and we beg for your forgiveness.”Chief Leonard Crow Dog offered forgiveness and urged for world peace: “We do not own the land, the land owns us.” Despite the positive news, there is more work to do. “The black snake has never stopped and if they didn’t stop at desecrating our graves of our ancestors, they’ll stop at nothing.” Young said. “So there will be a motion filed by the Energy Transfer today to continue the pipeline … We are a peaceful movement, but we may have to make a move to protect our territory.”

PHOTOS: Forgiveness Ceremony at Standing Rock brings together Native Americans and Veterans -  9 photos - Denver Post.

Veterans at Standing Rock Heading to Flint Next-  Hundreds of U.S. veterans that joined the historic uprising at Standing Rock at a pivotal moment ahead of a key victory are turning attention to their next act of solidarity, this time to stand with communities suffering from the ongoing water crisis in Flint, Michigan.  One of the main organizers who brought together more than 2,000 veterans to form a human shield around water protectors at Standing Rock in the face of an anticipated violent crackdown, U.S. Army veteran Wesley Clark Jr., said that while details of the trip to Flint aren't finalized, the move is on the agenda.

Oil Pipeline Shut Down After Spill, Just 200 Miles From Standing Rock --A six-inch crude oil pipeline operated by Belle Fourche Pipeline Company in western North Dakota was shut down following discovery of a leak on Monday. The amount of the spill was not immediately known, but oil has leaked into the Ash Coulee Creek in Billings County.  The site of the spill is about 200 miles from the camp where members of the Standing Rock Sioux Tribe and their supporters have been protesting the construction of the Dakota Access Pipeline .  "A series of booms have been placed across the creek to prevent downstream migration and a siphon dam has been constructed four miles downstream of the release point," Bill Suess, spill investigation program manager for the North Dakota Department of health, said. The Belle Fourche Pipeline Co. is part of the family-owned True companies , which also operates Bridger Pipeline LLC. Both pipelines are operated from the same control room in Casper, Wyoming. From 2006 to 2014, Belle Fourche reported 21 incidents, leaking a total of 272,832 gallons of oil. Bridger Pipeline recorded nine pipeline incidents in the same period, spilling nearly 11,000 gallons of crude. "In general, Bridger has a poor compliance history," wrote a federal regulator charged with overseeing pipeline safety in a 2012 order regarding a 2006 oil spill. A Belle Fourche pipeline that spilled 12,200 gallons in May, 2014 occurred on Bureau of Land Management (BLM) land near Buffalo, Wyoming. It was later discovered that Belle Fourche did not have a permit to operate the land. Its sister company, Bridger, was fined $27,029 for trespassing by the BLM.   Bridger was also responsible for dumping up to 50,000 gallons of crude into the scenic Yellowstone River in 2015.

North Dakota Could Be Biggest Loser in Ruling Against Oil PipelineEnergy Transfer Partners, the nation’s biggest pipeline operator, has lost hundreds of millions of dollars from delays in the completion of the Dakota Access Pipeline. And its standoff with the Standing Rock Sioux Tribe over a section running through tribal lands could mean an additional $80 million a month in losses. But it is not the only one paying the price. For North Dakota’s oil producers, once riding high on production from the booming Bakken fields, it is a new blow, after the plunge in oil prices that has shifted the industry’s activity and focus back to more traditional oil regions.  Fields with lower production costs in Texas and Oklahoma have been far more lucrative than North Dakota’s in recent years. The pipeline was meant to give Dakota producers new leverage in the market by reducing their dependence on more costly rail shipments for delivery. “The biggest loser is the State of North Dakota,” said Ron Ness, president of the North Dakota Petroleum Council. “Companies are not going to get as good a price for their Bakken barrels. It’s a significant impact on their revenues.” Bakken producers are forced to ship much of their oil by rail, which adds costs of at least $4 and sometimes as much as $10 per barrel shipped. That created a critical disadvantage for companies like Hess and Whiting Petroleum, which had large stakes in the Bakken. A barrel of Bakken oil now sells for about $1.50 below the American benchmark — $49.77 on Thursday — rarely making it profitable to ship to major markets.

Court to consider forcing approval of Dakota Access pipeline | TheHill: A federal judge will consider whether to require the federal government approve the controversial Dakota Access oil pipeline. Energy Transfer Partners, which is developing the pipeline, argued in court that when the Army Corps of Engineers issued a permit in July to build the line under Lake Oahe in North Dakota, it also took all the necessary steps to issue the easement that the company also needs.Judge James Boasberg of the District Court for the District of Columbia set a briefing schedule at a Friday hearing in Washington for Energy Transfer’s claim that granting the easement is a “ministerial” action and mandated since the company has the related permit. “The final decision on the right-of-way was made on July 25,” David Debold, the attorney representing Dakota Access, told Boasberg at the Friday hearing. Debold said Dakota Access is losing nearly $20 million every week that the Army Corps delays its decision on the easement. He requested “expedited” consideration of the motion, which Dakota Access first formally made in November. Briefs from Dakota Access, the tribes trying to stop the construction and the federal government will be complete by February under Boasberg’s order, and he may schedule oral arguments after that before making a decision.

 As Dakota Celebrates, Trump Advisors Propose Privatizing Oil-Rich Indian Reservations --With celebrations continuing at the site of the Dakota Access Pipeline protest (following the "Monumental victory" following the Obama administration's decision not to grant the construction permit), it appears the Trump administration has very different ideas. Having confirmed Trump's support for the pipeline (not to do with his investments), Reuters reports a Trump advisory group proposes the politically explosive idea of putting oil-rich Indian reservation lands into private ownership. As we noted last night, after months of protests by the Standing Rock Sioux Tribe of North Dakota, among others, the U.S. Army Corps of Engineers today effectively shut down the project by refusing to approve the last remaining permit required to complete a segment running under Lake Oahe.  Per Reuters, the permit denial was heavily celebrated by protesters in Cannon Ball, North Dakota but means that Energy Transfer Partners will have to go back to the drawing board to identify a new route for the last segment of the 1,172 mile pipeline that is largely already complete.And now, as Reuters reports, a group of advisors to President-elect Donald Trump on Native American issues wants to free those resources from what they call a suffocating federal bureaucracy that holds title to 56 million acres of tribal lands, two chairmen of the coalition told Reuters in exclusive interviews. The group proposes to put those lands into private ownership - a politically explosive idea that could upend more than century of policy designed to preserve Indian tribes on U.S.-owned reservations, which are governed by tribal leaders as sovereign nations.

Trump advisors aim to privatize oil-rich Indian reservations | Reuters: Native American reservations cover just 2 percent of the United States, but they may contain about a fifth of the nation’s oil and gas, along with vast coal reserves. Now, a group of advisors to President-elect Donald Trump on Native American issues wants to free those resources from what they call a suffocating federal bureaucracy that holds title to 56 million acres of tribal lands, two chairmen of the coalition told Reuters in exclusive interviews. The group proposes to put those lands into private ownership - a politically explosive idea that could upend more than century of policy designed to preserve Indian tribes on U.S.-owned reservations, which are governed by tribal leaders as sovereign nations. The tribes have rights to use the land, but they do not own it. They can drill it and reap the profits, but only under regulations that are far more burdensome than those applied to private property. "We should take tribal land away from public treatment," said Markwayne Mullin, a Republican U.S. Representative from Oklahoma and a Cherokee tribe member who is co-chairing Trump’s Native American Affairs Coalition. "As long as we can do it without unintended consequences, I think we will have broad support around Indian country."The plan dovetails with Trump’s larger aim of slashing regulation to boost energy production. It could deeply divide Native American leaders, who hold a range of opinions on the proper balance between development and conservation.

Mary Fallin Is As Pro-Oil As They Come --Governor Mary Fallin of Oklahoma, a vice-chair of the Trump transition team whose aggressive pro-oil and anti-tax policies have made her an industry darling, has emerged as a top contender to be our country's next Secretary of the Interior. If she is formally nominated in the coming days, Fallin could soon lead a federal department responsible for protecting endangered species, handling Native American affairs, controlling the U.S. Geological Survey, administering lucrative oil and gas leasing programs, and managing more than 440 million acres of public land, including the National Park system. Should Fallin take the reins at Interior, she will have broad power to reshape policies that will impact the future of the United States' most beloved landscapes. Her priorities will undoubtedly be very different than those of current Interior Secretary Sally Jewell, who has used her time in the post to promote the outdoor recreation economy, offset energy development with large-scale land conservation projects, and preserve new national monuments. Johnson Bridgwater, the director of the Sierra Club's Oklahoma chapter, calls Fallin's potential nomination "problematic.""She has basically been an absentee governor on all important environmental issues in our state during her term," he says, specifically highlighting her slow response to the oil-industry-induced earthquakes that have rocked the state as well as her decision to dissolve the Oklahoma Scenic Rivers Commission. Fallin, he adds, has starved the state's environmental enforcement agencies of funding while at the same time prioritizing the desires of fossil fuel developers.   Oklahoma's oil and gas interests, for their part, laud the governor's legacy. Fallin has "balanced competing interests well, including oil and gas producers, environmental concerns, royalty owners and surface," says Chad Warmington, president of the Oklahoma Oil and Gas Association, in a written statement to Outside. "She understands the importance of keeping the United States a number one global competitor in oil and natural gas.”

 Trump Shuns Palin, Picks McMorris Rodgers For Interior Secretary -- In what is being touted as further diversification of the president-elect administration, Donald Trump is expected to name Rep. Cathy McMorris Rodgers (R-Wash.) to lead the Interior Department, according to reports. McMorris Rodgers gets the nod ahead of Sarah Palin and Harold Hamm.  The Hill reports, Trump will tap McMorris-Rodgers, a five-term Republican who represents eastern Washington and is the chair of the House GOP Conference, to lead the department, the New York Times and Wall Street Journal reported Friday. McMorris Rodgers is a vice chair of Trump’s transition team and the highest-ranking woman in GOP leadership. She formally met with Trump on Nov. 20. Her office declined to comment Friday.  If confirmed by the Senate, McMorris Rodgers would lead the 70,000-employee, $12 billion Interior Department, which manages federal lands for both preservation and energy and mineral development, controls offshore drilling and oversees national parks. She would be Trump’s point person on public lands energy development, something Trump said he wants to expand as president.  McMorris Rodgers is a booster of hydropower and has pushed legislation to tackle forest fires in the West.  She has voted in favor of expanding fossil fuel development on public lands and in federal areas off-shore. She opposes efforts to change the royalty rates on federal coal mining, something pushed hard by Obama’s Interior Department, and voted for a GOP budget that would allow the sale of public lands to mining companies.  In the past, she has introduced legislation to require congressional approval before the president can designate a national monument, and a bill directing the Bureau of Land Management to release public lands it holds that it has deemed not suitable for wilderness status.

Oil’s Most Popular Trading Products May Soon Be Shut Down --For most retail investors, buying physical crude oil as a commodity is not an option. Instead, many investors turn to exchange traded notes (ETNs) as a way to speculate on changes in oil prices themselves.But direct oil investment products like USO have always been dicey as investment choices.More sophisticated investors with big Wall Street banks who have high speed trading and information advantages can essentially front run products like USO which trade oil contracts on a predictable basis. As a result, USO has been a far from perfect tool to replicate oil’s price movements.By the same token, leveraged structured products including some oil ETNs are an even worse choice. For evidence of that, one need look no further than UWTI, the leveraged exchange traded note run by Credit Suisse. Credit Suisse recently announced that it was shutting down UWTI and a similar but slightly smaller leveraged ETN also focused on oil.The problem with products like UWTI is not that the product is unsuccessful, but rather that it is broken. UWTI was supposed to give investors triple the daily exposure to a crude oil index. That meant gains or losses from speculating on oil could be substantially magnified by investors using the product. For that reason, the daily dollar trading value of UWTI was roughly the same as the dollar value of megacap Exxon Mobil’s daily trading volume. Similarly, UWTI has incredible liquidity – roughly half its shares turned over on any given day. That was largely driven by the fact that ETNs are not appropriate long term investments because of the transactions costs they incur in operations. Unfortunately for traders, those transactions costs add up over time – that’s true in the case of UWTI and virtually all other leveraged ETNs. In the case of UWTI, this meant that the shares lost 99.6 percent of their value over the last four years even as oil has only fallen by 50 percent. The only thing that stopped UWTI from ending up as one of the cheapest of penny stock investments is that the shares went through multiple reverse splits. Investors in UWTI were virtually guaranteed to lose money on the shares if they held them for even a short time, especially when compared to the alternative of investing in less costly alternatives offering exposure to oil.

Oil and gas exploration to turn profitable next year: WoodMac report - Consultancy Wood Mackenzie has forecast a return to profitability for oil and gas exploration next year thanks to sharp cost reductions, but said drillers will avoid exploration geared toward over-supplied LNG markets or in high-cost regions like the Arctic. In a report published Friday, Wood Mackenzie said deepwater well costs would fall to $30 million or less next year, with such drilling proving profitable over the development cycle at oil prices under $50/b. By comparison a single exploration well drilled by BP west of the Shetland Islands in 2012-13 is thought to have cost somewhere between $100 million and $200 million. Exploration "has a good chance of achieving double digit returns in 2017," the consultancy's exploration vice president, Andrew Latham, said.While exploration spending next year would only at best match this year's level, "lower costs mean well counts may hold up close to 2016 numbers," Wood Mackenzie said. It said exploration spending would account for just 8% of upstream investment next year, compared with the historic norm of around 14%, and that as in 2015-16, exploration would be led by the majors and a handful of independents.

U.S. Oil Exports Skyrocket Despite Climate Pacts -- Seven years ago, the U.S. exported its crude oil to just one country — Canada. This year, 22 countries received American crude oil, marking a more than 1,000 percent increase in U.S. oil exports since 2009, according to U.S. Department of Energy data released this week. Since Congress lifted restrictions on American oil exports a year ago, more and more U.S. crude oil has been streaming onto the global oil market to supply the world’s growing demand. It’s happening even as the U.S. and Canada have agreed to cut emissions from oil and gas operations and countries agree to cut their greenhouse gas pollution under the Paris Climate Agreement. The international pact aims to prevent global warming from exceeding 2°C (3.6°F).  The oil-friendly policies of the incoming Trump administration are not expected to significantly affect U.S. crude oil exports because the price of oil will largely determine the pace of  U.S. exports and production. This week, OPEC announced it would cut its production in a move to raise global oil prices, which could boost U.S. exports even more.  Where crude oil is shipped and refined, and how it is burned, are major factors in the emissions that drive climate change. Crude oil is the world’s second-largest source of carbon dioxide emissions — responsible for 33 percent of global carbon emissions. Oil ranks just behind coal, which emits 46 percent of the world’s man-made carbon dioxide, International Energy Agency data show.

More LNG outflows support US as net gas exporter, but position is tenuous - Platts snapshot video - Record-setting LNG exports in November were just enough to make the US a net exporter of natural gas for the first time ever, driven by profit margins to both Europe and Asia. While US LNG netbacks reached record highs, feedgas deliveries also climbed. J. Robinson evaluates the profits to be had and shares a Platts Analytics forecast for exports.

 US EIA lowers expected 2017 gas marketed output to 79.94 Bcf/d - The US Energy Information Administration Tuesday lowered its natural gas marketed production estimate for 2017 by 310 MMcf/d to an average 79.94 Bcf/d. Gas production is forecast to average 77.5 Bcf/d in 2016, a 1.3 Bcf/d decline from the 2015 level, marking the first annual decline since 2005, the agency said in its December Short-Term Energy Outlook. But EIA expected production to pick up starting in November because of drilling activity increases and new infrastructure coming online to bring gas to demand centers. "In 2017, forecast natural gas production increases by an average of 2.5 Bcf/d from the 2016 level," the agency said. The agency raised its projections for gas marketed production for the fourth quarter by 450 MMcf/d to 76.89 Bcf/d, and raised its full 2016 estimate 150 MMcf/d to average of 77.48 Bcf/d.For the Q4, EIA lowered its estimate for US natural gas consumption by 1.33 Bcf/d to 75.57 Bcf/d. The agency said that demand for US gas for 2016 is expected to average 75.22 Bcf/d -- 44 MMcf/d below last month's estimate -- compared with 74.65 Bcf/d in 2015. The report noted, however, that natural gas consumption for December 2016 through March 2017 is likely to be 4% above the same time last year, driven by temperatures projected to be 3% higher than normal but still 13% below the same period a year earlier.

Disappointed by Keystone XL setback, Canadians look to Asia. -  It’s been a tough few years for Canadian oil producers. As they ramped up production in the oil sands, Canadian E&Ps faced pipeline takeaway constraints that drove down the price of Western Canadian Select versus Gulf Coast crudes. The Keystone XL pipeline would have largely solved things, but when that project was killed by Canada’s U.S. friends and neighbors, oil sands producers had to settle for a series of smaller, more incremental projects that provided only a partial fix. The devastating Alberta fires of May 2016 reduced production and pretty much eliminated constraints for much of this year. But volumes have recovered, and if oil sands production is to continue growing, more pipelines and new customers will be needed. Today we consider Canada’s long-running effort to ensure there’s enough capacity to move its crude to market, two major projects that just won the backing of the Canadian government, and what may be next.  The “serenity prayer” —a good one to know, in these uncertain times—goes like this, “God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.” As we’ll get to, Canadians appear to be taking these words to heart when it comes to the development of pipeline takeaway capacity.

EU ministers back sharing natural gas contract supply data, not prices -  EU energy ministers have backed sharing supply data from large commercial natural gas contracts with the relevant national authority but stopped short of automatic notification to the European Commission, according to EU Council documents published late Monday. Ministers agreed in principle that companies would have to notify contracts covering 40% or more of national gas demand to the competent national authority. This national authority would assess their impact on national and regional gas supply security, and then choose which, if any, to notify to the EC, based on their security impact, according to the documents published after ministers met Monday in Brussels. The EC proposed in February that companies automatically notify it of all long-term contracts covering or contributing to 40% or more of annual gas demand in the EU country concerned. The proposals were part of the EU's draft update to the EU's 2010 gas supply security regulation. Ministers added that the 40% national demand threshold would have to be "further clarified," given the EU has an integrated gas market. Comparing contracts to national demand is irrelevant when gas can be traded anywhere in the EU market, Germany's energy state secretary Rainer Baake said during a debate at Monday's meeting. He also questioned the value of assessing long-term contracts, given that short-term contracts are becoming more common.

Israel, Greece, Cyprus to push for gas pipeline to Europe: sources -  Israel, Greece, and Cyprus have decided to take their proposal for a pipeline from gas fields offshore Israel and Cyprus to Europe, Israeli energy sources said late Thursday. This followed talks in Jerusalem between senior government officials of the three countries. The sources said representatives of the three countries would hold talks soon with European Union Climate Action and Energy Commissioner Miguel Arias Canete to promote the proposed pipeline that would run from offshore Israel via Cyprus and then on to Greece, approximately 1,400 km (868 miles). The EU has been looking for ways to reduce its dependence on Russian gas. "A common pipeline is one of the strategic options for exporting gas to Europe from the Eastern Mediterranean and additional gas discoveries in Israeli and Cypriot waters will make this attractive," Israeli Energy and Water Minister Yuval Steinitz said at the end of the talks.Greece was represented by Economy, Industry, and Tourism Minister Giorgos Stathakis and Cyprus by Energy, Commerce, Industry, and Tourism Minister Georgios Lakkotrypis. A feasibility study conducted by IGI-Poseidon for the European Commission put the cost of the pipeline at $5.7 billion. Israel is pinning its hopes of export gas on the development of the huge Leviathan field, which is expected to begin commercial production at the end of 2019. The Leviathan partners are also considering gas exports via pipeline to Turkey and largely idle LNG plants in Egypt.

Millions of West Africans to benefit from ban on toxic fuel imports: U.N. | Reuters: - Five West African countries have agreed to stop importing toxic fuels from Europe in a move that could improve the health of more than 250 million people, according to the United Nations. Nigeria, Benin, Togo, Ghana, and Ivory Coast have pledged to introduce strict standards to ensure they use cleaner, low-sulphur fuels for their vehicles, effectively stopping Europe from exporting its dirty fuels, the U.N. Environment Programme (UNEP) said. European trading firms have been exploiting weak regulations in West Africa to export fuels with levels of sulphur up to 300 times higher than is permitted in Europe, campaign group Public Eye said in a report published in September. Public Eye described the issue as a "ticking time bomb" as cities grow across Africa and populations boom in major hubs including Nigeria's Lagos and Ghana's Accra. "West Africa is sending a strong message that it is no longer accepting dirty fuels from Europe ... they are placing the health of their people first," said UNEP head Erik Solheim. "Air pollution is killing millions of people every year and we need to ensure that all countries urgently introduce cleaner fuels and vehicles to help reduce the shocking statistics," Solheim said in a statement released late on Monday. Sulphur is responsible for deadly heart and lung diseases, health experts say.

Nigeria, Morocco wealth funds sign pipeline deal to bring natural gas to Europe - A new pipeline project to bring Nigerian gas through Africa to Europe has been launched by the sovereign wealth funds of Nigeria and Morocco, the latest attempt to link Nigeria's vast gas resources with the lucrative European gas market. The Trans-African Pipeline will be developed jointly by the Moroccan sovereign wealth fund Ithmar Capital and the Nigeria Sovereign Investment Authority, the partners said Monday. Nigeria has huge gas reserves totaling some 5.1 Tcm, according to the latest BP Statistical Review of World Energy, but few options for monetizing the gas other than its LNG export facility.A previous pipeline project -- the Trans-Saharan Gas Pipeline -- was agreed on between Nigeria's NNPC and Algeria's Sonatrach in 2002, and an intergovernmental accord signed in 2009. But there has been little progress on the project since, given the huge distances involved and the high cost of developing such a vast pipeline project. On Monday, the governments of Nigeria and Morocco announced they would jointly develop a new regional gas pipeline "connecting the two countries, bringing the resources of Nigeria to Morocco, its neighbors and Europe." It is unclear exactly the route the pipeline would take, though the developers foresee it following the coast. "The pipeline will run an estimated 4,000 km along the west coast of Africa and the countries through which it runs and the exact route will be determined as the project moves forward, based on further research," a spokesman for Ithmar told S&P Global Platts.

India pushes Nigeria for more oil term contract volumes - Indian state-run oil refiners have called for Nigeria to increase its total term contract volumes next year by more than 20% as demand from the South Asian country climbs, an official from Nigeria's state-owned Nigerian National Petroleum Corporation said. This request comes a few weeks before Nigeria's crude oil term lifting contracts for 2017 are finalized, which will be decided by mid-December. India as the largest buyer of Nigerian crude, has always said it should have a longer-term arrangement with NNPC to ensure security of supply. "Three Indian companies mentioned that they are looking for a combined total of 11 million mt [in 2017] from 9 million mt [this year]," Anibor O. Kragha, group executive director at NNPC, told S&P Global Platts in an interview on the sidelines of the Petrotech conference in New Delhi late Monday."Now what they will get is a balance between term contracts and [spot] sales contracts," he added. The Nigerian crude oil term contracts involve the export of around 1.17 million b/d of Nigerian crude, out of the 2.2 million b/d the country can theoretically produce. They are then sold by contract holders to end-users, refiners and other buyers. But with Nigerian oil output sharply down due to renewed militancy, the term volumes could be much lower for 2017 if output does not rebound.

