- Legendary Singer Tom Jones Admits Being Abused, Says Sexual Harassment Common In Music Industry Too
Speaking to the BBC, legendary Welsh singer Tom Jones, perhap smore fmaous for his Vegas shows now, confirmed that the scandal in the movie industry, following the revelations regarding Harvey Weinstein, is also common in music.
Speaking at the launch of the “The Voice UK” television programme in Manchester, Jones stated that “Things have always happened in the music industry as well. There's been people complaining about publicists and different things they've been expected to do to get a record contract, just like a film contract."
Unexpectedly, Jones acknowledged that he’d faced this problem when he started out
“Yes. At the beginning, yes…
There were a few things like that. But you avoid it. You just walk out…
But what's tried on women is tried on men as well. But then again, it's not much though. It was just once, really."
Jones said that it left him feeling terrible…
“you think I’ve got to get away from this person and it can’t be like this… There’s always been that element there, that people with power sometimes abuse it.”
The question is whether other members of the music industry follow Jones lead but name names.
Jones added:
"Things happen in showbusiness, and sometimes things are covered up and then they come to light and other people come forward, it's like taking the cork off of a bottle.
Things come out that maybe should've come out years ago, who knows. But that's the way it is with showbusiness, you are in the public eye, and that's it. You have to take the good with the bad. But justice will out. If you've done something wrong you've got to pay for it, or prove that you haven't done anything wrong."
The fact that it’s also been going on in the music industry for many years – Jones began his career in 1963 – is probably not going to surprise anybody.
- Europe's Secession Problems Aren't Going Away
Authored by Ryan McMaken via The Mises Institute,
Earlier this week, The New York Times noted that movements for greater local autonomy appear to be spreading throughout Europe. In some ways, the conflict in Catalonia is just the tip of the iceberg. The Times reports:
Coming on the heels of the Catalan vote, the Lombardy and Veneto referendums are yet another signal of the homegrown conflicts that persist in many of the European Union’s member states. Separatist movements are also simmering in Britain — where voters in Scotland rejected independence in a 2014 referendum but continue to debate the issue — as well as France, Germany, Belgium and Romania.
Like Catalonia – and unlike Scotland – the Lombardy and Veneto regions of Italy are among the wealthiest regions, and send enormous amounts of tax revenue to Rome. Italy's southern regions, which are significantly poorer than northern Italy, have benefited from Northern wealth ever since Italians were all forced into a single nation-state in the late nineteenth century.
This has never been forgotten by Italians from Veneto, many of whom participated in a referendum in 2014 to declare Independence. Naturally, the Italian government in Rome declared the vote invalid. At the time, however, I interviewed one of the organizers Paolo Bernardini about the referendum. (See "Inside Venice's Secession Movement.") At the time, secessionists liek Bernardini appeared to be pursuing immediate and total independence from Rome, while remaining inside the EU:
A tiny majority of Veneto people are in favor both of the EU and of the Euro as a currency. So I envisage a little, rich state, playing a major economic and political role in the EU, a stabilizing role. It will interact naturally with other rich and similar states, Bavaria (still part of Germany), Austria, and the Netherlands. It will be a Finland in the Adriatic.
According to the Times piece, though, supporters of Northern independence have gone back to taking small steps, and realize – probably correctly – that there are numerous steps that must be taken between the status quo and total independence.
The new effort appears to be focused on conducting local plebescites demanding more local autonomy. This doesn't conflict with the goal of eventual independence, of course, although it probably is an essential first step.
Flemish Independence?
A region taking a gradualist approach is the Flemish-speaking region of northern Belgium, also known as Flanders. The Flanders situation has been noted in a multitude of media outlets looking to find "the next Catalonia." CNBC reports:
Political groups such as the New Flemish Alliance, a nationalist, conservative group which is dominant in the Belgian parliament, advocate a gradual secession of Flanders from Belgium. Euronews reported that the party even hung a Catalan flag outside its headquarters recently in support of the Spanish separatist region. With elections in 2019, the issue of Flemish independence is not likely to disappear soon.
The Catalonia and Scotland situations have brought secession issues to the fore in the English-language media, but there's nothing new about Belgium's problem. The unlikely unions of French-speaking and Flemish-speaking regions date back to 1830 when northern regions of Belgium won independence from the Netherlands. The resulting union known as Belgium has never been a totally comfortable one, as noted in a 2007 Chicago Tribune article, which compared Beligum to an unhappy and tired married couple:
They stay together mainly out of habit, and also because it would be such a headache to break up the household and divide the communal property.
If you know a couple like this, then you will understand the Belgians.
Dutch-speaking Flanders and French-speaking Wallonia are trapped in a loveless marriage called Belgium.
In today's Europe, divorce no longer carries the opprobrium it once did. The Czechoslovakians had a very amicable split in 1993. The Yugoslavs less so. Even Scotland and England are talking about a separation.
But in Brussels, which these days feels more the capital of the far-flung European Union than the capital of a medium-size European nation, polite Belgian politicians don't like the D-word. They wish the whole issue would just go away.
It won't. That much became clear in December when RTBF, the French-language state broadcaster, interrupted its regular programming with an urgent bulletin announcing that Flanders had declared independence.
