- As Prices Skyrocket, China Claims It Doesn't Need US Pork To Ensure Domestic Supply
As Prices Skyrocket, China Claims It Doesn’t Need US Pork To Ensure Domestic Supply
The Global Times is out with a new opinion piece on Tuesday morning, stating how China will expand its pork imports with Brazil rather than the US.
We’ve been covering this trend for the last several months, while the Trump administration continued to promote headlines indicating China was buying massive amounts of agriculture products from the US, including pork and soybeans. But as we noted, this wasn’t the case, and China abandoned US markets for Brazil.
In early Nov., China signed the first-ever trade deal with Brazil to start receiving shipments of swine offal, or organ meats (hearts, tongues, stomachs, and entrails).
BS SA and BRF SA are the Brazilian meat companies that will start sending pig byproducts to China.
As we’ve noted in the past, the US has likely lost its label as the top producer in supplying China with agriculture products because of the trade war, which has led to a decoupling of both economies and forced China to head to South America for new sourcing channels.
China’s “pig Ebola” wiped out about half of the country’s breeding pig population so far this year, forcing pork spot prices to hyperinflate, which resulted in the consumer price index jumping 4.5% Y/Y in Nov., well above the 4.2% consensus expectation, and the highest annual increase since 2001.
The pig shortage sent the country’s food inflation rate to a record +19.1% in November from +15.5% in October, primarily on higher inflation in fresh vegetable and pork prices.
To prevent further socio-economic unraveling spurred by soaring food inflation, China had to act quick, and that’s why they’ve started sourcing pigs from Brazil to fill the gap in the pork deficit.
In other reports, we noted that China typically sources most of its soybeans from the US between October and January, though that wasn’t the case this year.
Earlier this week, we produced a map showing all dry bulk, general cargo, and other dry vessels carrying agriculture products (fertilizers, grains, oil/oilseeds, meals/feeds/pulses, softs, and other agriculture products) across the world.
Several significant trends were spotted on the map. The first is how a massive flow of vessels are moving back and forth from Brazilian and Argentinean ports to Europe and China. The second observation is the muted activity on either coast of the US.
And maybe there’s some validity to the Global Times opinion piece since it appears China has gone elsewhere for its agriculture needs.
Still, if there were crop failures or any livestock disease outbreaks in South America, China would have to renter US markets for pigs and soybean.
Tyler Durden
Wed, 12/11/2019 – 01:00 - 2019 Was A Year Of Global Unrest… And 2020 Is Likely To Be Worse
2019 Was A Year Of Global Unrest… And 2020 Is Likely To Be Worse
Authored by Tony Walker via The Conversation,
2019 may well go down as the most disrupted year in global politics since the fall of the Berlin wall in 1989 and the subsequent implosion of the former Soviet Union.
However, the likelihood is that 2020 will be worse, and bloodier.
Conditions that spawned global unrest on every continent in 2019 are unlikely to recede. Rather, they are likely to worsen in the face of a slowing global economy and little sign of causes of disaffection being addressed.
Washington as disruptor
In a word, the world is in a mess, made more threatening by the retreat of the Trump administration from America’s traditional role as a stabilising force.
President Donald Trump has moved the US away from its traditional role of global stabilising force. AAP/EPA/Kevin Dietsch
If anything, Washington is a disruptor in its abandonment of international agreements. These include: the Paris Agreement on climate change and the Comprehensive and Progressive Agreement for Trans Pacific Partnership, previously the Trans Pacific Partnership, aimed at liberalising Asia-Pacific trade. The US has also withdrawn from the Joint Comprehensive Plan of Action (JCPOA) that froze Iran’s nuclear ambitions.
Washington’s defenestration of the JCPOA and its reimposition of tough sanctions on Iran has further destabilised the world’s most volatile region.
All this and more, including an unresolved trade conflict between the US and China, virtually guarantees 2020 will stretch the sinews of a fragile global order.
An evolving US-China technology war and risks of a technological decoupling add to the gloom.
The world is in worse shape than during the GFC
The Global Financial Crisis of 2007-08 was a period of intense uncertainty as a global financial system buckled. But, for the most part, that distress was confined to governments, boardrooms and the offices of international lending institutions.
The GFC did not fuel widespread global unrest as a shell-shocked financial world came to terms with the reality of a regulatory framework that had failed.
In 2019, the story has shifted dramatically.
Mass protests over the skewed benefits of globalisation accompanied by faltering confidence in a democratic model are challenging the assumptions on which a Western liberal capitalist system has rested. Local grievances are fuelling protests against an established order in places as far apart as La Paz in Bolivia and Beirut in Lebanon. Endemic corruption is looming larger.
If there is a defining issue that is driving popular unrest more or less across the board, it is that people do not feel they are sharing the benefits of an extended period of global economic expansion.
In January, Oxfam reported that the world’s 26 richest individuals owned as much wealth as the poorest half of the global population.
Billionaires grew their combined fortunes by US$2.5 billion (A$3.66 billion) a day in 2018, while the relative wealth of the world’s poorest 3.8 billion people declined by US$500 million a day.
A rich-poor gap is widening across the world to the point where it is no longer possible to argue that an economic growth model that advantages the few is lifting all boats.
Inequality and anger
Something had to give.
Professor Henry Carey of Georgia State University acknowledges differences in causes of localised unrest now sweeping the world, but he also identifies shared characteristics. He writes:
Each protest in this worldwide wave has its own local dynamic and cause.
But they also share certain characteristics: fed up with rising inequality, corruption and slow economic growth, angry citizens worldwide are demanding an end to corruption and the restoration of the democratic rule of law.
Carey makes the useful point that, as the world becomes more urbanised, overcrowded cities are staging points in a global wave of unrest.
In 1950, there were only two mega-cities with populations of 10 million or more – the New York metropolitan area and Tokyo. Today, there are 25 such megacities.
Of a world population of 7.7 billion people, 4.2 billion, or 55%, live in cities and other urban settlements. Another 2.5 billion will move into cities in poor countries by 2050, according to the United Nations.
In other words, poverty, gang crime, drug trafficking and all the other ills associated with an impoverished urban environment will become less manageable as overcrowding gets worse in cities, parts of which have become urban slums. Carey writes:
Ignored by the municipal government, [overcrowded urban settlements] usually lack sanitation, clean drinking water, electricity, health care facilities and schools […] The injustices of this daily life underlie the anger of many of today’s protesters. From Quito to Beirut, extreme marginalisation of so many people living in big dysfunctional and dangerous places has boiled over into deadly unrest.
In these circumstances, it is no accident that Latin America, with the world’s slowest economic growth and most glaring inequality, has exploded in the longest-lasting violent protests.
In Chile, where economic grievances boiled over into days of mass protests, an Asia-Pacific Economic Cooperation forum summit was abandoned because of security concerns.
In Bolivia, the long-serving populist president, Evo Morales, was forced out of office and the country by days of urban unrest.
In Haiti, protests over corruption, lack of employment and extreme poverty have paralysed the functioning of the state for months.
In countries such as Ecuador, Peru and Venezuela, unrest is barely contained in the face of endemic corruption and government failures to provide basic services.
In the Middle East, it is a similar story.
In Lebanon, riven by protests for months, Prime Minister Saad Hariri was forced to step down amid growing anger about rising living costs, lack of job opportunities, stagnant wages and corruption.
In Iraq, bloody protests over government failures to address inequality led to the resignation of Prime Minister Adel Abdul Mahdi amid risks of a resumption of a civil war between the country’s Shia and Sunni populations.
In Iran, days of protests over economic austerity were put down brutally by a regime that is battling crippling sanctions.
Elsewhere in the Middle East, the Egyptian regime of Abdel Fattah al-Sisi is under immense pressure from an exploding and impoverished population. Jordan has witnessed its own protests recently over economic hardship.
Libya is riven by civil war that is both driving and facilitating an asylum-seeker exodus across the Mediterranean, principally to Italy. This is, in turn, fuelling anti-immigrant tensions in that country.
In France, mass protests over President Emmanuel Macron’s attempts to address the country’s economic malaise show little sign of easing.
Elsewhere in Europe, unrest is barely contained. In Spain, tens of thousands of Catalonian independence protesters have taken to the streets of Barcelona in a tense standoff with Madrid.