Indian PM pledges easier policies to woo foreign investors to oil, natural gas sector --Indian Prime Minister Narendra Modi Monday pledged to continue working on oil and gas policies to make them more attractive to foreign and private investors and step up efforts to boost domestic production in an effort to meet the country's growing demand for energy resources. With the Indian economy expected to grow five-fold by 2040, India will account for one-fourth of the incremental global energy demand until that period, Modi told the opening session of the three-day Petrotech conference in New Delhi. "India is expected to consume more oil in 2040 than the whole of Europe. We expect manufacturing to account for 25% of the GDP by 2022 against 16% now," he said. India has made good policy progress since October 2014, when it deregulated diesel prices. The government then moved to boosting LPG penetration to reduce reliance on subsidized kerosene, while at the same time revamping the LPG subsidy system. This was followed by the announcement in March this year of a new upstream policy to attract much-needed investment in exploration and production.Modi added that current commercial vehicle population of 13 million would multiply to reach 56 million by 2040. And in the global civil aviation market, India, which is currently the eighth-largest market in the world, would become the third-largest by 2034. "Growth in the aviation sector is expected to raise demand for aviation fuel four times by 2040," he said. India's oil products demand grew 8.5% year on year in 2015 to 177 million mt, or 3.81 million b/d, as gasoline, LPG and naphtha saw double-digit growth in consumption, according to India's Petroleum Planning and Analysis Cell. The International Energy Agency expects Indian oil demand to average at 4.3 million b/d in 2016.

Beijing expected to end oil product export quotas for independent refiners - China's independent refineries likely have to rely on state-owned trading companies to export oil products in 2017 as Beijing is likely to stop awarding them quotas to export directly, informed sources said Friday. "It [stopping awarding quotas] is to restrict the growth of exports from independent refineries," said a source from a state-owned trading company, adding that the Ministry of Commerce had already held talks with the state-owned company about matter. "The independent refineries are still allowed to export, but need to sell through the state-owned trading houses which have normal trade permission," he added. The normal trade permissions were expected to be awarded only to the trading arms of Sinopec, CNPC, CNOOC and Sinochem, sources said. The ministry was not available to comment on Friday.But several factors support the suspension, the foremost of which is that the policy of allocating export quotas to independent refiners is temporary. "We are not sure whether the government would still allow us to export after the end of this year," said Zhang Liucheng, VP of Dongming, the country's biggest independent refinery. During the APPEC meeting in September, Zhang said oil product exports by independent refineries were expected to rise with more investment for better infrastructure if the government continued to issue them with export quotas. The Ministry of Commerce in mid-November last year said it would allow independent refiners that had already won crude import quotas the right to export oil products, but the permission only ran until the end of 2016. This year, 12 independent refineries hold a total 1.675 million mt of oil products export quotas. Under the quotas, they are allowed to directly sell their oil products -- which must be processed from imported crude oil -- to overseas buyers.

 Arab producers to keep Asia term crude oil, apply OPEC cut to extra supplies: sources -  Major Arab oil producing countries are looking to keep their term crude supplies into Asia at least for January loadings, while coping with OPEC's production cut agreement first with their incremental supply volumes, sources with direct knowledge of the matter said Monday. A number of major Arab oil producers told S&P Global Platts that producers intend to keep their term crude supply volumes with Asian customers and implement last week's OPEC agreement with their incremental supply volumes where necessary. The Arab producers' intended move came to light as some Asian refiners were trying to assess if OPEC's announced production cut would go beyond the tolerance flexibility clause in their term contracts with Middle East suppliers.While major national oil companies in the Middle East sell the majority of their crude production on a term basis, there are typically incremental volumes sold to refiners on a case by case basis. With OPEC looking to maintain its policy of keeping market share balanced by cutting surplus oil supplied into the market, national oil companies are seeking to minimize any impact to their key buyers across Asia, sources said. "Most [term] contracts [have been] renewed already [for 2017], [I] don't think the term commitments will be affected," a source at a national oil company within the Gulf Cooperation Council said. This was echoed by another major oil producer within the GCC. "We are still working through [the cuts] right now, we will protect the term [sales] the rest [incremental sales] will not be possible [due to the cuts]," the source said. A source at another GCC member state's national oil company noted that they had been preparing for the potential of an OPEC cut for a number of months and there should be no major impact on key term buyers.

 Do the numbers behind the Opec production deal add up? -- The supply agreement agreed by Opec on Wednesday sent oil prices soaring above $50 a barrel but there are many reasons for caution, not least in making sure no one cheats and producers from outside the cartel also contribute. While the deal looks straightforward, it is anything but and the devil is in the detail. The conference documents released on Wednesday evening show Opec countries, except Libya and Nigeria, reducing production from the start of January by 1.2m barrels a day to 32.5m for an initial period of six months. But extrapolating the numbers from the statement produces a production ceiling of 32.68m b/d, which is almost 200,000 b/d higher than the new target. “The difference might come from production estimates from Nigeria and Libya,” Another number that stands out relates to Iran.Because Tehran has spent years under sanctions, Opec agreed to award it an output baseline of 3.975m b/d — the highest pre-sanctions level it produced in 2005 — unlike most others whose baseline is what they pumped in October. A 4.5 per cent reduction from this level arrives at almost 3.8m b/d, which delegates say is an average level at which it has finally agreed to freeze for six months from January. Iran’s current output is closer to 3.7m, which gives the country room for an increase of at least 90,000 in theory at least. The reason for this fudge was to placate hardliners in Iran who wanted to make sure the country did not commit to any production cuts and meet demands from Saudi Arabia that Tehran had to be part of any deal. By using this convoluted formula, both sides can save face. Analysts have also suggested Opec may have miscalculated due to Angola’s production target being derived from its output in a different month than other members. It was agreed that, due to field maintenance affecting Angola’s output by about 200,000 b/d in October, the African country’s target would instead be based on what it produced the previous month. But Opec does not appear to have added the 200,000 production to its starting point.

 Saudi Arabia Surrenders To U.S. Shale - The new OPEC deal to cut oil output – the cartel’s first since 2008 – amounts to nothing less than Saudi Arabia’s surrender to the power of American shale.It has come about due to Riyadh’s belated, horrified understanding that it has utterly lost control over the energy market, running through its capital reserves in the process. Rather than young, feckless Deputy Crown Prince Mohammed bin Salman using Saudi Arabia’s John D Rockefeller strategy to permanently drive U.S. shale out of the energy market, the exact opposite result has occurred. Unwittingly, the Saudis have made the Americans the new global energy swing producer, the permanent ceiling for the global price of oil.This, in its way, is as momentous a shift in global power as the stunning recent Brexit and Donald Trump votes. Whereas Brexit showed Europe to be in absolute decline, while the election of Trump brings to an abrupt end 70 years of the U.S. as the global ordering power, the Saudi’s meek surrender brings to a close the long age of OPEC domination of the world’s energy market. This year truly has seen the death of one world order, along with the uncertain birth of another.The details of the new OPEC pact make it clear that even this belated effort to quell the self-imposed bleeding brought on by Saudi attempts to drive U.S. shale out of the energy market – by, in Rockefeller style, over-producing to drive down prices and eradicate their competitors – is problematic at best.OPEC as a whole agreed to cut 1.2m barrels per day (bpd) from production from the beginning of the new year, with the Saudis themselves bearing the brunt of the cuts with a personal reduction agreed to at just under 500,000 bpd. But as OPEC now accounts for less than half of all energy output in the world, it is a very weakened cartel, dependent on the kindness of strangers to survive.Externally, this means Russia. The new global energy reality has been forthrightly addressed in the accord, as the interim deal is contingent on securing a further 600,000 bpd in cuts from non-OPEC members, with Russia expected to contribute 300,000 bpd to this total. Unsurprisingly, the Kremlin is less than enthused, as Russian oil minister Alexander Novak blandly said that at best his country would only cut its production gradually, due to “technical problems”. OPEC isn’t much of a cartel if it is utterly dependent on major (and generally unwilling) outside players such as Russia to make its internal agreements work.

Exclusive: How Putin, Khamenei and Saudi prince got OPEC deal done | Reuters: Russian President Vladimir Putin played a crucial role in helping OPEC rivals Iran and Saudi Arabia set aside differences to forge the cartel's first deal with non-OPEC Russia in 15 years. Interventions ahead of Wednesday's OPEC meeting came at key moments from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran's Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani, OPEC and non-OPEC sources said. Putin’s role as intermediary between Riyadh and Tehran was pivotal, testament to the rising influence of Russia in the Middle East since its military intervention in the Syrian civil war just over a year ago. It started when Putin met Saudi Prince Mohammed in September on the sidelines of a G20 gathering in China. The two agreed to cooperate to help world oil markets clear a glut that had more than halved oil prices since 2014, pummeling Russian and Saudi government revenues. Oil prices are up 10 pct this week topping $53 a barrel. The financial pain made a deal possible despite the huge political differences between Russia and Saudi over the civil war in Syria. "Putin wants the deal. Full stop. Russian companies will have to cut production," said a Russian energy source briefed on the discussions. In September, OPEC agreed in principle at a meeting in Algiers to reduce output for the first time since the 2008 financial crisis. But the individual country commitments required to finalize a deal at Wednesday's Vienna meeting still required much diplomacy.

Russia Proves Consummate Dealmaker in Bringing About OPEC Production Cut.-- Russia's efforts were key to getting the OPEC cartel to reach last week's agreement, and included Russian President Vladimir Putin's meetings with his counterparts in Saudi Arabia and Iran, the Russian newspaper Vzglyad reported.On Wednesday the 14 members of OPEC agreed a deal to cut production, ending several years of discord within the cartel. Leading exporter Saudi Arabia, which blocked a production cut in November 2014 that would have bolstered global oil prices, has now managed to agree a deal with Iran, Venezuela and other members of the cartel. OPEC has agreed to cut production from January 1 by about 1.2 million barrels per day, or about 4.5 percent of current production, to 32.5 million barrels per day. The price of oil surged nine percent after Wednesday's announcement, and has continued to rise since then. On Friday Brent crude was trading at $54.46 per barrel, 13 percent higher than at the start of the week. The deal was reached despite serious differences within OPEC. Iran, having recently had economic sanctions connected with its nuclear program lifted, was keen to increase its production to pre-sanctions levels. In Libya and Nigeria, political instability and terror attacks on oil infrastructure have decreased output, making them reluctant to agree to a freeze limiting their oil output at current levels. All three countries have been granted an exemption from the deal, which is contingent on securing the agreement of non-OPEC producers to lower production by 600,000 barrels per day.

How Russia Outsmarted OPEC - OPEC’s historical deal to cut production has been sealed, and oil prices have jumped as a result, comfortably above the $50 per barrel mark. According to Lukoil’s vice president, Leonid Fedun, the average price of crude in 2017 could reach US$60 a barrel, thanks in no small part to that agreement. According to some observers, the effect won’t be so noticeable, and prices will continue to hover around US$50. In any case, Russia will certainly benefit from the cut agreement, as the chief of VTB, one of the country’s largest banks, said recently. Andrey Kostin said that the decision to cut production will, on the one hand, prop up international prices, which of course is good news for Russia, and on the other hand, it will benefit the ruble, an outcome which was also to be expected given the central place crude oil occupies in Russia’s export mix.What’s perhaps more interesting is that Russia did not, in fact, obligate itself to cut from essential production. It surfaced last week that the country’s total output had reached a new post-Soviet record of over 11.2 million barrels per day. The precise figure, according to Deputy Energy Minister Kirill Molodtsov, was 11.231 million barrels, and it is from this production level that Russia will take off the 300,000 bpd it agreed to cut to help OPEC in its market rebalancing efforts.Incidentally, Libya, which has been granted an exemption from the agreement, plans to ramp up its own output by 300,000 bpd by the end of 2016. To compare, Saudi Arabia pumped 10.6 million bpd in November, and now has to cut 486,000 bpd from that figure. Its friends in the region, including Iraq, Kuwait, Qatar, and the UAE, will cut a combined 510,000 bpd from their output.

Ahead of promised cut, Russia's oil output hits record high | Reuters: Russia plans to use its November oil production, which was its highest in almost 30 years, as its baseline when it cuts output under this week's deal with OPEC, Deputy Energy Minister Kirill Molodtsov said on Friday. Russia has promised to gradually cut output by up to 300,000 barrels per day (bpd) in the first half of 2017 as part of a deal with other producers aimed at supporting oil prices. Its daily oil production rose to an average of 11.21 million bpd in November, Russia's highest since the Soviet era, energy ministry data showed on Friday. That was 500,000 bpd higher than in August, the month before Russia and OPEC reached a preliminary agreement in Algiers to cap production. Under this week's follow-up agreement, the first between OPEC and Russia since 2001, specific cuts for individual states were set, with almost all OPEC members agreeing to cut from October levels. But Russia will use its November-December output levels, Energy Minister Alexander Novak told reporters on Thursday. November's production rose only slightly from October, by just 10,000 bpd, ministry data showed. "The peak of daily production for November was 11.231 million barrels," Deputy Energy Minister Molodtsov told a conference in Moscow. "All our agreements will clearly be formed around this figure," he said. According to his presentation, Russian production could grow to 11.3 million bpd in December.

The Wider Ramifications Of The OPEC Deal - Contrary to many analysts’ expectations, OPEC successfully reached a deal to cut production on Wednesday. The deal, while still contingent upon non-OPEC production cuts, would see total OPEC production drop to 32.5 million bpd. There are winners and losers in the deal, with the largest cuts born by Saudi Arabia (486,000 bpd), the UEA (139,000 bpd) and Iraq (210,000 bpd). Iraq and Iran, initially resistant to major cuts, got away with only minor changes to their overall production, though Iran won’t be able to pass that golden 4 million bpd threshold Bijan Zanganeh had been insisting upon since August. The wider ramifications of the OPEC deal, should it prove durable, will be felt across the industry as two years of untrammeled OPEC (and particularly Saudi) pumping comes to an end. The first tremors will be felt on the U.S. patch, where production has been falling for most of the year. Outside of the Permian basin, conditions among American drillers haven’t been all that encouraging, though the decline in production had stabilized in recent months and markets saw a bump after the election of Donald Trump as U.S. President. Higher prices could help U.S. producers with high costs claw back some market share, but competition will be fierce. An initial bump in prices may prove temporary as it gives U.S. producers incentive to pump more, sending the price back down. Encouraging signs that the OPEC deal will lead to a resurgence in U.S. shale production could prove enduring, however, and the rig count reached a high in the wake of the news. American shale has been the major factor in how this price crash endured long past the point Saudi estimates predicted: it’s a little unclear what the long-term effect will be.

OPEC to meet non-OPEC oil producers in Vienna December 10: Barkindo - OPEC has invited 14 non-OPEC oil producers to finalize details of coordinated cuts on Saturday December 10, at the oil producer group's headquarters in Vienna, secretary general Mohammad Barkindo said Monday. "We will have our joint ministerial level meeting with non-OPEC countries this coming Saturday, December 10, at the OPEC Secretariat in Vienna -- the first such meeting since 2002," Barkindo said at the Petrotech conference in New Delhi. OPEC decided on November 30 to hold production at 32.5 million b/d starting January 1, 2017 -- the first coordinated cut since 2008 -- amounting to an approximate 1.2 million b/d cut from current output levels. The deal exempts Libya and Nigeria and is contingent on key non-OPEC producers also agreeing to cut 600,000 b/d in total. Members of the OPEC delegation in New Delhi also confirmed with reporters that 14 countries had been contacted to attend the meeting on December 10.The list of the countries that have been invited and are expected to participate in the cuts include Azerbaijan, Bahrain, Bolivia, Brunei, Colombia, Russia, Mexico, Turkmenistan, Oman, Trinidad and Tobago, Egypt, the Republic of Congo, Kazakhstan and Uzbekistan. Barkindo, speaking at a press briefing in New Delhi, also said that he was "very confident" that non-OPEC would agree on a 600,000 b/d cut. "A lot of consultations have taken place between us and non-OPEC. This is a collective resolve by both parties to jointly to act and save this industry," he said. Barkindo also rebutted criticism from some analysts who did not expect OPEC to collectively agree on a cut. "Give us some credit. This is the first agreement that I know of between ourselves OPEC and non-OPEC countries that has in it a provision, a joint monitoring committee... To monitor and issue compliance to the agreement, this is the first time this has happened, this has guaranteed the integrity of this agreement," he added.

 OPEC Cheating Will Cap Oil At $52 -- OPEC succeeded in pulling off what many thought was impossible, overcoming mutual disdain and mistrust to reach a deal on reducing its oil output. Oil prices skyrocketed on the news, up more than 12 percent since the agreement was announced last week. But what if there is much less to the deal than meets the eye? What if OPEC does not actually follow through on the promised production cuts? Several days of strong price gains ran into a wall of skepticism on Tuesday, after fresh data showed that OPEC’s November production was much higher than anticipated. The cartel’s output jumped from 33.6-33.8 million barrels per day (mb/d) in October to a record high 34.19 mb/d in November. The gains came from Angola, Gabon, Indonesia, Libya, Nigeria, Iran and Iraq. If OPEC is to succeed in bringing production down to its stated target of 32.5 mb/d by January, it will now need to cut 1.7 mb/d, not just the 1.2 mb/d that it announced last week. But a few of those countries (Libya, Nigeria, Indonesia) are exempted from the limits agreed upon in the latest deal. That means that the rest of OPEC will need to shoulder steeper cuts if the cartel is to hit the 32.5 mb/d threshold. However, the group did not discuss this contingency – who should cut even deeper – so there is little reason to think that any individual member will voluntarily cut more than they agreed to just so that the collective output comes in lower. On top of all of that, two key OPEC countries exempted from the deal – Libya and Nigeria – have a large volume of oil production capacity offline. Libya has already added 200,000 barrels per day in production gains this year, taking output above 500,000 bpd. They are hoping to ultimately bring output up to 900,000 bpd next year. In a sign that they could be on their way to that target, ISIS was ousted from Sirte, its last major foothold in Libya. The war-torn country still suffers from a political vacuum and splintered allegiances, but the risk to supply is likely on the upside. Nigeria too has roughly 0.5 mb/d of capacity offline because of pipeline attacks. It won’t be easy but Nigeria could bring output back online in 2017. The two OPEC countries could overwhelm the effect of the deal.

Oil prices settle down on Monday - NASDAQ.com: - Oil prices reached a new, one-year high by mid-day on Monday, as last week's rally from the Organization of Petroleum Exporting Countries (OPEC) agreement to cut production continued apace U.S. crude for January delivery this morning gained 20 cents, or 0.4%, to $51.88 a barrel on the New York Mercantile Exchange (NYMEX). The price had been as high as $52.42 a barrel for Crude Oil, the best intraday price since July 2015. Brent Oil, the global oil price benchmark, gained 44 cents, or 0.8%, to $54.90 a barrel on ICE Futures Europe market. But oil prices settled down for the day. Crude oil settled at 51.08, down 1.24%. Brent oil was down for the day, 54.24%, 0.40%. The market contineus to gain as some investors anticipate that OPEC is more likely to keep this pledge than in past pacts. OPEC members are famed for surpassing production plans. Huge inventories of oil today are most likely, analysts said, to encourage the oilmen to keep their promises. "They only must be on their best behavior for a few months to get the market into a daily supply deficit," Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said in a note to investors.

OPEC Oil Production Hits New All Time High As Brent Surges To 16 Month High --The greatest trick OPEC ever pulled was convincing the world to buy oil even as production kept rising to new all time highs. Case in point, just out from Reuters:

  • OPEC NOVEMBER OIL OUTPUT RISES 370,000 BPD MONTH/MONTH TO 34.19 MILLION BPD, HIGHEST IN RECENT HISTORY - REUTERS SURVEY

Meanwhile, oil rose to fresh 16 month highs, with Brent rising above $55 for the first time since mid-2015. More details from Reuters: OPEC's oil output set another record high in November ahead of a deal to cut production, a Reuters survey found on Monday, helped by higher Iraqi exports and extra barrels from two nations exempted from cutting supply - Nigeria and Libya.  The latest rise in supply means the Organization of the Petroleum Exporting Countries will have a bigger task in complying with a plan to cut supply starting in 2017 - its first production-reduction deal since 2008. Supply from OPEC increased to 34.19 million barrels per day (bpd) in November from 33.82 million bpd in October, according to the survey based on shipping data and information from industry sources. Brent crude rose above $55 a barrel on Monday, trading at a 16-month high, on prospects of a tighter market next year following OPEC's deal. Prices are still half their level of mid-2014."OPEC's decision to cut production has removed a lot of downside risk for 2017," said Bjarne Schieldrop, chief commodities analyst at SEB, even though "some cheating is a natural habit among OPEC's members".  Based on the November survey, OPEC is pumping 1.69 million bpd above the 32.50 million bpd production target that it agreed last week to adopt from January 2017,following an outline agreement reached in September. This means that OPEC will need to find an addition half a million barrels to scrap to reach its "promised" quota.November's supply from OPEC excluding Gabon and Indonesia, at 33.23 million bpd, is the highest in Reuters survey records starting in 1997. At last week's meeting, Indonesia suspended its membership again. In November, Angola provided the largest supply boost as  planned maintenance on the Dalia crude stream ended. Output also climbed in Iraq due to record exports, lifting supply to 4.62 million bpd in November according to the survey.

Oil falls 2 percent on output cut skepticism, OPEC and Russia output rise | Reuters: Oil prices on Tuesday fell for the first session since OPEC agreed to cut output last week after data showed crude production rose in most major export regions and on growing skepticism that the cartel would be able to reduce production. After rising over 15 percent over the four sessions since the Nov. 30 OPEC meeting, Brent futures fell $1.06, or 1.9 percent, to $53.88 a barrel by 1:26 p.m. EST (1826 GMT). U.S. West Texas Intermediate crude futures fell $1.05, or 2 percent, to $50.74 per barrel. The Brent front-month contract has outperformed the U.S. contract since the OPEC meeting, with its premium over WTI reaching $2.29 a barrel earlier on Tuesday, its widest since August. "Reaction to the OPEC news was overdone. All they did was agree to cut output that they had added recently," said Phil Davis, managing partner at venture capital firm PSW Investments in Woodland Park, New Jersey. OPEC's output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey. Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd. Market watchers had said OPEC's decision to cut output marked an about-face for Saudi Arabia, which has been battling to keep market share for the past two years by selling more, if cheaper, barrels rather than bolstering prices. But in a sign the fight for market share is not over, Saudi Aramco cut the January price for its Arab Light grade for Asian customers by $1.20 a barrel from December.

Oil Prices Retreat As OPEC, Russia Bump Up Output Ahead Of Cuts - Having rallied to 16-month-highs on the back of OPEC’s deal to cut oil supply, oil prices dipped on Tuesday after figures showed that November output at both OPEC and Russia had reached record highs in November. As of 7:46 AM (EST), WTI Crude had dipped 1.49 percent at US$51.02, while Brent Crude was trading down 1.04 percent at US$54.37. OPEC’s November production jumped by 370,000 bpd from October to stand at 34.19 million bpd, a Reuters survey based on shipping data and information from industry sources found on Monday. Within OPEC, output rose mainly in Angola, Nigeria, Libya, Iran, and Iraq. This figure is way higher than the 32.5 million bpd OPEC set as a ceiling in its deal to reduce collective production. In that agreement, OPEC said that its cuts, which are to begin in January, are contingent on non-OPEC nations, including Russia, cutting around another 600,000 bpd. Another worry to traders was the fact that Russia’s output increased to 11.21 million bpd last month—the highest level since the Soviet era. Deputy energy minister Kirill Molodtsov said Russia would use the November figures as reference to cut 300,000 bpd it has pledged to help OPEC cut global supply. Analysts are already seeing that the euphoric rally since last Wednesday’s deal is starting to wane after seeing high production figures being reported for OPEC and Russia.

