week ending Feb 4

Will this Finally Be the Year the Fed Cuts its Balance Sheet? - Now that the Fed has slightly upped its Fed Funds rate target twice, there is talk of a much more ominous issue: shrinking the balance sheet. Late last year, St. Louis Fed president James Bullard affirmed that 2017 “possibly might be a good time to play that card.”What that would entail, of course, is reversing the years of a ballooning balance sheet by selling the securities that it previously attained. In selling assets, the Fed sops up bank reserves and they can no longer be used in the economy. The entire economy — as well as the so-called recovery — since the Fed began it’s unprecedented asset purchase has been a giant mirage. It rests on the band-aid of financial moves from the Fed that papers over the reality of the situation. If the band-aid is ripped off, the underlying reality is exposed. There is some worry that “the market” will respond poorly. Indeed! Why? Because the whole reason that “the market” has achieved new heights over the years is because it knew the Fed was there to backstop losses and buy assets! Reversing this trend doesn’t create a new crisis, it allows — finally — the healthy correction to complete itself. It is for this reason that the Fed and the Official Economists want to delay this as long as possible. Hence, in his most recent post, Ben Bernanke urges extreme “patience” [sic for “I hope we never have to do this”] in addressing the size of the balance sheet. With all the talk in Fed circles of “avoiding [market] disruptions” in the fake quest to shrink the balance sheet it appears to be a brewing financial theme without much substance. Just as the Fed undertook a 7 year narrative of raising the Fed Funds rate, it may take the entire Trump era to “talk about” shrinking the balance sheet.

Why Unwinding The Fed's Balance Sheet Could Get Messy -- With former Fed chair Ben Bernanke becoming the latest academic to opine on the potential unwind of the Fed's balance sheet last week (naturally, he was against it realizing the potentially dire implications such a move could have on asset prices), here is the same topic as viewed from the perspective of an actual trader, in this case FX strategist (who writes for Bloomberg) Vincent Cignarella, and who believes that "unwinding the Fed's balance sheet could get messy." Cignarella explains why the Fed better beware what it wishes for in his analysis below.The Federal Reserve should watch what it says about its $4.5t balance sheet. With so much uncertainty in the market about how it will be reduced, a few mistimed words could roil markets faster than you can mouth “taper tantrum.”The topic is hot. The Fed’s Bullard and Rosengren have recently said the central bank could use the balance sheet to help tighten policy and other bank presidents have also talked about tapering.  Ex-Chairman Bernanke just blogged about it, arguing there’s no need to rush.Hopefully they’re trying to avoid the past. Bernanke surprised the markets in mid-2013 when he said the Fed might cut back on monthly bond and mortgage-backed securities purchases by $10b. The result, traders panicked and pushed the 10-year yield to nearly 3% from below 2% in four months, sparking a crisis in emerging markets.If they mess it up this time, it could be worse. The Fed may announce a taper while they are increasing rates and in a bearish bond market, which could exacerbate any move because there are fewer buyers to absorb supply. Tapering a balance sheet of this size has never been done.The Fed will also be tightening for the first time in more than a decade -- raising the Fed Funds rate without draining reserves is repricing the curve, it isn’t tightening. Increasing rates changes the price of money in circulation, tapering reduces it.

Alarm Over the Fed's $4.45 Trillion Balance Sheet Is Silly - Tim Duy -- The Federal Reserve is laying the groundwork for shrinking its $4.45 trillion balance sheet. But don’t panic yet, bond traders. This isn’t 2013. A parade of speakers --- Fed Chair Janet Yellen, Governor Lael Brainard, and San Francisco Fed President John Williams -- is clearly priming the market for a future statement that says “the FOMC decided to reduce the reinvestment of principal payments” from its balance sheet holdings. Why now? Does 50 basis points of interest-rate increases mean the central bank is “well under way” toward rate normalization and can now justify holding the proceeds from bonds that mature rather than funneling the cash back into the economy by way of further bond purchases?  By itself, 50 basis points doesn’t push very deep into normal territory. But the Fed is looking forward to another 75 basis points of tightening this year, for a total of 125 basis points, or 1.25 percentage points. Still not much of an increase -- except that the definition of “normal” changed dramatically over the past year. The median estimate of the neutral federal funds rate has fallen in recent months from 3.8 percent in June 2015 to 3.1 percent now. It was 4.25 percent back in January 2012. The drop in the expected terminal point for policy changes the definition of normal, which then changes the timing of balance sheet normalization. Yellen estimates that the impact on financial conditions of ending reinvestment of principle payments during 2017 would be a 15 basis-point increase in 10-year Treasury yields, equivalent to two 25 basis-point increased in the target fed funds rate. But those who remember the infamous “Taper Tantrum” of 2013 may disagree and fear a much larger response from bond traders. Recall that yields jumped 100 basis points in the months after then Fed Chairman Ben Bernanke’shinted at ending quantitative easing. I wouldn't expect a repeat.

 Fed to stop mortgage reinvestments in 2018: Morgan Stanley | Reuters: The U.S. Federal Reserve will stop reinvestments of its mortgage-backed securities holdings in April 2018 in an attempt to shrink its $4.2 trillion balance sheet that had ballooned from bond purchases to combat the last recession, Morgan Stanley analysts said on Friday. Speculation about the timing and framework on the U.S. central bank's plan to pare its holdings of MBS and U.S. Treasury securities was rekindled after the Fed's policy meeting on Dec. 13-14 at which they raised interest rates by a quarter point. In the statement issued after that meeting, the Federal Open Market Committee, the Fed's policy-setting group, said it will continue to reinvest principal payments from its MBS and Treasuries "until normalization of the level of the federal funds rate is well under way." Morgan Stanley analysts arrived at their call on the timing of the Fed ending its MBS reinvestments based on the Fed's projected 3 percent longer-run equilibrium interest rate, together with their own forecast of two rate hikes in 2017 and three in 2018. "  Applying this informal guidance to our expectation for the rates path leads us to believe the Fed will halt its reinvestments of MBS in April 2018," they said. The Fed has maintained the size of its bond holdings at the current level through principal reinvestments since 2014 after its third round of large-scale bond purchases or quantitative easing ended. "We believe the FOMC will halt its reinvestments of MBS in April 2018, preceded by a ramp-up in messaging and announcement in the March 2018 FOMC statement," Morgan Stanley analysts wrote in a research note on Friday.

Fed Watch: FOMC Preview -  The Fed will take a pass at this week’s FOMC meeting. The median policy participant forecasts just three 25bp rate hikes this year and incoming data offers no surprises to force one of those this month. March, however, remains in play. The three forecasted rate hikes is not a promise. It could be one hike or could be four or more. The actual outcome will depend on the path of actual economic outcomes and what those outcomes imply for the forecast.The Fed is aware that crosscurrents in the economy – such as potentially significant changes to fiscal and economic policy – create substantial uncertainties about the course of monetary policy this year. From the most recent minutes:…many participants emphasized that the greater uncertainty about these policies made it more challenging to communicate to the public about the likely path of the federal funds rate.Translation: The Fed’s crystal ball is as cloudy as everyone else’s, but that’s hard to explain. For example, the potential positive demand shock from expected deficit spending could be overwhelmed by a potential negative supply shock from an increasingly xenophobic Trump Administration.What does this mean for March? Currently, market participants place low odds of a March rate hike. The underlying bet is that if the Fed moves three times this year, the most likely timing will be June, September, and December. I think this is reasonable; bringing March into that mix requires a change in the tone of the data.

FOMC Statement: No Change to Policy -- FOMC Statement: Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate stayed near its recent low. Household spending has continued to rise moderately while business fixed investment has remained soft. Measures of consumer and business sentiment have improved of late. Inflation increased in recent quarters but is still below the Committee's 2 percent longer-run objective. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance.  Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will rise to 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.   In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.

Parsing the Fed: How the February Statement Changed from December -- The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. The following tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the February statement compared with December .

Fed Watch: Was Kevin Warsh Really A Fed Governor? -- Former Federal Reserve Governor Kevin Warsh’s column in Tuesday’s Wall Street Journal was so riddled with errors and misperceptions that it is hard to believe he was actually a governor.Warsh wants the Fed to announce a “practicable long-term strategy and stick to it,” claiming they have offered many such plans but never stuck to them. I don’t agree. The Fed has a plan, but Warsh just refuses to see it.   The former governor’s first critique: A year ago around this time, the U.S. stock market fell about 10%. The Fed reacted precipitously, reversing its announced plan for 2016 of four quarter-point rate increases. But when prices rallied near the end of the year, the Fed decided it wouldn’t look good to let the moment pass without raising rates. It raised its key interest rate by a quarter point in December.The Fed did not reverse its announced plan. The rate forecast contained within the Fed’s Summary of Economic Projections is just that, a forecast, not a plan. Incoming data triggered a revision of that forecast. And, contrary to the narcissistic belief of many market participants, it wasn’t all about them. Falling equity prices were just one of many data points that changed the course of policy. The Fed faced a very real slowdown in activity. Andrew Levin, former Fed economist, for instance, described the economy as operating at stall speed. Note that output growth slowed markedly during 2015 and into 2016:The unemployment rate stalled out: And inflation remained tepid: If the Fed updated their forecast, it was for good reason. Warsh follows with another instance of the Fed supposedly reversing course: In late October, Fed Chair Janet Yellen expressed willingness to run a “high-pressure economy” to push the u  nemployment rate lower and inflation higher. Yet in a speech two weeks ago, she said that allowing the economy to run “persistently ‘hot’ would be risky and unwise.” Yellen never expressed a willingness to run a high-pressure economy. That was always a complete misrepresentation of her comments. In that speech, she was simply proposing a research agenda for macroeconomists, including the topic of the influence of aggregate demand on supply.

 PCE Price Index: Headline and Core Up Slightly in December - The BEA's Personal Income and Outlays report for December was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index rose 0.16% month-over-month (MoM) and is up 1.62% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.11% MoM and 1.70% YoY. Core PCE remains below the Fed's 2% target rate. The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE was higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.

Rapid Money Supply Growth Does Not Cause Inflation - Monetarist theory, which came to dominate economic thinking in the 1980s and the decades that followed, holds that rapid money supply growth is the cause of inflation. The theory, however, fails an actual test of the available evidence. In our review of 47 countries, generally from 1960 forward, we found that more often than not high inflation does not follow rapid money supply growth, and in contrast to this, high inflation has occurred frequently when it has not been preceded by rapid money supply growth.The purpose of this paper is to present these findings and solicit feedback on our data, methods, and conclusions. To analyze the issue, we developed a database of 47 countries that together constitute 91 percent of global GDP and looked at each episode of rapid money supply growth to see if it was followed by high inflation. In the majority of cases, it was not. In fact, the opposite was true—a large percentage of the cases of high inflation were not preceded by high money supply growth. These 47 countries all rank within the top 70 largest economies as measured by GDP and include each of the top 20 countries. If a country was not included, it was because we could not get a complete enough set of historical data on that country.

Dollar Dumps Most In 30 Years As Trump Raises Doubt Over "Strong Dollar Policy" --The US dollar is having its worst start to a year in decades...As the Trump Administration is breaking from a long-standing, bipartisan policy of supporting a strong dollar, the greenback has fallen against its peers by 2.7%, the worst start to a year since 1987, after Ronald Reagan engineered a decline in the dollar to combat a flood of Japanese imports.Finally, remember, nothing lasts forever...  As we noted previously, history did not end with the Cold War and, as Mark Twain put it, whilsthistory doesn’t repeat it often rhymes. As Alexander, Rome and Britain fell from their positions of absolute global dominance, so too has the US begun to slip. America’s global economic dominance has been declining since 1998, well before the Global Financial Crisis. A large part of this decline has actually had little to do with the actions of the US but rather with the unraveling of a century’s long economic anomaly. China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution. Just as the dollar emerged to global reserve currency status as its economic might grew, so the chart below suggests the increasing push for de-dollarization across the 'rest of the isolated world' may be a smart bet...

The slowdown in U.S. economic growth -- The Bureau of Economic Analysis announced yesterday that U.S. real GDP grew at a 1.9% annual rate in the fourth quarter, well below the historical average of 3.1% per year, but close to the 2.1% average since the recovery from the Great Recession began in 2009:Q3. The ongoing (though modest) growth brought our Econbrowser Recession Indicator Index down to 5.3%, erasing the modest spike up that had followed the weak GDP numbers in the first half of 2016. The index uses yesterday’s release to form a picture of where the economy stood as of the end of 2016:Q3. Real consumption spending grew at a 2.5% annual rate in the fourth quarter, a little faster than total GDP. But, as a result in part of the steep appreciation of the dollar, much of the consumption spending went to imported goods. The growth in imports subtracted 1.2% from the GDP growth we would have seen if all the spending had been on domestically produced goods and services. Real exports fell from their high levels of the third quarter. Housing and nonresidential fixed investment made modest positive contributions. Weak investment spending has been the story for the U.S. for many years now. The fraction of U.S. GDP devoted to investment in nonresidential equipment and structures has been below the historical average every year since the Great Recession. Lower investment spending means not just lower demand for goods and services. Over time it has left us with less productive capital than we would have had if historical trends had continued. There has been a clear slowdown in the rate of growth of the U.S. capital stock since the Great Recession. And slower growth of capital ultimately translates into slower growth of worker productivity. It’s interesting to look at a breakdown of why GDP has grown 1% slower since 2009 than the historical average. Slower growth in employment is a relatively minor factor. Employment has grown at a 1.5% annual growth rate since 2009, compared with the 1.7% since World War II. Instead productivity is the big story. Since the Great Recession ended, labor productivity only grew at a 0.6% annual rate, compared to the 1.4% historical average. And about half of the meager gains in productivity we did see came in the first few years of the recovery. There has been barely any growth since 2012.

Imports Normally Would Have Subtracted More From 2016 U.S. Growth - Brad Setser - I think in some ways the U.S. was lucky not to have slowed more in 2016. Why? Because import growth stalled, and imports did not subtract as much from U.S. growth as normally would be expected (and yes, that obviously wasn’t the dominant narrative of the 2016 election). Plus the U.S. essentially got a small GDP boost as a result of a bad harvest in Brazil that raised U.S. soybeans exports in q3 (a rise that was only partially reversed in q4). The U.S. isn’t (yet) a commodity-driven economy, but it also isn’t (yet) a robot-based intellectual property rights (IPR) royalty-driven economy totally divorced from natural sources of economic volatility. Imports are essentially a function of domestic demand growth and the exchange rate. More domestic demand than the exchange rate: the exchange rate in nearly all careful studies tends to have a stronger impact on U.S. exports than on U.S. imports. In the Fed’s U.S. international transactions model, for example: “The equations for goods and services exports predict that a 10 percent appreciation of the real dollar would reduce the level of overall real exports by about 7 percent after three years. After three years, the model predicts that real imports would be almost 4 percent higher.” Over the last twenty years the negative contribution of imports to growth—think of it as U.S. demand that is shared with the world—has been about 25 percent of U.S. domestic demand growth. So typically 75 percent of any increase in U.S. demand goes toward domestic output, and 25 percent goes to the rest of the world (the U.S. of course also benefits from demand growth elsewhere, as growth outside the U.S. pulls up exports). That is somewhat higher than that import share of GDP—as one would expect, if, over time, the import share of GDP is rising. But something strange happened in 2016. From mid-2015 to mid-2016 U.S. imports were essentially flat (the negative contribution over four quarters was only 5-10 basis points of GDP) while U.S. demand growth—even counting inventories—contributed 1.5 to 2 percentage points to GDP growth.

Does A Strong Dollar Slow The Growth Rate Of GDP? - St Louis Fed - Over the past several months, a new episode of appreciation of the dollar began. This appreciation has renewed concern of a slowdown in U.S. economic growth through the channel of international trade. The appreciation of the dollar implies that U.S. goods become more expensive abroad, and hence tends to reduce U.S. exports. Meanwhile, a strong dollar makes foreign goods cheaper to U.S. consumers, which tends to increase imports. The forces of increasing imports and decreasing exports both deteriorate the trade balance and could slow down the growth rate of the U.S. economy. This article reviews the impact a stronger dollar had on gross domestic product (GDP) growth from 2014 to the beginning of 2016, the previous significant episode of appreciation. How much does international trade, in conjunction with such a sharp appreciation of the dollar, slow down the GDP growth rate? The Bureau of Economic Analysis reports international trade’s contribution to the GDP growth rate each quarter. The figure below plots the GDP growth rate, the trade component's contribution to GDP growth and the appreciation of the dollar from the second quarter of 2014 to the first quarter of 2016. It is clear that a strong dollar is associated with net exports contributing negatively to GDP growth. During the sample period's two-year span, trade contributed positively to GDP growth in only one quarter. The negative impact was particularly strong over the first half of the appreciation period. For example, during the fourth quarter of 2014 and the first quarter of 2015, the contributions to the GDP growth rate from net exports were -1.14 percent and -1.65 percent, respectively. The negative effects diminished by the end of 2015, standing at -0.5 percent despite the dollar's increase in value of another 10 percent.

CBO sees rising deficits because of retiring baby boomers, spending growth - – This year’s federal deficit will drop to $559 billion, down from a deficit of $587 billion in fiscal 2016, but will explode to $1.4 trillion a year by 2027, the head of the Congressional Budget Office said Thursday. The deficits are expected to grow above 3% of GDP after 2019, in part because of an insufficient labor force associated with retiring baby boomers, and the continued growth in spending, CBO Director Keith Hall told the House Budget Committee. The nonpartisan office based its projections on the assumption on current laws remaining in place; the agency does not speculate on the effect of proposed legislation on the deficit. Democrats on the committee argued that immigrants would help the labor market, citing a CBO report in 2015 that said an inclusive U.S. immigration policy would have a net positive impact on the federal budget. Hall said the actual result of immigration reform will vary from different proposals and on whether the U.S. attracts more skilled workers than unskilled workers. “It [immigration] does affect labor supply, and that labor supply does help GDP grow,” Hall said. President Donald Trump signed an executive order last week that severely restricts immigration from seven Muslim countries, suspends all refugee admission for 120 days, and bars all Syrian refugees indefinitely; another executive order says the U.S. will build a wall or fence between the U.S. and Mexico.Hall said it is hard to know how many people are going to be affected by the executive order but, for now, “it won’t change our forecast.”

Kremlin Confirms Trump-Putin Call Was "Friendly, Constructive, Mutually Beneficial", Prioritized "Fighting Terrorism" - Vladimir Putin reportedly congratulated Donald Trump for officially assuming office and wished him success in his future activities, during the two controversial leaders' first conversation since the inauguration. As The Kremlin reports (via Google Translate):During the meeting, both sides had shown a disposition to actively work together on stabilization and development of Russian-American interaction - in a constructive, equal and mutually beneficial basis.Thoroughly discussed current international issues, including the fight against terrorism, the situation in the Middle East, the Arab-Israeli conflict, the sphere ofstrategic stability and non-proliferation, the situation around the Iranian nuclear program and the Korean Peninsula. Also touched upon the main aspects of the crisis in Ukraine. It was agreed to establish a partnership in all these and other areas.At the same time highlighted the priority of joint efforts in the fight against the main threat - international terrorism. The Presidents called for establishing a real coordination of US and Russian actions in order to defeat LIH and other terrorist groups in Syria.The importance of the restoration of mutually beneficial trade and economic ties between the business communities of the two countries, which could further stimulate progressive and stable development of bilateral relations. Donald Trump asked to convey the wishes of happiness and prosperity to the Russian people, noting that the US people are sympathetic to Russia and its citizens. Vladimir Putin, in turn, stressed that the Russian experience similar feelings towards the Americans. He recalled that our country for more than two centuries, America has supported, has been an ally in two world wars, and now considers the US as an important partner in the fight against international terrorism. The leaders agreed to maintain regular personal contacts.

Trump orders ISIS plan, gives Bannon role in revamped National Security Council -  President Donald Trump on Saturday ordered the Pentagon to devise a strategy to defeat the Islamic State and restructured the National Security Council to include his controversial top political adviser, as he forged a partnership with Russian President Vladimir Putin in their first official phone call. Trump and Putin spoke for one hour and vowed to join forces to fight terrorism in Syria and elsewhere, according to the White House and the Kremlin, signaling a potential shift in U.S.-Russian relations that have been marked by high tension. Meanwhile, Trump signed a presidential memo directing the Pentagon to submit a plan within 30 days to defeat the Islamic State, an effort to make good on his campaign promise to more aggressively confront Islamist terrorism than President Barack Obama did. Even before Saturday's order, military officials had been at work developing potential actions for Trump and Defense Secretary James Mattis to consider. Those include potentially deploying additional advisers to Iraq and Syria, allowing U.S. military personnel to accompany local forces closer to the front lines, and delegating greater decision-making power to field commanders.Counseling Trump in the effort will be Stephen Bannon, the White House chief strategist whose influence inside the administration is expanding far beyond politics. In an executive order, Trump reorganized the National Security Council to, along with other changes, give Bannon a regular seat on the principals committee - the meetings of the most senior national security officials, including the secretaries of defense and state.

Highlights From The Trump, Merkel Call: NATO, Terrorism, Middle East, Russian Relations -- Concluding a busy Saturday, in addition to speaking on the phone to Japan's prime minister Abe, and Russia's president Putin calling for "establishing real coordination of U.S. and Russian actions in order to defeat ISIS and other terrorist groups in Syria” as well as discussing the importance of "restoring business ties", Trump also prepared to sign three also on to sign three executive orders dealing with the reorganization of the NSC, focusing on cyberthreats to the US and a crackdown on ISIS, and spoke on the phone with German chancellor Angela Merkel. In their first conversation, Trump & Merkel covered "a range of issues, including NATO, the situation in the Middle East and North Africa, relations with Russia, and the Ukraine crisis."  The two also agreed on the "fundamental importance to the broader transatlantic relationship and its role in ensuring the peace and stability of our North Atlantic community." The leaders agreed on the need to strengthen already robust cooperation in the fight against terrorism and violent extremism, and to work to stabilize conflict areas in the Middle East and North Africa. Finally, Trump said he accepted Germany's invitation to attend the G-20 summit in Hamburg Germany, and said he "looked forward" to receiving the Chancellor in Washington soon. The full readout of the conversation is below.

John McCain is spitting mad about Trump’s Russia policy, but he’s all bark and no bite - President Donald Trump is scheduled to talk to Russian autocrat Vladimir Putin, and Arizona Senator John McCain has issued a righteous statement condemning any moves to lift sanctions (which Trump is considering): President Donald Trump’s call with Vladimir Putin is scheduled to take place amid widespread speculation that the White House is considering lifting sanctions against Russia. For the sake of America’s national security and that of our allies, I hope President Trump will put an end to this speculation and reject such a reckless course. If he does not, I will work with my colleagues to codify sanctions against Russia into law.... Each of our last three presidents had high hopes for building a partnership with the Russian government. Each attempt failed, not for lack of good faith and effort on the U.S. side, but because Putin wants to be our enemy. He needs us as his enemy. He will never be our partner, including in fighting ISIL. He believes that strengthening Russia means weakening America. President Trump should remember this when he speaks to Vladimir Putin. He should remember that the man on the other end of the line is a murderer and a thug who seeks to undermine American national security interests at every turn. For our commander-in-chief to think otherwise would be naïve and dangerous. As strongly worded as McCain’s statement is, it carries little force. He has so far shown no willingness to stand up to Trump in any meaningful way. For instance, McCain is going to vote to confirm Secretary of State nominee Rex Tillerson, the recipient of an Order of Friendship award from Putin. Will McCain carry through his threat of trying to pass a law to codify anti-Russian sanctions?

McCain to Trump: I will work to 'codify sanctions against Russia into law' if you try to lift them - Republican Sen. John McCain released a statement on Friday about President Donald Trump's planned phone call with Vladimir Putin, advising Trump to "put an end to speculation" that sanctions on Russia will be lifted. Trump's senior adviser Kellyanne Conway said on Friday that removing US sanctions on Russia "is under consideration" by the administration, and an executive order that would ease or lift the sanctions has reportedly been drafted for the president.  McCain said that lifting the sanctions would be "reckless," and promised to work "with my colleagues to codify" the sanctions into law if Trump moved to ease or lift them.  President Barack Obama sanctioned Russia in 2014 over its annexation of Crimea and incursion into eastern Ukraine. He issued new sanctions against Russia late last month over its hacking related to the 2016 election, calling Moscow's "malicious cyber-enabled activities" a "national emergency" aimed at undermining democratic processes. The 80-year-old Arizona senator, who serves as the chairman of the Senate Armed Services Committee, outlined the "death, destruction, and broken promises" that Russian President Vladimir Putin has left "in his wake" over the past three years.

Ukraine Sabotages Trump’s Russia Detente - Less than two weeks into office, President Trump faces one of the first big tests of his non-confrontational policy toward Russia. As new fighting erupts in Eastern Ukraine, the Kiev regime and its U.S. supporters are predictably demanding a showdown with Vladimir Putin. Initial evidence suggests, however, that the latest flare-up in this nearly three-year-old conflict was precipitated by Kiev, possibly in the hope of forcing just such a confrontation between Washington and Moscow. It’s looking more and more like a rerun of a disastrous stunt pulled by the government of Georgia in 2008, which triggered a clash with Russia with the expectation that the George W. Bush administration would come to its rescue and bring Georgia into the NATO alliance. After months of relative quiet, the fighting in Ukraine erupted on Jan. 28 around the city of Avdiivka, a now-decrepit industrial center. Eight pro-government fighters and five separatists apparently died in the first two days of hostilities. Meanwhile, residents of the city are struggling to survive heavy shelling and sub-zero weather with no heating. Perennial critics of Russia were quick to blame Moscow for the renewed bloodshed. “We call on Russia to stop the violence (and), honor the cease-fire,” declared a State Department official. The Washington Post’s reliably neo-conservative editorial page suggested that Russia felt liberated to unleash rocket and artillery barrages after Putin spoke with Trump by phone, with the goal of wrecking a meeting between Ukrainian President Petro Poroshenko and German Chancellor Angela Merkel.

Is Trump Being Sabotaged By The Pentagon? - Paul Craig Roberts --President Trump says he wants the US to have better relations with Russia and to halt military operations against Muslim countries. But he is being undermined by the Pentagon. The commander of US forces in Europe, General Ben Hodges, has lined up tanks on Poland’s border with Russia and fired salvos that the general says are a message to Russia, not a training exercise.  How is Trump going to normalize relations with Russia when the commander of US forces in Europe is threatening Russia with words and deeds?  The Pentagon has also sent armored vehicles to “moderate rebels” in Syria, according to Penagon spokesman Col. John Dorrian. Unable to prevent Russia and Syria from winning the war against ISIS, the Pentagon is busy at work derailing the peace negotiations.The military/security complex is using its puppets-on-a-string in the House and Senate to generate renewed conflict with Iran and to continue threats against China.Clearly, Trump is not in control of the most important part of his agenda—peace with the thermo-nuclear powers and cessation of interference in the affairs of other countries.Trump cannot simultaneously make peace with Russia and make war on Iran and China. The Russian government is not stupid. It will not sell out China and Iran for a deal with the West. Iran is a buffer against jihadism spilling into Muslim populations in the Russian Federation. China is Russia’s most important military and economic strategic ally against a renewal of US hostility toward Russia by Trump’s successor, assuming Trump succeeds in reducing US/Russian tensions. The neoconservatives with their agenda of US world hegemony and their alliance with the military-security complex will outlast the Trump administration.Moreover, China is rising, while the corrupt and dehumanized West is failing. A deal with the West is worth nothing. Countries that make deals w ith the West are exposed to financial and political exploitation. They become vassals. There are no exceptions.

Asininity From McCain "Send Weapons To Ukraine" -  This bit of asininity just came in from McCain: Send Weapons to Ukraine. McCain also repeated idiotic comments on Russian interference in the US election.Sen. John McCain (R-Ariz.) is calling on President Trump to send lethal aid to Ukraine after attacks this week were blamed on Russia-backed rebels.“Vladimir Putin’s violent campaign to destabilize and dismember the sovereign nation of Ukraine will not stop unless and until he meets a strong and determined response,” wrote McCain, chairman of the Senate Armed Services Committee.McCain also reiterated his call for Trump to maintain sanctions on Russia and impose new ones for Russia’s interference in the U.S. election.Failing to provide more help to Ukraine, McCain said, risks the country’s sovereignty and American credibility.“Ukrainians are not asking Americans to do their fighting,” McCain said. “Nearly 10,000 Ukrainians have died to protect their homeland and many more are serving and have sacrificed for the cause of a free and united Ukraine. But America does have a proud history of helping free people to defend themselves.” Just after I published Preposterous Rumors From Pelosi on Russia, Trump, Sanctions, McCain started yapping.  My article concluded “It could have been worse. The warmongers led by Senator John McCain and Hillary Clinton were itching for a major fight with Russia. Fools like Pelosi add fat to the fire.”  If McCain wants to understand the source of the mess in Ukraine, Libya, Syria, and Iraq, all he has to do is look in a mirror. McCain and his warmongering collection of neocons are the problem. The sooner McCain leaves the Senate, the better off the US will be and the safer the world will be.

Steve Bannon: ‘We’re going to war in the South China Sea … no doubt’ -- The United States and China will fight a war within the next 10 years over islands in the South China Sea, and “there’s no doubt about that”. At the same time, the US will be in another “major” war in the Middle East.  Those are the views – nine months ago at least – of one of the most powerful men in Donald Trump’s administration, Steve Bannon, the former head of far-right news website Breitbart who is now chief strategist at the White House. In the first weeks of Trump’s presidency, Bannon has emerged as a central figure. He was appointed to the “principals committee” of the National Security Council in a highly unusual move and was influential in the recent travel ban on citizens from seven Muslim-majority countries, overruling Department of Homeland Security officials who felt the order did not apply to green card holders.   While many in Trump’s team are outspoken critics of China, in radio shows Bannon hosted for Breitbart he makes plain the two largest threats to America: China and Islam.  “We’re going to war in the South China Sea in five to 10 years,” he said in March 2016. “There’s no doubt about that. They’re taking their sandbars and making basically stationary aircraft carriers and putting missiles on those. They come here to the United States in front of our face – and you understand how important face is – and say it’s an ancient territorial sea.”China says nearly the entire South China Sea falls within its territory, with half a dozen other countries maintaining partially overlapping claims. China has built a series of artificial islands on reefs and rocks in attempt to bolster its position, complete with military-length airstrips and anti-aircraft weapons. Bannon’s sentiments and his position in Trump’s inner circle add to fears of a military confrontation with China, after secretary of state Rex Tillerson said that the US would deny China access to the seven artificial islands. Experts warned any blockade would lead to war.

Rex Tillerson Backs Aggressive Policy in Disputed South China Sea as Exxon, Russia Eye Region’s Oil and Gas -- Steve Horn - President Donald Trump‘s newly sworn-in Secretary of State, recently retired ExxonMobil CEO Rex Tillerson, turned heads when he expressed support for an aggressive military stance against China’s actions in the disputed South China Sea during his Senate committee hearing and in response to questions from Democratic Party Committee members. Tillerson’s views on China and the South China Sea territory appear even more concerning against the backdrop of recently aired comments made by Trump’s increasingly powerful chief strategist, Steve Bannon, that the two nations were headed toward war in the next five to 10 years, as reported by the Independent (UK). However, what Tillerson did not reveal in his answers is that Exxon, as well as Russian state-owned companies Gazprom and Rosneft, have been angling to tap into the South China Sea’s offshore oil and gas bounty.  “We’re going to have to send China a clear signal that, first, the island-building stops,” Tillerson said at his hearing, speaking of the man-made islands China’s military has created in the South China Sea and uses as a military base. “And second, your access to those islands also is not going to be allowed.”  Tillerson, who came under fire during his hearing for maintaining close business ties with Russian President Vladimir Putin, was asked for further clarification on what he thinks the U.S. posture toward China should be in one of dozens of questions sent to him by Sen. Ben Cardin (D-MD). In responding, Tillerson spelled out the bellicose stance he believes the U.S. should take toward China, a country Trump has often said should be handled with a metaphorical iron fist. Sean Spicer, White House Press Secretary and Communications Director, echoed this in a recent press briefing, stating that, “The U.S. is going to make sure that we protect our interests there.” “It’s a question of if those islands are in fact in international waters and not part of China proper, then yeah, we’re going to make sure that we defend international territories from being taken over by one country,” said Spicer.

Trump Threatened To Send Troops To Mexico To Stop The "Bad Hombres Down There" --According to a transcript obtained by AP of the phone call which took place on Friday morning between President Trump and his Mexican counterpart, Enrique Pena Nieto, and which was intended to patch things up between the new president and his Mexican peer a day after Pena Nieto called off his visit to the US, Trump threatened to send U.S. troops to stop "bad hombres down there" unless the Mexican military does more to control them itself.The excerpt of the call did not make clear who exactly Trump considered "bad hombres," - drug cartels, immigrants, or both - or the tone and context of the remark, made in a Friday morning phone call between the leaders. It also did not contain Mexican President Enrique Pena Nieto's response. Nonetheless, the excerpt "offers a rare and striking look at how the new president is conducting diplomacy behind closed doors." As AP puts it, Trump's remark suggest he is using the same tough and blunt talk with world leaders that he used to rally crowds on the campaign trail. "You have a bunch of bad hombres down there," Trump told Pena Nieto, according to the excerpt seen by the AP. "You aren't doing enough to stop them. I think your military is scared. Our military isn't, so I just might send them down to take care of it." The phone call between the leaders was meant to diffuse the escalating tension between Trump and Pena Nieto. The two have had a series of public spats over Trump's determination to have Mexico pay for the planned border wall, something Mexico steadfastly refuses to agree to.

Can Trump really go after the ‘bad hombres’ in Mexico? -- Both sides deny it, but the Associated Press reports that President Trump warned Mexican President Enrique Peña Nieto in their phone call that if Mexico did not do something about the “bad hombres down there,” Trump might just send American forces to Mexico to “take care of it.”  Team Trump says his comments were “lighthearted” and not meant as a threat. Peña Nieto’s spokesman says, “It is absolutely false that the president of the United States threatened to send troops to Mexico.” CNN reports that Trump actually offered to help, saying, “You have some pretty tough hombres in Mexico that you may need help with. We are willing to help with that big-league, but they have to be knocked out and you have not done a good job knocking them out.”  Who’s right? Who the heck knows. But the kerfuffle raises a larger question: Does an American president actually have the legal authority to send Americans into Mexico (or any other country for that matter) to take care of “bad hombres” without that country’s approval?  According to a memorandum entitled “Authority of the Federal Bureau of Investigation to Override International Law in Extraterritorial Law Enforcement Activities.” from the US Department of Justice, the answer, depending on the circumstances, is … yes.

Reported acrimonious Trump phone call strains Australia-U.S. ties | Reuters: U.S. ties with staunch ally Australia turned strained on Thursday after reports of an acrimonious phone call between the two leaders emerged and U.S. President Donald Trump said a deal between the two nations on refugees was "dumb." Trump and Australian Prime Minister Malcolm Turnbull spoke for about 25 minutes on Saturday, but the call ended abruptly after Trump panned a bilateral resettlement deal on refugees, the Washington Post reported. Trump accused Australia of trying to export the "next Boston bombers" and said the call was the worst he had had with world leaders thus far, according to the newspaper. The Post, citing unidentified senior U.S. officials, was first to report details of the weekend call, which came at the end of day of widespread protests and confusion over Trump's order for a 120-day halt of the U.S. refugee program and a 90-day suspension on visits from people from seven predominantly Muslim countries. The apparent breakdown between Washington and Canberra that has developed over the resettlement deal could have serious repercussions. Australia and the United States are among the five nations that make up the Five Eyes group, the world's leading intelligence-sharing network. Under the Australia deal set with former President Barack Obama last year, the United States agreed to resettle up to 1,250 asylum seekers held in offshore processing camps on Pacific islands in Papua New Guinea and Nauru. In return, Australia would resettle refugees from El Salvador, Guatemala and Honduras. Many of the people being held in the Australian detention centers, which have drawn harsh criticism from the United Nations and rights groups, fled violence in countries such as Afghanistan, Iraq and Iran.

Pundits Stunned After Trump Reportedly Hung Up On Australia Prime Minister, Slamming "Dumb Refugee Deal" - First, the AP reported that according to a transcript of a phone call between the presidents of the US and Mexico, Trump threatening to send US troops to Mexico if it was unable to stop the "bad hombres down there." Then, in a separate report from the Washington Post, Trump labeled a refugee swap deal with Australia "dumb" on Thursday after a Washington Post report of an acrimonious telephone call with Australia's prime minister, replete with alleged "yelling" and which Trump hung up after just 25 minutes, that has threatened a rift in ties between the two ally nations. The Post reported that Trump described the resettlement plan as "the worst deal ever" and accused Australia of trying to export the "next Boston bombers". At one point, Trump reportedly informed Turnbull that he had spoken with four other world leaders that day — including Russian President Vladi­mir Putin — and that “this was the worst call by far.” The Post also said Trump had boasted to Turnbull about the size of his election victory. #BREAKING Sky News sources say Donald Trump was 'yelling' during his phone conversation with PM Turnbull and hung up after 25 minutespic.twitter.com/xqrebcOv84

McCain calls Australian ambassador to express support after Trump exchange | TheHill: Sen. John McCain (R-Ariz.) said Thursday that he spoke to the Australian ambassador to express support for the nations' relationship after a heated call from President Trump. "I called Australia’s Ambassador to the United States this morning to express my unwavering support for the U.S.-Australia alliance," McCain, who's frequently criticized Trump, said in a statement. McCain added that he asked Joe Hockey, the Australian ambassador to the U.S., to "convey to the people of Australia" that Americans value their alliance, "honor the sacrifice of the Australians who have served and are serving by our side, and remain committed to the safer, freer, and better world that Australia does far more than its fair share to protect and promote.” The Washington Post reported on Wednesday that Trump lashed out at Australian Prime Minister Malcolm Turnbull during a call last Saturday. The president boasted about his Electoral College victory, blasted a previous plan between the nations to accept refugees and cut short what was expected to be an hourlong call, according to the Post.

Trump on Tough Phone Calls With Foreign Leaders: 'Don't Worry About It' ... But Should We? - President Donald Trump on Thursday addressed the tense phone calls he shared with the Australian prime minister and Mexican president, telling about 2,000 people at the National Prayer Breakfast not to worry. “When you hear about the tough phone calls I’m having, don’t worry about it,” Mr. Trump said at the annual event in Washington, D.C. “They’re tough. We have to be tough. It’s time we’re going to be tough, folks. We’re taken advantage of by every nation in the world, virtually. It’s not going to happen anymore.” In a round of phone calls on Saturday with foreign leaders, Mr. Trump abruptly ended one conversation with Australian Prime Minister Malcolm Turnbull over an agreement to resettle about 1,250 refugees. Speaking with Mexican President Enrique Peña Nieto, Mr. Trump urged him to get control of the “bad hombres” within his country, which one White House official said was a reference to drug cartels. “The world is in trouble, but we’re going to straighten it out, OK?” Mr. Trump said at the breakfast. “That’s what I do. I fix things.”

Trump Doubles Down: "Iran Has Been Formally Put On Notice"  --Echoing comments made yesterday by his national security advisor Michael Flynn, Trump started his Thursday morning on Twitter by first threatening to pull UC Berkeley's funding and congratulating Rex Tillerson, and then stating that Iran is now formally “on notice” for firing a ballistic missile.  “Iran has been formally PUT ON NOTICE for firing a ballistic missile. Should have been thankful for the terrible deal the U.S. made with them!” he tweeted, without providing any other details.Iran has been formally PUT ON NOTICE for firing a ballistic missile. Should have been thankful for the terrible deal the U.S. made with them!— Donald J. Trump (@realDonaldTrump) February 2, 2017 Trump then added that "Iran was on its last legs and ready to collapse until the U.S. came along and gave it a life-line in the form of the Iran Deal: $150 billion.”  During a surprise appearance in the White House briefing room on Wednesday, Michael Flynn vowed a forceful U.S. response to Iran’s “destabilizing behavior across the Middle East.” Flynn said Iran “continues to threaten U.S. friends and allies in the region,” with a ballistic missile test launch over the weekend and other actions. Flynn also accused Barack Obama for allowing Iran to become “emboldened.” “As of today, we are officially putting Iran on notice,” he said, without elaborating what that meant.

The Coming Clash With Iran | The American Conservative: When Gen. Michael Flynn marched into the White House Briefing Room to declare that “we are officially putting Iran on notice,” he drew a red line for President Trump. In tweeting the threat, Trump agreed. His credibility is now on the line. And what triggered this virtual ultimatum? Iran-backed Houthi rebels, said Flynn, attacked a Saudi warship and Tehran tested a missile, undermining “security, prosperity, and stability throughout the Middle East,” placing “American lives at risk.” But how so? The Saudis have been bombing the Houthi rebels and ravaging their country, Yemen, for two years. Are the Saudis entitled to immunity from retaliation in wars that they start? Where is the evidence Iran had a role in the Red Sea attack on the Saudi ship? And why would President Trump make this war his war? As for the Iranian missile test, a 2015 U.N. resolution “called upon” Iran not to test nuclear-capable missiles. It did not forbid Iran from testing conventional missiles, which Tehran insists this was. Is the United States making new demands on Iran not written into the nuclear treaty or international law—to provoke a confrontation? Did Flynn coordinate with our allies about this warning of possible military action against Iran? Is NATO obligated to join any action we might take?

The Trump Administration’s Lies About Iran - Flynn’s dishonest claim that a Houthi attack on a Saudi vessel was an “Iranian action” has morphed into an even more provocative, false claim from the Press Secretary today:  The White House Press corps wanted to know what being put “on notice” entailed, and Spicer responded by claiming that Iran’s government took actions against a U.S. naval vessel, which would be an act of war. “I think General Flynn was really clear yesterday that Iran has violated the Joint Resolution that Iran’s additional hostile actions that it took against our navy vessel are ones that we are very clear are not going to sit by and take,” he said. Spicer has managed to combine Flynn’s nonsensical statement blaming Iran for the attack with the garbage analysis I mentioned earlier in the week that the attack had been intended for a U.S. ship, and he has produced something even more divorced from reality. No U.S. ship was attacked or targeted by anyone, Iran wasn’t responsible for the attack that did happen, and yet according to the Trump White House Iran took “hostile actions” against one of our ships. This is as blatant a lie as any that Spicer has told over the last two weeks, and it is on a matter of the greatest importance. The Trump administration is conjuring up “hostile actions” against a U.S. vessel out of thin air, and they appear to be doing so for no other reason than to stoke tensions and make conflict with Iran more likely. The administration is lying about Iranian “hostile actions,” and it seems to be trying to cook up an excuse for increasing tensions with and possibly military action against Iran. Hawks have repeated Saudi propaganda about Yemen uncritically for years, and their pervasive exaggeration of Iran’s involvement in Yemen has helped pave the way for the administration’s lies about Iranian “hostile actions” that never happened. The longer that the U.S. keeps backing the Saudi-led war on Yemen, the worse this is likely to get.

Israeli settlement construction ‘may not be helpful’ to reaching peace, White House says -- President Donald Trump's White House said late Thursday that Israel's settlement construction may not be helpful to reaching a peace deal with the Palestinians. “The American desire for peace between the Israelis and the Palestinians has remained unchanged for 50 years. While we don’t believe the existence of settlements is an impediment to peace, the construction of new settlements or the expansion of existing settlements beyond their current borders may not be helpful in achieving that goal," the White House said in a statement. "As the President has expressed many times, he hopes to achieve peace throughout the Middle East region. The Trump administration has not taken an official position on settlement activity and looks forward to continuing discussions, including with Prime Minister Netanyahu when he visits with President Trump later this month.” The Israeli ambassador to the United Nations, Danny Danon, was the first Israeli official to respond to the White House's statement. Speaking to Israel Radio on Friday morning, Danon said it was still too early to tell how the latest remarks would affect settlement construction. "I would not categorize this as a U-turn by the U.S. administration but the issue is clearly on their agenda .... The issue will be discussed when the prime minister meets the president in Washington," Danon said.  "We will not always agree on everything," he added.

Trump’s making his own rules as a diplomat, too --- Donald Trump made his own rules as a presidential candidate, and now he’s pushing ahead with global diplomacy in a similarly freewheeling fashion—with no Secretary of State yet in place and relatively little guidance from seasoned diplomatic advisers. Trump plans to speak by phone Saturday with the leaders of Australia, France, Germany and Japan, as well as with Russian President Vladimir Putin. The calls follow his White House meeting Friday with British Prime Minister Theresa May, and a phone call with Mexican President Enrique Peña Nieto. On Monday, Trump will host Jordan’s King Abdullah, a crucial Arab ally. The outreach comes despite the continued gaps in Trump’s diplomatic team. For decades, presidential meetings with foreign leaders have involved copious preparation by the State Department and the White House’s National Security Council which produces clear guidance to avoid surprises or misunderstandings that could trigger an international incident. Trump is still filling vacancies, including for posts with responsibility for coordinating policy for Europe and Russia. National Security Advisor Michael Flynn, a former military intelligence officer whose background is limited to the Middle East and Afghanistan, has no traditional diplomatic experience. The State Department is also a work in progress: Trump's nominee for Secretary of State, Rex Tillerson, isn't expected to be confirmed until Monday at the earliest. Even if he is confirmed as expected, Tillerson will need to install invaluable deputies—including new senior officials for Russia and the Middle East. The occupants of those two jobs, Victoria Nuland and Anne Patterson, resigned this month, taking a trove of institutional knowledge with them.

Trump’s Grand Strategic Train Wreck -- Believe it or not, President Donald Trump has a grand strategy. According to some analysts, Trump’s endless streams of erratic and apparently improvisational ideas don’t add up to anything consistent or purposeful enough to call a grand strategy. We see it otherwise. Beneath all the rants, tweets, and noise there is actually a discernible pattern of thought — a Trumpian view of the world that goes back decades. Trump has put forward a clear vision to guide his administration’s foreign policy — albeit a dark and highly troubling one, riddled with tensions and vexing dilemmas. Grand strategy is the conceptual architecture that lends structure and form to foreign policy. A leader who is “doing grand strategy” is not handling global events on an ad hoc or case-by-case basis. A grand strategy, rather, represents a more purposeful and deeply held set of concepts about a country’s goals and orientation in international affairs. At a minimum, a grand strategy consists of an understanding of the basic contours of the international environment, a country’s highest interests and objectives within that environment, the most pressing threats to those interests, and the actions that a country can take in order to address threats and promote national security and well-being.  The fundamental grand strategic interest of the United States today is precisely the same as it has been for the past 240 years: to ensure the country’s physical security, economic well-being, and way of life. The really interesting part of a particular president’s grand strategy, therefore, often begins with his or her perception of the nature of the international environment and the main threats to these basic interests. For Trump, the principal threats to the United States stem primarily from what might be called “intermestic” challenges — that is, powerful external forces that reverberate directly into the American domestic arena, threatening homeland security, disrupting the U.S. economy, and contaminating our society.

Those ‘Resignations’: What Really Happened at the State Department - Antiwar.com - The media has gone near-insane, claiming State is crumbling in protest under the Trump administration. This is not true. What happened at State is very routine.  Leaving the Department are head of the Management Bureau Pat Kennedy (above), Assistant Secretary of State for Administration Joyce Anne Barr, Assistant Secretary of State for Consular Affairs Michele Bond, Ambassador Gentry O. Smith, director of the Office of Foreign Missions, arms control official Tom Countryman, and Victoria Nuland. Here’s the story:

• No one at the State Dept resigned in protest.
• No one was formally fired.
• Six people were transferred from or retired from political appointee positions. Technically those who did not retire can be considered to have “resigned,” but that is a routine HR/personnel term used, not some political statement. The six are career Foreign Service career personnel (FSOs) They previously left their FSO job to be appointed into political jobs and now have resigned those (or retired out of the State Department) to return to career FSO jobs. A circle. They are required to submit a letter of resignation as a matter of routine when a new president takes office.
• As for perspective: only one Under Secretary of State (Alan Larson) stayed through the transition from Bill Clinton to George W. Bush. It is routine for senior officials to leave or be reassigned.
• Several of the six are connected to the Clinton emails and/or Clinton’s handling of Benghazi. One of these people, Pat Kennedy, played a significant role in both, as well as many other controversial issues during Clinton’s term. Sources tell me that although officially Kennedy “retired,” he was more or less required to do so by the Trump administration.
• I have no information on the others, whether they were asked to retire, or just part of a reshuffling of positions and will routinely be reassigned. Most likely the latter, as such reshuffling is very common as administrations change. As everywhere in the government, the new administration fills its own political appointee slots.
• Some of the six will hit mandatory retirement age on January 31 anyway.

Has President Trump ever seen this chart? He should.   Pethokoukis  -Politico reports that Donald Trump may not have a Council of Economic Advisors, the White House’s in-house think tank. Upon hearing that, former Obama White House CEA chair Austin Goolsbee tweeted: “If you never want to hear-even privately-that your idea will cost X/have these effects/needs more thought, you should definitely ban the CEA.” Which got me thinking: What sorts of things might a proper Trump CEA tell Trump? Maybe that superfast economic growth is very, very hard.  Maybe that we can’t grow out way out of the entitlement debt problem. Maybe that selling health insurance across state lines won’t revolutionize the insurance marketplace. And maybe the CEA economists would show Trump these two charts: The above charts are taken from a Martin Wolf column in the Financial Times, with this bit of explanation: The main explanation for the long-term decline in the share of manufacturing employment in the US (and other high-income economies) has been the rise in employment elsewhere. In 1950, employment in manufacturing was 13m, while that in the rest of the economy was 30m. By the end of 2016, it was 12m and 133m, respectively. Thus, all the increase in employment between 1950 and the end of 2016 occurred outside manufacturing. Yet output of US manufacturing was not stagnant. Between 1950 and 2016, output rose 640 per cent, while employment fell 7 per cent. Even between 1990 and 2016 output rose 63 per cent, while employment fell 31 per cent.  The explanation for the contrast between output and employment is rising productivity.

Trump’s Executive Orders Are Scary, but Are They More Bark Than Bite? - The past week's news cycle has been dominated by Donald Trump's wave of executive actions, many of which referenced major campaign promises to build the wall, cut the size of government, and make life miserable for undocumented immigrants. As other outlets have noted, modern presidential administrations often have a busy first few weeks. But the tenor of Trump's actions has been more bombastic and his pace has been exceptionally rapid—and though his orders and memoranda might not ultimately achieve their goals, they indicate that he's basically leveraging executive power for maximum spectacle.  To recap a frenetic week: As of Friday afternoon, Trump had signed one fairly inconsequential law, four executive orders, eight memoranda, and two proclamations. (The difference between memoranda and orders is fairly technical—obscure enough that even the president himself seems to think he's signing orders when actually they're memoranda.)  One memorandum froze new regulations, which Andrew Rudalevige, a scholar of executive powers, told me any president would enact in order to get a grasp on the executive branch. A few other actions—a call to streamline environmental and other regulatory reviews, a federal hiring freeze, a reinstatement of the anti-abortion the Mexico City policy—might have been done by many Republicans. Trump's withdrawal of the US from the Trans-Pacific Partnership was something Hillary Clinton said she would also do. And his decision to ask agencies to dismantle Obamacare as much as they could may have been a carbon copy of an action planned by 2012 GOP nominee Mitt Romney.  But his crackdown on illegal immigration, stated dedication to start work on a border wall, and plans to pull funding from "sanctuary cities" as punishment for those jurisdictions protecting undocumented immigrants were all pure Trump.  The most notable thing about Trump's actions so far might be their unusual language.  "They reflect a campaign rhetoric-slash-press-release approach to some of these issues," said Rudalevige. "Some of them have a lengthy purpose section, which is not necessarily common... [In the one on sanctuary cities] there's a line about, 'sanctuary jurisdictions have caused immeasurable harm to the American people and to the very fabric of our republic.' That's not very legal language. That is a belief—and I'm not sure one that's widely shared."

Trump Unveils Three More Executive Orders - President Trump is set to unveil three new executive orders at 3pm on Saturday which according to the White House press pool will include an order to reorganize the National Security Council's procedures and structure, an order to make the White House's NSC more adaptive to cyber threats, and will also seek a Joint Chiefs plan to defeat the Islamic State. Today's actions will bring the total number of executive orders signed by Trump since taking office to 17. A summary list of the previous fourteen, courtesy of Politico, is presented below.

President Trump's First Address To The Nation - US President Donald Trump made his first weekly address to the nation on Saturday, outlining the smorgasbord of actions he has taken in his first week... As AP reports, In it, Trump said he had met the leaders of some of the country's top manufacturing companies and labour unions and told them that he wanted to make things in America, using American workers. He also said that he had signed orders to prepare for repealing and replacing Obamacare, and the withdrawal from the Trans-Pacific Partnership so that the US could negotiate one-on-one deals that protected American workers. Trump said he had signed an order to begin construction of the Keystone and Dakota Access pipelines, following a renegotiation of terms requiring that pipelines installed in America be built with American steel and manufactured in the US. He said he had also signed an order to immediately begin construction of the border wall with Mexico and to crack down on sanctuary cities. Full Transcript:

What Does Corporate Tax Reform and Paying for the Wall Have to Do with Each Other? - Menzie Chinn - Maybe something, maybe nothing. There is a lot of confusion about how the Trump Administration will make Mexico “pay for the wall”. It is unclear to me that the individuals within the Administration, including the President, have any more clarity than we do.  Here are my main observations:

1. If corporate tax reform takes the form of the House’s blueprint for Destination Based Cash Flow Tax (DBCFT) with border adjustment, and is the basis for the view that Mexico will pay for the wall, then it is not “Mexico” that pays, but — depending on what happens to the dollar, and the extent of exchange rate pass through — US consumers, producers in all countries we trade with, and shareholders in US firms will pay.
2. If the idea is to place an explicit tariff on Mexican goods imported into the US, separate from whatever happens in the arena of corporate tax reform, then it’s possible that Mexican producers will pay, although it’s possible that US consumers will also pay in part.
3. If the idea is to place a tax on remittances from the US to Mexico (an idea mooted during the campaign), then indeed Mexicans may pay, but Mexican Americans who wish to remit funds to Mexico might also pay. To the extent the Trump Administration views such individuals as not real Americans, but “Mexicans”, then Mexico in aggregate would pay.

The DBCFT acts like a Value Added Tax (VAT), except that wage expenditures are also exempted from taxation, as pointed out by Krugman. The most simple public finance approach to evaluating the DBCFT relative to a no-tax situation is to assume the non-deductibility of imports results in an increase in demand for exports (due to the fact that exports are not taxed) that in turn increases the demand for dollars, so that in the end import prices and export prices are unchanged (see here). Hence, the DBCFT is neutral with respect to imports and exports. Shareholders bear the burden of the tax. In principle, ignoring aspects of tax shifting, etc., if total revenues are the same, then the burden falls in the same way on shareholders as in the currently existing tax system.

Distributional Implications of the Border Adjustment Tax for U.S. Households: Lower- and middle-income households may be hard hit - Furman, Russ, and Shambaugh (2017) provide evidence that tariffs are a regressive form of taxation,. Here, I expand on that work to give initial ballpark estimates for the impact of the border adjustment tax on households in different parts of the income distribution. The impact falls hardest on the lower- and middle-income households and the magnitude is considerably greater than the current U.S. tariff schedule imposes.Some analysts argue that the balance of the tax on imports and the tax break on export sales would strengthen the dollar enough that the border adjustment would not affect the purchasing power of consumers or firms with respect to imports. While the theoretical models are suggestive, this is an open empirical question that would benefit from careful empirical investigation. Were it indeed the case that exchange rate and wage adjustments would fully offset the tax on imports, which no one at present can say with certainty, the general equilibrium responses involved could take at least two years to occur if the existing literature on pass-through in traded goods prices is a guide. This analysis takes a middle ground. I suppose that frictions impeding general equilibrium adjustments in exchange rates and wages, as well as other factors well known in the pass-through literature, prevent the full general equilibrium responses that would wipe out the impact of the border tax adjustment. I assume that half of the proposed 20 percentage point border adjustment tax is passed into prices paid by buyers of imported goods. True believers in general equilibrium thus might look at this as a short- or medium-term scenario (1-3 years). General equilibrium skeptics might consider it a longer-term scenario.

Homeland Security Chief Hopes Trump's Wall "Will Be Done Within 2 Years" --Without mentioning who will pay for it, President Trump's new Secretary of Homeland Security told Fox News late Wednesday that he hopes the US-Mexico border wall can be built in two years. As AFP reports, retired Marine general John Kelly told Fox... "The wall will be built where it's needed first, and then it will be filled in. That's the way I look at it... I really hope to have it done within the next two years." Trump has signed an executive order designed to meet his campaign pledge to build a wall along the 2,000 mile (3,200 km) southern US border, with the stated goal of keeping out undocumented migrants, drugs and criminals. Some 653 miles of border already features fencing that blocks people and/or vehicles.Kelly said that protecting the southern border is "a layered approach" that includes physical barriers as well as technological sensors "and things like that". Kelly, who will oversee the wall's planning and construction, said that the Trump administration officials "already have the authority" under existing law to start the project. Trump has said that his cost estimates for building the wall range from $4 to $10 billion, but other estimates put the price at $11 billion for 400 more miles of fencing. The MIT Technology Review estimated that a 1,000 mile steel and concrete wall would cost $27 to $40 billion. Kelly was optimistic about what he called "the money aspect." "I think the funding will come relatively quickly," Kelly said, adding that construction could begin in just a few months.

Nafta: First shots in a trade war - FT -  Donald Trump is threatening to pull the trigger on a trade war with Mexico that could blow apart a relationship worth $1m a minute. The far-fetched prospect of better-than-ever bilateral ties, which the president invoked hours before torpedoing a summit with his counterpart Enrique Peña Nieto, now looks like a mirage. Mr Trump’s gambits include floating a unilateral 20 per cent tax on Mexican imports, humiliating Mexico by signing an executive order to start construction of a border wall while its ministers were in Washington and telling Mr Peña Nieto it was pointless to hold the summit unless he agreed to pay for the barrier. Despite an hour-long call between the presidents on Friday, which seemed to have eased some of the acrimony, relations between the neighbours are more fraught than at any time in the past four decades. Nobel economics laureate Paul Krugman tweeted last week that team Trump were acting like “spoiled children playing with loaded guns” amid fears that the dispute threatened the collapse of the North American Free Trade Agreement between the US, Mexico and Canada. The tax move has an echo from the early 1970s when the Nixon administration imposed a 10 per cent import duty on Mexico. But the stakes are far higher today. A $580bn bilateral relationship and millions of jobs are on the line on both sides of the border, the product of nearly a quarter of a century of free trade that has made the US and Mexico “not just neighbours, but roommates” as former Mexican congressman Agustín Barrios Gómez puts it. “All assumptions about the relationship are in play,” “We can no longer assume things will stay the same or integration will continue to deepen. There is a very real risk that things will deteriorate very rapidly.”

Dark Matter. Soon To Be Revealed? - Brad Setser - The debate around the House Republicans’ proposal for a border adjusted (destination-based cash flow) tax will, I think, force an important debate about the impact of corporate tax strategies on global trade flows.* My guess is that tax strategies do have a significant impact on the trade data (one hint: the trade deficit in pharmaceutical the U.S. now runs with Ireland and Switzerland). And in turn I suspect that the revenue projections from the House’s proposals will depend in part on how firms are expected to adapt to a world where export revenues booked in the U.S.—including export revenues from the royalties on intellectual property—are not taxed. A world where the U.S. suddenly becomes tax competitive with Ireland, the Netherlands and others. I suspect that the size of the impact will surprise many people.   I first started looking at the impact of firms’ tax strategies on the balance of payments back in early 2006, as part of a debate over the sustainability of the U.S. trade and external deficit. One argument at the time was that Americans had nearly magical skills at cross-border investing—magic that produced a surplus on net foreign direct investment (FDI) income (the dividends that American firms receive on their foreign investment relative to the dividends foreign firms receive on their U.S. investments) that would perpetually negate the United States’ interest payments on its net external debt. That magical surplus on investment income in the balance of payments effectively made conventional measures of U.S. external debt sustainability moot. Harvard’s Ricardo Hausmann named the forces that kept the U.S. income balance positive even as the U.S. ran persistent trade and current account deficits: dark matter. Time, I think, has helped bring the sources of dark matter—or, put differently, the sources of the United States’ exorbitant privilege—into the light. I suspected back in 2006, and now suspect even more strongly now, that “dark matter” is largely a function of the tax strategies employed by firms like Apple (here is a 2005 Wall Street Journal article focusing on another large tech firm).  The “income” the U.S. earns on its equity investment abroad now heavily shows up in low-tax jurisdictions. The “stock” position is now relatively balanced (the market value of U.S. direct investment abroad was $7 trillion at the end of 2015, which is not that different from the $6.5 trillion value of foreign direct investment in the U.S). The net income the U.S. earns on investments abroad essentially comes from the difference between the low cash returns foreign companies report on their U.S. equity investment and the large returns American firms report on their non-repatriated (e.g. tax deferred) income abroad.

The Auerbach Tax and Automobile Multinationals – -- Bloomberg reports:  A proposed tax on imports that President Donald Trump is said to be warming to could upend the competitive landscape for carmakers, boosting Ford Motor Co. while hindering manufacturers that rely more on overseas factories including Toyota Motor Corp. House Republican leaders have proposed a so-called border-adjusted tax, which would place a levy on vehicles imported into the U.S. and fully exempt those exported. Though Trump initially deemed the idea too complicated, White House Press Secretary Sean Spicer last week said it was under consideration and could help pay for a wall along the Mexico border. The overhaul to the U.S. tax system could hand an advantage to Ford, Honda Motor Co. and General Motors Co., which rely the least on imported vehicles among major automakers. The shake-up would also undermine Toyota Is Bloomberg assuming a fixed yen/$ exchange rate so these border adjustments boost exports and discourage imports? Greg Mankiw and Paul Krugman take a very different view: […] Alan Auerbach – the proponent of this idea – joined with Douglas Holtz-Eakin to state why this competitiveness argument is all wrong: These two (AHE) wrote:  Unlike tariffs on imports or subsidies for exports, border adjustments are not trade policy. Instead, they are paired and equal adjustments that create a level tax playing field for domestic and overseas competition; Border adjustments do not distort trade, as exchange rates should react immediately to offset the initial impact of these adjustments. As a corollary, border adjustments do not distort the pattern of domestic sales and purchases. So if this is not going to advantage Ford and GM to the disadvantage of Toyota, could something else be driving Ford’s support and the opposition from companies like Toyota. I have been looking more at the transfer pricing angle objecting to this claim from AHE:  Border adjustments eliminate the incentive to manipulate transfer prices in order to shift profits to lower-tax jurisdictionsA lot of people read this and think transfer pricing manipulation goes away. But this is clearly wrong if our trading partners have positive corporate tax rates that are sourced based.

Trump & Sending World Trade Back to the 1930s  -- The infantile Trump time travels back to the Great Depression and wishes things now are the way they were then. Sales of dystopian novels have taken off as the ramifications of US President Donald Trump--I have to re-read that every now and again out of disbelief--become clear. Having pushed through with quite frankly anti-Islamic policies to ban citizens of seven countries whose citizens have never caused a single fatality Stateside from entering the US, it's probably only a matter of time before his isolationist-protectionist policies are unleashed at a time you least expect it. We are getting a flavor of it already with Mexico and the tweet war. The question is, when does Trump's administration begin implementing discriminatory policies against the likes of China and Mexico? Unfortunately, much power has been vested in the executive for the sensible reason that, prior to Trump, no postwar American president has tempted fate by inviting a trade war. With Trump at the controls, however, there's no telling what depths of protectionism he'll sink to and how far down he'll drag down the rest of the world. The Sydney Morning Herald imagines the not-so-unimaginable scenario of Trump dragging the world back to the interwar years between WWI and WWII. When countries could not obtain what they needed by trade, they did by war. How far back in time Trump takes the world can be measured by the tariff levels he sets:  Trump's 20 per cent Mexican tariff would transport the world back 70 years. A 45 per cent China tariff would take us back almost a century to the 1930 Smoot-Hawley Tariff Act, which imposed tariffs in excess of 50 per cent. This protectionist act – named after two Republican senators and signed by a Republican president, Herbert Hoover – caused a slump in US exports as other countries retaliated and is widely accepted to have prolonged the Great Depression.

Here's a Glimpse of the Global Trade Carnage From a U.S. Border Tax   - Whether or not a border tax proposed by Republican congressional leaders helps U.S. President Donald Trump pay for his Mexico border wall, it would have a radical impact on global trade patterns. Deutsche Bank AG economists Robin Winkler and George Saravelos have calculated the amount of trade with the U.S. that countries stand to lose if they face a 20 percent penalty at the border. Mexico is the obvious biggest loser, but Canada and Asian manufacturing economies including Vietnam, Malaysia and Thailand would also be in line for a big hit. “The magnitudes of the damage would be enormous, in our view,” Winkler and Saravelos write from London in the research note published Wednesday. “We still consider border tax adjustment one of the key bullish risks for the dollar over the next year.” A border tax essentially places a levy on imported goods with the aim of narrowing the trade deficit and making the exports of domestic producers more competitive. The extent to which a country's trade with the U.S. would be impacted is partly determined by how elastic demand for their products in the U.S. is. If the elasticity is higher, they suffer more. In other words, if Taiwanese-made electrical machinery sold in the U.S. suddenly becomes, say, 10 percent more expensive -- after suppliers absorb some of the tax themselves -- and potential buyers can find a domestic substitute easily, then price becomes the defining factor.

 Does Trump want to somehow get rid of global supply chains? -- Peter Navarro, the head of President Trump’s new National Trade Council, gave a puzzling interview to the Financial Times. First, according to the FT, economist Navarro claimed Germany is using a “grossly undervalued” euro to “exploit” the United States. Yes, the euro has weakned against the dollar over the past two years. And maybe it is undervalued vs. economic fundamentals. But one factor driving that weakening has been the divergent policies of the Fed and the ECB. The FT:  “The European Central Bank’s mass bond-buying programme has weakened the single currency, while rate hikes by the US Fed has strengthened the dollar.” What’s more, inflationphobic Germany has been critical of the ECB strategy with German politicians, much like Republicans in the US calling for higher interest rates. But if those remarks were somewhat bewildering, this from Navarro may raise alarm:  Mr Navarro said one of the administration’s trade priorities was unwinding and repatriating the international supply chains on which many US multinational companies rely, taking aim at one of the pillars of the modern global economy.  “It does the American economy no long-term good to only keep the big box factories where we are now assembling ‘American’ products that are composed primarily of foreign components,” he said. “We need to manufacture those components in a robust domestic supply chain that will spur job and wage growth.” It’s that “unwinding and repatriating” bit that’s confounding. It sounds like Navarro views the idea of globe-spanning supply chains as problematic. You know, supply chains like this one: (Boeing graphic) Or this one: (iphone graphic) So does Navarro want companies to make all the various bits within the United States? Or is he merely saying that the US should manufacture and export more finished goods like cars, airplanes, and industrial equipment? As trade expert Brad Setser noted on Twitter:”If this was reframed as increasing the contribution of U.S. made goods to global supply chains it would make more sense.” But if he is making the former point, adds trade economist Douglas Irwin, also on Twitter, then it looks like “China is the model, not Germany.” And is China — a much poorer and less advanced economy — really the best model for America?

Specter of Global Trade War Rises as Trump Puts ‘America First’   - World leaders aren’t taking Donald Trump’s trade barbs lying down. After the U.S. president said Germany and Japan are gaming foreign-exchange markets to win favorable trade terms, Japanese Prime Minister Shinzo Abe joined German Chancellor Angela Merkel on Tuesday in pushing back and leading a global counter-charge to the accusations. “A massive clash is starting to emerge with Trump willing to get into major geopolitical spats with China and other countries to advance his ‘America First’ agenda,” Mark Leonard, director of the European Council on Foreign Relations, said in a phone interview. The sparks that have dominated the initial days of Trump’s presidency have set the stage for increased tensions over global trade and currency regimes. Decades of economic ties are at stake. Signs that the U.S. will favor bilateral trade agreements at the expense of multilateral deals have forced world leaders to define their own red lines, and forge new alliances. Trump has already shown that he can shift swiftly from campaign tweet to U.S. policy, opening an early front with Mexico in a push to impose a tax on imports from there to pay for a border wall. That means no one can afford to take his threats lightly.

A dwindling role for USTR?: President Donald Trump may have waded into complicated legal territory on Thursday when he announced that Wilbur Ross, his pick to lead the Commerce Department, would represent the United States in NAFTA renegotiation talks with Canada and Mexico.  In question is a provision of the Trade Act of 1974, which states that the U.S. trade representative — and not the Commerce secretary — “shall … have lead responsibility for the conduct of, and shall be the chief representative of the United States for, international trade negotiations.” It also says USTR shall serve as the president’s principal adviser on international trade policy and have primary responsibility for developing and coordinating the implementation of it. To be fair, Trump said Ross would be representing the U.S. “along with a lot of other great people,” so it’s possible that his role would not supersede that of veteran trade attorney Robert Lighthizer, assuming he is confirmed to be USTR. But it was Ross who sat in on a meeting between Trump and key congressional leaders on trade at the White House on Thursday, and Lighthizer was not in attendance, Morning Trade has learned. The White House did not respond to a request for a more detailed explanation of how trade negotiating responsibilities would be divided.Trump’s casual announcement raised eyebrows in the trade world given both the clarity of the law and the long-standing precedent that USTR handles the actual negotiating of trade deals. A spokesman for the Democrats on the House Ways and Means Committee called the move “head scratching,” and a spokesman for Sen. Ron Wyden, the Finance Committee’s ranking member, simply pointed to the law when asked for comment. But Ways and Means Chairman Kevin Brady downplayed the comments. “Mr. Trump is a businessman,” he said. “He’ll organize it efficiently. It may well be different than in the past.”

Trump's executive order could block 500,000 legal US residents from returning to America from trips -- When details leaked earlier this week about a spate of immigration-related executive orders from President Donald Trump, much public discussion focused on a 30-day ban on new visas for citizens from seven "terror-prone" countries. But the order signed on Friday by Trump is actually more severe, increasing the ban to 90 days. And its effects could extend well beyond preventing newcomers from Iran, Iraq, Libya, Somalia, Sudan and Yemen, from entering the U.S., lawyers consulted by ProPublica said. It's also expected to have substantial effects on hundreds of thousands of people from these countries who already live in the U.S. under green cards or on temporary student or employee visas. Since the order's travel ban applies to all "aliens" 2014 a term that encompasses anyone who isn't an American citizen 2014 it could bar those with current visas or even green cards from returning to the U.S. from trips abroad, said Stephen Legomsky, a former chief counsel to the U.S. Citizenship and Immigration Services under President Obama. "It's extraordinarily cruel," he said. The order bans the "entry" of foreigners from those countries and specifically exempts from the ban those who hold certain diplomatic visas. Not included in the exemption, however, are those who hold long-term temporary visas 2014 such as students or employees 2014 who have the right to live in the United States for years at a time, as well as to travel abroad and back as they please. "If applied literally, this provision would bar even those visitors who had made temporary trips abroad, for example a student who went home on winter break and is now returning,"

Trump’s Muslim Ban is Culmination of War on Terror Mentality but Still Uniquely Shameful - It is not difficult for any decent human being to immediately apprehend why and how Donald Trump’s ban on immigrants from seven Muslim countries is inhumane, bigoted, and shameful. During the campaign, the evil of the policy was recognized even by Mike Pence (“offensive and unconstitutional”) and Paul Ryan (violative of America’s “fundamental values”), who are far too craven and cowardly to object now.Trump’s own defense secretary, Gen. James Mattis, said when Trump first advocated his Muslim ban back in August that “we have lost faith in reason,” adding: “This kind of thing is causing us great damage right now, and it’s sending shock waves through this international system.”The sole ostensible rationale for this ban — it is necessary to keep out Muslim extremists — collapses upon the most minimal scrutiny. The countries that have produced and supported the greatest number of anti-U.S. terrorists — Saudi Arabia, Egypt, Qatar, UAE — are excluded from the ban list because the tyrannical regimes that run those countries are close U.S. allies. Conversely, the countries that are included — Syria, Iraq, Libya, Somalia, Iran, Sudan, and Yemen — have produced virtually no such terrorists; as the Cato Institute documented on Friday night: “Foreigners from those seven nations have killed zero Americans in terrorist attacks on U.S. soil between 1975 and the end of 2015.” Indeed, as of a 2015 study by the New America research center, deaths caused by terrorism from right-wing nationalists since 9/11 have significantly exceeded those from Muslim extremists.

Federal Court Halts Trump’s Order Barring Muslims After Protesters Swarm Airports  - A FEDERAL JUDGE in New York issued a nationwide temporary injunction, halting the implementation of part of President Donald Trump’s executive order on immigration on Saturday night, blocking the deportation of travelers with valid visas detained at airports in the past 24 hours. Judge Ann Donnelly, a United States District Court Judge in Brooklyn, issued the ruling at an emergency hearing on a lawsuit filed by the American Civil Liberties Union and other groups on Saturday, as Trump’s executive order temporarily banning citizens of seven nations with Muslim majorities from entering the U.S. took immediate effect. The judge ruled that the government must immediately stop deporting travelers from those nations, including refugees who already went through a rigorous vetting process, and provide a complete list of all those detained, deputy director of the ACLU’s Immigrants’ Rights Project Lee Gelernt told reporters in Brooklyn. “This ruling preserves the status quo and ensures that people who have been granted permission to be in this country are not illegally removed off U.S. soil,” Gelernt said.

Judge Blocks Trump Order on Refugees Amid Chaos and Outcry Worldwide — A federal judge in Brooklyn came to the aid of scores of refugees and others who were trapped at airports across the United States on Saturday after an executive order signed by President Trump, which sought to keep many foreigners from entering the country, led to chaotic scenes across the globe. The judge’s ruling blocked part of the president’s actions, preventing the government from deporting some arrivals who found themselves ensnared by the presidential order. But it stopped short of letting them into the country or issuing a broader ruling on the constitutionality of Mr. Trump’s actions. The high-stakes legal case played out on Saturday amid global turmoil, as the executive order signed by the president slammed shut the borders of the United States for an Iranian scientist headed to a lab in Massachusetts, a Syrian refugee family headed to a new life in Ohio and countless others across the world. The president’s order, enacted with the stroke of a pen at 4:42 p.m. Friday, suspended entry of all refugees to the United States for 120 days, barred Syrian refugees indefinitely, and blocked entry into the United States for 90 days for citizens of seven predominantly Muslim countries: Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. The Department of Homeland Security said that the order also barred green card holders from those countries from re-entering the United States. In a briefing for reporters, White House officials said that green card holders from the seven affected countries who are outside the United States would need a case-by-case waiver to return.

Constitutional Crisis? -  To Recap what everyone knows now (in case anyone reads this months from now) On January 27th Donald Trump signed an executive order suspending the refugee admission program for 120 days and blocking US entry for citizens of 7 countries for 30 days.The order was written without input from the Justice, Homeland Security, State and Defence departments. As written it banned entry for legal permanent residents (with green cards) who were travelling abroad when it was issued. It also banned entry for people who were on airplanes flying to the USA when it was signed. On January 28th dozens (to hundreds ?) of people were detained in Airports. Tens of thousands of ordinary Americans went to the airports to protest the new policy (there is hope). Also hundreds of lawyers spontaneously went to airports to attempt to represent (pro bono) the people who were detained and at risk of being put on planes returning to the foreign point of departure. Early January 29, some aspects of the execution of the executive order was temporarily stayed by a judgeJudge Ann Donnelly of the U.S. District Court in Brooklyn granted a request from the American Civil Liberties Union to stop the deportations after determining that the risk of injury to those detained by being returned to their home countries necessitated the decision.   3:00 AM January 29th, the Associated Press reported — something. It is not clear to me if the recent event is a constitutional crisis or just an absurd lie alternative fact.  The Ap reported Stephen Miller, a senior adviser to the White House, said that nothing in the judge’s order “in anyway impedes or prevents the implementation of the president’s executive order which remains in full, complete and total effect.”  If Miller meant what he said, he has declared that the Trump administration will order the executive branch to ignore the stay (that is the only way the order could remain in “total effect”. If so, there would no longer be rule of law in the USA. There would only be Trump’s orders and the decision by people in uniforms whether to obey them.

Trump Team Digs In: "We Wont Apologize For Keeping America Safe" - Under assault from foreign governments, domestic CEOs, and thousands of protesters across the nation, members of the Trump administration were stern in their refusal to budge, and were unified in their support of the president's sweeping executive order that bars refugees and people from seven nations from entering the U.S.  Repeating a phrase first uttered by Trump, top aides to the president denied that the immigration order amounted to a Muslim ban and pointed to the Obama administration for identifying the seven countries included in the order. The Trump team also defended the executive order's at times botched implementation amid backlash from some lawmakers and Federal Judges blocking the partial immgiration order. Among the more vocal defenders of Trump were top aide Kellyanne Conway, who on Sunday emphasized the importance of having safe borders, suggesting that the small number of people who were inconvenienced by the order was worth it to keep the country safe. She said 325,000 people "from overseas came into this country just yesterday through our airports." "You're talking about 300 and some who have been detained or are prevented from gaining access to an aircraft in their home countries," Conway said on "Fox News Sunday." "Thats 1 percent. And I think in terms of the upside being greater protection of our borders, of our people, it's a small price to pay." S

Priebus: Immigration Order ‘Doesn’t Include’ Green Card Holders, But Anyone Traveling to Banned Countries Will Be ‘Subjected to Further Screening’ -- White House Chief of Staff Reince Priebus muddied the waters on President Donald Trump's new executive order barring immigration from select countries, saying Sunday it "doesn't include green card holders going forward" but adding that anyone traveling back and forth from the countries in question will be subject to further screening, including U.S. citizens. In an interview on NBC's "Meet the Press," Priebus was asked about reports that the executive order affected green card holders, contrary to recommendations from the Department of Homeland Security. "We didn't overrule the Department of Homeland Security, as far as green card holders moving forward, it doesn't affect them," Priebus first said. But when pressed by host Chuck Todd on whether it impacts green card holders, Priebus reversed himself, saying, "Well, of course it does. If you're traveling back and forth, you're going to be subjected to further screening."  Asked whether the executive order would affect U.S. citizens, he again indicated it would, suggesting it was up to the "discretionary authority" of a Customs and Border Patrol agent whether to question citizens coming from the countries in question.

Trump Administration Flip-Flops: Green Card Holders Are Not Affected By Immigration Ban -- Following yesterday's statement from a Department of Homeland Security official that "[the order] will bar green card holders", it appears The White House has shifted its view. During an interview of NBC's "Meet The Press", White House Chief of Staff Reince Priebus flip-flopped that "as far as green card holders moving forward, [the order] doesn't affect them." As The Hill reports, White House Chief of Staff Reince Priebus on Sunday said the president's executive order barring refugees and people from seven majority-Muslim nations does not affect green card holders."We didn't overrule the Department of Homeland Security, as far as green card holders moving forward, it doesn't affect them," Priebus said on NBC's "Meet The Press."But Priebus noted if a person is traveling back and forth to one of the seven countries included in that order, that person is likely to be "subjected temporarily with more questioning until a better program is put in place.""We don't want people that are traveling back and forth to one of these seven countries that harbor terrorists to be traveling freely back and forth between the United States and those countries," he said.

Homeland Security States It Will Continue To Enforce Trump's Travel Ban -- Following a tumultuous night, in which late on Saturday evening a Brooklyn Federal Judge issued a partial ban on Trump's immigration order, on Sunday morning the Department of Homeland Security issued a statement saying it planned on continuing to “enforce all of the president’s executive orders in a manner that ensures the safety and security of the American people.” The DHS said the court order would not affect the overall implementation of the White House order and the court order affected a small number of travelers who were inconvenienced by security procedures upon their return, Fox News first reported.“The president’s executive orders remain in place—prohibited travel will remain prohibited, and the U.S. government retains its right to revoke visas at any time if required for national security or public safety,” the statement said.However, the DHS also added it would "comply with judicial orders" not to deport detained travelers affected by President Donald Trump's order. Stephen Miller, a senior adviser to the White House, said, "Nothing in the Brooklyn judge's order in anyway impedes or prevents the implementation of the president's executive order which remains in full, complete and total effect."As reported before, just before 9pm on Saturday, U.S. District Judge Ann Donnelly in New York issued an emergency order temporarily barring the U.S. from deporting people from nations subject to President Donald Trump's travel ban, saying travelers who had been detained had a strong argument that their legal rights had been violated. The stay was ordered after lawyers for the ACLU filed a court petition on behalf of people from seven predominantly Muslim nations who were detained at airports across the country as the ban took effect.

Countries Under Ban Aren’t Main Sources of Terror Attacks (WSJ) —President Donald Trump’s executive order to temporarily ban entry from seven Middle Eastern and African countries states that it is intended to “protect the American people from terrorist attacks by foreign nationals admitted to the United States.” However, few of the dozens of plots in the U.S. during and after 2001 were attempted or carried out by suspects who came from the countries targeted under the ban. Of 180 people charged with jihadist terrorism-related crimes or who died before being charged, 11 were identified as being from Syria, Iraq, Iran, Libya, Yemen, Sudan or Somalia, the countries specified in Mr. Trump’s order, according to an analysis of data on the attacks by The Wall Street Journal. None of the 11 were identified as coming from either Syria, Libya or Sudan, and none of the 11 were involved in any major U.S. plot resulting in the deaths of Americans, including the attacks of Sept. 11, 2001.The Journal analyzed U.S. law enforcement records on terror-related plots and arrests that were compiled by the nonpartisan New America Foundation. The data include those charged with conducting attacks, killed while executing attacks, taking steps toward violence in the U.S., or materially supporting terrorism. It doesn’t include people charged with attempting to travel abroad for jihadist purposes, with no direct correlation to a U.S. attack. The New America Foundation data also didn’t include the 19 Sept. 11 attackers. They were added as part of the Journal’s analysis of the data. President Trump’s chief of staff, Reince Priebus said Sunday on Meet the Press that the seven countries were deemed countries of concern by Congress and the Obama administration. The countries list originates from a bill Mr. Obama signed in 2015 that was originally introduced by Republican lawmakers, with some Democrats supporting it. The legislation grew out of ​concerns about citizens from a variety of countries becoming fighters for Islamic State or other groups in Iraq and Syria, then potentially visiting the U.S. The House version of the bill had 93 co-sponsors, about a third of whom were Democrats.

Trump Fires Acting Attorney General Who Defied Him — President Trump fired his acting attorney general on Monday night, removing her as the nation’s top law enforcement officer after she defiantly refused to defend his executive order closing the nation’s borders to refugees and people from predominantly Muslim countries. In an escalating crisis for his 10-day-old administration, the president declared in a statement that Sally Q. Yates, who had served as deputy attorney general under President Barack Obama, had betrayed the administration by announcing that Justice Department lawyers would not defend Mr. Trump’s order against legal challenges. The president replaced Ms. Yates with Dana J. Boente, the United States attorney for the Eastern District of Virginia, saying that he would serve as attorney general until Congress acts to confirm Senator Jeff Sessions of Alabama. In his first act in his new role, Mr. Boente announced that he was rescinding Ms. Yates’s order. Monday’s events have transformed the confirmation of Mr. Sessions into a referendum on Mr. Trump’s immigration order. Action in the Senate could come as early as Tuesday.

Questions Abound in Wake of Trump Firing Acting AG: President Donald Trump, on just his 10th day in office, fired the acting attorney general for refusing to defend his contentious refugee order. Trump said Yates, a 27-year veteran of the department with respect across the aisle, had “betrayed” the Justice Department, even as top Democrats lodged howls of protest. Trump decided to relieve Yates of duty after she informed Justice Department lawyers that she was “not convinced that the defense of the executive order is consistent with these responsibilities.” In a statement sure to raise the ire of the White House, Yates also wrote in a letter to the lawyers that she was not sure “the executive order is lawful.” She was referring to an executive order Trump signed Friday banning for 90 days citizens from Syria, Iran, Iraq, Somalia, Libya, Sudan, and Yemen. Syria, Iraq and Somalia were among the top five countries of origin for refugees entering the United States in 2016, according to the State Department. The White House responded to Yates’ letter a few hours later with an extraordinarily harsh statement that reflects the Trump administration’s penchant for throwing rhetorical elbows and savaging its foes. Adding to the general confusion of the day, Trump also replaced the acting head of Immigration and Customs Enforcement, Daniel Ragsdale with another acting director, Thomas D. Homan. Senate Minority Leader Charles E. Schumer, D-N.Y. said in a statement that Yates’ dismissal “underscores how important it is to have an attorney general who will stand up to the White House when they are violating the law.”

Trump On A Roll, Fires Director Of Immigration And Customs Enforcement --Having said the infamous words "you're fired" once already this evening, when President Trump relieved acting AG Sally Yates of her duties just after 9pm Eastern, and perhaps realizing just how much he missed the sound, moments ago Trump also relieved acting Immigration and Customs Enforcement (ICE) Director Daniel Ragsdale, who was replaced with Thomas Homan, who previously led ICE's "efforts to identify, arrest, detain, and remove illegal aliens, including those who present a danger to national security or are a risk to public safety, as well as those who enter the United States illegally or otherwise undermine the integrity of our immigration laws and our border control efforts."There was no immediate reason given for Ragsdale's dismissal. The full statement from DHS Secretary Kelly announcing Homan taking over as ICE Director is below.

Who Is Thomas Homan? Donald Trump Chose A New Immigration & Customs Enforcement Director - Monday night, on top of firing and replacing acting Attorney General Sally Yates, Donald Trump appointed Thomas Homan as Immigration and Customs Enforcement Director. Shortly after firing Yates after she told the Department of Justice to not defend Trump's temporary immigration ban, Trump also dismissed former Immigration and Customs Enforcement Director Daniel Ragsdale, who will now be replaced by Holman. However, the Department of Homeland Security's official statement from Secretary of Homeland Security John Kelly does not mention Ragsdale's name, nor give a reason for the replacement.   Instead, the statement reads, "Today, the president appointed Mr. Thomas D. Homan acting director of U.S. Immigration and Customs Enforcement (ICE)." After outlining Homan's career with no further explanation, it ends with these words: I am confident that he will continue to serve as a strong, effective leader for the men and women of ICE. I look forward to working alongside him to ensure that we enforce our immigration laws in the interior of the United States consistent with the national interest. According to the statement, Homan has been involved in immigration enforcement and law enforcement for over three decades. In fact, he's worked with ICE since it was created in March 2003. After receiving the award, The Washington Post published a profile on Homan, describing him as being "really good" at deporting people. Speaking about deportations during an interview with the Post, Homan admitted, "Yes, it’s not my favorite part of the job." Surely, Trump will be relying on him to deport many more people throughout the course of his presidency.