In Russia, sporadic demonstrations against official corruption have become a feature, as they have elsewhere in the former Soviet Union.
In Eastern Europe, authoritarian regimes such as those in Poland and Hungary carry with them their seeds of confrontation with a disaffected population.
In Africa, all the ills mentioned above are present in spades.
South Africa is struggling to cope with huge economic challenges posed by an influx of refugees and a vast underclass camped in townships on the fringes of its major cities.
In Hong Kong, a proposed extradition law that would have facilitated the removal of those accused of crimes or misdemeanours to the mainland might have prompted mass protests. But at the heart of the demonstrations are economic grievances. Hong Kong’s wealth disparities are obscene.
Climate unrest
Across the globe, unrest over climate change is a common denominator and is likely to become more – not less – challenging to governments.
In Australia, in the midst of what may well prove to be the worst bushfires since white settlement, agitation over climate is exerting enormous pressure on the government of the day.
Whether this is fair or not, the government is perceived to be indifferent to climate concerns.
In a study of protest movements, the Brookings Institution found multilateralism flourished, global GDP rose and the percentage of people living in absolute poverty declined steadily after the fall of the Berlin Wall in 1989.
Paradoxically, this was an era that also sowed the seeds of present challenges. Advances in technology and globalisation, spurred by lower trade barriers, boosted global GDP but also led to the dislocation of middle-class livelihoods in many Western societies. The study concludes:
Now, in the wake of the global financial crisis, two critical dynamics have unfolded: first, the powerful democracies of the trans-Atlantic community (the bulwark of the Western-led order) are facing political turmoil at home and setbacks in the liberal quality of their own governments.
Second, the democracies find themselves losing ground internationally to authoritarian powers bent on breaking the hold of these democracies on the character of the international order.
This is not helped by an administration in Washington that has yielded ground to authoritarian dictatorships at a time of global unrest in which stable Western leadership has hardly been more necessary.
* * *
Tyler Durden
Tue, 12/10/2019 – 23:45 - Trump Shuts Down WTO Appeals Court, Sending EU, China Scrambling For 'Plan B'
Trump Shuts Down WTO Appeals Court, Sending EU, China Scrambling For ‘Plan B’
Axios certainly has the best intro to today’s bombshell development: “Internationalists have always dreamed of a court with jurisdiction over all the countries of the world. In 1995, the World Trade Organization was created — allowing the world’s countries to press claims against one another for the first time.”
But it won’t survive the Trump presidency as on Tuesday his administration has effectively brought it to an end, neutering its ability to intervene in trade wars, having blocked all new appointments to its dispute-resolution court.
WTO file image via Shutterstock. Starting two years ago the US administration began blocking appointments, and now Trump has run out the clock as the now paralyzed WTO’s Appellate Body over that period declined from seven judges to three, and with two more terms expiring Tuesday, only one judge remains, thus without the ability to issue a binding ruling.
Also per Axios:
Donald “Tariff Man” Trump (his words) can now impose whatever tariffs he likes, without fear that the WTO might find them to be illegal.
However, there’s widespread perception that the WTO has been rendered obsolete until it undertakes major reforms — for example criticisms that it frequently fails to abide by its own rules, has an inconsistent appeals mechanism, and its rules fail to account for state-controlled enterprises.
Image via the AFP Viewed as among the foremost hindrances to Trump’s “America First” program, he’s already long bulldozed past WTO rules amid the trade war with China, including punitive levies on Chinese goods (and another tariff increase set for this upcoming weekend), and imposing metal tariffs on allies like Europe, Canada and Japan.
Via the Peterson Institute for International Economics: The World Trade Organization (WTO) resolves trade disputes through its dispute settlement process, a system that the United States helped design to ensure all countries follow negotiated trading rules. Since 1995, a total of 575 cases have been brought to the WTO, and the United States has been either a complainant or respondent in 275 of them.
* * *
And now the question of China and “a very unfortunate Plan B” initiative, as described in Bloomberg:
China is in preliminary talks to support the European Union’s backup plan for settling international trade disputes as President Donald Trump’s administration gets closer to scuttling the World Trade Organization’s role in refereeing cross-border commerce.
On Tuesday, China’s Ambassador to the WTO Zhang Xiangchen told Bloomberg News that Beijing is actively working to support the EU’s vision of an appeal-arbitration model, which essentially replicates the work of the WTO’s soon-to-be defunct appellate body.
So far such a Europe-based alternative has drawn interest from current WTO members Australia, Argentina, Brazil, Chile, Japan and Turkey, as noted in the report.
Data for year 2018. You will find more infographics at Statista
Meanwhile, internationalists fear a return to the law of the jungle:
“The WTO is facing its deepest crisis since its creation,” Phil Hogan, the European trade commissioner, told members of the European Parliament this year. If the rules governing international trade can no longer be enforced, “we’d have the law of the jungle.”
And one former appellate body member James Bacchus, told Bloomberg: “There has been a gradual support for this as a very unfortunate Plan B.”
He concluded, “Now it seems to be the best option, given all the lousy options we have left.”
Tyler Durden
Tue, 12/10/2019 – 23:25 - Escobar: What Really Happened In Iran?
Escobar: What Really Happened In Iran?
Authored by Pepe Escobar via The Saker blog,
On November 15, a wave of protests engulfed over 100 Iranian cities as the government resorted to an extremely unpopular measure: a fuel tax hike of as much as 300%, without a semblance of a PR campaign to explain the reasons.
Iranians, after all, have reflexively condemned subsidy removals for years now – especially related to cheap gasoline. If you are unemployed or underemployed in Iran, especially in big cities and towns, Plan A is always to pursue a second career as a taxi driver.
Protests started as overwhelmingly peaceful. But in some cases, especially in Tehran, Shiraz, Sirjan and Shahriar, a suburb of Tehran, they quickly degenerated into weaponized riots – complete with vandalizing public property, attacks on the police and torching of at least 700 bank outlets. Much like the confrontations in Hong Kong since June.
President Rouhani, aware of the social backlash, tactfully insisted that unarmed and innocent civilians arrested during the protests should be released. There are no conclusive figures, but Iranian diplomats admit, off the record, that as many as 7,000 people may have been arrested. Tehran’s judiciary system denies it.
According to Iran’s Interior Minister Abdolreza Rahmani Fazli, as many as 200,000 people took part in the protests nationwide. According to the Intelligence Ministry, 79 people were arrested in connection with the riots only in Khuzestan province – including three teams, supported by “a Persian Gulf state,” which supposedly coordinated attacks on government centers and security/police forces.
The Intelligence Ministry said it had arrested eight “CIA operatives,” accused of being instrumental in inciting the riots.
Now compare it with the official position by the IRGC.
The chief commander of the IRGC, Major General Hossein Salami, stressed riots were conducted by “thugs” linked to the US-supported Mujahedin-e Khalq (MKO), which has less than zero support inside Iran, and with added interference by the US, Israel and Saudi Arabia.
Salami also framed the riots as directly linked to “psychological pressure” from the Trump administration’s relentless “maximum pressure” campaign against Tehran. He directly connected the protests degenerating into riots in Iran with foreign interference in protests in Lebanon and Iraq.
Elijah Magnier has shown how Moqtada al-Sadr denied responsibility for the burning down of the Iranian consulate in Najaf – which was set on fire three times in November during protests in southern Iraq.
Tehran, via government spokesman Ali Rabiei, is adamant:
“According to our information, the attack on the consulate was not perpetrated by the Iraqi people, it was an organized attack.”
Predictably, the American narrative framed Lebanon and Iraq – where protests were overwhelmingly against local government corruption and incompetence, high unemployment, and abysmal living standards – as a region-wide insurgency against Iranian power.
Soleimani for President?
Analyst Sharmine Narwani, based on the latest serious polls in Iran, completely debunked the American narrative.
It’s a complex picture. Fifty-five percent of Iranians do blame government corruption and mismanagement for the dire state of the economy, while 38% blame the illegal US sanctions. At the same time, 70% of Iranians favor national self-sufficiency – which is what Supreme Leader Ayatollah Khamenei has been emphasizing – instead of more foreign trade.
