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Saturday, January 20, 2018

week ending Jan 20

 The Fed, worrying about the next recession, considers changes - Even while the economy and markets are booming, Federal Reserve officials are worrying about how they'll respond to the next recession, and they don't especially like the picture they see. It's one where the economy starts contracting but the Fed, still at a low interest rate, has little ability to respond. It lowers rates to zero but that amounts to only a fraction of the stimulus it has provided in past downturns. Once again, the Fed faces the quandary of what more it can do when it's at zero and can't cut anymore and is forced to contemplate extraordinary, uncertain and controversial measures like quantitative easing. More and more, Fed officials and academic economists are wondering if there's a better way and beginning to think seriously about a dramatic change to monetary policy that would revise or even scrap its current, flailing 2 percent inflation target. The Fed has missed that target almost since it was implemented in 2012, undermining its credibility in markets and possibly entrenching expectations that inflation will always run below target. Former Treasury Secretary Larry Summers, speaking at a Brookings Institution conference last week on the Fed's inflation target problem, urged the Fed to get moving on a fix. He noted that the Fed typically has lowered interest rates by 5 percentage points over time to stimulate the economy in recessions. The Fed doesn't have 5 points now, so the next recession will find the central bank less able to kick-start growth, possibly enabling a longer, deeper downturn."The overwhelming likelihood is that when recession comes, policy will not have sufficient room to cut rates as much as it would like to within the current framework,'' Summers said. Quoting a recent research paper, Summers suggested the Fed could be at a zero interest rate 30 to 40 percent of the time in the future unless it changes its current regime. "I am completely unconvinced that (quantitative easing) can be our salvation next time around,'' Summers said.

Party While You Can - Central Bank Ready To Pop The 'Everything' Bubble - Many people do not realize that America is not only entering a new year, but within the next month we will also be entering a new economic era. In early February, Janet Yellen is set to leave the Federal Reserve and be replaced by the new Fed chair nominee, Jerome Powell. Now, to be clear, the Fed chair along with the bank governors do not set central bank policy. Policy for most central banks around the world is dictated in Switzerland by the Bank for International Settlements. Fed chairmen like Janet Yellen are mere mascots implementing policy initiatives as ordered.  This is why we are now seeing supposedly separate central banking institutions around the world acting in unison, first with stimulus, then with fiscal tightening. However, it is important to note that each new Fed chair does tend to signal a new shift in action for the central bank.. Janet Yellen managed the tapering phase, in which stimulus has been carefully and systematically diminished while still maintaining delusional stock market euphoria. Now comes the era of Jerome Powell, who will oversee the last stages of fiscal tightening, the reduction of the Fed balance sheet, faster rate increases and the final implosion of the 'everything' bubble. As I warned before Trump won the election in 2016, a Trump presidency would inevitably be followed by economic crisis, and this would be facilitated by the Federal Reserve pulling the plug on fiat life support measures which kept the illusion of recovery going for the past several years. It is important to note that the mainstream media is consistently referring to Jerome Powell as "Trump's candidate" for the Fed, or "Trump's pick" (as if the president really has much of a choice in the roster of candidates for the Fed chair).  This could not be further from the truth. Powell and the Fed are autonomous from government. As Alan Greenspan openly admitted years ago, the Fed does not answer to the government and can act independently without oversight. So, why is the media insisting on misrepresenting Powell as some kind of Trump agent? Because Trump, and by extension all the conservatives that support him, are meant to take the blame when the 'everything' bubble vaporizes our financial structure. Jerome Powell is "Trump's guy" at the Fed; so any actions Powell takes to crush the recovery narrative will also be blamed on the Trump administration.

Senate panel approves Powell as Fed chair for second time - —The Senate Banking Committee for the second time approved the nomination of Federal Reserve Board Gov. Jerome Powell to be the central bank's chairman.Even though the committee had approved Powell already in December, a revote was necessary after the Senate adjourned for the year without finalizing his confirmation or agreeing to allow pending nominations to stay in play.  Powell’s nomination was approved Wednesday by voice vote by the Senate panel, with only Sen. Elizabeth Warren, D-Mass., voting against the nomination. She had also opposed Powell in December, saying she feared a loosening of rules under his watch. "Our financial rules for big banks need to be stronger, not weaker, and I have no faith that Gov. Powell will move the Fed in that direction,” she said.

The search for the next president of the New York Federal Reserve is a big deal -- We have written plenty before about the importance of the Federal Reserve in determining whether or not American workers will have a chance to see serious wage growth in coming years. Put simply, the Federal Reserve controls the economy’s brakes. If they decide the pace of economic growth is fast enough to risk overheating, leading to an outbreak of accelerating inflation, they step on the brake. No other policy has a hope at creating jobs and delivering broad-based wage growth if the Fed uses this brake prematurely. Recent decades have seen exactly this premature use of brakes, and the result has been unemployment kept too high to give typical workers the economic leverage and bargaining power they need to achieve substantial wage gains. Why has Fed often ridden the economy’s brakes too hard in recent decades? Mostly because they have a loud backseat driver that is terrified of any unexpected inflation: the nation’s financial sector. Unexpected inflation decreases the value of financial assets and transfers resources from creditors to debtors. Wealthy households and creditors—the prime clients of finance—want to avoid this kind of inflation-induced transfer at all costs. And the costs of avoiding it are high indeed. Excess unemployment, justified in the name of putting relentless downward pressure on inflation, is a key reason why inflation-adjusted wages for typical workers have nearly stagnated over most recent decades. And why does the Fed listen to their noisy backseat driver from the financial sector? This gets us to the search for a new president of the New York Fed. Regional Fed banks provide five of the 12 votes in the Federal Open Market Committee (FOMC), which sets the nation’s monetary policy. 11 of the regional banks rotate on and off the FOMC over a course of years, with four of these 11 having a vote at any given time. The president of the NY Fed, however, occupies a permanent seat on the FOMC, and is even the official Vice-Chair of the committee (the chair of the FOMC is the chair of the Board of Governors at the Federal Reserve).

Lowflation: Then and Now - The term "lowflation" was initially coined by economists at the IMF in 2014 (see here). It refers to an inflation rate that is persistently low (relative to some target) and positive (so, not deflation). Here is what lowflation looks like in the United States:  How should we think about lowflation? I've written a bit on the subject here and here. Is the phenomenon unusual? Is it something we should worry about? As it turns out, the phenomenon is not unusual even in recent U.S. monetary history. The following diagram plots the PCE core inflation rate for the United States since 1960. The shaded areas represent "lowflation" episodes--periods in which PCE core inflation is below 2%. The early 1960s was also an era of lowflation. So was the more recent period 1996-2003. The period 2004-2008 of (slightly above 2%) inflation seems more like a recent aberration. Is lowflation a problem? Perhaps. But if there is, it certainly doesn't seem to show up in the economy's RGDP growth performance. The following figure plots the growth rate of RGDP and RGDP per capita for each of the high and low inflation episodes identified in the early figure. In this sample period, economic growth in lowflation episodes averages about the same as growth in non-lowflation episodes. What is one to make of this?

The Dollar Is Collapsing - (8 graphs) The last four days have seen the US Dollar plunge 2% - the biggest drop since June 2016... As the chart suggests, there is a key driver of the dollar's moves. China's FX policy! One might argue that the Renminbi has been a more stable store of value to the Dollar in recent months. The dollar is now pushing precariously close to its weakest since January 2015. USDJPY is plunging (as Yen strengthens) which suggests The BoJ better do some more ETF buying... The Dollar weakness is dragging the Euro higher, entirely decoupled from rate-differentials (once again)  And at the same time, hedge funds and other speculative investors have amassed the heaviest long positions on the euro ever, according to the latest CFTC data. The Group-of-10’s best currency in 2017 is getting fresh momentum from the prospect of a September end to European Central Bank stimulus and an upswing in growth.  And as The Dollar Index plunges, so Emerging Market FX strengthens...Led by a resurgence in the Mexican Peso, MSCI EM FX Index is now at its strongest since 2011.

Yield Curve Flattens As 2-Year Treasury Rate Rises Above 2% - The 2-year Treasury yield is above 2% for the first time in nearly a decade. This rate, which is seen as a key proxy for monetary policy expectations, ticked up to 2.03% on Tuesday (Jan. 16), based on daily data via Treasury.gov. The increase, coupled with a fractional dip in the benchmark 10-year Treasury yield to 2.54%, squeezed the widely followed spread 10-year/2-year spread to 51 basis points, matching the low reached last month that marks the smallest difference since 2007.The futures market is currently predicting that the Federal Reserve will keep its target rate unchanged at the current 1.25%-to-1.50% range when policymakers meet on Jan. 31. By contrast, the probability of a rate hike is roughly 74% for the March 21 FOMC meeting, according to CME data this morning.  Some analysts are expecting the 10-year/2-year spread will dip into negative terrain later this year, which is to say that 2-year rate will rise above its 10-year counterpart. BMO’s Ian Lyngen and Aaron Kohli wrote in a report yesterday that “2018 will be the year the curve flattens to inversion,” courtesy of the Fed’s ongoing plan to raise rates. An inverted yield curve is generally considered a bearish sign for the economy, marking an increase in US recession risk. But economic risk is low at the moment amid solid growth that’s expected to continue for the foreseeable future. For example, the Atlanta Fed’s current estimate for 2017’s report on fourth-quarter GDP that’s due next week calls for a healthy 3.3% rise, slightly above Q3’s 3.2%. A positive outlook is also the consensus view for major economies around the world. “The global economy is firing on all cylinders,” says Paul Mortimer-Lee, chief market economist at BNP Paribas. As a result, “Treasuries will feel the heat.” Indeed, a set of moving averages continues to point to rising yields in the near term. For the 2-year yield in particular, the technical profile suggests that the upward bias will roll on.

China’s Holdings of Treasuries Slump to Lowest Level Since July - China’s holdings of Treasuries fell to a four-month low even as its foreign-exchange holdings increased in November, in a potential sign the world’s second-largest economy is curbing its appetite for U.S. government debt.China’s Treasury holdings are attracting extra attention after Bloomberg News reported last week the government was considering tapering its purchases of U.S. government debt. A pullback by America’s largest foreign creditor could put upward pressure on interest rates just as tax cuts may increase the U.S.’s need to issue more Treasuries to fund the deficit.China’s holdings of U.S. bonds, notes and bills decreased 1.1 percent $1.18 trillion in November from the previous month, according to Treasury Department data released Wednesday in Washington. That was the second monthly drop in three months. China remained the biggest foreign holder of U.S. Treasuries, ahead of Japan, which owned $1.08 trillion, down 0.9 percent from October and the lowest level in more than four years. That was the fourth straight month of decline in Japan’s holdings. The two countries account for about a third of all foreign ownership of Treasuries, which were little changed at $6.34 trillion in November, the figures showed.

Fed's Beige Book: "Modest to moderate"expansion, "on-going labor market tightness" -- Fed's Beige Book "This report was prepared at the Federal Reserve Bank of Atlanta based on information collected on or before January 8, 2018."Reports from the 12 Federal Reserve Districts indicated that the economy continued to expand from late November through the end of the year, with 11 Districts reporting modest to moderate gains and Dallas recording a robust increase. The outlook for 2018 remains optimistic for a majority of contacts across the country....On balance, employment continued to grow at a modest pace since the previous report. Most Districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth. Several Districts noted elevated demand for manufacturing and construction labor. Most Districts said that wages increased at a modest pace. A few Districts observed that firms were raising wages in a broader range of industries and positions since the previous report. Some Districts reported that firms expect wages to increase in the months ahead.

Q4 GDP Forecasts -- The advance estimate of Q4 GDP will be released on Friday, January 26th. Here are a few estimates, from Merrill Lynch:The strength of the retail sales report [last Friday] lifted our 4Q GDP tracking estimate by 0.6pp to 2.8% qoq saar. From the Altanta Fed : GDPNow The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in thefourth quarter of 2017 is 3.3 percent on January 12, up from 2.8 percent on January 10. From the NY Fed Nowcasting Report  The New York Fed Staff Nowcast stands at 3.9% for 2017:Q4 and 3.2% for 2018:Q1.  CR Note: It looks likely that GDP will be close or over 3% again in Q4.

Poll: Nearly half of Americans think economy is doing well -- Just less than half of Americans believe the economy is doing well under President Trump, a new poll shows.  A CBS News poll, released Sunday, found 48 percent of Americans say the country is doing well economically, compared to 22 percent who say it’s doing poorly. Another 30 percent said it is neither doing well or poorly, according to the poll. Another 49 percent of respondents indicated they believe the U.S. is run for the benefit of a few elites. By comparison, 28 percent said they believe the country is run for the benefit of the people, while 22 percent said neither, according to the poll, which was conducted Jan. 10-12. The poll had 2,164 respondents and has a margin of error of 2.6 percentage points.

GOP leaders face most difficult shutdown deadline yet | TheHill: Republican leaders are facing their toughest challenge yet in keeping the government open as lawmakers race to secure more money before current funding runs out at the end of the week. Leadership was already going to have their work cut out for them in trying to corral frustrated defense hawks, skeptical conservatives and fired-up Democrats into supporting another continuing resolution (CR) to keep the government's lights on. But President Trump created new headaches for Speaker Paul Ryan(R-Wis.) and his top lieutenants last week after the president rejected a bipartisan immigration deal and reportedly made explosive comments about "shithole countries,” throwing a wrench into broad negotiations on Capitol Hill. While Congress has enacted a series of short-term funding extensions since September, each one has become progressively more difficult to pass. And the latest push comes amid bipartisan backlash to Trump's reported comments about immigrants from Haiti, El Salvador and African countries. “I am worried’’ about the impact on a CR, said Rep. Tom Cole (R-Okla.), who chairs an Appropriations subcommittee. “Anything that makes it more difficult to sit down and come to a deal is not helpful when we have such a short amount of time.” “All these things are connected,” he added. The House will consider a short-term funding patch this week, though GOP leadership has not yet decided how long government funding will last or whether it will include money for disaster aid or the Children’s Health Insurance Program (CHIP). Current government funding is set to expire on Friday night.

Risk of US government shutdown looms as Jan. 19 deadline approaches -  With just four days until a spending deadline, the government could be heading for a shutdown on the one-year anniversary of Donald Trump's presidency.  It's long been thought that the key to unlocking any spending stalemate in Congress was to get closer to an immigration compromise. However, as lawmakers return from the holiday weekend, the mood on Capitol Hill between the two parties -- and even between factions within Republican enclaves -- has soured after a tumultuous week that included a bipartisan group of senators announcing they had an immigration deal, Trump rejecting it and reports that the President had used vulgar language to describe the African nations affected by such a proposal. Democrats have signaled all along that they wouldn't be quick to fund the government without assurances that there was a plan on the way to protect hundreds of thousands of young recipients of DACA, the Deferred Action for Childhood Arrivals program, which expires in March. After Trump's incendiary language and his rejection of the bipartisan deal last week, Democrats may be leaning more toward withholding their votes on a spending compromise. If that's the case, the burden will fall to House Speaker Paul Ryan who may have problems within his own ranks. If Democrats withhold their votes on a spending deal, Ryan will have to convince both defense hawks and the conservative House Freedom Caucus to vote on yet another short-term spending deal. "It is extremely difficult to convince our caucus members to vote for another short-term funding mechanism," House Freedom Caucus Chairman Mark Meadows told CNN Monday afternoon.

GOP Leaders Struggle to Avert Shutdown After Immigration Blow-Up --  Republican leaders in Congress are angling for another short-term funding measure to avert a government shutdown at the end of this week while trying to keep a dispute over immigration separate from their attempts to get agreement on spending priorities. With government funding set to expire at the end of the day Friday, Republican leaders are weighing a bid to extend it until Feb. 16, a person familiar with the negotiations said. They also are considering attaching legislation that would reauthorize the Children’s Health Insurance Program, the person said. Democrats say the burden is on President Donald Trump to help break the stalemate after he rejected a bipartisan proposal to shield young, undocumented immigrants from deportation and ignited outrage by reportedly disparaging Haiti and African nations as “shithole countries.” Democrats want to attach such an immigration measure to the must-pass spending bill, an idea House Speaker Paul Ryan of Wisconsin and Senate Majority Leader Mitch McConnell of Kentucky reject. The GOP strategy seeks to force Senate Democratic leader Charles Schumer of New York to decide whether this is the moment to force a showdown on immigration that results in a partial government shutdown in an election year. Senator Dick Durbin of Illinois, the No. 2 Democrat, said Tuesday that he’ll introduce the bipartisan immigration compromise as soon as Wednesday and that McConnell should allow the vote before the Friday spending vote. Both parties have struggled for months to agree on a spending deal for the rest of the fiscal year that began Oct. 1, and Congress already has had to pass three short-term funding bills. A dispute over how much to allocate to defense and domestic programs has been an obstacle to a broader fiscal agreement that also could provide disaster-relief funds, shore up Obamacare, extend the health program for low-income kids, and include an immigration deal pairing protections for the young immigrants with a border-security plan.

GOP leaders pitch children's health funding in plan to avert shutdown | TheHill: House GOP leaders on Tuesday night pitched a new strategy to avert a looming government shutdown that includes children's health funding and the delay of ObamaCare taxes. Lawmakers need to pass a short-term stopgap bill by midnight Friday, when money for the federal government runs out. The latest GOP plan would keep the government’s lights on through Feb. 16, and be coupled with a six-year extension of funding for the popular Children's Health Insurance Program (CHIP).The continuing resolution or CR would also delay ObamaCare's medical device and Cadillac taxes for two years, and the health insurance tax for one year starting in 2019. It would not include relief for immigrants who came to the United States illegally as children, which Democrats have been pushing for. Rep. Patrick McHenry (R-N.C.), the chief deputy whip, was full of confidence as he left the meeting of House Republicans in the Capitol’s basement. “I think we’re going to have a good vote and we can move this process forward,” said McHenry, who’s filling in as the GOP’s top vote-counter as Majority Whip Steve Scalise (R-La.) recovers from a surgery. Asked if GOP leaders can rally the Republicans needed to pass the CR without any Democrats, McHenry was optimistic –– and terse. “Yep,” he said. 

Republican leaders offer one-month spending bill - House Republican leaders presented their rank and file with a one-month spending bill Tuesday aimed at keeping the government open ahead of a Friday night deadline, as hopes for a deal on young undocumented immigrants faded. The bill would extend existing spending levels through Feb. 16 and include an extension of a popular children’s health insurance program — aimed at winning Democratic votes — and a new sweetener for conservatives and Democrats alike in delaying several taxes included in the Affordable Care Act. Few lawmakers were enthusiastic about the legislation, but several described it as a necessary evil to avoid the first government shutdown since 2013. Rep. Mark Amodei (R-Nev.) said leaders urged lawmakers to get behind the bill and make sure it could garner the Republican votes needed without having to appeal to Democrats. “Keep the power of 218 going so you don’t weaken the majority position by having to get votes from the minority,” he said. “We are where we are, and I think it’s important to fund the government and do these other things,” said Rep. Tom MacArthur (R-N.J.). MacArthur accused Democrats of “the height of stubbornness” if they vote against the bill because it doesn’t include a solution for “dreamers,” hundreds of thousands of immigrants brought to the country illegally as children. Hispanic Caucus Chair Rep. Michelle Lujan Grisham (D-N.M.) gives her support to “dreamers,” undocumented immigrants who were brought to the United States as children, at the Capitol on Jan. 10, 2018. (J. Scott Applewhite/AP) Shortly thereafter, leaders released the legislation online. They planned to test support Wednesday and bring the bill to a vote Thursday, according to multiple members. It was not immediately clear whether they would be successful. Rep. Mark Meadows (R-N.C.), who chairs the conservative Freedom Caucus, said that the legislation doesn’t yet have the votes needed to pass and he hasn’t decided how to vote. He dismissed the health-care tax delays as “window dressing.”

Shutdown drama grips the Capitol | TheHill: House Republican leaders are within striking distance of securing enough GOP votes to pass a stopgap spending bill to prevent a government shutdown, which would shift the funding fight to the Senate. But they aren’t out of the woods just yet. Many members of the House Freedom Caucus are vowing to oppose the spending measure unless leadership commits to putting a conservative immigration bill on the floor and boosting defense spending, which could make Thursday’s floor vote on the continuing resolution (CR) a nail-biter. Still, rank-and-file lawmakers and GOP leaders alike expressed confidence throughout Wednesday that their party would find the votes necessary to carry their legislation through the House. Rep. Mark Walker (R-N.C.), chairman of the Republican Study Committee, estimated in the afternoon that the whip count for the short-term funding bill was “somewhere between 210 and 215” votes. Leadership can only afford to lose 21 Republican votes and pass the funding bill without Democratic support, according to the majority whip’s office. The House CR, which would fund the government through Feb. 16, includes a six-year extension of funding for the Children's Health Insurance Program (CHIP). It would also delay three ObamaCare taxes, something that was added to attract more conservative support.

House Heads for Vote on Stopgap Funding Plan: Shutdown Update -- The House is on track to pass a one-month government spending bill on Thursday, forcing Senate Democrats to decide whether or not to block the measure in a risky bid to gain leverage on immigration. That means the odds of a shutdown starting at the end of the day Friday are going down, though not yet approaching zero. Speaker Paul Ryan is close to having the votes he needs to pass the stopgap spending bill, and his team continued Wednesday night to lean on a handful Republican holdouts. A GOP aide said Republican leaders were angling to keep the measure as it was presented initially to lawmakers, but didn’t rule out adding provisions -- like pay raises for the military -- to sweeten the deal. The House Rules Committee late Wednesday sent the stopgap bill to the floor for a vote without any changes. “We’ll be fine,” Representative Mike Simpson of Idaho, a senior member of the Appropriations Committee, said. Referring to the experience of the 2013 standoff that shuttered the government for 16 days, he said, “I guess you have to do that once every 12 or 15 years so that the new people learn their lesson.” House Minority Leader Nancy Pelosi urged Democrats to put up unified opposition. Republicans have a 238-193 advantage in the House, but they don’t quite have unity. Representative Mark Meadows, chairman of the House Freedom Caucus, was demanding some increases to the defense budget as well as promises to hold a vote on a conservative immigration bill. The North Carolina Republican said Ryan doesn’t yet have all the Republican votes he needs. There were some signs that leaders were at least entertaining some changes to the bill to get the votes. The main one may be authorizing a pay increase for the military, which is being held up by negotiations on a full budget for the rest of the fiscal year.

A few thoughts on the political economy of a gov’t shutdown --Jared Bernstein - I’d put the odds of a government shutdown at a little below half at this point, say 45%. To be clear, what we’re really talking about here is a partial shutdown; less than half of federal workers are considered non-essential, so most (~60%) stay on the job; those furloughed typically get paid retroactively.You can read about the latest details here, including a curve-ball tweet this AM from the president that seems to mess a bit with the R’s strategy: get D’s on board for a short-term budget patch by extending the CHIP program as part of the stopgap package (Trump’s tweet suggested he wants to resolve CHIP outside of the short-term deal; I doubt this changes much, as Congress will and should ignore him; his position has probably flipped n times by now). D’s in the Senate are under pressure to oppose a package that fails to reinstate DACA.Should a shutdown occur, the economic impact is a function of its length, though much–not all–of what is lost tends to get made up in later quarters post-shutdown. GS Researchers (no link) “estimate that each week of shutdown would reduce real GDP growth in Q1 by 0.2pp…annualized. The effects would be reversed the next quarter however. Shutdowns have also tended to have modest effects on financial markets.”But what about the political fallout? I think there’s a short-term and longer-term game in play here. In the near-term, though it’s hard to know which side will take the hit, shutdowns can and do hurt the party blamed for it by the majority of the public. My guess is the R’s would get blamed this time, just based on the extent to which the public is aware of their chaotic politics. But that’s a weak prediction.

Freedom Caucus Throws Water on Leadership Stopgap Confidence - Freedom Caucus Chairman Mark Meadows told reporters Thursday there are still more than 22 Republican ‘no’ votes on the stopgap funding measure and that the House GOP can’t pass it on its own without additional changes. “We’ve offered a number of different options, so it would take the leadership putting forth a different proposal than they currently have,” Meadows said on how GOP holdouts can get to “yes” on the continuing resolution. The North Carolina Republican declined to say how many of the “no” votes were from the Freedom Caucus versus the conference at large. Meadows confirmed that his group’s Plan A of full-year defense funding has been rejected and said he doesn’t think that its Plan B of defense anomalies is still in play. “I’m sure we’re at Plan C, but I’m not ready to talk about it,” he said. Meadows, speaking around noon Thursday, said he last talked to a member of leadership at 10:40 a.m. but he declined to say who it was. He also chose not to say when he last talked to President Donald Trump, but noted that the commander in chief “doesn’t want a shutdown.” Shortly before Meadows’ remarks, House Speaker Paul D. Ryan expressed confidence that the chamber would pass a CR and that Trump supported the plan, despite an earlier tweet from the president suggesting otherwise. House Minority Leader Nancy Pelosi called the current situation over government funding “amateur hour” in terms of Republican governance.  

Government Shutdown Looms as House Moves Toward Budget Vote — Congress stumbled toward a government shutdown this weekend as the House planned a showdown vote Thursday evening on a stopgap spending bill that Senate Democrats appear poised to block.A perilous day on Capitol Hill began with President Trump firing off a tweet that undermined his party’s strategy to keep the government open past Friday. By late afternoon, it was uncertain whether a bill to keep the government open past midnight Friday could even clear the House, much less the Senate, where Democratic votes would be necessary to win passage.At issue are the demands of Democrats — and some Republicans — that any further funding of the government include protections for young immigrants brought to the country illegally as children. Republican leaders had tried to win passage of a short-term spending bill that did not include any immigration provisions by attaching a six-year extension of the popular Children’s Health Insurance Program.But the gambit appears to have failed, and the chances of a shutdown are rising — a shutdown that would hit a year to the day after Mr. Trump took office. The parties remain at odds over immigration and federal spending levels, a weeks-old standoff that grew more fraught last week after Mr. Trump referred to African nations as “shithole countries.” The ensuing uproar upended immigration talks and emboldened Democrats. On Thursday, while budget negotiations made little ground, prominent House Democrats were introducing a resolution to censure the president for his words. The vast majority of House Democrats had signed a letter released Thursday proclaiming opposition to the Republican spending bill. More ominously, Virginia’s two Democratic senators, Mark Warner and Tim Kaine, whose constituents include hundreds of thousands of federal workers, announced together that they too would oppose the temporary spending bill in the Senate. For the stopgap bill to succeed in the Senate, Republican leaders need at least nine Democrats — probably more, given several expected Republican defections — to support it.

House OKs temporary spending bill to avoid shutdown, but future in Senate unclear | Fox News: A temporary spending bill passed in the House of Representatives Thursday evening, but its prospects in the Senate are unclear as Congress fights to avoid a government shutdown set for Friday night.The final House vote in favor of the bill was 230-197, with 11 Republicans voting no and six Democrats voting yes. Republicans hold a slim 51-49 majority in the Senate. Speaker of the House Paul Ryan, R-Wis., spoke to reporters just after the vote and directed his comments to Senate Democrats and Minority Leader Chuck Schumer. House of Representatives needs to pass Government Funding Bill tonight. So important for our country - our Military needs it! — Donald J. Trump (@realDonaldTrump) January 18, 2018 “Senator Schumer, do not shut down the federal government. Do not jeopardize funding for our military and for our national security. Do not jeopardize funding for the children’s health insurance program.” He added that not passing the bill is “risky, reckless and it is wrong.” Immplying that Republicans have done their part, Ryan put the possibility of a government shutdown solely on the shoulders of Democrats. 

Senate in disarray with shutdown hours away - Here's how grim things looked in the Senate as the countdown continued toward a shutdown at midnight Friday: The chamber struggled to even schedule a vote to fund the government, let alone cobble together the votes to actually pass a bill.After the GOP House passed a partisan month-long spending bill Thursday, senators in both parties appeared increasingly dug in. A spat on the Senate floor between Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer culminated in the chamber adjourning with no clear path to avoid a shutdown in barely 24 hours. No vote is scheduled, and the two party leaders spent the night sniping over who's to blame for the impasse. Democrats are demanding protections for hundreds of thousands of young immigrants facing deportation, and Republicans are insisting that government funding not be tied to immigration. Senate Democrats have lined up in opposition to the spending bill approved by the House, putting the government on course for a shutdown.For a few minutes late Thursday, it looked like the chamber couldn’t even agree to adjourn for the night after Sen. Angus King (I-Maine) objected to going to bed. Sen. Steve Daines (R-Mont.) ducked onto the Senate floor, checking on whether he would vote to have to adjourn the chamber — a rare procedural step invoked only at moments of the most severe gridlock.Past 10 p.m., McConnell finally secured an agreement to send senators home for the night and regroup. The episode did not foreshadow positive momentum for a deal to break the impasse. “You realize I’m not a fan of this place, right?” said Sen. Ron Johnson (R-Wis.) after the late night theatrics. Asked if the episode felt like a shutdown was looming, Johnson said: “It feels like a charade.”

Government shutdown looms as Schumer reports progress but no deal with Trump -- With hours left before a possible shutdown, Senate Minority Leader Charles E. Schumer (D-N.Y.) said he and President Trump made “some progress” in a private meeting about keeping the government open but did not strike a final deal. “We have a good number of disagreements,” Schumer told reporters at the Capitol upon returning from the White House. “Discussions will continue.” The meeting had set off alarms among congressional Republicans, who are holding firm in support of the short-term spending bill that passed the House Thursday night. Senate Democrats had rallied against the measure because it does not offer protections for young undocumented immigrants or address other priorities such as disaster relief. Neither Senate Majority Leader Mitch McConnell (R-Ky.) nor House Speaker Paul D. Ryan (R-Wis.) attended the White House meeting, according to GOP aides. House members were advised to remain in Washington on Friday in case of “additional procedural votes.” View Graphic Everything you need to know about a government shutdown Senate Majority Whip John Cornyn (R-Texas) said he spoke with Trump chief of staff John F. Kelly, who said the president told Schumer to “go back and talk to Paul Ryan and Mitch McConnell and work it out, so I think that’s the best way to handle this.” Schumer returned to the Capitol and met with House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Whip Richard J. Durbin (D-Ill.). At least one Senate Republican and some Democrats had been optimistic that Trump and Schumer would be able to avert a crisis. “This is welcome news to American people, military, DACA recipients,” Sen. Lindsey O. Graham (R-S.C.) wrote on Twitter. “Let’s see if two New Yorkers can agree on a deal good for USA.” 

Trump and Senators Scramble to Avoid Midnight Government Shutdown - — President Trump and Senate leaders scrambled on Friday to avert a midnight shutdown of much of the government, with Senator Chuck Schumer of New York, the Democratic leader, declaring that progress had been made in a private meeting with the president at the White House. But with the clock ticking, no votes were even scheduled before federal funds are to run out at midnight. “We had a long and detailed meeting,’’ Mr. Schumer told reporters at the Capitol after leaving the White House. “We discussed all of the major outstanding issues. We made some progress, but we still have a good number of disagreements. The discussions will continue.” By Friday afternoon, it appeared that only a last-minute congressional deal could stop what would be a rare shutdown of a federal government under one-party control. The House cleared stopgap spending legislation on Thursday night that would keep the government funded through Feb. 16, but Senate Democrats were seeking concessions on their own priorities, including protecting young undocumented immigrants from deportation, and an increase domestic spending, disaster aid for Puerto Rico and bolstering the government’s response to the opioid epidemic. “Our Democratic colleagues are engaged in a dangerous game of chicken,’’ Senator John Cornyn of Texas, the No. 2 Senate Republican, warned in a speech on the Senate floor. Mr. Trump, who described his session with Mr. Schumer as an “excellent preliminary meeting’’ in a tweet Friday afternoon, did not appear able or willing to suggest his own solution.  Excellent preliminary meeting in Oval with @SenSchumer - working on solutions for Security and our great Military together with @SenateMajLdr McConnell and @SpeakerRyan. Making progress - four week extension would be best!  — Donald J. Trump (@realDonaldTrump) Jan. 19, 2018

Government shutdown watch: Key Senate vote scheduled for Friday night - Senate Majority Leader Mitch McConnell has scheduled a key procedural vote Friday night on a plan to avert a government shutdown, but Republican leaders in the Senate were still scrambling to see if their proposal to fund the government had enough votes. McConnell set the vote on the proposal at 10 p.m. ET. Sixty votes will be needed to advance the bill. Republicans only control 51 seats, so GOP leaders need Democratic votes to cross that threshold. One of the key issues in the final moments before the shutdown has been just how long to extend funding. The House passed a measure Thursday night to continue funding the government through February 16, and that measure is currently before the Senate. Democrats have pushed for a shorter term continuing resolution of a couple days. Sen. Lindsey Graham, a South Carolina Republican who said he would not vote for the House proposal, pushed a plan to keep the government open until February 8. On Friday afternoon, McConnell got a second and third Senate Democrat -- Sen. Joe Donnelly of Indiana and later Heidi Heitkamp of North Dakota -- to say that they would vote to keep the government open until February 16. However, since at least two Republicans have said they'll vote against the measure, the Kentucky Republican still might need as many as dozen more members of the opposing party in order to pass the plan.

What happens if the government shuts down | TheHill: Government shutdowns are rare, especially when one party controls both chambers of Congress and the White House. The last shutdown was in 2013 and lasted 17 days. If a shutdown happens, many major federal responsibilities, like sending Social Security checks and operating the military, would continue. Each federal agency has a shutdown plan, written in consultation with the White House’s Office of Management and Budget (OMB), and the administration would have some wiggle room in what it does. In general, government operations and employees deemed “essential,” like those in the military and law enforcement, would continue to report to work. It’s a label that applies to more than half of the 2.1 million or so non-postal federal employees. Those workers would still get paid, but not until after the shutdown ends. During the 2013 shutdown, 850,000 individuals were furloughed per day, according to the OMB. Employees in “non-essential” government functions, meanwhile, would stay home and actually be prohibited from showing up. Congress acted to pay those employees after previous shutdowns, but pay is not guaranteed. Some government programs, such as Social Security payments, are not subject to the appropriations process. Those would continue, though some functions, like processing new Social Security applications, would shut down. In 2013, federal permitting and environmental reviews were put on hold, along with the processing of import and export license applications and federal loans for small business, families and rural communities. According to the OMB, the shutdown also delayed almost $4 billion in tax refunds.Here’s how some federal agencies plan to weather a shutdown: 

Government Shuts Down as Bill to Extend Funding Is Blocked; Senate Adjourns for the Night -- Much of the federal government officially shut down early Saturday morning after Senate Democrats, showing remarkable solidarity in the face of a clear political danger, blocked consideration of a stopgap spending measure to keep the government operating.

  • • The Senate adjourned for the night around 1:30 a.m. Eastern Time.
  • • The final roll call, was 50 in favor and 49 against. Sixty votes are needed to end debate and move to a final vote. Five Democrats voted to end debate, while four Republicans voted with most of the Democrats to block the bill. See how the senators voted »
  • • In the early morning hours, Senator Mitch McConnell, the Republican leader, proposed a measure that would keep the government open for another three weeks, not four as the House measure would have done, and said the Senate would come back to into session on Saturday at noon.
  • See how the shutdown will affect federal agencies »

US budget charade causes government shutdown - The annual back-and-forth budget charade between Democrats and Republicans dragged on late into the night on Friday when Senate Republicans failed to secure enough Democratic votes to pass a four-week federal funding extension. As a result, what has been called a “government shutdown” went into effect at 12:01 AM Saturday morning. Talks between congressional Democrats, Republicans and President Trump will continue this weekend over protection for 800,000 recipients of the Deferred Action for Childhood Arrivals (DACA) program, increased spending for border militarization and deportation roundup squads, disaster relief, and funding for most federal agencies. Whatever deal emerges from the kabuki theater in Washington will shift the entire framework of American politics further to the right. Knowing that their so-called “continuing resolution” was doomed to fail in the Senate, House Republicans cynically added an extension of the Child Health Insurance Program (CHIP) while excluding DACA protection in order to blame Democrats for prioritizing “illegal immigrants” over US citizen children. Politico reported that Democrats made a counterproposal Friday that included an additional $50 million in military funding in exchange for protection for DACA recipients as well as already agreed-upon increases for border militarization. Republicans called this right-wing proposal a “nonstarter.” Late Friday afternoon, Senate Minority Leader Charles Schumer (Democrat of New York) visited the White House for a parley with Trump, his old friend and benefactor. Schumer said he “made some progress” with Trump during the meeting. Trump called the session an “excellent preliminary meeting” in which he and the Democratic Senate leader were “working on solutions for security and our great military.”  Republican Senate Majority Leader Mitch McConnell spoke some truth when he said of the Republican proposal, “Its content is bipartisan; there are no provisions that my Democratic friends oppose.” Schumer and the Democrats want to shut down government operations over the weekend when the impact on Wall Street will be negligible in order to posture as defenders of DACA beneficiaries. A CBS poll released this week showed that 87 percent of Americans want a pathway to citizenship for these young people.

The government just shut down. What next?  -In the final moments leading up to Friday's midnight deadline, Senate Republicans and Democrats were unable to agree on a stopgap funding measure to continue government services. So what happens next? Here's a rundown of what will happen if the government remains shut down. Thousands of federal employees will be placed on furlough -- meaning they won't report to work Monday. Whoever works for agencies and departments that are considered nonessential, including agencies that pay out small business loans and process passport requests, will cease to work effective immediately until Congress is able to agree on a bill for the federal budget. 5 ways the government shutdown could be bad for your health 5 ways the government shutdown could be bad for your health The employees in these departments would be placed on "furlough." In previous shutdowns, everyone who stayed home was paid retroactively after an agreement was reached in Washington.At the peak of the 2013 government shutdown, about 850,000 employees were furloughed per day, according to the Office of Management and Budget. The White House said Friday that 1,056 members of the Executive Office of the President would be furloughed, and 659, considered essential, would continue to report to work. Furloughed staff will still be expected to report to duty on Monday, the White House said in a contingency plan posted to its website Friday. But they can stay for no longer than four hours to engage in "shutdown activities" like setting out-of-office messages or explaining how to carry out functions to colleagues who are not furloughed. The military is considered essential and will still report for duty. However, the troops -- including those in combat -- will potentially not be paid during a shutdown. If the shutdown goes on for weeks, about 1.3 million active-duty military will be expected to work potentially without pay. The military is currently paid through February 1. In addition, many civilian Department of Defense employees will not be working during the shutdown, including instructors at military academies and maintenance contractors. Special counsel Robert Mueller's Russia investigation team will continue to operate, a Justice Department spokesperson told CNN. "All employees with the Special Counsel's Office are considered exempt and would continue their operations in the case of a lapse in appropriations," the spokesperson said. If you had plans for a vacation to visit any national parks, zoos or museums, some of those may be closed. Visitors will still be able to visit the National Zoo, as well as Smithsonian museums, over the weekend. On Saturday afternoon, the Smithsonian tweeted that its museums, research centers and the National Zoo would be open on Monday and would provide updates as to the future as soon as they knew.

Trump Is Turning the State Department into a Global Weapons Dealer - The Trump administration will soon announce its next move in the ongoing assault on diplomacy and human rights currently taking place in the United States. Through a plan dubbed “Buy American,” the administration is calling for U.S. attachés and diplomats to play a larger role in the sale of U.S. weapons, effectively solidifying their role as lobbyists for the arms industry rather than agents of diplomacy. This means the State Department, the agency that is meant to foster diplomatic relations and maintain peaceful engagement with other countries, will now openly operate as a weapons dealer. The administration is essentially forcing the State Department to undermine itself, as seeking out and expanding opportunities for increased weapons sales are certainly not conducive to fostering peaceful global relations. The “Buy American” plan will increase U.S. officials’ involvement in facilitating weapons sales, while simultaneously easing rules that limit U.S. weapons sales to governments with poor human rights records. The move displays an increasingly undeniable truth—that the United States government views human rights not as the foundation of human dignity but as an impediment to corporate profits.  Though it has long been the case, U.S. officials around the world will now officially serve as salespeople for U.S. military corporations. Embassy staffers will now be charged with promoting weapons sales and briefing visiting senior U.S. officials so they can help finalize pending arms deals.

The Gathering Dance of Nuclear Death -- The corporate-technocratic system happily brings missiles, and the idea of missiles, to its fake news every day, and now to an acute panic. There’s no doubt at all it contemplates someday happily to bring the real thing.For a little while Hawaii thought it was under nuclear attack. There’s a conspiracy theory that someone in the Deep State wanted to panic Trump into launching nukes against North Korea.I don’t know about that, but one thing certain is that Republicans and Democrats, working together as usual, are doing all they can to whip America into a war hysteria such that even an accident (such as the government is claiming this Hawaii incident to be) becomes more likely to trigger nuclear war.(The nuclear war fever is mirrored by the technocracy’s ongoing cult of nuclear power, which has never been anything but an economic boondoggle, dependent on unsustainable fossil fuels and uranium, driving war, generating an unsolvable and mounting nuclear waste disposal crisis, horrifically destructive of the environment. The climate crocodiles love nukes. The US lies about Iran, but there’s no doubt about the essential affinity of the US civilian nuclear deployment and its weaponized war deployment. Just like with pesticides.)Anyone left who’s rational needs to be aware of the total malevolent stupidity of both halves of the Corporate One-Party and their bots. If there’s any fellow mammals out there, better find cover, preferably in groups, while the dinosaurs cheer on the asteroid for which they’ve long prayed.

Watch A Sitting Congresswoman Shred The MSM Narrative In Under A Minute - Hawaii Democratic Rep. Tulsi Gabbard appeared on multiple Sunday news shows a day after her state's false ICBM emergency alert sent the islands into a tense 40 minutes of panic before it was revealed to be a message sent in error, where she slammed the mainstream media's reporting on the North Korean nuclear threat, saying, "We've got to understand that North Korea is holding onto these nuclear weapons because they think it is their only protection from the United States coming in and doing to them what the United States has done to so many countries throughout history."  She further called for Trump to hold direct talks with Kim Jong Un in order to prevent the real thing from ever happening.  On Saturday Gabbard had immediately criticized President Trump for mishandling North Korea, taking to MSNBC to proclaim that "our leaders have failed us. Donald Trump is taking too long... he's not taking this [nuclear] threat seriously..." During Sunday interviews she elaborated on a plan of action, advising Trump to enter talks with Pyongyang which should “happen without preconditions” and that Trump should “sit across the table from Kim Jong Un” in order stamp out the climate of fear which contributed to the “unacceptable” alert issued on Saturday.   “We’ve got to get to the underlying issue here of why are the people of Hawaii and this country facing a nuclear threat coming from North Korea today, and what is this President doing urgently to eliminate that threat?” Gabbard said on CNN’s State of the Union. She added that Pyongyang sees its nuclear weapons program as "the only deterrent against the U.S. coming in and overthrowing their regime there" after decades of the US exhibiting a pattern of regime change when dealing with rogue states, which she said makes setting up preconditions for talks a self-defeating step. And concerning the potential for an "unintentional" nuclear war, Gabbard said, "It’s not just the President making a decision to launch a nuclear weapon. It’s these kinds of mistakes that we have seen happen in the past that bring us to this brink of nuclear war that could be unintentional.”

Trump's surprise turnaround on North Korea | Asia Times: US President Donald Trump has surprised some observers by embracing the current inter-Korean talks on North Korea’s participation in the 2018 Pyeongchang Winter Olympics despite fears that such participation is ultimately aimed at weakening the US-South Korean alliance and undermining international sanctions against Pyongyang. Senior US officials have welcomed the inter-Korean dialogue as a break from the escalating war of words between Washington and Pyongyang that has raised tensions in recent months and prompted talk of the US launching a preventive war to destroy North Korea’s nuclear facilities. US Defense Secretary Jim Mattis, Gen. Joseph Dunford, the chairman of the US Joint Chiefs of Staff, and US Secretary of State Rex Tillerson have all argued strongly for a diplomatic solution to the North Korean nuclear crisis. All of them have briefed Trump on the catastrophic consequences of a war breaking out on the Korean peninsula, countering the more hawkish view of H.R. McMaster, the president’s national security advisor, whose staff has been the main source of leaks about the US staging a “bloody nose” attack on North Korea. Those briefings have likely persuaded Trump to scale back his harsh rhetoric against North Korean leader Kim Jung-un and agree to delay to annual joint US-South Korean military exercises until the beginning of April, after the Winter Olympics are over. Trump said that he is ready to negotiate with Kim “under the right conditions.” Trump also views the resumption of inter-Korean talks as a vindication of his earlier tough stance on North Korea. South Korean President Moon Jae-in has diplomatically given “huge credit” to Trump for the Kim’s offer to talk with Seoul, enforcing the view that Trump’s strategic ambiguity when it comes to North Korea is paying dividends. Trump has dismissed criticism that he was handing Kim a propaganda victory when he endorsed the inter-Korean talks and delayed the military exercises. “I don’t think anybody thinks I’m bending. I think that people think that, if anything, I’m being too tough,” Trump told the Wall Street Journal last week, adding “I think it would be totally inappropriate” to hold the exercises during the Olympics. 

Trump: "Very Possible" Crisis With North Korea Can't Be Resolved Peacefully - In an exclusive interview with Reuters, President Trump said on Wednesday that Russia is helping North Korea get supplies in violation of international sanctions and that Pyongyang is getting “closer every day” to being able to deliver a long-range missile to the United States. As a result, Trump said he hoped the standoff with Pyongyang could be resolved “in a peaceful way, but it’s very possible that it can’t.”Having learned his lesson from his recent WSJ interview, Trump declined to comment when asked whether he had engaged in any communications at all with Kim, with whom he has exchanged public insults and threats, heightening tensions in the region. He did, however, blame Moscow:“Russia is not helping us at all with North Korea,” Trump said during the Oval Office interview. "What China is helping us with, Russia is denting. In other words, Russia is making up for some of what China is doing."Which is ironic because it was a Chinese, not Russian ship, that was recently observed  illegally selling oil to North Korea. It's even more ironic that in the interview, Trump praised China for its efforts to restrict oil and coal supplies to North Korea but said Beijing could do much more to help constrain Pyongyang.In any case, with North Korea still the major global challenge facing Trump this year, the president cast doubt during the 53-minute interview whether talks with North Korean leader Kim Jong Un would be useful. In the past he has not ruled out direct talks with Kim.“I’d sit down, but I‘m not sure that sitting down will solve the problem,” he said, noting that past negotiations with the North Koreans by his predecessors had failed to rein in North Korea’s nuclear and missile programs.“They’ve talked for 25 years and they’ve taken advantage of our presidents, of our previous presidents,” he said.The remarks come after Trump’s statement earlier in January, in which he said he is “absolutely” willing to talk on the phone to North Korean leader Kim Jong-un if certain conditions are met.

Top North Korea expert makes the case for the US bombing Kim Jong Un's personal toilet -  Jeffrey Lewis, the founding publisher of Arms Control Wonk and the director of the East Asia Nonproliferation Program at the Middlebury Institute of International Studies in Monterrey, California, has outlined a plan for the US to strike Kim Jong Un's personal toilet.  Writing at The Daily Beast over the weekend, Lewis was responding to increased chatter of a US strike on North Korea. Though Lewis was approaching the issue in a tongue-in-cheek way, his writing nonetheless illustrates the dangers of and motivations behind using military force to send a message.  Basically, reports have come forth that the US is tired of North Korea's constant defiance and wants to carry out a limited strike in response. In theory, the use of force against a weaker opponent can serve as a reminder of who is in charge.  But while North Korea couldn't really defend against a small US strike, it doesn't intend to defend. North Korea's military posture is entirely offensive. While the country could do little to stop an incoming cruise missile or airstrike, it has long had artillery aimed at Seoul, South Korea's capital of 25 million.  Lewis seems to think that the idea has some merit but that the difficulty lies in finding a target that's important enough to matter but not big enough to provoke war. From The Daily Beast:  "The central challenge, as we contemplate a 'bloody nose' option for a limited military strike, is finding a suitable target that represents Kim Jong Un's nose — a target that will allow our strike to be intimidating and humiliating to Kim, but not the sort of broad assault that might prompt him to retaliate with his growing stockpile of nuclear weapons."

The US Is Developing Two New Nuclear Weapons - As military suspicions between the US and Russia escalate to levels last seen during the Cold War, both countries are trying to bolster their defenses and their military readiness to hedge against a plethora of geopolitical risks, from nuclear war on the Korean peninsula to a direct military confrontation between China and the US, or possibly Russia and the US. With tensions at a fever pitch, the Wall Street Journal reported Tuesday that the Pentagon is developing two new nuclear missiles that would be capable of deployment from a nuclear submarine. It’s also seeking to reauthorize a nuclear-tipped sea-launched cruise missile, a system that was retired from the American arsenal in 2010.The development of the two weapons is among a broad range of recommendations in the Pentagon’s Nuclear Posture Review. Secretary of State Rex Tillerson allegedly made his “moron” comment about the president during a meeting at the Pentagon that was intended to review the US’s nuclear policy.All of this is part of a major reassessment of US nuclear strategy and programs that was commissioned about a year ago by President Donald Trump. According to WSJ, the Pentagon is expected to formally unveil its comprehensive new plan later this month. But in the meantime, it has leaked some tantalizing details to the WSJ’s Pentagon reporter, even though the final draft of the policy hasn’t been approved by the president.The Pentagon has dismissed an unclassified draft of the strategy that was published last week by HuffPost - which claimed that Trump wants to build a lot more nukes - as “predecisional.” Meanwhile more updated drafts are also circulating. But the plans to field the new nuclear systems have strong support in the Pentagon and are expected to go forward, according to people familiar with the review.The plan as it stands represents a shift away from de-nuclearization and returning instead to a Soviet-era arms race mentality.However, critics say that the development of low-power nukes is almost as dangerous as hydrogen bombs because they lower the threshold to possible use.

Pentagon mulls nuclear response to cyberattacks: report - A Pentagon report outlining an updated U.S. nuclear strategy suggests using nuclear weapons to respond to non-nuclear attacks on the U.S., according to The New York Times The newspaper reported Wednesday that the draft document, the Nuclear Posture Review, provides for possible nuclear responses to devastating cyberattacks on U.S critical infrastructure.  The suggestion marks a dramatic expansion of what the U.S. believes warrants a first use of nuclear weapons, the Times noted. Only in narrow cases, such as in the event of a biological attack on the U.S., has Washington suggested that it could respond with nuclear force. The U.S. typically views the use of nuclear weapons as appropriate in extreme circumstances. But the review expands the definition of what constitutes an extreme circumstance to "include significant non-nuclear strategic attacks," according to the Times. That could include massive cyberattacks, it said. Current and former U.S. officials told the newspaper that while the report includes a massive cyberattack among the actions that could warrant a nuclear response, there remain other, more-conventional plans for responding to such attacks.

Pentagon unveils strategy for military confrontation with Russia and China --The Trump administration’s defense secretary, former Marine Corps Gen. James Mattis, rolled out a new National Defense Strategy Friday that signals open preparations by US imperialism for direct military confrontation with nuclear-armed Russia and China.Speaking at Johns Hopkins University in Maryland, Mattis made clear that the strategy, the first such document to be issued by the Pentagon in roughly a decade, represented an historic shift from the ostensible justification for US global militarism for nearly two decades: the so-called war on terrorism.“Great power competition—not terrorism—is now the primary focus of US national security,” Mattis said in his speech, which accompanied the release of an 11-page declassified document outlining the National Defense Strategy in broad terms. A lengthier classified version was submitted to the US Congress, which includes the Pentagon’s detailed proposals for a massive increase in military spending.Much of the document’s language echoed terms used in the National Security Strategy document unveiled last month in a fascistic speech delivered by President Donald Trump. Mattis insisted that the US was facing “growing threat from revisionist powers as different as China and Russia, nations that seek to create a world consistent with their authoritarian models.”The defense strategy goes on to accuse China of seeking “Indo-Pacific regional hegemony in the near-term and displacement of the United States to achieve global preeminence in the future.”Russia, it charges, is attempting to achieve “veto authority over nations on its periphery in terms of their governmental, economic, and diplomatic decisions, to shatter the North Atlantic Treaty Organization and change European and Middle East security and economic structures to its favor.”“China is a strategic competitor using predatory economics to intimidate its neighbors while militarizing features in the South China Sea,” it states. “Russia has violated the borders of nearby nations and pursues veto power over the economic, diplomatic, and security decisions of its neighbors.” In what appeared to be a threat directed against both Russia and China, Mattis warned, “If you challenge us, it will be your longest and worst day.”

U.S. Navy Filing Homicide Charges Against 5 Officers After Ship Collisions - Five officers involved in two Navy ship collisions last year that killed a total of 17 sailors are being charged with negligent homicide, the Navy said Tuesday. A Navy spokesman, Capt. Greg Hicks, said the charges, which also include dereliction of duty and endangering a ship, will be presented to what the military calls an Article 32 hearing to determine whether the accused are taken to trial in a court-martial. The disciplinary actions were decided by Adm. Frank Caldwell and are the latest in a series of moves the Navy has made in the aftermath of the deadly collisions, which investigators concluded were avoidable. It fired several top leaders, including the commander of the 7th Fleet, Vice Adm. Joseph Aucoin, and several other senior commanders in the Pacific. The Navy has been reeling from tough questions arising from the two collisions. The destroyer USS Fitzgerald struck a commercial ship off the waters of Japan in June, killing seven U.S. sailors. The destroyer USS John S. McCain collided with an oil tanker in coastal waters off Singapore in August, killing 10 U.S. sailors. The Navy said it is filing at least three charges against four officers of the Fitzgerald, including the commanding officer, who was Cmdr. Bryce Benson at the time. Benson suffered a head injury in the collision and was airlifted to the U.S. Naval Hospital at Yokosuka, Japan. A Navy investigation found that Benson left the ship’s bridge before the collision. Also facing charges are two lieutenants and one lieutenant junior grade, whose names were not disclosed. The Navy said all four face criminal charges, including negligent homicide, dereliction of duty and endangering a ship. Fewer officers from the McCain are being charged. The Navy said the ship’s commander at the time, Cmdr. Alfredo J. Sanchez, is being charged with negligent homicide, dereliction of duty and endangering a ship. A chief petty officer, whose name was not disclosed, faces a charge of dereliction of duty.  

Why We Should Close America’s Overseas Military Bases - Cato - America’s overseas military bases are largely taken for granted in today’s foreign policy debates. The U.S. maintains a veritable empire of military bases throughout the world—about 800 of them in more than 70 countries. Many view our bases as a symbol of our status as the dominant world power. But America’s forward-deployed military posture incurs substantial costs and disadvantages, exposing the U.S. to vulnerabilities and unintended consequences.  Our overseas bases simply do not pay enough dividends when it comes to core national interests. Here are seven reasons why it’s time to close them.

  • 1. They don’t protect the homeland from direct attack.
  • 2. Their deterrence effect is overrated.
  • 3. They don’t always effectively prevent nuclear proliferation.
  • 4. They can encourage resentment.
  • 5. They can cause the U.S. to support brutal dictatorships.
  • 6. They risk entangling us in unnecessary wars.
  • 7. Technology has largely made them obsolete.

President Trump’s ‘Friends’ in Saudi Arabia - In the long arc of history, while regimes come and go, civilizations endure. Bet on the former against the latter, and you’re taking one helluva gamble. The House of Saud is a regime, a dynastic enterprise masquerading as a nation-state. Iran, by contrast, is the modern incarnation of an ancient civilization. The antagonism between the two is deep-seated, genuine, and destined to persist. How the United States found itself aligned with the former against the latter is a story fraught with miscalculation, folly, and hubris. Taken as a whole, it’s our version of Lawrence of Arabia, albeit without a charismatic protagonist on which to hang the tale. Our own equivalent of T. E. Lawrence would be an in-over-his-head mischief-maker like Graham Greene’s fictional Alden Pyle, albeit relocated from Indochina to the Persian Gulf. Imagine a composite figure combining the signature traits of Kermit Roosevelt, Oliver North, and Max Boot, and you have the makings of an epic of sorts, even if shorn of the wide-angle grandeur that was a hallmark of David Lean’s film.  Saudi Arabia qualifies as an American friend and ally in precisely the same sense as does the state of Israel. In both countries, cold calculation rather than warm regard governs attitudes toward the United States. Each faces a list of national security challenges longer than it can comfortably handle on its own. Over several decades, in hopes of mitigating those challenges, each has worked assiduously to cultivate a close relationship with Washington. There are differences, of course. We provide weapons to the Israelis gratis, with no expectation of repayment, American generosity testifying to an enduring (if partly manufactured) U.S. commitment to preserving the Jewish state. By contrast we sell weapons to the Saudis, who pay cash, their free-spending habits further binding the United States to the Saudi monarchy, which presidents of both parties have vowed to protect. Our obligation to support Israel is ostensibly moral, a religious and historical mandate. Our obligation to defend Saudi Arabia is somewhat less exalted, impossible to detach from questions of oil and the marketing of military hardware.

Watch The State Department Respond As US Ally Turkey Attacks US-Backed Forces In Syria - On Tuesday the US State Department spokesperson was asked during the daily press briefing about the obvious contradiction inherent in US ally and NATO member Turkey shelling US-backed Kurdish forces in Afrin - the Kurdish held zone in northwest Syria near the Turkish border. It's not the first time that a US partner force has attacked another US partner force in Syria (and then there's this Vice News headline from 2016 indicating it's sometimes gone three ways: "Three US allies are now fighting each other in northern Syria"). Thus far US military officials have sought to distance themselves from YPG (Kurdish People's Protection Units) operations in Afrin while simultaneously promising to ramp up support for the Kurdish YPG-dominated Syrian Democratic Forces (SDF) throughout the rest of Northern Syria. US Coalition spokesman Col. Ryan Dillon said Tuesday of the Syrian Kurds in Afrin, "We don't support them, we have nothing to do with them" - in what was a clear case of the Pentagon trying to dance around the issue with old-fashioned double speak, pretending as if the Syrian Kurds themselves don't see "Rojava" Kurds as a single entity.As a Pentagon spokesman recently told Defense One: "The Coalition is working jointly with the Syrian Democratic Forces (SDF) to establish and train the new Syrian Border Security Force (BSF). Currently, there are approximately 230 individuals training in the BSF’s inaugural class, with the goal of a final force size of approximately 30,000."  Turkey's President Recep Tayyip Erdoğan said of the new US-backed Border Security Force, which obviously is to be heavily Kurdish in composition, that it is akin to the US hosting a "terror army" along Turkey's border. Erdoğan has vowed "to strangle it before it’s even born." Meanwhile Turkey has amassed a huge invasion force to oust the YPG from Afrin Canton, and sporadic fighting and shelling is widely reported to have already begun. This as Secretary of State Rex Tillerson has indicated "the Unites States will remain in Syria" while continuing to train its SDF proxies and bolster its new "Syrian Border Security Force."  Watch as Heather Nauert fumbles through a response to an excellent and obvious question: What is the US position as its NATO ally is shelling its number one ally in the fight against ISIS in Syria?...

Trump softens on NAFTA - The White House will never admit this publicly, but the president is developing a softer attitude towards the North American Free Trade Agreement (NAFTA). Five sources who've spoken privately with Trump about NAFTA say he's taking more seriously the risks of withdrawing the U.S. from the trade deal with Canada and Mexico. A conga-line of Republican senators have met with the president and explained to him why they consider NAFTA so important to their states. Two arguments have helped change Trump's thinking:

  • Withdrawing from NAFTA might interrupt the stock market's record-breaking run under his presidency. When it comes to bragging rights, Trump views the Dow Jones Industrial average as a useful substitute for his poll numbers. Though he told the WSJ that he thought U.S. markets would go up if he terminated NAFTA, sources who've spoken with the president say that privately he’s less certain of that — and is loathe to jeopardize the stock market’s record-breaking streak.
  • Withdrawing from NAFTA would harm farmers and agricultural communities — whom Trump considers "my people."

Trump made two telling comments this week, which were buried under the deluge of porn star and "shithole" news:

  • He told a group of farmers in Nashville — an audience adorned with “I support NAFTA” pins — “On NAFTA, I’m working very hard to get a better deal for our country and for our farmers and for our manufacturers...It’s not the easiest negotiation, but we’re going to make it fair for you people again.” That's a much gentler tone than Trump usually uses to discuss the deal.
  • He told the WSJ this: “I would rather be able to negotiate [NAFTA]. We’ve made a lot of headway. We’re moving along nicely. Bob Lighthizer and others are working very hard, and we’ll see what happens.”

Trump faces pivotal decision on tariffs | TheHill: is days away from deciding whether to impose trade tariffs or quotas on imported solar panels. His decision will close a major chapter in a dispute that puts tens of thousands of jobs on the line and has tested longstanding alliances. The fight has split the solar industry, pitting imperiled companies that manufacture solar panels in the United States and want protection against firms that say tariffs would increase their costs.It’s also a test for Trump, who campaigned on a promise to fight for U.S. companies against unfair trade rules. The solar firms backing tariffs say they are the victims of unfair competition from China. “This is the president’s chance to take strong action and to put into action what he’s been saying throughout his first year as president,” said Tim Brightbill, a Wiley Rein attorney representing SolarWorld USA. Observers widely expect Trump will come down on the side of the domestic manufacturers, given his public remarks. “You know, they dump ‘em — government-subsidized, lots of things happening — they dump the panels, then everybody goes out of business,” Trump told Reuters on Wednesday. The legal deadline for Trump to take action is Jan. 26. He has said his decision would come “pretty soon.” Trump has repeatedly criticized China and past administrations for setting up a trade system in which Beijing has been “ripping us off.” “Right now, unfortunately, it is a very unfair and one-sided one,” Trump said when he visited China last year. “But I don’t blame China. After all, who can blame a country for taking advantage of another country for the benefit of its citizens?” 