Trump’s Immigration Ban Promises Constitutional Showdown - Did President Donald Trump’s executive order on immigration ban Muslims from the country on the basis of their religion? That will be a central question when federal judges dig more deeply into the constitutionality of the order, signed on Jan. 27. If the answer is yes, it appears vulnerable to a First Amendment challenge. So far, four U.S. district judges -- in Brooklyn, New York; Boston; Alexandria, Virginia; and Seattle -- have issued temporary rulings blocking aspects of the order. These provisional, hastily granted judicial rulings didn’t delve into deep constitutional issues. Instead, they sought to prevent deportations or other government actions that would harm individuals affected by it. Lawyers for those individuals will return to court in coming days to flesh out their arguments. The Trump administration presumably will send attorneys from the Justice Department to defend the executive order, and the respective judges will subsequently issue more-thorough rulings. One or more of the pending cases is likely to evolve this week into unusual and fascinating debates over the meaning of soaring constitutional provisions such as “due process,” “equal protection,” and a part of the First Amendment that prohibits the government from enacting laws “respecting the establishment of religion.” The debate also promises to spill over into confirmation hearings for Trump’s Supreme Court nominee, whom he is expected to make in coming days.

 It Took Donald Trump 8 Days To Bring The U.S. To The Brink Of A Constitutional Crisis - HuffPo -It took little more than a week in office for President Donald Trump to thrust the nation to the brink of a constitutional crisis.Late Friday, Trump issued an executive order forbidding millions of refugees, hundreds of thousands of visitors and 500,000 legal immigrants from seven majority-Muslim countries from entering the United States. Over the following 48 hours, massive protests erupted in cities and airports nationwide, courts temporarily blocked major parts of the order, the administration defied the courts and Democrats called for an investigation into the administration’s defiance. As the weekend drew to a close, an anonymous White House official proclaimed the whole episode a “massive success story.”The federal courts thought otherwise. On Saturday night, a judge in Brooklyn ordered the Trump administration to stop deporting refugees and visitors immigration authorities had previously cleared to enter the country. Two judges in Massachusetts ordered that travelers who were legally authorized to be in the United States shouldn’t be detained at or deported from Logan International Airport for a period of seven days. A judge in Seattle halted the deportation of two travelers. And a judge in Virginia issued an order requiring the administration to allow lawyers access to lawful permanent residents — also known as green card holders — whom Customs and Border Protection agents had detained at Dulles International Airport on Trump’s instructions.When federal judges rule, government officials — up to and including the president — are supposed to obey or risk being held in contempt of court. A government that ignored the courts would be able to violate the law and the Constitution at will. So for more than two centuries, the nation’s courts have had the last word on what’s legal and constitutional — and what is not.  “We are and will remain in compliance with judicial orders,” the Department of Homeland Security said in a statement Sunday evening.

Trial Balloon for a Coup? – I see a few key patterns here. First, the decision to first block, and then allow, green card holders was meant to create chaos and pull out opposition; they never intended to hold it for too long. It wouldn’t surprise me if the goal is to create “resistance fatigue,” to get Americans to the point where they’re more likely to say “Oh, another protest? Don’t you guys ever stop?” relatively quickly.However, the conspicuous absence of provisions preventing them from executing any of the “next steps” I outlined yesterday, such as bulk revocation of visas (including green cards) from nationals of various countries, and then pursuing them using mechanisms being set up for Latinos, highlights that this does not mean any sort of backing down on the part of the regime.Note also the most frightening escalation last night was that the DHS made it fairly clear that they did not feel bound to obey any court orders. CBP continued to deny all access to counsel, detain people, and deport them in direct contravention to the court’s order, citing “upper management,” and the DHS made a formal (but confusing) statement that they would continue to follow the President’s orders. (See my updates from yesterday, and the various links there, for details) Significant in today’s updates is any lack of suggestion that the courts’ authority played a role in the decision.That is to say, the administration is testing the extent to which the DHS (and other executive agencies) can act and ignore orders from the other branches of government. This is as serious as it can possibly get: all of the arguments about whether order X or Y is unconstitutional mean nothing if elements of the government are executing them and the courts are being ignored. Yesterday was the trial balloon for a coup d’état against the United States. It gave them useful information.

Donald Trump’s Muslim Ban Is Cowardly and Dangerous -- The first casualties of this bigoted, cowardly, self-defeating policy were detained early Saturday at American airports just hours after the executive order, ludicrously titled “Protecting the Nation From Foreign Terrorist Entry Into the United States,” went into effect. It must have felt like the worst trick of fate for these refugees to hit the wall of Donald Trump’s political posturing at the very last step of a yearslong, rigorous vetting process. This ban will also disrupt the lives and careers of potentially hundreds of thousands of immigrants who have been cleared to live in America under visas or permanent residency permits. That the order, breathtaking in scope and inflammatory in tone, was issued on Holocaust Remembrance Day spoke of the president’s callousness and indifference to history, to America’s deepest lessons about its own values. The order lacks any logic. It invokes the attacks of Sept. 11 as a rationale, while exempting the countries of origin of all the hijackers who carried out that plot and also, perhaps not coincidentally, several countries where the Trump family does business. The document does not explicitly mention any religion, yet it sets a blatantly unconstitutional standard by excluding Muslims while giving government officials the discretion to admit people of other faiths. ..Republicans in Congress who remain quiet or tacitly supportive of the ban should recognize that history will remember them as cowards.

How the Trump administration chose the 7 countries in the immigration executive order - The seven Muslim-majority countries targeted in President Trump's executive order on immigration were initially identified as "countries of concern" under the Obama administration.White House Press Secretary Sean Spicer on Sunday pointed to the Obama administration's actions as the basis for their selection of the seven countries. Trump'sorder bars citizens from Iraq, Syria, Iran, Libya, Somalia, Sudan and Yemen from entering the U.S. for the next 90 days."There were further travel restrictions already in place from those seven countries," Spicersaid on ABC's "This Week.""What the president did was take the first step through this executive order of ensuring that we're looking at the entire system of who's coming in, refugees that are coming in, people who are coming in from places that have a history or that our intelligence suggests that we need to have further extreme vetting for." In December 2015, President Obama signed into law a measure placing limited restrictions on certain travelers who had visited Iran, Iraq, Sudan, or Syria on or after March 1, 2011. Two months later, the Obama administration added Libya, Somalia, and Yemen to the list, in what it called an effort to address "the growing threat from foreign terrorist fighters." The restrictions specifically limited what is known as visa-waiver travel by those who had visited one of the seven countries within the specified time period. People who previously could have entered the United States without a visa were instead required to apply for one if they had traveled to one of the seven countries.  Trump's order is much broader. It bans all citizens from those seven countries from entering the U.S. and leaves green card holders subject to being rescreened after visiting those countries.

Kellyanne Conway Rages Against "Misinformation" Over Trump's Immigration Order --After exposed Obama, Carter, and Clinton's previous anti-immigration actions amid the backlash against President Trump's executive orders, administration senior adviser Kellyanne Conway appeared on CNBC this morning and was visibly angry at the "information underload" from the mainstream media and bullhorn-touting, crying politicians."The media and politicians have an obligation to calm the public [with facts] about what this policy does, and more importantly does not, do... this is why [Trump] has to tweet, so that the media will cover the tweet [facts]"  Additionally, in an effort to dispel some more misinformation, Breitbart offers seven inconvenient facts about Trump's refugee actions...

• 1. It is NOT a “Muslim ban.” You will search the Executive Order in vain for mentions of Islam, or any other religion. By Sunday morning, the media began suffering acute attacks of honesty and writing headlines such as “Trump’s Latest Executive Order: Banning People From 7 Countries and More” (CNN) and printing the full text of the order.
• 2. The order is based on security reviews conducted by President Barack Obama’s deputies. As White House counselor Kellyanne Conway pointed out on “Fox News Sunday,” the seven nations named in Trump’s executive order are drawn from the Terrorist Prevention Act of 2015. The 2015 “Visa Waiver Program Improvement and Terrorist Travel Prevention Act of 2015” named Iraq, Iran, Sudan, and Syria, while its 2016 update added Libya, Somalia, and Yemen.
• 3. The moratorium is largely temporary. Citizens of the seven countries named as security risks are banned from entering the United States for the next 90 days. Refugee processing is halted for 120 days.

Who Hasn’t Trump Banned? People From Places Where He’s Done Business -- President Trump’s executive order banning travel to the United States from seven predominantly Muslim countries is being rightly challenged in the courts for, among other things, its unconstitutional interference with free exercise of religion and denial of due process. Overlooked in the furor is another troubling aspect of the situation: President Trump omitted from his ban a number of other predominantly Muslim nations where his company has done business. This adds further illegitimacy to one of the most arbitrary executive actions in our recent history, and raises significant constitutional questions. The seven countries whose citizens are subject to the ban are relatively poor. Some, such as Syria, are torn by civil war; others are only now emerging from war. One thing these countries have in common is that they are places where the Trump organization does little to no business. By contrast, other neighboring Muslim countries are not on the list, even though some of their citizens pose just as great a risk — if not greater — of exporting terrorism to the United States. Among them are Saudi Arabia, the United Arab Emirates and Egypt. A vast majority of people living in these countries, like the people living in the seven subject to the immigration ban, are peaceful and law abiding. But these three countries have exported terror to the United States in the past. They accounted for 18 of the 19 terrorists who perpetrated the Sept. 11 attack on American soil (an attack which was directed by another Saudi, Osama Bin Laden, with the assistance of an Egyptian, Ayman al-Zawahri). These countries, unlike those subject to the ban, are ones where Donald Trump has done business. In Saudi Arabia, his most recent government financial disclosure revealed several limited liability Trump corporations. In Egypt, he had two Trump companies registered. In the United Arab Emirates, he had licensed his name to a Dubai golf resort and a luxury residential development and spa. A look at other nations with large Muslim populations only reinforces this troubling pattern. Turkey, India and the Philippines could all pose similar risks as the banned countries of origin that concern the president. Yet Mr. Trump has done business in all three places. They, too, are omitted from his list.

A surprising group affected by Trump's travel ban: airline crews - - On Jan. 27, President Donald Trump signed an Executive Order issuing a travel ban on seven predominantly-Muslim countries. The action ignited large protests at airports around the United States, as refugees and citizens on incoming flights were detained at airports or sent back to their countries. The ban on refugees is expected to last 120 days, and suspends entry of citizens from Iraq, Iran, Sudan, Libya, Somalia and Yemen for 90 days. Refugees from Syria have been blocked from entering indefinitely. One unexpected group of victims is airline flight crews, some of which are international citizens who have to attain Crewmember Visas before working for an international airline in the US. Up until now, that visa was enough to legally enter the US. Now, if a crew member holds a passport for one of the banned countries, it is unclear if they will be able to clear customs after landing at a US-based airport. According to the Association of Flight Attendants-CWA (AFA-CWA), which has United Airlines (UAL), Alaska Airlines (ALK) and Hawaiian Airlines (HA) in its union, the ban has already had a negative effect on this community of workers. “I can confirm that this has impacted crew in the US. It will impact them economically, as well,” says Taylor Garland, spokesperson for the AFA-CWA. “It’s total chaos in the workplace because there was no implementation process. There seems to be no regard for the impact on lives and families.”

Trump Administration Grants Waiver Allowing 872 Refugees Into The U.S.--Having backtracked on its proposal to ban green card holders from 7 mostly Muslim countries from entering the US, it now appears that the Trump admin has softened its stance regarding the admission of refugees, and according to Reuters, citing an internal DHS document, the U.S. government has granted waivers to let 872 refugees into the country this week, despite Trump's executive order on Friday temporarily banning entry of refugees from any country. It is unknown if there is a link between this waiver, and Trump's announcement late last night to replace the acting director of the DHS' Immigration and Customs Enforcement.  According to a Homeland Security official, the waiver was granted after the refugees were considered "in transit" and had already been cleared for resettlement before the ban took effect. Refugees preparing for resettlement typically have severed personal ties and relinquished their possessions, leaving them particularly vulnerable if their plans to depart are suddenly canceled. The waivers, granted by the State Department and the Department of Homeland Security (DHS), came amid international protests against Trump's rushed executive order. Critics said the order in some cases was not clearly communicated to the agencies responsible for implementing it. It was not known if additional waivers would be granted, the official said. The document did not give the nationalities of the refugees who will be admitted into the United States.

Trump’s Flack Says She Doesn’t “Resemble” Terrorists: Except this One -- William K. Black --Maybe it is because I am part Irish, or because I am flying to Dublin this week to present at the Trinity Economic Forum, but Kellyanne Conway’s claim that though she does not “resemble” any “terrorist,” she has to go through security checks at airports, stunned me.  Given her name and looks, that struck me as a bizarre statement.  Surely, she must “resemble” some of the IRA terrorists.  It took me four minutes of research to find an Irish terrorist that she resembles. This is a photo of Conway.  Now, we all know what she means when she says that she does not “resemble” a terrorist – she does not look like her origins were the Middle East.  She looks like her family origins were in Northern Europe.  (Yes, I know, we all share African origins.)  Her family name was “Fitzpatrick” prior to her marriage.  Her dad was Irish and her mom Italian.  She went to Catholic schools. It is no surprise, therefore, that she closely resembles terrorists.  Conway (nee Fitzpatrick), meet the famous Irish terrorist Dolours Price who grew up attending Catholic schools in Belfast – and helped blow up Old Bailey.  Criminologists’ warning that “looks can be deceiving” remains excellent advice when it comes to terrorists.  What Conway and Trump really mean when they refer to terrorists, of course, is “Muslim.”  Muslims “resemble” everyone, because there are tens of millions of Muslims of every race.  I know this because in addition to being part Irish, I grew up in Dearborn, Michigan.  Dearborn has a large, diverse, and vibrant community of Americans whose family origins were in the Middle East.  Many of them are Muslims and many of them are Christians.  These Arab-Americans are so diverse in appearance that, collectively, they “resemble” everyone.

Michael Savage cautions Trump about inner circle - He’s been dubbed “the Godfather of Trumpmania,” but Michael Savage noted on his nationally syndicated radio show Thursday that he also promised he would hold Donald Trump accountable if the real estate billionaire became president.  Savage said he’s concerned that Trump’s inner circle is causing him to move too fast, leading to costly mistakes, such as the raid on al-Qaida in Yemen, initially planned under Obama, that resulted in the deaths of a Navy SEAL and civilians.He expressed particular concern about Kellyanne Conway, Trump’s chief counselor and his former campaign manager, describing her as an “unknown pollster” who “came along late in the campaign and, by the way, attacked Trump for a year straight.”“I think Trump is in danger unless he wakes up to the fact that those around him may not be acting, let us say, in his best interest,” Savage said. Savage said Trump is “moving much too fast and on the wrong issues.”“He should have started with something less controversial than he did, and he should have gone a little slower,” said Savage. Savage’s message of borders, language and culture was a fixture in the campaign, and Trump was a frequent guest on Savage’s show. Savage has described his latest book, “Scorched Earth: Restoring the Country After Obama,” as “an architectural plan for Trump.”  Savage said he doesn’t have a problem with the fact that Conway endorsed Ted Cruz in the Republican presidential primaries. But she chaired a pro-Cruz political action committee that ran advertisements critical of Trump and made many statements on cable news shows. “The things that she said about Trump during the campaign are now being used against him by Trump’s worst enemies,” Savage said.

Barack Obama breaks silence on Donald Trump and encourages protests against Muslim ban - Mirror Online: Barack Obama has broken his silence for the first time since Donald Trump's inauguration - offering his encouragement to people protesting against Donald Trump. President Obama released a statement tonight, welcoming the protests, which he says are "exactly what we expect to see when American values are at stake." And in an even more pointed dig at his successor, he explained the difference between his pause on granting visas to Iraqi citizens in 2011 and Donald Trump's Muslim ban. The statement says he "fundamentally disagrees with the notion of discriminating against individuals because of their faith or religion."

Iran Bans US Citizens From Entering The Country -- One of the most vocal, and angry, reactions to Trump's anti-immigration executive order came from Iran whose foreign ministry, as noted previously, vowed to take reciprocal measures, as the Iranian government called the ban "an insult to the Muslim world." Tehran did not waste any time, and shortly after Iran said it would ban U.S. citizens entering the country in retaliation to Washington's visa ban against the nation. "While respecting the American people and distinguishing between them and the hostile policies of the U.S. government, Iran will implement the principle of reciprocity until the offensive U.S. limitations against Iranian nationals are lifted," a Foreign Ministry statement saidcited by Reuters. "The restrictions against travel by Muslims to America... are an open affront against the Muslim world and the Iranian nation in particular and will be known as a great gift to extremists," said the statement, carried by state media.

Iran Just Officially Ditched The Dollar -- Following President Donald Trump’s ban on travelers from seven predominantly Muslim countries, the Iranian government announced it would stop using the U.S. dollar “as its currency of choice in its financial and foreign exchange reports,” the local Financial Tribune reported. Iran governor Valiollah Seif’s central bank announced the decision in a television interview on January 29. The change will take effect on March 21, and it will impact all official financial and foreign exchange reports.“Iran’s difficulties [in dealing] with the dollar,” Seif said, “were in place from the time of the primary sanctions and this trend is continuing,” but when it comes to other currencies, he added, “we face no limitations.”In a piece published by Forbes, Dominic Dudley contends that this move is significant “in the light of the recent ‘Muslim ban‘” announced by Trump. Iran nationals were added to the order issued by the current U.S. administration, which prompted the Iranian government to vow to stop issuing visas to U.S. citizens.Dudley notes that since 1975, “no Americans have been killed in terrorist attacks in the US by the citizens of the countries included in the ban,” while countries such as Saudi Arabia — “home of 15 of the 19 terrorists involved in the 9/11 attacks” — were left out of the list of prohibited countries. Despite the country’s decision to halt the use of the U.S. dollar as its base currency for exchange with other nations, Iran’s top export is oil. In the global markets, oil is mainly purchased and sold in U.S. dollars. This fiscal year, Iran is expected to earn $41 billion from oil sales, with countries like the United Arab Emirates (UAE) and China as their top clients. It’s still uncertain how the country will manage to switch currencies without relying on the American currency. The shift, Dudley notes, “will add a degree of currency risk and volatility and is likely to complicate matters for the authorities.”

Over 400,000 Brits Want President Trump Banned From The UK --An online petition to prevent US President Donald Trump making an official state visit to the UK has generated enough signatures to warrant it being considered for debate in British parliament.  The petition was initially opened in the immediate aftermath of Trump’s election in November 2016 but, as RT reports, following Trump’s ‘Muslim ban’ executive order on Friday, it has garnered huge support online.“Donald Trump should be allowed to enter the UK in his capacity as head of the US Government, but he should not be invited to make an official State Visit because it would cause embarrassment to Her Majesty the Queen,” the petition states.  The petition also precludes President Trump from meeting with The Prince of Wales in any official capacity:“Donald Trump's well documented misogyny and vulgarity disqualifies him from being received by Her Majesty the Queen or the Prince of Wales.Therefore during the term of his presidency Donald Trump should not be invited to the United Kingdom for an official State Visit.”  British Labour Party leader Jeremy Corbyn tweeted the petition just after midday on January 29:  @Theresa_May would be failing the British people if she does not postpone the state visit & condemn Trump's actions in the clearest terms— Jeremy Corbyn MP (@jeremycorbyn) January 29, 2017

 Malevolence Tempered by Incompetence: Trump’s Horrifying Executive Order on Refugees and Visas -- NBC is reporting that the document was not reviewed by DHS, the Justice Department, the State Department, or the Department of Defense, and that National Security Council lawyers were prevented from evaluating it. Moreover, the New York Times writes that Customs and Border Protection and U.S. Citizen and Immigration Services, the agencies tasked with carrying out the policy, were only given a briefing call while Trump was actually signing the order itself. Yesterday, the Department of Justice gave a “no comment” when asked whether the Office of Legal Counsel had reviewed Trump’s executive orders—including the order at hand. (OLC normally reviews every executive order.)This order reads to me, frankly, as though it was not reviewed by competent counsel at all.CNN offers extraordinary details: Administration officials weren't immediately sure which countries' citizens would be barred from entering the United States. The Department of Homeland Security was left making a legal analysis on the order after Trump signed it. A Border Patrol agent, confronted with arriving refugees, referred questions only to the President himself, according to court filings. ..It wasn't until Friday -- the day Trump signed the order banning travel from seven Muslim-majority countries for 90 days and suspending all refugee admission for 120 days -- that career homeland security staff were allowed to see the final details of the order, a person with the familiar the matter said.. . .Homeland Security Secretary John Kelly and Department of Homeland Security leadership saw the final details shortly before the order was finalized, government officials said.

Outrage About Trump Exposes “Librul” Hypocrisy -- Wherever you look, those Trump policies are building directly on, or simply repeat Obama policies. The now theatrically outraged people swallowed those without a word of protest. A Trump order yesterday introduced a temporary ban on visa holders and visa issuing to citizens of seven Middle East countries. These countries are: Iraq, Syria, Iran, Libya, Somalia, Sudan and Yemen. Those countries have one thing in common. No terrorist who killed on U.S. soil originated from them. The (few) terrorists who attacked within the U.S. came from the Middle Eastern countries not on the list. Following Trump's order, outcries on social media and in various papers ensued. People went to airports to protest. TV was there to spread the news.But it is nothing new that the citizens of those countries are targeted with U.S. visa restrictions. It was Obama who introduced such in 2015 and 2016. The Trump order links directly to them. It does not name any country but refers to them as "countries designated in Division O, Title II, Section 203 of the 2016 consolidated appropriations act."U.S animosities against these countries is even older. According to the former general Clark, plans were made to wage war against six of the now named seven countries back in 2001. Yemen was later added while Lebanon was (temporarily?) taken off the list. The administrations change, the selected "enemies" stay the same. In 2011 Obama stopped processing Iraqi visa requests for six month. That move was quite similar to Trump's current one. Where was the outcry in 2001? In 2011, 2015 and 2016? Is it only bad when Trump restricts visits for certain people from certain countries?

Furor Time - Kunstler -   It’s only taken a week for President Trump to give the body politic an immigration enema. The aim, perhaps, was to flush out a set of bad ideas that Barack Obama had managed over eight years to instate as “normal.” Namely, that it’s unnecessary to enforce the immigration laws, or cruel and unusual to do so, or that national borders are a barbarous anachronism, or that federal laws are optional in certain self-selected jurisdictions. But Trump’s staff sure fucked up the details carrying out his refugee and immigration ban, most particularly detaining people with green cards, and those already granted visas. The blunder provoked an impressive blowback of airport protests, and finally a stay from a federal judge, which muddied the legality of Trump’s executive order — all in all, a tactical stumble for Prez DT, who apparently omitted to consult with an array of government agencies and their lawyers before issuing the decree at close-of-business Friday. For the record, I’m down with the complaint that Saudi Arabia, Pakistan, and Afghanistan were left off the no-come list, since those three lands produce more radical Islamic maniacs than anywhere else. The reader by now probably detects my ambivalent feelings in this bundle of issues and grievances, so let me try to clarify my basic positions: I think borders matter and they need to be protected. I think our immigration law enforcement under Obama has been deeply dishonest and damaging to our politics in ways that go far beyond the question of who gets to come here. I believe we are under no obligation to take in everybody and anybody who wants to move here. I believe we need an official time out from the high-volume immigration of recent decades. I believe we have good reasons to be picky about who we let in. The most dishonest and damaging trope of recent years is the widely-accepted idea on the Left that illegal immigrants are merely “undocumented” — as if they were the hapless victims of some clerical error made by the government and therefore deserving of a pass. Language matters. The acceptance and repetition of this lie has in effect given permission to the left to lie whenever it suits their purposes about all kinds of things, for instance the delusion that Russia stole the election from Hillary Clinton. And it is certainly true that they are assisted by legacy media giants such as The New York Times, The Washington Post, and NPR. The Times, especially is keen to provoke a national crisis that might unseat Trump, by simply declaring it so in a three-column headline:

Washington State Attorney General Sues Trump To Block Immigration Executive Order Nationwide - One day after 16 democratic attorneys general across the United States condemned President Trump's order to restrict people from seven Muslim-majority countries from entering the country, on Monday one of them - the Attorney General of Washington state - said he is filing a lawsuit against President Donald Trump over his immigration executive order. Bob Ferguson announced Monday that he is filing a federal lawsuit against President Donald Trump, some high-ranking administration officials and the Department of Homeland Security. The attorney general’s office says the complaint asks U.S. District Court to declare unconstitutional key provisions of Trump’s executive order on immigration.

LAPD Chief Refuses to Enforce Trump Immigration Law -- With 'sanctuary' cities across America furiously defiant over the new administration's threats to halt Obama's taxpayer-funded law-breaking, AP reports that President Trump is reviving a program that deputizes local officers to enforce federal immigration law.The program received scant attention as Trump announced on the same day his plans to build a border wall and hire thousands more federal agents as he looks to fulfill promises from his campaign.The program has fallen out of the favor in recent years amid complaints from critics that it promotes racial profiling.More than 60 police and sheriff's agencies had the special authority in 2009.Since then, the number has been halved and the effort scaled back amid complaints officers weren't focusing on catching violent offenders and instead arrested immigrants for minor violations. Police leaders across America have already responded with LAPD chief Charlie Beck perhaps the most vocal, saying in November, he has no plans to follow Trump's demands, "we are not going to engage in law enforcement activities solely based on somebody’s immigration status. We are not going to work in conjunction with Homeland Security on deportation efforts."

New York’s Bodegas Shut Down to Protest President Trump’s Travel Ban — Hundreds of ethnic Yemeni business owners who operate New York City corner bodegas and neighborhood delis closed shop Thursday in protest of President Donald Trump's travel ban on people from seven Muslim-majority countries.The shops were locked at noon and were to remain shuttered until 8 p.m., according to organizers of a late afternoon rally in downtown Brooklyn. At least 1,000 Yemeni-run small businesses are a part of many New Yorkers' daily lives, said Brooklyn Borough President Eric Adams, who planned to attend the rally.Haron Zokari closed his Manhattan deli at noon, as well. He said his wife and baby are stuck in Yemen after almost completing a four-year, green-card process."We are trying to stay strong," he said. "There's people there who are refugees and who are starving and running for their lives, so thank God we don't have it as bad as they do."Trump's executive order barred people from Yemen, Iraq, Iran, Libya, Somalia, Sudan, and Syria from entering the U.S. for 90 days. Under the order, travelers have been detained, sent back from the United States or stranded in other countries. Zaid Nagi, who owns three delis in the Bronx, said the ban disrupted plans to bring his mother to the United States, where he has lived for more than 20 years. The 36-year-old married father of four said the point of the protest was to say, "We are part of this community. We are not who this order is trying to say we are."

Plans to defy Trump among federal workers - The signs of popular dissent from President Donald Trump’s opening volley of actions have been plain to see on the nation’s streets, at airports in the aftermath of his refugee and visa ban, and in the blizzard of outrage on social media. But there’s another level of resistance to the new president that is less visible and potentially more troublesome to the administration: a growing wave of opposition from the federal workers charged with implementing any new president’s agenda. Less than two weeks into Trump’s administration, federal workers are in regular consultation with recently departed Obama-era political appointees about what they can do to push back against the new president’s initiatives. Some federal employees have set up social media accounts to anonymously leak word of changes that Trump appointees are trying to make. And a few government workers are pushing back more openly, incurring the wrath of a White House that, as press secretary Sean Spicer said this week about dissenters at the State Department, sends a clear message that they “should either get with the program, or they can go.” At a church in Washington, D.C., last weekend, dozens of federal workers attended a support group for civil servants seeking a forumto discuss their opposition to the Trump administration. And 180 federal employees have signed up for a workshop next weekend, where experts will offer advice on workers’ rights and how they can express civil disobedience.“You’re going to see the bureaucrats using time to their advantage,” said an employee, who spoke on the condition of anonymity for fear of retaliation. Through leaks to news organizations and internal complaints, he said, “people here will resist and push back against orders they find unconscionable.” The resistance is so early, so widespread and so deeply felt that it has officials worrying about paralysis and overt refusals by workers to do their jobs.

Tim Cook Blasts Trump Immigration Order: "It Is Not A Policy We Support" --First Google warned of the adverse side-effects from Trump's executive order on immigration by telling its offshore employees to return to the US, and advising those currently in the country to refrain from traveling abroad.Then, Microsoft CEO Satya Nadella, wrote in LinkedIn post that “as an immigrant and as a CEO, I’ve both experienced and seen the positive impact that immigration has on our company, for the country, and for the world. We will continue to advocate on this important topic.” Finally, moments ago the big tech trifecta was completed when Apple CEO Tim Cook blasted President Donald Turmp's executive orders on immigration policies Saturday, saying that immigration has been essential to Apple's corporate climate.“Apple would not exist without immigration, let alone thrive and innovate the way we do,” wrote Cook in an email to Apple staff, Recode reported. “I've heard from many of you who are deeply concerned about the executive order issued yesterday restricting immigration from seven Muslim-majority countries. I share your concerns. It is not a policy we support.” Cook also quoted Martin Luther King in the email to employees: “In the words of Dr. Martin Luther King, ‘We may have all come on different ships, but we are in the same boat now.’"

Why The Cold War Between Tech CEOs and Trump Is About To Go Nuclear -- Over the weekend, openly defiant CEOs, particularly among the tech sector, expressed their displeasure with Trump's Friday executive order on travel from seven Muslim countries with both words and deeds, among which the following (summary courtesy of Axios):

• VCs funding the ACLU: Several venture capitalists, as well as a few entrepreneurs, took turns soliciting donations to the American Civil Liberties Union through social media and personally matching those donations.
• Airbnb volunteers to help provide housing for impacted immigrants: The home-sharing company said that it will work with travelers and organizations to provide housing for those impacted by the executive order, whether through volunteer hosts or by funding housing.
• Lyft and Uber commit millions of dollars to legal aid: On Sunday, Lyft said it will donate $1 million to the ACLU over the next four years. Later in the day, Uber said it will create a $3 million legal defense fund for impacted drivers, as well as provide legal assistance and compensate their lost wages.
• Google is setting up a $2 million crisis fund: The search giant has set up a fund that will donate to the American Civil Liberties Union, Immigrant Legal Resource Center, International Rescue Committee, and UNHCR.

On Monday morning, former US Treasury Secretary Larry Summers, speaking in an interview with Bloomberg Television, said that he is “gratified” by what he heard from the tech community.  “As global businesses, they have a huge stake in the United States being a nation of the Statue of Liberty rather than being a nation of refugee camps.” He added that “they have a huge stake in the United States supporting an open and tolerant global system, they have that stake for their employees, their customers, they have it for the reputation of the United States and they have spoken out.”

Twitter Employees Are Donating $1.59 Million To The ACLU After Trump’s Travel Ban - Employees at Twitter have raised $530,000 to support relief efforts following President Trump’s controversial immigration order, according to Twitter employees who spoke with BuzzFeed News. That figure was matched by the company’s Executive Chair Omid Kordestani and CEO Jack Dorsey, the employees said, citing a company-wide email sent Wednesday evening. The total $1.59 million will be donated to the ACLU. Reached for comment, Twitter confirmed the amounts.“The Executive Order’s humanitarian and economic impact is real and upsetting,” Dorsey said on Twitter over the weekend. “We benefit from what refugees and immigrants bring to the U.S.”Several other tech industry leaders have criticized the president’s order, including Tim Cook, Brian Chesky, and Travis Kalanick, who is an economic adviser to Trump.Elon Musk, another member of the president’s Strategic and Policy Forum, said he would consult his fellow business leaders and propose amendments to the immigration order when the group meets with the president on Friday. Amazon and Expedia filed sworn statements earlier this week in support of a Washington state lawsuit against the Trump administration’s travel ban. Amazon CEO Jeff Bezos told his staff that the company will explore additional legal options, as did Apple’s Cook.

Corporate lawyers prepare for battle over Trump’s travel ban - FT - An army of corporate lawyers has joined the battle against President Donald Trump’s travel ban on citizens from seven Muslim-majority countries, as an effort to advise travellers detained at US airports shifts to legal action that could stretch on for years. Some of the biggest corporate law firms — including Gibson Dunn; Hogan Lovells; Paul Weiss; Skadden Arps; Covington & Burling; Latham & Watkins, and Kirkland & Ellis — sent lawyers to US airports over the weekend to provide advice. They are turning their attention to court challenges and immigration advice to those whose status is in flux. “You’re going to see a transition to more long-term challenges,” said Norman Eisen, the former special counsel for ethics and government reform in the Obama administration and a founder of Citizens for Responsibility and Ethics in Washington. “These are all emergency orders. We’re going to transition from these expedited decisions to a more formally based litigation where there will be motions, writs, evidence taken. This is a longer process and will go on for years.” The American Civil Liberties Union is preparing an assault on the constitutionality of the order on faith grounds, and said it had received $24m in donations last weekend alone. Washington was the first state to sue the administration on Monday over the ban, and San Francisco and Massachusetts followed on Tuesday. But involvement of large law firms shows that it is not just non-profit organisations that are willing to fight the government over the ban, but some of the most deep-pocketed corporate lawyers. Covington & Burling, a Washington firm that employs many former government lawyers, said it was forming a working group to co-ordinate advice on the fallout from the order.

Multinationals have the power to beat Donald Trump on immigration -FT - Steve Bannon, chief strategist to Donald Trump and the most malevolent voice in the US president’s head, is fond of observing that the media, business and “the party of Davos” only dimly grasp their agenda. Judging by the pre-inauguration mood among chief executives, particularly those from Wall Street, he is right. At the World Economic Forum last month, some remained naively cheerful about a dealmaker in the White House giving them tax cuts and deregulation. The abrupt, chaotic imposition of immigration curbs at the weekend has started to alert them to reality. What US multinationals confront in the president is not a loud-mouthed poseur who will do little in practice to disrupt the management of Apple and Goldman Sachs, but an ideological foe. The block on refugees from Syria and immigrants from other countries is only the start if Mr Bannon and Jeff Sessions, Mr Trump’s nominee as US attorney-general, have their way. Since, as Mr Bannon puts it, Mr Sessions is “the clearing house for policy and philosophy” in the Trump administration, next comes a clampdown on work visas. “Being diverse is not optional; it is what we must be,” Lloyd Blankfein, Goldman Sachs’s chief executive, told staff on Monday. Try that on Mr Bannon, a former Goldman executive, who bitterly condemns an elite that “wants to dictate to everybody how the world’s going to be run”, or Mr Sessions, who dismisses Silicon Valley’s wish for high-skilled immigration as a “hoax”. Multinational companies, agents of many economic changes in recent decades, face an existential challenge. Unlike other presidents, Mr Trump does not want to work with them or to reform them: he wants to bring them to heel. On the campaign trail, he promised a fight for the soul of business between globalisation and nationalism, and it turns out he meant it. Mr Bannon’s philosophy is not coherent: it includes a rambling mish-mash of support for “Judeo-Christian” capitalism, which he credits for the US postwar economic miracle, along with suspicion of Chinese state-backed capitalism and Islamist fundamentalism. The conclusion is simple, though: enough of helping others; time to put America first in “a brutal and bloody conflict”.

Former Norway PM held at Washington airport over 2014 visit to Iran -- A former prime minister of Norway has spoken of his shock after he was held and questioned at Washington Dulles airport because of a visit to Iran three years ago. Kjell Magne Bondevik, who served as prime minister of Norway from 1997-2000 and 2001-05, flew into the US from Europe on Tuesday afternoon to attend this week’s National Prayer Breakfast. He was held for an hour after customs agents saw in his diplomatic passport that he had been to Iran in 2014. Bondevik said his passport also clearly indicated that he was the former PM of Norway. “Of course I fully understand the fear of letting terrorists come into this country,” he told ABC7. “It should be enough when they found that I have a diplomatic passport, [that I’m a] former prime minister.“That should be enough for them to understand that I don’t represent any problem or threat to this country and [to] let me go immediately, but they didn’t.” Bondevik, who is the president the Oslo Centre, a human rights organisation, said he was placed in a room with travellers from the Middle East and Africa who were also facing extra scrutiny. He said he was ordered to wait for 40 minutes, before being questioned for another 20 minutes about his trip to Iran, which he had taken to speak at a human rights conference. “I was surprised, and I was provoked,” he said. “What will the reputation of the US be if this happens not only to me, but also to other international leaders?”

U.S. Hits Iran With Sanctions, Drawing Threat from Tehran - The Trump administration sanctioned dozens of Iranian-linked entities in a move that senior U.S. officials said marked the beginning of an escalating campaign to confront Tehran in the Middle East and restrain its military capabilities. Tehran quickly responded with its own plan to impose reciprocal measures, including legal restrictions on U.S. nationals and companies. The standoff amplifies the risk for the Trump administration of a crisis in the Persian Gulf, current and former U.S. officials said. The Pentagon said on Friday that a naval destroyer, the USS Cole, had arrived in the region to police the waters off Yemen. The Trump White House has accused Iran of arming and training Houthi militias in Yemen that have attacked American, Saudi and Emirati naval vessels. Senior White House officials have also voiced fears that Tehran and its allies could obstruct commercial traffic flowing through one of the world’s most important strategic waterways. The Trump White House stressed the fresh sanctions didn’t violate the landmark nuclear agreement forged between Iran, the Obama administration and other global powers in 2015. Iran has said any U.S. sanctions violate the pact. U.S. officials declined to comment on whether Secretary of State Rex Tillerson or other Trump administration officials would try to engage Iran’s government in an effort to defuse tensions. The Obama administration spent years developing a diplomatic channel to Tehran, specifically through Foreign Minister Javad Zarif. On Friday, President Donald Trump tweeted that Iran was “playing with fire” and “they don’t appreciate how ‘kind’ President Obama was to them. Not me!” Less than an hour later, Mr. Zarif responded with his own tweet that Iran was “unmoved by threats.” Trump administration officials said they were exploring other financial and military measures to constrain Tehran.

If Americans Truly Cared About Muslims, They Would Stop Killing Them by the Millions - Black Agenda Report -- In the most dramatic expression of insider opposition to a sitting administration’s policies in generations, over 1,000 U.S. State Department employees signed on to a memo protesting President Donald Trump’s temporary ban on people from seven predominantly Muslim countries setting foot on U.S. soil. Another recent high point in dissent among the State Department’s 18,000 worldwide employees occurred in June of last year, when 51 diplomats called for U.S. air strikes against the Syrian government of President Bashar al Assad. Neither outburst of dissent was directed against the U.S. wars and economic sanctions that have killed and displaced millions of people in the affected countries: Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. Rather, the diplomatic “rebellion” of last summer sought to pressure the Obama administration to join with Hillary Clinton and her “Big Tent” full of war hawks to confront Russia in the skies over Syria, while the memo currently making the rounds of State Department employees claims to uphold “core American and constitutional values,” preserve “good will towards Americans” and prevent “potential damage to the U.S. economy from the loss of revenue from foreign travelers and students.” In neither memo is there a word of support for world peace, nor a hint of respect for the national sovereignty of other peoples -- which is probably appropriate, since these are not, and never have been, “core American and constitutional values.”  Since 2001, war has been normalized in the U.S. -- especially war against Muslims, which now ranks at the top of actual “core American values.” Indeed, so much American hatred is directed at Muslims that Democrats and establishment Republicans must struggle to keep the Russians in the “hate zone” of the American popular psyche. The two premiere, officially-sanctioned hatreds are, of course, inter-related, particularly since the Kremlin stands in the way of a U.S. blitzkrieg in Syria, wrecking Washington’s decades-long strategy to deploy Islamic jihadists as foot soldiers of U.S. empire.

The Chaos President - Pam Martens  -- The chaos resulted from an Executive Order signed by Trump on Friday that bans the majority of refugees from coming to the U.S. for 120 days and suspends visas for persons from seven majority-Muslim countries: Iraq, Iran, Syria, Yemen, Sudan, Libya and Somalia. There was an immediate outcry from CEOs of  tech companies in Silicon Valley who have essential personnel working in the U.S. with visas. According to the National Foundation for American Policy, 51 percent of tech startup companies with a value of more than $1 billion had an immigrant as a co-founder. Google co-founder, Sergey Brin, joined protesters at San Francisco International Airport. Brin said he was protesting in his personal capacity as a refugee, not in his official Google capacity. Apple CEO Tim Cook and Microsoft CEO Satya Nadella expressed strong objections to the Trump order. Sam Altman, President of Y Combinator, also protested at the San Francisco airport and released a statement on his blog. He wrote that Trump’s “precedent of invalidating already-issued visas and green cards should be extremely troubling for immigrants of any country or for anyone who thinks their contributions to the US are important.  This is not just a Muslim ban.  This is a breach of America’s contract with all the immigrants in the nation.” The economic impact from banning college and university students from the targeted countries could also weigh heavily on U.S. prospects. The Washington Post reports that in 2015 “college students from overseas contributed more than $35 billion to the U.S. economy, according to the Commerce ­Department.” (How many parents from any foreign country will want their children to attend colleges and universities in the U.S. when chaotic, draconian policies can be crafted on a Friday afternoon by executive action.)

Seeing through the smoke - Frances Coppola - The last week has been extraordinary, even by the standards of these extraordinary times. A flurry of Executive Orders from the new President of the United States has thrown the global order into chaos and sparked outrage throughout the world.But he has only done exactly what he said he would do. There is nothing in the Executive Orders signed so far that was not announced during the Presidential campaign, repeatedly and to loud cheers from his many supporters. The President was lawfully voted in by the people of the United States on the basis of the promises he made to them, and he is now following through on those promises. Frankly, I find this hard to criticise. If his decisions are illiberal, discriminatory and racist, that is because a substantial proportion of the American people are illiberal, discriminatory and racist. The problem is not the President, it is those who elected him. I do not understand why those who cherish liberal values and the rights of man convinced themselves that President Trump did not mean what he said. Not to follow through on his promises would have been a major betrayal of those who voted for him. How could anyone possibly respect or trust a President who made promises on the campaign trail that he had no intention of keeping once in office? Honesty, loyalty and trustworthiness are the foundation of civic society. What price "liberal values", if they can only be maintained through bad faith? There is a distressing tendency in the mainstream press to dismiss the election of an illiberal, discriminatory and racist President as "populism", as if that is somehow different from, and inferior to, democracy.  But populism is democracy. Democracy does not guarantee liberalism, tolerance and respect for human rights. Democracy can elevate both saints and monsters to power. The fact is that the American people democratically elected this President. They voted for illiberalism, intolerance and racism. And not for the first time, either.

Trump's go-to man Bannon takes hardline view on immigration | Reuters: When Donald Trump's administration put together its controversial executive order on immigration, it was Steve Bannon – the populist firebrand fast emerging as the president's right-hand man – pushing a hard line. Senior officials at the Department of Homeland Security (DHS) interpreted the order to mean that lawful permanent residents - green card holders – who hailed from the seven Muslim-majority countries targeted in the immigration order would not face additional screening when they entered the country. But they were quickly overruled by Bannon, who is Trump’s chief strategist and oversaw the drafting of the executive order along with White House senior policy adviser Stephen Miller, a close ally of Bannon's, the officials said. "They were in charge of this operation," one senior DHS official said, adding that the experts were "almost immediately overruled by the White House, which means by Bannon and Miller." A senior national security official described the pair as a "tag team" pushing Trump's key policies, including the immigration order which bars the entry of refugees and places a temporary hold on people from seven countries - Syria, Yemen, Iraq, Iran, Sudan, Somalia and Libya. The inclusion of green card holders from those countries intensified opposition to an executive order that sparked legal challenges, protests at airports and sharp criticism from inside the Republican Party, including from some Trump allies. DHS officials say there was little or no White House consultation with immigration, customs and border security agencies on the immigration policy change, causing widespread confusion over how to implement Trump's order.

Trump travel ban stirs faint corporate outcry beyond Silicon Valley | Reuters: Most U.S. corporate bosses have stayed silent on President Donald Trump's immigration curbs, underscoring the sensitivities around opposing policies that could provoke a backlash from the White House. While the leaders of Apple Inc APPL.O, Google (GOOGL.O) and Facebook Inc (FB.O) emailed their staff to denounce the suspension of the U.S. refugee program and the halting of arrivals from seven Muslim-majority countries, many of their counterparts in other industries either declined comment or responded with company statements reiterating their commitment to diversity. The difference in response shows the pressure large swathes of corporate America faces to avoid tussling publicly with the new administration. Companies such as aircraft maker Boeing Co (BA.N) and automakers Ford Motor Co (F.N) and General Motors Co (GM.N) have already had run-ins with Trump over other issues, and they have much at stake in policy decisions that the administration will make on tax, trade and regulatory matters. Before office, Trump attacked Boeing over the cost of the future Air Force One program. Boeing Chief Executive Officer Dennis Muilenburg met with him earlier this month and said he and Trump had made progress on the Air Force One issue and the potential sale of fighter aircraft. Representatives from Boeing, General Motors and Ford declined to comment on Trump's immigration curbs.

Economic Implications of the Immigration Order - The most troubling aspects of President Trump's immigration executive order are the moral and national security implications (the later is outside my area of expertise, but its hard to see how betraying our friends, alienating our allies and handing an easy propaganda victory to our enemies advances the stated goal of protecting America). The economic implications are pretty bad as well.  Although the order currently applies only to people from seven countries, the spectacle of people who've jumped through all the bureaucratic hurdles to get permission to come to the US being detained and turned away at airports by a sudden, incompetently planned and implemented policy change will no doubt deter many others from wanting to come. In the short run, making it less attractive to come to the US will hurt our tourism and education exports.  In the longer run, it will harm our productivity by diminishing our universities, science, technology and human capital.  One of Trump's stated economic concerns is the US trade deficit, which was -$499.5 billion in 2016 (2.7% of GDP), according to the BEA's advance estimate.   While the US trade balance is negative in goods (-$770.5 billion) that is partly made up for by a $271.1 billion surplus in services.  According to the ITA, the US had 77.5 million visitors in 2015, and Colorado had 461,000.  Tourism is an important part of US service exports.  2016 figures aren't available yet, but in 2015, according to the BEA, $750.9 billion in service exports included $122.4 billion in "other personal travel" (i.e., non-business travel not related to health or education).   The order won't only deter tourists; in addition to tourism, education services are another major US export.  According to the Institute of International Education, there were just over 1 million international students enrolled in US colleges and universities last year. 

The Rise of the Zero-Sum Pie-Shrinkers - Justin Fox - The Donald Trump administration’s crackdown on travel to the U.S., although targeted at just a few nations and pitched as a terrorism-fighting move, has led to not-unreasonable worries that getting in and out of the U.S. will soon become a lot more difficult for all foreign nationals. For businesses and others (universities!) that depend on foreign talent, foreign customers or both, this is understandably alarming. As Christopher Mims put it in a Wall Street Journal column today on the tech industry’s concerns: Venture capitalists, executives and engineers I spoke to consistently made the same argument: In 2017, politicians who try to unduly impede the free movement of tech workers stand to deprive their home country of revenue and employment, as well as all the additional support, service and administrative jobs each of those highly paid workers creates in a community. Yes, restricting immigration -- especially in the inconsistent, hostile, shoddy way that it was done last weekend -- is bad for business. So is restricting trade, and picking foreign-policy fights with allies. In general, business leaders and investors seem to be waking up from their post-election dream that the Trump years would just be one long profit-boosting parade of tax cuts, deregulation and infrastructure spending. This is going to lead to some interesting conflicts within the Republican Party, and even within the Trump team. It may bring an economic downturn or even a financial crisis, although I wouldn’t go predicting that just yet. In the meantime, it seems important to note that for the people who seem to be calling the shots in the White House, including the president, the fact that their trade and immigration policies may hurt some businesses is a feature, not a bug. We’ve just been through a long era during which discussion of economic policy was largely about growing the pie from which all of us partake.  Not anymore: Who cares if productivity numbers tick down, or if our already somnambulant GDP sinks a bit further into its pillow? Nearly all the gains of the last 20 years have accrued to the junta anyway. It would, at this point, be better for the nation to divide up more equitably a slightly smaller pie than to add one extra slice -- only to ensure that it and eight of the other nine go first to the government and its rentiers, and the rest to the same four industries and 200 families. That’s from Michael Anton, a former George W. Bush speechwriter who has spent the past few years working at Citigroup and BlackRock but is now a national-security aide in the Trump White House. The “junta” he’s talking about is the pro-business, pro-globalization bipartisan elite -- you know, the people he worked with at Citigroup and BlackRock.

Over 100,000 Visas Revoked Due To Trump Travel Ban --Over 100,000 visas have been revoked following President Trump’s ban on travel from seven mostly Muslim countries the WaPo and NBC reported citing a government attorney in Alexandria federal court Friday. The attorney, Erez Reuveni from the Justice Department’s Office of Immigration Litigation, did not say how many people with visas were sent back to their home countries in response to the travel ban. However, he said no returning legal permanent residents have been denied entry. Reuveni told the court on Friday that in addition to the 60 people who were allegedly stripped of their legal status and deported, some 100,000 others have had their visas revoked since last Friday, when Trump signed an executive order barring citizens of Iraq, Iran, Sudan, Libya, Somalia, Syria, and Yemen from entering the US for 90 days while the federal government revisits its screening processes. The number was revealed during a hearing in a lawsuit filed by attorneys for two Yemeni brothers who arrived at Dulles International Airport last Saturday. They allege they were forced into giving up their legal resident visas, they argue, and quickly put on a return flight to Ethiopia. According to the lawsuit, they were detained by Customs and Border Protection agents at Dulles Airport and "forced to sign" I-407 forms "against their will and without their knowledge or consent." "The Immigration and Nationality Act provides no way to legally effectuate such a ban against this category of immigrants," the Virginia lawsuit states. "Congress has provided that immigrants in petitioners’ situation are entitled to enter the United States, and that if the government disagrees, it must institute regular removal proceedings before an immigration judge." Others meanwhile have said that Trump is merely doing what he promised, and that his immigration "ban" has been seen approvingly by a plurality of the US population as a recent Reuters poll found. A third, more skeptical group, has noted that the number seems too high to be realistic: "100,000 visa revoked in one week? So 5 million are issued a year from the 7 countries?" a confused commentator noted.

 Homeland Security chairman suggests changes possible to Trump refugee order | TheHill: House Homeland Security Committee Chairman Mike McCaul (R-Texas) on Wednesday would not rule out using his committee to make legislative tweaks to President Donald Trump’s executive order temporarily blocking travelers from seven Muslim-majority nations and suspending the resettlement of refugees in the U.S. The GOP chairman’s comments to The Hill come just a day after Speaker Paul Ryan (R-Wis.) said he backed Trump’s executive order and seemed to suggest legislation was not needed to address bipartisan concerns about the plan. “I think we’re going to look at both oversight and legislatively what we can do to better protect America and shut down terror pathways into the United States,” McCaul said when asked whether he planned to take up any legislative fixes in his committee. “That is the charge and mission of this committee.” McCaul, who advised the Trump campaign on national security issues and had been on Trump’s shortlist for Homeland Security secretary, declined to lay out specific concerns he had with the order. He’ll address them privately Thursday when he sits down with Homeland Security Secretary John Kelly, who is scheduled to appear before McCaul’s panel in a public hearing next Tuesday.  “You’re going to see a lot of that oversight take place [Tuesday] and I think the executive orders will be an obvious topic of discussion,” McCaul said. McCaul and another Trump adviser, Rudy Giuliani, authored a white paper for the Trump campaign last fall focused on ways to stop terrorists from entering the country. But it explicitly warned against a ban on Muslims, something Trump had called for on the campaign trail.

Boston Judge Unblocks Trump Travel Ban, Asks "Where Does It Say Muslim Countries?" -- President Donald Trump’s ban on immigrants from seven Muslim-majority countries will take effect in Boston on Sunday after a federal judge refused to extend a temporary ruling blocking its enforcement. As Bloomberg reports, the decision by U.S. District Judge Nathaniel Gorton on Friday dealt a setback to rights advocates who argued that blocking people from seven nations in the Middle East was unconstitutional. Gorton was weighing whether to extend a seven-day order blocking parts of Trump’s Executive Order. As GMA News Onine reports, U.S. District Judge Nathaniel Gorton on Friday asked Matthew Segal, an attorney with the American Civil Liberties Union (ACLU) representing the plaintiffs in the Boston case."Where does it say Muslim countries?"   Segal replied..."If your honor's question is, 'Does the word 'Muslim' make a profound presence in this executive order?,' my answer is that it doesn't,... But the president described what he was going to do as a Muslim ban and then he proceeded to carry it out."    Gorton shot back,  "Am I to take the words of an executive at any point before or after election as a part of that executive order?"  Judge Gorton on Friday asked U.S. Justice Department lawyer Joshua Press how the seven countries had been selected.  Press responded that the list had come from a law passed in 2015 and amended early last year requiring that citizens of the seven countries apply for visas to enter the United States, "out of concern about the refugees that were coming, mainly from Syria at that time and terrorist events that were occurring in Europe." As we noted previously, only 12.5% of the world's Muslims live in the seven countries on Trump's immigration ban list...

Bush-appointed judge halts Trump travel ban nationwide | TheHill: A federal judge in Seattle issued a temporary nationwide restraining order Friday stopping President Trump's executive order banning citizens of seven countries from entering the United States. Judge James Robart, who was appointed by former President George Bush in 2003, ruled the executive order would be stopped nationwide, effective immediately. “The Constitution prevailed today,” Washington Attorney General Bob Ferguson said in a statement after the ruling. “No one is above the law — not even the President.” "It's our president's duty to honor this ruling and I'll make sure he does," Ferguson added. The ruling, made at the request of Washington and Minnesota, is the broadest to date against Trump's executive order. Ferguson, a Democrat, filed the lawsuit three days after Trump signed the executive order. The suit argued that the travel ban targets Muslims and violates constitutional rights of immigrants and their families. The White House pledged action “at the earliest possible time” in a late Friday statement.

Another Travel Ban: IRS Moves To Revoke Passports For Unpaid Taxes President Trump's executive order on travel may be generating big protests, but an IRS missive on travel and passports may not go down too well either. More than a year ago, in H.R.22, Congress gave the IRS a new weapon to collect taxes. Tax code Section 7345 is labeled, “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” The law isn't limited to criminal tax cases, or even cases where the IRS thinks you are trying to flee. The idea of the law is to use travel as a way to enforce tax collections. It was proposed and rejected in 2012. But by late 2015, Congress passed it and President Obama signed it. Now, over a year later, the IRS has finally released new details on its website.

• If you have seriously delinquent tax debt, IRS can notify the State Department.
• The State Department generally will not issue or renew a passport after receiving certification from the IRS.
• The IRS has not yet started certifying tax debt to the State Department.

The IRS says certifications will begin in early 2017, and the IRS website will be updated to indicate when this process has been implemented.

Leaked Executive Order Reveals Trump's Plans For H-1B Visas -- Back in March 2016, Trump trashed the current H-1B visa system, saying "The H-1B program is neither high-skilled nor immigration; these are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay." Now, a draft of a new Trump executive order related to the issuance of H-1B visas, viewed byAxios, reportedly directs the Secretary of Homeland Security to consider ways to "make the process of H-1B allocation more efficient and ensure the beneficiaries of the program are the best and the brightest."While that directive could be accomplished in a variety of ways, one likely solution would be to replace the current lottery system with one that prioritizes visas for those earning the highest salaries.  And while such a solution will have wide-ranging impacts on various companies and industries seeking foreign workers, one key takeaway is that it will pit India's large IT-staffing firms against Silicon Valley's tech giants.Per the graphic below, large Indian consulting firms are by far the largest users of the H-1B visa program.  That said, most of the jobs created by those companies tend to have lower salaries than those created by the likes of Microsoft, Google and Facebook.  Tech industry insiders expect Trump will direct DHS, which runs the H-1B visa lottery system, to start a rule-making to re-prioritize the visa allocation to give preference to higher-paying firms. This pits tech firms against the Indian IT-staffing firms. In theory, prioritizing by salaries means visas for more senior, higher-paying jobs will be granted first, and visas for lower-paying jobs (such as those being filled by Indian IT services firms) would fall to the back of line, perhaps not getting allocated at all if demand for the high-wage job visas is strong.

Trump H1-B visa plan poised to shake up Silicon Valley: Still smarting over President Donald Trump’s controversial immigration ban, Silicon Valley now is bracing for his next likely target — H-1B visas that supply local tech companies with thousands of skilled foreign workers.The Trump administration has drafted an executive order to overhaul the visa program, according to Bloomberg, which saw a copy of the order Monday. It’s a move intended to protect American jobs from being snatched up by workers from overseas — keeping in line with the America-first policies Trump has repeatedly promised his supporters — but it could mean a major shake-up for the Silicon Valley workforce. “America’s economy, including its innovation economy, has been built on the courage and creativity of immigrants, including refugees,” said Carl Guardino, president and CEO of the Silicon Valley Leadership Group. “In fact, 40 percent of America’s Fortune 500 companies were founded by an immigrant or the child of an immigrant. Fifty-three percent of our engineers, the lifeblood of Silicon Valley, weren’t blessed to be born in the United States.” The U.S. grants 65,000 H-1B visas to skilled workers every year — and an additional 20,000 to foreigners who graduated from American universities. In 2013, about 27,000 of those visas went to workers in the Bay Area, according to the Brookings Institution. Tech companies say they need those workers to fill jobs requiring advanced science and math skills. The draft order targets those visas as well as visas granted to college students participating in summer work abroad, temporary agricultural workers and others, stating those programs “should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritizes the protection of American workers — our forgotten working people — and the jobs they hold.” The draft order directs government agencies to analyze the impact the visa programs have on U.S. jobs, and to write new regulations to protect U.S. workers.

H-1B visa reform bill introduced in US House of Representatives -- In what will be a big blow to IT firms in India+ , a legislation was introduced in the US House of Representatives on Monday mandating that the minimum salary of H-1B visa holders be doubled to $130,000. If the legislation is passed, it will become very difficult for American companies to use H1-B visas to hire foreign workers+ , including IT professionals from India. The BSE IT index slumped over four per cent+ at news of the introduction of the new legislation. The legislation "offers a market-based solution that gives priority to those companies willing to pay the most," said Congressman Zoe Lofgren, who introduced it. "This ensures American employers have access to the talent they need, while removing incentives for companies to undercut American wages and outsource jobs," he said.The legislation, called the High-Skilled Integrity and Fairness Act of 2017, prioritises market-based allocation of visas to those companies willing to pay as much as 200 per cent of a wage calculated by the survey.The legislation also proposes eliminating the 'lowest pay' category. The raised salary level - to more than $130,000 - is more than double the current H-1B minimum wage of $60,000, which was established in 1989 and has since remained unchanged."My legislation refocuses the H-1B programme to its original intent - to seek out and find the best and brightest from around the world, and to supplement the US workforce with talented, highly-paid, and highly-skilled workers who help create jobs here in America, not replace them," said Lofgren. The Congressman said the legislation also proposes removing the 'per country' cap for employment-based immigrant visas, so that all workers are treated more fairly+ and to move to a system where employers hire the most skilled workers without regard to national origin.  It raises the salary level at which H-1B dependent employers are exempt from attestation requirements to a new required wage level of 35 percentile points above the median national annual wage for Computer and Mathematical Occupations published by the Department of Labour Occupational Employment Statistics (roughly $132,000), which would be adjusted in the future without the need for new legislation, and eliminates the Master's Degree exemption for dependent employers.

 H-1B: Why a new US visa bill is causing panic in India - BBC News: A new bill introduced in the US House of Representatives proposes to limit the entry of highly-skilled workers into the country to stop companies "replacing" American workers. Indian media organisations have described the move as a big setback to the IT industry and the Indian government has conveyed its concerns to the US administration. H-1B is a type of US visa that allows skilled foreigners - mostly technology workers - to work in the US. The applicants must have at least a bachelor's degree, with a master's degree required for 20,000 of the 85,000 H-1B visas issued annually. This non-immigrant visa lets a firm employ foreigners for up to six years in positions for which they have been unable to find American employees. The H-1B visa holders can apply for permanent residency in the US and buy property in the country. In 2016, Richard Verma, then US ambassador to India, said an estimated 70% of these visas go to Indian citizens. However, the demand for these visas is three times higher, and H-1B visas are allocated by a lottery system. Several bills and a draft executive order are attempting changes to - or curbs on - the H-1B programme. The High-Skilled Integrity and Fairness Act of 2017, introduced last week in the House of Representatives by California lawmaker Zoe Lofgren, a Democrat, calls for replacing the lottery system with a preference for companies that can pay the highest salaries. It suggests raising the effective minimum wage for an H-1B visa holder to over $130,000, more than double the current $60,000 level established in 1989. Exemptions, though allowed, are rare.

In Major Intel Overhaul, Trump Adds CIA Director Back To National Security Council --On Monday afternoon President Donald Trump amended the Saturday memo which established a National Security Council which originally did not list the CIA director as a "regular attendee" of NSC meetings (it did, however, elevate Steve Bannon to that position), and announced that the administration has decided to add the director of the CIA back to the National Security Council.“The president has such respect for [CIA] Director [Mike] Pompeo and the men and women of the CIA that today the president is announcing that he will amend the memo to add the CIA back into the NSC,” White House press secretary Sean Spicer told reporters on Monday.

How Steve Bannon Rose To The Top Of Trump's Power Structure -- On Saturday night, President Trump signed an executive order promoting Chief Strategist Steve Bannon to the “principals committee” of the National Security Council — while, according to the New York Times, downgrading the roles of the chairman of the Joint Chiefs of Staff and the director of national intelligence, who will now attend only when the council is considering issues in their direct areas of responsibilities.  The move puts Bannon, a former Navy surface warfare officer, admiral’s aide, investment banker and media executive, on the same level as Trump's national security adviser, Michael Flynn. The rapid rise of Bannon has come as a shock to many political pundits even though he played a key role throughout Trump's campaign and is thought to be the key architect behind several of the recent executive orders signed by the new administration as well as Trump's fiery inaugural address.  In an interview last week attacking the media, Bannon clearly demonstrated the brash attitude that likely ingratiated him with the President and secured him a top spot in the Trump White House. "The media should be embarrassed and humiliated and keep its mouth shut and just listen for a while … I want you to quote this … The media here is the opposition party. They don't understand this country. They still do not understand why Donald Trump is the president of the United States. … The elite media got it dead wrong, 100 percent dead wrong … The mainstream media has not fired or terminated anyone associated with following our campaign … Look at the Twitter feeds of those people: They were outright activists of the Clinton campaign … That's why you have no power … You were humiliated." Of course, it didn't take long for various political pundits to criticize Trump's decision to add a political strategist to the National Security Council with Leon Panetta saying “the last place you want to put somebody who worries about politics is in a room where they’re talking about national security.”

Trump’s draft cybersecurity policy has no role for FBI -- A proposed White House cybersecurity policy would empower the federal government to take a greater role in protecting the nation’s digital infrastructure, much of which is in private hands.  But a draft copy of an executive order on the issue is also notable, observers say, because beyond its calls to “decisively shape cyberspace” it diminishes the role of once-key players, such as the FBI, and makes no mention of protecting election systems.Nor does it go as far as the Republican Party platform approved last July, which sought to enshrine the right of citizens to “hack back” and take other offensive digital measures. The draft executive order declares the internet “a vital national resource,” assigns the executive branch the role of guarding crucial private and public networks, and sets out 60-day and 100-day timetables to determine vulnerabilities, identify the nation’s major cyber adversaries and design incentives for private companies to adopt better practices. Once a security review is done, the draft calls on the secretaries of defense and homeland security, along with the chief of the National Security Agency, to identify areas where the U.S. government needs to focus to ensure “long-term cyber capability advantage.” “We are not sure how to explain this, as the FBI and law enforcement secured an important role in cybersecurity early in the Obama administration,” Charley Snyder and Michael Sulmeyer wrote Monday on the Lawfare blog, which focuses on national security law. “FBI zealously guards its role in investigating malicious cyber activities, and had been given a leading role in Obama-era policies.” Sulmeyer said in a subsequent telephone interview that he thought the omission of the FBI in the draft was “another case of a slipshod process.”

Trump scraps signing of cybersecurity executive action | TheHill: President Trump scrapped plans on Tuesday to sign an executive action launching a government-wide cybersecurity overhaul. The White House did not immediately provide an explanation for the cancellation. It was an abrupt about face after the White House spent all day Tuesday plugging its plans to boost the nation's offensive and defensive cyber capabilities.Officials told reporters earlier in the day that Trump planned to order Cabinet officials to enhance their agencies’ cyber defenses and commission an administration-wide review to assess hacking risks. Hours later, Trump convened a “listening session” with top White House, Cabinet and cybersecurity experts in the Roosevelt Room. “I will hold my Cabinet secretaries and agency heads accountable, totally accountable for the cybersecurity of their organizations which we probably don’t have as much, certainly not as much as we need,” he said. “We must protect federal networks and data.”

Trump Administration Plays Havoc with Voice of America - Linda Beale - Did you know that the Republicans inserted a change to the administration of the Voice of America (VOA) network in the December military authorization 'must pass' bill?  The VOA has always been administered by a bipartisan broadcasting board of governors--distinguished nonpartisan media experts.  The change was to have the $800 million budget Voice of America run by a CEO appointed by and directly responsible to the President of the United States.  Trump has now appointed  (maybe temporarily) two twenty-something Trump political operatives to oversee the VOA.  Matthew Schuck is a 2012 graduate from the nondescript Montgomery College who got his start with the Heritage Foundation and then the (alt) right-wing site Daily Surge and worked for the Trump campaign in Wisconsin. The other, Matt Ciepielowski, does not have even that modicum of (mis)understanding of journalistic standards: he is a 2012 graduate of Quinnipiac University and a Republican political strategist who worked for the right-wing Americans for Prosperity organization before he became the NH state director for the Trump campaign.  He also has ties to Ron Paul (Texas libertarian). See, e.g., Trump moves to put his own stamp on Voice of America, Politico.com (Jan. 23, 2017); Donald Trump sends two aides to Voice of America studios, raising fears he's going to politicize the outlet, Salon.com (Jan. 24, 2017). In other words, it appears that the Trump enterprise in the White House wants to convert the Voice Of America into a propaganda arm for Trump's "alternative facts" reality show in the White House, just as Sean Spicer, the Press Secretary, has served as a spouter of misinformation and what Trump's "beliefs" are rather than what the actual facts are.  Compare Kellyanne Conway's statement that we shouldn't listen to what Trump says but should "look at what's in his heart".  See e.g., Aaron Blake, Kellyanne Conway's laughable 'look at what's in his heart' defense of Donald Trump, Washington Post.  Just ways of claiming that lies and distortions don't matter and allowing Trump political operatives to say whatever they want.

Trump picks Colo. appeals court judge Neil Gorsuch for Supreme Court - President Trump nominated Colorado federal appeals court judge Neil Gorsuch for the Supreme Court on Tuesday, opting in the most important decision of his young presidency for a highly credentialed favorite of the conservative legal establishment to fill the opening created last year by the death of Justice Antonin Scalia.Gorsuch, 49, prevailed over the other finalist, Thomas Hardiman of Pennsylvania, also a federal appeals court judge, and Trump announced the nomination at a televised prime-time event at the White House.The bonhomie of the ceremony was in stark contrast to the reaction of Democrats, who are ready for a pitched battle over the future of the Supreme Court. Senate Minority Leader Charles E. Schumer (D-N.Y.) said Gorsuch will have to win over some Democratic senators to get the 60 votes needed to clear procedural hurdles. Trump broke tradition by entering the White House ceremony by himself, rather than alongside his nominee. He declared that after “what may be the most transparent judicial selection process in history,” he had delivered on a campaign promise to “find the very best judge in America” for the court.Gorsuch pledged to be impartial and independent, and respectful of his place in government. “It is the role of judges to apply, not alter, the work of the people’s representatives,” he said. “A judge who likes every outcome he reaches is very likely a bad judge.”

“Neil Gorsuch, the Nominee for a Stolen Seat” [New York Times editorial].It’s been almost a year since Senate Republicans took an empty Supreme Court seat hostage, discarding a constitutional duty that both parties have honored throughout American history and hobbling an entire branch of government for partisan gain. President Trump had a great opportunity to repair some of that damage by nominating a moderate candidate for the vacancy, which was created when Justice Antonin Scalia died last February. Instead, he chose Neil Gorsuch, a very conservative judge from the federal Court of Appeals for the 10th Circuit whose jurisprudence and writing style are often compared to those of Justice Scalia. If Judge Gorsuch is confirmed, the court will once again have a majority of justices appointed by Republican presidents, as it has for nearly half a century. For starters, that spells big trouble for public-sector labor unions, environmental regulations and women’s access to contraception. If Trump gets the chance to name another justice, the consequences could be much more dire. In normal times, Judge Gorsuch — a widely respected and, at 49, relatively young judge with a reliably conservative voting record — would be an obvious choice for a Republican president. The seat Judge Gorsuch hopes to sit in should have been filled, months ago, by Merrick Garland, the chief judge of the Court of Appeals for the District of Columbia Circuit, whom President Barack Obama nominated to the court last March. Judge Garland, a former federal prosecutor and 20-year veteran of the nation’s most important federal appeals court, is both more moderate and more qualified than Judge Gorsuch. That meant nothing to Senate Republicans, who abused their power as the majority party and, within hours of Justice Scalia’s death, shut down the confirmation process for the remainder of Mr. Obama’s presidency. There would be no negotiations to release this hostage; the sole object was to hold on to the court’s conservative majority. The outrageousness of the ploy was matched only by the unlikelihood that it would succeed — until, to virtually everyone’s shock, it did.

Potential nominee profile: Neil Gorsuch – SCOTUSblog -  Neil Gorsuch was appointed to the United States Court of Appeals for the 10th Circuit by President George W. Bush on May 10, 2006, and confirmed shortly thereafter. Both his pre-judicial resumé and his body of work as a judge make him a natural fit for an appointment to the Supreme Court by a Republican president. He is relatively young (turning 50 this year), and his background is filled with sterling legal and academic credentials. He was a Marshall Scholar at the University of Oxford, graduated from Harvard Law School, clerked for prominent conservative judges (Judge David Sentelle of the U.S. Court of Appeals for the District of Columbia Circuit, as well as Justices Byron White and Anthony Kennedy of the Supreme Court), and was a high-ranking official in the Bush Justice Department before his judicial appointment. He is celebrated as a keen legal thinker and a particularly incisive legal writer, with a flair that matches — or at least evokes — that of the justice whose seat he would be nominated to fill. In fact, one study has identified him as the most natural successor to Justice Antonin Scalia on the Trump shortlist, both in terms of his judicial style and his substantive approach.

What to Expect From Justice-To-Be Gorsuch on Bankruptcy -  Jason Kilborn, Credit Slips -  When I heard that the President had nominated 10th Circuit Judge Neil Gorsuch for the Supreme Court, I wondered what his bankruptcy-related opinions might tell us about him. Bill Rochelle beat me to it, with his characteristically insightful analysis of a few salient Gorsuch opinions. But I found three more that I thought worth highlighting, as well. A simple takeaway from all of these cases is that Gorsuch is not at all what one might call “debtor-friendly.” In fact, I don’t think one of the dozen-or-so opinions I found ruled in favor of the debtor(s). But a more nuanced takeaway is that Gorsuch is a careful and serious jurist who will apply the letter of the law in tight and cleverly written opinions. At least he should be fairly predictable, a virtue that the person who nominated Judge Gorsuch does not share.

Originalism Is Dumb -- Donald Trump has nominated Neil Gorsuch to the Supreme Court. If confirmed, Gorsuch will replace Antonin Scalia, whose death a year ago has left a vacancy that Republicans refused to allow Barack Obama to fill.  In the minds of conservatives, Gorsuch is a worthy heir to Scalia’s seat—far more so than the Obama White House’s centrist nominee Merrick Garland was. This is not only because Gorsuch typically rules from the bench in a conservative fashion but because, like Scalia, he adheres to the legal doctrine of originalism. As Gorsuch has written: Judges should ( . . . ) strive to apply the law as it is, focusing backward, not forward, and looking to text, structure, and history to decide what a reasonable reader at the time of the events in question would have understood the law to be—not to decide cases based on their own moral convictions or the policy consequences they believe might serve society best. In other words, Gorsuch subscribes to the dumbest judicial philosophy in the world—the Ouija board of legal doctrines—which would have us pretend to decipher the intent of those who wrote the Constitution 230 years ago, almost a century before slavery was abolished. Legal scholars schooled in more contextual and pragmatic notions of the law—radical notions about how our conceptions of the law should, and indeed must, change with time—have tried, usually in vain, to understand the appeal of originalism beyond its obvious conservative implications. Perhaps nobody sums up the originalist impulse better than Daniel Rodgers: The originalist argument tapped not a desire to go back to any actual past but a desire to escape altogether from time’s slipperiness—to locate a trap door through which one could reach beyond history and find a simpler place outside of it. Originalism’s appeal to the past was ( . . . ) profoundly ahistorical. Indeed, to legal critics worried about subjective judgments in the law, worried that the law’s ruling principles carried too abundantly the marks of change and adaptation upon it, originalism’s ahistoricism was precisely what gave it such power and attraction.

Supreme Court Justices’ Loyalty to the President -- That is a recent paper by Lee Epstein and Eric A. Posner, and here is the abstract:  A statistical analysis of voting by Supreme Court justices from 1937-2014 provides evidence of a “loyalty effect” — justices more frequently vote for the government when the president who appointed them is in office than when subsequent presidents lead the government. This effect exists even when subsequent presidents are of the same party as the justices in question. However, the loyalty effect is much stronger for Democratic justices than for Republican justices. This may be because Republican presidents are more ideologically committed than Democratic justices are, leaving less room for demonstrations of loyalty. You can read it here.

Trump's Supreme Court Nominee Could Hear Case Affecting Trump Golf Courses - Donald Trump is not only the U.S. president; he's also a golf industry giant. And like other golf course operators, he has a stake in the legal wrangling over a new environmental rule that could dent industry profits.Here's where Trump is different from his peers: He gets to name the head of the Environmental Protection Agency, and this week, the president may appoint a nominee to the U.S. Supreme Court, which soon will hear a case involving the environmental rule. The situation highlights the conflicts between Trump's two roles — one as president, the other as business owner. Although he has stepped back from day-to-day management of his companies, he has not sold off his stake in the Trump Organization. His sprawling business empire includes a dozen golf courses in the United States alone. The jewel may be Trump National Doral, just outside Miami. It's a resort with a hotel and a spa. At a campaign event in October, Trump said he was especially proud of Doral's four golf courses. "As you know, the Blue Monster is one of the great courses of the world," he said. But like any golf course, it is subject to various regulations. And there's a pending rule that the golf industry hates.  2015, under the Obama administration, the EPA and U.S. Army Corps of Engineers finalized the Waters of the United States rule to apply clean water regulations to thousands of new streams, lakes and wetlands. Under the rule, the Blue Monster — and all golf courses in the U.S. — would be subject to closer federal regulation. They have been filing lawsuits that have put the rule on hold. Bob Helland, with the Golf Course Superintendents Association of America, says the average golf course has over 11 acres of streams, ponds and wetlands that could be affected. Under the rule, courses may now need federal permission before applying fertilizer or pesticides.

The 4 Rules That Will Explain Neil Gorsuch’s Confirmation Fight - POLITICO Magazine: So Donald Trump has handed the proverbial rose to Neil Gorsuch, a conservative originalist in the mold of Antonin Scalia. He called the process “the most transparent in history,” and it was certainly unusual, with rumors flying in Washington that he planned to turn his announcement into a reality-show style Big Reveal. In the end, he went with a more traditional rollout, unveiling his choice of Gorsuch on Tuesday in a brief, sober prime-time speech from the East Room of the White House. The fight to get Gorsuch confirmed will be much less stately, with TV ads paid for by one megadonor or another, dueling rallies and websites, warring Twitter accounts and talking heads with robotic, partisan talking points cluttering the cable news sets. You can safely ignore just about all of it. For all the rhetorical artillery that will be flying over the next weeks, there are hard facts about the process that need to be kept front and center. Just keep these four rules in mind, and you can tune out all the noise:

• 1. When a party controls both the White House and the Senate, confirmation is a strong probability. The last time a president failed to get his nominee through a Senate run by the same party was back in 1968, when President Lyndon Johnson tried to elevate Justice Abe Fortas to chief justice.
• 2. Senators have become increasingly loyal to presidents of their own party
• 3. The justices have become far more predictable When Franklin Roosevelt put Felix Frankfurter on the Supreme Court in 1939, Frankfurter was attacked as a dangerous liberal. Over the years, as the issues facing the court changed, he emerged as the most prominent of judicial conservatives. When George H.W. Bush put David Souter on the court in 1990, White House chief of staff John Sununu called him a “slam dunk for conservatives.”  He emerged as one of the court’s leading liberals.
• 4. The filibuster is a highly endangered species.  In 2013, when then-Senate Majority Leader Harry Reid successfully fought to abolish the filibuster for lower court and Cabinet nominations—a fight some in the Democratic minority may regret—he left the tool in place for Supreme Court fights

Trump's SCOTUS pick founded club called 'Fascism Forever' | Daily Mail Online: Supreme Court Justice nominee Neil Gorsuch founded and led a student group called the ‘Fascism Forever Club’ at his elite high school, DailyMail.com can reveal.The club was set up to rally against the ‘left-wing tendencies’ of his professors while attending a Jesuit all-boys preparatory high school near Washington D.C.The name may be inconvenient for a Supreme Court nominee facing a tough confirmation battle. However it also shows the depth of Gorscuch’s right-wing credentials – and his penchant for mischief while attending his exclusive prep school in the 1980s.President Donald Trump nominated Gorsuch, a 49-year-old U.S. appellate judge, to replace the late Supreme Court Justice Antonin Scalia on Tuesday.Gorsuch founded the ‘Fascism Forever Club’ during his freshman year at Georgetown Preparatory, a now-$30,000-a-year private Jesuit school that is one of the most selective in the United States.He served as president until he graduated in 1985, according to his senior yearbook. The yearbook described the ‘Fascism Forever Club’ as an anti-faculty student group that battled against the 'liberal' views of the school administration. ‘In political circles, our tireless President Gorsuch’s “Fascism Forever Club” happily jerked its knees against the increasingly “left-wing” tendencies of the faculty,’ said the yearbook. Scroll down for video

Elizabeth Warren Torches Trump's SCOTUS Pick on the Senate Floor | Alternet: Democrats have been mostly silent since Donald Trump named Neil Gorsuch to the Supreme Court, with some members of the Senate confessing their unwillingness to engage in the kind of obstructionism Republicans demonstrated over the past eight years. But if Elizabeth Warren is any indication, Trump's SCOTUS pick may be in for a protracted fight. Warren began her address on the Senate floor Thursday by explaining how a "rigged" justice system has devastated working people and "made it harder for people who have been injured or cheated" to get a fair hearing. "The best example was the unprecedented blockade of Judge Merrick Garland's nomination to the Supreme Court," argued Warren. "Judge Garland was an obvious consensus nominee and a straight shooter who followed the law, so why block it? The problem was that Judge Garland's career didn't reflect a sufficient willingness to bend the law to suit the needs of the rich and powerful and for that sin, far-right groups financed by big business interests spent millions of dollars attacking him to torpedo his nomination and keep that seat open." A GOP-controlled Senate refused to give Garland a hearing or a vote, yet Trump is now threatening to "go nuclear" should Democrats oppose Gorsuch, a judge who has sided with corporations throughout his career. "Judge Gorsuch has shown a truly remarkable insensitivity to the struggles of working Americans and an eagerness to side with businesses that break the rules over workers who are seeking justice," Warren continued. "Even before he became a judge, Judge Gorsuch argued in favor of limiting the ability of investors and shareholders to bring lawsuits when companies commit fraud, whining about how annoying it is for billionaire corporations to have to face their investors when they cheat them."

 Trump Tells McConnell "Go Nuclear" If You Have To - Donald Trump has made his first comments since nominating Judge Gorsuch for The Supreme Court, stating that "I don't know how anyone can opposed Gorsuch" warning that if Congress ends up in gridlock, he would tell Majority leader Mitch McConnell to "go nuclear" - referring to a rule change enabling a simple majority to confirm his picks. President Trump to Mitch McConnell: “Go nuclear” if SCOTUS pick doesn't clear 60 votes https://t.co/uYLDrtBh3k https://t.co/IOlYQ4XMyW — CNN (@CNN) February 1, 2017 "He's perfect in almost every way"... “He’s perfect in almost every way”: Trump meets with SCOTUS groups day after Gorsuch pick https://t.co/3H8HckvhLB https://t.co/QVQ1aiHwIq — CNN (@CNN) February 1, 2017 As a reminder, the “nuclear option” refers to a move by the majority party in Senate — in this case the Democrats — to change the Senate rules to allow most executive branch and judicial nominations to be approved with a simple majority – 51 votes — rather than the 60 votes now required. Under longstanding rules, the minority party has been able to block a nomination with just 41 votes, commonly called a filibuster. "I want Gorsuch to go through an elegant process, as opposed to a demeaning process... of course the press can be very demeaning too, so..."

House to take first crack at repealing Obama-era regulations | Fox News: Determined to reverse eight years of a Democratic administration, House Republicans are on track to overturn a handful of rules finalized in President Barack Obama's final months in office to deal with climate change, federal contracting and background checks for gun ownership. Opponents criticize the regulations as job killers that will hold the U.S. economy back. Now, they're turning to an oversight tool used successfully only once before to void a rule issued by a federal agency. All that will be required to make the regulation invalid is a simple majority of both GOP-led chambers approving a joint resolution of disapproval -- and the president's signature. The House will take the first crack this week. A look at the regulations being targeted:

• Rule to reduce methane emissions on public and tribal lands: Industry groups said the rule comes at a time when methane emissions are already falling, and combined with other new regulations, will drive energy production off federal lands. That means less federal revenue and higher costs for consumers.
• Rule to lessen the environmental impact of coal mining on nearby streams: Coal mining companies are already facing pricing pressures from greater reliance on natural gas and renewables, and they said the rule would lead to the loss of tens of thousands of direct mining jobs and many thousands more indirectly as massive volumes of coal would become too expensive to mine.
• Rule requiring companies to disclose payments made to the U.S. and foreign governments relating to mining and drilling. Industry groups such as the American Petroleum Institute and U.S. Chamber of Commerce unsuccessfully filed suit to stop the rule. They said it requires U.S. companies to hand over key details of how they bid and compete while many foreign competitors are under no obligation to do the same.

Why the Republicans Cannot “Replace” Obamacare - Bill Black:  I offer these friendly amendments on Lawrence O’Donnell’s discussion of the Washington Post story titled “Behind closed doors, Republican lawmakers fret about how to repeal Obamacare.” O’Donnell and his guests spoke exclusively of how difficult it was for the Republicans to come up with a plan to replace Obamacare and making the point that the leaked transcript of the closed Republican meeting proved that the Republicans had no plan. The thrust of the comments was that the explanation for the difficulty was the technical complexity of the issues and differences of policy views among congressional Republicans. Neither explanation is accurate. The problem is much more basic, and explains why Republicans did not use their exceptional leverage to amend the draft Affordable Care Act that would have improved it, why they have not come up with a replacement plan in seven years, and why they will not be able to come up with a replacement plan in the future. People have forgotten that President Obama and Democratic Senators made extraordinary efforts to get Republican support for the bill in the Senate. The “gang of six” (three Democratic and three Republican Senators) deliberations stalled the bill for months. Had even a single Republican Senator been willing to support a superior health insurance plan, Obama would have leaped at the opportunity to support his or her amendment improving the bill. Senators knew that Obama was desperate to attract even a token Republican Senator to support an Affordable Care Act bill. Senators knew that this meant that every Republican Senator had unprecedented political power to amend the bill by adding superior provisions – in return for supporting the amended bill. No Republican Senator took advantage of that power because any change to the health insurance bill that would have improved it was anathema to Republicans. The problem is not that Obamacare is such an excellent program that it has no superior replacement. The problem is that the superior programs are unacceptable to the Republicans on ideological grounds. Indeed, the Congressional Republicans detest the superior alternatives because they are superior. The superior programs would have a far broader governmental role than does Obamacare. The Republicans do not want effective domestic governmental programs because it would discredit their claims that the government programs invariably fail.

Repealing the Affordable Care Act would cost jobs in every state -- The Republican-led effort to repeal the Affordable Care Act (ACA) includes two large fiscal changes: a tax cut and a spending cut.1 Because the U.S. economy still has some productive slack, these significant fiscal changes will affect the pace of economic growth. This report provides a rough estimate of how the combination of tax cuts and spending cuts in the ACA repeal will affect employment in U.S. states.2 Its main findings are:

• ACA repeal would cut federal spending nationwide by roughly $109 billion in 2019 and taxes by roughly $70 billion in 2019.
• The combination of tax cuts and spending cuts embedded in ACA repeal would reduce national job growth by almost 1.2 million in 2019, all else equal.
• The jobs that would be lost are not just health care jobs. Previous high-quality studies of the jobs gained through Medicaid expansions in the American Recovery and Reinvestment Act (ARRA) indicate that more than three-fourths of the jobs gained were not in the health care sector.
• Every state would lose jobs. How significant this job loss is would be determined by the extent to which a state expanded spending (and thus how much spending it will lose), what portion of a state’s households fall in the groups getting the largest tax cuts (how much it will gain).
• The top 15 job-losing states, as measured by jobs lost as a share of both the total employment and the share of residents under age 65, are Arizona, Colorado, Kentucky, Louisiana, Maryland, Montana, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, and West Virginia.
• Monetary policy is unlikely to be able to provide an expansionary boost to economic activity anywhere near large enough to counteract the significant fiscal contraction posed by ACA repeal, even in 2019. Thus, any claims that any ACA job losses would be neutralized by countervailing Federal Reserve policy are unconvincing.
• While states that never took up the Medicaid expansions that were part of ACA generally face a lower relative burden from repeal, it is important to note that these same states benefit disproportionately from the insurance premium and cost-sharing subsidies of the ACA. Overall, insurance premium and cost-sharing subsidies are roughly 0.4 percent of non-expansion states’ gross domestic product (GDP), while they are roughly 0.15 percent of GDP in expansion states.

