reality is only those delusions that we have in common...

Saturday, March 25, 2017

week ending Mar 25

(preview)

 Neel Kashkari: Balance Sheet Should Precede Rate Hikes - In a recent interview on CNBC's Squawk Box, Neel Kashkari explained his dissenting position on the March rate hike. His position was that there is not yet enough inflation. In fact, he thinks that the Fed's 2% inflation target shouldn't be seen as a hard ceiling. He even stated that predictions of coming inflation worries are baseless:For the last five or six years, the Federal Reserve keeps predicting inflation is around the corner. And those predictions end up being wrong.Of course, with the massive expansion of the Fed's balance sheet going into areas like the stock, bond, and housing markets, the Fed's measures of inflation don't even reveal what is happening to the economy's capital structure. Distortions in the capital markets are far more serious than than the PCE represents. It's frustrating enough that the central bankers are trying to increase the cost of living. But then we are reminded that they don't even know how credit expansion impacts the boom and bust cycle.What is interesting though, is Kashkari's opinion that addressing the gigantic balance sheet should come prior to any further rate hikes:As we move forward, we allow the balance sheet to start running off. Then we can return to fed funds rate hikes when the data call for it. The balance sheet should be the next move. This preference of balance sheet before rate hikes is also unique among the FOMC members — everyone else wants the balance sheet scaled back to follow additional rate hikes. It will be interesting to see whether Kashkari's opinion on this gets any ground among the other members. Perhaps we will get a further indication as we approach the May and June Fed meetings.

Goldman on Fed Balance Sheet Runoff -- A few brief excerpts from a note today by Goldman Sachs economist Daan Struyven: Balance Sheet Runoff: Sooner, Slower, Safer The debate within the FOMC about balance sheet normalization is now underway. Fed officials have two basic choices. They can rely exclusively on the funds rate for now and leave balance sheet decisions to the new leadership team in 2018, or they can combine ongoing funds rate hikes with a turn to balance sheet runoff later this year....A ... practical case for early balance sheet normalization is based on the upcoming Fed leadership transition. If the new appointments—especially the new Chair—are thought to favor aggressive balance sheet normalization, perhaps even including asset sales ... financial markets might experience heightened uncertainty during the transition. ... The current FOMC could reduce that uncertainty by establishing an early “baseline” path for very gradual balance sheet rundown. Committee decisions are subject to change, of course, but markets would probably take comfort from the fact that most FOMC members will remain in their positions and that it is harder for the new leadership to radically change a policy that is already in place than to devise a new one. We therefore expect the committee to announce gradual tapering of reinvestments in December 2017, while holding the funds rate unchanged at that meeting. Note: This might depend on who is the next Fed Chair.  Fed Chair Janet Yellen's term expires in Feb 2018 and the smart choice would be to reappoint her to another term (Like Reagan reappointing Democrat Volcker in 1983, Clinton reappointing Republican Greenspan, and Obama reappointing Republican Bernanke).  

 Dear Fed: This Is Where The Inflation You Are Looking For Is "Hiding" - The Fed's most recurring lament over the past 8 years, ever since the Financial crisis, is that there has been no measurable inflation in the US economy when using such conventional indicators as CPI, even though according to recent measurements by PriceStats real inflation, not the BLS' seasonally-adjusted, goalseeked and politically convenient  mutant, is now running at a blistering 3.6%, the highest in five years. That however has not stopped Fed members such as Williams to declare idiotically that since there is "no inflation", it is the Fed's duty to run policy "too hot" to spur inflation: Unfortunately, since the Fed - which several years ago canceled tracking M3 because "it was too expensive" - can not afford to buy a subscription to a service such as PriceStats, here is a simple answer where all that runaway inflation the Fed has created since the financial crisis courtesy of trillions and trillions in central bank liquidity, has ended up. Even better, the answer comes from the Fed's favorite FDIC-backed hedge fund: Goldman Sachs.To wit:This has been no ordinary bull market. Set in the context of the Global Financial Crisis, and despite the many ongoing concerns around political events and secular stagnation (and at times fears of deflation), equities have achieved phenomenal returns by any standards. As we have long discussed, much of this has reflected the impact of the very policies employed to prevent a deflationary trap in the aftermath of the Great Recession of 2009. Central banks moved rapidly to cut interest rates to record low levels and, before long, supplemented this with extraordinary monetary policies including QE. The results were clear to see: while consumer prices (and other measures of inflation in the real economy) were disinflating, the generous policies of the central banks resulted in rapid inflation of financial asset prices (Exhibit 1).The impact of QE has been felt across the financial landscape; rather unusually in an economic recovery (since the recession of 2009), bond markets also have enjoyed extraordinary returns alongside equities. Much of this can be explained by monetary policy and QE influences together with global disinflationary forces. And while the clueless economists of the Fed and other central banks keep focusing on the right part of the chart, especially the "US Wages" bar, where their policies have unleashed asset bubbles is on the left, in places like European and US High Yield, and of course the S&P500.