Chinese investment in the US crashed in Trump’s first year in office - Chinese investment in the United States plummeted in 2017, a product of policies stemming both from Beijing and Washington. The drop comes after 2016’s record levels of foreign direct investment (FDI) from China in the US, and looks set to continue this year.According to research firm Rhodium Group, in 2017 Chinese investment in the United States reached $29 billion in consummated deals, marking a 35% decrease from the year prior.However, over half of that accounted for deals that were announced in 2016. The value of newly announced deals in 2017 dropped 90% compared to the year prior, to a mere $8.7 billion. By those measures, 2017 notched the lowest amount of newly announced Chinese FDI in the US in six years.  The main factor behind the drop, as Rhodium notes, are controls that Beijing imposed early last year on outbound investment. The clampdown hindered some of the country’s most aggressive dealmakers, including property giant Wanda and travel conglomerate HNA. Tracking Chinese FDI in the US month by month shows that investment dropped immediately once Beijing issued its warning. In December 2016, China invested roughly $8 billion into US businesses, according to Rhodium. In January 2017, it invested just over $2 billion, and less than that each subsequent month of the year. Yet Washington also played a part in curbing deals. The Committee on Foreign Investment in the United States (CFIUS), an inter-agency government branch that vets deals for potential national security threats, played a role in staving off a few key investments that were pending. Last September, it derailed a planned $1.3 billion acquisition of Oregon-based Lattice Semiconductor by Canyon Bridge Capital Partners, a California-based fund with ties to China’s government. Two months later, Chinese aluminum maker Zhongwang called off a $2.8 billion purchase of Cleveland-based aluminum manufacturer Aleris, citing uncertainty over CFIUS approval. In total, Rhodium lists seven failed deals that would have led to “at least another $7 or $8 billion” in Chinese investments into the US had they been approved.

 Gallup Poll: U.S. Is Dramatically Losing Global Respect - A new Gallup poll released yesterday puts global approval of US leadership at just 30%, behind China at 31% and Russia at 27%. Germany has moved into the top slot in the world with a leadership approval rating of 41%.One of the most striking findings from the poll is how far America’s leadership approval has fallen among our closest neighbors. According to Gallup, Canada led declines with U.S. leadership approval sinking 40 points from 60% in 2016 to 20% in 2017. America’s neighbor to the south, Mexico, registered a record low approval rating of U.S. leadership, falling 28 points from 44% in 2016 to 16% in 2017, eight points lower than the previous decade low of 24% in 2008.Approval rankings in Europe were only slightly less abysmal. Europe now registers a 25% approval and 56% disapproval. The poll notes that these ratings were actually worse during the last year of the George W. Bush administration. (The last year of the Bush administration was 2008, a time when Wall Street was causing cataclysmic financial disasters around the globe.)Showing a broad consensus across Europe, U.S. leadership approval ratings declined significantly in 21 out of the 28 members of the European Union. The poll notes that “NATO member states led the fall in approval ratings across Europe and the world, with Portugal posting a 51-point decline in approval ratings, followed by a loss of 44 points in Belgium and a 42-point drop in Norway.” Four of the five countries with the world’s lowest approval ratings of U.S. leadership are in Europe; Portugal (12%), Sweden (11%) join Russia and Iceland (both at 8% approval).

21 Million Taxpayers Will Stop Taking the Charitable Deduction Under The TCJA - The Tax Cuts and Jobs Act (TCJA) will shrink the number of households claiming an itemized deduction for their gifts to non-profits from about 37 million to about 16 million in 2018, according to new Tax Policy Center estimates. At the same time, the new law will reduce the federal income tax subsidy for charitable giving by one-third, from about $63 billion to roughly $42 billion. Overall, the TCJA will reduce the marginal tax benefit of giving to charity by more than one-quarter in 2018, raising the after-tax cost of donating by about 7 percent.The TCJA makes four big changes that are likely to discourage charitable giving. It lowers individual income tax rates, thus reducing the value of all tax deductions; and it caps the state and local tax deduction at $10,000 and increases the standard deduction to $12,000 for singles and $24,000 for couples—two steps that will significantly reduce the number of itemizers.The new law also roughly doubles the estate tax exemption to $22 million for couples, which will discourage tax-motivated bequests by some very wealthy households. However, that change is not included in TPC’s estimates. Before accounting of any changes in the amount of charitable giving, the law will cut the number of those itemizing their charitable contributions by more than half, to about 16 million. The share of middle-income households claiming the charitable deduction will fall by two-thirds, from about 17 percent to just 5.5 percent. Even among those making between $86,000 and $150,000, the percentage of taxpayers itemizing their charitable gifts will plummet from about 39 percent to 15 percent. And because many fewer relatively small givers will continue to deduct their gifts to non-profits, the average tax benefit from charitable deductions for all households will increase from about $1,700 to $2,600.

 Senate Votes To Reauthorize NSA Spying Program - While most Congressional observers are focused on the battle to avert a weekend government shutdown (an outcome that's looking increasingly likely), the Senate on Thursday quietly passed an extension of the NSA's spying surveillance program, sending the bill to the president's desk a week after the House voted to authorize the controversial plan. Even President Trump voiced scepticism about reauthorizing the bill in a tweet earlier this year, where he claimed it had helped the Obama administration spy on the Trump campaign, although he infamously flip-flopped later. As the Hill  pointed out, the vote comes after an (almost) tension-filled hour on the Senate floor earlier this week where opponents tried, but failed, to mount a filibuster to force additional debate on the legislation, with both sides spotted lobbying key holdouts. Opponents rallied against the bill ahead of Thursday's vote, arguing the legislation is being rushed through. "The American people deserve better than the legislation before us. ...The American people deserve better than warrantless wiretapping," said Sen. Martin Heinrich (D-N.M.). He added that senators should "consider the gravity of the issues at hand and to oppose reauthorization until we can have a real opportunity for debate and reform." Critics of the controversial Section 702 of the FISA Act - the measure that was reauthorized by the Senate today and is expected to be signed into law despite Trump's reservations - said it allows the FBI to spy on Americans without first obtaining a warrant. Though some surveillance experts have disputed this.

The Same Democrats Who Denounce Donald Trump as a Lawless, Treasonous Authoritarian Just Voted to Give Him Vast Warrantless Spying Powers Glenn Greenwald -- Leading congressional Democrats have spent the last year relentlessly accusing Donald Trump of being controlled by or treasonously loyal to a hostile foreign power. Over the last several months, they have added to those disloyalty charges a new set of alleged crimes: abusing the powers of the executive branch — including the Justice Department and FBI — to vindictively punish political opponents while corruptly protecting the serious crimes of his allies, including his own family members and possibly himself. One would hope, and expect, that those who genuinely view Trump as a menace of this magnitude and view themselves as #Resistance fighters would do everything within their ability to impose as many limits and safeguards as possible on the powers he is able to wield. Yesterday in Washington, congressional Democrats were presented with a critical opportunity to do exactly that. A proposed new amendment was scheduled to be voted on in the House of Representatives that would have imposed meaningful limits and new safeguards on Trump’s ability to exercise one of the most dangerous, invasive, and historically abused presidential powers: spying on the communications of American citizens without warrants. Yesterday’s amendment was designed to limit the powers first enacted during the Bush years to legalize the Bush/Cheney domestic warrantless eavesdropping program. The Intercept’s Alex Emmons on Wednesday detailed the history and substance of the various bills pending in the House. Although the Trump White House and a majority of House Republicans (including House Speaker Paul Ryan and House Intelligence Committee Chair Devin Nunes) favored extension (and even an expansion) of the current law’s spying powers and opposed any real reforms, a substantial minority of GOP lawmakers have long opposed warrantless surveillance of Americans and thus, announced their intention to support new safeguards. That meant that House Democrats held the power in their hands to decide whether Trump — the president they have been vocally vilifying as a lawless tyrant threatening American democracy — would be subjected to serious limits and safeguards on how his FBI could spy on the conversations of American citizens.Joining the pro-surveillance coalition led by Trump, Paul Ryan, Devin Nunes, Schiff, and Swalwell was the House’s liberal icon and senior Democrat, Nancy Pelosi. The San Francisco Democrat also stood on the House floor and offered a vigorous defense of the Trump-endorsed bill that would extend to Trump’s FBI the power to spy on Americans without warrants, in the process denouncing the minimal warrant safeguards favored by many in her own party.

Intelligence Community Contractors Gain Whistleblower Protections - The Senate’s approval on Thursday of a controversial six-year reauthorization of the National Security Agency’s surveillance authority means that contractors in the intelligence community will regain protections that encourage responsible whistleblowing.The bill, which cleared the House last week and passed the Senate 65-34, renews procedures in place years ago to allow contractor employees—about one-fourth of the intelligence community workforce—the same incentives and protections as employees to blow the whistle on waste, fraud or abuse without fear of retaliation. Employees have protection under President Obama’s 2012 Presidential Policy Directive 19, Part A.Such an expansion of whistleblower rights had been sought by Sen. Claire McCaskill, D-Mo., in a bill introduced last October, and her vote earlier this week helped give Republicans the margin they needed to shut down debate from opponents of the larger bill. Critics had objected to warrantless surveillance of communications that involve domestic parties. (McCaskill’s office did not respond to inquiries on Thursday by publication time.) The nonprofit Government Accountability Project, which offers legal aid to whistleblowers, is “very excited about the provision,” GAP investigator Irvin McCullough told Government Executive. “It’s a huge milestone. Contractors are now protected to report wrongdoing, which will encourage internal disclosure and discourage external leaks.”

"Explosive", "Shocking" And "Alarming" FISA Memo Set To Rock DC, "End Mueller Investigation" - All hell is breaking loose in Washington D.C. after a four-page memo detailing extensive FISA court abuse was made available to the entire House of Representatives Thursday. The contents of the memo are so explosive, says Journalist Sara Carter, that it could lead to the removal of senior officials in the FBI and the Department of Justice and the end of Robert Mueller's special counsel investigation.These sources say the report is “explosive,” stating they would not be surprised if it leads to the end of Robert Mueller’s Special Counsel investigation into President Trump and his associates. -Sara Carter A source close to the matter tells Fox News that "the memo details the Intelligence Committee's oversight work for the FBI and Justice, including the controversy over unmasking and FISA surveillance." An educated guess by anyone who's been paying attention for the last year leads to the obvious conclusion that the report reveals extensive abuse of power and highly illegal collusion between the Obama administration, the FBI, the DOJ and the Clinton Campaign against Donald Trump and his team during and after the 2016 presidential election. Lawmakers who have seen the memo are calling for its immediate release, while the phrases "explosive," "shocking," "troubling," and "alarming" have all been used in all sincerity. One congressman even likened the report's details to KGB activity in Russia. “It is so alarming the American people have to see this,” Ohio Rep. Jim Jordan told Fox News. “It's troubling. It is shocking,” North Carolina Rep. Mark Meadows said. “Part of me wishes that I didn't read it because I don’t want to believe that those kinds of things could be happening in this country that I call home and love so much.”Rep. Peter King, R-N.Y., offered the motion on Thursday to make the Republican majority-authored report available to the members. “The document shows a troubling course of conduct and we need to make the document available, so the public can see it,” said a senior government official, who spoke on condition of anonymity due to the sensitivity of the document. “Once the public sees it, we can hold the people involved accountable in a number of ways.” The government official said that after reading the document “some of these people should no longer be in the government.” -Sara Carter

    Snowden: Trump Must Veto Reauthorized NSA Spying Powers In Light Of FISA Memo - Donald Trump must veto reauthorized NSA spying powers which passed both the House and the Senate yesterday without a single reform, in light of an explosive four-page memo said to detail sweeping FISA Abuses by the FBI, DOJ and the Obama Administration during and after the 2016 presidential election, says former NSA contractor and whistleblower Edward Snowden. The memo was circulated to the entire House of Representatives, prompting GOP lawmakers to call for its immediate release to the public. Snowden, who exposed the NSA's expansive mass surveillance program, contends that the expansive FISA Amendments Reauthorization Act never would have passed if the memo had been distributed before the vote. The Senate broke a filibuster led by Rand Paul (R-KY) and Ron Wyden (D-OR) on Tuesday evening, voting 65-34, while the House voted last week 256-164 in favor of the bill with almost no changes.Officials confirm there's a secret report showing abuses of spy law Congress voted to reauthorize this week. If this memo had been known prior to the vote, FISA reauth would have failed. These abuses must be made public, and @realDonaldTrump should send the bill back with a veto. https://t.co/BEwJ9EyIq0— Edward Snowden (@Snowden) January 19, 2018 The reauthorized FISA bill constitute the "crown jewels" of the Intelligence Community's spying powers, section 702, which allows the NSA to gather intelligence on foreigners overseas by surveilling fiber optic internet hubs where data enters the US.

    All Democrats and one Republican support net neutrality bill in Senate - A Senate bill to restore the recently repealed net neutrality rules now has support from 50 of 100 senators and would pass if one more Republican backs the effort. The measure has backing from all 49 members of the Senate Democratic caucus, including 47 Democrats and two independents who caucus with Democrats. Sen. Susan Collins (R-Maine) is the only Republican to support the bill so far, but Democrats are trying to secure one more Republican vote. Democrats announced the milestone in a press release today.  "Democrats will force vote on the legislation later this year," the party said in the announcement. "Republicans will have to choose whether to do the bidding of big ISPs and major corporations or average consumers, entrepreneurs, and small businesses." Specifically, the 50 senators support a Congressional Review Act (CRA) resolution from Sen. Ed Markey (D-Mass.), which would block the Federal Communications Commission's repeal of net neutrality rules. That would restore the Obama-era rules in full and reinstate the related classification of ISPs as common carriers under Title II of the Communications Act. This type of resolution cannot be blocked by a filibuster, so it just needs a simple majority. Democrats including Markey and Senator Brian Schatz (D-Hawaii) called for more Republican support on Twitter: Every Senate Democrat has now signed on to my CRA to restore #NetNeutrality. We’re all in for a free and open Internet.With just one more Republican vote, we can pass the CRA in the Senate. https://t.co/J2VJXcKtXS— Ed Markey (@SenMarkey) January 16, 2018The effort faces longer odds in the House, where Republicans command a bigger majority. President Trump could also veto the resolution even if it passes both chambers.

    Lawsuit filed by 22 state attorneys general seeks to block net neutrality repeal - A lawsuit filed today by the attorneys general of 22 states seeks to block the Federal Communications Commission’s recent controversial vote to repeal Obama era Net Neutrality regulations.The filing is led by New York State Attorney General Schneiderman, who called rollback a potential “disaster for New York consumers and businesses, and for everyone who cares about a free and open internet.”The letter, which was filed in the United States District Court of Appeals in Washington, is cosigned by AGs from California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Washington DC“An open internet – and the free exchange of ideas it allows – is critical to our democratic process,” Schneiderman added in an accompanying statement. “The repeal of net neutrality would turn internet service providers into gatekeepers – allowing them to put profits over consumers while controlling what we see, what we do, and what we say online.”This isn’t the first major joint effort to shoot down the ruling  — the suit comes as 49 Democratic Senators and one Republican vocalized their disapproval for the dubiously named Restoring Internet Freedom ruling. D.C.-based non-profit public interest group Public Knowledge also issued a protective petition today, asking the D.C. Court of appeals to review the rollback. Immediately following the FCC’s vote, advocacy group Free Press also announced plans to sue the FCC, citing, “Chairman Pai’s deeply flawed legal reasoning on several points.”

    Trump says that he is ‘not a racist,’ denies souring chances for immigration overhaul by using vulgarity - President Trump said Sunday that he is “not a racist” and denied that he had spoiled chances for an immigration overhaul in Congress by using a vulgarity to describe poor countries.  His remarks came as relations between key GOP and Democratic lawmakers turned poisonous as they debated whether Trump had referred to “shithole countries” in an Oval Office meeting last week with the fate of hundreds of thousands of young immigrants brought to the United States illegally as children hanging in the balance. Trump blamed Democrats for fouling chances for a deal and, in an extraordinary statement, called himself “the least racist person.” Sens. Tom Cotton (R-Ark.) and David Perdue (R-Ga.), who attended the meeting Thursday at which Trump reportedly used the vulgar term, had previously said they could not recall whether Trump said it, but on Sunday they denied outright that he had. They suggested that a Democrat who publicly confirmed the remarks, Senate Minority Whip Richard J. Durbin (Ill.), could not be trusted. The accusations prompted Democrats to blast the GOP senators for impugning a colleague’s integrity, while also slamming Trump and his remarks as unabashedly racist. The only administration official to speak publicly this weekend about the meeting was Homeland Security Secretary Kirstjen Nielsen, who attended the session. She said in an interview with “Fox News Sunday” that she did not “recall him using that exact phrase” but acknowledged that Trump “did use and will continue to use strong language.” Asked what was standing in the way of a deal, Trump again blamed Democrats. McCarthy said nothing. “I think we have a lot of sticking points, but they are all Democrat sticking points,” Trump said. “Because we are ready, willing and able to make a deal, but they don’t want to. They don’t want security at the border, there are people pouring in. They don’t want security at the border, they don’t want to stop the drugs. And they want to take money away from our military, which we will not do.”

    Africa Is Sending Us Its Best and Brightest - Tyler Cohen - President Donald Trump decried Thursday that the U.S. was not taking in enough immigrants from Norway, and accepting too many arrivals from Haiti, El Salvador and Africa, combined with some flowery language I would prefer not to reproduce. There has been a vociferous emotional reaction to his charges, but I would like to take a more sober tack and consider what the data actually tell us, focusing for now on Africa and Norway. One of the most striking facts about immigration to the U.S., unbeknownst even to many immigration advocates, is the superior education of Africans coming to this country. If we consider adults age 25 or older, born in Africa and living in the U.S., 41.7 of them have a bachelor’s degree or more, according to 2009 data. For contrast, the native-born population has a bachelor’s degree or more at the much lower rate of only 28.1 percent in these estimates, and foreign-born adults as a whole have a college degree at the rate of 26.8 percent, both well below the African rate. How about high school degrees? About one-third of immigrants overall lack this credential, but only 11.7 percent of African-born migrants don’t have a high school degree. That’s remarkably close to the rate for native-born Americans, estimated at 11.4 percent. Or consider Nigerian-Americans, Nigeria being the most populous nation in Africa. Their education levels are among the very highest in the U.S., above those of Asians, with 17 percent of Nigerian migrants having a master’s degree. In addition, about three-quarters of African migrants speak English, and they have higher than average rates of labor force participation. They are also much less likely to commit violent crimes than individuals born in the U.S. During America’s earlier age of mass migration, starting in the late 19th century, this country received many Norwegians. They were especially likely to come from low-skilled backgrounds, they had problems assimilating, and about 70 percent of them ended up returning to their home country. If we compare the sixteen immigrant groups from that time for which we have data, it is the Norwegians and Portuguese who did the worst in terms of wage gaps.

    US Resumes Accepting DACA Applications As Trump Rages On Twitter -  Late on Saturday the Trump administration said that it would resume accepting renewal applications for the Deferred Action for Childhood Arrivals program, bowing - for now - to a federal court ruling that blocked an effort to end the Obama-era policy. In September, President Trump said that he was ending DACA, which gives safe harbor from deportation and work permits to about 690,000 undocumented immigrants who were brought to the U.S. as children, known as Dreamers. He challenged Congress to replace the program with legislation offering similar protections, but lawmakers have so far been unable to agree on how. Then, last Tuesday, a San Francisco federal judge temporarily blocked the move, responding to multiple lawsuits challenging the decision. U.S. District Judge William Alsup said that until the cases are completed, the administration must consider renewal applications from immigrants who were enrolled in the program on Sept. 5, when Trump announced its end. The lawsuits challenging DACA argue that the rescission of the program violates administrative procedures and is unconstitutional. Mr. Trump’s supporters point out that President Barack Obama created the program using executive authority and argue that it can be ended using that same authority.  Trump complained on Twitter about the court ruling after it was issued and predicted that the decision would be overturned. “It just shows everyone how broken and unfair our Court System is when the opposing side in a case (such as DACA) always runs to the 9th Circuit and almost always wins before being reversed by higher courts,” he wrote. The ruling was issued by the U.S. Court of Appeals for the Ninth Circuit, which is based in San Francisco. Conservatives often complain that the court has liberal leanings. However, on Saturday, the U.S. Citizenship and Immigration Services said on its website that it would comply with the decision and "until further notice" would resume accepting renewal applications from those people. As a result, "Dreamers" who previously received a grant of protection under the Deferred Action of Childhood Arrivals (DACA) may apply for a renewal under the terms in place before it was rescinded in September.

    DOJ Asks Supreme Court To Overturn "Dreamer" Immigrant Ruling --- The DOJ said on Tuesday it will ask the US Supreme Court to overturn a judge’s ruling last week that blocked President Trump’s move to end the "Dreamer" program which protects hundreds of thousands of immigrants brought to the United States illegally as children.The Trump administration said it will file an appeal of the judge’s injunction directly with the conservative-majority Supreme Court as well as appeal to the San Francisco-based 9th U.S. Circuit Court of Appeals, the department said.As Reuters reports, the DOJ is not filing an emergency application that, if successful, would result in the judge’s ruling being put on hold, which means the programme will remain in effect during the litigation.“It defies both law and common sense for DACA ... to somehow be mandated nationwide by a single district court in  San Francisco,” Attorney General Jeff Sessions said in a statement. “We are now taking the rare step of requesting direct review on the merits of this injunction by the Supreme Court so that this issue may be resolved quickly and fairly for all the parties involved,” Sessions added. The DOJ’s move to go directly to the Supreme Court is unusual - if expected - as the administration is essentially seeking to circumvent the 9th Circuit appeals court, which has previously ruled against it over Trump’s travel bans on people entering the United States from seven Muslim-majority countries, and has been accused by conservatives of having a liberal bias.

    Five hurdles to a big DACA and border deal | TheHill: A bipartisan immigration fix is facing an increasingly uphill fight in Congress after President Trump rejected a Senate proposal and sparked a political firestorm by referring to several developing nations as “shithole countries.” Both sides are digging in on their positions in the fallout, raising fresh questions about what — if any — deal could make it to Trump’s desk before early March. The Trump administration announced in September that it is ending the Deferred Action for Childhood Arrivals (DACA) program.The decision sparked a race of legislative jockeying on Capitol Hill, but there are no signs of an agreement that could win over House Republicans and Trump without alienating Senate Democrats. Trump rejected one bipartisan proposal from a handful of senators, a blueprint that also drew pushback from GOP senators who warned that the group had tried to leapfrog the rest of the chamber. “What they need to do is share that with others so it will have broad enough support to actually get passed, so I think that message has now been delivered,” said Sen. John Cornyn (R-Texas). If Congress fails to reach a deal by early March, hundreds of thousands of immigrants will be at risk of being deported. Here are five hurdles to a deal. 

    DHS Is Planning To Arrest Sanctuary City Leaders - Having been grilled by Democratic lawmakers over her recollections of a White House meeting in which President Trump described some poor nations sending immigrants to the United States as "shithole countries," Department of Homeland Security Secretary Kirstjen Nielsen dropped a potentially even bigger tape-bomb.The Hill reports that Nielsen testified she did not recall Trump saying “shithole countries” while she spoke under oath before the Senate Judiciary Committee. She described the meeting as heated and said many people in the room used coarse language.“I don't remember the specific words [Trump used],” Nielsen said under questioning from Durbin. “What I was struck with, frankly as I'm sure you were as well, was the general profanity that was used in the room by almost everyone.”But then Nielsen shocked more than a few Democratic leaders across the nation, who appear to have grown accustomed to living beyond the law. According to The Washington Times, Nielsen confirmed Tuesday that her department has asked federal prosecutors to see if they can lodge criminal charges against sanctuary cities that refuse to cooperate with federal deportation efforts.“The Department of Justice is reviewing what avenues may be available,” Ms. Nielsen told the Senate Judiciary Committee. Her confirmation came after California’s new sanctuary law went into effect Jan. 1, severely restricting cooperation the state or any of its localities could offer.

    Massive raids threatened against immigrants in California - The Trump administration is preparing to launch a massive police-state dragnet against immigrants in California, pouring Immigration and Customs Enforcement (ICE) agents from all over the country into the state’s northern cities with the aim of rounding up at least 1,500 undocumented workers. The impending mass roundup was first reported Wednesday by the San Francisco Chronicle based on an anonymous source familiar with the planning for the operation. Both ICE and the Department of Homeland Security have refused to confirm or deny that the US government is preparing what will likely prove the largest immigration raid in US history. The threat has created terror and panic in immigrant communities in California’s Bay Area, undoubtedly a desired effect on the part of ICE officials. There are reports of residents staying away from work and even leaving the region to escape the clutches of immigration agents. No specific date has been given for launching the anti-immigrant blitz, with the Chronicle reporting only that it is to take place “within weeks.” The newspaper’s source said that agents will be flown in from across the country, and that both neighborhoods and workplaces will be raided. The threatened mass roundup follows last week’s raids carried out against nearly 100 7-Eleven stores in seventeen states, signaling an escalation in the persecution of undocumented workers at their job sites. 

    Immigration agents destroy humanitarian water supplies along US-Mexico border - Even as Democrats and Republicans work toward a right-wing immigration deal that will further militarize the US-Mexico border, a new report sheds light on the criminal outcome of the bipartisan, decades-long efforts to prevent immigrants from reaching the United States. The report, published on January 18, reveals that for years, US border agents have systematically emptied hundreds of emergency water supplies left behind by humanitarian organizations for immigrants along the desert region of the US-Mexico border. According to government statistics, more than 7,200 people have died attempting the journey through the four states bordering Mexico—Texas, New Mexico, California and Arizona—over the last two decades, the majority due to exposure to the elements, including dehydration. Even this figure significantly understates the real toll. A recent USA Today investigation revealed that the actual number killed in the past five years is between 25 and 300 percent higher due to government underreporting. Many of those whose deaths go unreported are thrown into mass unmarked graves.  Between 2012 and 2015, the years covered by their investigation, No More Deaths placed more than 31,558 gallon jugs (120,000 liters) of water in southern migration trails in the Arivaca corridor, a roughly 800-square-mile region in the Arizona desert that is a common route for migrants seeking to evade heavily militarized border systems.  The groups found through follow-up checks that more than 86 percent of the water had been drunk. At least 3,586 gallon jugs of water, however, had been deliberately destroyed in 415 separate instances, or more than twice per week on average. The scale of sabotage demonstrates that it could only have been the outcome of a deliberate and systematic strategy.

    Trump wall: President denies changing view on Mexico border plan - BBC News: US President Donald Trump has denied changing his views on the Mexico border wall. It comes after his chief of staff, John Kelly, told Fox News that the president's opinions had evolved since his original campaign promises about its construction and funding. "Campaigning is very different from governing," said Mr Kelly on Wednesday. Hours later, the president tweeted to say Mexico would still "directly or indirectly" pay for the wall. Immigration is a key issue between lawmakers and the White House on the eve of a possible federal government shutdown. With a longer-term budget deal not reached, Congress faces a Friday midnight deadline to pass a stopgap measure that would fund federal agencies until next month. Democrats want the bill to include protections for immigrants who entered the US illegally as children, known as "Dreamers".The Republican president had signalled he was ready to make a deal to help the Dreamers, in return for border security funding to include a wall on the Mexican border. Both the president and his chief of staff cited the estimated cost as $20bn (£14bn); Mr Trump had originally put the figure at $10-$12bn. Mr Kelly said the administration was looking at creating a wall across 800 miles (1,300km) of the 3,100km stretch. Last year Mr Trump said his wall would cover 1,000 miles with natural obstacles taking care of the rest.

     Conservative writer: Trump called friends to brag about 's---hole countries' remark | TheHill: A conservative columnist said President Trump called friends to brag after the meeting in which the president reportedly referred to Haiti, El Salvador and African nations as "shithole countries." "It’s weird that people in the room don’t remember Trump using that word when Trump himself was calling friends to brag about it afterwards," Erick Erickson, who has in the past been critical of Trump, said in a tweet. "I spoke to one of those friends. The President thought it would play well with the base." It’s weird that people in the room don’t remember Trump using that word when Trump himself was calling friends to brag about it afterwards. I spoke to one of those friends. The President thought it would play well with the base. - Erick Erickson (@EWErickson) January 14, 2018  Trump faced widespread backlash and accusations of racism after a report he disparaged several nations during a meeting with lawmakers at the White House.  “Why are we having all these people from shithole countries come here?” Trump reportedly asked, referring to immigrants from African nations, Haiti and El Salvador.The White House initially did not deny the comment, which came as lawmakers work on an immigration deal. In a tweet Friday morning, Trump denied he said "anything derogatory about Haitians." "Never said anything derogatory about Haitians other than Haiti is, obviously, a very poor and troubled country. Never said 'take them out.' Made up by Dems," the president tweeted.

    California Threatens To Prosecute Businesses That Cooperate With ICE -- California's Attorney General hit back against plans by federal immigration officials to conduct a "major sweep" for 1,500 undocumented individuals, telling employers state-wide that they face legal repercutions and fines up to $10,000 if they assist federal authorities. The sweep is in response to California's new "sanctuary city" laws which took effect Jan 1. “It’s important, given these rumors that are out there, to let people know – more specifically today, employers – that if they voluntarily start giving up information about their employees or access to their employees in ways that contradict our new California laws, they subject themselves to actions by my office,” said CA Attorney General Xavier Becerra, adding “We will prosecute those who violate the law.” Becerra's warning follows a report by the San Francisco Chronicle detailing the planned raids which will include worksites believed to be harboring illegal employees. According to The Chronicle, US Immigrations and Customs Enforcement (ICE) will be flying officers in from around the country to assist with the raids, according to an unnamed source. As we wrote yesterday, The sweep would be the largest of its kind under the Trump administration, a source told the Chronicle - and would be the first such operation since California Governor Jerry Brown signed legislation enacting statewide "sanctuary" laws last October - vastly limiting who state and local law enforcement agencies can detain, question and transfer at the request of federal authorities. It also forbids police officers from making arrests for civil immigration warrants, as well as joining federal task forces intended to enforce immigration laws.

    Supreme Court to take up Trump travel ban | TheHill: The Supreme Court on Friday afternoon agreed to review the legality of President Trump’s latest travel ban. The decision comes about two months after the court granted the administration’s request to fully reinstate the ban after lower courts blocked the administration from banning people with a bona fide relationship to a person to entity in the United States. The high court's decision signaled the justices may ultimately uphold the new targeted restrictions, which ban nationals from the six majority-Muslim countries - Iran, Libya, Syria, Yemen, Somalia and Chad. The administration is appealing the latest decision from the 9th Circuit Court of Appeals, which ruled Trump's ban violated federal immigration law.The 9th Circuit Court of Appeals ruled last month that Trump’s latest ban exceeded the scope of his authority on immigration and violated the Immigration and Nationality Act’s prohibition on nationality-based discrimination in the issuance of immigrant visas. The Supreme Court had agreed to hear two cases from the state of Hawaii and the International Refugee Assistance Project challenging the previous order, which banned nationals from Iran, Libya, Somalia, Syria, Sudan and Yemen for 90-days and excluded all refugees for 120 days. But the court ultimately tossed out the cases after the order expired. The justices said the issue was now moot. Hawaii is now challenging the indefinite and targeted restrictions Trump issued in September, in which he eliminated Sudan from the list of banned countries, but added Chad, North Korea and individuals affiliated with certain government agencies in Venezuela. The lower court bans did not block the restrictions on Venezuelan officials or immigrants from North Korea. 

    Puerto Rico: Post-Hurricane Maria Relief Effort Omnishambles Rolls On - Lambert Strether -If indeed there is any relief effort at all, as opposed to “right-sizing” the whole colony island. A million Puerto Ricans still don’t have power, although progress is being made, as heartwarming stories show (“Let There Be Light! Puerto Rico School Celebrates Return of Power After 112 Days”). In less happy news, suicides are up, and now, in the midst of the flu season, there is a shortage of saline bags, which are manufactured in Puerto Rico. Here is a set of statistics maintained by the Army Corps of Engineers (USACE); power is at the bottom:  Latest facts and figures on our activities in #PuertoRico and #USVirginIslands (As of Jan. 18) pic.twitter.com/UTiLFD8pM4 — USACE HQ (@USACEHQ) January 19, 2018  Meanwhile, 76,000 Puerto Ricans still lack access to clean water[1], and the EPA has issued warnings on contamination (“out of an abundance of caution”).   And so the grind of recovery continues in fits and starts. In this post, I’ll look at materiel shenanigains in rebuilding the grid, the bright side of the Puerto Rican exodus, the administration’s denial of a Puerto Rican relief loan, and disaster capitalism. A little disjointed, perhaps, but that is what is in the news flow!

    Trump Administration Tells Puerto Rico It’s Too Rich for Aid Money - David Dayen - Means testing has now come to disaster aid — and it only applies to Puerto Rico. When Congress passed a $36.5 billion disaster relief bill to bolster rebuilding efforts in several wildfire and hurricane-damaged areas in October, it shortchanged Puerto Rico, giving it a $4.9 billion loan instead of the grant that other areas received. Now, it appears the debt- and hurricane-ravaged island won’t even get that money. First reported in El Nuevo Dia, Puerto Rico’s daily newspaper, the Federal Emergency Management Agency and the Treasury Department informed the Puerto Rican government on January 9 that they will not disburse the loan through the Community Disaster Loans Program, after finding that Puerto Rico had a cash balance on December 29 of last year of $1.7 billion for ongoing operations. The letter also cited $6.875 billion scattered in various local government accounts. Since the loan was intended to fill in a gap in day-to-day funding, FEMA determined Puerto Rico does not need the money at this time. “Funds will be provided through the CDL Program when the Commonwealth’s central cash balance decreases to a certain level,” wrote FEMA official Alex Amparo and Deputy Assistant Treasury Secretary Gary Grippo. They didn’t specify that level but added that municipalities could also apply for loans. There’s no question that the Puerto Rican government has lacked fiscal transparency. But the very fact that Puerto Rico must receive assistance as loans rather than grants, unlike any other entity receiving disaster assistance, is bad enough. That the island is being treated like a welfare recipient found to have too much money in its bank account takes it to another level. Among U.S. territories suffering from catastrophe, only Puerto Rico is being means-tested.

    Individual Mandate Now Gone, G.O.P. Targets the One for Employers — Having wiped out the requirement for people to have health insurance, Republicans in Congress are taking aim at a new target: the mandate in the Affordable Care Act that employers offer coverage to employees.And many employers are cheering the effort.While large companies have long offered health benefits, many have chafed at the detailed requirements under the health law, including its reporting rules, which they see as onerous and expensive. Now that relief has been extended to individuals, some companies believe they should be next in line.The individual mandate and the employer mandate are “inextricably entwined,” said James A. Klein, the president of the American Benefits Council, an influential lobby for large companies like Dow Chemical, Microsoft and BP, the oil and gas producer.“It is inequitable to leave the employer mandate in place when its purpose — to support the individual mandate — no longer exists,” Mr. Klein said. “We are urging Congress to repeal the employer mandate.”Opposition to the employer mandate could increase as more employers are fined for not offering coverage or for not meeting federal standards for adequate, affordable coverage. Since October, the Internal Revenue Service has notified thousands of businesses that they owe money because they failed to offer coverage in 2015, when the mandate took effect.Representatives Devin Nunes of California and Mike Kelly of Pennsylvania, both Republicans, recently introduced a bill, supported by party leaders, to suspend the mandate, canceling any penalties that would be imposed for any year from 2015 to 2018.“The employer mandate is a job-killer, a wage-killer and a business-killer,” Mr. Kelly said.But Tom Leibfried, a health care lobbyist at the A.F.L.-C.I.O., called the proposals to repeal or weaken the employer mandate “a very bad idea.”“The Affordable Care Act was built on a framework of shared responsibility,” Mr. Leibfried said. “If you get rid of the employer mandate, you will see people lose coverage from their employers.” Such a move could also increase costs for the federal government. Even though Congress has eliminated the penalties for people who go without insurance, millions of consumers are still eligible for financial aid in the form of tax credits to help them pay insurance premiums. These subsidies increase with the rapidly rising cost of insurance. If fewer people receive coverage from employers, more will qualify for subsidized coverage in the public marketplaces created by the Affordable Care Act.

    Court battle brewing over work rules for Medicaid | TheHill: A battle is brewing in the courts over the Trump administration's move to let states impose work requirements for recipients of Medicaid, the health insurance program for the poor. Advocacy groups are gearing up to sue the administration, arguing that it doesn’t have the power to allow work requirements and other rules for Medicaid without action from Congress. But the administration is defending the legality of the shift. When unveiling guidance Thursday on the work requirements, top Medicaid official Seema Verma said the administration has "broad authority” under current law to allow states to make changes through waivers. On Friday, the administration quickly gave Kentucky the green light to implement work requirements for some beneficiaries, the first time such an approval has been given. Shortly after, the National Health Law Program (NHeLP) issued a press release stating, “litigation is expected because the approval violates federal law.” While NHeLP is “still reviewing” the approval’s details, “the action appears designed to achieve significant cuts in Medicaid enrollment rather than Medicaid’s stated purpose of furnishing medical assistance to low-income people,” Jane Perkins, the group’s legal director, said in a statement. Kentucky Gov. Matt Bevin (R) said the requirements are necessary because “able-bodied people” are essentially getting free health coverage without contributing to society. Asked if he anticipated legal challenges, Bevin said: “It’s conceivable. We live in America. There are lawsuits that fly around this town, this country. People certainly have that right.”

     The Trump Administration Targets the Poor - In policy terms, the real action is taking place at other federal departments and agencies, where Trump’s Republican appointees are trying to enact the Party’s radical and regressive agenda. This agenda has nothing to do with the economic nationalism and the pledges to defend the welfare state—Social Security, Medicare, Medicaid—that Donald Trump campaigned on. It is, instead, the agenda of billionaires far more ideological than Trump, such as the Koch brothers, the Mercer family, and the Ricketts family, who want to limit the government’s role in areas ranging from the environment to labor relations to health care to financial regulation. As the historian Josh Zeitz pointed out in a piece for Politico a couple of months ago, the ultimate aim of this agenda is to roll back not merely the regulatory reforms of Barack Obama but the entire Great Society vision of Lyndon Johnson. On Thursday, the Centers for Medicare and Medicaid Services, or C.M.S., issued new guidelines that will allow individual states to impose work requirements on recipients of Medicaid, the federal program that provides health-care coverage to poor people. Since 1965, when the Johnson Administration created Medicaid, the only requirement for enrolling in the program has been eligibility based on income. Now, under the new guidelines, states will be able to deny Medicaid to otherwise eligible people who fail to meet the new work requirements. The Medicaid announcement came a day after the Wall Street Journal reported that the Treasury Department is on the verge of relaxing federal rules that oblige banks to lend in poor neighborhoods. Democrats and housing activists have claimed that such changes could lead to the return of “redlining”—a banking practice that for decades denied mortgage financing to minority neighborhoods. Some banking experts said that the changes being considered wouldn’t go that far, but that they could reduce the incentives for banks to make loans, particularly mortgage loans, in poor neighborhoods.

    Bannon Is Subpoenaed in Mueller's Russia Investigation— Stephen K. Bannon, President Trump’s former chief strategist, was subpoenaed last week by the special counsel, Robert S. Mueller III, to testify before a grand jury as part of the investigation into possible links between Mr. Trump’s associates and Russia, according to a person with direct knowledge of the matter. The move marked the first time Mr. Mueller is known to have used a grand jury subpoena to seek information from a member of Mr. Trump’s inner circle. The special counsel’s office has used subpoenas before to seek information on Mr. Trump’s associates and their possible ties to Russia or other foreign governments. The subpoena could be a negotiating tactic. Mr. Mueller is likely to allow Mr. Bannon to forgo the grand jury appearance if he agrees to instead be questioned by investigators in the less formal setting of the special counsel’s offices about ties between Mr. Trump’s associates and Russia and about the president’s conduct in office, according to the person, who would not be named discussing the case. But it was not clear why Mr. Mueller treated Mr. Bannon differently than the dozen administration officials who were interviewed in the final months of last year and were never served with a subpoena. The subpoena is a sign that Mr. Bannon is not personally the focus of the investigation. Justice Department rules allow prosecutors to subpoena the targets of investigations only in rare circumstances. On Tuesday, Mr. Bannon testified behind closed doors before the House Intelligence Committee, which is also investigating Russia’s meddling in the 2016 election and ties between the Trump campaign and Russia. Mr. Bannon did not address reporters before entering the proceeding on Tuesday, and a spokesman for Mr. Mueller and a senior White House lawyer did not respond to messages seeking comment. Mr. Mueller issued the subpoena after Mr. Bannon was quoted in a new book criticizing Mr. Trump, saying that Donald Trump Jr.’s 2016 meeting with Russians was “treasonous” and predicting that the special counsel investigation would ultimately center on money laundering.

    Steve Bannon refuses lawmakers’ questions, following ‘White House instructions‘  -- Steve Bannon refused to answer questions from the House Intelligence Committee during a closed-door session on Tuesday, even after he was issued a subpoena to testify by the committee, saying that the White House had told him not to. Adam Schiff, the ranking Democrat on the committee, said during a news conference after the marathon hearing, that Bannon’s lawyer had told the committee that the former White House aide “was willing to answer our questions but under instructions from the White House not to”. Schiff condemned what he called “a gag order from the White House”.  Bannon, the former Breitbart head, testified before the committee but refused to answer any questions about his time in the transition, in the Trump administration and even after he left the White House.

    FBI investigating whether Russia funneled cash to NRA to aid Trump's campaign | McClatchy Washington Bureau: The FBI is investigating whether a top Russian banker with ties to the Kremlin illegally funneled money to the National Rifle Association to help Donald Trump win the presidency, two sources familiar with the matter have told McClatchy. FBI counterintelligence investigators have focused on the activities of Alexander Torshin, the deputy governor of Russia’s central bank who is known for his close relationships with both Russian President Vladimir Putin and the NRA, the sources said. It is illegal to use foreign money to influence federal elections. It’s unclear how long the Torshin inquiry has been ongoing, but the news comes as Justice Department Special Counsel Robert Mueller’s sweeping investigation of Russian meddling in the 2016 election, including whether the Kremlin colluded with Trump’s campaign, has been heating up. All of the sources spoke on condition of anonymity because Mueller’s investigation is confidential and mostly involves classified information. A spokesman for Mueller’s office declined comment.Disclosure of the Torshin investigation signals a new dimension in the 18-month-old FBI probe of Russia’s interference. McClatchy reported a year ago that a multi-agency U.S. law enforcement and counterintelligence investigation into Russia’s intervention, begun even before the start of the 2016 general election campaign, initially included a focus on whether the Kremlin secretly helped fund efforts to boost Trump, but little has been said about that possibility in recent months.  The extent to which the FBI has evidence of money flowing from Torshin to the NRA, or of the NRA’s participation in the transfer of funds, could not be learned.  However, the NRA reported spending a record $55 million on the 2016 elections, including $30 million to support Trump – triple what the group devoted to backing Republican Mitt Romney in the 2012 presidential race. Most of that was money was spent by an arm of the NRA that is not required to disclose its donors.

    Deutsche Bank Flagged "Suspicious" Transactions Involving Kushner --Deutsche Bank is looking at evidence that companies related to Jared Kushner may have moved "suspicious" money through the German lender, a German-language magazine reported. The bank reportedly informed a national finance supervisor about the transactions and will also inform special counsel Robert Mueller’s office – though details about the money or the bank’s suspicions weren’t immediately available.Late last year, German media reported that Mueller had subpoenaed Deutsche Bank for some of the Trump family’s financial records – a report Trump’s lawyers vociferously denied. As it turned out, the New York Times later clarified that the financial record being investigated belonged to the Kushner Companies – Trump son-in-law Jared Kushner’s family business. And the subpoena was sent by the Eastern District of New York, not Mueller. But these violations appear to be part of a separate investigation. The Eastern District appears to be investigating the Kushner Companies use of a visa program designed to attract foreign investment to the US. Trump himself has done extensive business with Deutsche, and acknowledged having $130 million in debts to the bank last year, though the Financial Times later reported that amount was closer to $300 million.Kushner Companies has also done major business with Deutsche Bank, including a $285 million loan in 2016 related to its property in the former New York Times building in Manhattan. The bank has not commented about the content of the reported inquiries, but has said it is cooperating with authorities. Coincidentally, Deutsche Bank is at the center of an ongoing Department of Justice investigation into its role in a Russian money laundering scheme for which it has paid hundreds of millions in fines to New York and British regulators. Former Trump adviser Steven Bannon was also quoted in “Fire and Fury” as saying the Russia investigation “goes through Deutsche Bank and all the Kushner shit.”

    Buy a flat, meet Trump Jr’ offer criticised as ‘ethics atrocity’ --The developers behind a Trump Towers project near Delhi are offering to fly the first 100 investors in the property to the US to meet Donald Trump Jr, the US president’s eldest son. The promotional materials for the project – the fifth in India to take the Trump name – claim the address in the Indian capital is “so powerful, a letter would reach you from any part of the world”. One former White House ethics counsel described the offer as an “ethics atrocity”. The specifics of the meeting with Trump Jr were unclear but the offer was repeated on a news broadcast featured on the developer’s website with the tagline “Buy a flat, meet Trump junior”. The launch of an “ultra luxury” residential project in Gurgaon, a hub for IT workers south of Delhi, was announced last week by two of the Trump Organization’s Indian franchisees, M3M Tribeca Developers. They claimed to have sold 20 apartments in the two 600ft towers within 24 hours of the launch, in part through boasts of building the “most luxury project in north India”, but also the lure of meeting a member of the US’s first family. 

    Trump: “Defining Deviancy Down” With Lots of Takers - Pam Martens  - If you are raising children, caring for aging parents, working multiple jobs to pay the mortgage or simply spending your free time protesting the policies of the current administration, you may have missed the latest series of scandals swirling around the so-called leader of the free world. Last week, the Wall Street Journal reported that Donald Trump’s longtime personal lawyer, Michael Cohen, “arranged a $130,000 payment” to a former porn star just weeks prior to the 2016 presidential election as part of a gag order meant to silence her from disclosing to the public an “alleged sexual encounter” with Trump while he was married to his current wife, Melania. The former porn star is Stephanie Clifford whose stage name is Stormy Daniels. Jacob Weisberg, Editor-in-Chief of the Slate Group, appeared on MSNBC last evening and had this to say about the porn star story: “..this whole presidency is an exercise in defining deviancy down. If this were any other presidency it would be career ending, it would be the biggest news in the world. With Donald Trump, it’s sort of not one of the worst ten things this week, that he paid hush-money to cover-up an almost year-long relationship with a former porn actress.” Yesterday, another gag order was reported, this time coming from the White House. According to Adam Schiff, a member of the House Intelligence Committee that is investigating possible Russian collusion with the Trump transition team in the 2016 election, Steve Bannon, the fired Trump strategist, refused to answer questions yesterday before the Committee under a subpoena because the White House told him it would infringe on the President’s right to Executive Privilege. Legal scholars have insisted that only one person can claim Executive Privilege at a time and that’s the person occupying the Oval Office. The New York Times reported yesterday that Bannon has also received a subpoena from Special Counsel Robert Mueller to testify before a grand jury. Also yesterday, the nonprofit watchdog, Public Citizen, released a report titled “Presidency for Sale,” documenting 64 instances in which Trump’s “sprawling set of businesses has resulted in a unique set of conflicts that previously were unimaginable for the president of the United States.” Robert Weissman, Public Citizen’s president stated: “Business is booming at the Trump International Hotel in D.C., not because of the décor, but because corporations and foreign governments want to curry favor with the president.”

    As No One Watched, Trump Pardoned 5 Megabanks For Corruption Charges - While Americans celebrated the holidays, President Trump followed in the footsteps of his predecessors by acting in the interest of Wall Street and using the distraction to do something that was not in the best interest of the American people. He pardoned five megabanks for rampant fraud and corruption, which is especially notable because of the amount of money he owes them. Trump has been using Deutsche Bank since the 1990s, and Financial Times has reported that he now owes the bank at least $130 million in outstanding loans secured in properties in Miami, Chicago, and Washington. However, the report claimed that the actual number is likely much larger at $300 million.Reports claimed that Deutsche was the only bank willing to lend Trump money after his companies faced multiple bankruptcies. The relationship has continued over the years, and an analysis from the Wall Street Journal claimed that Trump has received at least $2.5 billion in loans from Deutsche Bank over the last 20 years. There have been concerns about Trump’s ties to the bank becoming a conflict of interest, dating back to the 2016 election, and the evidence to support those concerns is now becoming clear.  During the week of Christmas, the Federal Register announced that the Trump Administration had issued waivers to Citigroup, JPMorgan, Barclays, UBS, and Deutsche Bank - all megabanks facing charges of fraud and corruption.The banks were involved in the LIBOR Scandal, in which they colluded to deliberately depress the rate at which they paid out on investments. By suppressing the London Interbank Offered Rate (LIBOR) at the beginning of an economic crisis in 2007, the megabanks were able to boost their earnings and to give their customers a false sense of security. Deutsche Bank pled guilty to wire fraud in a U.S. court in 2015, and it went on to pay $3.5 billion for its role in the LIBOR scandal—more than any other bank involved—before it reached a $7.2 billion settlement with the Justice Department in early 2017.

    Appropriations bill would bar SEC from requiring political spending disclosure - StarTribune.com: – The appropriations bill that the Senate and House must pass by Friday to avoid a government shutdown forbids the Securities and Exchange Commission from making publicly traded companies disclose their political spending to shareholders. The language has been embedded in every major federal spending bill since 2016. The prohibition comes as politicians talk about open government and critics lament unlimited corporate contributions allowed under the 2010 Citizens United Supreme Court decision that they say are reshaping elections. Telling regulators they cannot increase shareholder and public awareness of the influence of business on politics is controversial, but not so contentious that its inclusion in the 2018 appropriations bill will lead to a government shutdown, most observers believe. It would, however, have consequences. “People want transparency,” said John Stout, a corporate governance specialist in the Minneapolis office of the Fredrikson & Byron law firm. “You have to wonder about those who are trying to force transparency out of the system. For big companies, political spending is a micro part of annual spending, but you’d like to know who has influence.”

    Regulators grapple with fallout from Justice Dept. U-turn on pot - On a Thursday morning in early January, most of official Washington was contending with a road-clogging snowstorm when Attorney General Jeff Sessions triggered another form of chaos on Capitol Hill and inside the federal banking agencies.Sessions announced that the Justice Department was rescinding an Obama-era memo on marijuana enforcement, a move that carried big implications for banks and credit unions in California, Colorado, Oregon and a handful of other states that have legalized recreational pot use. It opened the possibility of a federal crackdown on marijuana, unsettling a carefully established balance meant to enable state-legal cannabis firms to access the banking system.But the federal agencies responsible for overseeing financial institutions were kept in the dark about Sessions’ plans, as were Republican congressional allies of the Trump administration. Members of Congress and their staffs only learned about the decision as they were making their way to work that snowy morning. “I was caught off-guard, but only because it’s so contrary to the administration’s interests,” Rep. Dana Rohrabacher, D-Calif., said in an interview, noting that his own support for legalization is shared by a majority of the American people. “I think everyone was caught off-guard.”

    Nomi Prins’ New Book: Central Banks Have Become the Markets – Pam Martens - Nomi Prins’ latest book, Collusion: How Central Bankers Rigged the World, ensures her place as one of this century’s most informed Wall Street historians. It’s the perfect segue from Prins’ earlier “It Takes a Pillage,” and her 2014 book All the Presidents’ Bankers. If you are serious about understanding the corrupting influences that have left the U.S. vulnerable to another epic financial crash, buy all three books and read them as one.Prins is a veteran of Wall Street who has now written six books and dozens of articles to help Americans navigate the snake pit that has replaced the financial system of the United States. It all started with her first book in 2004, Other People’s Money: The Corporate Mugging of America, where she explained her motivation as follows:“When I left Wall Street, at the height of a wave of scandals uncovering scores of massively destructive deceptions, my choice was based on a very personal sense of right and wrong…So, when people who didn’t know me very well asked me why I left the banking industry after a fifteen-year climb up the corporate ladder, I answered, ‘Goldman Sachs.’ “For it was not until I reached the inner sanctum of this autocratic and hypocritical organization – one too conceited to have its name or logo visible from the sidewalk of its 85 Broad Street headquarters [now relocated to 200 West Street] that I realized I had to get out…The fact that my decision coincided with corporate malfeasance of epic proportions made me realize that it was far more important to use my knowledge to be part of the solution than to continue being part of the problem.” In Collusion, Prins walks us through the critically-important events occurring during the 2007-2009 financial crash, many of which would have been relegated to the dust bin of history if not for this book. Prins makes the case that the U.S. is headed toward another epic financial crash as a result of the unchecked powers of the U.S. central bank (the Federal Reserve) and its global counterparts who are creating dangerous new asset bubbles in an effort to paper over the last ones.

    Reg relief may have to get in line behind other issues: Trump official — A Trump administration official struck a bearish tone Wednesday on the prospects for a financial regulatory relief bill, saying that it may need to wait in line behind other policy initiatives. The narrowly tailored bill negotiated between Senate Banking Committee Chairman Mike Crapo, R-Idaho, and moderate Democrats was approved by the panel last month and financial services lobbyists have been hopeful that the bill could see vote on the Senate floor by February. The bill would raise the Dodd-Frank Act asset threshold to be considered a “systemically important financial institution” from $50 billion to $250 billion and make a number of other reforms beneficial to community and midsize banks, including changes to the stress testing regime, the Volcker Rule and mortgage lending. Calabria said the regulatory relief bill "should have bipartisan support" but “the question really is, where is it going to be in the queue and will [Congress] get to it before” the midterm elections. Blooomberg News But Mark Calabria, chief economist for Vice President Mike Pence and a well-known D.C. policy expert, said passage of the bill could be delayed as policymakers deal with more pressing issues. In his remarks, he was also skeptical about regulators trying to stabilize cryptocurrency prices, and discussed the change in tone at the Consumer Financial Protection Bureau under new leadership. 

     NY Gov. Cuomo Targets Hedge Fund Managers With 17% "Fairness Fix" Tax --  New York State Governor Andrew Cuomo announced today legislation to close carried interest loophole with a so-called "Fairness Fix." Under U.S. law, part of income earned by hedge fund managers, private equity investors, venture capitalists and certain real estate investors is known as carried interest and is treated as capital gains, rather than as ordinary income, resulting in lower capital gains tax rates. This is reportedly costing NY state about $100m/year. Cuomo proposing legislation treating “this hedge fund compensation” as ordinary income for state tax purposes. “By imposing a 17 percent "Fairness Fix," every hedge fund manager working in New York State - including those living outside of the state - will be required to pay their fair share and losses under the federal tax code will be compensated. This proposal could raise nearly $1.1 billion annually and help ease the impacts of the federal tax plan.” Full Press Release: Governor Andrew M. Cuomo today announced legislation to close the carried interest loophole, deliver fairness to all New York taxpayers, and help alleviate the impacts of the Trump administration's federal tax plan. This proposal will fix and equalize the tax treatment of income for private equity investors. Currently, investors pay lower tax rates than ordinary New Yorkers on their income by way of the carried interest loophole. The "Fairness Fix" could raise nearly $1.1 billion annually. 

    Sallie to pump tax savings into personal loans, credit cards - Sallie Mae is using some of its windfall from the federal tax cut to accelerate its move into personal loans and credit cards. The nation’s largest private student lender, formally known as SLM Corp., says it will invest $30 million of its anticipated tax savings in three areas: $10 million each on consumer lending and credit cards, and the other $10 million on several technology projects, including the transfer of certain tech infrastructure to the cloud.  How financial firms will spend their tax-reform bonus has been perhaps the hottest topic this earnings season. Some lenders have earmarked funds for technology upgrades, while other lenders are vowing to pad the paychecks of the rank and file, increase buybacks and dividends or make charitable contributions.  What makes Sallie Mae's announcement even more interesting is that it's another example of nontraditional lenders widening their push into online consumer lending. Goldman Sachs, which in short order has lent out more than $2 billion through a digital platform called Marcus, said this week that it was expanding into home improvement loans. Chief Executive Raymond J. Quinlan said that personal loans were a good fit for Sallie Mae, which will be targeting the same kinds of borrowers it already serves with another type of unsecured loan. Sallie Mae has nearly $18 billion of assets, primarily private undergraduate student loans. Personal loans do not require a big investment in infrastructure nor substantially different credit models, he said.

    How Amazon’s Accounting Makes Rich People’s Income Invisible -Image you’re Jeff Bezos, circa 1998. You’re building a company (Amazon) that stands to make you and your compatriots vastly rich.But looking forward, you see a problem: if your company makes profits, it will have to pay taxes on them. (At least nominally, in theory, 35%!) Then you and your investors will have to pay taxes on them again when they’re distributed to you as dividends. (Though yes, at a far lower 20% rate than what high earners pay on earned income.) Add those two up over many years, and you’re talking tens, hundreds of billions of dollars in taxes.You’re a very smart guy. How are you going to avoid that?Simple: don’t show any profits (or, hence, distribute them as dividends). Consistently set prices so you constantly break even. This has at least three effects:

    • 1. You undercut all your competitors’ prices, driving them out of business. Nobody who’s trying to make a profit can possibly compete.
    • 2. You control more and more market share.
    • 3. You build a bigger and bigger business.

    Number 3 is how you monetize this, personally. The value of the company (its share price/market cap) rises steadily. Obviously, a business with $136 billion in revenues (2016) is going to be worth more than one with $10 or $50 billion in revenues — even if it never shows a “profit.” You take your profits in capital gains.

    Everyone Is Getting Hilariously Rich and You’re Not - NYT -- Recently the founder of something called Ripple briefly became richer than Mark Zuckerberg. Another day an anonymous donor set up an $86 million Bitcoin-fortune charity called the Pineapple Fund. A Tesla was spotted with a BLOCKHN license plate. There’s a surge in people looking to buy Bitcoin on their credit cards. After the Long Island Iced Tea company announced it would pivot to blockchain, its stock rose 500 percent in a day.  In 2017, the cryptocurrency Bitcoin went from $830 to $19,300, and now quivers around $14,000. Ether, its main rival, started the year at less than $10, closing out 2017 at $715. Now it’s over $1,100. The wealth is intoxicating news, feverish because it seems so random. Investors trying to grok the landscape compare it to the dot-com bubble of the late 1990s, when valuations soared and it was hard to separate the Amazons and Googles from the Pets.coms and eToys. The cryptocurrency community is centered around a tightknit group of friends — developers, libertarians, Redditors and cypherpunks — who have known each other for years through meet-ups, an endless circuit of crypto conferences and internet message boards. Over long hours in anonymous group chats, San Francisco bars and Settlers of Catan game nights, they talk about how cryptocurrency will decentralize power and wealth, changing the world order. The goal may be decentralization, but the money is extremely concentrated. Coinbase has more than 13 million accounts that own cryptocurrencies. Data suggests that about 94 percent of the Bitcoin wealth is held by men, and some estimate that 95 percent of the wealth is held by 4 percent of the owners. There are only a few winners here, and, unless they lose it all, their impact going forward will be outsize.  They also remember who laughed at them and when.

    Mnuchin: Bitcoin firms subject to anti-laundering rules — Treasury Secretary Steven Mnuchin on Friday warned traders and firms offering services related to cryptocurrencies like bitcoin that anti-money-laundering and know-your-customer rules apply to them — and regulators are watching closely. Speaking during a moderated discussion sponsored by the Economic Club of Washington Friday morning, Mnuchin said that he's concerned cryptocurrencies could be used to conduct money laundering, and that he and other regulators are looking into the issue. He noted that the Financial Stability Oversight Council last month set up an interagency working group to examine the burgeoning market. Mnuchin added that he is in discussions with foreign regulators to shore up AML rules for cryptocurrencies. “In the United States — and people may not realize this — under our laws, if you have a wallet to own bitcoins, that company has the same obligation as a bank to Know Your Customer,” Mnuchin said. “So, in the United States, we have rules for anti-money-laundering, for all different types of entities, we can track those types of [transactions]. The rest of the world doesn’t have that. So one of the things we are working very closely with the G-20 on is making sure that this doesn’t become the Swiss numbered bank account.”  Mnuchin added that he was worried about heightened levels of speculation in the bitcoin market. The virtual currency went from being valued at under $1,000 per coin a year ago to almost $20,000 in December. “The other concern I have is, there’s a lot of speculation in this, and I want to make sure that consumers who are trading this understand the risks,” Mnuchin said. “I am concerned that consumers may get hurt.” Mnuchin’s comments come amid increasing regulatory scrutiny of the boom in virtual currencies. Federal Reserve Vice Chairman for Supervision Randal Quarles warned about the dangers of virtual currencies last month, and outgoing Fed Chair Janet Yellen called cryptocurrencies "highly speculative" in her final press conference last month. In July the Treasury’s Financial Crimes Enforcement Network, or Fincen, levied a $110 million fine against the bitcoin exchange BTC-e for a series of AML violations.