Grainy footage showed King Albert II and Queen Paola heading for the airport to flee the country. There also was video of trams stopped at the new Flemish border, and live interviews with familiar politicians discussing the crisis.
Not until half an hour into the broadcast did the message "This is fiction" appear on the screen. Too late. Embassies in Brussels already had scrambled to seek clarification while thousands of worried callers jammed RTBF's switchboard…
Belgian politicians were not amused.
Mind you, this was back in 2007 before it had become well established that the Scots could vote on their own Independence, and before the British voted for Brexit.
These more recent developments make regionalist movements such as those in Spain, Italy, and Belgium of increasing notability.
The question remains, however, if nation-states lacking the Anglo-Saxon deference to electoral politics will be as tolerant of election outcomes as the British appear to be.
The Democracy Problem
At the core of all these issues remains an unanswered question: If a majority of voters in a region vote for independence or greater autonomy, will the vote be respected by the central government?
After all, European nation-states have for decades been lecturing the rest of the world about the wonderfulness of democracy and how "the will of the people" must prevail. At the national level, it is simply assumed that "the will of the majority" is what grants a state a "right" to rule over the citizenry.
But if a majority in a specific region votes for a divorce from the central government, is all this talk about democracy and the will of the majority to suddenly be ignored?
Ludwig von Mises, of course, in his book Liberalism, advocated for the idea that any region, right down to the village level, be allowed to gain independence based on the outcome of a freely held plebiscite.
In recent years, opponents of independence movements in Italy and Spain have bickered over the way these votes are being conducted, and over the extent to which a majority actually wants indepenence.
These arguments are good at buying time, but they conveniently ignore the central problem at hand: if Catalonia held a fair-and-square election, and, say, 75 percent of eligible voters opted for independence, would the Spanish government allow independence? What about a similar situation in northern Italy? It's a yes-or-no question, but it doesn't seem to be one either the Spanish or Italian government is willing to answer.
Thus, Europe's democracy problem persists. Is democracy only allowed when it is no threat to the established status quo for nation-states? Should the central government send in the troops to beat citizens and seize ballots when people vote "the wrong way"?
This isn't just a problem for Europe, of course. Most of the "democratic" world, including Europe and the Americas, has a similar problem.
Old Borders Have Outlived their Usefulness
As time goes on, though, it's going to be harder and harder for nation-states to defend the current configuration of their national borders.
The current model of nation-states is based on the idea that a single metropolis, or a group of them, can control surrounding rural frontier areas for reasons of military strategy and to ensure a food supply for the metropolis. In return, the wealthy metropolis will protect frontier areas from foreign invasions, and provide some semblance of order to far-flung regions lacking the wealth and power of the metropolis.
This system of nation-states began to take firm shape in the seventeenth century, and was finally solidified in the nineteenth. The world wars of the 20th century showed us the heights to which nation-states can reach, and the extent to which they can seize and control resources.
This old model, however, was initially based on the idea that populations would be largely agricultural and rural, and that personal, cultural, and economic networks would be focused around the nation-states themselves, and the people within them.
As time has gone on, though, urbanization, international trade, and international communications have grown far beyond what the national governments of old could have ever imagined. Capital cities in nation states no longer command the attention and economic focus of other powerful cities within their nation states, and trade with foreign populations has in many cases become more important that trade within one's own nation-state. Agriculture is no longer a key source of wealth, which makes city-states with only small rural hinterlands increasingly viable.
At the same time, these newly forced international connections reduce the importance of the old nation-states as "protectors" from the neighboring regions. After all, if trade with the foreigners next door is just as important as trade with one's own countrymen, it becomes increasingly difficult to see what one's national government is offering protection from.
Does northern Italy really need protection from Austrian or Swiss invaders? Does Flanders need protection from the Netherlands? In an age of thorough economic integration, a war between two European states would mostly be a matter of mutually-assured economic destruction.
Nevertheless, the force of habit is an important factor in political ideology. Many people continue to see their national borders as quasi-sacred, reacting with horror at the idea that their nation-state should be "dismembered." National governments are careful to downplay the fact that the borders of most modern nation-states barely reach back as far as the nineteenth century. Even a look at a map of Europe from 1945 should disabuse us of any notion that national boundaries are anything but temporary.
In fact, border changes can often be measured in lengths of time similar to those of a single human lifetime. But this doesn't stop commentators from declaring that such-and-such region or such-and-such state (i.e., California) will never secede or dramatically change its national status.
In politics, claims of "never" should always be treated as laughably naive. 100 years is quite long enough to completely change the map of the world.
- Coverup Questions Emerge Over Vegas Security Guard's 'Ellen' Appearance
Following his sudden re-appearance on The Ellen Show after vanishing for 6 days, numerous questions remain unanswered about Mandalay Bay shooting hero Jesus Campos' timeline and perhaps more concerning stil is that The Daily Mail reports that he was pressured into giving his only interview to Ellen DeGeneres because the giant company that owns the Las Vegas casino feared he would spill the beans about the shooting timeline if he was grilled by real journalists.