One thing red state voters don’t like about Obamacare is that it sucks – Matt Bruenig -- After the election, there was a spate of reporting about why lower class people in red states who benefited from Obamacare voted for Donald Trump. It turns out there are many reasons for this. But one reason that popped up in most of the stories was that the voters had completely legitimate grievances about how badly Obamacare is designed. In the post-Obamacare world, poor people can receive public health insurance through Medicaid provided their income is below a certain threshold (138% of the poverty line in Medicaid expansion states). As soon as their income goes over that threshold, they lose their Medicaid and are made to go out onto the Obamacare exchanges to buy insurance themselves. If they are only slightly above the Medicaid cutoff, they receive hefty income-based subsidies to make it easier for them to pay their monthly premiums for their exchange-based insurance. But a heavily subsidized exchange plan still often comes with a high deductible that people just above the Medicaid cutoff do not have enough income to cover. So people in this situation have health insurance but they cannot afford to use it.  Say what you will about all the dumb reasons why lower class people find themselves mad about welfare programs. But this is not one of them. It is absurd that someone whose income is 130% of the poverty line can go to a doctor but someone whose income is 140% (or 150%, 160%, etc.) of the poverty line cannot. Yet that is the reality the design of Obamacare has created. This design generates enormous resentment because it is actually bullshit that making a little more money makes health care unaffordable.

ObamaCare: CBO report shows full repeal is better than partial repeal | TheHill: After seven years of promising to repeal the Affordable Care Act (ACA), commonly known as ObamaCare, Republicans are toying with a dangerous strategy that would repeal the law’s mandates and subsidies but leave intact its the most harmful feature — the regulations it imposes on health insurance. This is despite warnings that a partial repeal would be far more disruptive. A new report by the non-partisan Congressional Budget Office (CBO) shows just how much more disruptive.Thanks to ObamaCare's health insurance regulations, avoiding coverage losses and other disruption is not an option. Those regulations have caused premiums in the individual market to double, with the largest increases among women age 55 to 64. They are making coverage increasingly worse for patients with multiple sclerosis, rheumatoid arthritis, infertility, and other expensive conditions. They are threatening to leave many ObamaCare enrollees with no coverage at all: 17 percent of enrollees are one insurer exit away from their Exchange collapsing. Repealing them would cause premiums to fall for tens of millions of Americans, especially women over age 55, freeing them to purchase more secure and sustainable coverage. Some people would lose coverage under full repeal. The CBO has consistently overestimated ObamaCare’s impact on coverage while low-balling its cost, so the agency’s projection that 23 million people would lose coverage is almost certainly an overestimate. Of those 23 million, some 19 million are currently enrolled in Medicaid; as many as 13 million would still be eligible after repeal, most of the remaining six million could obtain private insurance, and all of them could remain in Medicaid if states allow it. The actual number of people who would lose coverage under full repeal is likely comparable to the number who would if and when ObamaCare collapses of its own weight. Under full repeal, however, not only would premiums automatically fall for the vast majority of Exchange enrollees, but Congress could proactively provide a safety net for those who still cannot afford coverage and enact further reforms that improve healthcare for all Americans. Medicaid block grants, expanded health savings accounts, and other reforms would make healthcare better, more affordable, and more secure through lower prices and more sustainable coverage. Congress could even do it all in one bill.

Trump Meets With Big Pharma CEOs But Won't Get His Wish List | Fortune.com: President Donald Trump sat down with a host of major pharma company CEOs Tuesday morning to address pressing issues like high drug prices, the future of the FDA, and where treatments are produced. But a number of his demands will have a hard time becoming a reality.Meeting attendees included CEOs such as: Merck's (mrk) Ken Frazier; Novartis' (nvs) Joe Jimenez; Eli Lilly's (lly) David Ricks; Johnson & Johnson's (jnj) Alex Gorsky; Amgen's (amgn) Robert Bradway; Celgene's (celg) Mark Alles; and Stephen Ubl, head of the Pharmaceutical Research and Manufacturers of America (PhRMA) lobbying powerhouse.Trump pressed the bigwigs to bring down drug prices, which he described as "astronomical.""We have to get prices down for a lot of reasons," he said. "We have no choice, for Medicare and Medicaid."He went on to insist that drug makers should bring manufacturing and production, much of which is done in countries like India and China, back to the United States. In exchange, Trump asserted that he would work to remove burdensome regulations, appoint an FDA director who will focus on speeding up drug approvals, and reduce the American corporate tax burden. While several of the present CEOs responded optimistically to the meeting - praising the deregulation and tax reduction components in particular - and many of their companies' shares rose on hopes that Trump won't be as antagonistic toward drug makers as his recent comments that they're "getting away with murder" on prices would suggest, don't count on the wish list to come true. Here's why.

Donald Trump is finally floating an idea liberals can love --US President Donald Trump wants to raise the unemployment rate by one percentage point, and it’s actually an idea the political left can get behind. The Washington Examiner reports the Trump administration is considering changing the official unemployment rate to a statistic that is inclusive of more jobless Americans. Trump has called the current official unemployment rate “phony“, and this change would be the first step towards making the unemployment rate reflect Trump’s dismal view of the economy. In practical terms, the proposal would do nothing. The Bureau of Labor Statistics (BLS) already collects the higher unemployment rate number that Trump wants to report. The proposal would just change the number that is emphasized in government documents and public discourse. Currently, the official unemployment rate reported by the Bureau of Labor Statistics (BLS) is defined as the percentage of unemployed people who are currently in the labor force. In order to be in the labor force, a person either must have a job or have looked for work in the last four weeks. This disregards a large number of people who want jobs, but don’t have them, including those who have given up looking. Under Trump’s new official unemployment rate, anyone who says they want to work, but isn’t working, would be considered unemployed. For December 2016, this would have raised the number from 4.7% to 5.7%. The following chart shows the difference between the current official unemployment rate and the new rate Trump may propose since 1994 (when BLS first began collecting the latter).

Trump leaving LGBTQ nondiscrimination executive order in place signals approval of reasonable mandates for federal contractors - Last night, the White House said that President Trump would leave in place the Obama administration’s executive order that prohibits federal contractors and subcontractors from discriminating against employees on the basis of sexual orientation or gender identity in hiring, firing, pay, promotion, and other employment practices. It goes without saying that not revoking workplace protections for LGBTQ workers is an extraordinarily low bar for supporting LGBTQ workers. A president who truly supported LGBTQ workers would be pushing for broader legislation that prohibits discrimination, like the 2015 Equality Act, which would provide clear, fully-inclusive non-discrimination protections for LGBTQ people.

GOP lawmakers split over Trump LGBT order | TheHill: Republicans on Capitol Hill are split over President Trump’s decision to uphold an Obama-era executive order banning federal contractors from discriminating on the basis of sexual orientation. Trump announced early Tuesday he would enforce former President Barack Obama's 2014 executive order protecting gay, lesbian, bisexual and transgender employees from discrimination while working for federal contractors. Trump has been more conciliatory toward the LGBT community than past Republican presidents and some sitting members of his own party in Congress. The White House statement on Tuesday noted that Trump was the first GOP presidential candidate to mention the LGBT community in his speech at the party’s nominating convention. “President Donald J. Trump is determined to protect the rights of all Americans, including the LGBTQ community. President Trump continues to be respectful and supportive of LGBTQ rights, just as he was throughout the election,” the White House statement read. Speaker Paul Ryan(R-Wis.) didn't push back against Trump's decision, even though his leadership team clamped down on an open amendment process last year in response to proposals to enforce the executive order. “Speaker Ryan believes discrimination has no place in the workforce," Ryan spokeswoman AshLee Strong said.

House Votes To Overturn Obama Gun Rule Banning Sales To The Mentally Impaired --The House continued to dismantle Obama's legacy one item at a time, when on Thursday it struck down regulations that blocked gun ownership by some who have been deemed mentally impaired by the Social Security Administration. The House voted 235-180 along party lines Thursday to repeal an Obama-era rule requiring the Social Security Administration to send records of some beneficiaries to the federal firearms background check system after they’ve been deemed mentally incapable of managing their financial affairs. The database is used to determine eligibility for buying a firearm.   The rule, when implemented, would affect about 75,000 recipients of disability insurance and supplemental insurance income who require a representative to manage their benefits because of a disabling mental disorder, ranging from anxiety to schizophrenia. It applies to those between age 18 and full retirement age.  Critics said the rule stripped Second Amendment rights from people who are not dangerously mentally ill, such as those who have eating disorders or mental disorders that prevent them from managing their own finances.“This is a slap in the face for those in the disabled community because it paints all those who suffer from mental disorders with the same broad brush,” said House Judiciary Chairman Bob Goodlatte, R-Va. “It assumes that simply because an individual suffers from a mental condition, that individual is unfit to exercise his or her Second Amendment rights.”  Senate Judiciary Chairman Chuck Grassley, R-Iowa, called the Social Security regulation “reckless, overly broad and an affront to the Second Amendment rights of people with disabilities." He introduced an identical resolution to reverse it in the Senate on Thursday with 25 Republican co-sponsors, including Majority Leader Mitch McConnell, R-Ky.

 Trump sets 5-year and lifetime lobbying ban for officials | WKBN.com: (AP) — President Donald Trump is imposing a lifetime ban on administration officials lobbying for foreign governments, and a five-year ban for other lobbying. Trump used his executive authority Saturday to put in place the bans — fulfilling part of his campaign pledge to “drain the swamp” in Washington. Trump has said that those who want to work for him should focus on the job they’ll be doing for the American people, and not on future income earned by peddling their influence after serving in government. Administration officials describe the bans as historic in scope. But it’s not immediately clear how they’d be enforced. Trump also took a separate action to restructure the National Security Council ask military advisers to prepare a plan to defeat the Islamic State group.

Trump signs '2-for-1' order to reduce regulations | TheHill: President Trump on Monday signed an executive order that would require agencies to revoke two regulations for every new rule they want to issue. The executive order is aimed at dramatically rolling back federal regulations, one of his top campaign promises. Trump met with a handful of small business owners at the White House prior to signing the order. He called the executive order “a big one," according to a pool report.“We want to make ... life easier for small businesses,” he said, adding that it would also benefit large businesses. “There can’t be any discrimination.” The order requires agencies to control the costs of all new rules within their budget. Agencies are also prohibited from imposing any new costs in finalizing or repealing a rule for the remainder of 2017 unless that cost is offset by the repeal of two existing regulations. Trump's order does make exceptions for emergencies and national security. Starting in 2018, the order calls on the director of the White House Office of Management and Budget to give each agency a budget for how much it can increase regulatory costs or cut regulatory costs. Senior administration officials touted it as the “most significant administrative action in the world of regulatory reform since President Reagan created the Office of Information and Regulatory Affairs (OIRA) in 1981."

Trump Signs Executive Order to Curtail Regulations - NBC News: President Donald Trump signed an executive order Monday aimed at slashing federal regulations to help businesses, the latest in a string of presidential directives he has unveiled in his first 10 days in office. The "one in, two out" plan requires federal agencies requesting new regulations to cut two existing regulations. Trump said the order will reduce regulatory burdens on the private sector, particularly small businesses. "If you have a regulation you want, number one, we're not going to approve it because it's already been approved probably in 17 different forms," Trump said while signing the order surrounded by small business leaders. "But if we do, the only way you have a chance is we have to knock out two regulations for every new regulation," he said. "So if there's a new regulation, they have to knock out two." Government agencies must self-identify the regulations to cut, although the White House will ultimately decide what to nix. A temporary regulatory freeze issued by White House Chief of Staff Reince Priebus is already in place, but Monday's directive sets a budget for new regulations. It doesn't apply to the military or to national security regulations, and there is also an exception to allow flexibility during emergencies.

Benefit-cost analysis should be used to determine whether regulations come or go - Back in November Cass Sustein considered the 2 for 1 regulation executive order: Donald Trump promises to impose, soon after his inauguration, a new requirement on federal agencies: If they want to issue a new regulation, they have to rescind two regulations that are now on the books. The idea of “one in, two out” has rhetorical appeal, but it’s going to be extremely hard to pull off.In the abstract, of course, it sounds like a gimmick, and it’s a pretty dumb idea. As presidents from Ronald Reagan to Barack Obama have recognized, the real question is whether regulations, whether new or old, are justified. That requires a careful analysis of their costs and their benefits. ... The conclusion? In theory, “one in, two out” is silly, and in practice it’s likely to be a bit of a mess. It’s hardly the most sensible approach to regulatory reform. But with a little flexibility, and a lot of determination, executive branch officials might be able to make it work.  Read the guts for yourself, but I can't find any justification for the last line. 

Donald Trump Thinks He Can Endure More Controversy And Pain Than You - Donald Trump believes his pain threshold is his key to success.  Just two weeks into his administration, Donald Trump’s presidency is off to a rapid pace. But even by his standards, Monday was especially frenzied. With protests still simmering over the refugee and immigration ban he’d imposed days prior, Trump that morning mocked the Democratic leader of the Senate for shedding what he deemed “fake tears” for those affected by the ban.  That piece of mockery alone would have been enough in the past to stir a day’s outrage and news coverage. But it was followed by so much more. There were the rumblings of a constitutional crisis as customs agents reportedly disobeyed court orders to let the detained see lawyers. Trump signed another executive order dramatically curtailing regulations. His White House continued bickering with the press over his top political aide being named to the National Security Council. Jewish groups denounced his refusal to specifically mention Jews in his Holocaust Remembrance Day statement. And then came the night. The acting attorney general announced that she would not defend Trump’s ban on grounds it may be unconstitutional. So Trump fired her, finding a replacement who would do his bidding. Then he fired the director of Immigration and Customs Enforcement. And to cap the evening, he let it be known that the next day, he’d be nominating a justice to the Supreme Court. The political universe was left trying to simply catch its breath. “There are so many fires burning in so many different places that there is sensory overload,” said David Axelrod, President Barack Obama’s longtime adviser. “There was a lot of action at the beginning of the Obama administration. But it was focused on dealing with a crisis. This is of a different nature and magnitude. I wouldn’t say an order of magnitude, because order is not necessarily part of it.”  It’s often said that the office of the presidency ages the president. But in the era of Trump, the public and Congress are aging as well.  His first two weeks have been the equivalent of a political sugar rush, repeated on a daily, sometimes hourly basis. It’s left government officials both invigorated and exhausted. It’s overwhelmed staffers on Capitol Hill. And it’s made Democrats nervous that they’re playing whack-a-mole, chasing the last Trump controversy as a new one inevitably emerges. Some suspect it all may be by design. “We know what’s going on,” said Sen. Patrick Leahy (D-Vt.). “But I worry that sometime this speed is to make sure the American public doesn’t know what to do.”

Trump’s Bid to Slash Regulations Faces Bureaucratic Roadblocks - President Donald Trump set a daunting goal for government agencies bound by complex procedures, ordering his department heads to kill two regulations for each new one they issue. The two-for-one order is “a big one,” Trump said as he signed the directive Monday while surrounded by small-business executives in the Oval Office. Fulfilling the promise, which he made shortly after his election, may prove more difficult than signing an order. “It’s going to be hard to implement, just because changing rules involves going through detailed administrative processes and soliciting public comment,” said Darrell West, director of governance studies at the Brookings Institution in Washington. “So it’s not a situation where an agency head can come in and kill a regulation overnight.”  Eliminating a regulation is itself a regulatory process, one that involves months of work that can include vetting multiple rule drafts and reacting to thousands or even millions of comments from industries, trade groups and individuals. The process generally takes months, and can be challenged with a lawsuit by aggrieved parties. Monday’s action is another example of how the White House under Trump seeks to upend standard Washington practice in areas as diverse as immigration, lobbying, border security and the structure of the national security apparatus. Trump also said he’s determined to go after the 2010 Dodd-Frank banking overhaul law because he believes it has made it extremely difficult for businesses to get loans.

Trump Pledges ‘Big Number’ on Dodd-Frank in Anti-Rule Push - President Donald Trump stepped up his criticism of financial regulations, pledging to go after the 2010 Dodd-Frank banking overhaul because he said the law has made it difficult for businesses to get loans.“We’re going to be doing a big number on Dodd-Frank," Trump said Monday at an event with small business leaders at the White House. He called the legislation “a disaster" and said, “it’s almost impossible now to start a small business and it’s virtually impossible to expand your existing business.” Trump didn’t provide data linking borrowing to Dodd-Frank, and the law’s impact on business lending isn’t clear cut. Commercial and industrial lending is up significantly since the law was approved, though the amount of money lent to small businesses was little changed, according to government data.  Trump’s remarks are his most pointed on financial rules since he took office Jan. 20. His advisers vowed to dismantle Dodd-Frank during the transition period, but have provided scant details on how they plan to go about it. Trump didn’t say whether he planned to attack the law through executive action or by working with Congress on legislation. Banks and investors have been trying to decipher how the billionaire will balance his populist message to the middle class with his Wall Street ties, which include a cadre of former Goldman Sachs Group Inc. bankers he’s tapped for key roles in his administration.

Donald Trump plans to undo Dodd-Frank law, fiduciary rule | Fox News: President Donald Trump on Friday plans to sign an executive action to scale back the 2010 Dodd-Frank financial-overhaul law, in a sweeping plan to dismantle much of the regulatory system put in place after the financial crisis. Trump also plans another executive action aimed at rolling back a controversial regulation scheduled to take effect in April that critics have said would upend the retirement-account advisory business. “Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” White House National Economic Council Director Gary Cohn said in an interview with The Wall Street Journal. “The banks are going to be able to price product more efficiently and more effectively to consumers.” Trump will use a memorandum to ask the labor secretary to consider rescinding a rule set to go into effect in April that orders retirement advisers, overseeing about $3 trillion in assets, to act in the best interest of their clients, Cohn said in the White House interview. He said the rule limits consumer choice. Trump also will sign an executive order that directs the Treasury secretary and financial regulators to come up with a plan to revise rules the Dodd-Frank law put in place.

Dodd-Frank’s Bankruptcy Provision Could Be a Trump Target  --This week, President Trump, in signing another in a seemingly endless parade of executive orders, vowed to “do a big number” on Dodd-Frank, the 2010 law enacted in response to the financial crisis.While doing so will require more than a presidential signature on a piece of paper, I take him at his word. So far, he seems quite determined to do exactly what he said he was going to do during the election campaign. I also think the effort to dismantle Dodd-Frank will start in earnest with the Orderly Liquidation Authority. This is the special bankruptcy procedure for large financial institutions. It was enacted to allow the “too big to fail” banks an avenue to do the latter, since they are still quite big. Other commentators have pointed to the Consumer Financial Protection Bureau or the Volcker Rule, which restricts banks from making some of the speculative investments that led to the 2008-9 global economic crisis, as likely first targets.But the consumer bureau has strong defenders, including a United States senator, and dismantling Volcker would have really bad optics. The banks have already figured out several ways around the Volcker Rule — consider trading in distressed syndicated loans — and they may decide it is not worth the negative publicity that repeal would entail.  But who is going to stand up for an obscure piece of insolvency law that is easily painted as a bailout tool? Moreover, because the Orderly Liquidation Authority includes a line of credit for the Federal Deposit Insurance Corporation when it conducts liquidations under the law, any changes to this provision of Dodd-Frank, known as Title II, can happen through the budget reconciliation process, which is entirely immune from filibusters. And once Title II is gone, other pieces of Dodd-Frank may follow. Many of the proposals to create a new part of the bankruptcy code for banks — including that embedded in Representative Jeb Hensarling’s proposed Financial Choice Act — are pretend solutions. The proposals provide no real way to deal with anything beyond a very stylized form of bank failure.  If the bank fails in any way other than as predicted, these proposals will be useless. That, of course, will lead to a plea from Wall Street for bailouts.

Trump to Sign Orders Today Making Wall Street More Dangerous -- By Pam Martens - Donald Trump promised to bring back a 21^st Century version of the Glass-Steagall Act as a means of reforming Wall Street’s casino culture. At around noon today, Trump will continue the Orwellian reverse-speak of his campaign promises and do the opposite of what he promised. According to leaks to the financial media, Trump will today sign executive actions ordering swift reviews aimed at rolling back the feeble safeguards on Wall Street that currently exist while replacing them with — nothing. There has been no further word from Trump on bringing back the core principles of Glass-Steagall which would force the formal separation of banks holding taxpayer-backstopped insured deposits from the high-risk, derivatives-peddling, hedge-fund-financing investment banks. Trump is expected to sign one executive action today ordering financial regulators to review rolling back parts of the Dodd-Frank financial reform legislation that was passed by Congress in 2010. Another executive memorandum is expected to order the Labor Department not to implement the Fiduciary Rule that was set to take effect in April. The Fiduciary Rule, hated by Wall Street and its lobbyists, would force Wall Street firms to put the interests of clients owning retirement accounts above the interests of the firm. For example, it would mean that Wall Street would have to offer the client the best mutual fund at the lowest fee rather than one of its own in-house concoctions laden with far more onerous, self-serving fees and investments. Wall Street has had the gall to say the Fiduciary Rule is bad because it would limit opportunities for investors. Apparently, Wall Street means it would limit the opportunity for investors to be fleeced, thus limiting profits on Wall Street.

Trump Signs Executive Orders Rolling Back Dodd-Frank, Fiduciary Rule --As previewed earlier today, moments ago President signed two executive aimed at starting the process of rolling back the regulatory system put in place after the financial crisis. Among the targets are rules that protect against predatory lenders, force brokers to lower fees for retirees and ban proprietary trading. ordering the review of Dodd-Frank rules enacted after 2008 financial crisis, and halting the "fiduciary rule" that would require advisers on retirement accounts to work in the best interests of their clients. #Breaking President Trump signs executive order scaling back financial regulations. pic.twitter.com/Hs0QQHHzhT  Wall Street CEOs, tired of being constrained from blowing up the financial world with undue government regulations, have been pushing for changes for years, arguing that the industry has been too constrained by the system put in place by the 2010 Dodd-Frank Act. After Trump focused on limiting trade and immigration during his first two weeks in office, policies opposed by many in the financial industry, the president’s stroke of a pen unleashes a process to undo many of the rules they find most "irksome" as Bloomberg put it.“We’re going to attack all aspects of Dodd-Frank,” Gary Cohn, former Goldman president director of the White House National Economic Council, said Friday in an interview with Bloomberg Television. “We are going to engage the House, we’re going to engage the Senate. They are equally interested in reforming some of the regulatory processes as well. We can do quite a bit without them, but the more help we get from Congress the better off we’re all going to be.” And while it will take a while to fully roll back the legislation, we are confident that Wall Street is already preparing for the next big push into prop trading, major releveraging, blowing a whole new set of asset bubbles, and all those other thing which brought the system to a near collapse less than 10 years ago.

 Trump Signs Memorandum Shelving Fiduciary Standard For Financial Advisors -  At about 1:30 p.m. Eastern time on Friday, February 3, 2017, President Donald Trump signed a memorandum to roll back the Department of Labor’s fiduciary rule by asking the DOL to review the rule again and likely to delay its April 10th implementation (although at the time of this article a delay has not yet occurred but it is likely coming). Why does this matter? Simply put, the DOL fiduciary rule was designed to make sure that, if you hired a financial advisor to help with your retirement planning and assets, the financial advisor acted in your best interest, avoided conflicts of interest when possible, and was transparent with you about his or her compensation and fees. Many people are surprised to learn that such a rule does not already exist for financial advisors since financial advice, at its core, would appear only to be needed precisely to ensure the best interests of the consumer. While the fiduciary rule was not supported by everyone in the financial services industry, it has been hailed as a workable rule that is a step in the right direction for financial services, and the delay in implementation is expected to be the first step in terminating the rule as it exists today.

Trump ignites political fight over U.S. banking law reforms | Reuters: U.S. President Donald Trump on Friday ordered reviews of major banking rules that were put in place after the 2008 financial crisis, drawing fire from Democrats who said his order lacked substance and squarely aligned him with Wall Street bankers. Though the order was short on specifics, financial markets embraced Trump's signal that looser banking regulation is coming and pushed bank stocks higher. The Dow Jones U.S. Banks stocks index closed up 2.6 percent. .DJUSBK [.N] At a White House forum on Friday with U.S. business leaders, including JPMorgan Chase's (JPM.N) CEO Jamie Dimon, Trump said his administration expects "to be cutting a lot out of Dodd-Frank." That will involve a lot more than issuing an order, said former Democratic congressman Barney Frank, co-author of the 2010 Dodd-Frank Wall Street reform law that raised capital requirements for banks, restricted their trading by means of the "Volcker Rule," and created the Consumer Financial Protection Bureau to guard against predatory lending. Trump "can’t make any substantial change in the financial reform bill without Congress,” Frank told Reuters. "The language in the order doesn’t do anything. It tells the secretary of the Treasury to give them something to read. The tone of it is to weaken the bill.” Trump and other critics of the Dodd-Frank law say its regulations have hindered lending. At the meeting with CEO's on Friday Trump said, "I have so many people, friends of mine, that have nice businesses that can’t borrow money...because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank." Despite such criticisms, recent data from the Federal Reserve Bank of St. Louis showed U.S. commercial-bank lending at a 70-year high, climbing steadily since late-2010.

Cheat Sheet: What Trump can — and can’t — do to Dodd-Frank - The Trump administration released an executive order Friday calling for a review of financial regulatory policy, the clearest sign yet of the White House’s intent to roll back the onslaught of regulations since the 2010 Dodd-Frank Act was passed.    But the immediate questions about the order focused on what authority the White House has to enact real change, since congressional Democrats are resistant to rolling back the law and those running the regulatory agencies are still Obama administration appointees. News of the order, which appeared to be timed with President Trump’s scheduled meeting with business leaders, first came out in a media interview with National Economic Council Director Gary Cohn. He spoke of possible reforms including changes to the Financial Stability Oversight Council, the “living wills” process, a facility for resolving failed companies and even reforms for the housing finance system. According to a copy of the document that was circulating publicly on Friday, the administration's financial regulatory policy will focus on empowering consumers, preventing bailouts, fostering economic growth and "vibrant" markets, advancing U.S. interests in global regulatory discussions, and "restoring public accountability" at regulatory agencies.  Here are answers to some frequently asked questions about the Trump policy:

• The impact will likely be small in the short term. The order was framed as “core principles” rather than any immediate policy change. (The administration was also expected to call for a rollback of the Labor Department’s fiduciary duty rule.)
• Trump’s executive order could focus congressional efforts to reform, or repeal, sections of Dodd-Frank. Yet such an undertaking faces obstacles in the Senate, where Democrats still hold a sizable enough minority to block measures.
• Does this mean that Dodd-Frank will be repealed? No. Not only is a complete unwind of the 2010 law unlikely in the current political environment in Washington, but Trump officials themselves have said there are aspects of tougher regulation that they like.
• Even though Dodd-Frank was sweeping, it still left considerable authority in the hands of the regulators to interpret the law when writing rules and implementing them. While Congress wrote the law, many in the industry see the steps regulators took in the Obama administration as resulting in how the reforms have affected the industry. This ranges from the CFPB’s rules on mortgage underwriting, to how Obama’s Treasury supported the FSOC’s efforts to designate nonbank firms, to how the FDIC constructed its resolution authority for megabanks, and much more.

How Much Can Cutting Federal Regulation Boost the U.S. Economy? - Financial markets and the White House are betting that a rollback of federal regulations can provide a significant boost to the U.S. economy. Research suggests that’s no sure thing. The volume of federal regulation has grown dramatically over recent decades and Donald Trump says that’s holding back growth. But estimates of the costs and benefits of the expanding regulatory state are so disparate, it’s nearly impossible to pin down the payoff for Mr. Trump’s plan to cut back red tape. Here’s a primer on the regulatory state and its effect on the economy. One crude measure comes from simply tallying pages in the Code of Federal Regulations, which has climbed fairly relentlessly over the past half century under Republican and Democratic presidents and Congresses alike.  And the burden of meeting existing regulations is arguably lighter than figuring out new ones. Thus, another important measure could be each year’s new regulatory activity. For that, a rough gauge is the number of pages each year in the Federal Register, where the government publishes proposed rules and public notices. Broadly speaking, there are two approaches to estimating costs and benefits. A “bottom up” approach aggregates estimates for each individual regulation. A “top down” approach relies on economic modeling to show the overall effect of regulations on growth. In its most recent report, OMB estimated regulatory costs of between $74 billion and $110 billion. The benefits of the regulations, however, were significantly higher: $269 billion to $872 billion. The OMB is part of the executive office of the president, and thus inherently political. The top-down approach instead uses complex economic models to determine relationships between regulations and their effect on growth.The most aggressive of these studies find that regulation reduces the annual growth rate every year, and that therefore, compounded over time, the effects become enormous. One study from George Mason University‘s Mercatus Center, known for its antiregulation stance, estimated regulations across 22 industries reduced the growth rate by about 0.8% per year. “Had regulation been held constant at levels observed in 1980, our model predicts that the economy would have been nearly 25% larger by 2012,” conclude the authors

The idea is that the benefits of regulations are zero - From the "text of executive order on eliminating rules": (b) For fiscal year 2017, which is in progress, the heads of all agencies are directed that the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero, unless otherwise required by law or consistent with advice provided in writing by the Director of the Office of Management and Budget (Director). (c) In furtherance of the requirement of subsection (a) of this section, any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations. Any agency eliminating existing costs associated with prior regulations under this subsection shall do so in accordance with the Administrative Procedure Act and other applicable law. So let's say you want to impose a job-killing regulation that has benefits equal to 100 and costs equal to 20. The net benefits are 80 and so you go looking for two or more existing job-killing regulations to get rid of. Their costs must be greater than or equal to 20. The magnitude of their benefits do not matter.  There is nothing in economics that leads to the conclusion that the benefits of job-killing regulations are zero. Regulations have benefits and costs. If the benefits of the regulation is less then the costs then that regulation should not be implemented. If the benefits are greater than the costs then that regulation should be implemented because it would improve the overall welfare of society. But with this executive order, in order to improve social welfare we need to find at least two regulations (that may also have improved social welfare) to eliminate.

Republicans take first steps to kill Obama-era regulations | Reuters: Republicans on Monday continued their drive to loosen U.S. regulation, taking the first step to kill five Obama-era rules on corruption, the environment, labor and guns under the virtually untested Congressional Review Act. The House Rules Committee sent to the full chamber three regulations enacted under former President Barack Obama, a Democrat, to ax. They were the Stream Protection Rule, the Securities and Exchange Commission's "resource extraction rule," and one on gun buying. Republicans put as much urgency on limiting what they consider over-regulation that stifles economic growth as they do on overhauling the tax code and dismantling the Affordable Care Act, according to House Majority Leader Kevin McCarthy. This is the first time the Republican-led House of Representatives has targeted specific rules since convening on Jan. 3. Earlier this month it passed bills to limit regulatory agencies and Republican President Donald Trump is cutting regulation through executive orders. Under the law, Congress can use simple majority votes to stop recent regulations in their tracks. Agencies cannot create a new rule to replace any part of an overturned regulation. Timing in the law means any rules enacted in the final months of Obama's administration are eligible for axing. The law has been used effectively only once, in 2001. Both sides consider this week a test of its powers. On Tuesday the Rules Committee will send two more regulations to the full chamber, which is expected to vote to kill all five on Wednesday and then hand them off to the Senate.

 U.S. House axes rules to prevent corruption, pollution | Reuters: Two major U.S. rules aimed at curbing corruption and pollution in the energy sector may be entirely wiped from the books by next week, after the Republican-led House of Representatives on Wednesday voted to repeal them. The Senate is expected to take up repealing the rules, both of which were years in the making, as soon as Thursday. Under the virtually untested Congressional Review Act, the Republican-led Congress can vote to permanently undo newly minted regulations. Agencies cannot revisit overturned regulations and timing in the law means any regulation enacted in the Obama administration's final months are eligible for axing. Required by the 2010 Dodd-Frank Wall Street reform law, the Securities and Exchange Commission's "extraction rule" was approved this summer to require companies such as Exxon Mobil Corp and Chevron Corp to publicly state the taxes and other fees they pay to governments. Exxon, and other major energy corporations, fought for years to keep the rule from seeing the light of day. After a series of legal battles the SEC in June 2016 finally completed the rule, which supporters say can help expose questionable financial ties U.S. companies may have with foreign governments.During Wednesday's debate, Representative Maxine Waters, the senior Democrat on the House Financial Services Committee, raised concerns that Exxon's CEO during those fights was Rex Tillerson, just confirmed in the top diplomatic post of Secretary of State. During Tillerson's confirmation hearings, he raised Democrats' hackles by saying he did not know Exxon lobbied against U.S. sanctions on Russia, where he did business for years. Republicans say the rule is burdensome and costly for energy companies, and also duplicates other long-standing regulations. On the House floor Republican Jeb Hensarling, chairman of the Financial Services Committee, called the rule part of "a radical leftist elitist agenda against carbon-based jobs." The stream buffer rule is intended to lessen the amount of waste from mountain-top removal coal mining deposited in local waterways. Republican lawmakers, though, say it is hurting coal jobs by placing unworkable limits on the industry. Democrats, on the other hand, say it cuts down on water pollution.

Washington reels from Trump’s tornado of executive orders -- In his inauguration speech two weeks ago, Donald Trump billed his foreign policy doctrine as “America First”. But his first, combustible engagements with the rest of the world have only left other countries more confused about where they stand. Mr Trump has brought to the world stage the same blunt, combative showmanship that drew audiences to him as a reality television host and a presidential candidate. “The world is in trouble but we can straighten it out, OK,” he told guests at the National Prayer Breakfast before asking them to pray for Arnold Schwarzenegger’s ratings on New Celebrity Apprentice. “We have to be tough. We’re taken advantage of by every nation in the world virtually. It’s not gonna happen any more.” That new “tough” approach included tweeting that Iran did not appreciate “how ‘kind’ President Obama was to them”, describing a deal to take refugees off Australia’s hands as “dumb” and telling Mexico it had “taken advantage of the US for long enough”. At the same time, his defence secretary was warning North Korea that any use of nuclear weapons would be met with “overwhelming” force. All of Washington has a sense of whiplash from the daily tornado of executive orders and announcements coming from Mr Trump’s White House, but few areas are feeling it more than the world of foreign policy. The president has vowed to upend US foreign policy, even as members of his cabinet quietly put together counterproposals that adhere more closely to the traditional US script. This week, the White House issued a surprise statement calling on Israel to halt the construction of Jewish settlements outside East Jerusalem and the West Bank, a sharp detour from its previous statements towards Israel, which included promising to move the US embassy from Tel Aviv to Jerusalem, a step that would enrage Palestinians.The mixed messages are typical of the new administration’s cultivated style of chaos, which has enveloped both its domestic and foreign policy agendas.

Senate Democrats boycotting HHS, Treasury nominees (CNN)In a surprise turn of events, Senate Democrats announced Tuesday morning that they are boycotting a committee vote on two of President Donald Trump's Cabinet nominees, drawing fury from Republicans across the aisle. The Senate Finance Committee was set to vote on the nominations of Rep. Tom Price to lead the Department of Health and Human Services and Steve Mnuchin for Treasury Secretary. But minutes after the vote was scheduled to take place, Democrats on the panel convened an impromptu news conference to announce that they refused to participate in the proceeding, all as their Republican colleagues were waiting in a hearing room down the hallway. Sen. Ron Wyden, the top Democrat on the Finance Committee, pointed to what he called "truly alarming news" that surfaced on Monday, referring to a Wall Street Journal Report that said Price had received a special discounted rate of stocks at an Australian pharmaceutical company called Innate Immunotherapeutics. "This is contrary to congressional testimony he gave. Congressman insisted he didn't get special access to a special deal," Wyden said. "He misled the congress and he misled the American people." Democratic Sen. Sherrod Brown said Price had "outright lied to our committee." The CEO of Innate Immunotherapeutics criticized the WSJ story to CNN on Monday, rejecting the story's claim that Price had received a privileged offering. Committee Chairman Orrin Hatch had choice words for his colleagues across the aisle, calling their actions "abysmal" and "amazingly stupid."

Democrats Again Boycott Committee Vote, Blocking Confirmation Of Trump EPA Nominee --For the second day in a row, after Senate Democrats boycotted the committee votes for Steven Mnuchin and Tom Price yesterday only for republicans to implement a loophole, allowing the vote to take place as described earlier, on Wednesday morning Senate Democrats again boycotted a committee vote on a President Trump  pick, this time focusing on his choice to lead the Environmental Protection Agency, preventing the GOP from moving his confirmation forward. None of the Democrats on the Environment and Public Works panel, led by Sen. Tom Carper went into the meeting room, depriving the committee of the two minority party members it requires for a quorum to vote on Scott Pruitt. The Finance Committee’s Republicans bypassed the boycott Wednesday by voting to change the panel’s rules and allow a vote without Democrats, something the Environment panel could do to get Pruitt approved.  The Wednesday move by Democrats was to protest committee Chairman John Barrasso’s (R-Wyo.) refusal to delay the vote until Pruitt gave more substantive answers to numerous questions that they had for him. “The committee Democrats are deeply concerned about the lack of thoroughness of Mr. Pruitt’s responses to our questions for the record,” Carper wrote to Barrasso. “I ask you to direct Mr. Pruitt to disclose information requested by Democratic members with the same level of transparency that this committee has required of past nominees.” The Democrats’ top complaints centered on documents they requested about litigation Pruitt led as Oklahoma’s attorney general and his positions on major EPA regulations, among other concerns.

Senate Democrats Stall Another Vote, This Time For Attorney General -- Having already succeeded in delaying the confirmation of Tom Price and Steven Mnuchin, when Democrats boycotted a committee vote which had a minimum quorum requirement, moments ago Senate Democrats succeeded in stalling - if only temporarily - another confirmation when they used a procedural move on Tuesday afternoon to stall committee vote, this time on Jeff Sessions' nomination to become US Attorney General amid last night's controversy in which Trump fired the acting Attorney General Sally Yates for insubordination.The announcement came after the committee took a break to allow members to vote on the floor confirmation of Elaine Chao as Transportation Secretary. When it reconvened, Sen. Mazie Hirono told Grassley that Minority Leader Chuck Schumer intended to invoke the two-hour rule against holding committee meetings beyond the first two hours of the Senate's day, the Hill reported. As a result the Senate Judiciary Committee will reconvene at 10:30 a.m. on Wednesday to vote on Sessions’s nomination, Chairman Chuck Grassley said. While Sessions has already faced an uphill climb in his confirmation, it got more complicated on Monday night when Trump fired acting Attorney General Sally Yates, who deemed the president's order illegal and said she would not have Justice attorneys defend it. Trump quickly replaced Yates with Dana Boente, the U.S. attorney for the Eastern District of Virginia. He rescinded the Yates order and said Justice will defend the executive order.

 Democrats boycott confirmation hearings for Price, Sessions, Mnuchin, blocking votes - Democrats forced delays Tuesday in planned Senate committee votes on President Donald Trump's picks for Health and Treasury secretaries and attorney general, amid growing Democratic surliness over the administration's aggressive early moves against refugees and an expected bitter battle over filling the Supreme Court vacancy. Democrats abruptly boycotted a Senate Finance Committee meeting called to vote on Rep. Tom Price, R-Ga., the Health nominee and Steve Mnuchin, Trump's Treasury selection, saying both had misled Congress about their financial backgrounds. The Democrats' action prevented the Finance panel from acting because under committee rules, 13 of its members — including at least one Democrat — must be present for votes. It was unclear when the panel would reschedule to votes. At the Senate Judiciary Committee, a meeting considering Sen. Jeff Sessions, R-Ala., to be attorney general lasted so long — chiefly because of lengthy Democratic speeches — that Chairman Charles Grassley, R-Iowa, said the panel would meet again Wednesday. The meeting on Sessions' nomination was coming with Democrats and demonstrators around the country in an uproar over Trump's executive order temporarily blocking refugees. Even some Republicans were warning it could hinder anti-terrorism efforts. Not everything ground to a halt. The Senate education committee voted 12-11 to send Trump's pick to head the Education Department, Betsy DeVos, to the full Senate for a confirmation vote. The Senate Energy and Natural Resources Committee quickly approved former Texas Gov. Rick Perry as Energy secretary by 16-7, and Rep. Ryan Zinke, R-Mont., to head Interior by 16-6. And the full Senate easily confirmed Elaine Chao to become transportation secretary by a 93-6 vote. Chao was labor secretary under President George W. Bush, and is wife of Senate Majority Leader Mitch McConnell, R-Ky.

Republicans suspend committee rules, advance Mnuchin, Price nominations -- (CNN)Senate Republicans took an extraordinary step Wednesday to move forward with two of President Donald Trump's top Cabinet nominees after confronting a boycott from Democrats. Republican lawmakers on the Senate Finance Committee -- the panel that oversees the nominations of Steve Mnuchin to be Treasury secretary and Rep. Tom Price to be secretary of the Department of Health and Human Services -- gathered for the second day in a row with Democrats on the committee refusing to show up. The dramatic move could foreshadow strategy from Republicans over contentious battles still to come as Democrats try to use a variety of Senate procedures to stall the newly empowered GOP. The most high-profile of upcoming fights is Trump's Supreme Court pick Neil Gorsuch, a nomination that would require at least 60 votes to break a filibuster. Under committee rules, it is required that at least one Democrat be present for the panel to vote to send a nominee to the Senate floor. On Tuesday, not a single Democrat showed up, putting the two nominations at a standstill. Committee Chairman Orrin Hatch, a Utah Republican, pointed to the "extraordinary circumstances" surrounding the gathering and allowed the Republicans in the room vote to suspend the rules of the committee. With the committee rules suspended, the 14 Republicans in the room voted to move the Mnuchin and Price nominations to the full Senate, even without the presence of a single member of the opposite party.

GOP changes rules to push through nominees after Dem boycott | TheHill: Senate Republicans pushed through a pair of President Trump’s Cabinet nominees Wednesday, upending standard committee rules to circumvent a Democratic boycott. The Senate Finance Committee advanced a pair of Trump’s nominees with only Republican members present — Steven Mnuchin to head the Treasury Department, and Rep. Tom Price (R-Ga.) as secretary of Health and Human Services. By unanimous consent, the Republicans gathered in the hearing room agreed to change the committee’s standing rules, which normally require at least one member of each party to be in attendance for committee work to proceed. “It’s just another way of roughing up the president’s nominees,” said committee Chairman Orrin Hatch. Republicans made the unusual move after Democrats refused to attend a vote on the nominees for two days running, arguing the pair had made misleading statements to lawmakers that needed to be rectified. The nominees now head to the Senate floor, as partisan tensions over filling out Trump’s White House continued to intensify. Democrats are crying foul over Mnuchin’s answers over how OneWest Bank, which he headed after the financial crisis, handled foreclosures for mortgages it held, and also whether he was sufficiently forthcoming about foreign entities he helped establish. And questions have swirled for weeks around Price’s investment activity, including whether his political actions benefitted his personal portfolio.

Betsy DeVos's Nomination for Education Secretary Clears Committee - After contentious confirmation hearings, protests across the country and two rounds of voting, Betsy DeVos cleared the first hurdle in her path to becoming secretary of education on Tuesday with a party-line vote in the Senate Committee on Health, Education, Labor and Pensions that advanced her nomination to the Senate floor. All 12 Republican senators on the committee voted for Ms. DeVos, a billionaire with a complex web of investments, including some in companies with connections to federal education policy. All 11 Democrats opposed her, calling her both dangerous and unqualified. The committee voted twice on Ms. DeVos’s nomination after Democrats protested against a vote cast on behalf of Senator Orrin G. Hatch, Republican of Utah, who was initially absent.Ms. DeVos’s ultimate confirmation, while likely, is still not definite. Senator Lamar Alexander of Tennessee, chairman of the committee, was visibly frustrated — by Democratic delaying tactics and arguments — as he defended Ms. DeVos and said she would be devoted not only to giving parents a choice about school options but also to protecting public schools. “She wants to reverse the trend of a national school board and stop telling teachers and school boards how to run their schools,” Mr. Alexander said. “One would think the committee would be delighted with that. I respect my colleagues. I don’t question their motives. I don’t question their votes. But I believe their concerns are misplaced.” But Senator Lisa Murkowski, Republican of Alaska, expressed reservations about Ms. DeVos that sounded similar to those of Ms. DeVos’s opponents. The senator said that while she would vote to advance Ms. DeVos out of committee, she would not commit to voting for her on the Senate floor.

Second Republican senator to vote against DeVos | TheHill: Sen. Lisa Murkowski(R-Alaska) announced that she would not be voting for President Trump’s pick to lead the Education Department, becoming the second Republican senator to oppose Betsy DeVos's nomination. Murkowski made her announcement on the Senate floor, just after GOP Sen. Susan Collins(Maine) announced she would oppose DeVos. The pair are the first two Republicans to break with President Trump on his Cabinet nominees. Their no votes will make it difficult for DeVos to be confirmed. Republicans hold 52 seats in the Senate. If every Democrat votes against DeVos, Vice President Pence could break the tie. No Democrats have said they will vote for DeVos. "I have serious concerns about a nominee to be secretary of Education ... who has been so immersed in the discussion of vouchers," she said. "I do not intend to vote on final passage to support Ms. DeVos to be secretary of Education," she said.

 Senate confirms Rex Tillerson for secretary of State -- The Senate confirmed former ExxonMobil CEO Rex Tillerson as secretary of State on Wednesday, even as Democrats blocked progress on other Cabinet nominees chosen by President Trump. The vote, 56-43, puts a man who has negotiated business deals with countries around the world, including some hostile to the United States, in position to negotiate on behalf of Trump in matters of war and peace, climate change and human rights. Sen. John Cornyn, R-Texas, praised Tillerson before Wednesday’s vote. “His experience and aptitude and talent will be put to work for the American people,” Cornyn said. “He’s a man of character who believes in putting his country first.”Sen. Martin Heinrich, D-N.M., said he opposed Tillerson’s confirmation because “negotiating oil deals does not prepare you to be a diplomat advocating for American values.” He faulted Tillerson, 64, for saying during his confirmation hearing that he needed more information before he could respond to senators’ questions about whether women suffered human rights violations in Saudi Arabia. The answer is known to every school child, Heinrich said. Sen. Joe Donnelly, D-Ind., said he would vote against Tillerson because as chief of ExxonMobil, he did business with countries that were at odds with the U.S., like Russia, Iran, Syria and Sudan. “Putting a company’s interest before American interest is inexcusable and a disqualifying characteristic for America’s next secretary of State,” Donnelly said.

 Rex Tillerson Is Confirmed as Secretary of State Amid Record Opposition — Rex W. Tillerson, the former chairman and chief executive of Exxon Mobil, was confirmed by the Senate on Wednesday in a 56-to-43 vote to become the nation’s 69th secretary of state just as serious strains have emerged with important international allies. The votes against Mr. Tillerson’s confirmation were the most in Senate history for a secretary of state, a reflection of Democratic unease with President Trump’s early foreign policy pronouncements that threaten to upend a multilateral approach that has guided United States presidents since World War II. Thirteen senators voted in 2005 against Condoleezza Rice in the midst of a deteriorating Iraq war, and in 1825, Henry Clay was confirmed 27 to 14, the record for votes against until Wednesday, according to a tally provided by the Senate Historical Office. In a brief swearing-in ceremony in the Oval Office on Wednesday evening, Mr. Trump said Mr. Tillerson understood “the importance of strengthening our alliances and forming new alliances to enhance our strategic interests and the safety of our people.” Mr. Trump added, “It’s time to bring a clear-eyed focus on foreign affairs, to take a fresh look at the world around us, and to seek new solutions grounded in very ancient truths.”

Sessions approved by Senate committee | TheHill: A Senate committee voted to confirm Sen. Jeff Sessions (R-Ala.) to be attorney general on Wednesday, two days after the growing controversy surrounding President Trump’s travel ban on seven Muslim nations led to the firing of an acting attorney general for insubordination. The Senate Judiciary Committee approved Sessions 11-9 along party lines. His nomination now goes to the floor, where he is widely expected to be confirmed given the GOP's 52-seat majority. The committee vote comes as Senate Democrats have sought to slow progress on other Trump nominees, including Steve Mnuchin, the pick at the Treasury Department, and Rep. Tom Price (R-Ga.), Trump's pick to lead the Health and Human Services Department. The Alabama senator's already difficult path to confirmation was made more contentious by Trump's firing of acting Attorney General Sally Yates, who deemed the president's order illegal and said she would not have Justice attorneys defend it. Committee Democrats on Tuesday praised Yates for her actions and accused Sessions of helping Trump draft the order, a claim Committee Chair Chuck Grassley (R-Iowa) denied.

The CIA’s New Deputy Director Ran a Black Site for Torture – Greenwald - In May, 2013, the Washington Post’s Greg Miller reported that the head of the CIA’s clandestine service was being shifted out of that position as a result of “a management shake-up” by then-Director John Brennan. As Miller documented, this official – whom the paper did not name because she was a covert agent at the time – was centrally involved in the worst abuses of the CIA’s Bush-era torture regime.As Miller put it, she was “directly involved in its controversial interrogation program” and had an “extensive role” in torturing detainees. Even more troubling, she “had run a secret prison in Thailand” – part of the CIA’s network of “black sites” – “where two detainees were subjected to waterboarding and other harsh techniques.” The Senate Intelligence Committee’s report on torture also detailed the central role she played in the particularly gruesome torture of detainee Abu Zubaydah.Beyond all that, she played a vital role in the destruction of interrogation videotapes that showed the torture of detainees both at the black site she ran and other secret agency locations. The concealment of those interrogation tapes, which violated both multiple court orders as well the demands of the 9/11 Commission and the advice of White House lawyers, was condemned as “obstruction” by Commission Chairs Lee Hamilton and Thomas Keane. A special prosecutor and Grand Jury investigated those actions but ultimately chose not to prosecute. That CIA official’s name whose torture activities the Post described is Gina Haspel. Today, as BuzzFeed’s Jason Leopold noted, CIA Director Mike Pompeo announced that Haspel was selected by Trump to be Deputy Director of the CIA.

Anthony Scaramucci Won't Get Announced White House Role, Official Says -- Anthony Scaramucci, an investment firm founder and a Republican donor, will not be taking a senior job at the White House as previously announced, a senior administration official said Wednesday. Mr. Scaramucci was informed on Wednesday by Reince Priebus, President Trump’s chief of staff, and by Stephen K. Bannon, the president’s top strategist, that he would not get the job as liaison to the business community. Mr. Priebus and Mr. Bannon, the official said, plan to find  another role in the administration for Mr. Scaramucci in the future. The official spoke on the condition of anonymity because Mr. Scaramucci’s name had not officially been withdrawn. At issue is Mr. Scaramucci’s sale of his firm, SkyBridge Capital, to a division of HNA Group, a politically connected Chinese conglomerate that would become the firm’s majority owner. The sale has not been completed, and administration officials said the White House Counsel’s Office had predicted that it would take up to three months for Mr. Scaramucci to be cleared of potential ethics conflicts.The White House is operating without a functioning Office of Public Liaison and Intergovernmental Affairs, which Mr. Scaramucci would have led. Part of the job is to help coordinate matters across government agencies, a pressing need as protests over the president’s immigration order sweep the country. The New York Times reported Tuesday that HNA Group has strong ties to China’s ruling Communist Party and an opaque ownership structure. China experts say leading Chinese firms like HNA are looking for avenues of influence in a White House that is already stoking tensions on trade and other issues.

Vincent Viola Withdraws as Secretary of Army Nominee -- Vincent Viola, the billionaire founder of trading firm Virtu Financial Inc., has withdrawn his nomination to be Secretary of the Army after distancing himself from his business ties proved too difficult, according to two Trump administration officials and a third person familiar with Viola’s decision. Viola informed President Donald Trump Friday that he will be unable to accept the nomination because separating from the organizations that he has built over the last 35 years have proven insurmountable, said two of the people familiar with Viola’s decision, who asked not to be named. The full extent of Viola’s financial holdings and ownership stakes in other companies would’ve been detailed in ethics and financial disclosure forms to be filed as the nomination process unfolded. Without them, it’s difficult to know what business arrangements tripped him up. This is the first Trump nominee to withdraw from consideration. Viola, the son of a truck driver and a homemaker, is a West Point graduate and former Army infantry officer who served in the 101st Airborne Division. Viola’s net worth is estimated at $2.5 billion, according to the Bloomberg Billionaires Index. He founded Virtu Financial in 2008 and took the electronic market-making firm public in 2015. An earlier attempt at an IPO was shelved in 2014 after Michael Lewis’s “Flash Boys” brought the high-frequency trading firm under attack. Viola served as chairman of the New York Mercantile Exchange from 2001 to 2004, after starting his career on the Nymex trading floor and working his way up through the organization. He’s also the owner of the National Hockey League’s Florida Panthers, which updated their jerseys last year with a crest inspired by armed forces insignia in a nod to Florida’s military community and Viola’s Army heritage.

Groups Representing 10 Million People Oppose Fast Food CEO for Labor Secretary - More than 100 food and agriculture organizations, representing more than 10 million people across the food system, sent a letter to Capitol Hill Monday urging senators to oppose the confirmation of fast food CEO Andrew Puzder as secretary of labor. This clarion call from the nation's farmers, food-system workers and public health advocates, led by Corporate Accountability International , Food Chain Workers Alliance , Friends of the Earth and Real Food Media , comes on the heels of growing opposition and controversy surrounding Donald Trump's pick to head the Department of Labor. A recent Capital & Main investigation found that under Puzder's watch as CEO, CKE Restaurants faced more federal employment discrimination lawsuits than any other major fast food chain. The corporation violated workers' rights , including wage theft and failed to provide employees with overtime pay.  "Andrew Puzder is dangerous for working families and bad for our food system," said Jose Oliva, co-director of Food Chain Workers Alliance. "The country needs a labor secretary who will protect working families, not corporate interests. Puzder's track record as CEO of CKE Restaurants proves that he should be kept as far away from Washington as possible."

Puzder’s anti-worker positions disqualify him from serving as labor secretary: Here is a partial list of the worker protections that Puzder’s policies would undermine -- At this moment, we have a nominee for secretary of labor whose record and policy positions stand in stark contrast to past Democratic and Republican labor secretaries. Earlier this week, Andrew Puzder’s confirmation hearing was delayed for the fourth time. Senator Patty Murray, the senior Democrat on the Senate Health, Education, Labor, and Pensions Committee, reported that the committee still had not received Puzder’s paperwork, raising questions about his nomination. Regardless of Puzder’s financial disclosures, his record is clear. His positions on key policies are bad for American workers and should disqualify him from serving as secretary of labor. Puzder, CEO of CKE Restaurants, has opposed raising the minimum wage, criticized paid sick time proposals and health and safety regulations, and headed a company with a record of violating laws and regulations that protect workers’ wages, safety, and rights. (CKE Restaurants is the parent company of Hardee’s and Carl’s Jr.) If Puzder, or a nominee with similar positions, leads the Department of Labor, it would pose a threat to our nation’s economy and workers. An assault on critical worker protections would jeopardize the gains made during the Obama administration and give rise to greater inequality.

Trump's Latest Fan: Buffett Bought $12 Billion In Stocks Since The Election - Count one of Hillary Clinton's biggest financial backers, billionaire Warren Buffet, among the biggest fans of the "Trump rally." In an interview with Charlie Rose recorded on Friday, Warren Buffett said that since the election day, Berkshire Hathaway bought $12 billion in stock. This was a change in strategy for Buffett, who as it turns out was a net seller in the first nine days of the month, when Hillary seemed like a guaranteed winner in the November election, one which Buffett was selling into. “We’ve, net, bought $12 billion of common stocks since the election,” he said in an interview with Charlie Rose that aired on Friday. Buffett didn’t identify the securities that he picked. As of Sept. 30, Berkshire had an equity portfolio valued at $102.5 billion. Purchases of that magnitude represent a major pickup in activity for Omaha, Nebraska-based Berkshire. During the first nine months of last year, the company bought $5.2 billion and sold or redeemed roughly $20 billion worth of stocks, according to a regulatory filing. In 2015, Berkshire bought about $10 billion of equity securities For now, Buffett's bet has proven wise: stocks have rallied since the Trump victory as investors speculated that the Republican’s policies will stimulate the economy. However, in recent days gains have been pared as the Trumpflation rally is rapidly cooling. On Monday, after the turbulent rollout of an immigration order raised concern that the new administration may follow through with isolationist policies, stocks plunged by the most in 2017. Buffett also told Rose he was skeptical that the U.S. could increase output at a 4 percent annual clip, as the president has said he’s aiming to achieve. “That’s pretty high,” Buffett said. “Two percent will produce miracles.”

 Ray Dalio Sours On Trump, Warns His Policies "Could Hurt The World Economy (And Worse)" -- Less than a week after Donald Trump won the presidency, the head of the world's biggest hedge fund, Ray Dalio, unexpectedly declared that he was a firm believer in Trump's policies in a lengthy LinkedIn article in which he praised the coming age of Trump: "there is a good chance that we are at one of those major reversals that last a decade (like the 1970-71 shift from the 1960s period of non-inflationary growth to the 1970s decade of stagflation, or the 1980s shift to disinflationary strong growth).... there’s a good chance that the economy/market will shift from what we have gotten used to and what we will experience over the next many years will be very different from that."It now appears that Trump's honeymoon with some of the biggest asset managers is now officially over, because in his latest Daily Observations note, scooped by BBG, Dalio and co-CIO Bob Prince write that he’s becoming "more concerned that the damaging effects of President Donald Trump’s populist policies may overwhelm the benefits of his pro-business agenda."“We are now in a period of time when how this balance tilts will be more important to the economy, markets, and our well-beings than normally dominant drivers such as central bank policies,” Dalio wrote. The duo added that the current investment environment is marked by “exceptional uncertainty” and recommended avoiding concentrated bets, and holding easy-to-sell assets. And, as Bloomberg puts it, Dalio is "turning sour" on the new leader following his ban on visitors from seven mostly Muslim countries and his proposed border tax on Mexican goods. Earlier this month at the World Economic Forum in Davos, Dalio said it remains to be seen whether Trump is aggressive and thoughtful, or aggressive and reckless. So far the executives said they haven’t seen much thoughtfulness in Trump’s policy moves.

 Nomi Prins: Trump Hearts Goldman as the Bank Continues Its Washington Conquest - Irony isn’t a concept with which President Donald J. Trump is familiar. In his Inaugural Address, having nominated the wealthiest cabinet in American history, he proclaimed, “For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished — but the people did not share in its wealth.”  Under Trump, an even smaller group will flourish — in particular, a cadre of former Goldman Sachs executives. To put the matter bluntly, two of them (along with the Federal Reserve) are likely to control our economy and financial system in the years to come.Infusing Washington with Goldman alums isn’t exactly an original idea. Three of the last four presidents, including The Donald, have handed the wheel of the U.S. economy to ex-Goldmanites. But in true Trumpian style, after attacking Hillary Clinton for her Goldman ties, he wasn’t satisfied to do just that.  He had to do it bigger and better.  Unlike Bill Clinton and George W. Bush, just a sole Goldman figure lording it over economic policy wasn’t enough for him. No less than six Trump administration appointments already hail from that single banking outfit. Of those, two will impact your life strikingly: former Goldman partner and soon-to-be Treasury Secretary Steven Mnuchin and incoming top economic adviser and National Economic Council Chair Gary Cohn, former president and “number two” at Goldman.  (The Council he will head has been responsible for “policy-making for domestic and international economic issues.”)

 Donald Trump Has a Goldman Sachs Problem: Derivatives -- Pam Martens - In the midst of being skewered across media outlets yesterday for his chaotic rollout of an Executive Order that appeared to target Muslims, Trump pivoted to something he thought would please his financial backers on Wall Street. He called the Dodd-Frank financial reform legislation passed in 2010 by the Obama administration a “disaster” and promised to “do a big number” on it soon. The Dow closed down 122 points — now wary of Trump’s fire-ready-aim leadership on complex matters. The legitimate fear across Wall Street right now is that Trump’s zero-vetting approach to rule-by-Executive-Order could leave Wall Street in the same chaotic state as the airports experienced from his ham-fisted approach to immigration. But it’s not just Trump that Wall Street needs to fear: it’s Goldman Sachs as well. Trump has stuffed his administration with so many Goldman Sachs progeny that his administration is now regularly referred to as Government Sachs. Goldman Sachs has a unique vested interest in repealing chunks of Dodd-Frank while making sure that the Glass-Steagall Act is not reinstated. That’s because when it comes to derivatives, Goldman Sachs is keeping a lot of secrets. The Office of the Comptroller of the Currency (OCC) is the regulator of national banks. Each quarter it publishes a report on the derivative holdings of the biggest Wall Street banks and their holding companies. Its most recent report shows that as of September 30, 2016 Goldman Sachs Bank USA (a taxpayer-backstopped, FDIC insured bank where it holds its derivatives) had “credit exposure to risk-based capital” of 433 percent. That figure was more than double that of JPMorgan Chase (216 percent) and six times that of Bank of America (68 percent). There’s another big problem with Goldman Sachs: it has a miniscule asset base compared to the big guns on Wall Street but it’s attempting to play in the big leagues in terms of derivatives. As the chart above shows, Goldman Sachs is the third largest holder of derivatives on Wall Street with $45.48 trillion in notionals (face amount). (As of 2015, the entire GDP of the United States was only $18 trillion.) But Goldman only has $880 billion in assets. That ratio compares to JPMorgan Chase with $2.5 trillion in assets and $50.6 trillion in derivatives and Citigroup with $1.8 trillion in assets and $51.78 trillion in derivatives.

First Big Shock For Wall Street: Republicans Warn No Trump Tax Reform Until Spring 2018 -- When it comes to Wall Street, Trump can launch martial law, suspend habeas corpus and/or use the Constitution for kindling and the market could care less as stocks will still go up. However, threaten some of Trump's core economic stimulus projects like infrastructure spending (i.e., more public debt to fund corporate bottom lines) or tax reform (even more public debt flowing through to EPS), and suddenly stocks will pay very close attention. It now appears that this particular "worst case" for stocks may be playing out. As we cautioned in our previous post looking at the impact of Trump tax reform on corporate earnings, the biggest risk for the controversial president is that "at this rate Trump may spend much of his first year dealing with immigration reform and Obamacare." However, as Paul Ryan warned last week during the Republicans' outing in Philadelphia, Trump's "#1 priority", repealing and replacing Obamacare may not take place for several months.  Ok fine, repealing and replacing Obamacare may be on hiatus, but at least Trump's massive infrastructure project is still on track, and will be executed shortly. Guess again. According to Politico, the great bipartisan hope of 2017 – a massive public works initiative that would allow Donald Trump and Democrats to show they’re serious about putting blue-collar workers back to work – "may be in trouble before negotiations even begin."Trump will almost certainly need Senate Democrats to get any infrastructure legislation through Congress, and this week they laid out a $1 trillion proposal this week that neatly matches the price tag of Trump’s own plan. But the similarities end there: If anything, Democrats set a mark that will be nearly impossible for the White House to meet.  The gaping disparity between the two approaches, and huge unanswered questions about where the money would come from, are serious warning signs for one of Trump’s top priorities. The biggest difference: Senate Democrats want to build on existing government programs and consider adding to the deficit, while Trump has emphasized tax credits that his advisers argue would pay for themselves.

"This Is Unacceptable" - Congressman Slams Yellen For Prioritizing Foreign Banks Over "America's Interests" -- In what may be a harbinger of major headaches to come for the Fed, a recent letter (Jan. 31) penned by Republican representative  Patrick McHenry, Vice Chairman of the Financial Services Committee, has lashed out at Janet Yellen, telling the Fed chair in no uncertain terms that "despite the clear message delivered by President Donald Trump in prioritizing America's interest in international negotiations, it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability, or the authority to do so."His assessment of this ongoing activity by the Fed: "This is unacceptable." McHenry's emphasis is on "international forums" such as the Financial Stability Board, the Basel Committee on Banking and Supervision, and the International Association of Insurance Supervisors, and he notes that "continued participation" in these forums must be "predicated on achieving objectives set by the new Administration", something which will "likely require a comprehensive review of past agreements that unfairly penalized the American financial system in areas as varied as bank capital, insurance, derivatives, systemic risk, and asset management." He then adds that "the secretive structures of these international forums must also be reevaluated" because when the deals were negotiated, "international standards were turned into domestic regulations that forced American firms of various sizes to substantially raise their capital requirements, leading to slower economic growth here in America."

Fed’s participation in overseas regulatory forums is ‘unacceptable,’ leading Republican says - A senior Republican on the House Financial Services Committee said it was “unacceptable” that the Federal Reserve was still helping to craft international regulation of the financial industry even after President Donald Trump has been sworn into office. Rep. Patrick McHenry, a Republican from North Carolina, who is the vice chairman on the financial services panel, said the Fed should pull out of all talks until President Donald Trump has had the opportunity to put members of his team on the U.S. central bank’s board of governors. In a Jan. 31 letter to Fed Chairwoman Janet Yellen, McHenry specifically mentioned the Financial Stability Board, the Basel Committee on Banking and Supervision, and the International Association of Insurance Supervisors as forums where the central bank participates. Continued U.S. participation would likely require a comprehensive review of past agreements that unfairly penalized the American financial system in areas “as varied as bank capital, insurance, derivatives, systemic risk, and asset management,” McHenry said. The FSB brings together senior economic policy makers from the G-20 countries and other important markets “to promote global financial stability.” The Basel committee sets policies to strengthen bank regulation while the IAIS does the same for the insurance industry. A spokesperson for the Fed said the central bank had received the letter and would respond.

Republican attack on Fed casts doubt over global bank rules -- The future of cross-border co-operation on bank regulation in the Trump era has been thrown into doubt, with domestic pressure mounting on the US Federal Reserve and a senior member of the House of Representatives calling on the central bank not to negotiate new rules at “secretive” international bodies.  Ralph Hamers, chief executive of Dutch bank ING, told the Financial Times that he feared the US could pull back from a global agreement on banking regulation, which has been delayed because of divisions on the Basel Committee on Banking Supervision.  “We don’t know the position of the Americans any more,” Mr Hamers said. “That does mean further uncertainty and uncertainty is never good, it holds back investment and restricts economic growth.” Mr Hamers was speaking after the emergence of a letter to Janet Yellen, the Fed chair, from Patrick McHenry, one of the top five Republicans in the House of Representatives.The letter, dated January 31, warned that the US’s “continued participation” in international forums such as Basel, the Financial Stability Board and the International Association of Insurance Supervisors would depend on meeting the Trump administration’s objectives.  Mr McHenry added that such a step would probably involve “a comprehensive review of past agreements that unfairly penalised the American financial system in areas as varied as bank capital, insurance, derivatives, systemic risk and asset management”. Republicans are also pushing legislation to restrict the Fed’s freedom of manoeuvre. During the election, Donald Trump accused Ms Yellen of keeping rates low at the behest of former president Barack Obama.  “This is a multi-pronged attack on the Fed’s independence,”

Feds need means to deal with next AIG | American Banker - There is no doubt that the Dodd-Frank Act will be under attack over the next several years. Battles over well-known aspects of the law, like the Volcker Rule or the Consumer Financial Protection Bureau, are sure to get a lot of attention. But lesser-known — though still important — components of Dodd-Frank will likely receive much less public scrutiny, making them vulnerable to repeal without much fanfare.  For example, recent reports suggest that the National Association of Insurance Commissioners — a standard-setting body consisting of state insurance commissioners — plans to lobby Congress for the elimination of the Federal Insurance Office. Eliminating the FIO, an office that hasn’t received a lot of attention, would be a dangerous error that ignores the lessons learned in the 2007-2008 financial crisis. The FIO was established as part of the Treasury Department by Title V of Dodd-Frank as a response to the lack of insurance expertise at the federal level during the crisis. Most staff and principals in the Bush and Obama administrations, as well as at the financial regulatory agencies, had significant experience with banking and securities policy, but considerably less with insurance. This expertise void was a function of the fact that insurance companies in the U.S. are primarily regulated at the state level—a system codified by the McCarran Ferguson Act of 1945. This structure runs counter to the banking sector, in which all banks insured by the Federal Deposit Insurance Corp. have a federal regulator.  The lack of federal expertise on insurance matters before the financial crisis proved to be a regulatory blind spot. Large insurance companies such as AIG with sprawling domestic and international business lines experienced severe stress. AIG required the largest bailout in U.S. history. If the insurance sector faces similar stress in another financial crisis, federal policymakers and staff need a better understanding of the industry than they had in the lead-up to the 2008 meltdown. In short, the crisis showed that risks outside the banking sector can be systemic, and that the federal government needs more resources and better information to successfully manage these risks.

Big banks struggle to understand scope, impact of Trump travel ban - – The largest U.S. banks are treading lightly in response to President Trump's executive order banning travel to the U.S. by refugees and others from certain Muslim nations, with corporate statements emphasizing the need for diversity while stopping short of outright opposition. The banks are also clearly struggling to grasp the order's impact as the administration sends conflicting messages about who is covered under the ban, which is also subject to multiple court orders by separate jurisdictions. That careful balancing act was on display Monday afternoon after Bank of America and Wells Fargo issued advisories about the ban to their employees. “As a global company, we depend upon the diverse sources of talent that our teammates represent. In view of this, we are closely monitoring the recent refugee- and immigration-related executive order in the United States, and subsequent developments," Brian Moynihan, Bank of America's CEO, wrote in a message to employees. "We are connecting with teammates who may be affected, in response to questions. We also are working to ensure we have the most accurate and timely information to best assist potentially impacted teammates." "We are closely monitoring the recent refugee- and immigration-related executive order in the United States, and subsequent developments," wrote Brian Moynihan, the CEO of Bank of America, in a message to employees. Bloomberg News Hope Hardison, Wells Fargo's chief administrative officer, struck a similar tone. “While we are still assessing what this change means for Wells Fargo, we know that it may have deeply personal implications for team members who may have friends or family affected by it,” Hardison wrote to employees. “As always, Wells Fargo is committed to fostering a culture of diversity and inclusion where our team members are encouraged to value and respect others for their differences. These values will continue to be of great importance as we support team members who have been affected by this executive order.”

Citigroup objects to Trump's travel ban -- After initially declining this weekend to weigh in on President Trump’s travel ban regarding refugees and others traveling from certain Muslim nations, Citigroup said Monday that it is worried about the order’s impact on its employees and customers.  “As a U.S. company and the world’s most global financial institution, we are concerned about the message the executive order sends, as well as the impact immigration policies could have on our ability to serve our clients and contribute to growth,” Citi CEO Michael Corbat wrote in a message sent Monday to all employees. “We have been advising colleagues who could be affected and will continue to support them and their families.” In doing so, Citi becomes the first large commercial U.S. bank to publicly and directly object to the ban. On Sunday, JPMorgan Chase officials reacted to the ban by taking a cautious stance, simultaneously lauding efforts to keep the U.S. safe while emphasizing the need for diversity. Corbat’s message echoed those words while also going further by explicitly raising concerns about the ban. “We are proud of Citi’s diversity and the fact that we hail from over 100 countries,” Corbat said. “We encourage the leaders of the United States to find the right balance between protecting the country and its longstanding role as an open and welcoming society.”Bank of America declined to comment on Sunday, while a spokeswoman for Wells Fargo, which has less of an international presence than the other three banks, said it was still reviewing the order. The investment bank Goldman Sachs, meanwhile, delivered a far blunter message to employees in an voice mail: “This is not a policy we support,” CEO Lloyd Blankfein said, according to Bloomberg News.

Corporate America employs new tactics to avoid Trump ire - From the White House’s embrace of alternative facts to Donald Trump’s Twitter feed, a new crop of risks has corporate America on edge. Fearful of becoming the next target of the US president’s ire, multinationals are turning to advisers they would usually bring in to fight off activist investors and tailoring their media messages to fit the new president’s agenda.“Everyone is asking, ‘what do you do if Trump puts out a tweet with an alternative fact?’” said one lawyer, referring to the term coined by Trump counsellor Kellyanne Conway to describe an inaccurate statement by the White House press secretary. Lawyers and public relation experts are advising their S&P 500 clients to take a leaf from the US president’s media playbook and find ways to deliver Mr Trump news he can claim as personal victories.“People have understood that Donald likes to win and they need to play into that,” said another lawyer, who worked for Mr Trump during a high-profile bankruptcy case in the 1990s. “The basic strategy is to look at whether you have made an announcement in the past that you can rehash” to align with the president’s election promises.

Dow Companies Report Worst Revenues since 2010, Dow Rises to 20,000 (LOL?) - The Dow-20,000 hats have come out of the drawer after an agonizingly long wait that had commenced in early December with the Dow Jones Industrial Average tantalizingly close to the sacred number before the selling started all over again.What a ride it has been. From the beginning of 2011 through January 27, 2017, so a little more than six years, the DJIA has soared 73%, from 11,577 to 20,094. Glorious!!But when it comes to revenues of the 30 Dow component companies – a reality that is harder to doctor than ex-bad-items adjusted earnings-per-share hyped by Wall Street – the picture turns morose.The 30 Dow component companies represent the leaders of their industries. They’re among the largest, most valuable, most iconic American companies. And they’re periodically booted out to accommodate a changed world. For example, in March 2015, AT&T was booted out of the Dow, and Apple was inducted into it, as its ubiquitous iPhone had become the modern face of telecommunications. New blood with booming revenues replaces the stodgy old companies. In aggregate, revenues should therefore rise, right?And there has been a huge binge of acquisitions, from mega-deals such as Verizon’s $130-billion acquisition of Vodafone in 2013, to the many dozens of smaller companies that Apple, Cisco, IBM, and others have bought. These mergers bring the revenues of the acquired companies into the revenues of the Dow components. And in aggregate, revenues of the Dow companies would therefore soar, right?But the other day, I was asked about the revenues of all Dow components, after having lambasted the revenue debacles of two, IBM [Big Shrink to “Hire” 25,000 in the US, as Layoffs Pile Up] and Cisco [Cisco Buys 45th Company in 5 Years, Revenues Still Stagnate]. So here we go. Fasten your seatbelt.

Why the “Maximize Shareholder Value” Theory Is Bogus -- Yves Smith - From the early days of this website, we’ve written from time to time about why the “shareholder value” theory of corporate governance was made up by economists and has no legal foundation. It has also proven to be destructive in practice, save for CEO and compensation consultants who have gotten rich from it. Further confirmation comes from a must-read article in American Prospect by Steven Pearlstein, When Shareholder Capitalism Came to Town. It recounts how until the early 1990s, corporations had a much broader set of concerns, most importantly, taking care of customers, as well as having a sense of responsibility for their employees and the communities in which they operated. Equity is a residual economic claim. As we wrote in 2013:  Directors and officers, broadly speaking, have a duty of care and duty of loyalty to the corporation. From that flow more specific obligations under Federal and state law. But notice: those responsibilities are to the corporation, not to shareholders in particular…..Equity holders are at the bottom of the obligation chain. Directors do not have a legal foundation for given them preference over other parties that legitimately have stronger economic interests in the company than shareholders do. And even in the early 1980s, common shares were regarded as a speculative instrument. And rightly so, since shares are a weak and ambiguous legal promise: “You have a vote that we the company can dilute whenever we feel like it. And we might pay you dividends if we make enough money and are in the mood.”    The shareholder value theory has proven to be a bust in practice. Here are some of the reasons: It produces short-termism, underinvestment, and a preoccupation with image management. We wrote in 2005 for the Conference Board Review about how the preoccupation with quarterly earnings led companies to underinvest on a widespread basis. Richard Davies and Andrew Haldane of the Bank of England demonstrated that companies were using unduly high discount rates, which punished long-term investment. Pearlstein provides more confirmation:

 Retailers are expected to suffer big spike in bond default rate in 2017 - Sinking oil prices left energy company debt issuers crushed by defaults, distressed exchanges and bankruptcies in 2016. But they’re no longer the headliners weighing on the corporate bond market—2017 could be notorious for retailer-debt woes. Retail has become a growing and significant portion of Fitch Ratings “Bonds of Concern” list, with more than $4 billion of high-yield retail debt outstanding now at high risk of default in the next year, the agency said in a new report. They’re not alone in their view; analysts at CreditSights have an underperform rating on the retail sector.Fitch is expecting the overall 2017 default rate to rise to 3%, just above the 2.3% non-recessionary mark, and roughly in line with 2014 and 2015 rates. That’s after a 4.7% rate for 2016, led by energy issuers, which accounted for 84% of the total. But the retail-only default rate is expected to jump to as high as 9% in 2017 from its current 1% trailing 12-month level.

Black Cloud of Illiquidity Hovers Over the Bond Market - The $13.9 trillion market for U.S. Treasuries is often called the most important in the world. Lawmakers, regulators and investors have always taken its smooth functioning for granted, with rare exceptions such as the bidding scandal that almost sunk Salomon Brothers in the early 1990s. Liquidity, or the ability to buy or sell at a moment's notice, was unquestioned. All that changed one morning in October 2014 with a dramatic “flash crash” in yields. Rates on 10-year notes ripped sharply lower with no obvious trigger, only to scream back higher in a gut-wrenching 37-basis-point range. It was unprecedented, and it sparked the first government review of the market since 1998. More than two years later, regulators still don't know what exactly caused it, and the anxiety level among traders is on the rise as the market slumps anew. The failure to identify the root of the sudden liquidity collapse remains troubling, despite the absence of a repeat has helped put the issue lower on the list of concerns for investors. In many ways, the voracious demand of central banks worldwide, ultra-low rates and low volatility may have cushioned the deterioration in liquidity, but the problem hasn’t gone away and will increasingly make the market a more perilous place to trade as the Federal Reserve raises interest rates and the Donald Trump administration embarks on its debt and deficit spending programs. Volumes in the market aren't an obvious caution flag, as they have been relatively stable in the area of $500 billion per day for years. Of course, as a percentage of outstanding Treasuries, turnover has fallen sharply as the amount of bonds grew from $4.7 trillion in 2008. The core of the risks lies in the withdrawal of many of the markets key players, namely the bank dealers who formerly dominated the trading landscape. The post-crisis regulatory strictures designed to safeguard the financial system discouraged them from holding big Treasury positions. These banks shrank their positions as much as 80 percent in many cases, and chopped their sales and trading staff.

'Trump bump' will do nothing for the risk-averse -- Whether the much-discussed “Trump bump” will come to fruition remains to be seen. Bankers certainly are feeling more positive about economic conditions and the regulatory environment since the November election. Among the visible positive signs are the sudden upward direction in the stock market, a rise in the value of the dollar coupled with a drop in gold prices, and an increase in IPOs and merger activities. Speak with nearly anyone in the industry and you will hear the optimism in their voice about current prospects for business growth. But talk is just talk for now. Banks need to shift focus from compliance to their lending business if they want to capitalize on the positive post-election environment and accelerate growth. Ray Dalio, head of the Bridgewater Associates hedge fund, published a blog post last month predicting a Trump-led “ideological shift” in investment incentives, tax policy and deregulation that he said could ignite the “animal spirits” in both consumers and businesses. That raw enthusiasm has enormous implications for banking. Customers will look to put their stores of money back to work. Businesses will want to expand and — here’s a shocker — borrow money again. The movement of money should not create concerns about deposits flowing outward since funding is still cheap and easy to get. But bankers must ask the question: Is my institution an asset generator? The name of the game will be accumulating assets, preferably loans. Every bank must determine whether it is sufficiently customer-focused, or too focused on compliance. The industry has been slammed by regulation over the past nine years — a world dominated by chief risk officers, compliance officers, enterprise risk management departments and internal audits. While those structures need to stay in place, it is now time to refocus on the customer and the shareholder.

Will OCC charter make fintechs too big to fail? — The Office of the Comptroller of the Currency’s fintech charter is fueling a debate over whether it might reduce systemic risk or could instead create a new generation of "too big to fail" institutions. As they await the agency’s response to public feedback on its decision to create a special-purpose charter for fintech firms, critics and supporters alike have already started to imagine what it could mean for the broader financial system.

Fintech charter should be paired with beefed-up borrower protections --Over the last several years, new fintech competitors have challenged traditional banks with innovative, customer-friendly online applications and quick loan decisions. At first bankers saw these disruptors primarily as threats, grabbing share from community banks overburdened by regulatory compliance costs. The online players were said to have an advantage, with no federal regulator to oversee them. This view has changed somewhat over time and will even more with the Office of the Comptroller of the Currency planning to provide oversight of fintech companies through a special-purpose charter. Some in the banking sector — who originally opposed the OCC idea as permission for "banking light" — now support the proposal. This is most likely due to banks' new strategy of partnering with the online entrants to take advantage of their technology. And to do so, they need their third-party partners to be compliant. But besides the OCC charter, there is another regulatory need that should receive top priority — small-business borrower protections. If offering a national regulation option to fintech players is the proverbial carrot, compliance with commonsense borrower protections could be the stick. These protections are important because credit extended for a commercial purpose is not covered by the disclosure requirements of the federal Truth in Lending Act. That means lenders, including traditional banks, can display loan terms and costs, such as annual percentage rates, inconsistently, which makes it difficult for borrowers to compare offers. Some bury prepayment penalties deep inside 3-inch-thick loan documents. Few disclose an APR at all. The line of thinking that small-business owners are financially sophisticated or have knowledgeable advisers has not proved to be the case, particularly for the large majority of those who take on small-dollar loans. A recent study conducted by the Federal Reserve Bank of Cleveland was telling. The research found that mom-and-pop businesses struggle to compare credit products when using information provided by alternative lenders on their websites. Regulators should require disclosures that are clear and concise. If lenders had to compose standardized contracts in plain English — and provide APRs — it would go a long way toward reducing complexity, helping borrowers decide what is best for them, and eliminating bad actors.

One-off data-sharing deals aren't enough - Whether it’s using financial management apps like Mint or Albert to track their spending or relying on Digit to help them set aside savings, Americans have grown accustomed to real-time access to their financial information. Gone are the days of waiting 30 days for the next bank statement or keeping a shoebox full of receipts.The growing popularity of these digital tools has raised questions from both bankers and policymakers about the technology that powers them. In the fall of 2015, The Wall Street Journal reported that several major financial institutions temporarily shut off access to third-party data aggregators. The banks claimed the aggregators put customers’ bank accounts at risk and created unpredictable, and sometimes unmanageable, loads on banks’ servers. In response to these and similar reports, the Consumer Financial Protection Bureau, citing its authority under Section 1033 of the Dodd-Frank Act, issued a Request for Information in October to better understand how data aggregation technology works and what the benefits — and risks — are for consumers.Thus far, much of the focus in the debate has been on the risks of using consumers’ login credentials to collect their data from their bank accounts (a method often referred to as screen scraping). Most seem to agree that the industry needs to move toward more secure solutions. Increasingly, banks are developing application programming interfaces to make their customers’ data available to third parties, either on open platforms or through one-on-one relationships with data aggregators or specific apps. The latest example is the data-sharing agreement between JPMorgan Chase and Intuit – an agreement that enables users of Intuit products to authorize the bank to share their financial information without providing their bank login credentials. Last summer, a similar deal was announced by Wells Fargo and the accounting software provider Xero. Many more deals are likely in the works. This trend holds promise for consumers and for the data-sharing ecosystem. Direct data feeds via APIs can be more reliable and secure than other methods of data access, collection and transmission.  But an end-state that involves innumerable one-off deals between banks and third parties would be a bad outcome for consumers and for the industry as a whole. We need a broader set of industrywide standards and best practices if we are to arrive at solutions that support consumer choice and innovation.

The data access debate is about to get a lot more interesting - The long-running feud between banks and fintech companies over screen scraping is morphing into a more nuanced and important debate about how to exchange consumers' financial data securely and fairly. White papers are being written, lobbying groups are forming and interpretations of the law are being put forth. The questions are more complex than whether third-party data aggregators should be permitted to access consumers' accounts using their credentials. The new Matryoshka dolls include: Is the industry legally obligated to improve the way data is shared between banks and third-party apps like Mint or Digit? Will replacing screen scraping with something more secure and reliable also prevent third-party apps from capturing valuable data such as interest rates? Should the industry collaborate more on standards so smaller banks aren’t locked out of digital advancements?  The stakes are nothing short of the ability to innovate with financial apps – including some bank apps – at a time when most Americans live paycheck to paycheck and could use new tools to plan, save and borrow. The Consumer Financial Protection Bureau has also been taking an interest in the issue of data access, meaning that if the industry doesn't converge on a solution, one may eventually be foisted upon it.  The answers may require banks to rethink their business models, which rely to a degree on consumer lock-in. One wrinkle is that competing approaches to grabbing financial records are multiplying. Big banks have been landing application programming interface deals with fintech companies. This week, JPMorgan Chase and Intuit announced a partnership to make sharing financial data easier and safer through an API (specifically the OFX 2.2 API). Wells Fargo made a splash last year when it announced an API deal with an accounting software firm called Xero. “It will get worse before it gets better in terms of number of competing API-type solutions,” Moyer said.

‘Centralized’ blockchain projects are doomed to failure - Last year was an affirmation for people like me who believe the blockchain — the technology that underlays virtual currencies such as bitcoin — works best when it’s decentralized and open. While many titans of finance and the global securities industry hold tight to the idea that private, centralized blockchains are preferable, their mentality started to change last year. The industry’s shift toward favoring open, decentralized systems was only a matter of time. In late 2016, R3 CEV’s consortium released the source code for its private blockchain Corda platform. The response to the bank consortium was lackluster. Just weeks before launching the code, Goldman Sachs, Santander and JPMorgan Chase quit R3, albeit they did not cite the lack of decentralization as a reason for leaving. Project Jasper, a test of a closed and centralized blockchain version of Payments Canada’s large-value transfer system, offers another telling example. [...] These and other examples point to a kind of tragic misunderstanding of what makes blockchain so appealing. Large financial institutions have appeared to fall in love with blockchain. But they are not fully aware that decentralization is blockchain’s most valuable feature. What is more surprising is they have erased this feature in their pilots and proof of concepts. We probably haven’t seen the last of test projects that will go bust or just fade into obscurity. But in time, more large institutions will realize that closed, centralized blockchains aren’t any better than the databases now in use. But proponents of open, decentralized systems cannot afford to stand by and wait for acceptance. The blockchain industry remains at risk of losing control of its narrative to entrenched middlemen in the securities clearing industry, for example. These middlemen would seek to exploit institutional unease about implementation of a decentralized system.