Money Supply Growth Falls to 17-month Low in February -  The supply of US dollars has slowed during early 2017 with February's year-over-year percentage increase hitting a 17-month low of 7.7 percent. Monthly year-over-year growth rates in the money supply have been falling each month since October.  Over the past eight months or so, money supply growth rates have become somewhat volatile with the growth rate surging from 6.7 percent in late 2017 up to 11.3 percent by late 2016, and down again to under 8 percent by February of this year.  This recent period of volatility comes after a long period of relatively sedate and consistent growth in the money supply through most of 2013, 2014, and 2015.  The "Austrian" money supply measure (AMS) used here is a measure of the money supply pioneered by Murray Rothbard and Joseph Salerno and is designed to provide a better measure than M2. The Mises Institute now offers regular updates on this metric and its growth. The "Austrian" measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short time deposits, traveler's checks, and retail money funds).  Since 2014, money supply growth has ranged from about 7 percent to 8.5 percent. In October of last year, money supply growth hit a seven-year low of 6.8 percent, although this proved not to be an indication of any new trend.February's drop to a 7.7 percent year-over-year growth rate shows a return to the sort of growth that has been common in recent years. Recent variations in growth rates in AMS — compared to M2 — is being driven partly by historically large increases and decreases in treasury deposits at the Fed. The federal government has become increasingly liquid in recent years, with unusually large amounts of spend-ready dollars available. Looking at total deposits at the fed, for example, we can see that until recently, totals had reached well beyond what has been seen in the past: As of February there were 269 billion dollars in deposits at the Fed, which is a decrease of 1.7 percent from February 2016. Deposits nevertheless remain at a relatively high level. This follows a long period of sizable increases in Treasury deposits which can be seen in the graph below: 

Chicago Fed "Economic Growth Increased in February" --From the Chicago Fed: Economic Growth Increased in February Led by improvements in employment-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.34 in February from –0.02 in January. All four broad categories of indicators that make up the index increased from January, and only one of the four categories made a negative contribution to the index in February. The index’s three-month moving average, CFNAI-MA3, improved to +0.25 in February from +0.07 in January, reaching its highest level since December 2014. February’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.  This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

 Why US Growth of 2 Percent Is Plausible—And Unlikely to Get Much Higher -- Jason Furman - The US economy will likely grow at a rate of around 2 percent a year over the next decade. While this estimate seems low relative to the average annual growth rate of 3.5 percent from 1950 to 2000, it is not reflective of some newly found pessimism. Instead, it is largely based on two demographic facts: aging baby boomers entering retirement and the end of the influx of women into the workforce. In fact, without the cyclical boost in recent years from the falling unemployment rate, achieving even 2 percent annual growth will require substantially faster productivity growth than the United States has seen in recent years, along with a stabilized labor force participation rate on an age-adjusted basis. A piece I wrote on Vox explores plausible variations around this central expectation, either due to luck or to policy. A possible range of this uncertainty—that is, how different assumptions about productivity growth and labor force participation would affect this growth forecast—is shown in the table below. The Vox piece also documents how policy can make a small difference but cannot radically change the picture.This blog post provides additional detail on how estimates for growth for the next decade are calculated. It focuses on the base case, which corresponds to the Congressional Budget Office’s (CBO) projection of annual growth from 2016 to 2026, but the same method applies to the other cases shown in the table as well. (The Blue Chip consensus of private forecasters is slightly more optimistic, with a 2.2 percent projection for long-run growth.)

What's the Value of US Household Production? - The value of household production has never been included in GDP. But although this is sometimes interpreted as a knock against those who do most of household production, it's really just a matter of accounting. To be included in GDP, there needs to be a market transaction. Even back in 1934, when Simon Kuznets was reporting the first estimates of "national income" to the US Congress, he was careful to note: "A student of social affairs who is interested in the total productivity  of the nation, including those efforts which, like housewives' services,  do not appear on the market, can therefore use our measures only  with some qualifications." However, the US Bureau of Economic Analysis and statistical agencies in other countries now often use  "satellite accounts" to calculate the value of household production, which is currently equal to about 23% of US GDP--and has been declining over time. Here's a bit of broader context for the comment from Kuznets in  his 1934 report, National Income, 1929-1932 : Letter from the Acting Secretary of Commerce Transmitting in Response to Senate Resolution No. 220 (72nd Cong.) a Report on National Income, 1929-32, and then some information on the current estimates of the size of household production in the US and elsewhere.