As we detailed previously, Campos had originally agreed to do five interviews, all on Thursday last week, but suddenly went missing, his union boss, who was helping set up the deal, told DailyMail.com in an exclusive interview. David Hickey, president of the Michigan-based International Union, Security Police and Fire Professionals of America, would not confirm that MGM was behind the decision, but said the company certainly influenced Campos.
‘I was in a meeting with MGM’s upper management and they were definitely concerned about how tough someone like Hannity would be on him and they voiced their opinions,’ Hickey said.
He said all sides had agreed parameters for the interviews. ‘Everyone knew he wasn’t to talk about security protocols, staffing or training or give out names of employees.’
But he said the company — that, like most of Vegas’s casino industry, obsessively controls what employees are allowed to say to the media — was pressuring Campos not to give too much away.
‘I thought they were being negative, telling him that someone was going to be tough and how they were worried about his health — it wasn’t the thing he needed to hear four hours before the interviews were going to begin.’
Hickey said he met with the MGM executives at a location in Las Vegas where Campos was staying. They met in the living room but he wanted a word with some of the management team in private so they went into the bedroom.
When they returned, Campos had gone, and Hickey said he hasn’t seen or heard from him since. The next thing he knew the security official had bailed on the five interviews.
Then he learned on Monday that instead of appearing on a news show he would go on Ellen.
‘It certainly wasn’t my choice that he should appear on that circus,’ Hickey told DailyMail.com.
Ellen did not press him on the official timeline of the shooting, which has changed three times since the massacre.
And that appears to have been MGM's plan.
When he went through his recollection of the night, she did not press him to clarify some of the lingering questions about the official timeline – such as whether he or hotel officials delayed calling police for six minutes after he was shot.
If that version is proven to be true, it could open MGM to massive costs from lawsuits.
DeGeneres told him:
'I know you've had so many people asking for you to tell the story and talk about it and I understand your reluctance. You're talking about it now and you're not going to talk about it again.
‘I don't blame you. Why relive it over and over?'
Sources told DailyMail.com, MGM is worried that families of the 58 people murdered as well as many of the 546 injured in the Mandalay Bay massacre will launch lawsuits potentially worth billions of dollars against the company, and they thought Campos might not keep his story straight under the pressure of the TV lights and tough questioning.
That is why Campos, 25, appeared on a daytime chat show hosted by a fast-talking, dancing comedienne, rather than take questions from TV hardhitters such as Fox News’ Sean Hannity, NBC News or ABC News.
‘MGM was behind the decision to call off all the interviews and did a deal with Ellen, knowing she would not play hardball on the timeline as long as she had the exclusive,’ a TV insider told DailyMail.com.
The stench of coverup continues…
- How Many Hours Americans Need To Work To Pay Their Mortgage
When it comes to the cost of living in cities, a general rule of thumb is that housing prices are much higher in the country’s economic and population hubs, especially in the cities along the coasts.
As Visual Capitalist's Jeff Desjardins notes, particularly in recent years, prices have been pushed sky-high in places like New York City or San Francisco through a combination of limited supply of new homes, increasing demand, shifting demographics, and government regulations.
PUTTING IT INTO PERSPECTIVE
Today’s visualization from HowMuch.net applies a common denominator to compare 97 of the biggest cities in the United States. Using a measure of median household income against the average mortgage payment in each city, we get a gauge of how many hours must be worked each month just to pay down the house.
The visualization uses data from the U.S. Census for household income and Zillow for median home listing price, while calculating mortgage payments based on a standard 30-year term.
Courtesy of: Visual Capitalist
THE RESULTS
Using the above method to compare the amount of hours it takes to pay down a monthly mortgage, we see some interesting contrasts in the country.
Here are the five most expensive cities in the United States for housing:
With about 170 hours in a normal work month, the average people in these cities are spending 50% or more of their income just to pay down their mortgages. It’s worst in New York City and Los Angeles, where at least 65% of income is going towards housing.
These cities stand in stark contrast to the five cheapest cities based on hours of work needed:
In a city like Memphis, TN it takes only 18.4 hours of work a month to pay down the average mortgage. That’s equal to only about 10% of monthly household income.
COASTAL DISPARITY
Interestingly, even though coastal hubs have high prices relative to the cities in the middle of the country, they differ quite widely against each other. This discrepancy does not necessarily show in terms of ranking, but more in terms of the actual hours of work needed.
Washington, D.C., for example, requires less than half the hours of work to pay down a mortgage than Los Angeles or New York City. Meanwhile, a popular west coast hub like Seattle only needs 72.8 hours in comparison to New York’s 113.5 hours.
- Blaming Russia For The Internet 'Sewer'
Authored by Robert Parry via ConsortiumNews.com,
As the Russia-gate hysteria spirals down from the implausible to the absurd, almost every bad thing is blamed on the Russians, even how they turned the previously pristine Internet into a 'sewer'…
With the U.S. government offering tens of millions of dollars to combat Russian “propaganda and disinformation,” it’s perhaps not surprising that we see “researchers” such as Jonathan Albright of the Tow Center for Digital Journalism at Columbia University making the absurd accusation that the Russians have “basically turned [the Internet] into a sewer.”