  OilPrice Intelligence Report: Oil Tanks On Record OPEC Production - Oil prices fell back from 16-month highs on Tuesday, after fresh data showed that OPEC hit another record high in production in November. Brent briefly rose above a key threshold of $55 per barrel on Monday for the first time since the summer of 2015, but retreated on Tuesday to $53 per barrel. Since the OPEC agreement was announced last week, WTI climbed 19 percent and Brent prices are up 16 percent. "OPEC sentiment continues to support oil markets. Speculative short positions are still at elevated levels and as more traders unwind these positions they could trigger more support for oil prices," Hans van Cleef, senior energy economist at ABN Amro, told Reuters. But OPEC’s collective production set a record high in November, rising to 34.19 million barrels per day. That means the group will need to cut 1.69 mb/d from their production levels, not just the 1.2 mb/d in announced cuts last week in Vienna. However, the problem for OPEC is that a lot of the gains came from countries that are exempted under the November deal. Angola, Libya and Nigeria all added output in November from the month before. To offset those gains, OPEC would have to make deeper cuts, but since that was not specified in the agreement, there is little chance that it will happen. The data caused oil prices to fall more than 2 percent on Tuesday. . OPEC is set to meet with non-OPEC producers to finalize the technical details of their agreement. Non-OPEC producers have agreed to cut 600,000 barrels per day beginning in January, which will come on top of the 1.2 mb/d cut from OPEC. Russia alone will cut 300,000 barrels per day, although Russian officials have said that they would do so gradually. By any measure, OPEC’s latest meeting was its most successful in years. But there is still some uncertainty surrounding the cartel’s ability to implement the deal, and the willingness of individual members to adhere to their prescribed production allotments. OPEC has a history of not living up to agreements, with each member having the individual incentive to produce more than they say they will. The markets rallied last week on the severe cuts OPEC agreed to, but if the cuts are not carried out as promised, it will eventually undermine the effectiveness of the deal. "The only tool they have is to constrain production," former Saudi oil minister and legendary OPEC icon Ali al-Naimi said at an event in Washington, D.C last week. "The unfortunate part is we tend to cheat."

WTI Pops Despite Biggest Cushing Inventory Build Since 2008 - With OPEC behind us, perhaps the market's focus will swing back to fundamentals (as opposed to headlines) and following last week's huge build across products, API reported the second week in a row of crude inventory draws (bigger than the expected 1.37mm drop). However, Gasoline and Distillates saw major builds but Cushing inventories rose over 4mm barrels - the most since 2008. WTI seemed to focus on the crude draw at first... API:

  • Crude -2.21mm (-1.37mm exp)
  • Cushing +4.01mm (+2.87mm exp)
  • Gasoline +828k (+1.59mm exp)
  • Distillates +4.08mm(+1.24mm exp)

A second week of bigger than expected draws in crude inventories but Cushing saw the biggest weekly build since 2008...

Oil Market’s New Engine Losing Steam on Modi Cash Crackdown -- Oil demand growth in the world’s fastest-growing crude market may weaken as the government’s cash crackdown slows the economy. Diesel and gasoline use, which account for more than half of India’s oil demand, will slow or contract this month and possibly early next year, according to Ivy Global Energy Pte., FGE and Centrum Broking Ltd. Expansion in the world’s fastest-growing major economy is widely expected to ease temporarily after Prime Minister Narendra Modi last month withdrew high-value currency notes in a country where almost all consumer payments are in cash. “As the Indian economy largely depends on various cash-intensive sectors, the demonetization saga will no doubt slow down economic growth in the near term,” said Sri Paravaikkarasu, head of East of Suez oil at FGE in Singapore. “Moving into the first quarter, an expected slowdown in the economic growth should marginally drag down oil consumption, particularly that of transport fuels.” India’s $2 trillion economy imports more than 80 percent of its crude requirement and the International Energy Agency expects it to be the fastest-growing consumer through 2040. At a time when oil prices have hovered around $50 a barrel, the slowdown of a key demand center may take some steam out of an Organization of Petroleum Exporting Countries-driven price rally after the group approved its first supply cut in eight years. Brent crude, which added 15 percent last week, lost 0.9 percent to $53.97 a barrel at 12:17 p.m. Singapore time on Monday. Diesel consumption could fall as much as 12 percent and gasoline demand as much as 7 percent this month, according to Tushar Tarun Bansal, director at Ivy Global Energy. “I expect to see a much smaller growth in diesel demand of about 2 percent in the first quarter,” Bansal said. “But as the year ticks on, growth is expected to pick up further and normalize in the second quarter.”

Oil falls on output cut skepticism, OPEC and Russia output rise | Reuters: Oil prices on Tuesday ended lower for the first time since OPEC agreed on Nov. 30 to cut output, as data showing record high production in the producer group fed skepticism that it would be able to reduce supplies. Brent futures slid $1.01 to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents to $50.93 per barrel. Crude had surged more than 15 percent in the four sessions since the Nov. 30 OPEC meeting. "Prices fell for the first day in five in reaction to news that OPEC's output hit a record high last month," said James Williams, president of energy consultant WTRG Economics in Arkansas. OPEC's output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey. Oil prices pared losses slightly after inventory data released late Tuesday from the American Petroleum Institute showed U.S. crude stocks dropped more than expected last week despite a hefty build of 4 million barrels in Cushing, Oklahoma. [API/S] If the Cushing build is reinforced in Wednesday's report from the U.S. Energy Information Administration, that would signal the largest weekly rise since January 2009, data showed. As part of last week's decision, OPEC said major oil producers outside the group would cut 600,000 bpd of production on top of OPEC's 1.2 million bpd reduction. Those countries and OPEC meet this weekend to finalize the terms. Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd.

Russian oil-indexed gas prices set to rise on OPEC decision, oil rally - Natural Gas | Platts News Article & Story: The price of oil-indexed Russian gas is expected to rise through the course of 2017 following the recent oil price rally triggered by the decision by OPEC and non-OPEC countries to cut production from the start of next year, according to an S&P Global Platts analysis. The rise in the oil-indexed price range makes prices on the European hubs more competitive more quickly with Russian gas in Q1 2017, suggesting European buyers may maximize their nominations in the next two months or so. Oil prices have surged almost 20% in the week since the decision by OPEC to cut production by 1.2 million b/d, accompanied by a pledge by non-OPEC producers to remove 600,000 b/d from the market, including a 300,000 b/d Russian cut. Although oil-indexed gas contracts typically operate with a 6-9 month time lag, the impact of the oil price rally on Russian gas -- and how it competes against European gas hubs -- is sharply felt along the forward curve.The Dutch TTF price was assessed Tuesday by Platts at Eur16.25/MWh for January 2017 and Eur16.325/MWh for February 2017, while the top of the oil indexed range is estimated by Platts Analytics' Eclipse Energy at Eur17.02/MWh for January and Eur17.60/MWh for February. The top of the oil indexed range has been cheaper than TTF month-ahead prices through October, November and December, which has seen Russian gas exports to Europe hit repeated all-time highs as buyers maximize their purchases under long-term contracts.

EIA Weekly Crude Oil Inventory Report Shows Draw of 2.4 Million Barrels: Today’s Energy Information Administration (EIA) inventories report showed a slightly larger draw than expected, declining 2.4 million barrels during the week ending December 2. Analyst on average were looking for a smaller draw of 1.03 million barrels, according to a Thomson Reuters survey. The total stockpile now stands at 485.8 million barrels. On Tuesday, the American Petroleum Institute reported a similar draw of 2.2 million barrels. U.S crude oil imports averaged 8.3 million barrels per day last week, up by 755,000 barrels from the week before. Crude oil refinery inputs averaged 134,000 more barrels per day than the prior week’s average, bringing the average inputs to 16.4 million barrels per day. Gasoline production decreased for the week, averaging over 9.9 million barrels per day. Distillate production (fuel and diesel oils) also fell, averaging 5.1 million barrels per day. The total motor gasoline inventories increased by 3.4 million barrels last week. Inventories for both finished gasoline small blending components increased. Distillate fuel inventories rose by 2.5 million barrels while propane/propylene fell 1.5 million barrels. The total for commercial petroleum inventories increased by 1.4 million barrels from the week before. In response to today’s report, crude oil initially spiked higher then declined by about 60 cents in the minutes following. The WTI contract is trading down by about 1.6% to $50.04 at the time of this writing.

Oil slips on bearish U.S. inventory report, doubts over OPEC cut | Reuters: Oil prices slid on Wednesday on bearish U.S. petroleum inventory data and doubts that production cuts promised by OPEC and Russia would be deep enough to end a supply overhang that has weighed on markets for more than two years. Brent futures LCOc1 fell 93 cents, or 1.7 percent, to settle at $53.00 a barrel, while U.S. crude CLc1 lost $1.16, or 2.3 percent, to settle at $49.77. The U.S. Energy Information Administration EIA said crude inventories fell 2.4 million barrels during the week ended Dec. 2, which was more than the 1 million-barrel draw analysts had forecast in a Reuters poll. [EIA/S] Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures, however, increased by a hefty 3.8 million barrels last week, the most since 2009, the data showed. Reaction to the EIA report was muted, analysts said, in part because the results were similar to the data published by the American Petroleum Institute (API), an industry group, late on Tuesday. "Focus at the moment is on the key producers and OPEC and growing doubts non-OPEC producers will be able to come up with 600,000 barrels of cuts," said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky. The Organization of the Petroleum Exporting Countries last week agreed to slash output by around 1.2 million barrels per day beginning in January to reduce global oversupply and prop up oil prices. OPEC hopes non-OPEC countries will contribute a further 600,000 bpd of cuts. Russia has said it would reduce output by around 300,000 bpd.

Oil futures fall after builds in US products, Cushing stocks -  Oil futures declined Wednesday after US Energy Information Administration data showed product stocks built by more than anticipated, while the key storage hub of Cushing, Oklahoma, saw its biggest rise since 2009. That bearish set of data led the oil complex lower, even though US crude stocks fell for the third straight week. NYMEX January crude settled $1.16 lower at $49.77/b. ICE February Brent settled down 93 cents at $53.00/b. Refinery demand picked up last week, helping draw crude stocks lower. The refinery utilization rate increased 0.6 percentage point to 90.4% of capacity. However, inventories at Cushing, Oklahoma -- the delivery point for the NYMEX crude futures contract -- built 3.783 million barrels, which was the largest weekly increase since January 2009. Cushing stocks had fallen to 58.362 million barrels in mid-October, but now stand at 65.285 million barrels, above 65 million barrels for the first time since August. A likely factor behind last week's build was reduced flows from Cushing to the Gulf Coast, as USGC refiners try and mitigate state ad valorem taxes on year-end crude stocks. Likewise, Gulf Coast imports dropped 403,000 b/d last week to 2.931 million b/d. As a result, USGC stocks fell 6.911 million barrels last week to 246.450 million barrels. Crude stocks declined 2.389 million barrels to 485.756 million barrels in the week ended December 2, EIA said. Analysts S&P Global Platts surveyed Monday were looking for a draw of 1.7 million barrels.

Crude Tumbles Below $50 After Biggest Cushing Build Since Jan 2009 -Crude prices are lower this morning following API's huge reported build at Cushing (biggest since 2008) and fears over OPEC deal realities. With expectations for a crude draw (on lower imports), DOE confirmed a bigger than expected overall draw but also Cushing saw a 3.78mm barrel build - the biggest since Jan 2009. Both Distillates and Gasoline (most since Jan) also saw bigger than expected builds as US production dropped very modestly. DOE:

  • Crude -2.389mm (-1.37mm exp)
  • Cushing +3.783mm (+2.87mm exp) - biggest since Jan 2009
  • Gasoline +3.425mm (+1.59mm exp) - biggest since Jan 2016
  • Distillates +2.501mm (+1.24mm exp)

Biggest Cushing build since Jan 2009 offsets the bigger than expected draw in crude overall... As the US rig count continues to rise so the trend of US crude production has turned, but it dropped very modestly over the last week...

OPEC crude output hits new record of 33.86 mil b/d in Nov-Platts survey - OPEC crude oil production for November rose for the sixth straight month, to a record 33.86 million b/d, an S&P Global Platts survey showed Wednesday, largely on the return of Angola's Dalia field from maintenance and recovery in war-torn Libya. The November production figure was a 320,000 b/d rise from October output and illustrates the challenge OPEC faces implementing a production cut it finalized in Vienna last week with the aim of accelerating the global oil market's rebalancing. Many members appear to be pumping at or close to their full capacity to maximize revenues before the OPEC deal goes into force January 1. Under that plan, the organization will, for six months, cut 1.2 million b/d from its October output level, as calculated by an average of OPEC's six secondary sources, including Platts, and freeze production at around 32.5 million b/d. Saudi Arabia, which has committed to holding its output at 10.046 million b/d, saw its November production drop slightly to 10.52 million b/d, indicating it has a way to go before complying with its target. Exports of Saudi crude have been high in recent months and output has defied the usual seasonal decline, even with the peak summer air conditioning season long over, though experts say they expect the country to return to more typical winter consumption patterns to comply with the production cut. Iraq, OPEC's second largest producer, saw November output hold steady at 4.56 million b/d. The country had disputed secondary source estimates of its production as too low and sought an exemption from the OPEC cuts due to its war against the Islamic State. But Iraq ultimately agreed to the OPEC plan, which calls for the country to bring production down to 4.351 million b/d, as calculated by secondary sources. Iran, meanwhile, raised its November production slightly from October to 3.69 million b/d. Iran, which also sought an exemption from the cuts as it aimed to regain its pre-sanctions market share, is allowed to produce up to 3.797 million b/d under the OPEC plan.

Oil above $50 on hopes for non-OPEC output cuts | Reuters: Oil rebounded from the week's lows to close above $50 a barrel on Thursday, on growing optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production. Both Brent and U.S. benchmarks rallied after the former secretary general of the Organization of the Petroleum Exporting Countries made comments supportive of non-member production cuts. The benchmarks remain more than $1 below the highs reached Dec. 5 in the wake of the OPEC deal. Brent settled up 89 cents, or 1.7 percent, at $53.89 a barrel. U.S. light, sweet crude settled up $1.07, or 2.2 percent, at $50.84 a barrel. Oil producers will meet in Vienna on Saturday to see if non-OPEC countries will cut production to reduce a global supply glut that has pressured prices for more than two years. At a conference in New York, former OPEC Secretary General Abdalla El-Badri said a non-OPEC production cut of about 600,000 barrels per day (bpd) was "a must." OPEC has agreed to slash production by 1.2 million bpd in the first half of 2017, a deal that bolstered crude futures despite doubts over whether the amount was enough and whether the cuts would be effectively implemented. "There will be a significant amount of slippage in the amount of cuts that occur as we get into first part of 2017," said Andrew Lipow, president of Lipow Oil Associates in Houston. Russia, which is not an OPEC member, has signaled it was ready to cut production by 300,000 bpd and on Thursday Azerbaijan said it would come to Vienna armed with proposals for its own reduction.

Crude futures rise ahead of weekend OPEC/non-OPEC meeting in Vienna - Crude oil futures settled higher Thursday, with traders focused on a meeting in Vienna Saturday between OPEC and non-OPEC countries to discuss further cuts in oil production. NYMEX January crude settled $1.07 higher at $50.84/b, while ICE February Brent rose 89 cents to settle at $53.89/b. Meeting in Vienna on November 30, OPEC countries agreed to their first coordinated output cuts in eight years, with front-month NYMEX crude rallying $5.61 since (12.4%). "The upstream crude oil market [is] finding some support ahead of weekend meetings in Vienna between OPEC and non-OPEC producers," Tim Evans, energy futures specialist at Citi, said. "Traders may be reluctant to sell crude oil ahead of the OPEC/non-OPEC conclave."The OPEC agreement -- which would require OPEC producers to reduce output by 1.2 million b/d -- called for non-OPEC producers to cut their production by 600,000 b/d, with Russia already offering to shoulder 300,000 b/d of that beginning in March. "The 600,000 b/d from non-OPEC [countries] is a must," Abdalla Salem El-Badri, former secretary general of OPEC, said at the Platts Global Energy Outlook Forum in New York Thursday. Executives at the Forum expressed their optimism regarding the OPEC agreement, as well as Russia's commitment to participating. "I don't have any doubt at all," Harold Hamm, CEO of Continental Resources, said about Russia's participation. Even so, Evans doubted that other non-OPEC countries would be as quick to join the coordinated action, with Colombia and Brazil already ruling out cuts, for example.

OilPrice Intelligence Report: Oil Edges Higher As OPEC Pushes NOPEC For Output Cut: Oil prices seesawed this week on the hopes and fears of whether or not OPEC will be able to fully implement its historic deal, as well as the uncertainty over the additional non-OPEC cuts. Still, WTI and Brent mostly held onto their gains that accrued from the deal, with both benchmarks seemingly holding safely above $50 per barrel. Inventories may not fall as much as expected. The OPEC deal has been billed as a cure for the oversupplied oil markets, potentially setting the market up for a shortfall as soon as early 2017, which would require a drawdown in inventories. But some analysts see stockpiles remaining elevated through next year. The EIA’s latest Short-Term Energy Outlook expects inventory builds over the course of 2017, and a few more voices are coming to the same conclusion. “Even with 100 percent compliance from both OPEC and non-OPEC producers global stocks are unlikely to fall in the first half of 2017," Tamas Varga, analyst at brokerage PVM Oil Associates Ltd., told Bloomberg in an interview. “That should keep oil prices in check.” Calculations and estimates from Bloomberg News also finds very few inventory reductions next year. A lot of the uncertainty comes down to whether or not OPEC members comply with promised production cuts, as well as the commitment of Russia and other non-OPEC countries. Full compliance with the OPEC deal could lead to inventory drawdowns, whereas cheating from members could result in inventories remaining elevated. A follow up meeting with non-OPEC countries is scheduled for Saturday, where they will hash out the details of the promised 600,000 barrels per day of production cuts. Russia alone promised to cut 300,000 barrels per day, although it appears only willing to reduce gradually over the first half of 2017. OPEC invited 14 non-OPEC countries to the meeting in Vienna, but only five so far have said they will attend – Russia, Azerbaijan, Kazakhstan, Oman and Mexico. One OPEC source told Reuters that the stated cuts of 600,000 barrels per day might actually turn out to be just 500,000 barrels per day, an ominous sign that the results could be less impressive than previously thought. So far, aside from Russia, only Oman has expressed a willingness to cut.

   The OPEC Effect? U.S. Rig Count Spikes Most In 31 Months -- The number of oil and gas rigs in the United States was up again this week, with an increase of 27. Active oil rigs in the United States increased by 21, while the number of gas rigs increased by 6. The 21-rig increase this week represents the highest spike in the number of active oil rigs in the United States since July 2015. Similar to last week’s Baker Hughes report, the biggest gainer by basin was the coveted Permian, which now boasts 246 oil and gas rigs—up 11 rigs from last week, and 42 more than the same period last year. OPEC has struggled to find the balance between economic calamity for its oil-dependent members and lifting prices to a level that would see U.S. shale players come back online in droves, undoing whatever supply glut easing efforts on behalf of OPEC, but its efforts may be all for naught. Traders have been ever watchful of the OPEC deal that was sealed on the 30th of November, and now of the OPEC/non-OPEC meeting scheduled for the 10th of December. But the industry is also keenly aware of the Baker Hughes rig count figures, which serve as a fair metric of how the U.S. oil and gas industry is responding to the current price fluctuations and the OPEC chatter of the day, rather than how the speculators are responding. Unfortunately for OPEC, the U.S. has been steadily bringing new oil rigs online since late June 2016, well before the Algiers meeting where OPEC agreed to agree on a production cut at a later date, just a few months after the Doha meeting failure.The steadily increasing number of active oil rigs in the U.S. at a time when OPEC had failed to agree on a production cut at the Doha meeting may be a sign that oil and gas players in the U.S. are not waiting for OPEC to correct the market, and that they are behaving independently of the once-revered cartel. What’s more, since early September, before OPEC laid out the details of an agreement to cap production, the increase in U.S. oil rig count shows a marked ambivalence to the OPEC goings on, gaining a net of 91 oil rigs since 2 September until the count today. Compared to the rigs in operation this time last year, the U.S. has only 26 fewer rigs in operation today.

WORLD ECONOMIES IN TROUBLE: Middle East Oil Exports Lower Than 40 Years Ago - Yes, it's true.  Middle East net oil exports are less than they were 40 years ago.  How could this be?  Just yesterday, Zerohedge released a news story stating that OPEC oil production reached a new record high of 34.19 million barrels per day.  To the typical working-class stiff, driving a huge four-wheel drive truck pulling a RV and a trailer behind it with three ATV's on it, this sounds like great news. Unfortunately for the Middle East, this isn't something to celebrate.  Why?  Well, let's just say, there's more to the story than record oil production. While the Middle East oil companies were busy working hard (spending money hand over fist) to produce this record oil production, their wonderful citizens were working even harder to consume as much oil as they could get their hands on. In the past 40 years, Middle East domestic oil consumption surged more than six times from 1.5 million barrels per day (mbd) in 1976, to 9.6 mbd in 2015.  This had a seriously negative impact on rising Middle East oil production: According to the 2016 BP Statistical Review, the Middle East produced 30.10 mbd of oil in 2015 compared to 22.35 mbd in 1976.  This was a growth of 7.75 mbd.  However, Middle East domestic oil consumption increased from 1.51 mbd in 1976 to 9.57 mbd in 2015.   Thus, the Middle Eastern economies devoured an additional 8.06 mbd of oil during that 40 year time-period. The production data shown in the chart above only represents Middle East oil production.  OPEC members not included are Algeria, Angola, Ecuador, Gabon, Libya, Nigeria and Venezuela.  I only listed the production data for the Middle East as the data was readily available. Regardless, if we look at the two bars on the right side of the chart, we can see that Middle East net oil exports were higher in 1976 at 20.84 mbd versus 20.44 mbd in 2015.  Basically, all the hard work the Middle East oil companies spent on increasing production over the past 40 years went to supplying their own insatiable domestic consumption. Here is a breakdown of the some of the Middle Eastern countries oil consumption:

OPEC deal gives Suez Canal hope for revenue -- Despite higher crude prices being a negative on the surface for net importer Egypt, the Arab world’s most populous country hopes OPEC’s move to cut production will actually breathe life into the moribund traffic in its Suez Canal and provide badly needed foreign currency. Egypt’s has been a net importer of crude since 2012, and lately has started importing LNG to meet the rising demand for fuel and power. Typically energy importers prefer lower energy prices, but Cairo might be keen to see oil and gas prices rise as the market slump for both commodities since 2014 has had a disastrous effect on the government’s plans to raise more revenue from shipping through the Suez Canal. The need for revenue is acute particularly after Egypt fast-tracked an $8.2 billion canal expansion that was inaugurated in August 2015, only a year after the start of construction. Sailing through the 164-km canal can knock 11 days off a typical intercontinental voyage for which the alternative route would normally be around the Cape of Good Hope. However, tariffs are steep, estimated by shipping line Maersk at around $350,000/vessel. The fees are still too high compared to the extra cost of bunker fuel needed for longer voyages around the cape as the price of the heavy marine fuel has fallen by about two-thirds since mid-2014.

Persian Gulf debt creating 'vicious circle' for Arab oil producers: A borrowing bonanza in the Middle East is laying bare just how varied the risks are on the Arab Peninsula.In Qatar, billions of dollars in recently raised sovereign debt will help to accommodate soccer fans when FIFA comes to town. In Bahrain, bond proceeds are expected to keep a lid on simmering social unrest. A second year of low oil prices has left the Arab states of the Persian Gulf with lingering budget deficits, forcing them to borrow money from international lenders. While the six nations of the Gulf Cooperation Council are often discussed as a whole, their experience in debt markets and the implications of the borrowing binge for each country is anything but uniform. Some Gulf states have strong credit ratings but lack experience managing big debt loads. Others are avid borrowers but could see their costs rise as debt becomes larger in proportion to their economic output.The borrowing also comes as Gulf nations embark on ambitious plans to diversify their economies to become less reliant on oil. Moody's warned in August that the short-term relief brought by borrowing could cause Gulf states to delay much-needed reforms. OPEC's decision last week to cut oil production will also bolster the Gulf nations, but Moody's warned the countries would "continue to face economic, fiscal and external challenges" even as crude prices recover to a range of $50 to $60 a barrel.