US current account shrinks in fourth quarter: The U.S. current account deficit unexpectedly fell in the fourth quarter, hitting its lowest level in more than a year, as an increase in the primary income surplus offset a soybean-driven drop in exports. The Commerce Department said on Tuesday the current account deficit, which measures the flow of goods, services and investments into and out of the country, fell 3.1 percent to $112.4 billion, the lowest since the second quarter of 2015. The current account deficit for the third quarter was revised up to $116.0 billion from the previously reported $113.0 billion. Economists polled by Reuters had forecast the deficit rising to $128.2 billion in the fourth quarter. The fourth-quarter current account deficit represented 2.4 percent of gross domestic product, down from 2.5 percent in the third quarter. For all of 2016 the current account deficit totaled $481.2 billion, a 3.9 percent increase from 2015. That represented 2.6 percent of GDP, unchanged from 2015. The current account deficit has dropped from a record high of 6.3 percent of GDP in the fourth quarter of 2005 as rising domestic oil production and lower global oil prices curbed the import bill. Goods exports fell $3.4 billion to $371.7 billion in the fourth quarter. That reflected an $8.4 billion decrease in the export of food, mainly soybeans. Exports were also crimped by the dollar, which gained more than 5 percent against the currencies of the United States' main trading partners in the fourth quarter.

What Does President Donald Trump Mean for the US Economy?- Brad DeLong -- As the moment Trump took office, it seemed as though Trump could have become any one of three figures. We really did not know which. Those three were:

  • (1) He could have turned out to be a Ronald Reagan, a force of nature that has a commanding stage presence with strong though often contradictory policy intuitions.  Reagan wanted to balance the budget, but also to cut taxes and to greatly increase defense spending. He wanted to project US power abroad, win the Cold War, and get rid of nuclear weapons. Reagan also wanted strong economic growth, and to stop inflation. He wanted a gold standard. He also wanted low interest rates at the same time. Reagan did not go into office thinking he would double the US debt-to-GDP ratio. He did not go into office wanting to cause a 70% appreciation of the dollar and the beginning of the destruction of Midwestern manufacturing. And yet, those two things were major consequences of the way Reagan's economic policies developed.
  • (2) Trump could have turned out to be like Arnold Schwarzenegger, who got elected as governor of California in a similar kind of revolt against the establishment.  In the California Governor's Office, Schwarzenegger tried to make Hollywood-style deals, and failed comprehensively. The government went on automatic pilot. He hung out in his smoking tent, smoking cigars and trying to make deals. And it was, in Schwarzenegger's case, two terms of missed opportunity with very little happening.
  • (3) Trump could have turned out to be somebody like former Italian President Silvio Berlusconi. An awful lot of public money gets diverted to friends with random policy decisions. There were occasional bursts of technocracy when things get so bad that someone competent had to be put in charge for a while. But only short bursts. Italy lost a decade of economic growth--not all, but in large part due to Berlusconi.  And then at the end, the infrastructure is handed over to private friends who are then able to charge monopoly prices for what ought to be public services.

This looks like what we are going to get. In that case, it would be a waste of money, but it won't have a depressing effect on the US economy. People will work, even at things that are largely useless. But it would be a wasted opportunity and another divergence in income distribution, as well as further erosion of confidence in the fairness of the system.

 Budget Director Mulvaney Admits No Hope "To Balance The Budget This Year" --Appearing on Meet the Press earlier this morning with the always condescending, well at least if he's interviewing a Republican guest, Chuck Todd, the Director of the Office of Management and Budget, Mick Mulvaney, said there's no hope of achieving a balanced budget this year.  Of course, that should hardly come as a surprise to almost anyone other than the suddenly fiscally conservative Chuck Todd.  “No, we won’t be able to balance the budget this year, but we’re working on trying to get it to balance within the ten-year budget window, which is what Republicans in the House and the Senate have traditionally done the last couple of years."A smirking Chuck Todd also pressed Mulvaney regarding his thoughts on raising the debt ceiling with a series of 'gotcha' questions:Todd:  "Debt ceiling.  We hit it on Friday.  Extraordinary measures by the Treasury Secretary will mean a couple more months.  You were a tough nut to crack on the debt ceiling when you were Congressman Mulvaney.  Why should people who were like minded with you who basically said 'hey look, I'll give you that debt ceiling but I want real cuts, I want real deficit reduction, I want a real plan.' I think at one point you said I'll raise the debt ceiling in exchange for a balanced budget.  You're not going to be making that ask this time, are you?" Mulvaney:  "I have voted to raise the debt ceiling before as most people in Congress have.  Traditionally, you go back to the 1920's and 1930's, the debt ceiling debate has been used to try and step back and say 'why do we have a deficit problem, why do we have a debt problem and how can we fix it.'  So we'll be coming forward with ideas to raise the debt ceiling but at the same time try to address some of those long-term reasons that we have the debt in the first place."