    My Joke Cryptocurrency Hit $2 Billion and Something Is Very Wrong -  When I jokingly tweeted about “investing in Dogecoin” in late 2013, I never imagined that the tongue-in-cheek cryptocurrency I had just brought into the world would still be around in the year 2018, let alone hit a $2 billion market cap like it just did over the weekend. Last year saw an explosion of interest and investment in cryptocurrencies across the board, so it’s tempting to see 2017 as the best year to date for the industry. But I feel it is shortsighted to mistake this explosive growth as being sustainable—in fact, I feel 2017 was arguably the worst year for cryptocurrencies yet. To understand why, let’s revisit what I learned from the currency I created as a joke. Dogecoin started as a parody of the multitude of alternative cryptocurrencies, or “altcoins,” flooding the market at the time. As interest in Dogecoin grew through social media and an active Reddit community, it went on to become an educational gateway for many people dipping their toes into the world of cryptocurrencies for the first time, thanks to its low price and welcoming community.  However, as I quickly learned, a passionate community of people throwing around money is like blood in the water to the shark-like scammers and opportunists who, in late 2014, co-opted the Dogecoin community and fleeced its members for millions of dollars.

    Researchers find that one person likely drove Bitcoin from $150 to $1,000 --Researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman have written a fascinating paper on Bitcoin price manipulation. Entitled “Price Manipulation in the Bitcoin Ecosystem” and appearing in the recent issue of the Journal of Monetary Economics the paper describes to what degree the Bitcoin ecosystem is controlled by bad actors.To many it’s been obvious that the Bitcoin markets are, at the very least, being manipulated by one or two big players. “This paper identifies and analyzes the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired,” the researchers wrote. “During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.” The team found that many instances of price manipulation happened simply because the market was very thin for various cryptocurrencies including early Bitcoin. “Despite the huge increase in market capitalization, similar to the bitcoin market in 2013 (the period examined), markets for these other cryptocurrencies are very thin. The number of cryptocurrencies has increased from approximately 80 during the period examined to 843 today! Many of these markets are thin and subject to price manipulation.”The manipulation happened primarily via two bots, Markus and Willy, that seemed to be performing valid trades but did not actually own the bitcoin they were using. During the Mt. Gox hack a number of these bots were able to create fake trades and make off with millions while manipulating the price of BTC.

    Bitcoin’s fluctuations are too much for even ransomware cybercriminals - Bitcoin’s price swings are so huge that even ransomware developers are dialling back their reliance on the currency, according to researchers at cybersecurity firm Proofpoint. Over the last quarter of 2017, researchers saw a fall of 73% in payment demands denominated in bitcoin. When demanding money to unlock a victim’s data, cybercriminals are now more likely to simply ask for a figure in US dollars, or a local currency, than specify a sum of bitcoin. Just like conventional salespeople, ransomware developers pay careful attention to the prices they charge. Some criminals offer discounts depending on the region the victim is in, offering cheaper unlocking to residents of developing nations, while others use an escalating price to encourage users to pay quickly and without overthinking things. But a rapidly oscillating bitcoin price plays havoc with those goals, Proofpoint says. “Surging cryptocurrency values are a boon for holders of bitcoin. But they are a challenge for anyone who tries to price their product or service in bitcoin — threat actors included. In Q4, newer ransomware strains appeared to take this into account. Sigma ransomware first appeared in mid-November demanding a payment denominated in US dollars.” Now, more than two thirds of ransomware strains seen in the wild denominate the payment in normal currencies. But they still demand the actual transaction be carried out in bitcoin, the researchers note. 

     Crypto crackdown? That's a lot of hype, too  - Wild price swings are par for the course in the hypervolatile cryptocurrency markets, but what happened on Jan. 16 and 17 wasn't a mere swing, dip or correction. It was a bloodbath. A perfect storm of market conditions — a massive bull run that saw the cryptocurrency market skyrocket from $147 billion in early October to more than $827 billion three months later, followed by red-flag headlines that warned of regulatory crackdowns to come in countries around the globe — caused a crash. In hindsight, a crash was inevitable. What surprised many was its severity. Within hours, bitcoin, Ethereum and other top coins had shed more than 25% of their value. When Asia woke up — late afternoon on the East Coast — the panic selling grew worse, and bitcoin fell below $10,000, barely half of its December high. By Wednesday morning, investors on Reddit and other social media sites were wondering, with a combination of awe and terror, whether the crash was finally over — or whether a prolonged bear market was just beginning. The mid-January crash, from which digital assets have yet to fully recover, was another sign of just how susceptible the global, round-the-clock cryptocurrency markets are to negative press — especially when that press involves the threat of regulatory action. Finance experts from Jamie Dimon to the Nobel Prize-winning economist Joseph Stiglitz have predicted in recent weeks that the government would come down hard on cryptocurrencies—and now regulators from the United States to South Korea appear to be getting ready to do just that. In early January, Securities and Exchange Commission Chairman Jay Clayton joined with lawmakers to issue a statement endorsing a warning from state regulators about the risks of cryptocurrency. Last Friday, Treasury Secretary Steven Mnuchin told an audience at the Economic Club in Washington that the Financial Stability Oversight Council, which is responsible for monitoring risk in the financial system, had formed a working group focused on the evolving asset class. "We want to make sure that bad people cannot use [cryptocurrencies] to do bad things," he said. 

    SEC Stymies Plans to Offer Bitcoin Funds Anytime Soon - Jerri-lynn Scofield - The Securities and Exchange Commission (SEC) yesterday put the kibosh on plans to offer exchange-traded funds (ETFs) or other products based on bitcoin or cryptocurrencies to retail investors anytime soon.  In a Staff Letter: Engaging on Fund Innovation and Cryptocurrency-related Holdings, Dalia Blass, the SEC ’s Director of the Division of Investment Management, posed 31 detailed questions over how funds would value, store, and safeguard fund holdings, as well as concerns over whether investors understood the risk of these investments, and the potential for market manipulation. These concerns must be satisfied before the agency will endorse any plans to offer bitcoin-based products to mom and pop investors. Over to the WSJThe Securities and Exchange Commission outlined its views in a letter to two Wall Street trade groups whose members envision the profits that could flow from selling exposure to bitcoin through popular investment vehicles such as ETFs and mutual funds. The SEC questioned how bitcoin’s volatility and potential illiquidity would fit with funds that must calculate a fair market price for their portfolio at the end of every trading day and allow investors to easily cash out their shares. The SEC has been skeptical over pressure to launch bitcoin funds to appeal to retail investors, as well as expressed concerns over initial coin offerings, determining that the latter should be treated as securities sales and thus conform with existing investor protection rules, according to the WSJ. This scrutiny has increased under SEC chair Jay Clayton: Last year, the SEC rejected two proposed ETFs that would directly own bitcoin, including one from Cameron and Tyler Winklevoss, arguing that the global market for the digital currency wasn’t transparent enough to support sufficient oversight. Some fund companies hoped that the SEC might relent after two Chicago exchanges late last year launched futures contracts on bitcoin. Just last week, the SEC confounded these expectations, by asking sponsors to withdraw proposals to offer ETFs based on bitcoin futures. Just a smattering of points from the 31 questions that the staff letter raises, broadly addressing the issues of valuation, liquidity, and custody:

    Did Bitcoin Just Burst? How It Compares to History’s Big Bubbles -- Bitcoin’s recent wobbles have given fresh urgency to a question that’s gripped market observers for much of the past year: Will the cryptocurrency go down as one of history’s most infamous bubbles, alongside tulipmania and the dot-com craze?The magnitude of Bitcoin’s boom (before it lost as much as 48 percent from its Dec. 18 high) suggests investors have reason to be worried. As the chart shows, the cryptocurrency’s nearly 60-fold increase during the past three years was truly extraordinary. It dwarfed the Nasdaq Composite Index’s gain during the headiest days of the 1990s. Going further back, it comfortably outstripped the Mississippi and South Sea bubbles of the 1700s. It even topped the Dutch tulipmania of the 1630s, though that last comparison should be taken with a grain of salt given the scarcity of recorded tulip values. (The chart includes prices for just one varietal; consistent post-peak figures were unavailable.) Bulls say that Bitcoin’s boom is far from over, and that there’s more to analyzing a market than just measuring price gains. While the recent tumble has alarmed some investors, the cryptocurrency has bounced back from several previous swoons exceeding 50 percent. If Bitcoin did become a widely-accepted form of digital gold, as predicted by Cameron Winklevoss of Facebook fame, it could have a lot further to surge. There’s also more than one way to slice a rally. On an annualized basis, Bitcoin’s three-year rise has been slower than the gains seen during several of history’s biggest manias -- most notably the Mississippi and South Sea bubbles.

    The Great Reset - Bob Moriarty - The "Everything Bubble" is bursting. This is going to get ugly. I suspect it began with the top in Bitcon and the other 1300-1400 related pseudo currencies back in December. I did an interview in the first week of December where I said Bitcon was in a bubble. I believed it would do the same thing every other bubble in history did. It was going to crash and take all the money of most of the investors. The piece was posted on the 10 th of December. When I did the interview, Bitcon had been going virtually straight up for months and was about $16,858, a new high. The interview allowed for comments. There were 136 in total. I just went through them to read what people were saying. 65% were convinced I am nothing but a senile old man long past his prime who doesn't understand that "This time it's different." That may well be true, Barbara reminds me half a dozen times a day I'm a senile old man. She may well have a point. But as I pointed out in Nobody Knows Anything, "This time it's different" is the bell they ring at the top of every bubble. The book has been out for almost two years now and it's still selling hundreds of copies a month. There must be something to it. I did yet another interview on Bitcon and the pseudo currencies that went up on the 13th of December and I made it perfectly clear that we were at a top and the bubble was about to burst. I made an interesting comment that can only be appreciated in hindsight, "If Bitcoin is $50,000 in a month then I'm obviously wrong. I'm either right or I'm wrong, it's really simple. But I've never seen a clearer bubble than Bitcoin, this makes the Florida land boom and even the dot com bubble look tame by comparison." John McAfee made an even more interesting comment quoted in the same article that will grow with time when he said, "Bubbles are mathematically impossible in this new paradigm. Gold is laughable compared to cryptocurrencies. How do you fractionalize gold? How do you ship it? It's physical so how do you safely store it. It was good for people 3,000 years ago. Today it is inherently worthless. Soon it will drop in value as crypto currencies climb." It is a month later. One of us got it dead right. And regardless of McAfee's IQ or wealth for him to say, "bubbles are mathematically impossible in this new paradigm" goes beyond stupid. That is shit house rat crazy. He needs to go to Amazon or any bookstore and spend $15 to learn about bubbles in history and how human behavior never changes.

    Pimco Says Lack of Fear in Markets Means You Should Be Worried - One of the world’s largest money managers says you should fear the lack of fear in markets. Investors in global equities are enjoying the best start to a year in at least three decades, cutting back on cash positions and plowing more money into riskier assets. However, just as many expect this bull run to last even longer than previously expected, Pacific Investment Management Co. says now is the time for caution. “The fact that the fear is gone is the main reason why we should be worried,” Joachim Fels, a global economic adviser at Pimco, told Bloomberg TV on Wednesday from Newport Beach, California. “That means most investors are now pretty fully invested and that means they will want to get out if the markets start to correct -- exacerbating the downdraft.”Chances are that interest rates will rise faster than many expect, pushing up government bond yields, he said. Fels also suggested inflation may tick higher, and continues to advise an overweight position on inflation-linked bonds within fixed-income portfolios. His firm has cut exposure to corporate credit, particularly high-yielding bonds, concerned that a sell-off may soon arrive, with the asset class having a high correlation to stocks. For now, investors seem immune to such warnings. The MSCI All-Country World Index is up 4.6 percent in 2018, the best start to a year since at least 1988, according to data compiled by Bloomberg.

    At CES, Spectre haunted tech executives in public and private meetings - Despite being drenched and briefly thrust in to darkness, the largest annoyance for many top tech executives at CES was the shadow of Spectre.The world’s largest electronics show immediately careened toward the twin maladies dubbed Spectre and Meltdown, potentially exploitable weaknesses in the brains of PCs and servers world-wide.On Monday, Intel Corp. Chief Executive Brian Krzanich—days after originally revealing the potential attack targets discovered by Alphabet Inc.-affiliated researchers—began his preshow keynote by praising the industrywide response and stressing that Intel wasn’t solely affected. The next morning, Advanced Micro Devices Inc. and Microsoft Corp. proved Krzanich’s point as thousands of exhibitors began showing off their wares—Microsoft had to halt patches to some AMD-based devices due to slowdowns and stoppages, damaging AMD”s stock just as Intel’s had been stoned the week before. The gray skies from a storm that soaked Vegas and closed down Google’s most prominent CES presence on its first day were still lingering when MarketWatch met with AMD Chief Executive Lisa Su in a hotel suite that afternoon. Su said the problem was only affecting some “legacy processors,” meaning older AMD chips, and said the specific issue with the halted Microsoft patches would be fixed quickly.Su and Papermaster both insisted in the interview that chips wouldn’t have to be re-architected to avoid the techniques that appear susceptible, but little appeared to be set in stone—less than 48 hours later, Papermaster would update his blog post on the issue.

    Fears mount about Meltdown, Spectre threats to cloud computing -  Cloud computing vendors are a likely target as hackers try to exploit the Meltdown and Spectre hardware vulnerabilities that have affected most desktops and servers. "They are a high-value target,” said Scott Laliberte, managing director, global leader of security and privacy solutions at Protiviti. The situation harkens back to a worry people had in the earliest days of cloud computing. “The cloud providers’ big issue is this new class of attack directly impacts cloud infrastructure and the things you’re not supposed to be able to do in the cloud ," said one expert. “When cloud computing first came out, everyone was hesitant to move because there was all this theoretical risk of, if somebody got into one tenant’s environment, could they jump to another tenant’s environment?” Laliberte said. “That concern subsided after a while, because no one saw that happening; there were no real exploits or attacks being published that took advantage of that. Spectre and Meltdown are now reviving that risk and bringing it to light, and making people rethink their control and mitigation strategy.” It’s of particular interest to banks, which must stay informed as they made decisions about cloud computing versus tech solutions on premises. In the worst-case scenario, bad actors could use Spectre and Meltdown to access a cloud user’s system and try to read memory from other tenants’ systems, using that access to steal passwords and other sensitive information. 

    No, the Senate reg relief bill isn’t destroying Dodd-Frank – BankThink --That was the reaction Tuesday from some after The New York Times splashed an article about efforts to ease the Dodd-Frank Act on its front page. The article used mostly measured terms, but said the Senate regulatory relief bill “would roll back restrictions on swaths of the finance industry” and help “hundreds of smaller banks to avoid certain elements of federal oversight.” That was all it took to provoke condemnation from many progressives on social media, who alternately decried President Trump and Republicans for destroying bank safeguards and blamed the moderate Democrats who are supporting the Senate bill. Why are @TheDemocrats supporting this? The LAST thing we need is another financial meltdown. Capitalism and Corporations aren’t ethical. @SenWarren Aren’t you our main proponent of consumer protections? #Confused #DoddFrank #TuesdayThoughts https://t.co/LkQHS9MqE4— Emily Timm (@timm_emily) January 16, 2018Let’s remember why we have Dodd Frank ... to protect consumers and stabilize the financial institutions. Undoing it means bamks could take excessive risks and we could have a repeat of Lehman Bros in 2008. Reafy to loose all your savings again? https://t.co/0lr8A92w1c — puffin98 (@puffin98) January 16, 2018 Many said lawmakers are trying to “gut” Dodd-Frank and help “Wall Street” banks. The most common refrain, however, was that banks large and small would be free to return to the bad old days before the financial crisis hit.  The problem with this narrative is that it’s demonstrably false.

    More questions for Wells Fargo after exam rating leak --The leak of confidential supervisory information about Wells Fargo's examination rating is fueling speculation that further regulatory action may soon be taken against the San Francisco megabank and raising renewed questions about its regulator's oversight.  A recent report said that the management component of Wells' Camels rating — one of the most subjective parts of the test — had been downgraded to 3 in mid-2017, a warning shot to management indicating ongoing supervisory concerns or weakness. "If there's been a management downgrade, the reasons have been articulated to management and there are issues and remediation steps they are ," The downgrade has also put the spotlight on why the OCC took so long to reflect Wells Fargo's problems in its exam rating. Bloomberg News Both Wells and the Office of the Comptroller of the Currency, the bank's primary regulator, have declined to comment on the disclosure made in The Wall Street Journal. But the very fact that it was leaked at all was seen as a bad sign. Banks are prohibited by law from disclosing their Camels rating, making it a federal crime.  Industry analysts said it's clear Wells is being closely scrutinized.   The management component is just one part of the Camels test, which is an acronym for the six essential components looked at by regulators to rate a bank's financial condition: Capital, asset quality, management, earnings, liquidity and sensitivity to market risk.  The downgrade of the management component for Wells could mean risk management practices may be considered less than satisfactory relative to the megabank's size and complexity.

    Fed’s Quarles to seek more ‘tailoring’ of large-bank rules - — Federal Reserve Vice Chairman for Supervision Randal Quarles on Friday gave the clearest indication yet of the central bank's intention to recalibrate the regulatory framework for the nation’s largest banks, including revisions to capital and liquidity rules.Speaking before a conference of the American Bar Association Friday, Quarles said that the agency is reviewing its current regulatory structure for the leverage ratio — a simple ratio that requires banks to hold capital against their assets regardless of their character — and signaled the Fed may further tailor rules to distinguish between "global systemically important banks" and non-GSIBs. Revising the leverage ratio has been a consistent focus for the industry and the Trump administration. While the original ratio included all assets with an equal risk weight, to produce what proponents say is a purer capital measure, large banks have argued that certain low-risk assets should be taken out of the ratio, and that view was confirmed by a recent Treasury Department report that recommended financial reforms. “Leverage ratio recalibration is also among the Federal Reserve’s highest-priority, near-term initiatives,” Quarles said. “We have made considerable progress on that front in the past few months, and I expect that you will see a proposal on this topic relatively soon.”Quarles added that revising many of the capital and liquidity rules for banks with more than $250 billion in assets, but that have not be designated as G-SIBs, should be aimed at keeping rules in sync with the systemic risk that those firms pose. “Tailoring is not an objective limited to a subset of the smallest firms,” Quarles said. “The character of our regulation should match the character of the risk at the institution. Accordingly, we should be looking at additional opportunities for more tailoring for larger ... non-GSIBs.” Quarles specifically pointed out that requirements under the Liquidity Coverage Ratio do not have a gradation between G-SIBs and non-G-SIBs, particularly as it pertains to internal stress testing models. He said similar calibrations might be necessary with the single counterparty credit limits and the living wills process.

    Bank Failures by Year -- In 2017, eight FDIC insured banks failed. This was up from 5 in 2016. The great recession / housing bust / financial crisis related failures are behind us. The first graph shows the number of bank failures per year since the FDIC was founded in 1933. Typically about 7 banks fail per year, so the 8 failures in 2017 was close to normal.
    Note: There were a large number of failures in the '80s and early '90s. Many of these failures were related to loose lending, especially for commercial real estate.  Also, a large number of the failures in the '80s and '90s were in Texas with loose regulation.Even though there were more failures in the '80s and early '90s then during the recent crisis, the recent financial crisis was much worse (larger banks failed and were bailed out). The second graph includes pre-FDIC failures. In a typical year - before the Depression - 500 banks would fail and the depositors would lose a large portion of their savings.  Then, during the Depression, thousands of banks failed. Note that the S&L crisis and recent financial crisis look small on this graph.

    Music to investors’ ears: Banks will use tax cut to boost dividends  -- Executives of large banks told investors and analysts what they wanted to hear Friday when they said that much of the savings from the reduction in the corporate tax rate would be used to boost returns to shareholders. During conference calls held to discuss fourth-quarter and 2017 earnings, senior leaders at JPMorgan Chase, Wells Fargo and PNC Financial Services Group all said that returning capital to shareholders — through higher dividend payments, expanded stock buyback programs or both — would be a top priority in 2018.“Because we have a lower tax rate … if everything else stays equal, we'll have more [capital] to return,” to investors, PNC Chief Financial Officer Rob Reilly said during Friday’s conference call.  PNC estimates that its tax rate will fall to 17% this year, from roughly 26.8% in the third quarter of 2017. (Most banks’ fourth-quarter rates were skewed by one-time items related to the timing of the tax cut’s passage.)  JPMorgan Chief Financial Officer Marianne Lake said that while increasing payouts to investors is always a priority, it is reasonable to assume that those payouts will be larger now that the bank’s effective tax rate will drop to 19% in 2018, from 29.6% in last year’s third quarter. The decline in the tax rate is expected to boost the bank's profits by 14%, or roughly $3.5 billion, in 2018, according to Bloomberg. Bankers' comments were music to the ears of analysts, who have been eagerly waiting to hear how banks intend to spend their tax savings since President Trump signed the $1.5 trillion tax cut into law last month. One analyst on JPMorgan’s call described the tax cut as a “once-in-a-lifetime” corporate benefit.

    Loan growth from tax cuts might take a while - It is going to take more than a cut in corporate taxes to encourage businesses to take out more bank loans to start building new facilities or buying more equipment. Though business owners are certainly more optimistic about the direction of the economy since Congress passed a law that slashes the corporate tax rate to 21%, it's doubtful their borrowing will increase meaningfully until they see more signs of more robust growth, bankers say. Dallas-based Comerica, for example, said it expects its loan growth to closely track the gross domestic product, which most economists predict will increase between 2% and 3% in 2018. Though that is in line with current trends, it’s a pace that is “unlikely to excite many investors,” Sandler O’Neill said in a research note to shareholders Tuesday. “Overall, our customer sentiment is more positive given the progress Washington has made on tax and regulatory relief, but remains cautious as we closely watch for signs of stronger economic growth,” Comerica Chairman and CEO Ralph W. Babb said on the bank’s fourth-quarter earnings call Tuesday. Other CEOs are also warning bank investors and analysts not to get their hopes up that the tax cut will lead to a surge in new borrowing. On Friday, PNC Financial Services Group Chairman and CEO William Demchak said that its impact on borrowing will be so negligible that the Pittsburgh company is not even building it into its loan projections for 2018. That echoed comments he made at an investor conference last month — before President Trump signed the Tax Cuts and Jobs Act into law — when he said that it’s “wildly optimistic” to assume that businesses have been sitting on the sidelines waiting for Congress to act. 

    Behind Citi's plans to have it both ways on capital -- When Citigroup CEO Michael Corbat suggested on Tuesday that the bank’s capital cushion would rebound from the fourth-quarter blow delivered by tax reform, his reassurances raised two questions. How would it do that and maintain investor payouts? Moreover, will other banks be able to have it both ways, too? Citi's common equity Tier 1 capital ratio dropped to 12.3%, compared with 13% in the third quarter and 12.6% in the fourth quarter of 2016. The ratio declined because the new tax law generated a one-time reduction of $6 billion in common equity Tier 1. The contributors to the reduction were share buybacks, dividend payments and the bank's widely anticipated (and widely covered) $22 billion charge in the fourth quarter to write down the value of its deferred tax assets and other effects of the tax law. Still, higher dividends and stock buybacks are said to be on the way. Citi estimates that its returns on tangible common equity should improve from 9.6% in the fourth quarter to 10.5% in 2018 and at least 13% in 2020. 

    How the wave of GOP departures will affect banks | American Banker - House Republicans are exiting Congress in droves ahead of the 2018 midterm elections and the stakes for the financial services industry could be significant.The key question is if the retirement of 31 GOP members of Congress is a leading indicator of a wave election for Democrats or a symptom of the volatility in modern politics. “If the election were held today, it would be a big Democratic wave,” said Alex Conant, who runs a Republican consulting firm called Firehouse Strategies. But, he said, “10 months is a really long time for politics and things move very fast. The environment will look different in ten months.”  (Slideshow)Of the more than 30 GOP lawmakers due to retire at yearend — a historically significant level of departures for a single election — several are important to banking policy. Still, Conant, who was Sen. Marco Rubio’s communications director during his presidential campaign, says the industry is smart to think ahead. “Nobody should be surprised if they wake up after the election and find out that Democrats are in charge,” Conant said. “The time to make first contact with a candidate is not the day after he or she won an election.”If Democrats control the House, the biggest immediate impact for banks and credit unions from a policy perspective would be that Rep. Maxine Waters would likely chair the House Financial Services Committee.The California Democrat is one of the more progressive members of Congress and has proposed legislation to break up big banks.“Obviously there is a big ideological difference between Chairwoman Waters and the likely next Republican to be chair,” said Aaron Klein, a fellow in economic studies at the Brookings Institution and former chief economist at the Senate Banking Committee under Democratic Chairman Chris Dodd. But a financial services lobbyist, who asked to remain anonymous, said that, while efforts to roll back Dodd-Frank regulations would likely be stymied by Waters if she were to hold the panel’s gavel, President Trump’s veto power protects the industry from legislation adding new regulations.

    CFPB deputy files appeal in battle to unseat Mulvaney - The deputy director of the Consumer Financial Protection Bureau filed an appeal Friday in her battle to oust acting CFPB Director Mick Mulvaney, prolonging the fight over President Trump's appointment. Leandra English requested an expedited review of her case by the U.S. Court of Appeals for the District of Columbia, just two days after U.S. District Judge Timothy J. Kelly refused to grant a preliminary injunction, Kelly ruled that English was unlikely to succeed in removing Mulvaney, because doing so would upset the status quo, and she was unable to demonstrate irreparable harm to herself or the agency.English has claimed she is the lawful director of the CFPB, having been appointed as deputy director by former CFPB Director Richard Cordray in late November. Trump appointed Mulvaney as acting director on the same day.English sued both Trump and Mulvaney alleging that statutory language in the Dodd-Frank Act takes precedence and states that the CFPB director can name a successor. The Department of Justice and the CFPB's general counsel have said Trump has broad powers to appoint Mulvaney under the Federal Vacancies Reform Act.English's case is not the only one pending on the matter. The Lower East Side People's Federal Credit Union has filed a substantially similar lawsuit in New York that also protests Trump's decision. The oral arguments on that case were heard on Friday morning. It's not immediately clear what would happen if that court reached a different verdict than Kelly.  Outside experts have continued to say English's case is weak, indicating that the longer Mulvaney remains in control, the less likely a court will be to reverse the earlier decision.

    Supreme Court case could affect CFPB constitutionality ruling - The Supreme Court agreed Friday to hear a case challenging the appointment of administrative law judges, which could affect an appeals court ruling on the constitutionality of the Consumer Financial Protection Bureau. The Supreme Court case, Lucia v. Securities and Exchange Commission, was cited by the U.S. Court of Appeals for the D.C. Circuit in February when it agreed to consider an appeal by the CFPB on whether the agency's single-director structure is unconstitutional.  The appeals court is expected to rule any day in the closely watched case, PHH v. CFPB. The court could decide to hold off on a ruling while the Supreme Court determines the Lucia case, experts said.  If the Supreme Court concludes that the method of choosing administrative law judges is unlawful, it has the potential to throw out a judgment against PHH. During oral arguments in May, the appeals court justices did not spend much time discussing what would happen to the PHH case if the judge who initially decided the case was deemed to be an "inferior office" and not an "employee" of the CFPB.  The case dates to 2014, when Cameron Elliot, an administrative law judge who worked for the SEC, recommended that PHH disgorge more than $6 million in damages for taking illegal kickbacks in violation of the Real Estate Settlement Procedures Act.   In 2015, then-CFPB Director Richard Cordray overruled that decision and ordered PHH to pay $109 million. An en banc panel of the D.C. Circuit ruled that the CFPB was unconstitutional, but that ruling was vacated when the full court agreed to hear the CFPB's appeal.

    CU fights to keep alive lawsuit against Trump’s CFPB pick - A lone credit union’s legal battle to oust Mick Mulvaney as acting director of the Consumer Financial Protection Bureau will likely turn on whether it has standing to sue.  The issue of whether the appointment has done harm to the financial institution was front and center last week, when the Lower East Side People’s Federal Credit Union fought against a Justice Department motion to dismiss its case. Ilann Maazel, a partner at Emery Celli Brinckerhoff & Abady LLP who represents the credit union, argued that “as a regulated entity, the plaintiff here has a standing,” in the Southern District of New York before U.S. District Judge Paul Gardephe  In support of his argument, Maazel cited State National Bank of Big Spring v. CFPB, a suit by one Texas bank against the CFPB that argued the agency’s structure violated the Constitution’s separation of powers because it had no meaningful checks from any branch of government. In the Big Spring case, the court agreed that the bank had standing as a regulated entity of the CFPB.But Gardephe questioned whether or not the court had “walked back” on language from Big Spring and what the counsel thought of the language, “standing is not dispensed in gross.”Maazel suggested the notion that a regulated entity could not bring action against its regulator would give that entity only one other option: purposely break a law in order to trigger an enforcement action just to get its day in court. This was something Maazel was not willing to advise his client to do. “In short, it really doesn’t matter,” Maazel said. “We don’t need to show any harm beyond what we just described. It is harmful to be regulated by an agency that cannot regulate you.”

    Banks, consumer groups stir up backlash against potential CFPB pick - — National Credit Union Administration Chairman J. Mark McWatters has not even been announced as President Trump's pick to run the Consumer Financial Protection Bureau, but his potential nomination already is uniting several diverse groups in opposition. Since news of McWatters’ potential pick first broke in American Banker in December, banking industry representatives have criticized the idea of appointing him to the CFPB post over concerns that his past backing of the credit union industry poses a problem. As NCUA chairman, McWatters has publicly stated support for credit unions getting preferential regulatory treatment over banks, due to what he suggests is a safer business model. “I would plead with anyone who has even the slightest concern about the ever-expanding power of the fourth branch of government to reject the idea of appointing an activist agency head like McWatters to lead the most unaccountable agency ever created," said Utah Bankers Association President Howard Headlee. "I can’t think of a more disastrous combination, not just for community banks, but for the American economy.” The focus on McWatters sparked opposing op-eds in American Banker, from a community banking spokesman blasting the idea and a credit union representative defending McWatters. Camden Fine, chief executive officer of the Independent Community Bankers of America, said, "The CFPB should not be led by the head of an agency that has acted as a cheerleader for the industry under its oversight." "Rather," Fine said, "it requires an even-handed official with experience in the broader commercial banking sector." But Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, shot down that notion in another op-ed, calling McWatters “more than qualified.”

    CFPB signals plan to kill payday rule | American Banker -- The Consumer Financial Protection Bureau said Tuesday that it plans to reopen its payday lending rule, issuing the announcement on the same day that the rule — written by the bureau's previous leadership — technically went into effect. "The bureau intends to engage in a rulemaking process so that the bureau may reconsider the payday rule," the CFPB said in a terse, three-paragraph press release. Although details are lacking about how the consumer agency might rewrite or kill the rule, the latest move is another illustration of the sea change since former CFPB Director Richard Cordray stepped down in November and was succeeded by acting Director Mick Mulvaney, the White House budget director who had strongly criticized the bureau in the past. (Mulvaney was not quoted or mentioned in the press release.) The small-dollar payday rule, which was finalized in October under Cordray, requires lenders to determine a borrower's ability to repay a short-term loan of 45 days or less. Tuesday's effective date codifies the rule in the Code of Federal Regulations. By April of this year, payday and installment lenders must register their information systems for compliance with the rule. However, lenders have until August 2019 to comply with tough new underwriting guidelines. The CFPB said it would offer waivers to payday and installment lenders that are struggling to meet the April 2018 deadline to register. 

    Not so fast: CFPB effort to reopen payday rule faces hurdles - The Consumer Financial Protection Bureau faces significant obstacles in reopening the payday lending rule, including likely legal challenges from consumer groups and ensuring any change complies with the Administrative Procedure Act, which governs how agencies issue regulations.The decision this week is seen as a way for acting CFPB Director Mick Mulvaney to attempt to eliminate the payday rule's core requirement that lenders determine a borrower's ability to repay a small-dollar loan.So far, Mulvaney has just delayed the rule indefinitely. But that can't go on forever and if he attempts to make a substantive change, he will have to provide a reasonable basis for doing so under the Administrative Procedure Act, something that could prove difficult given that the rule was finalized in October on the basis of three years of research. "To make any changes [to the existing rule] is a high hurdle because it cannot be based solely on a change in policy," said Quyen Truong, a partner at Stroock & Stroock & Lavan, and a former assistant CFPB director and deputy general counsel. "It likely will be a lengthy process to jump through all the hoops of the Administrative Procedure Act requirements. The agency also would have to point to some lack in data or analysis in the original rulemaking." Practically speaking, the CFPB would have a harder time rescinding the rule than amending it, lawyers said. The agency is expected to issue a new notice of advanced rulemaking, which would be open for public comment for at least 60 days. After the public weighs in, the bureau would issue a new final rule. It also has to conduct an analysis on how it will affect small businesses. "It is not clear that this necessarily means there will be no payday rule, but there is likely to be a more narrow payday rule," said Ben Olson,a former deputy CFPB assistant director. "I don't know that current bureau leadership knows how they want to handle this yet other than announcing their intention to do something."

    Mulvaney launches public review of entire CFPB - Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, issued "a call for evidence" on Wednesday seeking comment on how the bureau can fulfill its proper and appropriate functions to best protect consumers.The CFPB said it plans to publish a series of requests for information in the Federal Register in the coming weeks asking for the public to weigh in on the agency's enforcement, supervision, rulemaking, market monitoring and education activities. “In this New Year, and under new leadership, it is natural for the bureau to critically examine its policies and practices to ensure they align with the bureau’s statutory mandate," Mulvaney said in a press release. "Moving forward, the bureau will consistently seek out constructive feedback and welcome ideas for improvement.”  The first request for information will focus on so-called civil investigative demands, known as CIDs, which are issued to companies during enforcement investigations. The bureau said comments received will help "evaluate existing CID processes and procedures" and determine whether any changes are warranted. The requests for information "will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities," the agency said in a press release.“Much can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process," Mulvaney said.  It was the second significant move by Mulvaney in two days. He announced Tuesday that the agency would reopen its final rule targeting payday lending, a decision that has sparked condemnation by Democrats and consumer groups.

    Mulvaney requests 'zero' money for CFPB -- Consumer Financial Protection Bureau Director Mick Mulvaney has requested "zero" funding from the Federal Reserve in the second quarter and instead will use reserves to fund the agency. Mulvaney sent a letter Wednesday to Fed Chair Janet Yellen stating that the CFPB already has $177 million in reserve, enough to cover its $145 million second-quarter budget, and therefore it does not need any funding. "This letter is to inform you that for second quarter of fiscal year 2018, the bureau is requesting $0," Mulvaney wrote to Yellen. "Simply put, I have been assured that the funds currently in the bureau fund, are sufficient for the bureau to carry out its statutory mandates for the next fiscal quarter while striving to be efficient, effective and accountable," said acting CFPb Director Mick Muvlaney. Bloomberg News Mulvaney said that since the bureau had a $177.1 million reserve balance at the Federal Reserve Bank of New York, he determined that "no additional funds are necessary to carry out the authorities of the bureau for fiscal 2018, Q2." Those funds were set aside by former CFPB Director Richard Cordray in case of emergencies, but Mulvaney suggested he didn't see the point. There is no statutory authority that mandates the CFPB to maintain a reserve. "I see no practical reason for such a large reserve, since I am informed the board has never denied a bureau request for funding," Mulvaney wrote in the letter, which was first reported by Politico. "Simply put, I have been assured that the funds currently in the bureau fund, are sufficient for the bureau to carry out its statutory mandates for the next fiscal quarter while striving to be efficient, effective and accountable."

    Is CFPB’s Mulvaney waging war on the agency he runs? - If anyone has doubted that acting Consumer Financial Protection Bureau Director Mick Mulvaney intends to overhaul the agency, the last three days alone have put those doubts to rest.Just this week, the CFPB reportedly withdrew an April 2017 lawsuit against four online payday lenders, signaled it would tighten up on its spending, launched a public review of all the bureau's activities and announced that it would reopen the payday lending rule.Lawyers who represent banks and credit unions praise the moves, noting that Mulvaney, who also is director of the Office of Management and Budget, was trying to show that Republicans can run the government more efficiently."He is changing the agency to be more of a traditional law enforcement agency and he is going to start listening to the companies that he regulates, which was not the case under the prior regime," said Scott Pearson, a partner at Ballard Spahr in Los Angeles.Others suggested Mulvaney was waging a full-scale war on an agency that he and other conservatives have never liked."This looks like a concentrated effort to quickly and significantly change the CFPB from within," said Christopher Willis, a partner at Ballard Spahr. "Everything he's done since taking office has supported the idea that he wants to restrain the agency's activity, not just now but for the future." Here are answers to frequently asked questions about Mulvaney's recent moves.

    Mulvaney, handpicked team in tow, ready to reshape CFPB -- President Trump’s decision to name budget director Mick Mulvaney as acting head of the Consumer Financial Protection Bureau may have grabbed headlines this past fall, but the real groundwork for change is just now being laid. Mulvaney has made several key hires in recent weeks, including top employees from his budget office and two former staffers for Rep. Jeb Hensarling, R-Texas, chairman of the Financial Services Committee. Whether or not these staffers have policy views that exactly match their bosses, the announcements carry a symbolic significance, given the sharp criticisms that both Mulvaney and Hensarling have lobbed at the consumer agency over the years. With new hires coming aboard, Mulvaney, the bureau's acting director, will have the manpower he needs to begin making real changes to the CFPB. Bloomberg News But these appointments are more than just symbolic. As more top staff come online, those bent on overhauling the agency will be better equipped to do so. Naming Mulvaney to the acting director position — a move that continues to be contested in court —was like “the first landing crew establishing a beachhead,” said Chuck Gabriel, president of Capital Alpha Partners. “You bring in these staffers and now you’re truly taking control.” As Sen. Elizabeth Warren, D-Mass., who founded the bureau, is fond of saying: Personnel is policy. The staff being brought on now will be instrumental to establishing the framework for change that a Senate-confirmed director is likely to take up. “These new hires are going to be very actively working and conferring around town, so that they can have a list of options and a briefing book ready for day one, when a permanent director is confirmed,” 

    A new name emerges as possible head of CFPB — A new name has surfaced in the sweepstakes to be the next Consumer Financial Protection Bureau director amid growing skepticism that the White House's first choice, J. Mark McWatters, will get the nod. Jonathan Dever, a Republican Ohio state representative and defense lawyer, is being touted as a top candidate to lead the bureau, according to multiple insiders. Dever’s name first surfaced last year, but appears to have picked up steam in recent days after the banking industry raised objections to McWatters, arguing the chairman of the National Credit Union Administration is too close to the industry he supervises. Little is known about Dever, though he is being championed by Rep. Steve Stivers, R-Ohio, a member of the House Financial Services Committee and the National Republican Campaign Committee. Dever was elected to the Ohio state legislature in 2014 and operates The Dever Law Firm, a small company outside of Cincinnati. According to the company’s website, Dever specializes in mortgage regulations and foreclosure defense. Dever has sponsored foreclosure legislation, including a bill that created the D.O.L.L.A.R. Deed program in Ohio that allows homeowners to stay in their homes as renters if they don’t qualify for a mortgage modification. Top administration officials, including Vice President Mike Pence’s Chief Economist Mark Calabria and Treasury senior counsel Craig Phillips, criticized mortgage regulations in speeches this week for driving up the cost of credit and creating an uneven playing field, shifting market share to the government’s balance sheet. Many conservatives blame the CFPB for the tightness of credit. “It continues to be too difficult to get a mortgage,” Phillips said in a speech Thursday. “The nature of regulation can be measured in costs and the costs have skyrocketed since the financial crisis.” McWatters’ name surfaced late last month as the lead contender to be the next CFPB director, but bankers have balked, pointing to his record of favoring credit unions as head of the NCUA. House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Tex., has come out in defense of McWatters, but there have been attacks on his candidacy from the left and the right. 

    Blockchain being considered to resurrect crisis-era mortgage product -- A group of big financial institutions wants to use the blockchain to help resurrect the packaging of home mortgages into securities, a business that almost destroyed the global banking system in 2008. Credit Suisse, U.S. Bancorp, Wells Fargo and Western Asset Management said Thursday that they successfully tested the distributed ledger technology as a way to make it easier to track securitized home loans. Before the 2008 crisis, bundling home loans together and then selling those baskets to investors was a huge profit center for banks. But this was the primary cause of the meltdown after many borrowers couldn't repay their debt and the value of the securitized loans crashed, causing trillions of dollars in losses.The business then shrank dramatically. "Structuring securities is complex, involving many different parties, manual processes, duplicated documents and data in different formats," David Rutter, chief executive officer of the blockchain startup R3, which is organizing the consortium, said in a statement Thursday. While the group is starting with residential mortgages that aren't backed by the U.S. government, it plans to expand to other types of asset-backed securities. The next step is delivering a commercially viable product, R3 said.Distributed ledgers consist of a network of users or companies that share access to a database to track things like bitcoin payments or data reconciliation that's vital to securitized mortgages. "Distributed ledger technology will increasingly improve security around data, not just for capital markets but across numerous other industries," Penny Morgan, global securities operations manager at Western Asset Management, said in the statement.

    House votes to exempt more firms from HMDA rule — The House has voted to exempt community banks, small credit unions and nonbank mortgage lenders from new Home Mortgage Disclosure Act reporting requirements that went into effect Jan. 1.  The bill, sponsored by Rep. Tom Emmer, R-Minn., is aimed at providing relief to smaller institutions from the Consumer Financial Protection Bureau’s 2015 rule that had expanded HMDA data points.  The CFPB rule only exempted mortgage lenders that originate fewer than 25 closed-end mortgages and fewer than 100 home equity loans over a two-year period. Under the Emmer bill, those reporting thresholds would be expanded to 500 closed-end mortgages and 500 home equity loans in a two-year period.  The House passed the HMDA relief bill by a 243-184 vote Thursday evening.  The CFPB rule had drawn criticism because it requires lenders to report 48 data elements, nearly double the previous total.  In terms of regulatory burden, "that is a lot, especially for a community bank," said Ron Haynie, senior vice president at the Independent Community Bankers of America.   The American Bankers Association had expressed concerned that the new HMDA requirements might force small banks out of the mortgage business.

    FHFA breaks silence on housing finance reform — Federal Housing Finance Agency Director Mel Watt finally detailed his views on housing finance reform, saying that the agency believes Fannie Mae and Freddie Mac should be reincorporated as private entities and the government must provide an explicit guarantee for catastrophic losses in the secondary mortgage market. In a letter dated Tuesday to Senate Banking Committee leaders, Watt said once returned to the private sector, Fannie and Freddie would represent the first two "secondary market entities" that would be able to issue government-guaranteed mortgaged backed securities as a common security that has a mandated rate of return set by a regulator. Watt's views appear to broadly coincide with the package being developed by Chairman Mike Crapo, R-Indiana, and Sherrod Brown, D-Ohio.  Watt said he was making the recommendations based on repeated requests by Congress as it begins to take up housing finance reform. But he added that he still believes “it is the prerogative and responsibility of Congress, not FHFA, to decide on housing finance reform.” In an outline FHFA document obtained by American Banker, the agency said Fannie and Freddie should be preserved, but "reincorporated as private, shareholder-owned corporations with a regulated rate of return.”  It adds that the government should provide an "explicit and paid-for catastrophic guarantee" on all MBS issued by Fannie, Freddie and other private-sector competitors. The regulator would collect the fees from the guarantee and create a mortgage insurance fund that would cover losses in the event of a severe downturn, similar to how the Federal Deposit Insurance Corp.'s fund covers losses on insured deposits. Under the FHFA's plan, the secondary market entities would have mandated capital and liquidity requirements. Though FHFA suggested there should be more than two guarantors, it warned against having so many that it leads to a race to the bottom.  The document also outlined a number of housing goals, including maintaining the cash window utilized by smaller lenders and affordable housing mandates for Fannie and Freddie.

    Treasury, FHFA see eye to eye on housing finance reform, top official says-- The Treasury Department mostly agrees with a housing finance reform plan put forward by Federal Housing Finance Agency Director Mel Watt this week, according to Craig Phillips, a senior counselor to Secretary Steven Mnuchin. The FHFA plan would return Fannie Mae and Freddie Mac to the private market and provide them an explicit, catastrophic guarantee for their mortgage-backed securities in return for fees paid into a reserve fund. “We are broadly supportive” of the FHFA outline, Phillips told at a Women in Housing and Finance event on Thursday.  But he acknowledged some of the exact details are still being worked out. "The harder part is the how," he said, noting the difficulty of increasing the private market's share of the housing sector while maintaining affordability goals of Fannie and Freddie. The comments provide further evidence that housing finance reform discussions are gaining steam. Watt, an Obama-era appointee, provided the first details this week of how the agency views reform of the government-sponsored enterprise, including creating a limited number of private-sector competitors to newly privatized Fannie and Freddie. The plan would also keep a number of affordable housing goals that would “provide benefits at least comparable” to the requirements that Fannie and Freddie currently abide by.While Watt warned against he creation of too many private-sector competitors to Fannie and Freddie due to fears of lax standards amid heavy competition, Phillips said there could be many guarantors as long as there was strong oversight.

    Cheat sheet: Senate goes own way on housing finance reform — Senate negotiators are breaking from an emerging consensus on housing finance reform, working on a bill that would place Fannie Mae and Freddie Mac into receivership, repeal their charters and replace them with multiple mortgage guarantors. As recently as Thursday afternoon, it appeared policymakers were lining up behind a plan put forward by the Federal Housing Finance Agency that would reconstitute Fannie and Freddie, effectively turning them into utilities with access to an explicit government guarantee against catastrophic loss. But according to sources familiar with the negotiation, the most recent thinking on the Senate bill would deviate substantially from the FHFA’s outline. It would replace the government-sponsored enterprises with upward of 10 private-market guarantors and eliminate affordable housing goals in favor of an incentive system designed to encourage lending to low- and middle-income borrowers. Overall, the outline being discussed appears to be a move further to the right, likely an effort to encourage more conservative support among Republicans leery of the GSEs. It also likely puts it more in line with what House Financial Services Committee Chairman Jeb Hensarling is planning. But it runs the risk of alienating moderate Democrats who must sign off on any final package to clear the Senate. The FHFA's plan would effectively turn Fannie and Freddie into utilities with a set rate of return. The Senate plan would replace them with multiple guarantors, which do not have such restrictions. Bloomberg News To be sure, sources caution the Senate bill is still in flux and subject to ongoing negotiations. But here’s what we know of the latest version — and how it differs from the FHFA’s plan. Under the current Senate version, new mortgage guarantors would be created after Fannie and Freddie are placed into receivership. While the FHFA’s plan calls for a limited number of guarantors — FHFA Director Mel Watt warns that too many could weaken underwriting standards — the Senate plan sets no such restriction. Moreover, the FHFA envisions a reconstituted Fannie and Freddie as utilities with a rate of return set by a regulator.  But the Senate version would not set a rate of return and firms would be allowed to pick the markets they operate in, potentially resulting in some markets not being served. 

    Commercial Real Estate Suffers First Down-Year since 2009 - Wolf Street - In the era of the never-ending “Everything Bubble,” where asset prices can do only one thing, namely surge, it might come as an unwelcome surprise: Commercial real estate prices had their first down-year since the Financial Crisis, according to the Green Street Property Price index, which ended December 2017 at 125.96, a notch below its level a year ago (126.66).The index is flat with its level 18 months ago, in June 2016. This is when the index began to plateau, after a huge surge that pushed the index up 106% from May 2009 and leaves it 26% above the peak of the prior crazy bubble that imploded with spectacular results.Even after inflation — according to the Fed’s favorite measure, core PCE, consumer prices have risen 18% since May 2007 — the index is significantly higher than at the peak of the prior crazy bubble.This chart of the Green Street Commercial Property Price Index shows the phenomenal eight-year boom that has now been teetering at an uneasy plateau for a year-and-a-half.The chart below shows year-over-year percentage changes of the CPPI. Note how enormously volatile CRE prices can be when the math doesn’t work out anymore (red columns), or when enthusiasm reigns (blue columns), with double-digit year-over-year price plunges and surges being part of the deal:Commercial real estate is highly leveraged, backed by $4.3 trillion in bank loans, as of November 2017. Much of this debt is held by smaller banks with less than $50 billion in assets, concentrated in CRE in their local markets. And these banks are less able to withstand shocks to collateral values. Boston Fed President Eric Rosengren has been fretting about them for a while. The “significant decline in collateral values” of CRE was one of the root causes of the Financial Crisis, as he said in a presentation on the topic. The CPPI is based on estimates of private-market value for REIT portfolios across the five major property sectors of institutional-quality commercial real estate, according to Green Street Advisors.

    U.S. Bancorp, PNC, others fined in foreclosure cases - The Federal Reserve is closing the book on sanctions against U.S. banks over improper handling of post-crisis mortgage foreclosures, fining firms including Goldman Sachs Group and the IndyMac successor formerly chaired by Treasury Secretary Steven Mnuchin.In an enforcement case that has stretched across seven years, the Fed is ending its role by fining five companies, the agency said Friday. More than $35 million in new penalties include $14 million for Goldman Sachs, $8 million for Morgan Stanley, $4.4 million for U.S. Bancorp, $3.5 million for PNC Financial Services Group and $5.2 million for CIT Group, which had purchased OneWest Bank (the firm that bought IndyMac).Mnuchin was chairman of OneWest and Comptroller of the Currency Joseph Otting was its chief executive when the firm faced earlier foreclosure sanctions.The Fed had earlier fined other banks, including Bank of America, JPMorgan Chase, Ally Financial, SunTrust Banks and HSBC Holdings.After the banks were accused of botching thousands of foreclosures in 2011, the Fed and other regulators required lenders to fix problems in their servicing of residential mortgages. The Fed’s termination of the earlier enforcement actions means the regulator is satisfied that the firms have improved their practices, the agency said.IndyMac failed in 2008 as one of the mortgage meltdown’s major casualties. That same year, Mnuchin, a former Goldman Sachs banker, led a group of investors that included hedge fund billionaire John Paulson and finance giant George Soros in buying the bank.  IndyMac’s name was changed to OneWest and Mnuchin hired Otting, a veteran West Coast banker, to run it. The firm — beset by the foreclosure scrutiny — was sold off to CIT in 2015, and Mnuchin and Otting joined the Trump administration last year.

    Foreclosure activity falls to a 12-year low - Foreclosure filings were reported on 676,535 properties nationwide in 2017, marking the lowest level of foreclosure activity since 2005, according to Attom Data Solutions. Foreclosure activity dropped 27% from 933,045 properties with filings in 2016 and 76% from its 2010 peak of almost 2.9 million properties."Thanks to a housing boom driven primarily by a scarcity of supply, which has helped to limit home purchases to the most highly qualified and low-risk borrowers, the U.S. housing market has the luxury of playing a version of foreclosure limbo in which it searches for how low foreclosures can go," said Daren Blomquist, senior vice president at Attom, in a press release.

    Second mortgage and bank card defaults spike as spending rises -  Default rates in second mortgages and bank cards rose notably in December, suggesting consumers are having trouble managing increased spending. The second mortgage default rate climbed to 1.22% from 1.08% the previous month, and was nearly three times as high a year ago when it was 0.41%, according to Standard & Poor's and Experian. First mortgage default rates inched up month-to-month to an average of 0.68%, but were lower year-to-year. In November, the first mortgage default rate was 0.66%, and in December 2016, it was 0.71%.  The auto loan default rate also remained fairly stable at 1.1%. It was down a basis point from November and up 7 basis points from December 2016. "Defaults on auto loans are up slightly and first mortgage defaults are little changed over the last two to three years," said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a press release. In contrast, the average bank card default rate was notably higher in December of last year. It jumped to 3.44% from 3.28% the previous month and from 2.95% the previous year. Consumers have increased their spending due to strong employment, but because wage growth is stagnant there has been some concern that increased defaults in some sectors could reflect less manageable debt-to-income levels.

    5 ways a government shutdown will affect mortgage lending - The mortgage industry's fortunes are closely tied to a number of public agencies, and lenders will likely see originations slow if the political impasse in Washington shuts the government down at midnight. But the severity of its impact on the mortgage market will depend on how long it lasts. The Department of Housing and Urban Development does "not expect the impact on the housing market to be significant, as long as the shutdown is brief," according to a section of its website addressing the potential impacts of a shutdown. A shutdown in 2013 continued for 16 days, and the Federal Housing Administration continued to insure single-family loans for the duration. However, "with each day the shutdown continues, we can expect an increase in the impacts on potential homeowners, home sellers and the entire housing market." "A protracted shutdown could see a decline in home sales, reversing the trend toward a strengthening market we've been seeing," according to HUD. Most endorsements of certain Federal Housing Administration loan products will continue but could slow as a result of the shutdown. However, certain specialized products will not be available due to a lack of statutory authority to continue originating them. Whether the shutdown will delay loans in the pipeline from closing will depend on whether other aspects of the government shutdown affect lenders' ability to verify borrower information and continue processing mortgages. In addition to impacting the FHA, the shutdown could affect the mortgage industry by disrupting some functions of the Internal Revenue Service and the U.S. Department of Agriculture that affect lending, as a similar one in 2013 did. But other government-related entities with close ties to the mortgage industry came through in 2013 with little disruption or no disruption to operations, and are expected to again. Here's a look at what will happen at five federal agencies that support the mortgage industry if the government shuts down. 

    Application volume increases even as mortgage rates rises - Even as mortgage rates rose to their highest level since March, application activity increased from one week earlier, according to the Mortgage Bankers Association.The MBA's market composite index, a measure of mortgage loan application volume, for the week ending Jan. 12 increased 4.1% on a seasonally adjusted basis from one week earlier. The survey found that the refinance index increased 4% from the previous week.The refinance application share decreased to 52.2% from 52.9% the previous week. The seasonally adjusted purchase index increased 3% from one week earlier. The unadjusted purchase index increased 35% compared with the previous week and was 7% higher than the same week one year ago.

     MBA: Mortgage Applications Increase in Latest Weekly Survey --From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey: Mortgage applications increased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 12, 2018. .. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 35 percent compared with the previous week and was 7 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since March 2017, 4.33 percent, from 4.23 percent, with points increasing to 0.54 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

     Mortgage Rates close to 4.25%, "highest in more than 9 months" -- From Matthew Graham at Mortgage News Daily: Be Careful With News on Mortgage Rates Today Rates spiked more than normal yesterday and then repeated the feat today. Combine that with weakness in underlying bond markets (which drive mortgage rates) that began on Tuesday afternoon, and the average lender is roughly an eighth of a percentage point higher in rate today. Freddie's headline of 4.04% is the stuff of dreams as far as most borrowers are concerned. While rates near 4.0% are available in some of the best cases, the average top-tier quote is now easily 4.125% and many lenders are up to 4.25%. If you're not putting 20% down or have less than perfect qualifications, it would be even higher. Like yesterday, these are the highest rates in more than 9 months.

    What Will Rising Mortgage Rates Do to Housing Bubble 2? - Wolf Richter -- The US government bond market has further soured this week, with Treasuries selling off across the spectrum. When bond prices fall, yields rise. For example, the two-year Treasury yield rose to 2.06% on Friday, the highest since September 2008. In the chart, note the determined spike of 79 basis points since September 8, 2017. That was the month when the Fed announced the highly telegraphed details of its QE Unwind. September as month of the QE-Unwind announcement keeps cropping up. All kinds of things began to happen, at first quietly, without drawing much attention. But then the trajectory just kept going. The three-year yield, which had gone nowhere for the first eight months of 2017, rose to 2.20% on Friday, the highest since October 1, 2008. It has spiked 82 basis points since September 8: The ten-year yield – the benchmark for financial markets that most influences US mortgage rates – jumped to 2.66% late Friday. This is particularly interesting because the 10-year yield had declined from March 2017 into August despite the Fed’s three rate hikes last year, and rising short-term yields. At 2.66%, the 10-year yield has reached its highest level since April 2014, when the “Taper Tantrum” was winding down. That Taper Tantrum was the bond market’s way of saying “we’re shocked and appalled,” when Chairman Bernanke dropped hints the Fed might eventually begin tapering what the market had called “QE Infinity.” The 10-year yield has now doubled since the historic intraday low on July 7, 2016 of 1.32% (it closed that day at 1.37%, a historic closing low): Friday capped four weeks of pain in the Treasury market. But it has not impacted yet the corporate bond market, and the spread in yields between Treasuries and corporate bonds, and particularly junk bonds, has further narrowed.  But it has impacted the mortgage market. On Friday, the average 30-year fixed-rate mortgage with conforming loan balances ($417,000 or less) for top-tier borrowers, according to Mortgage News Daily, ended at 4.23%, the highest in nine months. But historically, 4.25% is still very low. And likely just the beginning of a long, uneven climb higher. And the impact on mortgage payments can be sizable. When rates rise for example from 3.5% to 4.5%, the payment for a $250,000 mortgage jumps by $144 to $1,267 a month. This can move the payment out of reach for households that have trouble making ends meet. A one-percentage-point increase takes on larger proportions in a place like San Francisco, where it might take a mortgage of $1.25 million to buy a median home. At 3.5%, the monthly payment is $5,613. At 4.5%, it jumps to 6,334, an increase of $721 a month and an increase of $8,652 a year.

    A plague of million-dollar homes haunts real estate -- The share of homes valued at more than $1 million has surged more than fourfold since 2002, according to new data from real estate site Trulia, which analyzed the luxury real estate market in the top 100 U.S. metropolitan areas. Across those regions, about 4.3 percent of homes are now worth at least $1 million, compared with about 1 percent in 2002, said Trulia senior economist Cheryl Young. Rising real estate values since the housing crisis have bolstered the price tags of many homes. Trulia found that $1 million doesn't necessarily denote a "luxury" home these days. In some cities -- think San Francisco -- they're the norm, rather than a marker of top quality. That puts pressure on lower-income buyers who can't afford to keep up with rising property prices, while cutting the amount of inventory available at prices below $1 million. The share of homes valued below $1 million is "decreasing at a rate we're surprised by," Young said. "It was 98.9 percent in 2002, and now it's 95.7 percent. That is pretty shocking."Rising real estate values, tight inventory and a lack of new construction are contributing to the surge in million-dollar homes. Yet another factor may be at play: rising income inequality, which has benefited the bank accounts of America's richest families.  The top 0.1 percent of American earners, or those with $6 million in average income, have seen their incomes surge by 320 percent between 1980 to 2014, compared with just 42 percent for middle-income workers, according to research published last year by Gabriel Zucman and fellow economists. That has created a huge gulf in spending power between the richest Americans and the middle class, giving those at the top the buying power to spring for homes worth $1 million or more.  It may explain why the share of homes worth $5 million or more is growing even faster. This segment is what Trulia describes as "the most luxurious homes available." To be sure, it remains a tiny part of the real estate market, accounting for just 0.28 percent of overall sales. Still, that figure is five times higher than in 2002, Trulia said.

    Housing Starts Crash In December - Housing Starts plunged 8.2% MoM in December (5 times worse than expected and the biggest drop since Nov 2016) and November was revised lower as it seems the exuberant steam is coming out of the housing 'recovery'. Year-over-Year Housing Starts tumbled 6.0%... Driven by a big slump in single-family housing starts... However, single-family permits rose to cycle highs...highest since 2007 Of course - focus on permits (the future) and ignore the starts (must be the weather) will be the narrative of the day! 

    Housing Starts decreased to 1.192 Million Annual Rate in December -- From the Census Bureau: Permits, Starts and Completions Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,192,000. This is 8.2 percent below the revised November estimate of 1,299,000 and is 6.0 percent below the December 2016 rate of 1,268,000. Single-family housing starts in December were at a rate of 836,000; this is 11.8 percent below the revised November figure of 948,000. The December rate for units in buildings with five units or more was 352,000.  An estimated 1,202,100 housing units were started in 2017. This is 2.4 percent above the 2016 figure of 1,173,800.  Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,302,000. This is 0.1 percent below the revised November rate of 1,303,000, but is 2.8 percent above the December 2016 rate of 1,266,000. Single-family authorizations in December were at a rate of 881,000; this is 1.8 percent above the revised November figure of 865,000. Authorizations of units in buildings with five units or more were at a rate of 382,000 in December. The first graph shows single and multi-family housing starts for the last several years. Multi-family starts (red, 2+ units) increased slightly in December compared to November. However Multi-family starts were down sharply year-over-year. Multi-family is volatile month-to-month, but has been mostly moving sideways to down recently. Single-family starts (blue) decreased in December, but are still up year-over-year. The second graph shows total and single unit starts since 1968. The second graph shows the huge collapse following thehousing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically fairly low). Total housing starts in December were below expectations. However starts for October and November were revised up slightly.