Tomb of the Unknown Soldier outside the Kremlin wall in Moscow, Dec. 6, 2016. (Photo by Robert Parry)
I’ve been operating on the Internet since 1995 and I can assure you that the Internet has always been “a sewer” – in that it has been home to crazy conspiracy theories, ugly personal insults, click-bait tabloid “news,” and pretty much every vile prejudice you can think of. Whatever some Russians may or may not have done in buying $100,000 in ads on Facebook (compared to its $27 billion in annual revenue) or opening 201 Twitter accounts (out of Twitter’s 328 million monthly users), the Russians are not responsible for the sewage coursing through the Internet.
Americans, Europeans, Asians, Africans and pretty much every other segment of the world’s population didn’t need Russian help to turn the Internet into an informational “sewer.” But, of course, fairness and proportionality have no place in today’s Russia-gate frenzy.
After all, your “non-governmental organization” or your scholarly “think tank” is not likely to get a piece of the $160 million that the U.S. government authorized last December to counter primarily Russian “propaganda and disinformation” if you explain that the Russians are at most responsible for a tiny trickle of “sewage” compared to the vast rivers of “sewage” coming from many other sources.
If you put the Russia-gate controversy in context, you also are not likely to have your “research” cited by The Washington Post as Albright did on Thursday because he supposedly found some links at the home-décor/fashion site Pinterest to a few articles that derived from a few of the 470 Facebook accounts and pages that Facebook suspects of having a link to Russia and shut them down. (To put that 470 number into perspective, Facebook has about two billion monthly users.)
Albright’s full quote about the Russians allegedly exploiting various social media platforms on the Internet was: “They’ve gone to every possible medium and basically turned it into a sewer.”
But let’s look at the facts. According to Facebook, the suspected “Russian-linked” accounts purchased $100,000 in ads from 2015 to 2017 (compared to Facebook’s annual revenue of about $27 billion), with only 44 percent of those ads appearing before the 2016 election and many having little or nothing to do with politics, which is curious if the Kremlin’s goal was to help elect Donald Trump and defeat Hillary Clinton.
Even former Clinton political strategist Mark Penn has acknowledged the absurdity of thinking that such piddling amounts could have any impact on a $2.4 billion presidential campaign, plus all the billions of dollars worth of free-media attention to the conventions, debates, etc. Based on what’s known about the Facebook ads, Penn calculated that “the actual electioneering [in battleground states] amounts to about $6,500.”
In a Wall Street Journal op-ed on Monday, Penn added, “I have 40 years of experience in politics, and this Russian ad buy mostly after the election anyway, simply does not add up to a carefully targeted campaign to move voters. It takes tens of millions of dollars to deliver meaningful messages to the contested portion of the electorate.”
Puppies and Pokemon
And, then there is the curious content. According to The New York Times, one of these “Russian-linked” Facebook groups was dedicated to photos of “adorable puppies.” Of course, the Times tried hard to detect some sinister motive behind the “puppies” page.
The New York Times building in Manhattan. (Photo credit: Robert Parry)
Similarly, CNN went wild over its own “discovery” that one of the “Russian-linked” pages offered Amazon gift cards to people who found “Pokémon Go” sites near scenes where police shot unarmed black men – if you would name the Pokémon after the victims.
“It’s unclear what the people behind the contest hoped to accomplish, though it may have been to remind people living near places where these incidents had taken place of what had happened and to upset or anger them,” CNN mused, adding:
“CNN has not found any evidence that any Pokémon Go users attempted to enter the contest, or whether any of the Amazon Gift Cards that were promised were ever awarded — or, indeed, whether the people who designed the contest ever had any intention of awarding the prizes.”
So, these dastardly Russians are exploiting “adorable puppies” and want to “remind people” about unarmed victims of police violence, clearly a masterful strategy to undermine American democracy or – according to the original Russia-gate narrative – to elect Donald Trump.
A New York Times article on Wednesday acknowledged another inconvenient truth that unintentionally added more perspective to the Russia-gate hysteria.
It turns out that some of the mainstream media’s favorite “fact-checking” organizations are home to Google ads that look like news items and lead readers to phony sites dressed up to resemble People, Vogue or other legitimate content providers.
“None of the stories were true,” the Times reported. “Yet as recently as late last week, they were being promoted with prominent ads served by Google on PolitiFact and Snopes, fact-checking sites created precisely to dispel such falsehoods.”
There is obvious irony in PolitiFact and Snopes profiting off “fake news” by taking money for these Google ads. But this reality also underscores the larger reality that fabricated news articles – whether peddling lies about Melania Trump or a hot new celebrity or outlandish Russian plots – are driven principally by the profit motive.
The Truth About Fake News
Occasionally, the U.S. mainstream media even acknowledges that fact. For instance, last November, The New York Times, which was then flogging the Russia-linked “fake news” theme, ran a relatively responsible article about a leading “fake news” Web site that the Times tracked down. It turned out to be an entrepreneurial effort by an unemployed Georgian student using a Web site in Tbilisi to make some money by promoting pro-Trump stories, whether true or not.
Hillary Clinton at the Code 2017 conference on May 31, 2017
The owner of the Web site, 22-year-old Beqa Latsabidse, said he had initially tried to push stories favorable to Hillary Clinton but that proved unprofitable so he switched to publishing anti-Clinton and pro-Trump articles, including made-up stories. In other words, the Times found no Russian connection.