Trump’s Budget and the Fiscal Crisis of the State: Something’s Gotta Give -- The Washington Post has a good article this morning on the response on Capitol Hill to Trump’s budget.The big news is that the biggest opposition to Trump’s budget is coming from—it’s almost getting predictable, at this point—not the Democrats but the Republicans.Some of President Trump’s best friends in Congress sharply criticized his first budget Thursday, with defense hawks saying the proposed hike in Pentagon spending wasn’t big enough, while rural conservatives and others attacked plans to cut a wide range of federal agencies and programs.The bad mood among Republican critics was tempered by a consensus that the president’s budget wasn’t going very far on Capitol Hill, where lawmakers reminded everybody that they ultimately control the nation’s purse strings.“While we have a responsibility to reduce our federal deficit, I am disappointed that many of the reductions and eliminations proposed in the president’s skinny budget are draconian, careless and counterproductive,” Rep. Hal Rogers (R-Ky.) the former chairman of the House Appropriations Committee, said in a statement. “We will certainly review this budget proposal, but Congress ultimately has the power of the purse.”No president ever gets everything he wants on the budget, but this is Trump’s first year in office, the moment when he should be getting maximal cooperation. We’re now past the 50-day mark of Trump’s First 100 Days, and he has yet to win a single major victory. That doesn’t put him in the best negotiating position when it comes to dealing with Congress. Certainly not with the opposition, and increasingly, it seems, not with his party either.What’s doubly interesting here is that the opposition from his party is as incoherent and divided as Trump himself. One part of the party thinks Trump’s budget doesn’t go far enough; John McCain thinks that Trump’s increases in military spending aren’t nearly as big as they should be. Another part thinks Trump’s budget goes too far—either on increasing defense or decreasing spending on social programs and elsewhere. Another part doesn’t like the way Trump is going after their district-level pork. And there’s a last part—this one shocked me—that thinks that, when it comes to foreign policy, Trump’s budget pushes too hard on the military front, not hard enough on the diplomatic front.

The Public is Clueless About the Federal Budget and It’s the New York Times’ Fault - Dean Baker --Paul Krugman criticized the Trump administration for its budget, which would cut or eliminate many programs that benefit low- and moderate-income people. In his piece, Krugman points out that the public is incredibly ignorant on the budget, with most people having virtually no idea of where most spending goes. In particular, he referenced an analysis that found people on average believed we spend more than 30 percent of the budget on foreign aid. The actual figure is less than one percent.This is the sort of item that inevitably leads people to deplore the ignorance of the masses. While ignorance is deplorable, instead of blaming the masses, we might more appropriately look at the elites. The overwhelming majority of people are never going to look at a budget document. Insofar as they get any information on the budget, it is from reporters who tell them how much we spend in various areas of the budget. (They may get this information indirectly from their friends who read the newspaper or listen to news.)When they hear about spending, they will invariably hear things like we spend $40 billion a year on foreign aid or $17.3 billion on Temporary Assistance for Needy Families (TANF). Most people will think these figures are large sums, since they dwarf the sums that people see in their daily lives. In fact, the former is less than one percent of the $4.1 trillion that we will spend in 2017, while the latter is just over 0.4 percent of total spending. The media could do a much better job of informing the public about spending (i.e. by doing their job) if they made a point of putting these figures in context. As it is, giving people these really huge numbers without context is essentially telling them nothing. As an alternative, they could make a point of always referring to these numbers as a share of the budget and/or expressing them on a per person basis (e.g. the spending on TANF comes to a bit more than $50 per person per year from every person in the country).

 Republicans Start Lining Up to Fight for the N.E.A. and N.E.H. -- At first blush it’s like a dream come true for conservatives: Donald J. Trump has become the first president to formally propose eliminating federal programs for the arts and humanities, which have long been in the cross hairs of Republicans, and the threat is all the more real because the party also controls Congress. “The lord has been good to me late in life, my friend,” Patrick J. Buchanan, the conservative firebrand, said in an interview this week about the president’s assault on the National Endowment for the Arts, which Mr. Buchanan railed against during his insurgent run for president in 1992.But even with one-party control in Washington, the fates of the arts endowment and the National Endowment for the Humanities are far from sealed.Several key Republican lawmakers are expressing support for the programs, which, since their near-death experiences during the culture wars of a generation ago, have taken pains to counter accusations of coastal elitism by making sure to distribute their grants widely across all 50 states. Most states receive less than $1 per person in grants from the N.E.A. each year. (table, graph) And the contours of the political battle itself have changed since those earlier fights in the 1980s and ’90s. The arguments then were over ideology, taste, free speech and the size of government; today they are about economic investment, federal priorities and how people feel about Mr. Trump remaking America to his liking. Senator Lisa Murkowski, an Alaska Republican who is the chairwoman of a crucial Senate appropriations panel that oversees the endowments, said in a statement, “I believe we can find a way to commit to fiscal responsibility while continuing to support the important benefits that N.E.A. and N.E.H. provide.”

Meals on Wheels receives spike in donations after White House proposes cuts - Since the White House released its latest budget proposal to defund various social programs, Meals on Wheels has received a massive increase in online donations and volunteer signups.The non-profit organization that serves 2.4 million Americans received more than $100,000 in donations over a two-day period, officials announced on Saturday. The organization typically receives nearly $1,000 in daily online donations. The White House announced on Thursday its plan to eliminate the Community Development Block Grant program that funds 3 percent of Meals on Wheels operations nationwide. Still, spokeswoman Jenny Bertolette warned on CNN that the group’s 5,000 local branches rely heavily on the money to bring food to people who need it the most.