 Amex joins JPMorgan, IBM in hyperledger effort -- American Express Co. is elbowing its way into the crowded blockchain party. The biggest credit-card issuer by purchases has signed on to the Hyperledger Project, a industry group of more than 100 members developing blockchain technology for corporate use. The digital ledger known for underpinning bitcoin has potential to reshape the global financial system and other industries. American Express will contribute code and engineers to Hyperledger, which was started by the Linux Foundation in 2015 and now counts companies like International Business Machines Corp., Airbus Group SE and JPMorgan Chase & Co. as members. Many banks had previously joined a consortium called R3 CEV to explore ways to speed financial transactions using blockchain, but that group has lost members and is already a member of Hyperledger. “We want to get closer to blockchain technology and further imagine its possibilities and use cases,” Sastry Durvasula, senior vice president of technology at American Express, said in an interview. American Express, while experimenting with various applications of the technology across its businesses, had yet to join an industry group. In 2015, its American Express Ventures invested in Abra, which uses blockchain to transfer money worldwide. New York-based American Express sees blockchain as a “game-changing” technology in banking, particularly digital payments. It could even be as important for companies as Big Data, the use of analytics tools to sift through large volumes of information to find patterns, Durvasula said.

 Wells Fargo latest to share customer data with Intuit via API - A data deal between Wells Fargo and Intuit made public Friday could be another step toward large banks' sharing customer information with fintechs and aggregators.In the second half of this year, the estimated million or so Wells Fargo consumers who use QuickBooks Online, Mint, or TurboTax Online will be able to opt in to have their bank account data automatically fed into those programs through application programming interfaces.The announcement comes about a week after JPMorgan Chase revealed a similar deal with Intuit and eight months after Wells Fargo completed a similar agreement with the accounting software provider Xero. The goal of all of these deals is the same: to provide a more secure, standards-based way of giving customer data to third-party software providers and data aggregators like Intuit and Yodlee. It’s an alternative to screen scraping, the common practice in which consumers share their online banking usernames and passwords with third parties, which then log in as them to “scrape” their account information from the bank’s site. Data aggregators have accused banks in the past of blocking this activity. Banks have countered that screen scraping is insecure and a strain on their online banking servers. Consumer advocates argue that the whole industry needs to come to some agreement on this issue, to help give consumers control of their data.

Deutsche Bank to settle probes for nearly $630 mln - Deutsche Bank AG has agreed to pay nearly $630 million to end investigations by U.K. and New York regulators into Russian equity trades that transferred $10 billion out of that country in violation of anti-money-laundering laws. The two fines-- $425 million to New York's Department of Financial Services and $204 million to the U.K.'s Financial Conduct Authority --only partially resolve legal issues hanging over the German lender. The settlement doesn't end a separate probe into the Russian trades by the U.S. Justice Department. It is unclear when a potential settlement in that investigation might be reached. Deutsche Bank said the $630 million in settlements announced Monday and Tuesday are "already materially reflected" in existing litigation reserves and that it is cooperating with other investigations into the Russia trades. Regulators said that Deutsche Bank cooperated in the investigations while the bank has made significant improvements to its anti-money-laundering program and other controls. The bank agreed with New York authorities to bring in an independent monitor for up to two years as part of that settlement. Earlier this month, Deutsche Bank separately agreed with the U.S. Justice Department to pay $7.2 billion in cash and consumer relief to end a series of mortgage-securities probes. The $3.1 billion cash portion was seen by analysts and investors as a manageable outcome, and ended speculation that the anticipated settlement might force the bank to immediately raise capital.

The Public Interest in Public Securities Settlements - A year ago, Citigroup Global Markets, Inc., among other Citigroup subsidiaries, agreed to pay the U.S. Government $180 million. The U.S. Securities and Exchange Commission (SEC) alleged that Citigroup misrepresented the risks associated with hedge funds’ investments and profited by approximately $2.9 billion. The funds collapsed. The clients lost billions of dollars. Yet the settlement included no factual admissions. No individual was sanctioned. In 2011, a federal judge had even rejected a similar settlement between the SEC and that same Citigroup subsidiary.  The SEC makes and enforces rules associated with trading stock on public exchanges. When the SEC suspects a company or individual has violated those rules, it launches an investigation and can bring charges, either in a court or in an administrative proceeding overseen by the Commission itself. Firms that opt not to fight the allegations agree to settle with the Commission. Over the past decade, settlements between firms and the SEC have largely changed venue from the federal courts to administrative hearings. Between 2007 and 2012, 60 percent of the SEC’s settlements were filed in court. In 2015, that number dropped to 17 percent. In fact, every settlement with a large Wall Street bank pursued by the SEC in recent years has been filed in an administrative proceeding. What changed?  In her recent article, Urska Velikonja, a professor at Emory University School of Law, argues that the transition from the courtroom to in-house settlements is a consequence of The Dodd-Frank Wall Street Reform and Consumer Protection Act.

Private Banking Meets Cross-Selling for JPMorgan’s Wealthy Clients - Salespeople of all stripes know the drill. Go to the morning pump-up sessions. Hit the revenue targets. Move product or move along. The playbook for selling everything from phones to time shares also crops up in a rarefied environment -- the Manhattan offices of JPMorgan Chase & Co.’s elite wealth-management unit. There, private bankers working with JPMorgan’s richest customers are encouraged to steer client assets into certain funds and instruments that generate rich fees for the bank, according to several former employees. How banks cross-sell -- essentially, a “would you like fries with that” approach -- has come under regulatory scrutiny after revelations last year that Wells Fargo employees opened millions of fake accounts in clients’ names to reach sales targets. Wells Fargo admitted to a lapse and has changed its incentives. But the scandal brings an old question about banking into sharper focus: When do bank’s incentives for employees put the customer second? There’s nothing illegal about cross-selling. Every company wants to sell its own stuff, and JPMorgan, the nation’s biggest bank, is no different. It stands out because it has so many in-house investments to offer its clients, including the biggest pool of in-house mutual funds in the U.S. banking industry. Several former employees at the private bank said the pep talks and reward system to sell such products made them uncomfortable: They felt pressured to push certain investments even when they believed others might be better for their clients.  No one is accusing JPMorgan of making up false accounts. The bank says it serves its wealthy clients by offering a wide range of investment options and discloses that it favors its own products.

 3 More Scandals That Will Have You Saying, ‘WTF Wells Fargo’ - Fortune - Times appear to keep getting tougher for Wells Fargo.  After taking a beating publicly over the fake accounts scandal last year, the company divulged some dismal numbers in its quarterly earnings report earlier this month. The number of new checking accounts opened at the bank dropped 40% from a year earlier, with applications for credit cards falling 43%, leading to a 14% drop in profits. The bank even announced it will be closing 400 branches across the country by 2018, a reversal of its rapid expansion over the last several years. Here are three indications that Wells Fargo,once America's profitable bank, is now the country's most scandal plagued. Wells Fargo CEO Tim Sloan admitted last week that there is evidence to suggest that some employees may have faced retaliation for calling the company’s ethics hotline and reporting objectionable behavior. The bank had hired a third party to investigate instances over the last five years where an employee was fired within 12 months of calling the hotline. Often, lateness or some other trivial reason would be concocted to justify terminating a worker, according to a report in CNNMoney. The bank is now expanding the investigation, looking at the penalties some employees faced for whistleblowing that fell short of termination. As of right now, it's unclear whether the admission will open Wells Fargo up to legal action. It is illegal for a company to suppress whistleblowing, most notably under the Sarbanes-Oxley and Dodd-Frank statues.Adding another layer to the phony account scandal, it appears that management and employees at the bank’s branches across the country had at least 24 hours warning about when internal watchdogs were scheduled to come and perform inspections checking the validity and integrity of account handling, according to the Wall Street Journal. Such warning gave time for employees to shred incriminating paperwork and forge necessary signatures. Four former employees of the Los Angeles region claim the bank improperly charged customers with late fees to extend their promised interest rate even when the delay was the bank’s fault, according to ProPublica. The scam typically cost customers $1,000 to $1,500, depending on how big the loan was.

 Wells Fargo Scandal Blocks Severance Pay for Laid-Off Workers - For more than 400 employees recently laid off by Wells Fargo, the aftermath of the bank’s scandal over sham accounts has had an unexpected consequence: The bank is prohibited from paying the severance it owes them. In mid-November, Wells Fargo’s federal regulator, the Office of the Comptroller of the Currency, imposed additional restrictions on the troubled bank. The rules, part of which are intended to curb golden parachute packages, limit what payments Wells Fargo is permitted to make to terminated employees without explicit regulatory approval. Routine severance pay is sometimes exempted from such restrictions, but the federal rules for golden parachute pay are complex, and Wells Fargo’s severance plan is not eligible for the exemption, according to Diana Rodriguez, a bank spokeswoman. Former employees at all levels of the company, from rank-and-file branch workers to corporate executives, are affected by the hold. Wells Fargo’s severance packages typically run from six weeks of pay to as long as 16 months, depending on the employee’s length of service.  The people affected are those whose jobs have been cut as part of Wells Fargo’s regular business adjustments. They are not accused of wrongdoing. Workers who are fired for cause, such as those involved in the scandal, are not eligible for severance. In recent years, the bank has terminated 5,300 employees in connection with its misconduct.

January 2017: Unofficial Problem Bank list unchanged at 163 Institutions --This is an unofficial list of Problem Banks compiled only from public sources.Here is the unofficial problem bank list for January 2017.  Update on the Unofficial Problem Bank List for January 2017.  During the month, the list dropped from 169 to 163 institutions after six removals.  Aggregate assets fell by $1.5 billion to $43.5 billion.  A year ago, the list held 238 institutions with assets of $69.5 billion. Actions were terminated against The Baraboo National Bank, Baraboo, WI ($412 million); International Finance Bank, Miami, FL ($354 million); First National Bank USA, Boutte, LA ($132 million); and First Federal of South Carolina, FSB, Walterboro, SC ($77 million  Ticker: FSGB). Removals through failure were Seaway Bank and Trust Company, Chicago, IL ($361 million) and Harvest Community Bank, Pennsville, NJ ($126 million).  It has been 15 months since the last month with two or more bank failures.  The failure in Chicago is the 18th bank to fail in that city since September 2009 and the 64th bank to fail in Illinois since 2008.

How about a cannabis banking charter? -- A lot is being written and debated about the Office of the Comptroller of the Currency’s plan to provide limited national charters for fintech firms. On its face, the proposed policy is sensible — offering a solution to regulatory uncertainty for a promising new sector. But the OCC’s determination to craft a fintech charter raises similar questions about the plight of other burgeoning industries that could benefit from a federal license. Here, I am going to make a heretical suggestion: the OCC or some other regulator could advance the cause of cannabis banking — which despite questions over its federal legality has not spurred outrage from policymakers — by offering similar chartering options for financial institutions that want to serve the legal pot industry.  I propose the creation of a Bank Charter of Cannabis Services, or BCCS for short. Let’s take a step back to explore why a cannabis banking charter is necessary.  Cannabis and its derivatives are considered a Class I drug alongside heroin and LSD by the Drug Enforcement Agency. Per the DEA’s website: “Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse.” Despite ballot initiatives legalizing pot in nearly 30 states, this federal definition means businesses serving the cannabis industry have had a hard time obtaining financing, accepting credit cards or establishing a basic banking relationship with a depository institution. According to an article in Hortidaily.com, two-thirds or more of the U.S. lives in a state that has some form of legal cannabis. Public acceptance of cannabis is running at 60% nationally. Regardless of anyone’s personal beliefs, the momentum has been building for years to establish cannabis as a legal industry and the time has passed for any turning back of the clock. There is also an active venture capital market in the startup world of cannabis. According to CBInsights, $560.7 million was invested in 273 private cannabis-focused startup transactions globally since 2012.

Banks Call for Looser Robo-Call Rules Getting Friendlier Reception: During the Obama administration, U.S. banks were often at loggerheads with the federal government over unwanted automated calls to consumers. But in the early days of Donald Trump's presidency the industry has good reason to believe that some of the existing restrictions will be softened. Such changes could be a source of substantial savings for banks and credit unions, particularly in the realm of consumer debt collection. The rules governing robo-calls to mobile phones — which were enacted by the Federal Communications Commission in 2015 — are currently being challenged in court. But even if the restrictions survive that lawsuit, they seem likely to be scaled back by either the agency itself, which is now under new management, or by the Republican-controlled Congress. Analysts at Compass Point Research & Trading said in a note Monday that they expect the FCC to pursue a "broad deregulatory agenda" during Trump's presidency, including a softening of the robo-calling rules. Newly installed FCC Chairman Ajit Pai spoke in December about the need to "fire up the weed whacker and remove those rules that are holding back investment, innovation and job creation." Pai, a Republican who joined the commission in 2012, voted against the 2015 robo-calling rules. Those restrictions, which passed 3-2 on a party-line vote, mostly rejected entreaties made by banks and other companies.

 Why Is Connecticut Giving Its Employees’ Money to the Asset Management Industry? - James Kwak - In general, the State of Connecticut offers pretty good defined contribution retirement plans to its employees. Most importantly, it offers several low-cost index funds in institutional share classes. For example, you can invest in the Vanguard Institutional Index Fund Institutional Plus Shares, which tracks the S&P 500 for just 2 basis points, or the TIAA-CREF Small-Cap Blend Index Institutional Class, which tracks the Russell 2000 for just 7 basis points. Administrative fees are unbundled, and are only 5 basis points. For no good reason I can discern, however, you can also invest in actively managed stock funds like the JPMorgan Mid Cap Value Fund, which costs 80 basis points. As I’ve previously said, I have mixed feelings about target date funds. In principle, they do the reallocation and rebalancing for you, so they could be appropriate for people who want to make one choice and then forget about their investments (which, in many ways, is a good strategy). The hitch is that a target date fund is only as good as the funds inside it. Fidelity, for example, puts twenty-five different funds inside one of its target date funds, including thirteen U.S. stock funds, eleven of which appear to be actively managed. This is just a clever way to sneak expensive active management back in through the back door. The Connecticut retirement plans do have target date funds, but luckily they use Vanguard’s versions, which are made up of index funds and only charge 14–16 bp (as opposed to 77 bp for the Fidelity Freedom 2040 fund) … until now. As of February, the Connecticut defined contribution plans are switching away from Vanguard to something called “GoalMaker,” which takes your money and spreads it out among the various funds offered by the plan—including those expensive, actively managed funds.

The Depp Conundrum: Who Should Keep Tabs on the Money? - The thing celebrity magazines never mention about Johnny Depp’s current problems — the foreclosures on his homes, how he was said to have cut off his fingertip in a marital dispute, the fact he may need to sell a small French village to cover debts associated with the subsequent divorce — is how his challenges are relevant to the Trump administration. Mr. Depp has appeared in some of the highest-grossing films of the past 30 years, earning him an estimated $650 million. Being a rich movie star, however, does not necessarily bring great financial savvy. Over the past decade, Mr. Depp has paid more than $5.6 million in interest on overdue taxes, has lent millions of dollars to people unlikely to pay him back and has unwisely splurchased a number of questionable investments, not the least of which is that town near St.-Tropez. These money missteps, Mr. Depp says, are not his fault. Back in 1999, you see, Mr. Depp hired a firm named the Management Group to oversee his finances. But instead of protecting his fortunes, those financial advisers “engaged in years of gross mismanagement, self-dealing, and at times, actual fraud,” according to a lawsuit Mr. Depp filed against the company. (The Management Group filed a countersuit on Tuesday denying wrongdoing and arguing that it “did everything possible to protect Depp from his own irresponsible and profligate spending.”) The alleged fiscal malfeasance visited upon Mr. Depp occurred over 16 years, but the actor was unaware of this skulduggery, his lawsuit asserts, because he simply wasn’t paying much attention to what was going on.

Consumer agency fines Mastercard, UniRush $13M over prepaid cards | TheHill: Financial regulators have ordered Mastercard and UniRush to pay $13 million in payments and fines for leaving tens of thousands of customers unable to access their own money through prepaid cards. The Consumer Financial Protection Bureau (CFPB) action is in response to a breakdown of the companies’ RushCard system. The reloadable prepaid debit card is advertised as a way for consumers to get their paychecks and other direct deposits on their card “up to two days sooner.” But the CFPB said the system went down in October 2015 when Mastercard switched its processing platform, a move the companies spent 13 months preparing for.As a result, the bureau said customers were left without access to the funds stored on their cards for days and, in some cases, weeks. Deposits for more than 45,000 customers were delayed and transactions were declined because Mastercard failed to provide UniRush with accurate information about account balances. The companies have been ordered to pay customers $10 million in restitution and another $3 million in civil penalties. “Mastercard and UniRush’s failures cut off tens of thousands of vulnerable consumers from their own money, and threw some into a personal financial crisis,” CFPB Director Richard Cordray said in a statement.

CFPB Fines Prospect Mortgage $3.5M for Alleged Kickbacks: The Consumer Financial Protection Bureau hit Prospect Mortgage with a $3.5 million fine for allegedly paying kickbacks to two real estate brokers and a servicer for referrals of government-backed mortgage loans. The bureau also took action against Keller Williams Realty Mid-Willamette and Remax Gold Coast, which were among more than 100 real estate brokers that had "improper arrangements" with the Sherman Oaks, Calif., firm, the CFPB said. "Today's action sends a clear message that it is illegal to make or accept payments for mortgage referrals," CFPB Director Richard Cordray said in a press release. "We will hold both sides of these improper arrangements accountable for breaking the law, which skews the real estate market to the disadvantage of consumers and honest businesses." The CFPB said that Prospect created marketing services agreements from 2011 to 2016 and made payments to various companies that were disguised as advertising and promotional services. Prospect paid real estate brokers from $200 to $20,000 a month in return for borrower referrals, the bureau said. Prospect tracked the number of referrals made by each broker and also paid various real estate brokers to locate loan officers at Prospect using desk licensing agreements, the CFPB said. Additionally, Prospect allegedly paid brokers to "prequalify" home loan borrowers with Prospect and to "write in" the lender’s name for anyone seeking to purchase a listed property, the CFPB said. The company allegedly split fees with Planet Home Lending, a Connecticut mortgage servicer that it hired to identify and help persuade eligible consumers to refinance into a government-backed loan through Prospect.

Court blocks Dem efforts to intervene in CFPB case | American Banker - -- A federal appeals court on Thursday denied efforts by 16 Democratic attorneys general, several consumer groups and two Democratic lawmakers to defend the Consumer Financial Protection Bureau in a critical case that could determine the fate of Director Richard Cordray. A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit denied three separate motions filed by Democrats and consumer groups last week to intervene in the controversial case, PHH Corp. v CFPB. The same panel ruled in October that the CFPB's single-director structure was unconstitutional. That controversial ruling found that a provision of the Dodd-Frank Act that only allowed the CFPB's director to be removed for cause was unconstitutional. The panel said that the CFPB's director can be removed at will by the president, but the decision was stayed by Judge Brett Kavanaugh while the case is on appeal. The CFPB has requested an en banc rehearing of the case to the full D.C. Circuit. But the panel's ruling further limits the agency's ability to prevail in the case. If the D.C. Circuit denies the CFPB's appeal, a Justice Department under Attorney General-designate Jeff Sessions is unlikely to defend the CFPB before the Supreme Court. By denying the ability of Democrats to intervene, the panel took away the chance for another party to step in to defend it. The attorneys general for 16 states and the District of Columbia had cited the Trump administration's opposition to Dodd-Frank Act reforms and the impact the ruling would have on coordinating with the CFPB to enforce consumer financial protection laws. The consumer groups that also sought to intervene in the case included Americans for Financial Reform, the Center for Responsible Lending, the Leadership Conference on Civil and Human Rights, Self-Help Credit Union, United States Public Interest Research Group and Maeve Brown, the executive director of Housing and Economic Rights Advocates.

More Evidence that a For-Cause Removal of CFPB Director Corday Would Be Pretextual - Adam Levitin, Credi Slips - If Trump is planning on attempting to remove CFPB Director Richard Cordray "for cause" he's hardly going about it in a smart way.  The Trump administration keeps generating more and more evidence that any for-cause removal would be purely pretextual, which strengthens Corday's hand were he to litigate the removal order (as he surely would).   First, the various causes that get bandied about (e.g., employment discrimination claims at the CFPB, settlements with auto finance companies) all seem to relate back to things that happened a few years ago in the Obama administration. If Cordray were engaged in malfeasance, inefficiency, or neglect of duty, don't you think the Obama administration would have done something about that?  It's not as if the so-called (alternative) factual basis for the various allegations are something new.  The fact that the Obama administration didn't remove Cordray suggests that any attempt by the Trump administration to do so on the basis of events from years prior is nothing but pretext for a politically motivated dismissal.  (One also has to wonder if there's some sort of laches argument Cordray could raise if the grounds for dismissal are stale.) Second, Trump's apparently already interviewed people for the CFPB Director position.  If those interviews pre-date the conclusion of any investigative process, it points to any investigation being just for show, as there's not currently a job available. Third, there is the statement today that "personnel is policy" by Gary Cohn, Trump's chief economic advisor, in reference to the CFPB Director and other statements to the effect that the Trump administration seeks to effect broad changes at the CFPB by altering its "personnel".  Taken together this is pretty good public evidence that any for cause removal is pretextual--a change in personnel would be about pursuing a policy goal, not ensuring against inefficiency, malfeasance or neglect of office.  Given the strength of the public evidence, Cordray might well be able to get discovery on this issue, and who only knows what would come out in the non-public evidence, including, presumably, deposition of the President.  (I also wonder if Cordray would be able to get discovery on the President's business holdings, including his tax returns, given that the President's own personal business interests might be implicated by the removal decision.)   Now remember, come July 2018, Cordray's term at CFPB will be up, and Trump will be able to nominate his own Director.  Why on earth would the Trump administration risk an ugly and potentially embarrassing litigation and minor Constitutional crisis when it's going to get its own man in the job relatively soon anyway?  

Yellen Eyes Commercial Real-Estate Froth as Fed Weighs ’17 Risks --  A decade after the U.S. housing market collapsed, Federal Reserve officials are watching rising apartment towers as the next potential asset-price bubble, which could add to the debate about the pace of interest-rate hikes this year. Fed Chair Janet Yellen cited commercial real estate prices as “high” in a speech at Stanford University on Jan. 19. That message has been echoed by Governor Jerome Powell, who warned “low rates may lead to a reach for yield,” as well as Boston Fed President Eric Rosengren, who cited luxury housing in his city. While single-family housing prices have had a gradual recovery from the mortgage bust, commercial real estate is showing signs of being overheated in markets such as New York, San Francisco and Boston. Fed officials have mostly said they plan to address potential asset price bubbles with financial supervision, rather than by raising interest rates at a faster pace than they currently expect. But such hot-spots are testing their patience. “It’s an important sector and so has to be on the radar screen,” said Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore and a former Fed economist. “At least a couple of bank presidents would see it as a substantive argument for tighter policy. But I don’t see any indication that the center of the committee is inclined to adopt a faster pace of tightening.”

 Citigroup Plans to Exit Mortgage Servicing by End of 2018 -  Citigroup Inc. plans to exit the mortgage-servicing business by the end of 2018 to focus on making new loans. New Residential Investment Corp. agreed to pay Citigroup $950 million for servicing rights on Fannie Mae- and Freddie Mac-backed loans with $97 billion of outstanding balances, the New York-based buyer said Monday in a statement. Citigroup also reached a deal with Cenlar FSB to service its remaining mortgages, and plans to transfer the rights for those loans beginning in 2018, the bank said in a separate statement.  The sale to New Residential, which is subject to regulatory approval, is expected to be completed in the first half of 2017. Citigroup said the agreements will reduce pretax results by about $400 million in the current quarter. Expense benefits will start to accrue in 2018, according to the bank. “The strategic action is intended to simplify CitiMortgage’s operations, reduce expenses and improve returns on capital,” the New York-based company said in the statement.

  CitiMortgage announces strategic exit of mortgage servicing operations by 2018 - Citigroup (C) announced it has executed agreements that will accelerate the transformation of the U.S. mortgage business by effectively exiting servicing operations by the end of 2018 to intensify focus on originations. The strategic action is intended to simplify CitiMortgage's operations, reduce expenses, and improve returns on capital. Citi has signed a definitive agreement to sell its mortgage servicing rights, and the related servicing, on approximately 780,000 Fannie Mae and Freddie Mac loans of non-Citibank retail customers with outstanding balances of approximately $97B to New Residential Mortgage (NRZ). The sale, subject to the approval of both agencies and the FHFA, is expected to be completed in the first half of 2017. In addition, Citi has entered into a subservicing agreement with Cenlar FSB for the remaining Citi-owned loans and certain other mortgage servicing rights not sold to NRZ. Loan servicing on these assets are expected to be transferred to Cenlar beginning in 2018. As part of its assumption of the servicing obligations, Cenlar will provide core operations, customer service and default operations. Loans of Citi's retail banking clients will be retained by Citi but will be included in the subservicing contract. Citi will work to ensure a smooth transition in the servicing of these loans for affected clients and is working to transfer as many employees as possible along with the mortgage servicing rights and operations. These transactions are expected to negatively impact pre-tax results by approximately $400M, including a loss on sale and certain related transaction costs, in the first quarter of 2017.

Higher Rates Will Lower MSR Impairments: Moody’s: Companies whose financials have taken hits due to their holdings of mortgage servicing rights are in for a treat, according to Moody's Investors Service. Higher rates are expected to improve the capital position of mortgage companies, Moody's said in a research note Wednesday. And companies that hold MSR assets should expect lower impairments to those assets. The cause of the change in fortunes is rising interest rates. Under generally accepted accounting principles, the fair value of a company's MSRs needs to be mark-to-market and that can affect financial results. In a rising rate environment, loans underlying the MSRs are less likely to prepay, increasing their value. "The prolonged low interest rate environment has led to significant declines in MSRs, eroding the capital and profitability of U.S. nonbank mortgage companies that hold MSRs, but relief is on the way," Gene Berman, a Moody's assistant vice president and analyst, said in a news release. Moody's said that the fourth quarter should show a "significant reversal" of the decline of MSR fair values that was reported for the first nine months of 2016. Among the companies that Moody's expects to benefit the most from rising interest rates are Nationstar Mortgage Holdings and Walter Investment Management Corp. These companies experienced material reductions in MSRs at 10% and 23% of fair value, respectively, Moody's said.

  Mortgage Bankers Offer New Vision for Housing Finance Reform: The Mortgage Bankers Association unveiled a new housing finance reform plan on Tuesday designed to kick-start congressional discussions over what to do with Fannie Mae and Freddie Mac. The thrust of the plan would create a system with multiple privately owned utilities that act as "guarantors" for mortgages. Those firms could in turn buy an explicit federal guarantee from a proposed government insurance fund for eligible securities that they would issue. Under the plan, the securities would be federally guaranteed, but the companies would not be. "Today's paper is intended to provide thoughtful recommendations on how to reform the [government-sponsored enterprises] while ensuring a healthy, robust secondary mortgage market emerges for both single-family and multifamily mortgages," said Rodrigo Lopez, executive chairman of NorthMarq Capital and chairman of the MBA, in a press release. Housing finance reform discussions have moved in fits and starts since Fannie and Freddie were seized by the government and put into conservatorship during the financial crisis. But reform talks are heating up again this year as the new administration has pledged to tackle the issue and the government-sponsored enterprises are projected to run out of capital by the end of next year.The MBA's decision to weigh in with its own plan is a clear sign that they believe the dynamics that hampered previous attempts to find a permanent solution have changed. The trade group listed the availability of the 30-year fixed-rate mortgage and a deep liquid market for single-family loans as top priorities, but acknowledged that achieving those goals without putting taxpayer dollars at risk is difficult.

 Can MBA Jump-Start Housing Finance Reform?: The Mortgage Bankers Association is trying to jump-start discussions around housing finance reform even as political dysfunction on Capitol Hill is reaching new lows. The trade group released a paper Tuesday outlining a new plan designed to resolve the fate of Fannie Mae and Freddie Mac, which would call for creating several smaller public utilities that would buy federal insurance from the government for securities they issue. "We recognize this is going to be a marathon, not a sprint, and obviously there are speed bumps that are taking place with the outset of a new Congress and the new administration," said Bill Kilmer, senior vice president for legislative and political affairs at the MBA during a call with reporters. The MBA plan centers around creating private, shareholder-owned companies that would acquire loans and issue mortgage backed securities. However, the MBA said in order to maintain a deep, liquid market and the availability of the 30-year fixed-rate mortgage, the government will need to guarantee those securities, but minimize taxpayer exposure to a market downturn. The plan arrives as Democrats and Republicans have all but declared open warfare on each other. Democrats boycotted a Senate Finance Committee confirmation vote for Treasury Secretary-designate Steven Mnuchin, which at least temporarily stalled the nomination and provoked fierce criticism from Republicans. The blowup illustrates the high level of partisan tensions at the moment, imperiling any effort at housing finance reform.

Investors Victory in GSE Case May Be Turning Point Against Treasury: A federal appeals court ruling has opened the door for litigants to challenge a 2012 decision by the U.S. government to sweep all of Fannie Mae and Freddie Mac's profits into the coffers of the Treasury Department. This week’s ruling will allow mutual fund manager Fairholme Funds and shareholders represented by Investors Unite to review 48 previously secret government documents related to the profit sweep decision. The ruling could also give the investors in Fannie and Freddie legal leverage to force the Treasury Department and Federal Housing Finance Agency to release additional documents. The group is seeking more than 10,000 sealed documents. "GSE shareholders secured a notable procedural victory in Fairholme v. U.S.," said Isaac Boltansky, a Washington policy analyst at Compass Point Research and Trading. "We believe that this decision should be viewed positively for shareholders and our sense remains that the odds of a GSE shareholder settlement have increased since the election." Bose George, a managing director at Keefe, Bruyette and Woods, agreed. "It is clearly a win for plaintiffs," he said. "Now we have to see the documents."The next question involves the mechanism for reviewing the documents and the timeline for their release. He expects the information gleamed from the documents "will reflect poorly on the government's motives."

Split Ginnie Mae from HUD to Protect the Housing Market - Ginnie Mae played a crucial role in stabilizing the housing industry between 2008 and 2012, yet the organization continues to be understaffed and underfunded, at a disservice to the American people. Ginnie Mae's role in the housing industry — and, in fact, in the American economy — is far too important to allow it to deteriorate for the sole purpose of political gamesmanship. Politics has no place at the table when it comes to supporting affordable housing for the American public.Prior to 2008, Freddie and Fannie answered only to their stockholders. After the subprime meltdown of 2007-2008, the GSEs entered conservatorship under the Federal Housing Finance Agency. The debate still rages as to if and when that conservatorship should end. Ginnie Mae, on the other hand, answers directly to the Department of Housing and Urban Development. It falls under HUD's budgetary scrutiny and restraint, even though it is a wholly owned corporation of the federal government. As a result, Ginnie Mae is consistently underfunded and underrepresented at the proverbial table when it seeks the resources necessary to carry out its mission of making affordable housing available to several groups of Americans who need that assistance. I respectfully call upon all interested parties to raise their voices in support of an independently structured Ginnie Mae. And I call upon the new administration and Congress to release Ginnie from the budget and supervisory constraints imposed by HUD oversight. It is time to separate Ginnie Mae from HUD. It is time for the federal government to recognize its importance to the housing industry and provide access to adequate funding.

Mortgage-Interest Deduction — Eliminate It and Progressive, High-Tax States Will Suffer -- If you have spent much time in the more rarefied corners of California, one thing will be obvious: The lifestyle associated with urban progressivism can be very comfortable — if you can afford it. If you can’t — well, the view from Santa Monica is very different from the view from Friant, just as the view from Tribeca is very different from the view from Elmira in upstate New York. Progressivism in the United States used to be a school of political action, but today it is mainly a highly refined lifestyle — one that Republicans may be on the verge of making a little more expensive. It’s time for a blue-state tax hike.   Congressional Republicans and the Trump administration will disagree about many things, but it is rare to find a Republican of almost any description who will turn his nose up at a tax cut of almost any description. As Robert Novak put it: “God put the Republican Party on earth to cut taxes. If they don’t do that, they have no useful function.” And tax cuts are coming. But there are two proposals in circulation that would constitute significant tax increases — tax increases that would fall most heavily on upper-income Americans in high-tax progressive states such as California and New York. The first is a proposal to reduce or eliminate the mortgage-interest deduction, a tax subsidy that makes having a big mortgage on an expensive house relatively attractive to affluent households; the second is to reduce or eliminate the deduction for state income taxes, a provision that takes some of the sting out of living in a high-tax jurisdiction such as New York City (which has both state and local income taxes) or California, home to the nation’s highest state-tax burden. Do not hold your breath waiting for the inequality warriors to congratulate Republicans for proposing these significant tax increases on the rich. Expect lamentations and the rending of garments, instead.

Rising Rates Will Cut Prepayments: Morningstar: Nearly a third of the loans in the nonagency space will likely see prepayments cut in half if refinancing incentives disappear due to higher interest rates, according Morningstar Credit Ratings. Mortgages with interest rates below 6% and loan-to-value ratios under 60% are expected to display the largest drop in prepayments as a result of higher rates, Morningstar said in a note released Thursday. And because there is such a high concentration of loans that fall into that category among post-crisis originations, these loans will demonstrate a disproportionately greater reduction in prepayments than loans originated before the financial crisis. "If mortgage rates rise above the existing interest rates on RMBS pools, we expect to see a reduction in principal prepayments because of a decrease in refinancing activity," the authors of the Morningstar report, Gaurav Singhania and Olgay Cangur, wrote. "The borrowers would have no incentive to refinance under these circumstances." Singhania and Cangur found that when there was a 0.25% rate refinance incentive, borrowers with an LTV below 60% were 11 times more likely to prepay their mortgages than those with an LTV above 100%. Additionally, the authors noted that nearly two-thirds of post-crisis originations have mark-to-market LTVs below 60% versus just a third of precrisis loans. That disparity trickles down into expectations for residential mortgage-backed securities

 Fannie Mae: Mortgage Serious Delinquency rate decreased in December, Lowest since March 2008 --  Fannie Mae reported today that the Single-Family Serious Delinquency rate decreased to 1.20% in December, down from 1.23% in November. The serious delinquency rate is down from 1.55% in December 2015.This is the lowest serious delinquency rate since March 2008.These are mortgage loans that are "three monthly payments or more past due or in foreclosure".   The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.  Although the rate is declining, the "normal" serious delinquency rate is under 1%.    The Fannie Mae serious delinquency rate has fallen 0.35 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% for about 7 more months.

Lawler: Table of Distressed Sales and All Cash Sales for Selected Cities in December --Economist Tom Lawler sent me the table below of short sales, foreclosures and all cash sales for selected cities in December.  On distressed: The total "distressed" share is down year-over-year in all of these markets.  Short sales and foreclosures are mostly down in these areas. The All Cash Share (last two columns) is mostly declining year-over-year. As investors continue to pull back, the share of all cash buyers continues to decline.

MBA: Mortgage Applications Decrease in Latest Weekly Survey --From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 27, 2017. The previous week’s results included an adjustment for the MLK Day holiday.... The Refinance Index decreased 1 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index increased 12 percent compared with the previous week and was 2 percent higher than the same week one year ago. .. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to its highest level since December 2016, 4.39 percent, from 4.35 percent, with points increasing to 0.34 from 0.30 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

Increasing Mortgage Rates May Increase Downward Pressure on Housing Demand -- Today, the Financial Times reported that mortgage rates hit a 2017 high.   The following chart from the St. Louis FRED's system is a bit behind the article's data, but it also shows that mortgage rates are higher: At what point does this impact the housing market?  We don't know -- there is no basic rule of thumb linking basis point increases in mortgage rates with home sales.  However, data shows that both new and existing home sales may be peaking: The above chart shows new and existing home sales.  Both sets of data are recalibrated to a base 100 beginning on the last day of the last recession.  Existing sales (in red) have been reported at the same level (~110 on the chart) since July 2105.  This is by far the larger market.  New homes sales (in blue) increased in 2H 2016, but have since printed at approximately the same level.    At some point, interest rates will increase to a level where they will construct demand. 

Mortgage Rates Unchanged on Weak Economic Growth News: Mortgage interest rates held steady after rising last week because of weaker-than-expected gross domestic product numbers, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 4.19% for the week ending Feb. 2, unchanged from last week. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.72%. "The 10-year Treasury yield fell 5 basis points this week following a tepid advance estimate of fourth-quarter GDP and the Fed's decision to leave rates unchanged. The 30-year mortgage rate remained flat, starting the month 47 basis points higher than this time last year," said Sean Becketti, chief economist at Freddie Mac. The 15-year fixed-rate mortgage this week averaged 3.41%, up from last week when it averaged 3.4%. A year ago at this time, the 15-year averaged 3.01%. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.23%, up from last week when it averaged 3.2%, while a year ago it averaged 2.85%.

Home Prices Up 5.7% in November: Black Knight: Home prices increased 5.7% year over year in November, Black Knight Financial Services reported. Black Knight said in its Home Price Index report released Monday that the index reached $267,000, also representing a 0.2% uptick from the month prior. Home prices are now just 0.3% below a new national peak. New York came out ahead of all other states in terms of price appreciation, with a 1.1% increase, followed by New Jersey and Tennessee. New York City also posted the highest level of price appreciation at the metropolitan level with a 1.4% increase. The rest of the top 10 was largely dominated by cities in Tennessee (Nashville, Knoxville and Kingsport) and Florida (Cape Coral, The Villages, Lakeland, Ocala and Palm Bay). Also on the list was Coeur d'Alene, Idaho.

Home Prices Rose 5.3% Year-over-Year, Gains Continue in November - With today's release of the November S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.9% month over month. The seasonally adjusted year-over-year change has hovered between 4.4% and 5.4% for the last twenty-four months. Today's S&P/Case-Shiller National Home Price Index (not seasonally adjusted) reached another new high. The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.9% from the previous month. The nonseasonally adjusted index was up 5.3% year-over-year. Investing.com had forecast a 0.7% MoM seasonally adjusted increase and 5.1% YoY nonseasonally adjusted for the 20-city series. Here is an excerpt of the analysis from today's Standard & Poor's press release.  “With the S&P CoreLogic Case-Shiller National Home Price Index rising at about 5.5% annual rate over the last two-and-a-half years and having reached a new all-time high recently, one can argue that housing has recovered from the boom-bust cycle that began a dozen years ago,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The recovery has been supported by a few economic factors: low interest rates, falling unemployment, and consistent gains in per-capita disposable personal income. Thirty-year fixed rate mortgages dropped under 4.5% in 2011 and have only recently shown hints of rising above that level. The unemployment rate at 4.7% is close to the Fed’s full employment target. Inflation adjusted per capita personal disposable income has risen at about a 2.5% annual rate for 30 months. [Link to source]  The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.

Case-Shiller: National House Price Index increased 5.6% year-over-year in November --S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3 month average of September, October and November prices).  This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: The S&P CoreLogic Case-Shiller National Index Hits New Peak as Home Prices Gains ContinueThe S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.6% annual gain in November, up from 5.5% last month. The 10-City Composite posted a 4.5% annual increase, up from 4.3% the previous month. The 20-City Composite reported a year-over-year gain of 5.3%, up from 5.1% in October. Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last 10 months. In November, Seattle led the way with a 10.4% year-over-year price increase, followed by Portland with 10.1%, and Denver with an 8.7% increase. Eight cities reported greater price increases in the year ending November 2016 versus the year ending October 2016. ... Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in November. Both the 10-City Composite and the 20-City Composite posted 0.2% increases in November. After seasonal adjustment, the National Index recorded a 0.8% month-over-month increase, while both the 10-City and 20-City Composites each reported 0.9% month-over-month increases. Ten of 20 cities reported increases in November before seasonal adjustment; after seasonal adjustment, all 20 cities saw prices rise. The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000). The Composite 10 index is off 9.2% from the peak, and up 0.9% in November (SA). The Composite 20 index is off 7.0% from the peak, and up 0.9% (SA) in November. The National index is slightly above the previous peak (SA), and up 0.8% (SA) in November. The National index is up 36.1% from the post-bubble low set in December 2011 (SA). The second graph shows the Year over year change in all three indices. The Composite 10 SA is up 4.5% compared to November 2015. The Composite 20 SA is up 5.3% year-over-year. The National index SA is up 5.6% year-over-year.

Case-Shiller Home Prices Reach Record High In November (Right Before Rates Exploded Higher) --The good news - US home prices have never, ever, been higher according to Case-Shiller.“With the S&P CoreLogic Case-Shiller National Home Price Index rising at about 5.5% annual rate over the last two-and-a-half years and having reached a new all-time high recently, one can argue that housing has recovered from the boom-bust cycle that began a dozen years ago,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.“The recovery has been supported by a few economic factors: low interest rates, falling unemployment, and consistent gains in per-capita disposable personal income. Thirty-year fixed rate mortgages dropped under 4.5% in 2011 and have only recently shown hints of rising above that level. The unemployment rate at 4.7% is close to the Fed’s full employment target. Inflation adjusted per capita personal disposable income has risen at about a 2.5% annual rate for 30 months.The bad news - that was November's data. The ugly news - mortgage rates have exploded higher since then... Probably Nothing...

Real Prices and Price-to-Rent Ratio in November -- It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being slightly above the previous bubble peak. However, in real terms, the National index (SA) is still about 14.9% below the bubble peak. The year-over-year increase in prices is mostly moving sideways now around 5%. In November, the index was up 5.6% YoY. In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $277,000 today adjusted for inflation (38.5%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through November) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to August 2005 levels, and the CoreLogic index (NSA) is back to September 2005. The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to April 2004 levels, the Composite 20 index is back to November 2003, and the CoreLogic index back to March 2004. In real terms, house prices are back to late 2003 / early 2004 levels. P This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to October 2003 levels, the Composite 20 index is back to June 2003 levels, and the CoreLogic index is back to July 2003. In real terms, and as a price-to-rent ratio, prices are back to late 2003 / early 2004 - and the price-to-rent ratio maybe moving a little more sideways now.

Luxury home sales continued to slump in the fourth quarter: Uncertainty around the election spooked wealthy home buyers in the fourth quarter, continuing 2016's slowdown in luxury real estate, according to several new reports Sales in the Hamptons, Aspen and Los Angeles fell by double-digit percentages in the fourth quarter, as the supply of unsold homes grew and prices came under pressure, according to market reports Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants. Separate research from Redfin found that luxury properties nationwide under-performed the broader housing market for the eighth consecutive quarter. The supply of homes priced at $1 million or more rose 1 percent in the fourth quarter, while the number of $5 million-plus homes was up 15 percent. "The Trump rally in the stock market did little to move prices in luxury real estate," Redfin's chief economist Nela Richardson said. "Cities with booming luxury markets attracted traditional high-income buyers seeking a place to live, work and grow their families. Prices in cities with more transient luxury buyers, looking for investments or a place to park their wealth, had more tepid growth to close out 2016." The big question is whether the weakness in 2016 will continue in this year. In the Hamptons, where the fourth quarter is always the weakest, the number of total sales fell 15 percent compared with the same quarter a year ago. The high end of the market was especially weak, bringing the average sale price down 30 percent, to $1.7 million. The median price fell 7 percent, to $925,000.

HVS: Q4 2016 Homeownership and Vacancy Rates -- The Census Bureau released the Residential Vacancies and Homeownership report for Q4 2016. This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.  This survey might show the trend, but I wouldn't rely on the absolute numbers.  The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend. The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate increased to 63.7% in Q4, from 63.5% in Q3.  I'd put more weight on the decennial Census numbers - and given changing demographics, the homeownership rate is probably close to a bottom. The HVS homeowner vacancy was unchanged at 1.8% in Q4.   The rental vacancy rate increased to 6.9% in Q4.The quarterly HVS is the most timely survey on households, but there are many questions about the accuracy of this survey. Overall this suggests that vacancies have declined significantly, and my guess is the homeownership rate is probably close to the bottom.

 NAR: Pending Home Sales Index increased 1.6% in December, up 0.3% year-over-year --From the NAR: Pending Home Sales Bounce Back in December: The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 1.6 percent to 109.0 in December from 107.3 in November. With last month's uptick in activity, the index is now 0.3 percent above last December (108.7). The PHSI in the Northeast declined 1.6 percent to 96.4 in December, and is now 1.2 percent below a year ago. In the Midwest the index decreased 0.8 percent to 102.7 in December, and is now 3.4 percent lower than December 2015.Pending home sales in the South rose 2.4 percent to an index of 121.3 in December and are now 0.5 percent above last December. The index in the West jumped 5.0 percent in December to 106.1, and is now 5.0 percent higher than a year ago.  This was above expectations of a 0.6% increase for this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in January and February.

Construction Spending decreased in December -- Earlier today, the Census Bureau reported that overall construction spending decreased in December: The U.S. Census Bureau of the Department of Commerce announced today that construction spending during December 2016 was estimated at a seasonally adjusted annual rate of $1,181.5 billion, 0.2 percent below the revised November estimate of $1,184.4 billion. The December figure is 4.2 percent above the December 2015 estimate of $1,133.7 billion.
The value of construction in 2016 was $1,162.4 billion, 4.5 percent above the $1,112.4 billion spent in 2015. Private spending increased, however public spending decreased in December: Spending on private construction was at a seasonally adjusted annual rate of $897.0 billion, 0.2 percent above the revised November estimate of $894.8 billion. ...
In December, the estimated seasonally adjusted annual rate of public construction spending was $284.5 billion, 1.7 percent below the revised November estimate of $289.6 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been generally increasing, and is still 31% below the bubble peak. Non-residential spending is now 4% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 13% below the peak in March 2009, and 8% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 4%. Non-residential spending is up 9% year-over-year. Public spending is down 2% year-over-year. Looking forward, all categories of construction spending should increase in 2017. This was below the consensus forecast of a 0.2% increase for December, however the previous months were revised up.

December 2016 Construction Spending Growth Declined: The headlines say construction spending was down, and was below expectations. Consider this a weaker report than last month. Public construction returned to contraction year-over-year whilst private construction remained in expansion. Overall, construction ended 2016 on a soft note - but did improve overall over 2015. But the confusion is that construction spending does not correlate to construction employment - casting doubt on the validity of one or both data sets. Econintersect analysis:

• Growth decelerated 0.8 % month-over-month and up 4.2 % year-over-year.
• Inflation adjusted construction spending up 3.4 % year-over-year.
• 3 month rolling average is 10.5 % ABOVE the rolling average one year ago, and accelerated 0.7 % month-over-month. As the data is noisy (and has so much backward revision) - the moving averages likely are the best way to view construction spending.
• Backward revision for the last 3 months was marginally upward.
• Down 0.2 % month-over-month and up 4.2 % year-over-year (versus the reported +3.4 % year-over-year growth last month).
• Market expected from Bloomberg / Econoday -0.4 % to 0.8 % month-over-month (consensus +0.2) versus the -0.2 % reported

Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was four years of headwinds for GDP.

 Personal Income increased 0.3% in December, Spending increased 0.5% --The BEA released the Personal Income and Outlays report for December:  Personal income increased $50.2 billion (0.3 percent) in December according to estimates released today by the Bureau of Economic Analysis ... personal consumption expenditures (PCE) increased $63.1 billion (0.5 percent)....Real PCE increased 0.3 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.  On inflation: The PCE price index increased 1.6 percent year-over-year. (This was up from 1.4% year-over-year in November). The core PCE price index (excluding food and energy) increased 1.7 percent year-over-year in December (the same as in November).

December 2016 Personal Income Year-over-Year Growth Again Weakens: The headline data this month showed improved consumer income and expenditure growth. However, year-over-year growth of income weakened, whilst consumption was unchanged. Personal consumption has been the major driver of GDP since the end of the Great Recession. Inflation however, is dragging down the nominal numbers - and consumption continues to outpace income growth (this month inflation adjusted consumption grew 3 times faster than income). Remember these are average numbers - not median. One has to wonder how the low end of the households are coping. The market looks at current values (not real inflation adjusted) and was expecting (from Bloomberg):

• The monthly fluctuations are confusing. Looking at the inflation adjusted 3 month trend rate of growth, disposable income growth rate trend is unchanged while consumption's growth rate is decelerating.
• Real Disposable Personal Income is up 2.1 % year-over-year (published 2.3 % last month - now revised to 2.4 %), and real consumption expenditures is up 2.8 % year-over-year (published 2.8 % last month - now revised to 2.8 %)
• this data is very noisy and as usual includes moderate backward revision - this month the changes modified the year-over-year trends.
• The advance estimate of 4Q2016 GDP indicated the economy was expanding at 1.9 % (quarter-over-quarter compounded). Expenditures are counted in GDP, and income is ignored as GDP measures the spending side of the economy. However, over periods of time - consumer income and expenditure grow at the same rate.
• The savings rate continues to be low historically, and was down 0.2 % to 5.4 % this month.

Does Saving Cause Lending Cause Investment? (No.) Steve Roth  - Households save money and lend it to businesses, who invest it in productive enterprises. That’s the economic story you’ve been hearing your whole life, right? Or at least since Econ 101. Saving funds investment. That core idea is embedded (and unquestioned) in modern macro: the Solow growth model, IS/LM, the lot.  Put aside that the basic bookkeeping of this idea — that personal saving creates “savings” that “fund” lending and investment — doesn’t make any sense. (It’s an error of composition; you have more savings if you save, but the economy doesn’t.) Let’s look at history: when households save more, is there more lending and (business) investment — either immediately or a few quarters/years down the road? Mostly: no. Here are some saving, lending, and investment measures for the U.S., post-war (starting Q1 1948), all divided by GDP to make them comparable: The first thing to notice here: both lending and investment are vastly larger than household saving. They can’t be “funded” by that saving, or at least not much. (Think: bank lending and endogenous money.)  Otherwise, eyeballing this, it’s pretty much impossible to tell if these measures are correlated. When saving goes up or down, do lending and investment do likewise (concurrently, or some time later)? They’re all over the place. So let’s use software to look at correlations between them.A correlation of 1.0 means the two measures move perfectly together — if X goes up, so does Y, by an equal amount. A correlation of -1 means they move perfectly in opposite directions — if X goes up, Y always goes down by an equal amount.Of course, correlation doesn’t demonstrate causation. But lack of correlation, and especially negative correlation, does much to disprove causation. What kind of disproofs do we see here?

• • Personal saving and commercial lending seem to be lightly correlated. The correlation declines over the course of a year, but then increases two or three years out. It’s an odd pattern, with a lot of possible causal stories that might explain it.
• • Personal saving and private investment (including both residential and business investment) are very weakly correlated, and what correlation there is is mostly negative. More saving correlates with less investment.
• • Commercial lending has medium-strong correlation with private investment in the short term, declining rapidly over time. This is not terribly surprising. But it has nothing to do with private saving.
• • Perhaps the most telling result here: Personal saving has a significant and quite consistent negative correlation with business investment. Again: more saving, less investment. This directly contradicts what you learned in Econ 101.

 Consumer Spending Is Economy’s Bright Spot -- The trend in consumer spending posted an encouraging profile during the last full month of the Obama adminstration’s tenure, prompting some analysts to reaffirm the case for another round of raising interest rates. The year-over-year change for personal consumption expenditures (PCE) ticked up to 4.5% in December, according to the Bureau of Economic Analysis. That puts the annual trend for spending at the highest rate since Nov. 2014. “Consumers keep on spending to help the economy grow and inflation is stirring,” says Chris Rupkey, chief economist at MUFG Union Bank. “The economy is at full employment. Time for the Fed to hoist sail on interest rates.” The numbers for personal income, however, offer a counterpoint. While the year-over-year change for PCE continues to accelerate, the equivalent comparison for disposable personal income (DPI) was generally flat in 2016. DPI increased 3.7% for the year through December, which is close to the slowest pace recorded for last year.  DPI data can be volatile at times and so it’s wise to focus on the trend over several months. But even by that standard, recent history offers a cautious view. It’s too soon to know if DSPI’s flatlining will bring new headwinds for consumer spending, although a weaker trend for income in the months ahead would be worrisome after a year of treading water.

Consumer Confidence Retreated in January -- The latest Conference Board Consumer Confidence Index was released this morning based on data collected through January 19. The headline number of 111.8 was a decrease from the final reading of 113.3 for December, a downward revision from 113.7. Today's number was below the Investing.com consensus of 113.0.  Here is an excerpt from the Conference Board press release. "Consumer confidence decreased in January, after reaching a 15-year high in December (Aug. 2001, 114.0)," said Lynn Franco, Director of Economic Indicators at The Conference Board. "The decline in confidence was driven solely by a less optimistic outlook for business conditions, jobs, and especially consumers' income prospects. Consumers' assessment of current conditions, on the other hand, improved in January. Despite the retreat in confidence, consumers remain confident that the economy will continue to expand in the coming months."  The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

Consumer Confidence Disappoints, Drops From Trump-Fueled 16-Year Highs As Hope Fades -- Having surged to its highest since August 2001 in the afterglow on Trump's election victory, Conference Board Consumer Confidence slipped for the first time since October. Interestingly, while 'present situation' rose, hope plunged with 'expectations' slumping most since Feb 2016. Notably, fewer survey respondents believed it was a good time to buy a home, car, or major appliance.

Growth in U.S.–China trade deficit between 2001 and 2015 cost 3.4 million jobs: Here’s how to rebalance trade and rebuild American manufacturing -- The United States has a massive trade deficit with China. It has grown since the end of the Great Recession. The growth of that deficit almost entirely explains the failure of manufacturing employment to fully recover along with the rest of the economy. And as other studies have suggested, the trade deficit has cost us millions of jobs since China entered the World Trade Organization (WTO) in 2001. The growth of the trade deficit means that the United States is both losing jobs in manufacturing (in electronics and high tech, apparel, textiles, and a range of heavier durable goods industries) and missing opportunities to add jobs in manufacturing (in exporting industries such as transport equipment, agricultural products, computer and electronic parts, chemicals, machinery, and food and beverages) because imports from China have soared, and exports have increased much less. The trade deficit with China affects different regions in different ways. Some regions are devastated by layoffs and factory closings while others are surviving but not growing the way they could be if new factories were opening and existing plants were hiring more workers. This slowdown in manufacturing job generation is also contributing to stagnating wages and incomes of typical workers and widening inequality. Following are the specific problems that call for a policy response:

What Exactly Does Mexico Export to the US? -- One of the many ways conventional economic theory hinders our discussions of trade is it gets us thinking about goods “produced” in one country and “consumed” in another. Mexicans grow tomatoes, drill oil, sew shirts, and assemble cars; Americans eat, burn, wear and drive them. Most trade in the real world does not look like this. What you have, rather, are commodity chains, where different parts of the production process take place in different countries. In most cross-border transactions, the buyers are not consumers, or even distributors, but producers who use the imported goods as inputs. And in many cases, the relevant transactions are not arm’s-length market exchanges, but transfers within a single corporate structure. Even the final purchasers may not be consumers: In general, investment goods and exports have higher imported content than consumption goods do.  Case in point: US-Mexico trade. What with the latest eruption from DC, I was curious what US imports from Mexico actually look like. [1] Here’s what the Census says:  As you can see, consumer goods account for only about a quarter of US imports from Mexico. Given that a large fraction of the service imports are tourism, the total share of consumption in US imports from Mexico will be a bit higher, between 30 and 35 percent. [2] (But presumably tourism would not be affected by a tariff.) The remainder is divided about evenly between industrial inputs (raw materials plus intermediate goods like cloth, steel, auto parts, etc.) and investment goods. Machinery and equipment, including computers, account for an impressive 25 percent of Mexican exports to the US. Petroleum products, despite the widespread perception of Mexico as an oil exporter, account for less than 5 percent.  Well, it’s enough, to begin with, that most of us have a distorted idea of what “trade” involves. It’s always dangerous to talk about something at a high level of abstraction without a clear sense of the concrete reality involved — even if, in a given case, the abstract description works fine. But in this case I don’t think it works fine. I think our model of one country and producing and the other consuming, misleads us in some important ways about the likely impact of something like Trump’s tariff.

The US shouldn’t blame Mexico for “losing” at trade — it should blame Germany -- Since the mid-1990s US manufacturers lost market share to foreign competitors and hemmorhaged jobs. This produced a political backlash the consequences of which are only beginning to be felt.  One consequence that seems increasingly likely, however, is that the rules of the global trading system will change. As with most policy questions in America today, it’s more or less impossible to predict how things will change, but trade is an area where the executive branch has relatively more leeway to change policy without Congressional consent than, for example, the tax code, financial regulation, health care, or infrastructure. (Alex has much more detail.) And there have been plenty of hints about how the new administration thinks about trade:

• The overall trade deficit can be narrowed by focusing on the biggest bilateral trade deficits with specific countries.
• Bilateral trade deficits are caused by “bad deals” and need to be addressed on a case-by-case basis.
• Therefore the way to boost American employment is by negotiating “better deals” with China, Japan, Germany, and Mexico, since the bilateral deficits with those four countries have consistently explained about three-fourths of America’s trade deficit in goods and more than all of the total trade deficit in goods and services as of 2015, the last year with complete data.

While there are plenty of reasons to think the existing set of rules often haven’t worked in the interests of the median American and could be improved, this line of thinking is deeply flawed.A better framework would replace the myopic focus on bilateral trade balances with an understanding of global trends in saving versus spending. This would mean ignoring Mexico, focusing somewhat less on China, and focusing much more on the euro area, Switzerland, Korea, Taiwan, and Singapore. Importantly, solutions exist that should satisfy American negotiators while also improving living standards for many people in the targeted countries. Gains for Americans shouldn’t have to come at the expense of foreign workers.

Trade deficits and real blue collar manufacturing compensation -- In response to Trump’s faux populism and his terribly misguided attack on globalization and trade, it has become fashionable in some circles to dismiss persistent US trade deficits as a problem (here’s Dean Baker and I on why this is wrong). Here’s a picture that comes to mind when I hear people make this case. It shows the real compensation–wages plus benefits–for blue-collar workers in manufacturing from the late 1940s-2016 along with the trade deficit as a share of GDP. Basically, the real compensation of these blue-collar factory workers doubled from the late 1940s to the late 1970s. It has been essentially flat since then. I’m not at all claiming that the fact of negative trade balances over this full stagnation period fully explains this trend. There were and are many moving parts. But the usual argument by those who want to dismiss any negative impact of this deficit is that productivity growth was displacing manufacturing workers over this period. That doesn’t work here (nor does it convincingly explain the job story, especially in the 2000s). Manufacturing productivity has been growing over this full period, including when real comp was rising. And while I don’t expect within-industry correlations between pay and productivity, I don’t see how the productivity argument explains this wage series. Demand shifts against non-college educated workers, deunionization, eroding labor standards, the absence of full employment, excessive profits in finance–I’m sure they’re all in the mix here. As is the trade deficit, as US non-managerial workers in the factory sector went into global competition with much cheaper workers from the countries of our trading partners.

Japan Will Invest Its Pensions In US Infrastructure To Create "Hundreds Of Thousands Of US Jobs" - Having decided to actively increase its risk exposure over the past few years, including venturing into high beta stocks and junk bonds - a gamble that has lead to a big jump in quarterly volatility not to mention significant downside risk should global markets suffer a crash - Japan's Government Pension Investment Fund, or GPIF, the world's largest pension fund, has decided to invest in US infrastructure projects next. According to Japan's Nikkei, infrastructure investments in the U.S. by Japan's GPIF will feature heavily in the economic cooperation package to be discussed at next week's summit in Washington between the two countries' leaders. The stated goal is to create "hundreds of thousands of American jobs", in keeping with U.S. President Donald Trump's agenda, and deepen ties between the two countries. The unstated goal is to avoid Trump lashing out at Japan as a currency manipulator, and putting in peril Japan's QQE "with curve control" experiment, which is the bedrock of all Abenomics (as further expained in the following Nikkei piece).  Japan has grown nervous that after Mexico, China and Germany, it may be next nation to find itself in Trump's spotlight, something Trump hinted at yesterday during his meeting with pharma CEOs when he said that "other countries take advantage of America by devaluation," and then directly named China and Japan as "planning money markets," presumably implying manipulation.

Japan reportedly setting up package for Trump to create 700,000 US jobs | Fox News: Japan, which has a consistent trade surplus with the U.S., is putting the finishing touches on a package that it claims will create 700,000 jobs in the U.S. and help create a $450-billion market, Reuters reported, citing government sources familiar with the plans. Prime Minister Shinzo Abe and President Trump are expected to meet on Feb. 10. Major Japanese newspapers cited a draft of the proposal that calls for cooperation on building high-speed trains in the U.S. northeast, Texas and California. The two sides would also jointly develop artificial intelligence, robotics, space and Internet technology. The Japanese may use money from its foreign exchange reserves to fund the package, Reuters reported. On a broader basis, the two countries would cooperate in building liquefied natural gas facilities in Asia to help expand exports of U.S. natural gas and work together to expand nuclear energy-related sales. The aim appears to be to turn what could potentially be a major crisis over trade friction into a business opportunity for both sides. Abe's proposed public-private initiative is intended to create several hundred thousand jobs, the reports said Thursday, and involve $150 billion in new investment in U.S. infrastructure from Japanese government and private sources over the next decade. Asked in parliament about his plans for talks with Trump, Abe said Japanese companies are making significant contributions to the U.S. economy.

Amazon Signs 50-Year Lease On 900-Acre Air Cargo Hub To House 40 "Prime Air" Jets --Watch out FedEx, here comes Amazon Prime Air.  And, if history is any guide, Amazon may be quite happy to provide your cargo services at a discount to costs, which we suspect your shareholders, unlike Amazon's, will find to be sub-optimal. According to the Consumerist, Amazon has signed a 50-year lease on a 900-acre cargo hub at the Cincinnati/Northern Kentucky International Airport intended to house a fleet of 40 Prime Air jets.  Amazon is expected to invest $1.5 billion in the facility in return for $40 million in tax incentives from the State of Kentucky. The facility is located at the Cincinnati/Northern Kentucky International Airport, less than 100 miles away from the 1,200-acre UPS Worldport in Louisville. That’s right near the massive Amazon fulfillment center in Hebron, KY, and the e-commerce behemoth has signed a 50-year lease on 900 acres of property from the airport. Amazon is investing $1.5 billion in the hub, which will receive $40 million in tax incentives from the state of Kentucky over ten years if Amazon meets job targets. Only 16 of the 40 Prime Air cargo jets that Amazon has leased are in service now, and the Cincinnati/Northern Kentucky hub is meant to serve as their home once they’re all in the air. Amazon began its air operation at what used to be the DHL domestic hub at a decommissionedd Air Force base in Ohio, northeast of Cincinnati.

U.S. Light Vehicle Sales decrease to 17.5 million annual rate in January -- Based on a preliminary estimate from WardsAuto, light vehicle sales were at a 17.47 million SAAR in January.  That is up about 2% from January 2016, and down 4.5% from the 18.29 million annual sales rate last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for January (red, light vehicle sales of 17.47 million SAAR from WardsAuto). This was below the consensus forecast of 17.7 million for January. After two consecutive years of record sales, it looks like sales will mostly move sideways in 2017. The second graph shows light vehicle sales since the BEA started keeping data in 1967.

US factory orders increase more than expected, shipments surge: New orders for U.S.-made goods rose more than expected in December and shipments surged, offering more evidence of a pickup in manufacturing activity as an earlier drag from lower oil prices and a strong dollar fades. Factory goods orders increased 1.3 percent, the Commerce Department said on Friday after a revised 2.3 percent decline in November. Economists polled by Reuters had forecast factory orders rising 1.0 percent in December after a previously reported 2.4 percent decline in November. Total shipments of manufactured goods increased 2.2 percent, the largest increase since December 2010, after rising 0.3 percent in November. The department also said orders for non-defense capital goods excluding aircraft — seen as a measure of business confidence and spending plans — rose 0.7 percent in December instead of the 0.8 percent increase reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 1.0 percent in December as previously reported. A report on Wednesday showed factory activity accelerated to a more than two-year high in January, with manufacturers reporting increases in new orders and employment. Manufacturing accounts for about 12 percent of the economy. A collapse in oil prices in 2015 and a surge in the dollar weighed on manufacturing for much of last year, with most of the pain coming through sharp cutbacks in business spending on equipment. Oil prices have since risen above $50 per barrel, lifting some of the fog off manufacturing.The government reported last Friday that business spending on equipment increased at a 3.1 percent annualized rate in the fourth quarter, the first increase in over a year.

Dallas Fed Manufacturing Outlook: Conditions Improved in January - This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for January. The latest general business activity index increased 4 points, coming in at 22.1, up from 17.7 in December. Annual seasonal revisions were made to historical data. Here is an excerpt from the latest report:Texas factory activity increased for the seventh consecutive month in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down but remained positive at 11.9, suggesting output growth continued but at a slightly slower pace this month.Other measures of current manufacturing activity also indicated expansion. The new orders index climbed to a multiyear high of 15.7, while the growth rate of orders index returned to positive territory, rising 8 points to 6.7. The capacity utilization index posted a seventh positive reading in a row, although it moved down to 9.1 this month. The shipments index rose 10 points to 15.8, with more than a third of manufacturers noting a rise in shipment volumes from December.Perceptions of broader business conditions improved further this month. The general business activity index posted a fourth consecutive positive reading and moved up to 22.1, its highest reading since April 2010. The company outlook index pushed up to 25.0, also a level not seen since 2010.  Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator.

Dallas Fed: Regional Manufacturing Activity "Continues to Expand" in January From the Dallas Fed: Texas Manufacturing Activity Continues to ExpandTexas factory activity increased for the seventh consecutive month in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down but remained positive at 11.9, suggesting output growth continued but at a slightly slower pace this month. ......The general business activity index posted a fourth consecutive positive reading and moved up to 22.1, its highest reading since April 2010. ..Labor market measures indicated employment gains and longer workweeks. The employment index bounced back to 6.1 after dipping into negative territory last month. Twenty-three percent of firms noted net hiring, compared with 17 percent noting net layoffs. The hours worked index moved up to 9.1, its strongest reading since the end of 2015. ...This was the last of the regional Fed surveys for January. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Regional Fed Manufacturing Overview: Improving Activity Continues - Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated." Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for January is 10.84, up from last month's 5.93 and in positive territory for the third consecutive month.

ISM Manufacturing index increased to 56.0 in January -- The ISM manufacturing index indicated expansion in January. The PMI was at 56.0% in January, up from 54.5% in December. The employment index was at 56.1%, up from 52.8% last month, and the new orders index was at 60.4%, up from 60.3%. From the Institute for Supply Management: January 2017 Manufacturing ISM® Report On Business® “The January PMI® registered 56 percent, an increase of 1.5 percentage points from the seasonally adjusted December reading of 54.5 percent. The New Orders Index registered 60.4 percent, an increase of 0.1 percentage point from the seasonally adjusted December reading of 60.3 percent. The Production Index registered 61.4 percent, 2 percentage points higher than the seasonally adjusted December reading of 59.4 percent. The Employment Index registered 56.1 percent, an increase of 3.3 percentage points from the seasonally adjusted December reading of 52.8 percent. Inventories of raw materials registered 48.5 percent, an increase of 1.5 percentage points from the December reading of 47 percent. The Prices Index registered 69 percent in January, an increase of 3.5 percentage points from the December reading of 65.5 percent, indicating higher raw materials prices for the 11th consecutive month. The PMI®, New Orders, and Production Indexes all registered their highest levels since November of 2014, and comments from the panel are generally positive regarding demand levels and business conditions.”  Here is a long term graph of the ISM manufacturing index. This was above expectations of 55.0%, and suggests manufacturing expanded at as faster pace in January than in December.

ISM Manufacturing Index: Continued Expansion in January - Today the Institute for Supply Management published its monthly Manufacturing Report for January. The latest headline Purchasing Managers Index (PMI) was 56.0 percent, an increase of 1.5 percent from 54.5 the previous month, and its highest since November of 2014. Today's headline number was above the Investing.com forecast of 55.0 percent. Here is the key analysis from the report: “The January PMI^® registered 56 percent, an increase of 1.5 percentage points from the seasonally adjusted December reading of 54.5 percent. The New Orders Index registered 60.4 percent, an increase of 0.1 percentage point from the seasonally adjusted December reading of 60.3 percent. The Production Index registered 61.4 percent, 2 percentage points higher than the seasonally adjusted December reading of 59.4 percent. The Employment Index registered 56.1 percent, an increase of 3.3 percentage points from the seasonally adjusted December reading of 52.8 percent. Inventories of raw materials registered 48.5 percent, an increase of 1.5 percentage points from the December reading of 47 percent. The Prices Index registered 69 percent in January, an increase of 3.5 percentage points from the December reading of 65.5 percent, indicating higher raw materials prices for the 11th consecutive month. The PMI^®, New Orders, and Production Indexes all registered their highest levels since November of 2014, and comments from the panel are generally positive regarding demand levels and business conditions.” [source]  Here is the table of PMI components.

Markit Manufacturing PMI: January Down Fractionally -- The January US Manufacturing Purchasing Managers' Index conducted by Markit came in at 55.0, down fractionally from the 55.1 December figure. Today's headline number was slightly below the Investing.com consensus of 55.1. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: US manufacturers signalled a strong start to 2017, with both output and new order growth accelerating since the end of last year. Improving business conditions were also reflecting in a sustained upturn in payroll numbers and the steepest rise in stocks of finished goods since the index began in 2007. Meanwhile, manufacturers reported that confidence regarding the year-ahead business outlook was the strongest since March 2016, which was mainly linked to hopes of a continued upturn in domestic economic conditions. At 55.0 in January, up from 54.3 in December, the seasonally adjusted Markit final US Manufacturing Purchasing Managers’ Index™ (PMI™) signalled a robust and accelerated improvement in overall business conditions across the manufacturing sector. The latest reading was little changed from the earlier ‘flash’ reading of 55.1 and pointed to the fastest upturn in manufacturing performance since March 2015. All five index components exerted a positive influence in the headline PMI in January, led by the sharpest expansion of incoming new work for over two years. [Press Release] Here is a snapshot of the series since mid-2012.

 Chicago PMI Down Again in January -- The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity.The latest report for Chicago PMI came in at 50.3, a 3.6 point decrease from last month's revised 53.9.Here is an excerpt from the press release:“Business activity in the New Year got off to a slow start with contracting orders and easing production weighing heavily on hiring intentions. Activity in Q1 is usually weaker due to seasonal factors, so the following surveys will provide a better picture of business performance.”“‘Respondents to our survey did not expect to be affected by rate increases by the Fed in 2017. Although cost of capital is expected to increase, firms seemed to have already factored this into their purchase decisions.” said Shaily Mittal, senior economist at MNI Indicators. [Source]  Let's take a look at the Chicago PMI since its inception.

Markit Services PMI Up in January -  The January US Services Purchasing Managers' Index conducted by Markit came in at 55.6 percent, up 1.7 percent from the December estimate. The Investing.com consensus was for 55.1 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release:U.S. service providers started the year with the fastest rise in business activity since late-2015, driven by another robust increase in incoming new work. Greater willingness to spend among clients and signs of an upturn in domestic economic conditions also contributed to stronger business optimism across the service sector. January data signalled that services companies are more confident about their growth prospects than at any time since May 2015.The seasonally adjusted final Markit U.S. Services Business Activity Index rebounded to 55.6 in January, up from December’s three-month low of 53.9. Moreover, the latest reading was comfortably above the average for Q4 2016 (54.4) and signalled the fastest rate of business activity growth since November 2015. Higher levels of business activity were mainly linked to improved sales growth and a more supportive economic backdrop. [Press Release] Here is a snapshot of the series since mid-2012.

ISM Non-Manufacturing: Growth Inches Down in January -  The Institute of Supply Management (ISM) has now released the January Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 56.5 percent, down from 56.6 last month. Today's number came in below the Investing.com forecast of 57.0 percent.  Here is the report summary:"The NMI^® registered 56.5 percent which is 0.1 percentage point lower than the seasonally adjusted December reading of 56.6. This represents continued growth in the non-manufacturing sector at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased to 60.3 percent, 0.6 percentage point lower than the seasonally adjusted December reading of 60.9 percent, reflecting growth for the 90th consecutive month, at a slightly slower rate in January. The New Orders Index registered 58.6 percent, 2.1 percentage points lower than the seasonally adjusted reading of 60.7 percent in December. The Employment Index increased 2 percentage points in January to 54.7 percent from the seasonally adjusted December reading of 52.7 percent. The Prices Index increased 2.9 percentage points from the seasonally adjusted December reading of 56.1 percent to 59 percent; indicating prices increased for the 10th consecutive month, at a faster rate in January. According to the NMI^®, 12 non-manufacturing industries reported growth in January. The non-manufacturing sector begins 2017 with a cooling-off in the rate of growth month-over-month. The sector still reflects strong growth. Respondents' comments are mixed indicating both optimism and a degree of uncertainty in the business outlook as a result of the change in government administration." [Source] Unlike its much older kin, the ISM Manufacturing Series, there is relatively little history for ISM's Non-Manufacturing data, especially for the headline Composite Index, which dates from 2008. The chart below shows Non-Manufacturing Composite. We have only a single recession to gauge is behavior as a business cycle indicator.

Weekly Initial Unemployment Claims decrease to 246,000 --The DOL reported:In the week ending January 28, the advance figure for seasonally adjusted initial claims was 246,000, a decrease of 14,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 259,000 to 260,000. The 4-week moving average was 248,000, an increase of 2,250 from the previous week's revised average. The previous week's average was revised up by 250 from 245,500 to 245,750.  The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.

ADP: Private Employment increased 246,000 in January -- From ADP: Private sector employment increased by 246,000 jobs from December 2016 to January 2017 according to the January ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. ...“The U.S. labor market is hitting on all cylinders and we saw small and midsized businesses perform exceptionally well,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Further analysis shows that services gains have rebounded from their tepid December pace, adding 201,000 jobs. The goods producers added 46,000 jobs, which is the strongest job growth that sector has seen in the last two years.” Mark Zandi, chief economist of Moody’s Analytics said, “2017 got off to a strong start in the job market. Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.”  This was well above the consensus forecast for 168,000 private sector jobs added in the ADP report.   The BLS report for January will be released Friday, and the consensus is for 175,000 non-farm payroll jobs added in January.

First Look at January Employment: ADP Says 246K New Nonfarm Private Jobs - The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). Today we have the ADP January estimate of 246K new nonfarm private employment jobs, an astonishing increase over December's 151K, which was a tiny downward revision of 2K. November was revised upward by 11K.  The 153K estimate came in way above the Investing.com consensus of 165K for the ADP number. The Investing.com forecast for the forthcoming BLS report is for 175K nonfarm new jobs (the actual PAYEMS number) and the unemployment rate to remain unchanged at 4.7%.Here is an excerpt from today's ADP report:“The U.S. labor market is hitting on all cylinders and we saw small and midsized businesses perform exceptionally well,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Further analysis shows that services gains have rebounded from their tepid December pace, adding 201,000 jobs. The goods producers added 46,000 jobs, which is the strongest job growth that sector has seen in the last two years.”Mark Zandi, chief economist of Moody’s Analytics said, “2017 got off to a strong start in the job market. Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.” Here is a visualization of the two series over the previous twelve months.

 US Added A Blistering 246K Private Sector Jobs In December, Most Since June - Just as the hard indicators in the US economy were starting to roll over, with whisper expectations that the Fed's 3 projected rate hikes in 2017 would gradually be reduced to 2 (in line with market expectations) moments ago ADP reported a blistering 246K jobs were added in December, far above the 165K expected and certainly well above the Fed's "guidance" of what would be normal monthly job growth in the 80-120K area. This was the highest monthly jobs addition since June, and even the construction and manufacturing sectors saw job additions of 25,000 and 15,000, respectivelyAnd with both the Fed due out later today, and the official payrolls report out on Friday, the potential for an upside surprise to both is suddenly in play, which explains why the dollar has spiksed on the news to session highs.“The U.S. labor market is hitting on all cylinders and we saw small and midsized businesses perform exceptionally well,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Further analysis shows that services gains have rebounded from their tepid December pace, adding 201,000 jobs. The goods producers added 46,000 jobs, which is the strongest job growth that sector has seen in the last two years.”Mark Zandi, chief economist of Moody’s Analytics said, “2017 got off to a strong start in the job market. Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again. here is the change in Total Nonfarm Private Employment by Company Size

January Employment Report: 227,000 Jobs, 4.8% Unemployment Rate (Graphs included) -- From the BLS: Total nonfarm payroll employment increased by 227,000 in January, and the unemployment rate was little changed at 4.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in retail trade, construction, and financial activities. ... The change in total nonfarm payroll employment for November was revised down from +204,000 to +164,000, and the change for December was revised up from +156,000 to +157,000. With these revisions, employment gains in November and December combined were 39,000 lower than previously reported....In January, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $26.00, following a 6-cent increase in December. Over the year, average hourly earnings have risen by 2.5 percent.... [Annual Benchmark Revision] The total nonfarm employment level for March 2016 was revised downward by 60,000(-81,000 on a not seasonally adjusted basis, or -0.1 percent). ... The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 227 thousand in January (private payrolls increased 237 thousand). Payrolls for November and December were revised down by a combined 39 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In January, the year-over-year change was 2.34 million jobs. This is a solid year-over-year gain. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate increased in January to 62.9%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio was increased to 59.9% (black line). The fourth graph shows the unemployment rate. The unemployment rate increased in January to 4.8%. This was above expectations of 175,000 jobs, however the previous two months were revised down. Another solid report.

January Jobs Report – The Numbers -- Here are some key numbers from the January jobs report released Friday by the Labor Department. Nonfarm employers added a seasonally adjusted 227,000 jobs in January, exceeding economists’ expectations for a 174,000 gain last month. Over the past three months, job growth has averaged 183,000. The pace of hiring has decelerated since 2014 and 2015, but that isn’t necessarily a warning sign about the labor market’s health and could reflect an economy that is approaching full employment. The jobless rate in January was 4.8%, ticking up from December; economists surveyed by The Wall Street Journal had expected 4.7% unemployment in the first month of 2017. The low unemployment rate is one reason the Federal Reserve has decided to start moving interest rates higher. Fed policy makers in December said the unemployment rate in the long run should sit in the 4.5% to 5% range, with a median longer-run projection of 4.8%. The share of Americans who had a job or were looking for one in January was 62.9%, up from 62.7% in December. The workforce-participation rate peaked in 2000 and fell sharply after the 2007-09 recession. It remains near levels not seen since the late 1970s, but the rate has leveled off since late 2015—a reflection of stronger conditions in the labor market. Many forecasters expect participation will resume its decline in the coming years due to long-term demographic and economic trends, including the retirement of the baby-boom generation. Average hourly earnings for private-sector workers were $26.00 in January, up a modest 3 cents from December and rising 2.5% over the past year. Wage growth has firmed over the past couple of years as lower unemployment has forced U.S. employers to compete over a shrinking pool of available workers. But progress has been uneven, and the pace of pay raises remains subdued compared with prerecession levels. One factor that may have helped boost January pay: turn-of-the-year minimum-wage increases in 19 states. A broad measure of unemployment and underemployment, known as the U-6, was 9.4% in January. That was its highest level since October and nearly twice the level of the official jobless rate, which is known as the U-3. The measure includes discouraged job-seekers who have stopped looking for work, other people marginally attached to the labor force, and part-time employees who say they want but can’t find full-time work. As of January, 24.4% of unemployed Americans had been out of work longer than six months. That was 1.9 million people, a figure that fell by 244,000 over the previous 12 months. Long-term unemployment remains elevated from prerecession levels, though it has come down since peaking in mid-2010 at a little less than half of the unemployed population.

January Jobs Report: Surprising 227K New Jobs, Better Than Expected - This morning's employment report for January showed a 227K increase in total nonfarm payrolls. The unemployment rate ticked upward from 4.7% to 4.8%. The Investing.com consensus was for 175K new jobs and the unemployment rate to remain at 4.7%. Revisions were made to total nonfarm payrolls for all of 2016. Here are two excerpts from the Employment Situation Summary released this morning by the Bureau of Labor Statistics: Total nonfarm payroll employment increased by 227,000 in January, and the unemployment rate was little changed at 4.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in retail trade, construction, and financial activities. Here is a snapshot of the monthly percent change in Nonfarm Employment since 2000. We've added a 12-month moving average to highlight the long-term trend. The unemployment peak for the current cycle was 10.0% in October 2009. The chart here shows the pattern of unemployment, recessions and the S&P Composite since 1948. Unemployment is usually a lagging indicator that moves inversely with equity prices (top series in the chart). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The mirror relationship appears to be repeating itself with the most recent and previous bear markets.Now let's take a look at the unemployment rate as a recession indicator, or more specifically the cyclical troughs in the UR as a recession indicator. The next chart features a 12-month moving average of the UR with the troughs highlighted. As the inset table shows, the correlation between the MA troughs and recession starts is remarkably close. We've added another chart to illustrate the reality of the unemployment rate - the unemployment rate divided by the labor force participation rate. The next chart shows the unemployment rate for the civilian population unemployed 27 weeks and over. This rate has fallen significantly since its 4.4% all-time peak in April 2010. It is now at 1.2%, up from 1.1% the previous month.

Jobs report: Solid jobs gains in January and a focus on wages (yes, they’re up, but no overheating in sight) - Jared Bernstein - The US job market continues to deliver solid job gains, as the nation’s payrolls rose 227,000 last month, the strongest month for payroll gains since last September. The unemployment rate ticked up slightly to 4.8 percent, due largely to an increase in labor force participation, a positive indicator of more workers drawn into the improving job market. Average wages were up 2.5 percent over the past year, a slight deceleration from recent months, but still beating recent inflation, meaning that, at least on average, real paychecks have been gaining some buying power. This month’s smoother, which boosts the data’s signal-to-noise ratio by taking averages in monthly job changes over 3-, 6-, and 12-month windows, shows steady employment growth in the range of about 185,000-195,000 per month. Construction employment was up 36,000 over the month. Residential building has boosted job growth in the sector, accounting for three-fourths of the 170,000 jobs gained in construction over the past year. Restaurants and bars added 30,000 jobs, building on a solid trend with jobs up 286,000 jobs over the past year and providing an indicator of healthy consumer spending. Health care employment, driven in no small part by health care reform and its sharp increase in insurance coverage of millions of Americans, was up 18,000 in January and 374,000 over the year.  While the job market continues to improve, there are still some concerning indicators. The underemployment rate (or U-6 in BLS terminology; see figure), which adds involuntary part-timers to the unemployment rate, along with smaller groups of people not looking for jobs because they couldn’t find work (“discouraged” workers), has been stuck around the mid-9’s. My analysis suggests that at full employment this measure should be around 8.5 percent (that’s U-6*). Also, while the tick up in the participation rate is welcomed, it remains well below its pre-recession peak, including for prime-age (25-54) workers, meaning this is not purely a benign story of retirees aging out of the workforce. At 78.2 percent, where it has been stuck since October, this prime-age employment rate is still two full percentage points below where it was before the Great Recession. A tighter labor market offering better jobs could likely pull some of these working-age folks into the workforce.

January Employment Rises Sharply -  Private-sector employment rebounded in January, beating expectations by a wide margin, according to this morning’s release from the US Labor Department. US companies added 237,000 workers last month, the strongest monthly increase since last July and well above December’s modest gain of 165,000. The revival in growth lifted the year-over-year trend, too, boosting the annual pace for the first time in five months. Private payrolls rose 1.80% in January vs. the year-earlier level, a modest improvement over December’s 1.70% advance — a six-year low.One weak spot in today’s report is weaker wage growth. Average hourly earnings increased 2.5% in year-over-year terms, the softest gain since last August. That’s disappointing, but the upbeat numbers for payrolls implies that a firmer wage trend may be coming.A revival in job growth is, of course, a step in the right direction but it’s not obvious that the slow deceleration in the trend has stabilized, much less reversed. Keep in mind that the annual rate of job growth has been slowing for two years, punctuated by brief respites along the way. Perhaps the trend will stabilize, which is a reasonable guesstimate in the wake of today’s release. But one good month for the labor market is hardly a game changer and so it’s still prudent to assume that the employment trend will drift lower, albeit in a non-threatening degree for the foreseeable future.Recent data surely leaves little room for pessimism. Yesterday’s jobless claims report, for instance, was clearly bullish… again. New filings for unemployment benefits fell to a seasonally adjusted 246,000 for the week through Jan. 28 – close to a multi-decade low. This leading indicator for the labor market continues to signal the all-clear for the near-term outlook. “The number [for payrolls growth] is pretty right on target with the really positive momentum that we’ve seen in many of the markets over the last three to four months, particularly since the election,” says Tony Bedikian, head of global markets at Citizens Bank, via CNBC. “This keeps the trajectory of optimism on course.” Fair enough, but the data still points to a deceleration in growth for payrolls. The good news is that the slowdown is gradual, which implies that a moderate expansion can roll on for quite some time before the trend looks worrisome. In turn, that buys the Trump administration time to roll out its plan for boosting economic growth through tax cuts, lighter regulation, and new infrastructure spending. Will it work? No one really knows at this point. The good news is that the labor market is in no imminent danger of slipping over to the dark side.

Job Growth on Stable Course as Employment Rate Rises -  Dean Baker --The unemployment rate inched up in January to 4.8 percent, as the economy reportedly added 227,000 jobs. The modest change in the unemployment rate was also associated with a rise in the employment-to-population ratio (EPOP) to 59.9 percent. This is equal to the previous high for the recovery in March of last year. The jobs growth figure was somewhat higher than had generally been expected, but is somewhat offset by the fact that the prior months’ numbers were revised down by 39,000. While the rise in the EPOP is good news, it is still well below pre-recession levels. The drop remains even when looking at prime-age workers (ages 25-54), with the EPOP for prime-age men 2.7 percentage points below pre-recession peaks and the EPOP for women is down 1.5 percentage points. The overall EPOP for African Americans hit a new high for the recovery, at 57.5 percent. While these data are erratic, the January figure is more than a full percentage point above the year-round average for 2016. Other data in the household survey were mixed, notably there was a substantial decline in the share of unemployment due to voluntary quits. The January percentage was 11.4 percent, 1.1 percentage point below its November peak. This measure of workers’ confidence in their labor market prospects is almost a full percentage point below the pre-recession peak of 12.3 percent, and almost four percentage points below the 15.2 percent peak in April of 2000.  Wage growth appears to have moderated slightly in the most recent data. The average hourly wage in January was 2.5 percent above its year-ago level. Comparing the average for the last three months with the prior three months, wages grew at just a 2.2 percent annual rate. It is worth remembering that there is some shift from non-wage benefits such as health care to wages, so that wage growth exceeds to some extent the rate of growth of compensation. The Employment Cost Index rose by just 2.2 percent over the last year. The January job gains were likely in part attributable to weather, as there were few serious snowstorms in the northeast and Midwest in the period preceding the reference week, which is unusual for January. This could suggest somewhat weaker growth going forward. It is also worth noting the continued weakness in hours. Although the number of jobs has increased by 1.6 percent over the last year, the aggregate weekly hours index has risen by just 1.1 percent.  On the whole the report shows a labor force that is growing at a respectable, but not overly rapid rate. There is no evidence of overheating in the form of accelerating wage growth or longer workweeks. However by any measure the last jobs report of the Obama years is hugely better than the first one.