On sanctions, no less than 83% agree they exerted a serious impact on their lives. Mostly because of sanctions, according to World Bank figures, Iranian GDP per capita has shrunk to roughly $6,000.
The bad news for the Rouhani administration is that 58% of Iranians blame his team for corruption and mismanagement – and they are essentially correct. Team Rouhani’s promises of a better life after the JCPOA obviously did not materialize. In the short term, the political winners are bound to be the principlists – which insist there’s no possible entente cordiale with Washington at any level.
The polls also reveal, significantly, massive popular support for Tehran’s foreign and military policy – especially on Syria and Iraq. The most popular leaders in Iran are legendary Quds Force commander Gen. Soleimani (a whopping 82%), followed by Foreign Minister Mohammad Javad Zarif (67%) and the head of the Judiciary Ebrahim Raisi (64%).
The key takeaway is that at least half and on some issues two-thirds of Iran’s popular opinion essentially support the government in Tehran – not as much economically but certainly in political terms. As Narwani summarizes it, “so far Iranians have chosen security and stability over upheaval every time.”
‘Counter-pressure’
What’s certain is that Tehran won’t deviate from a strategy that may be defined as “maximum counter-pressure” – on multiple fronts. Iranian banks have been cut off from SWIFT by the US since 2018. So efforts are intensifying to link Iran’s SEPAM system with the Russian SPFS and the Chinese CIPS – alternative interbank paying systems.
Tehran continues to sell oil – as Persian Gulf traders have repeatedly confirmed to me since last summer. Digital tracking agency Tankertrackers.com concurs. The top two destinations are China and Syria. Volumes hover around 700,000 barrels a day. Beijing has solemnly ignored every sanction threat from Washington regarding oil trading with Iran.
Khamenei, earlier this month, was adamant:
“The US policy of maximum pressure has failed. The Americans presumed that they can force Iran to make concessions and bring it to its knees by focusing on maximum pressure, especially in the area of economy, but they have troubled themselves.”
In fact “maximum counter-pressure” is reaching a whole new level.
Iranian Navy Commander Rear Admiral Hossein Khanzadi confirmed that Iran will hold joint naval drills with Russia and China in the Indian Ocean in late December.
That came out of quite a significant meeting in Tehran, between Khanzadi and the deputy chief of the Chinese Joint Staff Department, Major General Shao Yuanming.
So welcome to Maritime Security Belt. In effect from December 27th. Smack on the Indian Ocean – the alleged privileged territory of Washington’s Indo-Pacific policy. And uniting the three key nodes of Eurasia integration: Russia, China and Iran.
Khanzadi said that, “strategic goals have been defined at the level administrations, and at the level of armed forces, issues have been defined in the form of joint efforts.” General Yuanming praised Iran’s Navy as “an international and strategic force.”
But geopolitically, this packs a way more significant game-changing punch. Russia may have conducted naval joint drills with Iran on the Caspian Sea. But a complex drill, including China, in the Indian Ocean, is a whole new ball game.
Yuanming put it in a way that every student of Mahan, Spykman and Brzezinski easily understands:
“Seas, which are used as a platform for conducting global commerce, cannot be exclusively beneficial to certain powers.”
So start paying attention to Russia, China and Iran being quite active not only across the Heartland but also across the Rimland.
Tyler Durden
Tue, 12/10/2019 – 23:05 - Lavrov Mocks Media Frenzy Over "Secrets" Exchanged During "Normal" Diplomatic Meeting With Trump
Lavrov Mocks Media Frenzy Over “Secrets” Exchanged During “Normal” Diplomatic Meeting With Trump
Little has been revealed in terms of precise statements or any potential diplomatic breakthroughs following Russian Foreign Minister Sergei Lavrov’s closed-door, no press admitted meeting with President Trump on Tuesday.
But the predictable outraged frenzy given the timing didn’t disappoint, with CNN pointing out “the extraordinary spectacle of President Donald Trump consulting with Moscow on the day House Democrats unveiled articles of impeachment underpinned partly by Trump’s unusual relationship with Russia.”
Via the White House On that note, Lavrov did punch back on the ‘Russiagate’ narrative in general as well as the notion that a mere diplomatic meeting would suggest a ‘compromised’ White House, saying in a joint press conference with Secretary of State Pompeo that his county’s alleged election interference is “baseless” and any level of proof “simply does not exist”.
Russian Foreign Minister Sergey Lavrov: “We have highlighted once again that all speculation about our alleged interference in domestic processes in the US are baseless. There are no facts that would support that …no one has given us this proof because it simply does not exist” pic.twitter.com/LiUItaj1Ch
— Aaron Rupar (@atrupar) December 10, 2019
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This after Rep. Adam Schiff slammed the high level meeting as “a success of the Russian propaganda” while lamenting that supposedly “adversaries” were “invited in” but with “allies locked out.”
Trump is meeting with Russia’s Foreign Minister in the Oval Office — again.
Adversaries invited in. Allies locked out.
Last time, they laughed about Trump’s firing of Comey. Today, they can celebrate the success of Russian propaganda.
Reagan wouldn’t recognize this GOP. pic.twitter.com/iHiksPXMbM
— Adam Schiff (@RepAdamSchiff) December 10, 2019
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“There was no press at our meeting, American or Russian. If Schiff can describe the ministerial-level contacts normal to any country and my meeting with the president in such a way, then I believe that they will soon accuse our diplomats, just as they have our athletes, of doping and call for criminal punishment,” Lavrov said mockingly.
In a tweet President Trump said he had a “very good” meeting with the top Russian diplomat and listed items discussed as including trade, Iran, North Korea, the INF Treaty, Nuclear Arms Control, and election meddling (on this last topic, Lavrov denied receiving a “warning” from Trump regarding interference).
Just had a very good meeting with Foreign Minister Sergey Lavrov and representatives of Russia. Discussed many items including Trade, Iran, North Korea, INF Treaty, Nuclear Arms Control, and Election Meddling. Look forward to continuing our dialogue in the near future! pic.twitter.com/tHecH9a9ck
— Donald J. Trump (@realDonaldTrump) December 10, 2019
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A White House statement indicated the potential for greater trade with Russia was also a focus on the meeting.
Speaking of trade and ongoing sanctions Lavrov boasted before reporters that trade between the two countries has actually grown during the Trump administration.
“Regardless of the sanctions – which obviously hurt everyone – the trade between our two countries has grown during the Trump presidency from $20 billion, to which it was reduced under President Obama, to $27 billion this year,” Lavrov said.
A further highlight of the late Tuesday press conference came when one reporter sought to “trap” the Russian foreign minister by asking whether he had again received any classified information during this Oval visit, based on prior allegations from their initial May 2017 meeting.
“I can only find that out based on what you report,” Lavrov replied, and then appeared to again mock the assumptions behind the question:
“We talked about what I openly and literally told you. If you find some secrets there, feel free to make that sensational.”
Also of note is that Lavrov said he again extended a personal invitation from Putin to Trump to be in attendance for Moscow’s Victory Day celebrations in May. The president is said to be “considering it”.
Tyler Durden
Tue, 12/10/2019 – 22:45 - These Secretive Oil Companies Control $3 Trillion In Wealth
These Secretive Oil Companies Control $3 Trillion In Wealth
Authored by Anes Alic via OilPrice.com,
They control the vast majority of the world’s oil and gas assets, yet the average person has never even heard of them, outside of those that are famous for things like getting attacked by missiles or becoming embroiled in a high-profile corruption scandal.
State-owned oil and gas companies (aka, the national oil companies, or NOCs) control at least US$3 trillion in oil and gas assets, compared to around $2.5 trillion as of 2017, and hold an estimated 90% of all known reserves–considerably more than publicly listed companies such as BP, ExxonMobil and Shell. Meanwhile, Saudi Aramco leads the pack as the world’s most profitable company.
That means that NOCs control about as much wealth as all U.S. billionaires or roughly twice the assets of global multilateral development banks.
Source: Resourcegovernance.org
If we go by annual revenue alone, China’s state-run Sinopec—explorer, producer, refiner, marketer and distributor—was the biggest oil and gas company in the world at the end of 2018. By net income, that title goes to Saudi Aramco, which reported net income in 2018 of $111.1 billion, compared to Sinopec’s $9.1 billion.