Saudi central bank hit by hackers' 'digital bomb', risking payments -  State-sponsored hackers who unleashed a digital bomb in key parts of Saudi Arabia's computer networks over the last two weeks damaged systems at the country's central bank, known as the Saudi Arabian Monetary Agency, according to two people briefed on an ongoing investigation of the breach. State-sponsored hackers who unleashed a digital bomb in key parts of Saudi Arabia's computer networks over the last two weeks damaged systems at the country's central bank, known as the Saudi Arabian Monetary Agency, according to two people briefed on an ongoing investigation of the breach. The attacks, which afflicted at least six government entities, used a computer-killing malware known as Shamoon that is linked to Iran, they said. Hitting the targets had the potential to inflict damage across several critical sectors, including finance and transportation. The investigation is still in its early stages and the determination of responsibility could change, the two people said. The number of entities where damage occurred is likely to grow as the probe continues, a third said. Iranian officials didn't respond to repeated requests for comment on the attack. Calls placed to the Saudi Interior Ministry about the targeting of the country's central bank weren't returned. This would be at least the second central bank to suffer a major digital attack in the past year. In February, hackers stole $81m by manipulating the international payment system at the central bank in Bangladesh. The malware, which overwrites the master boot record of a computer, rendering it inoperable, has already destroyed thousands of computers across multiple government agencies, two people familiar with the probe said.

Boris Johnson’s remarks about Saudi Arabia ‘not the government’s view’ -- Boris Johnson was not representing the government’s views on Saudi Arabia when he accused the state of abusing Islam and acting as a puppeteer in proxy wars, Downing Street has said. The foreign secretary was setting out his own views on Saudi Arabia and Iran at a conference in Rome last week, the prime minister’s spokeswoman said on Thursday, but would be sticking to the government’s line when he visited Saudi ministers this weekend. The spokeswoman insisted Downing Street had “full confidence in the foreign secretary” but said Saudi Arabia was “a vital partner for the UK, particularly on counter-terrorism and, when you look at what is happening in the region, we are supportive of the Saudi-led coalition which is working in support of the legitimate government in Yemen against Houthi rebels”. Asked if the prime minister had any sympathy with Johnson’s view of the Yemen conflict, she added: “I’ve set out what the PM views are, and those are the foreign secretary’s views, they are not the government’s views on Saudi and its role in the region.”Johnson’s remarks, published in the Guardian, came at an embarrassing moment for Downing Street, emerging shortly after Theresa May returned from a two-day trip to the Gulf where she spoke repeatedly of the closeness of the relationship between the UK and Gulf states.  The foreign secretary had said: “There are politicians who are twisting and abusing religion and different strains of the same religion in order to further their own political objectives. That’s one of the biggest political problems in the whole region. And the tragedy for me – and that’s why you have these proxy wars being fought the whole time in that area – is that there is not strong enough leadership in the countries themselves.”’

Devastating Cholera Outbreak in War-torn Yemen | HealthMap The war-torn country of Yemen has been battling a significant cholera outbreak since mid-October of 2016. The number of suspected cases doubled over the course of 12 days from 2,070 cases on November 1st, to 4,119 cases on November 13th [2,3,5]. As of November 14th, there has been eight confirmed deaths from cholera and 56 from acute diarrhea across the country (2,5). This cholera outbreak is mostly affecting children, with half of the suspected cases being reported in children under 10 years old [4,6]. Cholera is an acute diarrheal disease caused by ingesting food or water contaminated with the bacterium Vibrio cholera, or from coming in close contact with an infected individual. The food or water often becomes contaminated with V. cholerae through fecal contamination from already infected persons [8]. Most people infected with cholera experience mild or no symptoms [8]. Thus, those who are unaware of their cholera infection living in locations with poor water and sanitation infrastructure can contribute to spread of the disease [7]. Cholera more commonly affects individuals living in slums or refugee camps, due to reduced access to clean water and sanitation facilities [7]. Only one in ten people infected with cholera will experience severe symptoms including severe watery diarrhea and vomiting [8]. Consequently, these symptoms cause severe dehydration, which can be deadly. Symptoms often take between 12 hours and five days to occur after ingestion of V. cholerae bacteria [7]. If left untreated, cholera can result in death within hours after symptoms commence [7].

Rebels defiant as Syrian army nears Aleppo's Old City | Reuters: Syria's army and allied militia advanced towards rebel-held areas of Aleppo's Old City on Sunday in an attack which a military source predicted would be over in a matter of weeks. Western and regional states backing the rebellion against President Bashar al-Assad appear unwilling or unable to do anything to prevent a major defeat for those fighting to topple the Syrian leader, whose campaign to regain all Aleppo has been backed by the Russian air force and foreign Shi'ite militias. Rebel groups in Aleppo have told the United States they will not leave their shrinking enclave, a senior rebel official told Reuters, after Russia call for talks with Washington over a full withdrawal of opposition fighters. But the rebels may eventually have no choice but to negotiate a withdrawal from eastern Aleppo, where tens of thousands of civilians are thought to be sheltering, in the face of relentless bombardment and ground assaults. The army said Sunday's gains, some of which were confirmed by a rebel official with the Jabha Shamiya group, included a strategically important eye hospital. The rebel official said it had yet to fall. Loud explosions were heard in eastern Aleppo as night fell, Reuters journalists in the government-held part of the city said. The Jabha Shamiya official said further advances may force a rebel withdrawal to the southwestern corner of their enclave. "The areas of Old Aleppo will be threatened to a great degree," the official said. "It is scorched earth." Food and fuel supplies are critically low in eastern Aleppo, where hospitals have been repeatedly bombed out of operation.

Our Syrian Rebels Are Issuing Threats Via WaPo – Marcy Wheeler -  This is a striking article in the WaPo. It deals extensively with setbacks rebels in Syria have already suffered at the hand of Russia’s campaign. But it bears this headline, as if Trump’s administration, not Russian intervention (and Obama’s mixed commitment), is the key change. “Fearing abandonment by Trump, CIA-backed rebels in Syria mull alternatives” As I said, the story provides plenty of evidence the real change here stems from Russian involvement, not Trump’s election. But Trump’s election provides a way for a bunch of people to issue threats about what rebels might do in response to their fading fortunes. The story quotes some anonymous US officials which likely includes Adam Schiff, who is also quoted by name, as well as an anonymous “U.S.-vetted rebel commander” who apparently speaks for the thousands the article claims to represent, and Qatar’s foreign minister Mohammed bin Abdulrahman Jassim al-Thani, suggesting that if rebels aren’t helped more America’s alliance with the Gulf States may be in trouble. It also lays out what Trump’s incoming team, including Mike Flynn and James Mattis, might feel about how a Syrian win would help Iran. I’m most interested in this part of the article, in which a single US official lays out a certain narrative about the US backed rebels — basically pretending that the covert program has worked. The possibility of cutting loose opposition groups it has vetted, trained and armed would be a jolt to a CIA already unsettled by the low opinion of U.S. intelligence capabilities that Trump had expressed during his presidential campaign. From a slow and disorganized start, the opposition “accomplished many of the goals the U.S. hoped for,” including their development into a credible fighting force that showed signs of pressuring Assad into negotiations, had Russia not begun bombing and Iran stepped up its presence on the ground, said one of several U.S. officials who discussed the situation on the condition of anonymity because they were not authorized to speak publicly.  The United States estimates that there are 50,000 or more fighters it calls “moderate opposition,” concentrated in the northwest province of Idlib, in Aleppo and in smaller pockets throughout western and southern Syria, and that they are not likely to give up. “They’ve been fighting for years, and they’ve managed to survive,” the U.S. official said. “Their opposition to Assad is not going to fade away.” Not only does this passage far overstate the success of US efforts, but it — like Qatar’s foreign minister — threatens that these armed men won’t go away if the US backs Assad.

Recapture of Mosul 'possible' before next U.S. administration: Pentagon chief | Reuters: While the fight to retake the Iraqi city of Mosul from Islamic State is going to be difficult, it is "possible" it could be complete before President-elect Donald Trump takes office, U.S. Defense Secretary Ash Carter said on Monday. Some 100,000 Iraqi government troops, Kurdish security forces and mainly Shi'ite militiamen are participating in the assault on Mosul that began on Oct. 17, with air and ground support from a U.S.-led coalition. The capture of Mosul, the largest city under control of Islamic State, is seen as crucial toward dismantling the caliphate which the militants declared over parts of the Iraq and Syria in 2014. "That is certainly possible and again it is going to be a tough fight," Carter said when asked if the recapture would be complete before Jan. 20, when Trump starts his presidency. Islamic State fighters retreating in the face of a seven-week military assault on their Mosul stronghold have hit back in the past few days, exploiting cloudy skies which hampered U.S-led air support and highlighting the fragile army gains. In a series of counter-attacks since Friday, the jihadist fighters struck elite Iraqi troops spearheading the offensive in eastern Mosul, and attacked security forces to the south and west of the city.

UN Agrees To Stop Reporting Iraqi Casualties After Military Complains --Following complaints from the Iraqi government, the United Nations has agreed to stop recording casualty figures for the ISIS war in Iraq, meaning that November’s report of 1,959 deaths among Iraqi security forces will be the last deaths you’ll be hearing about from them.The war with the Islamic State militants left at least 5,719 people killed and 1,734 wounded in the last month. The fighting has slowed in Mosul, but the numbers remain high. In October, 5,930 people were killed and 2,463 were wounded. The Iraqi government will not release their casualty figures, so these numbers are rough estimates.At least 1,533 civilians were killed and another 1,113 were wounded across Iraq. These figures are likely low as some witnesses are estimating that over 100 civilians are wounded in Mosul everyday. Many of the dead in Mosul are being buried in gardens and going unreported.At least 216 of the fatalities belonged to military personnel, and 287 more of them were wounded. These figures are likely underreported as well. Workers at the Wadi al-Salam cemetery in Najaf say they take in at least 20 bodies belonging to security personnel, including Shi’ite militiamen, on a daily basis.Militants reportedly lost about 2,227 personnel. Another 171 were wounded. The number of fatalities among ISIS/Daesh may be exaggerated by sources in the Iraqi government seeking to boost morale or to cover the deaths of civilians in the war zone. In any case, due to the nature of the fighting, precise figures are impossible.The United Nations, which has a team on the ground in Iraq, released its figures on Thursday. The team found that 926 civilians were killed, about a third of them in Nineveh province. Another 930 were wounded. The U.N. team apparently has access to verifiable military figures, because they also report that 1,959 security personnel were killed and 450 more were wounded. The U.N. figures do not include casualties from Anbar province. The Anbar Health Directorate, however, reported 292 civilians killed and 98 injured. Combining the highest figures, Antiwar.com finds that a total of 5,719 people were killed or their remains were discovered in the last month. Another 1734 were wounded.

How Iran closed the Mosul 'horseshoe' and changed Iraq war | Reuters: In the early days of the assault on Islamic State in Mosul, Iran successfully pressed Iraq to change its battle plan and seal off the city, an intervention which has since shaped the tortuous course of the conflict, sources briefed on the plan say. The original campaign strategy called for Iraqi forces to close in around Mosul in a horseshoe formation, blocking three fronts but leaving open the fourth - to the west of the city leading to Islamic State territory in neighboring Syria. That model, used to recapture several Iraqi cities from the ultra-hardline militants in the last two years, would have left fighters and civilians a clear route of escape and could have made the Mosul battle quicker and simpler. But Tehran, anxious that retreating fighters would sweep back into Syria just as Iran's ally President Bashar al-Assad was gaining the upper hand in his country's five-year civil war, wanted Islamic State crushed and eliminated in Mosul. The sources say Iran lobbied for Iranian-backed Popular Mobilization fighters to be sent to the western front to seal off the link between Mosul and Raqqa, the two main cities of Islamic State's self-declared cross-border caliphate. That link is now broken. For the first time in Iraq's two-and-half-year, Western-backed drive to defeat Islamic State, several thousand militants have little choice but to fight to the death, and 1 million remaining Mosul citizens have no escape from the front lines creeping ever closer to the city center. "If you corner your enemy and don’t leave an escape, he will fight till the end," said a Kurdish official involved in planning the Mosul battle.

Rouhani says Iran will not let Trump rip up nuclear deal | Reuters: Iran's President Hassan Rouhani said on Tuesday he would not let U.S. President-elect Donald Trump rip up a global nuclear deal, warning of unspecified repercussions if Washington reneges on the agreement. Trump had said during campaigns for the White House that he would scrap Iran's pact with world powers - under which Tehran agreed to curb its nuclear program in return for lifted sanctions - describing it as "the worst deal ever negotiated". "[Trump] wants to do many things, but none of his actions would affect us," Rouhani said in a speech at University of Tehran broadcast live on state television. "Do you think the he can rip up the JCPOA (Joint Comprehensive Plan of Action nuclear deal)? Do you think we and our nation will let him do that?" Analysts have said Trump's comments could signal a harder U.S. line on Iran, a development that could in turn empower hardliners on Iran's political scene, including rivals of Rouhani. Iran's Supreme Leader, Ayatollah Ali Khamenei, warned against any changes to the nuclear deal after Trump's comments in June, and said last month that an extension of a U.S. sanction regime would be viewed as a violation of the accord. Rouhani echoed Khamenei's comments on the U.S. Congress decision last month to pass legislation to extend the Iran Sanctions Act (ISA) for 10 years to make it easier for Washington to reimpose sanctions if Tehran contravenes the nuclear deal. U.S. President Barack Obama still needs to sign the legislation.

WikiLeaks Documents Reveal Sinister Relations Between Erdogan And ISIS -- Back in November 2015, when the world (or at least parts of it) was trying to answer one simple question: where does ISIS get its money, we first provided the answer in "Meet The Man Who Funds ISIS: Bilal Erdogan, The Son Of Turkey's President." Subsequent articles such as "ISIS Oil Trade Full Frontal: "Raqqa's Rockefellers", Bilal Erdogan, KRG Crude, And The Israel Connection" only shed more light on the illegal cash-for-oil transfer taking place between Turkey's ruling family and the Islamic State. Ultimately, the highly illegal bilateral trade (which the west had quietly averted its attention away from) faded and eventually stopped entirely following the expansion of the Russian bombing campaign which cut off the main trade routes between Turkey and Islamic State oil producers, which in some ways was good news for Turkey, as it avoided being shamed internationally for its role in supporting the terrorist organization. That, however, changed today following today's article by the Press Project which has found WikiLeaks evidence highlighting "sinister relations between Erdogan and ISIS" and transformed yet another conspiracy theory into non-conspiratorial fact. As author Thanos Kamilialis writes, the connection of the Turkish president Recep Tayyip Erdogans family with the oil smuggling of the “Islamic State” is revealed after Wikileaks? revealing of emails from the Turkish energy minister, and Erdogan?s son-in-law, Berat Albayrak. Albayrak?s emails seem to confirm the not-so-recent accusations, since the energy minister is appealing to be the “unofficial” owner of the oil company Powertrance which is importing oil from the Isis land in Northern Irak to Turkey. This is the full story of the relationship between Turkey and the Islamic State:

Erdogan wants Turkey's trade with Iran, Russia, China in local currencies | Middle East Eye: Turkish President Recep Tayyip Erdogan said his country is moving towards allowing trade with Iran, Russia and China to be conducted in local rather than foreign currencies, as he continues his efforts to strengthen the falling lira. "If we buy something from them, we will use their money, if they buy something from us, they will use our currency," he said, ahead of a trip by Turkish Prime Minister Binali Yildirim to Russia for meetings on Tuesday. Erdogan - who previously said discussions were underway with Moscow, Beijing and Tehran on the issue - added that instructions related to this proposal had been given to the central bank. Erdogan has called on Turks to cash in their foreign exchange holdings and buy lira to stem the Turkish currency's decline. The lira has lost a fifth of its value this year, hit by a resurgent dollar and widening concern about a crackdown after the 15 July failed coup."Our Turkish lira is blessed," he told a cheering, flag-waving crowd after opening a museum in the city named after his predecessor and long-time friend Abdullah Gul. Ankara hopes such demands will help the lira win back the losses it has suffered since the failed coup in July, when a rogue military faction tried to oust Erdogan from power. In November alone, the lira declined more than 10 percent while it continues to reach record lows against a stronger US dollar. The lira on Friday reached a record low of 3.58 to the dollar before making up some of the loss. In another televised speech on Sunday, Erdogan urged owners of shopping malls to "change paying their rent in foreign currencies” to Turkish lira" to prove they are "patriotic".

US 'almost certain' to extend Russian sanctions in March: former diplomat - US sanctions against the Russian energy sector are "likely or almost certain" to be renewed in March and again next summer, despite predictions that President-elect Donald Trump will take a softer stance with Moscow, a sanctions expert and former US ambassador to Ukraine said December 6. "The Trump administration is not going to monkey with sanctions," said John Herbst, now director of the Atlantic Council's Eurasia program. "The people that the president-elect has named as national security figures all understand the dangers of [Russian President Vladimir] Putin's aggressive agenda and the need to withstand it." He was speaking at an Atlantic Council event in Washington. If Trump decides not to renew the Russian sanctions through executive action, however, Congress has made clear its willingness to impose sanctions through legislation. "There's going to be a strong majority on both sides of the aisle in favor of sanctions, and perhaps a veto-proof majority," Herbst said."But we can't fool ourselves: Western Europe may not go along," Aufhauser said. "And unilateral sanctions are usually a lousy idea." European sanctions against Russia expire January 31, and EU leaders are expected to vote next week whether to extend them by six months. The Atlantic Council released a study calling into question the effectiveness of the US and European sanctions against Russia. Report author Sergey Aleksashenko, former deputy chairman of the Russian Central Bank and former chairman of Merrill Lynch Russia, recommended tightening sanctions against individuals, expanding financial sanctions and increasing the cost on Russia's energy sector through an embargo on buying crude from state-owned companies.

Trump's Biggest Test So Far -- On December 7th, was posed the biggest test so far of the mettle of America’s President-Elect, Donald Trump. He had said several times during his campaign, that if elected as President, he would seek a new, less-hostile, relationship between the U.S. and Russia. Now the moment has come when he must either make his first move forward with that historic commitment, or else - by his own inaction when the circumstances (such as right now) demand immediate action on this very promise - set his future U.S. Presidential Administration onto exactly the opposite path: following through with and accepting the existing hostilities, even when they are the most blatantly irrational and counter-factual on their American basis (as now is the case). The precipitating event here is this: NATO Secretary-General Jens Stoltenberg and German Foreign Minister Frank-Walter Steinmeier said on December 7th that they want to continue the existing hostilities against Russia: specifically the economic sanctions that U.S. President Barack Obama initiated against Russia after Russia had accepted the overwhelming (90%+) request of the residents in Crimea to restore Crimea’s pre-1954 status, of being for hundreds of years an integral part of Russia. The way Steinmeier phrased it was, “The necessary significant progress” by Russia in the implementation of the Minsk Peace Agreement for Ukraine, has not been achieved, and so the sanctions against Russia “will continue to exist.” By “the necessary significant progress” he was referring actually to the thing that has been blocking the carrying-out of the Minsk agreements: the Ukrainian Government’s refusal to adhere to provision #11 of the Minsk II Accords, the provision that says Ukraine will pass an amendment to its Constitution so as to provide “special administrative status” within Ukraine to the two breakaway regions, Donbass (where 90% of the residents had voted for the Ukrainian President whom U.S. President Barack Obama’s Administration had overthrown in a bloody coup in February 2014, which coup sparked Donbass’s breakaway), and Crimea (where 75% had voted for that deposed President, whose bloody removal by Obama’s operation sparked Crimea’s breakaway on 16 March 2014, three weeks after that coup).What Stoltenberg and Steinmeier ought to be demanding, then, certainly is not continuation of sanctions against Russia for something that Russia isn’t responsible for and actually opposes (a breaking of that promise by the Ukainian Goverment), which is Ukraine’s refusal to comply with provision #11 of the Minsk II Accords, but, instead, sanctions against the Ukrainian Government itself, and perhaps also against the U.S. Government, for their opposing and blocking implementation of that key provision of the Accords (and, perhaps belatedly, also for that coup).

Israel blocks Gaza women from breast cancer treatment -- Khuloud Abu Qamar spoke quietly but her words still shocked. “Israel is killing me slowly,” she said. “And it is killing my children, too.” After undergoing surgery for breast cancer last year, Abu Qamar requires further treatment which she has not been able to receive in Gaza. She has asked Israel for permission to travel. Her applications have so far been rejected. Aged 40, she has six children, the youngest of whom is still a baby. Her plight is shared by many others in Gaza. Estimates from the local health ministry indicate that several hundred women with breast cancer have been obstructed from traveling by Israel so far this year. Leaving Gaza for treatment is vital as the coastal strip’s hospitals are not properly equipped to provide such services as radiotherapy. As part of the state’s propaganda, Israel has portrayed itself as a global leader in cancer treatment and research. To promote breast cancer awareness in October, the Israeli Air Force painted its warplanes pink. The gimmick gave no comfort to women in Gaza. Alaa Masoud, a 25-year-old mother living in Jabaliya refugee camp, has also been diagnosed with breast cancer. She recently had her right breast removed at al-Shifa hospital in Gaza City. Her doctors have stated that she now needs to see specialists working in Israel or the West Bank. So far, she has made five requests for permission to travel through Erez, the Israeli military checkpoint on Gaza’s northern boundary. All five of her requests have been rejected. The refusal has exacerbated her suffering. Her cancer and surgery forced her to stop breastfeeding her baby Amir. “I don’t want to die,” she said. “I want to see my baby grow up to be a lovely young man.”

A Major Red Flag? Chinese Oil Demand Growth Could Shrink 60% In 2017 - Chinese growth of crude oil imports may likely shrink by more than 60 percent next year, as storage facilities are filling in and smaller refiners face more scrutiny over taxes and licenses, according to a Bloomberg survey of analysts. According to Energy Aspects analyst Michal Meidan, Chinese crude oil imports are expected to grow by 5 to 9 percent in 2017, compared to an estimated growth of 11 to 14 percent this year.  According to customs data quoted by Bloomberg, Chinese imports increased by 14 percent to average 7.5 million bpd between January and November this year. The median estimate of 8 analysts in the survey showed that China would increase oil purchases by 4.8 percent on the year in 2017.In addition, China has been bumping up crude oil imports while port and pipeline infrastructure has not been keeping up with development fast enough, which could also reduce the growth of imports.For the small refiners, the so-called ‘teapots’, they are allocated import quotas to which they need to stick to. As of October of this year, 17 teapots had been allocated a combined quota of 1.35 million bpd for 2016, while a dozen other small refiners are in the process of being approved.According to Pang Guanglian, deputy secretary general of the China Petroleum and Chemical Industry Federation—one of the associations reviewing import quotas—the amount of additional new quotas for private refiners could fall “significantly” next year compared to this year, Bloomberg said.A few months ago, the Chinese authorities announced an attempt to impose stricter control on taxes paid by independent refineries. According to a Platts analysis, this might potentially result in slowed short-term crude import plans, although it was unlikely to lead to substantial impacts in the longer run.

Analysis: Beijing's silence on oil export quotas creates turmoil in industry - The possibility that Beijing may not award oil product export quotas to independent refiners has created turmoil in the industry and raised questions on the impact this would have on refinery run rates, oil product exports, and the Shandong provincial government's infrastructure investment plans. Reliable trading sources in China told S&P Global Platts last week that the government may not allocate export quotas to independent refiners for 2017. This would leave the independent refiners dependent on state-owned trading companies to export oil products. The Ministry of Commerce, the authority responsible for allocating quotas, has not yet issued a statement. But a formal announcement may not come, given that the export policy for independent refiners is only valid until end-2016.The speculation has stemmed from the fact that the government has not yet asked the independent refiners to submit quota applications, when in fact, to secure quotas for the first quarter of 2017, the applications should have been submitted by mid-November. Industry sources said the government may be looking to control independent refiners' exports. There is also a policy debate going on in the government on whether China wants to and should become a big oil products exporter, as this runs counter to the government's plan to control excess refining capacity and pollution.