Majority of Americans Oppose Trump’s Proposed Increases to the Defense Budget - A majority of Americans oppose President Donald Trump's proposed budget increases to the Department of Defense at the cost of other departments, a new poll finds.A CNN/ORC poll out Wednesday finds 58 percent of respondents oppose the administration's plan to increase military spending by cutting funding for the State Department and other agencies.The proposal to cut State funding was met with immediate criticism from Republican Sens. Marco Rubio, John McCain and Lindsey Graham. Graham last week called the pitch "dead on arrival." McCain also criticized the proposed increases in Defense Department spending as not robust enough. The State Department, in its first briefing since the inauguration, pushed backed Tuesday against assertions that its role was being diminished in the new administration.  Secretary of State Rex Tillerson "is very engaged with the White House, very engaged with the president, speaks to him frequently," acting State spokesman Mark Toner said. "I can assure everyone that the secretary's voice, or the State Department's voice, is heard loud and clear in policy discussions."

America First? 200,000 Troops Deployed To 177 Nations –(infographics) There was no shortage of cuts proposed in Trump’s budget for 2018, which was released earlier this week. However, as Visual Capitalist's Jeff Desjardins notes, one of the few departments that did not receive a haircut was the Department of Defense. If the proposed budget ultimately passes in Congress, the DoD would be allocated an extra $54 billion in federal funding – a 10% increase that would be one of the largest one-year defense budget increases in American History. To put the proposed increase in context, the United States already spends more on defense than the next seven countries combined. Meanwhile, the additional $54 billion is about the size of the United Kingdom’s entire defense budget.With over half of all U.S. discretionary spending being put towards the military each year, the U.S. is able to have extensive operations both at home and abroad. Our chart for this week breaks down military personnel based on the latest numbers released by the DoD on February 27, 2017.In total, excluding civilian support staff, there are about 2.1 million troops. Of those, 1.3 million are on active duty, while about 800,000 are in reserve or part of the National Guard. On a domestic basis, there are about 1.1 million active troops stationed in the United States, and here’s how they are grouped based on branch of service:

Trump Shifting Authority Over Military Operations Back to Pentagon - President Trump is shifting more authority over military operations to the Pentagon, according to White House officials, reversing what his aides and some generals say was a tendency by the Obama White House to micromanage issues better left to military commanders. The change is at the heart of a re-engineering of the National Security Council’s role under its new leader, Lt. Gen. H. R. McMaster, and reflects Mr. Trump’s belief that the N.S.C. should focus less on military operations and tactics and more on strategic issues. A guiding precept for the president and his team is that the balance of power in the world has shifted against American interests, and that General McMaster should focus on developing foreign and economic policy options in concert with the Pentagon, State Department and other agencies to respond to that challenge. The new approach to managing military operations was evident this month when a Marine artillery battery and a team of Army Rangers — some 400 troops in all — arrived in northern Syria. Defense Secretary Jim Mattis signed off on the deployments and notified the White House. But General McMaster neither convened a meeting at the White House to discuss whether to send the forces nor presented the Pentagon with questions about where, precisely, the troops would operate or what risks they might confront. Though the streamlined decision-making has been welcomed by many in the military, it could raise questions about whether Mr. Trump, who has drawn heavily from current and former generals to fill key jobs in his administration, is exercising sufficient oversight. “For President Trump, it is very early days, but he appears to be going back to a model of greater delegation of authority,” . “The benefit is that it allows the military campaign to go forward without undue pauses, interruptions or delays,” Ms. Flournoy added. “That enables it to create more momentum and to be more responsive to changes on the battlefield. But there is a risk if there is inadequate oversight and the president stops paying close attention. It can be detrimental, even dangerous, if a commander in chief does not feel ownership of the campaign or loses touch with how things are evolving on the ground.”

Donald Trump Is Filling Top Pentagon and Homeland Security Positions With Defense Contractors - President Donald Trump has weaponized the revolving door by appointing defense contractors and their lobbyists to key government positions as he seeks to rapidly expand the military budget and homeland security programs.Two Department of Homeland Security appointments Trump announced Tuesday morning are perfect examples.Benjamin Cassidy, installed by Trump as assistant secretary for legislative affairs, previously worked as a senior executive at Boeing’s international business sector, marketing Boeing military products abroad. Jonathan Rath Hoffman, named assistant secretary for public affairs, previously worked as a consultant to the Chertoff Group, the sprawling homeland security consulting firm founded by former Secretary of Homeland Security Michael Chertoff. The firm has come under fire for advising a variety of firms seeking government contracts, including for full-body scanners deemed invasive by privacy activists. Hoffman also led a state chapter of a neoconservative military-contractor advocacy organization during the 2016 presidential campaign. Neither position requires Senate confirmation. Personnel from major defense companies now occupy the highest ranks of the administration including cabinet members and political appointees charged with implementing the Trump agenda. At least 15 officials with financial ties to defense contractors have been either nominated or appointed so far, with potentially more industry names on the way as Trump has yet to nominate a variety of roles in the government, including Army and Navy secretaries. Before their confirmations, Jim Mattis and John Kelly, the secretaries of the departments of Defense and Homeland Security, were primarily paid by defense firms.