These numbers may seem a bit wild, but no one really ever knows where they come from or how they are derived.
By annual revenue metrics, by year-end 2018, four of the top 10 oil and gas companies in the world were state-owned: Sinopec, Aramco, China National Petroleum Corporation (CNPC) and Russian Gazprom. The other six Top 10 titles went to Shell (4th), BP (5th), Exxon (6th), Total (7Th) Valero (8th) and Phillips 66 (10th).
Despite their economic importance, most of these 71 NOCs are notoriously secretive–Norway’s Equinor being one of the few exceptions. For the remainder of the NOCs, their opacity poses a significant fiscal and governance risk, especially when they carry huge debts.
Source: IMF.Org
Massive Fiscal Players
The National Oil Company Database has listed at least 19 NOCs with assets in excess of $50 billion.
At least 25 NOCs account for 20% or more of government revenues, with Nigeria’s national oil company, the Nigerian National Petroleum Corporation (NNPC), collecting about half the general government revenues through oil and gas sales.
The database also reveals a pattern of weak public reporting by many NOCs, with only 20 of 71 NOCs revealing sufficient information for the 10 most critical indicators. More than half of the NOCs fail to publish financial statements audited by independent auditors, with some like the Republic of Congo’s SNPC failing to even disclose a balance sheet at all.
It’s often only when their debt loads become unsustainable that their true extent is revealed to the public, pushing the governments that had guaranteed the debts into a financial crisis.
NOCs frequently borrow funds to finance new investments, maintain large discretionary expenditures or fulfill certain political agendas. The borrowings may take the form of loans from other oil companies (e.g., Nigeria’s NNPC), from banks (e.g., Ghana’s GNPC), from another government entity (e.g., Sonatrach which borrows from the Algerian Central Bank), by issuing corporate bonds (e.g., Russia’s Rosneft) as well as oil-backed loans from other traders or NOCs (e.g., Kazakhstan’s KazMunayGas).
NOC borrowing does have its benefits. The need to borrow can incentivize these oil and gas companies to develop healthy corporate governance practices in a bid to improve their credit ratings. A good case in point is Saudi Aramco’s recent bond issuance, which provided a rare peek into its financial performance.
Excessive debt can, however, create significant risks.
Some NOCs such as Venezuela’s PDVSA and Angola’s Sonangol have debts exceeding 20% of the country’s GDP. Other NOCs are highly leveraged, such as Russia’s Rosneft and the UAE-headquartered TAQA. Mexico’s Pemex has negative equity.
Source: IMF.Org
Source: Brooking.edu
Nevertheless, maintaining healthy levels of debt and equity are not always enough. Consider Venezuela’s PDVSA, which despite holding 335 billion barrels of oil-equivalent reserves–the largest reserves of any NOC– is still unable to service all of its $35 billion of debt.
All those riches are mostly locked underground, yet the company is unable to access them after years of mismanagement as well as the impact of sanctions and the economic crisis. Public debt figures of Venezuela and Mexico include debts by their NOCs, though debts by Brazil’s Petrobras or Bolivia’s YPFB are not included in their national debts.
Some NOCs such as Norway’s Equinor and Colombia’s Ecopetrol and have consistently delivered strong returns on public investment. Yet in too many countries NOCs have struggled to develop into commercially efficient actors, and in extreme cases have actively contributed to large-scale corruption, not to mention that they largely remain unaccountable for the role they play in climate change.
So, NOCs may control $3 trillion in oil and have the luxury of being entirely opaque and, in some cases, thoroughly corrupt, but their non-state-owned international oil company (IOC) brethren still tips the scales overall on revenue and income.
Where the IOCs lose out is politically because NOCs aren’t always about doing good business; sometimes, there about establishing a foothold somewhere even when it doesn’t make economic sense. That can equate to enormous power over time.
Tyler Durden
Tue, 12/10/2019 – 22:25 - WSJ Blasts "Willing Press Echo Chamber" For Enabling Schiff To "Distort Truth For Political Gain"
WSJ Blasts “Willing Press Echo Chamber” For Enabling Schiff To “Distort Truth For Political Gain”
With Bloomberg News now banned from Trump campaign events, after openly admitting its political bias, and with the likes of Harwood and Todd now fully paid up members of the resistance, there has been one voice from the establishment media that has remained quietly ‘balanced’, quietly not-activist, and quietly reporting the news.
The Wall Street Journal has lambasted President Trump for his trade war, anguished over his manner, and criticized many of his actions as President; but, unlike the rest of the mainstream media, they have also acknowledged his successes, reported the facts about various left-wing conspiracies (as opposed to amplified them), and has not been afraid to stand alone as a quasi voice of reason amid the most-polarized environment this nation has known since the Civil War.
All of which is background for what The Journal did tonight as its Editorial Board dared to go after two ‘untouchables’ – Rep. Adam Schiff and the Washington press corps.
In a stunning rebuke of both, an op-ed details how the Horowitz report exposes the Democrat’s many distortions. They begin with a jab-jab-cross…
“Monday’s Justice Department Inspector General report on the FBI’s Trump-Russia probe is illuminating in many ways, not least the light it casts on the previous claims by politicians when they were telling the public about what they saw in classified documents.
House Intelligence Chairman Adam Schiff in particular has been exposed for distortions and falsehoods.”
And after exposing the lies, distortions, and falsehoods that Schiff again and again promoted on any TV screen that would have him, The Journal concludes with a Tyson-esque upper-cut to end the battle…
“Mr. Schiff had access to the same documents as Mr. Nunes.
His decision to misrepresent the FBI’s actions shows he is willing to distort the truth for political purposes.
He gets away with this because he has a willing echo chamber in the Washington press corps.”
Once again, Schiff has been exposed for undertaking exactly the kind of partisan lying and manipulation that he claims – falsely – the Republicans (and particularly Mr. Nunes – who has been ultimately vindicated) have been doing all along.
The only question America must have now is simple – where is the accountability?
Tyler Durden
Tue, 12/10/2019 – 22:05 - Jonathan Turley: "They Even Threatened My Dog" For Defending Trump At Impeachment Hearings
Jonathan Turley: “They Even Threatened My Dog” For Defending Trump At Impeachment Hearings
Authored by Paul Joseph Watson via Summit News,
Law professor Jonathan Turley revealed that even his dog was violently threatened after he testified in favor of President Trump during the impeachment hearings.
Turley already spoke about death threats he received following his testimony last week, but went further in an interview with CBS anchor Norah O’Donnell.
“I know you received a lot of threats after what you did last week,” O’Donnell told the George Washington University law professor.
“And my wife and dog,” Turley responded.
“To be fair, you did talk about them during your testimony. You did bring up your wife and dog,” O’Donnell said.
“Who would shoot a Goldendoodle?” Turley asked in response.
“Maybe a Shih Tzu, but not a Goldendoodle. I don’t understand where the anger comes from. Although as an academic, the thought that you could talk about James Madison and that would be fighting words is something I haven’t seen outside of a law school.”
The violent anger directed towards Turley came as a result of him challenging the impeachment process and arguing that there was not enough evidence to impeach President Trump.
* * *
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Tyler Durden
Tue, 12/10/2019 – 21:45 - CBP Baltimore Breaks Record For Recovered Outbound Stolen Vehicles, 95% Of Cars Headed To Africa
CBP Baltimore Breaks Record For Recovered Outbound Stolen Vehicles, 95% Of Cars Headed To Africa
U.S. Customs and Border Protection (CBP) – Baltimore Service Port has reported a new record in the number of stolen vehicles being exported from the US. CBP said 246 stolen vehicles, worth over $10.3 million, have been recovered at seaports in Baltimore, Wilmington, Del., and Philadelphia in 2019.
Baltimore ranks second nationally behind New York, in which 257 stolen vehicles were recovered in 2019.
Nationwide, more than 1,000 vehicles have been recovered during import and export inspections, with a majority of the vehicles recovered on East Coast ports.
CBP said it has been a record year for recoveries in Baltimore, Philadelphia, and Wilmington. Recoveries this year are up 112% over last year’s figures. At least 66% of the recoveries occurred at the Port of Baltimore.
The agency blamed transnational criminal organizations (TCOs) that operate up and down Interstate-95 for the jump in stolen vehicles.