The Times article on Wednesday revealed the additional problem of Google ads placed on mainstream Internet sites leading readers to bogus news sites to get clicks and thus advertising dollars. And, it turns out that PolitiFact and Snopes were at least unwittingly profiting off these entrepreneurial ventures by running their ads. Again, there was no claim here of Russian “links.” It was all about good ole American greed.
But the even larger Internet problem is that many “reputable” news sites, such as AOL, lure readers into clicking on some sensationalistic or misleading headline, which takes readers to a story that is often tabloid trash or an extreme exaggeration of what the headline promised.
This reality about the Internet should be the larger context in which the Russia-gate story plays out, the miniscule nature of this Russian “meddling” even if these “suspected … links to Russia” – as the Times initially described the 470 Facebook pages – turn out to be true.
But there are no lucrative grants going to “researchers” who would put the trickle of alleged Russian “sewage” into the context of the vast flow of Internet “sewage” that is even flowing through the esteemed “fact-checking” sites of PolitiFact and Snopes.
There are also higher newspaper sales and better TV ratings if the mainstream media keeps turning up new angles on Russia-gate, even as some of the old ones fall away as inconsequential or meaningless (such as the Senate Intelligence Committee dismissing earlier controversies over Sen. Jeff Sessions’s brief meeting with the Russian ambassador at the Mayflower Hotel and minor changes in the Republican platform).
Saying ‘False’ Is ‘True’
And, there is the issue of who decides what’s true. PolitiFact continues to defend its false claim that Hillary Clinton was speaking the truth when – in referencing leaked Democratic emails last October – she claimed that the 17 U.S. intelligence agencies “have all concluded that these espionage attacks, these cyberattacks, come from the highest levels of the Kremlin, and they are designed to influence our election.”
Director of National Intelligence James Clapper (right) talks with President Barack Obama in the Oval Office, with John Brennan and other national security aides present. (Photo credit: Office of Director of National Intelligence)
That claim was always untrue because a reference to a consensus of the 17 intelligence agencies suggests a National Intelligence Estimate or similar product that seeks the judgments of the entire intelligence community. No NIE or community-wide study was ever done on this topic.
Only later – in January 2017 – did a small subset of the intelligence community, what Director of National Intelligence James Clapper described as “hand-picked” analystsfrom three agencies – the Central Intelligence Agency, National Security Agency and Federal Bureau of Investigation – issue an “assessment” blaming the Russians while acknowledging a lack of actual evidence.
In other words, the Jan. 6 “assessment” was comparable to the “stovepiped” intelligence that influenced many of the mistaken judgments of President George W. Bush’s administration. In “stovepiped” intelligence, a selected group of analysts is closeted away and develops judgments without the benefit of other experts who might offer contradictory evidence or question the groupthink.
So, in many ways, Clinton’s statement was the opposite of true both when she said it in 2016 and later in 2017 when she repeated it in direct reference to the Jan. 6 assessment. If PolitiFact really cared about facts, it would have corrected its earlier claim that Clinton was telling the truth, but the fact-checking organization wouldn’t budge — even after The New York Times and The Associated Press ran corrections.
In this context, PolitiFact showed its contempt even for conclusive evidence – testimony from former DNI Clapper (corroborated by former CIA Director John Brennan) that the 17-agency claim was false. Instead, PolitiFact was determined to protect Clinton’s false statement from being described for what it was: false.
Of course, maybe PolitiFact is suffering from the arrogance of its elite status as an arbiter of truth with its position on Google’s First Draft coalition, a collection of mainstream news outlets and fact-checkers which gets to decide what information is true and what is not true — for algorithms that then will exclude or downplay what’s deemed “false.”
So, if PolitiFact says something is true – even if it’s false – it becomes “true.” Thus, it’s perhaps not entirely ironic that PolitiFact would collect money from Google ads placed on its site by advertisers of fake news.
- ScotiaMocatta Put For Sale After Multibillion Money-Laundering Scandal
The world’s oldest gold trader is for sale after a massive money laundering scandal may have terminally crippled one of the most iconic names in the business.
Canada’s Bank of Nova Scotia is exploring options for its gold business ScotiaMocatta, the Financial Times reported, which include a possible sale of Canada’s most popular precious metals trader. Scotiabank made a decision to sell ScotiaMocatta following a massive money laundering scandal centered on a U.S. refinery that involved smuggled gold from South America. The ScotiaMocatta business, a mainstay in PM trading, is one of London’s main gold trading banks and is being sold by JPMorgan.
According to the FT sources, ScotiaMocatta’s future had been underway for several months, with ScotiaBank allegedly seeking a buyer for up to a year and was likely to shrink the business if a sale is not completed, although according to the article Chinese buyers – the world’s dumbest money these days – are rumoured to be the key targets of the sale.
While gold trading has been in a cyclical decline in recent years, the “straw that broke the camel’s back” in prompting the sale was Scotiabank’s lending to Elemetal, a precious metals refinery in Dallas. Scotiabank was one of its biggest lenders, they said. The problem emerged in March, when US prosecutors accused workers at a subsidiary of Elemetal, NTR Metals in Florida, of a money laundering scheme using “billions of dollars of criminally derived gold” mostly from Peru.