A Healthy Labor Market For The New Year - U.S. Economic Snapshot (10 graphs) January employment numbers released by the BLS reveal a 227,000 increase in payroll employment, but a 40,000 decrease in November after the final revision and a 1,000 increase to December. Total private employment, however, was up 237,000 as the government shed 10,000 jobs. The service sector showed the largest increase with 192,000 more jobs. Mining and logging (oil largely) increased for the third consecutive month. Average job growth for the last three months is 183,000 similar to what it was in 2015. This is not spectacular, but it is steady.   Average weekly hours remained at 34.4 and average hourly earnings increased very slightly, from $25.97 to $26.00. The household survey showed an increase in the labor force, the participation rate climbing to 62.9% and the employment to population ratio increased to 59.9. This is encouraging if it signals that workers who have been sitting on the sidelines are coming back into the labor force. However, the number employed fell somewhat and those unemployed rose, so that the unemployment rate increased slightly, from 4.72% to 4.78%. The number unemployed 27 weeks or longer ticked up slightly. The productivity report on February 2 revealed a 1.3% increase in output per hour for the fourth quarter of 2016. Output increased 2.2% and hours increased 0.9%. Unit labor cost rose 1.7%, reflecting a 3.0% increase in hourly compensation alongside the 1.3% increase in productivity.The overall labor market picture is one of steady progress but not much pressure on wages. This sets the table well for the Fed’s plan to gradually raise rates over the course of the year. There is no reason to hurry and no real reason to back away from their plan.

The January Jobs Report in 10 Charts - The U.S. economy added 227,000 jobs in January and more Americans joined the labor force, while wages rose modestly.  The official unemployment rate was 4.8% in January. But as a candidate, President Donald Trump often favored broader measures of unemployment, that include discouraged workers or workers who have part-time work but want full-time jobs. The rate that includes all discouraged and marginally attached workers (known as U-5) was 5.8% in January, while the broadest underemployment measure that includes part-time workers who want full-time jobs stood at 9.4%. . Average hourly earnings rose 2.5% from a year earlier, the smallest year-over-year gain since last March. Average weekly earnings were up 1.9%, the lowest gain in six months. . Total payrolls are up around 1.6% from a year earlier. This level of growth is down from the 1.9% rate of increase in early 2016. . The share of Americans that are employed climbed to 59.9% from 59.7%, matching the postrecession high. The share of Americans in the labor force—defined as those with jobs, or actively looking for work, also climbed to 62.9% from 62.7%. Both measures, however, remain significantly below the levels that were seen prior to the last two recessions. . Among the overall population, labor-force participation is dropping largely due to the retirement of the baby-boomer generation. But even among workers in their prime working years—from 25 to 54—when few people are in school or retired, employment and labor-force participation remain lower than before the recession. . The share of unemployed Americans who are leaving the labor force has fallen to its lowest level in more than 25 years. . The share of Americans who are finding jobs from outside the labor force remains higher than it was earlier in the current expansion, but lower than in past expansions. . Unemployment is considerably lower for those with higher levels of educational attainment. The unemployment rate for those with a college degree has hovered near 2.5% for the past two years, while unemployment for those without a high-school degree was 7.7% in January. . The difference in unemployment rates between men and women has narrowed since the recession ended, but unemployment rates are significantly different along racial lines. . The median spell of unemployment lasts for just over 10 weeks. That’s significantly better than the 25 weeks that was typical in mid-2010, but significantly longer periods of unemployment than were seen in the late 1990s or mid-2000s.

January 2017 BLS Jobs Situation Improves? -  The headline seasonally adjusted BLS job growth was strong. There were issues with the headlines. The headlines were at odds with the household survey (which showed employment declining) - and also at odds with the unadjusted data (which showed average employment decline for Januarys). This month the data was re-benchmarked: Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors using an improved methodology to select models. Also, household survey data for January 2017 reflect updated population estimates. The rate of growth for employment significantly improved this month (red line on graph below). This is a year-over-year analysis which has no seasonality issues.

• The unadjusted jobs decrease month-over-month was around average for times of economic expansion.
• Economic intuitive sectors of employment were mixed.
• This month's report internals (comparing household to establishment data sets) was fairly inconsistent with the household survey showing seasonally adjusted employment declining 30,000 vs the headline establishment number of growing 237,000. The point here is that part of the headlines are from the household survey (such as the unemployment rate) and part is from the establishment survey (job growth). From a survey control point of view - the common element is jobs growth - and if they do not match, your confidence in either survey is diminished. [note that the household survey includes ALL jobs growth, not just non-farm).
• The household survey added 76,000 people from the workforce - this is one of the reasons the unemployment rate worsened.
• The NFIB statement on jobs growth this month is at the end of this post.
• BLS reported: 227K (non-farm) and 237K (non-farm private). Unemployment rate was up 0.1 % to 4.8 %.
• ADP reported: --- 246K (non-farm private)
• In Econintersect's January 2017 economic forecast released in late December, we estimated non-farm private payroll growth at 100,000 (based on economic potential) and 150,000 (fudged based on current overrun of economic potential);

Full-Time Jobs Soar By 457K To Record High; Part-Time Jobs Tumble By 490K -- While Trump will surely point to the record drop in people not in the labor force - in addition to the overall 227K jobs gained - as proof he is starting off on the right foot (not to mention the S&P which remains within a fraction of all time highs), one other aspect of today's jobs report the President will likely highlight is that in January, the recent trend of "part-timing" the US labor force abruptly reversed, and according to the Establishment Survey, the number of full-time jobs surged by 457K in January to a new all time high of 124,705K.  At the same time, part-time jobs tumbled by 490,000 to 27,405K, the biggest monthly drop since last June.

Where The January Jobs Were --While in recent months, we had documented that job growth was mostly observed in lower, or minimum-wage paying, jobs, in January, when as the BLS earlier reported the US added some 227K jobs, the increase was uniform across virtually all job sectors, with only Government and Transportation and Warehousing jobs declining by 10,000 and 4,000, respectively. All other sectors saw an increase in employees. The breakdown is as follows:

• Retail jobs rose by 46,000 in January, and by 229,000 in 2016. Three industries added jobs in January--clothing and clothing accessories stores (+18,000), electronics and appliance stores (+8,000), and furniture and home furnishings stores (+6,000). We find this surprising in light of the mass layoff announcements reported by retailers in recent months.
• Construction jobs rose by 36,000. Residential building added 9,000 jobs over the month, while residential specialty trade contractors added +11,000. Over the past 12 months, the US has added 170,000 jobs.
• Financial jobs rose by 32,000 jobs in January, with gains in real estate (+10,000), insurance carriers and related activities (+9,000), and credit intermediation and related activities (+9,000). Financial activities added an average of 15,000 jobs per month in 2016.
• Employment in professional and technical services rose by 23,000, in line with the average monthly gain in 2016. Over the month, job gains occurred in computer systems design and related services (+13,000).
• Food services and drinking places jobs - i.e., waiters and bartenders - continued to trend up in January (+30,000). This industry added 286,000 jobs over the past 12 months, and continues to
• Health care jobs added another +18,000 positions, following a gain of 41,000 in December. The industry has added 374,000 jobs over the past 12 months.
• Employment in other major industries, including mining and logging, manufacturing, wholesale trade, transportation and warehousing, information, and government, showed little change over the month.

And visually:

Comments: Another Solid Employment Report - The headline jobs number was above expectations, however there were combined downward revisions to the previous two months. Overall this was a solid report. In January, the year-over-year change was 2.34 million jobs. This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.  The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.5% YoY in January.   This is generally trending up, but this index is noisy and the pace of wage growth slowed in January. Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old. The 25 to 54 participation rate was unchanged in January at 81.5%, and the 25 to 54 employment population ratio was unchanged at 78.2%. The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more. The number of persons working part time for economic reasons increased in January. This level suggests slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that increased to 9.4% in January. This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.85 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 1.83 million in December. This is generally trending down, but still elevated.

Latest Employment Dynamics Data Show Worrisome Decline In Labor Market Fluidity --The monthly employment situation report from the Bureau of Labor Statistics always makes headlines, but other BLS data, although less closely watched, can reveal long-term trends that are even more important. The latest data on business employment dynamics are a case in point.The Business Employment Dynamics project tracks data on total jobs created and destroyed by US firms, based on a quarterly sample survey. Unlike the monthly jobs data, it looks separately at jobs created by new and expanding firms and jobs destroyed by firms that close or contract. The chart shows those data through Q2 2016.  One's first impulse, in looking at the employment dynamics data, is to focus on net job gains. The data show an unbroken string of net job gains since the beginning of the recovery from the Great Recession. That is certainly good news, even if it only confirms what we already knew from the monthly payroll jobs data. If we read the chart differently, though, we get a picture of long-term trends that is not so favorable. Suppose that instead of subtracting job losses from job gains, we add the two numbers. That gives us a measure that economists call the job reallocation rate. What does this unfamiliar number tell us that data on net job gains do not?

Trump’s employment goals would require massive immigration or forcing elderly Americans to work at unprecedented rates -- On the White House website, the Trump administration announced a new goal of adding 25 million new jobs over the next ten years, an extraordinarily audacious, or simply innumerate, target. If their plan were successful, it would require raising employment rates well above what we can realistically hope for given the aging of the population and historical evidence on these rates. Now I happen to love optimistic agendas, but to the extent that this goal is not fantasy based on “alternative facts,” it can mean only one of two things: either the United States needs an enormous influx of immigrants, or a much higher share of the elderly population needs to be put to work. The addition of 25 million new jobs would bring the number of employed from 152 million to about 177 million workers, which the administration hopes to achieve in ten years. Note that this is a very generous interpretation of the administration’s target, because the Congressional Budget Office (CBO) already projects 2027 employment to be higher by about 8 million, largely due to population growth. So if the administration gets 8 million jobs for free, where would the remaining 17 million jobs come from? One simple way to make some progress toward the employment goal is to significantly increase immigration. Given that the Trump administration is more focused on limiting access to the United States rather than expanding the role of immigrants, I can likely dismiss increased immigration as part of their grand plan.  Since the American population is aging —the age 65 and over share of the population is expected to rise from 19.3 percent in 2016 to 24.1 percent in 2027—the administration would need elderly individuals to work at much higher rates than they do now.  If other age groups don’t raise their employment rates above prior peaks, we would need the employed share of the elderly to soar to 32.3 percent in 2027 from 18.6 percent in 2016.

“The End of Employees” -- Yves Smith -- The Wall Street Journal has an important new story, The End of Employees, on how the big company love of outsourcing means that traditional employment has declined and is expected to fall further. Some key sections of the article: Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.The men and women who unload shipping containers at Wal-Mart Stores Inc. warehouses are provided by trucking company Schneider National Inc.’s logistics operation, which in turn subcontracts with temporary-staffing agencies. Pfizer Inc. used contractors to perform the majority of its clinical drug trials last year…. The shift is radically altering what it means to be a company and a worker. More flexibility for companies to shrink the size of their employee base, pay and benefits means less job security for workers. Rising from the mailroom to a corner office is harder now that outsourced jobs are no longer part of the workforce from which star performers are promoted…For workers, the changes often lead to lower pay and make it surprisingly hard to answer the simple question “Where do you work?” Some economists say the parallel workforce created by the rise of contracting is helping to fuel income inequality between people who do the same jobs. No one knows how many Americans work as contractors, because they don’t fit neatly into the job categories tracked by government agencies. Rough estimates by economists range from 3% to 14% of the nation’s workforce, or as many as 20 million people. As you can see, the story projects this as an unstoppable trend. The article is mainly full of success stories, which naturally is what companies would want to talk about. The alleged benefits are two-fold: that specialist contractors can do a better job of managing non-core activities because they are specialists and have higher skills and that using outside help keeps companies lean and allows them to be more “agile”.

Republicans are poised to repeal important worker protections, starting with the requirement that federal contractors play fair -- The Obama administration instituted a series of executive orders to raise wages and benefits, improve worker safety, and reduce discrimination for workers on federal contracts.  Approximately 25 percent of the U.S. workforce is employed by companies that do business with the federal government, according to the Office of Federal Contract Compliance Programs, so measures that relate to workers employed by federal contractors can have a broad impact on the workforce.  Tomorrow, congressional Republicans will begin the process of repealing the rule implementing the previous administration’s executive order on Fair Pay and Safe Workplaces.  Using the Congressional Review Act (CRA), which provides for expedited procedures for considering a joint resolution disapproving a final rule, they will take aim at this measure designed to protect workers.  It is likely that they will succeed, sending the resolution to President Trump’s desk as early as this week.   President Trump will then have the opportunity to veto the resolution.  For Trump to remain true to his campaign promises to defend U.S. workers, that is exactly what he must do. Under the CRA, a resolution of disapproval cannot be filibustered in the Senate, and thus requires only a majority for passage. Any resolution of disapproval that is enacted invalidates not only the rule in question, but, in most cases, also prevents an agency from issuing another rule in “substantially the same form” as the disapproved rule unless authorized to do so in a subsequent law (5 U.S.C. § 801(b)(2). Therefore, if the Fair Pay and Safe Workplaces rule is invalidated under CRA, it is unlikely that another rule addressing labor and employment law violations in federal contracting would be promulgated, leaving workers unprotected and law-abiding contractors exposed to unfair competition from businesses that don’t play by the rules. Without the transparency required by the rule, American taxpayer dollars will continue to support employers that violate basic wage and hour laws, safety regulations, and anti-discrimination protections.

 It’s the Poverty, Stupid, Not Trump’s Imagined Carnage -- On Tuesday, Trump tweeted at Chicago, his designated urban-carnage center, declaring he would send in “the Feds” unless Mayor Rahm Emanuel, who also happens to have been President Obama’s first chief of staff, and other city officials figured out how to quell gun violence. It is a fact that Chicago has had the highest number of murders in the country over the past five years. However, there are more than a dozen cities, including Miami, New Orleans, and Washington, D.C., that have higher per capita homicide rates.  Most municipal leaders understand that crime reduction hinges on addressing multiple underlying economic factors like poverty, which requires dollars and innovative strategies, not beatdowns. Chicago officials want more federal funding for education, economic development, and gun control, not the National Guard. Indeed, poverty is the top economic issue for both Democratic and Republican mayors in the United States, as we know from the Boston University Initiative on Cities, which tallied the responses from 102 mayors in cities of 75,000 or more in 41 states for its recent 2016 Menino Survey of Mayors. The mayors’ top two policy priorities are quality-of-life issues, a category that includes crime and policing, and economic development. But Boston University researchers noted that their third priority, socioeconomic issues like poverty, was “more unexpected,” explaining that “while cities naturally face high demands to support lower income residents, redistributive policies traditionally fall to higher levels of government.”

  Waste Not, Want Not: Right to Repair Laws on Agenda in Some States -- Jerri-Lynn Scofield --Motherboard reports that five states have resurrected legislation that would mandate a right to repair consumer electronics. These states are Kansas, Massachusetts, Minnesota, Nebraska, and New York. The bills would require companies to make replacement parts available to independent repair shops, as well as make public diagnostic and servicing manuals, and are aimed to dismantle the exclusive aftermarket repair market that limits repairs to the original manufacturers. Allowing such monopoly arrangements to continue unchallenged allows original manufacturers to dominate aftermarket repairs. And this status quo imposes more than mere economic costs on consumers. It also creates unnecessary electronics waste that burdens the environment: first in consuming more resources to produce unnecessary products, and in requiring disposal of devices that are at best imperfectly recycled and contain many hazardous materials. Manufacturer control over original spare parts forces independent repair shops either to scavenge broken devices for parts, or to turn to grey market sources of supply. As another Motherboard piece, How to Fix Everything, describes, the Department of Homeland Security and federal customs agents have conducted raids on such shops for using allegedly “counterfeit” parts in their repairs. This is not the first time that state legislatures have considered right to repair legislation.   In 2012, following a direct ballot initiative that saw 86% of those voting supporting the measure, Massachusetts passed the first automotive right to repair bill, and that eventually became the basis for a nationwide policy. Auto manufacturers themselves promoted a federal policy out of concern that otherwise they might have to deal with 50 competing state statutory variants on the same theme.

 California Threatens To Cut Off Funds To Washington -- With secession threats looming, the state of California is reportedly studying ways to suspend financial transfers to Washington after the Trump administration threatened to withhold federal money from sanctuary cities.With California counties among the Top 10 who stand to lose tax-payer funding for providing sanctuary to illegal immigrants... KPIX5 reports that officials are looking for money that flows through Sacramento to the federal government that could be used to offset the potential loss of billions of dollars’ worth of federal funds if President Trump makes good on his threat to punish cities and states that don’t cooperate with federal agents’ requests to turn over undocumented immigrants, a senior government source in Sacramento said.The federal funds pay for a variety of state and local programs from law enforcement to homeless shelters. “California could very well become an organized non-payer,” said Willie Brown, Jr, a former speaker of the state Assembly in an interview recorded Friday for KPIX 5’s Sunday morning news.“They could recommend non-compliance with the federal tax code.” California is among a handful of so-called “donor states,” which pay more in taxes to the federal Treasury than they receive in government funding.

California Considering Legislation To Become First Ever Sanctuary State – We've written frequently in recent weeks/months about the brewing battle between the Trump administration and so-called "sanctuary cities" where local police officers are specifically instructed to ignore federal immigration laws.  Now, the leftist state of California is considering a new senate bill that would have the entire state become America's first "sanctuary state." According to CBS Los Angeles, Senate Bill 54, written by Senate President Pro Tem Kevin de Leon of Los Angeles, will come to the floor for it's first public hearing today.  While Democrat-controlled cities like Los Angeles, San
Francisco and Sacramento are already considered sanctuary cities, SB54 would enforce the same protections for illegal immigrants on more conservative California cities in the San Joaquin Valley and elsewhere.As if that weren't enough, CBS points out that the bill will also consider providing taxpayer dollars to fund lawyers for illegal immigrants facing deportation. California may prohibit local law enforcement from cooperating with federal immigration authorities, creating a border-to-border sanctuary in the nation’s largest state as legislative Democrats ramp up their efforts to battle President Donald Trump’s migration policies. While many of California’s largest cities — including Los Angeles, San Francisco and Sacramento — have so-called sanctuary policies that prohibit police from cooperating with immigration authorities, much of the state does not. The Democratic legislation, written by Senate President Pro Tem Kevin de Leon of Los Angeles, comes up for debate less than a week after Trump signed an order threatening to withdraw some federal grants from jurisdictions that bar officials from communicating with federal authorities about someone’s immigration status.

Puerto Rico Defaults on Multimillion-Dollar Debt Amid Crisis - ABC News: Puerto Rico's government on Wednesday announced another multimillion-dollar default as the crisis-wracked U.S. territory seeks to restructure nearly $70 billion in public debt. The government said it missed $312 million worth of bond payments including $279 million owed by Puerto Rico's Government Development Bank, which oversaw debt transactions until falling into a fiscal state of emergency itself. Officials warned the bank only has about $156 million in liquidity. The government said the remaining payments missed involve general obligation bonds backed by the island's constitution and those issued by Puerto Rico's public finance and infrastructure agencies. However, the U.S. territory paid $295 million worth of interest due on some debt, including a portion backed by a local sales tax and on bonds issued by agencies including the Aqueduct and Sewer Authority and the Highways and Transportation Authority, according to spokesman Elliot Rivera. Both Gov. Ricardo Rossello and his predecessor have favored payments to those holding bonds backed by a local sales tax versus general obligation bondholders. "It's very difficult to please everybody," said economist Vicente Feliciano, noting that a federal control board that oversees Puerto Rico's finances is seeking to set aside $800 million for debt payments when more than $3 billion will be due in upcoming years

How do you balance a budget when debts are exploding and your population is fleeing? - It’s not easy to balance the budget in a state like Illinois, with crippling debts and a shrinking tax base. The only way to get the job done is to rein in spending and reform the root of the state’s spending problems: namely the broken pension system and expensive collective bargaining agreements. But Illinois politicians have spurned these measures and haven’t passed a balanced budget since 2001. The state’s debts have been skyrocketing for decades. Meanwhile, Illinois – the only shrinking state in the region – has had its’ population decline for three consecutive years as a result of massive out-migration to other states. In the most recent year of U.S. Census Bureau data, Illinois’ population shrank by 37,500.Illinois needs more economic growth and more taxpayers chipping in to fund massive, growing debts, but job creation is stagnant and people are fleeing for the nearest border. Yet, despite Illinois being in such an obvious bind, the state legislature has repeatedly proposed massive tax increases on the population. The logic simply doesn’t make sense. Taxpayers are fleeing, and the state population is shrinking. If Illinois can’t fund its debt with its current population, how will the state fund its future, larger debt with a presumably smaller population?

 NYC Plans New Facial Recognition Cameras At Bridges, Tunnels (& Here's How To Dodge Them) --The state of New York has privately asked surveillance companies to pitch a vast camera system that would scan and identify people who drive in and out of New York City, according to a December memo obtained by Vocativ. As big brother tactics continue to creep quietly into Americans' everyday lives, here are six ways to dodge biometric verification... As Vocativ.com reports, the call for private companies to submit plans is part of Governor Andrew Cuomo’s major infrastructure package, which he introduced in October.Though much of the related proposals would be indisputably welcome to most New Yorkers — renovating airports and improving public transportation — a little-noticed detail included installing cameras to “test emerging facial recognition software and equipment.”“This is a highly advanced system they’re asking for,” said Clare Garvie, an associate at Georgetown University’s Center for Privacy and Technology, and who specializes in police use of face recognition technologies. “This is going to be terabytes — if not petabytes — of data, and multiple cameras running 24 hours a day. In order to be face recognition compliant they probably have to be pretty high definition.”Cuomo’s office didn’t respond to multiple requests for clarification in the ensuing weeks after his announcement. But a memo from the Metropolitan Transit Authority’s Bridges and Tunnels division, obtained through a Freedom of Information Act request, shows that on December 12, the MTA put out a call to an unknown group of private vendors of surveillance equipment. The proposed system would both scan drivers as they approached or crossed most of the city’s bridges and tunnels at high speeds, and would also capture and pair those photos with the license plates of their cars.

Ransomware completely shuts down Ohio town government -- In another interesting example of what happens when you don’t manage your backups correctly, the Licking County government offices, including the police force, have been shut down by ransomware. Although details are sparse, it’s clear that someone in the office caught a bug in a phishing scam or by downloading it and now their servers are locked up. Wrote Kent Mallett of the Newark Advocate: The virus, accompanied by a financial demand, is labeled ransomware, which has hit several local governments in Ohio and was the subject of a warning from the state auditor last summer.All county offices remain open, but online access and landline telephones are not available for those on the county system. The shutdown is expected to continue at least the rest of the week.The county government offices, including 911 dispatch, currently must work without computers or office phones. “The public can still call 911 for emergency police, fire or medical response,” wrote Mallett. These sorts of attacks are becoming more commonplace and, as mentioned before, can be avoided with good backup practices. Sadly not every computer in every hospital, county office or police department is connected to a nicely journaled and spacious hard drive, so these things will happen more and more. Luckily it improves cryptocurrency popularity as these small office finally give up and buy bitcoin to pay their ransom.

South Dakota Senate sends ethics law repeal to governor (AP) — New ethics regulations that South Dakota voters imposed in November are all but stripped from law after the state Senate voted Wednesday to send a bill repealing them to Gov. Dennis Daugaard. The chamber voted 27-8 to pass the repeal bill, which the Republican governor has said he supports. It would dismantle a ballot initiative that instituted a public campaign finance system, created an ethics commission and tightened campaign finance and lobbying laws. The ethics crackdown is one of several November ballot measures that are now facing scrutiny in statehouses across the nation. But the South Dakota law appears to be under the most imminent danger of repeal and directly affects the very lawmakers who are weighing its fate. Elsewhere, Maine Gov. Paul LePage has said he wants to mitigate the “severe” damage done by citizen initiatives, including a minimum wage hike, while Massachusetts and North Dakota have delayed marijuana initiatives to give officials more time to implement them. In South Dakota, backers have criticized the Legislature for working to overturn the result of the election. The bill first passed through the House before heading to the Senate.

 How Kids Displaced Dads as Rulers of the Household, According to Economists -- Children are displacing dads as the ones who rule the roost in American households, new economic research suggests. A paper by economists at the University of Maryland and Indiana University contends that the rise in two-income households and the decrease in the number of children couples are having is upending traditional power dynamics in U.S. families.  A century ago, Dad’s role as the sole breadwinner earned him a high degree of respect from his wife and children, the researchers say. For instance, if the kids wanted to buy something of value, Dad ultimately had to sign off because he was the one making the money. As female labor participation began picking up in the 1970s, and the distribution of spouses’ earnings narrowed, women gained more leverage inside the family. They, too, could write checks to send their kids to summer camp, and demand good behavior as a condition of doling out such resources. That helped trigger more competition between spouses for their children’s love and affection, the researchers say.  And while women’s power gain from this shift is notable, perhaps more surprising is that its correspondence with couples having fewer kids ultimately left children with more leverage. The average number of children per household fell by about 0.9 between 1900 and 2010, according to the paper, which was published via the National Bureau of Economic Research. That drop in family size reduced competition between the children for resources from their parents, giving the kids more muscle inside the household.  “Both things push in the direction of having kids get more,”

Pa. school administrators say cash-strapped districts are 'treading water': Pennsylvania public schools continue to “tread water” in the face of rising mandated costs and decreasing or stagnant revenues that have forced them to raise taxes, cut programs and staff, and borrow money, according to an annual report released Wednesday by two school administrator organizations. The report from the Pennsylvania Association of School Administrators (PASA) and the Pennsylvania Association of School Business Officials (PASBO), which surveyed 361 districts, was not entirely bleak. It noted that the financial picture for many districts improved this year after the Pennsylvania legislature signed into law a new student-weighted funding formula and passed an on-time budget with $200 million in new Basic Education Funding. “They were thrown a life vest,” the report said. The report comes six days before Gov. Wolf is to present his budget proposal for next year, in which school funding is likely to again play a major role. The governor has not yet said how he plans to fill a potentially historic budget shortfall, except to say it won’t be with new or increased broad-based taxes, such as sales or income taxes. With an estimated deficit of $2.8 billion looming in Wolf's budget, districts are not optimistic about the future, according to the PASA-PASBO Report on School District Budgets.

DeVos Set to Take Over System Where Test Scores Have Stalled - WSJ  If confirmed as education secretary by the U.S. Senate, Betsy DeVos will take over a national education system with an improving graduation rate but stagnant test scores, despite a reform effort under the Obama administration that pumped billions of dollars into the worst-performing schools.Ms. DeVos, President Donald Trump’s nominee, passed a key Senate committee vote on Tuesday, but she faces what could be a close vote in the full Senate, likely sometime next week. She would likely maintain her commitment to expand the use of charter schools and vouchers for students to attend private school, a departure for a top administrator of an education system built largely on traditional public schools.“I’m a firm believer that parents should be empowered to choose the learning environment that’s best for each of their individual children,” Ms. DeVos said during her confirmation hearing in January.  Ms. DeVos, who declined to be interviewed for this article, has spent decades advocating for the school-choice movement and was an architect of Detroit’s charter system. She hasn’t provided an overarching plan for education, but Mr. Trump has said he would prioritize steering an additional $20 billion of federal funds to school choice. Under the administration of former President Barack Obama, billions of dollars in grants have targeted struggling schools and charter enrollment has grown. The administration also used competitive grants to nudge states to adopt Common Core, academic standards that outlined what students should know in reading and math.

 Elite US colleges have more students from the top 1% than from the bottom 50% -- Elite US universities tend to recruit from the top of the income distribution. A study recently released by the Equality of Opportunity Project investigated the role of college in intergenerational class mobility. Among other topics, the research team, led by Stanford University economist Raj Chetty, used income-tax and college-enrollment data to look at the distribution of students by parental income at what the team called "Ivy Plus" schools: The eight universities of the Ivy League along with the University of Chicago, Stanford, MIT, and Duke. The researchers found a stunning result: At these 12 colleges, 14.5% of students came from families in the top 1% of the income distribution, while just 13.5% came from the bottom 50%.  Equality of Opportunity Project  Check out the full slideshow here

Trump Threatens To Pull U.C. Berkeley Funds After Violent Protesters Cancel Yiannopoulos Speech  -In the latest crackdown by less than tolerant liberals against free speech, on Wednesday night hundreds of protesters at University of California in Berkeley smashed windows, set fires and clashed with police as they forced a controversial "alt-right" speaker to cancel his appearance at the liberal-leaning institution.Two hours before Breitbart News editor Milo Yiannopoulos was to give a speech at the student union, protesters tossed metal barricades and rocks through the building's windows and set a light generator on fire near the entrance, footage from news outlets showed.Just toppled a light pole. Craziest protest I've seen in Berkeley by far. Crowd fast turning violent. pic.twitter.com/5ujFLOtA4u  Police ordered protesters to disperse as the school put the campus on lockdown. Protesters also tossed bricks and fireworks at police in riot gear who fired rubber pellets back at the crowd, according to SFGate.com, a news outlet in San Francisco. "We shut down the event. It was great. Mission accomplished," a protester told CNN. On Thursday morning, in a barrage of tweets that touched on topics as far ranging as Rex Tillerson, to the death of Navy SEAL Ryan Owens to the Iran ballistic missile test, Trump also lashed out at UC Berkley, and hinted that the university which "does not allow free speech and practices violence on innocent people with a different point of view" may see its federal funding yanked. If U.C. Berkeley does not allow free speech and practices violence on innocent people with a different point of view - NO FEDERAL FUNDS? — Donald J. Trump (@realDonaldTrump) February 2, 2017

College Endowments Lose 1.9% in Worst Showing Since 2009  - U.S. college endowments suffered their biggest loss since the financial crisis, dragged down by global stocks, hedge funds and natural resources, according to an industry survey released Tuesday. The 1.9 percent average loss reported by the National Association of College and University Business Officers and money manager Commonfund in Wilton, Connecticut, for the year ended June 30, compared with a nearly 4 percent gain, with dividends, in the S&P 500 Index. In the prior 12-month period, schools saw a 2.4 percent return on average. The 10-year average return fell to 5 percent as a result of the tepid performance, well below the median 7.4 percent most say they expect to earn over time, according to the report. Yet 74 percent of respondents increased the amount spent from their endowments to support their institution. The average spending rate was 4.3 percent, up slightly from 4.2 percent a year earlier. “These below market long-term returns may make it even harder for institutions to maintain spending rates,” John D. Walda, Nacubo’s president, said on a conference call. Endowments were hampered by investments in non-U.S. equities, which declined 7.8 percent, energy and natural resources, which lost 7.5 percent, and commodities and managed futures, which were down 7.7 percent. Wealthier schools’ performance was dragged down by their larger allocations to riskier alternatives such as hedge funds. Hedge funds were among the worst performers for endowments of all sizes, with a 4.0 percent loss. Endowments with more than $1 billion declined 1.9 percent, the same as the average. These schools had 58 percent of their portfolios in alternative strategies, unlike schools under $25 million, which had 10 percent.

Endowment Gains Aren’t Enough for Schools Facing Rising Expenses  - Yale University’s $25.4 billion endowment declined in value last year even as it posted an investment gain. Like many colleges, Yale spent more than it earned in the year through June 30. School endowments contribute annually to student aid, faculty salaries and other costs in their operating budgets. Spending, which is often determined by three- or five-year averages of investment returns, is coming under increasing pressure as endowments struggle to keep up with historical results. Boards of trustees and investment committees are re-calibrating expectations for performance, said Paul Dimitruk, chairman of Partners Capital, which handles investments for clients including endowments and foundations. “Many sophisticated investors believe, as we do, that returns are going to be subpar from historical averages for as far out as we can see,” said Dimitruk, who is also on the investment committee at Denison University in Ohio. The value of Denison’s $716 million endowment fell 10 percent, reflecting spending and investment performance. College endowments had an average investment loss of 1.9 percent in fiscal 2016, according to a survey of 805 schools by the National Association of College and University Business Officers and money manager Commonfund. That’s the worst year since 2009.

America’s Student Debt Problem Is Much Bigger Than Anybody Realized -  The Department of Education recently released a memo admitting that repayment rates on student loans have been grossly exaggerated. Data from 99.8% of schools across the country has been manipulated to cover up growing problems with the $1.3 trillion in outstanding student loans. New calculations show that more than half of all borrowers from 1,000 different institutions have defaulted on or not paid back a single dollar of their loans over the last seven years. This comes in stark contrast to previous claims and should call into question any statistics provided by government agencies. The American people haven’t fully grasped the long-term implications of loaning a trillion dollars to young people who have no credit or assets. Increases in tuition seen over the past two decades have become a point of controversy and angst for those who don’t fully understand the contributing factors. Between 1995 and 2015, the average cost of a public, four-year university skyrocketed by well over 200%. Although federal student aid programs are often championed as a necessity, they have been instrumental in making higher education unaffordable. The opportunity to pay for college by working a part-time job evaporated as soon as huge sums of money were handed out to anyone with a pulse. Since students no longer pay their tuition upfront, colleges are able to raise prices in perpetuity, knowing the government will step in and make credit easier and easier to obtain. As an added bonus, outstanding student loans account for 45% of the government’s financial assets.

Why Those Student Loans Aren't Getting Paid Off - Last month, the US Department of Education admitted that a much larger number of students are defaulting on student loans than previously reported. According to the Wall Street Journal:  the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country. The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years. An earlier report released in April had stated that "More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind."44 million Americans have at least some student loan debt for a total of 1.26 trillion dollars. The overall delinquency rate for these loans is 11.1 percent.  If that seems like no big deal, just imagine if we were talking about similar numbers for home loans.  In the days following the foreclosure crisis of 2008 and 2009, approximately ten percent of home loans were 90-days delinquent. But today, in a period when employment and earnings are vastly better than what they were in 2010, the delinquency rate for student loans is more than 11 percent, and has been that way for four years. Imagine Indeed, the comparison with home loans appears apt, and can offer us some insights into what's wrong with the student loan process.  As with student loans, home loans are subsidized in a variety of ways, and this tends to drive up the price of the product being subsidized. But, with home loans, the terms of the loan are still at least partially based on the likelihood that the borrower will be able to pay back the loan. A borrower with low income and a poor credit history is going to pay more in interest and fees.  But, this is not how it's done with student loans. If student loans took default risk into account the way home loans do, students seeking engineering degrees or —other degrees that typically lead to higher wages — would cost the borrower less than would loans made to philosophy and art history majors.1 This is illustrated in a helpful calculator produced by the Hamilton Project at the Brookings Institutition in which students can calculate his or her likely debt burden based on program of study.

 Attorney General’s Opinion Says State Pension Fund Accounting Methods Illegal and Unconstitutional State  – State Treasurer Curtis Loftis has been saying for years the accounting system used to calculate the state pension system’s unfunded liability is reckless, unsound and deceives the public. For years, his concerns have been ignored. Now the Attorney General’s Office has weighed in with an official opinion, requested by Loftis, concluding that the accounting system is both illegal and unconstitutional. Read the 13 page opinion. Signed by Solicitor General Bob Cook of the S.C. Attorney General’s Office, the opinion says the “open amortization” method used by the S.C. Public Benefits Authority violates constitutional requirements for the retirement system to operate on a “sound actuarial basis.” Loftis says the unfunded liabilities built up by the State pension fund are now in the range of $24-40 billion dollars. “It’s impossible to give a more precise estimate,” Loftis said, “because the funds have been so grossly mismanaged.” Loftis urged the S.C. General Assembly to compel the Public Employee Benefit Authority to comply with state law and the State Constitution immediately. “I hope this independent legal opinion provided by our Attorney General’s Office will show once for all that our pension fund management system is a sham and a major scandal that threatens to bury our State in debt.”

Trump tells drug companies to 'get prices down' | TheHill: President Trump on Tuesday told a group of drug company executives gathered for a meeting at the White House that they need to "get prices down." "You folks have done a tremendous job but we have to get prices down," Trump said, according to a pool report. Trump has been a critic of high drug prices, and has endorsed measures like allowing Medicare to negotiate prices. But the president also called for reducing regulations to allow for faster approvals of new drugs and to allow drug companies to bring jobs back to the U.S. "We’re going to be cutting regulation at a level nobody's ever seen before," Trump said in the meeting with executives. "You can’t get approval for the plant and then you can’t get approval to make the drug, other than that you’re doing fantastic," he said. Trump called drug prices "astronomical." "U.S. drug companies have produced extraordinary results for our country, but the pricing has been astronomical for our country," he said. Still, he also offered to make the Food and Drug Administration's approval of new drugs "much faster."

Repealing The ACA Could Worsen The Opioid Epidemic - As our country grapples with an “unprecedented opioid epidemic,” Congress is taking steps to take away an important tool to fight it — the Affordable Care Act (ACA). The annual cost of the epidemic is estimated to be $78.5 billion. In 2014, there were more deaths from opioid and other drug overdose than any other year; 60.9 percent of those overdoses involved an opioid. Every day, an average of 78 Americans die from opioid abuse. The coverage expansions and protections under the ACA can help lessen the epidemic and save lives. Because of the ACA, an estimated 26 million people have health coverage through the marketplaces or Medicaid that includes substance use disorder (SUD) treatment and prevention. Additional people enrolled in new individual market or small group market plans outside the marketplace also now have SUD treatment covered because most individual and small employer insurance plans can no longer exclude SUD treatment. And, as Ohio Governor John Kasich recently noted, the Medicaid expansion is getting SUD treatment services to people in need.  In addition, coverage expansions under the ACA help people afford regular access to care, including mental health services and treatment of underlying conditions that can help to prevent SUD or allow for early identification and treatment. However, a repeal of the ACA would more than double the uninsured rate and, in the three states with the highest drug overdose deaths—Kentucky, New Hampshire, and West Virginia—a repeal would about triple the uninsured rate. Repealing the ACA will remove coverage for SUD treatment and prevention from millions of Americans, leaving a gap in care when it is most needed.

Hidden Distress Among Well-Off Women in America – Yves Smith - We’ve written regularly about the how death rates have been rising among some large segments of the US population. One troubling finding was the Case-Deaton study that reported how lifespans have shortened among less educated white Americans aged 45-54. As co-author and Nobel Prize winner Angus Deaton said earlier this year, “Many areas of Appalachia and Mississippi Delta have lower life expectancy than Bangladesh.” The Case-Deaton findings came after a 2015 Urban Institute study that found that death rates had increased among white women generally. A Mother Jones story depicted the problem as poverty-related: The Urban Institute researchers attribute the rise in US deaths among white women to a number of factors. The largest is the sharp spike in overdose deaths from prescription painkillers like Oxycontin, which jumped from 3.3 to 15.9 deaths per 100,000 between 1999 and 2011—an increase of a factor of five. But even without the spike in drug overdoses, white women’s death rates are rising. As deaths from car accidents, breast cancer, and murder have declined, women have died in higher numbers from more pedestrian health care problems, such as the flu and respiratory infections, as well as chronic illnesses linked to obesity, such as diabetes, kidney disease (a complication of high blood pressure), and heart disease…. However, even middle and upper income women are not faring all that well. On Saturday, I flagged a Financial Times story, The huge disparities in US life expectancy in five charts, as a must read, and commented on this chart in particular: What leaped out for me is that life expectancy for middle and upper middle class men rose smartly from 1980 onward, yet it was flat for women in the same income groups. Life expectancy for men now exceeds that of women for those cohorts, an un-heard of reversal of widespread norms.

New CDC Research Debunks Agency's Assertion That Mercury in Vaccines Is Safe -  The U.S. Environmental Protection Agency (EPA) and U.S. Food and Drug Administration (FDA) once again advised pregnant women to curb consumption of fish in order to limit fetal exposures to neurotoxic mercury . This warning raises the baffling query: How can the Centers for Disease Control and Prevention (CDC) justify its recommendations that pregnant women get flu shots which are laden with far more mercury than what's found in a can of tuna?  The CDC has long answered that nettlesome question with the controversial claim that ethylmercury in vaccines is not toxic to humans. Now, two CDC scientists have published research decisively debunking that assertion. As it turns out, there is no "good mercury" and "bad mercury." Both forms are equally poisonous to the brain.  The CDC study , Alkyl Mercury-Induced Toxicity: Multiple Mechanisms of Action , appeared last month in the journal, Reviews of Environmental Contamination and Toxicology. The 45-page meta-review of relevant science examines the various ways that mercury harms the human body. Its authors, John F. Risher, PhD, and Pamela Tucker, MD, are researchers in the CDC's Division of Toxicology and Human Health Sciences, Agency for Toxic Substances and Disease Registry.  "This scientific paper is the one of most important pieces of research to come out of the CDC in a decade," Paul Thomas, M.D., a Dartmouth-trained pediatrician who has been practicing medicine for 30 years, said. "It confirms what so many already suspected: that public health officials have been making a terrible mistake in recommending that we expose babies and pregnant women to this neurotoxin. I regret to say that I gave these shots to children. The CDC led us all to believe that it was perfectly safe."  Despite this stark rejection of a decade of CDC safety assurances, CDC's website continues to feature now discredited safety assurances.

Our research in China’s estuaries offers glimpses of a dire future: a world without effective antibiotics -- Antibiotics are medicines for treating infectious diseases caused by bacteria. They are one of the greatest medical discoveries of all time. They have saved my life, and probably saved yours as well. But we have used them unwisely.  We used them to treat viral infections, such as the flu, that don’t respond to antibiotics. We used them to promote growth rates in healthy agricultural animals. We have not followed instructions on how to take them properly.  These actions have serious consequences. Bacteria have fought back; and all over the world, have become resistant to antibiotics. They do this by acquiring mutations, or by stealing genes that confer resistance to antibiotics from other bacteria.  The more we use antibiotics, the faster they become resistant. This has led to a major health crisis in the 21st century. It was recently estimated that by 2050, a total of 10 million people will die every year from antibiotic resistant infections. This is more than deaths from cancer. The problem is so widespread that every person now carries antibiotic resistance genes in at least some of their gut bacteria or microbiome. This is not so bad because usually these bacteria do not cause disease, and they only have one or two resistance genes each. But it does lead to some unexpected and unwanted consequences.  The resistance genes in the human gut are eventually released into sewage, where they go on to pollute streams, rivers and waterways. In a paper just published in Nature Microbiology, my colleagues and I show that antibiotic resistance genes have now become a major pollutant in estuaries, where rivers join the sea. Some estuaries in China have up to 100 million antibiotic resistance genes per gram of mud. That’s a million resistance genes in a fragment of mud that’s the size of a match head. None of these genes were there 100 years ago.  Why does this matter? Well, many food items, such as prawns, oysters, crabs and fish, are harvested from estuaries. And many of these animals feed in or live in sediment. That means there’s a direct pathway for bacteria from estuary mud to enter the human food chain. Some of these bacteria are bound to have combinations of resistance genes that have never been seen together before.

Warning: Food Wrappers Still Coated in Cancer-Causing Chemical -- New research based on nationwide tests shows that many fast food chains still use food wrappers, bags and boxes coated with highly fluorinated chemicals. The Environmental Working Group's (EWG) report supplements a new peer-reviewed study in the journal Environmental Science & Technology Letters , which shows some of the test samples contained traces of a notorious and now-banned chemical formerly used to make DuPont's Teflon.  Scientists from nonprofit research organizations including EWG, federal and state regulatory agencies and academic institutions collaborated to collect and test samples of sandwich and pastry wrappers, french fry bags, pizza boxes and other paper and paperboard products from 27 fast food chains and several local restaurants in five regions of the U.S. They found that of the 327 samples used to serve food, collected in 2014 and 2015, 40 percent tested positive for fluorine, a likely indicator of the compounds known as PFCs or PFAS chemicals.   "Fluorine-based coatings are used in food packaging to repel grease," said David Andrews, Ph.D., EWG senior scientist and co-author of the EWG report and the peer-reviewed paper. "There is very little public information on how much leaching occurs, as there are lots of different types of coatings made with this family of chemicals. Our tests show they are not necessary, because there are PFC-free food wrappers readily available."  Perfluorinated chemicals or PFCs and PFASs, have been linked to cancer , developmental issues, reproductive harm, compromised immune systems and other health effects. Although some PFCs, such as those formerly used to make Teflon and 3M's Scotchgard, have been banned or phased out as hazardous, chemical companies have flooded the market with a new generation of PFCs that have not been adequately tested for safety.

The surprising link between air pollution and Alzheimer’s disease - For older women, breathing air that is heavily polluted by vehicle exhaust and other sources of fine particulates nearly doubles the likelihood of developing dementia, finds a study published Tuesday. And the cognitive effects of air pollution are dramatically more pronounced in women who carry a genetic variant, known as APOE-e4, which puts them at higher risk for developing Alzheimer’s disease.In a nationwide study that tracked the cognitive health of women between the ages of 65 and 79 for 10 years, those who had the APOE-e4 variant were nearly three times more likely to develop dementia if they were exposed to high levels of air pollution than APOE-e4 carriers who were not.  Among carriers of that gene, older women exposed to heavy air pollution were close to four times likelier than those who breathed mostly clean air to develop “global cognitive decline” — a measurable loss of memory and reasoning skills short of dementia. While scientists have long tallied the health costs of air pollution in asthma, lung disease and cardiovascular disease, the impact of air pollutants on brain health has only begun to come to light. This research looks at a large population of American women, at lab mice, and at brain tissue in petri dishes to establish a link between serious cognitive decline and the very fine particles of pollution emitted by motor vehicles, power plants and the burning of biomass products such as wood. All three of these biomedical research methods suggest that exposure to high levels of fine air pollutants increases both dementia’s classic behavioral signs of disorientation and memory loss as well as its less obvious hallmarks. These include amyloid beta protein clumps in the brain and the die-off of cells in the brain’s hippocampus, a key center for memory formation.

1,700 Flint Residents File Class-Action Lawsuit Against the EPA -- More than 1,700 residents of Flint , Michigan, are seeking legal compensation in a class-action lawsuit against the U.S. government for the handling of the lead water crisis in their city.   The litigation has been a long time coming for a community that has suffered well over two years with poisoned water and for most of that time, the state and federal government denied there was a problem at all.   The lawsuit was filed on Monday and it lists more than 1,700 damaged citizens who claim that the U.S. Environmental Protection Agency ( EPA ) failed at every level of the crisis. The lawsuit alleges that the EPA failed to notify residents soon enough and did little to force state or local officials to take action to mitigate damages. According to the lawsuit:  "This case involves a major failure on all levels of government to protect the health and safety of the public. Local, state and federal agencies and employees, working individually and at times in concert with each other, mismanaged this environmental catastrophe." Despite the fact that poisoned water in Flint has been common knowledge for about a year, residents have been told that they will likely need to continue drinking bottled water until 2020. Even as lead levels fall below the national threshold , the infrastructure for the new, clean water system will take years to complete. Already, several local state-appointed emergency managers have been arrested and charged in connection with deliberate decisions to endanger residents' lives in exchange for cost-cutting procedures. These criminal cases will likely contribute to the lawsuit as well.

Pig-Human Organ Farming Doesn’t Look Promising Yet - MIT - In research that has rattled policy makers from Washington to the Vatican, scientists in California today described their controversial first attempts to create pigs with human organs inside them.The experiments involved fusing human stem cells into animal embryos and then trying to grow the resulting "chimeras" into fetal animals whose tissue is partly human.  Scientists at the Salk Institute in La Jolla, California, injected human stem cells into more than 2,000 pig embryos, then allowed these to gestate for up to four weeks in surrogate sows. Their work was described on Thursday in the journal Cell.  The effort was not particularly successful: few human cells survived, and they did not contribute to the developing animals in a meaningful way. Still, the scientists call the work a first step toward “human organ generation” in barnyard animals. Tens of thousands of people die each year awaiting organ transplants. The existence of such human-animal chimeras was first reported last year in MIT Technology Review, when we described how several scientific teams had established pregnancies of pig and sheep embryos that contained added human cells.As in the new report, none of the animals were allowed to develop more than a few weeks, and none have been born. The slim contribution of human cells is also likely to cool fears of monstrous results. Still, the new line of research has been under the scrutiny of policy makers. Citing concerns that the experiments could lead to unexpected outcomes, like a pig with an all-too-human brain, the National Institutes of Health placed a moratorium on funding the work in late 2015. The agency later proposed lifting the ban, subject to restrictions and oversight by a special committee.

Organisms created with synthetic DNA pave way for entirely new life forms -- From the moment life gained a foothold on Earth its story has been written in a DNA code of four letters. With G, T, C and A - the molecules that pair up in the DNA helix.  Now, the first living organisms to thrive with an expanded genetic code have been made by researchers in work that paves the way for the creation and exploitation of entirely new life forms.  Scientists in the US modified common E coli microbes to carry a beefed-up payload of genetic material which, they say, will ultimately allow them to program how the organisms operate and behave. The work is aimed at making bugs that churn out new kinds of proteins which can be harvested and turned into drugs to treat a range of diseases. But the same technology could also lead to new kinds of materials, the researchers say.  In a report published on Monday, the scientists describe the modified microbes as a starting point for efforts to “create organisms with wholly unnatural attributes and traits not found elsewhere in nature.” The cells constitute a “stable form of semi-synthetic life” and “lay the foundation for achieving the central goal of synthetic biology: the creation of new life forms and functions,” they add. Floyd Romesberg and his team at the Scripps Research Institute in California expanded the genetic code from four letters to six by adding two new molecules they call X and Y and adding them to the bugs’ genetic makeup. The microbes are modified to absorb the new genetic material which the scientists make separately and then feed to the cells.  “Our failsafe is based on the availability of X and Y and the cell could never make them.”

How to prepare for CRISPR -- Tyler Cowen -- That is an MR reader request, namely: One issue that it appears we’ll discuss more in the future is genetic experimentation – the sort heralded by CRISPR. How do you suggest we prepare for this technology? What should be reading? Discussing? Read my book The Age of the Infovore, to better understand the importance of human diversity, and also ponder my earlier post on whether genetic engineering will lead to excess human conformity.  Then investigate what kinds of sperm and eggs are most popular and thus most expensive on the current market; that’s tall, smart people who look a bit like the parents.  That might give us an idea of what kind of genetic engineering people are trying to accomplish.  Then watch or rewatch Star Trek II: The Wrath of Khan.  If you still have spare time, dip into the New Testament again. Then read about extensive Chinese efforts in this area.  Consider also how slow advances have been in genomics, and how difficult manipulability will be for most issues.  Then study Moore’s Law and Big Data.  Then read about how unlikely regulation will be able to stop advances in this area (the biggest intellectual gap in this set of instructions).  Then read or reread Aldous Huxley and any Greek tragedy centering around the idea of hubris.  Mix together, stir, shake, and sit down and cry.

Judge Blocks Monsanto's Bid to Stop California From Listing Glyphosate as Carcinogenic - California could become the first state to require Monsanto to label its glyphosate -based herbicide, Roundup , as a possible carcinogen following Fresno County Superior Court Judge Kristi Kapetan's tentative ruling on Friday.  The tentative ruling regards the agrochemical giant's Jan. 2016 lawsuit against California's Environmental Protection Agency's Office of Environmental Health Hazard Assessment (OEHHA). In Sept. 2015, the OEHHA issued plans to list glyphosate as a possible cancer threat under the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Proposition 65. The OEHHA made the decision following the France-based International Agency for Research on Cancer (IARC) findings that glyphosate is "probably carcinogenic to humans (Group 2A)" in March 2015. In its lawsuit, Monsanto claimed that the listing was unconstitutional because the OEHHA delegated law-making authority "to an unelected and non-transparent foreign body that is not under the oversight or control of any federal or state government entity."  However, California lawyers argued in its motion to dismiss the lawsuit that the IARC's scientific determinations are "the gold standard in carcinogen identification."

First GMO apples will hit US shelves next month -- A brave new world in apples arrives in Midwestern grocery stores in February. The Canadian company Okanagan will begin selling "Arctic" apples that have been genetically modified to resist browning, reports the CBC.To show off the apples' talent, the Arctics will be sold pre-sliced in clear pouches, though they will not be marked as GMO products. The only way customers will know that is if they scan the product code or if the yet-unnamed stores choose to publicize the GMO angle.  "I don't think we're hiding behind the fact that we use that technique," says Okanagan chief Neal Carter. "We don't want to demonize the product by putting a big GMO sticker on it." Plus, he adds, the brand has gotten a lot of press already.  This first test run will be small: A total of 500 40-pound boxes will be split among 10 stores, reports Capital Press. So far, the USDA has approved three varieties: Arctic's versions of the Golden Delicious, the Granny Smith, and the Fuji, but the company expects to keep adding more.  It will, however, take time for Arctic apples to reach stores across the US in commercial quantities. The company has orchards in British Columbia, along with about 85,000 trees at an unspecified site in Washington state, but it plans big expansions over the next few years.  The apples are modified so that the enzymes that cause browning are essentially switched off, and Carter says consumers won't notice any difference. US producers aren't thrilled with the development, reports NPR.

Dow Chemical wants farmers to keep using a pesticide linked to autism and ADHD -- In 2014, the first and most comprehensive look at the environmental causes of autism and developmental delay, known as the CHARGE study, found that the nearby application of agricultural pesticides greatly increases the risk of autism. Women who lived less than a mile from fields where chlorpyrifos was sprayed during their second trimesters of pregnancy, as Magda did, had their chances of giving birth to an autistic child more than triple. And it was just one of dozens of recent studies that have linked even small amounts of fetal chlorpyrifos exposure to neurodevelopmental problems, including ADHD, intelligence deficits, and learning difficulties. On November 10, the U.S. Environmental Protection Agency issued a groundbreaking report laying out the serious dangers of chlorpyrifos. The “Chlorpyrifos Revised Human Health Risk Assessment,” as it was called, laid out the evidence that the pesticide can cause intelligence deficits and attention, memory, and motor problems in children. According to the report, 1- and 2-year-old children risk exposures from food alone that are 14,000 percent above the level the agency now thinks is safe.  Dow, the giant chemical company that patented chlorpyrifos and still makes most of the products containing it, has consistently disputed the mounting scientific evidence that its blockbuster chemical harms children. But the government report made it clear that the EPA now accepts the independent science showing that the pesticide used to grow so much of our food is unsafe. The “pre-publication copy” of the report stated that “residues of chlorpyrifos on most individual food crops exceed the ‘reasonable certainty of no harm’ safety standard under the Federal Food, Drug and Cosmetic Act,” which means, in simple terms, that any given sample of food may contain harmful levels of chlorpyrifos. In addition, estimated drinking water and non-drinking water exposures to the chemical also exceed safety standards. The next step was to finalize a chlorpyrifos ban. Yet when the EPA’s report was published indicating that the agency was finally taking action on chlorpyrifos, there was little rejoicing among the scientists and environmental advocates, because two days earlier, Donald Trump had won the presidential election.

Starvation looms for six million children in Horn of Africa, charity says | Reuters: - Hunger, malnutrition and death threaten 6.5 million children in the impoverished drylands of Somalia, Ethiopia and Kenya due to back-to-back droughts, a charity said on Friday, with spring rains also predicted to be poor. Repeated rain failures have pushed 15 million people across the three countries into crisis, and in need of aid, as their animals are dying and water is in short supply, Save the Children said in a statement. "The situation for already desperate children and families in Somalia, Ethiopia and Kenya will only get worse – leaving millions at risk of hunger, and even death," the charity's Ethiopia country director, John Graham, said. The next rainy season is likely to bring more below-average rainfall across the region, experts predict. Almost 500,000 children already have severe acute malnutrition, Save the Children said, which means they risk dying without emergency intervention. Donors, political leaders and the new United Nations Secretary António Guterres are meeting at the African Union (AU) summit which opens on Monday in Ethiopia. Guterres was the U.N.'s refugee chief during Somalia's 2011 famine, in which 260,000 died due to drought, conflict and a ban on food aid in territory held by the Islamist militant group, al Shabaab. The U.N. warned this month that Somalia, crippled by decades of war, risks slipping back into famine as five million people, or more than four out of 10 residents, do not have enough food.

The Green Revolution and Corporate Agriculture Drive Hunger and Famine - History is repeating itself as Africa, so many times in the past the target of colonial depredation, is today the target of a new dual campaign of aggression. The first prong of this campaign is the new colonialism based on land-grabbing and export commodity agriculture. The goal is to seize control of the land, destroy all food production and replace it with industrial plantations to produce export commodities, and drive all the people off their land and into shantytowns. The second prong is the already turbulent climate chaos which has been driven most by the same industrial agriculture, and which in recent years has been wreaking havoc on African farming and food harvests. Today, after years of widespread drought and collapsed harvests, large parts of sub-Saharan Africa are on the verge of famine. This famine, like all previous modern famines, is completely artificial, completely man-made, caused by corporate agriculture and now by the climate change of which this agricultural sector is the main driver. This latest food crisis follows upon the purely financial food crisis of 2008-2009 which was triggered by rising commodity prices. This was part of the finance sector’s war of speculation and its intentional crashing of the global economy in 2008. In all these ways – financial crisis, land crisis, climate crisis – we have corporate campaigns designed to cause disaster, destruction, and chaos. The corporations then proceed to use the crises they intentionally generate as further opportunities for aggression and profit. This is called disaster capitalism. All corporate sectors practice it, and corporate agriculture is the most aggressive and destructive practitioner of all.

France’s wild hamsters being turned into ‘crazed cannibals’ by diet of corn  A diet of corn is turning wild hamsters in north-eastern France into deranged cannibals that devour their offspring, researchers have reported.Earlier work had looked at the impact of pesticides and mechanised ploughing, which can destroy their underground homes, especially during hibernation in winter. But the possible link with what they eat remained unexplored.  “There’s clearly an imbalance,”   More common farther to the east, Cricetus cricetus in critically endangered in western Europe. The findings, reported last week in the British Royal Society journal Proceedings B, finger industrial-scale monoculture as the culprit. Once nourished by a variety of grains, roots and insects, the burrowing rodents live today in a semi-sterile and unbroken ocean of industrially grown maize, or corn.  The monotonous diet is leaving the animals starving, scientists discovered almost by accident. The problem is a lack of vitamins. In fact, one in particular: B3, or niacin.

Hunters Compete to Kill as Many Coyotes as Possible From Sunup to Sundown -- The Animal Legal Defense Fund filed a complaint last week on behalf of a Wyoming resident in an attempt to stop an upcoming coyote-killing contest. The "Wyoming Best of the Best" involves teams of hunters vying to kill as many coyotes as possible from sunup to sundown.  Non-hunting participants place bets on the teams they think will kill the most coyotes . The complaint alleges the event constitutes a nuisance in the form of illegal gambling, since participants wager money and the outcome is based predominantly on chance. Illegal gambling is a violation of the state nuisance statute, designed to prevent activities that put the moral integrity and safety of the community at risk.  The Rock Springs event is scheduled for this coming weekend, Feb. 3 – 4. The rules encourage people of all ages and experience to enter, including children.   Wyoming Best of the Best involves betting opportunities for most coyotes killed, biggest coyote killed, littlest coyote killed, a rifle raffle and a Calcutta—a form of betting pool where participants pick winners and the pool of funds is distributed according to a prearranged scale of percentages, to those who selected winners. Hunting participants wager $50 per person for the chance to win cash prizes and advance to the state championship for killing the most coyotes. Teams may also wager an extra $20 per team to enter the "Big Dog/Little Dog" contests, for the chance to win extra cash prizes for killing the biggest and/or littlest coyote.

We are destroying rainforests so quickly they may be gone in 100 years - If you want to see the world’s climate changing, fly over a tropical country. Thirty years ago, a wide belt of rainforest circled the earth, covering much of Latin America, south-east Asia and Africa. Today, it is being rapidly replaced by great swathes of palm oil trees and rubber plantations, land cleared for cattle grazing, soya farming, expanding cities, dams and logging.  People have been deforesting the tropics for thousands of years for timber and farming, but now, nothing less than the physical transformation of the Earth is taking place. Every year about 18m hectares of forest – an area the size of England and Wales – is felled. In just 40 years, possibly 1bn hectares, the equivalent of Europe, has gone. Half the world’s rainforests have been razed in a century, and the latest satellite analysis shows that in the last 15 years new hotspots have emerged from Cambodia to Liberia. At current rates, they will vanish altogether in 100 years.  As fast as the trees go, the chance of slowing or reversing climate change becomes slimmer. Tropical deforestation causes carbon dioxide, the main greenhouse gas, to linger in the atmosphere and trap solar radiation. This raises temperatures and leads to climate change: deforestation in Latin America, Asia and Africa can affect rainfall and weather everywhere from the US Midwest, to Europe and China.   The consensus of the world’s atmospheric scientists is that about 12% of all man-made climate emissions – nearly as much as the world’s 1.2bn cars and lorries – now comes from deforestation, mostly in tropical areas. Conserving forests is critical; the carbon locked up in Democratic Republic of the Congo’s 150m hectares of forests are nearly three times the world’s global annual emissions.

London on pollution ‘high alert’ due to cold air, traffic, and wood burning -- London has been put on “very high” alert as cold and still weather, traffic, and a peak in the use of wood-burning stoves combined to send air pollution soaring in the capital and across swaths of the UK. According to data from King’s College London, areas of London including Camden, the City of London and Westminster all reached 10 out of 10 on the air pollution index, with many other areas rated seven or higher. “Today the shameful state of London’s toxic air has meant that I am forced to trigger the first ‘very high’ air pollution alert under my new comprehensive alert system,” said the Mayor of London, Sadiq Khan. “This is the highest level of alert and everyone – from the most vulnerable to the physically fit – may need to take precautions to protect themselves from the filthy air.”

London Just Set a New Modern Pollution Record --  London isn’t called the “Big Smoke” for nothing. The city’s poor air quality set a modern record during this week’s spate of pollution that occurred when cold, windless weather trapped emissions over the capital. More than 20 sites recorded levels that hit the limit 10 on an index maintained by King’s College London from Jan. 17 to Jan. 24, the most since the index was introduced in 2012, said Andrew Grieve, an analyst at the college. The college uses sensors placed around the city to measure various types of pollution, such as particulate matter and gasses. High pollution levels come and go in what are known as episodes. At various times this week, air quality in London was worse than Beijing. But overall, the Chinese city has much worse air over a sustained period of time. Simon Birkett, director of Clean Air in London, said that Beijing would soon quickly overtake London once celebrations for Chinese New Year got underway. “Things will go mental in Beijing,” he said. “They’ll have a massive firework problem, and particles will go through the roof.” London Mayor Sadiq Khan issued a “very high” pollution alert this week, the first since he became mayor last year. His alert meant that levels were more than twice the legal hourly limit. Children were told to play indoors.

Mongolians protest over air pollution: 'Wake up and smell the smog' - BBC News: Thousands of Mongolians took to the streets of the capital, Ulaanbaatar, on Saturday to call for the government to take action on air pollution. Protesters, some wearing face masks and holding black balloons, gathered as temperatures fell below -20C. Ulaanbaatar, one of the world's coldest capitals, is also one of the most polluted cities in the world, according to the UN children's agency Unicef. Many residents burn polluting fuels to keep their homes warm. Some say they cannot afford the alternatives and have asked for state assistance. One protester's banner read: "Wake up and smell the smog." It is the second pollution protest during the current Mongolian winter. In December, Mongolian environment and tourism minister Oyunkhorol Dulamsuren said that, between 2011 and 2015, the government spent more than $37m, plus $47m from international donors, on tackling air pollution. Among children under five, respiratory infections are one of the leading causes of death, Unicef says.

Trump Picks 'Friend of Big Polluters' for Supreme Court - President Donald Trump 's nomination of Judge Neil Gorsuch to the Supreme Court has been criticized by environmental groups and human health advocates, who fear that the conservative judge would side with corporations, limit the federal government's regulatory responsibilities, and gut environmental and health protection if confirmed. Several news outlets have noted that his mother, Anne Gorsuch Burford, served as U.S. Environmental Protection Agency (EPA) director under President Ronald Reagan. She has been accused of wanting to dismantle the agency and notoriously resigned under fire after serving 22 months in the administration over mismanagement of a $1.6 billion program to clean up hazardous waste dumps.   Earthjustice , the nation's largest environmental law organization, is calling on the Senate to reject Gorsuch as Supreme Court Justice, citing his history of rulings against workers' rights, that he's a friend of big business, that he has shown hostility to the rights of the disabled and that he has protected police officers charged with excessive force.   Gorsuch is perhaps best known for the case, Hobby Lobby Stores, Inc. v. Sebelius, in which he agreed with the majority opinion that corporations are persons and should not be required to pay for contraceptive coverage under the Affordable Care Act.  Earthjustice noted that Gorsuch favors limits on federal regulatory power:

• Gorsuch is opposed to the Chevron doctrine, which emerged from the landmark Chevron v. Natural Resources Defense Council decision of 1984, and held that federal agency experts must have the authority to determine how their regulations should be carried out.
• Gorsuch believes judges should get to overrule agency experts when deciding how to enforce federal regulations. Even the late Supreme Court Justice Antonin Scalia agreed with the Chevron doctrine.

"Gorsuch has a lengthy record of decisions that seek to benefit corporations and restrict the federal government's regulatory responsibilities. His decisions also reflect a history of limiting the rights of women, the disabled, workers, and many others," said Earthjustice President Trip Van Noppen.

Scott Pruitt Will Make America Great Again — For Polluters -  (Bill Moyers video & transcript) President Trump’s choice to lead the Environmental Protection Agency might put it on the endangered species list. In this exclusive web essay, Bill Moyers takes on President Trump’s choice to lead the Environmental Protection Agency. Oklahoma Attorney General Scott Pruitt has a track record of putting the business interests of the energy sector before the environmental and health interests of the public. He has spent his career fighting the rules and regulations of the agency he is now being nominated to lead. His expected confirmation threatens to make America great for polluters again.

5.7 trillion gallons of water snowed on Calif. in January: Over five trillion gallons of water — much of it still locked up as snow in the mountains — fell across California in January, ending the prolonged drought in the northern part of the state. The parade of snowstorms that blasted the state in January dumped the equivalent of about 5.7 trillion gallons of water, according to researchers at Colorado University’s Center for Water Earth Science and Technology. (That's how much water was in the snow that fell). Many ski areas in the Sierra were pasted with 20 to 30 feet of snow. Mammoth Mountain had its snowiest month ever recorded, with over 20 feet. If all the snow in the state melted, the water would be enough to fill the Great Salt Lake in Utah. It would also be enough to fill around 8 million Olympic-size swimming pools.“The start to winter has been the best California has seen since 2011 and gives water managers hope for relief from what has been a historically dry five-year period,” said David Rizzardo, of the California Department of Water Resources, in a statement.Weather stations in the central Sierra had their wettest January since records began in 1913.Two of the states biggest reservoirs (Oroville and Shasta) are over 75% full of water, the department said. Much of the rain and snow came via so-called "atmospheric rivers," including the “Pineapple Express." These rivers in the air funnel large amounts moisture out of the tropics toward the West Coast. Just in January alone, the state was able to recover over a third of the water it lost over the past few years, the Colorado scientists said.

Drought-easing California snow heaviest in 22 years - Clambering through a snowy meadow with drifts up to the tree branches, California's water managers measured the state's vital Sierra Nevada snowpack Thursday at a drought-busting and welcome 173 percent of average.Runoff from the overall Sierra snowpack, which provides arid California with a third of its water in a good year, stood at the highest level since 1995 for this point in the year, California's Department of Water Resources said. State officials say Gov. Jerry Brown will wait until closer to the end of California's rain and snow season this spring to decide whether to lift an emergency declaration addressing the devastating five-year drought. But Thursday's snowpack reading, which took place in a meadow that had been bare of snow at the height of the drought, was good news. "It gives everything a much brighter outlook," said Frank Gehrke, the state's snow-survey chief, who conducts the snow surveys several times each winter. Gehrke had to change his route because the snow was so much higher than normal. At Phillips Station, his measurements showed snow at a level that would have melted down to 28.1 inches of water. That compares to 11.3 inches in an average year. The state measures overall snowpack through more than 100 electronic sensors throughout the Sierra Nevada. Statewide, snowpack stood at 173 percent of average for the date.

Scientists link toxic algal blooms along U.S. West Coast to warm waters in the Pacific -- Late in 2015, we published a series of stories about a large-scale harmful algal bloom year off the West Coast that resulted in numerous marine animal deaths and closures of recreational and commercial fisheries in California, Oregon, and Washington. At the time, scientists hypothesized that the severe, widespread toxic bloom was connected to unusually persistent warmth in the waters of the North Pacific, but actual evidence was limited.    New research led by Oregon State University and NOAA scientists supports the connection. The scientists have linked basin-wide warmth across the Pacific Ocean to the presence of elevated levels of a natural toxin—domoic acid—in razor clams in Oregon waters. According to the study, warmer oceans led to a higher likelihood that toxins would surpass safe threshold levels in Oregon, Washington, and California.  While records of the temperature and large-scale circulation of the tropical and North Pacific Ocean date back decades, long-term records of harmful algal blooms along the West Coast are much shorter in length.   Thanks to monitoring efforts along the U.S. West coast that started in the early 90s, scientists now have a long enough record to correlate the most problematic harmful algal bloom events to oceanic and climatic factors which are measured over long time scales.  Events with high levels of domoic acid in shellfish tend to be associated with or immediately follow warmer-than-average ocean conditions in the tropical and North Pacific Ocean. Case in point: the large area of above-average temperatures that was dubbed “the Blob,” which extended along the West Coast in 2015. Similarly, shellfish poisoning events often occurred during warm phases of the El Niño Southern Oscillation (ENSO) and the Pacific Decadal Oscillation (PDO).

History of global temperature 1880-2016 - The animation above from NOAA shows annual temperatures each year from 1880 – when modern record-keeping began – through record-warm 2016, compared to the twentieth-century average.NOAA described the animation in a statement: The maps from the early years in the animation are dominated by shades of blue, indicating temperatures were up to 3°C (5.4°F) cooler than the twentieth-century average. By the 1980s, the maps take on shades of yellow, with a few large cooler-than-average spots shifting around from year to year. By the 2000s, most of the planet is orange and red—up to 3°C (5.4°F) warmer than the long-term average, with only a few isolated cool spots from year to year. In recent years, the maps are dominated by shades of red.2016 is officially the warmest year on record, edging out previous record holder 2015, according to NOAA. It’s the third year in a row that global average surface temperature set a new record, and the fifth time the record has been broken since the start of the twenty-first century. According to climate experts, global warming due to increasing greenhouse gases doesn’t necessarily mean that each year will be warmer than the previous year. Natural variability will continue to make some years warmer or cooler than the year before, even as Earth warms over the long-term. For example, scientist say that the string of three record-breaking years in a row is unlikely to continue in 2017, especially because La Niña developed in late 2016 and continued into early 2017.

El Niño may return in 2017 - Braun : (Reuters) - It is time to say goodbye to La Niña, and possibly hello to El Niño again later in the year.Ever since the record-setting El Niño of late 2015 started winding down early last year, commodity markets have been fully focused on the La Niña that forecasters had predicted would dominate late 2016 and potentially much of 2017.The El Niño-Southern Oscillation, or ENSO, is one of the most followed global climatic features, as its cool phase La Niña and warm phase El Niño have somewhat contrasting effects on weather patterns worldwide.La Niña tends to bring wet weather to Southeast Asia, warm summers and cold winters to much of North America, and dry conditions to Argentina and southern Brazil, among other impacts. El Niño often introduces the reverse conditions.La Niña finally emerged last August, but the necessary atmospheric ingredients for it to strengthen never fully came together, and the 2016/17 episode will soon go down in climate history as a “weak” La Niña.Sea surface temperatures have remained in a weak state ever since, but the anomaly has begun to fade. In the latest week, waters were the warmest they have been since last June (http://reut.rs/2keIU0C).Had this La Niña been a stronger event, the odds of its persistence through 2017 and into 2018 would have been good, as the cooler cycle generally has more staying power than the warm one.Now La Niña is expected by U.S. government forecasters to fade away by February. But will neutral ENSO conditions prevail in 2017, or will El Niño revisit?The ENSO bias for later in 2017 now points more toward El Niño, as four out of five weak or borderline La Niña events observed over the past seven decades turned into El Niño the next year.

Interactive: How much does El Niño affect global temperature? -- Every day, thousands of measurements are taken across the world by weather stations, ships, satellites, floating buoys and weather balloons. Scientists combine these different data sources together to take the Earth’s temperature and see how it is changing over time. The graph below shows the average temperature of the Earth’s surface since 1951, as measured by the US National Aeronautic and Space Administration (NASA). You can see from the blue line that global temperatures have risen markedly since the 1950s. But rather than a smooth climb, there are lots of ups and downs from year to year.  Scientists know that greenhouse gases from human activity accumulate in the atmosphere, trapping heat and causing global temperatures to rise. But natural factors can nudge global temperatures up or down in any given year, too. A natural phenomenon in the Pacific, known as El Niño, tends to boost global temperature in years when an event occurs. Its cooler counterpart, La Niña, drags temperatures down. The red line in the graph above shows the NASA global temperature record with the effects of El Niño and La Niña removed. (You can read more about the method scientists use to do this in this article from statistician and climate change blogger Tamino.) Once you remove the El Niño/La Niña signal, you can see the warm peaks associated with strong El Niños in 1982/3 and 1997/8 appear less pronounced. Notably, 2016 is still the hottest year on record by quite some margin, even once you remove the effect of the strong El Niño. Changes in solar activity and volcanic eruptions can affect global temperature, too. The yellow line in the graph above shows the same NASA global temperature record, but this time with the effects of all the major natural influences on climate – El Niño/La Niña, solar activity and volcanic eruptions – taken out.

Republicans move to sell off 3.3m acres of national land, sparking rallies - Now that Republicans have quietly drawn a path to give away much of Americans’ public land, US representative Jason Chaffetz of Utah has introduced what the Wilderness Society is calling “step two” in the GOP’s plan to offload federal property. The new piece of legislation would direct the interior secretary to immediately sell off an area of public land the size of Connecticut. In a press release for House Bill 621, Chaffetz, a Tea Party Republican, claimed that the 3.3m acres of national land, maintained by the Bureau of Land Management (BLM), served “no purpose for taxpayers”.   But many in the 10 states that would lose federal land in the bill disagree, and public land rallies in opposition are bringing together environmentalists and sportsmen across the west.  Set aside for mixed use, BLM land is leased for oil, gas and timber, but is also open to campers, cyclists and other outdoor enthusiasts. As well as providing corridors for gray wolves and grizzly bears, low-lying BLM land often makes up the winter pasture for big game species, such as elk, pronghorn and big-horned sheep.  Jason Amaro, who represents the south-west chapter of Backcountry Hunters and Anglers, describes the move as a land grab. “Last I checked, hunters and fishermen were taxpayers,” said Amaro, who lives in a New Mexico county where 70,000 acres of federal lands are singled out. In total, his state, which sees $650m in economic activity from hunting and fishing, stands to lose 800,000 acres of BLM land, or more than the state of Rhode Island. “That word ‘disposal’ is scary. It’s not ‘disposable’ for an outdoorsman,” he said.

Bay of Bengal: depleted fish stocks and huge dead zone signal tipping point - The Bay of Bengal’s basin contains some of the most populous regions of the earth. No less than a quarter of the world’s population is concentrated in the eight countries that border the bay1. Approximately 200 million people live along the Bay of Bengal’s coasts and of these a major proportion are partially or wholly dependent on its fisheries2. For the majority of those who depend on it, the Bay of Bengal can provide no more than a meagre living: 61% of India’s fisherfolk already live below the poverty line. Yet the numbers dependent on fisheries are only likely to grow in years to come, partly because of climate change. In southern India drought and water scarcity have already induced tens of thousands of farmers to join the fishing fleet3. Rising sea levels are also likely to drive many displaced people into the fishing industry. But the fisheries of the Bay of Bengal have been under pressure for decades and are now severely depleted4. Many once-abundant species have all but disappeared. Particularly badly affected are the species at the top of the food chain. The bay was once feared by sailors for its man-eating sharks; they are now rare in these waters. Other apex predators like grouper, croaker and rays have also been badly hit. Catches now consist mainly of species like sardines, which are at the bottom of the marine food web5. Good intentions have played no small part in creating the current situation. In the 1960s, western aid agencies encouraged the growth of trawling in India, so that fishermen could profit from the demand for prawns in foreign markets. This led to a “pink gold rush”, in which prawns were trawled with fine mesh nets that were dragged along the sea floor. But along with hauls of “pink gold” these nets also scooped up whole seafloor ecosystems as well as vulnerable species like turtles, dolphins, sea snakes, rays and sharks. These were once called bycatch, and were largely discarded. Today the collateral damage of the trawling industry is processed and sold to the fast-growing poultry and aquaculture industries of the region6. In effect, the processes that sustain the Bay of Bengal’s fisheries are being destroyed in order to produce dirt-cheap chicken feed and fish feed.

One of the last Obama-era climate reports had a troubling update about the rising seas --  A new report, released by the National Oceanic and Atmospheric Administration on the last day of Barack Obama’s presidency, presents a series of updated estimates for future sea-level rise, both in the United States and worldwide. It suggests that, under extreme future climate change, global sea levels could rise by more than eight feet by the end of the century — one of the highest estimates yet to be presented in a federal report.    The report also contains a series of regional estimates, suggesting that many parts of the United States will experience sea-level rise at a rate well above the global average. And with little more than a foot of sea-level rise, many coastal cities could see a 25-fold increase in the frequency of damaging floods. How soon this could happen will depend on the severity of future global warming.  Prior public reports have focused on only global sea-level-rise estimates, Sweet noted. The new report aimed to both update these global estimates and provide regional assessments as well, so local governments can have the best available information when making decisions about how to protect coastal communities.    A 2012 NOAA report on global sea-level rise included four possible climate scenarios, each involving different degrees of ocean warming and glacier melting around the world: one scenario with high sea-level rise, one with low sea-level rise and two intermediate scenarios. The report suggested that the most extreme scenario could result in 6.6 feet of global mean sea-level rise by the year 2100. At a minimum, it suggested 0.7 feet of sea-level rise by that time.The new report includes six possible climate scenarios, and it updates both the highest and lowest sea-level-rise estimates. It suggests that in the most extreme scenario, global mean sea levels could rise 8.2 feet by the year 2100. And in the lowest scenario, sea levels may rise by about one foot by the end of the century.

‘Beyond the extreme’: Scientists marvel at ‘increasingly non-natural’ Arctic warmth - The Arctic is so warm and has been this warm for so long that scientists are struggling to explain it and are in disbelief. The climate of the Arctic is known to oscillate wildly, but scientists say this warmth is so extreme that humans surely have their hands in it and may well be changing how it operates. Temperatures are far warmer than ever observed in modern records, and sea ice extent keeps setting record lows.Unfortunately, influxes of "warm" air from both the Pacific/Atlantic Oceans this week will likely continue preventing #Arctic sea ice growth pic.twitter.com/QU4wQPwejo 2016 was the warmest year on record in the Arctic, and 2017 has picked up right where it left off. “Arctic extreme (relative) warmth continues,” Ryan Maue, a meteorologist with WeatherBell Analytics, tweeted on Wednesday, referring to January’s temperatures. Veteran Arctic climate scientists are stunned. “[A]fter studying the Arctic and its climate for three and a half decades, I have concluded that what has happened over the last year goes beyond even the extreme,” wrote Mark Serreze, director of the National Snow and Ice Data Center in Boulder, Colo., in an essay for Earth magazine. At the North Pole, the mercury has rocketed to near the melting point twice since November, and another huge flux of warmth is projected by models next week. Their simulations predict some places in the high Arctic will rise over 50 degrees above normal.One chart, in particular, is a jaw-dropping and emblematic display of the intensity and duration of the Arctic warmth. It illustrates the difference from normal in the number of “freezing degree days,” a measure of the accumulated cold since September.The number of freezing degree days is far lower than any other period on record. Eric Holthaus, a meteorologist and science writer who first posted the chart to Twitter, remarked it illustrated a “stunning lack of freezing power” over the Arctic. “This is happening now,” he added. “Not in 50 or 100 years — now.”

Greenland Ice Sheet Melting 600 Percent Faster Than Predicted by Current Models -- This Real News Network report focuses on one of what is becoming a large number of instances where climate models have underestimated the speed of climate change.  (video and transcript)

Pentagon: Arctic melt requires updated US strategy -- An updated US military strategy for the Arctic says “diminishing ice levels” due to warming temperatures pose a series of security risks to the country. Released this week at the request of Alaska senator Dan Sullivan, a Republican, the 16-page document says the US must boost investment in its military assets around the North Pole. “Diminishing sea ice will give rise to new economic opportunities in the region while simultaneously increasing concerns about human safety and protection of a unique ecosystem that many indigenous communities rely on for subsistence,” reads the Arctic Strategy. “The breaking up of sea ice also threatens existing detection and warning infrastructure by increasing the rate of coastal erosion.”  In stark contrast to claims Trump’s administration may axe funding to climate science programmes, the Pentagon report says weather and climate science is a matter of national security.“Robust observations, remote sensing capabilities, and modelling of the space, air, sea surface, ice, and ocean environments that affect operations in the Arctic are key aspects of domain awareness and safe operations, particularly in a remote and harsh region,” it says.Citing NASA’s findings that the Arctic is “warming more rapidly than the rest of the planet”, the report says planners must consider the safety of their teams when evaluating environmental risk.In a statement Sullivan – who sits on the influential Senate Armed Services Committee – said he hoped president Trump and Pentagon officials would “take a serious look at this document” and start work on a comprehensive Arctic strategy.

Climate Change, Doomsday And The 'Inevitable' Extinction Of Humankind -- Does climate change seriously threaten to wipe out the human species if left unchecked? Examining our evolutionary past suggests it might once have been the perfect catalyst for our extinction. But now?  On January 14 of this year, the Bulletin of the Atomic Scientists moved the hands of its Doomsday Clock one minute further from midnight (it’s now six minutes to midnight), encouraged, it was announced, by the “progress seen around globe in both key threat areas: nuclear weapons and climate change".First published in 1947, the bulletin was founded by scientists, engineers and other experts involved in the Manhattan Project. The clock continues to serve as a metaphorical countdown to the apocalypse - the annihilation of humanity - set for midnight. Today, the bulletin’s Board of Sponsors, comprising no less than 18 Nobel Laureates, almost every one of them a physicist or chemist, sets the hands of the clock based on their reading of “threats to the survival and development of humanity from nuclear weapons, climate change, and emerging technologies in the life sciences". They’ve a much wider brief now, a longer list of threats, and, I guess, more reasons to be pessimistic.Our evolutionary group - the hominins - diversified quickly after the split from the human-chimp ancestor, and through its multiple evolutionary iterations natural selection produced 25 or 30 two-footed ape species - undoubtedly with more to be found as anthropologists discover more fossils. All of these are now extinct, except us.Those 7 million years represent only the last couple of minutes on a 24-hour clock of Earth’s 5 billion year history. The culling of 30 species to 1 in this short timeframe, or a more than 95% loss of hominin biodiversity, is worse than the worst mass extinction episode recorded in the fossil record: the Permian event some 250 million years ago.But these mass events obscure the fact that, in the history of life, extinction has been a dominant theme, a continuous process. Evidence from the last 600 million years shows roughly one-third of existing animal species going extinct every 10 million years. Seen in this context, the rate of extinction in the human evolutionary tree is striking, about three times faster than normal. This strongly suggests that we hominins are a highly extinction-prone mammal.

When The Rich Become Preppers, It's Time To Worry - Chris Martenson -- For over 10 years now, we've been openly advocating that folks take action to become more prepared should crisis arrive. And for a long time, this advice relegated us to being labeled "tin-foil hat doomsday preppers" (and other less-polite monikers). The media just couldn't figure out any other box to put us in. But now, the concept of taking at least some responsibility for your own future well-being by increasing your self-reliance is finally moving towards the mainstream. Of course, government agencies have long ascribed to "situational planning" in case sudden unrest were to happen. Nations around the world have long invested in redundant supply chains, as well as well-stocked disaster 'continuity caves', fortresses and hardened facilities of all sorts. It's strikes us as puzzling that most private citizens fully expect their government to be prepared for disaster like this, yet don't see similar wisdom in practicing a similar approach to preparation in their own life. In fact, many go so far as to denigrate and even mock their friends and neighbors who do. Perhaps that gap between what's considered acceptable in a public institution but not in a private home is best explained as abdication of personal responsibility. It happens a lot in our society. Live your life and let the government worry about the scary stuff. They'll take care of us if something bad happens.  We think it's a huge error in judgment (remember Katrina, anyone?), but we understand why it's a convenient and comforting narrative to hold. Plus, it frees up a lot more time to shop at the big box stores and keep up on the Kardashians. Life's more fun and stress-free...right up until some unexpected disruption occurs. Those expecting/demanding the State to have high emergency preparedness while not practicing the same in their own lives lack integrity. Nobody respects a low-integrity person for very long. (Pro tip:  Don’t fly your personal jet to give a lecture on the importance of addressing climate change.)

Green movement 'greatest threat to freedom', says Trump adviser  --The environmental movement is “the greatest threat to freedom and prosperity in the modern world”, according to an adviser to the US president Donald Trump’s administration. Myron Ebell, who has denied the dangers of climate change for many years and led Trump’s transition team for the Environmental Protection Agency (EPA) until the president’s recent inauguration, also said he fully expected Trump to keep his promise to withdraw the US from the global agreement to fight global warming.Ebell said US voters had rejected what he dubbed the “expertariat” and said there was no doubt that Trump thinks that climate change is not a crisis and does not require urgent action. Trump has already replaced the climate change page on the White House website with a fossil-fuel-based energy policy, resurrected two controversial oil pipelines and attempted to gag the EPA, the Agriculture Department and the National Parks Service.Trump, who has called climate change a “hoax” and “bullshit”, has packed his administration with climate-change deniers but appeared to soften his stance after his election win, saying there is “some connectivity” between human activity and climate change. However, he also claimed action to cut carbon emissions was making US companies uncompetitive. Ebell, who has returned to his role at the anti-regulation thinktank the Competitive Enterprise Institute, said on Monday: “The environmental movement is, in my view, the greatest threat to freedom and prosperity in the modern world.” The CEI does not disclose its funders but has in the past received money from the oil giant ExxonMobil. “Our special interest is, I would say, freedom,” Ebell said.  During the US presidential campaign, Trump pledged to withdraw from the climate change deal agreed by 196 nations in Paris in 2015, making the US the only country considering doing so. “I expect President Trump to be very assiduous in keeping his promises,” Ebell said.