“Export examinations are a critical component to Customs and Border Protection’s border security mission. Transnational criminal organizations use stolen vehicles as currency and they conceal illicit revenue from their illegal activities in outbound cargo,” said Casey Durst, Director of Field Operations for CBP’s Baltimore Field Office. “CBP officers remain committed to striking back at criminal groups where it hurts most, by intercepting their illegal exports and illicit financial gains.”
CBP said at least 95% of the stolen vehicles recovered at East Coast ports were destined to West African nations, including Benin, The Gambia, Ghana, Ivory Coast, Nigeria, Senegal, Sierra Leone, and Togo.
CBP provides details of some of the vehicles recovered:
- 80% (198 vehicles) were from model years 2015 through 2019.
- 63% (156 vehicles) were sport utility vehicles. Nationally, SUV’s comprised 45% of CBP’s recovered stolen vehicles during 2019.
- The top-5 recovered stolen vehicles were the Land Rover Range Rover (28), Toyota Camry (15), Toyota Rav4 (12), Toyota 4Runner (9), and Cadillac Escalade (7).
- The most expensive recovered stolen vehicle was a 2017 Audi R8, valued at $162,900, was destined to Togo.
- The newest vehicle was a 2020 Mercedes Benz GLE350, destined to West Africa.
- The oldest vehicle was a 1988 Mack truck, destined to West Africa. The oldest passenger vehicle was a 2002 Toyota Camry, destined to Nigeria.
The agency warned that the number of recovered stolen vehicles have surged in the last several years, officials said the trend would likely persist into the new year.
Tyler Durden
Tue, 12/10/2019 – 21:25 - Dem Congressman: Impeach Trump To Heal The Wounds Of Slavery
Dem Congressman: Impeach Trump To Heal The Wounds Of Slavery
Authored by Graham Noble via LibertyNation.com,
It is hardly a surprise when Democrats accuse President Donald Trump of some terrible act. Nor is it shocking to hear the president incriminated for all manner of terrible and tragic events. But to witness a Democrat member of Congress blame Trump for slavery is too much of a stretch. Yet, Rep. Al Green (D-TX) is doing just that – or at least drawing a bizarre link between slavery and the current commander in chief.
Green, with a largely unremarkable political career, is now well known for one thing: his obsession with seeing this president impeached. The representative repeatedly and unsuccessfully introduced motions to impeach Trump – long before any phone calls to Ukrainian presidents.
Green’s Ridiculous Obsession
The congressman did have the courage to say what most Democrats seem to have been thinking for months and what drives the effort to remove the president from office: that his party must impeach Trump to prevent him from winning a second term in 2020. More recently, Green has suggested that should the president survive a Senate trial – which seems fairly certain – the Democrats could and should impeach Trump again, taking advantage of the lack of any law limiting the number of times a president can be impeached.
Al Green
However, impeachment is not enough to satisfy the congressman. Green now says that it must be for the right reason. That seems fair – until one discovers that the right reason for Green is to make amends for slavery.
During an interview on Dec. 7, Green claimed that the American people “understand” Trump must be impeached immediately, but his reasoning got puzzling when he said: “I also think that if we don’t include some of the things that are important to people of color then I think that our business won’t be finished with.”
One can only assume that articles of impeachment must incorporate language, or even charges, that acknowledge what Green described as “the original sin” of slavery. Somehow, impeaching Trump will make amends for an inhumane system officially abolished in America in 1865.
Green added, “Slavery was the thing that put all of what President Trump has done lately into motion.”
Trump And Slavery
Slavery led to Trump becoming president. That makes perfect sense – at least to Green.
“So, I appreciate whatever we will do,” the congressman continued, “but until we deal with the issue of invidious discrimination as [it] relates to LGBTQ community, the anti-Semitism, the racism, the Islamophobia, the transphobia, and also the misogyny that he has exemplified, I don’t think our work is done.”
Knowing they have no case against the president, various Democrats resort to emotional appeals to justify removing Trump from office. Rather than point to evidence of criminality or abuse of power, which they simply do not have, the president’s political enemies pontificate vaguely about honoring the Constitution, protecting democracy, and even – as House Speaker Nancy Pelosi (D-CA) recently suggested – preserving civilization itself.
Green is doing the same thing; he’s just also throwing in the race card for good measure. Is anybody buying what he is selling? In a little under three years, Trump has done far more for the black community than his predecessor did in eight years. The idea that impeaching Trump will heal the vestigial wounds of slavery is more insulting to black Americans than to Trump. How many more years of being patronized, lectured to, and condescended to by Green and his Democrat colleagues must the black community take before it abandons its misplaced loyalty to the very party that resisted the abolition of slavery?
Tyler Durden
Tue, 12/10/2019 – 21:05 - Repocalypse 2.0 On Deck? "Turn" Repo Rates Are Blowing Out
Repocalypse 2.0 On Deck? “Turn” Repo Rates Are Blowing Out
Earlier today, repo market icon Zoltan Pozsar scared the living daylights out of cross-asset traders everywhere with what could be called a doomsday prediction in which the former NY Fed and Treasury staffer warned that as a result of collapsing systemic liquidity and a drought of “excess reserves”, the coming days could see a lock up in the FX swap market (in the process sending the US Dollar soaring), which would then translate to a violent deleveraging of massively levered hedge funds, and a liquidation first in the bond then stock market.
Yet while Pozsar had seemingly no concerns staking his hard-earned reputation on the outcome of a potentially catastrophic event that would subsequently be used by the Fed as a catalyst for QE4, he was far less confident about “when” it would occur:
it’s hard to have a definitive answer: it depends. It depends on how equities do, which depends on the trade deal and other random tweets. It depends on how auctions go, which depends on the equity market and the curve slope relative to actual funding costs.
Still, now that the genie is out of the bottle, everyone will become a cross-asset expert, trying to isolate even the smallest notable deviation from the norm as the horseman of the coming market apocalypse, and focusing first and foremost on the most direct indication that something is (again) broken in the repo market: the overnight general collateral repo rate.
However, what concerned market watchers will find when they pull up the recent O/N G/C repo rates is… nothing. Indeed, after the turbulent repo moves in mid/late September, and one outlier event in mid-October, the past two months have seen O/N repo barely move.
A very different picture however emerges when looking at forward, or “turn” repo rates, those that capture the year-end interval of Dec 31-Jan 2 (hence “turn”), where the past month has seen a sharp, consistent increase in repo rates, which peaked in the past two days around 4.10%-4.20%.
While one can argue that the rising repo pressure on the “turn” was due the traders starting to frontrun the dismal events laid out by Pozsar, there is a more conventional explanation for the upward pressure on the Turn, which as another repo expert, Curvature’s Scott Skyrm writes today, is “due to an abundance of collateral sellers, without any significant new cash entering the market – through end user cash investors or through the Federal Reserve.” Or, as he summarizes, “Basically, more sellers than buyers” of collateral.
That said, following today’s modest drop in the “turn”, we may have found ourselves in a very brief holding pattern, as the market is waiting for the specifics in the next round of Fed RP Operations to be announced on Thursday.
And this is where things get interesting: if Pozsar is right, nothing the Fed announces on Thursday short of QE4, will help relieve the pressure on the “turn” into year end, which the Credit Suisse strategist sees rising ever higher, until it forces dealers to freeze either the FX swap market, or the repo market, or – devastatingly – both. Everything else would, or perhaps should, be ignored by the market as the reserve hold in the financial system is massive and growing by the day as the Fed’s T-Bill QE failed to plug the liquidity drain.
Skyrm, on the other hand, has a more sanguine view, and expects the Fed to announce a $50 billion (at least) term operation for Monday December 23 (double the current term ops) and a $50 billion (at least) term operation for Monday, December 30. Of course, even Skyrm hedges, noting that “if the Fed announces operations of $25 billion or less on those days then Turn rates will immediately spike higher. However, in the past the Fed has always provided enough liquidity to the market and I still have faith.”