     New Residential Building Permits: 1.3M in December - The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for December new residential building permits. The latest reading of 1.302M was a fractional decrease from 1.303M in November and above the Investing.com forecast of 1.273M.  Here is the opening of this morning's monthly report: Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,302,000. This is 0.1 percent (±1.4 percent)* below the revised November rate of 1,303,000, but is 2.8 percent (±1.9 percent) above the December 2016 rate of 1,266,000. Single-family authorizations in December were at a rate of 881,000; this is 1.8 percent (±1.2 percent) above the revised November figure of 865,000. Authorizations of units in buildings with five units or more were at a rate of 382,000 in December. An estimated 1,263,400 housing units were authorized by building permits in 2017. This is 4.7 percent (±0.6%) above the 2016 figure of 1,206,600. [link to report] Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

    NAHB: Builder Confidence decreased to 72 in January -- The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 72 in January, down from 74 in December. Any number above 50 indicates that more builders view sales conditions as good than poor. From NAHB: Builder Confidence Remains Strong as New Year Starts Builder confidence in the market for newly-built single-family homes dropped two points to a level of 72 in January on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) after reaching an 18-year high in December 2017. “Builders are confident that changes to the tax code will promote the small business sector and boost broader economic growth,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Our members are excited about the year ahead, even as they continue to face building material price increases and shortages of labor and lots.” “The HMI gauge of future sales expectations has remained in the 70s, a sign that housing demand should continue to grow in 2018,” said NAHB Chief Economist Robert Dietz. “As the overall economy strengthens, owner-occupied household formation increases and the supply of existing home inventory tightens, we can expect the single-family housing market to make further gains this year.” The three HMI components registered relatively minor losses in January. The index gauging current sales conditions dropped one point to 79, the component charting sales expectations in the next six months fell a single point to 78, and the index measuring buyer traffic fell four points to 54. Looking at the three-month moving averages for regional HMI scores, the West rose two points to 81, the South increased one point to 73, the Midwest inched up a single point to 70 and Northeast climbed five points to 59.

    US Consumer Sentiment Unexpectedly Falls to Six-Month Low - Consumer sentiment unexpectedly declined in January to a six-month low as American households viewed the economy less favorably, a University of Michigan report showed Friday. Highlights of Michigan Sentiment (January, preliminary:

    • Sentiment index dropped to 94.4 (est. 97) from 95.9 in December
    • Current conditions gauge, which measures Americans’ perceptions of their finances, decreased to 109.2, the lowest since November 2016, from 113.8
    • Expectations measure improved to 84.8 from 84.3
    • Year-ahead inflation climbed to 2.8%, the highest since April 2016, from 2.7%
    The decline in sentiment included a decrease in a measure of buying conditions for big-ticket goods, indicating consumer spending may slow early this year after a solid holiday-shopping season. The setback in purchasing conditions was mainly due to less- attractive pricing, according to the University of Michigan. That was reflected in a pickup in increases in expected inflation rates over the coming year and longer term. At the same time, the expectations index remained stable, with 70 percent of respondents saying they thought the impact of the tax reform act will be positive. What’s more, the survey showed lingering strength in personal finances. Improved finances were reported by half of all respondents, matching the 2017 average which was the best in 17 years.

    Study shows 31 million people believe they will die in credit card debt -- Starting to feel like you'll never pay off your credit card debt? A new study says you're not the only one.According to CreditCards.com, 31 million people believe they'll die in debt. This comes as credit debt in the U.S. is reaching record highs. Last week, the Federal Reserve reported that revolving credit jumped 13 percent in November. Analysts say the rise in credit card use is a sign of growing consumer confidence.

    Big Brother on wheels: Why your car company may know more about you than your spouse.  — Daniel Dunn was about to sign a lease for a Honda Fit last year when a detail buried in the lengthy agreement caught his eye. Honda wanted to track the location of his vehicle, the contract stated, according to Dunn — a stipulation that struck the 69-year-old Temecula, Calif., retiree as a bit odd. But Dunn was eager to drive away in his new car and, despite initial hesitation, he signed the document, a decision with which he has since made peace. “I don’t care if they know where I go,” said Dunn, who makes regular trips to the grocery store and a local yoga studio in his vehicle. “They’re probably thinking, ‘What a boring life this guy’s got.’ ” Dunn may consider his everyday driving habits mundane, but auto and privacy experts suspect that big automakers like Honda see them as anything but. By monitoring his everyday movements, an automaker can vacuum up a massive amount of personal information about someone like Dunn, everything from how fast he drives and how hard he brakes to how much fuel his car uses and the entertainment he prefers. The company can determine where he shops, the weather on his street, how often he wears his seat belt, what he was doing moments before a wreck — even where he likes to eat and how much he weighs. Though drivers may not realize it, tens of millions of American cars are being monitored like Dunn’s, experts say, and the number increases with nearly every new vehicle that is leased or sold.

    CES Shows That the Future Will Not Work – Yves SMith - A new article by Taylor Lorenz in the Daily Beast, CES Was Full of Useless Robots and Machines That Don’t Work, by virtue of doing what tech writers are never supposed to do, namely report as opposed to cheerlead, is being buried despite its importance.  Lorenz went to the what is the biggest, most important consumer tech trade show in the US, and arguably the world, and found that tons of the great new gotta-have-them wares in the pipeline don’t work. As in unabashedly, obviously don’t work or are so ludicrously not fit for purpose as to be the functional equivalent of not work. This inability to even credibly fake next gen products, and worse, not even be embarrassed that they aren’t performing, is proof that the tech industry has gone past an event horizon into a state of obvious collective impotence and not one cares ore even seems to regard it as unusual. Broken companion robots for the elderly? Why not? A “tell you what to wear and how to take care of it” device….that depends on everything you own having RFID chips in them, which isn’t here, many never get here, and in any event excludes all those nice things you own now?  How about an idea that would seem a lot easier to implement: wheelie suitcases that follow you around? Nope: 90Fun’s Puppy 1 self-driving rollaway, which uses Segway technology to roll behind you, couldn’t go 10 feet without falling on its face. A Chinese competitor I observed in action kept losing its owner and was abysmally slow. I couldn’t imagine running late for a flight and trying to keep any of these in tow. With all the outrages in the world, it may seem hard to get up in arms about a big trade show gone massively pear shaped. But you need to see this as proof of degeneracy and narcissism among our supposed best and brightest. When sports teams are trounced by opponents or score own goals, they have the decency to act upset and mortified. Here we have Silicon Valley exhibiting grotesque loserdom on a large-scale basis…and that’s somehow normal and OK? Did these people all go to schools where everyone got a prize for just showing up? This looks like the result of decades of overprotective parenting, of building self esteem matters more than teaching skills, finally coming home to roost.

    Gun Theft Is Sweeping America - Stealing from people almost guaranteed to be armed would seem like a dumb idea to most, but not everybody got the memo. Firearm theft from licensed retailers including gun stores is becoming increasingly common, according to data released by the Bureau of Alcohol, Tobacco, Firearms and Explosives this week.  The number of robberies of federal firearms licensees reported to the ATF have increased 227 percent since 2013 and burglaries of such gun purveyors are up 71 percent over that same period. To make matters worse, the quantity of firearms stolen has increased as thefts become more frequent. In 2013, 3,355 firearms were taken in burglaries, compared with 7,841 in 2017, with a steady increase each year. The trend is slightly different for robberies, which tend to leave perpetrators less time to gather up guns: that number increased from 96 in 2013 to 370 in 2016, but fell to 288 last year.  Guns are rarely inexpensive items and often the target of thieves. But the government doesn’t seem to have an answer for this particular crime wave. The ATF said it’s looking into the data in order “to identify causation for the uptick in these types of crimes over the past five years,” a spokeswoman said in an emailed statement.  Texas gun licensees lost the most firearms in burglaries last year, 769, followed by 456 in Alabama and 427 in both Colorado and Georgia. That’s a big decrease for Georgia, which topped the states at 1,069 such stolen firearms last year.

    Industrial Production Increased 0.9% in December -- From the Fed: Industrial production and Capacity Utilization Industrial production rose 0.9 percent in December even though manufacturing output only edged up 0.1 percent. Revisions to mining and utilities altered the pattern of growth for October and November, but the level of the overall index in November was little changed. For the fourth quarter as a whole, total industrial production jumped 8.2 percent at an annual rate after being held down in the third quarter by Hurricanes Harvey and Irma. At 107.5 percent of its 2012 average, the index has increased 3.6 percent since December 2016 for its largest calendar-year gain since 2010. The gain in manufacturing output in December was its fourth consecutive monthly increase. The output of utilities advanced 5.6 percent for the month, while the index for mining moved up 1.6 percent. Capacity utilization for the industrial sector was 77.9 percent, a rate that is 2.0 percentage points below its long-run (1972–2016) average.  This graph shows Capacity Utilization. This series is up 11.2 percentage points from the record low set in June 2009 (the series starts in 1967). Capacity utilization at 77.9% is 2.0% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007.. The second graph shows industrial production since 1967. Industrial production increased in December to 107.5. This is 23% above the recession low, and 2% above the pre-recession peak.

    The Big Four Economic Indicators: Industrial Production Up 0.9% in December -- Today's report on Industrial Production for December shows a 0.9% increase month-over-month, which was better than the Investing.com consensus of 0.4%. December's figures represent a new peak, overtaking the November 2014 peak. The year-over-year change is 3.56 percent, up from last month's YoY increase.Here is the overview from the Federal Reserve: Industrial production moved up 0.2 percent in November after posting an upwardly revised increase of 1.2 percent in October. Manufacturing production also rose 0.2 percent in November, its third consecutive monthly gain. The output of utilities dropped 1.9 percent. The index for mining increased 2.0 percent, as oil and gas extraction returned to normal levels after being held down in October by Hurricane Nate. Excluding the post-hurricane rebound in oil and gas extraction, total industrial production would have been unchanged in November. Total industrial production was 106.4 percent of its 2012 average in November and was 3.4 percent above its year-earlier level. Capacity utilization for the industrial sector was 77.1 percent in November, a rate that is 2.8 percentage points below its long-run (1972–2016) average. [view full report] The chart below shows the year-over-year percent change in Industrial Production since the series inception in 1919, the current level is lower than at the onset of 8 of the 17 recessions over this time frame of nearly a century.

    Industrial production, retail sales complete strong quarter: By now I'm sure you've read elsewhere that industrial production rose strongly in December. That's certainly true, and to put it in perspective, here is the overall number (red) together with manufacturing (blue) and mining (including oil and gas) ( green): All of these numbers have risen strongly since the bottom of the "shallow industrial recession" that ended in early 2016 when the decline in the price of oil and gas stopped. Here's a look at the same data YoY: Apropos of a post I wrote last week, while this is pretty good, it still does not compare with the strong growth of industrial production during the booms of the laste 1960s and 1990s: Although we don't have the final number for personal income in December, industrial production joins employment and retail sales in having a strong 4th quarter. The below graph shows all three quarter over quarter for the last two years: All of these picked up stoutly after the hurricanes, and I wonder if some of the strength in the quarter just ended isn't payback for the interruptions (and the need to repair) following those weather events. The strong growth in industrial production shows the wisdom of paying attention to the average of the regional Fed surveys and the ISM manufacturing index, and in particular the new orders components of those indexes. They turned up in 2016 in advance of the bottom in production, and have been very strong during the second half of 2017. The simple fact is, THEY LEAD. Those who complained that they were soft data once again failed to understand this vital point.Another point to make is that once again the Weekly Indicators and their forecasting of near term strength over the last half year have also been correct -- and timely. They continue to forecast strength through the first half of this year. Once we have the Q4 GDP report next week, I will look ahead to the second half of 2018. 

     NY Fed: "Business activity continued to grow at a solid clip" --From the NY Fed: Empire State Manufacturing Survey: Manufacturing firms in New York State reported that business activity continued to expand strongly. The general business conditions index was little changed at 17.7. ... The index for number of employees fell nineteen points to 3.8, a level suggesting only a small increase in employment levels. The average workweek index fell to a level near zero, indicating that hours worked were unchanged.  Looking ahead, firms remained optimistic about the six-month outlook. The index for future business conditions edged up two points to 48.6. The index for future inventories rose to 20.3, a record high, indicating that firms expect to build up inventories significantly in the months ahead. The index for future number of employees rose three points to 26.9, a multiyear high. This was slightly below expectations, but still a solid report.

     Philly Fed Manufacturing Index: Continued Growth in January - The Philly Fed's Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a generally reliable clue as to the direction of the broader Chicago Fed's National Activity Index.  The latest Manufacturing Index came in at 22.2, down from last month's 27.9 and has been positive for twenty consecutive months. The 3-month moving average came in at 24.8, down from 27.0 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 42.2, a decrease from the previous month's 52.7. Annual revisions were made. Today's 22.2 headline number came in below the 25.0 forecast at Investing.com. Here is the introduction from the survey released today: Economic growth continued in January, according to the firms responding to this month’s Manufacturing Business Outlook Survey. The broadest measures of current conditions remained positive this month, although indexes for general activity, new orders, and employment declined from their readings in December. The firms reported higher prices for both inputs and their own manufactured goods this month. The future indexes reflecting expected growth over the next six months remained at high levels, although the indexes fell from their readings in December. (Full Report) The first chart below gives us a look at this diffusion index since 2000, which shows us how it has behaved in proximity to the two 21st century recessions. The red dots show the indicator itself, which is quite noisy, and the 3-month moving average, which is more useful as an indicator of coincident economic activity. We can see periods of contraction in 2011, 2012 and 2015, and a shallower contraction in 2013. 2016 saw an improvement only to detract in the second half of 2017.

    Weekly Initial Unemployment Claims decrease to 220,000 - The DOL reported:In the week ending January 13, the advance figure for seasonally adjusted initial claims was 220,000, a decrease of 41,000 from the previous week's unrevised level of 261,000. This is the lowest level for initial claims since February 24, 1973 when it was 218,000. The 4-week moving average was 244,500, a decrease of 6,250 from the previous week's unrevised average of 250,750. Claims taking procedures continue to be disrupted in the Virgin Islands. The claims taking process in Puerto Rico has still not returned to normal.  The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

    Beige Book Finds Widespread Labor Shortages, Modest Wage Growth -  Hot on the heels of the news that Apple will create some 20,000 jobs in the US over the next 5 years, came the latest Beige Book report from the Federal Reserve, according to which it's not jobs that are missing in the US, it's qualified employees. As it usually does, the Beige Book - which collects data from the 12 Federal Reserve Districts - found that the economy continued to expand from late November, with the various Fed districts reporting "modest to moderate" gains while Dallas was the sole outlier, recording a "robust increase." it also said that most districts reported "modest to moderate price growth since the last report; exceptions were Chicago, which noted that prices increased only slightly while San Francisco noted price inflation was down slightly." There were also reports of rising home prices across most of the country.The Beige Book said that the outlook for 2018 remains optimistic "for a majority of contacts across the country" and that some retailers highlighted that holiday sales were higher than expected. Meanwhile, most manufacturers reported modest growth in overall business conditions. To be sure, the one thing the Beige Book has been closely watched for in recent quarter, are its observations on the state of labor market, and here it once again reiterated that most districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth.  Curiously, despite the pervasive inability to find skilled workers, most districts said that wages increased only at a modest pace. Perhaps if employers are so short staffed, they would consider rising wages? And while the Beige Book noted that only a few Districts observed that firms were raising wages in a broader range of industries and positions, some districts reported that firms expect wages to increase in the months ahead.  All of the above, of course, is strange considering the US has nearly 100 million work eligible people currently not in the labor force. Maybe if US employers are truly so short of workers, they will consider - gasp - raising wages to attract talented employees...

    As Labor Pool Shrinks, Prison Time Is Less of a Hiring Hurdle - NYT - A rapidly tightening labor market is forcing companies across the country to consider workers they once would have turned away. That is providing opportunities to people who have long faced barriers to employment, such as criminal records, disabilities or prolonged bouts of joblessness. In Dane County, Wis., where the unemployment rate was just 2 percent in November, demand for workers has grown so intense that manufacturers are taking their recruiting a step further: hiring inmates at full wages to work in factories even while they serve their prison sentences. These companies were not part of traditional work-release programs that are far less generous and rarely lead to jobs after release. “When the unemployment rate is high, you can afford to not hire anyone who has a criminal record, you can afford to not hire someone who’s been out of work for two years,” said Lawrence H. Summers, the Harvard economist and former Treasury secretary. “When the unemployment rate is lower, employers will adapt to people rather than asking people to adapt to them.” The American economy hasn’t experienced this kind of fierce competition for workers since the late 1990s and early 2000s, the last time the unemployment rate — currently 4.1 percent — was this low. The tight job market hasn’t yet translated into strong wage growth for American workers. But there are tentative signs that, too, could be changing — particularly for lower-paid workers who were largely left out of the early stages of the economic recovery. Walmart on Thursday said it would raise pay for entry-level workers beginning in February; its rival Target announced a similar move last fall. Employers are also becoming more flexible in other ways. Burning Glass Technologies, a Boston-based software company that analyzes job-market data, has found an increase in postings open to people without experience. And unemployment rates have fallen sharply in recent years for people with disabilities or without a high school diploma.

    #MeToo effect: Calls flood U.S. sexual assault hotlines (Reuters) - The phones at U.S. sexual assault hotlines have been ringing in record numbers as the #MeToo social movement spurs victims to reach out for help, sending organizations scrambling to keep up. Calls spiked when the movement began in October, with people waiting up to three hours to talk to someone at the country’s largest one, the National Sexual Assault Hotline. The number of calls to the hotline operated by the Rape, Abuse & Incest National Network (RAINN) surged 25 percent in November from a year earlier, and another 30 percent in December, according to RAINN. Its 209,480 total calls in 2017 were the most for any year since its founding in 1993.  Last fall, actress Alyssa Milano of the television show “Charmed” asked women who had been sexually assaulted or harassed to post “Me Too” in response to allegations made against movie mogul Harvey Weinstein.   Weinstein, accused of sexual abuse by dozens of women, has denied having nonconsensual sexual contact with anyone. Reuters has not been able to independently confirm the accusations.

    Human Trafficking is Off the Charts, so Texas State Attorney General Produced a Documentary to Alert the Public -- Human trafficking is much more common than people want to believe, and in just about every city and town in America there is an underground slave trade. The issue is slowly being brought into public consciousness, however, and the Texas State Attorney General, Ken Paxton, has overseen a recently released documentary film entitled, “Be the One.’ The film aims to show the public just how prevalent human trafficking, including sexual exploitation and forced labor, are today, just how easy it is to overlook, and what you can do if you notice the tell-tale signs. In a 2017 study, it was estimated that is over 300,000 victims of human trafficking in Texas today. The statistical breakdown is shocking:Researchers conducted interviews, focus groups and web-based surveys with professionals at social service agencies who provide outreach and relief services to trafficking victims and survivors to establish benchmarks on human trafficking prevalence across Texas. Main findings include:

    • There are an estimated 313,000 victims of human trafficking in Texas.
    • Approximately 79,000 minors and youths are victims of sex trafficking in Texas.
    • Approximately 234,000 workers in Texas are victims of labor trafficking.
    • Traffickers exploit approximately $600 million per year from victims of labor trafficking in Texas in the most at-risk industries and economic sectors, including migrant farm work, construction, kitchen workers in restaurants, and landscaping services.
    • An estimated $6.5 billion is spent on the lifetime costs of providing care to victims and survivors of minor and youth sex trafficking in Texas, including costs related to law enforcement, prosecution and social services.

    Supreme Court blocks redrawing of North Carolina congressional maps (Reuters) - The U.S. Supreme Court on Thursday blocked a lower court’s order for North Carolina to rework its congressional map because Republicans violated the Constitution by drawing electoral districts intended to maximize their party’s chances of winning. The conservative-majority court granted a bid by Republican legislators in North Carolina to suspend the Jan. 9 order by a federal court panel in Greensboro that gave the Republican-controlled General Assembly until Jan. 24 to come up with a new map for U.S. House of Representatives districts. Two liberal justices, Ruth Bader Ginsburg and Sonia Sotomayor, objected to the high court’s action. The Supreme Court’s decision to stay the order reduces the chance that the current district lines will be altered ahead of the November mid-term congressional elections. The court offered no reason for its decision. The three-judge panel ruled that the Republican-drawn districts violated the U.S. Constitution’s guarantee of equal protection under the law by intentionally hobbling the electoral strength of non-Republican voters. Two of the three judges also said the plan ran afoul of the Constitution’s First Amendment by discriminating based on political belief and association. Those judges on Tuesday refused to put the ruling on hold. North Carolina’s congressional maps were challenged in two lawsuits by more than two dozen Democratic voters, the North Carolina Democratic Party and other groups. Under current North Carolina congressional boundaries, Republicans won 10 of the 13 House districts in 2016, despite getting just 53 percent of the statewide vote.

    Can Government Officials Have You Arrested for Speaking to Them? - If a citizen speaks at a public meeting and says something a politician doesn’t like, can the citizen be arrested, cuffed, and carted off to the hoosegow?  Suppose that, during this fraught encounter, the citizen violates some law—even by accident, even one no one has ever heard of, even one dug up after the fact—does that make her arrest constitutional?Deyshia Hargrave, meet Fane Lozman. You need to follow his case.Hargrave is a language arts teacher in Kaplan, Louisana. She was arrested Monday after she questioned school-district policy during public comment at a school board meeting.She asked why the superintendent of schools was receiving a five-figure raise when local teachers had not had a permanent pay increase in a decade. As she was speaking, the school-board president slammed his gavel, and a police officer told her to leave. She left, but once she went into the hall, the officer took her to the ground, handcuffed her, and arrested her for “remaining after having been forbidden” and “resisting an officer.” Fane Lozman, whose case will be argued in front of the Supreme Court on February 27, faced the same fate at a meeting of the Riviera Beach, Florida, city council in November 2006. Lozman, remarkably enough, has made his way to the high court more or less without assistance twice in the past four years, arguing two different aspects of his acrimonious dispute with the Riviera Beach city government. The first case, which Lozman won, asked whether his motorless plywood “floating home” was actually a “vessel” subject to federal admiralty law. (Answer, via Justice Stephen Breyer: “Um, no.”) The second case is about police tactics at public meetings; its result could make a profound difference to citizens like Hargrave who want to talk back to local officials without a trip to jail. 

    Inmate Chews Own Fingers Off After Private Prison Health Care Left Him in Unbearable Pain, Court Papers Say - A paralyzed man held inside an Arizona prison chewed off three fingers on his left hand in a desperate attempt to receive treatment for “excruciating pain” from previous injuries, according to new court papers filed in a legal fight over private prison health care.“He reported that the terrible pain he felt makes everything else seem insignificant,” stated a letter from a lawyer representing inmates in the state’s prisons. “He chewed off part of the fingers on his left hand because the pain was so unbearable.”The man, who uses a wheelchair and is not identified in the court papers filed Friday, told prison medical workers they weren’t giving him the right pain medications and that he would rather kill himself than live in such extreme agony, according to his medical records.The extreme example of a man mutilating his own body is part of an ongoing battle over inmate health care in Arizona, as well as the broader national issue of how budget-minded states use private companies to care for its prisoners. A group of inmates sued the state in 2012 over prison conditions and the two sides reached a settlement in 2015 that required Arizona to reform medical care in its prisons, which is now provided by for-profit company Corizon Correctional Healthcare.

    What's The Difference Between Children's Books In China And The U.S.? -- What are the hidden messages in the storybooks we read to our kids? That's a question that inspired a team of researchers to set up a study. Specifically, they wondered how the lessons varied from storybooks of one country to another. For a taste of their findings, take a typical book in China: The Cat That Eats Letters. Ostensibly it's about a cat that has an appetite for sloppy letters — "written too large or too small, or if the letter is missing a stroke," explains one of the researchers, psychologist Cecilia Cheung, a professor at University of California Riverside. "So the only way children can stop their letters from being eaten is to write really carefully and practice every day." But the underlying point is clear: "This is really instilling the idea of effort — that children have to learn to consistently practice in order to achieve a certain level," says Cheung. And that idea, she says, is a core tenet of Chinese culture. The book is one of dozens of storybooks from a list recommended by the education agencies of China, the United States and Mexico that Cheung and her collaborators analyzed for the study. The results — published in the Journal of Cross Cultural Psychology: The storybooks from China stress those values about twice as frequently as the books from the U.S. and Mexico. Take another typical example from China — The Foolish Old Man Who Removed The Mountain, which recounts a folktale about a man who is literally trying to remove a mountain that's blocking the path from his village to the city."Every day he has to dig some dirt from the mountain," says Cheung.The book celebrates perseverance, of course — but also another value Cheung and her collaborators tracked: steering clear of bad influences. As Cheung puts it, "avoiding a negative person and staying on track and not being distracted by things that would derail you from achieving your goals."In this case the man keeps on digging "even as he has to endure criticism from his fellow villagers who call him silly. And in the end he actually removes the mountain."

    Higher Education Is Drowning in BS - I have had nearly enough bullshit. The manure has piled up so deep in the hallways, classrooms, and administration buildings of American higher education that I am not sure how much longer I can wade through it and retain my sanity and integrity.  Even worse, the accumulated effects of all the academic BS are contributing to this country’s disastrous political condition and, ultimately, putting at risk the very viability and character of decent civilization. What do I mean by BS?BS is the university’s loss of capacity to grapple with life’s Big Questions, because of our crisis of faith in truth, reality, reason, evidence, argument, civility, and our common humanity.BS is the farce of what are actually "fragmentversities" claiming to be universities, of hyperspecialization and academic disciplines unable to talk with each other about obvious shared concerns.BS is the expectation that a good education can be provided by institutions modeled organizationally on factories, state bureaucracies, and shopping malls — that is, by enormous universities processing hordes of students as if they were livestock, numbers waiting in line, and shopping consumers. BS is universities hijacked by the relentless pursuit of money and prestige, including chasing rankings that they know are deeply flawed, at the expense of genuine educational excellence (to be distinguished from the vacuous "excellence" peddled by recruitment and "advancement" offices in every run-of-the-mill university).BS is the ideologically infused jargon deployed by various fields to stake out in-group self-importance and insulate them from accountability to those not fluent in such solipsistic language games.BS is a tenure system that provides guaranteed lifetime employment to faculty who are lousy teachers and inactive scholars, not because they espouse unpopular viewpoints that need the protection of "academic freedom," but only because years ago they somehow were granted tenure.BS is the shifting of the "burden" of teaching undergraduate courses from traditional tenure-track faculty to miscellaneous, often-underpaid adjunct faculty and graduate students.BS is states pounding their chests over their great public universities even while their legislatures cut higher-education budgets year after year after year. BS is the fantasy that education worthy of the name can be accomplished online through "distance learning."

    Former Obama Administration Officials Are Being Named College Presidents - When Agnes Scott College announced last week that Leocadia I. Zak would become its next president, the women’s college in Georgia did not insistently trumpet her experience with the federal government. The college’s announcement first noted Zak’s roots as a graduate of Mount Holyoke College and her law degree from Northeastern University. It also described her as someone with an “extensive background in international economic development and international project finance.”Only after those descriptions did the announcement detail the seven years Zak spent as director of the U.S. Trade and Development Agency during President Obama’s years in office. Nonetheless, Zak’s background in government means she stands at the convergence of several trends affecting who becomes a college president.  Obama-era officials have done fairly well in the midst of those trends. In addition to Zak, several others have become college presidents or chancellors. Sylvia Mathews Burwell, the former health and human services secretary and Office of Management and Budget director, became president of American University last year. Rebecca Blank, acting secretary of the U.S. Department of Commerce from 2012 to 2013, became chancellor of the University of Wisconsin at Madison in July 2013. That same year, the University of California system presidency was awarded to Janet Napolitano, a former Arizona governor who at the time was secretary of homeland security. That’s not to count some other lower-ranking Obama administration officials who became college presidents. Karol Mason, a former assistant attorney general, became president of the John Jay College of Criminal Justice at the City University of New York in 2017, and Mark Mitsui, a deputy assistant secretary within the Department of Education, became president of Portland Community College in 2016.

    The Heads Of New York's Elite K-12 Schools Are Making More Than Most College Presidents --   Consider, for example, the premier private school of New York's Upper East Side, The Dalton School, which charges $46,050 a year for Kindergarteners to nap, play with blocks and read an occasional book... Meanwhile, Dalton is a 'bargain' relative to another private school just a hop, skip and a jump across Central Park, the Trinity School, which charges Kindergartners closer $50,000 a year (or roughly the median annual income of an entire household across most of America) for what we suspect is a nearly identical regimen of sleeping and block playing. Of course, with tuitions that high one might expect these schools to have a student-teacher ratio of 3:1 and/or some sort of advanced technology that allows them to churn out Kindergartners that are already solving advanced Calculus problems. Alas, as the Wall Street Journal notes today, the truth is that, much like public school across the country, a substantial portion of the exorbitant tuitions paid by New York's "millionaire, billlionaire, private jet owners" to elite private schools goes toward funding the salaries of massively overpaid administrators.  Per the WSJ, at least nine private school heads received compensation totaling over $800,000 in 2015 and Trinity's John Allman cleared a staggering $1.1 million (or roughly the tuition of 22 of his students). The median base salary for heads of the city’s private schools is $493,478 this academic year among 44 city schools in a survey by the association. That compares to $275,000 nationwide. The group says the city’s pay for heads grew faster as well: Its median salary jumped 70% in a decade, compared with 45% nationwide.At least nine heads of private K-12 schools in New York City earned total yearly packages topping $800,000, according to 2015 federal tax forms, the most recent year available.But it's not just administrators in 'The City' that are cleaning up...the head of Riverdale Country School in the Bronx, Dominic Randolph, made $974,644 in 2015, including housing and base pay of $752,776 and Horace Mann’s Thomas Kelly made $880,242, including housing and base pay of $835,497.

    Nearly 40% Of Student Loan Borrowers To Default By 2023 - A Brookings Institution report  has offered a new set of dire observations suggesting that "the looming student default crisis is worse than we thought." The analysis "suggests that nearly 40% of borrowers may default on their student loans by 2023," a staggering number if one assumes the TBAC's forecast that there will be roughly $2.5 trillion in student loans outstanding by 2020 (see chart above). It would mean that no less than $1 trillion in student loans will be in some form of default in two years, an outcome which will necessitate another indirect, if ultimately taxpayer funded bailout from the US treasury: recall that the vast majority of student debt is currently issued by the US government. But while the overall rise in student loan defaults in coming years is hardly a surprise, a more troubling observation made by author Judith Scott-Clayton is that debt and default among black college students "is at crisis levels, and even a bachelor’s degree is no guarantee of security: black BA graduates default at five times the rate of white BA graduates (21 versus 4 percent), and are more likely to default than white dropouts."   The Brookings study also found that the worsening default pattern is most acute at for-profit colleges: out of 100 students who ever attended one, 23 defaulted within 12 years of starting college in 1996 compared to 43 of those who started in 2004. This contrasts with an increase from just 8 to 11 students of 100 among entrants who never attended a for-profit, the report said. But the most notable finding from the report is the stunning racial divergence in default rates, with black students a clear outlier, and expected to default at nearly double the rate as all other students, and 5 times as much as white college graduates. The new data underscore that default rates depend more on student and institutional factors than on average levels of debt. For example, only 4 percent of white graduates who never attended a for-profit defaulted within 12 years of entry, compared to 67 percent of black dropouts who ever attended a for-profit. And while average debt per student has risen over time, defaults are highest among those who borrow relatively small amounts.

    Retirement crisis: 37% of Gen X say they won't be able to afford to retire - Add Gen Xers to the long list of Americans who fear they won't have a sizable enough nest egg to retire.  Nearly four out of 10 (37%) of Generation X — those born between 1965 and the late 1970s — say they would like to stop working for good and "fully retire" someday, "but will not be able to afford to," a new survey from TD Ameritrade, an online broker based in Omaha, found. Other gloomy Gen X retirement findings:

    • 43% say "they are behind" in their savings.
    • Half (49%) are "worried about running out of money" once they leave the workforce.
    • Nearly two out of 10 (17%) say they "aren't saving or investing for anything."
    • Only a third expect to be "very secure" in retirement — vs. nearly half of Baby Boomers.

    Why Is CalPERS Board Member/Governor Wannabe John Chiang Telling a Big Lie About CalPERS Private Equity Outsourcing Scheme? - Yves Smith --Last week, California State Treasurer John Chiang, who sits on the CalPERS board, spoke to the Culver City Democrats’ Club. Chiang is running for Governor. The session was recorded and I am told the video will be posted.  During the Q&A section, someone who reads Naked Capitalism asked about CalPERS’ plans to outsource its private equity program (for details, see our recent post: CalPERS Launches Illegal, Corrupt, Unjustified and Beneficiary-Damaging Private Equity “Strategic Partner” Search Obviously Designed to Favor BlackRock): How can CALPERS justify handing over as much as $26 billion to a costly private equity middleman and hand the business to one firm – BlackRock? Why is it being done in the first place? Other big public pension funds are going in the opposite direction – of doing more in house to reduce fees, not increase them. Chiang’s response:There are a few that are going in-house… My office looked at it. We put together, I wouldn’t call it quite a white paper but as we started a few years ago some of us were very interested in a Canadian model where in the Canadian model, the private equity model, did very well except once we looked at where they were making money, they were making money on oil companies in Canada.  Part of our challenge is, we’ve been trying to figure out how do we replicate a private equity performance and expertise and bring it in-house. And there is interest but to cover all the territory that the private equity companies [unintelligible few words] would be quite expensive. But we are looking into that, trying to reduce the fees and bring those services [unitelligible few words]

    Brown goes to court to finish pension reforms - While his lawyers urge the state Supreme Court to allow pension cuts, Gov. Brown is taking his time to fill a vacant seat that would make his appointees a majority on the high court, four of the seven justices.The vacancy created by the retirement last August of Justice Kathryn Werdegar, who gave notice in March, is being filled by different justices temporarily brought up from the appeals court to hear each case.“It’s not something I want to do too quickly,” Brown said at a state budget news conference last week. “It’s very important now. I have appointed three. The fourth could be very decisive. So I want to understand how that decisivness should work.”Democratic appointees will be a majority for the first time since 1986, when voters ousted three Brown appointees (Chief Justice Rose Bird, Cruz Reynoso, and Joseph Grodin) after a campaign focused on death penalty reservals, the Associated Press reported.Brown said last week he has a “hunch” the courts will modify the “California rule,” so “when the next recession comes around the governors will have the option of considering pension cutbacks for the first time.”As the news conference wrapped up, Gov. Brown was asked to explain, as a lawyer and former state attorney general, why he thinks the courts may allow future governors to consider pension cutbacks during a recession. Part of his reply: “There’s already been several lower court opinions through the court of appeals where judges, both liberal and conservative, have taken a position that employees are entitled to a reasonable pension but not entitled to any remuneration they can imagine.”

    Lawsuit Against Blackstone, KKR/Prisma, PAAMCO, Kentucky Retirement System, and Others Has Major Implications for Public Pension Funds - Yves Smith - A case filed at the end of last year, Mayberry v. KKR, hasn’t gotten the attention it warrants. The suit, which we’ve embedded at the end of this post, was filed on behalf of the beneficiaries of Kentucky Retirement Systems (KRS), the state’s public pension fund and its taxpayers, against Blackstone, KKR/Prisma, and PAAMCO for engaging in a civil conspiracy and violating its fiduciary duties under Kentucky law by misrepresenting what it calls “Black Box” hedge fund products. One of the eight plaintiffs is a sitting district court judge.In addition to suing the top executives at these funds, including Henry Kravis and George Roberts of KKR and Steve Schwarzamn of Blackstone, the filing also targets four former and three current KRS board members, four former KRS administrators for breach of fiduciary duties, along with KRS’ fiduciary counsel, several financial advisers, its actuarial adviser, and a firm that certified its Comprehensive Annual Financial Report. The fund managers allegedly focused on KRS and other desperate and clueless public pension funds who were unsuitable investors, particularly at the risk levels they were taking. KRS made what was a huge investment for a pension fund of its size. $1.2 billion across three funds all at once, in 2011, roughly 10% of its total assets at the time. They all had troublingly cute names. The KKR/Prisma funds was “Daniel Boone,” the Blackstone fund was “Henry Clay” and the PAAMCO fund, “Colonels”.  In the case of KKR/Prisma, the fund had installed an employee at KRS as well as having a KKR/Prisma executive sitting as a non-voting member of the KRS board. The filing argues that that contributed to KRS investing an additional $300 million into the worst performing hedge fund even as it was exiting other hedge funds. 1

    Does Retirement Raise the Risk of Death? - I know a few too many examples from my own life of men who retired--and then promptly died. Maria D. Fitzpatrick and Timothy J. Moore provide some systematic evidence on this connection in "The Mortality Effects of Retirement: Evidence from Social Security Eligibility at Age 62," published in the Journal of Public Economics (January 2018, 157: 12-137). It was also released as NBER working paper #24217 in December 2017. From the abstract: "Social Security eligibility begins at age 62, and approximately one third of Americans immediately claim at that age. We examine whether age 62 is associated with a discontinuous change in aggregate mortality, a key measure of population health. Using mortality data that covers the entire U.S. population and includes exact dates of birth and death, we document a robust two percent increase in male mortality immediately after age 62. The change in female mortality is smaller and imprecisely estimated. Additional analysis suggests that the increase in male mortality is connected to retirement from the labor force and associated lifestyle changes." This is a technical research paper that will only be accessible to the initiate, but you can get a good flavor of the results from a couple of figures. A first figure shows the patterns of claiming Social Security. There are various rules about the age at which different kinds of benefits can be claimed. For example Social Security disability benefits can be claimed earlier, but access to what most people think of as the usual Social Security Benefits starts at 62. The figure shows the step-change or discontinuity in number of people retiring at 62, followed by a slower rise in claiming benefits and a smaller jump at age 65.

    The Collapse of the Social Security Ponzi Scheme -- While Capitol Hill's denizens frequently discuss how their budgetary changes are going to impact the taxes paid by Main Street and Corporate America, they rarely mention the impact of these changes on the entitlements that most Americans feel are their birthright.  This is particularly the case for the nation's Social Security system, a key part of retirement funding for tens of millions of Americans.  Thanks to the Committee for a Responsible Federal Budget (CRFB), we have a glimpse into what lies ahead for this key aspect of life in the United States. Let's open this posting with a graphic from another one of the CFRB's studies showing how the population in the United States is projected: As you can see, the number of Americans 65 years of age and older is projected to more than double from around 50 million currently to over 100 million in 2070.  Obviously, this is going to put a strain on age-based entitlement programs. According to CRFB's analysis of the 2017 Social Security Trustees Report, we find the following:

    • 1.) On a combined basis, the Old-Age, Survivors and Disability Trust Funds (OASDI) face a theoretical 75 year shortfall of 2.83 percent of taxable payroll or 1.01 percent of Gross Domestic Product and will be insolvent by 2034.
    • 2.) Social Security will pay out $27 billion more in benefits than it receives in tax revenue this year.
    • 3.) Social Security will generate cash flow deficits of $1.4 trillion over the next 10 years and $4.9 trillion over the following decade as shown here (as a percentage of payroll):

     The Long-Term Care Crisis: Premiums Exploding, Leaving Seniors With “An Awful Choice” -- Yves Smith - A Wall Street Journal article gives an overview of a topic we discussed briefly before: an escalating crisis in the long-term care business. As we explain in more detail below, the entire industry massively underpriced policies that cover nursing home and other types of long-term care for the elderly. They are now playing catch-up with hefty rate increases. This puts those who paid for coverage in a terrible fix: do they abandon the policies entirely, when they have paid in substantial amounts of money and the policies do have real economic value should they need them? Do they reduce the amount of coverage so they can keep the premiums affordable? Or do they take the hit, when it might mean serious cutbacks to spending or retirement savings. 7.3 million individuals, equal to nearly 20% of the people over 65, are grappling with the dilemma of what to do about long-term care sticker shock. Some examples from the Journal’s story: […] And there is an additional set of issues even for those who can afford to pay for pricier coverage. As we described in our earlier post, even the long-term care insurer that is supposedly the best in terms of paying claims, Genworth, now has many complaints on consumer websites. My own experience, when my mother was injured long enough that she might be submitting a claim, was that I got a HAMP-level run-around: they would not deal with me over the Internet and I was repeatedly disconnected when put on hold. When I finally reached a rep, I was told that they would need to send a nurse to evaluate my mother…but the phone rep could not schedule that visit and claimed they could not reach the unit responsible, and would have someone call back instead. We never got that call.

    Don’t make the poor work for health care - Fresh off some of the most detested policymaking in American history, the White House is about to turn to another unpopular conservative obsession: Work requirements. Republicans have long argued that too many able-bodied adults are getting a free ride from the government. During the Obama years, they took specific issue with the Affordable Care Act's expansion of Medicaid, but the Obama administration always turned them down. But the Trump White House is changing course. It is reportedly finalizing guidelines for what circumstances under which they'll approve the waivers — and will quite likely announce a batch of approvals soon as well. Let's not mince words: This is a stupid and terrible policy decision. How stupid and terrible? Let's count the ways:

    • 1. A sizable majority of able-bodied adults on Medicaid already work. Despite ObamaCare's expansion, almost two-thirds of Medicaid's 68 million beneficiaries are still either children, the elderly, or people on disability. Among the remaining adults, 60 percent are already working. The remainder — about 9.8 million people — have good reasons not to be in the workforce. Fifteen percent of them are going to school, and 30 percent are taking care of other family members. Another 36 percent report being too sick or disabled to work, though they haven't qualified for disability benefits (which, it's worth remembering, have a pretty strict threshold).
    • 2. There aren't enough jobs. If you're going to require people to work, it seems obvious you need to make sure enough jobs are available.
    • 3. It will undercut wage growth.  If there are more people looking for work than jobs available, employers have all the bargaining power: They can pay people pennies, cut benefits, and get away with demeaning work conditions because workers' only other option is unemployment and destitution.
    • 4. It will result in an underfunded and capricious bureaucracy. Any work requirement program also comes with additional red tape: Beneficiaries have to fill out paperwork and jump through hoops, which can be harder for low-income workers with erratic schedules and spotty internet access.
    • 5. What about the idle rich? The principle that able-bodied people shouldn't get something for nothing has a certain intuitive force. And it explains why a lot of efforts to impose work requirements persist. So it's worth noting out how often American society doesn't abide by this principle and, in fact, seems totally fine with it.

    J.P. Morgan Health Conference All About The Deals Amid Uncertainty For Millions  — There’s so much money floating around here this week, you can almost see it wafting through the air. About 10,000 attendees, mostly confident men in well-cut suits and even nicer watches, are packing the elegant Westin St. Francis Hotel for the invite-only J.P. Morgan Healthcare Conference, which ends Thursday. For many of these investors, health providers, insurers and entrepreneurs at the nation’s largest and most prestigious health investment conference, it’s all about the deal — and the after-hours parties. The J.P. Morgan gathering comes at a jarring time when you consider that the other world of health care is flooded with uncertainty for the millions of ordinary Americans who inhabit it. They face a precarious political landscape in which the future of the Affordable Care Act remains uncertain and Republican leaders in Congress mull dramatic cuts to Medicaid and Medicare. John Baackes, CEO of the nation’s largest public health plan, L.A. Care, which insures 2.1 million low-income patients, said if his enrollees wandered into the conference, “they’d think they were in a foreign land and that this has nothing to do with them.” Much of U.S. health care is underwritten by public dollars, but people here didn’t come to talk about that or rising costs, particularly for prescription drugs. Only a few presentations at this year’s conference have touched on prices, including a J.P. Morgan study released Monday that found many Americans put off medical care until they get their tax refund — a clear sign that that they don’t have enough saved up to pay for care when they need it.

    Peeved by price gouging and shortages, hospitals will now make their own drugs -- For four of the country’s largest hospital systems, enough is enough.Sick of drug companies’ eye-popping price hikes and ridiculous shortages, the feisty hospital systems announced Wednesday that they’ve banded together and formed an unnamed non-profit to make their own steady supply of affordable generic medicines.  The leading hospital system, Intermountain Healthcare, released a statement explaining:  The new company intends to be an FDA approved manufacturer and will either directly manufacture generic drugs or sub-contract manufacturing to reputable contract manufacturing organizations, providing patients an affordable alternative to products from generic drug companies whose capricious and unfair pricing practices are damaging the generic drug market and hurting consumers. The company will also seek to stabilize the supply of essential generic medications administered in hospitals, many of which have fallen into chronic shortage.Standing with Intermountain Healthcare is Ascension, SSM Health, and Trinity Health. The US Department of Veterans Affairs is also collaborating with the group. Together, they represent more than 450 hospitals across the country.In an interview with The New York Times, Intermountain Healthcare’s CEO, Dr. Marc Harrison, did not mince words. “This is a shot across the bow of the bad guys,” he said. “We are not going to lay down. We are going to go ahead and try and fix it.” The news—and furor—follows years of headlines, scandals, and congressional hearings over certain drug companies dramatically raising the prices of generic drugs and creating frustrating shortages. The most notable example is that of Martin Shkreli’s company Turing Pharmaceuticals, which dramatically raised the price of the old, cheap generic drug Daraprim by more than 5,000 percent—from $13.50 to $750 a pill. Daraprim is used to treat a parasitic infection and often given to babies and HIV/AIDS patients

    Opioid Crisis Blamed For Sharp Increase In Accidental Deaths In U.S - Accidental deaths in the United States rose significantly in 2016, becoming the third-leading cause of fatalities for the first time in more than a century – a trend fueled by the steep rise in opioid overdoses, the National Safety Council reports.Accidents — defined by the council as unintentional, preventable injuries — claimed a record 161,374 lives in 2016, a 10 percent increase over 2015. They include motor vehicle crashes, falls, drowning, choking and poisoning, a category that encompasses accidental overdoses.NSC said in a statement, "The unprecedented spike [in accidental deaths] has been fueled by the opioid crisis. Unintentional opioid overdose deaths totaled 37,814 from drugs including prescription opioid pain relievers, heroin, and illicitly-made fentanyl."By comparison, motor vehicle deaths were at 40,327 in 2016, a 6.8 percent increase from the previous year. Deaths related to falls were also up by nearly 4 percent and drownings and fire-related deaths saw slight increases from 2015, up 5.1 percent and 3.2 percent, respectively. The only category to show a decline was choking deaths, which were down 4.4 percent. Ohio led the nation in opioid overdose deaths, with 3,495, followed by New York, with 2,752 and Florida, 2,622.

    Opioids in the Suburbs -- In nine days in early December, eight young people died of overdoses in Fairfax County, Va., the second-richest of the 3,007 counties in the United States. Mass events like these happen frequently and in all sorts of places. A half-dozen people died in the small Rhode Island town of Burrillville in the first weeks of 2015. Twenty-eight people overdosed in a single afternoon in Huntington, West Virginia, in 2016, though all but two survived. We describe them as “mass” overdoses, but of course the life of a heroin addict is a solitary one, and most of those involved die alone in alleys, in cars, in the bedrooms they grew up in. Sixty-four thousand Americans died of overdoses in 2016, and early statistics for 2017 hint at a 21 percent rise. It is perhaps natural that observers link the problems to economic or social hard luck, as Bill Clinton did a couple of years ago, when he described white working-class people as “dying of a broken heart.” To look at prosperous Northern Virginia is to see a different sociological picture, in which the drugs are more a cause than an effect. Americans are beginning to understand what the lobbyists for pharmaceutical companies successfully concealed from them for two decades: Factory-made prescription opioids like Vicodin, Percocet, and Oxycontin are basically the same drug as the heroin that street addicts buy from their dealers and inject into their veins. When unsuspecting people get prescribed oxycodone for a knee injury or a surgery, a certain percentage will become addicted. That percentage is high: The Centers for Disease Control reported last March that 13.5 percent of people prescribed eight days of opioids were still using them a year later. Unwarned, any patient can get hooked. It happened to quarterback Brett Favre and to radio host Rush Limbaugh. And the over-prescription of these pills created a massive recreational market. Everyone “knew” that pills, which respectable people took, could never be as dangerous as heroin, which respectable people did not. People of modest means who became addicted to these pills discovered they were prohibitively expensive on the streets. Heroin was affordable.

    Maternal mortality statistics - In the past 20 years while maternal mortality ratios (MMR) have fallen 48% in developed nations and 44% worldwide, the number of maternal deaths in the United States has actually doubled, from a low of 12/100,000 births in 1990 to 28/100,000 in 2013.1,2 At first glance, these numbers may look low, but these increases mean that the US mortality rate during that time has also increased, making it 1 of only 20 nations worldwide, 12 of which are in sub-Saharan Africa, where that has occurred. Currently, the United States has a higher MMR than nations such as Iran, Syria, Ukraine, and Jamaica.According to the Centers for Disease Control and Prevention (CDC), up to half of the maternal deaths in the United States should be preventable.4 If that is true, then we need to ask ourselves, why are these women dying? And who are they? Are there quantifiable differences in risk factors among women of different ages, races, ethnic or social groups or those who live in different locations? And because these answers are critical if our nation is to address the overall problem of maternal mortality effectively, intelligently and efficiently, what is the best way to obtain these data and be assured of their accuracy? 

    Alabama flu outbreak declared emergency: Schools close, hospitals reschedule surgeries - Alabama Gov. Kay Ivey has issued a State Public Health Emergency as the flu continues to ravage the state, causing school closings and over-filled hospitals. The outbreak has already caused one Birmingham-area school, Briarwood Christian School, to close due to a large number of students and teachers with the flu. Several campuses of Randolph School in Huntsville were also closed this week due to the flu outbreak. Emergency departments and outpatient clinics are also seeing very high volumes of patients. At this time, this is not a pandemic flu situation, but a major seasonal flu situation, according to the Alabama Department of Public Health.   Children's of Alabama issued its diversion protocol Thursday due to a bed shortage at the hospital, said hospital spokesman Jody Seal.The hospital is requesting the Birmingham Regional Emergency Medical Services System to divert patients to another pediatric hospital due to the shortage of available beds. "Additionally due to the shortage of available bed, Children's may transfer patients to other hospitals in order to provide the patients with the best available care," Seal said.  UAB Hospital is rescheduling some non-emergency elective surgeries originally scheduled for Thursday and Friday due to the hospital being over capacity due to flu patients, UAB spokesman Bob Shepard told AL.com.

    CDC declares season's flu outbreak an epidemic – The Center for Disease Control reports this season’s flu outbreak is now considered an epidemic.Every state except Hawaii is reporting widespread illness.Seven children have died this past week, bringing the total to 20 children nationwide.ABC News Chief Medical Correspondent Doctor Jen Ashton says the nationwide epidemic is the worst flu season since 2014-2015.“The good news is that we may be at or close to peak; we’ll know that in probably a couple of weeks,” Ashton said. The latest Washington State flu update for the week ending January 6 showed 46 confirmed deaths statewide, with three of those in Whatcom County so far this flu season.

    CDC Cancels Nuke Talk, Warns About "Widespread" Flue Epidemic - In late December, the Centers for Disease Control and Prevention (CDC) announced that it would conduct a briefing on January 16 regarding the “public health response to a nuclear detonation” over the skies of the United States. Now, the CDC has canceled the nuclear briefing and focused on something much more important: the flu epidemic across the continental United States. The agency announced the switch in topics late Friday, citing the ‘out of control’ flu cases as the main reason for the shift. “To date, this influenza season is notable for the sheer volume of flu that most of the United States is seeing at the same time which can stress health systems,” according to a CDC statement. “The vast majority of this activity has been caused by influenza A H3N2, associated with severe illness in young children and people 65 years and older.” A weekly Influenza Surveillance Report prepared by the Influenza Division Weekly Influenza Activity Estimates reported by State and Territorial Epidemiologists warns of a “widespread” breakout across the entire United States for the week ending Jan 06, 2018. The originally scheduled event, titled “Public Health Response to a Nuclear Detonation,” was supposed to provide an educational framework for Americans of what do in the event of a nuclear bomb detonation.Earlier this month, the hysteria around nuclear war flourished when President Trump tweeted about the his “nuclear button” size while comparing it to North Korean Leader Kim Jong Un’s button. In response, Americans panicked and bought anti-radiation pills in droves, as drug sales skyrocketed for potassium iodide tablets.North Korean Leader Kim Jong Un just stated that the “Nuclear Button is on his desk at all times.” Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!— Donald J. Trump (@realDonaldTrump) January 3, 2018 The decision to cancel the nuke talk came before a false nuclear attack alert– ‘triggered by human error’- sent people in Hawaii into a panic on Saturday. Further,  another false nuclear attack alert occurred in Japan on Tuesday, which officials quickly reversed in 5-minutes. The nuke talk is a workshop that educates civilians on what to do before and after a nuclear bomb explodes.

    Are You One Of The 170 Million Americans Drinking Radioactive Tap Water? - According to a new bombshell report from the Environmental Working Group (EWG), tap water for more than 170 million Americans contains radioactive elements that may increase the risk of cancer. The group examined 50,000 public water systems throughout the United States and found from 2010 to 2015, more than 22,000 water utilities reported radium in treated water.Radiation in tap water poses serious health threats, particularly for children, and women during pregnancy. The most common radioactive element the EWG found was radium. Studies show that radium above the EPA legal limit may cause depression of the immune system, anemia, cataracts, fractured teeth, and of course cancer. Radium is a naturally occurring radioactive element that resides on the earth’s crust. The EWG emphasizes that higher radium levels in tap water occur when uranium mining or oil and gas drilling exploration companies disturb the earth’s geology. The process triggers radiation called “ionizing because it can release electrons from atoms and molecules, and turn them into ions,” explained the EWG. The EPA warns that all ionizing radiation is carcinogenic, implying that radium above the EPA limit is all too prevalent in America and it could be causing lots of cancer. In 158 public water systems serving some 276,000 Americans in 27 states, the EWG found that radium exceeded the federal legal ceiling for radium-226 and radium-228.The EWG’s Tap Water Database covers six radioactive contaminants, including radium, radon, and uranium. The database shows radium-226 and radium-228 are the two most common forms of radiation in every state. The EWG expresses frustration with the 41-year old federal drinking water standards that are not designed to protect human health. New public health goals were set in 2006 by the California Office of Environmental Hazard Assessment, but have been widely overlooked by the federal government.

    EPA eases path for new chemicals, raising fears of health hazards — The Environmental Protection Agency is shifting course under the Trump administration on how it assesses new chemicals for health and environmental hazards, streamlining a safety review process that industry leaders say is too slow and cumbersome. But some former EPA officials, as well as experts and advocates, say the agency is skipping vital steps that protect the public from hazardous chemicals that consumers have never used before, undermining new laws and regulations that Congress passed with overwhelming bipartisan support in 2016.  According to these critics, that could mean that manufacturers might get approval to introduce a new chemical for one purpose, without getting a thorough, timely review of the chemical’s safety if it is later used for a different purpose. Asbestos, for example, was commonly used in building insulation before the EPA cracked down on its use, but the carcinogenic chemical is still found in brake pads for automobiles — posing hazards for garage mechanics — and is widely used to manufacture chlorine.  In recent months, the EPA has quietly overhauled its process for determining whether new chemicals — used in everything from household cleaners and industrial manufacturing to children’s toys — pose a serious risk to human health or the environment. Among other changes, the agency will no longer require that manufacturers who want to produce new, potentially hazardous chemicals sign legal agreements that restrict their use under certain conditions.  Chemical industry lobbyists had pushed for the change, arguing that the EPA’s rising use of consent orders was unwarranted.

    There were over 12,000 poison control calls for people eating laundry pods last year - Tide Pods are the Internet's breakout meme of early 2018. For those of you not in the know, the joke is that brightly colored laundry detergent pods look like delicious fruity candy so maybe we should, you know, eat them. To be clear, you should not eat them. “You’re really taking a chance — and to what end?” Alfred Aleguas of the Florida Poison Information Center told The Washington Post earlier this month. “It’s pretty foolish behavior.” The Consumer Product Safety Commission warned that “a meme should not become a family tragedy.” Tide partnered with New England Patriots tight end Rob Gronkowski to issue a PSA. But Tide Pods are not exactly a breaking public health emergency. In fact, data from the American Association of Poison Control Centers (AAPCC), which compiles up-to-the-minute numbers on poison control calls, shows that detergent pod poisonings are actually trending downward. In 2017, there were 12,299 calls to U.S. poison control centers due to exposure to laundry pods, according to AAPCC's latest data. That number is actually down by about 14 percent since 2015, when there were over 14,000 calls. The organization didn't start tracking pod poisoning separately until 2012, when Tide Pods first came out. A couple things to keep in mind. First, while 12,000 poison control calls sounds like a lot, it's well within the range of calls for a lot of other common household products. In 2016, for instance, there were over 20,000 calls related to hand sanitizers, 17,000 for toothpaste exposure, 16,000 for deodorants and 13,000 for mouthwash. Second, not every call represents an actual ingestion of a laundry pod. A parent may call poison control because they suspect their kid ate something harmful but aren't really sure, for instance. That call still gets logged in the database.  Notably, of the 13,000-plus laundry pod calls in 2016, only about 5,000 resulted in someone requiring treatment in a medical facility. And only about 700 of those resulted in a “moderate” or “major” risk to the individual's health.

    Why Are Millennials Eating Toxic Tide-Pods? -- A new internet meme called ‘The Tide Pod Challenge‘ has circulated social media channels with the millennial generation taking some severe risks to their health. In a period of wage stagnation and a job environment that is deteriorating, the hopeless millennials have resorted to stupid social media challenges in the hopes of gaining fame, and perhaps the chance for a better life. As we know, that is never the case, unless a brilliant millennial monetize the content. Nevertheless, in the first 15-days of the new year, as millennials are on break from overpriced universities, poison control centers across the country have received 39 calls of teens poisoning themselves after they ate the highly toxic laundry pod.On Tuesday, the American Association of Poison Control Centers (AAPCC) released a statement warning Americans about the “potential poison exposure to single-load laundry packets.”“The ‘laundry packet challenge’ is neither funny nor without serious health implications,” said Stephen Kaminski, JD, AAPCC’s CEO and Executive Director.“The intentional misuse of these products poses a real threat to the health of individuals. We have seen a large spike in single-load laundry packet exposures among teenagers since these videos have been uploaded,” Kaminski added. The challenge starts with a dumb millennial bitting into a brightly colored pod of death from tide and chewing the packet until they foam from the mouth. Yes, that is the challenge in its entirety…

    Concerns Grow That Infections From ‘Zombie Deer’ Meat Can Jump To Humans - NPR - Would you eat venison if there was a chance it could slowly eat away at your brain?  If there's a slight possibility, it doesn't bother Patrick States. The States take pride in skipping the butcher counter at the grocery store. The red meat on their table almost always comes from wild game hunted in Colorado, a source they see as more organic than anything wrapped in Styrofoam and plastic. Tonight's deer came from outside the northwestern town of Craig. The area has a low-prevalence of Chronic Wasting Disease, a deadly neurological disorder similar to Mad Cow that's found in deer, elk and moose.  First observed among captive mule deer in Fort Collins in 1967, CWD has since infected wild herds in 24 states and Canada. It has also been found in South Korea and Norway. In that time, there's been no report of human illness due to CWD exposure, but a recent Canadian study has renewed concerns that the disease could make the jump. Colorado Parks and Wildlife asks hunters to test kills from certain areas affected by CWD. If an animal comes back positive, they recommend hunters avoid any risk by tossing out the meat before it's eaten. A CWD-infected animal can live for two years before showing signs, like a vacant stare or exposed ribs. Predators or car accidents tend to remove infected animals first, according to Dunfee.What's trickier is explaining why hunters should worry at all. As Dunfee acknowledges, scientists have found no conclusive proof that infected meat has harmed people.That evidence, or lack of it, suggests a strong "species barrier" between deer and humans.CWD passes from animal to animal through prions, misfolded proteins that cause other proteins to misfold around them. Different prion diseases tend to only harm certain species, but can evolve to overcome those limitations. For instance, Mad Cow emerged in the UK in the mid-1980s after cattle ate the bone meal of sheep infected with scrapie, a similar brain-wasting disease. The disease then made the jump to people through infected beef products, causing a new variant of Creutzfeldt-Jakob Disease

    San Francisco Requires Poop Maps To Help Pedestrians Avoid Human Waste - How much poop is there on the streets of the City by the Bay?  Would you believe there is an online map to track human feces on the city’s streets? There is.   According to Fox News, one area of the city reported a 140% rise in feces. As Jay Caruso of RedState noted, “Public urination is so widespread it has damaged subway elevators and escalators, building walls and power poles.”When did the gleaming jewel that was San Francisco become a repository for poop? Mayor Willie Brown terminated ordinances; city district Attorney Terence Hallinan would not prosecute “victimless” crimes involving drugs and prostitution.A report from the Office of the Controller stated, “service requests related to human waste increased across all Supervisorial Districts in San Francisco in FY 2015-16, and at a rate well above the average growth in overall SF311 use. District 6 (in Zone B) had far more service requests related to human waste than any other district – three-times as many as the next highest count in District 9 (Zone D) – and nearly 30 percent more requests compared to FY 2014-15. This change appears to be driven mostly by additional reports along Market Street,  Additionally, data from Public Works showed an increase of 13.5% in service orders generated from public service requests,

    The Dicamba Crisis Part Four: The Strict Intent of the Destructive System -- Parts one, two, three. - Monsanto dubbed the 2017 dicamba disaster a “tremendous success” with “wonderful results.” What does it mean when Monsanto proclaims success? Monsanto’s commitment in the face of disaster to push on aggressively with the Xtend expansion, to double down, proves that disaster is a core goal for them. In 2015 Monsanto marketed Xtend cotton seed in the absence of regulatory approval for any of the allegedly “improved” herbicide formulations. Xtend soybeans followed in 2016, still no brand-name dicamba. Therefore from the start it was evident that the company envisioned off-label use of the cheapest, most volatile dicamba formulations. This didn’t matter because Monsanto and BASF knew their own brand-name formulations also were highly volatile. In 2015-2016 Monsanto merely was setting up one of its future alibis, the lie that farmers were illicitly using cheap formulations. The company secured any future plausibility of this lie by ensuring it would be true for Xtend adopters in 2016. The 2017 crisis of volatility and destruction of non-Xtend soybeans and all other broad-leaf crops and plants followed like clock-work. It was predicted, it was forecast, it was intended by the sellers of dicamba and dicamba-tolerant seeds. Anyone who now wants to continue with business as usual, full speed ahead, self-evidently is a conscious criminal. Monsanto is ardent to expand at the most breakneck speed in the most reckless way. The company proclaims its goal to go from 20 million acres of soybeans planted to Xtend in 2017 to 40 million in 2018 and 55 million in 2019. Monsanto’s campaign is classic disaster capitalism: Intentionally generate a disaster then use it to maximize your profit and power. Dicamba’s volatility is a campaign of extortion designed to force all soy farmers to buy Xtend seeds. More broadly the goal is to render food production as tenuous as possible. The worst part of dicamba’s ravages is that it’s destroying produce farms and vegetable gardens, it’s destroying actual food production. If the Xtend system continues to expand it will render everything but commodity dicamba-tolerant soybeans impossible to grow across the range of the Xtend deployment. This is a case study in the real goal of poison-based agriculture. The will to continue this deployment on the part of Monsanto, the US and state governments, academia and the mainstream media proves that this destruction is the goal.