Who will save China's rust belt? - Now that Trump has decided to save America's rust belt, I thought it would be interesting to look at the issues facing China's rust belt. Here is the Financial Times: North-eastern China is facing a demographic crisis as educated millennials abandon the industrial heartland, the country's worst-performing region. Planning officials revealed this month that the economy of Liaoning, one of the three northeastern provinces, had shrunk 2.2 per cent in the first nine months of the year -- the largest regional contraction in China in seven years. . . For younger workers, the slowdown is made worse by the region's extreme reliance on the state. Most new jobs in China are created in private companies but north-eastern China is home to the state-backed heavy industrial companies and state-owned farms that form the Communist party's traditional support base. In some cities, new jobs in government or state-owned enterprises only open when an older worker leaves, leading to a practice whereby parents or other family members will retire to create a slot for a younger relative.In the 1990s, China's three north-eastern provinces saw net immigration of 360,000 people, but from 2000 to 2010, 2m left. . . . China's 2010 census showed that the fertility rate of the north-east had dropped to only 0.75, too low to replace an ageing labour pool. More recent mid-cycle census data from 2015 has not yet been released, but is likely to show a further decline. If that 0.75 fertility rate is accurate, it would be by far the world's lowest rate, for any large region.  Before fixing the problem, let's think about possible causes:

  • 1. Trade: Many people claim America's rust belt has been devastated by imports. But China is the world's largest exporter of goods. It's also the world's largest exporter of steel. So trade does not seem to be the culprit.
  • 2. Environmental regulations: But China has relative weak environmental controls, so that doesn't seem to be the problem either.
  • 3. Neoliberalism: This region is the most state dominated in China, so neoliberalism doesn't seem to be the problem.
  • 4. Declining output: China's steel output has soared in recent decades, rising to roughly 50% of global output:

China’s Banks Are Hiding More Than $2 Trillion in Loans - WSJ: In 2014, the Chinese city of Haimen on the mouth of the Yangtze River set out to build a large apartment complex and turned to Bank of Nanjing Co. for about $29 million in financing. The bank was happy to oblige but it didn’t call the money a loan, according to people familiar with the matter. It was added to Bank of Nanjing’s balance sheet as an “investment receivable,” a loosely regulated category of assets that allows bank officials to set aside little or nothing for potential losses. Bank officials aren’t shy about the accounting sleight of hand, which is rampant across China. The bank had about $39 billion in investment receivables in the third quarter, nearly as big as its loan portfolio, and profits have climbed by more than 20% a year. As of June, 32 publicly traded Chinese banks had a total of $2 trillion in investment receivables as of June, up from $334 billion at the end of 2011, according to a tally by The Wall Street Journal of the latest available information from data provider Wind Information Co.The investments are equivalent to 20% of the same banks’ total loans in dollar terms, up from 6% at the end of 2011. The 32 banks have about 70% of all the banking assets in China. The surge shows how Chinese banks are trying to keep the credit spigot open to support the country’s slowing economy. Structuring financing deals as investments instead of loans frees up bank capital and makes it easier to extend loan deadlines or new credit to borrowers. The strategy has been especially popular at small and midsize banks, said executives and analysts. The epidemic of investment receivables has created a parallel buildup of debt in addition to China’s rising official debt levels, now 2½ times gross domestic product. “The rapid growth in banks’ off-balance-sheet and investment activities, in essence, means hidden credit risks and could threaten financial safety,” said Shang Fulin, China’s top banking regulator, in an unusually blunt speech in September.

China forex reserves fall in battle to stem capital flight - In November, Beijing depleted its foreign exchange reserves more than expected, as authorities struggled to stem massive outflows of capital in view of a depreciating yuan against a strongly rising US dollar. According to data released by the People's Bank of China (PBoC) on Wednesday, the central bank's forex reserves fell by $69.06 billion (64.43 billion euros) last month, to $3.052 trillion - the fifth straight month of decline and a level not seen since March 2011. China's gold reserves also fell to $69.7 billion at end-November from $75.348 billion at end-October. November's drop was the largest since January, when a sharp fall in the yuan and worries about China's slowing economy raised fears that Beijing would devalue its currency, shocking global financial markets. The central bank is widely believed to have sold US dollars to support the yuan currency as it sunk to more than 8-1/2 year lows. China's foreign exchange regulator said the decline in reserves was partly due to the dollar's 3 percent rally versus major currencies in November. The yuan fell 1.6 percent in November alone, its worst month since August 2015, and adding to a more than 5 percent slide so far this year. China's currency has been falling alongside other emerging market currencies in the face of the rising dollar. The US currency is riding high on hopes that President-elect Donald Trump's economic policy will boost growth in the world's biggest economy.

Chinese Reserves Tumble By $69 Billion, Biggest Drop Since January --While in recent months, the PBOC had tried to mask the real pace of reserve outflows, covering up the accelerated selling of US-denominated assets to defend its rapidly devaluing currency, we noted in October that using more accurate calculations, China's capital outflows are once again surging, having hit $78 billion in September. Overnight, China, unable to continue "covering up" its reserve state, disclosed that, as we warned, FX reserve liquidation had soared with total reserves falling by nearly $70 billion last month as the country’s central bank burned through more of its reserves in the fight to defend the renminbi from greater depreciation on the back of accelerating capital outflows. This was the largest decline since January. PBOC's total reserves declined by $69.1 bilion to $3.051 trillion in November, a decline of 2.2 per cent from the previous month and the largest drop since January’s fall of 3 per cent. A median forecast from economists had predicted a fall of only 1.9 per cent from October.After adjusting for currency valuation effects, the reserves fall would be about US$34bn.As the FT notes, this "fifth consecutive monthly fall indicates growing difficulty for policymakers. Since the renminbi’s sharp depreciation in August 2015, Beijing has sought to combat more severe softening against the greenback by selling dollars from the central bank’s foreign exchange reserves."The yuan's weakness has helped to continue driving the outflows that began plaguing China after the one-off devaluation in August 2015. In the first ten months of 2016 capital outflows from China rose to $530bn, with October’s level exceeding the year’s monthly average. A separate dataset, called "PBOC's FX position" (usually released around the middle of the month), would give a useful cross-check on PBOC's FX sales net of valuation effects. This data shows the amount of PBOC's FX assets at book value. Partly reflecting the uncertainty of the size of valuation effects, there is sometimes a significant gap between this data and the reserves data after adjusting for estimated currency valuation effects (e.g., in the last few months since June, the former suggests that the monthly average of PBOC’s FX sales was about US$25bn more than implied by the latter)

The November Fall in China’s Reserves and Rise in China’s Real Exports - China’s reserves fell by $69 billion in November.With the notable exception of Sid Verma and Luke Kawa at Bloomberg, Headlines generally have emphasized the size of the fallThe Financial Times was pretty restrained compared to the norm, and the FT still highlighted that the November fall was “the largest drop since a 3 per cent fall in January.”But the fall was actually a bit smaller than what I was expecting.Valuation changes on their own knocked $30 billion or so off reserves (easy math—$1 trillion in euro, yen and similar assets, with an average fall of 3 percent in November).It isn’t quite clear how China books mark-to-market changes in the value of its bond (and equity portfolio).My rough estimate would suggest mark to market losses on China’s holdings of Treasuries and Agencies of about 1.5 percent, or $20 billion (Counting the agency portfolio and Belgian custodial book, per my usual adjustment). Bunds and OATs (French government bonds) also fell in value—but SAFE likely has a couple hundred billion in equities too, and their value rose. But it isn’t clear that all of China’s assets are marked to market monthly, so there is a bit of uncertainty here not just about the overall performance of the portfolio, but also how the portfolio’s value is reported.Sum it all up and it is possible valuation knocked somewhere between $30 and $50 billion off China’s headline reserves.Which implies that “true” sales were between $20 and $40 billion.And frankly that seems a bit low.

China Amplifies Warning on Taiwan, and Trump Takes a Tougher Line - China warned President-elect Donald J. Trump on Monday that he was risking a confrontation over Taiwan, even as Mr. Trump broadened the dispute with new messages on Twitter challenging Beijing’s trade policies and military activities in the South China Sea. A front-page editorial in the overseas edition of People’s Daily, the official organ of the Communist Party of China, denounced Mr. Trump for speaking Friday with Taiwan’s president, Tsai Ing-wen, warning that “creating troubles for the China-U.S. relationship is creating troubles for the U.S. itself.” The rebuke was much tougher than the Chinese Foreign Ministry’s initial response to the phone call, which broke with decades of American diplomatic practice. For his part, Mr. Trump seemed to take umbrage at the idea that he needed China’s approval to speak with Ms. Tsai. In two posts on Twitter, he wrote: “Did China ask us if it was O.K. to devalue their currency (making it hard for our companies to compete), heavily tax our products going into their country (the U.S. doesn’t tax them) or to build a massive military complex in the middle of the South China Sea? I don’t think so!” China often uses the overseas edition of People’s Daily to test-run major policy pronouncements. In a pointed rejoinder to Mr. Trump, the editorial said that pushing China on Taiwan “would greatly reduce the chance to achieve the goal of making America great again.” Continue reading the main story AdvertisementContinue reading the main story By going after China’s policies on trade and security, Mr. Trump appeared to be confirming his intent to take a tougher line with the Chinese leadership across a broader range of issues — and further dampened hopes in Beijing that he might step back from the campaign rhetoric he has used, including threats of punishing trade tariffs.

 Trumps talks with Taiwan President: Tsai Ing-wen calls Donald, Western media flips out – YouTube

In First Formal Briefing, China Says Trump "Clear" On Taiwan's Importance To Beijing, In Touch With His Team -- Seeking to defuse any diplomatic tensions following Trump's phone call with Taiwanese President Tsai Ing-wen, China’s Foreign Ministry said Mr. Trump’s people understand the importance of the issue to Beijing even as Trump took to Twitter to complain about Chinese economic and military policy. "The whole world knows about the Chinese government's position on the Taiwan issue." ministry spokesman Lu Kang told a packed briefing room on Monday. He added that “Taiwan-related issues are the most important and sensitive part of the China-U.S relationship.  We believe Trump’s transition team is very clear on that.” Trump's unusual call with Taiwan President Tsai Ing-wen on Friday prompted a diplomatic protest on Saturday, although Lu Kang would not say directly who China had lodged "stern representations" with about Trump's call, repeating a weekend statement that it had gone to the "relevant side" in the United States. "The Chinese side in Beijing and Washington lodged solemn representations with the relevant side in the U.S. The world is very clear on China's solemn position. The U.S. side, including President-elect Trump's team, is very clear about China's solemn position on this issue." Pressed on who the diplomatic protest was lodged with, Lu said: "I think it's easy to understand 'the relevant side'." "In fact, China has maintained contacts and communication with the team of President-elect Trump," he added, repeating a previous assertion, though did not give details. Lu also said he would not speculate on what prompted the call.

What does Donald Trump’s phone call with President Tsai mean for future US arms sales to Taiwan? - The ripple effect of a telephone call between US president-elect Donald Trump and Taiwan President Tsai Ing-wen has cast uncertainty overthe protocol of future arms deals between Washington and Taipei, an area of key concern to Beijing. Following their 10-minute conversation on Friday, Trump said on Twitter: “Interesting how the US sells Taiwan billions of dollars of military equipment but I should not accept a congratulatory call”, indicating the incoming US president might treat Taiwan more like an honoured client for American arms exports.The call came just hours after the US House of Representatives on Friday passed the National Defence Authorisation Act for Fiscal Year 2017, which included for the first time a section on high-level senior military exchanges with Taiwan. The bill, which was voted through 375-34, will be forwarded to the Senate for consideration this week. Beijing and Washington set up formal diplomatic ties in 1979, but the US Congress in the same year passed the Taiwan Relations Act that allows arms sales to Taiwan.The weapons sales are subject to congressional approval. Members of both parties support them . However, Ni noted that Trump’s personal style may add variations. “He is a businessman first and foremost. China should watch out for wild card moves from a Trump government that could use this to leverage economic tussles with China,” Ni said. Dr Li Fei, deputy director of Xiamen University’s Taiwan Research Institute, said Trump had regarded the phone conversation as a curtesy gesture between a customer and a supplier dealing with defence weapons. “Trump is not a politician and lacks sensitivity over international diplomacy. He was treating it as a business deal,” Li said.

Little tricks: how China’s response to Trump’s Taiwan call got lost in translation - Unpredictable US President-elect Donald Trump again shocked the international relations establishment when he talked with Taiwan leader Tsai Ing-wen on the phone; the call was brought to the limelight by the Financial Times last Friday.  The conversation was first reported to be initiated by pro-Taiwan staff in Trump’s transition team, then was said to be initiated by Tsai, as claimed (or exclaimed) in Trump’s ensuing tweets.  Whoever made the first move, the call broke with 37 years of China-US diplomatic protocol that US accepts and respects “One China” policy. No US President or President-elect has ever called a Taiwanese leader in recent decades. News media in the US and the rest of the world followed with breaking news and in-depth analysis, deeply perplexed by the sudden call while speculating on a possible furious reaction from China, and a possible diversion in China policy from US. But the translation of China’s eventual response may have confused matters further. While any change of US foreign policy during Trump’s presidency may be vague and unpredictable, China’s reaction can be less predictable. . China’s Foreign Minister Wang Yi simply offered a brief but very Chinese comment in an interview with Hong Kong-based Phoenix TV, describing the call as Taiwan’s “xiao dong zuo” and affirming that the “One China” policy will not change. A signal for diversion in China policy? A personal business interest move? Or simply being too unrestrained? The Western media tried hard to decipher Trump’s real intention behind the call. But here I want to focus on how English-language media translated and reported the subtle phrase from Wang Yi.  “Little trick”, or xiao dong zuo in Chinese, means dishonest or improper behaviour in a hidden, stealthy fashion, often carrying malicious intention. In gaming parlance, the opposite of “xiao dong zuo” is playing cards on the table.

China urges U.S. to block transit by Taiwan president | Reuters: China called on U.S. officials on Tuesday not to let Taiwanese President Tsai Ing-wen pass through the United States en route to Guatemala next month, days after President-elect Donald Trump irked Beijing by speaking to Tsai in a break with decades of precedent. The U.S. State Department appeared to reject the call, saying that such transits were based on "long-standing U.S. practice, consistent with the unofficial nature of (U.S.) relations with Taiwan." China is deeply suspicious of Tsai, whom it thinks wants to push for the formal independence of Taiwan, a self-governing island that Beijing regards as a renegade province. Her call with Trump on Friday was the first between a U.S. president-elect or president and a Taiwanese leader since President Jimmy Carter switched diplomatic recognition to China from Taiwan in 1979. Tsai is due to visit Guatemala, one of Taiwan's small band of diplomatic allies, on Jan. 11-12, its foreign minister, Carlos Raul Morales, told Reuters. Taiwan's Liberty Times, considered close to Tsai's ruling Democratic Progressive Party, reported on Monday that she was planning to go through New York early next month on her way to Nicaragua, Guatemala and El Salvador. Taiwan has not formally confirmed Tsai's trip but visits to its allies in the region are normally combined with transit stops in the United States and meetings with Taiwan-friendly officials.The trip would take place before Trump is inaugurated on Jan. 20 to replace Democrat Barack Obama and Tsai's delegation would seek to meet Trump's team, including his White House chief of staff Reince Priebus, the Liberty Times said.

 "China Should Build More Nuclear Arms, ICBMs In Response To Trump": Local Press --While China has been busy de-escalating the recent diplomatic spat with president-elect Donald Trump, with Beijing going so far as to call Trump's ambassador to China, Terry Brandstad, an "old friend", in a less diplomatic-context it is busy pushing every bellicose, nationalist button it can find. In a Thursday editorial in Global Times, China said it should "significantly" increase military spending and produce more nuclear weapons as a response to US President-elect Donald Trump, China should "build more strategic nuclear arms and accelerate the deployment of the DF-41 intercontinental ballistic missile" to protect its interests, should Trump attempt to corner the country in an "unacceptable way", it said. "China's military spending in 2017 should be augmented significantly," it added in the print article run in both English and Chinese. While the paper is not part of the official state media, it has close ties to the ruling Communist Party, and is considered the nationalistic affiliate of the People's Daily. Chinese officials are sometimes thought to use it as a rhetorical hammer, but have also admonished it for its often bombastic language according to the AFP. In any event, what is said there certainly carries if not official weight, then is a distinct warning about what "could happen."The editorial follows a Twitter tirade by Trump earlier in the week blasting China's trade and foreign policies, as well as a protocol-shattering decision to accept a congratulatory phone call from Taiwanese leader Tsai Ing-wen. Beijing regards Taiwan as a rogue province awaiting unification. In the editorial, the Global Times said: "We need to get better prepared militarily regarding the Taiwan question to ensure that those who advocate Taiwan's independence will be punished, and take precautions in case of US provocations in the South China Sea."

Do Not Tell Anyone, But the Case For Naming Taiwan a Manipulator Is Stronger than the Case For Naming China - Brad Setser -  Taiwan has an extremely large current account surplus. Over 14 percent of GDP in 2015, and over 10 percent of GDP since 2012. (See the WEO data or this chart). Relative to its GDP, Taiwan’s current account surplus is far bigger than China’s current account surplus is relative to its GDP.Taiwan’s central bank clearly has been buying foreign currency in the foreign exchange market. The balance of payments data shows between $10 and $15 billion of purchases a year in recent years, and roughly $3 billion of purchases a quarter this year (data here).And Taiwan’s government clearly has been encouraging private capital outflows—notably from the the life insurance industry—largely by loosening prudential regulation, and allowing the insurers to take more foreign currency risk. Private outflows help limit the need for central bank intervention to keep the currency down, but also require private institutional investors to take on ever more foreign currency risk.China by contrast has been selling foreign exchange reserves in the market to prop its currency up. Right now, the case that China is managing its currency in ways that are adverse to U.S. trade interests is not strong. Plus, Taiwan’s real effective exchange rate—using the BIS data—has depreciated significantly over the past ten-plus years, unlike China’s real effective exchange rate. The fact that a weaker real exchange rate has gone hand in hand with the rise in Taiwan’s surplus shouldn’t be a surprise, but there are still a surprising number of folks who believe that real exchange rates don’t matter for trade in an era of global supply chains. In Taiwan’s case, a weaker currency has gone hand in hand with a bigger current account surplus.“Taiwan is actually intervening in the market to hold its currency down” is the kind of wonky technocratic detail that seems somewhat out of favor right now.* But it is also factually true that Taiwan has a bigger current account surplus and a more consistent pattern of intervention to resist appreciation over past few years than China does. Korea too, though Korea is a more complex story.** Which adds to the awkwardness of singling China out…if that is in fact what President-Elect Trump plans to do.

‘A tragedy in our history’: South Korean parliament votes to impeach President Park Geun-hye - South Korean lawmakers on Friday passed an impeachment motion against President Park Geun-hye, stripping away her sweeping executive powers over a corruption scandal that paralysed her administration and triggered massive street protests. The National Assembly ballot transfers Park’s authority to the prime minister, pending a decision by the Constitutional Court on whether to ratify the decision and permanently remove the president from office. I am so sorry for all South Koreans that I created this national chaos with my carelessness when our country faces so many difficulties, from the economy to national defence South Korean President Park Geun-hye A ruling could take up to six months, during which time Park will remain in the presidential Blue House while the country faces a period of political uncertainty and policy paralysis The motion was adopted by 234 votes to 56, easily securing the required two-thirds majority in the 300-seat chamber. “I declare that the bill to impeach President Park Geun-hye has just been approved,” announced speaker Chung Se-kyun. “Whether you support or oppose it, all lawmakers and South Korean people who are watching this grave situation unfold must feel so miserable and heavy at heart. I deeply wish that such tragedy in our constitutional history will not be repeated ever again.” The anonymous paper ballot was conducted against the background din of hundreds of slogan-chanting protesters outside the assembly building, screaming “Impeach Park.” Impeached South Korean President Park Geun-hye apologised on Friday for the political “chaos” in the country and urged the government to remain vigilant on the economy and national security.“I am so sorry for all South Koreans that I created this national chaos with my carelessness when our country faces so many difficulties, from the economy to national defence,” Park said in a televised statement after parliament passed a motion of impeachment.

Japan govt to issue additional deficit-covering bonds around $17 billion for FY2016 -govt sources | Reuters: Japan is considering issuing additional deficit-covering bonds worth around 1.9 trillion yen ($17 billion) to offset an expected tax revenue shortfall in the current fiscal year to March, government sources told Reuters on Tuesday. The government expects tax revenues to undershoot its initial forecast of 57.6 trillion yen by around 1.9 trillion yen, which would mark the first downward revision in seven years, the sources said. The plan will be included in a proposed third supplementary budget expected to be approved by cabinet this month. Australian economy shrinks 0.5pc in worst fall since global financial crisis  - Australia's economy shrank 0.5 per cent in the September quarter, well below already pessimistic analyst forecasts and its steepest decline since the global financial crisis of late-2008. The annual rate of growth came in at an anemic 1.8 per cent, according to the Bureau of Statistics data, also below expectations. Economists were generally expecting a slight fall in gross domestic product (GDP), with the typical forecast for a -0.1 per cent quarter and economic growth of 2.2 per cent over the year.A range of partial figures led analysts to their downbeat predictions, with yesterday's trade data pointing to a 0.2 percentage point subtraction from economic growth, while construction data released last week were much worse than expected and business investment was also weak.However, the final result was considerably weaker than forecast, pushing the Australian dollar down the best part of half a cent to 74.2 US cents by 11:38am (AEDT).The final National Accounts data showed that slumping private investment in new dwellings contributed 0.3 percentage points to the GDP decline, with new engineering detracting 0.2 percentage points.Public capital expenditure, such as infrastructure investment, knocked 0.5 percentage points off growth in the September quarter after a strong June quarter.

Indian Economy Crashes As Modi's "Black Money" Theory Collapses --Amid social unrest and loss of faith in the nation's currency, India's economy has ground to a halt with its Composite PMI crashing by a record in the last month as demonetization strikes. However, even more problematic is that Indians have validated 82% of bank notesrendered worthless by PM Modi, dramatically undermining the government’s estimate of unaccounted wealth in the economy. As Bloomberg reports, About 12.6 trillion rupees ($185 billion) had been deposited into bank accounts as of Dec. 3, the people said, asking not to be identified citing rules for speaking with the media. The government had estimated that about 5 trillion rupees of the 15.3 trillion rupees sucked out by Modi’s move would stay undeclared, implying that this was cash stashed away to evade taxes, known locally as black money. Lack of a meaningful cancellation could be a double blow for Modi as the measure was being used as a political and economic gauge of the success of his Nov. 8 move. One of Modi’s biggest campaign pledges was to expose black money in Asia’s No. 3 economy, and economists were viewing the cash as a potential windfall for the government. "Some of the windfall that the government was hoping for from the cancellation of notes will be dented," said Anjali Verma, chief economist at PhillipCapital Ltd. "That means the fiscal stimulus that was being expected might also take some hit. That is not good news at a time when direct consumption, private investment is not expected to pick up." In such a situation where the gains of demonetization aren’t apparent, individuals will more closely analyze the pain. A slump in demand due to the cash shortages will hurt company revenues and government tax collections, widening the budget deficit and ultimately weakening the rupee, Lokapriya said. So was the whole effort merely, as Modi admitted, a move towards a cashless society after all? And not in any way related to corruption? Either way, it is too late now as faith in the fiat currency has collapsed.