The Curvature analyst may have faith, but if Zoltan Pozsar is right – and he traditionally has been – in his apocalyptic forecast, the Fed has not been providing enough liquidity since mid-September, and certainly not in the correct format, and it will fail to do so in the coming days, forcing the “worst case scenario” Pozsar described, one in which the “year-end in the FX swap market is shaping up to be the worst in recent memory, and the markets are not pricing any of this.” It is only once markets “start pricing this”, especially after the liquidity-draining Dec 16 tax deadline, that the Fed will have no choice but to respond to the violent market repricing lower, finally launching the QE4 that mega dealers such as JPM have been begging for all along.
So who will be right: Pozsar, and his fatalistic forecast for a market crash in the coming days (that triggers QE4), or Skyrm’s cautious optimism? The answer will be revealed by the “turn” repo rate: if it resumes rising, and hits 5%, 6%, 7% or more, then all bets are off.
Tyler Durden
Tue, 12/10/2019 – 20:44 - The Good, The Bad, & The Ugly In NAFTA 2.0
The Good, The Bad, & The Ugly In NAFTA 2.0
Authored by Mike Shedlock via MishTalk,
Democrats agree to pass USMCA, Trump’s NAFTA replacement.
Goodbye NAFTA, Hello USMCA
In what “seemingly” constitutes a major victory for Trump, Democratic Lawmakers Agree to Support North America Trade Pact.
House Democrats agreed to support the new U.S. trade deal with Mexico and Canada, marking a victory for President Trump who ran for office in 2016 on a pledge to remake or blow up the North American Free Trade Agreement.
House Speaker Nancy Pelosi called the new version of the U.S.-Mexico-Canada Agreement a “victory for American workers” at a Tuesday morning news conference. The pact will replace Nafta when ratified and contains provisions aimed at creating more manufacturing jobs, for example, by increasing the proportion of vehicles that must originate in North America for the cars and trucks to receive duty-free treatment.
It also includes updated labor rules and beefed-up enforcement provisions to hold firms in Mexico to account on labor, according to people familiar with the emerging deal.
USMCA had long been supported by Republicans and leading business trade groups but opposed by Democrats over concerns such as the legal language enforcing new labor rules. The Democratic approval Monday comes as a rare bipartisan moment of cooperation on economic policy at a time when Capitol Hill is divided over the impeachment inquiry.
USMCA Key Provisions
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Mexican Labor: U.S. labor unions and Democrats have long complained that Mexican workers can’t always form unions freely and demand fair pay, a situation they say puts pressure on U.S. manufacturing jobs. The Trump administration’s USMCA has new additional labor rules, not included in the current Nafta, as well as new enforcement procedures demanded by Democrats.
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Auto Rules: Compared with Nafta, USMCA significantly tightens the rules that the auto industry has to follow in order to trade vehicles duty free in North America. A certain proportion of a car will have to be produced by workers with higher wages, and a greater proportion of components will have to originate in North America.
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Digital Freedom: USMCA, unlike the current Nafta, includes rules mandating the free flow of data among the three countries. This and other novel provisions on exchange rates and other areas aren’t so crucial for Canada and Mexico but could later be applied to pacts with more restrictive countries or even China.
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Agriculture: A deal to pass USMCA means farmers of major crops no longer have to worry about President Trump potentially pulling out of the existing Nafta and leaving them fewer major export markets. USMCA also gives dairy farmers more access to Canada.
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Pharma: Big drugmakers are likely to be disappointed, since Democrats pushed the Trump administration to remove language that would have protected expensive biologic drugs from generic imitators for 10 years. The existing Nafta treaty has no such drug protections.
Point by Point Comments
1: Pelosi wanted more, and settled for less. Five days ago, the Wall Street Journal reported Democrats Want to Invade Mexico. Essentially, the unions demanded that the US be allowed to enforce labor laws in Mexico. However, Mexico would not agree. Canada would not have gone alone either.
2: The devil is in the details. I suspect Mexico will be able to circumvent these rules, if it wants.
3: Digital rules accomplish nothing.
4: Agriculture essentially remains the status quo. Wisconsin dairy farmers do get a minor victory.
5: This is a potential victory for US consumers, but one that Trump did not appear to want. In practice, however, I wonder if it does much.
AFL-CIO President Rich Trumka Tweets
Dramatically Worse
Nearly anything the AFL-CIO supports is, by definition, bad for US consumers.
Thus, if this deal really is a “dramatic improvement”, I propose it is dramatically worse.
The one place Trumka is correct, most likely by accident, is on Big Pharma.
Trump on USMCA
America’s great USMCA Trade Bill is looking good. It will be the best and most important trade deal ever made by the USA. Good for everybody – Farmers, Manufacturers, Energy, Unions – tremendous support. Importantly, we will finally end our Country’s worst Trade Deal, NAFTA!
— Donald J. Trump (@realDonaldTrump) December 10, 2019
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Devil in the Details
What this comes down to is how easily Mexico can get around key provisions 1 and 2.
The more Mexico adheres to those points, the worse the deal Trump negotiated.
Good for Unions, Bad for Consumers
If it’s Good for Unions, It’s Bad for Consumers.
I wrote about that construct a couple days ago in France Should Take a Lesson From Ronald Reagan: Fire the Strikers.
Even FDR understood that public unions and public service were impossibly incompatible.
Click on the link for discussion.
Proud Union Hater
I am a proud union hater all my life.
They promote based on seniority, not talent. They keep incompetent teachers in jobs. They keep corrupt police officers in jobs.
They raise taxes for benefits the average person can’t get, then demand more and more in return for less.
— Mike “Mish” Shedlock (@MishGEA) December 8, 2019
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Unions promote on seniority, not talent. Anyone who wants to get ahead based on performance, not seniority, should not be a union supporter.
Moreover, corrupt union leaders get into bed with corrupt politicians. The combination is the biggest vote-buying racket in the world.
This puts the public at the mercy of militant teachers’ unions, police unions, and firefighter unions all demanding and receiving untenable pension promises.
GM and Ford
GM’s bonds, despite a bailout (necessary because giving into union demands bankrupted the company) are just a step above Junk.
So are Ford bond.
The strike is over. Hooray. But GM has a second date with bankruptcy court. Ford will have a first.
Pensions
Meanwhile, please note that Illinois pensions are among the worst funded in the entire nation. Things are even worse in Chicago where Each Chicagoan Owes $140,000 to Bail Out Chicago Pensions.
Chicago Mayor Lori Lightfoot’s only solution is the same as that of predecessor Rahm Emmanuel: Raise Taxes.
Get The Hell Out Now
These facts, and they keep piling up, is what prompted me to write on October 4, Escape Illinois: Get The Hell Out Now, We Are
Also consider Chicago Headed for Insolvency, Get the Hell Out Now.
In 2020 we are moving to Utah. We have had enough.
Trump Irony
Trump is bragging about USMCA. And most Trump supporters will see it that way.
But at best, the deal represents no significant changes.
Importantly, the more the AFL-CIO and Pelosi are right, the worse Trump’s deal is in practice.
Tyler Durden
Tue, 12/10/2019 – 20:05 -
- Yuan Tumbles After Navarro Warns "No Indication That Tariffs Will Be Delayed"
Yuan Tumbles After Navarro Warns “No Indication That Tariffs Will Be Delayed”
While US equity futures have barely dipped, offshore yuan has tumbled – erasing the earlier optimistic spike – after White House Trade Advisor Peter Navarro told Fox News that he has “no indication that December tariffs will not be put on.”
Additionally Navarro said that China “was trying to shape the narrative on trade talks to affect the futures market,” and that is up to the Chinese if a trade deal can get done.
Yuan erased all of the gains from China’s comments this morning…
Source: Bloomberg
And while Yuan plunged, Dow futs dropped only 30 points (for now)…
Tyler Durden
Tue, 12/10/2019 – 19:52 - Senate Republicans To Let Bidens Off The Hook? May Skip Witnesses In 'Expedited' Impeachment Trial
Senate Republicans To Let Bidens Off The Hook? May Skip Witnesses In ‘Expedited’ Impeachment Trial
While House Democrats are about to impeach President Trump for asking Ukraine to investigate the Bidens for what looks like obvious corruption – Senate Republicans have no interest in calling witnesses to determine whether Trump’s request was justified in the first place.
According to the Washington Examiner, the GOP-controlled Senate have no plans to call key witnesses to testify in an impeachment trial. This means Joe Biden, Hunter Biden, John Kerry’s stepson, Alexandra Chalupa and Ukrainian prosecutors involved in the Burisma case won’t set foot in the Senate.