Here the story take a turn into a slightly surreal detour:
NTR imported more than $3.6bn of gold from Latin America between 2012 and 2015, the court documents allege. Two of the accused, Samer Barrage and Juan Granda, pleaded guilty last month to a charge of money laundering in plea deals.
After the story came to light in March, Elemetal was kicked off the London Bullion Market Association’s “Good Delivery List” of gold refiners;
This was an almost instant death sentence for the company as buyers will usually only buy gold from a refiner on the list. Indeed, in the same month, New York’s Comex futures exchange said it was no longer taking gold from Elemetal for delivery against futures contracts in the world’s biggest gold futures market.
And this is where the scourge of gold rehypothecation emerged, as in the scandal surrounding Elemetal, it became impossible for holders of Elemetal gold to sell the gold bars on, leaving them sitting in bank vaults, according to traders quoted by the FT. Buyers are reluctant to take the gold, given the investigations.
This means that hundreds of millions in loans made to Elemetal by ScotiaMocatta are suddenly stuck in limbo. It also means that one of five bullion banks that settle gold trades in the London market, the world’s largest, has effectively been blackballed. It was built on the 1997 purchase by Scotiabank of Mocatta Bullion, which traces its roots back to 1671. And with Mocatta crippled, Scotiabank, which has the biggest foreign presence of any Canadian bank, is focusing its international strategy on the Pacific Alliance, a Latin American trade bloc comprising Mexico, Peru, Chile and Colombia. It will also hope to find a willing Chinese buyer for the gold trading operation.
Mocatta’s exit will be good news for HSBC and JPMorgan, which dominate the London market; their large balance sheets enable them to provide credit to clients and refiners around the world. Additionally, and unlike Scotiabank, they also have vaults in London. Gold trading in London is estimated to be worth more than $5tn a year, although as the FT notes, there are no precise figures on how much gold is traded there every day.
- Senate Passes 2018 Budget Paving Way For $1.5 Trillion In Tax Cuts, Sending Yields, Dollar Sharply Higher
Senate republicans took a major, if relatively easy, step toward passing Trump's tax plan on Thursday night with the critical passage of a budget blueprint that would protect a $1.5 trillion tax cut from a Democratic filibuster. Senators narrowly voted 51-49 to pass the fiscal year 2018 budget after a several hour-long marathon on the Senate floor. The budget resolution could also pave the way for opening up the Arctic National Wildlife Refuge in Alaska to oil exploration by ensuring that drilling legislation can pass with only Republican votes according to the NYT.
With a 52-seat majority, Mitch McConnell had a narrow path to getting the 50 votes needed to clear the budget through the upper chamber. But GOP leadership caught a break this week when Sen. John McCain, a holdout over defense spending, announced he would vote yes, and Sen. Thad Cochran, recovering from health issues, returned early to Washington.
The budget’s passage could keep Republicans on track to pass a tax package late this year or early in 2018. That said, there are still plenty of possible complications, not least of all bickering within the GOP over the final shape of the tax package – where the fate of state and local tax exemptions has still to be decided – as the following Goldman flowchart shows: the steps that were successfully passed tonight are shown in green.
The House could pick up the Senate-passed budget as early as next week and give final approval to parliamentary language protecting the Republicans’ coveted tax effort. If House Republicans instead insist on negotiating a compromise that melds the Senate and House budget plans, tax legislation could be delayed.
“Passing this budget is critical to getting tax reform done, so we can strengthen our economy after years of stagnation under the previous administration,” said Senate Majority Leader Mitch McConnell (R-Ky.).
The Senate gave its approval to the budget blueprint on Thursday night after considering a flurry of amendments, a tedious process that gives the minority party an opportunity to force the majority to endure politically difficult votes. One Democratic amendment that was rejected sought to stop tax cuts from going to the top 1 percent; another would have restored cuts to Medicare.
The Senate approved the budget after the previously discussed so-called vote-a-rama, a legislative whirlwind in which amendments are considered one after another
Giving tonight events an aura of fatalistic determinism, Senator Lindsey Graham, and a member of the Budget Committee, said "this is the last, best chance we will have to cut taxes,” and warned that the consequences would be ruinous if the party failed. “That will be the end of us as a party,” he said, “because if you’re a Republican and you don’t want to simplify the tax code and cut taxes, what good are you to anybody?”
Where things get laughable is when one considers the context of what just happened: In Congress, the annual budget resolution provides an outline of federal spending and revenues. The Senate’s blueprint, for the 2018 fiscal year that began Oct. 1, claims to achieve a balanced budget within a decade, assuming greater economic growth and using an accounting method that excludes Social Security. In order to erase projected deficits, it calls for trillions of dollars in spending cuts over the coming decade.But the cuts exist only on paper, without legislation to achieve them.
And as the GOP predicts that by 2028 US government spending will equal revenues, here is what will really happen:
Meanwhile, as Republicans played with excel's "goalseek" function, Democrats sounded the alarm, warning that the aspirational cuts in the budget plan called for slicing more than $1 trillion from Medicaid and about $470 billion from Medicare over a decade. Unfortunately for Democrats, they have exactly zero say in the matter: Though Democrats have pleaded to have more say in the tax overhaul, parliamentary language in the budget resolution would allow Republicans to pass a tax bill without any cooperation from the minority party.