Pentagon Denies Trying To Shelve Study That Found $125 Billion In Waste -The Defense Department on Tuesday denied it tried to quash a 2015 study that found it could save $125 billion in noncombat administrative programs but admitted it has so far only found a small fraction of those savings.As Stars and Stripes' Travis Tritten reports (via Military.com), the department hopes to save $7.9 billion during the next five years through recommendations in the study of back-office waste, which itself cost about $9 million to complete, the Defense Department's acting deputy chief management officer told a House panel.The study's original findings as well as a perceived lack of action from the Defense Department riled members of the House Oversight and Government Reform Committee, which held the hearing on the fate of the report as President Donald Trump's administration plans a $54 billion boost in defense spending by cutting other federal programs such as foreign aid."I think the one thing I would take unequivocal issue with is that the report was in any way suppressed," said David Tillotson III, who is acting as the Defense Department deputy chief management officer. "It was actively discussed within the department at the time and it has formed the basis of discussion since that time."The study found more than one million Defense Department employees perform noncombat related work, such as human resources, finances, health care management and property management, and $125 billion could be s aved by making those operations more efficient. The study was conducted by the Defense Business Board, an advisory body to the Pentagon, and included work by two contracted groups.

Hill Republicans say they're growing frustrated with Mattis -  Defense Secretary James Mattis’ unconventional choices for top Pentagon posts and his reluctance to aggressively push for dramatic increases in the defense budget have rankled Republicans on Capitol Hill who say he’s burning through political capital he needs as he begins reshaping the Pentagon. Mattis was widely embraced on both sides of the aisle when President Donald Trump nominated him. Republicans and Democrats alike expressed hope that the retired four-star general would be a moderating force on the volatile commander in chief. But Republican lawmakers and senior congressional aides said in recent interviews they’re running out of patience with Mattis' staffing decisions, which have disappointed Republican members of the Senate Armed Services Committee hoping to see their ideological allies elevated to senior levels in the Defense Department. Others are grumbling about Mattis’ refusal to advocate a bigger increase in the defense budget, which defense hawks believe was gutted disastrously under President Barack Obama. “He certainly has got a tough job, but it sometimes feels like he forgets that we won the election,” said one aide to a GOP senator on the Armed Services Committee, who declined to speak on the record for fear of publicly alienating the defense secretary. “We’ve waited eight years for this, to be able to fill these posts with Republicans,” said another top GOP Hill staffer. “We know Trump isn’t part of the establishment and that it’s going to be a bit different, but it should go without saying that a Republican administration is expected to staff federal agencies with Republicans.”

What Would Happen in the Hours and Minutes After a US-China War Started? - Donald Trump campaigned on the idea that China is a trickster nation that bamboozled the US on trade by futzing with its currency valuation. Immediately after the election, he risked offending China by talking to the president of Taiwan. Since then, the new administration's stance on China has been unclear at best, and for its part, Beijing is preparing for a trade war, which Trump has all but promised. It's obvious that China is willing to fight the US, at least economically. But could the US and China come to blows militarily? It's not looking likely, according to M. Taylor Fravel, an associate professor of political science and a China expert in the Security Studies Program at MIT. Fravel explained to me that it's not in China's interest to suddenly declare war on the US. "The worst thing for an autocrat is losing a war," he said. "I do not see the use of force as solving many problems for them." Still, war with China is something Trump adviser Steve Bannon said was inevitable a year ago. Chalk that up to Bannon's habit of stating things in the most dramatic way possible, but when someone in the White House feels that way, it could drive policy in unanticipated directions. Even if you set aside the unlikely possibility of an abrupt Pearl Harbor–style surprise attack from either side, tensions could still escalate to the point where shots get fired. Fravel was kind enough to walk me step by step through the potential flash point that could usher in a war between two of the most powerful countries in the world. The US and China obviously don't share a border, so unless the flash point happens to be North Korea, boots-on-the-ground battlefield scenarios are pretty farfetched. According to a 2015 report prepared by the RAND Corporation for the US Army, "A Sino-US conflict is unlikely to involve large land combat." So we're most likely talking about a conflict between US and Chinese ships, planes, and lots of missiles. Indeed, if war were to break out, one likely cause would be a "conflict on an island in the South China Sea," Fravel told me. He listed some candidates. A crisis could center on a maritime dispute between China and the Philippines, for instance. "Finally, of course, you have Taiwan," he told me—referring to the island that forms the northernmost limit of the South China Sea. Fravel called Taiwan "the one issue that could spark a large war between the US and China, even though of course that's unlikely."  So we're going to use Taiwan as our example.