    Charcoal business threatens African Forestry - African Climate Reporters - It is a clear fact that ,the Increasing demand of charcoal for domestic used in Africa Is becoming a big problem to the entire African forestry ,and as such this Is contributing to deforestation, desertification and climate change which may likely causes series of problems to human health and the migration of all the wild animal in the entire region. In poor developing-country households, wood, charcoal and other solid fuels (mainly agricultural residues and coal) are often burned in open fires or poorly functioning stoves. Indeed ,Poverty and unemployed has contributed immensely to the daily attacks on African forest trees for domestic used. Wood fuel meets around a tenth of the world’s energy demand, with its users overwhelmingly found in sub-Saharan Africa. Here, nine out of ten people—around 760 million individuals—rely on firewood and charcoal as their primary source of energy for cooking, heating and other uses. African climate reporters after spending months of investigation find out that ,majority of Rural Dweller in Africa usually cut down the forest trees and burn them to make charcoal that can be sold in the market They transport them to various cities and Town through Truck and other vehicles for sale without planting new trees to replace the old once. However, there is growing concern that the forest could soon turn into desert. As they have been linked to forest degradation, deforestation, and respiratory diseases (from indoor smoke), and major efforts directed at reducing or replacing their use. 

    South Africa: Cape Town slashes water use amid drought - BBC News: The South African city of Cape Town will slash residents' water allowance to 50 litres a day from next month amid fears that it could become the world's first major city to run out of water. The city had reached a "point of no return", Mayor Patricia de Lille said. Cape Town, a popular tourist destination, has been hit by its worst drought in a century. Ms De Lille warned that the city risked reaching "Day Zero" on 21 April, when taps in homes could run dry. "We can no longer ask people to stop wasting water. We must force them," she said at a press conference. "Despite our urging for months, 60% of Capetonians are callously using more than 87 litres per day," she added, referring to the current daily limit.A person uses about 15 litres per minute for a typical shower and the same amount when flushing a standard toilet, according to WaterWise, a South African water usage awareness campaign. 

     Half of drought-hit Somalia needs aid in 2018: UN -   About 6.2 million people in Somalia - half the population - need emergency aid, such as food, water and shelter, due to unprecedented drought and ongoing conflict, the United Nations said on Wednesday, appealing for $1.6 billion. The drought - spanning four consecutive poor rainy seasons - has forced millions from their homes and left hundreds of thousands of children malnourished. One in four people in the Horn of Africa nation faces the risk of hunger. The U.N. Office for the Coordination of Humanitarian Affairs (OCHA) said donors raised enough funds in 2017 to avert famine and stave off an outbreak of cholera, but the situation was set to worsen this year without sufficient aid. “We are likely to see sectors such as shelter being sub-funded, and then you will see people out in the open, with no adequate shelter - and having very little to conduct their lives with,” said Peter de Clercq, head of OCHA in Somalia. “We will also see more children with acute malnutrition, and there will be less children in school,” he said by video conference from Mogadishu, the Somali capital. Somalia’s 2011 famine killed 260,000 people, half of whom died before the official declaration of famine, caused by drought, war and lack of access for humanitarian aid. The country has been mired in conflict since 1991. Its weak, Western-backed government is struggling to assert control over poor, rural areas under the Islamist militant group al Shabaab - challenging the delivery of aid to the most needy. Somali Prime Minister Hassan Ali Khayre thanked the international community for the $1.3 billion raised last year, but warned there was no room for complacency. “We face similar challenges and risks this year and the years to follow,” said Hassan. 

    Save the snowpack, save the water supply - Between droughts and floods, the last decade has offered water managers in the southwest a preview of how climate change could impact a supply largely dependent on winter snow. This year’s disappointing snowpack has them worried again. "Water and climate change are joined at the hip,” said Brad Udall, a researcher at Colorado State University who published a paper earlier this year showing how climate change has reduced flows in the Colorado River. “One of the primary impacts of a warming atmosphere are changes to our water cycle." Snowpack is 50 percent lower than the average at this point in the winter at dozens of basins in the region. It’s a major concern in a region with a growing population where water supplies are often pushed to their limits, even in good years. In addition to fueling the West's winter tourism industry, the snow provides a steady supply of water for the Colorado River, which serves 40 million people spread from Denver to Los Angeles.The problem is not just a lack of snow, but changes in how it is falling and melting. Think of the snowpack as a natural reservoir. During the winter, it freezes in place. When temperatures rise in the spring, the water within is released gradually, filling reservoirs through the rest of the year. That pattern is fracturing around the world. A study released Wednesday by the University of Potsdam also found less available water from snowpack in High Mountain Asia from 1987 to 2009. In the western U.S., the snow line is receding to higher elevations—typically above 8,000 feet. Below that line, rain is often falling instead of snow, meaning less precipitation is stored in the snowpack. A big storm might send water to reservoirs, but many pools weren’t built to hold a deluge of rain. As a result, they often have to release the water to avoid flooding.Without predictable snowpack melts, “it reduces reliability on the supply side,” said Demetri Polyzos, a senior engineer for the Metropolitan Water District, the wholesale water agency for Southern California.

    Photos of California's Deadly Mudslides -- The massive wildfires that scorched parts of Southern California last month left hillsides devoid of vegetation and covered with ash and a dried-out layer of topsoil. On Tuesday, heavy rains fell north of Los Angeles, turning many of these hillsides into torrents of mud and boulders that destroyed dozens of homes and damaged hundreds more. At the moment, 17 deaths have been reported, as search and rescue teams are looking for eight missing people, who may still be trapped inside their homes.

    January 2018 La Niña update: summiting the peak - Now that we are smack dab in the middle of winter in the Northern Hemisphere, the time of year when ENSO tends to have its more reliable impacts in the United States, it’s go-time for paying attention to what’s going on in the Pacific. And the latest CPC/IRI ENSO forecast says…[drum roll please]…La Niña is here to stay for this winter with a 85-95% probability before transitioning to ENSO-Neutral conditions during the spring. December 2017 sea surface temperature departure from the 1981-2010 average. Graphic by climate.gov; data from NOAA’s Environmental Visualization Lab.We are certainly in the midst of a La Niña event as sea surface temperatures across the central/equatorial Pacific continue to remain colder than average. In fact, in December the SSTs in the Niño3.4 region—the box in the Pacific Ocean where we look for La Niña or El Niño conditions—were  around 1°C cooler than average for the second consecutive month. Three-month average anomalies of 1°C mark the cutoff between weak and moderate ENSO events, putting this La Niña on the cusp of a moderate event, should the anomalies last one more month.Of course, we can’t forget that La Niña is a coupled ocean-atmospheric system. So what is the atmosphere doing? For the month of December, the thunderstorm activity across the equatorial Pacific looked pretty La Niña-like with reduced precipitation near the date-line and farther east while enhanced precipitation fell across the broader Maritime continent in the western Pacific Ocean.  Backing this up, the Equatorial Southern Oscillation Index, which monitors areas closely related to ENSO along the equator, measured 0.9 for December. Positive values reflect lower than average pressure in the western Pacific and higher than average pressure in the central/eastern Pacific Ocean (2).

     It's Official: 2017 Was the Hottest Year Without an El Niño - The United Nations announced Thursday that 2017 was the hottest year on record without an El Niño event kicking up global annual temperatures. Last year's average surface temperatures—driven by carbon dioxide and other greenhouse gas emissions—was 1.1 degree Celsius above pre-industrial times, putting the world on course to breach the internationally agreed "1.5°C" temperature barrier to avoid dangerous climate change set by the 2015 Paris climate agreement . Significantly, the Paris agreement could be negatively impacted by President Donald Trump and his administration's rash of anti-environmental policies . Trump, who famously denies climate change and wants to promote U.S. fossil fuels, plans to repeal the Clean Power Plan that limits power plant emissions and intends to withdraw the U.S. from the landmark climate accord. The UN report was based on a consolidated analysis by the World Meteorological Organization (WMO) of five leading international datasets.  Other international organizations have also placed 2017 as either the second or third hottest year behind 2016, which happened to be bolstered by El Niño. (Warmer waters in the tropical Pacific Ocean during an El Niño can boost warming effects around the globe). On Thursday, NASA ranked last year was the second warmest since record-keeping began in 1880. The National Oceanic and Atmospheric Administration ( NOAA ), which uses a different analytical method, ranked it third.

    Ocean Acidification Changing Mussel Shell Structure - For thousands of years, California mussel shells have been made up of long, cylindrical calcite crystals organized in neat, vertical rows. But scientists have found that as ocean acidification has accelerated over the past 15 years, these shells have undergone dramatic structural changes, being built out of unorganized, uneven minerals instead. “What we’ve seen in more recent shells is that the crystals are small and disoriented,” Sophie McCoy, a biologist at Florida State University who led the study, said in a statement. “These are significant changes in how these animals produce their shells that can be tied to a shifting ocean chemistry.” The new findings were published last week in the journal Global Change Biology. McCoy, collaborating with scientists at the University of Chicago and the University of Glasgow in Scotland, compared modern California mussel shells collected from Tatoosh Island off the northwestern tip of Washington to shells from the same region dating back thousands of years. Historically, California mussels have laid down a heap of calcium carbonate fragments, which they later organized into orderly rows to create their geometric shells. Now, it appears the organisms leave the material disordered. The scientists found that in addition to recent shells losing their structural symmetry, the mussels also had elevated levels of magnesium — a sign that the process of shell formation has been disrupted. “When more magnesium is found in the skeleton, it signals that the organism has less control over what it’s making,” McCoy said 

    Climate Change Has Quadrupled Ocean ‘Dead Zones,’ Researchers Warn - The size of oxygen-starved ocean “dead zones,” where plants and animals struggle to survive, has increased fourfold around the world, according to a new scientific analysis.The growth of the zones is yet another consequence of global warming — including increasing ocean temperatures — triggered by greenhouse gases and, closer to the coasts, contamination by agricultural runoff and sewage.“Rising nutrient loads coupled with climate change — each resulting from human activities — are changing ocean biogeochemistry and increasing oxygen consumption,” says the study published in the journal Science. Ultimately, such changes are “unsustainable and may result in ecosystem collapses, which ultimately will cause societal and economic harm.” The analysis of the oxygen-starved zones was conducted by a team of scientists from the Global Oxygen Network (GO2NE), created in 2016 by the Intergovernmental Oceanographic Commission of the United Nations. Researchers determined that open-ocean “oxygen-minimum” zones have expanded since 1950 by an area roughy equivalent to the size of the European Union. The volume of ocean water completely devoid of oxygen has more than quadrupled in that time, the study found. The number of hypoxic, or oxygen depleted, zones along coasts has increased up to 10 times, from less than 50 to 500. Denise Breitburg, a marine ecologist at the Smithsonian Environmental Research Center and lead author of the study, called the plunge in ocean oxygen “among the most serious effects of human activities on the Earth’s environment.” Oxygen is “fundamental to life in the oceans,” she said in a statement. “If you can’t breathe, nothing else matters,” 

    Scientists say 'dead zones' like those in Chesapeake have grown four-fold across oceans, threaten marine life - The Chesapeake Bay has struggled for decades with dead zones — areas in which the water contains little or no oxygen, which sometimes causes massive fish kills. But while the problem has eased here in recent years, it has developed and worsened elsewhere around the globe, researchers say.  Since 1950, the number of coastal ecosystems that scientists say are “suffocating” has grown tenfold. The problem has grown four times over in the open ocean, which is generally a more stable and resilient environment. Scientists say ocean oxygen content has declined 2 percent over the past 50 years. Scientists say the trend is another consequence of global warming that threatens to disrupt food chains, destroy habitats and make it harder for some creatures and microorganisms to survive. The extent of the problem was reported in the journal Science last week by an international team of researchers led by and including Chesapeake-focused scientists in Maryland.“This is really a global issue — it’s not just a local issue,” said lead author Denise Breitburg, a marine ecologist with the Smithsonian Environmental Research Center in Edgewater. “The severity of the changes that we’re seeing are really worrisome.” In the Chesapeake and other estuaries, excessive amounts of nutrients such as nitrogen and phosphorus begin the chain reaction that can lead to fish kills. The pollution, which flows into waterways from farms and wastewater treatment plants and urban stormwater runoff, fertilizes growth of algae blooms. When the algae dies and decomposes, microbes use up the oxygen in the water. Climate change is exacerbating and spreading the problem, the researchers say. Warmer water doesn’t hold as much oxygen as cooler water, so as global temperatures rise, ocean oxygen levels are steadily declining. Rising water temperatures also speed up metabolism in many ocean creatures, forcing them to breathe in more oxygen to survive.  While many fish and other organisms can swim away from suffocating waters, an increase in low-oxygen waters means less suitable habitat is available, potentially making some creatures more prone to predation, the scientists said. Organisms that can’t get away will die. Fish such as sturgeon and striped bass swim to cooler waters on the bottom of the Chesapeake during the summer. But if those areas have no oxygen, “that habitat is lost,” Roman said.

    Study finds that global warming exacerbates refugee crises - The refugee crisis – particularly in the Mediterranean area – has received large amounts of new attention in the past few years, with people fleeing from Syria and entering the European Union emblematic of the problem. There has been some research connecting this refugee problem with changes to the climate. In particular, the years preceding the Syrian refugee crisis were characterized by a severe drought that reduced farm output and led to economic and social strife there. Separating out the influences of climate change from general social instability may be impossible, because they are intimately linked. But we do know that climate change can cause social and economic instability. We also know that these instabilities can boil over into larger problems that lead to mass exodus. The problem isn’t knowing the connection between climate and refugees exists – rather the problem is quantifying it.   A very recent publication appearing in the journal Science investigates this complex subject. The paper, Asylum Applications Respond to Temperature Fluctuations, was published by Anouch Missirian and Wolfram Schlenker from Columbia University. It focused not just on Syria and the Mediterranean area, but expanded their study to be worldwide.The researchers identified 103 countries that contributed to asylum applications to the European Union. Collectively, these nations submitted 350,000 applications to the EU per year. The authors combed the weather histories from these 103 source sites and explored how the weather varied in the 2000–2014 time period.  They found that when temperatures in agricultural areas and seasons at the source countries varied away from an optimal value (of about 20°C), the number of people seeking asylum increased. And the increase wasn’t just proportional. They found it was nonlinear, meaning that initial increases in temperature only mildly changed the asylum application numbers. But as temperatures varied more and more, the number of seekers increased more quickly.

    1.5C degree goal ′extremely unlikely′ – IPCC - A draft report from the IPCC says only huge and rapid change in the way we live can keep global warming below 1.5 degrees Celsius, the lower limit set out by the Paris Agreement. Reactions to the leaked paper vary. The International Panel on Climate Change (IPCC) has reportedly issued a paper saying that without drastic measures to cut carbon emissions, reduce our energy use and remove carbon already in the atmosphere, we are "extremely unlikely" to meet the Paris Agreement goal of keeping global warming below 1.5 degrees Celsius (2.7 degrees Fahrenheit). Currently, the planet's average temperature is on course to rise to 1.5 degrees above pre-industrial levels by 2040, the document says. The IPCC distributed the draft to researchers around the world for reviewing late last week. Media outlets including Reuters and AFP said they had seen the paper, which the IPCC calls a "working document" that is likely to change before publication in October this year.But its assessment of the likelihood of keeping climate change below 1.5 degrees chimes with that of previously published studies around 1.5 degrees and the views of leading climate scientists.

    New Study Showing Ozone Recovery Hailed as Model for Tackling Climate Crisis - Hailed as an example of how concerted global action can help solve a planetary crisis, a new study conducted by NASA scientists documented the first direct evidence that an international effort to ban chlorofluorocarbons (CFCs) has led to the recovery of the Antarctic ozone hole. Published in the journal Geophysical Research Letters on Thursday, the study uses satellite observations to demonstrate that the decline in atmospheric chlorine that resulted from the implementation of the Montreal Protocol, enacted in 1989, has led to "about 20 percent less ozone depletion during the Antarctic winter than there was in 2005—the first year that measurements of chlorine and ozone during the Antarctic winter were made by NASA's Aura satellite." "We see very clearly that chlorine from CFCs is going down in the ozone hole, and that less ozone depletion is occurring because of it," Susan Strahan, an atmospheric scientist from NASA's Goddard Space Flight Center and one of the study's lead authors, said in a statement.In a video (above) published on NASA's website on Thursday, Strahan explained the significance of the study and why the Montreal Protocol should be celebrated as a great success.While CFCs and other ozone-depleting substances were phased out by the mid-1990s, the study notes that the Antarctic ozone hole—which was first discovered in 1985—"is healing slowly" because the man-made substances that caused the hole in the first place "have long lifetimes." Given that fact, researchers believe that it could be several decades before the ozone hole is eliminated altogether.

    El Niño causes West Antarctica’s ice shelves to gain height yet lose mass -- El Niño events are known for bringing floods to South America and contributing to wildfires in Indonesia, but new research reveals they also affect the height and mass of ice shelves in Antarctica. Ice shelves form where a glacier on land reaches the coast and the ice flows out onto the ocean to form a floating shelf. During an El Niño event, many of the ice shelves around West Antarctica receive more snow on their surface, but also lose more ice from underneath because of warm ocean water. Overall, the ice shelves actually lose mass during an El Niño, the research finds, making such events an important factor in the year-to-year fluctuations of ice shelf size. With more “extreme” El Niño events expected as global temperatures rise, West Antarctica’s ice shelves could see larger fluctuations in height and mass, the lead author tells Carbon Brief – on top of their accelerated thinning in response to climate change. The new study, published in Nature Geoscience, focuses on the ice shelves of the West Antarctic. These shelves hold back some of the fastest-melting glaciers on the continent.

    How a Melting Arctic Changes Everything  - As the Arctic Circle’s ice melts away, people of the High North feel their top-of-the-world economy heating up. Gold mines, roads and a full spectrum of energy projects dot the horizon—with Russia leading the way and other Arctic countries scrambling to catch up. There’s much to do, and not enough capital to go around. That means countries with deep pockets, deep ambition and no Arctic coastline—namely China—can get a seat at the table, too.Investing at the top of the world isn’t easy. The remoteness of the region, and a lack of basic infrastructure means the Arctic is simply not wired into the rest of the global trade system. Arctic financial data are scarce. But the global asset manager Guggenheim Partners has shed some light on what’s likely to come next in the Arctic. They’ve spent the last seven years studying the region and the last three amassing a database of 900 planned, in-process, finished, cancelled and desired Arctic infrastructure projects.Some of the projects reflect grand ambitions to upgrade national, industrial and social systems. Others are smaller scale and meant to connect remote places into larger patterns of trade. Taken together, they would require as much as $1 trillion in investments.So far, Russia's oil-and-gas money has underwritten a lot of the work, giving President Vladimir Putin a leg up as changing conditions grant access to new riches. Russia has an overwhelming lead over its neighbors with nearly 250 potential projects. Finland, the U.S. and Canada follow in the number of wish-list items. Underscoring many of these initiatives is careful maneuvering by China—whether through Arctic trade deals or strategic financing. Who can build their projects first, and who funds them, will go a long way in determining which countries are best positioned to exert economic dominance in the region over the coming decades.

    Scott Pruitt insincerely asked what's Earth's ideal temperature. Scientists answer -- In an interview with Reuters last week, Trump’s EPA administrator Scott Pruitt said, The climate is changing. That’s not the debate. The debate is how do we know what the ideal surface temperature is in 2100?  Pruitt’s goal is to sow doubt on behalf of his oil industry allies in order to weaken and delay climate policies. Shifting the ‘debate’ toward ‘the ideal surface temperature’ achieves that goal by creating the perception that we don’t know what temperature we should aim for. It’s in line with his boss’ recent ignorant tweet suggesting that “Perhaps we could use a little bit of that good old Global Warming.” I spoke with a number of climate scientists who agreed that to minimize the risks associated with rapid human-caused climate change, from a practical standpoint the ‘ideal temperature’ is as close to the current one as possible. Stefan Rahmstorf, Head of Earth System Analysis at the Potsdam Institute for Climate Impact Research pointed out that we’re not concerned about specific temperatures; it’s rapid temperature changes that cause problems:Pruitt of course is trying to have a strawman debate, distracting from the fact that not a certain temperature as such is better or worse, but that a change from what we are adapted to is a problem, especially a very rapid change - in either direction, cooling or warming, this causes big disruption. We should not stray too far away from what we and the currently existing ecosystems have evolved for. That is the optimum, simply because it is what we’re highly adapted to, and any major change is going to be very painful.  Texas Tech’s Katharine Hayhoe agreed, noting that human civilization has developed in the relatively stable climate of the past 10,000 years. There is no one perfect temperature for the earth, but there is for us humans, and that’s the temperature we’ve had over the last few thousands of years when we built our civilization, agriculture, economy, and infrastructure. Global average temperature over the last few millennia has fluctuated by a few tenths of degrees; today, it’s risen by nearly 1°C and counting. Why do we care? Because we are perfectly adapted to our current conditions. Two-thirds of the world’s largest cities are located within a metre of sea level. What happens when sea level rises a metre or more, as it’s likely to this century?

    Los Angeles schemes to sue major oil companies over climate change.  -- California has had a hell of a year: droughts, wildfires, and now, mudslides. As taxpayers shoulder the brunt of the state’s enormous disaster relief tab, two L.A. lawmakers say fossil fuel companies should take financial responsibility for climate change-related damages.In a written proposal, L.A. city council members Mike Bonin and Paul Koretz say fossil fuel companies did “nothing to stop their destructive ways” even though they knew their actions exacerbated climate change. They request a meeting with city attorney Mike Feuer to assess the feasibility of pursuing legal action against oil and gas companies.In addition, the proposal suggests filing a motion to bolster New York City’s lawsuit against five major oil companies. That case, filed last Tuesday, also looks to shift the costs of climate change back on the companies responsible for causing the damage.San Francisco and Oakland filed similar lawsuits in September 2017, arguing that oil and gas companies have failed to curtail emissions despite evidence that “global warming has become gravely dangerous.”

    Climate Change Mitigation Pays Off $6 for Every $1 Invested…As Funds Targeted for Cuts -- naked capitalism -  Yves here. No doubt, some readers will take issue with the logic of this post, in that they will see making investments to reduce exposure to the effects of climate change as a distraction from the more important task of getting greenhouse gas levels down. But the flip side is that relatively low cost measures that reduce overall societal costs free up free up more resources to address the underlying challenge. In other words, this doesn’t have to be seen as either/or. This story was originally published by CityLab and is reproduced here as part of the Climate Desk collaboration.  In financial terms, 2017 was the worst year for natural disasters in American history, costing the country $306 billion. Scientists agree that hurricanes, floods, and fires are now turbo-charged by climate change, which the president and many top Republican leaders still refuse to acknowledge. But even while the federal government fails to address the root of the problem, there are ways to limit the damage from these increasingly frequent events — in property, and, more importantly, in human life.  A new report from the National Institute of Building Sciences finds that for every dollar spent on federal grants aimed at improving disaster resilience, society saves six dollars. This return is higher than previously thought: A 2005 study by NIBS found that each dollar from these grants yielded four dollars in savings.“A lot of things have happened since 2005,” said NIBS’s Ryan Colker, who contributed to the report. “Katrina, Sandy, and the increasing … frequency of disasters prompted us to look at what has changed.”NIBS, a nonprofit group authorized by the U.S. Congress, took into account grants from FEMA, HUD, and the Economic Development Administration, whose staffs collaborated with NIBS to produce the report. $27 billion spent in mitigation grants over the past 23 years has yielded $158 billion in societal savings, they found. Many of the interventions the grants funded were simple, like installing hurricane shutters, replacing flammable roofs, and clearing vegetation close to a structure.

    Trump Navy nominee says sea rise from climate change will be a top priority - President Trump’s nominee to oversee Navy facilities said Thursday she would make handling threats from climate change and rising sea levels a top priority for the service if confirmed. Phyllis Bayer testified to the Senate Armed Services Committee that climate change is already causing issues for the Navy and she would delve even deeper into the issue than required by Congress, which has ordered a report on the 10 military facilities most threatened by changing climates. “I commit to you, senator, that in the effort that the Department of the Navy will be contributing to that study for the Department of Defense I will look even further into those issues,” Bayer told Sen. Angus King, I-Maine, a committee member. The report was part of Congress’ annual National Defense Authorization Act, which also deems climate change a “direct threat” to U.S. national security that is endangering 128 military bases. Trump signed the NDAA but the law is at odds with his new National Security Strategy, which dropped the past administration’s references to climate change in favor of focuses on the U.S. business and economic climate. Climate change and sea level rise “is one of my top priorities if confirmed in the job,” said Bayer, who is nominated to be assistant Navy secretary for installations, energy, and the environment. “It’s affecting the infrastructure and it’s adding to the expense of the department’s infrastructure costs and maintenance.”

    GOP voters support green energy, oppose coal, nuclear bailouts, state-wide poll finds - A state-wide poll of conservative Ohio voters finds that 85 percent would pay something extra in their monthly bills for power generated by renewable technologies such as wind and solar. Nearly half of those polled said they would be willing to pay between $10 and $20 extra every month for green power. The release of the polling results by the Ohio Conservative Energy Forum comes as state lawmakers begin hearings on legislation mandating renewable energy, minimum property setback rules for wind turbines, as well as new subsidies for old coal and nuclear power plants.

    Nearly all members of National Park Service advisory panel resign in frustration -- More than three-quarters of the members of a federally chartered board advising the National Park Service have quit out of frustration that Interior Secretary Ryan Zinke had refused to meet with them or convene a single meeting last year. The resignation of 10 out of 12 National Park System Advisory Board members leaves the federal government without a functioning body to designate national historic or natural landmarks. It also underscores the extent to which federal advisory bodies have become marginalized under the Trump administration. In May 2017, Zinke suspended all outside committees while his staff reviewed their composition and work. In a letter to the secretary on Monday, departing board chairman Tony Knowles, a former Alaska governor, wrote that he and eight other members "have stood by waiting for the chance to meet and continue the partnership . . . as prescribed by law." All of the signatories, who serve as unpaid volunteers, had terms set to expire in May., "We understand the complexity of transition but our requests to engage have been ignored and the matters on which we wanted to brief the new Department team are clearly not part of its agenda," Knowles wrote. "I wish the National Park System and Service well and will always be dedicated to their success." On Wednesday, Carolyn "Carrie" Hessler Radelet, the chief executive of Project Concern International, submitted a separate resignation letter. "[F]rom all of the events of this past year I have a profound concern that the mission of stewardship, protection, and advancement of our National Parks has been set aside," wrote Radelet, whose term was not set to expire until 2021. 

    Majority of National Parks Panel Quits in Protest of Ryan Zinke - Nearly all members of the National Park Service advisory panel abruptly quit on Monday in protest of the Trump administration's policies, which they say have neglected science, climate change and environmental protections.  "From all of the events of this past year I have a profound concern that the mission of stewardship, protection, and advancement of our National Parks has been set aside," the head of the panel, Tony Knowles, wrote in a letter of resignation addressed to Interior Secretary Ryan Zinke , who oversees management of the country's national parks and monuments . The letter was signed by nine of the panel's 12 members. The bipartisan panel was appointed by former President Obama. The terms of the members who quit were due to expire in May. The advisory board , first authorized in 1935, advises the director of the National Park Service and the interior secretary on matters relating to the National Park Service and the National Park System. Environmental advocates have criticized Sec. Zinke's policies, from his recommendations to President Trump to shrink and reduce protections for public lands , to opening up the nation's thousands of miles of coastline to offshore oil drilling . "We resigned because we were deeply disappointed with the department and we were concerned," Knowles told the New York Times . Knowles added that Sec. Zinke "appears to have no interest in continuing the agenda of science, the effect of climate change, pursuing the protection of the ecosystem." According to the letter, the board had repeatedly tried but failed to secure a meeting with Zinke.  "[Our] requests to engage have been ignored and the matters on which we wanted to brief the new Department team are clearly not part of the agenda," the letter states.

     The damage done by Trump’s Department of the Interior -  Secretary of the Interior Ryan Zinke had an arcade game called Big Buck Hunter installed in the employee cafeteria. The game comes with plastic rifles, which players aim at animated deer. The point of the installation, Zinke has said, is to highlight sportsmen’s contribution to conservation. “Get excited for #hunting season!” he tweeted, along with a photo of himself standing next to the game, which looks like a slot machine sporting antlers. Nowadays, it is, in a manner of speaking, always hunting season at the Department of the Interior. The department, which comprises agencies ranging from the National Park Service to the Bureau of Ocean Energy Management, oversees some five hundred million acres of federal land, and more than one and a half billion acres offshore. Usually, there’s a tension between the department’s mandates—to protect the nation’s natural resources and to manage them for commercial use. Under Zinke, the only question, from the redwood forests to the Gulf Stream waters, is how fast these resources can be auctioned off. One of Zinke’s first acts was to overturn a moratorium on new leases for coal mines on public land. He subsequently recommended slashing the size of several national monuments, including Bears Ears, in Utah, and Gold Butte, in Nevada, and lifting restrictions at others to allow more development. (In December, acting on these recommendations, President Donald Trump announced that he was cutting the area of the Bears Ears monument by more than three-quarters and shrinking the Grand Staircase-Escalante monument, also in Utah, by almost half.) Zinke has also proposed gutting a plan, years in the making, to save the endangered sage grouse; instead of protecting ten million acres in the West that had been set aside for the bird’s preservation, he’d like to see them given over to mining. And he’s moved to scrap Obama-era regulations that would have set more stringent standards for fracking on federal property. All these changes have been applauded by the oil and gas industries, and many have also been praised by congressional Republicans. (Before Zinke became Interior Secretary, he was a one-term congressman from Montana.) But, to some members of the G.O.P., Zinke’s recent decision to open up great swaths of both coasts to offshore oil and gas drilling represents a rig too far.

    EPA drops rule requiring mining companies to have money to clean up pollution - President Donald Trump's administration announced Friday that it won't require mining companies to prove they have the financial wherewithal to clean up their pollution, despite an industry legacy of abandoned mines that have fouled waterways across the U.S. The move came after mining groups and Western-state Republicans pushed back against a proposal under former President Barack Obama to make companies set aside money for future cleanup costs. U.S. Environmental Protection Agency Administrator Scott Pruitt said modern mining practices and state and federal rules already in place adequately address the risks from mines that are still operating. Requiring more from mining companies was unnecessary, Pruitt said, and "would impose an undue burden on this important sector of the American economy and rural America, where most of these jobs are based."  The U.S. mining industry has a long history of abandoning contaminated sites and leaving taxpayers to foot the bill for cleanups. Thousands of shuttered mines leak contaminated water into rivers, streams and other waterways, including hundreds of cases in which the EPA has intervened, sometimes at huge expense. The EPA spent $1.1 billion on cleanup work at abandoned hard-rock mining and processing sites across the U.S. from 2010 to 2014. Since 1980, at least 52 mines and mine processing sites using modern techniques had spills or other releases of pollution, according to documents released by the EPA last year. In 2015, an EPA cleanup team accidentally triggered a 3-million gallon spill of contaminated water from Colorado's inactive Gold King mine, tainting rivers in three states with heavy metals including arsenic and lead. Article continues belowThe Obama-era rule was issued last December under court order after environmental groups sued the government to enforce a long-ignored provision in the 1980 federal Superfund law. "It's galling to see the Trump administration side with industry polluters over the America taxpayer," said Bonnie Gestring with Earthworks, one of the plaintiffs in the case. "We'll see them back in court," she added. 

    How Trump's Tax Plan Made It Harder to Finance Renewables  - PosiGen Inc. was close to finalizing terms on a $100 million financing deal. Then Congress passed President Donald Trump’s tax-reform plan. “We just lost $100 million in tax equity last week,” Thomas Neyhart, chief executive officer of the Louisiana rooftop solar installer, said in an interview. “Of course, they let us go because we’re relatively small.” He declined to identify the prospective U.S. investor.PosiGen is one of many companies that are suddenly facing a new financing reality because of the tax overhaul, especially clean-energy developers seeking tax-equity deals. At least $3 billion in potential deals are on hold for this type of financing, according to John Marciano, a Washington-based partner at law firm Akin Gump Strauss Hauer & Feld LLP. Some investors have exited or are sidelined, while others are considering repricing their transactions. Tax equity is a critical but esoteric source of renewables financing -- totaling about $12.2 billion in 2016, according to Bloomberg New Energy Finance. There were about 35 tax-equity investors last year, according to JPMorgan Chase & Co. While solar and wind projects are typically eligible for federal tax credits, many don’t owe enough to the government to take full advantage. Instead, they turn to banks, insurance companies and some big technology firms that monetize the credits through tax-equity investments. Because the law reduced the corporate rate from 35 percent to 21 percent, companies will have fewer liabilities and therefore less need to find ways to reduce their bills. Further, there are provisions in the law that may constrain some multinational companies’ ability to do deals.

    Solar tariffs not a death blow for industry - President Donald Trump’s upcoming decision to erect trade barriers on solar equipment imports could deal a setback to the young sector as federal subsidies shrink, but wouldn’t sound the death knell for the industry that some renewable energy advocates have feared.The U.S. International Trade Commission’s recommendation for combined quotas and tariffs up to 35 percent on imports of solar cells and panels have sparked some panic among many in the industry who argue it will hike costs for the clean energy systems and wipe out up to a third of the solar jobs in the U.S. But the recommendation is still far weaker than the measures sought by Suniva and SolarWorld Americas, the two companies that lodged the trade complaint.  Panels are also only one part of the total cost of building a solar installation, and they now make up less than 20 percent of the overall price of a home system and about one-third the cost of a large, utility-scale plant."I wouldn’t characterize it as an end-game scenario," said Timothy Fox, a vice president and analyst at ClearView Energy Partners. Pro Energy’s Eric Wolff has the full story here. The White House is expected to announce its decision in the solar case tomorrow, before Trump leaves to attend the World Economic Forum in Davos, Switzerland, an administration official told POLITICO’s Andrew Restuccia. The long-awaited decision is not yet final, the official said, and advisers are likely to present the president a couple of options so that he can issue a final verdict.The general thinking is it will be a tailored, moderate approach, the official added — though that source and others have cautioned that with this president, it’s nearly impossible to predict how things will go in the end.

    Weakening of bird protections has no "significant impact" on Lake Erie wind project, developers say  - A decision by the Trump administration to ease restrictions on companies that accidentally kill migratory birds came as the developers of a Lake Erie wind farm are studying the potential impact of the turbines on birds.There's a debate between environmental groups and the wind project developers whether the changes to the Migratory Bird Treaty Act will have any impact on North America's first freshwater offshore wind farm, scheduled to be constructed in Lake Erie this year."Based on our preliminary reading of the Department of Interior ruling, it is our opinion at this time that it will not significantly impact Icebreaker," said Beth Nagusky of the Lake Erie Energy Development Corp., the nonprofit development group that is guiding the project.LEEDCo continues to conduct bi-weekly aerial surveys of Lake Erie birds in the vicinity of the future Icebreaker site, Nagusky said. The findings have been positive, he added."Our risk assessment shows that our six-turbine project poses minimal risk to birds and bats," Nagusky said. "Regardless, we still plan to conduct rigorous pre- and post-construction monitoring, and adopt mitigation and adaptive management measures, to proactively protect fish and wildlife."LEEDCo has submitted environmental applications to the Ohio Power Siting Board detailing its plans for monitoring and analyzing the impact of the wind farm on birds, bats and fishApproval of the plans is required before LEEDCo can proceed with construction of the $126 million wind project planned for a site about eight to 10 miles northwest of Cleveland. Bird advocates, however, believe that the weakening of the Migratory Bird Treaty Act "might have some impact on Icebreaker," said Michael Hutchins, director of the American Bird Conservancy's Bird Smart Wind Energy Campaign.

    A New Era of Batteries Spells Trouble for Gas in America - California, the state that helped birth the global boom in battery-toting electric vehicles, is trying to spark a similar transformation for utilities. And that spells trouble for power plants all across the U.S. that run on natural gas. The California Public Utilities Commission approved an order Thursday that will require PG&E Corp., the state’s biggest utility, to change the way it supplies power when demand peaks. Instead of relying on electricity from three gas-fired plants run by Calpine Corp., PG&E will have to use batteries or other non-fossil fuel resources to keep the lights on in the most-populated U.S. state. The shift is possible in California partly because there’s a surplus of solar power, after a surge of rooftop panels and large-scale gathering systems helped double the renewable energy it used over the past decade. Batteries can charge up in daylight and dispense electricity later. With improved technology and lower costs, storage systems are becoming more viable for utilities, especially in a state hoping to get half its power from wind and solar by 2030 and targeting major cuts in greenhouse gas emissions.

       Why cobalt will struggle to free itself from the DRC - (Reuters) - The cobalt market will record a supply surplus both this year and next, according to heavyweight commodities research house CRU. This might seem a little surprising, given all the bullish hype surrounding a metal that more than doubled in price last year. CRU itself has drastically revised its original assessment of a sustained supply shortfall due to strong demand growth from the battery sector. What has changed its mind? In short, it’s the return of the Katanga mine after two years of suspended activities. Once fully operational, Katanga will be the “largest cobalt-producing mining project in the world”. (CRU Insight, Jan. 4 2018) Bulls needn’t panic just yet, however. CRU doesn’t expect much of a price reaction. Rather, “big future consumers of cobalt like automotive companies, tech companies and battery manufacturers will choose to invest and stockpile” material to try and mitigate future supply risk. Because the return of Katanga simply increases the dependence of the whole cobalt supply chain on just one highly problematic country, the Democratic Republic of Congo (DRC). The Katanga copper mine has been out of action since the end of 2015 for a major refurbishment. It is now returning with a super-charged cobalt circuit and, according to owner Glencore, should produce 11,000 tonnes of the battery material this year, rising to 34,000 tonnes next year. To put those figures into context, consider the fact that the United States Geological Survey (USGS) estimates global mined cobalt production was just 123,000 tonnes in 2016. 

    Aviation Emissions Rising Steeply, With 'Colossal Gap' Between Carriers - Hainan Airlines and All Nippon Airways ranked first in fuel efficiency among transpacific carriers in 2016, according to a report released Tuesday by the International Council on Clean Transportation. The new report analyzed 20 airlines operating nonstop flights between the mainland U.S. and East Asia and Oceania. The difference in efficiency performance between the most and least fuel-efficient carriers was 64 percent. "The colossal gap between the most and least fuel-efficient airlines shows that dramatic pollution reductions are easily within reach using existing technologies," said Vera Pardee, senior counsel at the Center for Biological Diversity 's Climate Law Institute. "By flying less-polluting carriers like Hainan and All Nippon, we can all reduce our carbon footprint while giving delinquent airlines an incentive to adopt their competitors' more climate-friendly practices." Airlines analyzed in the study cut fuel use and carbon pollution through a number of strategies, including buying new aircraft, increasing passenger density and optimizing freight load. Aviation already accounts for at least 2.5 percent of global greenhouse gas pollution, and the industry's emissions are rising steeply. If commercial aviation were considered a country, it would rank seventh after Germany in terms of carbon emissions. Airplanes could generate 43 metric gigatons of planet-warming pollution through 2050, consuming more than 4 percent of the world's remaining carbon budget, according to a Center for Biological Diversity report .

    UK to miss legal climate targets without urgent action - The UK will miss its legally binding carbon targets without urgent government action, official advisers have warned. Vague ambitions must be turned into solid plans, says the Committee on Climate Change. The CCC also warned that there are “significant” risks to the delivery of existing projects, such as the new Hinkley Point nuclear plant.“There has been a very fundamental change of stance,” said Lord Deben, chair of the CCC. Deben said the CCC analysis released on Wednesday was the best-case scenario and had assumed ministers will deliver all the carbon cuts pledged so far. “We have given every benefit of the doubt,” he said. “But even if they do all the things they say they are going to do, to the maximum, there will still be a gap.” The CCC highlighted a series of government pledges that have little or no detail on how they will be delivered, including giving all homes a good level of energy efficiency by 2035. Also highlighted was the critical need to roll out carbon capture and storage plants (CCS) by the 2030s, to trap and bury emissions from fossil fuel plants. “We cannot underline more strongly that without CCS, meeting our statutory targets will cost a great deal more,” Deben said. “CCS is essential.”

    Europe's microwave ovens emit nearly as much CO2 as 7m cars - Popping frozen peas into the microwave for a couple of minutes may seem utterly harmless, but Europe’s stock of these quick-cook ovens emit as much carbon as nearly 7m cars, a new study has found. And the problem is growing: with costs falling and kitchen appliances becoming “status” items, owners are throwing away microwaves after an average of eight years, pushing rising sales. A study by the University of Manchester worked out the emissions of carbon dioxide – the main greenhouse gas responsible for climate change – at every stage of microwaves, from manufacture to waste disposal. “It is electricity consumption by microwaves that has the biggest impact on the environment,” say the authors, who also calculate that the emissions from using 19 microwaves over a year are the same as those from a car. “Efforts to reduce consumption should focus on improving consumer awareness and behaviour to use appliances more efficiently. For example, electricity consumption by microwaves can be reduced by adjusting the time of cooking to the type of food.” Each year more microwaves are sold than any other type of oven in the EU: annual sales are expected to reach 135m by the end of the decade. David Reay, professor of carbon management at the University of Edinburgh, pointed out that the damage done by microwaves is still a fraction of that done by cars. “Yes, there are a lot of microwaves in the EU, and yes they use electricity,” he said. “But their emissions are dwarfed by those from cars – there are around 30m cars in the UK alone and these emit way more than all the emissions from microwaves in the EU. Latest data show that passenger cars in the UK emitted 69m tonnes of CO2 equivalent in 2015. This is 10 times the amount this new microwave oven study estimates for annual emissions for all the microwave ovens in the whole of the EU.” 

    Texas shatters record for winter power demand - Houston Chronicle: Texas has set a new record for winter power demand in the wake of a record-breaking cold snap that gripped the state on Tuesday night, according to the Electric Reliability Council of Texas, which oversees 90 percent of the state's grid. Power demand peaked between 7 a.m. and 8 a.m. Wednesday at 65,731 megawatts -- shattering the record of 62,855 megawatts hit earlier this month when another cold snap hit the state. In a news release, ERCOT said the state had sufficient power resources available to meet demand.

    Heatwave tests Australia's power grid (Reuters) - Sweltering weather across southern Australia sparked power price spikes on Friday and prompted the national grid operator to put emergency generators on standby. Temperatures above 40 degrees Celsius (104°F) represent the first major test of the energy grid this year after nearly 2,000 megawatts of extra capacity were added to prevent blackouts that have previously hit household and industrial users. The extra capacity includes the world’s biggest lithium ion battery built by Tesla Inc, which was switched on last month and provides 120 megawatts. Scorching conditions stretch the grid as people crank up power-hungry air conditioners, while the heat reduces the capacity of transmission wires to carry electricity. The Australian Energy Market Operator (AEMO), which runs the national electricity market, expected a decline in reserves in the states of Victoria and South Australia on Friday afternoon, but no disruption to supply. It asked generators that feed power into the grid to be on standby to supply extra power in those states. Forecast wholesale spot power prices for dispatch on Friday afternoon in South Australia and Victoria have spiked to the capped level of A$14,200 ($11,366) per megawatt hour (MWh), AEMO said on its website. Last summer was the first in eight years to see power failures in Australia’s southeastern states, including outages that forced BHP Billiton to stop production at its Olympic Dam mine for two weeks and Alcoa Corp to shut one of two potlines at its Portland aluminium smelter. Alcoa, one of the biggest electricity users in Victoria, is one of several industrial customers asked by AEMO to go on standby to reduce electricity demand if necessary on Friday afternoon. 

    Turning soybeans into diesel fuel is costing us billions (NPR) This year, trucks and other heavy-duty motors in America will burn some 3 billion gallons of diesel fuel that was made from soybean oil. They're doing it, though, not because it's cheaper or better, but because they're required to, by law.The law is the Renewable Fuel Standard, or RFS. For some, especially Midwestern farmers, it's the key to creating clean energy from American soil and sun. For others — like many economists — it's a wasteful misuse of resources. And the most wasteful part of the RFS, according to some, is biodiesel. It's different from ethanol, a fuel that's made from corn and mixed into gasoline, also as required by the RFS. In fact, gasoline companies probably would use ethanol even if there were no law requiring it, because ethanol is a useful fuel additive — at least up to a point. That's not true of biodiesel. Scott Irwin, an economist at the University of Illinois, calculates that the extra cost for biodiesel comes to about $1.80 per gallon right now, meaning that the biofuel law is costing Americans about $5.4 billion a year.   Defenders of biodiesel insist that it's a much cleaner fuel than regular diesel, because it doesn't come from the ground, but from soybean plants that capture carbon dioxide from the air as they grow. In fact, by the EPA's calculations, replacing petroleum-based fuel with biodiesel will cut greenhouse emissions at least in half. A growing number of environmentalists, however, say that this calculation is dead wrong. They say that if more soybeans are needed to make fuel in addition to food, it inevitably means that people somewhere on Earth will have to plow up grasslands or cut down forests in order to grow that additional supply — and clearing such land releases huge amounts of carbon dioxide into the atmosphere.

    India ground zero in fight between water and energy - India's lack of water will drive the need for solar and wind energy more than concerns over climate change will, according to a report released Tuesday. More than 80 percent of the subcontinent's electricity comes from power plants that require freshwater cooling, which presents a problem since a lack of water was the prime culprit for some power plants shutting down over the last five years, according to the World Resources Institute, a nonpartisan environmental think tank in Washington. The plants include both coal and nuclear generators, called thermal plants because of the heat they produce to make electricity. "Thermal power plants have been forced to shut down due to inaccessibility of cooling water, losing tens of terawatt-hours of electricity generation in recent years," the report said. The report is the first comprehensive study of how access to water is affecting India's energy needs. India lost about 14 terawatt-hours of power generation because of water shortages in 2016, which canceled "out more than 20 percent of growth in the country’s total electricity generation from 2015," according to the report. One terawatt is equivalent to burning about 1 billion tons of coal annually. By comparison, the U.S. burned about 700 million tons of coal in 2016 for electricity. The scenario will only grow worse as India's economy grows and the demand for fossil fuels and nuclear power increase, putting utilities and industries in a fight for water. The country still has 300 million people who do not have access to electricity in a country of 1.2 billion. A blackout in 2012 that turned out the lights for over half a billion people helped to underscore the fragility of India's grid.

    Cheap Energy Draws Bitcoin Miners To Canada -- China’s bitcoin mining scene is huge, accounting for over half of the world’s mining power, with giant Bitmain Technologies leading the way. Chinese miners enjoy cheap labor and electricity from small towns scattered around rural China. But is this gravy train coming to an end? Bitcoin veterans are no stranger to conflicting news coming from China, but it seems that some miners are looking for alternatives, and Canadian energy companies are looking to step up to meet the demand. Hydro-Quebec is in a unique position to court bitcoin miners. As Canada’s largest utility provider, the company is offering techies special deals to move data-centers or mining operations into the Great White North. The utility giant is offering electricity costs of $0.0248 per kWh to data centers, and $0.0394 per kWh to cryptocurrency miners, 50 to 75 percent cheaper than comparable North American alternatives. With these huge savings, Hydro-Quebec is reportedly scrambling to keep up with demand.

    North Dakota coal industry disappointed by rejected proposal  (AP) — North Dakota coal industry officials are disappointed by the Federal Energy Regulatory Commission's rejection of a proposal that would have propped up the state's main power source. The U.S. Department of Energy issued the proposal last fall to compensate power plants for keeping coal on hand. The commission unanimously decided against adopting the proposal on Monday because it failed to meet a Federal Power Act standard. "We are disappointed in yesterday's determination by the Federal Energy Regulatory Commission," Lignite Energy Council President Jason Bohrer said in a statement Tuesday, the Bismarck Tribune reported. "Currently, regional electricity markets do not properly compensate generators who produce 'always on' power or whose power is not susceptible to weather disruptions." The Energy Department's proposal came after an agency study calling for grid resiliency in the nation's power supply. The department defines resiliency as the ability to recover from natural or man-made disasters that disrupt fuel supply. The department said that resiliency has been threatened in recent years by increasing plant closures due to regulation and competition from cheap natural gas. Energy Secretary Rick Perry had suggested that the commission adopt a rule that pays baseload power plants for have 90 days' worth of fuel onsite. In its decision, the commission cited the Federal Power Act standard that requires showing that existing tariffs are "unjust, unreasonable, unduly discriminatory or preferential" before implementing tariff changes. 

    Duke Energy: Unlined coal ash pits once 'a feature, rather than a flaw' :: WRAL.com: Duke Energy blasted its opponents in a final regulatory filing Friday, saying they leaned on "simplistic crutches," false analysis and a Pollyanna hindsight to argue against the company's bid to raise electricity rates enough to cover clean up costs at the company's coal ash ponds. This rate decision, pending before state regulators, isn't about the 2014 Dan River spill that spewed coal ash downstream, the company said in its brief. Nor is it about the coulda, woulda, shoulda customer advocates have engaged in in an effort to block the increase, Duke Energy Progress attorneys said. The company complied with existing laws and industry standards when it left wet ash in unlined pits for decades, they said. At one point "the lack of a liner was considered a feature, rather than a flaw" because soil would filter out containments, the company said. Impact on groundwater wasn't initially a concern "because the ash basins were built more than a decade before the adoption of any federal or state regulation related to groundwater corrective action," attorneys argued. Arguments now that the company should have done more in the past to save customers money now on cleanup rely on hindsight and ignore the fact, Duke attorneys argued, that regulators with the North Carolina Utilities Commission might not have even allowed the utility to go above and beyond on coal ash in recent decades, due to the costs this would have passed on to customers and the lack of legal necessity. That same commission will decide now whether Duke Energy Progress shareholders or its customers will cover the majority of costs for a cleanup that has since been ordered by changes in state and federal law. Between Duke Energy Progress and its sister company, Duke Energy Carolinas, parent Duke Energy has asked for more than $1 billion a year in increases.

    Out of prison, former coal exec launches Senate campaign  (AP) — A former coal company CEO who went to prison on charges stemming from the deadliest U.S. mine disaster in decades kicked off his U.S. Senate campaign by trying to persuade a largely working class audience that he identifies with them. But one father whose son died in the 2010 tragedy called the GOP businessman's jump into politics "more of a slap in our face." More than 100 supporters clapped heartily for former Massey Energy executive Don Blankenship at his town hall-style event Thursday, where the Republican candidate declared avid support for pro-coal President Donald Trump and signaled he was aligned with West Virginia's hard-working electorate. "I may leave here tonight in a little fancier car," Blankenship told those gathered at a conference center in the city of Logan. "But we come from the same place, and I have not forgotten." Men and women in white T-shirts reading "Blankenship" and "U.S. Senate" beneath an American flag applauded repeatedly as he talked about job creation, and aligning with Trump and a Republican-led state Legislature to improve West Virginia's sagging coal economy. The campaign kickoff event Thursday night drew no protesters. But Robert Atkins, the man in the audience whose 25-year-old son Jason was killed in the 2010 Upper Big Branch mine explosion along with 28 others, said the Senate bid has brought up bitter memories for his family. 

    A blue sky in Beijing? It’s not a fluke, says Greenpeace — Winters in Beijing have long been choked by thick, dusty, toxic smog. But this winter, the sky has taken on a once seemingly unthinkable hue: blue. Pollution in Beijing and in 27 other cities in northeastern China has fallen precipitously, dropping 33 percent on average compared with the last three months of 2016. In Beijing, pollution fell 53 percent. Greenpeace estimated that lower pollution levels resulted in 160,000 fewer premature deaths across China in 2017. The drop indicated that the government’s antipollution campaign — first announced in 2013 but accelerated last year for regions around the capital — has begun to show results. Even so, pollution levels fell less precipitously or rose elsewhere, suggesting that a concerted effort last fall to shift heating to natural gas from coal may have simply shifted the harmful effects to regions far from the capital. In the northern province of Heilongjiang, on the border with Russia, pollution levels rose 10 percent. In a statement with its analysis, Greenpeace argued that the results demonstrated the need for more government action, noting that nationwide the drop in pollutants was only 4 percent. “China’s national air pollution action plan has brought massive reductions in pollution levels and associated health risks, but policies favoring coal and heavy industry are holding back progress,” Huang Wei, one of the organization’s campaigners, said in the statement. But in Beijing, where pollution levels are tracked as closely as property prices are in Hong Kong, London or New York, the respite from eye-watering, throat-scratching smog has nonetheless been welcomed. Only a year ago the pollution was so bad on some days that schools were closed and flights were canceled.

    ‘I’m Freezing and Shaking’: China’s Winter Heating Crisis, Mapped - While people in Beijing enjoyed the benefits of a record air pollution drop this winter, those in the provinces were left unable to keep warm, cook or sleep for lack of heating.Reports on the heating crisis that was triggered by the government's anti-pollution drive have largely focused on the areas surrounding Beijing, but mapping of social media data by Unearthed now shows that people were complaining of the cold more than 1,000 kilometers (approximately 621 miles) away."The heating in my home is not working, I'm freezing and shaking, rushing to go to sleep," one user posted at 2:33 am on Weibo, one of China's most popular social media sites."There are places in Hebei province that don't have heating but don't allow people to burn coal. How are the people in these places supposed to live through the winter? We want to manage the pollution, but citizens also have to be able to live their lives, don't they?"There were reportedly millions of people who experienced the unintended consequences of the government's drive to cut pollution in northern China this winter.The latest data shows that is has certainly worked. Beijing's smog has dropped by a record 54 percent in the final quarter of 2017, compared to 2016. But implementation of the government's target to switch millions of households from coal to cleaner energywas hampered by high demand, overzealous local officials and a separate government policy drive to eliminate small industrial coal burners.

    As gas crisis hit, China coal miners, utilities ramped up output  (Reuters) - China's coal miners and thermal power plants ramped up output to their highest in years in December, data showed on Thursday, in a rush to feed unexpectedly strong demand from millions of homes as natural gas shortages triggered a winter heating crisis. The jump came as millions of homes across northern China used more electricity and gas to heat their homes after being forced to switch from coal. It also reflects a ramp-up in coal-fired power use due to the gas shortages caused by the ambitious plan, undermining the government's long-term plan to boost clean energy use and wean the nation off its most-used fuel. The production of thermal electricity, generated almost entirely by coal-fired capacity, rose to 441.7 billion kilowatt-hours (kWh), the highest in the National Bureau of Statistics' records going back to February 2015. "This year, Beijing's pullback on coal-to-gas conversion has benefited coal consumption," said Cheng Gong, analyst at China National Coal Association. Electricity demand in December is typically higher as people crank up the heat in their homes because of colder temperatures. However, the above-normal demand last month caused thermal power output to rise 17 percent from November and 3.6 percent from December 2016. Full-year output rose 4.6 percent. Last month, the world's top coal miners churned out their highest tonnage since December 2015. The data highlights the challenge for Beijing as it seeks to curb coal use, reduce excess mining capacity and boost wind and solar power. In early December, Beijing scaled back its conversion of households to natural gas heating from coal across northern China after provinces almost ran out of gas. It also eased restrictions on coal-power projects. Thermal power accounted for 77.5 percent of total output in December, up from 72 percent in November, well away from the government's target for coal-fired power to account for 55 percent of installed capacity by 2020.

    Investors Are Buying Power Stations In Russia To Mine Cryptocurrency -- Two electric power stations in Russia were recently sold to a cryptocurrency miner looking to expand his operations – the latest sign that the country’s government-supported push to become a cryptocurrency mining hub has been successful. The two stations are situated in the Perm Region on the western slopes of the Middle Ural Mountains, and in the neighboring Republic of Udmurtia. The facilities will be used as data centers as well as housing for cryptocurrency mining equipment and a center for cryptocurrency mining. The price paid for the two stations? Roughly 160 million rubles (about $3 million), according to RT. After initially approaching cryptocurrencies with skepticism, the Russian government last summer signaled that it would instead try to regulate and embrace the markets.  That trend has culminated with the Russian Ministry of Finance drafting a bill to legalize the trading of cryptocurrencies on approved exchanges, according to Deputy Finance Minister Alexei Moiseev, who has indicated that the government is seeking to provide greater oversight. President Vladimir Putin has ordered the government to create legislation governing the status of bitcoin, other cryptocurrencies, mining, and initial coin offerings, as well as defining everything that relates to digital money, by July.

    Ohio EPA Reports New Rover Pipeline Spill To Federal Regulators - The $4.2 billion Rover Pipeline cutting diagonally across Ohio is drawing more concern from state regulators. Last week, the Ohio EPA told the Federal Energy Regulatory Commission that it is “deeply concerned” about a new spill from the Rover Pipeline. Nearly 150,000 gallons of drilling fluid was “lost down a hole” beneath the Tuscarawas River in southwestern Stark County. That’s the same site where more than 2 million gallons of the fluid – mixed with diesel – leaked last April and turned up in a wetland. Horizontal drilling to lay the pipe beneath highways and rivers was suspended then but allowed to resume in December. The pipeline owner, Energy Transfer Partners, has said that it’s continuing to follow a plan approved by the feds and state EPA.  Amid spills from the Rover and Keystone pipelines, among others, FERC recently announced plans to review its pipeline policies for the first time since 1999.The state has sued Rover for $2.3 million over the cleanup costs from the first spill, after the pipeline’s owners refused to pay state fines. There’s no indication if the fluid in the latest spill contained diesel.The EPA's letter notes that the company is now flying drones to monitor surface leaks and has recovery equipment in place. The pipeline is expected to pump 3.25 billion cubic feet of gas per day from the Marcellus and Utica shale fields. That’s enough to supply more than 15 million households.

    Rover Pipeline Spills Another 150,000 Gallons of Drilling Fluid Into Ohio Wetlands - Energy Transfer Partners ' troubled $4.2 billion Rover pipeline has spilled nearly 150,000 gallons of drilling fluid into wetlands near the Tuscarawas River in Stark County, Ohio—the same site where it released 2 million gallons in April.  The 713-mile pipeline, which will carry fracked gas across Pennsylvania, West Virginia, Ohio and Michigan and Canada, is currently under construction by the same Dallas-based company that built the controversial Dakota Access pipeline . Horizontal directional drilling work to lay the pipe beneath highways and rivers was temporarily halted in the wake of the major April spill, but work was allowed to resume in December. Energy Transfer Partners said it is continuing to follow a plan approved by the federal government and the state EPA, WOSU reported. According to Kallanish Energy , the Ohio Environmental Protection Agency inspected the horizontal directional drilling site on Jan. 10 and reported 146,000 gallons of drilling fluids "lost down the hole," referring to the pilot hole installation under the Tuscarawas River. Three attempts to seal the hole have failed, the state agency said. No inadvertent returns have been detected. Energy Transfer Partners is currently flying drones around the site to monitor the situation. The Ohio EPA said it "intends to closely monitor this situation if loss of returns continues" and pledged to work directly with the Federal Energy Regulatory Commission on "the next course of action."  In September, Energy Transfer Partners was fined $2.3 million for numerous water and air pollution violations across Ohio. Over the last two years, the Rover pipeline has racked up more "noncompliance incidents" than any other interstate gas pipeline.