Family’s $29 Billion Fortune Claim Denied Amid India’s Tax Hunt -- India’s government has rejected a $29 billion declaration of income from a family of four citizens. That fortune would’ve made them wealthier than the nation’s richest man. The Mumbai-based family including the patriarch, his wife, son and sister together declared 2 trillion rupees -- more than Mukesh Ambani’s $21 billion of wealth -- during a government program offering amnesty on undisclosed income, the Ministry of Finance said in a statement on Sunday. Another man from Prime Minister Narendra Modi’s home state of Gujarat revealed 138.6 billion rupees of illegal income, locally known as black money. “After due inquiry, it was found that these were persons of suspicious nature and very small means and the declarations could have been misused,” according to the statement. The department has since started a probe “to determine the intention behind these false declarations.” Modi, who is attempting to fulfill his election pledge of unearthing black money, in September offered tax evaders an amnesty in exchange for a one-time levy of 45 percent on their income. That program led to a disclosure of 673.8 billion rupees of illegal income excluding the two cases rejected by the Finance Ministry. While the government didn’t elaborate on why it found the transactions suspicious, analysts said these may be cases where several individuals used the people to launder cash. "This obviously appears to be a case of money laundering and it’s the right thing on the part of the tax authorities to launch an investigation," said Anil Verma, national coordinator for the New Delhi-based independent governance watchdog Association for Democratic Reforms. "To me this isn’t surprising at all, given the large part that cash plays in our economy from elections to real estate."

There May Not Be Any Demonetisation At the End Of It All: For the last few days, reports in the media have been indicating that the banks may end up receiving the bulk of the demonetised 1000 and 500 rupee notes in a legitimate manner. Economist Arun Kumar, who has done extensive work on black money, is optimistic that going by the present pace of deposit and replacement of 1000 and 500 notes, over 95% of the invalidated currency may come into the banking system. This effectively means that the entire “shock and awe” strategy of Prime Minister Modi, accompanied by so much pain and disruption in the lives of a billion people, ends up with very little black money being located and extinguished. This will be seen as a colossal failure of governance and there are serious implications of this failure. Indeed the government was already counting its chickens by estimating that up to Rs 3 lakh crore – out of a total of Rs 14.5 lakh crore – may not come back into the banking system, and therefore would get extinguished. This would automatically increase RBI’s surplus reserves by Rs 3 lakh crore. The Centre on its part was seeing this as an additional fiscal space as it could access this money through various mechanisms. Speculative plans were abuzz that the prime minister could use these funds as a social sector transfer to the poor so that their pain could be somewhat alleviated. There was also talk that part of these funds may be used to recapitalise banks which are not lending due to massive capital requirements in the backdrop of unprecedented NPAs.All these plans would come a cropper if the bulk of the 1000 and 500 notes come back into the system without a reasonable amount of black money getting extinguished.

India’s RBI Surprises Markets by Keeping Rates Unchanged; Slashes Growth Outlook - WSJ: —The Reserve Bank of India unexpectedly left its main interest rate unchanged on Wednesday, citing global financial markets volatility, while it cut its growth forecast, in the first official assessment of a government decision to scrap most of the cash in circulation. The central bank’s monetary policy committee, headed by Gov. Urjit Patel, left the main interest rate unchanged at 6.25%. Four of five economists interviewed by The Wall Street Journal last week said they expected the RBI to cut its main rate by at least 0.25 percentage point. The central bank was expected to act to mitigate the impact of the cash crunch that is gripping the country. Instead, it offered an assessment of the damages of the currency move on Asia’s third-largest economy, as it cut its growth forecast to 7.1% in the 12 months to April, from 7.6% previously. India’s stocks fell after the RBI’s decision was made public. The S&P BSE Sensex declined 0.4% to 26,291.61, erasing a 0.3% gain before the policy decision. The RBI cited the dollar’s surge and the increase in the prices of oil and commodities as two factors that could increase global volatility, and suggested it was taking stock of the tightening in U.S. monetary policy. “International financial markets were strongly impacted by the result of the U.S. presidential election and incoming data that raised the probability of the Federal Reserve tightening monetary policy,” the RBI said in a news release that accompanied the decision. It also cited “the specter of financial market volatility.”

In Bundelkhand, Farmers Sink Into Debt As Rural Economy Collapses: Almost a month after Prime Minister Narendra Modi announced the scrapping of Rs 500 and Rs 1000 notes, the socio-economic fabric of Bundelkhand – one of the poorest regions in central India comprising parts of Uttar Pradesh and Madhya Pradesh – is slowly crumbling. The shortage of cash in banks, a parallel black economy, an illegal cash-barter system and deepening feudal repression have intensified the woes of this largely agricultural belt, which is already reeling under the impact of three consecutive droughts and then a flood this past monsoon. The farmers had barely recovered from the devastating impact of climate change in Bundelkhand and ever-mounting cycles of debt, and now the government’s demonetisation move has come as a bolt from the blue for them. Not just farmers, but everyone associated with agricultural trading stands to lose out on a large portion of their incomes. The seasonal nature of agriculture and allied businesses means that the impact of the losses incurred over the next few months will have ripple effects on farms’ incomes throughout the next year. Bundelkhand is a crucial microcosm of how demonetisation has affected poor regions of the country. With more than 45% of its people living under the poverty line – more than half of them fall under the Antyodaya category (extremely poor) – a majority of agricultural land owned by a small section of upper caste Hindus, an abysmal literacy rate, and starkly high malnourishment levels, Bundelkhand has been badly affected. The region, which is composed of 13 districts and spread across two of the most densely populated states, is an important signifier of how people are coping with the effects of demonetisation.

RBI's Lack of Foresight and Transparency on the Impact of Demonetisation Is Disappointing: By avoiding questions on when the situation will normalise and suggesting that the growth forecast doesn’t take into account the transitory impact of demonetisation, Urjit Patel is shunning responsibility.After abjectly surrendering to the Centre over the manner of demonetisation, the RBI seems to have somewhat asserted its institutional integrity by not cutting the interest rate even as finance minister Arun Jaitley had publicly raised hopes of a rate cut in view of banks getting flooded by deposits over the past month. The markets had already priced in a 25 to 50 basis point cut in interest rate, which of course did not come about. The stock market fell and yields on government bonds went up as an immediate reaction. However, what is more worrisome is that the body language of the RBI governor clearly betrayed a lack of confidence about the behaviour of the economy in the near term. Urjit Patel chose not to directly answer key questions regarding when Indian citizens would be able to withdraw their money from banks without restrictions or when the RBI will complete printing of the entire Rs 15 lakh crore of currency invalidated on November 8. All the RBI said that was 25% of the currency had been replaced. At this rate, the full replacement might not happen before March. On pointed questions by the media, the deputy governor incharge kept repeating just one line,”It is under constant review”. It was a bit amusing to watch the RBI governor trying to put up a brave front yet directing all difficult questions to his deputies. This is clearly a contrast from previous governors, who fielded the most difficult questions upfront. However, Patel did try to defend the Centre, even if unconvincingly, when he asserted that full planning was done before Prime Minister Narendra Modi announced the demonetisation. This just won’t pass muster. For if there is one thing clear to everyone in this messy episode, it is that there was very little planning. Which is what has caused so much pain to so many people, yet sadly the Centre still refuses describe this as anything more than “inconvenience”. Indeed, the prime minister and the finance minister are clearly conveying a sense of hubris in the way they are articulating the “inconvenience” to the people. The RBI too ended up rubbing salt in people’s wounds when Patel suggested, “The money in the bank is yours. It will remain yours”. He said it was only a transition problem. But the governor just would not tell us when this transition problem would end.

India Outflow: Deutsche Bank Says You Ain't Seen Nothing Yet - If you thought November was ugly, brace yourself for even more outflows from Indian assets in December, according to Deutsche Bank AG. Foreign funds pulled money from Indian stocks at the fastest pace since 2008 last month as Donald Trump’s surprise election win spurred expectations for more rapid interest-rate increases in the U.S. and Prime Minister Narendra Modi’s cancellation of high-denomination bank notes hurt cash-based business activity. The bond market wasn’t spared, with the biggest monthly exodus since the taper tantrum in 2013. “We think that the worst of the outflows are not yet over,” said Abhay Laijawala, the head of research at Deutsche Bank in Mumbai. “The markets cannot stabilize until selling by foreigners abates.”Modi’s shock move to recall 86 percent of the currency in circulation in a bid to tackle corruption is taking a heavy toll on the economy, with Goldman Sachs Group Inc. slashing its fourth-quarter growth projection to 4 percent, compared with an expansion of 7.3 percent in the previous three months. The Reserve Bank of India held interest rates on Wednesday, surprising economists who had been expecting it to cut. “The RBI policy reinforces our concern that emerging markets are needing to recalibrate their monetary policies in line with the strengthening dollar,” said Laijawala. Foreign funds pulled $2.6 billion from Indian equities in November and $2.1 billion from bonds, exchange data show. The selloff is continuing, with $2.1 billion being withdrawn from debt so far in December and $88 million exiting stocks.

With 65% of ATMs Nonoperational, Goldman Warns India Is "Returning To Barter System" - India continues to stagger from bad to worse following Modi's demonetization. With just 35% of ATMs nationwide operational, Goldman warns the shortage of cash continues to incentivize the use of alternate payments, including extension of informal credit and a return to barter systems. Addtionally, the slowdown in activity is dramatically reflected in lower tax collections and discounts offered by luxury car companies.Goldman Sachs  recently introduced their India 'De-monetization dashboard' in which theytrack the progress of the Indian government's recent currency reform announced on November 8 via a variety of high-frequency data, including money supply, credit/deposit, interest rates, physical asset premia, real economic activity, price indicators and capital flows.This week’s update shows that cash availability at ATMs is still low. On real economic activity, there were no major data releases this week. However, PMIs and auto sales data released last week suggested a significant slowdown in activity. Separately, anecdotal evidence suggested continued weakness in activity as shown in the lower indirect tax collections and various discounts given by luxury car companies. According to Livemint, 95% of ATMs (out of 200,000 in the country) have been re-calibrated to accept new notes but only 35% of the re-calibrated ATMs are operational. Banks are preferring to make cash available in their own branches instead of making cash available at ATMs. Daily data from ATMs in the four key metro cities – namely Bengaluru, Delhi, Kolkata and Mumbai – show that people are still facing a ‘cash crunch’ in about half of the ATMs. The shortage of cash continues to incentivize the use of alternate payments including electronic payment systems, extension of informal credit and a return to barter systems. The government has further announced various measures to promote digital and non-cash transactions including discounts on digital purchase of fuel, suburban train tickets, and service tax exemptions on transaction charges up to INR 2000 on December 8.

Kazakhstan jails activists, plans a Great Firewall to stifle online dissent -- In Kazakhstan, the power of citizens to resist authoritarianism has been dealt a significant blow. On November 28, two major Kazakh land activists, Max Bokayev and Talgat Ayanov, were sentenced to five years in prison on charges of organising unsanctioned protests and inciting social discord.  Bokayev and Ayanov were arrested following large-scale land protests in the country in April and May. Normally very cautious, in this instance, the regime failed to spot the potential threat of online activism in time, and therefore let protests unfold.  The jailing of the two men shows the government of President Nursultan Nazarbayev well understands that it can no longer underestimate the power of new forms of civic activism.  The Central Asian authoritarian state has not tolerated political opposition for years. It jails journalists, frequently violates citizens’ civil liberties and stifles every other form of liberal democracy.  The Kazakh people often watch the regime get away with this behaviour, partly because they enjoy the status quo, and partly because they feel powerless to affect politics.  But beneath the surface, a new era of civic activism has been growing since 2010, coming to fruition in the land protests of April 2016. Developments in technology, increasing access to the internet, and the growing popularity of social media equipped Kazakh civil society groups with tools to even out the battle against an overly centralised and corrupt government.

Gambia president concedes defeat in shock election loss - (AP) — President Yahya Jammeh has "accepted defeat" in elections after more than 22 years in power in Gambia, the head of the country's election commission said Friday. The longtime leader was expected to address the nation later in the day. The stunning announcement came from Alieu Momarr Njai a day after eight opposition parties united behind a single candidate to try to oust Jammeh at the polls. "This is very unique that somebody who has been ruling this country for so long has accepted defeat," Njai told The Associated Press. Jammeh will announce the official vote count and the winner when he makes a statement to the nation later today, Njai said. Adama Barrow, a former businessman and the candidate endorsed by the opposition coalition, is believed to have won the election, but that will only be confirmed when Jammeh makes his announcement. Only days earlier Jammeh had said that his victory was all but assured by God. After voting Thursday he predicted "the biggest landslide in the history of the country." Previous elections since 1994 have been criticized as rigged. All internet and international phone service was cut on election day in a bid by Jammeh to thwart unrest. Barrow said on voting day that he strongly believed Gambians were ready for change. "He is not going to be re-elected — his era is finished," Barrow said Thursday. If Jammeh steps down from power, it will mark a startling development for the tiny West African country he has tightly ruled. Human rights groups say his regime has ordered the deaths of countless political opponents, and he is also accused of targeting journalists, and gays and lesbians.

Venezuela to Issue Bigger Bills This Month as Currency Plunges - With the value of Venezuela’s largest banknotes reduced to a few U.S. cents by triple-digit inflation and the currency’s collapse on the black market, the country’s central bank said it will begin circulating higher-denomination notes this month. New denominations including bills of 500, 1,000, 2,000, 5,000, 10,000 and 20,000 bolivars will start appearing at banks from Dec. 15, according to a Central Bank statement, adding that coins of 10, 50, and 100 bolivars would also be released. Bloomberg News first reported the plans for larger bills on November 30. The reluctance of authorities to issue bills larger than 100 bolivars over the past several years as the currency declined in value had forced Venezuelans to ditch wallets in favor of bags of cash for everyday transactions. Some shopkeepers have started to weigh wads of notes instead of counting them to save time. Venezuela’s government, meanwhile, is planning to announce new currency measures after the bolivar lost almost two-thirds of its value in black-market trading last month. “There’s an action being planned that is going to have a very important impact,” foreign trade and investment minister Jesus Faria said Sunday in an interview on the Televen television network, without proving additional details. “In the middle of this turbulence, there have to be continuous revisions, and that’s what we’re adopting, adjusting to the new challenges and conditions. The changes will be adopted Tuesday, he said. Venezuela’s economy should start to stabilize next year and grow 1.5 to 2 percent, Faria said, adding that the government is working on policies to stabilize prices, inflation and speculation. The recent decision by oil cartel OPEC to cut production should provide Venezuela with additional revenue of $8 billion or $9 billion next year and help improve the availability of products, he said.

More Canadians going bust as consumer debt surges 3.6% - The Globe and Mail: A new Equifax Canada report says low interest rates and falling oil prices drove up consumer debt and delinquency rates in the third quarter. The credit reporting agency found that average debt increased by 3.6 per cent to $22,081 in the quarter ended Sept. 30 compared to the same period last year. As of the third quarter, Canadian consumers owed $1.702-trillion compared to $1.587-trillion a year earlier. Equifax says the percentage of people who are 90 days or more behind paying their debt grew to 1.14 per cent from 1.05 per cent during the same year-over-year period. It says the increase in delinquency was largely driven by oil-producing provinces in Western Canada and Newfoundland and Labrador, where default rates tend to be higher. Total consumer debt, excluding mortgages, remains on the rise fuelled in part by low interest rates, it said.

Canadians' average debt load now up to $22,081, 3.6% rise since last year - Business - CBC News: The average Canadian now owes $22,081 in consumer debt, a figure that doesn't include any mortgages, debt monitoring firm Equifax says. On average, people between the ages of 46 and 55 have the most debt, Equifax says. (Natalie Holdway/CBC)In a report released Wednesday, Equifax says the debt figure increased by 3.6 per cent in the third quarter of 2016 compared to the same period a year ago. All in all, consumer debt now stands at more than $1.7 trillion. But while the average is rising, that figure belies an interesting paradox: Many people have little or no consumer debt, but those who do are borrowing more and more. "The majority of consumers are actually decreasing their debt," said Equifax's senior director, Regina Malina, "but those who are still increasing it are adding larger amounts on average and by enough to increase the total levels. According to Equifax, Fort McMurray is the most endebted city in Canada, on average. (Natalie Holdway/CBC)"The fact is people who can afford to do so are buying more cars, spending more on housing and borrowing more," she added. So far at least, they're managing to keep their heads above water. Equifax considers a loan to have gone delinquent when a borrower has not made a payment in more than three months. By that standard, the delinquency rate is still low — 1.14 per cent in the third quarter. That's up from 1.05 per cent at the same time last year, but still low in overall terms. Much of the surge in delinquencies has come from oil-dependent provinces in Western Canada and Newfoundland and Labrador, Equifax said.

Make No Mistake: Russia Remains The Only Target Country Of NATO's Nuclear Weapons - Britain, China, France, Russia and the United States are the world’s five «nuclear weapons states», a description officially recognised in the Nuclear Non-Proliferation Treaty (NPT), which lays down that «each nuclear-weapon State Party to the Treaty undertakes not to transfer to any recipient whatsoever nuclear weapons or other nuclear explosive devices…»It is apparent that the word ‘transfer’ involves ownership and not location, because the United States has transferred many nuclear weapons to countries which, although members of the US-NATO military alliance, are not nuclear weapons states. An analysis by the Nuclear Threat Initiative indicates that the US has positioned 160-200 B-61 nuclear warheads «at six bases in five NATO countries: Belgium (10-20), Germany (10-20), Italy (60-70), Netherlands (10-20), and Turkey (60-70)».According to a NATO statement of December 2015, «A number of NATO member countries contribute a dual-capable aircraft (DCA) capability to the Alliance. These aircraft are available for nuclear roles at various levels of readiness – the highest level of readiness is measured in weeks. In their nuclear role, the aircraft are equipped to carry nuclear bombs and personnel are trained accordingly».The claim that the readiness level is measured in weeks is intriguing, because, as indicated in the US-NATO Readiness Action Plan of October 2015, the entire alliance is gearing up for war against Russia and, among other blatantly provocative initiatives, is «Raising the readiness and capabilities of the Multinational Corps Northeast Headquarters in Szczecin, Poland and enhancing its role as a hub for regional cooperation».NATO’s policy of confrontation with Russia is causing some disquiet in western Europe, whose citizens are kept in the dark about the depth and demands of the military alliance to which their countries are committed, such as their aircraft being «equipped to carry nuclear bombs». It is policy that the US B-61 nuclear weapons stored in Europe are delivered to targets by aircraft of the Belgian, Dutch, German and Italian air forces.

Something Strange Is Taking Place In The Mediterranean - For two months, using marinetraffic.com, we have been monitoring the movements of ships owned by a couple of NGOs, and, using data from data.unhcr.org. We have kept track of the daily arrivals of African immigrants in Italy. It turned out we were witness of a big scam and an illegal human traffic operation. NGOs, smugglers, the mafia in cahoots with the European Union have shipped thousands of illegals into Europe under the pretext of rescuing people, assisted by the Italian coast guard which coordinated their activities.  Human traffickers  contact the Italian coast guard in advance to receive support and to pick up their dubious cargo. NGO ships are directed to the “rescue spot” even as those to be rescued are still in Libya. The 15 ships that we observed are owned or leased by NGOs have regularly been seen to leave their Italian ports, head south, stop short of reaching the Libyan coast, pick up their human cargo, and take course back 260 miles to Italy even though the  port of Zarzis in Tunis is just 60 mile away from the rescue spot. The organizations in question are: MOAS, Jugend Rettet, Stichting Bootvluchting, Médecins Sans Frontières, Save the Children, Proactiva Open Arms, Sea-Watch.org, Sea-Eye and Life Boat. The real intention of the people behind the NGOs is not clear. Their motive can be money, we would not be surprised if it turned out to be so. They may also be politically driven; the activities of the Malta-based organisation, MOAS, by trafficking people to Italy is the best guarantee that migrants will not show up on the Maltese shore. MOAS is managed by an Maltese Marine officer well known in Malta for his maltreatment of refugees 1). It is also possible that these organisations are managed by naive “do-gooders” who do not understand that offering their services they are acting like a magnet to the people from Africa and thus they are willy-nilly causing more fatalities, not to mention that their actions are destabilizing Europe. How high-minded the intentions of these organisations might be, their actions are criminal as most of these migrants are not eligible for being granted asylum and will end up on the streets of Rome or Paris and undermine Europe stability raising racially motivated social tensions. During the two months of our observation, we have monitored at least 39,000 Africans illegally smuggled into Italy, which was done with the full consent of the Italian and European authorities.

Refugees dying from hypothermia as deadly Mediterranean boat crossings continue into winter | The Independent: Refugees are dying of hypothermia as thousands continue desperate attempts to cross the Mediterranean Sea in plummeting temperatures and worsening winter weather. While European leaders have hailed the “success” of a deal aiming to stop migrant boats being launched from Turkey to Greece, the number of asylum seekers taking the longer and more treacherous route from Libya to Italy has increased dramatically. More than 4,700 refugees have died attempting sea journeys to Europe this year, of drowning, fuel inhalation and suffocation in overcrowded dinghies. Now, the cold itself is taking lives. A day rescuing refugees from the Mediterranean Sea At least two women have been killed by hypothermia in the past week. Rescuers with the medical charity Médecins Sans Frontières (MSF) said it was the first time they had seen refugees die from the condition. Helmi Emmen, a nurse on the Aquarius search and rescue ship, said they were found on a rubber dinghy packed with around 120 migrants off the coast of Libya on Sunday. It was only after around 60 people had been rescued from the boat that medics saw two women lying on the floor. One was not breathing and was pronounced dead following attempts at CPR on the deck. “The other woman was still breathing and had a pulse,” said Ms Emmen. “We put her on oxygen but she stopped breathing and her pulse was going down. We didn’t succeed in saving her.” Both women were young and thin, most probably undernourished from their long journey and stay in Libya, and were wearing only thin T-shirts as a defence against the cold and water filling the boat. “It is the first time we have seen a hypothermia death but we expect this to happen more,” Ms Emmen said. “We are trying to be prepared for it.” The Italian coast guard discovered 11 more bodies in another boat on Tuesday, while a commercial ship carrying out a separate rescue found three people dead.

Matteo Renzi's referendum defeat is 'first step towards Italy leaving the eurozone': Germany's finance minister has called for a calm response to the outcome of Italy's constitutional referendum - which saw centre-left leader Matteo Renzi ousted - and said there was no basis to talk of it triggering a "euro crisis." Wolfgang Schaeuble said as he arrived for a meeting with his eurozone counterparts in Brussels that Italy needs a government that's capable of acting and he hopes it will continue pursuing reforms despite the referendum result. Schaeuble added: "I think we should take note of this with a degree of calm. The Italians have decided; we have to respect that. They will make the best of it." The minister said: "There is no reason to talk of a euro crisis and there is certainly no reason to conjure one up." Matteo Renzi, the Italian prime minister, resigned late on Sunday night after losing the constitutional referendum. He conceded before official results were announced as exit polls showed he was heading for a heavy defeat. "My experience of government finishes here," Mr Renzi told a press conference after the No campaign won what he described as an "extraordinarily clear" victory in the referendum on which he had staked his future. Italian referendum result The outcome energised the anti-immigrant Northern League party, an ally of French far-right leader Marine Le Pen. The party called for an early general election in Italy.

And the winner (in Italy) is … Donald Trump -- The Trumpian style of politics, which the American tycoon used to win the White House last month, has carried the day in Italy, too: Anywhere you look these past few months, there’s rhetoric that claims to reject politics, the propagation of fake stories (bufala in Italian) and the wide airing of insults.“Between anti-politics and bufala, Trump is everywhere in this campaign,” said Pippo Civati, a former ally of Prime Minister Matteo Renzi, who’s fighting for his political future on Sunday. The vote on changes to the constitution has become a plebiscite on the center-left Renzi government and has, in striking ways, come to resemble the U.S. presidential campaign as well as the Brexit referendum. Political analysts attribute the rise of what might be called Trumpism, Italian style (or what others would say is modern politics, hate or love it) in part to the widening gap between what people think is happening, and what is really happening. Italians, for example, estimate that about 30 percent in the country is a migrant, according to a 2014 poll by Ipsos. As it happens, migrants comprise about seven percent of the population. But perception is the reality of media-driven politics.The U.S. and Italy share another characteristic that makes them vulnerable to hoaxes and “post-truth politics,” said Nando Pagnoncelli, head of public affairs for Ipsos in Italy: They watch a lot of TV. The reliance on television for information makes it easier to sway the electorate with false news and populist rhetoric, said Pagnoncelli, adding that “citizens don’t have real tools to verify data and trustworthiness.” At times in Italy, the two sides vary so widely that both can’t even be close to right. Renzi promises that his constitutional reform, which cuts down the number of seats in the Italian Senate by more than two-thirds, will save €500 million. The No camp, led by the internet-based, anti-establishment 5Star Movement founded by comedian Beppe Grillo, said the real saving would only be about a tenth of that, or €57.7 million. Either way, it would have little impact on Italian public debt, which totals about €2.25 trillion.