The Risks of Pre-emptive Strikes Against North Korea -- A declaration by Secretary of State Rex W. Tillerson that the United States would consider pre-emptive military action against North Korea raises a question that has dogged American military planners for 20 years: How could this be made to work? The United States has long threatened force. The sincerity of such threats has always been ambiguous, as they are often meant less to prepare for war than to act as a deterrent to North Korea and a reassurance of the commitment by the United States to South Korea. But there is a reason that, even as North Korea’s weapons programs have passed red line after red line, the United States has never followed through. Almost any plan would bring a high risk of unintended escalation to all-out war, analysts believe. It would place millions of South Korean and Japanese civilians in the cross hairs of North Korean weapons with few guaranteed benefits. That officials would even raise a pre-emptive attack shows the growing severity of the crisis, but the problems associated with any such plan demonstrate why that crisis has remained unsolved for two decades.   A pre-emptive attack can generally mean one of three things. Mr. Tillerson, in keeping with past American statements, did not clarify which of those options were on the table but ruled none of them out. Here is a brief guide to each:

  • 1. A Single Strike to Halt a Missile Launch - Mike Mullen, a former chairman of the Joint Chiefs of Staff, said American strikes could “take out launch capabilities on the launchpad or take them out once they’re launched.” The risk: This would almost certainly be too late to prevent all nuclear missiles from getting off the ground and, given that missile defense is no guarantee, through to their targets.
  • 2. A Set of Strikes to Devastate the Arsenal - Striking nuclear and missile facilities would delay the programs and pressure Pyongyang to surrender them. Cyberattacks, launched alongside or instead of physical attacks, could sabotage the programs and disrupt the military command. The risk: Even a limited attack would probably prompt retaliation. An attack broad enough to seriously degrade the program could provoke North Korean fears of an invasion or an assassination attempt, potentially leading to all-out war.
  • 3. A War Launched on American Terms - The United States would initiate a war to destroy the North Korean government outright, much as in Iraq in 2003. The risk: North Korea would almost certainly succeed in launching some nuclear and chemical weapons, potentially killing millions.

Trump Warns Germany "Owes Vast Sums To US... Must Be Paid For Defense" -- Amid #NoHandshakeGate and the "we have something in common" moment, yesterday's meeting between President Trump and German Chancellor Merkel was at best cordial, judging by the G-20 discussions, and this latest tweet from Trump... Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel. Nevertheless, Germany owes..... ...vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany! — Donald J. Trump (@realDonaldTrump) March 18, 2017 Of course this is not the first time he has pointed this out... NATO, he said, “has problems.” “[NATO] is obsolete, first because it was designed many, many years ago,” Bild quoted Trump as saying about the trans-Atlantic military alliance. “Secondly, countries aren’t paying what they should” and NATO “didn’t deal with terrorism.” While those comments expanded on doubts Trump raised about the North Atlantic Treaty Organization during his campaign, he reserved some of his most dismissive remarks for the EU and Merkel, whose open-border refugee policy he called a “catastrophic mistake.” Trump is 100% Correct - Germany has been under-funding its defense budget for years... NATO's 28-member countries committed in 2014 to spending 2 percent of their gross domestic product on defense within a decade. But only the U.S. and four other members of the post-World War II military coalition are meeting the standard, Pence said.

Germany Slams Trump's Claim That It Owes "Vast Sums" To NATO And The U.S. --The pleasantries, lack of handshake between Trump and Merkel notwithstanding, are officially over. One day after Trump returned to his favorite medium to slam Germany for abusing NATO's funding scheme, and US defense spending generosity, accusing Germany of owing "vast sums" of money to both NATO and the US, Germany has struck back. As a reminder, this is what Trump tweeted on Saturday morning:Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel. Nevertheless, Germany owes vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany! That in turn, was followed on Sunday morning by a statement by German Defense Minister Ursula von der Leyen in which she responded to Trump, rejecting the US president's claim: "There is no debit account at NATO," von der Leyen said in a statement, adding that it waswrong to link the alliance's target for members to spend 2 percent of their economic output on defense by 2024 solely to NATO.  "Defense spending also goes into UN peacekeeping missions, into our European missions and into our contribution to the fight against IS terrorism," von der Leyen said. The defense minister added that everyone wanted the burden to be shared fairly and for that to happen it was necessary to have a "modern security concept" that included a modern NATO but also a European defense union and investment in the United Nations.

Exclusive: Tillerson plans to skip NATO meeting, visit Russia in April - sources | Reuters: U.S. Secretary of State Rex Tillerson plans to skip an April 5-6 meeting of NATO foreign ministers for a U.S. visit by the Chinese president and will travel to Russia later in the month, U.S. officials said on Monday, a step allies may see as putting Moscow's concerns ahead of theirs. Tillerson intends to miss what would be his first meeting in Brussels with the 28 NATO members to attend President Donald Trump's expected April 6-7 talks with Chinese President Xi Jinping at Trump's Mar-a-Lago resort in Florida, four current and former U.S. officials said. The decisions to skip the NATO meeting and to visit Moscow risked feeding a perception that Trump may be putting U.S. dealings with big powers before those of smaller nations that depend on Washington for their security, said two former U.S. officials. Trump has often praised Russian President Vladimir Putin, and Tillerson worked with Russia's government for years as a top executive at Exxon Mobil Corp, and has questioned the wisdom of sanctions against Russia that he said could harm U.S. businesses. State Department spokesman Mark Toner had no immediate comment on whether Tillerson would skip the NATO meeting or visit Russia. Two U.S. officials said Tillerson planned to visit Moscow on April 12. Trump has already antagonized and worried NATO allies by referring to the Western security alliance as "obsolete" and by pressing other members to meet their commitments to spend at least 2 percent of gross domestic product on defense.