    This pipeline spilled almost 150,000 gallons of waste and it's not even running yet   - Before a pipeline can spill any oil or gas, it must be built. During that process, however, a different type of spill can happen—one that spews not fossil fuels but drilling liquid instead. Now this has happened in Ohio, where the Rover Pipeline, one of the latest projects from Energy Transfer Partners—yes, the same company behind the contested Dakota Access Pipeline—spilled 146,000 gallons of this industrial waste near the Tuscarawas River in Stark County. The spill was discovered by the state’s Environmental Protection Agency a week ago on January 10, but the implications continue today. The liquid was lost into a hole being drilled under the river. During a pipeline’s creation, drilling fluid—usually made up of bentonite, which is just a natural clay—is used to lubricate the drill as it breaks ground. However, if the equipment encounters a crack, crevice, or something much larger, the drilling fluid can flow into those spaces, potentially endangering nearby bodies of water. “Ohio EPA is in continual communication with Rover concerning these concerns, and the agency is determined to fulfill our role in protecting human health and the environment,” James Lee, the EPA’s media relations person, told Earther. Because the liquid has not yet surfaced, Energy Transfer Partners does not consider the loss of the drilling fluid a spill, said Alexis Daniel, public relations specialist for the company, in an email to Earther. “We are continuing to work through the process,” the email read..Since the fluid has not yet surfaced, the Ohio EPA doesn’t yet know where it’ll end up. It certainly has an idea, though. The 713-mile-long interstate natural gas twin-pipeline project—set to run through Pennsylvania, West Virginia, Ohio, and Michigan—suffered a similar mishap in April 2017 in the same spot as this most recent one. That time, 2 million gallons of this industrial waste surfaced on wetland adjacent to the Tuscarawas River. The area became full of mud and deteriorated the wetland’s water quality, according toregulatory filings the Sierra Club received.

    Is fracking in parks on way? --  Gov. John Kasich plans to fill all vacancies on the Ohio Oil and Gas Leasing Commission by the end of the year Why should you care about full membership on an obscure state panel? Because that means fracking is likely on its way to Ohio state parks and other public areas. For years, Kasich in effect declared a moratorium on oil and gas drilling in the parks by refusing to appoint members to the commission, which meant nobody could get permission to drill.But the GOP-dominated legislature, extremely friendly to the oil and gas industry, passed an amendment to the state budget this year effectively forcing Kasich to either fill the panel or step aside and let legislative leaders do it. Kasich vetoed the proviso; the House easily overrode it, and the Senate threatened to do so as well unless Kasich got moving to end his moratorium.Kasich spokesman Jon Keeling said two members already have been chosen, and the governor hopes to fill the remaining three vacancies by Dec. 31. Dispatch Reporter Jim Siegel notes that, when asked about the commission last week, House Speaker Cliff Rosenberger said Republican lawmakers are keeping an eye on whether Kasich is following the legislature’s wishes.

    These days, oil and gas companies are super-sizing their well pads - Dave Elkin remembers in the earlier days of the Marcellus when EQT drilled three wells from a single well pad and it was considered a technological marvel. It was a quaint memory that contrasts sharply with the company’s and industry’s new normal: superpads — concrete platforms that can house 30 wells, maybe even 40, with long horizontal tentacles stretching underground for up to 4 miles in each direction.  A superpad means a quarter of a billion dollars pumped into a single hillside in a place like rural Washington County. It means fewer well pads in total but much more activity on those that exist. It means that from a 10-acre spot, a company like EQT can theoretically slurp natural gas from underneath an area nearly the size of the City of Pittsburgh.  “I call them mini-industrial complexes,” said David Schlosser, president of exploration and production at EQT. Downtown-based EQT — now the largest producer of natural gas in the U.S. — is leading the Marcellus pack in supersizing its well pads, with about a dozen sites permitted to hold 20 or more wells.  There’s the Big Sky pad in Nottingham, Washington County, with 26 permitted wells. The Strope pad in Franklin Township, Greene County, with 28. The Prentice pad in Forward Township has 37 wells permitted on it. They may not all materialize, Mr. Schlosser cautioned; the company often gets permits for more wells than it will eventually drill to keep its options open. The Cogar pad in Amwell Township is a case in point. It was permitted to hold 30 wells, but to date only 22 have been drilled, and EQT says it is stopping there. The pad itself is on a hill and it’s difficult to see all the machinery on the concrete slab from the winding country roads that encircle it. Yet everything around it hints at the operation. Pipeline ditches, trucks, lights, road signs intended to guide the trucks away from vulnerable roads — all are preludes to the industry on the hill.

    Tracking the effects of Energy Transfer's Rover pipeline on gas flows, production -- Energy Transfer Partners’ 3.25-Bcf/d Rover Pipeline recently began service on its next phase — Phase 1B — opening up additional natural gas receipt points for its Mainline A and increasing westbound gas flows from the Marcellus/Utica. The project will help relieve takeaway constraints for growing gas supply in the Marcellus/Utica region, while also increasing gas-on-gas competition for supply basins targeting the Ontario and Gulf Coast markets. This latest launch brings the project closer to achieving full completion, which is expected by the end of March 2018, but volumes on Rover are already changing regional flow and pricing dynamics. Today, we provide an update on Rover’s progress. As we wrote in Against All Odds, initial service on the first portions of the Rover Pipeline began flowing this past September, with just two of six planned laterals online and partial capacity available on just one of its two mainlines (Mainline A). But even with just the first phase of its system operational, Rover quickly began to make its mark on the gas market. Within days of launching initial service, producers filled the pipeline to capacity, which at that time was 700 MMcf/d. New compression was added in early October 2017, boosting capacity to 1.2 Bcf/d, and flows again jumped, this time to more than 1.0 Bcf/d for a period. The additional takeaway capacity helped eastern Ohio gas production volumes reach new highs last fall, and as we discussed in Toe Bone Connected to the Foot Bone, regional gas flows started to shift in response to this new supply route pushing more Marcellus/Utica gas toward the Midwest, where it could then turn south toward the Gulf Coast.

    Columbia nuns to argue in federal court that gas pipeline violated their religious freedom --   An order of Roman Catholic nuns near Columbia will get another day in federal court in their pursuit of a lawsuit against a gas pipeline company and a federal agency. In a federal appeals court in Philadelphia on Friday, attorneys for the Adorers of the Blood of Christ will argue that forcibly building the Atlantic Sunrise pipeline through their property was a violation of their deeply held religious beliefs and the federal Religious Freedom Restoration Act. In September, a federal district court judge in Reading dismissed the nuns’ freedom-of-religion lawsuit brought against the Transcontinental Gas Pipe Line Co. and the Federal Energy Regulatory Commission, which approved the project, saying the court didn’t have jurisdiction to hear the lawsuit.The nuns disagreed, and appealed the case to a federal appeals court.In addition to hearing from the nuns’ attorneys on Friday, a panel of three judges will hear arguments from attorneys for FERC and the pipeline company. The nuns maintain that their land ethic, adopted in 2005, holds them to use their West Hempfield Township property in a manner that does not harm the Earth. The pipeline, they say, will carry fracked natural gas, a fossil fuel “that would facilitate climate change and harm the Earth, in direct contravention of their religious beliefs.”  The court will not make a decision on Friday. If the judges eventually rule in favor of the nuns, their freedom-of-religion lawsuit would be remanded back to U.S. District Court. The nuns’ objections to the pipeline has received worldwide attention.

    Court Orders Nonprofit Law Firm to Pay $52,000 to Oil and Gas Company for Defending Local Fracking Waste Ban --In early January, a federal judge ordered the nonprofit law firm Community Environmental Legal Defense Fund (CELDF) to pay $52,000 to an oil and gas exploration company for defending a rural Pennsylvania township’s ban on underground injections of frack waste.This sanction comes at the request of Pennsylvania General Energy Company (PGE) and the Pennsylvania Independent Oil &Gas Association, but is part of a growing trend to prevent municipalities across the nation from pushing back against state and federal attempts to overrule them.Starting in 2012, PGE proposed an injection well which, according to Grant Township’s Board of Supervisors, “would receive 30,000 barrels [1.26 million gallons] of frack wastewater per month for 10 years.” The board of supervisors for this small community near Pittsburgh warns that the injection well “threatens to subject every resident of Grant Township to a slow poisoning, and threatens thousands more who depend on Grant Township’s watershed for clean water.” The community’s law, they go on, bans the injection well “as a violation of our basic civil rights.” PGE operates multiple gas-extraction wells in the township. CELDF, which has defended Grant’s efforts to prevent waste injection wells for over three years, has worked with some 200 municipalities in the United States to defend local laws challenging similar corporate projects. The group aims to drive state constitutional change to bolster the rights of local residents and ecosystems against what it calls regressive state preemption and corporate personhood. Grant Township, for example, is elevating a “right of self-government,” rights “to clean air, water, and soil” and “ecosystem rights” above corporations’ “rights” to inject waste from oil and gas extraction in the township. These types of local laws often face substantial legal pushback from private corporations and states which claim authority over issues such as fossil fuel production. Along with the sanctions against CELDF, PGE is suing Grant Township itself, population 741, for damages that would likely be in the hundreds of thousands of dollars. Among its claims: The injection well ban violates the corporation’s rights as a “person” under the First, Fourth, and Fifth Amendments; the Equal Protection Clause of the Fourteenth Amendment; and the Contract Clause and Supremacy Clause of the U.S. Constitution.

    Fracking Waste Lawsuit Highlights Dangerous Trend of Corporations Targeting Community Rights Defenders - In early January, a federal judge ordered the nonprofit law firm Community Environmental Legal Defense Fund (CELDF) to pay $52,000 to an oil and gas exploration company for defending a rural Pennsylvania township's ban on underground injections of fracking waste.   This sanction comes at the request of Pennsylvania General Energy Company (PGE) and the Pennsylvania Independent Oil & Gas Association, but is part of a growing trend to prevent municipalities across the nation from pushing back against state and federal attempts to overrule them. Starting in 2012, PGE proposed an injection well which, according to Grant Township's Board of Supervisors, "would receive 30,000 barrels [1.26 million gallons] of frack wastewater per month for 10 years." The board of supervisors for this small community near Pittsburgh warned that the injection well "threatens to subject every resident of Grant Township to a slow poisoning, and threatens thousands more who depend on Grant Township's watershed for clean water ."   CELDF, which has defended Grant's efforts to prevent waste injection wells for over three years, has worked with some 200 municipalities in the U.S. to defend local laws challenging similar corporate projects.   At the heart of the court's decision awarding PGE sanctions against the legal nonprofit (the company originally asked for $500,000) is an argument that the sanctions are justified because CELDF's legal arguments are contrary to "settled" law and therefore "frivolous." This reasoning asserts that corporate personhood and Pennsylvania's authority over municipalities on issues affecting drinking water and fossil fuel development is settled, and therefore CELDF's defense of Grant's claim to the contrary is "clearly unreasonable."  CELDF is not alone in facing sanctions for challenging so-called settled law on similar issues. Defend Local Solutions is a campaign led by Tallahassee's Mayor Andrew Gillum which is aimed at expanding the powers of municipalities in Florida. The campaign said at least seven states have "super preemption" bills on the books that sanction local officials who dare challenge specific state preemption bills that rescind powers from municipalities.

    New York rejects a natural gas pipeline, and federal regulators say that's ok - In a setback for the fossil fuel industry, federal energy regulators rejected a petition from the Constitution Pipeline Company to overturn New York State's denial of a water permit for a proposed natural gas pipeline. Without the permit, the pipeline can't be built. In a decision on Jan. 11, the Federal Energy Regulatory Commission (FERC) denied the request from the company to revive the proposed 125-mile Constitution Pipeline from the Marcellus Shale in Pennsylvania to Upstate New York. The decision comes during one of the largest expansions of natural gas infrastructure in U.S. history, a buildout that critics say is driven more bythe financial interests of gas and electric companies than market demand. Officials with New York's Department of Environmental Conservation (DEC) rejected the water quality permit for the pipeline in April 2016 stating, in part, that it failed to meet the state's water quality standards. Constitution challenged the decision on the grounds that the state agency did not act within a reasonable time. The federal commission, in rejecting the company's challenge, wrote: "The record does not show that New York DEC in any instance failed to act on an application that was before it for more than the outer time limit of one year." The company first filed for a water quality permit with New York DEC in August 2013, then withdrew and resubmitted its application in 2014 and again in 2015 at the DEC's request. "States and project sponsors that engage in repeated withdrawal and refiling of applications for water quality certifications are acting, in many cases, contrary to the public interest and to the spirit of the Clean Water Act by failing to provide reasonably expeditious state decisions," the federal commission wrote. "Even so, we do not conclude that the practice violates the letter of the statute."

    After new setback, Constitution Pipeline says it will fight FERC order -  The builder of the proposed Constitution Pipeline from Pennsylvania to New York said it will ask the Federal Energy Regulatory Commission to take another look at its recent ruling that upholds New York State’s denial of a water-quality permit for the troubled project. Constitution Pipeline said it will seek a rehearing or appeal FERC’s decision on Jan. 11, in which the commission declined to overturn the permit decision by New York State’s Department of Environmental Conservation (DEC). That decision has stopped the company from beginning to build the 124-mile natural gas line. The company, a unit of the Williams Companies, argues that DEC waived its right to issue a water quality permit under Section 401 of the federal Clean Water Act because it did not act within a “reasonable time,” which FERC interprets as one year. Constitution says FERC got it wrong by failing to recognize that the waiver applied to the company’s application. FERC’s action is the latest setback for the project, which has also failed to persuade an appeals court to overturn the DEC’s permit denial. The DEC denied the water permit in April 2016, three years after Constitution first applied, and after the company twice withdrew and then resubmitted its application. In its denial, the department said Constitution had not provided enough information to allow the DEC to determine whether the pipeline project would meet water-quality standardsAnne Marie Garti, an environmental attorney and founder of the group Stop the Pipeline, said New York’s actions will likely be upheld despite Williams’ appeals.

    Conflicting decisions on pipelines frustrate industry, landowners - In March 2016, workers for one of the nation’s largest natural gas pipeline companies cut down a large swath of maple trees in Susquehanna County–a rural patch of northeastern Pennsylvania. A video shot by an activist shows the trees crashing down as chainsaws buzz.  Cathy Holleran was powerless to stop it. At the time, she was tapping the trees for her family’s maple syrup business, but the pipeline company condemned her land using the power of eminent domain. Driving around a year-and-a half later, she’s still in disbelief. A court order had prevented her from interfering, and law enforcement officers came to protect the pipeline workers.“We had to stay completely away. They brought armed U.S. Marshals with assault rifles and Pennsylvania State Police, and had guys walking all over property in bullet proof vests,” Holleran recalls. “I mean, really! We’re making syrup. What are we going to do? Are we going to go attack these guys?” “This used to all be woods– as thick as that,” she says, gesturing to a cluster of remaining trees. She says her family’s maple syrup business has been cut in half. But the real shame of it all, Holleran adds, is this may all have been for nothing. The Constitution Pipeline was supposed to emanate from northeastern Pennsylvania, and run 121 miles through New York State. Federal regulators gave their blessing to the project. So did Pennsylvania regulators. But New York State (whose border is about 20 miles from Holleran’s land) refused to grant a necessary water permit. The pipeline company, Williams, sued, but a federal court recently sided with New York. Holleran says she’d warned the company of this possibility. “All along we kept saying, ‘You might not get through New York. You might not get your permits. You’re gonna come through here and cut our land?’” It has long been assumed by the pipeline industry that once their projects get approval from the Federal Energy Regulatory Commission (FERC) the state permits fall into place.

    Cuomo doesn’t want offshore drilling in New York -- Gov. Cuomo on Monday asked the US Department of the Interior to exempt New York from a controversial new plan to expand offshore drilling —one week after the department issued an exemption to Florida.Cuomo said in a letter to Interior Secretary Ryan Zinke that offshore drilling “poses an unacceptable threat” to New York’s ocean resources and economy.“It introduces the unprecedented risk of extremely hazardous oil spills, contributes to the acceleration of climate change, and conflicts with New York’s ambitious agenda to develop offshore wind energy,” the governor said.“With this plan, the federal government is trampling on the interests of New Yorkers and threatening the future well-being of our state.”Cuomo highlighted the importance of the New York Harbor and Long Island as being home to millions as well as a hub of economic activity.The governor also pointed to the department’s sudden exemption of Florida from the new offshore drilling plan as an example that more research needed to be done.“Your decision to remove Florida from consideration of any new oil and gas platforms before your Department has even concluded its public fact-finding process appears arbitrary,” he said.“Nevertheless, to the extent that states are exempted from consideration, New York should also be exempted.” Florida’s unexpected exemption gave a political boost to its governor, Rick Scott, a Republican who is expected to run for the Senate this year.

    Environmentalists push own plan to shut down Mackinac Straits pipeline -  Tired of waiting for the state, environmentalists are offering their own plan for shutting down an oil pipeline that runs beneath the Mackinac Straits. In recent years, concerns the aging pipeline could leak prompted calls from various groups to stop oil flowing through the pipeline. The Line 5 pipeline is owned by Enbridge Energy, which is a corporate sponsor of Michigan Radio. “We believe the state ought to be looking at the alternatives to Line 5 for Michigan. Not the alternatives for Enbridge to be getting all of their oil to market. Because Michigan actually benefits very little from Line 5,” says Sean Mc Brearty, with the group Oil and Water Don’t Mix.Attorney General Bill Schuette, who’s also running for governor, said back in July he wants "specific and definite timetable" for decommissioning Line 5.     But six months later, there’s still no state plan.Earlier this month, the state entered into a contract with Michigan Technological University to perform a risk analysis on Line 5 that will evaluate Enbridge’s liability for a worst-case-scenario pipeline spill and the impact it would have on Michigan’s environment and economy.“As the state awaits the completion of thorough analyses of Line 5 to determine the best course of action, the current agreement in place with Enbridge provides additional transparency and measures Enbridge must meet in order to keep the pipeline operating safely,” says Tanya Baker, a spokeswoman for Gov. Snyder. Baker says a shutdown of the pipeline is not off the table.

    Tanker With Russian Gas Still Set for Boston After Weather - The liquefied natural gas tanker headed to the U.S. with a controversial cargo is due to resume its journey after making a U-turn in the middle of the Atlantic Ocean last night. The vessel named Gaselys was set to land at a terminal outside Boston on Saturday and changed its course to delay the date of its arrival, according Engie SA, the French utility that owns the cargo.  The ship turned east last night and listed its destination as Algeciras near Gibraltar, and that entry still remains on a ship-tracking database compiled by Bloomberg.“The final destination of the cargo did not change,” Damien de Gaulejac, a spokesman for Engie, said by email. “It is still Everett, but the date of delivery has been adjusted, in particular for weather reasons.” The vessel is carrying a cargo from storage tanks at a terminal near London, which earlier received the first fuel from the $27 billion Yamal LNG plant in Russia’s icy north. It’s a closely-watched shipment because some of the gas came from the project that’s under financial sanctions imposed by the U.S. in 2014 after President Vladimir Putin invaded Ukraine’s Crimea. The shipment was arranged during a polar cold snap that gripped the U.S. northeast earlier this month, sending prices to records.  Engie’s North American unit bought the spot cargo for delivery to the U.S. from Malaysia’s Petroliam Nasional Bhd. to supplement its contracted volumes from Trinidad and Tobago into its Everett terminal near Boston, it said last week. The Yamal LNG project, co-owned by Russia’s Novatek PJSC, Total SA, China Natural Petroleum Corp. and China’s Silk Road Fund, started production in December despite U.S. financial sanctions imposed in 2014 because of Russia’s involvement in the Ukrainian conflict. It plans to deliver 14 spot cargoes by April, when long-term contracts kick in.

    Environmental groups sue Corps to block Bayou Bridge pipeline permit -- Environmental groups went to federal court in Baton Rouge on Thursday (Jan. 11) to block construction permits awarded by the Army Corps of Engineers to the Bayou Bridge oil pipeline that would allow it to be built through the environmentally sensitive Atchafalaya Basin.The pipeline, which would eventually connect with the controversial Dakota Access pipeline carrying Bakken oil from North Dakota, "would pose a serious threat, with risks of oil spills into wetlands, rivers and lakes; as well as the potential for permanent destruction of invaluable cypress and tupelo river swamps," said a news release announcing the suit. The suit contends the corps did not adequately address the environmental risks posed by the project in allowing construction to proceed. "Not only is the Atchafalaya Basin the most important ecosystem for neotropical migratory birds in the western hemisphere, but it is also critically important to protect much of south Louisiana and the Mississippi valley from major river floods," said Dean Wilson, Executive Director of Atchafalaya Basinkeeper, one of the organizations filing the suit. "By allowing unsustainable development in the Basin, we are endangering hundreds of cities and communities and millions of people in southern Louisiana." The corps permits were issued Dec. 14. Spokesmen for the corps and the U.S. Justice Department said late Thursday that they are unable to comment on pending litigation. "As with any infrastructure project, we respect there are a wide range of opinions," said a statement released by Energy Transfer.  "Pipelines, like Bayou Bridge,  are heavily regulated by the U.S. Department of Transportation for both safety and reliability, and have proven to be the safest, most efficient means of transporting energy resources.’

    Banks gives pipeline developer another chance after pulling funding from Dakota Access - Banks that pulled funding from the Dakota Access Pipeline due to strong public opposition are now teaming up with the pipeline’s developer on another controversial fossil fuel project. Energy Transfer Partners, the lead developer of the Bayou Bridge Pipeline in south-central Louisiana, is using the lessons it learned from the Dakota Access Pipeline saga to win both financial and political support.Bayou Bridge LLC, the company building the pipeline, is a partnership between Energy Transfer Partners and Phillips 66, whose primary business is petroleum refining. Two banks that pulled funding from Energy Transfer Partners’ Dakota Access Project due to public opposition — DNB Capital and US Bank — are both financing Bayou Bridge through credit agreements with Phillips 66 and Energy Transfer, according to a new report released Thursday by the Public Accountability Initiative (PAI), a nonprofit public interest research group.“US Bank and DNB Capital publicly stopped financing Dakota Access when activists called attention to the pipeline’s impacts on indigenous communities,” Robert Galbraith, a senior researcher at PAI and author of the report, said in a press statement Thursday. “But both are still lending to the companies building Bayou Bridge.”Despite Energy Transfer Partners’ dismal safety and environmental track record, financial institutions are lining up to loan the company money. Altogether, 40 banks have granted access to a total of $12.25 billion in credit to the companies building Bayou Bridge, according to PAI. The pipeline is proposed to carry 280,000 barrels of crude oil per day through 11 Louisiana parishes, crossing 700 bodies of water and more than 700 acres of fragile wetlands. If constructed, Bayou Bridge would impact watersheds that supply drinking water for up to 300,000 people.

     Groups Opposing Planned Pipeline Sue Company for Records (AP) — Environmental groups trying to keep a crude oil pipeline from crossing Louisiana filed a lawsuit Tuesday to get access to records about the project. By expropriating land and acting as a common carrier, Bayou Bridge Pipeline LLC is acting as a government body and therefore must obey public records laws, the suit contends. The 162-mile-long (261-kilometer) pipeline is a joint venture between Energy Transfer Partners of Dallas, which built the Dakota Access pipeline, and Phillips 66 Partners LP, which owns a smaller share of the Dakota pipeline. The Dakota project sparked a string of violent clashes between protesters and police in North Dakota in 2016 and 2017. Atchafalaya Basinkeeper, the Louisiana Bucket Brigade, and 350 New Orleans sued Bayou Bridge after representatives of the joint venture refused to turn over records about property rights, environmental safety and civil protest. Among other things, the groups are asking for all records about acquiring easements and private property expropriations, and all records of communications with government agencies or officials at all levels. "We will not allow Bayou Bridge to quietly seize hundreds of people's land for private profit with no public oversight," Anne Rolfes, director of Louisiana Bucket Brigade, said in a news release. "The entire process has taken place behind closed doors, leaving in the dark the local people who bear the risks this dangerous pipeline poses to our health, natural environment, and even our very livelihoods." Bayou Bridge did not immediately respond to a query filed through its website. Lee Hanse of San Antonio, Texas, identified on the Louisiana Secretary of State's website as executive vice president of Energy Transfer Partners, the majority owner of the project, did not immediately respond to an email. 

    US Gulf Coast distillate flows to Europe at 920,000 mt for Jan -- Distillate volumes heading to Northwest Europe and the Mediterranean from the US Gulf Coast for January are currently at 920,000 mt, according to data from S&P Global Platts' trade flow software cFlow. The current figure is more or less the same as last January's volume despite a difficult arbitrage from the US to Europe at the moment as result of a strong US Atlantic Coast market for heating oil. One LR2, one LR1 and two medium range tankers were seen to leave the USGC in the last seven days. LR2s are relatively uncommon in the USGC compared to LR1s as only a limited number of ports in the region can accommodate them. All of the vessels that left were heading to the Amsterdam-Rotterdam-Antwerp hub, as the Mediterranean market for ultra low sulfur diesel is still sufficiently well supplied to the point of weakness, leaving little option for the volume beyond Northwest Europe. Among the vessels currently on the water is one MR vessel, the Stealth Falcon, that is likely to be carrying gasoil to Algiers in Algeria, after loading in Houston, although this trans-Atlantic arbitrage was still not considered workable by gasoil traders in Europe. The lack of gasoil volumes being produced at local Mediterranean refineries, coupled with a strong demand for gasoil grades across the region over the winter months, has exacerbated recent market tightness in the Mediterranean. Furthermore, North African demand for gasoil has been relatively strong, with Algeria's Sonatrach tendering for six cargoes of 0.1% gasoil over January. Details around the tender volumes for February remain unconfirmed. 

    Zinke talks with more governors about offshore drilling plan | TheHill: Interior Secretary Ryan Zinke has so far spoken with seven governors to hear their objections to his plan to open the Atlantic and Pacific coasts to offshore oil and natural gas drilling. The calls were set up after Zinke’s surprise announcement late Tuesday that waters near Florida would be removed from the plan. That came after Zinke briefly met with Florida Gov. Rick Scott (R), a close Trump administration ally who is likely to run for Senate this year. Nearly every other Atlantic and Pacific governor jumped on the Florida announcement to demand that they, too, be removed from consideration in the Interior Department’s plan for drilling rights lease sales between 2019 and 2024. Interior said Friday that in addition to Scott, Zinke has already spoken with South Carolina Gov. Henry McMaster (R), who wants his state out of the drilling consideration. On Friday alone, Zinke spoke with five Democratic governors opposed to drilling: Rhode Island’s Gina Raimondo, California’s Jerry Brown, Washington’s Jay Inslee, Delaware’s John Carney and North Carolina’s Roy Cooper. Zinke plans to talk to Oregon Gov. Kate Brown (D), another opponent of the plan, later Friday, Interior said. Coastal governors have argued in recent days that Interior has to remove them from drilling consideration if they object. The governors and legal experts say that the drilling plan could be overturned in court if Zinke doesn’t extend the standard he granted to Florida, which hosts President Trump’s coastal Mar-a-Lago resort. 

    Trump's public lands rollback is on shaky ethical ground -- The Trump administration, aided by a willing but slim majority in Congress, began to comprehensively dismantle public lands protections in 2017. The regulatory results were fairly astonishing. They amount to an unprecedented rollback of conservation norms that date back to Theodore Roosevelt, who made the preservation of natural resources national policy more than a century ago. President Donald Trump’s disassembling of public lands protections include drastically slashing the size of national monuments in Utah, opening up the Arctic National Wildlife Refuge to oil drilling, jettisoning protections for sage grouse throughout vast areas of the arid West and taking a headlong dive into increased fossil-fuel production. The latter involves ending moratoria on coal and oil-and-gas leasing, terminating methane emission controls, scuttling hydraulic fracturing regulations and eviscerating federal consideration of the long-term costs of carbon emissions on the planet’s environment. Americans have lived through public land scandals such as the Teapot Dome affair in the 1920s, in which bribery by oil companies sent the secretary of the interior to prison. In the 1980s, the Reagan administration’s secretary of the interior privatized federal coal in Wyoming’s Powder River Basin without trying to obtain fair market value for it. But those giveaways pale before what is going on now. The legal grounds for the Trump turnaround in national policy will be tested in the courts over the next few years. In some cases, the administration may be unable to show a rational reason for changes in course that were conscientiously vetted and adopted just a few years ago. But the politics of this abrupt about-face should be debated now, as the Trump public lands revolution takes effect. 

    API president to Trump: Don't forget energy infrastructure - Jack Gerard, president of the American Petroleum Institute, urged President Donald Trump Tuesday not to forget about the energy sector when it comes to fixing the nation's infrastructure. "Too often, the infrastructure conversation is limited to highways, roads and bridges - which rely heavily on government funding," he said in a prepared speech at an API event in Washington. "By expanding our focus beyond traditional infrastructure and considering the great opportunity of energy infrastructure investments, we could potentially double the economic benefits of infrastructure in this country." The comments come as President Donald Trump works on getting an infrastructure bill before Congress later this year. White House officials are scheduled to meet with Senate Republicans and Democrats on Capitol Hill this afternoon to discuss such a bill, according to the Hill. Energy lobbyists are eager to see Congress take steps to speed up oil and gas pipeline permitting while modernizing the nation's power grid, to address the expansion of non-traditional energy sources like wind turbines and solar panels while also providing better defense against cyber threats.In his speech, Gerard applauded the administration's announcement last week it planned to open up 90 percent of U.S. coastlines to offshore drilling, including the Atlantic and Arctic Oceans. But Gerard was less ebullient about the White House's moves to renegotiate global trade agreements like the North American Free Trade Agreement, of which Trump has been critical."Global trade flows have played a critical role in America's energy renaissance – spurring economic growth and investment and creating American jobs," he said. "As the administration continues negotiations with Canada and Mexico, we urge them to seek modernization in ways that maintain these benefits."

    Pipeline Builders Outflank Opposition with Expansions - Fox Business - Some of North America's biggest new pipeline projects are already in the ground. As environmentalists and local activists make it extraordinarily difficult to build new oil and gas lines, energy companies are working around the opposition by supersizing old pipes that already crisscross parts of the continent. Executives at some of the biggest pipeline operators in the U.S. and Canada, including Enbridge Inc. and Kinder Morgan Inc., say they pivoted to the strategy as plans for new pipelines came under attack. For decades, new pipeline projects rarely drew attention, much less ire. "We used to just show up with a map," said Al Monaco, president and chief executive of Enbridge. But in recent years, groups with a goal of keeping fossil fuels in the ground have joined forces with Native American activists, landowners and other local opponents to stall numerous projects, Most notable among these was TransCanada Corp.'s much-debated Keystone XL pipeline. Skipping new lines -- and the environmental reviews and taking of land by eminent domain that they often require -- and instead working under existing permits and rights of way is just common sense, said Mr. Monaco, who added that it is often a far less expensive approach "Once the pipe is in the ground, you can do a lot of things: reverse flows, expand it, optimize it," he added. Pipeline expansions may help explain why, despite the Trump administration's recent approval of the Keystone XL pipeline, TransCanada has yet to make a final decision about moving forward. While the project was stranded in regulatory limbo for years during the Obama administration, Enbridge quietly cobbled together two existing oil lines to create the first sizable spigot to bring Canadian crude to Texas. Its retooled network can move nearly 600,000 barrels a day to Gulf Coast refiners and foreign buyers. Enbridge is also pursuing a combination of other pipeline expansions that together could add another 800,000 barrels a day of capacity to bring Canadian crude south at a cost of just $1.3 billion. That is roughly the same volume Keystone XL would carry -- at a price tag more than 80% lower.

    Ample crude supplies help boost Rocky Mountain refiners' margins. -Refiners in the five Rocky Mountain states that make up the U.S. Energy Information Administration’s Petroleum Administration for Defense District 4 — or PADD 4 — enjoy higher margins than their counterparts in every other part of the country except California. Quarterly crack spreads for domestic crude in PADD 4 averaged $25/bbl between 2014 and 2017, while those for Canadian crude averaged $31/bbl. Today, we explain that these lofty cracks reflect an abundance of crude — both from indigenous Rockies production and Canadian and North Dakota supplies passing through the region — as well as higher-than-average diesel and gasoline prices.  We first covered Rockies refining back in 2014 with a two-part series based on analysis by our friends at Turner Mason. Those blogs discussed how PADD 4 refiners planned capacity expansions in response to increased regional demand for refined products — especially diesel fuel for operating drilling rigs — and enjoyed robust margins based on advantaged crude supplies (see Rocky Mountain High Part 1 and Part 2). Refiners in PADD 4 traditionally relied on local conventional crude production in Montana, Wyoming, Colorado and Utah. We described the more recent surge in unconventional production in our series on Niobrara Shale (see Bananarama in the Rockies). The big increase in local Rockies production added to higher inflows of crude from North Dakota and Western Canada, both of which have been covered extensively in the blogosphere (see for example our recent Take My Crude Away post on the Bakken and If We Ever Get Out of Here on Canada). We followed the build-out of crude takeaway infrastructure to get light shale crude from the Denver-Julesburg (DJ) Basin play at the southern end of the Niobrara in Colorado — originally via rail before pipelines were constructed (see Part 3 of our  Slow Train Coming series from February 2016) and most recently looking at pipeline overbuild out of the region in July 2017 (see Colorado (G)Oil).

    North Dakota oil output cut back to meet gas capture rules - Houston Chronicle: - Fearing sanctions by the state, some North Dakota oil drillers have begun cutting output to control the amount of natural gas that's being burned off at well sites and wasted as a byproduct of crude production, industry and state officials say. Rebounding oil prices and technology advances in western North Dakota's oil patch have goosed crude production, spurring unanticipated record levels of natural gas that comes with it, said Justin Kringstad, director of the North Dakota Pipeline Authority. The state's gas-gathering and processing capability is 2.1 billion cubic feet daily. In November, the latest figures available, the industry was right at that ceiling - with a record 2.09 billion cubic feet (0.06 billion cubic meters) of natural gas produced daily. Pipeline capacity is adequate to move the natural gas to market, but it's the lack of gas-gathering and processing facilities in between that's the problem. That forces some drillers to restrict oil output at some wells to meet gas flaring rules, said Ron Ness, president of the North Dakota Petroleum Council. "We don't want to be restricted by the state," said Ness, whose group represents hundreds of companies.Ness said an industry group task force is being formed this month to pinpoint where gas-gathering and processing infrastructure is needed most. The rules that went into effect in 2014 allow regulators to set production limits on oil companies if the targets aren't met. Companies that fail to meet the goals could have production at a well limited to as little as 100 barrels a day, depending on the amount of gas flared. The rules that were adopted by the state and endorsed by the industry require oil companies to capture 85 percent of the gas by 2016, and 90 percent by 2020. They came after as much of a third of the gas went up in smoke, drawing criticism from environmentalist and many residents who said the state was losing revenue from the wasted gas, and that it contributed to unnecessary carbon dioxide emissions. 

    New NASA Study Solves Climate Mystery, Confirms Methane Spike Tied to Oil and Gas --Over the past few years, natural gas has become the primary fuel that America uses to generate electricity, displacing the long-time king of fossil fuels, coal.   But new peer-reviewed research adds to the growing evidence that the shift from coal to gas isn't necessarily good news for the climate. A team led by scientists at NASA's Jet Propulsion Laboratory confirmed that the oil and gas industry is responsible for the largest share of the world's rising methane emissions, which are a major factor in climate change—and in the process the researchers resolved one of the mysteries that has plagued climate scientists over the past several years. That mystery? Since 2006, methane emissions have been rising by about 25 teragrams (a unit of weight so large that NASA notes you'd need more than 200,000 elephants to equal one teragram) every year. But when different researchers sought to pinpoint the sources of that methane, they ran into a problem.If you added the growing amounts of methane pollution from oil and gas to the rising amount of methane measured from other sources, like microbes in wetlands and marshes, the totals came out too high—exceeding the levels actually measured in the atmosphere. The numbers didn't add up.It turns out, there was a third factor at play, one whose role was underestimated, NASA's new paper concludes, after reviewing satellite data, ground-level measurements and chemical analyses of the emissions from different sources.A drop in the acreage burned in fires worldwide between 2006 and 2014 meant that methane from those fires went down far more than scientists had realized. Fire-related methane pollution dropped twice as much as previously believed, the new paper, published in the journal Nature Communications, reports. Using this data, "the team showed that about 17 teragrams per year of the increase is due to fossil fuels, another 12 is from wetlands or rice farming, while fires are decreasing by about 4 teragrams per year," NASA said in a Jan. 2 press release. "The three numbers combine to 25 teragrams a year—the same as the observed increase."

    Residents call on candidates for governor to shut down Aliso Canyon gas facility  - A mysterious disease is spreading through Kyoko Hibino’s neighborhood, but you’d never know it by glancing at her sunny, tree-lined Southern California community, she says.The Porter Ranch resident has suffered bronchitis, heart palpitations, headaches and nosebleeds, none of which amount to a diagnosis by doctors. Hibino said her cat also started getting nosebleeds, and now has cancer.“We are slowly being killed,” she said, noting that the air near her house is clear, making the problem hard to spot. “It’s not ‘dramatic’ enough.”Three years after a massive gas leak at the Southern California Gas Co. storage facility at Aliso Canyon — the largest methane leak in U.S. history — nearby residents say they’re still suffering health problems from toxins in the air.Though not government-owned, Southern California Gas is subject to state regulations. The candidates did not discuss the topic during the forum.“This is our health! This is our air! This is not just in the Valley! The wind blows, and it blows everywhere,” said Jane Fowler of nearby Granada Hills. “Some of you don’t even know you’ve been affected.”Fowler, 58, said she had to stop working in elder care and driving an Uber due to unpredictable dizziness, blackouts and other ailments that she says are tied to the smelly leak. She said the emissions killed her dog and sickened her cats.A broken well at the Aliso Canyon site forced about 8,000 families in the northwest San Fernando Valley to evacuate starting in 2015. After a state appeals court lifted a temporary ban on operations, Southern California Gas resumed injections at the facility this past summer and has been conducting safety improvements.Use of the facility is now allowed on a limited basis, but opponents want the site shut down entirely.

    Jordan Cove opponents and supporters disagree on findings of new report - Anti-pipeline protesters said they feel vindicated by a report released Thursday stating the natural gas pipeline and export facility proposed in Southern Oregon would be the state’s largest source of greenhouse gas emissions, while a project spokesman found the information to be inaccurate. The report, published by Oil Change International, says the Jordan Cove project would produce more than 15 times the emissions of the Boardman coal plant, Oregon’s last remaining coal plant set to close in 2020, and equal the emissions of nearly 8 million passenger vehicles. In total, the report says the pipeline will produce 36.8 million metric tons of greenhouse gas emissions per year.  Oil Change International is an advocacy organization focused on “exposing the true costs of fossil fuels and facilitating the coming transition towards clean energy,” according to its website. The 229-mile Pacific Connector Pipeline would have the capacity to push 1.2 billion cubic feet per day of natural gas across Klamath, Jackson, Douglas and Coos counties to a plant in Coos Bay where the gas would be turned into liquid form and be transported to Asian markets. The pipeline would connect to existing pipelines to transport natural gas from Utah, Wyoming, Colorado and the Montney Basin in British Columbia. “The emissions estimate includes an estimated range of methane leakage along the supply chain and finds that even a conservative estimate of methane leakage undermines claims that the gas supplied to global markets via the project would lead to a net reduction in greenhouse gas emissions,” the report said. It also asserts there is no evidence that natural gas from the project would replace coal in global markets, and the project undermines the need to reduce emissions from all sources of fossil fuel to address the climate crisis.

    Hess cutting hundreds of workers as it battles activist investor | Fox Business: Hess Corp is cutting roughly 13 percent of its workforce and streamlining operations as it battles an activist hedge fund shareholder pushing for the U.S. oil and gas producer to post its first quarterly profit since 2014.  Most of the cuts, which could start as early as Tuesday and continue through the week, are in Houston, home to a majority of the company’s employees, according to two sources familiar with the matter. Lorrie Hecker, a Hess spokeswoman, confirmed the cuts, saying about 300 workers, or about 13 percent of the company’s workforce, would be dismissed. Executives from the New York-based company’s headquarters were flying to Houston on Tuesday to meet with employees. The job cuts are part of a plan to reduce expenses by more than $150 million a year, the company said. “We are doing all we can to ease the transition for employees who are impacted including severance, outplacement assistance and other benefits and support,” Hecker said in an emailed statement to Reuters. The cuts come despite a more than 20 percent rise in oil CLc1 prices in the past three months as the U.S. shale industry recovers on rising demand and shrinking global stockpiles.Hess had not cut staff two years ago even as some peers let thousands of workers go, with executives publicly saying they would retain talent in anticipation of a price rebound. Recent asset sales and pressure from investors to improve results have the company reversing course just as rivals post improved results from rising commodity prices. Hedge fund Elliott Management Corp last month launched an activist campaign against Hess, saying it was frustrated by the company’s “continuing underperformance” and floated the idea of pushing to remove John Hess as chief executive.

    Occidental Well Design Pushes Oil Production Gains -- Unconventional well design continues to drive gains in oil production per foot. Operators are stimulating the source rock more. This increases contact to the wellbore, increasing production. We continue to cover oil production improvements in US operators. EOG Resources continues to outpace everyone else, but we are seeing operators mimicking its success. Concho has also reported a number of monster wells in the Delaware. Devon is seeing better results in the Eagle Ford than the Permian. Pioneer's well design has continued to improve oil production. Occidental has a large Permian footprint, and has been doing a very good job of improving production per foot. Its focus on west Texas has provided some of the best unconventional geology in the US. OXY continues to optimize frac' design. Controling frac' height and wing half length decreases the chance of interference. This increases the number of locations per section and decreases oil left behind. OXY has seen improvements in both the Wolfcamp and Bone Spring. Its largest improvement has been in Delaware Wolfcamp. We pulled 120 horizontals completed after 2016. OXY has had several huge results in Eddy County. Four locations produced over 100 MBO of oil in the first two months of well life. Thirty-five completions had a lateral length between 4,000 and 5,000 feet. Sixty-one were longer than 7,000 feet.

    Refinery rates to drop in Q1 after hitting record in late 2017: IEA -- Global refinery intake is expected to drop by 0.1 million b/d in the first quarter of 2018 after hitting a record in the last quarter of 2017, the International Energy Agency said in its latest monthly oil market report. The agency attributed the Q1 throughout drop to maintenance work, which is starting to pick up. But at the end of last year global refining throughput reached record 81.5 million b/d, "instead of seeing the usual seasonal slowdown," the IEA said. High runs defined refinery operations in the US, where they "returned to pre-hurricane highs in December" while China's refiners "ran at their highest ever quarterly level," the report said. December throughput is "likely to finalise as the highest month yet," the report added. But record refinery runs "did not go unnoticed by the market and crude oil futures rallied," the IEA said, adding that as a result "refining margins continuously softened throughout the quarter, as December indicators hit the lowest in more than a year in Europe and the US." The downward pressure on European margins came from "seasonally lower gasoline and weaker fuel oil cracks," the IEA said. The European fuel oil market, currently trading at a multi-month low, has started putting pressure on refineries in the region who are not ruling out potential run cuts. Similar sentiment has been observed in Russia, according to market sources. According to the IEA, margins have weakened in the US as well and, while the cold snap supported "otherwise softening diesel cracks" in the US Gulf Coast, weaker gasoline cracks have been driving margins lower.

    U.S. oil industry set to break record, upend global trade (Reuters) - Surging shale production is poised to push U.S. oil output to more than 10 million barrels per day - toppling a record set in 1970 and crossing a threshold few could have imagined even a decade ago. And this new record, expected within days, likely won't last long. The U.S. government forecasts that the nation's production will climb to 11 million barrels a day by late 2019, a level that would rival Russia, the world's top producer. The economic and political impacts of soaring U.S. output are breathtaking, cutting the nation's oil imports by a fifth over a decade, providing high-paying jobs in rural communities and lowering consumer prices for domestic gasoline by 37 percent from a 2008 peak. Fears of dire energy shortages that gripped the country in the 1970s have been replaced by a presidential policy of global "energy dominance." "It has had incredibly positive impacts for the U.S. economy, for the workforce and even our reduced carbon footprint" as shale natural gas has displaced coal at power plants, said John England, head of consultancy Deloitte's U.S. energy and resources practice. U.S. energy exports now compete with Middle East oil for buyers in Asia. Daily trading volumes of U.S. oil futures contracts have more doubled in the past decade, averaging more than 1.2 billion barrels per day in 2017, according to exchange operator CME Group. The U.S. oil price benchmark, West Texas Intermediate crude, is now watched closely worldwide by foreign customers of U.S. gasoline, diesel and crude. The question of whether the shale sector can continue at this pace remains an open debate. The rapid growth has stirred concerns that the industry is already peaking and that production forecasts are too optimistic. 

    Chief energy expert: US set to become 'undisputed leader' in oil and gas | TheHill - A global energy chief said he foresees the United States becoming the "undisputed leader" in oil and gas production for "years to come." Speaking at an event at the Center for Strategic and International Studies in Washington, D.C., Tuesday, Fatih Birol, executive director for the International Energy Agency (IEA), said that the U.S. is primed to lead the world in oil and gas production. "With all the implications, this is the most important transformation we're seeing within the oil and gas industry," Fatah said while rolling out the IEA's World Energy Outlook for 2017. Birol, a noted expert in the energy sector, echoed similar comments earlier Tuesday at a Senate Energy and Resources Committee hearing. Speaking on Capitol Hill, Birol told senators that the country's anticipated energy production dominance will be a result of a "shale revolution." "The U.S. is becoming the undisputed leader of oil and gas production worldwide," Birol said. Birol went on to call the growth in oil production within the U.S. "unprecedented" for both its size and pace of growth and compared the increases to Saudi Arabia 50 years ago. In terms of natural gas, Birol guessed that the U.S. would be the largest exporter of the fuel by 2020, adding that China will be the biggest customer. However, Birol warned senators that China's increasing need for energy, as it winds down its own coal production, will lead the country to rival the U.S. for nuclear energy.

    EIA expects total U.S. fossil fuel production to reach record levels in 2018 and 2019 -- In its January 2018 Short-Term Energy Outlook (STEO), EIA forecasts that total fossil fuels production in the United States will average almost 73 quadrillion British thermal units (Btu) in 2018, the highest level of production on record. EIA expects total fossil fuel production to then set another record in 2019, with production forecast to rise to 75 quadrillion Btu.  Fossil fuels include dry natural gas, crude oil, coal, and hydrocarbon gas liquids (HGL). Although EIA tends to express fossil fuel production in physical units, such as cubic feet for natural gas, barrels for oil, and tons for coal, expressing production in heat content allows for comparisons across fuel types. Record production levels are largely attributable to increased production of natural gas and crude oil enabled by the use of hydraulic fracturing techniques in tight rock formations. EIA expects increases in natural gas production to be the leading contributor to overall fossil fuels production growth in 2018 and increases in crude oil production growth to the be leading contributor in 2019. In both years, expected growth in natural gas, crude oil, and HGL production more than offset expected declines in coal production. On a heat-content basis, dry natural gas accounted for the largest share of fossil fuel production in 2017 at 41%. Crude oil accounted for 29%, coal for 23%, and HGL for the remaining 7% of the total. As recently as 2010, coal was the leading source of U.S. fossil fuel production, but it was surpassed by dry natural gas in 2011 and by crude oil in 2015.  In 2018, EIA forecasts dry natural gas production will average 80.4 billion cubic feet per day (Bcf/d), an increase of 9% from 2017 levels. If achieved, this level of production would be the highest annual average on record, surpassing the previous record of 74.2 Bcf/d set in 2015. EIA forecasts dry natural gas production will set another record with 83.0 Bcf/d in 2019. Growth is likely to be concentrated in Appalachia’s Marcellus and Utica shales along with the Permian Basin in Texas and New Mexico.

    Natural gas prices, production, and exports increased from 2016 to 2017 – EIA - In 2017, natural gas spot prices at the national benchmark Henry Hub in Louisiana averaged $3.01 per million British thermal units (MMBtu), about 50 cents per MMBtu higher than in 2016. The higher prices in 2017 contributed to less natural gas consumption for power generation. Increased domestic production was offset by increased exports of natural gas by pipeline and liquefied natural gas (LNG) cargoes. Overall, natural gas prices at key regional trading hubs were less volatile in 2017 than in previous years, as pipelines that came online throughout the year eased some infrastructure constraints that affect regional prices. In the Northeast, which tends to have large price spikes during periods of cold weather, new pipeline capacity, along with warmer winter weather, helped to moderate price volatility. However, record cold temperatures at the end of December in the eastern United States led to record high demand for natural gas and significant price spikes at many trading locations.  Additional takeaway capacity in the Appalachian region, the region with the largest U.S. natural gas production growth in 2017, continued to narrow price differences between Henry Hub and nearby trading hubs such as Dominion South in western Pennsylvania, Transco Zone 6 NY in New York City, and Algonquin Citygate near Boston, Massachusetts.  Until the last few days of 2017, relatively warm winter weather limited natural gas consumption growth in the residential and commercial sectors compared with 2016 levels. However, higher natural gas prices contributed to a 6% year-on-year decline in natural gas consumption for power generation, based on data through October and projections for November and December. This decline was despite a large increase in natural gas-fired capacity additions in 2017, as coal became more competitive with natural gas.  Mild winter temperatures in early 2017 also limited natural gas storage withdrawals, with the first-ever net injection recorded in the month of February. As a result, natural gas storage inventories ended the injection season lower than last year, but higher than the previous five-year average. EIA expects the United States to become a net exporter of natural gas on an annual basis in 2017 for the first time since 1957.

     Latest winter storm in US stokes bullish reaction from gas futures market - Another blast of wintry weather that's forecast to bring frigid temperatures to the US Midwest and a mix of freezing rain, ice and snow to the Atlantic Seaboard began affecting gas markets already on Friday.In late-morning trading, cash prices at the benchmark Henry Hub surged to over $4/MMBtu for weekend flow dates. At the Transco Zone-5 hub in North Carolina and Zone-6 hub in New York, prices surged to more than $20/MMBtu Friday.Further north, in the Boston metro area, prices at Algonquin city-gates hub climbed to $18/MMBtu, data from Intercontinental Exchange showed. While the approaching winter storm's impact on temperatures and gas demand is forecast to fall short of early January's "bomb cyclone," the futures market now appears to be keeping a more watchful eye on the cumulative supply impact of recent wintry weather impacting much of the eastern US. On the NYMEX Friday, the prompt-month February contract gained more than 12 cents/MMBtu, settling at $3.20/MMBtu, its highest since early November.  On Friday, winter weather was already impacting states in the Midwest where a mix of snow and ice saw the region's population-weighted temperature plunge to just 20 degrees Fahrenheit. In response, gas demand across the Midcontinent surged to 29 Bcf/d Friday, its highest since early January. At the Chicago city-gates, prices were elevated Friday, trading just shy of $4/MMBtu. Prices at the Midwest hub are up from under $3/MMBtu at midweek, S&P Global Platts data show.

    NYMEX Feb natural gas down 2.4 cents at $3.208/MMBtu ahead of storage data - NYMEX February natural gas futures traded a narrow range in US overnight trading on expectations of a more modest storage withdrawal but lower-than-average end-of-season supply. At 7:08 am EST (1208 GMT), the contract was 2.4 cents lower at $3.208/MMBtu, after trading a $3.191-$3.260/MMBtu range. Milder weather is expected to have significantly slowed US storage withdrawals from the previous week's record high 359 Bcf in the Energy Information Administration's inventory report for the week ending January 12 due at 10:30 am EST. A consensus estimate by analysts surveyed by S&P Global Platts is for a 189-Bcf withdrawal, reducing stocks to 2.578 Tcf. The EIA sees working gas in storage ending the withdrawal season on March 31 at 1.320 Tcf, below the five-year average of 1.697 Tcf, provided draws match the five-year average for the rest of the heating season.

    NYMEX Feb natural gas falls 13.6 cents to $3.064/MMBtu on technical selling -- NYMEX February natural gas futures fell in overnight US trading largely on technical selling. At 7:00 am EST (1200 GMT), the contract was 13.6 cents lower at $3.064/MMBtu. Market sentiment is that the contract is overbought after it rose 40.5 cents during the previous business week. Milder weather is feeding expectations of a modest pull from stocks in the next inventory report ager a record-high draw of 359 Bcf in the week to January 5. In its latest update for the week to January 10, the Energy Information Administration said US gas consumption fell 14% week on week and dry gas production was up 2%. The latest six-to 10-day and eight-to 14-day forecasts from the National Weather Service show the US split between above-average temperatures in almost the entire East and below-average temperatures in most of the West, separated by a band of average temperatures.

    NYMEX Feb natural gas ticks back up to $3.156/MMBtu amid mixed fundamentals --NYMEX February natural gas futures were up slightly ahead of Wednesday's open, as changing weather looks to drive a fluctuating pace of storage erosion. After settling 7.1 cents lower Tuesday, NYMEX February gas was trading at $3.156/MMBtu at 6:40 am ET (1140 GMT) Wednesday, up 2.7 cents overnight in the US. Following a deep freeze to start the year that drove a record-high storage pull of 359 Bcf during the week ended January 5, milder weather in the succeeding week is seen to have trimmed demand for natural gas and kept a lid on the rate of weekly storage draws when the next inventory data is released. The US Energy Information Administration's latest Natural Gas Weekly Update for the week to January 10 outlined a 14% decline in total US gas consumption amid diminished domestic demand across nearly all sectors, as temperatures moderated from the previous week's cold. Forecasts for the forthcoming storage report that will cover the week ended January 12 signal a step down in the pace of inventory erosion, calling for stock withdrawals in the mid-190s Bcf to the mid-200s Bcf. This would compare to the 203 Bcf five-year average draw and a 230 Bcf year-ago pull. Returning frigid weather on tap for the current week to January 19 feeds expectations for a reprise of a large storage withdrawal in excess of 260 Bcf for the review period, according to analyst projections, but the absence of cold across major heat-consuming regions further out suggests a renewed weakness in demand that should allow more gas to remain in underground storage facilities.

     NYMEX Feb natural gas 3.5 cents lower at $3.154/MMBtu on bearish fundamentals NYMEX February natural gas futures fell in overnight ahead US trading on bearish fundamentals. At 7:13 am EST (1213 GMT), the contract was 3.5 cents lower at $3.154/MMBtu. US storage withdrawals slowed significantly to 183 Bcf in the Energy Information Administration inventory report for the week ended January 12, taking total working gas stocks to 2.584 Tcf, or 368 Bcf lower on the year and 362 Bcf below the five-year average. Cold weather returned to the major heat-consuming regions of the Northeast and Midwest this week, but overall gas demand throughout much of that period reflected little change week on week, feeding mixed expectations for the next weekly storage data due out on Thursday. Medium-range weather outlooks from the National Weather Service show warmer conditions across the major heating regions in the central and eastern US.

    Kinder Morgan further delays Canada Trans Mountain oil pipeline (Reuters) - Kinder Morgan Canada said on Wednesday that the start-up of its Canadian Trans Mountain oil pipeline expansion would be delayed by three months to December 2020, marking the latest setback to a project facing fierce local opposition. Trans Mountain originally had an operational date of December 2019, but the company in October pushed that back to September 2020 because of difficulty in obtaining permits. The company is focusing on gaining permit approvals, and is holding off on starting full construction of the C$7.4 billion ($5.95 billion) project, Chief Executive Steve Kean said. “What we’re doing here is all the right things,” Kean said on a conference call with analysts about quarterly results. “We are being careful stewards of our capital and we’re doing everything we can to get the clarity we need to proceed.” The proposed pipeline expansion from Canada’s oil-rich Alberta province to the British Columbia coast would nearly triple its capacity to 890,000 barrels per day. Canadian oil producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark, say they need additional pipeline capacity to fetch better prices. But Trans Mountain faces opposition from some municipalities along the pipeline’s route, certain aboriginal groups and environmental activists. Concerns range from potential spills to providing an outlet for Alberta’s oil sands, which some consider a dirtier form of extracting oil than conventional means. Last month, Canada’s energy regulator ruled in favor of the company’s appeal to sidestep some municipal permits for the pipeline. 

    340 billion gallons of sludge spur environmental fears in Canada - Amid the bogs and forests of northern Alberta, in the heart of the Canadian oil patch, lie some of the largest waste dumps of the global energy business. In the shadow of the pipes and smokestacks that turn oil sands into flowing crude, earthen dams as long as 11 miles encircle lakes of toxic sludge, the byproduct of decades of extraction. These waste pools -- known as tailings ponds -- represent perhaps the most serious environmental challenge facing the oil-sands industry. Now, the battle over how quickly to clean them up -- and fears about who will pay -- are escalating anew. To howls from environmentalists, the provincial energy regulator granted two industry giants -- Suncor Energy Inc. and Canadian Natural Resources Ltd. -- approval for plans that could push a full cleanup decades into the future. Critics say the industry could end up sticking taxpayers with the bill, estimated at C$27 billion ($22 billion). At issue is how, and by extension when, the ponds must be returned to a natural state. The industry is seeking more time to find cheaper ways to do the job. Environmentalists argue the problem has festered for half a century -- and the waste keeps piling up. “Rather than waiting for that silver bullet and continuing to test things out in the lab, we think that the technologies that exist today should be implemented in full force,” said Jodi McNeill, a policy analyst at the Pembina Institute, an energy researcher in Calgary. 

    Fox Creek earthquakes linked to completion volume and location of hydraulic fracturing -- The volume of hydraulic fracturing fluid and the location of well pads control the frequency and occurrence of measurable earthquakes, new Alberta Geological Survey and UAlberta research has found.  Ryan Schultz has been studying earthquakes in the Fox Creek, Alberta area since they started in December 2013. The seismologist—who works at the Alberta Geological Survey (a branch of the Alberta Energy Regulator) and with the University of Alberta—wanted to better understand what was causing the quakes. Schultz and his colleagues found that when increased volumes were injected in susceptible locations (i.e., in connection with a nearby slip-ready fault), it transmits increased pressure to the fault line, leading to more numerous measurable earthquakes. It's not as simple as more volume equals more earthquakes, though-a link that scientists have long identified in the history of induced seismicity, dating back to the 1950s. There is another factor at play in the Fox Creek area, and it's all about location, explained Schultz. "If there is a pre-existing fault, but you're not connected to it by some sort of fluid pathway, you can hydraulically fracture the formation, and you're probably not going to cause a significant earthquake," said Schultz. "It's conceptually quite simple, but actually determining those things underground is really hard to do in practice." Since 2013, there has been a marked increase in the rate of earthquakes near Fox Creek, ranging up to magnitude 4s. While other research has pointed to industry activity as contributing to the quakes, this study is the first to identify specific factors causing the seismic activity. 

    Volume of fracking fluid pumped underground tied to Canada quakes - Volume of fracking fluid pumped underground tied to Canada quakes - The amount of water pumped into fracking wells is the No. 1 factor related to earthquake occurrence at Fox Creek, a large oil and gas production site in central Canada, researchers report January 19 in Science. An injection of 10,000 cubic meters of fluid or more at a well appears to trigger a quake.Fox Creek sits atop the Duvernay Formation, a sedimentary layer rich in oil and gas. Before December 2013, the area was earthquake-free. Since then, hundreds of earthquakes have shaken the region; most were below magnitude 4, but a magnitude 4.8 quake in 2016 temporarily shut down operations.Previous investigations revealed that fracking well injections at the site were triggering earthquakes on an underlying fault system. But mysteries remained: For example, why didn’t the quakes didn’t start until almost three years after fracking activities began in 2010?Ryan Schultz of the Alberta Geological Survey in Edmonton and his colleagues compared the timing and location of the earthquakes with fracking activity at 300 wells in the region.  An analysis of rates of injection, fluid pressure and fluid volume for the wells closest in proximity to the quakes revealed that, at this site, only volume was linked to the quakes. A previous study has linked the rate of wastewater disposal injections to seismic slip (SN: 7/11/15, p. 10). As for the three-year delay, the authors say, fracking well injections tend to increase in volume over time as operations mature. So once the injection volumes reached that 10,000-cubic- meter threshold, the earthquakes began.

    Crisis-hit Venezuela's oil output plummets in 2017 to decades low (Reuters) - Venezuela’s crude oil production fell nearly 13 percent last year, according to figures released by OPEC on Thursday, hitting a 28-year annual low that points to a deepening economic crisis and increased chances of a debt default. The South American country produced 2.072 million barrels per day (bpd) in 2017 versus 2.373 million bpd the previous year, a nearly 300,000-bpd drop. That was the biggest decline among the members of the Organization of the Petroleum Exporting Countries that have pledged to restrain production since the start of 2017 through 2018. But unlike voluntary cuts by Saudi Arabia, Russia and others intended to stoke higher crude prices by draining a global glut, Venezuela has been unable to stop a now six-year-long production decline. Insufficient investments, payment delays to suppliers, U.S. sanctions, and a brain drain have hammered Venezuela’s oil industry. The production fall has hit oil exports – its only major source of foreign currency to repay debt - and refining, creating intermittent fuel scarcity in the country and at some of its main allies, such as Cuba. An alleged crackdown on oil graft in the last few months, seen by critics as an effort by President Nicolas Maduro to consolidate power, has sown panic across the energy industry and all but paralyzed state oil company PDVSA, according to people at the firm and in the sector. It is a remarkable downfall for the OPEC member home to the world’s biggest crude reserves. “This is one of the worst collapses in history. It happened without an invasion like in Iraq, the breakup of a country like in the Soviet Union, or a civil war like in Libya,” 

    Fracking is one of the least sustainable ways to produce electricity, says new study - Shale gas ranks among the least sustainable sources of electricity, according to research from a team of Manchester scientists. Hydraulic fracturing, or “fracking” to extract shale gas is a controversial technique that has been opposed by many environmental campaigners and local residents in proposed fracking areas.  Despite being banned by the Scottish government, fracking projects are currently being rolled out in other parts of the UK.     After finding a “very sizeable quantity of natural gas” in Lancashire’s Bowland Shale, fracking company Cuadrilla announced on Friday it intends to drill four exploratory horizontal wells to extract gas.However, there is still much debate surrounding fracking, and in a study published in the journal Science of The Total Environment, a research team has for the first time examined the environmental, economic and social sustainability of shale gas.  “Many countries are considering exploitation of shale gas but its overall sustainability is disputed,” said Professor Adisa Azapagic of the University of Manchester.  As it stands, the US is still the only nation that is undertaking fracking on a large scale.