A Coalition of Scientists Keeps Watch on the U.S. Government’s Climate Data --During Donald Trump’s first week in office, a steady stream of electronic signals pointed to upheaval within the agencies that deal with environmental protections and climate change. Via memos leaked to the press, rogue tweets, and unnamed agency sources, the public learned of growing pressure on federal employees to avoid sharing their scientific work. Meanwhile, small but significant changes to federal web pages hinted at the demise of former president Barack Obama’s efforts to manage climate change.The Trump team got to work editing the web starting on inauguration day, when most mentions of climate change vanished from the White House website. Trump’s team did not post a replacement page on climate, though they did publish an “America First Energy Plan” that noted, “President Trump is committed to eliminating harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule.”A coalition of scientists, researchers, and technologists had been preparing for this scenario. At events held in Toronto, Philadelphia, Chicago, Indianapolis, and Los Angeles they had worked to pull as many climate and environmental datasets as possible off the federal web sites of departments including the Environmental Protection Agency, the National Aeronautics and Space Administration (NASA), the Energy Department, and the National Oceanic and Atmospheric Administration (NOAA). As Obama’s climate plans disappeared from the White House site, the work of one of the groups involved in preserving data, the Environmental Data and Governance Initiative (EDGI), shifted, too. While the group continues to help host events at which technologists copy data from the web, EDGI has begun monitoring 25,000 pages for erasures. And in week one, they witnessed Obama’s climate legacy being scrubbed little by little from federal sites.

U.S. will change course on climate policy, says former EPA transition head | Reuters: The United States will switch course on climate change and pull out of a global pact to cut emissions, said Myron Ebell, who headed U.S. President Donald Trump's Environmental Protection Agency (EPA) transition team until his inauguration. Ebell is the director of global warming and international environmental policy at the Competitive Enterprise Institute, a U.S. conservative think tank, and helped to guide the EPA's transition after Trump was elected in November until he was sworn in on Jan. 20. Trump, a climate skeptic, campaigned on a pledge to boost the U.S. oil and gas drilling and coal mining industries by reducing regulation. He alarmed nations that backed the 2015 Paris agreement to cut greenhouse gases by pledging to pull the United States out of the global deal agreed by nearly 200 countries. However, Trump told the New York Times in November that he had an "open mind" on the agreement. Trump's administration has asked the EPA to halt all contracts, grants and interagency agreements pending a review, sources said. "The U.S. will clearly change its course on climate policy. Trump has made it clear he will withdraw from the Paris Agreement. He could do it by executive order tomorrow or he could do it as part of a larger package," Ebell told reporters in London on Monday.

Congress can now start erasing some of Obama’s environmental rules. Here’s what they’re targeting - This week, Republicans in Congress may finally have the opportunity to begin dismantling a series of environmental rules finalized by the Obama administration. And they’re likely to initially target two controversial environmental regulations released in the closing months of 2016, which place greater restrictions on both the coal and the oil and gas industries.  The first is a regulation finalized in mid-November that seeks to curb fugitive methane emissions from oil and gas drilling operations on public lands. And the second, a last-minute rule adopted in December, prohibits coal-mining companies from engaging in any activities that could permanently pollute streams and other sources of drinking water.The key to undoing the regulations comes in the form of a rarely used federal law known as the Congressional Review Act. The law allows Congress 60 legislative days (that means working days in session) from the time a federal regulation is finalized to pass a “joint resolution of disapproval” on the rule. If the president signs the resolution, the rule is nullified — and, furthermore, the law stipulates that “substantially” similar regulations may not ever be passed again unless specifically authorized by Congress.  When it comes to the 60-day countdown period, though, things can get a little complicated. If a congressional session ends before the period is up — and because Congress meets sporadically, that period can sometimes drag out for months — then the law requires that the countdown begin again on the 15th day of the new session.In this case, the previous Congress adjourned before the 60-day deadline period ended for multiple Obama-era regulations passed in the latter half of 2016. The countdown is just now starting over again this week, as Monday marks the 15th day of session for the new Congress. So now is the first time they may begin formally introducing resolutions affecting late-term Obama regulations that will be valid under the Congressional Review Act — and do so with a sympathetic president in office who is likely to sign them. Resolutions to disapprove of the two Obama actions are already scheduled to be taken up by Congress this week.

Alt-Right Climate Extremists Already Losing Ground With Trump Administration -- In his U.S. Senate confirmation hearing two weeks ago, Trump's new Secretary of State Rex Tillerson stated that:  "The risk of climate change does exist, and the consequences could be serious enough that action should be taken."  While still head of the oil-giant ExxonMobil a few short weeks ago, the same Rex TIllerson told a crowd gathered in London that:  "We [ExxonMobil] have long supported a carbon tax as the best policy of those being considered. Replacing the hodge-podge of current, largely ineffective regulations with a revenue-neutral carbon tax would ensure a uniform and predictable cost of carbon across the economy."  Despite what Tillerson's intentions may or may not be, I guarantee the Secretary of State's words sent a chill down the spine of Trump transition team members like Myron Ebell , who see a tax on carbon pollution as the devil incarnate, and outright deny that climate change is even a problem.  Late last year Ebell was elevated in stature after being appointed by then President-elect Trump to head his Environmental Protection Agency (EPA) transition team. Ebell, whose views on climate change and environmental regulations are considered far-right even amongst the right-wing, has not enjoyed this much attention in years. Unfortunately for Ebell, things just aren't going the way he envisioned. In an Ebell world, Trump and his top appointees would be out on the hustings pushing the climate denier talking points about how it was warmer in the Medieval warming period and that the United Nations is using climate change to take over the world.  Last week there were rumors that the Trump Administration had ordered the EPA to remove all mentions of climate change from the department's website. But by the afternoon on the same day that plan was suspended until further notice. "We've been told to stand down," an EPA employee told E&E News. It wouldn't be a stretch to suppose that this was a direct order from Ebell that was hastily reversed by some higher-ups.

Trump’s EPA pick stonewalls senators questioning his industry ties - The Oklahoma Attorney General’s office has more than 3,000 pieces of correspondence between fossil fuel companies and Scott Pruitt’s office since 2013. No one has seen them. Meanwhile, Pruitt has been nominated to head the Environmental Protection Agency (EPA), which regulates pollution, including from fossil fuel businesses. Last week, he faced members of the Senate Environment and Public Works committee, many of whom found his answers insufficient. This week, Pruitt submitted written responses to committee members trying to find out exactly how close the prospective EPA head is to the companies he would be regulating. The answers were less than forthcoming.At least a dozen times, Pruitt told senators that to get an answer, they should file a public records request with the attorney general’s office — even though he still runs that office. Moreover, those 3,000 emails were requested via open records request over two years ago. “He has it within his power to provide this information,” said Nick Surgey, director of research for the Center for Media and Democracy, which made the January 2015 request. “He remains the attorney general of Oklahoma. If he decided that it was important to provide this information, he could instruct his staff to do so.” The attorney general’s office says it is still responding to an earlier open records request and that it responds to requests in order. Pruitt said he doesn’t know how many requests have gone unanswered in the last two years, or how long his office takes to fulfill the requests. “I am not familiar with the pending requests,” Pruitt writes, though he could have simply requested the information from his own office. “I am not aware of what the average length of time my office took to fulfill open record act requests is,” he writes later in the testimony.

 GOP senator ‘concerned’ about EPA pick's history of suing the agency --  Sen. Susan Collins (R-Maine) is “concerned” about the number of lawsuits President Trump’s nominee to lead the Environmental Protection Agency (EPA) has filed against the agency he may soon run. Collins is the first Republican senator to come out publicly with concerns about Oklahoma Attorney General Scott Pruitt. “I am concerned, based on the meeting I had with Scott Pruitt, about the number of times he has sued the very agency that he has now been tapped to lead,” Collins told Maine Public. Pruitt’s record of repeatedly suing the EPA during President Obama’s tenure is a sticking point for Democrats, who argue it shows that he opposes the agency’s core missions.He sued the Obama administration EPA 14 times to get regulations overturned and won a court decision in one case. Pruitt and his Republican and industry allies see his record of litigation as a top qualification. In his official biography, he calls himself “a leading advocate against the EPA’s activist agenda.”Collins, meanwhile, takes a moderate position on environmental policy.She is one of a small handful of Republican lawmakers who support policies to limit greenhouse gas emissions and has voted to preserve Obama’s Clean Power Plan.The Senate Environment and Public Works Committee is planning to vote Wednesday on confirming Pruitt. After that, the nomination would go to the full Senate for consideration. Pruitt only needs 51 votes to be confirmed, and Republicans have a 52-seat majority in the Senate.

Trump's EPA pick vote delayed in boycott by Senate Democrats | Reuters: Republican U.S. senators on Wednesday delayed a committee vote on President Donald Trump's pick to head the Environmental Protection Agency after the panel's Democrats boycotted the meeting, saying that nominee Scott Pruitt doubts the science of climate change. The boycott in the Senate Environment and Public Works Committee delayed the transition to a new administrator for the agency. Senator Ben Cardin, a Democrat, said he could not support Pruitt, a Republican and the attorney general of Oklahoma, for a public health position because he "denies the sum of empirical science and the urgency to act on climate change." At a committee confirmation hearing last month Pruitt, who has sued the agency he intends to run more than a dozen times on behalf of the oil-drilling state Oklahoma, expressed doubt about climate change science. But Pruitt said he would be would be obliged for now to uphold the agency's 2009 "endangerment finding" that carbon dioxide emissions harm public health. The finding is the agency's basis for regulations on those emissions. Senator Tom Carper, the panel's top Democrat, said Pruitt had provided "woefully inadequate" answers to written questions and had not named one agency regulation that he supported. "If Mr. Pruitt is serious about leading this important agency, he should be more than willing to provide straightforward answers to our fundamental questions," Carper said.

House Science Panel to Hold Hearing on "Making the EPA Great Again" -- The House Science, Space and Technology Committee is scheduled to hold a hearing next week on “Making the Environmental Protection Agency Great Again.” The hearing is likely to delve into the subject of the “Secret Science Reform Act,” pushing it another step closer to reality. Science Chairman Lamar Smith (R-Texas) has said it is one of his priorities this year. The bill would require U.S. EPA to use only “transparent or reproducible” science to develop regulations and that such scientific data be posted online so that they can be scrutinized. The Science panel has scheduled a full committee hearing for 11 a.m. Feb. 7. The controversial science reform act has not yet been introduced but could be by that time. Proponents argue that the legislation would simply make science transparent and allow for independent scrutiny to ensure science is not politically tainted before it influences policy. Democrats and scores of scientific organizations say the measure would have a crippling effect, since large-scale studies are not easy to reproduce and some industry or private data can’t be made public. President Obama pledged to veto the bill if it ever passed both chambers, but it never advanced to the Senate floor for a full vote.

Scientists Are Planning the Next Big Washington March -- Last weekend, a massive milieu of women in pink hats descended on Washington, D.C. for the Women’s March. The next big protest being planned for the nation’s capital could involve a sea of lab coats (and likely a few pink hats as well). A group of researchers have proposed a March for Science. What started as a discussion on Reddit has quickly blossomed into a movement.  Organizers started a private Facebook group and Twitter account on Monday. By Wednesday afternoon, the former boasted more than 300,000 members and the latter had nearly 55,000 followers. A public Facebook page had more than 11,000 likes just five hours after going online. The explosion of support caught organizers off guard, but they’re meeting this weekend to discuss details about the date and full mission statement. The march would be the latest in a string of actions taken by scientists following Donald Trump’s election and his inauguration as president. His administration has been widely viewed as hostile to science — from the transition period through hearings for his cabinet nominees through silencing key federal science agencies and freezing grants

Environmentalists preparing to battle Trump, GOP in court: Environmentalists facing a hostile Trump administration and a Republican-dominated Congress say the courts may offer their best chance to block changes they oppose. Advocacy groups nationwide are hiring more staff lawyers and coordinating with private attorneys and firms volunteering their services. They are seeking donations, setting priorities and reviewing laws that could be the basis of lawsuits against Trump policies concerning climate change, endangered wildlife, pollution and other issues. Vermont Law School Professor Patrick Parenteau says there will be "all-out war" in courtrooms if the Republicans try to roll back environmental protections. A spokesman for Trump's transition team says the critics are primarily interested in stoking fear to raise money.

Allaying concerns, EPA lifts temporary freeze on grants to states -The Environmental Protection Agency has resumed issuing grants following a brief pause that alarmed state regulators, environmental advocates and congressional lawmakers already concerned the Trump administration would rein in the EPA’s reach and scope. But the tight control on how the agency communicates with the public through social media and news outlets will remain in place for now, a spokesman said Thursday. And no decision has been made about what the agency’s website will say about climate change, he said. EPA spokesman Doug Ericksen said Thursday that an internal review of about $3.8 billion in grants the agency annually sends to states for basic environmental programs such as clean air and water monitoring has been completed. “We finished our review process,” said Ericksen, a GOP State Sen. from Washington who is temporarily acting as the agency’s spokesman. “As of now, nothing has been delayed. Nothing has been cut. There was simply a pause and everything’s up and running.”

Deranged And Deluded: The Media’s Complicity In The Climate Crisis -- In an important recent book, the Indian writer Amitav Ghosh refers to the present era of corporate-driven climate crisis as 'The Great Derangement'. For almost 12,000 years, since the last Ice Age, humanity has lived through a period of relative climate stability known as the Holocene. When Homo sapiens shifted, for the most part, from a nomadic hunter-gatherer existence to an agriculture-based life, towns and cities grew, humans went into space and the global population shot up to over seven billion people.  Today, many scientists believe that we have effectively entered a new geological era called the Anthropocene during which human activities have 'started to have a significant global impact on Earth's geology and ecosystems'. Indeed, we are now faced with severe, human-induced climate instability and catastrophic loss of species: the sixth mass extinction in four-and-a-half billion years of geological history, but the only one to have been caused by us. Last Thursday, the Bulletin of the Atomic Scientists moved their symbolic Doomsday Clock forward thirty seconds, towards apocalypse. It is now two and a half minutes to midnight, the closest since 1953. Historically, the Doomsday Clock represented the threat of nuclear annihilation. But global climate change is now also recognised as an 'extreme danger'.  Future generations, warns Ghosh, may well look back on this time and wonder whether humanity was deranged to continue on a course of business-as-usual.  The 'mainstream' media is not somehow separate from this state-corporate status quo, selflessly and valiantly providing a neutral window into what powerful sectors in society are doing. Instead, the major news media are an intrinsic component of this system run for the benefit of elites. The media are, in effect, the public relations wing of a planetary-wide network of exploitation, abuse and destruction. The climate crisis is the gravest symptom of this dysfunctional global apparatus.

Ryan Zinke is one step closer to becoming interior secretary -- Rep. Ryan Zinke’s nomination to become interior secretary passed a Senate committee Tuesday, placing him one step closer to lead an agency that manages millions of acres of federal land and the natural resources under it.The Senate Committee on Energy and Natural Resources approved Zinke (R-Mont.), on a 16-6 vote largely along party lines. Zinke’s nomination now goes to the Senate floor, where he will probably be confirmed. All of the committee’s 12 Republicans voted in Zinke’s favor, including Sen. Lisa Murkowski (Alaska), its chairman; Sen. Jeff Sessions (Ala.), who was in the middle of his own vote in the Judiciary Committee to become attorney general; and Sen. Jeff Flake (Ariz.).But six Democrats who grilled Zinke on issues such as climate change and sexual harassment at his hearing voted no, including Sens. Bernie Sanders (Vt.), an independent who caucuses with Democrats; Al Franken (Minn.) and Tammy Duckworth (Ill.). Four Democrats approved the nomination. Zinke immediately put to rest a question that shadowed his nomination early in his hearing a little more than a week ago. He said that he absolutely had no intention of selling federal land to states or other parties. Zinke told the committee that President Trump’s ambitious infrastructure spending plans should “prioritize the estimated $12.5 billion in backlog of maintenance and repair” at hundreds of national parks across the country. The nominee enjoyed the support of Republicans from western states where officials considered the Obama administration’s regulation of coal and protections of wildlife such as the greater sage grouse an intrusion that hurt revenue from natural resources.

Committee sends Rick Perry's energy secretary nomination to full Senate — Rick Perry is one step closer to serving in the Trump Cabinet. A majority of the Senate Natural Resources and Energy Committee on Tuesday backed Perry's confirmation as the new Secretary of Energy. The full Senate will vote on the Perry nomination in the coming weeks, and he is likely to win approval. President Donald Trump appointed Perry to the post in December, and Perry put in a strong performance at the committee hearing last week. His nomination sailed through the panel with a 16-7 vote, which included the backing of four Democratic senators. Perry's nomination has so far proven to be the least contentious of the early Trump administration. Notably, Perry calmed the waters with Senate Democrats. In his testimony, Perry said he believed human activity affects climate change and that he no longer wanted to abolish the Department of Energy, a campaign promise from his 2012 presidential campaign. U.S. Sen. John Cornyn, the second-highest-ranking Republican senator, immediately released a statement in support of the move. “Under Rick Perry’s leadership, Texas experienced innovative growth in our energy sector, which translated to more jobs and lower prices for families across our state," Cornyn said. "I’m confident he’ll replicate this success at a national level and help launch the next great era in American energy production.” As part of the Department of Energy, Perry will be responsible for maintaining the security of the country's nuclear weapons. During his confirmation hearing, Perry vowed repeatedly to "modernize the nation's nuclear stockpile." What that will mean under the Trump administration remains to be seen, as President Trump has indicated he wants to “expand” America’s nuclear arsenal and has said he is willing to restart a nuclear arms race.

Fact Box: Senate panel approves Trump Interior, Energy picks - Oil | Platts News Article & Story: The Senate Energy Natural Resources Committee on Tuesday approved the nominations of Ryan Zinke to head the Interior Department and Rick Perry to head the Energy Department, setting up likely approvals by the full Senate as soon as this week. Zinke was approved by a 16-6 vote and Perry was approved by a 16-7 vote. Here is a look at their backgrounds, key issues both nominees will likely face, and the oil policy path they may pursue if approved by the Senate:
INTERIOR SECRETARY NOMINEE RYAN ZINKE:  Key Issues: Interior manages US public lands and minerals and, if approved, Zinke could play a major role in Trump's expected efforts to expand drilling both on and offshore. As head of Interior, Zinke would lead the possible effort by the Trump administration to redo the Obama administration's 2017-22 offshore drilling plan, which excluded sales in the Arctic and Atlantic oceans. Zinke would also be in charge of an agency which has developed new regulations on hydraulic fracturing and methane emissions from oil and gas operations on federal lands. Zinke, a supporter of the Keystone XL pipeline, has called Interior's methane rule "duplicative and unnecessary" and backed legislation to end the agency's moratorium on coal leasing.
Policy Path: During his nomination hearing on January 17, Zinke said he would review Obama's decision to block oil and natural gas drilling in most US Arctic waters and suggested a reversal of recent national monument designations may be in the works. During that hearing, he backed efforts to repeal federal rules on methane emissions from oil and gas operations, said he was "absolutely against" the transfer or sale of public lands and pushed for "reasonable" regulation of fossil fuel production on federal lands. "I can guarantee you it is better to produce energy domestically under reasonable regulation than watch it be produced overseas with no regulation," Zinke said during the hearing.
ENERGY SECRETARY NOMINEE RICK PERRY  - Key Issues: If approved, Perry would be in charge of an agency which was instrumental in finalizing the Iran nuclear deal -- which Trump has said he wants to scrap -- manages the US Strategic Petroleum Reserve and oversees the Energy Information Administration, the government authority on energy statistics and analysis. As head of the DOE, Perry would manage sales of millions of barrels of crude out of the SPR, which Congress has authorized over the past year, and would need to decide on roughly $2 billion in infrastructure upgrades the DOE says the government stockpile currently needs.
Policy Path: Perry has not commented publicly on the SPR and declined to comment on the Iran deal during his hearing this month. During the hearing, which did not focus on US crude oil policy, Perry pushed the idea of an "all-of-the-above" energy strategy and touted his track record as governor of boosting both oil and gas production but also development of renewable energy resources, particularly wind. In addition, while Perry acknowledged that climate is change he said some of it is "naturally occurring" and said the issue needed to be addressed "in a thoughtful way that does not compromise economic growth, that, you know, quite frankly, does not affect our energy affordability."

Republicans Move to Sell off 3.3 Million Acres of Public Land -- Following approval by the Senate Committee on Energy and Natural Resources, Rep Ryan Zinke's nomination for Interior Secretary now heads to the full Senate for a vote.  ZInke, saying Teddy Roosevelt " had it right " in putting millions of acres under federal protection, repeatedly defended his belief at his confirmation hearing in keeping most public land under federal control and opposing large-scale sale of public land to states, a position that aligns him with Donald Trump and breaks with his party.  As Interior Secretary, Zinke's belief could soon run up against possible larger GOP plans to sell federal land to states, foreshadowed in a rule change by the House last month to alter the cost calculations of transferring federal land. And a bill introduced by Rep. Jason Chaffetz (R-UT) last week proposes to sell 3.3 million acres of federal land in 10 different states, a move environmental advocates and sportsmen groups say would cut economic activity and block public access to larger parcels of federal land. The 10 states affected are Arizona, Colorado, Idaho, Montana, Nebraska, Nevada, New Mexico, Oregon, Utah and Wyoming.

Democrats Boycott Committee Vote on Trump’s EPA Pick -- All 10 Democratic members of the Senate Environment and Public Works (EPW) Committee boycotted a vote on Scott Pruitt's nomination for U.S. Environmental Protection Agency ( EPA ) Administrator Wednesday, citing serious concerns over his stances on climate change and pollution regulation, and demanding more complete answers from the nominee on various hot-button issues.The move deprived the committee of the two minority members necessary for a vote, stalling the GOP from moving Pruitt's nomination to the full Senate. While GOP members of the Senate Finance Committee, faced with a similar Democratic boycott Wednesday, altered committee rules to move health secretary nominee Tom Price and treasury pick Steven Mnuchin's nominations to the full Senate without a Democratic vote, it's unclear if the EPW Committee will follow suit. "We applaud the committee's Democrats for refusing to be complicit in approving such an unacceptable nominee and boycotting this vote," Sierra Club's Executive Director Michael Brune said. "Scott Pruitt would likely bring unacceptable changes to our bedrock environmental laws if given control of the EPA. We will continue to resist this nomination and the rollbacks on our clean air and clean water protections that would ensue if Scott Pruitt seizes control of this agency."  Pruitt's nomination has been hotly contested in and out of Washington, with The Hill reporting that outside groups have spent more than $3 million in ads and other actions supporting and opposing his candidacy.

Senate Republicans suspend committee rules to approve Scott Pruitt, Trump’s EPA nominee -- Senate Republicans on Thursday again used their majority to suspend committee rules and push through another Trump administration nominee, Scott Pruitt to lead the Environmental Protection Agency, bypassing Democrats who for the second day had refused to show up for a vote on his nomination. “Elections have consequences, and a new president is entitled to put in place people who will advance his agenda,” said Sen. John Barrasso (R-Wy.), who chairs the Committee on Environment and Public Works. “We took this extraordinary step because the minority members of the committee took the extraordinary step of boycotting.” Committee Republicans approved Pruitt’s nomination 11-0 on a roll call vote and sent it on to the full Senate despite the objections of Democrats, who had already boycotted a Wednesday session in a show of solidarity against someone who has repeatedly sued the EPA in recent years. The committee’s move comes a day after Republicans used similar tactics to advance the nominations of Trump’s treasury nominee, Steven Mnuchin, and his selection for health and human services secretary, Rep. Tom Price (R-Ga.). The committee’s procedural rules allow them to be changed or suspended “by vote of a majority of committee members at a business meeting if a quorum is present.” Barrasso said the Senate parliamentarian had ruled Thursday’s procedure proper under those rules, though the Senator added that the Democrats’ boycott had “put us in…uncharted waters.”

Groups Denounce GOP's Move to Force Through Trump's EPA Pick -  Republicans on the Senate Environment and Public Works Committee have suspended their panel's rules to force through Scott Pruitt 's nomination to head the U.S. Environmental Protection Agency (EPA).  The maneuver was made only one day after all 10 Democratic members of the committee announced a boycott over President Donald Trump's EPA pick. The boycott was sparked over their serious concerns of the Oklahoma attorney general's stances on climate change , pollution regulation and unanswered requests to provide official documents or emails that would shed light on his ties to the energy industry.  After temporarily suspending the committee's rules—which requires at least two minority members to meet quorum—committee Republicans unanimously approved Pruitt by a 11-0 vote at a Thursday hearing. This means Pruitt's nomination will go to the full GOP-controlled Senate, where he is likely to be approved. 

Congress Uses Obscure Law to Start Ripping Apart Environmental Policies - The House GOP is just getting started with cuts using the Congressional Review Act (CRA), an arcane piece of mid-1990s legislation allowing Congress to overturn any Obama regulations finalized after June of last year. In addition to the disclosure requirements Wednesday, the House also voted to axe the Department of Interior's (DOI) Stream Protection Rule, which protected streams and waterways from mining waste. On the chopping block for Friday is another DOI rule requiring oil and gas companies to reduce methane emissions on federal lands. (Speaking of methane, a new study published Wednesday in the journal Environmental Research Letters demonstrates that global methane emissions from the fossil fuel industry may actually be higher than current estimates). "Supporters who vote for these resolutions should explain why they think there should never be any limits on what gets dumped into streams, or any limits on mountain top removal coal mining or on methane spewing into the air," Scott Slesinger, legislative director at the Natural Resources Defense Council, said. "It's hard to imagine why they'd oppose methane limits , since this gas causes health and climate problems, and industry could make money from selling it, instead of allowing it to leak or be wasted. Taxpayers would also benefit, because the leakage reduces royalty payments." The CRA also stipulates that federal agencies cannot re-issue rules in "substantially the same form" as previous regulations, although since the CRA has only been used once before in history, it remains to be seen how this will take effect.

Trump Regulatory Freeze Halts $180 Billion Of Proposed Obama Rules, New Study Shows - On his first day in office, President Trump instructed Chief of Staff, Reince Priebus, to send a memo to all executive agencies imposing a regulatory moratorium that effectively froze all pending rules and regulations proposed by the Obama administration on their way out of Washington D.C.  Now, accorded to a new study from the American Action Forum, that simple one-page memo from Priebus potentially saved Americans $180 billion. According to American Action Forum (AAF) research, this memo put a hold on $181 billion in total regulatory costs, including $17 billion in annual costs, and 5.5 million hours of paperwork. This moratorium freezes 22 rulemakings with annual costs above $100 million and 16 measures with more than $1 billion in long-term costs. From vehicle-to-vehicle communications to efficiency standards for air conditioners and furnaces, Obama's parting regulations ran the gamut. The largest rules subject to the moratorium are a mix of those still in the proposed stage, recently finalized, and concluded but not yet published. Below are the top five rules likely subject to the regulatory freeze:

• Vehicle-to-Vehicle Communications: $108 billion in total costs
• Efficiency Standards for Air Conditioners: $12.3 billion in total costs
• Efficiency Standards for Furnaces: $9.2 billion in total costs
• Hospital and Critical Access Reform: $5.7 billion in total costs
• Efficiency Standards for Uninterruptible Power Supplies: $4.6 billion in total costs

Auto dealers want Trump to weaken car emissions rules | TheHill: Auto dealers are joining the call from carmakers for President Trump to roll back his predecessor’s aggressive vehicle emissions rules. At the group’s annual meeting in New Orleans, leaders and members of the National Automobile Dealers Association argued that the greenhouse gas and fuel efficiency rules from the Environmental Protection Agency (EPA) and Department of Transportation make cars too expensive, Reuters reported. “You inflate the price of the vehicle, and a car that was maybe within reach of being affordable now may not be,” said Mark Scarpelli, the group’s new chairman, according to Reuters.He estimated that the rules add $1,500 to $3,000 to the cost of a new car, and suggested that a “different phase-in period” could help significantly. “We need to lighten the load, because the government is trying to force manufacturers to make cars people don't even want,” Sidney DeBoer, founder of dealer group Lithia Motors Inc., told Reuters. Former President Obama’s rules set a goal of a fleet-wide 54.5 mpg average fuel economy by 2025. The Obama administration in its final days officially determined that the rules are attainable and shouldn’t change mid-way through, despite pleas from automakers to ease up on the standards. Scott Pruitt, Oklahoma’s attorney general and Trump’s nominee to lead the EPA, told senators in his confirmation hearing that he would review Obama’s determination and see if officials should try to change the rules.

Donald Trump 'taking steps to abolish Environmental Protection Agency' -- Donald Trump will work towards the abolition of the Environmental Protection Agency – and any employees cleaving to the Obama era should be “very worried” by the prospect of Scott Pruitt taking over the agency, a key aide of the president has told the Guardian. In an exclusive interview, Myron Ebell – who headed up Trump’s EPA transition team, said that agency’s environmental research, reports and data would not be removed from its website, but climate education material might be changed or “withdrawn”. Ebell also signalled that a review of fuel efficiency standards for cars, rushed through by the departing Obama administration, is likely to be reopened despite its contribution to the US’s pledged emissions cuts in the Paris agreement. A campaign stump pledge by Trump to scrap the EPA in its entirety was “an aspirational goal” that would be best achieved by incremental demolition rather than an executive order, according to Ebell.  “To abolish an agency requires not only thought but time because you have to decide what to do with certain functions that Congress has assigned to that agency,” he said.“President Trump said during the campaign that he would like to abolish the EPA or ‘leave a little bit’. It is a goal he has and sometimes it takes a long time to achieve goals. You can’t abolish the EPA by waving a magic wand.” The EPA was created in 1970 to protect human health and the environment, but Trump favours devolving much of its work and responsibilities to US states.Ebell has previously said that two-thirds of the agency’s 15,000 engineers, scientists and researchers could be axed but not that Trump’s campaign pledge of revoking the agency itself was still an objective. Half of the EPA’s $8.2bn (£6.47bn) budget is currently passed on to the states and it was “quite possible” that Trump would initially propose a 10% cut in federal EPA funding, Ebell said.

Massachusetts lawmakers propose bill for 100% renewable energy by 2035 -- Bill SD 1932 also mandates that by 2050, the state will phase out the use of fossil fuels from the transportation and heating sectors, replacing such sources with clean energy. The bill supplements an already concerted effort by Massachusetts to pursue a low-carbon economy. The Massachusetts Global Warming Solutions Act already requires the state to reduce greenhouse gas emissions 80% from 1990 levels by 2050. However, this bill really propels Massachusetts into the clean energy realm, being dubbed by sponsor Sean Garballey as a “bold step” to put the state on a “path to a cleaner and more sustainable future…it signals to the country our commitment to long-term solutions in meeting the very real challenges of climate change”. Ben Hellerstein, state director for Environment Massachusetts, the advocacy group who issued the bill, said that it “sends a clear message to officials in DC” as president Donald Trump takes over the White House, accompanied by a cabinet equally doubtful of the effects of climate change.

100 percent renewable energy sources require overcapacity --Germany decided to go nuclear-free by 2022. A CO2-emission-free electricity supply system based on intermittent sources, such as wind and solar – or photovoltaic (PV) – power could replace nuclear power. However, these sources depend on the weather conditions. In a new study published in EPJ Plus, Fritz Wagner from the Max Planck Institute for Plasma Physics in Germany analysed weather conditions using 2010, 2012, 2013 and 2015 data derived from the electricity supply system itself, instead of relying on meteorological data. By scaling existing data up to a 100% supply from intermittent renewable energy sources, the author demonstrates that an average 325 GW wind and PV power are required to meet the 100% renewable energy target. Intermittent sources are, by definition, unsteady. Therefore, a back-up system capable of providing power at a level of 89% of peak load would be needed. This requires creating an oversised power system to produce large amounts of surplus energy. The option of an oversized, intermittent renewable-energy-sources system to feed the storage is also ineffective. This is because, in this case, energy can be taken directly from the large intermittent supply, making storage superfluous. In addition, the impact on land use and the transformation of landscape by an unprecedented density of wind convertors and transmission lines needs to be taken into consideration. He also warns of the risk that it will intensify social resistance.

Green Mythology: adding different types of renewables smoothes output --A favourite assertion of renewables enthusiasts is that intermittent supply can be smoothed by simply adding different types of renewable resource. How often have you heard “If it’s not windy then we can use tidal instead”. I present a simple renewable supply model for the UK that has 20 GW of tidal, 13.6 GW of wind and 8.8 GW of solar for a total of 42.5 GW installed capacity. When everything is on this outputs a maximum of 22.2 GW of power (52.2% load). When everything is off that falls to 0.9 GW (2.1% load). Those contemplating engineering the UK grid along these lines must surely be mad.  I spent a short while reviewing the charts in UK Grid Graphed and selected April 2016 as the base for the model, not because it was representative but because it had a nice pattern of windy spells separated by lulls (Figure 1). This extreme variance in wind is compensated by solar being mid-range in the Spring. At the end of 2015, the UK had 13.6 GW of installed wind and 8.9 GW of installed solar. Come April 2016 that will have increased but not by much. Tide generation data does not exist for the UK and so I somewhat laboriously created a numerical replica of the 1*DoEn model of Borrows et al (2008): Tapping the Tidal Power Potential of the Eastern Irish Sea that was discussed in my post on tides last week week: Green Mythology: Tidal Base-load Power in the UK (Figure 2).Stacking solar on tide on wind provides the picture shown in Figure 3. Adding dual mode tidal to the mix is catastrophic for stability of combined output. On the first day we get a neap spring tide sitting on top of a wind spike during the day when the sun is up and this combines to produce 22.2 GW. On the 8th day we get the trough in tidal production of a neap tide coinciding with a lull in the wind when The Sun has set for a total of 0.9 GW. That is an uncontrollable dynamic range factor of 25. So is the assertion that combining different sorts of renewables smooths output true or false? It is clearly yet another Green Myth that simply refuses to die.

Saudi Aramco Said to Weigh Up to $5 Billion of Renewable Deals -  Saudi Aramco, the world’s largest oil company, is considering as much as $5 billion of investments in renewable energy firms as part of plans to diversify from crude production, according to people with knowledge of the matter. Banks including HSBC Holdings Plc, JPMorgan Chase & Co. and Credit Suisse Group AG have been invited to pitch for a role helping Aramco identify potential acquisition targets and advising on deals, the people said, asking not to be identified as the information is private. The energy company is seeking to bring foreign expertise in renewable energy into the kingdom, the people said, adding that first investments under the plan could occur this year. Saudi Arabia is planning to produce 10 gigawatts of power from renewable energy sources including solar, wind and nuclear by 2023 and transform Aramco into a diversified energy company. The kingdom also plans to develop a renewable energy research and manufacturing industry as part of an economic transformation plan announced by Deputy Crown Prince Mohammed bin Salman in April. Saudi Aramco, HSBC, Credit Suisse and JPMorgan declined to comment. The kingdom intends to become a global “powerhouse” of renewable energy including solar, wind and nuclear power, the country’s Energy Minister and chairman of Aramco, Khalid Al-Falih, said at the World Economic Forum in Davos, Switzerland. By 2030 the kingdom wants to produce 30 percent of its power from renewable energy sources.

Renewables boom will cause a 40-fold increase in storage within developing countries by 2025 - Energy storage is set to grow 40 percent per year in developing markets, says a team of researchers at the World Bank Group. That growth will take the current installed base of around 2 gigawatts up to 80 gigawatts in less than a decade. And if certain rule changes are made, capacity increases could be higher than that. The findings were published in a new report from the International Finance Corporation and the Energy Sector Management Assistance Program, which are both part of the World Bank. Unsurprisingly, China and India, with their ambitious renewables programs, are predicted to be the biggest contributors. But a host of other developing economies are set to become strong players in storage. The International Energy Agency estimates that by 2020 developing countries will need to double their electrical power output to meet rising demand. By 2035, these countries will represent 80 percent of the total growth in both energy production and consumption. An estimated 2.5 billion more people will be flocking into the world’s cities by 2050, placing increasing strain on existing grid infrastructure. These stresses will be felt most in the world’s developing economies, adding to power demands caused by increased industrialization.

China Generates Record Wind Power, Then Throws It Away: China's wind power generation hit a record last year, but so did wastage, to about as much as Greece or Bulgaria use in total electricity each year. China has been choking under a thick blanket of smog this winter, so locals should be cheered that the nation produced a record amount of wind power last year. They may be less cheered to hear, however, that much of this shiny new green power essentially evaporates into the ether. Wind power generated in 2016 rose an impressive 30% to 241 billion kilowatt-hours, according to figures reported Tuesday. But the amount of unused wind power rose much faster. Wastage rose nearly 50% to 50 billion-kilowatt hours: about as much as Greece or Bulgaria use in total electricity each year. ...

New industrial strategy excludes mature renewables - The new industrial strategy launched by prime minister Theresa May today is to review the lowest cost way of decarbonising the economy, but has appeared to lock out the majority of renewables. The strategy, published by the Department for Business, Energy and Industrial Strategy, comprises a 132-page document that outlines several areas which the government sees key to stimulating more sustainable growth in the UK economy. Central to this is a pledge to review the opportunities available to “reduce the cost of achieving our decarbonisation goals in the power and industrial sectors”. However the document goes on to clarify that the review will only cover three topics, namely support for greater energy efficiency, the use of “existing instruments” to support further cost reductions in offshore wind, and collaboration with Ofgem to “ensure markets and networks operate as efficiently as possible”. There is no mention of solar PV or onshore wind – forecast by the government’s advisory body The Committee on Climate Change to be the cheapest forms of low-carbon power by the fifth carbon budget reporting period – in the entire document.

Do the Netherlands’ trains really run on 100% wind power? -- This question generated a number of comments in the last Blowout so I thought I would take a quick look at it. I find that the electrified portion of the Dutch railway network runs on grid electricity that comes dominantly from fossil fuel generation (natural gas and coal). NS claims 100% wind power because it has a contract with various wind farms to produce enough energy to power its rail system, but this is just an accounting transaction. Only a small fraction of the power delivered to its trains actually comes from wind. First some details on the Netherlands’ electricity sector. As shown in the table below installed capacity is dominantly fossil fuel, with natural gas making up 61% of total installed capacity and coal 15%. Wind contributes 4,117MW, representing 13% of the capacity mix. (Data from ENTSO-E ):  No details on the current generation mix are readily available, but as shown in Figure 1 gas and coal supplied around 80% of the Netherlands’ electricity between 2000 and 2013 and it’s likely that this percentage still applies. How much of the Netherlands’ electricity is supplied by wind? According to Cleantechnica   wind power in the Netherlands generates 7.4 billion kWh (7.4TWh) of electricity annually, and according to BP the Netherlands’ total electricity generation in 2015 was 109.6TWh. However, wind power consumption in the Netherlands in 2015 was 12.5TWh, indicating that about 5TWh of wind power was imported during the year. So while wind contributes about 7% to the Netherlands’ electricity generation it contributes about 11% to the country’s electricity consumption. Either figure comfortably exceeds the amount of electricity NS uses to power its electric trains, which is variously quoted as either 1.2 or 1.4TWh/year.

Europe Is Losing Its Reputation as a Renewable Energy Leader - Europe is losing its status as a global leader in clean energy, with investment in the region plummeting 21 percent last year, while spending in the rest of the world boomed. A record $328.9 billion was invested worldwide in solar, wind and other renewable energy sources in 2015, according to a report released Tuesday by REN 21, an international coalition of governments, renewable energy trade associations and financial institutions including the World Bank Group. Spending in Europe was $48.8 billion, down from $62 billion a year earlier. Excluding China, which is the world’s biggest clean energy investor, Asia poured more into renewables than Europe for the first time in 2015, according to the report, which uses data from Bloomberg New Energy Finance.

Deutsche Bank pulls out of coal projects to meet Paris climate pledge - Deutsche Bank, the biggest bank in Germany, has said it will stop financing coal projects as part of its commitments under the Paris agreement to tackle global warming. “Deutsche Bank and its subsidiaries will not grant new financing for greenfield thermal coal mining and new coal-fired power plant construction,” it said in a statement. Existing exposure to such projects will be gradually reduced, it added. The lender said the decision was in line with the pledges it made at last year’s Paris climate conference, along with 400 other public and private companies, to help fight global warming. The bank pulled out of a deal to finance the controversial expansion of a coal port in Australia in 2014 because it said there was no consensus about how it would impact the Great Barrier Reef. Green groups claimed then that Deutsche Bank had bowed to public pressure after 180,000 Germans signed a petition urging the bank not to fund the expansion at Abbot Point in Queensland. A study last month by the legal group Arabella Advisors found that global funds were increasingly signalling plans to pull out of fossil fuel investments, one year on from the Paris climate agreement. The accord, signed by 192 countries, is the world’s first universal, legally binding climate deal.

Coal India raises doubts about its future  -- Even as it chases a production target of a billion tons a year by 2020, India's state-run coal monopoly is privately raising doubts about its prospects in the next decade. In an unpublished report viewed by the Nikkei Asian Review, Coal India, the world's largest coal producer, says the industry faces a major domestic challenge as renewable energy makes inroads into coal's dominance in electricity generation. Representatives of Coal India's workers rejected the report's pessimistic findings, saying they are a ploy to counter demands for higher wages and better working conditions. Coal India did not respond to requests for comment. Coal India reported record production of 538 million tons for the year ended March 2016, up from 494 million tons the previous year. However, a subsequent fall in demand has forced Coal India to reduce production growth, and it is likely to fall short of the current year's target of 724 million tons. The company produced only 230 million tons in the period to September 2016. Indian imports are also falling -- from 217 million tons in the 2014-2015 financial year to 199 million tons in 2015-2016. In the current financial year, imports are forecast to fall further, to 160 million tons.

Burning Wood Beats Coal at J-Power Amid Climate Change Fight - Japan’s biggest electricity wholesaler knows it’ll take more than cutting-edge coal technology to save the environment. Electric Power Development Co., known as J-Power, is looking to build its first major power plant that burns natural gas near cities such as Tokyo as well as use more woody biomass instead of fossil fuels, Executive Officer Hitoshi Kanno said. That’s because even the most advanced coal technology on offer now isn’t enough for companies like J-Power to meet Prime Minister Shinzo Abe’s emissions goal, he said. Along with countries across the world including China, Japan is seeking to cut carbon dioxide emissions and reduce energy consumption to lessen its impact on global warming, with the Abe government adopting an efficiency target for thermal power producers to meet by the year 2031. J-Power would be unable to meet the goal without burning cleaner fuel like gas and left-over wood and revamping aging facilities.  “As we heavily rely on coal-powered plants, many people say it’s the most difficult for J-Power to meet the target -- and that’s absolutely right,” said Kanno in a Jan. 27 interview in Tokyo. “We would need to replace existing coal plants with more efficient ones, expand the use of biomass fuel and build a gas-fired plant.”

Trump Pushes Contradictory Gas and Coal Boosting Plans -- On the one hand, he’s pledged regulatory rollbacks on fracking and opening federal lands to boost natural gas production. But he also has said he’s going to “save coal.” This Thursday he doubled down on a Trumpian paradox, saying at a GOP retreat in Philadelphia, “We’re going to put our coal miners to work.” Yet in a 2012 tweet he promoted lower natural gas prices, saying, “Fracking will lead to American energy independence.” He stoked the burning contradiction within the same speech this September as well. “The shale energy revolution will unleash massive wealth for America,” Trump told a meeting of natural gas industry executives in Pittsburgh. “And we will end the war on coal and the war on miners.” There’s just one problem. Both coal and natural gas are in the business of lighting American homes — and one can’t win without the other losing.

Coal News: Alaska Natives to protect land for California carbon program: (AP) — An undeveloped Alaska coal field, California's offsets for carbon pollution and thousands of acres of forest are the unlikely players in a complex agreement that is expected to generate millions for an Alaska Native organization. [Native Advertisement] The agreement protects the land from development and sets up financial benefits for the Chugach Alaska Corp., a regional Alaska Native corporation representing 2,500 Aleut, Eskimo and Indian shareholders around Alaska's Prince William Sound. Many largely rely on commercial fisheries and a subsistence lifestyle. The corporation will preserve 115,000 acres of its forested land that will be used to calculate credits purchased by California polluters through the state's "cap and trade" program to reduce greenhouse gas emissions. It's not an unusual move, with protected forests in Michigan, South Carolina, New Hampshire, Virginia, Wisconsin and Arizona feeding into the program, said Dave Clegern, California Air Resources Board spokesman. Alaska's effort to join California's aggressive program to fight climate change comes as President Donald Trump's administration has vowed to loosen environmental protections and disputed global warming. Participants in the deal say other Alaska Native corporations are pursuing similar projects. They declined to disclose the price of their agreement, saying the terms are confidential. Potential payoffs from the carbon offsets, however, are expected to run in the millions for a long period of time, according to Josie Hickel, a Chugach senior vice president and shareholder.

House begins tearing up Obama-era rules - POLITICO: The House passed two bills on Wednesday that will erase regulations targeting the coal industry and the oil and mining sector, launching Republicans' offensive against a series of late-term rules put in place by former President Barack Obama. If it passes the Senate and is signed by President Donald Trump, as is expected, the vote will mark the first time in 15 years that lawmakers successfully used the Congressional Review Act to unwind executive branch actions — and Republicans lawmakers who were enraged over Obama’s expansive regulatory agenda say they are prepared to deploy the tool to kill a dozen or more rules on energy, labor and guns. Story Continued Below The first two such resolutions cleared the House on Wednesday, largely along party line votes, and target the Interior Department’s stream rule, which aimed to protect waterways from pollution from mountaintop coal mining but was fiercely opposed by the industry and GOP. The second kills a Securities and Exchange Commission rule requiring oil, gas and mining companies to reveal payments made to foreign governments. "These measures will deliver relief from regulations that threaten to wipe off thousands of jobs in the energy industry," House Speaker Paul Ryan said Tuesday. The Senate may take up those resolutions as soon as Wednesday, according to Sen. Jim Inhofe (R-Okla.), who sponsored the Senate version of the SEC resolution. An aide to Senate Majority Leader Mitch McConnell said nothing was scheduled yet.

House GOP dismantles Obama regulation protecting streams from coal mining debris - - Moving to dismantle former President Barack Obama's legacy on the environment and other issues, House Republicans approved a measure Wednesday that scuttles a regulation aimed at preventing coal mining debris from being dumped into nearby streams. Lawmakers also voted to rescind a separate rule requiring companies to disclose payments made to foreign governments relating to mining and drilling. Republicans said the votes were first in a series of actions to reverse years of what they see as excessive government regulation during Obama's presidency. Rules on fracking, guns and federal contracting also are in the cross-hairs as the GOP moves to void a host of regulations finalized during Obama's last months in office. "Make no mistake about it, this Obama administration rule is not designed to protect streams. Instead, it was an effort to regulate the coal mining industry right out of business," said Rep. Bill Johnson, R-Ohio, who sponsored the disapproval measure on the stream protection rule.The House approved the measure, 228-194. Nine Republicans voted against repeal, while four Democrats supported it. Lawmakers approved the financial disclosure measure, 235-187. The rule, which grew out of the 2010 Dodd-Frank financial oversight law, was intended to promote transparency so citizens in some of the world's most impoverished countries can hold their governments accountable for the wealth generated through mining and drilling. Republicans said the regulation placed an unfair burden on U.S. companies by requiring them to hand over key details of how they bid and compete while many foreign competitors are under no obligation to do the same. The GOP said the cost of compliance is estimated at $590 million a year — money that could be used to help produce more oil, gas and mineral resources.

Jenkins: Stream Protection Rule will be overturned soon: The House of Representatives voted Wednesday to remove the Stream Protection Rule. Congressmen David McKinley (R-W.Va.) and Evan Jenkins (R-W.Va.) spoke on the House floor about the impact of the rule and how it impacts West Virginia. “Simply put, it was President Obama’s attempt to drive a final nail into the coffin of an industry that made America great,” McKinley said. “This war on coal has to come to a stop and I think this election set the tone for that.” “The loss of a coal job and the closing of a coal mine affects us all,” Jenkins said. “Its severance tax revenues help to fund our schools, pay for our police and fire departments, and put money in the coffers of our local governments. This rule would cost cities and counties $6.4 billion in tax revenue with the decline in coal mining.” The resolution passed 228-194. The Senate will consider the resolution when the chamber’s session begins Thursday at 11:00 a.m. Both Senators Joe Manchin (D-W.Va.) and Shelley Moore Capito (R-W.Va.) support removing the rule.

Coal rule killed by U.S. Congress, others near chopping block | Reuters: The U.S. Congress moved swiftly on Thursday to undo Obama-era rules on the environment, corruption, labor and guns, with the Senate wiping from the books a rule aimed at reducing water pollution. By a vote of 54-45, the Senate approved a resolution already passed in the House of Representatives to kill the rule aimed at keeping pollutants out of streams in areas near mountaintop removal coal-mining sites. The resolution now goes to President Donald Trump, who is expected to sign it quickly. It was only the second time the Congressional Review Act, which allows lawmakers to stop newly minted regulations in their tracks, has been used successfully since it was passed in 2000. The Senate then turned to an equally controversial rule requiring mining and energy companies such as Exxon Mobil and Chevron to disclose taxes and other payments they make to governments at home and abroad. Democrats, who cannot filibuster the resolution, attempted to slow the process by pushing debate late into the night, with a vote scheduled for shortly after 6:30 a.m. on Friday. Republicans are using their control of Congress and the White House to attack regulations they believe hurt the economy. They cast the stream protection rule as harming industry and usurping state rights. "The Obama Administration’s stream buffer rule was an attack against coal miners and their families,” said the top Senate Republican, Mitch McConnell, adding it had threatened jobs in his home state of Kentucky.

Congress Passes Unconventional Nuclear Power Bill - House lawmakers passed legislation Monday to support unconventional nuclear power. If signed by President Trump, the proposal could change how the government regulates nuclear power and create a boom in the utilization of advanced unconventional reactor technology. The bill was sponsored by two Republicans and three Democrats. “We believe that trailblazing the advance of nuclear energy technology including Gen 3+, Small Modular Reactors, Non-Light Water Reactor (LWR) Advanced Reactors and Fusion Reactors is one of the key imperatives for U.S. market competitiveness,” David Blee, executive director of the U.S. Nuclear Infrastructure Council (NIC), told The Daily Caller News Foundation. “It is vital to maintaining the U.S. lead in technology innovation, safety enhancements, energy security and clean energy,” Blee said.

Reps. Yarmuth, Slaughter Introduce Bill to Halt New Mountaintop Removal Coal Mining – Today, Rep. John Yarmuth (KY-3) and Rep. Louise Slaughter (NY-25) reintroduced the Appalachian Community Health Emergency Act, legislation that requires the first comprehensive federal study of the health dangers of mountaintop removal coal mining. The ACHE Act, H.R. 786, places a “time out” on all new mountaintop removal mining permits until federal officials determine that the controversial process does not pose a threat to the health of surrounding communities.  Rep. Yarmuth said, “Mountaintop removal poses a dangerous threat to clean air, clean water, and the health and safety of the residents of coal communities throughout our nation. As this administration is sure to expand the use of this reckless practice, it’s imperative that our government conduct a comprehensive federal study of the health risks of this harmful mining method and provide coal community families with the information and answers they are rightfully owed. I believe mountaintop removal should be banned, but at a minimum we should halt all new permits until the safety of the residents in the surrounding communities is assured.”  “Every American has a right to live and raise their family in a safe and healthy environment,” said Rep. Slaughter, a native of Harlan County, KY whose father was the blacksmith for a coal mine. “Reckless, profit-driven mining practices that contaminate the air and water all too often infringe on that right and put the health of entire communities at risk. The scientific evidence is clear, and we should place a moratorium on further mountaintop coal removal until we can ensure that families in these communities are safe.”  The ACHE Act would require the Department of Health and Human Services to conduct a comprehensive study to determine the health effects of mountaintop removal mining.

EDF approves compensation for French nuclear plant shutdown - EDF has approved the French government’s offer of compensation for shutting down its 1800 MW Fessenheim nuclear power plant (pictured).The plant came online in 1978 and is the nation's oldest operational nuclear facility. It has been planned for shutdown since 2012 in fulfilment of a campaign promise by President Francois Hollande.In August 2016 the government agreed to pay an initial sum to cover the costs of shutting down the plant. This week EDF’s board said it would receive a first payment of €490m ($527m) as well as potential additional payments until 2041 to make up for lost income. EDF said in a statement that the payments would cover decommissioning, staff retraining, taxes and “post-operation costs”. Government authorization for EDF’s troubled 1650 MW Flamanville 3 EPR reactor, as well as for restarting its 1300 MW Paluel 2 reactor which was taken offline in early 2015, depends on the shutdown of Fessenheim as, according to a 2015 law, France’s installed nuclear generation capacity cannot exceed 63.2 GW. The Flamanville reactor is planned to come online in late 2018. Although trade unions had protested Fessenheim's shutdown in anticipation of job losses, EDF said it had proceeded with the agreement despite the "unanimously negative opinion" submitted by its union.

Possible nuclear fuel find raises hopes of Fukushima plant breakthrough - Hopes have been raised for a breakthrough in the decommissioning of the wrecked Fukushima Daiichi nuclear plant after its operator said it may have discovered melted fuel beneath a reactor, almost six years after the plant suffered a triple meltdown.Tokyo Electric Power (Tepco) said on Monday that a remote camera appeared to have found the debris beneath the badly damaged No 2 reactor, where radiation levels remain dangerously high. Locating the fuel is the first step towards removing it. The operator said more analysis would be needed before it could confirm that the images were of melted uranium fuel rods, but confirmed that the lumps were not there before Fukushima Daiichi was hit by a powerful earthquake and tsunami on 11 March 2011. The tsunami, triggered by a 9.0-magnitude quake, killed more than 18,500 people along the coast of north-east Japan and destroyed the backup power supply at Fukushima Daiichi, triggering the world’s worst nuclear accident since Chernobyl 25 years earlier. Meltdowns in three of the plant’s six reactors forced about 160,000 people to evacuate and sent plumes of radiation across the Fukushima region. Many of the evacuees are unlikely to return home. If Tepco can confirm that the black mass comprises melted fuel, it would represent a significant breakthrough in a recovery effort that has been hit by mishaps, the buildup of huge quantities of contaminated water, and soaring costs.  Three previous attempts to use robots to locate melted fuel inside the same reactor ended in failure when the devices were rendered useless by radiation.

Radiation levels in Japan’s nuclear Fukushima plant at record high | world-news | Hindustan Times: Radiation levels inside a stricken reactor at Japan’s Fukushima nuclear plant have hit a record high capable of shutting down robots, in the latest challenge to efforts aimed at dismantling the disaster-hit facility. Radiation levels inside the plant’s No 2 reactor were estimated at 530 sieverts per hour at one spot, Tokyo Electric Power Co (TEPCO) said on Thursday after analysing images taken by a manually operated camera that probed the deepest point yet within the reactor. Even after taking a 30% margin of error into account, the radiation level was still far higher than the previous record of 73 sieverts per hour detected by sensors in 2012 though at a point not as deep, TEPCO said. Radiation exposure at 530 sieverts per hour would effectively shut down TEPCO’s planned robot camera probe in under two hours. But TEPCO said the high reading focused on a single point, with levels estimated to be much lower at other spots filmed by the camera. It added that the planned robot probe would not sustain severe damage because it was unlikely to linger for too long at a single point. The three cameras mounted on a caterpillar-type robot are designed to withstand up to 1,000 sieverts in total. TEPCO said the radiation is not leaking outside the reactor.

Record high fatal radiation levels, hole in reactor detected at crippled Fukushima nuclear facility -- Radiation levels of up to 530 Sieverts per hour were detected inside an inactive Reactor 2 at the Fukushima Daiichi nuclear complex damaged during the 2011 earthquake and tsunami catastrophe, Japanese media reported on Thursday citing the plant operator, Tokyo Electric Power Company (TEPCO).  A dose of about 8 Sieverts is considered incurable and fatal.  A hole of no less than one square meter in size has also been discovered beneath the reactor's pressure vessel, TEPCO said. According to researchers, the apparent opening in the metal grating of one of three reactors that had melted down in 2011, is believed to be have been caused by melted nuclear fuel that fell through the vessel.The iron scaffolding has a melting point of 1500 degrees, TEPCO said, explaining that there is a possibility the fuel debris has fallen onto it and burnt the hole. Such fuel debris have been discovered on equipment at the bottom of the pressure vessel just above the hole, it added. The latest findings were released after a recent camera probe inside the reactor, TEPCO said. Using a remote-controlled camera fitted on a long pipe, scientists managed to get images of hard-to-reach places where residual nuclear material remained. The substance there is so toxic that even specially-made robots designed to probe the underwater depths beneath the power plant have previously crumbled and shut down. However, TEPCO still plans to launch further more detailed assessments at the damaged nuclear facility with the help of self-propelled robots.  Earlier this week, hopes for a more efficient cleanup at Fukushima were high, as the plant operator announced a portion of nuclear fuel debris responsible for a lot of the lingering contamination from six years ago may have finally been found.

Fukushima Radiation Spikes to Unprecedented Levels Following Possible Breach - New readings at Fukushima have recorded the highest radiation levels seen since the triple core meltdown that occurred in 2011. Readings inside the containment vessel of reactor no. 2 are as high as 530 sieverts per hour, a dosage that would be fatal dozens and dozens of times over if a human were to be exposed to it. The previous high was a still very fatal rate of 73 sieverts per hour. Tokyo Electric Power Co. Holdings Inc. (Tepco) tells the Japan Times that the reading was taken underneath the pressure vessel that contains the reactor core. Along with the extremely high levels of radiation—described to the Times as "unimaginable" by expects—inspections found hole in the floor grating under the pressure vessel, where melted fuel may have passed through, perhaps as early as 2011 at the time of the initial incident. From the Japan Times: Tepco said on Thursday that the blazing radiation reading was taken near the entrance to the space just below the pressure vessel, which contains the reactor core.Tepco also announced that, based on its analysis of images taken by a remote-controlled camera, that there is a 2-meter hole in the metal grating under the pressure vessel in the reactor's primary containment vessel. It also thinks part of the grating is warped.  It will be a tough problem to solve because the radiation is so horrifically severe. It's enough to kill a human with only very brief exposure but robots aren't safe either. At levels this high, a robot would only be able to operate for two hours before the radiation ravages its internals and renders it useless.  Tepco hopes to find and start removing the fuel by 2021.

 China, Saudi Arabia agree to build HTR - China and Saudi Arabia have signed a memorandum of understanding on the construction of a high-temperature gas-cooled reactor (HTR). It was one of 14 agreements and memoranda of understanding signed yesterday during a meeting in Riyadh of Chinese president Xi Jinping and Saudi’s King Salman bin Abdulaziz. CNEC has been working with Tsinghua University since 2003 on the design, construction and commercialization of HTR technology. The partners signed a new agreement in March 2014 aimed at furthering cooperation in both international and domestic marketing of the advanced reactor technology. In a statement today, CNEC said: “After 30 years of basic research, experimental reactor operation and demonstration projects, China has now systematically mastered all the key HTR technologies.” A demonstration HTR-PM unit under construction at Shidaowan near Weihai city in China’s Shandong province. That plant will initially comprise twin HTR-PM reactor modules driving a single 210 MWe steam turbine. Construction started in late 2012 and it is scheduled to start commercial operation in late 2017.

Daily chart: Construction of most nuclear-power reactors is behind schedule | The Economist: THE boom in nuclear energy began in the 1950s, when America, Russia, Britain and France rushed to develop reactor technologies for electricity generation. By the late 1970s around 230 reactors were under construction. However, following the accidents at Three Mile Island in 1979 and Chernobyl in 1986, fears about safety led governments in Europe and America to halt construction and wind down research on new civilian nuclear technology. Interest in nuclear energy did not rebound until the turn of the millennium, when concerns over securing energy supplies, reducing carbon emissions and meeting the growing demand for electricity in developing economies kick-started another wave of investment. Building reactors is not an easy business proposition. Two recent additions to the world’s nuclear fleet, in Argentina and the United States, took 33 and 44 years to erect. Moreover, neither of the two technologies that were supposed to revolutionise the supply of nuclear energy—the European Pressurised Reactor (EPR) and the AP1000 from America’s Westinghouse—has yet been installed, despite being conceived early this century. According to the Global Nuclear Power database, almost two-thirds of the 55 plants currently under construction are behind schedule. In Finland, France and China, all of the EPRs in progress are years behind planners′ expectations. Delays in construction of the AP1000s in America are likely to cost Toshiba, their owner, billions of dollars. On January 27th Toshiba said it was scaling back its nuclear ambitions.Nonetheless, relative upstarts in South Korea and China show that large reactor projects are still viable. South Korea’s Korea Electric Power (KEPCO) is building four plants in the United Arab Emirates. The first reactor at the Barakah plant in Abu Dhabi is set to go online within months, on time and possibly on budget. If it succeeds, the reason is likely to be consistency. KEPCO always works with the same suppliers and construction firms hailing from Korea Inc. By contrast, both the EPR and AP1000, first-of-a-kind technologies with teething problems, have suffered from being contracted out to global engineering firms.

Ohio electric deregulation on the chopping block? | cleveland.com: -- The big power plants that FirstEnergy and Columbus-based American Electric Power have operated for decades just cannot make electricity as cheaply -- or as profitably -- as the new gas turbines, and at times, wind farms. The companies have been looking for a way to escape the perils of market prices that come with deregulation or at the very least craft "surgical" amendments to state laws that since 2000 have been gradually moving the industry into market-based pricing. In other words, they want to "re-structure" the state's utility laws. And you can bet that their opponents -- independent power producers which own coal plants or are building gas turbine plants --along with consumer groups are gearing up for a fight. This past week Nicholas Akins, CEO of AEP, gave a glimpse of what the utilities have been talking about privately and efforts to resolve their differences before they formally involve lawmakers. "We've got to make sure that an industry restructuring package is transparent enough and people will understand it well enough to accommodate some of these varied interests," he told financial analysts during the company's public teleconference discussing 2016 sales and profits. "There are already drafts of legislation that are circulating around and we just need to make sure all the parties are comfortable with that,"he added. AEP, which is doing well financially, wants to build wind and solar farms, and maybe new gas plants, he told them. And FirstEnergy is interested in finding a way to subsidize its nuclear power plants Davis-Besse and Perry.

Ohio Gov. Kasich again pushes for oil and gas severance tax increase | Midwest Energy News: The latest state budget from Ohio Gov. John Kasich renews his effort to increase the severance tax for oil and natural gas. And once again, that proposal is meeting with opposition from some state lawmakers and leaders in the state’s oil and gas industry. The proposal would impose a fixed rate of 6.5 percent for crude oil and natural gas when sold at the wellhead, and a lower rate of 4.5 percent at later stages of distribution for natural gas and natural gas liquids. Two years ago, Kasich sought the same rates in the 2015 budget. “These rates are lower than those levied by other major state producers, such as Texas, Oklahoma and North Dakota, and will place Ohio squarely in the middle of the pack of all state rates,” according to a fact sheet provided when the 2017 budget package was released. Ohio’s current rate of 20 cents per barrel of oil and 3 cents per thousand cubic feet (Mcf) of natural gas is “already at the ground floor with regard to how much they tax this industry,” noted Ted Auch of FracTracker Alliance. “They’re giving this stuff away.” Nonetheless, Ohio House Finance Committee chairman Rep. Ryan Smith (R-Bidwell) called the proposal “ironic” and compared it to the 1993 movie Groundhog Day. “Because the same thing is coming back budget after budget after budget,” Smith said. He spoke about the proposal at a conference hosted by Vorys Advisors and the law firm of Vorys, Sater, Seymour and Pease in Columbus on January 31.

Baseline results in for injection well water study - Athens NEWS Baseline water-quality testing conducted by Ohio University employees on behalf of Athens County near fracking waste injection wells showed some chemicals at several sites exceeding secondary maximum contamination levels, as well as Ohio Department of Health advisory levels. The levels did not rise to the level of being actionable, however. The Regional Groundwater Quality Report was funded by the Athens County Commissioners for $15,637 and was produced by the OU Voinovich School of Leadership and Public Affairs by Senior Project Manager Jennifer Bowman, Environmental Studies associate professor Natalie Kruse and Geospatial Software Development Engineer Steve Porter.  Waste-injection wells have become extremely controversial in Athens County, with environmental activists claiming they threaten vital water resources, among other problems. The oil and gas industry insists they’re safe, and argue that waste injection is safer than other forms of disposal.  Bowman, the Athens County Fracking Action Network and Torch CAN-DO were meeting with local residents to obtain permission to conduct further monitoring of water wells throughout that area, which includes four fracking waste injection wells.  The study area included the eight active Class II injection wells in Athens County. The researchers collected samples during two separate time periods, which were analyzed by the Summit Environmental Technologies, Inc. laboratory in Cuyahoga Falls, Ohio. The study’s conclusions reported that iron, manganese and total dissolved solids exceeded the secondary maximum contamination levels at various sites. . “In addition, one parameter that exceeded health advisories includes methane.”

TransCanada receives approval for two Marcellus area pipelines -- The executive order that gave TransCanada the go ahead to pursue completion of the Keystone XL Pipeline stole the spotlight from two smaller, but still substantial pipeline projects received approval from the Federal Energy Regulatory Commission (FERC). A TransCanada press release announced the approval for the construction of the Leach XPress and Rayne XPress projects. Both will provide natural gas from the Marcellus and Utica production areas to Midwest and Gulf Coast Markets.  The $1.4 billion Leach XPress will transport 1.5 billion cubic feet per day (Bcf/d) of natural gas across the northern panhandle of West Virginia and then through southeastern Ohio. The Rayne XPress will provide natural gas to the Gulf Coast region and includes two new compressor stations to increase the Rayne Pipeline’s capacity by 1.0 Bcf/d. Marcellus Drilling News reported that the two pipelines have not been without controversy, despite limited publicity. Last June the Obama EPA tried to derail the projects (see Federal EPA Throws Cold Water on Leach XPress, Rayne Xpress Pipes). However, FERC ignored the EPA and moved forward (a latter day miracle). Last June, Natural Gas Intelligence laid out the EPA’s concerns, citing mostly insufficient information in regards to its environmental impact and the alternative options for pipelines in the area that would eliminate the necessity of the Leach, including the Mountaineer XPress Pipeline, which would require far fewer miles of pipeline in order to expand capacity. The article also noted that most of the possible impacts of the Leach could likely be minimized with mitigation plans. TransCanada has a November 1, 2017 in-service date for the projects, beginning right-of-way preparation and construction on both of the pipeline projects in February.

Williams Gets U.S. Approval for $3 Billion Shale Gas Pipeline - Williams Cos. won U.S. approval to build its $3 billion Atlantic Sunrise natural gas pipeline expansion in the Northeast, ending a review that ran almost two years and forced delays in the project. The 200-mile (322-kilometer) pipeline will expand shipments from shale formations by enough to serve 7 million homes, according to Williams. The Federal Energy Regulatory Commission approved it on Friday just hours before the scheduled resignation of commissioner Norman Bay, whose departure will leave the agency without the quorum needed for major decisions. The decision spares Williams further delays after already waiting for more than 670 days for clearance. Last year, the stocks of both Williams and a would-be shipper on the project, Cabot Oil & Gas Corp., plunged on speculation that the expansion would face more regulatory setbacks. The time it takes to approve such pipelines has jumped to 429 days from 359 days just in the past three years as environmental opposition grows, according to Bloomberg Intelligence. Williams said in a statement Friday that it was pleased the agency had approved “this much-needed energy infrastructure project.” The company said it plans to start construction on the main portion of the project in mid-2017, establishing a path for more gas to flow to markets along the Eastern Seaboard in time for the 2017-2018 winter heating season. Construction on another part of the project known as the Central Penn Line is scheduled to begin in the third quarter, allowing Williams to bring the entire capacity of the expansion into service in mid-2018.

Uncovered DEP data reveals effects of fracking in PA - The publicly funded and independent watchdog press Public Herald recently published the results of a three-year investigation in Pennsylvania that it says reveals “widespread and systemic impacts related to ‘fracking’.” The Herald first filed a request for records of complaints to the Pennsylvania Department of Environmental Protection (DEP) in 2011. The DEP declined to release the complaints, telling the Herald they were “confidential” and that they “didn’t want to cause alarm.” However, after persistent inquiry, the Herald reviewed 6,819 complaint cases and more than 50 file reviews, resulting in public availability of these cases via the Pennsylvania Oil & Gas Complaint Map. The Public Herald notes that citizen complaints are dispersed across counties where shale gas drilling occurred. The Public Herald saw complaints about drinking water, water supplies, gas migration, spill response, pollution, and leaking wells. In conjunction with Dr. Anthony Ingraffea, a published oil and gas engineering expert from Cornell University, the team analyzed the data. Ingraffea states: It’s not like all the bad stuff is happening up in the northeast. Pennsylvania is pretty widespread, and what the data shows, quite clearly, is that impact has been systemic. It’s not as if complaints about fracking are new. There have been many controversies surrounding the practice, even some that have led to bans and moratoriums. But what surprised the Public Herald team most was the total number of complaints–thousands more than they anticipated–and that they showed a strong relationship to unconventional shale gas development. As unconventional well numbers rose, complaints also went up during the same time period in correlation to the complaints. When compared to conventional gas drilling, the number of wells drilled was high, but complaints were low. While there could be other factors that affect these numbers, such DEP reporting records or other record-keeping issues, it is hard to ignore the Herald’s data. …when Governor Tom Wolf took office in 2015, after campaigning on the promise to make fracking “safe,” the number of complaints exceeded the number of new shale gas wells for the first time since 2009.

Exxon's Fracking Linked to 176 Drinking Water Complaints in Rural Pennsylvania – Steve Horn - The investigative journalism outlet Public Herald documented that ExxonMobil subsidiary XTO Energy has been the subject of 176 citizen complaints in Pennsylvania, many of them drinking water-related. The state is home to the Marcellus Shale basin, the most prolific field for obtaining natural gas via hydraulic fracturing ('fracking”) in the U.S. and an early hotbed of debate on fracking's potential threats.  In its investigation, the Pennsylvania-based publication spent three years digging up complaints submitted by the state's citizens to the Pennsylvania Department of Environmental Protection (DEP). With documents spanning from 2004–2016, the complaints previously have been concealed from the public, and Public Herald says they show “evidence of widespread and systemic impacts” of fracking on water in the state. A DeSmog review of files housed on the investigation's document-hosting website, PublicFiles.org, shows dozens upon dozens of these wells were owned by XTO. Exxon bought XTO as a wholly owned subsidiary in 2009 and said that the purchase would “enhance Exxon Mobil's position in the development of unconventional natural gas and oil resources.” Indeed, Exxon quickly became and still is the top producer of shale gas in the U.S.One of Exxon's liquefied natural gas export projects, Golden Pass LNG, which is co-owned with Qatar Petroleum, reported in March 2016 that it will receive gas from the Transco Pipeline system. Transco, as DeSmog reported in 2014, will feed Marcellus Shale gas to Gulf of Mexico-based export facilities like Golden Pass.  As a company, Exxon lobbied on behalf of liquefied natural gas (LNG) exports in quarter two and quarter four of 2016. Golden Pass got a key permit from the Obama administration in December. But what kind of impacts are these projects leaving behind in Pennsylvania and other fracking sites?

9,942 Citizen-Reported Fracking Complaints Reveal 14-Years of Suppressed Data - Guess what was found in Pennsylvania's Department of Environmental Protection's (DEP) filing cabinets after gas operators drilled 10,027 fracking wells over the last 14 years? Only 9,942 citizen-reported fracking complaints. And 44 percent of those are drinking water-related. Pennsylvania's DEP finally released the complaints to Public Herald , an investigative journalism nonprofit. There's much to learn from Pennsylvania's now-public 9,942 fracking complaints as legislators decide to frack or not to frack in Western Maryland.  As fracking took off in 2008, so did the number of citizens lodging water, air and land fracking complaints with the DEP.   A year ago, we reported that Pennsylvania's drinking water contamination due to fracking appeared to be much higher than previously reported. To date, Pennsylvania's Department of Environmental Protection (DEP) reports only 284 positive water contaminations for the 10,027 fracking wells drilled. That three percent figure seems pretty low.  What hasn't set right with many is that Pennsylvania's official water contamination rate is starkly different than what citizens report on-the-ground. Thousands of news stories, YouTube videos and social media posts report an entirely different story of serious fracking water issues, rampant air pollution , land destruction and negative health issues.

Managing fluids used in shale wells - The largest shale play in the United States spans across Farm and Dairy’s readership area, producing one-fourth of the nation’s natural gas. This area is also known as the Utica and Marcellus basins. “Shale gas continues to grow, right now harvesting 37.4 billion cubic feet per day,” said David Yoxtheimer, hydrogeologist and Extension associate with Penn State University’s Marcellus Center for Outreach and Research.  But millions of gallons of fluids are being used to drill and fracture those wells.“Water management costs are significant — $2-$15 per barrel to dispose of the fluids,” he said. “When you think of millions of barrels being produced each day, those numbers add up quickly.”Penn State’s Marcellus center reports between 5 and 25 percent of the cost to drill and develop a shale well is in managing the fluids.Drillers use 50,000 to 100,000 gallons of water in the drilling process and 3- to 10-plus million gallons of water to hydraulically fracture a single well, according to 2016 reports from Penn State. The fluid has to be managed before and after the well is drilled and/or fractured.  The flowback fluids, meaning the fluid that comes back to the surface immediately after fracking, can be anywhere from 5-50 percent. Flowback fluids have a low concentration of metal and salts. Produced fluids that come out of the well over time and during production have a higher concentration of dissolved solids because they have had a longer time in contact with the shale. Experts estimate a half a barrel of produced fluid for every barrel of oil. In fracturing fluid, there is a wide range of additives used. The additives are used to inhibit corrosion to protect the steel, biocides to disinfect, etc. To find out what exactly is added to the water in a specific area or project, visit www.fracfocus.org, a website operated by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission.  There are five options for the fluids once they are used:

• • Direct reuse, blending with new fluids;
  • On-site treatment with reuse;
  • Off-site treatment with reuse;
  • Treatment, with discharge into ground water;
  • Class II Underground Inspection Control well disposal;

GOP lines up resolutions to undo coal, methane rules - House Republicans are preparing to vote next week on two resolutions undoing pollution rules issued in the closing months of the Obama administration. Two Interior Department rules — one protecting streams from coal mining waste and another to cut methane emissions at oil and natural gas drilling sites — are the targets of Congressional Review Act resolutions due up in the House next week. Rep. Rob Bishop(R-Utah), the chairman of the House Natural Resources Committee, called the rules “abusive, last minute regulations.”“Congress has an obligation to ensure executive actions are consistent with congressional intent, and that agencies operate in accordance with their statutory mandate,” he said on Friday. “When they don’t, and in this case they haven’t, it is our responsibility to act.” Both rules have been targets for House Republicans and affected industries for a long time. The Stream Protection Rule is an Office of Surface Mining regulation that was reviewed over the course of the entire Obama administration. Environmental groups supported the rule as a measure to protect waterways from adverse impacts of mountaintop removal mining, but the coal industry said the regulation would kill mining jobs. Methane was a target for Obama later on in his presidency, when regulators warned about its impact on climate change. But the drilling industry said the Bureau of Land Management's venting and flaring rule is too costly, and it quickly moved to oppose new federal regulations on oil and natural gas wells.

Here's What's at Stake If Congress Kills the Methane Rule --Now, the oil and gas industry and its allies in Washington, DC, are echoing the miners of old as they try to do away with the Interior Department's Methane and Waste Prevention Rule, which was finalized in November of last year. The industry's arguments today are just as flawed as the miners' were a century ago. Just as it was standard practice for mills to dump tailings directly into streams, so is it common for oil drillers to dump natural gas, a mix of methane and other hydrocarbons, into the atmosphere. The practice is known as venting or, when the methane is burnt off, flaring, and it's done when a well lacks a "gathering system" to pipe the natural gas that accompanies oil from the well to the market. Meanwhile, methane can leak from nearly every step of oil and natural gas production, from drilling, to fracking, to piping, to processing. In 2015, the oil and gas industry reported that its facilities in the U.S. collectively emitted 3.3 million metric tons of methane, with a little less than half that coming from facilities on federally managed lands. Methane is a potent greenhouse gas, with at least 86 times the warming potential of carbon dioxide over the short term. If methane is leaking, then so are harmful hydrocarbons, such as benzene, a known carcinogen. Those reasons are enough to get a handle on leaks and venting. But even for those who don't believe in human-induced climate change—i.e. members of the new administration in Washington and many Republican congressmen—there is another compelling case for reducing methane leaks. The stuff leaking from the pipes and being vented and flared is natural gas, a marketable commodity. That's money oozing into the air. More than $300 million worth of gas is lost annually from federal and tribal lands alone, according to a 2015 Environmental Defense Fund analysis. That adds up to millions in lost royalties for the feds and local communities, too. 

 New bill would prohibit DEP from enacting tougher methane standards than EPA -  A bill in the state Senate could handcuff the Pennsylvania Department of Environmental Protection in enacting tough regulations on methane emissions, but it is receiving opposition from environmentalists and Gov. Tom Wolf. At its core, the bill would prohibit the DEP from enacting any methane regulation that is stricter than any regulation on the books with the federal Environmental Protection Agency. State Sen. Guy Reschenthaler, R-37, Jefferson Hills, sponsored the bill and said Monday it would help get rid of “duplicative regulations” between the DEP and the EPA. However, some environmentalists see it as an attempt to take enforcement powers away from the DEP at a time when President Donald Trump is stripping oversight abilities of the EPA. Joseph Otis Minott, executive director of the Philadelphia-based Clean Air Council, said Monday the bill is a “terrible” idea that would “hurt the health and welfare of Pennsylvania residents living in shale country. “It deprives Pennsylvania from doing what it believes it should do to protect public health and welfare of its residents,” he said. “Pennsylvania is the nation’s second-largest producer of natural gas and the state with the oldest infrastructure. Why would the Legislature cede its responsibility to protect its residents to the federal government?” Reschenthaler said his bill would streamline regulations and help in job creation by reducing “a duplicative, confusing and costly patchwork of standards” between the DEP and EPA.

Virginia House Votes to Keep Fracking Chemical Cocktails a Secret -  Virginia's House of Delegates voted 59-37 on Monday in favor of a bill that would allow fracking companies to keep their chemical cocktails a secret.  HB 1678 states that "chemical ingredient names, the chemical abstracts number for a chemical ingredient, or the amount or concentration of chemicals or ingredients used to stimulate a well" are exempt from the Virginia Freedom of Information Act.  As the Richmond Times-Dispatch reported, while fracking is not heavily used in Virginia, some energy companies have shown interest. Texas energy company Shore Exploration and Production Corp. has acquired about 86,000 acres of gas and oil leases for Virginia's Taylorsville basin.  The bill was sponsored by Republican delegate Roxann L. Robinson, who argued that "by protecting that actual recipe, it will foster more efficient and more advancements in the fracking industry."   She claimed that HB1678 has since evolved into a "transparency bill" after it was amended to only cover information about chemical concentrations, not the chemicals themselves, according to the Times-Dispatch. Robinson has also sponsored HB 1679 , a separate bill that "authorizes the Director of the Department of Mines, Minerals and Energy (Director) to disclose [chemical names and concentrations] to additional Department staff or state or local officials to assist the Department in responding to an emergency."

Atlantic Coast Pipeline collaborators 'encouraged' by Trump's energy infrastructure push -   Players behind an effort to stretch a 550-mile natural gas pipeline from West Virginia to North Carolina say they’re “encouraged” by President Donald Trump’s apparent push for energy infrastructure projects. The Atlantic Coast Pipeline is a collaboration of subsidiaries of Dominion Resources, Duke Energy, Piedmont Natural Gas and Virginia Natural Gas parent AGL Resources. And it was one of more than 50 infrastructure projects from across the nation prioritized in a new report attributed to Trump’s administration, apparently uncovered by McClatchy Newspapers’ Washington bureau. The Trump report says the project would mean 10,000 total direct jobs and cost between $4.5 billion and $5 billion. It errantly says the project has been permitted. The earliest the project could even receive its final federal permissions would be this fall. Aaron Ruby, spokesman for the ACP, said his group couldn’t comment on lists reported in the media “as we cannot independently verify their source.” Nor would he answer questions about whether the Trump administration had consulted ACP before apparently constructing its list. “However, we are very encouraged by the Trump administration’s recognition of the urgent national need to build critically important energy infrastructure projects,” he said, pointing to the president’s recent moves to push other pipeline projects forward, such as Dakota Access. “The administration has taken several important first steps in recent days to clear the path for these projects, and we are eager to work with the president to ensure that projects like the Atlantic Coast Pipeline are approved and built in a timely manner.”

Colonial Pipeline refiles tariff to change minimum batches, rounding increments - Colonial Pipeline told shippers Monday that it is again filing changes to the minimum tender and rounding process, two parts of a tariff that was rejected last summer by the US Federal Energy Regulatory Commission. The pipeline operator refiled with FERC a tariff to implement changes that will reduce the minimum batch size on the line and reduce the rounding increment for allocating capacity on the line. The changes would be implemented on Colonial's 19th cycle, the first cycles in April. The proposed change would reduce the minimum size from 25,000 barrels to 15,000 barrels on its main lines Lines 1 and 2, and change allocation rounding to the nearest 5,000-barrel increment, down from 25,000-barrel increments.The pipeline operator first proposed the changes in August of 2015 as part of a package that would also halt the transfer of shipper history and change the rules to how shippers could attain regular shipper status. FERC eventually rejected the tariff in July because the proposed changes to how new shippers would attain regular shippers status and the elimination of shipper history trade were found to be insurmountable hurdles for companies wanting to ship on the line.

Florida Fracking Ban Bill Draws Bipartisan Support - A bipartisan group of lawmakers in Florida have proposed legislation to ban fracking in the state.Republicans across the United States have largely embraced fracking, a popular method for stimulating a well to extract hard-to-access oil and gas reserves. With this new bill, filed to the Senate last week byRepublican Sen. Dana Young, Florida is bucking the trend. Another Republican legislator has filed a companion bill in the state House of Representatives. Fracking is technically legal under current laws in Florida, but isn't yet happening. This is largely because there are no specific rules for how it should be done. Officials in recent years have repeatedly attempted to establish such regulations. At the same time, public opposition to fracking has grown. More than 70 counties and cities across the state have passed local ordinances prohibiting the process or supporting a state ban. Environmentalists, communities and local officials are primarily concerned that future fracking activities could threaten the state's precious freshwater sources. "Our aquifer, which is a main source of fresh water for us, runs across the state and knows no county line," Young said in a statement. "I believe we must act quickly and decisively to protect our fragile environment from incompatible well stimulation practices in our state. The wellbeing of our environment is something that all Floridians care about which is why you'll find my bill to ban fracking in Florida has bipartisan support in both chambers." Young represents a west Florida district that includes the city of Tampa, one of the biggest cities in the state to endorse a statewide fracking ban.

Moving natural gas down the Texas gulf coast. - As natural gas exports to Mexico continue to rise and as construction proceeds on liquefaction/LNG export terminals in Freeport and Corpus Christi, TX, the need to transport increasing volumes of gas down the Texas Gulf Coast becomes ever more urgent. And moving gas down the coast is no easy task; the Lone Star State’s convoluted mix of interstate and intrastate pipelines were designed primarily to flow gas up the coast from South Texas and Gulf Coast production areas to the greater Houston Ship Channel area—and from there on interstate pipes to Louisiana and beyond. Today we use RBN’s Fretboard Model to discuss whether existing and planned southbound pipeline capacity will be sufficient to meet export demand.  For several months now, RBN has been making the case that 1) the natural gas export market—more specifically, pipeline exports to Mexico and waterborne exports of LNG—will be the biggest demand drivers for U.S. natural gas production, 2) Texas producers will need a major assist from Marcellus/Utica and other producers in supplying all the gas that will be required to keep pace, and 3) Texas’s existing networks of interstate and intrastate pipes will need major re-plumbing and expansion. We’ve tackled this Texas-size topic not only in blogs, but also in Part 1, Part 2, and Part 3 of our Drill Down series, “I Saw Miles and Miles of Texas.” The fourth and final part of that series will be published next week. As we said in Part 3 of the Drill Down series, one of the biggest challenges in moving increasing volumes of gas south along the Texas Gulf Coast is that the interstate pipelines there are “telescoped the wrong way” —that is, because the pipes were originally designed to add supplies as they moved gas north toward Louisiana (and from there to the Northeast and Midwest), their diameters and capacities increased along the way. Also, while some of the interstate pipelines along the coast begin at the Mexican border (or at least extend deep into South Texas), others start further up the coast and therefore aren’t as helpful in moving gas to the Agua Dulce hub in Nueces County (near Corpus Christi), which has emerged as a key pricing point for the South Texas gas market, including Eagle Ford production as well as gas flows bound for Mexico.

'Biggest Oil Find' of 2016 Puts Crown Jewel Texas Oasis in Crosshairs for Fracking - DeSmog (blog) — Travelers crossing the long stretch of arid desert spanning West Texas might stumble across an extraordinarily improbable sight — a tiny teeming wetlands, a sliver of marsh that seems like it should sit by the ocean but actually lays over 450 miles from the nearest coast. This cienega, or desert-wetlands (an ecosystem so unusual that its name sounds like a contradiction), lies instead near a massive swimming pool and lake, all fed by clusters of freshwater springs that include the deepest underwater cave ever discovered in the U.S., stretching far under the desert's dry sands. Famous as “the oasis of West Texas,” Balmorhea State Park now hosts over 150,000 visitors a year, drawn by the chance to swim in the cool waters of the park's crystal-blue pool, which is fed by up to 28 million gallons of water a day flowing from the San Solomon springs. The pool's steady 72 to 76 degree Fahrenheit temperatures make the waters temptingly cool in the hot Texas summer and surprisingly warm in the winter, locals say — part of the reason it's been called “the crown jewel of the desert.” The wild desert surrounding the springs here looks virtually nothing like it does further east, in the Permian Basin, where the oil industry has been in the midst of the nation's biggest shale drilling frenzy. Drivers on the interstate can smell oil in the air before they even see the oilfields outside Midland, Texas. From the mesquite and cactus-dotted plains atop the Permian Basin, over 2 million barrels of oil a day are pumped out of the ground. Dense fields of thousands of oil pump-jacks line roadsides, extracting fossil fuel from wells that are sometimes less than a football field apart. In September, Apache Corp. announced a major new oil and gas find in Reeves County, a claimed $80 billion discovery that could turn the region's fate on its head. This has locals, who have seen what happens to people's air, water, and communities when deserts are transformed into oil fields, worried. The prospect of allowing thousands of wells to be fracked where water is so scarce raises fundamental questions about what natural resources Americans are willing to sacrifice in the pursuit of fracked oil and gas, Matta and other Balmorhea locals say. Though the drilling industry long denied that fracking puts water wells at risk of contamination, a major EPAstudy released in December concluded that drilling and fracking can pose serious risks to people's drinking water, and has already left some of the country's water supplies “unusable.”