Big Mess in Italy: There is a high degree of probability (approaching 90%, I’d say) that Italy will experience a severe banking crisis in the next few quarters. Perhaps they can stave off the problem for a year, but something will have to be done about the banks. We’ll go into that later in the letter, since the plight of the banking system is the root cause of all the country’s other problems. Without a banking crisis, Italy would still be the political mess it has been for 65 years, but the banking mess turns the political mess into an economic mess. There is a significant chance Italy will decide to leave the Eurozone and/or the European Union in the next year or so. Is it likely? No, but we’ve seen less likely things happen recently. Just the discussion of the possibility could be destabilizing to markets that already have enough worries. If we are lucky, Italy will decide quickly what to do and then do it in a planned, orderly fashion. That would, however, go against everything we know about Italy from experience. Italian citizens haven’t had much fun the past decade, judging from their GDP. You can see in the left side of the chart below that GDP per person has lagged the EU since 1995. Worse, it kept falling after 2009 even as Italy’s neighbors recovered. This performance stands in stark contrast to Italy’s pre-euro experience. Even though Italy constantly revalued the lira, that revaluation process allowed Italy to grow its GDP in real terms as fast as Germany did for decades. Notice in the graph above that the real dropoff in Italian economic performance began shortly after the introduction of the euro in 1999.The bar chart on the right above shows the employment rate for people ages 15–64 in various European countries. Italy is second worst on the list, with only Greece having fewer working-age jobholders. That tells you all you need to know about why there is political turmoil and pushback from Italian voters.

Italians Vote “No,” Renzi to Resign, Banking Crisis Now Looking for Taxpayers -- naked capitalism - Yves here. The big business story today was the well-anticipated defeat of a referendum in Italy on which prime minister Matteo Renzi had staked his leadership. Due to the distraction of PropOrNot, as you can see from our series of posts today, we are turning over the overview to Wolf Richter. Some additional details from the Financial Times: Italians rejected the constitutional changes — designed to ease gridlock in the country’s political system — by a wide margin of 59-41 per cent, according to early returns, in a vote marked by a high turnout of nearly 69 per cent… The political instability triggered by Mr Renzi’s defeat could jeopardise plans by Monte dei Paschi di Siena, Italy’s struggling third-largest bank, to raise up to €5bn by the end of the year. The bank and its advisers are expected to meet on Monday morning to decide whether to go ahead with the plan. The idea that Monte dei Paschi could raise that much money after the past two rescue efforts wiped out equity investors is quite a stretch. Even though Italians are better at just about anyone in Europe in sweeping things under the rug, the magnitude of the banking mess means that rug is not just mighty lumpy but also starting to move around. More from the pink paper:Any new government would either be led by Mr Renzi himself, or another senior member of his centre-left Democratic party — with Pier Carlo Padoan, the finance minister, Pietro Grasso, the president of the Senate, Graziano Delrio, the transport minister, and Dario Franceschini, the culture minister, among the most-frequently mentioned candidates.They would probably have a narrow mandate to carry the country to the next elections due in early 2018. But if there is no agreement on a new government, Italy would face the prospect of snap elections.Mr Renzi’s defeat marks a big victory for the Five Star Movement, which has been running neck and neck with the ruling Democratic party in most national polls this year and has been aiming to unseat the prime minister for most of his tenure… But while the referendum result will embolden Five Star — which has called for another referendum, this time on exiting the euro — it would still have to gain power in parliamentary elections in order to carry out its political programme.

Italians Vote “No,” Renzi to Resign, Banking Crisis Now Looking for Taxpayers - Wolf Richter at Wolf Street - A constitutional-reform referendum on tweaking the way a country governs itself, of the type Italy held today, would normally not be a big deal for banks in that country, and particularly not for banks in other countries, and it wouldn’t have much impact on currencies and credit markets. But these are not normal times for Italy, which is in the middle of a vicious banking crisis, and they’re not normal times for the EU either, which has been grappling with a banking crisis of its own, even as it has begun to splinter, after the Brexit vote. And it still wouldn’t be such a huge deal if Prime Minister Matteo Renzi hadn’t pledged he’d resign in case of a “no” vote. Now the Italians have voted “no” by a resounding margin, according to preliminary results. Without waiting for final results, Renzi announced in a televised address to his compatriots that he intends to resign. Renzi admitted that the vote had been a “clear” rejection of the proposed constitutional reform. “The experience of my government ends here,” he said. He’d meet with his cabinet on Monday and then turn in his resignation to President Sergio Mattarella (who might tell Renzi to give it a second thought). Now all bets on Italy’s political, economic, and financial stability are, once again, off. And by extension, the stability – what remains of it – of the Eurozone. Renzi’s resignation, if accepted, could lead to new elections later next year. During these elections, opposition parties that had campaigned on the “no” vote could surge, with the 5-Star Movement gaining additional traction. The 5-Star Movement has long campaigned on an anti-euro platform. While the UK voted to exit the European Union, Italy might try to exit the Eurozone. This will be tough to do, and it will have daunting implications. Alone a serious discussion of this topic at the national level will spread uncertainty and fears of financial mayhem. But until that election, a caretaker government would have to deal with the white-hot banking crisis, and some banks might collapse entirely.

Italy referendum: PM Matteo Renzi resigns after clear referendum defeat - Italian Prime Minister Matteo Renzi has resigned after suffering a heavy defeat in a referendum over his plan to reform the constitution. In a late-night news conference, he said he took responsibility for the outcome. He said the No camp must now make clear proposals. An exit poll for state broadcaster RAI suggests 42-46% voted to back reform, compared with 54-58% voting No. The first projections based on the official count point to a wider defeat. Early indications have the Yes vote at 39-43% and the No at 57-61%. "Good luck to us all," Mr Renzi told reporters. He said he would tell a Cabinet meeting on Monday afternoon that he was resigning, and then tender his resignation to the Italian president after two-and-a-half years in office. Mr Renzi said the reforms would have cut Italy's bureaucracy and made the country more competitive. The vote asked about plans to streamline parliament but it was widely seen as a chance to register discontent with the prime minister.The No vote was supported by populist parties, and the referendum was regarded as a barometer of anti-establishment sentiment in Europe. Opposition leader Matteo Salvini, of the anti-immigrant Northern League, said that if the exit polls were confirmed, the referendum will be a "victory of the people against the strong powers of three-quarters of the world". The result of this referendum is a striking victory for this country's many opposition parties - led in this campaign by the populist Five Star Movement. Five Star's immediate goal now will be victory in the next general election - and a rethink of Italy's relationship with the European Union.

Italy’s ‘No’ Poses Trouble for Eurozone -—Sunday’s referendum vote in Italy reinforced a widening split between the economics needed to sustain Europe’s common currency and the continent’s rising tide of populism.Italians resoundingly rejected constitutional changes aimed at streamlining lawmaking and boosting competitiveness, marking a sobering start to what could be a defining year ahead for the European Union. National elections are set for 2017 in three of the bloc’s founding members. Sunday’s vote makes it more likely that Italy, too, will have parliamentary polls next year.  In all of these countries, mainstream parties have been losing ground to populist movements, many of them on the far right. To be sure, in Austria, however, voters on Sunday turned back the presidential bid of a right-wing populist Norbert Hofer, who campaigned on curbing immigration and reinstating national borders. Green party leader Alexander Van der Bellen prevailed with more than 53% of the vote for the largely ceremonial position.   The biggest winner from Sunday’s ballot in Italy was Beppe Grillo, a comedian-turned-politician, and his populist 5 Star Movement, which wants a nonbinding referendum on Italy’s membership in the euro, an end to EU-mandated government-spending limits and income guarantees for all citizens. Italy’s prime minister, Matteo Renzi, argued that his country needed to back the constitutional changes or be left behind. He said Italy needs to cut red tape and make it easier for companies to do business. “The antiestablishment feeling is stronger than the desire to reform,” said Stefano Stefanini, an adviser at lobbying and public-affairs firm Podesta Group and an aide to former Italian President Giorgio Napolitano. “There is a reluctance to change, an innate conservatism in Italy.” That is the paradox at the heart of European—and American—politics today: A resistance to change among voters is leading to increasingly antiestablishment choices at the ballot box.

The Italian Referendum: The Vote, the Narrative, the EU, the Banks --In this post I’ll do a quick wrap-up of the Italian referendum results as I see them. Despite heavy-breathing from journalists on both sides of the Atlantic, I don’t view the the Italian electorate’s rejection of Renzi’s constitutional reforms as part of a putative “populist wave,” nor do I see the result as leading to an Italexit (or Quitaly, or whatever). However, the result does couple political risk and financial risk uncomfortably tightly, in that Italy needs a government that can take decisions in regard to what’s generally referred to as its “troubled banking sector.” Italy’s been good at kicking the can down the road. So far.  First, I’ll briefly summarize what the Italian referendum was about, and the results. Then, I’ll look at the narrative (“ZOMG!! Populism”) and the local particularities that make that narrative unlikely. I’ll also present some pundits whose hair isn’t on fire. Next, I’ll look at whether the results make Italy’s exit from the EU more likely (no). Finally, I’ll look at the gradually worsening Italian banking crisis, and ask whether whether anything “sudden” might happen; interestingly, there are rather a lot of leaks right now, and they’re not consistent, so I take it that European elites are negotiating with each other and potential marks investors through the press. More, I can’t say.  Caveat: I’m trying my hardest not to project my American political narratives onto Italy (that is, I think, what the “populism” narrative does (and I’m not even sure it’s correct for this country)). If we have any readers who are knowledgeable about Italy, please speak up!

Deutsche Bank CEO Warns Employees "Europe Is Endangered" After Italy Vote --At around the time ECB Governing Council member Ewald Nowotny said that Italy may have to spend taxpayer funds to bail out insolvent banks, warning that "the difference between Italy and other states such as Germany and Austria is that, until now, in Italy there has not been any significant state aid or state takeovers of banks," and that "it therefore cannot be ruled out that it will be necessary for the state to take stakes (in banks) in some way," Deutsche Bank CEO John Cryan sent a letter to employees in which he warned that following the Italian referendum, the economic environment "is a harbinger of renewed turbulence that could spill over from the political arena to the economy – with Europe particular endangered." He also said Deutsche Bank still needed to finish negotiations with the U.S. Department of Justice, which has demanded $14 billion to settle claims the bank missold mortgage-backed securities. Cryan said he could not give details on how talks were progressing.The rest of Cryan's "December message to employees" was, somewhat more enjoyable pep talk. His full letter is below:

What Happens Next In Italy: Here Is Goldman's Take - While the market overcame its initial scare following yesterday's counter-establishment Italian referendum vote, and European stocks proceeded to not only make up all losses, but soar in the overnight session by the most since Trump's presidential victory, what happens next in Italy is largely unknown. What follows are Goldman's snap thoughts on the Italian next steps.

  • This afternoon, PM Renzi will formally tender his resignations to the President of the Republic, Mr Mattarella. The latter will likely ask Mr Renzi to stay on to preside over the approval of the 2017 Budget Law – the deadline is 31 December. Meanwhile, the President will officially start consultations with leaders of all political forces represented in Parliament to explore the formation of a new government.
  • Mr Renzi’s Democratic Party (PD) enjoys a relative majority in Parliament. Together with its centrist allies, it holds an absolute majority in both Houses (393 seats out of 630 in the Lower House and 186 out of 320 in the Senate). Since the ‘old guard’ of PD’s leadership did not support the constitutional reforms, the political fallout is likely to be mostly within the party, rather than altering broader political balances. Goldman's base case is that the current ruling coalition will stick together and back a new government.
  • Relative to Goldman's prior expectations, the bank would elevate its subjective probability from 45% to 60% of a caretaker government being appointed. GS expects the Cabinet to be led by a political figure drawn from the ranks of the ruling coalition (one possibility is the Minister of the Economy, Mr Padoan). An outsider technocrat is unlikely to be appointed as this would be highly unpopular choice with the electorate. The new government would likely have a narrow policy agendaconsisting mainly of: (i) Overseeing the recapitalisation of the partly state-owned Monte dei Paschi di Siena and potentially other smaller banks. If the referendum outcome stalls the current recap plans, a precautionary injection of public funds into these institutions could be required. In such a case, the application of the ‘bail-in’ rule book would be contentious, and the market instability exemption could be invoked; and (ii) re-drafting the electoral laws for the two Chambers of Parliament ahead of a general election in the spring of 2018.
  • As expected, the opposition 5 Star Movement and Lega Nord are calling for the dissolution of Parliament and early general elections. Goldman has raised its subjective odds of elections in 2017 from 20% to 25%, but not higher. The Constitutional Court is expected to rule on whether the electoral law for the Lower House (nick-named Italicum in the Italian media) is fit for purpose. The central case is that the Court will ask Parliament to redraft the law to enhance social representation. The same fate already occurred to the electoral law for the Senate and voting with the current set of electoral rules would most likely result in a ‘hung’ Parliament. A redrafting of the electoral laws would also serve the purpose of reducing the risk that anti-establishment forces take control of Parliament. Arguing for an increase in the odds of an early election is the fact that Mr Renzi, whilst defeated, was able to get around 13 million voters behind him, around 30% higher than in the European parliament elections of 2013, and he remains the most popular politician on the centre-left of the political spectrum.

"My Government Ends Here" Renzi Resigns After Losing Italian Referendum: The Full Rundown -- To summarize, this is what has happened so yet another major blow to the European political status quo:

  1. Italy PM Renzi lost by a huge margin, with the latest estimate somewhere around 59% voting "No" to Renzi's proposed constitutional referendum.
  2. In a speech moments after the results were announced, Renzi confirmed he would hand in his resignation tomorrow, adding he isn't available to lead a caretaker government in a blow to many sellside forecasters he would do just that
  3. As Bloomberg notes, the scale of the loss and how quickly it happened cast a huge shadow on the fate of the continent headed into 2017.
  4. Italy's opposition parties, from Grillo's Five Star Movement to Calvini's "Northern League" to Berlusconi's Forza Italia, seem to be aiming for early elections as soon as possible, "after making a few tweaks to the current electoral law." Grillo said this can be done in "one week."
  5. The blow out result of the referendum is a confirmation that anti-euro populists are ascendent in Europe. Expect more long nights in the months to come, especially in France and the Netherlands which are the two next big potential dominoes to fall.
  6. What's next? According to Bloomberg, "Italy is in for a period of high instability. The prospect of a prolonged, bitter electoral campaign won't do any good to the country's already anemic recovery. Not to mention its battered banks who may have to ask for public aid."
  7. The EURUSD dropped to the lowest level since March 2015, sliding uner 1.05 briefly, but has since recovered some of its initial losses:

"The experience of my government ends here," Renzi said in a televised address to the nation after early voting results suggested his 'Yes' camp may have lost the referendum by as much as 20 points.

Italy Is Preparing a Bailout of Struggling Bank Monte dei Paschi -- Italy is preparing a taxpayer-funded bailout for Banca Monte dei Paschi di Siena, the country’s third-largest bank, after the rejection of Prime Minister Matteo Renzi’s electoral reforms in a referendum Sunday undermined its efforts to find new investors. The Tuscan bank, founded during the Renaissance, is looking to raise 5 billion euros ($5.4 billion) this month to avoid being wound down, but investors are reluctant to commit funds after Renzi’s referendum defeat left a political vacuum. Renzi has said he will quit, but the country’s head of state asked him to put his resignation on hold until parliament has approved the 2017 budget. That could be done as early as Friday.One person familiar with the matter said the bank was looking at the idea of a so-called precautionary recapitalisation, which would involve the government injecting cash. Two other sources said a government decree authorising the state recapitalisation was ready, with its implementation depending on political developments in the next few days. An injection of cash by the state would first require losses for institutional investors who hold the bank’s junior debt, according to EU banking rules. The bank’s finance chief, Francesco Mele, had hinted at such an outcome already last week. The Treasury and MPS weren’t immediately available for comment. Retail investors who hold 2.1 billion euros of the bank’s subordinated bonds would be either spared or reimbursed, according to a person familiar with the matter. Retail investors hold nearly two-thirds of MPS’s subordinated debt, and many claim that the bonds were sold to them as being essentially as safe as deposits, even though they weren’t covered by the country’s deposit protection scheme.

Italian Government Prepares To Nationalize Monte Paschi --After two previous taxpayer funded bailouts, and nearly five months of foreplay since the third largest Italian bank failed the latest European stress test at the end of July, in which the Italian government in September vow that "bailout for Italian banks has been 'absolutely' ruled out", a third bailout, as we previewed earlier today, is now imminent.According to Reuters, which cites two sources, Italy is preparing to take a €2 billion controlling stake in Monte Paschi as the bank's hopes of a private funding rescue have faded after a fruitless five month search to secure an anchor investor, following Prime Minister Matteo Renzi's decision to quit.The government, which is already the ailing bank's single largest shareholder with a four percent share, is planning do a debt-for-equity swap, and buy junior bonds held by ordinary Italians to take the stake up to 40%, the sources said. The bonds would then be equitized, converting the government's bond stake into pure equity ownership, a troubling approach as it would effectively wipe out the existing equity tranche and position the bank for a potential bankruptcy fight in court where the government faces off with the equity committee.This transaction would make the government by far the biggest shareholder, meaning the Treasury would be able to control Italy's third biggest bank and its shareholder meetings, or in other words, the bank would be nationalized. The sources said a government decree authorizing the deal, which would see the state buy the subordinated bonds from retail investors and convert them into shares, could be rushed through as early as this weekend. Italy's treasury would buy the bonds held by around 40,000 retail investors at face value, the sources said.

Italy Threatens ECB With Blackmail; Demands More Time For Monte Paschi Rescue -Last night we reported that according to Reuters, with a private bailout off the table now that Italy is in political limbo, a nationalization in the form of a government debt-to-equity bailout of Monte Paschi was imminent, however there was a snag: political opposition from Brussels - which has insisted on a bail-in resolution mechanism instead of a bail out - could scuttle the transaction which is meant to make whole junior bondholders - mostly retail investors - courtesy of other taxpayers. The alternative was to request more time from the ECB, which has previously given Monte Paschi a year end deadline.Now, according to the FT, we learn that Rome is demanding the ECB give it more time to rescue the third largest Italian bank. That was to be expected, what is surprising, however, is that as the FT adds, Italy is "preparing to blame the bank for losses imposed on bondholders if Rome is forced into an urgent state bailout", a negotiating tactic some could call blackmail.Citing four people "close to the issue", the FT adds that the board of MPS, which has the Italian Treasury as its largest shareholder, is asking the supervisory arm of the European Central Bank to give it until mid-January to pull off a €5bn equity injection and try to avoid forcing losses on some debtholders as required under new EU bailout rules. In a letter to the ECB, MPS says political instability unleashed by the resignation of prime minister Matteo Renzi following his defeat in Sunday’s referendum has made it impossible to get the deal done until a new government is formed, these people say.If the ECB fails to approve the extension, MPS could be heading for a recapitalisation by the Italian state in the next few days. That would be only the beginning as contagion would soon follows:

ECB Calls Italy's Bluff, Rejects Monte Paschi Request For More Time To Raise Capital --Earlier this week, we reported that according to the FT, a suddenly empowered Rome was demanding that the ECB give it more time to rescue Italy's Monte Paschi show private bailout effort has effectively failed. What is surprising is that Italy was "preparing to blame the bank for losses imposed on bondholders if Rome is forced into an urgent state bailout", a negotiating tactic we dubbed at the time blackmail. The board of MPS, which has the Italian Treasury as its largest shareholder, was asking the supervisory arm of the European Central Bank to give it until mid-January to pull off a €5bn equity injection and try to avoid forcing losses on some debtholders as required under new EU bailout rules.  And this is where the blackmail came  in: cited by the FT, a person involved in the negotiations warned that “If they don’t give the extension, the ECB must take responsibility. They will be pushing the button. We are only asking for five more weeks.” According to Reuters, as of moments ago the ECB has called Italy's bluff, and the central bank "has rejected a request by ailing Italian lender Monte dei Paschi di Siena for more time to raise capital, a source said on Friday, in a move that piles pressure on the Italian government to bail out the bank." The ECB's supervisory board turned down the request at a meeting on Friday on the grounds that a delay would be of little use and that it was time for Rome to step in, the source said.

Great Timing Award: Wolfgang Schäuble Says "Greece Must Reform Or Leave Eurozone"Mish - On the same day Matteo Renzi suffered a crushing defeat at the hands of alleged “populists” in Italy, German finance minister Wolfgang Schäuble ruled out debt relief for Greece ahead of a eurozone finance minister meeting. Schäuble says Greece Must Reform or Leave Eurozone.Greece must implement economic reforms if it is to keep its place in the eurozone, Germany’s finance minister has insisted, ruling out debt relief for the country ahead of a crucial euro group meeting on Monday.As the finance ministers of member states using the single currency prepared to discuss fiscal plans for the coming year, Wolfgang Schäuble in effect presented Greece with an ultimatum: either it must enforce unpopular structural reforms or exit the bloc.“Athens must finally implement the needed reforms,” he told the newspaper Bild am Sonntag in an interview [in German] published on Sunday.“If Greece wants to stay in the euro, there is no way around it – in fact completely regardless of the debt level.”Asked if German voters should be prepared for the inevitability of debt relief in the run-up to national elections next year, Schäuble quipped: “That would not help Greece.”Schäuble, who also asserted the Greek budget was not burdened by debt servicing because interest rates were now so low, made the comments as speculation mounted over how best to put the thrice-bailed-out nation back on the road to economic recovery. Facts of the Matter

  1. Greece has an unsustainable €330bn debt load.
  2. On May 6, In Leaked Letter IMF Tells Germany “Debt Relief for Greece or IMF Drops Out”.
  3. On May 23, the leaked letter became an official announcement: The IMF warned “EU Must Give Greece Unconditional Debt Relief”.

In a strongly worded assessment, the IMF said that there was no prospect of Greece meeting the draconian terms of its current bailout plan and that interest payments on the soaring national debt would eat up 60% of the budget by 2060 in the absence of debt forgiveness.

Austria center-left presidential candidate deals blow to populists -  —Center-left candidate Alexander Van der Bellen beat back a challenge from a right-wing populist opponent to become Austria’s next president, bucking a trend of nationalist electoral successes across the West. Van der Bellen, 72 years old, led his opponent Norbert Hofer by 53.3% to 46.7% of the vote in Austria’s runoff presidential election, according to Austrian public television projections based on exit polls and interim results. Hofer congratulated Van der Bellen on his victory in a Facebook post and called on all Austrians to “stick together and work together.” Van der Bellen’s win of the largely ceremonial post notched a rare victory for supporters of European integration and liberal internationalism in a year in which nationalism and populism swept across Europe and the U.S. “I fought for a pro-European Austria from the start,” Van der Bellen said Sunday evening on Austria’s ORF public television. He promised to uphold the values of “freedom, equality, and solidarity with all those who at the moment aren’t well off in our economic system.”