    US forcing Europe to abandon Russian gas & buy more expensive American LNG - The United States is afraid of fair competition in the energy sector, and is hampering the implementation of the Russian Nord Stream 2 gas pipeline project, according to Russian Foreign Minister Sergey Lavrov. Read more EU has no legal way to block Russia’s Nord Stream 2 pipeline - Vestager “There is reprisal in the energy sector against North Stream 2. It is the US which is calling it politicized, leading to a split in Europe, and the strangling of Ukraine,” he said at a press conference on Monday. “Washington clearly forces Europeans to abandon Nord Stream 2, despite the fact that gas deliveries to Germany via the pipeline could be 2,000km shorter than through Ukraine, and the cost of transit could be halved,” said the Russian diplomat. Europeans “are being forced to buy much more expensive liquefied gas from the United States instead of Russian gas,” Lavrov added. He also said that the US could not withstand fair competition from Russia in the gas-export sector. Russia plans to build the Nord Stream 2 natural gas pipeline under the Baltic Sea to Germany, and to double the existing pipeline's capacity of 55 billion cubic meters per year. The project has faced fierce resistance from some EU members, especially from the Baltic states and Poland. They say the pipeline will cut gas transit through Ukraine and will result in a Russian monopoly in the EU gas market. Other countries like Austria, Hungary and Germany are in favor of buying Russian gas.

    How a ‘sneaky’ US fracking firm is taking flak in SA -- Most of the recent debates on fracking have focused on the Karoo region, with much less scrutiny on similar plans to dig for gas and oil next to some of SA’s most valuable farming areas and mountain "water factories".Rhino Resource Partners, a Texas-based company, has been pushing for approval to search for gas in a 4.4-million-hectare chunk of land in KwaZulu-Natal, Free State and the Eastern Cape. A significant part of the search area — initially encompassing about 19,000 properties — includes farm land adjacent to mountain catchment areas. Late in 2017, despite opposition from affected parties, Rhino got the go-ahead to begin searching for a wide variety of petroleum resources, including oil, gas, condensate, coal bed methane, helium and biogenic gas in a reduced exploration area covering about 2.4-million hectares (slightly larger than Kruger National Park). The exploration venture is led by Dallas attorney and businessman Patrick James Mulligan, who boasts about closing several recent deals in West, East and Southern Africa for offshore and onshore oil and gas. Nearly 40 formal objections have been lodged against the exploration project by farmers, traditional leaders, environmentalists and other interest groups. A common thread running through many of the formal appeals is the claim that Rhino has deliberately employed "incremental" stealth tactics to win permission for exploration. Rhino adopted a slowly-slowly approach to dodge the need for a comprehensive upfront environmental impact assessment.  Rhino’s recent application for environmental authorisation speaks about "early-phase exploration" only, obviating the need to explore the potential negative effects of invasive drilling methods.

    Niger Delta Avengers To Resume Massive Attack On Oil Facilities - Nigeria’s oil militant group, the Niger Delta Avengers (NDA), has vowed to launch a fresh round of attacks on the country’s oil installations and facilities in the next few days The threat was made in a press statement signed by Major-General Murdoch Agbinibo, the group’s spokesperson. The statement bore the apocalyptic headline “Happy doomed year, Nigeria”, an indication of the NDA’s fury. The group warned that the planned attack will be very deadly and target the deep sea operations of the oil multinationals. “We mean it when we say they (the oil installations) shall dance to the sound of the fury of the Niger Delta Avengers. Good a thing the ocean is wide enough to accommodate as many wrecks as possible,” the group raved. The group said its "High Command" has summoned a meeting of all its operatives to review the progress of its operations and deliberate on the planned actions for the future. “It was agreed at the meeting that the killings and division presently playing out in Nigeria along divergent grounds makes this the perfect time to restructure this country. While promising a brutal outpour of our wrath, which shall shake the coffers of the failed Nigerian nation, our demand is for the government to restructure the country,” said the NDA.

     Congo Republic plans to join OPEC (Reuters) - Congo Republic plans to join the OPEC oil cartel, the government said, as the former French colony presses ahead with projects that could help it become the third-largest oil producer in sub-Saharan Africa. “The Republic of Congo has decided to accede to the Organization of the Petroleum Exporting Countries (OPEC),” the statement dated Jan. 11 but sent out to journalists on Wednesday. Congo’s oil sector was badly hurt by the global dip in prices and a slowdown in its own output since 2014, but it has been rejuvenated by new projects scheduled to boost output by a quarter to 350,000 barrels per day (bpd) this year. If successful, the country, where Italy’s ENI and France’s Total are among the operators, will be the no. 3 oil producer in sub-Saharan Africa, analysts say. “This imminent accession expresses the will of his Excellency (Congo President) Denis Sassou Nguesso to place our country in the rank of the world’s leaders,” the statement, signed by Nguesso’s director of cabinet Florent Ntsiba, added. He said Saudi Arabia’s Foreign Minister Adel al-Jubeir had expressed support for the idea during a visit to Brazzaville on Jan. 8. But sticking to strict OPEC quotas could prove tough for a central African country that is in major financial trouble and which depends almost exclusively on oil for its foreign exchange and government revenues. The economy has been badly hit by low oil prices and poor fiscal management, causing total government revenue to fall by nearly a third since 2015 and public or publicly-guaranteed debt to rise to around 110 percent of GDP. 

    Shell Gives North Sea Shot in Arm With Field Redevelopment -  Royal Dutch Shell Plc made one of its biggest commitments to the North Sea in 30 years, with plans to redevelop the Penguins oil and gas field. The Anglo-Dutch oil major will build a floating production, storage and offloading vessel -- its first new manned installation in almost three decades -- to take output from eight wells it plans to drill. Peak production will be the equivalent of 45,000 barrels a day, with a break-even price of less than $40 a barrel, Shell said on Monday. “It is another example of how we are unlocking development opportunities, with lower costs, in support of Shell’s transformation into a world class investment case,” Andy Brown, Shell’s upstream director, said in a statement. Penguins, a joint venture between Shell and Exxon Mobil Corp., is already operational after first being developed in 2002. Oil from the field -- about 150 miles (240 kilometers) northeast of the Shetland Islands -- will be transported by tanker to refineries, while the gas will be sent by a pipeline to the St. Fergus terminal in Scotland. Production in the North Sea has fallen by about two-thirds since its heyday in the 1990s as fields have depleted. The U.K. is making it easier to claim tax relief to encourage companies to apply new technology to extract oil and gas from fields previously considered too expensive and difficult to develop. The U.K. Oil and Gas Authority said the redevelopment is “a vote of confidence” for the area. “We are expecting further high-value projects to move forward to sanction this year, which will help prolong U.K. production for many years,” 

    BP Accused of 'Side-Stepping' Russian Sanctions - A new expose published Monday reveals how BP , working closely with the British government, has been "side-stepping" sanctions introduced after the Russian annexation of Crimea.The expose is based on documents, obtained under British Freedom of Information laws, which have been obtained by the campaign organization, Culture Unstained , part of the ArtNotOil Coalition , which campaigns to kick fossil fuel money out of the arts. The campaign group is particularly critical of BP's ongoing sponsorship of the British Museum in the UK.The documents reveal what Culture Unstained calls the "close working relationship between UK government and BP over Russia" despite the fact that the material "suggests that BP is attempting to bypass sanctions preventing shale drilling in Russia."The British Government's hypocrisy is evident in the fact that despite taking a strong public line on Russia, the UK government has been helping BP water down U.S. sanctions and hosting events to boost UK ties with Russian oil and gas sector.Over a period of several months, the documents outline how BP had numerous meetings with British government ministers and embassy staff, with British Ministers repeatedly offering support for BP's business in Russia. For example, in February 2017, the British Embassy in Russia hosted a Seminar on Vocation and Professional Education in the Oil and Gas Sector . It was designed to strengthen collaboration on "UK and Russia education companies, schools and universities in one of the key industries—oil and gas." The president of BP Russia, David Campbell, gave the opening remarks at the event. Two months later, the Department for International Trade hosted a workshop on "How to break into the Russian Oil & Gas Sector." It highlighted that "maintaining oil & gas production requires large scale use of new technologies, which largely are not restricted by sanctions, and offered 'presentations by legal advisors about sanctions.'" Meanwhile, in June 2017, when new U.S. Sanctions on Russia were being proposed, BP and other oil companies started mobilizing against the U.S. bill. Within days, the British Embassy in Russia emailed BP to discuss "what this could mean for UK interests." Of particular concern was BP's 19.75 percent stake in Russian state oil company, Rosneft.

    Shell Bids a Long Goodbye to Middle Eastern Oil - Energy company abandons last Iraqi oil fields but maintains a presence in natural-gas industry. Shell said Monday it is selling for an undisclosed amount a stake in the West Qurna 1 oil field in Iraq to Japan’s Itochu Corp. , the latest step in a gradual retreat from the region. The company is also expected to give up its holding in Iraq’s Majnoon oil field later this year, though it will retain its natural-gas interests in the country. Once it officially leaves Iraq later this year, Shell will have oil assets in Oman that produce about 220,000 barrels a day.Shell is keeping its considerable natural-gas interests in Middle Eastern countries, including Qatar, Oman, Egypt and Iraq, a strategy it has followed after its $50 billion deal to buy gas giant BG Group PLC in 2016. The deal also brought Shell big business in Brazil’s offshore oil fields, where it has centered its oil-production strategy. The move reflects the waning attraction of the Middle East’s once-prized oil reserves, as companies find that the free flow of crude in the region often comes at a political or financial cost. U.S. oil giants Exxon Mobil Corp. and Chevron Corp. have ratcheted up their focus on shale interests on their home turf in recent years, though both retain interests in Iraq.

    Burning Iranian Oil Tanker Off China Coast Sinks After One Week - The Iranian oil tanker burning in the East China Sea for more than a week has finally sunk, Chinese media reported on Sunday. The Sanchi tanker and a cargo ship collided 260km (160 miles) off Shanghai on 6 January, with the tanker then drifting south-east towards Japan. China Central Television said that the Sanchi had gone down after "suddenly igniting" around noon (04:00 GMT).Earlier, the Iranian press reported that all 32 crew members - 30 Iranians and two Bangladeshis - on the tanker are dead. The tanker was carrying 136,000 tonnes of ultra-light crude but Chinese officials, credible as always, said there is no major slick.Even though some 13 vessels and an Iranian commando unit had been taking part in the salvage operation, amid bad weather, no survivors were found, and according to a spokesman for the Iranian team, Mohammad Rastad, there was no hope of finding any survivors.According to BBC, on Saturday, salvage workers had boarded the vessel and found the bodies of two crew members in a lifeboat. Only one other body had been found during the week of salvage operations. The rescue workers retrieved the ship's black box but had to leave quickly because of the toxic smoke and high temperatures. The Panama-flagged Sanchi was bringing the condensate from Iran to South Korea when the collision with the Hong Kong-registered freighter CF Crystal, carrying grain from the US, happened in the East China Sea. The cause of the collision is still not known. Condensate is very different from the black crude that is often seen in oil spills. It is toxic, low in density and considerably more explosive than regular crude. Condensate creates products such as jet fuel, petrol, diesel and heating fuel.

    Iranian Tanker Leaves Massive Oil Slick, Worries Mount Over Environmental Damage - Experts have expressed concern about the potential environmental aftermath of a stricken Iranian oil tanker that exploded and sank in the East China Sea on Sunday. The Sanchi—carrying 150,000 tons, or nearly 1 million barrels, of condensate oil—collided with the CF Crystal on Jan 6. The tanker caught fire and burned for more than a week before sinking. Iranian officials said all 32 crew members on the tanker were killed. According to the BBC , Chinese ships are racing to clean up a 46 square mile oil slick left behind. The slick is thought to be made up of heavy fuel used to power the vessel.BBC's China Correspondent Robin Brant reported that the oil slick has more than doubled in size since Sunday, noting that the big concern now is the environmental impact.There could also be a very tall plume of condensate oil underneath the surface, Brant noted. Condensate is an ultra-light oil that is highly toxic and much more explosive than regular crude oil. Experts worry that ship's sinking would likely expel the remaining condensate and the tanker's bunker fuel, contaminating the surrounding waters, Reuters, "bunker fuel is the dirtiest kind of oil, extremely toxic when spilled, though less explosive. Condensate is poisonous to marine organisms." As Rick Steiner, a U.S. marine scientist explained to the news service, the East China Sea is known for its rich—but already polluted—marine ecosystem that includes whales, porpoises and seabirds.

    Oil spill from sunken tanker is expanding in East China Sea — Several oil slicks have been found in waters around a sunken Iranian tanker ship in the East China Sea in a spill that is growing and whose potentially major impact on the marine environment is still being assessed. The State Oceanic Administration said late Monday oil slicks around the site of the sunken ship were much larger than the previous day. The Sanchi sunk on Sunday after burning for more than a week following a collision with a Hong Kong-registered tanker. All 32 members of its crew — 30 Iranians and two Bangladeshis — are believed dead. The State Oceanic Administration said a 15-kilometer (9-mile)-long oil slick was found southwest of the site of the sinking and another slick stretched 18 kilometers (11 miles) to the east. The site is about 530 kilometers (330 miles) from Shanghai and 310 kilometers (193 miles) from Naha, Japan. The administration said two ships and an aircraft were on the scene monitoring developments, but described no further action being taken at present. The ship was carrying natural gas condensate, which continued to burn on the ocean surface. Condensate is highly toxic but readily evaporates or burns off in a fire. If trapped underwater, however, it could seriously harm the marine environment. The cause of the Jan. 6 collision between the Sanchi and the Chinese freighter CF Crystal, which was carrying grain, remains unclear. The ship’s voice data recorder was reportedly recovered Saturday, possibly helping reveal how the collision and resulting fire occurred. 

    Huge Oil Spill Spreads in East China Sea, Stirring Environmental Concerns - — An oil spill from an Iranian tanker that sank in the East China Sea is rapidly spreading, officials said Tuesday, alarming environmentalists about the threat to sea and bird life in the waterway.The tanker, the Sanchi, was carrying 136,000 tons of highly flammable fuel oil when it crashed into a freighter on Jan. 6. On Sunday, the Sanchi sank after a huge blast sent up a great plume of black smoke and set the surface of the water on fire, China Central Television said.The bodies of three crew members have been recovered, and the remaining 29 were presumed dead, the Iranian government said. Thirty Iranians and two Bangladeshis were believed to have died.The oil slicks from the sunken tanker were growing in size, China’s State Oceanic Administration said Tuesday. There are now two huge slicks covering 52 square miles, compared with just four square miles the previous day. Strong winds were pushing the spill toward Japan, away from China, and it was now less than 200 miles from Naha, Japan. One concern is that, since the Sanchi sank, marine life will be endangered by the fuel oil’s spreading instead of burning off. And experts are further concerned that the even dirtier bunker fuel powering the tanker will be released into the sea, exposing delicate marine life to the extremely toxic substance. Greenpeace expressed alarm about the threat to the marine ecosystem in the East China Sea, which is one of the world’s most heavily trafficked waterways, saying the disaster occurred in “an important spawning ground” for fish. The tanker was carrying more than one million barrels of condensate, an extremely light crude oil, to South Korea when it collided with the freighter. When spilled, the condensate can produce a deep underwater plume damaging to marine life.The Japanese Coast Guard said the fire on the surface of the sea was extinguished early Monday.“Given the poor condition of the ship after a week of fire and explosions, it is likely that all cargo (and fuel) tanks are breached, and all of this toxic hydrocarbon mixture has now been released into the environment,” said Rick Steiner, a marine conservation specialist formerly with the University of Alaska. “If so, this is the single largest environmental release of petroleum condensate in history,” he said.

    Oil Spill Spreading in East China Sea 'Now the Size of Paris' - There are increasing environmental and health concerns surrounding the oil spill in the East China Sea from the Iranian registered tanker, the Sanchi, which sank on Monday carrying 136,000 tons, or one million barrels, of a highly flammable oil mix called condensate. The tanker had burned for a week before exploding after colliding with another ship on Jan. 6, with all 32 crew now presumed dead or missing.   There are now four separate oil slicks of the condensate from the Panama registered tanker, which together cover over 100 square kilometers, or just under 40 square miles, the same size as Paris , according to a statement by the Chinese State Oceanic Administration released Wednesday.  Regarding the ecological impact of the spill, the Guardian reported Thursday that "Consumers in Japan, China and South Korea should be wary of buying seafood until governments in the region have monitored and released details about the toxic impact of the Sanchi oil spill, scientists have warned."  The paper added that "millions of fish are likely to have been contaminated by carcinogens."  Greenpeace added that the region was "an important spawning ground" for fish. A Greenpeace spokesperson told the New York Times , "At this time of year the area is used as wintering ground by common edible species such as hairtail, yellow croaker, chub mackerel and blue crab." However, it is not just fish that are threatened by the spill, as Greenpeace noted: "The area is also on the migratory pathway of many marine mammals, such as humpback whale , right whale and gray whale." Wherever the oil ends up, the disaster looks like it will be the largest tanker spill since the early nineties.

    The Unprecedented East China Sea Oil Spill - Over the last two weeks, the maritime world has watched with horror as a tragedy has unfolded in the East China Sea. A massive Iranian tanker, the Sanchi, collided with a Chinese freighter carrying grain. Damaged and adrift, the tanker caught on fire, burned for more than a week, and sank. All 32 crew members are presumed dead. Meanwhile, Chinese authorities and environmental groups have been trying to understand the environmental threat posed by the million barrels of hydrocarbons that the tanker was carrying. Because the Sanchi was not carrying crude oil, but rather condensate, a liquid by-product of natural gas and some kinds of oil production. There has never been a condensate spill like this. While it might seem that all oil spills would at least be similar, in this case that is not true. Underground, crude is a liquid you can pump. Condensate, on the other hand, is a gas amid the heat and pressure down there. Bring it up to the surface and it condenses into liquid. This liquid is made of hydrocarbons like crude—and is sometimes classed as a form of it—but contains a different mix of molecules than other crude oils. That mix is substantially lighter, containing more small, simple molecules and fewer large, complex molecules.  In technical terms, condensate is primarily made up of alkanes: methane, propane, butane, and the octane of high-octane gasoline.Condensate, as you might expect, is highly flammable, which explains the towering flames that are visible in some photographs and video of the incident. It’s also very low-density. It has a specific gravity that is much, much lower than water, which means that it almost certainly is going to rise to the surface after it is leaked, Hunt says.“[There is] the classic image of a spill at sea—black oil floating on the water, people attempting to use booms and skimmers or to use dispersants,” he says. “In a case like this, a product like this, those techniques would not be recommended. It’s flammable so you wouldn’t want to contain it, or use a skimmer to recover it, because then you are risking a fire.” There have also been some reports that the condensate might dissolve in water and travel vast distances. While studies of condensate’s environmental effects are limited, one lab study found that its toxicity to corals, for example, was greater than expected based on its molecular components.

    Japanese LNG buyers' average spot contract price in Dec highest since Jan 2015: METI - Japanese LNG buyers paid an average $10.20/MMBtu for spot cargoes contracted in December, up 13.33% from November and also the highest level since January 2015, Ministry of Economy, Trade and Industry data showed Monday. The delivery months for these contracts are not disclosed. The spot market has been well supported by strong demand from end-users due to colder winter weather in Northeast Asia, while steady demand from China also provided support on the back of the country's policy to switch from coal to gas for heating. S&P Global Platts JKM averaged $10.568/MMBtu in December, reflecting deals for January and February deliveries. METI also said the average price of cargoes delivered into Japan in December was $8.10/MMBtu, rising 14.08% from $7.10/MMBtu in November. Platts JKM for cargoes delivered in December averaged $9.183/MMBtu.

    CNPC forecasts Chinese 2018 oil demand to grow 5% to 12 million b/d -- China's apparent oil demand is expected to rise 4.6% year on year to hit 600 million mt (12.05 million b/d) in 2018, with net crude imports to increase 7.7% to 451 million mt, according to a report released Tuesday by state-owned China National Petroleum Corp.'s Economics and Technology Research Institute. China's oil product exports are forecast to surge 30.7% year on year to 46.8 million mt amid strong growth in output but slow domestic demand. The projections are based on the assumption that Chinese GDP will grow 6.7% in 2018, slower than the 6.9% that the institute estimated for 2017. In contrast, the institute's estimate for apparent oil demand was 590 million mt for 2017, up 5.9% from the previous year. In 2017, for the first time China surpassed US to become the world's largest crude oil importer, with the dependency on imported oil hitting 67.4%, according to the report. "If domestic crude output recovers, China's dependency on imported petroleum will reach 68.8% in 2018," the institute said in the report. At the same time, the institute expects China to add 36 million mt/year (723,000 b/d) of refining capacity in 2018 to reach 808 million mt/year. The independent sector accounts for about 69.4% of the capacity increase, and the sector's total capacity would account for 33% of the country's total refining capacity, rising to 36% in 2020. Supported by the additional capacity, China is forecast to produce 378 million mt of oil products this year, up 4.8% year on year.

    Russia To Discuss Possible Exit From OPEC Deal - Russia may be on its way out of the OPEC output reduction deal, according to the country’s Energy Minister, Alexander Novak.Reuters reports that Novak might discuss the country’s potential exit from the pact in Oman next week. Russia had vowed to cut output by 300,000 barrels per day under the agreement as part of a group of non-OPEC producers who elected to coordinate the bloc’s market stabilization initiative. “We see that the market is becoming balanced. We see that the market surplus is decreasing, but the market is not completely balanced yet and, of course, we need to continue monitoring the situation,” Novak said.  Russian oil majors have been complaining about the deal and how it is creating stumbling blocks on the road towards the industry’s expansion plans. Brent barrel prices are currently approaching $70 a barrel, suggesting crude markets are rebalancing as we approach June, when the deal is set for “review” – a process with little description in the full text of the OPEC deal’s renewal, which was agreed upon in November.As far as OPEC members are concerned, the deal could carry on beyond the end of 2018. Speaking to CNBC, the United Arab Emirates’ energy minister, Suhail al-Mazrouei said: "I am expecting that this group of countries that stood and have become responsible for helping the market to correct, (that) there is a very good chance that they could stick together and put a shape around that alliance." His statement comes amid a variety of scenarios on how the deal might come to an end, featuring civil unrest in Venezuela and Iran that may lead to supply disruptions; Russia pulling out of the pact in June; OPEC members and other parties to the deal starting—or continuing—to cheat; and oil prices rising too high.

    OilPrice Intelligence Report: Can The Oil Rally Continue?: Oil prices hit $70 per barrel for the first time in more than three years on Thursday. The last time Brent traded that high, prices were falling off a cliff after the November 2014 OPEC meeting left members producing without restraint, leading to a global glut of supply. The next steps for oil are unclear. Market sentiment is decidedly bullish, but speculators have piled into extremely bullish bets, which exposes the market to a correction if the upward momentum starts to sputter. The EIA sharply revised up its forecast for U.S. oil production this year and next, predicting average output of 10.3 mb/d in 2017 (up nearly 300,000 bpd from last month’s forecast) and 10.8 mb/d in 2019. By November 2019, the EIA says, the U.S. could hit 11 mb/d, surpassing Russia as the world’s largest producer. The strength of U.S. shale is one of the main bearish factors looming over the oil market, but it remains to be seen if shale drillers can achieve such lofty production levels. Few expected Brent to hit $70 per barrel so soon, and what happens next is a matter of opinion. With outages in key oil producing countries, strong demand expected this year, and ongoing declines in inventories, some analysts see more room on the upside. “Pretty much all of the fundamental boxes are supportive of the current rally and a bit more,” said Paul Horsnell, head of commodities research at Standard Chartered Plc in London. But others believe the rally has gone too far. “Seventy dollars is too much,” said Eugen Weinberg, head of commodities research at Commerzbank AG, according to Bloomberg. “It’s not completely unexpected, given the price momentum. But there will be a reaction in U.S. shale, and OPEC’s strategy will backfire massively.” 

    Lower inventories may help crude prices to reach $70 this year - The OPEC+ method of cutting production to lower inventories may not be the fastest way but it is probably the least-painful way from a price standpoint to balance the oil market, John Spears, President of Spears & Associates told Azernews. Spears went on to say that the other method to balance the market would be for OPEC+ to increase its oil production and reduce oil prices to the marginal lifting cost (perhaps as low as $20/bbl) in order to shut-in high-cost oil fields and spur oil consumption. “In the past oil prices have swung usually because oil demand and oil supply did not grow at the same rate. Most of the time oil demand tends to rise or fall smoothly from year to year. However, supply from new oil fields tends to come on stream irregularly and in big increments, like the Kashagan field, since most big oilfields traditionally take the better part of a decade to discover and bring on line. As a result of this supply-demand mismatch, the oil market has swung from undersupply to oversupply and prices have reacted accordingly,” the company’s President stressed. Further touching upon the issue of the prolongation of the OPEC+ deal, Spears noted that the OPEC+ production cuts can only be effective in reducing global oil inventories if compliance with the agreement remains high. “On this point, the high level of compliance with production cuts over the past year by the members to the agreement has led the market to expect that compliance will remain high going forward. However, we expect that the level of compliance will begin to slip as inventories near the level that OPEC+ is targeting,” the expert said. Spears believes that the other two factors that will play an important role in determining if the production cuts are effective are the growth in global oil demand in 2018 and the level of oil production in the U.S. 

    Money managers raise length in crude futures to record highs - Money mangers raised their stakes in bullish bets on NYMEX crude to record highs in the week that ended Tuesday, Commodity Futures Trading Commission data showed Friday. The group's length increased 36,580 contracts to 463,262 contracts, topping the previous record of 448,846 contracts set February 21. At the same time, the size of the short position has been sharply reduced since October, revealing a bullish bias held by money managers. That short position fell by 6,934 contracts to 30,612 contracts the week that ended Tuesday, leaving the group's net length at 432,650 contracts. By comparison, money manager's net length stood at 405,328 contracts February 21, then fell as low as 105,983 June 27 a few days after NYMEX crude had sunk to around $42/b, which proved to be the low point of 2017. Crude then stabilized around $50/b, before a rally began in October that took out $60/b by late December and has yet to run out of steam. Front-month NYMEX crude settled Friday at $64.30/b, a three-year high. Higher oil prices have also coincided with a growing short position held by swap dealers, which likely reflects more hedging activity by producers. Swap dealers serve as counterparties to producers in over-the-counter transactions, and then sell futures to mitigate price risk. The short position swap dealers held has pushed further into record territory, up 34,815 contracts to 782,569 contracts the week ending Tuesday. This move isn't surprising in light of higher oil prices, but greater production also means there are more barrels to hedge. US shale oil companies might also be under more stringent requirements from their lenders to lock in higher prices given investor pressure for them to live within their cash flows. A cold spell across the US that lasted from around Christmas into the first week of the New Year pushed NYMEX ULSD futures above $2.08/gal, a high last seen in February 2015. With the cold snap lifting this week, the stage was possibly set for some length to leave the market. 

    Hedge fund bulls have left oil market looking very stretched - (Reuters) - Hedge funds and other money managers have boosted their bullish position in oil to a new record, but with crude taking over from fuels as the main target of fresh buying.Hedge funds boosted their net long position in the six most important futures and options contracts linked to crude and fuels by 67 million barrels to a record 1,399 million barrels in the week to Jan. 9.Portfolio managers have increased their net long position in Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil by a total of 1,089 million barrels since the end of June.The accumulation of bullish positions is easily the largest on record and far outstrips anything seen even during the spike in oil prices during late 2007 and the first half of 2008 (http://tmsnrt.rs/2D8l6V7).In the last six months, funds have added 374 million barrels of net long positions in Brent, 344 million in WTI, 112 million in gasoline, 128 million in heating oil and 131 million barrels in gasoil.The scale of the buying has left positions looking very stretched on many measures and prices vulnerable to a correction if fund managers try to realise some of their paper profits.Hedge funds now hold more than 10 long positions in crude and fuels for every short position, up from a ratio of less than 1.60:1 at the end of June.If fund managers try to sell some of those positions, they may have difficulty finding buyers, which could cause a sharp downward move in prices ("Why stock markets crash", Sornette, 2003).In the past, large concentrations of hedge fund positions, either long or short, have normally preceded a reversal in the price trend ("Predatory trading and crowded exits", Clunie, 2010).In the current case, however, portfolio managers seem to be gambling oil prices will break up into a new, higher trading range before eventually correcting.The global economy is growing strongly and world trade volumes are increasing at the fastest rate since the start of the decade.Oil consumption is increasing strongly while OPEC and its allies continue to restrict production to draw down inventories.U.S. shale production is set to increase strongly in 2018 as a result of the increase in prices, but the impact will most likely be felt later in the year, and that has not daunted most of the oil bulls. Few fund managers are willing to bet against the rising trend in prices - yet.

    Crude futures: Crude slips back after reaching $70/b; dollar weakens -- Crude futures slipped down in European trading Monday morning, after hitting a high of $70.03/b in the early hours of the day, supported by a weaker dollar and speculative buying. At 1200 GMT, March ICE Brent crude futures were 19 cents/b lower at $69.68/b, while February NYMEX WTI crude was down 10 cents/b at $64.20/b. The US Dollar Index was down 0.32 at 90.30, the lowest level since December 2014, boosting oil prices. Speculative net long positions in crude futures were at record levels in the last reporting week, providing upward support as speculators invest in crude. The managed money net long position in ICE Brent futures was at a record high of 567,852 contracts for the week ended January 9, according to data from the Intercontinental Exchange. Meanwhile, analysts have upped their price forecasts amid a tightening supply balance in crude markets following increased demand and high compliance with OPEC/non-OPEC production cuts. "We now see a deficit of 430,000 b/d in 2018 compared to 100,000 b/d prior, and thus see Brent crude oil prices averaging $64/b in 2018 compared to $56 prior," a BofA Merrill Lynch Global Research report released Monday said. Analysts are now increasingly convinced that the market is rebalancing, although a concern remains over the resurgence of US shale output, which could bring prices back down. Data from Baker Hughes released Friday showed an increase in drilling activity in the US, with the oil rig count increasing by 10 to 752 over the week, the highest weekly increase since June 2016. Market participants will be watching US Energy Information Administration data published tomorrow evening, which will contain estimates of shale oil production.

    Oil hovers near three-year high despite rising U.S. output (Reuters) - Oil hovered near a three-year high above $70 a barrel on Monday on signs that production cuts by OPEC and Russia are tightening supplies, although analysts warned of a “red flag” due to surging U.S. production. International benchmark Brent crude futures LCOc1 last traded 29 cents higher at $70.16 by 1937 GMT, having risen to a high of $70.37 a barrel earlier in the session. U.S. West Texas Intermediate (WTI) crude futures CLc1 gained 51 cents at $64.81 a barrel. Both benchmarks hit levels not seen since December 2014, although trading was thin due to a holiday in the United States. A production-cutting pact between the Organization of the Petroleum Exporting Countries, Russia and other producers has given a strong tailwind to oil prices. Growing signs of a tightening market after a three-year rout have bolstered confidence among traders and analysts. Bank of America Merrill Lynch on Monday raised its 2018 Brent price forecast to $64 a barrel from $56, forecasting a deficit of 430,000 barrels per day (bpd) in oil production compared to demand this year. “OPEC and non-OPEC producers remain committed to production cuts at the same time world oil demand continues to increase,” “As we go through 2018, the market is also going to continue to look at geopolitical supply disruptions that could occur in Libya, Nigeria and Venezuela.” Still, some analysts have warned that the 13 percent rally since the start of the year could peter out due to global refinery maintenance and rising North American production. U.S. energy companies added 10 oil rigs in the week to Jan. 12, taking the number to 752, energy service firm Baker Hughes said on Friday. That was the biggest increase since June 2017. In Canada, energy firms almost doubled the number of rigs drilling for oil last week to 185, the highest level in 10 months. 

    Oil prices drop off three-year highs but strong demand supports ---(Reuters) - Oil prices dropped off three-year highs on Tuesday as traders booked profits but healthy demand underpinned prices near $70 per barrel, a level not seen since the market slump in 2014. Prices have been driven up by oil production curbs in OPEC nations and Russia, and demand amid healthy economic growth. Imports to India, the world’s third-biggest oil consumer, rose by about 1.8 percent in 2017 to a record 4.37 million barrels per day (bpd) as the country boosted purchases to feed its expanded refining capacity. Brent futures LCOc1 fell $1.11, or 1.6 percent, to settle at $69.15 a barrel after hitting a session low of $68.83. The global benchmark hit a peak of $70.37 on Monday, matching a high from December 2014 at the start of a three-year market decline. U.S. West Texas Intermediate (WTI) crude futures CLc1 ended at $63.73 a barrel, down 57 cents, or 0.9 percent. WTI hit a December 2014 peak of $64.89 earlier in the session. “It’s such a quiet day ... I think this is a pause as you try and decide what the rise in rig counts means and what the Russia comments mean,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. Reacting to the three-year price high, Russian Energy Minister Alexander Novak said the oil market was not yet balanced and that the global deal to cut output should continue as the price rise could be due to cold weather. The U.S. rig count, an early indicator of future output, rose by 10 oil rigs last week to 752 and is much higher than a year ago when only 522 rigs were active. [RIG/U] “All in all, this is still a pretty positive day because even though there is no news to drive prices, you’re not giving up much ground here,” Haworth said. Most analysts and market participants said oil is vulnerable to profit taking as hedge funds and money mangers have amassed a record number of bullish bets on U.S. crude. In addition, trading was thin on Monday due to the Martin Luther King Jr. Day holiday in the United States. 

    Crude futures: Brent slips back, struggling to hold on to $70/b - Crude futures struggled to hold onto gains made the previous day, slipping back from $70/b in European morning trading Tuesday. At 1145 GMT, March ICE Brent crude futures were 98 cents lower at $69.28/b, while February NYMEX WTI crude was down 45 cents at $63.85/b. Related analysis: Brent strength could pressure Atlantic Basin crude differentials After settling at its highest since December 2014 Monday, Brent has fallen back, languishing below $70/b on profit taking and a lack of fresh bullish drivers. "It's trying to break above the $70 level several times but not succeeding, it's more of a technical setback with lots of hot money on the prompt," Global Risk Management's Michael Poulson said. Speculators on the oil curve are able to move their positions quickly and with a record high net speculative long, according to ICE data, the futures are struggling to hold on to recent gains. "We are approaching the five-year average, and the large speculative position is a good sign we are approaching the high," Poulson added. Commerzbank analysts also pointed to this large speculative position, saying that the level of the speculative long in Brent and WTI contracts at over 1 million contracts is equivalent to "nearly the total amount of commercial crude oil stocks in the OECD countries," according to an analysts' note Tuesday. "We therefore expect prices to correct in the coming weeks, just as soon as inventory trends shift and attention is focused more on the growing US oil production," the Commerzbank note added.

    Has Oil Become Overbought? - Oil prices trimmed their gains at the start of trading on Tuesday, although the losses were relatively minor. Benchmark prices are holding up amid strong demand, falling inventories and bullish sentiment.   The head of Russian oil company Lukoil said that Russia should withdraw from the OPEC/non-OPEC production cuts if oil prices stay at $70 per barrel for six months. Russia’s participation is crucial to the cohesion of the group, and the comments are the first in what will likely be a lot more rumors about the compliance to the production cuts, particularly if oil prices remain elevated.    A group of investment banks, including Citigroup, Societe Generale, and JPMorgan Chase predict that compliance with the OPEC cuts will falter this year. The banks estimate that inventories will clear and by mid-year OPEC may find it difficult to maintain compliance. “There could be an agreement over the summer on ramping production back up,” Ed Morse, head of commodities research at Citigroup, told Bloomberg. The predictions come as ministers from OPEC countries have sought to reassure the markets that the deal will remain intact.   Energy Transfer Partners has run into trouble with two key projects. The Rover pipeline, which would carry Marcellus shale gas through Ohio, Michigan and into Canada, has been beset with environmental challenges. Last April, the ETP spilled 2 million gallons of clay and water, and more recently it spilled 148,000 gallons of drilling fluid. Ohio regulators are seeking to block the company from further horizontal drilling to advance the $4.2 billion project. Separately, environmental groups have sued the U.S. Army Corps of Engineers to block the construction of ETP’s Bayou Bridge Pipeline in Louisiana.   Top shale gas drillers in the Marcellus are super-sizing their wellpads. In the past, a wellpad would be used to drill a handful of wells. But some gas drillers are building much larger wellpads, and using them to drill upwards of 30 or 40 wells. These “superpads” can produce a lot more gas in a smaller footprint. It also means that gas drillers can drill a group of wells in one moment, then come back later and drill more wells from the same pad. EQT, the largest gas producer in the U.S., is reportedly one of the leaders of this new practice, which can see $250 million invested in a single supersized wellpad. 

    Crude futures: ICE Brent crude retreats further, undergoing correction after rally - Crude futures continued to ease in European morning trading Wednesday, with ICE Brent retreating further from $70/b amid some concerns that fundamentals did not justify the highs seen early this week. Related video:Market Movers Europe, Jan 15-19 At 1200 GMT, March ICE Brent crude futures were 36 cents/b lower at $68.79/b, while February NYMEX WTI crude was down 25 cents/b at $63.48/b. Brent crude hit the psychologically important $70/b level earlier this week. Analysts have expressed concern that the rally in crude futures, which began late last year, was overdone with some of the fundamental factors which triggered the rally having now reversed. The Forties pipeline outage, Libyan production issues and geopolitical tensions involving Iran all helped to support prices in previous months, but those factors have since subsided. The rally continued into this year with record net speculative long positions, stoking worries oil markets were primed for a large correction. However, analysts were skeptical that speculators will liquidate their positions at once, taking profits at the current levels, as backwardation in the futures incentivizes funds to hold onto a long position.

      WTI/RBOB Extend Gains After Bigger Than Expected Crude Draw - Crude edged higher as OPEC showed increased determination to curb production and tighten markets ahead of inventory data tonight, but extended gains after API reported a bigger than expected crude draw (9th in a row). API:

      • Crude -5.121mm (-3.15mm exp)
      • Cushing -3.936mm (2.5mm exp)
      • Gasoline +1.782mm
      • Distillates +609k

      This is the 9th straight week of crude draws and gasoline builds...There could be some weather-impact in this data as Bloomberg notes that at least two Gulf Coast refineries aren’t producing product because of issues related to sub-freezing temperatures sweeping across the South while multiple other sites are having cold-related upsets.“The market continues to take support from signs that OPEC and Russia’s compliance with their production cuts is really high and it doesn’t seem that there are any worries that there is cheating going on yet,” Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut, said by telephone. Prices were higher on the day but limped into the API data as the Dollar spiked but resumed climbing after the bigger than expected crude draw.

      WTI/RBOB Jump After Biggest Cushing Stock Draw On Record -  WTI/RBOB prices have fallen after a brief pop on last night's API data but kneejerked higher after DOE reported a bigger than expected crude draw (9th straight week). Cushing saw its biggest draw ever and Distillates surprised with a draw as US crude production bounced back. Ahead of the DOE dats, Bloomberg noted the market's anxiety: A ninth-consecutive crude draw would be helpful, but a tenth consecutive weekly gasoline build would not. And a fifth straight distillate build would add more bearish sentiment. Survey data already see sizable builds in both product categories, and figures coming in showing larger builds could have bulls questioning the insanely long positioning of the crude market.  DOE:

      • Crude -6.86mm (-3.15mm exp) - 9th straight week of draws
      • Cushing -4.184mm (2.5mm exp) - biggest draw ever
      • Gasoline +3.62mm - 10th straight week of builds
      • Distillates -3.887mm - biggest draw since Oct 20th

      Another crude draw and another gasoline build but Cushing's 4.18mm draw is the largest on record. Distillates surprised with a draw that is perhaps weather-driven as several refiners were shut in... That cold snap across the eastern US is showing its effects on heating fuel. Distillate demand soared the most for any week since 2000, to the highest level in a decade.  That surprise distillate draw didn't seem to come from exports which actually dropped last week, but, as Bloomberg's Bert Gilbert notes, the chart below shows that product supplied for diesel last week hit the highest level since February 2008.

      Oil Prices Rebound After EIA Reports Another Large Crude Draw - Amid emerging doubts that OPEC and Russia have outdone themselves with the oil production cuts and are starting to suffer the consequences, the Energy Information Administration reported another large draw in oil inventories this week. At 6.9 million barrels, the draw is significant enough to support a further price rise for WTI. Yesterday, the American Petroleum Institute reported yet another draw, of 5.12 million barrels, keeping spirits high. Analysts expected the EIA to report its ninth straight weekly inventory draw, with a Reuters poll setting the size of the draw at 3.5 million barrels, the same as last week’s analyst poll by Platts showed. In g asoline, the EIA reported another build, of 3.6 million barrels for the week to January 12. That’s compared to a 4.1-million-barrel build in the prior week. Production of the fuel averaged 9.7 million bpd last week, up from 9.5 million bpd in the week to January 5.   Last week, the EIA shook markets with the latest edition of its Short-Term Energy Outlook, in which the authority forecast U.S. oil production would reach 10.3 million barrels daily this year and rise further to 11 million bpd in late 2019. This has not affected prices negatively, however, as supply continues to tighten, according to observers.  As a result, two banks have already raised their price targets for oil for this year. BofA said it had revised its supply and demand forecast for the year and now expected a deficit of 430,000 bpd versus an earlier one of 100,000 bpd. As a result, BofA now expects Brent crude to average US$64 a barrel and WTI to hover around US$60 a barrel. That’s up from US$56 and US$52 a barrel, respectively.

      $70 Oil Cripples European Refiners --In the latest indication of the strength of the recovery of global oil prices, European refineries are struggling to pay their crude bills as margins decline and demand weakens for some of their products, Bloomberg reports.The profit curve for fuel oil, used by shippers and power stations, has fallen the most dramatically. High inflows of diesel in the Middle East are making that fuel difficult to bank on as well.As a result of the capital crunch, refinery runs could become shorter, KBC Advanced Technologies, a research firm in the sector, says, though part of these fluctuations are owed to normal seasonal tendencies.“Oil demand usually slackens in the first quarter and into the second quarter, so sooner or later refinery intakes will have to slacken and the usual signal for that is lower margins,” KBC chief economist Stephen George said.The timing of the revised production strategy comes just as refinery margins reach a three-year low, Barclays says, which is particularly telling. The oil price crash in late 2014 largely shapes the market. Hydroskimming facilities, which refine fuels in a relatively unsophisticated process, have it tough because their techniques do not allow for diesel or gasoline production like complex refineries. “Fuel oil cracks are paltry, which is impacting hydroskimming margins, with Urals margins in particular falling,” Ehsan Ul-Haq, of the London-based Resource Economist Ltd. told Bloomberg. Russia’s Urals crude grade is more sensitive to the strong markets because of its high fuel yield, he added.

      OMR: Is seventy plenty? -- The price of Brent crude oil closed earlier this week above $70/bbl for the first time since 2 December 2014 (shortly after OPEC’s “market share” ministerial meeting) and money managers have placed record bets on the recent upward momentum continuing. The factors contributing to this burst of optimism by investors include; the possible unravelling of the Iran nuclear deal and recent demonstrations in the country, disruption to the industry in Libya, and the closure of the Forties pipeline system. Although these factors might have faded somewhat, there are others at work. The general perception that the market has been tightening is clearly the overriding factor and, within this overall picture, there is mounting concern about Venezuela’s production.Taking Venezuela first, production has been sliding for a long time – it is now about half the level inherited by President Chavez in 1999 – and in December output was 490 kb/d lower than a year ago, having fallen to 1.61 mb/d. It is reasonable to assume that the decline will continue but we cannot know at what rate. If output and exports sink further other producers with the flexibility to deliver oil similar in quality to Venezuela’s shipments to the US and elsewhere, including China, might decide to step in with more barrels of their own. The oil market is clearly tightening; in the three consecutive quarters 2Q17-4Q17 OECD crude stocks fell by an average of 630 kb/d; such a threesome has happened rarely in modern history: examples include 1999 (prices doubled), 2009 (prices increased by nearly $20/bbl), and 2013 (prices increased by $6/bbl). Since the nadir for Brent crude in June when the price was $45/bbl, the 2017 OECD crude draws have coincided with a price increase for Brent of nearly $25/bbl.

      WTI Tumbles To $62 Handle After IEA Predicts "Explosive" US Shale Production As Oil Prices Surge --Overnight, the International Energy Agency became the latest entity to recognize that 2018 is shaping up to be a pivotal year for energy production in US shale fields, and a showdown between OPEC and non-OPEC producers, namely those in the US.According to the latest IEA report, US shale output is poised for "explosive" growth in 2018 as WTI trades at its strongest level since the summer of 2015, which in turn will unleash pent up US output, potentially leading to a sharp oversupply of black gold,As Bloomberg  notes, the IEA's forecast supports OPEC's own projections: As we pointed out yesterday, the cartel also expects US production to ramp up in 2018 as shale producers - much more lean and efficient and significantly delevered after the 2015/2016 "episode" - unleash output as oil price continue to rise well above the generally accepted shale breakevens in the low $50s. The IEA boosted its forecasts for non-OPEC supply growth this year by 100,000 barrels to 1.7 million barrels a day compared with last month’s report, modestly higher than OPEC's projections. It also warned 2018 could be a “volatile” year as Venezuela's energy industry teeters on the brink of collapse. Both OPEC and IEA expect Venezuela's difficulties to continue after Latin America's socialist paradise brooked the biggest unplanned production decline of 2017. “The big 2018 supply story is unfolding fast in the Americas,” the IEA said in its monthly report. “Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico.”"Given Venezuela’s astonishing debt and deteriorating oil network, it is possible that declines this year will be even steeper than the 270,000 barrels a day in 2017," the report said. The country’s output last year was 1.97 million barrels a day, the lowest in nearly 30 years." "Yet, the IEA doesn’t see a “clear sign yet of OPEC turning up the taps to cool down oil’s rally” to “compensate for a precipitous drop in supply from Venezuela."

      OilPrice Intelligence Report: The Shale Surge Is Far From Over: Oil prices fell back a bit at the end of this week. EIA data shows a rise in U.S. production, but also another strong decline in inventories. Brent is struggling to hold above $70, and benchmark prices await some direction.The IEA’s latest Oil Market Report paints a mixed picture for prices. Clearly, the market is tightening, the IEA says, but it also says that shale growth will be “explosive” this year. The agency revised up its forecasts growth for U.S production from 870,000 bpd to 1.1 mb/d in 2018. That, combined with gains from other non-OPEC countries, could end the price rally, although the IEA says a lot of uncertainty remains.   Venezuela’s December output cratered to 1.6 million barrels per day (mb/d), falling by 216,000 bpd from a month before. The shocking single-month decline raises the prospect of a much more serious meltdown in the country’s oil sector than most analysts previously believed. Debt, lack of maintenance, a lack of cash to invest, the decrepit state of PDVSA’s oil assets, and a brain drain are all contributing to the steep decline. Analysts see output falling to 1.3 mb/d this year, perhaps lower. “The only discussion right now is how much is it going to decline by. There is no talk of a turnaround,” Luisa Palacios, analyst at consultancy Medley Global Advisors in New York, told the WSJ. Argus Media reports that surging oil production in the Permian could run into a ceiling of midstream capacity in the coming years, threatening the boom. For now, there is enough pipeline capacity to carry Permian oil to the Gulf Coast, but at some point the pipeline network will be maxed out, and there is “going to be a day of reckoning,” Enterprise Products Partners senior vice president Brent Secrest said at the Argus Americas Crude Summit in Houston, Texas. Pipeline companies see the bottleneck beginning in 2019 or 2020.

      Oil Rig Count Declines Amid Falling Prices -- The number of active oil and gas rigs fell this week, according to Baker Hughes data, decreasing by 3 total rigs. This brings the total number of oil and gas rigs to 936, which is an addition of 242 rigs year over year.The number of oil rigs in the United States fell by 5 this week after gaining 10 last week, while the number of gas rigs increased by 2. The number of oil rigs stands at 747 versus 551 a year ago. The number of gas rigs in the US now stands at 189, up 142 a year ago.At 10:11am EST, the price of a WTI barrel was trading down $0.40 (-0.63%) to $63.49—nearly the same as this time last week. The Brent barrel was trading down $0.40 (-0.58%) to $68.91. Prices fell further in the early afternoon prior to the data release. US crude oil production rose last week, resuming the upward movement that oil prices enjoyed throughout Q4 2017. The first week of 2018 saw production in the United States slipping from 9.782 million bpd in the last week of 2017, down to 9.492 million bpd. But this week, production moved upward again to 9.750 million bpd.  Canada has seen severe swings in its active oil and rig count. Last week, Canada saw 102 oil and gas rigs added. This week, Canada added another 49, bringing its total to 325.Despite the overall decline in the number of rigs for the week, the Permian basin rig count increased by 6 this week, and now stands at 409 rigs, or 128 above this same week last year. At 1:11pm EST, WTI was trading at $63.29 (-$0.60) with Brent trading at $68.64 (-$0.67).

      US oil drillers cut rigs for 2nd week in three -Baker Hughes -- (Reuters) - U.S. energy companies this week cut oil rigs for the second time in three weeks even though crude prices traded near their highest level since 2014. Drillers cut five oil rigs in the week to Jan. 19, bringing the total count down to 747, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday. RIG-OL-USA-BHI The U.S. rig count, an early indicator of future output, is much higher than a year ago when only 551 rigs were active after energy companies boosted spending in 2017 as crude started recovering from a two-year price crash. U.S. crude futures traded above $63 a barrel on Friday after hitting $64.89 this week, its highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016. Looking ahead, futures were trading around $62 for the balance of 2018 and $58 for calendar 2019 . In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co said 23 of the roughly 65 E&Ps they track, including Antero Resources Corp , have already provided capital expenditure guidance for 2018 indicating an 8 percent increase in planned spending over 2017. Cowen said the E&Ps it tracks planned to spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53 percent over what they planned to spend in 2016. Antero said it planned to keep its drilling and completion capital budget flat at $1.3 billion annually through 2020. Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week slightly increased their forecast for the total oil and natural gas rig count to an average of 1,004 in 2018 and 1,128 in 2019. Last week, it forecast 996 in 2018 and 1,126 in 2019. There were 936 oil and natural gas rigs active on Jan. 19. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas. U.S. oil output is expected to continue to rise in February with production from shale formations rising by 111,000 barrels per day (bpd) to 6.55 million bpd, the U.S. Energy Information Administration said on Tuesday.

       Oil prices fall 1 pct as growing U.S. crude output weighs - (Reuters) - Oil prices slid 1 percent on Friday and were on track for the biggest weekly falls since October as a bounce-back in U.S. production outweighed ongoing declines in crude inventories. Brent crude futures LCOc1 were trading 69 cents lower at $68.53 a barrel at 11:22 a.m. EST (1622 GMT). On Monday, they hit their highest since December 2014 at $70.37. U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $63.21 a barrel, down 74 cents. WTI marked a December-2014 peak of $64.89 a barrel on Tuesday. Both benchmarks were on track for a weekly loss of nearly 2 percent. The International Energy Agency (IEA), in its monthly report, said that global oil stocks have tightened substantially, aided by OPEC cuts, demand growth and Venezuelan production hitting near 30-year lows. But it warned that rapidly increasing production in the United States could threaten market balancing. "Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico," the IEA said of 2018 production. The energy watchdog forecast U.S. supply growth will push its output past 10 million barrels per day (bpd), overtaking Saudi Arabia and rivalling Russia. U.S. crude oil production C-OUT-T-EIA rose to 9.75 million bpd last week, according to government data. Some analysts, however, contend the IEA may be underestimating oil demand growth this year amid strong U.S. shale production trends as global economies show signs of growth to absorb the commodity. "The demand side of the equation is keeping us well-healed," said Phil Flynn, analyst at Price Futures Group in Chicago, who expects oil demand to hit between 1.8 million bpd to 2 million bpd. "While it's great to be adding shale, it's coming at the expense of deepwater projects. Demand is going to continue to surprise on the upside," he added. Overall, however, oil prices remain well supported, and most analysts do not expect steep declines.

      Oil Prices Book Biggest Weekly Loss Since October --Oil prices accumulated a more than 1-percent decline this week, pressured by U.S. production growth, despite the variety of bullish demand forecasts and data about tightening global supply. A record-high number of long positions on Brent and WTI also helped fuel a concern about the immediate future of benchmark prices.The ratio of long to short positions on Brent and WTI, Reuters’ John Kemp noted in his latest column, now stands at 10:1, compared with 1.60:1 at end-June 2017.The Energy Information Administration reported yesterday that overall oil production in the Untied States had hit 9.75 million barrels daily last week, up by 258,000 bpd from the previous week and a whopping 806,000 bpd from a year earlier. At this rate of weekly growth, U.S. drillers could hit the 10-million-bpd mark much sooner than expected unless they deliberately decide to rein in production to stop prices from falling. As this figure is comprised of numerous individual companies, a concerted effort to rein in prices is highly unlikely. Adding to the negative reaction was a reported 258,000-bpd build in gasoline inventories that took the joy out of a ninth consecutive weekly decline in crude oil inventories, and not a small one, at 6.9 million barrels.  The weekly price decline for West Texas Intermediate could come in as high as 1.8 percent, MarketWatch notes, and Brent could book an accumulative loss of the same size. “The market appears a bit overextended after a 30% rally, with barely a move lower, over the past three months,” a Bank Wealth management investment strategist, Rob Haworth, told MarketWatch.

      OPEC Oil Production Rose In December Despite Plunge In Venezuela Output - In its latest monthly report, OPEC announced that according to secondary sources, December oil production by the cartel rose by 42.4kbpd from November to 32.416mmbpd, if 144kbpd below October's 32.56mmbpd level, and just below the mandated production ceiling of 32.5mmbpd. While the biggest producer Saudi Arabia saw its output dip by 11kbpd to 9.918mmbpd, it was Venezuela's production that tumbled by nearly 5%, or 82.2kbpd, to 1.745mmbpd, and is rapidly becoming the biggest swing factor in rising oil prices. The decline was offset by a jump in Nigerian oil production, which pumped 75.7kbpd more in December, to 1.861mmbpd. Algeria, Angola, Iran and Kuwait also saw their output increase in December. OPEC also revised its 2017 global oil demand growth higher, now at 1.57mmbpd, averaging some 96.99mmbpd in 2017. For 2018, oil demand growth is anticipated at 1.53mmbpd, or some 98.51mmbpd.   Meanwhile, world oil supply in December increased by 0.40 mb/d m-o-m, to average 97.49 mb/d, representing an increase of 0.83 mb/d y-o-y. Preliminary non-OPEC oil supply, including OPEC NGLs, was up by 0.35 mb/d m-o-m in December to average 65.07 mb/d. For 2017, non-OPEC supply is estimated to grow by 0.77 mb/d y-o-y to average 57.79 mb/d, representing a downward revision of 0.04 mb/d from last month’s report, following a downward revision in OECD and DCs by 28 tb/d and 35 tb/d, respectively, while the oil supply forecast for the FSU was revised up by 32 tb/d. For 2018, y-o-y growth of 1.15 mb/d is forecast, following an upward revision for production in the US, Canada, Mexico and the UK and downward revisions in Norway and Argentina, and showing total supply expected at 58.94 mb/d. In December 2017, OPEC crude oil production increased by 42 tb/d, according to secondary sources, to average 32.42 mb/d. Separately, non-OPEC oil supply growth - mostly shale - in 2017 was revised fractionally lower to 0.77mmbpd.The non-OPEC supply growth estimation for 2017 has been revised downward by 0.04 mb/d since last month’s assessment to 0.77 mb/d y-o-y, to average 57.79 mb/d. While the oil supply growth estimation for the US, Canada, other OECD Europe and Russia improved, expected growth in Norway, UK, Indonesia, Argentina and Brazil has been adjusted down.The US remains the key driver of non-OPEC supply growth, adding 0.62 mb/d to non-OPEC production in 2017, supported by other countries such as; Canada with 0.32 mb/d, Brazil with 0.17 mb/d, Kazakhstan with 0.18 mb/d, Russia with 0.09 mb/d, Ghana with 0.07 mb/d and Congo with 0.04 mb/d.

      OPEC sees more oil supply from rivals, countering its cuts and Venezuelan woes (Reuters) - OPEC has raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage U.S. shale drillers to pump more, offsetting an OPEC-led deal to clear a supply glut and a deepening plunge in Venezuelan production. In a monthly report on Thursday, the Organization of the Petroleum Exporting Countries said outside producers would boost supply by 1.15 million barrels per day (bpd) this year, up from 990,000 bpd expected previously. “Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil,” OPEC said in the report, using another term for shale. OPEC, Russia and several other non-OPEC producers began to cut supply a year ago to get rid of a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018. The OPEC forecast of higher rival supply could add to a debate about the effectiveness of keeping the curbs in place. A ministerial monitoring panel meets this weekend in Oman and is expected to discuss the eventual exit strategy from the deal. But the forecast was balanced by figures in the report showing OPEC’s compliance with the supply cuts remained high in December and a further sharp slide in Venezuelan oil output. Oil prices edged higher after the report was released to trade above $69 a barrel and later steadied. Prices are close to the highest since December 2014. In a further sign excess supply is easing, OPEC said inventories in developed economies declined by 16.6 million barrels in November to 2.933 billion barrels, 133 million above the five-year average. OPEC’s stated goal is to reduce stocks to the five-year average. 

      Speculation Grows That OPEC Will End Cuts Early - As oil trades near a three-year high and crude stockpiles fall rapidly, analysts are questioning whether the OPEC-led production cuts will last until the end of the year. As the producer group gears up for a meeting with its partners to review strategy in Muscat, Oman, this weekend, there are growing expectations that the deal will be phased out early. The "probability is growing" that the accord may conclude before the end of the year, said Harry Tchilinguirian, BNP Paribas SA’s head of commodity strategy. Discussions around an early exit are likely to emerge at the next OPEC meeting in June, he said. "If Brent is still trading around $60 a barrel and oil inventories are close enough to OPEC’s five-year average," the deal may be phased out informally by nations gradually weakening their compliance with production cuts, Tchilinguirian said. It would be "prudent" to expect OPEC members will start cheating given higher oil prices, said Energy Aspects Ltd.’s chief oil analyst Amrita Sen. Other analysts predict a more formalized unwinding of the cuts. "I don’t think the deal per se will end" as inventories near the five-year average, said Bjarne Schieldrop, chief commodity analyst at SEB AB. The Declaration of Cooperation -- the 2016 accord that first established the group of 24 oil producers-- will still stand, but be modified to allow for production cuts to gradually unwind from mid-2018, he said. 

      The OPEC Deal May End In June -- A couple of weeks ago, comments from the UAE’s energy minister spurred the oil price rally higher. What the minister said — or rather, hinted — was that the oil production cut deal that OPEC agreed to at the end of 2016 with Russia could continue beyond its December 2018 deadline. The rise, however, may have been too high for OPEC and Russia’s liking. In a market that runs on rumor and comments, prices were bound to jump higher after Suhail Al-Mazrouei’s comments and a string of bullish forecasts on oil demand. They are now apparently too high, and OPEC might be considering ending the deal at the June meeting of the so-called Vienna Club that includes Russia and the other countries that agreed to cap their oil production. A growing number of commodity analysts are predicting that this is how events will unfold. Citi’s Ed Morse, for example, told Bloomberg recently that OPEC and Russia have reason to “want to talk the price down” because they fear how U.S. shale will respond to Brent above $70. What’s more, Morse noted, U.S. shale is not the only threat for OPEC’s peace of mind: deepwater oil and Canadian oil sands can be just as dangerous at the right price level. Then there’s Russia, of course, which, as Morse says, is particularly concerned about high oil prices lifting the ruble — and Russia doesn’t want an expensive ruble, as it would diminish the competitiveness of its exports. As a result, the Russian central bank is currently on a dollar-buying spree to help keep the local currency cheap.  Morse is part of a growing company that also includes the commodity analysts of Societe Generale and JPMorgan. Deutsche Bank analyst Michael Hsueh said earlier this week that Brent hitting $70 would accelerate the process of devising an exit strategy.

      Saudi Wealth Fund Is Said to Weigh Bank Loans for Investments - Saudi Arabia’s sovereign wealth fund, which aims to become a $2 trillion investment giant, is considering borrowing from banks for the first time as it seeks investments in the kingdom and abroad, according to people familiar with the matter. The Public Investment Fund, or PIF, has held talks with local and international banks and could raise about $5 billion this year, some of the people said, asking not to be identified because the information is private. No final decisions on timing or size have been made and the PIF may instead turn to government financing, the people said. A spokesman for the PIF declined to comment.The fund is willing to borrow as it seeks to diversify the kingdom’s oil-dependent economy and boost returns from investments, Managing Director Yasir Al-Rumayyan said in a Bloomberg Television interview in October. Saudi Arabia is stepping up efforts to turn the PIF into a global giant by giving it ownership of state-owned oil company Saudi Aramco, which is preparing for what could be the world’s biggest initial public offering.  The sovereign fund has announced some large international deals, including a commitment to put $20 billion into a U.S. infrastructure fund managed by Blackstone Group LP, and as much as $45 billion in a technology investment fund managed by SoftBank Group Corp., as well as a $3.5 billion stake in Uber Technologies Inc. The PIF is also behind several large real estate developments in Saudi Arabia, including a new city called Neom that will be built on the Red Sea Coast, an entertainment city on the edge of Riyadh and another tourism project on the Red Sea. It has also finalized an accord to take over the management of Riyadh’s $10 billion unfinished financial hub as the government attempts to revive the project, people familiar with the matter said last year.