Activists threaten to block Oklahoma pipeline construction - Native American and environmental activists have vowed to block a planned crude oil pipeline, hinting at a standoff in Oklahoma reminiscent to the monthslong Dakota Access Pipeline protest. Once built, the $900 million Diamond Pipeline will carry sweet crude oil from a national transport hub in Cushing eastward toward Tennessee. Opponents said the project was crafted without input by tribes and might disturb unidentified graves of ancestors who were marched to Oklahoma along the Trail of Tears. Organizer Mekasi Camp Horinek declined to say where the protesters would set up along the pipeline's route but warned that actions could begin soon. “There definitely will be an encampment that's going to come here to Oklahoma in the near future where we can call on our allies, our brothers and sisters, the connections we made during that fight at Standing Rock,” said Horinek, state director for Bold Oklahoma. Minor construction has already begun on the Diamond Pipeline and the first pipe could be laid within weeks. The project is a joint venture between Plains All American Pipeline and Valero. Plains All American Pipeline spokesman Brad Leone said the company reached out to almost two dozen tribes before permits were issued by the U.S. Army Corps of Engineers. He said the Corps offered tribes an opportunity to review and comment about the route, which takes the pipeline through seven Oklahoma counties. “Where concerns were raised about the route, every effort was made to reroute the pipeline, use less invasive installation technologies, or provide access to the right of way during construction activities for trained cultural monitors, some of whom are recommended by or directly provided by certain tribes,” Leone wrote in an email to The Oklahoman. Ashley McCray, founder of NoPlainsPipeline, has visited the Standing Rock protest site in North Dakota, spending a few weeks to help weatherize the camp. “The encampment at Standing Rock was really good for a lot of people in Oklahoma because it has enabled them to realize that the front line is in their own backyard,” McCray said. “We just need to bring the fight here.”

BP Plays Long Game with Rockies Assets - The main rationale of BP plc’s decision to move its U.S. Lower 48 headquarters from Houston to Denver is to be closer to two-thirds of its operated oil and natural gas production and proved reserves in the Rocky Mountain region.Could BP’s decision signal a revival for the Rockies exploration and production (E&P) investment and activity, particularly for natural gas? After a surge of activity from 2005 to 2008, Rockies investment and production started to decline, partly due to competition from Marcellus shale gas production. The long-term bullish outlook for U.S. natural gas at home and abroad could lift gas prices and natural gas E&P in the United States, including the Rockies.With natural gas comprising about 80 percent of BP’s Lower 48 portfolio, the company has not only been very focused on improving efficiency and its cost structure, but using emerging technologies such as multi-lateral drilling and data analytics to maintain a competitive, sustainable, safe business, even at lower commodity prices, BP spokesperson Brett Clanton told Rigzone.At the same time, the company is participating in the transition to a low-carbon economy. By the end of the decade, BP expects its 60 percent of its portfolio to be natural gas assets, up from the current 50 percent, as new projects come on stream, BP CEO Bob Dudley said in an October 2016 speech. This includes projects in Trinidad & Tobago, Oman, Egypt and the Shah Deniz 2 project in Azerbaijan. “The scale of energy demand means that the world will continue to need energy from all sources, but the balance of the energy mix needs to change,” Dudley stated.

This lawmaker wants to ease rules on drilling in national parks, and conservationists aren’t happy - It’s safe to say that Rep. Paul A. Gosar (R-Ariz.) is no friend of environmentalists. He boycotted Pope Francis’s speech to Congress in 2015 because the pontiff addressed climate change. He received a score of 3 percent that year from the League of Conservation Voters, significantly below the House average of 41 percent.But his latest move came as a surprise to many. Gosar submitted a resolution Monday that threatens to repeal the National Park Service’s authority to manage private drilling for oil, gas and minerals at 40 national parks, according to the National Parks Conservation Association. Under what are known as the 9B rules, the Park Service, which controls the surface of natural parks, can decline drilling rights to parties that own resources beneath the surface if it determines that the operation would be an environmental threat.“The resolution is just the latest in a series of moves by federal lawmakers to weaken environmental protections for national parks under the Congressional Review Act,” said the association, a nonprofit watchdog for parks. “If these repeals are signed into law … it will not only stop these protections, it will also prohibit agencies from issuing similar rules and protections in the future, unless directed by Congress The parks that have “split-estate ownership” of surface and underground resources include Everglades National Park, Mammoth Cave National Park and Theodore Roosevelt National Park, the association said.

How Come “Old Faithful” Is Spewing Out Crude? Drilling In Our National Parks Is A Hot Issue -- I am now, 40-plus years in the oil and gas industry, primarily on the marketing and PR side, where I spent most of my career trying to explain to naysayers that drilling (and more recently, fracking) is a good thing for our energy independence, the economy, and our national security. Let me start with the downside of this, then I’ll explain the upside. First off, why do we actually need to drill in the parks? Recent humongous finds in the Permian, the Gulf of Mexico, Alaska and elsewhere have proven reserves that will keep us slathered in oil for at least, according to industry experts, the next 100 years. And there are still millions of acres of undrilled land in the same regions that hold just as much promise, if not more. Secondly, the national parks (in my opinion) are sacred ground. Not from a religious sense, but from the perspective I mentioned earlier. It’s a place where you can go and commune with nature in her most primitive state. Taking a kayak around the bend of a pristine river only to see a line of oil rigs is not my idea of a fun trip. And trying to enjoy the solitude of the Grand Tetons while listening to fracking pumps in the background hardly seems peaceful. Make no mistake, I love this industry. I am all for the energy renaissance we are in the midst of right now, and I believe we should still go full speed ahead with exploration and production. But on private lands, and non-national park public lands. Not national parks. Strangely enough, I’ve done a non-scientific poll among my many friends in the industry, and I have yet to find anyone in our industry who thinks this is a good idea. We have good laws in place right now, and our new President has indicated that we will introduce more, that are friendly to our industry. But I don’t think looking for oil in our national parks should be one of them. Oh, I mentioned earlier that I would address the upside of this subject. I’ll do it as soon as I can think of one.

House repeals Obama rule on methane emissions on federal lands | Reuters: The U.S. House of Representatives on Friday repealed a rule put forth in the final days of the Obama administration that limited emissions of the potent greenhouse gas methane from oil and gas drilling on federal lands, in the latest move by Republican lawmakers to overturn regulation on the energy industry. The Senate is expected to vote next on repealing the rule, which was part of former President Barack Obama's efforts to curb climate change. Congress this week repealed pollution and anti-corruption rules on energy companies.

Trial Begins: This Man Faces 30 Years in Prison for Shutting Down a Pipeline -- The trial began on Monday for Ken Ward, a climate activist and co-founder of the Climate Disobedience Center , who risks spending 30 years in prison for shutting down a pipeline carrying tar sands crude last October.  At the time, 59 year old Ward, who shut down the Kinder Morgan Trans-Mountain Pipeline in Anacortes, Washington, said his actions were "to avert climate catastrophe and stand with the Standing Rock water protectors. We must stop the fossil fuel industry in its tracks." Ward participated in the #Shutitdown action which targeted tar sands pipelines in different states, including Washington, Oregon, North Dakota, Montana and Minnesota. It has led to a dozen criminal cases against activists and journalists, of which Ward's is the first to go to full trial. As yesterday unfolded the prosecution dropped one of the three charges—trespassing— against Ken leaving only charges of burglary and sabotage for him to face.

A ray of light in dark times: Jury refuses to convict Ken Ward for pipeline shutdown!  - In a resounding recognition of the threat of climate change, a Skagit County jury has refused to convict Ken Ward of two felony counts stemming from an act of civil disobedience in October of last year. After more than five hours of deliberation, Ward’s three-day trial ended in a hung jury, with at least one juror refusing to convict.“In five hours, the jury was unable to decide that with all of the evidence against me, including the video of me closing the valve, that this was a crime. I didn’t contest a single piece of the evidence, only presented my story and evidence of catastrophic climate change. This is a tremendous outcome.,” said Ken Ward after the decision.The trial was closely watched as the first in a series stemming from pipeline protests last October. The outcome of Ward’s trial is a powerful victory for the group who call themselves the “ValveTurners.” On October 11th 2016, Ward closed an emergency block valve on Kinder Morgan’s TransMountain Pipeline, which transports tar sands from Canada to Washington refineries. The action, coordinated with four others across the country, was described by Reuters as“the biggest coordinated move on U.S. energy infrastructure ever undertaken by environmental protesters.”The Valve Turners’ action stopped the equivalent of 15% of the amount of oil burned in the United States in a single day. Ward was charged with two felonies, sabotage and burglary, and faced up to 20 years imprisonment and $40,000 in fines had he been convicted. Wardbroadcas this action, which included cutting two chains to enter a TransMountain block valve site and closing the valve. Ward did not contest the facts of his actions.  Ward’s defense consisted exclusively of his motivation to confront the threat of climate change, and the defense did not contest a single piece of evidence brought by the prosecution. Several exhibits demonstrating climate science and impacts and the role of civil disobedience in societal change were permitted as evidence. Ward himself was the only witness called by the defense. “This trial was about climate change. The prosecution presented only information about what Ken did on October 11, and Ken and the defense presented only information about climate change, so the only decision that the jury was making was which story mattered more. And the story of the climate crisis won.”

After Trump, Black Lives Matter And Pipeline Protests, New Bills Would Raise Penalties For Protest : NPR: From the Black Lives Matter movement to environmentalists trying to stop new oil pipelines to the recent Women's March against President Trump, the past year has been filled with large, often spontaneous protests.Now the reaction to those protests is appearing in a number of Republican-controlled statehouses across the country, where lawmakers are introducing proposals to increase penalties for those who block roadways while protesting.A bill in Iowa was inspired by a protest against Donald Trump shortly after the November election. More than 100 demonstrators blocked traffic on Interstate 80, just outside Iowa City, Iowa, stopping traffic on the busy trucking route for almost a half-hour. "You're not just stopping traffic," said Republican state Sen. Jake Chapman about his bill, which would apply to people blocking highways with speeds posted above 55 mph. Violators could get a felony and spend five years in prison, plus a fine of up to $7,500 "You're impeding law enforcement ability to get to call where there could be serious life-threatening situations," said Chapman, who also works for an ambulance service. Opponents of the bill call it an attack on free speech. "Republicans have taken over state legislatures across the country and they appear interested in punishing people with different views than theirs," said Democratic state Sen. Joe Bolckom of Iowa City.

North Dakota House passes new rule for reporting oil spills - On Wednesday January 25, the North Dakota House legislators voted in an overwhelming majority of 82-11 in favor of House Bill 1151 that eliminates the need to report oil spills under ten barrels. No one wants oil spills, but as Meg Morley wrote in a letter to the Grand Forks Herald urging the legislature to pass the new law, “Spills WILL happen; they’re inevitable when you’re working with oil.” No one questioned whether or not they happen. The argument centered around how big the spill has to be before it’s necessary to report it. North Dakota HB 1151 states companies no longer need to report spills of crude oil, produced water or natural gas that are contained to a well site or production location and are less than 10 barrels, or 420 gallons. Supporters of the bill say it will eliminate inspection of spills that are contained to a well site and can easily be cleaned up by companies. Other supporters of the bill also said it would clean up the administrative burden the reporting standard places on public employees. According to the Bismarck Tribune, Kathleen Spilman, a consultant with Keitu Engineering who develops emergency response plans for the oil and gas industry, said she estimates 80 county and state employees get email notices about every spill, regardless of the size. However, Department of Mineral Resources spokesperson Alison Ritter said the law probably wouldn’t save the department much money, since oil and gas field inspectors do not immediately respond to a spill of 10 barrels or less that is contained on site. Instead, such incidents are inspected during routine inspections to ensure they’ve been properly cleaned up. Yet landowners say the new law directly contradicts a commitment to protecting North Dakota’s environment. Troy Coons, North Dakota Landowners Association Chairman, said the organization would continue to oppose the law, even if it’s passed, reports the Dickinson Press. The organization supports reporting every spill over one gallon, regardless of the location. Kayla Pulvermacher, member advocacy director for the Farmers Union, noted that producers would likely want to know if spills, regardless of size, happen on their land.

Malia Obama joins Dakota Access Pipeline protests - Malia Obama, the oldest daughter of former President Barack Obama, was spotted Friday at a Dakota Access pipeline protest at the Sundance Film Festival. Malia Obama joins Dakota Access pipeline protest at Sundance https://t.co/8RtAHZ9jQV pic.twitter.com/o7aboCYycG— (@mercnews) Obama was praised by fellow protester, actress Shailene Woodley, who also attended the event at the Sundance Film Festival in Park City, Utah.“It was amazing to see Malia,” the actress told Democracy Now. “To witness a human being and a woman coming in to her own outside of her family and outside of the attachments that this country has on her, but someone who’s willing to participate in democracy because she chooses to,” Woodley said. “Because she recognizes, regardless of her last name, that if she doesn’t participate in democracy, there will be no world for her future children.” Malia reportedly left her family’s Caribbean vacation to attend the Sundance festival. The Dakota Access Pipeline was in headlines late last year as massive protests nationwide fought to stop the pipeline. Many were concerned with possible oil spills, the pipeline's affect on nearby water supplies and the tribal rights of the Standing Rock Sioux tribe, who discovered the construction of the pipeline was planned through a sacred site. Feds stopped construction of the pipeline under Obama, however President Trump took executive action this week to move forward with its construction.

Military veterans throw support behind Standing Rock protesters after Trump signs Dakota Access pipeline memo -  A U.S. military veterans group announced new efforts to support the Standing Rock Native American tribe and protesters who oppose completion of the Dakota Access pipeline, just days after President Donald Trump took action to move the project forward.  Those efforts include developing the capability to deploy thousands of veteran volunteers to Standing Rock, potentially putting the White House in a politically difficult position. They come as tensions have escalated between protesters and law officers in recent weeks.  Veterans Stand launched a fundraising drive on GoFundMe last week to support a network of protesters camped out near Cannon Ball, North Dakota. It seeks to raise $500,000 to buy supplies for campers, provide car rides for volunteers and create a rapid response ability. It has raised about $19,000 in two days."The 4,000 could have easily turned into 20,000, because that's how we're trained to operate." -Anthony Diggs, communications director, Veterans Stand"We stand in unity with our brothers and sisters in Standing Rock (and beyond) and our community is ready to mobilize," the group said on the GoFundMe page.  About 4,000 veterans traveled to the reservation in North Dakota last month to support the protest by the Standing Rock Sioux tribe, environmentalists and other activists, according to figures provided by Veterans Stand.  The Standing Rock Sioux oppose completion of Energy Transfer Partners' Dakota Access pipeline because it would pass beneath a source for the tribe's drinking water and construction would disrupt sacred land, they say.

Lawyer: No timetable for allowing Dakota Access construction | TheHill: A government lawyer said Monday that he didn’t know when the Army Corps of Engineers will issue a construction easement for the Dakota Access pipeline, a move mandated by an order from President Trump. Trump ordered the Army Corps last week to issue an easement allowing construction on the most controversial stretch of the 1,170-mile $3.8 billion Dakota Access Pipeline. But it's not clear when that easement will be issued. “The Corps and the Army are continuing to make decisions under the order,” attorney Matthew Marinelli told a federal judge on Monday. “I can’t give you a timetable for the completion of that decision-making process.”The Obama administration declined to issue the easement after the Standing Rock Sioux tribe warned that the pipeline threatens its drinking water supply in North Dakota. The tribe sued over the pipeline, with their concerns sparking national protests against the project. Obama officials said they would conduct an environmental impact assessment of the pipeline, something that could delay the mostly complete project for years. Trump issued orders Tuesday calling for the completion of both the Dakota Access and the Keystone XL pipelines, expediting both. Marinelli said senior Army Corps officials were meeting on Monday to discuss how to follow that order. “My clients are actively working toward responding to that presidential memorandum,” he said. Jan Hasselman, an Earthjustice lawyer representing the Standing Rock Sioux, said Monday that the tribe is worried it might not have enough time to ask a court to block the project’s operation once the Army Corps issues the easement.

Army Corps ordered to issue final Dakota Access pipeline permit, two lawmakers say -- The acting secretary of the Army has instructed the Army Corps of Engineers to provide the final permit needed to complete the Dakota Access pipeline, according to two Republican North Dakota lawmakers who support the project. Sen. John Hoeven and Rep. Kevin Cramer both issued statements Tuesday night saying the acting secretary of the Army, Robert Speer, had ordered the Corps to grant an easement for the pipeline to run under Lake Oahe. “This will enable the company to complete the project,” Hoeven said, “which can and will be built with the necessary safety features to protect the Standing Rock Sioux Tribe and others downstream.” On Wednesday, however, the Army said the process still had a ways to go. Malcolm Frost, chief of public affairs for the Army, said the Army “has initiated the steps” outlined in the Jan. 24 presidential directive which directs the acting secretary of the Army to “expeditiously review” the Dakota Access Pipeline permits. “These initial steps do not mean the easement has been approved,” Frost said. “The assistant secretary for the Army Civil Works will make a decision on the pipeline once a full review and analysis is completed in accordance with the directive.” A representative of the pipeline company, Energy Transfer Partners, said Tuesday night that the company did not know anything beyond what it saw on Cramer’s and Hoeven’s websites.

US Army Corps of Engineers directed to approve Dakota Access easement. - The acting Secretary of the Army has directed the Army Corps of Engineers to issue the final remaining easement for the Dakota Access pipeline for a disputed crossing at Lake Oahe.   Robert Speer, who was designated as the acting Secretary of the U.S. Army on January 20, 2017, notified Congress Tuesday that the agency will be granting the easement.   The move follows a memo from President Donald Trump on Jan. 24 directing that the agency expedite reviews and approvals for the project, which was proposed to carry Bakken crude 1,172 miles across four states to Illinois, where it can more readily access refineries that handle light sweet crude.   Proponents of the pipeline have said it will take thousands of trucks off the road and represents the safest way of transporting crude, while opponents have questioned whether safety measures at Lake Oahe will be adequate to protect the water, which provides drinking water to the tribe and many others downstream.  Delegates for North Dakota have generally supported completion of the project, seen by industry leaders as critical infrastructure for the Bakken’s future. Members of the tribe did not have an immediate statement Tuesday night, but have repeatedly called on President Trump to respect their treaty rights and stick with the Environmental Impact Statement the U.S. Army Corps of Engineers had said it would grant in the waning days of the Obama administration.

US army to allow Dakota oil pipeline --The US Army has been ordered to allow the construction of the final section of a controversial oil pipeline. North Dakota Senator John Hoeven said the Army Corps of Engineers had been directed to allow work under Lake Oahe, a reservoir on the Missouri River. Native Americans, who have protested against the Dakota Access Pipeline for months, vowed legal action to stop it. President Donald Trump recently signed an executive order signalling his support for the pipeline. The US Army Corps of Engineers, which has approval authority, decided last year to explore other routes for the pipeline amid huge protests by the Standing Rock Sioux Tribe. In an announcement on Tuesday, Mr Hoeven said that the acting Secretary of the Army, Robert Speer, had ordered the corps to allow the work necessary to complete the pipeline.But the Standing Rock Sioux Tribe argues that the Army has to wait for the results of a scheduled environmental impact study (EIS) that was ordered in January. "The Army Corps lacks statutory authority to simply stop the EIS," they said in a statement. The $3.7bn (£2.8bn) pipeline is designed to transport about 470,000 barrels of crude oil a day across four states, from North Dakota to a terminal in Illinois, where it can be shipped to refineries.

76 Arrested at Standing Rock as Trump Tries to Move DAPL Forward - Seventy-six Water Protectors were arrested following a clash with law enforcement at Standing Rock on Wednesday afternoon. The arrests came a day after federal officials claimed that the final controversial easement for the Dakota Access Pipeline (DAPL) had been granted. Morton County Sheriff's Office spokesman Rob Keller told BBC News that the arrests were made after demonstrators moved from their flood-prone main camp, Oceti Sakowin, to private land owned by the pipeline operator, Energy Transfer Partners. According to the Huffington Post , deputies said "rogue protesters" were seized without injury after twice refusing warnings to leave the property,. "Law enforcement showed great restraint, enduring verbal abuse and taunts and protesters resisting arrest but did not make use of any less-than-lethal munitions. The camp was cleared by around 4:00 pm," the office said in a statement .  Demonstrators noted in a Facebook post that the short-lived "Last Child" camp was a "peaceful assembly."

Thousands of Veterans: Dakota Access Pipeline 'Will Not Get Completed' - "Thousands" of U.S. military veterans and volunteers are readying their return to Standing Rock as President Donald Trump tries to move the Dakota Access Pipeline (DAPL) forward and clashes between law enforcement and Water Protectors continue to break out. "We are committed to the people of Standing Rock, we are committed to nonviolence and we will do everything within our power to ensure that the environment and human life are respected. That pipeline will not get completed. Not on our watch," Anthony Diggs, a spokesman for Veterans Stand , told CNBC . In early December, Veterans Stand mobilized more than 2,000 veteran to descend upon Standing Rock, North Dakota. The vets volunteered to act as peaceful human shields for Water Protectors who were facing increasingly violent confrontations and mass arrests from heavily militarized police. As it happened, their arrival coincided with the U.S. Army Corps of Engineers denying a key easement for the pipeline to travel under Lake Oahe. The corps' decision temporarily halted pipeline construction to allow time for an Environmental Impact Study. However, with Trump now in office, the $3.7 billion project has found new legs. Last week, the president issued executive orders to "review and approve" the DAPL as well as the long-contested Keystone XL in "an expedited manner." He also asked the corps to reconsider the environmental review.  To make matters worse for pipeline opponents, Sen. John Hoeven (R-ND) and Rep. Kevin Cramer (R-ND) separately claimed that the final easement for the DAPL has already been granted even though the Standing Rock Sioux said they had not received notice that the easement was granted, calling the lawmakers' claims "premature."

Dozens Arrested at Standing Rock as Veterans Vow to Block Completion of Dakota Access Pipeline - Real News Network video and transcript

Tribal chairman decries Dakota Access protesters' new camp | National News | lompocrecord.com— Dakota Access oil pipeline protesters who tried to set up a new camp on private land undermined the Standing Rock Sioux tribe's efforts to stop the $3.8 billion project, tribal Chairman Dave Archambault says. Archambault in recent weeks has been pushing protesters to leave their flood-prone main encampment on federal land between the reservation and the pipeline route and asking that activism be spread around the U.S. He said efforts by some to establish a camp Wednesday on nearby higher ground "do not represent the tribe." Authorities arrested 74 protesters, including American Indian activist Chase Iron Eyes, after they set up teepees Wednesday on land owned by Texas-based pipeline developer Energy Transfer Partners. Protesters said they were peacefully assembling on land they believe rightfully belongs to American Indians. The Morton County Sheriff's Office initially reported 76 arrests but later said two were protesters accused of unrelated drug offenses. The new camp site was west of the main encampment that for months has housed hundreds and sometimes thousands of people who support the tribe's position that the pipeline threatens their drinking water and Native American cultural sites. The pipeline would carry oil from North Dakota through the Dakotas and Iowa to a shipping point in Illinois. The route would go under Lake Oahe, a large reservoir along the Missouri River. Energy Transfer Partners disputes the tribe's arguments and says the pipeline will be safe. A few hundred people still remain in the main camp, which is being cleaned up this week in advance of spring flooding that could carry any remaining refuse into the Missouri River. Archambault in recent weeks has called for the camp to disband, and late Wednesday he urged people who have left to stay away. "In these past few weeks at camp, I see no reflection of our earlier unity, and without unity we lose," he said.

Dakota Access company wants some court information sealed | TheHill: The company developing the controversial Dakota Access oil pipeline wants some records regarding the project to be hidden from the public. Dakota Access LLC, a subsidiary of Energy Transfer Partners, outlined its objections to certain disclosures in a brief late Wednesday in the federal District Court for the District of Columbia. The company cited the ongoing protests against the pipeline as evidence to argue that “terrorists or others intending to cause harm” could misuse the information. “Given the intense amount of public attention this pipeline has received, and the unlawful activity already experienced, there is a greater than typical risk that this information would be misused to harm the public,” it wrote. Information regarding the pipeline from the Army Corps of Engineers has been submitted to the court as part of a complex case in which an American Indian tribe is trying to get the pipeline blocked and the company is trying to force its approval. The project’s main remaining hurdle is an Army Corps easement it needs in order to build under Lake Oahe in North Dakota. Former President Obama delayed the easement before leaving office. But last week, President Trump instructed the Army Corps to approve it as soon as possible. Dakota Access said all of the parties to the case have agreed to seal some of the information.

Is The Kremlin Funding A Campaign That Undermines U.S. Fracking? - The recent National Intelligence Council report assessing the involvement of Russia in last year’s U.S. presidential elections spurred a flurry of media reports suggesting that Russia is heavily involved in anti-fracking campaigning. Some authors interpreted this involvement as a “propaganda effort”, while others claimed the Kremlin was financially backing anti-fracking groups in the U.S., without, however, providing any evidence for this claim. The basis for all these reports is part of the report, in which the authors discuss the agenda of RT, a state-funded TV channel and website that is widely seen as the Kremlin’s chief megaphone abroad. Anti-fracking rhetoric was identified in the report as a major element of RT’s agenda and interpreted by the report’s authors as reflecting Russia’s concern about the growing influence of shale oil and gas on international markets and “the potential challenges to Gazprom’s profitability.” One media report author, Drew Johnson, went further, seeing this rhetoric as indicative of Putin’s direct financial involvement in anti-fracking campaigns in an effort to undermine America’s energy independence. It only takes a bit of common sense to see why Russia would not be too happy with the shale revolution – it brought prices down, shaving billions off Russia’s state revenues from oil. So, the suggestion that the Kremlin has a material interest in undermining the popularity of fracking in the U.S. by fueling opposition to it is a logical one. Yet, besides this logical suggestion, there are several questions that might raise some doubts as to the actual “Russian threat” to fracking. First of all, Russia does not export its own fossil fuels to America, so that can’t be a reason for the campaigns. Second, Russia’s energy industry has proved to be very resilient—more than a lot of small U.S. shale players—simply because of size and government support. One could argue that the U.S. energy industry actually suffered a bigger blow from the price crash than the Russian industry. Third, the threat that American gas could pose to Gazprom’s profitability is a very remote one: gas is exported either via pipelines or as LNG. Gazprom’s pipeline network around Russia and in Europe ensures its stable position on regional markets – a position that it will take U.S. exporters a lot of time and investment to challenge.

Pipeline backers make big promises about jobs, growth | Fox Business: Former President Barack Obama rejected the Keystone XL in 2015. The Army Corps of Engineers put a halt to construction of the Dakota Access pipeline last month. The move by Trump fulfills a campaign promise to revive the projects, which he says will create thousands of jobs and generate taxes for states and communities. However, the number of jobs created and the economic benefits have been hotly debated. Many experts believe any impact on the U.S. economy will be small. Despite Trump's executive orders, both projects face likely court fights by environmental groups, and the Keystone XL pipeline faces uncertain demand from oil shippers. According to a 2014 report by the U.S. State Department, Keystone XL would support about 42,100 jobs including about 3,900 workers directly involved in construction. Workers, including those indirectly supported by the pipeline, would earn about $2 billion.Once construction ends and oil starts flowing, the pipeline would support just 35 permanent jobs, according to the report. The Dakota Access project has created about 12,000 construction jobs, according to project leader Energy Transfer Partners LP. But most sections of the pipeline are finished and most of the jobs are too. The State Department said that construction of Keystone XL would contribute around $3.4 billion to the nation's output. The companies building the Dakota Access pipeline say they have spent more than $3.5 billion and would spend "hundreds of millions a month" to finish the work. Those sums, however, are insignificant in the $18 trillion U.S. economy. The XL pipeline would contribute about 0.02 percent to the nation's gross domestic product.

Trump Doubles Down On Dubious Pledge To Build Pipelines With U.S. Steel | The Huffington Post: President Donald Trump doubled down Thursday on his pledge to require that the Keystone XL and Dakota Access pipelines be built from steel manufactured in the United States.Speaking at the annual Republican Party retreat in Philadelphia, Trump said he added a last-minute clause that ordered the use of American-made steel to a flurry of presidential memoranda he signed this week in hopes of restarting talks with developer TransCanada to build Keystone XL and ending a delay on construction of the hotly protested Dakota Access Pipeline in North Dakota.“I was sitting at my desk, and I’m getting ready to sign Keystone and Dakota, and I say, where is the pipe coming from? And I won’t tell you where, but you wouldn’t be happy,” Trump said. “If people want to build pipelines in our land we want the pipe to be manufactured here.”But such a stipulation may not be legal. The requirements may run afoul of regulations set by the World Trade Organization. The rules laid the groundwork for the post-war boom and created a bulwark against the kind of global economic collapse last seen in the 1930s. The fourth paragraph of the General Agreement on Tariffs and Trade, a 1947 trade deal that helped establish the WTO, barred its member countries from giving favor to domestic products.The issue was last tested nearly four decades ago, when the U.S. successfully challenged Canada’s 1973 Foreign Investment Review Act, which required regulators to give favor to domestically produced product before approving an investment.

Trump’s first days fuel optimism among drillers, angst for environmentalists - In less than two weeks in office, President Donald Trump is working to usher in a new era for American energy companies. He’s begun rolling back efforts to combat climate change and is pushing for federal approval of controversial, new infrastructure projects — such as the Keystone XL and Dakota Access oil pipelines. There is guarded optimism among fossil fuel companies as they wait and see, along with everyone else, how Trump will deliver on his promises to boost American energy production. But his win has also been a major blow to many environmental groups, climate scientists, and others who worry about the administration’s disregard for science and policies aimed at protecting public health and the natural world. They’re now steeling themselves for a long, hard fight. Not surprisingly, President Trump sounds a lot like candidate Trump. “The shale energy revolution will unleash massive wealth for American workers and their families,” he told oil and gas executives in Pittsburgh last fall. With that in mind, on his first day in office, the Trump administration deleted information on climate change from the White House’s official website and posted a new America First Energy Plan—which calls for rolling back environmental regulations, and promoting the further development of fossil fuels, particularly the nation’s shale oil and gas. This is good news to people like David Spigelmyer, who heads of the Marcellus Shale Coalition, a trade group representing natural gas producers. “We’re optimistic because we believe that free market enterprise will work, and that energy options won’t be taken off the table,” says Spigelmyer. “All sources of energy will be given an opportunity to compete.”

TOP OIL TRADER: Trump’s border tax would make gasoline more expensive -- A top oil trader is counting on President Donald Trump's border tax to increase oil prices - helping American producers while hurting American car drivers."If the tax is adopted, WTI could move to a $10 [per barrel] premium to Brent providing a substantial economic advantage to US producers," according to an investment outlook from Andurand Capital Management, a $1.6 billion hedge fund firm. "Such a tax would also increase domestic gasoline prices in the US."A copy of the January 16 note was reviewed by Business Insider. Trump said January 23 that he would impose a significant "border tax" on companies that move production outside of the US to other countries. America’s oil giants have production facilities around the world, and could be impacted by such a tax.London-based Andurand Capital Management is run by Pierre Andurand, and was up 22.2% last year compared to the 16.9% return of the S&P GSCI Crude index, according to the note. In December, Andurand's fund gained 6.8% net of fees, owing largely to a long position in crude oil (long Brent, WTI future and call options), the note said.Here's the relevant excerpt from Andurand's outlook (emphasis added): "We believe that OPEC would like to achieve higher oil prices quickly to counteract the potential cross border tax adjustment supported by President elect Donald Trump. The issue of the Trump border tax policy is a real wild card and could have a significant impact on US and foreign oil prices. If the tax is adopted, WTI could move to a $10/bbl premium to Brent providing a substantial economic advantage to US producers. However, such a tax would also increase domestic gasoline prices in the US. At current relatively low oil prices, we believe that there is still room for the tax to be implemented. However, if OPEC succeeds in propping oil prices up towards $70/bbl, President Trump might face resistance from US gasoline consumers and drop the tax adjustment (at least for the energy sector). While we believe there is a 30% chance for the tax adjustment to go through, it also reinforces our belief that OPEC will do anything that is necessary to push oil prices higher as soon as possible.

Oil and Gas Production in N America -- This post provides an overview of N American oil and gas production utilising the growing mountain of charts to be found in Global Energy Graphed. These charts show the parlous state of the Mexican oil and gas industry that will be the focus of this post. Oil production is down nearly to the point where Mexico will cease oil exports. Gas production is down and Mexico has already become a serial gas importer. Drilling has virtually come to a halt. I want to kick off with a quick update on Global Energy Graphed that has expanded enormously in recent weeks but is still very much a work in progress with a lot more to come. Note that the easiest way to navigate this resource is through the menu bar up top. Hover the cursor over charts to read the data that lies behind.

• Monthly oil production from the IEA where we have now graphed the whole Oil Market Report from January 2002. There is a total of 54 graphs that were updated to December 2016 on 2nd February.
• Annual gas production and consumption as reported by the BP statistical review. There are summary charts for 7 regions plus individual country charts for all major producers and consumers. There are 51 graphs in all.
• Annual coal production and consumption as reported by the BP statistical review. There are summary charts for 5 regions plus individual country charts for all major producers and consumers. There are 26 graphs in all (not yet completed).

Why vertically integrated midstream companies hold an edge - Things are definitely looking up in the U.S. midstream sector, but that doesn’t mean that all midstream companies in the horse race will gain equally—in fact, it’s a given that they won’t. To separate the win-place-and-show companies from the middle of the pack and the real laggards, what’s needed is a detailed, muzzle-to-tail inspection of midstreamers’ individual assets, the production areas they serve, the take-or-pay and other contracts that provide their revenue, and how their assets work as a team (or don’t). As we said in Part 1 of this blog series, for racehorse owners and the folks who run midstream companies alike, the aim (as the old song goes) is to “accentuate the positive, eliminate the negative … and don’t mess with mister in-between.” To get the complete picture of a midstream company’s value and prospects, you’ve got to factor in the positive but also ferret out the negative and the in-between, something our good friends at East Daley Capital have done in Dirty Little Secrets—Lifting the Covers on Midstream Energy Company Risk,” which provides company-by-company analyses of 23 midstreamers as well as lessons learn from those detailed reviews. (More information on the report, which runs more than 100 pages, is available here.)

How global economic growth will drown in Trump’s oil glut after 2018  - Oil is here to stay — certainly the Trump administration thinks so, judging by its extraordinary ‘America First Energy Plan’ to ramp up exploitation of America’s last remaining oil, gas and coal resources.The Trump energy plan would appear to be vindicated by BP’s new Energy Outlook, which forecasts a steady growth in demand for oil into the 2040s. The British oil and gas company also forecasts that there is more than enough oil to meet rising global demand.BP is a powerful member of the top US oil industry lobby group, the American Petroleum Institute, whose other members include ExxonMobil, Chevron, Royal Dutch Shell and Saudi Aramco. The group is currently lobbying the Trump administration for more deregulation, offshore drilling and pipeline construction. BP’s Energy Outlook paints a rosy picture of the future of global oil and gas, as a viable and profitable investment opportunity. The BP report appears to stand in stark contrast to a controversial HSBC report released late last year, which INSURGE intelligence exclusively published in full in January. That report agreed that oil demand would continue surging, but offered a very different scenario of what would happen next. HSBC predicted that supply growth would be insufficient to meet demand. So wide would the supply-demand gap be, that by 2040 the world would need to find the equivalent of four Saudi Arabias of oil production to meet demand. This would lead to an oil crunch which in 2018, or shortly after, could trigger a global financial crash of similar scale and nature to what we saw in 2008.BP’s quite different oil production scenario would mean a very different future for oil prices, but not necessarily for the global economy. If BP is right that recoverable global oil supplies are around 2.6 trillion barrels, this could meet rising demand out to 2050 twice over.The world would face a decadal oil glut. The BP report doesn’t explore in detail how this might impact prices, but it would likely o ffset substantial price hikes. Tepid prices, BP warned, would probably be exacerbated by weakening demand for oil driven by a combination of climate change policies and technological advances in renewable energy and electrification.

House Kills Requirement For Energy Companies To Disclose Payments To Foreign Governments -- In a victory for the US oil, gas and mining industry, which for years has appealed to the executive branch and courts to eliminate a rule which Exxon Mobil (whose former CEO was just confirmed as US Secretary of State), Chevron and other producers alleged put them at a disadvantage against foreign competitors, this afternoon the House approved a resolution killing an SEC requirement for US energy companies to disclose their payments to foreign governments, known as the "extraction rule." The industry had claimed that the rule, part of the 2010 Dodd-Frank act, gives global rivals a competitive edge. Backers, on the other hand, said the rule would keep payments to foreign nations in government coffers, not private pockets, and generally avoid bribes and graft. Because Exxon and Chevron aren’t listed on the European exchanges, they don’t have to comply with the EU disclosure rules Bloomberg explains. That may give them an edge over other oil majors who must report project-level payments, critics say. In its 2015 disclosure to the UK, Rosneft reported $29.8 million in payments to the Russian Federation, Vietnam, Brazil and Norway. In the same year, BP reported $15.2 billion in payments to 23 countries, Total disclosed $16.7 billion to 44 countries, and Shell reported $21.8 billion to 24 countries. The idea behind the measure is simple: If foreign oil companies disclose payments of $1 million to the government of Country X, then the lawmakers and citizens of Country X will know that $1 million should show up on the country’s budget. If less shows up, then obviously some of that amount was "diverted for private use" i.e., embezzled.

 Another Win For Big Oil: House Removes Transparency Rule - The Republican-dominated House of Representatives yesterday moved to repeal a rule that requires oil companies to report on their payments to foreign governments, including taxes and royalties from their activities in these countries. The rule, part of the Dodd-Frank Act, was devised and approved two years after the 2008 crisis, aiming to make public energy companies more transparent and limit the potential for bribes abroad. The energy companies themselves, however, protested that the rule puts them at a disadvantage to foreign competitors that are not bound by it. On the other hand, backers of the rule note that the main competitors of Exxon and Chevron are based in Europe, and as such, are subject to EU regulations to the same effect. Shell, BP, Total, and the rest of them all report their tax and royalty payments to foreign governments on an annual basis. Rex Tillerson, the new Secretary of State, was one of the most vocal opponents to the rule, arguing that it would make it harder for Exxon to do business in resource-rich countries such as Russia. Yet despite the fact that the rule was stipulated in the Dodd-Frank Act, it never took effect: in the years following the passing of the Dodd-Frank Act, the SEC has working on formulating it more specifically. As Vox reports, the final formulation was only completed in the middle of last year, and the rule was supposed to take effect this year. The Congress is using a little known piece of legislation to quickly remove Obama regulations: the Congressional Review Act. It allows lawmakers to repeal regulation by a simple majority vote. By the end of this week, according to Bloomberg, the House is also expected to kill regulation regarding mountain-top mining and limiting methane emissions.

Saudi Arabia may raise U.S. oil investments: energy minister | Reuters: Saudi Arabia may increase its oil investments in the United States due to a more fossil fuel-oriented energy policy by the U.S. administration of President Donald Trump, the kingdom's energy minister said. Trump had campaigned on a promise that Washington should boost U.S. energy independence from oil cartels such as OPEC, of which Saudi Arabia is its de facto leader and by far the group's biggest producer. But Saudi Arabia's Minister of Energy, Industry and Mineral Resources, Khalid al-Falih, told the BBC that "there are huge areas of alignment" in interests between the two traditional allies. "President Trump has policies which are good for the oil industries and I think we have to acknowledge it ... He has steered away from excessively anti-fossil fuels, unrealistic policies," Falih told the BBC in an interview broadcast on Wednesday. "I think he wants a mixed energy portfolio that includes oil, gas, renewables, and make sure that the American economy is competitive. We want the same in Saudi Arabia." Last year Saudi Arabia unveiled sweeping plans aiming to end the kingdom's "addiction" to oil and transform it into a global investment power through a broad reform plan dubbed Vision 2030. Asked whether there is a worry about Trump's promise to pursue energy independence and block crude imports from Saudi Arabia, Falih said: "We have no problem with the growth of American indigenous oil supply. I have said repeatedly, as long as they grow in line with global energy demand, we welcome them. "We had billions of dollars invested in refining and distribution in the United States and we may be increasing that investment on the back of pro-industry, pro-oil and gas policies of the Trump administration."

Boom and bust returns as oil market loses its swing - Up until 1972, independent US oilmen and oil states like Texas acquiesced to heavy-handed government regulations over oil, imposing monthly quotas on producers. This was all done to vanquish chronic booms and busts that vexed the oil industry, consumers, investors, and officials. A massive price bust in 1931 prompted Texas and Oklahoma governors to send troops into oilfields to shut wells. Afterwards, with the support of both the conservative oil industry and the liberal FDR Administration, oil states like Texas imposed mandatory quotas well-by-well, field-by-field, for 40 years. These super-strict quotas produced a four-decade “Texas Era” of unparalleled price stability which ended in 1972 when slowing US supply and increased nationalisation in the Middle East enabled Opec to become supply manager and price fixer.  Opec achieved some success stabilising prices, but never matched Texas’ achievement. Opec’s reign withered and died about 10 years ago when oil prices began their wild rollercoaster ride, first up to $145 in 2008 and then down to $26 last February. Texas and Opec quotas both aimed to stabilise near-term prices and anchor perceptions of long-term prices so the industry — and everyone who depended on oil — could plan and invest. Oil remains civilisation’s lifeblood and price stability is of paramount importance. Boom-bust oil price cycles reduce planning horizons, deter investment in machinery and equipment, and increase unemployment. Extreme price fluctuation complicates monetary policy, induces global downturns, and can trigger war and terrorism. Some believe recent pledges by Opec and Russia to restrain production mark the return of supply management. Hardly. Since these producers began talking about restraint last February, they added around 1.4m barrels per day to the glut. Their recent pledges to trim production from historically high levels resemble ad hoc, collective supply restraint agreements that sprang up occasionally since oil’s earliest days by producers spooked by price busts. They sometimes enjoyed temporary success but invariably fell apart due to supply growth outside and cheating within members’ ranks. Opec’s own analysts, and those at the US Energy Information Administration, project these pledges will not dent the towering inventory glut.

Exxon Mobil misses on fourth-quarter earnings -  Shares of Exxon Mobil were down less than 1% in premarket trade Tuesday after the company missed fourth-quarter earnings expectations. The company reported net income of $1.68 billion, or 41 cents per share, down from $2.8 billion, or 67 cents per share in the year-earlier period. The FactSet consensus was for earnings per share of 70 cents. Exxon Mobil reported revenue of $61.1 billion, up from $59.8 billion in the year-earlier period, but below the FactSet consensus of $61.4 billion. The company recorded an upstream asset impairment charge of $2 billion, related to dry gas operations in the Rocky Mountain region, which the company said impacted fourth-quarter and full year earnings, as well as a downturn in commodity prices. Shares of Exxon have fallen 6% in the past month, compared to the S&P 500's gain of 2%.

Shell says on track with asset sales as Q4 earnings disappoint - Shell said Thursday it remains on track to cut its debts by selling assets and lowering costs as it benefits from a production boost as a result of the landmark acquisition of the UK's BG Group last year. Reporting its 2016 fourth quarter earnings which missed market expectations, Shell said oil and gas production for the fourth quarter was 3.905 million b/d of oil equivalent, an increase of 28% from the year-ago period. The total included 824,000 boe/d from BG assets which were bought for $54 billion in early 2016. For the full year, Shell said its oil and gas production was 3.67 million boe/d, an increase of 24% compared to 2015, or 2% excluding BG. Shell said it also benefited from higher cash flows which more than covered its cash dividend for a second quarter. Cash flows from operations, a closely watched metric as oil companies recover from the oil price slump, were $9.2 billion during the fourth quarter, up from $8.5 billion in the previous quarter and $5.4 billion for Q4 2015. Following Shell's announcement this week of assets sales in the UK and Thailand worth up to $4.7 billion, Shell said it has agreed or completed some $15 billion worth of asset sales since last year, half the $30 billion divestment program target by 2018 to help cover the cost of the BG acquisition. "Our strategy is starting to pay off..." CEO Ben van Beurden said in a statement. "We are gaining momentum on divestments, with some $15 billion completed in 2016, announced, or in progress, and we are on track to complete our overall $30 billion divestment program as planned."

 History repeats as US E&P operators grow by acquisition: Barely three weeks into the New Year, US upstream merger and acquisitions have sizzled as players in a charged-up industry, hungry to get moving after two-plus years of low oil prices and curbed activity, position not just for the up-cycle but the next decade or two. Overwhelmingly, the Permian Basin of West Texas and southeast New Mexico, has been the main site of recent acquisitions, as its vast geography and multistacked shale and unconventional pay zones offer huge potential. Just one zone, the Wolfcamp in the eastern Permian, is said to contain 20 billion barrels of recoverable oil and 16 Tcf of recoverable natural gas. But while shale oil is relatively new, operators’ recent bids to expand their shares of it represents the latest in a long series of reinvention cycles in a 150-plus-year-old industry. As baseball legend Yogi Berra, famous for funny quips, said in another context: “It’s deja vu all over again.” “These things go in waves,” Canaccord Genuity analyst Sam Burwell said. And “the Permian will be the best bet for the foreseeable future.” The biggest recent Permian deals came last week, as ExxonMobil announced a $6.6 billion acquisition to beef up its holdings in the New Mexico Permian. Also, Noble Energy said it will buy small Clayton Williams Energy for $2.7 billion, largely to capture West Texas Permian acreage contiguous with its own inventory. Also, Sanchez Energy sets its cap to become a much bigger Eagle Ford player by inking a $2.3 billion deal for acreage in the south Texas play, which during the downturn lost more than a third of its peak 1.6 million b/d of oil output. The purchase, jointly with Blackstone Energy Partners, is from big independent Anadarko Petroleum.Also, WPX Energy is spending $775 million for acreage in the western Permian, and RSP Permian, Diamondback Energy and Parsley Energy made smaller Permian acquisitions in recent months. All four are mid-sized operators.

Inside FERC Henry Hub February index down 55 cents to $3.39/MMBtu - The February bidweek national average natural gas price dropped 84 cents compared with January's bidweek price to $3.45/MMBtu, according to Inside FERC's Gas Market Report, as the market factored in the likelihood of increasingly bearish weather conditions in key demand centers around the US. The February bidweek price at the benchmark Henry Hub point fell 55 cents to average $3.39/MMBtu, a nearly 14% decrease from the January price. That came as the NYMEX February gas futures contract expired at $3.391/MMBtu, a more than 33 cent decline since ending December trading at $3.724/MMBtu. The February contract also ended nearly 54 cents below the January contract's expiry. The slide in February prices came as the US National Weather Service's outlook for the first two weeks of the month turned increasingly bearish, calling for above-average temperatures across much of the western half of the US, likely dampening incremental gas demand. In California, the bidweek price for Southern California Gas city-gate fell 39 cents, or almost 10% compared with January, to average $3.53/MMBtu. In contrast, spot prices at SoCal Gas city-gate reached as high as $3.75/MMBtu during January as unseasonably cold weather and strong demand pushed the spot market to some of the highest levels of the ongoing winter. Upstream, in the Rockies, bidweek prices at Cheyenne Hub fell just over 55 cents to average $3.14/MMBtu. In the Midwest, bearish expectations for February pushed prices down even more, with Chicago city-gates dropping 77 cents to average $3.40/MMBtu.The biggest declines were reserved for premium Northeast markets, however, as Algonquin city-gate bidweek prices fell almost $4.70 to average $7.39/MMBtu.

NYMEX March gas futures rise 1.9 cents to settle at $3.187/MMBtu -  The NYMEX March natural gas futures contract strengthened after the release of the US Energy Information Administration's weekly gas storage report that showed a larger-than-expected withdrawal of 87 Bcf, helping boost the contract 1.9 cents higher to settle Thursday at $3.187/MMBtu. Despite being slightly larger than the 83-Bcf withdrawal projected by a consensus of analysts surveyed by S&P Global Platts, the withdrawal is a marked departure from historical data, with 2016 showing a withdrawal of 169 Bcf and the five-year average at 166 Bcf, tempering upward movement. Over the next two weeks, Platts Analytics' Bentek Energy projects total US demand to average around 86 Bcf/d, about a 9.7 Bcf/d drop from the corresponding period in 2016. The National Weather Service's eight- to 14-day outlook lends additional credence to Platts Analytics' weak demand outlook, with an increasingly high probability for above-average temperatures expected over more than three-quarters of the continental US.Insulating the market from downward movement resulting from weaker demand has been a year-on-year decrease of 4.1 Bcf/d in US dry gas production, with the current February average hovering around 70.1 Bcf/d, tightening the supply-demand balance. With current storage stocks sitting 266 Bcf below year-ago levels, contracts from June through December experienced the strongest upward movement in a strengthening contango market, increasing an average 4.9 cents, with December reaching the highest of $3.568/MMBtu. Downside risk to the tightening supply-demand market in the coming months has been the "robust growth trend [in rig counts] during the final seven months" of 2016, driven by flatter US natural gas production and a shift in the import-export balance that resulted in an "erosion in the oversupply of dry gas since 2015," analysts at RigData said. RigData is a unit of Platts.

Crude oil, NGL to account for 80% of 2017 drilling in Canada, rigs up: PSAC -  Nearly 80% of the total wells to be drilled in Canada in 2017 will be targeted at crude oil and NGLs and the remaining 20% at natural gas, the president of an oil services industry group said Tuesday. "With WTI prices stabilizing over $50/b for the past month, conventional producers in Alberta and Saskatchewan will be spending more dollars in drilling and are already hiring rigs," Petroleum Services Association of Canada President Mark Salkeld said. The winter drilling season in Western Canada -- which extends from early December to end of March -- has been active and the total number of rigs in operation on January 31 is 355, Salkeld said. This is compared with some 250 rigs deployed in January end last year, he said. On Monday, assuming a WTI price of $52.50/b and an AECO gas price of C$3 ($2.3)/MMBtu, PSAC forecast that a total of 5,150 wells will be drilled in Canada in the current year. In 2016, the total number of wells drilled was 3,950, he said. In 2017, Alberta is forecast to have the most wells drilled at 2,706, followed by Saskatchewan at 1,985, British Columbia at 367 and Manitoba at 73. The remaining 19 wells will be drilled in Eastern Canada, PSAC said. The bulk of the drilling will take place in the Cardium and Duvernay plays in the Western Canadian Sedimentary Basin, with the "dominant" areas include Rocky Mountain House, Wapiti and Sundre, he said.

Canada regulator says Tundra oil spill cleanup almost complete | Reuters: Crews have nearly finished cleaning up 35 barrels of crude oil that leaked from a pipeline at a facility owned by Tundra Energy Marketing Ltd in southeastern Saskatchewan, Canada's energy regulator said on Thursday. There were no injuries or fires as a result of the spill, which occurred Tuesday evening at a Tundra's Ingoldsby facility, 270 kilometers (168 miles) southeast of Regina. It was the second crude oil spill in a matter of weeks for the privately-held company, after more than 1,000 barrels leaked onto aboriginal land in Saskatchewan. The Ingoldsby facility comes under the jurisdiction of Canada's National Energy Board because it is a federally regulated site, and an investigation into the root cause of the leak is underway. "Our inspectors were there on site and they are satisfied the cleanup is moving ahead appropriately," NEB spokesman Tom Neufeld said. The January spill is being investigated by the Saskatchewan government, which said it will provide assistance to the NEB on the latest leak if requested, but could not speculate on the cause of the Ingoldsby incident. "Our investigation continues into the spill on the Ocean Man First Nation and we will release those findings when complete," a Saskatchewan government spokeswoman said. In a statement released on Wednesday, Tundra said it discovered the leak on Tuesday night and shut down operations immediately. All of the crude oil spilled was contained within Tundra's lease site.

U.S. transparency reversal stings Canadian, European oil firms | Reuters: A reversal of U.S. transparency requirements for the natural resources industry could give American oil companies an edge over Canadian and European rivals who face some of the toughest rules in the world, according to company executives, legal experts and trade groups. The U.S. Senate passed a resolution early on Friday to overturn the "resource extraction rule," an Obama administration regulation that required companies to disclose taxes and other payments to foreign governments. President Donald Trump is expected to soon sign the resolution killing the rule, which had been aimed at discouraging shady dealing in far-flung nations. The rule was among a handful of regulations ushered in during the final months of Barack Obama's presidency that the Republican-controlled Congress has targeted as overly burdensome for the U.S. economy. Overturning the regulation leaves Canadian and European natural resource companies with far more stringent reporting standards for payments to foreign governments than U.S. behemoths like Exxon Mobil Corp and Chevron Corp. Certain details of contract negotiations and terms of bids to access reserves must be divulged under the Canadian and European rules. That could provide American companies a glimpse of their rivals' negotiating tactics around the globe, without having to tip their hands in return. "It definitely could put Canada at a disadvantage because we are fairly stringent on our rules, both domestically and internationally, on how our companies operate,"

Trump’s Trade War With Mexico Could Crash Natural Gas Prices | OilPrice.com: The much hyped “trade war” that Donald Trump is apparently preparing for the southern neighbor of the U.S. could be over before its starts, as the full extent of the mutual dependency of the two countries is gradually revealed. One of the major aspects of this mutual dependency is natural gas. The U.S. last year exported some 127.4 billion cu ft of gas to Mexico on a monthly basis, almost twice the amount it used to export two years earlier. This increase has been a boon for shale gas producers who were struggling with falling profits because of a hefty oversupply. Mexico has helped clear up the glut and its need for gas is nowhere near satisfied: there are projections that demand for U.S. gas will reach 6 billion cu ft daily by 2020, from an average 3.5 billion cu ft daily in the first ten months of 2016. Mexico’s power generation industry needs fuel, and cheap fuel at that, and the U.S. shale producers are happy to supply it.The situation at the moment looks like a stalemate: Trump wants to build the wall and he wants Mexico – and U.S. taxpayers– to pay for it. Pena Nieto appears unwilling to accept these terms. Then there’s Trump’s stated intention to do away with NAFTA in a bid to get things back to an every-man-for-himself style of regional trade policies. The combination of these is flammable. It’s difficult to say who needs whom more. Mexico needs natural gas for the bulk of its electricity production: the fuel is responsible for 60 percent of the country’s power output. Last year, imports from the U.S. exceeded domestic production. Although Mexico is working hard towards expanding its own energy industry, this takes time and investments, and U.S. gas is cheap. So, Mexico clearly needs the gas, especially amid rising fuel prices at the pump – part of the government’s energy market liberalization efforts – that sparked huge protests. For the U.S., Mexico was the biggest single export market for its natural gas in the first nine months of 2016. Exports to Mexico stood at 123 billion cu ft monthly for January-September, from a total of 185 billion cu ft exported monthly in the period. The annual increase was 79 percent. Meanwhile, exports to Canada, which is the other big market for U.S. gas, fell by 39 percent due to lower demand and sufficient local supply.

2016 offshore discovered liquids resources were 90% lower than in 2010 - Rystad Energy concludes that the 2016 total offshore discovered liquids resources reached only slightly below 2.3 billion bbl, 90% lower than in 2010. This drop is most significant to the overall decline in discovered volumes; in fact, total global discovered volumes (oil & gas combined) are at an all-time low since the 1940s. In 2016, the average liquid content in the discovered resources was merely ~40%. Even more tellingly, the replacement ratio for liquids in 2016 was below 10%. For comparison, the replacement ratio for liquids in 2013 was as high as ~30%. (country details)

Shell to sell $3 billion of North Sea assets to Chrysaor -- Royal Dutch Shell is nearing the sale of a large part of its North Sea oil and gas assets to private equity-backed Chrysaor for $3 billion, banking sources said, marking a milestone in its drive to reduce debt after buying BG Group. Chrysaor, a North Sea-focused oil company backed by private equity fund EIG Partners, will acquire from Shell a mix of older fields, new developments and infrastructure in a move analysts say could breathe new life into one of the world’s oldest offshore basins where production has been in a steady decline since the late 1990s. The anticipated deal in what is a relatively high-cost region has been seen by the industry as a litmus test for the sector’s appetite for buying and selling oil and gas fields, known as upstream, as it slowly emerges from a brutal two-and-a-half year downturn. It could now unlock other deals in the North Sea and other regions.

UK gas-for-power demand at multi-year high in January -  The amount of natural gas used in the UK to generate electricity set a fresh multi-year high last month after dipping in December due to weaker demand during the Christmas Holiday, data from National Grid showed Wednesday. Gas-for-power demand stood at 2.21 Bcm in January, the highest for a calendar month in at least six years and increases of 6% month on month and 30% year on year. This marked the fourth time in a row that monthly gas-for-power demand stood above the 2 Bcm mark after failing to breach this barrier during any month between February 2011 and September 2016.Cumulative gas-for-power demand so far during the Winter 2016-17 delivery period stood at 8.43 Bcm, an increase of 56% on an annual basis and already 16% higher than total gas-for-power demand during the entire Winter 2014-15 delivery period. A combination of more favorable gas-fired generation economics allied to coal-fired plant closures saw UK gas-for-power demand increase sharply from the beginning of 2016. Last year, gas-for-power demand rose 52% year on year to 20.94 Bcm and reached as high as 94 million cu m/d in early December. Nonetheless, gas-fired profitability has suffered so far this year as NBP pricing has been supported by a combination of colder-than-average temperatures, a weak LNG delivery schedule, and more expensive Continental European hub pricing.

Southern French gas prices reach record highs as cold weather hits -- Platts video & transcript: Lucie Roux talks about prices on the TRS natural gas hub in southern France having reached record highs in January as sustained cold weather exacerbated a tight supply system caused by limited global LNG supplies, low storage levels and internal flow constraints. Southern French LNG terminal Fos near Marseilles is set to receive seven cargoes in February but traders remain concerned as the supply situation could become even tighter if the cold weather persists into February. This would likely cause storage levels to fall below the level needed to ensure secure supplies, in turn triggering gas prices to spike again.

Freezing Central Asia pulls low-density Russian gasoil away from Med -  Black Sea gasoil streams for export to the Mediterranean market have become more dense over the winter as Central Asia gets first pickings of Russian gasoil with better cold properties -- and by its very nature, lower densities. As a consequence, the remaining gasoil streams offered to traders that operate in the Mediterranean basin have increasingly been higher-density material. Sources say the cold weather across Central Asia has resulted in a shift for heating fuel which has driven the recent redistribution of product across end consumer markets. With more higher density streams on offer to the Mediterranean market, blenders have needed to rethink their blending economics, and the streams used to meet certain consumer requirements.Occasional issues have arisen when meeting tailored requirements, market sources reported. The science of blending becomes ever more important as bespoke grades within the Mediterranean basin become increasingly prevalent. In particular there has been an increase in demand from North Africa for 0.1% gasoil, in recent months, including the addition of Tunisia to the 0.1% sulfur-content pool. The premium of Mediterranean 0.1% gasoil cargoes to ICE low-sulfur gasoil futures was assessed 50 cents higher on the day Thursday at $5.00/mt. The Tunisian grade applies a cap on the density, which is lower than standard tenders issued elsewhere in the region. A maximum density of 845 kg/cu m, required by the Tunisian tenders, means blenders need to carefully consider the gasoil streams used for blending.

 Gazprom plays ball: the depoliticization of the European gas market -Despite uneasy relations between Europe and Moscow, Gazprom’s gas supplies to European consumers are projected to set a new record in 2016. In 2015, this Russian energy company delivered 158.6 billion cubic meters (bcm) to Europe and Turkey. In 2016 this number is set to hit almost 180 bcm – a 12% increase. This number includes exports to all European countries minus three Baltic States plus Turkey. Gazprom’s exports to the EU28 in 2016 are estimated at around 153 bcm. (Global natural gas exports of Gazprom went up from 195.7 bcm in 2015 to 210 bcm in 2016.) What these figures show is that EU utilities are not afraid of Gazprom and are eager to buy cheap energy from Russia. Gazprom does not disclose the prices it charges its European clients, only an average price charged for its European customers. Gazprom’s average European gas price was $182.50/1,000 cu m in the first half of 2016, Gazprom’s average price for 2016 is estimated at around $165-$170/1,000 cm.

Factbox: Potential impacts of US lifting sanctions on Russian oil sector -  US President Donald Trump said Friday ahead of his first conversation with Russian President Vladimir Putin since taking office that it was too soon to know whether to continue US sanctions against Moscow. Trump has promised to take a softer approach to Russian relations than his predecessor, fueling speculation that he could lift the sanctions. Related: Find more content about Trump's administration in our news and analysis feature.Trump and Putin are scheduled to speak Saturday. "I don't know the gentleman," Trump said. "I hope we have a fantastic relationship, that's possible. And it's also possible that we won't. We will see what happens. I will be representing the American people very, very strongly, very, very forcefully." May took a firmer stance, saying the UK would continue to argue within the EU that it must keep Russian sanctions in place until Moscow fully complies with the 2014 Minsk Protocol. "We have been very clear that we want to see the Minsk agreement fully implemented," she said. The sanctions imposed in 2014 in response to Russia's role in the Ukraine conflict have had a significant impact on the investment climate in Russia. They froze several major upstream oil joint ventures between Russian and Western firms, with ExxonMobil taking an estimated $1 billion hit. Former ExxonMobil CEO Rex Tillerson's nomination to be US secretary of state is on track to be confirmed by the Senate, likely next week, after three key Republican senators previously skeptical of his Russian ties said they would support him. "We'll see what happens," Trump said during a joint press conference with UK Prime Minister Theresa May. "As far as the sanctions, [it's] very early to be talking about that."

India halves LNG import duty to 2.5% to hike gas share in energy basket -  India has decided to cut import duty on LNG to 2.5% from 5% to encourage the use of natural gas in the country, finance minister Arun Jaitley said while presenting the national budget for fiscal 2017-2018 Wednesday. The revised rate will come into force when the new fiscal year starts on April 1, a finance ministry official said. In October, oil minister Dharmendra Pradhan had said that India would aim to raise the share of gas in the energy basket to 15% from 6.5% currently in the next three to four years.India's share of natural gas in the energy basket is low compared with the global average of 24%. New Delhi plans to more than double its LNG imports to 50 million mt by 2020 from 19.2 million mt in 2016, according to data from Platts Analytics. Indian LNG demand is expected to grow 38% year on year in 2017 as infrastructural and regulatory barriers are eased while contractual LNG volumes are raised, Platts Analytics data showed. Market sources said, however, that they had expected a complete removal of duty on LNG imports, bringing it in line with crude oil, on which no import tariffs are imposed.

Differentials for Nigeria’s lightest crudes lowest in over a year | Hellenic Shipping News - Differentials for the lightest end of the Nigerian crude oil complex — light, condensate-like Agbami and Akpo grades — against benchmark Dated Brent have fallen as an abundance of sweet crude in the Atlantic Basin has made it difficult for it to land into Europe and as major buyer India has mostly sated its March-loading demand. On Thursday, Platts assessed Agbami FOB and Akpo FOB cargoes at a discount of $1.10/b to the West African Dated strip. This is the lowest level for the two grades since December 12, 2015, when they were at Dated Brent minus $1.15/b. Both grades have dropped precipitously since the beginning of December, when Agbami briefly went into positive territory at a premium of 5 cents/b to the WAF Dated Strip and Akpo was assessed at flat to the WAF Dated Strip. Large volumes of Mediterranean sweet crudes such as Kazakhstan’s CPC Blend and Algeria’s Saharan Blend, refinery maintenance in Europe, sluggish demand for light naphtha-rich North Sea grades and more of a focus on heavy sours by a number of refineries — and subsequent falling differentials for sweet Mediterranean and North Sea grades — have made it difficult for Agbami and Akpo to find buyers in Europe. Around half of the eight Agbami March-loading cargoes have sold and three of the four Akpo March-loading cargoes also still available, trading sources said. Major buying refineries of Nigerian crude in India have also now finished their March tendering cycle and due to limited interest from Europe, some of the typically attractive grades to India, like Agbami, will have to discount further to find homes, traders said. “Europe has a lot of cheaper options in the North Sea and in the Med — I don’t think Europe [will be] supporting Nigeria,”

 Lukoil Eyes Start Of Oilfield Development In Iran This Year - Lukoil hopes it will begin the development of two oil fields in Iran later this year, after the conclusion of negotiations currently held with the National Iranian Oil Company. This is what Lukoil vice president and chief of Middle Eastern operations Gati al-Jebouri told media yesterday.Currently, Lukoil and NIOC are discussing the cost structure of the two projects, and the Russian company hopes that the Iranian side will reach a decision by the end of June, although no firm deadlines have been set, Al-Jebouri also said.Earlier this month, Lukoil was named in a list of 29 foreign companies approved by NIOC for participation in oil and gas field tenders, to take place later this year. The Russian company has not concealed its eagerness to return to Iran: as soon as the Western sanctions on Tehran were lifted, Lukoil President Vagit Alekperov went to Iran to meet with Iranian oil minister Bijan Namdar Zangeneh, who announced to the press that Lukoil was the first foreign oil firm to sign a memorandum of understanding. Before the sanctions, Lukoil operated the Anaran oil field in Iran. According to a recent report by Iran’s Financial Tribune, Russian companies have so far signed preliminary agreements for the development of seven oil and gas deposits in the country. These companies – except Lukoil and Gazprom, who were included in the 29-company list – will be included in a second list of approved foreign oil and gas players. Names include Rosneft, Zarubezhneft, and Tatneft.

Saudi Aramco could raise March crude OSP differentials for Asia: traders - Saudi Aramco is expected to raise the March official selling prices of its Asia-bound crude oil, largely due to the stronger Dubai crude oil market structure, traders said Tuesday. Most traders surveyed by S&P Global Platts said they expected Aramco to raise the March OSP differential of its Asia-bound Arab Light crude by around 10-20 cents/b from a discount of 15 cents/b to the Platts Oman/Dubai average in February. The expected increase reflects the narrowing contango in the Dubai market structure, traders said. S&P Global Platts data showed the spread between frontline cash Dubai versus same-month Dubai swaps at minus 26 cents/b over January to date, up from minus 61 cents/b in December.The spread between the two was last higher in October, when cash Dubai averaged 6 cents/b higher than same-month Dubai swaps. The Dubai market structure is understood to be a key component in the Saudi OSP calculations. Some traders expected the lighter Saudi grades to receive larger increases to their OSP differentials than the medium and heavier grades. "Naphtha crack got stronger compared to last month," said a Singapore-based crude trader. The second-month naphtha to Dubai crude swap crack has averaged at a premium of 55 cents/b in January to date, significantly higher than minus $1.40/b last month, Platts data showed. Meanwhile, fuel oil cracks were relatively steady compared with December, with second-month 180 CST and 380 CST HSFO averaging at minus $2.33/b and minus $3.29/b to Dubai crude swaps, respectively, to date in January.

OPEC May Be Powerless To Stop Lower For Longer - Just a few months after oil prices began to crash from its US$100 level in 2014, BP’s chief executive Bob Dudley warned the industry that it needed “to prepare for lower for longer”.  At the beginning of 2017 - with oil prices relatively stable at over US$50 for a couple of months now - the UK oil supermajor said it in its 2017 Energy Outlook edition that oil resources are abundant, and those that are known today dwarf the expected global consumption of oil out to 2050 and beyond. In BP’s predictions for a future world in the next 20-30 years, the abundance of potential oil reserves and supply may lead to low-cost producers pumping “ever-increasing amounts of that oil and higher-cost producers getting gradually crowded out”, group chief economist Spencer Dale said. This abundance of oil resources contrasts with expectations of slowing growth of oil demand, Dale noted. BP’s supply-demand expectation suggests that oil prices may not only be lower for longer, but that they may be lower for even longer.  Low-cost oil producers may try to use their competitive advantage to increase market share, BP said, and they may be tempted to pump more oil before the demand growth starts to abate. This may lead to “quite significant pressures to dampen long-run prices”, Dale commented in a presentation of BP’s outlook, as quoted by the Financial Times.

OPEC Convinces Investors That Its Oil Output Cuts Are Real… OPEC appears to have persuaded investors that it’s making good on promised production cuts.  Money managers are the most optimistic on West Texas Intermediate oil prices in at least a decade as the Organization of Petroleum Exporting Countries and other producers reduce crude output. Saudi Arabia has said more than 80 percent of the targeted reduction of 1.8 million barrels a day has been implemented. Oil shipments from OPEC are plunging this month, according to tanker-tracker Petro-Logistics SA.   “All the signs are pointing to a pretty significant OPEC cut,” Mike Wittner, head of commodities research at Societe Generale SA in New York, said by telephone. “Until this week we were only getting data from the producers, now the tanker traffic seems to be supporting this view.” OPEC will reduce supply by 900,000 barrels a day in January, the first month of the accord’s implementation, said Geneva-based Petro-Logistics. That’s about 75 percent of the cut that the producer group agreed to make. Eleven non-members led by Russia are to curb their output in support. Hedge funds boosted their net-long position, or the difference between bets on a price increase and wagers on a decline, by 6.1 percent in the week ended Jan. 24, U.S. Commodity Futures Trading Commission data show. WTI rose 1.3 percent to $53.18 a barrel in the report week. The U.S. benchmark slipped 1 percent to close at $52.63 on Monday. OPEC members Saudi Arabia, Kuwait and Algeria have said they’ve cut output this month by even more than was required, while Russia said it’s also curbing production faster than was agreed. Saudi Energy Minister Khalid Al-Falih said Jan. 22 that adherence has been so good that OPEC probably won’t need to extend the accord when it expires in the middle of the year.

Oil slips as U.S. drilling recovery weakens deal to cut output | Reuters: Oil prices fell on Monday as news of another weekly increase in U.S. drilling activity spread concern over rising output just as many of the world's oil producers are trying to comply with a deal to pump less to try to prop up prices. The number of active U.S. oil rigs rose to the highest since November 2015 last week, according to Baker Hughes data, showing drillers are taking advantage of oil prices above $50 a barrel. Global benchmark Brent crude oil prices were down 24 cents at $55.28 a barrel at 1438 GMT, while U.S. crude futures traded down 25 cents at $52.92. "Oil prices are down because of the rise in the U.S. rig count," said Tamas Varga, analyst at PVM Oil Associates in London. The Organization of the Petroleum Exporting Countries and other producers including Russia agreed to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017 to relieve a two-year supply overhang. First indications of compliance to that deal show that members have cut production by 900,000 barrels per day (bpd) in January, according to Petro-Logistics, a company that tracks OPEC supply.

Oil ends at lowest level in over a week with U.S. output set to grow -  Oil futures logged a second straight session decline on Monday to settle at their lowest level in more than a week as traders fretted over signs that U.S. production is set to grow—potentially offsetting efforts by other major crude producers to ease global supplies. On the New York Mercantile Exchange, March West Texas Intermediate crude CLH7, -0.02% fell 54 cents, or 1%, to settle at $52.63 a barrel. That was the lowest finish for a front-month contract since Jan. 20, according to data from Dow Jones. March Brent crude LCOH7, +0.07% which expires at Tuesday’s settlement, lost 29 cents, or 0.5%, to $55.23 a barrel on London’s ICE Futures exchange. “Concerns over rising American production continue to mount, with official rig counts for last week indicating that a further 15 oil rigs had been added in the U.S.,” Baker Hughes reported on Friday a weekly rise of 15 in U.S. oil drilling rigs to total 566 and U.S. government data released last week showed a rise of 17,000 barrels a day in total domestic crude production for the week ended Jan. 20. “This mounting production continued to threaten to undermine the efforts of OPEC to reduce global supply, said Chiorando.   Oil prices also fell “as uncertainty over U.S. policy weighed on markets, following President Trump’s curbs on immigration that have met with fierce opposition world-wide,” he said. U.S. stocks suffered sharp losses in Monday trading.

WTI, RBOB Prices Slide After Biggest Inventory Build Since October -- WTI (and RBOB) prices slid lower into the NYMEX close ahead of API's report tonight that showed further major builds in crude and products. Crude saw inventories rise 5.83mm barrels last week - the most since the end of October and while Cushing saw its 4th weekly draw in a row, Gasoline and Distillates both saw major builds. API:

• Crude +5.83mm (+3mm exp)
• Cushing -906k (-700k exp)
• Gasoline +2.86mm
• Distillates+2.27mm

The crude build is the biggest since October. This is the 5th weekly build in Gasoline in a row...

Libya: back on the road to supply security? --Global Oil Markets podcast -- Once a North African OPEC powerhouse for light, sweet crude oil, Libya is now riven by civil war and disrupted oil supply. The country is trying to pull itself back into contention as a supplier of crude into the Mediterranean and beyond. S&P Global Platts editors Joel Hanley and Gillian Carr discuss what progress is being made.  Since the fall of Moammar Qadhafi in 2011 and the civil war that has followed, Libya’s crude oil output has dropped by over a million barrels per day. As the country rebuilds its capacity, S&P Global Platts investigates the effort to bring Libya back as an oil force, and examines the pitfalls on its road to recovery.   Download our special report

The Oil War Is Only Just Getting Started Submitted - It’s been a month now that investors and analysts have been closely watching two main drivers for oil prices: how OPEC is doing with the supply-cut deal, and how U.S. shale is responding to fifty-plus-dollar oil with rebounding drilling activity. Those two main factors are largely neutralizing each other, and are putting a floor and a cap to a price range of between $50 and $60. The U.S. rig count has been rising, while OPEC seems unfazed by the resurgence in North American shale activity and is trying to convince the market (and itself) and prove that it would be mostly adhering to the promise to curtail supply in an effort to boost prices and bring markets back to balance. In the next couple of months, official production figures will point to who’s winning this round of the oil wars.This would be the short-term game between low-cost producers and higher-cost producers.In the longer run, the latest energy outlook by supermajor BP points to another looming battle for market share, where low-cost producers may try to boost market shares before oil demand peaks. BP’s Energy Outlook 2017 estimates that there is an abundance of oil resources, and “known resources today dwarf the world’s likely consumption of oil out to 2050 and beyond”.“In a world where there’s an abundance of potential oil reserves and supply, what we may see is low-cost producers producing ever-increasing amounts of that oil and higher-cost producers getting gradually crowded out,” Spencer Dale, BP group chief economist said. In BP’s definition of low-cost producers, the majority of the lowest-cost resources sit in large, conventional onshore oilfields, particularly in the Middle East and Russia.

WTI, RBOB Tumble After Biggest Crude Build Since October, Record Gasoline Inventory -- DOE confirms API's major builds in Crude, Gasoline, and Distillates sending WTI and RBOB prices tumbling. US crude production declined in the last week but remain on an upward trajectory with rig counts as East Coast inventories hit an new all-time record high. DOE

• Crude +6.46mm (+3mm exp)
• Cushing -1.25mm (-200k exp)
• Gasoline +3.866mm (+1.5mm exp)
• Distillates +1.4568mm (-500k exp)

The 5th weekly build in gasoline and the biggest build in crude since October... OPEC's good work in boosting the price through output restraint is being undone by surging inventories. Crude stockpile up more than twice as much as expected in Bloomberg's survey.

Oil Prices Fall After Another Major Build In Inventories - The Energy Information Administration today reported a 6.5-million-barrel increase in commercial crude oil stocks in the U.S., a day after the American Petroleum Institute reported a smaller build in inventories of 5.8 million barrels.  Prices after the API report remained relatively stable, most likely because of positive news coming from the OPEC camp: according to several estimates, the members of the cartel have cut around 1 million bpd from their combined output, demonstrating the compliance that most investors have been worrying about after the production cut deal struck last November. In light of this, EIA’s report is also not very likely to swing the market, especially since the EIA noted that total crude oil stockpiles stood at 494.8 million barrels at the end of the week to January 27, within seasonal limits.  Gasoline inventories rose by 3.9 million barrels in the period, the authority also said, confirming and, as with crude oil inventories, topping API estimates of a 2.9-million-barrel increase. Distillate stockpiles rose by 1.6 million barrels.Refineries, operating at 88.2 percent of capacity, churned out an daily average of 9.1 million barrels of gasoline and 4.7 million barrels of distillate last week, compared with 8.8 million barrels of gasoline and 4.6 million barrels of distillate in the prior week.  Imports for the seven-day period stood at 8.3 million barrels daily, up from 7.8 million bpd in the previous week.

U.S. oil prices fall after sharp rise in stockpiles | Reuters: Oil prices fell on Thursday after official data showed U.S. crude and gasoline stockpiles rose sharply, although signs that OPEC and other producers are holding the line on output cuts are helping support prices. Brent crude futures fell 24 cents, or 0.4 percent, to $56.56 a barrel as of 0146 GMT (08:46 p.m. ET) after settling up $1.22 in the previous session. Front month futures for West Texas Intermediate were down 28 cents, or 0.5 percent, at $53.60 after climbing $1.07 at the day before. U.S. crude stocks grew last week by an unexpected 6.5 million barrels to 494.76 million barrels, the Energy Information Administration said on Wednesday, as refiners let stocks build further in a seasonally slow season for production. [EIA/] The build in stocks far exceeded analysts' expectations for an increase of 3.3 million barrels. "Obviously we saw some solid gains in prices in the previous session so there might be a little bit of profit taking in the Asian session after the market rallied unexpectedly," said Ben Le Brun, market analyst with optionsXpress in Sydney. "But prices are still very much range-bound," he added. Gasoline stocks climbed by 3.9 million barrels, compared with analyst expectations in a Reuters poll for a 1-million barrel gain. Gasoline demand has been seasonally weak, down 5.7 percent from a year ago over the past four weeks.But prices were underpinned by indications that producers from the Organization of the Petroleum Exporting Countries and others are curbing output and geopolitical tensions between the United States and Tehran after Iran's latest missile test.

US has too much gasoline and that could mean lower oil prices: U.S. gasoline supplies are piling up, and while that might not help drivers much, it could be a negative for the price of oil. The glut is growing as refineries head into spring maintenance season, which means even less demand for crude to make gasoline. As for the consumer, prices typically rise at this time of year but the hike could be slightly less. Crude inventories increased by 6.5 million barrels in the week ended Jan. 27, and gasoline inventories rose by 3.9 million barrels last week and are at above-average levels, according to Energy Information Administration data. Diesel supplies were also up 1.6 million barrels. "You might have the oddity of gasoline prices moving higher while crude oil stays in a range. That's because there's enough refinery maintenance that there's going to be substantially less demand for crude oil from Feb. 15 to April 15," said Tom Kloza, global energy analyst at Oil Price Information Service. The fuel stockpiles are building even as the U.S. has been exporting record amounts of fuel, and refineries have cut back on output as they perform turnaround maintenance before switching to summer fuels. Exports of gasoline totaled 902,000 barrels a day last week, off recent highs but the four-week average of 922,000 barrels is double the amount exported a year ago. Diesel exports were at 880,000 barrels, off from the week earlier's 1.1 million barrels a day.

Oil complex strengthens as US dollar slips following Fed decision - Oil futures rose Wednesday despite data showing weekly builds in US petroleum stocks, with traders focused on OPEC supply cuts as well as the dollar's decline late in the session. NYMEX March crude settled $1.07 higher at $53.88/b. ICE April Brent settled $1.22 higher at $56.80/b. Crude futures settled just a few cents off intraday highs that were reached in the wake of the Federal Open Market Committee's decision to keep interest rates unchanged. That announcement, while expected, caused the US Dollar Index to fall as low as 99.6 within minutes. The dollar index was nearly 100 points just before the Fed's decision was made public. A weaker dollar makes crude and fuel imports less expensive, putting upward pressure on crude futures. "The FOMC statement sounded like it was giving a bit less direction on what the Fed is thinking on rate hikes," said Mike Dragosits, senior commodity strategist at TD Securities. "Maybe the market got a bit hawkish after the election and as expectations get pulled back it's helping drive the dollar lower," he said. Earlier Wednesday, Energy Information Administration data showed US stocks of crude, gasoline and distillates all rose in the week that ended January 27. Oil futures pared increases after the EIA data was released, but quickly recovered, evidence of the market ignoring current fundamentals

US crude settles at $53.54, down 34 cents, as rising US crude supplies offset OPEC output cuts -- U.S. crude futures ended lower after a choppy trading day on Thursday, as rising oil stockpiles in American storage facilities offset evidence that OPEC and other big exporters were cutting production. Prices retraced early gains as traders grew less concerned about mounting tensions between the United States and Iran. "Traders seem to have concluded the dispute between the U.S. and Iran over a recent missile test represents more of a war of words than the start of a military confrontation that would put supplies from the wider Persian Gulf at risk," Tim Evans, Citi Futures' energy futures specialist, said in a note. U.S. President Donald Trump said on Thursday in a tweet that Iran had been "put on notice" after the country tested a ballistic missile. U.S. light crude settled down 34 cents to $53.54, after climbing by $1.07 on Wednesday. Brent crude was down 23 cents at $56.57 a barrel by 2:33 p.m ET (1933 GMT) after settling up $1.22 in the previous session. Earlier, both Brent and WTI traded at their highest levels since early January on indications producers from the Organization of the Petroleum Exporting Countries and other exporters were following through on their agreements to cut output to reduce a global supply glut. The curbs follow an agreement last year by OPEC and other exporters to reduce supplies by a combined 1.8 million barrels per day (bpd) to prop up prices that remain at about half their mid-2014 levels. A Reuters survey this week found that most key oil producers were sticking to the deal, with compliance above 80 percent. Russian oil output contracted in January by 100,000 bpd, Energy Ministry data showed on Thursday.

It’s ambitious to think that oil prices could reach $65: IEA: Despite a recent OPEC agreement to cut oil production and boost prices, it is unrealistic to expect that the commodity will reach $65 a barrel in the near term, an analyst at the Paris-based International Energy Agency told CNBC. OPEC countries reached an agreement last November to cut production by 1.2 million barrels per day to support oil prices and tackle three-consecutive years of falling investment. In early December, some non-OPEC countries, such as Russia, joined their efforts and promised to cut output by 600,000 barrels per day. "I think 63, 65 (dollars a barrel for Brent) I think you might be a little bit ambitious there because the OPEC producers have got this basic issue, they don't want the price to go too low clearly, because their economies wouldn't stand it," Neil Atkinson, head of the oil industry and markets division, at the IEA told CNBC Friday."But if the price goes too high then that's going to attract a lot of investment in other parts of the world, principally the U.S. shale producers," Atkinson added. The six-month agreement had its first test in January. Analysts are watching closely whether OPEC and non-OPEC members stick to their commitments. A large number of oil experts do not expect 100 percent compliance. According to Atkinson, so far, "they're doing quite well." "The signs are quite encouraging that production has been cut back quite significantly in January," he added. A Reuters survey, published this week, showed at the end of January OPEC members cut production by 958,000 barrels per day, equating to an 82 percent compliance of what they initially pledged.

Rig Count Sees Largest 4 Week Gain Since April 2014 - The number of active oil and gas rigs in the United States increased on Friday by 17, nearly erasing earlier gains to both WTI and Brent crude oil benchmarks. Both benchmarks were trading up early on Friday on the back of geopolitical tensions between Iran and the United States over the threat of fresh sanctions. The total number of active oil and gas rigs in the United States is now 729, according to oilfield services provider Baker Hughes, which is 158 rigs above the rig count a year ago.This week marks the largest four-week gain to the number of oil rigs (+54) since April 2014 (+56). All of this week’s gains were oil rig gains, which were up from 566 last week to 583 this week. The number of active oil rigs in the United States is now the highest since October 2015.Oil rigs have increased by 106 since the OPEC agreement was announced on November 30. The number of gas rigs stayed the same this week at 145 ending 12 straight weeks of increases. Cana Woodford saw the largest increase by basin for a total of 7 rigs gained, with the Permian gaining 4 and Eagle Ford 2. The Granite Walsh Basin and Haynesville both lost rigs. After this week’s 4-rig gain, the Permian now has 295 oil and gas rigs—115 rigs more than the same week last year. These figures continue the trend of the redistribution of rigs by basin—while three weeks ago the Permian Basin accounted for 41% of all active oil and gas rigs in the United States, it now accounts for 51%. And while the Eagle Ford Basin accounted for 14% three weeks ago, it now accounts for only 10%.

Rig Count Surges Again To 16-Month Highs (But Where's The Oil Industry Jobs) - For the third week in a row, the US oil rig count rose dramatically (up 15 to 583 - the highest since October 2015). This is the biggest 3-week surge in rig counts since April 2013... (the biggest 3-week percentage gain since Nov 2009) Production continues to trend with rig count... However, as exuberant as this number is, job gains are nowhere to be found as the robotization of the industry (amid more 'real' costs of capital) provide no help to Americans... As Bloomberg notes, the addition of just 100 jobs to industry payrolls lags well behind the pace of the overall U.S. economy, which added 227,000 workers during the month. The growing use of robots and other efficiencies honed over the course of a 2 1/2 year market downturn means more work is getting done with fewer people.