“Passing this budget is not a requirement for passing tax reform,” said Senator Gary Peters, Democrat of Michigan. “Passing this budget is only a requirement to pass a tax bill with as few votes as possible, without input or buy-in from members of the minority.”
For Republicans, the budget debate provided a moment to showcase their main goal in the coming months, which according to the NYT is approving an overhaul of the tax code for the first time in decades, which they hope will lead to greater economic growth. But before they can move ahead with a tax bill, the House and Senate need to agree on the same budget resolution. The House approved its budget resolution, which had long been stalled, on Oct. 5. The House budget also lays the groundwork for a tax bill, but, unlike the Senate’s approach, it calls for the legislation to not add to the deficit.
The House budget resolution also seeks more concrete action when it comes to cutting spending, instructing committees to come up with legislation that would produce at least about $200 billion in savings.
However, according to The Hill, a House GOP source says the amendment seems sufficient to avoid a conference committee between the two chambers, and allow the House to simply pass the Senate resolution.
Ultimately, however, the only reason why the vote passed so easily is because as the Hill explained, it doesn't matter, and was merely viewed as a mere vehicle for passing tax reform
"This is the biggest hoax cast upon the American people ever that this budget process even exists. The only thing about this that matters is in preparation for tax reform," said Sen. Bob Corker (R-Tenn.), who voted for the budget. Corker noted bluntly that he believes the budget doesn't have a real-world impact and if he was chairman of the Budget Committee he would disband it. When a staffer told him he was about to miss an amendment vote, he shot back: "yeah, on a vote that doesn't matter."
McCain, explaining why he would support the budget, added: “At the end of the day, we all know that the Senate budget resolution will not impact final appropriations.”
Then again, all of these nuances were lost on the shotgun headline scanning algos, which read that Trump's tax plan is one step closer to passage and sent both the USDJPY…
… and 10Y yields surging…
With gold lower…
With Dow Futs up over 100 points…
… and the Fed cursing their fate, because as Dudley explained yesterday, the last thing the feed needs right now as it is desperate to avoid tightening fast, is a burst of wage inflation, something which Trump's tax proposal, if it passes, will promptly lead to, crushing the Fed's carefully laid plan to take years and years in unwinding it balance sheet and rising rates.
- Be Afraid America – DHS Warns ISIS, Al Qaeda Are Planning '9/11-Style' Attack
Nothing distracts like fear. And today, former DHS chief Elaine Duke invoked one of the most traumatic episodes in US history to remind complacent Americans that Al Qaeda and ISIS are still out there, plotting deadly terror attacks meant to kill as many American civilians as possible.
With the Islamic State in retreat following the surrender of its de facto capital to US-backed Arab and Kurdish fighters, Duke told reporters that remnants of the group have partnered with a resurgent Al Qaeda to plot a devastating terror attack on the scale of a 9/11 – thus generating a headline seemingly tailor made to make pulses quicken.
“The terrorist organizations, be it ISIS or Al-Qaeda or others, want to have the big explosion like they did on 9/11. They want to take down aircraft, the intelligence is clear on that,” the acting US secretary of homeland security said during a visit to the UK, as cited by British media.
“The threat is still severe,” she stated on Wednesday in London following her meeting with UK Home Secretary Amber Rudd, according to Russia Today.
Duke warned that groups have carried out several relatively small-scale terror attacks (think the attacks that have rocked the UK, France and Belgium over the past year), which suggests the groups could be moving on to more ambitious targets. In the UK alone, the attacks have killed nearly 40 people.
One strategy Duke fears is a 9/11 style plane hijacking, something terrorists have not given up on despite the advances in airport security since 9/11.
“Creating terror is their goal. A bladed weapon attack causes terror and continues to disrupt the world, but that does not mean they have given up on a major aviation plot,” she said.
During her meeting with Judd, Duke parroted the UK conservatives’ push to remove terrorist content from the internet – content that has been effective at recruiting home-grown jihadists in the UK’s Muslim population.
The attacks famously prompted British Prime Minister Theresa May to ask “allied democratic governments” to “regulate cyberspace to prevent the spread of extremism and terrorism planning.”
Duke said that while tech firms have been cooperative, there’s still much progress to be done.
“We will continue to push as far as we can go. I think that we have the cooperation of those companies and we just need to work on that,” she said. Social media firms joining a meeting of G7 interior ministers to discuss the issue this week “is a positive sign,” she said.
“There has been a shift and for us somewhat with the Charlottesville incident,” said Duke, adding that tech companies are under “social pressures” and have “to balance between keeping their user agreements and giving law enforcement what they need.”
Terror attacks have become a regular occurrence in the UK since the rise of ISIS. A bombing in the Manchester Arena last May killed 23 people and injured more than 100 others, making it the deadliest attack of its kind in the UK since 2005. The latest terrorist attack occurred on Sept. 15 at Parsons Green tube station, where a partially-exploded bomb injured 30 commuters.