      Prince Alwaleed Moved To Highest Security Saudi Prison After Refusing To Pay $6 Billion For Freedom: Report -  -- Saudi Arabia's billionaire prince Alwaleed Bin Talal, has been carted off to Al Ha'ir prison, south of Riyadh, after refusing to pay  a reported $6 billion to Crown Prince Mohammed Bin Salman to secure his freedom, following a massive consolidation of power on November 4, 2017 in which over 300 princes, ministers and other elites were rounded up in an "anti-corruption" purge. Sources told the Middle East Montior  that nearly 60 detainees were transferred to the most high security prison in the Kingdom. The prisoners include Prince Al-Waleed Bin Talal as Prince Turki Bin Abdullah and a number of government officials who refused to make the large financial payments for their release.  Among those arrested on allegations of corruption is Prince Alwaleed Bin Talal, the Saudi King's nephew who is worth more than $17bn according to Forbes, and owns stakes in Twitter, Lyft and Citigroup. According to a Daily Mail source, the crown prince had lulled Alwaleed into a false sense of security, inviting him to a meeting at his Al Yamamah palace, then sent officers to arrest him the night before the meeting.'Suddenly at 2.45am all his guards were disarmed, the royal guards of MBS storm in,' said the source.'He's dragged from his own bedroom in his pajamas, handcuffed, put in the back of an SUV, and interrogated like a criminal.'They hung them upside down, just to send a message. Purged princes and the like were taken to the Riydah Ritz Carlton Hotel, where they have reportedly been allowed to buy their freedom by giving up their billions in oil wealth for their lives.

      Saudi Arabia Closes the World’s Ritziest Prison - The Ritz-Carlton in Riyadh is due to resume life as a five-star hotel next month, but the purge that turned it into the world’s most luxurious prison still carries risks for Saudi Arabia’s young leader.Crown Prince Mohammed bin Salman, 32, held relatives and scores of others from his anti-corruption sweep in the 492-room establishment since November. Some are still there, while others are thought to be abroad, under house arrest or banned from traveling. The Ritz website is now taking reservations from Feb. 14, signaling an end to one chapter of a campaign whose goal is to recoup as much as $100 billion of allegedly misappropriated money.The detentions are part of Prince Mohammed’s drive to transform Saudi society and the economy and cement his power. At the same time, they have strained ties within the royal family, once the pillar of Saudi stability, and raised questions over the increasingly authoritarian heir’s intentions amid the prospect of facing some new powerful enemies.“Prince Mohammed runs a risk that former detainees may seek to coalesce into small groups to undermine further reforms and his leadership,” said Theodore Karasik, senior adviser at Gulf State Analytics in Washington. “He will have created enemies with some royal family members despite their pledges of loyalty.”

      With Saudi princes dead, arrested, King Fahd's grandson flees kingdom to... Iran - A member of the Saudi royal family has reportedly fled to arch-rival Iran, hours after the death of his uncle Prince Abdul Aziz bin Fahd. A report by India today raises questions about the nature of Prince Turki’s departure from Saudi Arabia, as all of the country’s royals have been barred from travelling. #Saudi Prince Turki bin Mohamed, late King Fahd’s grandchild, fled to Iran seeking political asylum after arrest of his father in MBS’ purge https://t.co/WrfgsPUVYD — SaadAbedine (@SaadAbedine) November 7, 2017 One commentator on the region’s politics tweeted that asylum has already been granted:Source to @kann: Saudi Prince Turki Bin Mohammed Bin Fahd, grandson of #Saudi King Fahd (d. 2005), was granted asylum in Iran. https://t.co/Pyx7QzJ9v3— Mohamed Soltan (@soltanlife) November 6, 2017 There are rumours that Prince Abdulaziz bin Fahd, Prince Turki’s uncle and the youngest son of late King Fahd, died while resisting arrest by Saudi security forces. AlIthad News reported on the death of Prince Abdul Aziz but did not mention a cause of death. Other news outlets also covered his death:

      US military to maintain open-ended presence in Syria, Tillerson says - The US intends to maintain an open-ended military presence in Syria, not only to fight Isis and al-Qaida but also to provide a bulwark against Iranian influence, ensure the departure of the Assad regime and create conditions for the return of refugees, the secretary of state, Rex Tillerson, said on Wednesday.The new Syria policy, outlined by Tillerson in a speech at Stanford University, represents a significant expansion of US aims in the country, which theTrump administration had previously restricted to counter-terrorism throughout its first year in office.It had been unclear for some time how a strictly limited counter-terrorism role squared with Trump’s stated goal of containing Iranian influence, or how it would give the US clout at negotiations over Syria’s political future. Tillerson’s speech suggested that asRussia drew down its military presence, the US would expand its own. How far it is ready to risk troops and invest resources in the policy remains far from clear.Tillerson’s comments came as the number of internal refugees fleeing fighting in Idlib has more than doubled in the last week, to 212,000 people, in an escalating humanitarian crisis that officials have warned could spur a new migration wave.In his Stanford speech, Tillerson laid out five US goals in Syria: the defeat of Isis and al-Qaida, a UN-brokered resolution for Syria that involved Bashar al-Assad’s departure, a curb on Iran, conditions for the safe return of refugees, and the complete elimination of remaining chemical weapons.While the focus of US military effort thus far has been on Isis, Tillerson warned: “Al-Qaida is still a grave threat and is looking to reconstitute in new and powerful ways.

      Tillerson denies US plans to form Syria border force --US Secretary of State Rex Tillerson has said that Washington owed Turkey an explanation over reports that it was creating a 30,000-strong border force in northern Syria, adding that the issue has been "misportrayed"."That entire situation has been misportrayed, misdescribed, some people misspoke. We are not creating a border security force at all," Tillerson told reporters on his way back from giving a speech at Stanford University in California on Wednesday.According to media reports, Washington is working to establish the border security force with the involvement of Kurdish militias.Citing several other US officials, reports published earlier this week said that the US-led coalition fighting the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) armed group would recruit around half of the new force from the Syrian Democratic Forces (SDF), an umbrella group of fighters dominated by the Kurdish People's Protection Units (YPG) and considered by Ankara to be a "terrorist" group.  The Turkish government said that it would carry out a military operation into Kurdish-held areas in northern Syria if Washington goes ahead with the reported plan.Furthermore, Turkish Foreign Minister Mevlut Cavusoglu said relations between Turkey and the US would be "irreversibly harmed" if Washington forms the force in question, after meeting Tillerson in Vancouver on Tuesday on the sidelines of a gathering to discuss sanctions against North Korea.Tillerson said in California he had told Cavusoglu that the US' intention was to train local forces in the fight against remaining ISIL fighters in Syria."We have ISIS still attacking in parts of northwest Syria and along the Euphrates valley, so this is just more training and trying to block ISIS from their escape routes," said Tillerson. "We understand why they reacted the way they did," he said, amid Turkish preparations to launch an operation against the YPG.

      Syria Kurds vow to cleanse enclave from Turkish ‘scourges’ - The head of a powerful Kurdish militia hit back on Tuesday at Turkish threats to attack its forces in northern Syria, pledging to "cleanse" the area of Ankara's "scourges". Turkish President Recep Tayyip Erdogan on Tuesday vowed to soon launch an operation against towns in Syria held by the Kurdish People's Protection Units (YPG), which Ankara considers "terrorists". The YPG, a key US ally in the fight against jihadists, controls key urban hubs in northern Syria including the towns of Afrin and Manbij. In an interview published Tuesday with Kurdish news agency ANF, YPG chief Sipan Hemo said his forces stood "ready" to defend those towns against a Turkish assault. "Our forces will be able to cleanse the area from Erdogan's scourges, just as we were able to cleanse it from Daesh," Hemo said, using the Arabic acronym for the Islamic State group. "This is what the war in Afrin will be like," he said. With US backing, the YPG has cleared swathes of territory in northern and eastern Syria from IS and has established semi-autonomous rule in those areas. And at the weekend, the US-led coalition fighting IS said it was working to create a 30,000-strong border security force in northern Syria that would deploy along the Turkish frontier. Ankara immediately objected to such a move out of fear the new force would be comprised of the YPG, which it accuses of being a branch of the outlawed Kurdistan Workers' Party (PKK) that has waged an insurgency in Turkey since 1984. Erdogan has long threatened an operation against the YPG's enclave in Afrin but has stepped up his threats in recent days. 

      Turkey Notifies NATO Of Imminent Massive Invasion Of Syria To Fight Kurds -  Turkey is poised for an imminent massive ground invasion of Northern Syria to quash Kurdish militia groups currently holding Afrin near the Turkish border. Multiple regional outlets have reported a build-up of forces that could constitute the largest external intervening force thus far in the entirety of the Syrian war. According to Middle East based Al-Sura News, Turkey's military build-up currently underway includes special forces troops, Army units, Turkish-backed Syrian Rebels and Turkey's air force. The Kurdish YPG/J (People's Protection Units) has held Afrin since the Syrian government withdrew from the area in 2012, which constitutes the western-most part of the self-declared Rojava autonomous Kurdish zone. Turkey considers it a "terrorist" enclave as it sees Syrian Kurdish factions as an extension of the PKK, while the US has claimed not to be active in supporting Kurdish operations in Afrin, which lies a mere 40 kilometers from Aleppo where the Syrian Army continues to advance through the Aleppo countryside and into Idlib province.Over the weekend President Recep Tayyip Erdogan slammed recent US efforts to ramp up support for the Kurdish dominated Syrian Democratic Forces (SDF), saying during a speech in Ankara, “A country we call an ally is insisting on forming a terror army on our borders." He framed US support to Syrian Kurds as undermining Turkey's security, adding, “What can that terror army target but Turkey? Our mission is to strangle it before it’s even born."Meanwhile a top Turkish general told a meeting of NATO military commanders, "We cannot and will not allow support and arming of the YPG terror group under the name of an operational partner. We hope this mistake will be corrected in the shortest time."Regional outlets Al Jazeera and Al Masdar News have confirmed that the large Turkish convoy has entered northwest Syria and that sporadic fighting against Kurdish forces is already underway. Notably the air force is said to be mobilized - a significant factor as Turkish ground forces, including its proxy rebel forces making up its "Euphrates Shield Operation", have had little success in the past dislodging Kurdish fighters without air support.

      Syria Vows To Shoot Down Turkish Jets As Erdogan Orders Putin "Do Not Oppose" Assault -  According to the Associated Press, this morning Syria said it would shoot down any Turkish jets carrying out attacks inside Syria. This comes as preparations continue for an imminent large-scale Turkish attack of Kurdish militia groups currently holding Afrin near the Turkish border. Multiple regional outlets have confirmed a build-up of forces that could constitute the largest external intervening force thus far in the entirety of the Syrian war, including special forces troops, Army units, Turkish-backed Syrian rebels and Turkey's air force. In response to Turkey's President Recep Tayyip Erdoğan vowing military action to "destroy all terror nests" in Syria - a reference to the US-backed YPG (which makes up the core of the SDF) which holds vast territory along Turkey's border spanning into northeast Syria - the Syrian Deputy Foreign Minister Fayssal Mekdad told reporters Thursday that Syrian defense systems have regained full operational power and stand ready to destroy Turkish air targets in Syrian airspace should Afrin be attacked. Mekdad also stated that Damascus would consider any Turkish attack on Afrin an act of aggression. Sporadic fighting and shelling has already occurred according to reports from the region. Though Turkish shelling of Kurdish positions along the border is nothing new in the conflict, should Turkey mobilize its air force in support of ground forces this would mark a dramatic escalation, especially given that both Russia and the US operate over Northern Syria, with Russia controlling the airspace over Afrin Canton and Idlib. Whether the operation against Syrian Kurds moves forward or not into a full scale Turkish assault by land and air depends in large part on Russia, which has administered 'deconfliction' zones in the Afrin area, and has sponsored trilateral talks with Turkey and Iran which seeks cooperation among the three powers to wind down the war in Syria. Russia is also widely reported to have long had military advisors on the ground in Afrin, which have in the past helped coordinate the fight against ISIS.

      Russians asking for help after swarming drone attacks | Asia Times: Russia is seeking international assistance in its quest to determine the source of swarming drone attacks on two of its military bases in Syria. The twin strikes represent the first time swarming drones have been used by terrorists against hardened targets, and judging from the excitement on the Russian side, they are clearly worried and upset. While denying that they lost any equipment in the strikes, it is hard to explain otherwise the level of alarm in Russia’s military.The Russian General Staff held a briefing in Moscow to show off some of the  home-made drones that were used to attack Hmeimim Air Base in Latakia, Syria and the important Russian naval base in Tartus.The drones themselves are simple.  They use a small commercial gasoline two stroke engine that might be found in a weed whacker or used to power a bicycle. Structurally the drones are made out of wooden spars and styrofoam “boards” that are tied into the wooden structure with glue and plastic wrap.The drone itself is launched from some sort of simple rail platform and guided by two piece of wood on the drone with cutouts to protect the drone’s aerodynamic quality.  The drones carry either eight or ten bomblets, each stuffed with the explosive PETN (pentaerythritol tetranitrate), a very energetic explosive that has been favored by terrorists such as the shoe bomber, Richard Reid.  PETN needs to be ignited by an explosive fuse, and the bomblets all have fuses that explode on contact. The Russians have pointed to the Ukraine as a possible source of PETN for the bombs. But there are many other sources and PETN and other explosives such as RDX are widely available on the black market.

      Russian Military Pulls Out Of Syrian Kurdish Town As Turkey Initiates "Massive Cross-Border Attack" -Turkey's defense minister has confirmed the Turkish military has begun cross-border shelling of the Syrian Kurdish enclave of Afrin in what he further describes as the "de facto start" of the operation in order to destroy - in President Recep Tayyip Erdoğan's words - Kurdish "terror nests" - and which has been dubbed previously by Turkey as a 'massive cross-border attack.' Crucially, the Turkish state-run news agency Anadoul confirmed that Russian military personnel have started pulling out of Afrin ahead of Turkey's "expected" and imminent cross-border military operation. Russia has administered 'deconfliction' zones in the Afrin area while controlling airspace overhead, and has sponsored trilateral talks with Turkey and Iran which seeks cooperation among the three powers to wind down the war in Syria. The Russian military has long had "military advisors" on the ground in Afrin, which have in the past helped coordinate the fight against ISIS. As we explained previously, the question of whether or not the large-scale Turkish assault on the Syrian Kurds moves forward or not depends in large part on Russia. . As Reuters reported, "Foreign Minister Mevlut Cavusoglu also told broadcaster CNN Turk that Turkey will coordinate with Russia and Iran on an air operation in Afrin." However, according to many observers, the key element to a successful Turkish operation will be airpower as previously Turkish-backed forces making up "Euphrates Shield Operation" have had little success in the past dislodging Kurdish fighters without air support. On Thursday Syria said it will shoot down any Turkish jets carrying out attacks inside Syria.

      ‘Make Trade, Not War’ is China’s daring plan in the Middle East - China’s “Go West” strategy was brought into sharp focus at a forum in Shanghai last weekend. Billed as the Belt and Road Initiative: Towards Greater Cooperation between China and the Middle East, it highlighted key aspects of Beijing’s wider plan. The New Silk Roads, or the Belt and Road Initiative, involve six key economic corridors, connecting Asia, the Middle East, North Africa and Europe. One, in particular, extends through the Middle East to North Africa. This is where the Belt and Road meets MENA or the Middle East and North Africa. Of course, Beijing’s massive economic project goes way beyond merely exporting China’s excess production capacity. That is part of the plan, along with building selected industrial bases in MENA countries by using technical and production expertise from the world’s second-largest economy. Again, this is will connect western China to the eastern Mediterranean. It will mean developing a corridor through projects such as the Red Med railway. There are also plans to expand ports, such as Oman’s Duqm, as well as substantial investment in Turkey.   A look at the numbers tells a significant part of the story. In 2010, China-Arab trade was worth US$145 billion. By 2014, it had reached $250 billion and rising. China is now the largest exporter to assorted MENA nations, while MENA accounts for 40% of Beijing’s oil imports.  The next stage surrounding energy will be the implementation of a maze of LNG, or liquefied natural gas, pipelines, power grids, power plants and even green projects, sprouting up across the new Silk Road corridors and transit routes. According to the Asian Development Bank, the myriad of Belt and Road infrastructure projects for the next 15 years could hit a staggering $26 trillion. Other less grandiose figures come in at $8 trillion during the next two decades.

      Exclusive: Trump says Russia helping North Korea skirt sanctions; Pyongyang getting close on missile (Reuters) - U.S. President Donald Trump complained on Wednesday that Russia was helping North Korea to evade international sanctions, signaling frustration with a country he had hoped to forge friendly relations with after his 2016 election win. “Russia is not helping us at all with North Korea,” Trump said during an Oval Office interview with Reuters. “What China is helping us with, Russia is denting. In other words, Russia is making up for some of what China is doing.” China and Russia both signed onto the latest rounds of United Nations Security Council sanctions against North Korea imposed last year. There was no immediate comment from the Russian embassy in Washington on Trump’s remarks. With North Korea persisting as the major global challenge facing Trump this year, the president cast doubt on whether talks with North Korean leader Kim Jong Un would be useful. In the past he has not ruled out direct talks with Kim. “I’d sit down, but I‘m not sure that sitting down will solve the problem,” he said, noting that past negotiations with the North Koreans by his predecessors had failed to rein in North Korea’s nuclear and missile programs. He blamed his three immediate predecessors, Bill Clinton, George W. Bush and Barack Obama, for failing to resolve the crisis and, a day after his doctor gave him a perfect score on a cognitive test, suggested he had the mental acuity to solve it. “I guess they all realized they’re going to have to leave it to a president that scored the highest on tests,” he joked. He declined to comment when asked whether he had engaged in any communications at all with Kim, with whom he has exchanged public insults and threats, heightening tensions in the region. Trump said he hoped the standoff with Pyongyang could be resolved “in a peaceful way, but it’s very possible that it can’t.”

      Despite Beijing's Denials, 6 Chinese Ships Are Observed "Secretly" Breaking N.Korean Sanctions - China officials denied reality in December despite being "caught red handed" selling sanctions-defying oil to North Korea. However, the denials might be harder to justify, as WSJ reports citing satellite photographs and intelligence gathered by U.S. officials, at least six Chinese-owned or operated cargo ships violated UN sanctions against North Korea. The Wall Street Journal reports that the U.S. compiled the information from Asian waters as part of the Trump administration’s strategy to pressure North Korea into giving up its nuclear weapons and long-range missiles. The effort identified the ships by name and tracked their movements. The ships entered ports in North Korea and transported what U.S. officials said was illicit cargo to Russia and Vietnam or made ship-to-ship transfers at sea.  Additionally, U.S. evidence shows the ships made extensive maneuvers designed to disguise the violations. WSJ reports that declassified intelligence reports, photos and maps shared with the U.N. by American officials asserted multiple instances of Chinese ships violating Security Council resolutions banning North Korean coal exports and ship-to-ship transfers of refined petroleum bound for North Korea. The Journal reviewed much of that evidence. Within days after the complete U.N. ban was passed, the Glory Hope 1, a Chinese-owned vessel, entered the Yellow Sea near North Korea under a Panamanian flag. The ship crossed the Yellow Sea, entered North Korea’s Taedong River and then turned into the North Korean port of Songnim, according to the information presented to the U.N.

      Korean War allies consider further sanctions against North Korea -- As North and South Korea engage in talks, a group of 20 countries has said Kim Jong Un needs to be forced to the negotiating table. Pyongyang has said it would send a cheer squad to next month's Winter Olympics. Diplomats from 20 countries agreed to consider fresh sanctions against North Korea at a US-Canadian summit in Vancouver on Tuesday.Any new sanctions would be unilateral and go beyond United Nations sanctions passed in response to Pyongyang's recent nuclear weapons and ballistic missile tests, according to a joint statement.The US-Canadian sponsored summit was announced after Pyongyang tested its most advanced ballistic missile in November. Representatives of the countries that were involved in backing South Korea during the 1950-1953 Korean War were in attendance.During the meeting, the United States also told allies to bolster the US-led "maximum pressure" campaign against North Korea by stopping any attempts to evade existing sanctions against the pariah country. "We must increase the costs of the regime's behavior to the point that North Korea must come to the table for credible negotiations," US Secretary of State Rex Tillerson told senior diplomats in the western Canadian city. "We will not allow North Korea to drive a wedge through our resolve or solidarity."Many officials argued the international community needed to maintain its economic pressure against Pyongyang despite its recent diplomatic overture to South Korea."It is not the time to ease pressure or to reward North Korea," Japanese Foreign Minister Taro Kono said. "The fact that North Korea is engaging in dialogue could be interpreted as proof that the sanctions are working." The world, he added, should be wary of the North's efforts to talk with the South, which he described as a "charm offensive."

      North And South Korea Agree To Form Joint Team, Will March Together At Olympic Opening Ceremony -  In a decision that Yonhap called an "unprecedented breakthrough", North and South Korea have agreed to form their first joint Olympic team and will march together under a unified flag during the opening ceremony. The two Koreas agreed to form a joint women's ice hockey team to take part in the Winter Olympics to be held February 9-25 in Pyeongchang, the two countries announced Wednesday. Seoul's Unification Ministry said the agreement was during talks on Wednesday at the border village of Panmunjom, after the North agreed to make its first appearance in the Olympic games in the South. North Korea boycotted the last Olympics held in the South in 1988. The International Olympic committee is slated to meet on January 20 at its Switzerland headquarters to discuss the details of the joint team as well as the North's participation in the Games.The two Koreas have been pressing ahead with a flurry of projects to cooperate in the Olympics since North Korean leader Kim Jong-un abruptly said in a New Year's speech that he was willing to send a delegation to the games.   Critics say Kim's overture is an attempt to use improved ties with Seoul to weaken U.S.-led international sanctions on the North while buying time to perfect his nuclear weapons program. But the moves nevertheless have provided a temporary thaw in the Koreas' long-strained ties and fostered optimism that he North won't launch any new provocations, at least during the Olympics. South Korea's president previously announced his support of a proposal for the rivals' first unified Olympic team.  The North's participation in the Olympics 'will serve as a chance to warm solidly frozen South-North ties,' President Moon Jae-in said during a visit with South Korean Olympic athletes, quoted by The Daily Mail.

      China sails its aircraft carrier past Taiwan in marked increase of hostilities (Reuters) - A Chinese carrier group has sailed through the narrow Taiwan Strait that separates the self-ruled island from its giant neighbor but no unusual activity was detected, Taiwan said on Wednesday, amid heightened tension with Beijing. Beijing has taken an increasingly hostile stance toward Taiwan since the election two years ago of President Tsai Ing-wen of the pro-independence Democratic Progressive Party. China suspects Tsai wants to push for formal independence, though she has said she wants to maintain the status quo and is committed to ensuring peace. In recent months, China has stepped up military drills around Taiwan, alarming Taipei. China says the exercises are routine, but that it will not tolerate any attempt by the island to declare independence. Taiwan's Defence Ministry said a group of Chinese ships led by the Liaoning aircraft carrier entered the southwestern part of the Taiwan Strait in the early hours of Tuesday, though it stayed on the Chinese side of the waterway. 

      The Chinese Are Now Spending As Much As Americans - In the US, the latest batch of data, released this week, showed retail sales climbed in December for the sixth straight month - though they missed expectations, with growth slowing to 0.3% MoM. With the personal savings rate at a 10 year low, the US consumer is now fully tapped out: This latest uptick in spending has presumably been fueled by debt, as credit-card borrowing has reached an all-time high. But another milestone in the history of global consumerism passed last month: As the Washington Post  points out, China tied the US in 2018 in terms of domestic retail sales - according to data compiled by Mizuho.  In some important categories, China has overtaken the US: With 17.6 million vehicles sold in the US in 2016, for example, but that was far below the 24 million passenger cars sold in China. US automakers account for about one out of every five cars sold in China, even though the communist party placed a 10% tax on luxury cars and trucks imported from the United States. This economic heft has made the problem of confronting China intractable: China is now responsible for 20% of sales for some of the largest US corporations. This is making it difficult for Trump to confront Xi Jinping. Any restrictions on Chinese access  to the US market would be met with barriers to American companies selling in China. "China is one of the most important markets for many U.S. multinational companies,” Shen says. “This should lend China immense bargaining power." As the new year begins, it’s likely consumer spending in China will quickly surpass that in the US as more newly minted middle class Chinese discover consumer electronics, cars and fashion.

      China is heading toward a debt crisis that will throw into question everything we think we know about it’s economy  - China’s worrisome build-up of corporate and household debt is well-documented, but fears of a financial crisis have receded sharply from the turbulent days of 2015 and 2016, when the country’s stock market crashed on fears that an epic two-decade growth streak might come to an abrupt halt. Since then, a proactive Chinese government and stronger-than-expected global economic growth have supported China’s economy and eased fears about a sharp imminent slowdown. Still, concerns about the country’s debt levels have only deepened.  "In the short-run, growth, as defined by changes in gross domestic product (GDP), can be increased by more lending and investing," write Benn Steil and Benjamin Della Rocca of the Council of Foreign Relations in a new blogpost.  "In the longer-term, however, lending and investing can’t boost GDP if it results in bad debt that is properly written down. The big question is how much bad debt China currently has, and how much more it will be producing in the years ahead."By some estimates, they add, China’s true growth rate, after taking the bad debt into account, is barely half the reported 6.9% clip. The country's total non-financial sector debt, which includes household, corporate and government debt, will surge to nearly 300% of GDP by 2022, up from 242% in 2016. Steil and Della Rocca examine recipients of the recent wave of lending to "gauge whether China has been creating good debt—debt that will produce positive returns—or bad."They find that profits at private-sector firms rose 18% between 2011 and 2016, while profits at state-owned enterprises that are far less efficient plunged 33%. At the same time, the share of corporate liability growth accounted for by the state sector soared from 59% in 2010 to 80% by 2016, as the chart below shows, a terrible omen for productivity. "Given the evidence that President Xi Jinping has abandoned any pretense of concern with NPLs, and our evidence that China is shoveling new loans to companies with the least ability to pay them back, we think China is heading towards a debt crisis," Steil and Della Rocca warn.

      Japan warns over North Korean 'charm offensive' - BBC News: Japan has told an international meeting on North Korea that the world should not be blinded by Pyongyang's recent "charm offensive". Foreign Minister Taro Kono's comments come as the Koreas discuss Pyongyang's plans to take part in February's Winter Olympics in the South. A flurry of ideas to emerge include sending a huge cheerleader squad over the land border. Ministers attending the talks in Canada agreed to raise pressure on Pyongyang. But the 20 foreign ministers in Vancouver also expressed support for the ongoing North-South discussions. North Korea has in the past two years rapidly advanced its nuclear and conventional weapons programmes, despite increasing international sanctions. Its latest ballistic test, on 28 November, sparked a new series of fresh sanctions from the UN, which targeted petrol shipments and travel. But North Korean leader Kim Jong-un said in early January that he was "open to dialogue" with the South and proposed sending a delegation to the Games in Pyeongchang, South Korea, next month. The two Koreas subsequently held their first high-level talks in more than two years on how to make this happen. Amid enthusiasm at apparently easing tensions, ideas to emerge from the talks reportedly include:

      Days after Hawaii alert gaffe, Japan issues false alarm about a missile launch (Reuters) - Japanese public broadcaster NHK issued a false alarm on Tuesday saying North Korea appeared to have launched a missile and urging people to take shelter, but it managed to correct the error within minutes. The mistake took place at a tense time in the region following North Korea’s largest nuclear test to date in September and its claim in November that it had successfully tested a new type of intercontinental ballistic missile that could reach all of the U.S. mainland. Pyongyang regularly threatens to destroy Japan and the United States. But there were no immediate reports of panic or other disruptions following the NHK report. A similar gaffe caused panic in the U.S. state of Hawaii at the weekend.  NHK’s 6.55 p.m. (0955 GMT) alert on its web site said: “North Korea appears to have launched a missile...The government urges people to take shelter inside buildings or underground.” The same alert was sent to mobile phone users of NHK’s online news distribution service. In five minutes, the broadcaster put out another message on the website correcting itself and said no government warning, called “J-alert”, had been issued. “This happened because equipment to send a news flash onto the Internet had been incorrectly operated. We are deeply sorry,” an NHK announcer said on its 9:00 p.m. news program, bowing deeply in apology. 

      India Test Fires Nuclear-Capable ICBM, Poses Major Threat to China -- On Thursday, India successfully conducted the “first pre-induction trial” of its over 5,000-km range Agni-V intercontinental ballistic missile (ICBM), reported The Times of India. The nuclear-capable ICBM paves the way for India to join an "elite" group of countries who can strap a nuclear bomb to an ICBM and fling it across the globe. More importantly, the development has dramatically changed the calculus of war and nuclear deterrence balance of power between India and China, putting most of China’s critical assets, including the coastal cities in range.The ICBM, called Agni-V, was launched on Thursday from Abdul Kalam Island, off Odisha State in eastern India, flying for about 19-minutes with a range of 3,000 miles.The Defense Minister Nirmala Sitharaman said, “We have successfully launched nuclear-capable ballistic missile Agni-V today.”We have successfully launched nuclear capable ballistic missile Agni-V today: Defence Minister Nirmala Sitharaman in Chennai (File pic) pic.twitter.com/6KivWbmZg6— ANI (@ANI) January 18, 2018According to The Times of India’s sources, "The country’s most formidable missile will undergo one more such pre-induction trial within this year before it is inducted into the Agni-V regiment already raised by the tri-Service Strategic Forces Command (SFC) with the requisite command and control structures." With the Agni-V, India is now a member of the "nuclear club" of countries with ICBMs with a range of over  5,000km such as the U.S., Russia, China, France, and the United Kingdom. The motive behind India’s development of the long-range ICBM is to deter the threat of an aggressive and expansionist China, which already has an arsenal of ICBMs.

      Breach of World’s Largest Database Prompts Overhaul in India - India announced it was adding an extra layer of privacy to its virtual identification system following allegations of a major privacy breach in the world’s largest biometric database. The move to allow all citizens to use a virtual ID to avoid sharing their unique identity numbers when using government and other services comes after a news report said personal details of up to a billion citizens enrolled in the program could be illegally accessed for just $8 paid through a digital wallet. Its operator, the Unique Identification Authority of India said there was no breach. Still, it’s the biggest overhaul of the system -- known as Aadhaar -- since it was introduced in 2010. Citizens will be able to to generate a 16-digit virtual identity in lieu of their Aadhaar number with banks and state departments at the time of authenticating their identity, the government said in a statement. Banks and companies will be given "agency specific" unique tokens to avoid storing customers’ Aadhaar data, it said. The update marks an "important evolution" of the Aadhaar system, but comes too late to mitigate the risk of the misuse of any information that’s already been publicly disclosed, said Saksham Khosla, a research analyst at Carnegie India. At the same time, "the process of generating a virtual ID introduces more transaction costs into an authentication system already beset by exclusion," Khosla said. "The Indian state’s record of last-mile communication, especially of tasks requiring a fair amount of digital literacy, is not encouraging."

      Seven Manual Scavengers Died in Seven Days. Why Is There Still Silence? - What a beginning to this new year – seven manual scavengers have died in the first seven days of 2018. On January 1, five workers in Mumbai were fixing a sewer line which ran 10 metres below ground level. While being lifted back by a crane, the cable broke, which is not surprising at all, and three of them died on the spot. One worker died the next day and the only surviving worker broke his legs and underwent surgery. In another case, three manual scavengers died on January 7 in Bangalore while cleaning a choked manhole at a residential apartment.D.V. Samuel of the Safai Karmachari Andolan pointed out that the government does not even consider the sanitation workers cleaning septic tanks and sewer lines as manual scavengers. An alarming number of sanitation workers regularly die due to toxic gases from the human waste that they manually clean by going inside septic tanks and sewer lines. If we refuse to even acknowledge manual scavenging, how are we ever going to stop it?There is another blind spot in these cases of sewer deaths – the victims’ caste. Most media reports on the deaths in sewer lines and septic tanks do not mention the caste of the workers. However, it is no secret that most of the sanitation workers in our country are from those castes that are regarded as ‘untouchable’ by Hinduism. While our constitution prohibits forcing Dalits to do any demeaning work, many of them still continue to be engaged in sanitation work and manual scavenging. The practice of manual scavenging is banned under the Prohibition of Employment as Manual Scavengers and Their Rehabilitation Act of 2013. But in cases when the worker involved is a Dalit, the practice of manual scavenging also violates the Scheduled Caste and Scheduled Tribe (Prevention of Atrocities) Act of 1989 with its amendments of 2015.

      Venezuela government, opposition conclude talks without agreement (Reuters) - Members of Venezuela’s leftist government and opposition leaders concluded a round of talks in the Dominican Republic on Saturday, failing to reach a deal to address the country’s political and economic crisis. Saying they had made strides but needed more time, the parties announced another round of talks to begin in the Dominican Republic on Jan. 18. The result prolongs the standoff between the government and the opposition, who have tried and failed for years to strike a pact. The two sides last met for talks in December. Nevertheless, Dominican President Danilo Medina, who led the negotiations, expressed optimism about the progress made during the round. “Although we have made extremely important advances, we still have pending matters that must be discussed,” he said at a press conference following the end of the talks. FILE PHOTO: Former Spanish Prime Minister Jose Luis Rodriguez Zapatero, Dominican Republic's President Danilo Medina and Chancellor Miguel Vargas attend Venezuelan government and opposition meeting in Santo Domingo, Dominican Republic December 2, 2017. REUTERS/Ricardo Rojas Representatives from Bolivia, Chile, Mexico and Nicaragua also participated in the discussions. The parties did not detail where they had made progress. As millions of Venezuelans grapple with shortages of food and basic goods, the opposition leaders are demanding that Venezuelan President Nicolas Maduro accept humanitarian assistance from abroad, in addition to releasing several hundred jailed political activists.

      Recent Wave of Looting Shows Extent of Hunger in Venezuela -- The economic crisis and the food shortage in Venezuela is so serious that looting has become commonplace throughout the country. In January alone, nearly 400 small protests and more than 100 instances of looting have taken place across 19 states, according to the Venezuelan Conflict Observatory.On Saturday, January 13, Venezuelans began looting for food in the states of Guárico and Zulia.In Maracaibo — the capital of Zulia — residents looted a supermarket after waiting hours in line to buy corn flour. Violence broke out when they were informed that only members of pro-government community councils could make purchases.“People were upset,” Ana, a mother of two, said. “There were people waiting yesterday. They started to open the doors (of the supermarket), to get in and grab packets of flour, but the police arrived.”A similar situation occurred in the town of Calabozo. According to the opposition party Vente Venezuela, it has become “totally paralyzed following mass looting.” According to opposition Deputy Carlos Prosperi, a government supply network known as Mercal and “several shops on tenth and eleventh avenue” were looted.The Bolivarian National Guard has been tasked with keeping the area in order with gunshots and tear gas, but the situation seems irrepressible.

      Global Economy to Edge Up to 3.1 percent in 2018 but Future Potential Growth a Concern — World Bank - The World Bank forecasts global economic growth to edge up to 3.1 percent in 2018 after a much stronger-than-expected 2017, as the recovery in investment, manufacturing, and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices. However, this is largely seen as a short-term upswing. Over the longer term, slowing potential growth—a measure of how fast an economy can expand when labor and capital are fully employed—puts at risk gains in improving living standards and reducing poverty around the world, the World Bank warns in its January 2018 Global Economic Prospects. Growth in advanced economies is expected to moderate slightly to 2.2 percent in 2018, as central banks gradually remove their post-crisis accommodation and as an upturn in investment levels off. Growth in emerging market and developing economies as a whole is projected to strengthen to 4.5 percent in 2018, as activity in commodity exporters continues to recover.   “The broad-based recovery in global growth is encouraging, but this is no time for complacency,” World Bank Group President Jim Yong Kim said. “This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity.”2018 is on track to be the first year since the financial crisis that the global economy will be operating at or near full capacity. With slack in the economy expected to dissipate, policymakers will need to look beyond monetary and fiscal policy tools to stimulate short-term growth and consider initiatives more likely to boost long-term potential. The slowdown in potential growth is the result of years of softening productivity growth, weak investment, and the aging of the global labor force. The deceleration is widespread, affecting economies that account for more than 65 percent of global GDP. Without efforts to revitalize potential growth, the decline may extend into the next decade, and could slow average global growth by a quarter percentage point and average growth in emerging market and developing economies by half a percentage point over that period.

      2017Q3: Europe Beats Expectations For Q3 - (8 graphs) Third quarter GDP numbers for Europe have been finally been released and they indicate that the EU is performing better than expected. EU GDP grew at an annualized rate of 2.42% during the third quarter, slightly down from the 2.83% growth experienced last quarter. Compared to 2016Q3, however, EU GDP rose by 2.6%, 0.1 percentage points higher than predicted. Moreover, this quarter marks the highest growth numbers for the European Union since 2007. This compares favorably to the United States, whose GDP grew at an annualized rate of 3.2% in the third quarter. Indeed, 15 of the 28 member nations performed stronger than the EU as a whole. Ireland, Romania, Malta, and Luxembourg posted the highest annualized growth at 17.8%, 11%, 7.7%, and 6.8%, respectively although for reasons cited in earlier posts Ireland’s numbers are an anomaly.. Denmark is the only country in the EU whose economy contracted. EU investment in fixed capital also saw substantial growth. Year-on-year fixed capital investment growth increased from 3.3% to 4.3% during 2017Q3. In contrast, year-on-year fixed capital investment growth in the United States was only 3.8%. Annualized quarterly fixed capital investment growth, however, decreased from 8.24% in 2017Q2 to only 4.47% in 2017Q3. The worst performing countries in this regard were Ireland, Luxembourg, Estonia, and Greece, who decreased investment by 83%, 44%, 27%, and 22%, respectively. This stark decline in investment is likely to inhibit future growth potential in these countries compared to the rest of the EU. Malta, Hungary, and Sweden on the other hand boasted investment growth of over 50%, 18%, and 16%. These countries have been truncated in the above graph to facilitate comparison among the remaining countries.  Among the unadjusted countries displayed above, Italy, the Netherlands, and Finland increased investments the most with growth rates of 12.6%, 10.1%, and 9.43%, respectively. This is particularly good news for future Italian growth potential as its GDP remains below pre-crisis levels and its recovery has been one of the most sluggish in Europe. European households also continued spending more during 2017Q3. The EU as a whole saw annualized real household consumption growth of 2.0%. The highest consumption growth was seen in Romania and Portugal, where household expenditures increased at an annualized rate of 15.2% and 5.6%, respectively. Lithuanian households on the other hand decreased expenditures at an annualized rate of 7.5%.

      Switzerland's Central Bank Makes Record Profit -- More evidence of a "synchronized global economy." From The WSJ: Switzerland's central bank -- think, US Federal Reserve -- made $55 billion last  year (2017) -- more than Apple, and way way more than the US central bank. The Swiss bank expects record profit on higher global equity and bond prices and a weaker Swiss franc. Some data points regarding the Swiss bank:

      • $800 billion portfolio in foreign stocks and bonds
      • expects to report a record annual profit of $55 billion for 2017
      • $55 billion = 8% of the country's GDP
      • by comparison, if the Federal Reserve were to run a profit of similar scale relative to the U.S. economy, it would be about $1.5 trillion
      • the US Federal Reserve has earned an annual profit of around $100 billion in recent years
      • the profit is more than Apple Inc earns in a year
      • more than JPMorgan and Berkshire Hathaway Inc combined
      • the Swiss bank's largest holding: Apple; owns almost 20 million shares of Apple
      • but it has a problem: what to do with $750 billion

      Varoufakis Reveals Outburst Against “Stupid” Tsipras - Greek Reporter - Former Greek Finance Minister Yanis Varoufakis has revealed he accused Prime Minister Alexis Tsipras of being “totally stupid” in accepting a demand by Greece’s creditors for big primary surpluses.During an interview with Greece’s Parapolitika radio, Varoufakis said when he learned that Tsipras in 2015 accepted, without consulting him, a primary surplus target of 3.5 percent he confronted the premier:“I told him: ‘Are you totally stupid? What have they given you in return?’ And he replied: ‘Oh, maybe I was stupid. I will retract from the promise’.”Varoufakis said he actually used a stronger word than “stupid”.In the same interview, the former finance minister repeated claims that Tsipras did not really want to win in the infamous July 2015 referendum on the bailout.Varoufakis said he remembered that everyone at the prime minister’s office that evening was sad.“I do not know when exactly Tsipras decided to capitulate,” he added.Referring to his successor, Euclid Tsakalotos, he said: “I can no longer recognize him.”“Euclid became a yes man on July 6 [2015]… Τhe case of Euclid hurts, because I was an eyewitness of his total transformation,” he added.

       The week that Brexit plumbed new depths of absurdity - Any expectation that the New Year would concentrate Brexiters’ minds on the pragmatic realities of Brexit has been abundantly dashed this week, with a string of absurdities. Yet, absurdities though they be, each of them is revealing of some of the deep and recurring flaws within Brexit.So, first, came the news that David Davis had consulted lawyers as to possible legal action against the EU for producing documents outlining the consequences of Britain becoming a third country to the EU after Brexit (see, for example, this one on the consequences for road transport). The legal advice, predictably, was that there was no basis for such an action but even to entertain the idea is extraordinary (and to which court would the case be taken? The despised ECJ presumably). For it is an ineluctable consequence of Brexit that, in March 2019, Britain will become a third country, and a real possibility – actually welcomed by some Brexiters – is that there will be no deal. It was even rumoured this week, although nothing came of it, that Britain would create a Minister charged with planning for a no deal scenario. Thus it is bizarre that Davis would think it illegitimate for the EU to plan for this. Equally bizarre was his claim that the EU was not giving sufficient credence to a transition (or, in Brexit-speak, implementation) period since – apart from the fact that this is by no means assured – the EU documents in question did, precisely, identify this as a possibility that could mitigate or defer the full consequences of being a third country. This piece of nonsense was elegantly taken apart by Jonathan Lis in the latest of his string of excellent, excoriating articles on the government’s approach to Brexit. But in addition to the points he makes I think this episode is a fresh illustration of something I have written about before on this blog (in fact, it is by a long way the most read post), namely that Brexiters constantly talk as if Britain is being expelled from the EU rather than choosing to leave. So the consequences are treated as if they are a punishment for, rather than being entailed by, that choice.

       Commission debates extending Brexit transition - The European Commission has not ruled out extending a Brexit transition period beyond 2020, the deadline set by chief negotiator Michel Barnier in December.Ambassadors from a number of EU countries raised the possibility of a longer transition at a meeting in Brussels on Wednesday, according to four diplomats.“The Commission didn’t rule out that it could be prolonged,” said a senior diplomat who was in the room.British Prime Minister Theresa May called for a two-year transition period in a speech in Florence in September in which she also said the U.K. would continue to make annual payments into EU budget during this time.Barnier said last month it would be logical for the transition to end on December 31, 2020 because that was the last day of the EU’s current seven-year budget.The U.K. government wants to secure agreement on a transition by March 2018 in order to provide business with clarity about what happens when Britain is due to leave the EU in March 2019.But awkward questions remain: What happens if a final deal on trade and the U.K.’s future relationship with the EU is not completed by the end of a transition period? Won’t the likely transition terms just create another cliff edge for businesses and regulators a bit further down the line?At Wednesday’s meeting, some member countries asked whether the possibility of an extension should be included in the text of the guidelines, but the Commission said this would send the wrong message, another diplomat said.A third senior diplomat confirmed the account, adding that the Commission pointed out an extension could be complicated because it would overlap with the new European budget which starts in 2021.However long the transition, the EU27 are united in the view that the U.K. must continue to abide by EU law and contribute to the budget during this period.“If there’s an extension that overlaps with new budget, London will have to pay,” one of the diplomats explained. The Commission also refused to set a deadline for the implementation of what was agreed in the first part of Brexit talks on the financial settlement, citizens’ rights and Ireland, several diplomats said.

      ECB official warns of abrupt Brexit ‘shock’ - An influential eurozone central bank official has warned that an abrupt British departure from the EU would be a “genuine shock” threatening the stability of Europe’s financial system.  Philip Lane, governor of the Central Bank of Ireland and a member of the European Central Bank’s governing council, said the Brexit negotiations were the issue that merited his closest attention this year — and emphasised London’s importance in providing financing to the rest of the bloc. “The City of London is the wholesale headquarters of the EU,” Mr Lane told the Financial Times. “If there is a genuine shock and we have a Brexit without a transition period, then that is a financial stability risk.”  The UK struck a divorce deal with the bloc last month, but negotiations are set to become more complicated this year, with Britain seeking to agree the terms of a standstill transition of “about two years” by the end of March, and a longer-term accord on future ties by the autumn.  All three elements would form part of a package that would need to be ratified by the time Britain leaves the bloc by March 29 2019 to avoid a “cliff-edge” Brexit in which the UK exits without a transition deal.

      Labour OUTRAGE as member signals party WILL push for second Brexit referendum - A MEMBER of the Labour leadership signalled today that the party will push for a second referendum to keep Britain in the EU.Seb Dance, the deputy leader of Labour’s European Parliament group, has insisted that voters should have a chance to reverse the historic referendum after the negotiations are complete. His comments came after both party leader Jeremy Corbyn and shadow foreign secretary Emily Thornberry failed to rule out another referendum. However, Labour in Westminster have already tried to vote down the EU Withdrawal Bill and in the European Parliament supported a motion to prevent the talks going on to trade in a sign that they could be gearing up to make the case for Remain. In revealing comments in an article for the LabourList website, Mr Dance, who is one of the MEPs for London, said: “It is the inescapable nature of what is to come that has led many of us in the Labour movement to call for the British people to have the final say at the end of this process. “Allowing the public to cast judgement on the outcome of the negotiations is not an affront to democracy.

      Juncker says would like Britain to rejoin EU after Brexit (Reuters) - EU chief executive Jean-Claude Juncker renewed an offer to Britain on Wednesday to stay in the European Union and said he hoped that even if it goes through with Brexit it would apply to rejoin the bloc. Speaking to the European Parliament, where he had endorsed a statement on Tuesday by European Council President Donald Tusk that Britain would be welcome to remain Juncker said he accepted a share of responsibility for the British referendum vote in 2016 to leave the Union. “I still feel the exit of Britain is a catastrophe, yes, a defeat we all have to take responsibility for,” he said, responding to a written question from a German lawmaker who had asked if Juncker felt responsible for Brexit. “But the reasons for the British exit lie deeper. As Prime Minister (Theresa) May has said, the British never felt at ease in the EU and for 40 years they haven’t been given the chance to feel more at ease. That is why the blame is on many.” ”Mr. Tusk and I once again reached out to the British government yesterday and said that if the British people, the British parliament, the British government, wish for another way than Brexit, we would be prepared to discuss it. We are not throwing out the British, we want them to stay. And if they want to, they should be able to. “But I noticed that in London, they have reacted almost upset at this reaction. Be it as it may, once the British have left under Article 50 there is still Article 49 which allows a return to membership and I would like that. I would like us now to treat each other with respect and not abandon each other.” There has been a surge in debate this month in Britain on whether there should be a second vote to endorse the terms on which Britain leaves. However, May’s spokesman said on Tuesday that there was no question of not following through in March next year on the referendum vote of June 2016 to leave the EU. Constitutional lawyers are divided on whether Britain can withdraw its two-year notice to quit but the exchanges underline a view in Brussels that an EU political consensus could be found to avert Brexit -- even if most are now resigned to Britain leaving and believe the Union will weather the disruption.

      In Brexit Tug-of-War, EU Aims at City of London’s Tax-Haven Empire - The European Commission last year published its first ever tax-haven black list. On it was an eclectic mix of 17 far-flung jurisdictions including Panama, South Korea, the United Arab Emirates, Macao, Bahrain, Barbados, Namibia and Trinidad and Tobago, though eight of them, including Panama, have already been removed. Conspicuously absent from the list were EU countries accused of facilitating tax avoidance, such as Luxembourg, Ireland, and the Netherlands. Also not included were British Overseas Territories or Crown Dependencies, despite being named in earlier EU lists and some being implicated in the Paradise Papers scandal. But that could be about to change. According to a new report by The Independent, the screening process is set to restart in “early spring” for British territories including Anguilla, the British Virgin Islands and the Turks and Caicos Islands:Other British territories – Bermuda, the Cayman Islands, Guernsey, the Isle of Man and Jersey – promised to try and address EU concerns to stay off the list, which will now be reviewed annually.The Independent has been informed that as things stand it looks like Bermuda will be given a clean bill of health by the EU, but that outstanding questions remain for the Turks and Caicos Islands and Anguilla. According to one recent study by Berkeley academic Gabriel Zucman, there is £1.4tn of “off shore wealth” located in the UK, Isle of Man, Jersey, Guernsey, Bermuda and Cayman Islands alone. The City of London is not just a place where the infinite threads of global finance meet, it is also the center of a vast, secretive web of tax havens cast across the globe. The “City of London Corporation” itself has functioned for centuries as an offshore island inside Britain, even inside London, a tax haven in its own right. Each of the sprawling financial web’s sections – the individual havens in the Caribbean and elsewhere (all of them Crown dependencies) – trap passing money and business from nearby jurisdictions and feed them up to the City of London. This is arguably the central plank of its post-colonial business model. But now that could be at risk. The timing of the EU’s threat to blacklist British tax havens is politically convenient, coming less than two months before crucial Brexit trade talks are scheduled to begin. According to spokespeople at the European Commission, decisions on which jurisdictions to blacklist are taken according to a strict and public criteria and are not subject to any political pressure or consideration in Brexit negotiations. But as The Independent points out, some officials privately acknowledge that the dynamic is shifting, with the EU seemingly willing to use the process as leverage and vowing to pursue the territories for revenue post-withdrawal.

      No Brexit deal on financial services if UK diverges from EU, says Merkel ally - The U.K. must understand that Brexit is not “the center of the world” for Germany and it should not expect “equal treatment” on financial services once it leaves unless it adheres to EU standards, according to a senior German MEP who is a close confidant of German Chancellor Angela Merkel. Elmar Brok, the longest-serving MEP and a member of the European Parliament’s Brexit Steering Group — which formulates the legislature’s position on the topic — said that Brexit is barely on the political radar in Germany and that the U.K. should not expect any favors that would threaten the integrity of the EU single market. “Brexit is not part of the coalition talks. Business people [in Germany] tell us ‘please, no cherry-picking,'” he told POLITICO in an interview on the margins of the Parliament’s plenary session in Strasbourg. “[Brexit] didn’t play a role in the [German] election campaign,” he added.But he said this appeared to be hard for politicians in the U.K. to understand. “The Brits are so concerned about it, they don’t understand that it’s not an issue for us,” he said. “They believe that Brexit is the center of the world, but it’s not.”On the Brexit negotiations themselves, he said the British government has unrealistic expectations — particularly on access to the EU market for financial services. U.K. Brexit Secretary David Davis has said the British government is seeking a free-trade agreement like the one the EU has with Canada but with much broader scope — “Canada plus plus plus” as he put it. And Chancellor Philip Hammond said last week he regards a post-Brexit deal that excludes services as unfair. “More than 80 percent of our economy is services. Services is the fastest growing area of global trade. And it is the area where we have our biggest comparative advantage,” he told the German paper Welt am Sonntag. Brok said that negotiations about the U.K.’s future relationship with the EU were so complex they would have to carry on into a transition period. But Brok said there aren’t any trade deals around the world open to financial services, and that the U.K would have to maintain EU standards if it wants to retain something close to the current access it enjoys.

      Britain could be back in the EU within a generation, hints Theresa May’s de facto deputy David Lidington -- Britain could rejoin a reformed European Union within a generation, Theresa May’s de facto deputy prime minister has suggested, as he said it would be “something for future parliaments to consider”.David Lidington, the Cabinet Office Minister who replaced Damian Green at Mrs May’s side in this month’s reshuffle, said it was impossible to predict what the EU will look like in “10 or 20 years’ time”.  In his first interview since taking on the new role, Mr Lidington, who campaigned for Remain during the EU Referendum, also told The Telegraph he had not changed his views on Brexit but as a democrat it was his job to implement the will of the people.  The former Europe minister, who is now arguably the country’s most powerful politician after Mrs May, chairs several key Cabinet sub-committees on Brexit after taking over Mr Green’s responsibilities.

      The company that runs Britain is near to collapse. Watch and worry - You may never have heard of Carillion. There’s no reason you should have. Its lack of glamour is neatly summed up by the name it sported in the 90s: Tarmac. But since then it has grown and grown to become the UK’s second-largest building firm – and one of the biggest contractors to the British government. Name an infrastructure pie in the UK and the chances are Carillion has its fingers in it: the HS2 rail link, broadband rollout, the Royal Liverpool University Hospital, the Library of Birmingham. It maintains army barracks, builds PFI schools, lays down roads in Aberdeen. The lot. There’s just one snag. For over a year now, Carillion has been in meltdown. Its shares have dropped 90%, it’s issued profit warnings, and it’s on to its third chief executive within six months. And this week, the government moved into emergency mode. A group of ministers held a crisis meeting on Thursday to discuss the firm. Around the table, reports the FT, were business secretary Greg Clark, as well as ministers from the Cabinet Office, health, transport, justice, education and local government. Even the Foreign Office sent a representative. That roll call says all you need to know about the public significance of what happens next at Carillion. This is a firm that employs just under 20,000 workers in Britain – and the same again abroad. It has a huge chain of suppliers – and its habit of going in for joint ventures with other construction businesses means that a collapse at Carillion would send shockwaves through the industry and through the government’s public works programme. To see what this means, take the HS2 rail link, where Carillion this summer was part of a consortium that won a £1.4bn contract to knock tunnels through the Chilterns. If Carillion goes under, what happens to the largest infrastructure project in Europe? What happens to its partners on the deal, British firm Kier, and France’s Eiffage? The project will need to be put back and the taxpayer will almost certainly have to step in. Imagine that same catastrophe befalling dozens of other projects across the UK and you get a sense of what’s at stake. Jobs will be cut, schools will go unbuilt (just a couple of months ago, Oxfordshire county council pulled the plug on a 10-year schools project) – and the government’s entire private finance initiative (PFI) model for building this country’s essential services will be shaken to the core. The dirty secret of PFI and all government attempts to pass public services into the private realm is that the shareholders make profits while the taxpayers remain on the hook for any losses.

       UK Construction Giant With 43,000 Employees Collapses - Tense last-minute rescue negotiations failed to yield a result over the weekend, and on Monday morning a major British construction company announced it was going into liquidation after it was unsuccessful in securing a financial lifeline. Carillion, which employs 43,000 people around the world, said in a statement Monday that rescue talks with stakeholders including the British government had collapsed, sending the company into compulsory liquidation. Commenting on the collapse, Carillion Chairman Philip Green said in a statement that "This is a very sad day for Carillion…Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future." In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision. We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers. Carillion, which has numerous public sector and employs 19,500 workers in Britain and 10,000 in Canada, has its roots in the construction business: roughly three-quarters of its sales come from the U.K., where it has hundreds of contracts with the government. It also builds infrastructure for high speed rail and power distribution projects, and provides government services such as road maintenance and hospital management. The company had no choice but to liquidate after holding meetings with government figures over the weekend after its bankers refused to provide £300m in new funding without direct intervention from Whitehall. That said, the government will be providing funding required by the liquidator — known as the official receiver — to maintain the public services carried on by Carillion staff, subcontractors and suppliers. .

      Carillion Collapse Will Leave Taxpayers With Big Bills, Produce Knock-On Failures; Shows Danger of “Public/Private Partnerships” --  Yves Smith -  The failure of the UK infrastructure firm Carillion demonstrates that “public/private partnership” means private gains and socialized losses. Carillion is being put into liquidation, with “very little of value left within the business,” despite it having had over 43,000 employees, with over 20,000 in the UK, as well as hundreds of subcontractors. Due to the sprawl of Carillion’s activities, information about the implications of its collapse will come out over the coming days and weeks. However, some things are evident now. We’ll provide a starter list: Many contractors to Carillion will go bust. As the Guardian explained: Experts also said up to 30,000 small firms were owed money by Carillion, which crashed into liquidation on Monday morning, with insolvency practitioners reporting an immediate rush of calls from worried business owners. Clive flagged an article from the Building Services Engineering Association yesterday: The liquidation of construction giant Carillion could lead to potentially catastrophic losses for thousands of SMEs, according to the Building Engineering Services Association (BESA) and the electrotechnical and engineering services trade body ECA. According to its latest set of accounts, Carillion was holding over £800m in retentions payments owed to sub-contractors. There is growing alarm that much of this money will be lost leaving many more firms at risk of financial collapse. As Clive explained: Likely to never be repaid to their suppliers. Retentions are basically extortion — you (the supplier or subcontractor) agree to letting us withhold payment, we agree to cutting you in on new work. Maybe. If you don’t rock the boat on other things (like turning a blind eye to site safety, engaging on-demand in phoney bidding scams and cover pricing, petty embezzlement by our managers…) Due to the importance of many of Carillion’s roles, government will step in to take up many of the projects and bear the costs.  That translates into tax increases, higher user charges, and/or service cuts. As the Financial Times noted: The collapse will have implications throughout the UK, where Carillion is the biggest manager of military bases for the Ministry of Defence as well as providing facilities management for hospitals, courts and schools, and work on key infrastructure projects.

      Carillion Must Now Also Face Justice for Blacklisting Trade Unionists - naked capitalism - Yves here. It should not come as a surprise to find that Carillion, a bad financial actor, also abused safety rules, and its legal structure insulated it from the consequences. However, this post triggered another line of thought. First, the headline is misguided, because as with the TBTF banks in the crisis, holding companies accountable is pointless. They pay “cost of doing business” penalties and carry on with the same bad conduct, perhaps more carefully if they got big enough fines or bad enough headlines. Individuals need to be punished, most of all the executives responsible, with hefty fines, clawbacks, loss of deferred pay, and when appropriate (which is vastly more often than it happens) jail time. But there is a second concern with the idea of holding Carillion, or more accurately, its executives, managers, and key enablers accountable. With the liquidation of the firm, what happens to the enormous volume of records, particularly those kept on computers? Typically in a liquidation, all the equipment is auctioned off. Is there any legal or regulatory process underway to make sure this data won’t be lost? Otherwise, the odds that key perps will get off easy rises considerably.

      The Carillion whitewash -  The Carillion whitewash has begun. Carillion's interim CEO, Keith Cochrane, is spinning the line that had banks not pulled funding, its collapse could have been averted. And the Financial Times has released details of a letter Carillion sent to the Government at the beginning of January, in which it asked for short-term advances to tide it over while it underwent restructuring. Labour MP Pat McFadden has written to the Treasury Secretary asking whether it would have been more cost-effective for the U.K. Government to support Carillion, rather than allowing it to collapse.   This looks to me like a campaign to deflect blame from Carillion's management to its lenders and customers. We are being led to believe that it wasn't insolvent, it was just illiquid, and depriving it of short-term funds caused a completely unnecessary collapse.   Deliciously, the bank Cochrane principally accuses of precipitating Carillion's collapse by depriving it of funds is RBS, which was rescued at taxpayer expense in the 2008 financial crisis. Something tells me Cochrane's fingering of RBS is no accident. For a bailed-out bank to refuse to provide a major Government contractor with short-term funds looks at best ungrateful and at worst insulting. Of course, RBS is itself a past master at playing the "we're not insolvent, we are just illiquid" game. On the day that RBS failed, in September 2008, RBS's CEO, Fred Goodwin, insisted that the bank was solvent. "We don't have a capital problem," he said. "We have a liquidity problem. All we need is short-term cash".* But in fact, RBS was deeply insolvent. Rescuing it cost the U.K. Government £45bn, and RBS has lost a further £58bn since. Nearly ten years after the crisis, it is still in majority public ownership.  The similarity to RBS's collapse is striking. Less than a week after Carillion's failure, we now know that it is deeply insolvent. A couple of days after it filed for compulsory liquidation, Carillion’s unsecured bonds were trading at only 2.4% of par:

      Medical records of thousands of patients were handed to US firms connected to tobacco industry by British health officials, Telegraph probe reveals -- The medical records of British cancer victims have been handed to a controversial American firm working for one of the world’s biggest tobacco companies, the Daily Telegraph can reveal.The data covering almost 180,000 patients - every case of lung cancer diagnosed in England over a four year period - was given by health officials to a firm which has acted to cigarette giants Philip Morris International for almost three decades.It is feared the company could use the anonymised data in legal cases minimising the dangers of smoking, or fighting regulation.The sensitive information, taken from NHS records, was taken without the consent of any of the cancer sufferers or their families. An investigation by the Daily Telegraph reveals that Public Health England (PHE) gave the anonymised data, covering 179,040 lung tumours diagnosed between 2009 and 2013, to a commercial firm..