A Gallic Dark Horse Emerges - The surprise emergence of the centre-right conservative candidate Francois Fillon as the victor in the Republican’s primary election has transformed the dynamics of the French presidential election. Fillon is a devout Catholic with socially conservative views who appeals to the traditional French bourgeois. These voters are alienated from the metropolitan Parisian elite and have been flirting with the National Front (“NF”) but have now discovered a champion they can identify with.  Fillon is therefore a significant threat to the NF, in particular the traditionalist Catholic strongholds in southern France most associated with the politics of Marion Marechal-Le Pen, the niece of the better known Marine Le Pen. Fillon is also advocating a free market “shock therapy” to the ailing French state with a massive cull of 500,000 public sector jobs and the gutting of workers rights including the 35 hour week, to the horror of the powerful public sector unions. Fillon’s Thatcherite politics has electrified his conservative base but have alarmed many on the Left. Most experts consider that the most likely outcome of the first round of the presidential elections, scheduled for April 2017, will be a run-off between the centre-right Francois Fillon and Marine Le Pen, of the hard right. The Socialist Party is in a state of collapse and with multiple candidates from the left-wing political spectrum competing, it is unlikely that any of them will be able to overcome Le Pen’s base of support in the first round. Let us assume, for the moment, that the second round contest will involve a climatic duel between Fillon and Le Pen. The battle for the future of France will be based on the core issues of security, identity and the economy. Both Fillon and Le Pen advocate harsh measures against jihadi extremists and the preachers of hate who spread hard-line Islamism within Muslim communities. The centre-right has largely deserted the “happy identity” rhetoric of the liberal establishment and has embraced the hard right terrain once exclusively occupied by the NF.

 In "Astonishing U-Turn" Merkel Pledges To Ban Burka Before Being Reelected As CDU Leader - In what the local press has dubbed an "astonishing U-turn", during a 77 minute speech by Angela Merkel, interrupted by minutes of standing ovations, the German chancellor pledged to strengthen the forces of law and order while speeding up the sclerotic deportation process of failed asylum seekers. But what stunned listeners was Merkel's pledge toban the burka saying "show your face. The full covering is not permissible and should be banned wherever it is legally possible." The German Chancellor told delegates at the Christian Democratic Union (CDU) two-day party congress held in the western German town of Essen, where moments ago she was reelected with 89.5% of the vote, that German law “takes precedence” over the Islamic code of Sharia.Merkel was presenting her political program and also launched her bid for another term as CDU leader and German chancellor. She went on to call “security and order, justice and law” some of the pillars of the CDU’s political agenda, and stressed that “all Germans who always lived here as well as those who just arrived” should observe the law.

Commission threatens to derail gun law deal - A deal on new EU gun controls risks being shot down by the European Commission only hours after negotiators thought they had reached agreement. In the aftermath of the Paris terror attacks in November 2015, the Commission proposed changes to the EU’s Firearms Directive — in place since 1991 — including a controversial ban on civilian ownership of firearms that look like machine guns. Earlier this year, MEPs and governments rejected the ban, saying that limiting the ownership of high-capacity magazines was a more effective way of preventing massacres. In the early hours of Tuesday morning, a spokeswoman for the Slovak government, which holds the presidency of the Council of the EU, said “an agreement in principle” had been reached between the Council and the Parliament.  However, Julian King, the security commissioner, threatened to scupper the deal after negotiators rejected his attempts to reintroduce the proposal to ban “variants” of machine guns during the meeting, according to several sources who were present at the negotiation.  “Everyone made an exceptional effort, but not there yet,” King said on Twitter at 2:30 a.m, which contradicted statements made by the Slovak presidency and MEPs saying agreement on the main issues had been reached. “The Commission presented completely new proposals during the meeting, which is very unusual practice,” said Dita Charanzová, a Czech Liberal MEP who was at the meeting. “I haven’t experienced this before.” The Commission could either withdraw the proposal altogether, or demand that all 28 member countries back the rules, rather than a majority, as would have been the case. That would make a vote in favor of the measures difficult to secure. “The single market was not built for the free circulation of Kalashnikovs,” Margaritas Schinas, a spokesman for the Commission, told reporters Tuesday. Many Baltic, Central and Eastern countries, including Slovakia, have resisted the introduction of tougher controls, arguing that the Commission has not provided any evidence that such weapons have been used in terrorist attacks. Countries such as France and Italy, however, have been pushing for even more far-reaching rules.

A Eurosceptic union is forming across Europe - Brendan O’Neill - Of all the barbs fired at us Brexiteers, the one that’s irritated me most is ‘Little Englander’. The suggestion is that pro-EU people are broad-minded Europhiles while Brexiteers are petty nationalists who want to dismantle the Chunnel and while away our days drinking tea and slagging off Germans. It couldn’t be more wrong. In fact, the most wonderful thing about Brexit — glorious, rebellious Brexit — is the new European unity it is forging. Far from giving an English two-fingered salute to the continent, the Brexit bug is helping bring the continent together, uniting peoples who’ve had a gutful of the technocrats. The overthrow of Matteo Renzi is 2016’s latest ballot-box revolt against the new managerial elites. Protesting way too much, observers insist the vote against Renzi’s proposed reforms had little to do with the EU. Please. Yes, the referendum was narrowly concerned with the role of the Senate, and with giving more power to — guess who? Yep, Renzi: a new law would grant the Italian executive greater clout at the expense of parliamentary deliberation.  But the Italian people knew very well that Brussels was backing Renzi, and that Renzi had become a kind of younger, better-looking stand-in for hapless Hollande in Merkel’s Brussels-loving oligarchical circle. And they know Beppe Grillo’s clownish Five Star Movement, which wants a referendum on the euro, is likely to be a major beneficiary of the beautiful turmoil they unleashed. And still they sent Renzi packing, because bruising Brussels is what European people do these days. We love it.

Europe’s Crisis Was Caused More By Reckless Lending Than By Reckless Spending - Most discussion of the Eurozone crisis has revolved around the alleged profligacy of the heavily indebted “peripheral” countries. In fact, however, the desperate position of these countries mainly results from reckless lending by banks located in the “center” countries. As such, the crisis is just one more case of the well-known financial cycle that, in an era of financial deregulation, arises from cross-border financial flows dominated by “push” factors, i.e., by circumstances in the economic and financial systems of those center countries. Lending is always nothing more than the provision of purchasing power, and in the case of the southern European periphery was mainly funded outside the euro area. In this specific instance, therefore, it is patently clear — beyond conceptual considerations — that contrary to the narrative of northern European political debate, southern Europe’s debt hardly represented a transfer of savings from the Eurozone’s more advanced nations to its periphery.Additionally, repayment crises (the “bust”) are not only the end result of the upside phase of the capital flow cycle (the “boom”) but by themselves also create serious problems such as distortions in the recipient economy and the very obvious overexposure of creditor institutions, to which as much attention should have been paid as to the “sudden stop”. The Eurozone lacked institutional structures to cope with such dangers. Its institutions, and the limits imposed on fiscal deficits and government debt, were designed on the premise that the only potential source of problems would be the misbehavior of governments. In accord with the policy consensus of previous decades, though, no provisions were introduced to cope with a financial crisis originating from the misbehavior of big private financial institutions headquartered in the center countries, and their supervisors.  We can hardly afford to repeat this disastrous omission. Changes are needed both in the architecture of the institutions and also in the vision that informs their supervisory authorities. The best full-employment and growth oriented macroeconomic policies can do little to handle the massive waves of finance and cross-border flows from financial institutions in the center countries. Unless strong regulations are introduced to manage those financial flows — if not cancel them out — even the most carefully crafted policies will be powerless.

Rout shrinks universe of negative yielding bonds by $2.5tn- The global stock of negative-yielding debt has tumbled more than $2.5tn since the summer, underscoring the dramatic sell-off in bond prices and easing the burden on pension funds that have been starved for income by low rates. The value of bonds outstanding with sub-zero yields has fallen to $10.79tn, from $13.44tn in mid-August, according to Tradeweb data compiled for the Financial Times.  More than 40 per cent of the $2.65tn decline in negative-yielding bonds occurred in November alone amid the worst rout for the fixed income market since at least 1990, as $1.7tn in market value was wiped from the broad Bloomberg Barclays Global Aggregate index. “It has been painful, no question,” said Marilyn Cohen, president at Envision Capital, a fixed income manager, of the rout in bond prices that sent yields rising.Yields have risen across the board, led by the US as investors anticipate substantial fiscal stimulus next year under president-elect Donald Trump.  The 10-year Treasury yield has jumped 0.57 percentage points from the summer lows to 2.4 per cent. In turn, 10-year German Bund yields clocked in at 0.33 per cent on Monday, from as low as -0.189 per cent this summer, while Japan’s benchmark bond yield has climbed from -0.287 per cent to 0.041 per cent over that time.  The abrupt rise in yields, while unsettling in the short run, represents “the light at the end of the tunnel that we’ve been longing for”, said Ms Cohen, adding that the 30-year bond bull market that this summer knocked yields down to historic lows had become “way, way overdone” and made it difficult for clients, particularly senior citizens, who rely on the consistent income that bonds provide. ‘

ECB Haunted by Ghost of Christmas Past as Stimulus Choice Nears - If Mario Draghi wants to avoid a repeat of the market carnage his press conference sparked a year ago, he might have to negotiate a few roadblocks. Almost all economists surveyed by Bloomberg expect the European Central Bank president to announce on Thursday that the institution’s bond-buying program will be extended after March, and most foresee an extension of about six months at the current 80 billion euros ($85 billion) a month. Anything less could bring echoes of Dec. 3, 2015, when Draghi capped weeks of buildup with underwhelming stimulus that sent bond yields and the euro surging. This time, with bond scarcity bolstering the case of hawks who want the ECB to tread cautiously, his still-dovish tone has been slightly tempered. While the outlook for rising inflation is heavily reliant on continued monetary accommodation, the amount of monthly bond purchases and the program’s duration can be flexibly arranged, he said in a rare interview last week.   “Monetary policy communication is clearly much more difficult than it used to be,” said Mark Dowding, London-based partner and money manager at BlueBay Asset Management. “In the midst of this complicated menu of different items, the scope for the ECB to be trying to say one thing but the market to hear something different is clearly a risk that is present.” The ECB has already spent 1.4 trillion euros on quantitative easing, a figure that will rise to 1.7 trillion euros by the end of March. A crucial hurdle to enlarging it even further is that some assets simply aren’t eligible to buy under self-imposed rules. Economists in the Bloomberg survey predict that the Governing Council will probably opt to raise the maximum share of any single public-sector security, or exposure to its issuers, that euro-area central banks can hold. Another option would be to scrap the requirement that yields should be above the deposit rate, currently minus 0.4 percent. Giving policy makers more leeway in allowing purchases to be linked to the amount of outstanding debt, rather than according to the size of each country’s economy, might also help.

ECB Stuns Markets, Announces Tapering Of Bond Purchases To €60 Billion --That Reuters trial balloon was right. In a stunning announcement, Mario Draghi came out hawkish after all, and while the ECB kept all rates unchanged, it announced that it would effectively taper its bond purchases from €80 billion to €60 billion starting in April 2017: "From April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim" however adds that "the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the Governing Council intends to increase the programme in terms of size and/or duration." Full press release:[…] the Governing Council decided to continue its purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of March 2017. From April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. If, in the meantime, the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the Governing Council intends to increase the programme in terms of size and/or duration. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP.

Draghi Says ECB Can Do More as QE Heads for $2.4 Trillion -- Mario Draghi warned that the region’s feeble inflation outlook means European Central Bank stimulus won’t end any time soon. “The presence of the ECB on markets will be there for a long time,” the institution’s president said in Frankfurt after the Governing Council agreed to add more than half a trillion euros to its bond-buying program and extend it until at least the end of 2017. Quantitative easing is “in a sense open-ended, it’s state-contingent,” he said. Draghi cited weak underlying price pressures, political uncertainties and inadequate government reforms as he laid out the reasons for expanding the ECB’s asset-purchase plan to at least 2.3 trillion euros ($2.4 trillion). He and his colleagues have frequently stressed that the euro area’s economic upturn is largely reliant on continued monetary easing as governments fail to play their part. “I heard a dovish message,” said Holger Sandte, senior European economist at Nordea Markets in Copenhagen. “He’s basically saying that the next tapering is coming only in 2018.” The market reaction suggested confusion among investors, who initially focused on a reduction in bond buying to 60 billion euros a month starting in April from 80 billion euros currently -- interpreting the ECB as being hawkish. The euro was down 1.4 percent at $1.0606 at 5:21 p.m. Frankfurt time, while German 10-year bonds climbed to the highest since January and two-year notes rallied before giving up gains. Draghi said new staff economic projections showing euro-area inflation averaging 1.7 percent in 2019 were “not really” close to the central bank’s goal of just under 2 percent. He also reiterated the ECB’s line that the economic outlook remains subject to downside risks.

RBS to pay investors $1 billion in bid to avoid fundraising trial | Reuters: Royal Bank of Scotland has agreed to pay 800 million pounds ($1 billion) over allegations it misled shareholders during a fundraising at the height of the financial crisis. The state-controlled British bank said on Monday it had struck a deal with three of the five investor groups involved in the lawsuit. It is now trying to reach an agreement with the others in order to avoid a potentially embarrassing trial. Thousands of retail investors have yet to agree to the split settlement, which adds a fresh dimension to an unprecedented English lawsuit that stands out for its size and complexity. The investors allege RBS failed to give them a proper picture of its finances during a 2008 fundraising. They lost most of their money when RBS nearly collapsed a few months later and had to be bailed out by the British government, costing taxpayers more than 45 billion pounds. Monday's deal includes a settlement with Standard Life, Legal & General, Aviva and Prudential and the Universities Superannuation Scheme (USS), which together bought about 10 percent of the 2008 share issue.

Government memo demanding end to Brexit leaks is leaked -- Theresa May has called for urgent action to prevent ministers and government officials from leaking information about the Brexit process to journalists. The prime minister’s demand resulted in a warning memo from the cabinet secretary that, ironically, was itself passed on to a national newspaper within days. Sir Jeremy Heywood wrote to permanent secretaries in government departments to say that a “spate of corrosive leaks” must end. He said there was a need for a “cultural change”, and set out plans to review areas vulnerable to leaks and to place security teams in charge of ramped-up inquiries into who was passing information on. “Anyone found to have leaked sensitive information will be dismissed, even where there is no compromise of national security,” he said. Heywood also wrote: “The prime minister has directed that we urgently tighten security processes and improve our response to leaks. “She has instructed that we begin this work immediately and expects to see rapid and visible improvement. “Ministers, permanent secretaries and senior officials set the tone in an organisation and no amount of process will make up for an environment where leaks are accepted. “If leaders think they are the necessary cost of open ways of working they are mistaken.” Heywood also revealed that he had strengthened control for “sensitive cabinet committee papers” that were used by senior members of May’s team to discuss Brexit plans so far.

No special Brexit deal for the City of London, warn Hammond and Davis: The City of London will not get any special treatment in the upcoming Brexit negotiations, senior members of Theresa May’s Cabinet have told a group of high-profile banking and insurance chiefs. The Daily Telegraph understands that Philip Hammond, the Chancellor, and David Davis, the Brexit Secretary, told a group of City leaders that, despite accounting for 11.8pc of gross domestic product (GDP), financial and professional services is only one industry and cannot be seen to be treated differently. “There was quite a blunt warning that politically the Government does not want to be seen to do a deal to favour rich bankers, if it doesn’t comply with Brexit voters’ wishes - that there is more to the negotiation that just the City,” said one of the ten industry leaders who attended the meeting, which took place in the Shard. Another said: “The message was: 'You’re not the only sector. You’re a very important sector but you’re not the only sector and so what we have to do is to understand how we factor in your needs along with the needs of the other sectors in the country’.”That is likely to mean the UK will not keep precisely to EU finance rules, indicating banks and other firms will not keep the passports which allow them to trade freely across the continent. As a result the Government and the Square Mile expect a modest amount of business and jobs to move from the UK to other European financial centres.

Theresa May wins Brexit vote after agreeing to publish plan FT - Theresa May has won the overwhelming backing of MPs for her timetable to start Brexit talks in March 2017 — but only after agreeing to publish a plan setting out her objectives and promising MPs a vote on the final “divorce deal”. Labour agreed to back the prime minister’s timetable for Brexit but insisted Mrs May should first publish a detailed negotiating strategy. Some pro-EU Conservative MPs said a white paper, a thorough policy document, should be produced in the new year. Mrs May’s allies said the prime minister would not give away her negotiating hand and that any “plan” would be limited in scope. But MPs were reassured they would have the last word on Brexit, with David Davis, Brexit secretary, saying it was “inconceivable” they would not have a vote on a final deal. The same package will also be put to national parliaments in the other 27 EU member states and to the European Parliament. However, by the time MPs have their vote they are likely to be presented with a “take it or leave it” question. If they reject a deal, Britain could end up leaving the EU in 2019 in a “hard Brexit” with no package in place to ease the transition.Mr Davis said of the proposed vote: “That is what I expect, it is as simple as that.” He added that the Westminster vote would refer only to the terms of the deal, and not the principle of leaving the EU. His comments came during a debate on a Labour motion requiring the government to publish its Brexit objectives before negotiations start, although it gave Mrs May a “get out” clause by saying this should not undermine her negotiating position. The prime minister agreed to the motion but published an amendment — backed by Labour — that both endorsed her plan to activate Article 50 next March and recognised the result of June’s referendum.

UK suffers its first lost decade in 150 years - Britain has endured its first lost decade in 150 years, the governor of the Bank of England said yesterday, as he called on politicians to do more to spread wealth and to end the populist uprisings that have hit Britain, America and Italy. A retreat into isolationism would be a “tragedy”, Mark Carney warned, despite acknowledging that free trade had hurt the poor and that pay had been too weak for years. He accepted that globalisation was “associated with low wages, insecure employment, stateless corporations and striking inequalities”, but said: “Why doesn’t it feel like the good old days? Because anxiety about the future has increased, because productivity hasn’t recovered and because real wages are below where they were a decade ago, something that no one alive today has experienced before.” Economists have been at fault for failing to recognise “the realities of uneven gains from trade and technology”, the governor said in only his second big speech since the referendum. He hit back at critics who lay the blame at the Bank, claiming that low interest rates and quantitative easing have been a force for good and have not damaged savers or the less well-off.The Bank has been under fire in Westminster since Theresa May said in October that low rates and QE were having “bad side-effects”. In a strong rebuttal, he argued that the Bank had cushioned the blow from the financial crisis, easing the pain on the poor who suffered most from recessions. “Monetary policy has been highly effective,” he said. “The data do not support the idea that the period of low rates has benefited the wealthiest at the expense of the least wealthy.” He said Bank simulations showed that wages would have been £2,000 a year lower on average and 1.5 million more people would be unemployed had policy not responded as it did. Threatening to reignite the political row, Mr Carney blamed governments for the popular backlash against economic disappointment. “All monetary policy has distributional effects, but it is rightly the role of elected governments to take measures to offset them if they so choose,” he said.

Cameron defends decision to call Brexit referendum - BBC News: David Cameron has defended his decision to call a referendum on the EU - despite the fact it cost him his job. The former prime minister said the issue had been "poisoning" British politics and the Conservative Party - and people were frustrated about it. He described the Brexit vote and Donald Trump's election in the US as a "movement of unhappiness". Mr Cameron quit as prime minister in June after the UK voted by 52% to 48% to leave the European Union. He made the comments in a speech to students at Depauw University in Indiana entitled "The Historic Events of 2016 and Where We Go From Here" .Commenting on the Brexit vote, he said: "I believe and still believe that the fact that we hadn't had a referendum on this issue for 40 years, despite the fact that the European Union was changing ... was actually beginning to poison British politics - it was certainly poisoning politics in my own party. "And I think, more broadly people felt 'well, we have been promised referendums and they haven't been delivered' and people were beginning to feel very frustrated about this issue. "Britain has made its choice - I believe that choice will be carried through. "I think it is right it is carried through and yes, there will be difficulties along the way because it's a big change, but ultimately it can be made to work."

Tied to Europe, Britain’s Car Industry Is Vulnerable After ‘Brexit’ - The New York Times: Britain’s automotive industry, once ailing and plagued by strikes, now hums with the vibrancy of a global manufacturing hub. Most of the cars made in Burnaston, models like Auris and Avensis, will make their way beyond the British borders. Toyota buys parts and hires workers from across the European Union. But the level of integration, previously lauded, has made the carmakers especially vulnerable after Britain’s vote to leave the bloc. If a messy divorce follows, Toyota and others face the prospect of higher tariffs, a smaller labor pool and less access to the 500 million potential customers in Europe — all of which will be negotiated in the coming months and years. The drop in the British pound since the vote has not been much help, either. Many of the carmakers’ contracts here are priced in euros, even with suppliers in the same country like Johnson Controls, which makes seats for Toyota. “We have made clear that if we lose some of these elements, it will make making cars in the U.K. less competitive,” said Anthony J. Walker, deputy managing director of Toyota Manufacturing in Britain. “We would have to reduce costs, which would be very hard.”

Brexit could see EU student numbers nose dive, Cambridge warns -- Cambridge University has said it faces significant risks from Britain’s exit from the EU, including an estimated two-thirds fall in the number of EU students it enrols each year. In a written submission to MPs on the education select committee, the university indicated that it expects annual admission numbers for EU under- and postgraduates to fall from 1,100 to below 400. “Assuming that EU students move to the unregulated international [tuition fees] rate, it is almost certain that application numbers will fall further. We are currently modelling a two-third reduction in admissions from the non-UK EU,” Cambridge said in its submission to the committee’s forthcoming hearing on the impact of Brexit on higher education. Neil Carmichael, the Conservative MP who chairs the committee, said: “This written evidence from university leaders, academics, businesses and others highlights the degree of concern about the fate of UK universities post-Brexit. Cambridge also said its latest data for undergraduate admissions in 2017 had already revealed a drop in applications from the EU by 17%. Because applications to Cambridge close well ahead of most other institutions, it is the first solid evidence of a “Brexit effect” hitting university applications. The fall comes despite the British government guaranteeing access to student loans to EU-based undergraduates until the end of their course.

Must do better: British schools fail to impress in world ranking - Britain’s schools have failed to improve their performance in international tests over the past three years, raising concern that structural reforms are not improving teaching in the classroom. Results of tests sat by thousands of British teenagers in science, maths and reading showed only marginal changes from assessments by a similar sample three years earlier. Britain actually moved up several places in international rankings to 15th in science even though its average test score of 509 points was lower, because results in other nations slipped slightly.British schools have traditionally done well in the global assessment of science, its strongest subject. There was also a slight improvement in Britain’s ranking for reading, up one place to 22nd with average test scores of 498, which was 4 points better than those in 2013. In maths Britain slipped one place to 27th, as average scores fell, from 499 points to 492 points. Both were close to the international average. Education experts said the slight changes in results compared with those of three years ago were not significant and there had in effect been no material improvement in the past three years, nor indeed much change in Britain’s scores since 2006. The results are based on two-hour tests sat by samples of 15-year-olds in 72 countries, known as the programme for international student assessment (Pisa), and are organised by the Organisation for Economic Co-operation and Development (OECD).

Homes of the elderly being seized by local councils to pay for residential care bills | Daily Mail Online: Homes of the elderly and vulnerable are being taken by local authorities to pay for residential care bills.Deferred Payment Agreements (DFA) see elderly people hand over their properties to councils which then hold the homes as collateral and cover costs on their behalf.The homes can then be legally seized by the council once a person dies, to cover their debts. According to early NHS figures, 55 councils have taken part in the scheme with 2,895 DFAs currently in place, reports the Sunday Times. There are around 400,000 people living in care homes across the country with bills costing people and their families a fortune. Plans to introduce a cap on social care costs this year have been delayed by the Government until 2020, amid fears over how councils could fund the move. Ministers confirmed that the £72,000 limit on bills for residential care was being pushed back after 'genuine concerns' were raised about its introduction.  The decision was made last year, after the Local Government Association wrote to Health Secretary Jeremy Hunt calling for the measure to be delayed, warning that the funding gap in adult social care was growing by a minimum of £700 million a year.