Their reasoning? Senate Republicans have “no appetite” for it.
Senate impeachment rules require a majority vote to call witnesses, and with just two out of 53 votes to spare, there is no “appetite” among Republicans to pursue testimony from people that Democrats blocked Republicans from subpoenaing during the House investigation. Indeed, Republicans might forgo calling witnesses altogether, saying minds are made up on Trump’s guilt or innocence and that testimony at trial on the Senate floor would draw out the proceedings unnecessarily. –Washington Examiner
Instead, top Senate Republicans are leaning towards calling a quick vote to acquit Trump once House Democrats and the White House have delivered their arguments.
“At that point, I would expect that most members would be ready to vote and wouldn’t need more information,” said Sen. John Barrasso of Wyoming – the #3 ranked Senate Republican. “Many people have their minds pretty well made up.”
“Here’s what I want to avoid: this thing going on longer than it needs to,” said Sen. Lindsey Graham (R-SC). “I want to end this.“
The president is not in danger of being removed from office by the Senate, a move that requires 67 votes.
But in a trial, he is seeking exoneration. Some Republicans question whether that’s possible without hearing from witnesses, whether it be these or other less politically charged figures. “Not sure how you have a fair trial without calling witnesses,” said one Trump ally in the House. But with some Senate Republicans facing uncertain 2020 reelection contests and others privately unhappy with Trump’s behavior, mustering 51 GOP votes for Trump’s dream witness list appears impossible.
“How many senators would enjoy a Trump rally? That’s probably your whip count for calling Hunter,” a Republican senator said, requesting anonymity to speak candidly. Senate Democrats are not expected to provide any votes to call Biden or the others. Or they might ask so high a price, demanding that in exchange, they be allowed to call Secretary of State Mike Pompeo and Vice President Mike Pence, that Republicans balk. –Washington Examiner
“It becomes endless motions to call people, and I’m not sure what anybody gains from all that,” said #2 Senate Republican, John Thune of South Dakota.
That may not play well with Trump’s base, who was expecting to see a doddering Joe Biden and his cokehead son Hunter answer tough questions about Ukraine.
“President Trump’s allies will want to see witnesses called. How many, and which witnesses, will quickly become a dividing line,” said former Trump adviser Jason Miller, who co-hosts an impeachment-centric podcast with Steve Bannon.
Without witness testimony, the Senate proceedings would take roughly two weeks according to the report.
On Tuesday, House Democrats introduced two articles of impeachment accusing President Trump of abusing his power and obstructing Congress. Notably, there is no mention “extortion” or “quid-pro-quo” – accusations Democrats have been pounding on throughout the process.
Tyler Durden
Tue, 12/10/2019 – 19:45 - Paul Volcker: The Last Of His Kind
Paul Volcker: The Last Of His Kind
Authored by Jim Rickards via The Daily Reckoning,
One of the most important figures in the history of U.S. monetary policy, Paul Volcker, died Sunday at the age of 92.
Volcker is famous for having raised interest rates all the way to 20% in June 1981, the highest rates since the Civil War.
His actions are widely credited for ending the great inflation of the 1970s and setting the stage for the Reagan economy of the ’80s (although his sky-high rates nearly sank the economy at first).
Volcker didn’t kill inflation right away — it took another couple of years to finally end it, but rates were never that high again.
Volcker had a solid understanding of inflation and had opposed going off the gold standard in 1971.
He was one of the people in the room at Camp David when Nixon made the decision to close the gold window. He was actually one of the move’s primary strategists.
People assume Nixon and his team intended to permanently sever the dollar from gold. But it’s not true.
What Nixon actually said — and Paul Volcker confirmed this when I spoke to him — is that they didn’t think the U.S. was permanently going off the gold standard.
Nixon, and others involved with the decision, considered it a temporary suspension until the major global powers could get together, rewrite the system and get back to a gold standard at a much higher gold price (it was then pegged at $35/ounce).
Volcker understood that it was necessary to get the gold price right before a gold standard could resume. After all the money printing that went to fund Vietnam and the Great Society in the 1960s, he knew that a higher gold price was necessary.
In other words, Volcker knew the U.S. would have to avoid the mistake Winston Churchill made in 1925 as Great Britain’s chancellor of the Exchequer, the equivalent of the U.S. Treasury.
Churchill was determined to fix the gold price (measured in sterling) at the pre-WWI parity. He felt duty-bound to live up to the old value.
But he neglected all the money printing that occurred to pay for the war. A higher gold price was required to reflect the inflation that took place. Otherwise, setting the gold price too low would be extremely deflationary.
And that’s what happened. Churchill fixed gold at the pre-war value.
By failing to set gold at a higher price (again, measured in sterling), Churchill essentially cut the money supply in half. That threw the U.K. into a depression.
While the rest of the world ran into the depression in 1929, in the U.K. it started in 1926. In other words, Churchill’s decision plunged the U.K. into recession three years ahead of the rest of the world.
Going back to gold at a much higher price measured in sterling would have been the right way to do it. Choosing the wrong price was a contributor to the great depression.
So in 1971, Volcker realized that gold would have to be fixed at a higher price to reflect the money-printing that had taken place during the preceding years. Otherwise, it could have dire consequences.
Of course, the point was moot because the U.S. never did reopen the gold window. And the ’70s were certainly marked by inflation, not deflation.
Most people don’t know how close to hyperinflation the U.S. came by the late ’70s, and how close the world was to losing confidence in the dollar.
In 1977, the U.S. had to issue Treasury bonds denominated in Swiss francs because no one wanted dollars, at least at an interest rate that the Treasury was willing to pay.
They were called Carter bonds.
Not surprisingly, the economic morass of the late ’70s cost Carter reelection. Inflation was between 14% and 15% by the time Reagan was sworn in.
Many people forget that Carter appointed Volcker, not Reagan. He began raising rates right away, although they only rose to 20% under Reagan.
Volcker’s extreme interest rates helped send the economy into recession, first in mid-1980 and again in 1982.
Although Volcker had Reagan’s support, many voices in the Republican Party wanted him replaced by a more accommodating Fed chairman. So Volcker was not extremely popular at the time.
But he knew the dollar is ultimately backed by confidence, and he was determined to restore it.
Volcker did tame inflation, which was back down to about 3% in 1983 after peaking near 15% in 1980. The dollar strengthened, the economy recovered and one of the greatest bull markets in stock market history was underway.
So Paul Volcker remains one of the most important Fed chairmen ever.
May he rest in peace.
Tyler Durden
Tue, 12/10/2019 – 19:25 - "Unprecedented" China Auto Market Collapse Heads Into Third Year After November Sales Drop 4.2%
“Unprecedented” China Auto Market Collapse Heads Into Third Year After November Sales Drop 4.2%
The ongoing recession in the global auto market has undoubtedly been lead by China – and if November’s trends are any indication, the entire industry could be setting up for an ugly 2020.
Sales of sedans in China fell 4.2% in November to 1.97 million units, according to the CPCA on Monday.
This marks the 17th decline in the last 18 months and all but ensures that China will see a second straight annual drop for its auto market, according to Bloomberg.
Last year was the first time the market shrunk in decades, with ripple effects extending to places like Europe, Latin America and the rest of Asia. The industry has faced headwinds in the ongoing trade war, in addition to an overstretched consumer and ride-hailing and car-sharing services.
Areas outside of China’s big cities suffered the most, as a slowing economy kept consumers out of the showrooms that sold cheaper local brands. Experts are predicting consolidation in the industry as a result. Some brands, like Suzuki and PSA Group, have pulled out of China (or are in the process of selling stakes).
Bigger names like Toyota and BMW have weathered the storm well due to demand for hybrid cars – but this demand is anything but a guarantee moving forward.
EVs were once a reason for optimism, especially with Volkswagen spending $4.4 billion next year to ramp up EV production in the country and Tesla moving a new plant to Shanghai.
But last month, wholesales of NEVs fell a stunning 42% to 79,000 units.
Recall, as we reported days ago, it’s looking like Beijing isn’t so excited to help sustain the EV niche of the market anymore.