BHI: US rig count up double-digits in third straight week - Oil & Gas ... Rig deployment in the US continued to pick up steam during the week ended Feb. 3 as Baker Hughes Inc.’s tally of active units recorded its third consecutive weekly double-digit increase.The overall count gained 17 units to 729, up 325 since a modern era nadir of 404 touched last May 27 and up 158 units year-over-year (OGJ Online, Jan. 27, 2017). Units targeting crude oil and units drilling horizontally, catalysts of the drilling rebound of the past 8 months, also were up 17 units each during the week. The Permian, however, had a more subdued week, gaining just 4 units to 295, up 161 since its recent bottom on May 13 and up 115 year-over-year.   The Permian remains a stalwart for future drilling and production activity in the US. Exploration and production firms are continue to plan further rig deployments in the region over the coming year, and, accordingly, production is expected to continue rising. The US Energy Information Administration projects Permian output to average 2.3 million b/d in 2017 and 2.5 million b/d in 2018. That compares with 2 million b/d in 2016 and 1.9 million b/d in 2015. Distinguishing itself from the other major oil regions in the US, the Permian features producing zones each more than 1,000 ft thick, EIA notes. “Because of its large geographic size, the Permian offers a lot of potential for testing and drilling, and the multiple stacked plays allow producers to continue to drill both vertical wells and hydraulically fractured horizontal wells,” the agency explains. With its 17-unit jump, the US oil-directed rig count now totals 583, an increase of 267 since May 27 and 116 year-over-year. Gas-directed rigs and those considered unclassified were unmoved at 145 and 1, respectively. US onshore rigs gained 17 units to 705, driven by a 17-unit jump in horizontal rigs to 596, up 282 since May 27 and up 138 year-over-year. Directional drilling rigs rose 5 units to 66, up 30 since July 8. Oklahoma led the major oil- and gas-producing regions during the week, climbing 6 units to 102, nearly double its count on June 24 and above the 100 mark for the first time since Sept. 25, 2015. The Cana Woodford jumped 7 units to 56, up 32 since June 24. Oklahoma and the Cana Woodford are home to two of hottest regions in the US behind the much larger Permian—the South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko basin Canadian and Kingfisher (STACK) play. Last week, Continental Resources Inc. said it plans to operate an average 16 rigs in Oklahoma during 2017. Of the total, 11 will be in the STACK targeting the Meramec and Woodford formations, and 5 in the SCOOP. The firm is slated to operate an average 20 rigs companywide for the year.

OilPrice Intelligence Report: Is Iran The Next Big Catalyst For Oil Prices? - Oil prices posted some modest gains this week, despite some small up and down movements. OPEC compliance continues to look good, but oil inventories are also rising in the U.S., raising fears of ongoing supply problems. Oil volatility has declined in recent weeks, but it is far from clear which direction it will move in over the next several weeks and months.   Oil markets were buoyed this week by further evidence that OPEC is more or less complying with the production cuts that it promised a few months ago. A Reuters survey put the cuts so far at 1 million barrels per day. Bloomberg mostly agrees, estimating that the cartel cut output by 840,000 bpd so far. In other words, by all accounts, OPEC has achieved a roughly 80 percent compliance rate with its promised cuts. Given the strong skepticism surrounding the deal, the news is bullish for oil. “Compliance is great -- it’s been really fantastic,” Saudi Energy minister Khalid Al-Falih said recently. “Based on everything I know, I think it’s been one of the best agreements we’ve had for a long time.” The Trump administration is moving to impose new sanctions on Iranian entities after Iran tested a ballistic missile. The move comes after the administration said that they were “putting Iran on notice,” a vaguely worded threat that has undone years of improving relations. Iran has said that new sanctions would breach the 2015 nuclear accord; the U.S. insists they do not. The latest flare up in tensions upends a two-year détente between the U.S. and Iran and put the two countries back on a path of confrontation. Iran has succeeded in ramping up oil production after international sanctions were lifted a year ago, but the sudden resurgence in tensions could push up prices if things escalate. The geopolitical battle with Iran had enormous influence a few years ago, and this could be one of the major black swan events of 2017.   Earnings reports from ExxonMobil, Chevron and Royal Dutch Shell ( have been highly disappointing, each company coming in sharply lower than consensus estimates. Shell just reported full-year earnings for 2016 that were the worst in over a decade. At the same time, oil executives struck an optimistic tone, arguing that the worst is over. Shell, for example, was cash flow positive in the past two quarters, allowing it to cover dividends and pay down debt. With oil prices now solidly above $50 per barrel, the oil majors are confident 2017 will be better.

Kuwait cabinet approves budget with huge deficit | GulfNews.com: The Kuwaiti government on Monday approved the 2017/2018 budget with a projected huge deficit for the third year running due to the sharp fall in oil prices. Finance Minister Anas Al Saleh said the fiscal year’s budget which begins on April 1 is projecting a shortfall of 6.6 billion dinars (Dh79.34 billion; $21.6 billion).The deficit is 25 per cent less than the projected shortfall in the current 2016/2017 fiscal year estimated at $29 billion, due to an improvement in oil prices.Revenues are projected at 13.3 billion dinars and spending is estimated at 19.9 billion dinars, the minister told reporters.The budget becomes official only after the Gulf state’s elected parliament approves it. Oil revenues are projected at $38.4 billion, up 36 per cent on the estimated oil income in this year’s budget, the minister said.Despite the sharp slide in oil prices in the past three years, income from oil is still projected to make up 88 per cent of Kuwait’s total revenues, Saleh said.After posting healthy surpluses for 16 years in a row, Kuwait posted a budget deficit in 2015/2016 which ended March 31 last year.In previous years Kuwait built up a sovereign wealth fund worth around $600 billion that is invested mostly in the United States, Europe and Asia.

Saudi Arabia signals end of tax-free living as oil revenues slump -- Tax-free living will soon be a thing of the past for Saudis after its cabinet on Monday approved an IMF-backed value-added tax to be imposed across the Gulf following an oil slump. A 5% levy will apply to certain goods following an agreement with the six-member Gulf Cooperation Council in June last year. Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue. Saudi Arabia is the world’s biggest oil exporter and the largest economy in the Arab region. It froze major building projects, cut cabinet ministers’ salaries and imposed a wage freeze on civil servants to cope with last year’s record budget deficit of $97bn. It also made unprecedented cuts to fuel and utilities subsidies. The kingdom is broadening its investment base and boosting other non-oil income as part of economic diversification efforts and aims to balance its budget by 2020. The cabinet “decided to approve the unified agreement for value-added tax” to be implemented throughout the Gulf Cooperation Council (GCC), the official Saudi Press Agency said. “A royal decree has been prepared,” it said. The move is in line with an International Monetary Fund recommendation for Gulf states to impose revenue-raising measures including excise and value-added taxes to help their adjustment to lower crude prices which have slowed regional growth.

EXCLUSIVE: Pentagon believes attack on Saudi frigate meant for US warship | Fox News: The Iranian-backed suicide attack targeting a Saudi frigate off the coast of Yemen on Monday may have been meant for an American warship, two defense officials told Fox News. The incident in question occurred in the southern Red Sea and was carried out by Iranian-backed Houthi rebels. Two Saudi sailors were killed and three were wounded. At first the ship was thought to have been struck by a missile. But based on new analysis of a video showing the attack, American intelligence officials now believe this was, in fact, a suicide bomber whose small boat rammed the side of the Saudi vessel. In the audio heard on the video, a voice narrating the attack shouts in Arabic, "Allahu akbar [God is great], death to America, death to Israel, a curse on the Jews and victory for Islam." U.S. defense analysts believe those behind the attack either thought the bomber was striking an American warship or that this was a “dress rehearsal” similar to the attack on the USS Cole, according to one official.

Trump Continues Obama’s Inane, Immoral, Unconstitutional Drone Policy - We keep dropping bombs and we keep killing more civilians and children than we do alleged terrorists. Instead of lamenting all the lives needlessly destroyed, we praise a US soldier who died in an illegal, immoral, and unconstitutional action. In the following video, Ron Paul discusses US action in Yemen. President Trump ordered a second US attack on Yemen in his still-short presidency. Over the weekend a commando-style raid was said to have killed 14 al-Qaeda operatives. Also killed were at least ten civilians including children. Is this just a continuation of Obama’s disastrous Yemen policy? “Even if they sincerely believed in their hearts, they have to look at the results, …. Don’t they ever look at history? … The seeds have been sewn for them to turn against us,” said Paul. “Obama expanded Bush's inane, unconstitutional, immoral drone policy. Trump followed Obama. Hillary would have too. https://t.co/M1HrqsCsqZ pic.twitter.com/uE8NtKkyMg  No one ever questions why the policy of nation-building never works.

White House: Military won't target US citizens in anti-terror raids | TheHill: President Trump’s top spokesman on Tuesday said the military will never target U.S. citizens in overseas operations, including those suspected of being involved in terrorist groups. “No American citizen will ever be targeted,” White House press secretary Sean Spicer said when asked whether the Trump administration would target American citizens with ties to extremists. The comment put the Trump White House at odds with the Obama administration, which killed U.S.-born alleged al Qaeda leader Anwar al-Awlaki in a 2011 drone strike in Yemen. The Justice Department produced a legal memo justifying the strike, which was made public in 2014. The administration said the killing did not violate the Constitution because al-Awlaki posed an imminent threat to the U.S. Spicer indicated those types of operations would not longer be carried out by the U.S. military.

Obama Killed a 16-Year-Old American in Yemen. Trump Just Killed His 8-Year-Old Sister. - Greenwald - In 2010, President Obama directed the CIA to assassinate an American citizen in Yemen, Anwar al-Awlaki, despite the fact that he had never been charged with (let alone convicted of) any crime, and the agency successfully carried out that order a year later with a September, 2011 drone strike. While that assassination created widespread debate – the once-again-beloved ACLU sued Obama to restrain him from the assassination on the ground of due process and then, when that suit was dismissed, sued Obama again after the killing was carried out – another drone-killing carried out shortly thereafter was perhaps even more significant yet generated relatively little attention. Two weeks after the killing of Awlaki, a separate CIA drone strike in Yemen killed his 16-year-old American-born son, Abdulrahman, along with the boy’s 17-year-old cousin and several other innocent Yemenis. The U.S. eventually claimed that the boy was not their target but merely “collateral damage.” Abdulrahman’s grief-stricken grandfather, Nasser al-Awlaki, urged the Washington Post “to visit a Facebook memorial page for Abdulrahman,” which explained: “Look at his pictures, his friends, and his hobbies His Facebook page shows a typical kid.”  In a hideous symbol of the bipartisan continuity of U.S. barbarism, Nasser al-Awlaki just lost another one of his young grandchildren to U.S. violence. On Sunday, the Navy’s SEAL Team 6, using armed Reaper drones for cover, carried out a commando raid on what it said was a compound harboring officials of Al Qaeda in the Arabian Peninsula. A statement issued by President Trump lamented the death of an American service member and several others who were wounded, but made no mention of any civilian deaths. U.S. military officials initially denied any civilian deaths, and (therefore) the CNN report on the raid said nothing about any civilians being killed. But reports from Yemen quickly surfaced that 30 people were killed, including 10 women and children. Among the dead: the 8-year-old granddaughter of Nasser al-Awlaki, Nawar, who was also the daughter of Anwar Awlaki. (pictures of the children are included here)

 Trump Insists That Now, More Than Ever, Americans Must Stand Strong In Face Of Empathy  —Stressing that the very future of the republic was at stake, President Donald Trump called upon all Americans Monday to stand strong and resolute in the face of empathy. “Now, more than ever, we as a nation must remain steadfast in resisting the urge to understand the feelings and perspectives of others,” said Trump, adding that a rising tide of dangerous empathy could, if unchecked, quickly engulf the country in compassion. “Above all else, we must never descend into treating people as separate individuals with their own concerns and desires, deserving of sympathy and respect. That is surely the path to kindness, from which a nation seldom returns.” Trump went on to say that the courage Americans demonstrated today would allow future generations to one day look at the world around them with indifference or, with any luck, pure disdain.

Crazy Ideas About The U.S. Attack In Yemen - The Fake Outrage About Trump piece included a part on a U.S. special force attack in Yemen that had happened just hours before: The rural home of a tribal leader's family, friendly with some Yemeni al-Qaeda members, was raided by a special operations commando. A U.S. tiltrotor military aircraft was shot down during the raid. One soldier was killed and several were wounded. The U.S. commandos responded with their usual panic. They killed anyone in sight and bombed the shit out of any nearby structure. According to Yemeni sources between 30 and 57 Yemenis were killed including eight women and eight children (graphic pics). The U.S. military claimed, as it always does, that no civilians were hurt in the raid. One of the killed kids was the 8 year old daughter of al-Qaeda propagandist Anwar al-Awlaki. That early description holds up well against recent reporting by NBC, the Washington Post and the New York Times. The incident happened as described. But an open question is still why the raid happen. The military and the administration claim it was to get intelligence, laptops, hard-drives and the like. But that is not a good explanation for an elaborate raid that needed lots of resources and backup. We had noted that "Yemeni sources say that at least two men were abducted by the U.S. military." The U.S. Central Command claims that no prisoners were taken only intelligence material. But a few days ago it also claimed that no civilians were hurt which it now admits indeed happened. My gut tells me that we will hear more on this issue. There are also some weird conspiracy theories around the raid. Marcy Wheeler aka Emptywheel headlined: Trump Fulfills Another Campaign Promise: Kills 8-Year Old American Girl and asked "Was that the point?"  That is crazy and impossible theory. Trump had been in office for less than ten days.  An organization like the U.S. military can not possibly vet, arrange and coordinated such a collection of different units and assets without several weeks of intense preparations. Another crazy piece was published by Reuters today: U.S. military officials told Reuters that Trump approved his first covert counterterrorism operation without sufficient intelligence, ground support or adequate backup preparations.  As a result, three officials said, the attacking SEAL team found itself dropping onto a reinforced al Qaeda base defended by landmines, snipers, and a larger than expected contingent of heavily armed Islamist extremists. On wonders who these three "U.S. military officials" are who try to back-stab Trump and his advisors. The raiders surely had prior and current intelligence, they surely had enough forces on the ground and in the air. Lots of backup actually did come in when needed.

U.S. military probing more possible civilian deaths in Yemen raid | Reuters: The U.S. military said on Wednesday it was looking into whether more civilians were killed in a raid on al Qaeda in Yemen on the weekend, in the first operation authorized by President Donald Trump as commander in chief. U.S. Navy SEAL William “Ryan” Owens was killed in the raid on a branch of al Qaeda, also known as AQAP, in al Bayda province, which the Pentagon said also killed 14 militants. However, medics at the scene said about 30 people, including 10 women and children, were killed. U.S. Central Command said in a statement that an investigating team had "concluded regrettably that civilian non-combatants were likely killed" during Sunday's raid. It said children may have been among the casualties. Central Command said its assessment "seeks to determine if there were any still-undetected civilian casualties in the ferocious firefight."U.S. military officials told Reuters that Trump approved his first covert counterterrorism operation without sufficient intelligence, ground support or adequate backup preparations. As a result, three officials said, the attacking SEAL team found itself dropping onto a reinforced al Qaeda base defended by landmines, snipers, and a larger than expected contingent of heavily armed Islamist extremists. The Pentagon directed queries about the officials' characterization of the raid to U.S. Central Command, which pointed only to its statement on Wednesday.

US Sends Navy Destroyer Off Yemen Coast As Tensions With Iran Rise --While there were some hopes President Trump would demilitarize US presence in the Middle East, they are quickly getting dashed with every passing day, and following Trump's announcement last week he would implement "safe zones" in Syria which would boost US troop presence in the region, on Friday US officials announced they had moved a Navy destroyer -the USS Cole, which in 2000 was infamously attacked by terrorists while on dock in Yemen's Aden harbor - off the coast of Yemen to protect waterways from Houthi militia aligned with Iran, according to Reuters, citing heightened tension between Washington and Tehran. More details from Reuters: The USS Cole arrived in the vicinity of the Bab al-Mandab Strait off southwestern Yemen where it will carry out patrols including escorting vessels, the officials said.While U.S. military vessels have carried out routine operations in the region in the past, this movement is part of an increased presence there aimed at protecting shipping from the Iran-allied Houthis, they said.The Houthis are allied to Iran, which is at odds with new U.S. President Donald Trump over its recent test launch of a ballistic missiles. Trump said on Thursday that “nothing is off the table” in dealing with Iran, a day after his national security adviser, Michael Flynn said he was putting Iran “on notice.”On Friday, tensions with Iran increased further on Friday when the U.S. Treasury Department announced sanctions on 13 people and 12 entities under U.S. Iran sanctions authority. Earlier this week Houthi insurgents reportedly attacked a Saudi warship off the western coast of Yemen, causing an explosion that killed two crew members. That incident was part of an escalation in combat on Yemen's western coast between the militia and the coalition backing the country's internationally recognized government.

Iran Admits It Test Fired New Missile, Putting Nuclear Deal In Jeopardy -- After yesterday US officials reported that Iran conducted a nuclear ballistic missile test on Sunday, which to some would be another violation of the UN resolution and Obama's nuclear deal, on Wednesday Iran's defense minister admitted that the Islamic Republic had indeed tested a new missile, but added the test did not breach Tehran's nuclear accord with world powers or a U.N. Security Council resolution endorsing the pact. Iran has test-fired several ballistic missiles since the nuclear deal in 2015, but this is the first during U.S. President Donald Trump's administration. Trump said in his election campaign that he would stop Iran's missile program. Furthermore, the confirmed launch comes at a precarious time, with president Trump seemingly looking for excuses to scrap the Iran deal, which could potentially lead to the reestablishment of Iran sanctions and the halt of Iranian oil exports to global markets, taking away as much as 1 million barrels of daily supply.

Putin's Russia in biggest Arctic military push since Soviet fall | Reuters: Russia is again on the march in the Arctic and building new nuclear icebreakers. It is part of a push to firm Moscow's hand in the High North as it vies for dominance with traditional rivals Canada, the United States, and Norway as well as newcomer China. Interviews with officials and military analysts and reviews of government documents show Russia's build-up is the biggest since the 1991 Soviet fall and will, in some areas, give Moscow more military capabilities than the Soviet Union once had. The expansion has far-reaching financial and geopolitical ramifications. The Arctic is estimated to hold more hydrocarbon reserves than Saudi Arabia and Moscow is putting down a serious military marker. "History is repeating itself," Vladimir Blinov, a guide on board the icebreaker Lenin, which is named after communist revolutionary Vladimir Lenin, told a recent tour group. "Back then (in the 1950s) it was the height of the Cold War and the United States was leading in some areas. But we beat the Americans and built the world's first nuclear ship (the Lenin). The situation today is similar." Under President Vladimir Putin, Moscow is rushing to re-open abandoned Soviet military, air and radar bases on remote Arctic islands and to build new ones, as it pushes ahead with a claim to almost half a million square miles of the Arctic.The Arctic, the U.S. Geological Survey estimates, holds oil and gas reserves equivalent to 412 billion barrels of oil, about 22 percent of the world’s undiscovered oil and gas.

Analysis: China's 2016 oil demand in the red as GDP growth hits 26-year low - China's apparent oil demand slipped into the negative territory in 2016, a sharp reversal from the near 7% growth witnessed a year earlier, as the country's slowest GDP growth in 26 years slashed appetite for industrial and transportation fuels in Asia's biggest oil consuming nation. A near 25% growth in LPG demand and close to double-digit growth in naphtha and jet fuel demand failed to offset the impact of sharp falls in gasoil and fuel oil consumption, pulling down overall oil demand in 2016 by 0.8% to 11.11 million b/d, compared with a growth of 6.6% in 2015. The world's second biggest oil consumer saw a sharp slowdown in demand after GDP growth slowed to 6.7% in 2016 from 6.9% in 2015 and 7.3% in 2014. GDP growth was 3.9% in 1990. Although GDP growth was only 0.2 percentage points lower than in 2015, fixed asset investment growth slowed to 8.1% year on year in 2016 from 10% in 2015. Industrial production grew 6% in 2016, also lower than the 6.1% growth seen in 2015, data from the National Bureau of Statistics showed. These factors together pulled down gasoil consumption in the transportation and construction sectors, resulting in a 5.4% year-on-year fall in apparent demand for the fuel, which accounts for around 30% of China's overall oil products consumption.Beijing does not release official data on oil demand and stocks. Platts calculates apparent or implied oil demand by taking into account official data on monthly throughput at Chinese refineries and net product imports. But the official data fails to reflect some of the crude throughput increases from the new crude oil consumers -- the independent refineries.

What’s the End Game for Xi Jinping’s Political Moves? -- China faces a year of potential political instability in 2017. Not only will Beijing need to deal with the potentially antagonistic U.S. Trump administration, it will also undergo a leadership upheaval later this year, which even President Xi Jinping himself will find it difficult to fully control. The 19th National Congress of the Communist Party of China in the fall will see a major reshuffle of party leadership, followed by the once-every-five-years government overhaul in early 2018. Five of the seven Politburo Standing Committee members, excluding only Xi and Premier Li Keqiang, are expected to step down, as they will reach the unofficial retirement age of 68. But there is uncertainty regarding Xi’s apparent desire for power; some circles believe he may break party rules to try to consolidate his power. It would not be unprecedented for Xi to break with Communist Party traditions. Prior to his elevation, there was an unspoken rule that no current or former Politburo Standing Committee (PBSC) members would be investigated for corruption or other criminal activity. As members of China’s highest decision-making body, they received deference in lines with traditional Confucian values. But Xi daringly disregarded this convention and launched an investigation into former PBSC member Zhou Yongkang, who was subsequently sentenced to life in prison on corruption charges. Xi has also moved to restructure the People’ Liberation Army, once thought impossible due to deeply ingrained vested interests. He did this after prosecuting and convicting a number of military officers — most notably Generals Xu Caihou and Guo Boxiong — on graft charges.

China sends its billionaires a chilling message - FT - It reads like the plot of a bad thriller — a Chinese billionaire sits with his entourage of female bodyguards in his apartment in the Hong Kong Four Seasons in the early hours of Chinese new year’s eve. The women are employed not only to protect him but also to wipe the sweat from his brow and back. Suddenly, half a dozen public security agents from mainland China burst in, overpower the bodyguards, bundle the billionaire out of the luxury hotel and spirit him across the border to face the wrath of the Communist party. But this is not the script for a kung fu potboiler. The billionaire is Xiao Jianhua, one of China’s most politically connected and wealthy men, and his abduction from the heart of Hong Kong’s financial district last Friday has shaken the city to its core. When the UK handed the former colony back to China in 1997, Beijing guaranteed Hong Kong a “high degree of autonomy” for 50 years and left the territory’s independent courts, free press and efficient bureaucracy mostly untouched. One of the cardinal rules of the arrangement is that no law enforcement agencies from outside Hong Kong, including those from mainland China, are allowed to operate inside the territory. Coming a little over a year after Chinese agents abducted five Hong Kong booksellers for publishing embarrassing books on the private lives of Chinese leaders, this latest breach of Hong Kong law is a terrible blow to the city’s credibility. Either the Hong Kong government and security services were complicit in the snatching of Mr Xiao or they were negligent in allowing it to happen right under their noses.

Tempest Trump: China and US urged to make plans for ‘major storm’ in bilateral relationship  -  Donald Trump’s inauguration as US president has injected unprecedented uncertainty into China-US relations, with diplomatic pundits warning that leaders in Beijing and Washington need to have contingency plans in place to deal with soaring risks and unforeseeable events that could throw bilateral ties into crisis and inflict collateral damage on other parts of the world. “There is little doubt that a major storm is gathering,” . “Both sides appear to have made few discernible efforts to hide the fact that they expect a rough ride ahead for bilateral ties.” Throughout his election campaign, Trump accused China of unfair trade practices and vowed to levy a flat 45 per cent tariff on all Chinese imports to the US. Since his surprise election victory, he has sparred with China on a range of security and economic issues, from currency manipulation to Taiwan, the South China Sea and North Korea. Robert Daly, director of the Washington-based Kissinger Institute on China and the United States, said the potential for wild-card events to shape US-China relations had grown.  While most people in both countries had viewed the other country negatively since 2014, top US and Chinese leaders had seen each other primarily through an adversarial lens, he said, for different reasons and with different styles.“So this is a new situation when the public has a negative view and leaders have a negative view,” Daly said. “The global situation is more uncertain than it’s been and there’s a competition for leadership [between the two countries].”

Trump May Be Pushing China Into Clash That Won’t Benefit Anyone - Given his actions on a range of issues so far, US President Donald Trump is likely to go after China using a range of tactics from punitive tarrifs to casting aside the US’s ‘One China’ policy and embracing Taiwan. So far, of course, he has scored a self-goal by scrapping the Trans Pacific Partnership (TPP), the foundation on which the Barack Obama administration’s “pivot” to Asia was anchored. In an intriguing op-ed in the New York Times, Yan Xuetong, a leading Chinese academician has painted a dramatic portrait of what China can become if it is put into the pressure cooker by Trump. Instead of playing it on the backfoot, China could, he said, actually take on the attack on the frontfoot and emerge as a “full fledged super power”. What does that mean? First, it could fill the vacuum left by the US abandoning free trade by creating a new trading bloc to replace the TPP. Australia and South Korea would be encouraged to join, but Japan would be left out of the new bloc. Second, he says, as of now, only “Pakistan is a traditional military ally,” but if the US changed its one China policy and recognised Taiwan’s independence, China “should establish as many military alliances as possible.” Specifically, Beijing should enter into military pacts with Cambodia, Thailand and the the Philippines. With the trade and military alliance in place, Beijing would become “the leader of East Asia and make the region safer.”

 War With US Becoming A "Practical Reality" Chinese Military Warns - In the harshest warning yet that China is actively contemplating a worst case scenario for its diplomatic relations with the US, a senior Chinese military official said that “a war within the president’s term’ or ‘war breaking out tonight’ are not just slogans, they are becoming a practical reality.” The remarks, first reported by the SCMP, were published on the People’s Liberation Army website in response to the escalating rhetoric towards China from America's new administration, and as Beijing braces itself for a possible deterioration in Sino-US ties, with a particular emphasis on maritime security. The commentary written by an official at the national defence mobilisation department in the Central Military Commission - which has overall authority of China’s armed forces - also called for a US rebalancing of its strategy in Asia, military deployments in the East and South China Seas and the instillation of a missile defence system in South Korea were hot spots getting closer to ignition.

 China Stepping Up as Trump Withdraws From the World Stage -- As Washington greets a new administration disinclined to play a worldwide role, Beijing increasingly accepts opportunities to lead. Climate change policy is one good example of this trend. Commentators warn that Trump’s pledge to withdraw the U.S. from the Paris climate agreement would let China “off the hook” for curbing carbon emissions. In fact, China put itself “on the hook” in Paris for reasons having little to do with the United States. China is moving to add more nuclear, hydroelectric, solar and wind turbine generating capacity. Greenpeace estimates that during every hour of every day in 2015, China on average installed more than one new wind turbine, and enough solar panels to cover a soccer field. China is already the world’s leading producer of renewable energy technologies. More remarkably, it is also the leading consumer. And in January, it announced plans to invest an additional $360 billion in renewable power between now and 2020. That’s $120 billion a year. These renewable power measures are being taken to fight China’s number one problem—air pollution—but they will also automatically cut China’s carbon emissions.

Abe, Trump agree to hold summit on Feb. 10 - Prime Minister Shinzo Abe and U.S. President Donald Trump agreed during a telephone conversation Saturday to hold face-to-face talks on Feb. 10 and affirmed the importance of bilateral ties, the Japanese and U.S. governments said. The leaders “affirmed in our phone conversation the importance of the Japan-U.S. alliance in economic and security challenges,” Abe told reporters after the call. And Trump “affirmed the ironclad U.S. commitment to ensuring the security of Japan,” the White House press office said. The talks in Washington will be the first meeting between the Japanese and American leaders since Trump took office. The two held unofficial talks in New York last November shortly after Trump caused a shock by winning the highly divisive presidential race. “I want us to have a frank exchange of views on the economy and security in our meeting,” Abe told reporters after Saturday’s 42-minute phone call with Trump. A government official quoted Abe as telling Trump that he “hopes the United States will become a greater country through (your) leadership,” adding Japan wants to “fulfill our role as your ally.”

Japan's long road to fiscal health may be getting longer- Nikkei Asian Review: -- Japan's government has set itself the goal of achieving a primary budget surplus -- that is, not including interest payments on government debt -- by fiscal 2020. But it is still spending more than it takes in taxes, making that target look increasingly unrealistic. Japan is forecast to run a primary deficit of 8.3 trillion yen ($72.2 billion) in the budget year beginning April 2020, even if its growth, unadjusted for inflation, is running at 3%, the Cabinet Office said Wednesday. During the regular Diet session that opened Jan. 20, Prime Minister Shinzo Abe stressed the importance of education, noting that this year marks the 70th anniversary of the enforcement of the Constitution of Japan, which stipulates that all citizens are entitled to nine years of free, compulsory education. Lawmakers from both the ruling and opposition parties called for improvements to the country's education system during parliamentary questions. Some opposition parties are pushing for free higher education, which could cost 5 trillion yen a year. If that change were introduced, even step by step, it would significantly raise spending from the Cabinet Office's current forecast of 106.7 trillion for fiscal 2020. The policy change is not included in the Cabinet Office's medium- and long-term projections.Defense spending is rising as well. Facing a deteriorating security environment in East Asia and demands for higher military spending from the new administration of U.S. President Donald Trump, Japanese think tanks, including the Institute for International Policy Studies, chaired by former Prime Minister Yasuhiro Nakasone, are calling for the country's defense budget to be expanded to 1.2% of gross domestic product.

Tough road to fiscal reform for debt-ridden Japan before FY2020 — Japan’s goal to restore its fiscal health, the worst among developed countries, is still far off amid prospects for tepid economic growth and swelling spending on health, pensions and defense. Furthermore, reining in spending and boosting tax revenue have become more difficult since a consumption tax hike was twice postponed and the yen appreciated against the U.S. dollar to the detriment of exporters’ profits. As difficulties mount, many economists believe Japan will not be able to meet its target of achieving a primary surplus by fiscal 2020 as internationally pledged, let alone an interim milestone set for fiscal 2018. “Should attaining the targets be dropped or postponed, confidence in Japan’s finances will be eroded,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. “Since the delaying (in 2016) of the consumption tax hike, the administration’s commitment or willingness to restore fiscal health has been waning,” Kodama said. A primary balance deficit means a country cannot finance its annual government budget without issuing new bonds, even when debt-servicing costs are excluded. Japan’s primary deficit in fiscal 2020 is now expected to total 8.3 trillion yen ($72.2 billion), up from 5.5 trillion yen projected in July. And its ratio to nominal gross domestic product is projected at 1.4 percent, up from 1.0 percent, according to the Cabinet Office. But analysts at SMBC Nikko Securities Co paint an even bleaker picture, putting the ratio at around 3 percent in fiscal 2020.

BOJ to conduct special bond buying after yield surge on Trump remarks | The Japan Times: Japanese government bonds swung and the yen fell as the central bank moved to reassert control over surging yields, while money market rates rose in China after officials boosted their target for a key benchmark. Japanese 10-year yields briefly erased gains and the yen dropped after the Bank of Japan offered to buy an unlimited amount of bonds at a fixed rate in an unscheduled operation — a move viewed by market players as a sign that the central bank has been shaken by U.S. President Donald Trump’s criticism of its monetary easing. Earlier in the day, the BOJ did not boost its buying of government bonds in its regular debt-buying operation as much as expected, driving up the benchmark 10-year interest rate to its highest level in a year. The BOJ aims to keep the 10-year government debt yield at around zero percent as part of its stimulus program. In the wake of a spike in long-term government debt yields, the central bank announced a “fixed-rate” bond-buying operation, more powerful than a regular one, for the first time since Nov. 17, resulting in a sharp drop of the 10-year government debt yield. The BOJ’s move came days after Trump named China and Japan currency manipulators, effectively accusing the BOJ of intentionally lowering the value of the yen by drastically easing its monetary grip.If Trump continues to blame Japan for manipulating its currency, it may be difficult for the BOJ to ease its monetary policy, which in turn will trigger a spike in long-term government debt yields and a stronger yen, market watchers say.

Central Banks Quietly Backing Out of Negative Interest Rate Policies (NIRP) -- Wolf Richter - Markets are suspecting that central banks are in the process of exiting this fabulous multi-year party quietly, and that on the way out they won’t refill the booze and dope, leaving the besotted revelers to their own devices. That thought isn’t sitting very well with these revelers. In markets where central banks have pushed  government bond prices into the stratosphere and yields, even 10-year yields, below zero, there has been a sea change. The 10-year yield of the Japanese Government Bond (JGB) jumped 2.5 basis points to 0.115% on Thursday, the highest since January 2016, after an auction for ¥2.4 trillion of 10-year JGBs flopped, as investors were losing interest in this paper at this yield, and as the Bank of Japan, rather than gobbling up every JGB in sight to help the auction along, sat on its hands and let it happen.  And on Friday morning, the 10-year yield jumped another 3 basis points to 0.145%! In September last year, the BOJ started the now apparently troubled experiment of trying to control not just short-term interest rates but also the entire yield curve. It targeted a 10-year yield of about 0% (it was negative at the time). Analysts believed that this would mean a range between -0.1% and +0.1%, and that if the yield rose to +0.1%, the BOJ would throw its weight around and buy. But the fact that the BOJ allowed the yield to go above that imaginary line signaled to the markets that it no longer has the intention of capping the yield at +0.1%, that in fact the BOJ has stepped back.This happened even as BOJ Governor Haruhiko Kuroda, on Thursday, once again was trying to jawbone the markets with a verbal commitment to his yield-curve targeting strategy and his mega-QQE of ¥80 trillion ($710 billion) a year in asset purchases. The 10-year yield had fallen below zero for the first time on February 9, 2016, as the BOJ began dabbling with its own negative interest rate policy (NIRP), because its zero-interest-rate policy and its mega-QQE bond and stock buying binge somehow wasn’t enough, and because everyone in Europe was doing it. But that’s like so ancient history now (via Trading Economics; red marks in the charts below are mine):

Demonetisation: India’s Stress Test -Yves here. This meaty post is gives a detailed recap of India’s demonetization experiment and discusses the likely economic and political fallout. Jerri-Lynn pointed out early on that the Modi got a lot of popular support for this initiative despite the remarkable amount of unnecessary damage. But it was also the poorest people in India that were hit the hardest.  The author says that polls show that Modi has not taken much of hit despite how badly botched the demonetization program was, and that it also appears not to have done much to achieve its aims of cracking down on dirty money (there is a very informative discussion about how it appears to have been laundered successfully, when the apparent hope was that the rich tax evaders would take losses). But as we’ve seen, many recent polls have proven to be unreliable. An upcoming election in Uttar Pradesh will provide a much better reading.

 January India manufacturing PMI rebounds from demonetization downturn- Nikkei Asian Review: -- The Nikkei India Manufacturing Purchasing Managers' Index, or PMI, rose to 50.4 in January from December's 49.6. The index returned to the above-50 growth zone after December's sudden drop stemming from the high-value banknotes demonetization. A reading above 50 indicates economic expansion, while one below 50 points toward contraction. The main factors contributing to the recovery were growth of both new orders and output. According to IHS Markit, which compiled the survey, anecdotal evidence highlighted a return to normal market conditions and a subsequent improvement in demand. In December's survey, panel firms blamed the demonetization for the downturn, as cash shortages in the economy reportedly resulted in fewer levels of new orders received. Pollyanna De Lima, economist at IHS Markit, commented on January's PMI: "Improving confidence among firms bodes well for the outlook, with the expansion in manufacturing output likely to pick up pace in coming months."

Locals Wary of Modi Math as Foreigners Sell $6 Billion Debt - The risk of record borrowings is turning Indian bond investors skeptical going into the government’s budget Wednesday, just as foreign funds exit the market at the fastest pace since 2013. Primary dealers have rescued two of the last four sovereign-debt auctions, as Prime Minister Narendra Modi’s administration is expected to announce an unprecedented 6.25 trillion rupees ($92 billion) in gross market borrowings to fund the fiscal deficit, a survey conducted by Bloomberg shows. With India’s monetary-easing cycle seen nearing its end and global yields rising, rupee bonds notes are seen losing appeal, and analysts expect 2017’s gain in benchmark 10-year notes to be the smallest in four years. Global holdings of rupee-denominated government and corporate notes are set for a fourth straight monthly decline, having fallen 392 billion rupees since Sept. 30. “There is the possibility of foreign outflows continuing and not too many are betting on more than one India rate cut,” Finance Minister Arun Jaitley will target a budget shortfall of 3.3 percent of gross domestic product for the year ending March 2018, according to the median estimate in a Bloomberg survey of 13 economists. That’s wider than the 3 percent goal set earlier, though lower than the 3.5 percent estimated for the current financial year. Net borrowing, excluding redemptions, is forecast at 4.3 trillion rupees, as against 4.1 trillion rupees this fiscal year. Modi is seen boosting expenditure to offset the damage inflicted by his shock recall of high-value currency notes in November, done to combat corruption, which had crimped spending as residents rushed to deposit money at banks.

Why The World Needs To Watch The India-Pakistan Nuclear Standoff - Nuclear dangers are growing in five different regions. The least noticed is South Asia.New Delhi has not been able to figure out how to deal with militant groups that enjoy safe havens in Pakistan. So far, India’s options have been to do nothing after attacks or execute war plans that invite mushroom clouds. A third option, which involves commando raids, may now be coming into view.During seven decades of strained relations, Indian war planning has been downsized from fighting major conflicts to fighting limited conventional wars. Comparatively speaking, moving from limited conventional war to commando raids is a step in the right direction. But this progression offers little consolation when the potential for escalation is ever present, and when nuclear weapons serve as a backdrop to every military encounter.War plans don’t go away; they evolve. India’s army then pivoted to plans for quick strikes and shallow advances along many possible avenues of attack. Rawalpindi countered by embracing nuclear weapons tailored for various kinds of battlefield use. The Indian Army’s so-called “Cold Start” doctrine remains on the books, even though implementation is problematic due to long-standing disconnects in civil-military relations, joint-military operations and military procurement. More importantly, a limited conventional war, no matter how carefully planned, may not stay limited. India’s civilian leaders have yet to endorse the army’s plans, and didn’t employ them after the 2008 Mumbai attacks.Since then, Pakistan has been more victimized by acts of terror than India. But because the perpetrators are overwhelmingly homegrown—and since they have refrained from attacking Indian targets—their carnage does not prompt war scares on the subcontinent.In contrast, attacks against Indian targets that originate in Pakistan have clear escalatory potential. They typically occur after New Delhi makes overtures to improve relations with Pakistan. Prime Minister Narendra Modi has made three such overtures. He invited Prime Minister Nawaz Sharif to attend his inauguration in May 2014, he agreed in July 2015 to resume a composite dialogue on all outstanding issues, and he made an unannounced visit to Lahore bearing birthday and wedding gifts for Nawaz Sharif and his family on Christmas Day 2015.

Billionaire Peter Thiel makes fortune after ‘sweetheart’ deal with Government - A scheme funded by New Zealand taxpayers netted billionaire Peter Thiel tens of millions of dollars while his publicly funded investment partner barely broke even. The partnering of Thiel's Valar Ventures and the Government-owned New Zealand Venture Investment Fund (NZVIF) was launched by minister Steven Joyce in March 2012, nine months after Thiel took his oath of citizenship at the New Zealand consulate in Santa Monica. Joyce said at the time the venture was "part of the Government's comprehensive business growth agenda", but a Herald investigation has discovered the arrangement was quietly ended in October when Thiel activated a generous buyback option allowing him and his private partners to claim all profits from the venture by cheaply buying out his public co-investor. Valar and Thiel did not respond to questions about the buyback this week, and have also declined to comment after numerous requests from both local and international media about the wider issue of his Kiwi citizenship. A Wall St analyst told the Weekend Herald the clause left the Government facing a "horrendous risk-return proposition" that had no place in agreements between commercial parties. "If a professional investor signed this deal, they would be the butt of their colleagues' jokes all the way out the door," the analyst said.

Brazil's Public Accounts Register Record Deficit of R$155.8 Billion  – The consolidated public sector in Brazil (federal, state, municipal and state-owned companies) registered a primary deficit of R$155.8 billion in 2016 according to the country’s Central Bank (CB). The deficit was equivalent to 2.47 percent of the country’s GDP, and the largest in fifteen years.Brazil’s Central Bank report shows largest public deficit in fifteen years for 2016, photo internet recreation. “The increased deficit was due to the reduction of economic activity,” said Fernando Rocha of the Central Bank’s Economic Department, to local news outlet G1. “We have had very weak economic activity and the recovery has been very slow, much more than expected. Rocha, however, said the public accounts remained within the target for 2016, which was approved by Brazil’s Congress at R$163.9 billion. In 2015 the primary deficit was of R$111.2 billion equivalent to 1.85 percent of the GDP. The federal government closed 2016 with a record primary deficit of R$159.4 billion last year. The deterioration of public accounts as a consequence of the worst economic crisis Brazil has ever faced has reduced revenues in recent years. With rising unemployment and decreasing activity, revenues declined significantly in the federal, state and local governments coffers. In 2016, net revenues obtained by the federal government declined by 4.1 percent while total expenditures fell at a slower pace of 1.2 percent.

Argentine Judge Orders Arrest Of Local Uber Executives, Shut Down Of Uber Mobile App --While Uber is dealing with fallout from its response to Trump's Friday immigration order, when it tweeted it would pause surge pricing, which was taken as a form of "strike breaking," whilst simultaneously profiting off the situation, and its actions were seen as seeking to grab market share from striking taxi drivers, leading to a #DeleteUber meme spreading across social networks, it has a more tangible problem in Argentina, where Buenos Aires prosecutor Martin Lapadi moments ago requested the arrest of local Uber executives, and ordered the shut down of the company's mobile application.As a reminder, Uber has been operating since mid-April without a permit or tax-identification number, which has led to numerous lawsuits by taxi unions. City officials have issued multiple injunctions attempting to bring its service to a halt. And credit card companies have been blocked from processing Uber payments on locally registered cards. The ride-hailing company even went as far as working with bitcoin startup Xapo to circumvent the credit card roadblock, one of its more pressing barriers to service in Argentina.However, even that loophole now appears to be closed.  As Noticias reports, the arrest warrant targets Uber execs Diego Mariano Oliveira, general manager of UBER Argentina, and Mariano Otero, the local CEO of the company. The Argentine newspaper adds that arrest warrants are based on the fact that Uber executives never ceased their infringements but ignored judicial orders, continuing the company's illegal activity.

Canadian PM says mosque shooting a 'terrorist attack on Muslims' - Six people were killed and eight wounded when gunmen opened fire at a Quebec City mosque during Sunday night prayers, in what Canadian Prime Minister Justin Trudeau called a "terrorist attack on Muslims". Police said two suspects had been arrested, but gave no details about them or what prompted the attack. Initially, the mosque president said five people were killed and a witness said up to three gunmen had fired on about 40 people inside the Quebec City Islamic Cultural Centre. Police said only two people were involved in the attack. "Six people are confirmed dead - they range in age from 35 to about 70," Quebec provincial police spokeswoman Christine Coulombe told reporters, adding eight people were wounded and 39 were unharmed. Prime Minister Justin Trudeau said in a statement: "We condemn this terrorist attack on Muslims in a center of worship and refuge". “Muslim-Canadians are an important part of our national fabric, and these senseless acts have no place in our communities, cities and country."The shooting came on the weekend that Trudeau said Canada would welcome refugees, after U.S. President Donald Trump suspended the U.S. refugee program and temporarily barred citizens from seven Muslim-majority countries from entering the United States on national security grounds.

Quebec Mosque Shooter Reportedly A Racist, Sexist Le Pen/Trump-Supporting Lone-Wolf --Having cleared one suspect (of Moroccan descent) as merely a witness, The Globe and Mail reports that the white male suspect in the deadly Quebec City mosque attack yesterday was known in the city's activist circles as a right-wing troll who frequently took anti-foreigner and anti-feminist positions and stood up for U.S. President Donald Trump. As Reuters reports, a French-Canadian university student was the sole suspect in a shooting at a Quebec City mosque and was charged with the premeditated murder of six people, Canadian authorities said on Monday, in what Prime Minister Justin Trudeau called "a terrorist attack."Court documents identified the gunman in the attack on Sunday evening prayers as Alexandre Bissonnette. He was also charged with five counts of attempted murder, according to court papers.Among the six men killed were a butcher, a university professor, a pharmacist and an accountant, according to police and Canadian media.

Trump, Brexit reinforce Germany's appetite to dominate Europe - After the recent NATO 'invasion' in Poland, we saw the first German military presence (always in the context of NATO) in a former Baltic Soviet republic since WWII: “German tanks and troops began arriving in Lithuania on Tuesday, the first entry of the German military into the former Baltic Soviet republic since its occupation by the Nazis during the Second World War. The German deployment is to include 450 troops and some 200 vehicles, including 30 tanks. In all, the NATO alliance has committed to moving four battalions, roughly 3,000 to 4,000 troops, to within striking distance of Russia in northeastern Europe as part of a permanent “rotating” deployment.” Recall that, recently “German Chancellor Angela Merkel has warned European Union leaders they cannot rely on the "eternal guarantee" of US support, as concerns continue to grow about incoming President Donald Trump's commitment to trans-Atlantic ties. Speaking to the press in Brussels as she received an honorary joint doctorate from Ghent and Louvain universities, Merkel said "traditional partners" could no longer be relied upon to "closely cooperate" with Europe on issues such as defense.” The decline of the US-German relations has been exposed initially with the NSA interceptions scandal, yet, progressively, the big picture came on surface, revealing a transatlantic economic war between banking and corporate giants. Merkel's statements could be considered an official declaration of Germany's deeper desire to become an autonomous power that will dominate in the European continent. It is obvious that Germany (i.e., German capital), will seek to take advantage both from Brexit and the Trump presidency.

Greece has three weeks to deal with ‘potentially disastrous’ debt  --Greece’s embattled government has three weeks to break the deadlock in increasingly difficult talks with creditors or risk the country’s debt crisis resurfacing with renewed vigour. Faced with the dilemma of agreeing to additional austerity or calling fresh elections, prime minister Alexis Tsipras was weighing his options at the weekend. Fears of further uncertainty in Europe’s weakest member state mounted as the International Monetary Fund (IMF) predicted that Greece’s debt load could become “explosive” by 2030. “It is critical that a compromise is found,” said Aristides Hatzis, professor of law and economics at the university of Athens, noting that a slew of elections across Europe would only make Greece’s predicament worse.“If these negotiations are not wrapped up by 20 February [when eurozone finance ministers next meet] we could be looking at potentially disastrous political turmoil, which would bring back the scenario of Grexit with a vengeance.” Central to the impasse is the enduring argument among lenders over Athens’ ability to achieve fiscal targets once its latest bailout programme expires in 2018. Without legislation of further pension cuts and tax increases, the IMF does not believe it can attain a primary budget surplus of 3.5%. At a meeting of eurozone finance ministers on Thursday, Athens found itself out in the cold with even the normally supportive European commission failing to rally to its defence.

New euro zone loans to Greece hinge on IMF participation in bailout - ESM | Reuters: Greece will only receive more loans from the euro zone if the International Monetary Fund joins its latest aid programme, the head of the bloc's bailout fund said on Monday, spelling out a condition thus far disregarded by Athens's creditors. Greece needs a new tranche of financial aid under its 86 billion euro bailout by the third quarter of the year or it faces the risk of defaulting on its debts. Under the current programme, Greece's third since 2010, loans have been disbursed by euro zone creditors without the formal participation of the IMF, although that has always been a requirement. But with elections coming in the Netherlands and Germany -- two of the most adamant supporters of the IMF role in the bailout, the creditors want to apply the agreed conditions for new loans to Athens more strictly. Klaus Regling, who chairs the European Stability Mechanism (ESM), said a further slice of financial aid can only be issued once the IMF decides to be part of the programme. "That is my working assumption because our member states wanted it that way. It is the institutional arrangement that we agreed on in the past," Regling told reporters in Luxembourg. The IMF will discuss its role in the Greek bailout in a board meeting on Feb. 6. In a report leaked last week, the IMF said Athens's debt will rise to an unsustainable 275 percent of its gross domestic product by 2060 if no sizeable debt relief is given to Athens by its creditors.

When will the EU and the ECB Stop Torturing the Greeks? -- The troika refers to the European Union (EU), European Central Bank (ECB), and the International Monetary Fund (IMF).  The IMF, traditionally, was the greatest proponent of any international entity of inflicting extreme austerity on nations suffering economic crises.  The IMF’s economists have increasingly reviewed the evidence and concluded that austerity reduces growth and that putting nations into inescapable debt traps is stupid and harmful.  The EU and the ECB, however, have been impervious to these economic studies and intent on hammering the Greeks.  The purported EU “bailout” of Greece is an exercise in EU propaganda.  Overwhelmingly, EU aid involving Greece goes to Greek banks – and the bank bailout bails out the creditors of Greek banks.  Those creditors, overwhelmingly, are EU banks. The EU and the ECB have forbidden Greece to use stimulus and locked Greece into a debt trap that will crush the Greek economy for over a half-century.The International Monetary Fund believes Greece’s debt is “highly unsustainable” and will reach 275% of gross domestic product by 2060 unless the country’s loans are significantly restructured, according to a draft confidential review of the country’s economy. The Greek debt trap will worsen, not end, after 2060 absent major debt relief.  The IMF predicts that the growth of Greek debt will “become explosive thereafter.”  In the commercial sphere, creditors routinely grant major debt relief to corporations in analogous circumstances.  Donald Trump brags relentlessly about his ability to induce his creditors to restructure his firms’ debt payments.

They keep lying while they argue about how to proceed with destroying Greeks: IMF, Germany and EU | Defend Democracy Press: IMF is arguing for restructuring the Greek debt, which it recognizes as “highly non sustainable”. It contributed largely itself to this result by organizing “Bail out” programs for Greece which proved to be “Bail down”. If measured by GDP, investments, unemployment, debt, demographic results and suicides rate, among the Greek population, the Greek “program” organized by the IMF, the German government and the EU has represented the biggest disaster in post-War capitalist Europe, deeper than what happened in Germany between 1929 and 1933. But Mrs. Lagarde, Mrs. Merkel and her Finance Minister (sitting where Minister Goering was sitting during the War) and also Mr. Juncker, are so curious to see where this experiment will finally lead, they push always for new achievements of the same kind. But, while all of them agree on the purpose, that is the destruction of the Greek population, the occupation and the looting of Greece, they differ some times very sharply, on the best war tactics. Now they want more “reforms”. The IMF reforms are really radical and effective. They will solve the problems of the Greek Social Security by all but abolishing it. If pensioners go more quickly to heaven, then you have to pay more pensions. This is also true for poor Greeks

Italy Bond Risk Soars To 3-Year Highs As Youth Unemployment Tops 40% -- The last 4 months have seen something 'odd' happen in Europe's periphery. Sovereign 'risk' has conspicuously (and rationally) risen as macro-fundamentals have deteriorated - something that we have not seen since Draghi's 2012 "whatever it takes" moment.  For the first time since June 2015, Italian youth unemployment has risen above 40% and notably, Italian bond yields are rising... And the result is growing concerns about Italy's idiosyncratic risk as the risk premium of BTPs over Bunds soars to its highest sicne 2014 (worst now than the Referendum peak)...

French Bond Risk Spikes To 3-Year High After Radical Left Cheers Hamon's Win In Socialist Primary -- The final slate of candidates for French national elections in April-May is nearly complete, and judging by French government bond risk spiking, the decision to choose radical left wing Benoit Hamon to represent the French Socialists has investors worried about the fiscal future of the country. As MishTalk.com's Michael Shedlock notes, The radical Left is cheering.  Partial results from about 60 per cent of the polling stations showed that Mr Hamon, a former education minister, attracted 59 per cent of the vote in the primary run-off, against Manuel Valls, the former prime minister, who secured 41 per cent of the vote. More than 1m voters turned out for the final round of the primary. Mr Hamon’s win marks a fierce rejection of the business-friendly policies implemented by President François Hollande. It reveals a desire among Socialist party sympathisers to return to core leftwing policies after Mr Hollande’s unpopular term.

In Latest Scandal, Le Pen's Main Rival Accused Of Getting Wife, Children Jobs Paying €1 Million -- Last week we reported that in the aftermath of a report by the Canard Enchaine newspaper, French financial prosecutors had launched an informal probe into possible misuse of public funds by French presidential frontrunner Francois Fillon, who was accused of paying his wife around €500,000 over a period of ten years. Now one week later, the man who is expected - according to public polls whose reputation over the past year has hit rock bottom - to defeat Marine Le Pen in the French presidential election's runoff round, was hit with a fresh scandal, after a new report by the same satirical newspaper alleged that Fillon got his wife and two of his children jobs that paid nearly 1 million euros.   According to the report, Penelope Fillon worked as his parliamentary aide for longer than he has admitted and was paid 331,000 more euros for the role than it originally reported. In the new Canard report, the candidate's wife was paid more for that job than it wrote in its edition last week, reaching a total of 831,440 euros ($897,456) gross. Additionally, two of Fillon's five children were employed as parliamentary assistants, earning a further 84,000 euros, the report alleged.  Le Canard has also written that Penelope Fillon was paid another 100,000 euros for a job at a cultural magazine. Fillon has denied any wrongdoing and says the work was real. He told TF1 television last week that she was paid from 1997. Le Canard wrote on Tuesday that she was also employed as parliamentary assistant from 1988 to 1990.

France's FN sets out unorthodox economic plans to support a euro exit | Reuters: France's National Front will combine the euro exit at the heart of its economic platform with a cocktail of unorthodox policies including money printing, currency intervention and import taxes, a top party official told Reuters. A key measure in the presidential platform National Front (FN) leader Marine Le Pen will unveil this weekend will be to break France's dependence on market financing by reserving the right to order the central bank to buy up its bonds. All of this would require a major overhaul of French laws and would require not only Le Pen being elected president in May but also the FN winning parliamentary elections in June. "The only way for the French economy to adapt itself to how the global economy is evolving is by getting its monetary and budgetary sovereignty back," said Jean Messiha, who coordinates the drafting of Le Pen's election platform. Opinion polls see Le Pen as likely to top the first round of the presidential poll on April 23 but then lose the May 7 run-off to conservative Francois Fillon or centrist Emmanuel Macron. But in a race that is turning out to be the most unpredictable France has known in decades, the FN hopes this weekend's rally in Lyon, where Le Pen will spell out her electoral agenda, will help convince voters who have traditionally backed mainstream parties to give her a chance. "The FN's program explicitly foresees re-establishing the possibility for the French state to refinance itself at the Bank of France," Messiha said, referring to what is essentially printing money to finance public spending. The FN considers that "by breaking the financial market's monopoly, you will automatically lower the cost of (borrowing) money," he said.

France′s Fillon sees support drop as calls rise for election pullout  -- A poll by BVA of voting intentions gave Fillon between 18 and 20 percent of the vote in the April 23 first round, behind far-right leader Marine Le Pen with 25 percent and independent centrist Emmanuel Macron with 21-22 percent. A poll by Ifop Fiducial on Friday night showed a similar slide in support for Fillon since a scandal involving payments to his wife emerged in late January. A recent poll by Harris Interactive showed that 69 percent of French people wanted Fillon to drop his bid to become the country's president. Fillon told reporters on Friday that he would fight what he called a "demolition exercise." Emmanuel Macron - the former protege of President Francois Hollande - is now favorite for the presidency. Macron last year created a new political party called "En Marche" ("On the Move"), on a centrist, liberal economic and pro-European platform. By electing Benoit Hamon, France's Socialists meanwhile appear unlikely to make much impact in the race.

Bank of Italy and ECB say euro exit would be disaster for Italy - (Reuters) - The Italian and European central banks on Monday intervened in a growing Italian political debate over whether to quit the euro, saying it would be a "disaster" and "economic suicide". ECB governing council member Ewald Nowotny and Bank of Italy deputy governor Salvatore Rossi made their comments after calls from the anti-establishment 5-Star Movement, running just behind the ruling Democratic Party in opinion polls, to dump the euro. Elections could be held as early as June and, with several parties pushing for Italy to quit the single currency, the subject is likely to feature strongly. "The scenario is one of catastrophe and disaster," Rossi told RTL radio. "This does not mean it cannot happen, because anything can happen." After the interviewer noted that many listeners were pushing for a return to the lira, Rossi said: "Everybody's savings would be worth less, much less." In a Eurobarometer survey published in December, 47 percent of Italians considered the euro a 'bad thing' for their country, against 41 percent in favour. However, other recent surveys in Italian newspapers have shown a majority of Italians wanting to keep the single currency. Many Italians believe the euro has hurt their economy by making exports more expensive and tying Italy to EU rules that prevent it spending to boost growth. Speaking in Vienna, Austrian central bank head Nowotny said: "It would be economic suicide for Italy to leave the euro zone. The same is true for France."

Italian banks make little headway in clearing out bad loans: ECB | Reuters: Italian banks have made little progress in reducing the mountain of bad debts which has curbed their ability to lend new money, fresh data showed on Tuesday. Italy's 14 biggest banks held 284.4 billion euros worth of so called non-performing exposures at the end of September, just 1.6 billion euros less than three months earlier, even as provisions on those loans rose, figures from the European Central Bank showed. That corresponds to about one in every 10 Italian loans and almost a third of all soured credit at the 122 large euro zone banks supervised by the ECB, by far the biggest pile of bad debt in the currency union. Across the entire euro zone bad loans totaled nearly 1 trillion euros ($1 trillion) at the end of September, leaving banks affected struggling to plug often massive holes in their balance sheets. In Italy Monte dei Paschi di Siena (BMPS.MI) is working on a state rescue after the ECB said it needed to plug a capital shortfall of 8.8 billion euros. UniCredit (CRDI.MI) meanwhile said it plans to raise 13 billion euros after booking a 12.2 billion charge, partly due to bad loans. A key issue is that the private market for bad loans is small and illiquid, resulting in excessively low prices, discouraging banks from offloading them at significant losses. Anticipating some of these losses, top banks in Italy have already set aside reserves equal to 45.4 percent of all their bad debt, a higher 'coverage ratio' than in all but a few euro zone nations but still below prevailing market prices.

EU needs to create 'bad bank' for €1tn toxic loan pile, says EBA chief - A top European banking regulator has called on Brussels policymakers to create an EU “bad bank” to buy billions of euros of toxic loans from lenders to break the vicious circle of falling profits, squeezed lending and weak economic growth. Andrea Enria, chairman of the European Banking Authority, planned to say in a speech on Monday that the scale of the region’s bad debt problem has become “urgent and actionable” as lenders now hold more than €1tn of toxic loans. Mr Enria believes that while the EU has recognised the bad debt crisis facing its banks faster than Japan did after its “lost decade” in the 1990s, it is now at risk of addressing the problem even more slowly than Tokyo did. He proposes that the EU should create a taxpayer-backed fund to buy bad loans from struggling lenders at their “real economic value” — a level to be determined by the fund after doing due diligence on the loans. This would have the double benefit of increasing transparency around the true value of the vast piles of non-performing loans clogging up the balance sheets of many banks in the region and increase the size of the nascent market for such assets. The EBA has no power to introduce such a project itself and Mr Enria’s speech seems designed to promote the idea of an EU bad bank for debate in Brussels and other capitals.

 ECB Assets Rise Above 36% Of Eurozone GDP; Draghi Now Owns 10.2% Of European Corporate Bonds --The ECB's nationalization of the European corporate bond sector continues. In the ECB's latest update, the six central banks acting on behalf of the Euro system provided an update on the list of corporate bonds they bought. They bought into 810 issuances with a total of €573bn in amount outstanding. For the week ending 27th January, the bond purchases stood at €1.9bn across sectors. This increases the number of securities held by the ECB to 813, and lift the ECB's total corporate bond holdings to €58.82b, which means that as of the latest weekly data, the ECB now owns 10.2% of the total €575.42BN in European corporate debt outstanding.Since one month ago, the ECB owned 9.2% of the corporate bond market, the rate of nationalization of the private, outstanding corporate bonds is roughly 1% per month.Tangentially, 52 or 6.4% of the 813 securities held by the ECB are negative yielding.Which corporate bonds did Mario Draghi generously subsidize this week? According to the ECB's holdings, utilities remain the largest industry group with 215 securities, while according to Bloomberg, in the latest week  the ECB bought bonds issued by Atlantia, BASF, Carmila, Enel, Fresenius, Italgas, LEG Immobilien, Linde, Legrand, RTE, Snam and Telefonica Emisiones. The complete list of ECB holdings by ISINs can be found here.

Top ECB officials defend easy money policy as inflation bounces | Reuters: Two top officials at the European Central Bank defended its ultra-easy monetary policy on Thursday after a rebound in inflation had upset bond markets and sparked criticism of it, particularly in cash-rich Germany. With inflation surging well above expectations last month, calls have increased for the bank to claw back stimulus by phasing out its unprecedented 2.3 trillion euro stimulus programme that has kept borrowing costs at record lows for years. But Benoit Coeure and Peter Praet, two members of the ECB's Executive Board, said the bank would keep looking through the rapid rise in inflation, which they mostly attributed to a bounce in oil prices. "The ups and downs of monthly data are not relevant if they are temporary and have no implications for the medium-term outlook for price stability," Praet, who is also the ECB's chief economist, said in Berlin. "Continued monetary policy support is necessary." He added that tariffs on imports and other protectionist proposals from the new U.S. administration are also alarming, with potential implications for the economic outlook. His words were echoed by Coeure, who cautioned, however, that the ECB will watch out for any sign that the recovery in energy prices was starting to filter through to other goods and to salaries. "We will continue to monitor closely the evolution of prices and costs in the coming weeks and months in order to assess any second-round effects of energy prices and also to judge the extent to which the increase in inflation represents a sustainable adjustment towards our objective,"

Germany's credit to ECB sets new record in December | Reuters: Germany's credit toward the European Central Bank set a new record in December as money flowed into the euro zone's strongest economy for a sixth straight month, albeit at a slower pace, ECB data showed on Wednesday. Germany's net claims on the ECB hit 754.2 billion euros ($813.7 billion) in the final month of 2016 according to the Target 2 data, which tracks cross-border payments in the euro zone. The German inflows are testament to its strong exports but also reflect savers' preference for parking their money in what is perceived to be the euro zone's safe haven while banks in countries such as Italy are under pressure, and anti-euro sentiment is on the rise. As these payments are not settled by national central banks, their total amount represents the money that each of them would have to pay or receive from the ECB if the currency club dissolved, as ECB President Mario Draghi recently said in a letter to two Italian lawmakers. Italy, where euroskeptic voices are growing louder, has the largest debt with the ECB at 356.6 billion euros, despite a small decline in December after eight straight months of outflows. The threat of defaults on cross-border debts has often been credited as one element keeping the euro zone together throughout the financial crisis. The ECB has maintained its own huge bond buying-program, where many of the sellers are foreign investors with accounts in Germany, was largely responsible for the growing Target 2 imbalances.

European Bonds Post Worst January on Record Amid Political Angst --Euro-region bonds handed investors the worst start to a year on record as heightened political risk across the currency bloc added to speculation the European Central Bank may bring its asset-purchase program to an abrupt halt in 2018. With general elections scheduled in France, Germany and the Netherlands this year amid an increase in support for anti-euro rhetoric, yields on French and Italian bonds climbed this week to their highest level relative to benchmark German debt since 2014. In the face of stronger growth and rising inflation, some investors aren’t listening to Mario Draghi when he says the ECB hasn’t considered tapering its bond-buying plan. Rising populism in the region’s biggest economies and speculation that the ECB’s stimulus plan may be nearing its endgame have clouded the horizon for bond investors, who have grown used to the central bank insulating euro-area securities from political tension. That’s seen yield spreads expand to levels unseen since quantitative easing began in 2015, and left analysts forecasting more pain if electoral risks materialize, particularly in light of the extreme market reactions seen in the wake of Donald Trump’s victory in the U.S. The market’s move suggests Draghi’s insistence last year that policy makers weren’t considering scaling down stimulus and caution in January that underlying inflation showed “no convincing signs” of picking up is falling on deaf ears. “The market is obviously seeing through this,” It’s “seeing that quantitative easing has to come to an end soon.”

IMF issues damning report on eurozone fiscal policy - A new study from the International Monetary Fund (IMF) accuses EU countries of running excessive deficits, distorted budgets and poor compliance with financial rules in the single currency area.  The IMF working paper called Fiscal Politics in the Euro Area analyzes data from 19 countries participating in the eurozone over 1999–2015.It reveals the public-debt-to-GDP ratio of the euro area as a whole increased from an average of less than 60 percent of GDP in the early 1990s to more than 90 percent in 2015. According to the EU statistical service Eurostat, the new debt is more than fifty percent higher than the maximum allowed level of 60 percent determined by the Stability and Growth Pact, a set of rules designed to make sure EU members “pursue sound public finances and coordinate their fiscal policies.”The IMF study shows that while the euro was introduced to be the common currency within the EU, the member states have been struggling to maintain confidence in it since the start of the sovereign debt crisis of 2009. Some of them were struggling to repay or finance their government debt, mainly because of increased public spending and slow growth. Previously, when all of them had their own currencies, the governments could have devalued the currency to resolve the situation.The paper also said that many euro area countries are running "excessive deficits" while spending more than they are earning.They are “rooted in distorted political incentives" at both national and eurozone levels, it added.According to the report, one of the major reasons for those distortions is “the expressed perception by many analysts that European fiscal governance releases countries from their national responsibilities.” “Nothing could be further from the truth: fiscal policy is, first and foremost, a national responsibility. The combination of this misperception with the predominance of the national dimension of politics constitutes a dangerous mix,” the IMF said.

Europe Proposes "Restrictions On Payments In Cash" -- Having discontinued its production of EUR500 banknotes, it appears Europe is charging towards the utopian dream of a cashless society. Just days after Davos' elites discussed why the world needs to "get rid of currency," the European Commission has introduced a proposal enforcing "restrictions on payments in cash." With Rogoff, Stiglitz, Summers et al. all calling for the end of cash - because only terrorists and drug-dealers need cash (nothing at all to do with totalitarian control over a nation's wealth) - we are not surprised that this proposal from the European Commission (sanctuary of statism) would appear... The Commission published on 2 February 2016 a Communication to the Council and the Parliament on an Action Plan to further step up the fight against the financing of terrorism (COM (2016) 50). The Action Plan builds on existing EU rules to adapt to new threats and aims at updating EU policies in line with international standards. In the context of the Commission's action to extent the scope of the Regulation on the controls of cash entering or leaving the Community, reference is made to the appropriateness to explore the relevance of potential upper limits to cash payments. The Action Plan states that "Payments in cash are widely used in the financing of terrorist activities… In this context, the relevance of potential upper limits to cash payments could also be explored. Several Member States have in place prohibitions for cash payments above a specific threshold." Cash has the important feature of offering anonymity to transactions. Such anonymity may be desired for legitimate reason (e.g. protection of privacy). But, such anonymity can also be misused for money laundering and terrorist financing purposes. The possibility to conduct large cash payments facilitates money laundering and terrorist financing activities because of the difficulty to control cash payment transactions.

Things Just Got Serious in Europe’s War on Cash -- The central authorities in Europe just launched their most important offensive to date in their multiyear War on Cash. The new move comes directly from the European Union’s executive branch, the European Commission, which just announced its intention to “explore the relevance of potential upper limits to cash payments,” with a view to implementing cross-regional measures in 2018.Maximum limits on cash transactions already exist in most European countries, and the general trend is downward. Last year, Spain joined France in placing a €1,000 maximum on cash payments. Greece went one better, dropping its cap for cash transactions from €1,500 to €500. In simple terms, any legal purchase of a good or service over €500 will need to be done with plastic or mobile money.In some countries, the maximum cash limit is significantly higher. For example, in Europe’s biggest economy, Germany, recent attempts by the government to set a threshold of €5,000 triggered a fierce public backlash. The German tabloid Bild published a scathing open letter titled “Hands Off Our Cash,” while a broad spectrum of political parties condemned the proposed measures as an attack on data protection and privacy.  Germany’s neighbor to the south, Austria, has similar reservations about the EU’s plans to suppress cash. The Deputy Economy Minister Harald Mahrer said that Austrians should have the constitutional right to protect their privacy. “We don’t want someone to be able to track digitally what we buy, eat and drink, what books we read and what movies we watch,” Mahrer said on Austrian public radio station Oe1. “We will fight everywhere against rules” including caps on cash purchases, he said. In other words, any attempt by the European Commission to set a mandatory continent-wide limit is likely to be met with fierce resistance — at least from some countries. Others are already so far down the path toward a cashless society that they’ll barely notice the difference.

White House doesn’t bite after being labeled a threat to EU - European Council President Donald Tusk lumped the “worrying declarations” of President Donald Trump’s new administration together with the geopolitical challenges posed by Russia, China and Islamic terrorism as examples of the external threats facing the EU, in a letter to European leaders ahead of their summit on Friday. “Particularly the change in Washington puts the European Union in a difficult situation with the new administration seeming to put into question the last 70 years of American foreign policy,” Tusk wrote in the letter. The stark warning illustrated the extent to which Europe no longer views the transatlantic alliance — a pillar of Western democracy since World War II — as unshakable, and went as far as to depict the United States as a potential source of anti-European sentiment. Underscoring the level of anxiety, a senior EU diplomat said lunch at the summit in Malta will be dedicated to a discussion of the new American administration. Asked for a response, however, the White House said it is committed to the region and declined to get into specifics, including about whether its policy is to try to break up the European Union. “The U.S. remains committed to our European partners as we seek to build strong relationships with our friends and allies in Europe and beyond,” a White House spokeswoman said in an email to Morning Trade.

 An Unstable Economic Order? - Mohamed A. El-Erian – The retreat of the advanced economies from the global economy – and, in the case of the United Kingdom, from regional trading arrangements – has received a lot of attention lately. At a time when the global economy’s underlying structures are under strain, this could have far-reaching consequences.   Whether by choice or necessity, the vast majority of the world’s economies are part of a multilateral system that gives their counterparts in the advanced world – especially the United States and Europe – enormous privileges. Three stand out.   First, because they issue the world’s main reserve currencies, the advanced economies get to exchange bits of paper that they printed for goods and services produced by others. Second, for most global investors, these economies’ bonds are a quasi-automatic component of portfolio allocations, so their governments’ budget deficits are financed in part by other countries’ savings.  The advanced economies’ final key advantage is voting power and representation. They command either veto power or a blocking minority in the Bretton Woods institutions (the International Monetary Fund and the World Bank), which gives them a disproportionate influence on the rules and practices that govern the international economic and monetary system. And, given their historical dominance of these organizations, their nationals are de facto assured the top positions.  These privileges don’t come for free – at least they shouldn’t. In exchange, the advanced economies are supposed to fulfill certain responsibilities that help ensure the system’s functioning and stability. But recent developments have cast doubts on whether the advanced economies are able to hold up their end of this bargain.

EU's chief Brexit negotiator says Theresa May's promised trade deal by 2019 is 'impossible' | The Independent: The European Parliament’s chief Brexit negotiator has rubbished Theresa May’s pledge to deliver a new EU trade deal by 2019 as “impossible”. Guy Verhofstadt also suggested the British people voted to leave the EU because of a Little Englander mentality. Yet he held out the prospect that Britain could choose to rejoin the bloc one day, saying, “That is always possible.”In her Brexit speech earlier this month, the Prime Minister threatened to crash out of the EU with “no deal” if other leaders refused her demands. However, a day later, she told MPs she would “deliver” an agreement by Brexit, to avoid inflicting punishing World Trade Organisation tariffs on businesses. “That’s what I’m committed to – and that’s what this Government is going to deliver,” she said, raising the stakes for the negotiations to come. But Mr Verhofstadt, a senior MEP and former Belgian Prime Minister, dismissed the prospect, in an interview with Al Jazeera English. “That’s technically impossible,” he said, referring to the suggested two-year timeline. EU leaders have insisted Britain must first agree to a suggested £50bn “divorce bill” – a payment for outstanding liabilities – under the terms of the Article 50 exit clause. This year’s elections in both France and Germany are also expected to slow the Prime Minister’s hopes to start trade talks – which normally take many years to complete, regardless. Although the European Commission will lead the talks from the Brussels side, the European Parliament must also ratify any agreement.

US agrees to 'immediate' post-Brexit trade talks: UK (AFP) - US President Donald Trump has agreed to start immediate trade talks with Britain with the goal of preserving current arrangements when it leaves the European Union, Downing Street said Saturday. The "high-level talks", agreed during Prime Minister Theresa May's visit to the White House on Friday, risk antagonising EU leaders, who have warned London cannot start negotiations with other countries until it exits the bloc. The bilateral talks, which also include setting up joint working groups, are aimed at laying the groundwork for a new deal that can be signed as soon as possible after Brexit. "The first step towards achieving this will be a new Trade Negotiation Agreement (TNA) which will see high-level talks between the two nations beginning immediately," a Downing Street spokesman said. The agreement came in a working lunch with Trump in Washington, where May became the first foreign leader to meet the new US president following his inauguration. May was keen to secure an early committment to the UK-US "special relationship" from Trump, who has alarmed America's allies with his criticism of NATO and the EU.

British PM Theresa May Says U.K.-U.S. Trade Talks to Begin Immediately - High-level talks between the U.S. and the U.K. on strengthening trade ties will begin immediately, Downing Street said Saturday, following British Prime Minister Theresa May’s meeting with President Donald Trump in Washington on Friday. Mrs. May’s office said a team of U.S. and U.K. officials would start scoping out what can be achieved together before the U.K. exits the European Union. Turkish President Recep Tayyip Erdogan, who Mrs. May met in Ankara on Saturday, made a similar commitment to increase trade links with the U.K. The British leader has said the U.K. is reshaping its role in the world as it leaves the EU, including by renewing its relationship with both new allies and longstanding ones. But her trip to Washington and Ankara prompted criticism from some opposition lawmakers, who said she was cozying up to leaders whose values didn’t align with those in Britain.Mrs. May on Saturday declined to comment on Mr. Trump’s executive order on refugees, saying the U.S. policy on immigration is a matter for the U.S. This prompted criticism from opposition lawmakers.Jeremy Corbyn, leader of the Labour Party, said Mrs. May should have stood up for Britain by condemning Mr. Trump’s order. “It should sadden our country that she chose not to,” he said.Opposition members of Parliament also criticized her for putting trade ahead of concerns about the rule of law in Turkey. Since the failed coup in July, Turkish authorities have purged more than 140,000 civil servants and military personnel accused of supporting alleged coup plotters; 40,000 of them are under detention. Turkey has said its post-coup actions are justified under emergency laws enacted after the attempted coup.

Theresa May’s visit to Turkey is more evidence of her desperate search for trading partners to replace the EU at any cost | The Independent: The talks with Erdogan will be seen as endorsing the destruction of Turkish democracy; he is replacing it with a presidential system as dictatorial and repressive as anything seen in Latin America in the 1960s and 1970s.As the international political order fragments, Theresa May flies from seeing Donald Trump, who speaks approvingly of the use of torture, to a meeting with President Recep Tayyip Erdogan who is presiding over the reintroduction of torture in Turkey. The opportunism and hypocrisy of British foreign policy, as the UK flails around for new allies to replace the EU, is better illustrated by the Prime Minister’s Turkish trip than by her ingratiating speech to Republican Party leaders in Philadelphia. She told them that as close allies the US and UK would always win the war of ideas “by proving that open, liberal, democratic societies will always defeat those that are closed, coercive and cruel.” Yet within 48 hours of adopting this high moral tone, May will be in talks with Erdogan which will be seen as endorsing the destruction of Turkish democracy; he is replacing it with a presidential system as dictatorial and repressive as anything seen in Latin America in the 1960s and 1970s. Since a failed military coup last July, a sweeping purge has seen at least 137,000 judges, teachers, journalists, civil servants and military personnel arrested or sacked, according to the government’s own figures.

Trade deals are difficult to negotiate and Britain lacks the skills for the job - Britain’s prime minister is the first foreign leader to visit the new American president, Donald Trump. They have lots to discuss – international security, immigration, “the special relationship”. There is also much talk of laying the ground for a US-UK trade deal. Much of the talk of a trade deal, however, misses some of the fundamentals of what trade deals actually are and what they involve. They are agreements over the extent to which countries will agree the scale and scope of access to each other’s markets. These may be reciprocal: “We agree to trade in cars in both directions with a 10% tariff.” Or they can be quotas, limiting the quantity or value of certain goods that can be traded.Alternatively they can be multi-faceted: “We agree to have no restrictions on you exporting gin to us if we can export bourbon to you on the same terms.” They are not, as most politicians seem to think: “We agree to buy £100m worth of stuff from you if you buy £100m worth of stuff from us.” So why does the UK need these deals at all? It could simply have free trade with everyone – and some people have made the case for this. In practice, this would mean offering other countries free access to its markets and hoping that they would reciprocate. Countries would only agree to this where they think it is in their interests – where they assume they will sell more to us than we will to them. In this situation, comparative advantage dominates. This means that production (all those manufacturing jobs) gravitates to the location with the lowest costs. This is often politically unacceptable, as governments generally look to protect jobs and tax revenues, as well as to protect activities that fund innovation.

 Brexit decision 'difficult' for Labour, Keir Starmer says - BBC News: Labour MPs face a "difficult decision" as Parliament debates whether to authorise the UK's departure from the EU, its Brexit spokesman says. Sir Keir Starmer said "as democrats" Labour should not block the start of the process but called for an end to "gloating" from Brexit campaigners. He was speaking as MPs began a two-day debate on legislation to authorise the triggering of formal negotiations. The European Union (Notification of Withdrawal) Bill would allow Prime Minister Theresa May to invoke Article 50 of the Lisbon Treaty, getting official talks between the UK and the EU started.The Liberal Democrats and Scottish National Party are to vote against it, but Labour's leadership is backing it, meaning the government is expected to win.  Brexit Secretary David Davis said the draft legislation was about "implementing a decision already made" by voters in the EU referendum.

 Brexit bill’s obstacle course through UK parliament — She said she’d do it by the end of March and despite a few bumps along the way, Theresa May is on track to meet her self-imposed deadline for triggering Article 50, formally putting the Brexit show on the road. All she has to do now is get the legislation that authorizes her to begin Brexit negotiations through parliament. It’s a process she hoped she would never face but the Supreme Court forced her hand, ruling last week that such a fundamental change requires the backing of parliament. Thankfully for the prime minister, there is little appetite in the House of Commons or the House of Lords to oppose Article 50 outright. The Labour party has instructed its 229 MPs to back Article 50. That leaves the Scottish National Party (54 MPs) and the Liberal Democrats (9 MPs), along with a currently unknown number of Labour rebels, making up the bulk of the opposition to Article 50. With Conservative MPs almost unanimously behind the bill — only veteran Europhile Ken Clarke has publicly said he’ll vote against — May expects to win comfortably. The Lords isn’t expected to cause trouble, with even pro-EU Liberal Democrat peers indicating that they don’t want the unelected upper house to subvert the result of a referendum.

MPs hand Theresa May the starting gun on Brexit | The Independent: Britain has taken a decisive step towards leaving the European Union after MPs overwhelmingly gave Theresa May their backing to trigger the Article 50 exit clause. In an historic moment – after almost 20 hours of debate - the Commons voted by 498 votes to 114 for the legislation to clear its first stage, to raucous cheers from ecstatic Conservative MPs. The vote, a majority of 384, does not guarantee that Brexit will happen, because the Bill must yet be approved at later stages and is certain to be amended when it reaches the House of Lords.However, Brexit supporters now believe momentum is firmly behind the Prime Minister’s timetable to invoke Article 50 next month – and to leave the EU two years later, in 2019. The vote exposed Labour’s deep divisions over Brexit, with 47 MPs defying Jeremy Corbyn’s three-line whip to support the Bill. Two of his Shadow Cabinet members resigned and another 15 Labour MPs abstained. Liberal Democrat leader Tim Farron was hit by his own mini-revolt, when two of the nine Lib Dem MPs failed to oppose Article 50. Just one Conservative – Ken Clarke – voted against. Immediately after the vote, a delighted Iain Duncan Smith said: “The inevitable has happened.” The former Cabinet minister pointed to a succession of treaties which had turned the EU into a “federal union”, adding: “They had left us, it was just a matter of time before the UK realised that was the case.” But Mr Clarke said: “The battle has only just started – we are in a very unreal, silly world since the rather startling result of the referendum.”

British Government Publishes 77-Page Brexit "White Paper": Main Highlights --The British government published its long-awaited White Paper on Brexit, which formally lays out its strategy for the U.K.'s exit from the European Union. The 77-page document was presented in the House of Commons on Thursday by David Davis, the minister in charge of Brexit, and was also published online. The publication comes after pressure from MPs across the House of Commons, and was released just one day after British House of Commons lawmakers voted in favor of a bill, which if passed fully through parliament, would allow Theresa May to begin the Brexit.The White Paper lays out the government's 12 "principles" including migration control and "taking control of our own laws". Brexit Secretary David Davis said the UK's "best days are still to come", outside the EU. Alternatively, Sir Keir Starmer, Labour's shadow Brexit secretary, told the Commons there was "nothing" in the white paper to resolve the position of UK nationals living in other EU countries. And he said the paper failed to guarantee MPs a "meaningful" vote on the deal eventually obtained by Mrs May, rather than a simple choice to take it or leave it.In the paper, the government delineates its goals for its negotiations with the EU, as announced by Prime Minister Theresa May last month. These include withdrawing from the EU single market and customs union and negotiating a new free trade agreement.It also says reaching an early deal on the rights of EU nationals in the UK and British expats in Europe has "not proven possible", saying the government wants to secure an agreement with European countries "at the earliest opportunity" during the formal talks. And it says the government will "keep our positions closely held and will need at times to be careful about the commentary we make public", with MPs offered a vote on the final deal. Some highlights from the paper courtesy of The Telegraph:

On how not to frustrate Brexit - There are now two further attempts under way to derail the Brexit process. The first is a crowd-funded action in the Republic of Ireland to get the ECJ to rule on the reversibility of Brexit. It is worth reading this article in the Wall Street Journal just to get a scale of the political delusion behind the case. We have no opinion on the narrow legal argument. It may well be that the Article 50 process is declared reversible. But it is hard to imagine a situation where that would be the case in practice. Maybe a US withdrawal from Nato, a US military attack against a Nato member, a US-embargo of EU goods, or something else of that nature might get everybody in the EU, including the UK, to agree to a reversal of Article 50. We are still talking about a process where the House of Commons, the British government, and 27 other EU member states would have to agree unanimously.  The other attempt to derail the process is a little more intelligent because it is political, but it is coming too late. John Harris argues in the Guardian that the Labour Party should consider blocking Article 50 because of Donald Trump:  "We all know the opposing arguments, and they are worth taking seriously: that even if the referendum result is speciously interpreted as consent for hard Brexit, it has to be respected; that many Labour MPs represent areas that voted leave and fear Ukip; that there are two byelections coming up in leave-voting seats, and that the party is in an unbelievably fragile position. But at the same time, I know what many people who fear the Trump/Brexit moment will say: that at a moment so freighted with historic significance, when the UK may be about to trade in an enduring alliance with Europe for a role as the ally of a truly terrifying US president, will it really be Labour MPs’ choice to back the most reckless course imaginable? We shall soon see."

What the World's Biggest Bank Bosses Say About Brexit Exodus -- Standard Chartered Plc and Barclays Plc are considering choosing Ireland’s capital as their EU base for ensuring continued access to the bloc, according to people with knowledge of their contingency plans. Goldman Sachs Group Inc., Citigroup Inc. and Lloyds Banking Group Plc are eyeing Frankfurt, other people said. Banks are fleshing out their plans after Prime Minister Theresa May announced in January that the U.K. would leave the EU’s single market in 2019, likely spelling the end of passporting, where banks seamlessly service the rest of the bloc from their London hubs. Frankfurt is a natural pick for firms fleeing London given a financial ecosystem featuring Deutsche Bank AG, the European Central Bank and BaFin, one of the only regulators with experience overseeing complicated derivatives trading. As for Ireland, it’s presenting itself as a low-tax, English-speaking location with similar laws and regulations to Britain. All told, TheCityUK lobby group reckons as many as 35,000 jobs could be relocated out of the U.K. Dublin could potentially gain between 12,000 and 15,000 jobs as a result of Brexit, Goodbody Stockbrokers has said. Bloomberg News conducted interviews and reviewed public statements to discover what each major bank is now planning.

 Bank of England Predicts Inflation Will Overshoot Their 2% Target - From the Bank's latest policy statement: The value of sterling remains 18% below its peak in November 2015, reflecting investors’ perceptions that a lower real exchange rate will be required following the UK’s withdrawal from the EU.  Over the next few years, a consequence of weaker sterling is that the higher imported costs resulting from it will boost consumer prices and cause inflation to overshoot the 2% target.  This effect is already becoming evident in the data.  CPI inflation rose to 1.6% in December and further substantial increases are very likely over the coming months.  In the central projection, conditioned on market yields that are somewhat higher than in November, inflation is expected to increase to 2.8% in the first half of 2018, before falling back gradually to 2.4% in three years’ time.  Inflation is judged likely to return to close to the target over the subsequent year.  Measures of inflation compensation derived from financial markets have stabilised at around average historical levels, having increased during late 2016 as concerns about a period of unusually low inflation faded. Several statistical sources show UK price pressures.  The latest report from the ONS shows strong price increases, especially over the last few months:  And yesterday's Markit manufacturing release reported prices increased at the fastest pace in quarter century, due to a combination of the weak sterling and rising commodity prices.   What's important in the latest BOE statement is that the bank will accept higher inflation.  This indicates the bank probably wants to hedge their bets in case domestic growth begins to slow due to the Brexit situation. 

How statistics lost their power – and why we should fear what comes next - In theory, statistics should help settle arguments. They ought to provide stable reference points that everyone – no matter what their politics – can agree on. Yet in recent years, divergent levels of trust in statistics has become one of the key schisms that have opened up in western liberal democracies. Shortly before the November presidential election, a study in the US discovered that 68% of Trump supporters distrusted the economic data published by the federal government. In the UK, a research project by Cambridge University and YouGov looking at conspiracy theories discovered that 55% of the population believes that the government “is hiding the truth about the number of immigrants living here”. Rather than diffusing controversy and polarisation, it seems as if statistics are actually stoking them. Antipathy to statistics has become one of the hallmarks of the populist right, with statisticians and economists chief among the various “experts” that were ostensibly rejected by voters in 2016. Not only are statistics viewed by many as untrustworthy, there appears to be something almost insulting or arrogant about them. Reducing social and economic issues to numerical aggregates and averages seems to violate some people’s sense of political decency.Nowhere is this more vividly manifest than with immigration. The thinktank British Future has studied how best to win arguments in favour of immigration and multiculturalism. One of its main findings is that people often respond warmly to qualitative evidence, such as the stories of individual migrants and photographs of diverse communities. But statistics – especially regarding alleged benefits of migration to Britain’s economy – elicit quite the opposite reaction. People assume that the numbers are manipulated and dislike the elitism of resorting to quantitative evidence. Presented with official estimates of how many immigrants are in the country illegally, a common response is to scoff. Far from increasing support for immigration, British Future found, pointing to its positive effect on GDP can actually make people more hostile to it. GDP itself has come to seem like a Trojan horse for an elitist liberal agenda. Sensing this, politicians have now largely abandoned discussing immigration in economic terms.