Just one day before the US security chief’s warnings, Andrew Parker, director general MI5, Britain’s domestic intelligence agency, said that Britain was under unprecedented threat from Islamist terrorists.
* * *
Scared enough yet? Don't worry, we'll just take away a little more 'freedom' to ensure your 'security'… and remember – it's for your own good!
- Chinese Capital Outflows Return As Soon As PBOC Halts FX Intervention
Since the addition of the Chinese renminbi (RMB), i.e. Yuan, to the IMF’s SDR basket of reserve currencies last October, more than 60 countries and regions have added and adopted the renminbi as a new reserve currency, according to the latest report on renminbi internationalization by the People’s Bank of China.
As a reminder, one year ago the International Monetary Fund included China’s currency in its Special Drawing Rights basket as an international reserve currency, along with the U.S. dollar, the euro, the Japanese yen and the British pound. As the PBOC gloated, this inclusion further promoted the international use of RMB, which is ironic considering in the past year the Chinese central bank unleashed some of the most draconian capital controls and measures to avoid capital flight, going as far as effectively banning offshore M&A (not to mention bitcoin trading) which Beijing saw as just another way to avoid China’s capital account firewall. Meanwhile, to “lead by example” the ECB invested €500MM of its reserves in renminbi-denominated assets during the first half of this year.
The PBOC also said “it will push forward with internalization of the renminbi and keep its position stable in the global monetary system.”
“Looking ahead, the scope of international usage of renminbi will be further expanded in 2017 and usage channels will be further widened” the report said.
“Renminbi internationalization will play a more active role in serving the real economy and facilitating trade and investment.”
Supposedly that means that the next time the Yuan crashes once people remember that of China’s $30 trillion in loans, roughly 20% are NPL, the PBOC will not intervene when tens of billion in capital resume fleeing every day.
Somehow we doubt it, especially since as the report itself admitted, the value of trade deals settled in the renminbi fell by 35.5% in 2016 from the previous year. Renminbi settlement accounted for 16.9% of China’s total goods trade last year, while the proportion was 22.6% in 2015, 20% in 2014, and close to zero in 2009. The currency fell by 6.5% against the dollar in 2016 – the biggest annual drop since 1994, but gained about 5% this year due to dollar weakness and tighter controls on capital outflows.
And speaking of capital flight, even though the PBOC reported that in September official central bank reserves rose by $17 billion to $3.109 tn (largely due to valuation effects), according to the latest SAFE data released overnight, after the first, and only month of inflows in three years, outflows have again returned for a total of $7bn in September (vs. net inflows of +US$9bn in Aug), in light of the recently relaxed FX forward rule (recall “Yuan Tumbles After Beijing Gives Speculators Green Light To Short The Currency” from September 8)
Below are the details from Goldman:
Our usual preferred gauge of underlying flows suggests a total net FX outflow of US$7bn in Sep (US$2.4bn from net FX demand onshore plus US$4.9bn in FX outflow routed through the CNH market).
- According to the SAFE dataset on “onshore FX settlement”, net CNY demand by non-banks onshore in Sep was -US$2.4bn (vs. +US$3.1bn in Aug). This is composed of +$5.1bn net inflows via net outright spot transactions and net outflow of US$7.5bn via net freshly-entered forward transactions. In particular, demand for short-CNY forwards rose significantly (from US$10bn in Aug to US$28bn in Sep), following the cut of reserve requirement for sales of FX derivatives to zero in early Sep, which made it less costly for onshore entities to hedge against CNY.
- Another SAFE dataset on “cross-border RMB flows” shows that net flow of RMB from offshore to onshore was -US$4.9bn in Sep (vs. +US$5.8bn in Aug).
Exhibit 1 the usual gauge of FX flows suggests a small net outflow of US$7bn in Sep
Related, another data set called PBOC’s FX position (also released today) suggests no net FX purchases by the PBOC in Sep (in contrast with the earlier released FX reserve data that implies about $17bn in FX purchases).
Two notes in terms of flow pattern for Sep:
Foreigners’ investment in domestic fixed income products remained solid, rising by US$15bn in Sep according to bond custodian data (Exhibit 2), following a $12bn increase in Aug. But similar to the previous month, a large portion of this inflow was into domestic NCDs, which could reflect short-term arbitrage activity driven by the rate spread implied by CNH cross-currency swap and domestic NCD yields.
Exhibit 2: Bond inflows were large in Aug and Sep, although a majority of these were into short-term NCDs
Trading firms repatriated a larger portion of their trade surplus back onshore, up to 84% in Sep, from 59% in Aug and the average of 40% in the last two years. The absolute amount though was roughly flat vs. Aug (at c. $24bn).
Separately, in a conference held on the sidelines of the Party Congress, Governor Zhou downplayed the pace of FX and outflow liberalization going forward. He said that the transition to CNY free convertibility is a long-term process; and that CNY band widening would signal more FX reform in future, but this is currently not a policy focus. In the near term, the authorities may continue to use a combination of daily guidance (via the fixing’s countercyclical factor) and occasional reinforcing FX intervention to manage the CNY, in our view.
In other words, capital controls are here to stay, and the moment outflows go back to double digit territory, the PBOC will unleash all hell against the Yuan short all over again.
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