We also noted that Beijing’s ambivalence was starting to show up in the numbers. EV sales fell off a cliff after June of this year, when the government slashed purchase subsidies. From July to October, sales of new energy cars were down 28% from the year prior.
Subsidies are unlikely to come back, we noted. The government is now aiming for “quality instead of just quantity”, noting that subsidies would be more costly than they were a few years ago, when the market was smaller. Instead, Beijing said it will spend the money on building out its infrastructure, like its charging stations.
A Bloomberg NEF report predicts that the EV market will rebound next year, however, stating: “Potential cuts to subsidies at the beginning of 2020 are keeping the industry in limbo. A shrinking market could force the government to give up its plans on cuts.”
Tyler Durden
Tue, 12/10/2019 – 19:05 - University Departments Ditch Genderless-Term "Alumni"… For Genderless-Term "Alumnx"
University Departments Ditch Genderless-Term “Alumni”… For Genderless-Term “Alumnx”
Authored by Jeremiah Poff via The College Fix,
Latin derived word is originally genderless..
College departments across the country are avoiding the term “alumni,” opting instead to use “alumnx,” even though the original term is gender neutral.
A Google search of the term “alumnx” returns a long list of results from American colleges using the term, though most are specific to departments and specialized resource centers. They include the University of California-San Diego, Syracuse University, University of Michigan and Loyola University of Maryland, primarily on LGBTQ+ resource pages.
The term “alumni” is a latin word that derives from the root word “alumnus,” meaning “pupil,” according to the online etymology dictionary. “Alumni” is the gender-neutral plural form of the word. Some websites use “alumnx” and “alumni” interchangeably.
The discovery was made Sunday by Jordan Lancaster, a freelance contributor to The Daily Caller and Washington Examiner. She tweeted a series of screenshots from different schools with the caption “seize the endowments.” They included images from Rutgers University, UC-San Diego, UMich and Vermont College of Fine Arts.
seize the endowments pic.twitter.com/ubhMeFqzqM
— Jordan Lancaster (@jordylancaster) December 8, 2019
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The tweet drew attention from many conservative users, who mocked the practice. Lancaster called it “an issue that only matters to people extremely in the university bubble.”
exactly. this is fully an issue that only matters to people extremely in the university bubble lol
— Jordan Lancaster (@jordylancaster) December 8, 2019
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UC-San Diego uses “alumnx” on its critical gender studies major website, including in the URL, but the website also uses the more familiar “alumni” in the text of the page. A request for comment Sunday seeking clarification was not immediately returned.
At Syracuse, the LGBT resource center uses “alumnx” in both the URL and throughout the page, only using “alumni” when referencing the school’s alumni association. Syracuse did not immediately respond to The Fix’s request for comment.
The academic program of “intergroup relations” at the University of Michigan includes the term on its page, but uses it interchangeably with “alumni” and “alumna” on the site, with no clear pattern. A request for comment Sunday was not immediately returned.
The LGBTQ+ services website for Loyola University of Maryland uses “alumnx” for its website, but uses “alumni” as well.
“Welcome to Loyola’s LGBTQ+ Alumnx page! As Loyola starts to expand LGBTQ+ visibility, we are looking to maintain an active database of a/sexuality and a/gender diverse alumni to support, encourage, and connect current students with alumni of Loyola University Maryland,” the website reads, again showing no clear pattern of the use of the terms.
The Fix’s request for comment was not immediately returned.
Tyler Durden
Tue, 12/10/2019 – 18:45 - FISA Report Reveals Clinton Meddled In 2016 Election
FISA Report Reveals Clinton Meddled In 2016 Election
If Russia spending $100,000 on Facebook ads constitutes election interference, and Donald Trump asking Ukraine to investigate the Bidens is too – then Hillary Clinton takes the cake when it comes to influence campaigns designed to harm a political opponent.
Contained within Monday’s FISA report by the DOJ Inspector General is the revelation that Fusion GPS, the firm paid by the Clinton campaign to produce the Steele dossier, “was paying Steele to discuss his reporting with the media.” (P. 369 and elsewhere)
(h/t @wakeywakey16) And when did Steele talk with the media (which got him fired as an FBI source)? September of 2016, roughly six weeks before the election.
One of the more damaging articles to result from these meetings was authored by Yahoo News journalist Michael Isikoff, who said in an interview that he was invited by Fusion GPS to meet a “secret source” at a Washington restaurant.
That secret source was none other than Christopher Steele, a former MI-6 Russia expert who fed the Isikoff information for a September 23, 2016 article – which would have had far greater reach and impact coming from such a widely-read media outlet vs. $100,000 in Russian-bought Facebook ads.
Isikoff’s article claimed that former Trump campaign aide Carter Page “has opened up private communications with senior Russian officials – including talks about the possible lifting of economic sanctions if the Republican nominee becomes president.”
This allegaton was found by special counsel Robert Mueller report to be false. Moreover, the FBI knew about it in December, 2016, when DOJ #4 Bruce Ohr told the agency as much.
FISA report, P. 206 “Steele told us that in September [of 2016] her and Simpson gave an “off-the-record” briefing to a small number of journalists about his reporting,” reads page 165 of the FISA report, which says that Steele “acknowledged that Yahoo News was identified in one of the court filings in the foreign litigation as being present.“
Put another way, Hillary Clinton paid Christopher Steele to feed information to the MSM in order to harm Donald Trump right before the 2016 election. Granted, there were intermediaries; the Clinton campaign paid law firm Perkins Coie, which paid Fusion GPS, which paid Steele. And if asked, we’re guessing Clinton would claim she had no idea this happened – which, quite frankly, simply isn’t plausible given the stakes.
Whatever the case – the act of Simpson paying Steele to peddle fiction to the media for the purpose of harming Trump, by itself, constitutes blatant election meddling by every standard set by the left over the past three years.
We’re sure Hillary can explain that if and when she jumps into the 2020 race.
Tyler Durden
Tue, 12/10/2019 – 18:33 - Meat Prices Spike 8% In Brazil, Threatening A Holiday-Gathering Mainstay For Many
Meat Prices Spike 8% In Brazil, Threatening A Holiday-Gathering Mainstay For Many
Consumers in Brazil are facing a crisis: barbeques, which are a mainstay of Brazilian cuisine and have inspired countless Brazilian steakhouses, are under threat.
The price of beef, pork and chicken in the country are experiencing a sharp rise, even while inflation elsewhere in the country remains low, according to Bloomberg. The meats are up 8.1% month over month in November, threatening to take the main course off the table at many Brazilian celebrations this upcoming holiday season.
Renata Ziller, a teacher and mother of three in Brasilia, said:
“We’ll have to do something with rice, I guess. I’ll have to use some creativity because the prices are so high.”
Ziller The price rise has been a result of increased demand for Brazilian meat from China, in addition a drought impacting the quality of many cattle pastures. The price rise has political and economic implications, Bloomberg writes.
Meat was invoked by leftist former President Luiz Inacio Lula da Silva, who said he would fight for the rights of Brazilian workers to “hold family gatherings, have a barbecue, and drink a little beer, which is what makes us happy.”
President Jair Bolsonaro also commented on the price hikes: “People are complaining, rightly, that the price of meat has gone up. The world has started to buy more meat from us. Unfortunately that’s what happens.”
Bolsonaro supports the free market, and said there was little he could do about the price spike – a refreshing take from a politician.
The price of a chicken in the country was up 8% year over year while pork rose 15% and a filet mignon has risen by about 20%. Meat had the largest impact of all products on the country’s inflation numbers for November.
Rafael Cortez, from the consultancy Tendencias Consultoria, said: “Inflation in general ought to be a positive factor for the government, however this current rise in a product that is so dear to the average Brazilian could favor the opposition narrative. We are already starting to see this on social media.”
Geovana Santos, a 20-year-old trash collector with a one-year old daughter, said the price spikes have caused her to change her diet:
“Basically I just have to buy sausage, because it’s cheaper,” she concluded.
Eventually, as prices rise, less Brazilians like Santos will eat meat and demand will hopefully taper, causing prices to again slide lower. With free market concepts like these so simple intuitive and effective, it’s no wonder Central Banks can’t appreciate them.
Tyler Durden
Tue, 12/10/2019 – 18:25
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