U.S. reverses course and offers new dates for NATO talks | Reuters: U.S. Secretary of State Rex Tillerson proposed new dates on Tuesday for a NATO meeting, the State Department said, after he initially decided to skip the talks and rebuffed the alliance's efforts to reschedule them. Tillerson's decision to miss his first meeting with NATO foreign ministers, set for April 5-6 in Brussels, unsettled European allies who worried it reopened questions about U.S. President Donald Trump's commitment to the alliance. Reuters exclusively reported on Monday that Tillerson would stay in the United States to attend Trump's expected April 6-7 talks with Chinese President Xi Jinping in Florida. U.S. officials also said Tillerson would visit Russia later in April. The alliance had offered to change the meeting dates so Tillerson could attend both it and the Xi talks but the U.S. State Department rebuffed the idea, a former U.S. official and a former NATO diplomat, both speaking on condition of anonymity, said on Monday. On Tuesday, State Department spokesman Mark Toner said the department put forward new dates for a meeting when Tillerson could come, noting that such a decision would have to be made by consensus among the 28 NATO members. "We are certainly appreciative of the effort to accommodate Secretary Tillerson," Toner told reporters. "We have offered alternative dates that the secretary could attend." He also sought to allay European concerns by saying that "the United States remains 100 percent committed to NATO."

Trump to attend NATO summit in Brussels amid complaint allies owe ‘vast sums’ — President Trump will travel to Brussels in May for a NATO summit, the White House said Tuesday. The announcement comes as Trump has roiled the alliance with renewed complaints about how much European allies are paying for their defense. But administration officials say the U.S. has a "strong commitment" to the alliance.In a meeting at the White House with German Chancellor Angela Merkel last week, Trump suggested that allies owe "vast sums of money from past years."He followed up that meeting with a tweet demanding that "the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!"Those statements reflected a shift in U.S. policy. At the most recent NATO summits in Wales and Poland, nations agreed to spend at least 2% of their economic output on defense by 2024, but the agreement was not retrospective and the money is not owed to the United States. "There is no debt account in NATO," German defense minister Ursula von der Leyen said Sunday.White House press secretary Sean Spicer said Tuesday that Trump "looks forward to meeting with his NATO counterparts to reaffirm our strong commitment to NATO." But he also alluded to two issues where Trump has been critical of the alliance, saying Trump hoped to "discuss issues critical to the alliance, especially allied responsibility-sharing and NATO’s role in the fight against terrorism."  Also Tuesday, the State Department said Rex Tillerson would be the first secretary of State to skip a meeting with NATO foreign ministers for the first time in 14 years, raising more questions about the U.S. commitment to the 68-year-old alliance. Instead, Tillerson will travel to Russia, NATO's chief rival, amid an FBI investigation into Russia's role in the 2016 election. But from lecterns across Washington Tuesday, the Trump administration professed support for NATO. "The United States remains 100% committed to NATO. President Trump said this in his very first address to a joint session of Congress. He said our commitment to NATO is unwavering and it remains so," State Department spokesman Mark Toner said.

Inside Trump’s White House, New York moderates spark infighting and suspicion -- Inside the White House, they are dismissed by their rivals as “the Democrats.” Outspoken, worldly and polished, this coterie of ascendant Manhattan business figures-turned-presidential advisers is scrambling the still-evolving power centers swirling around President Trump. Led by Gary Cohn and Dina Powell — two former Goldman Sachs executives often aligned with Trump’s eldest daughter and his son-in-law — the group and its broad network of allies are the targets of suspicion, loathing and jealousy from their more ideological West Wing colleagues. On the other side are the Republican populists driving much of Trump’s nationalist agenda and confrontations, led by chief strategist Stephen K. Bannon, who has grown closer to Chief of Staff Reince Priebus in part to counter the New Yorkers. As Trump’s administration enters its third month, the constant jockeying and backbiting among senior staff is further inflaming tensions at a time when the White House is struggling on numerous fronts — from the endangered health-care bill to the controversial budget to the hundreds of top jobs still vacant throughout the government. (Deirdra O'Regan/The Washington Post) The emerging turf war has led to fights over White House protocol and access to the president, backstabbing and leaks to reporters, and a heated Oval Office showdown over trade refereed by the president himself. This account of the internal workings of Trump’s team is based on interviews with 18 top White House officials, confidants of the president and other senior Republicans with knowledge of the relationships, many of whom requested anonymity to speak candidly. For the most part so far, the ideologues are winning.

White House installs political aides at Cabinet agencies to be Trump’s eyes and ears -- The political appointee charged with keeping watch over Environmental Protection Agency Administrator Scott Pruitt and his aides has offered unsolicited advice so often that after just four weeks on the job, Pruitt has shut him out of many staff meetings, according to two senior administration officials. At the Pentagon, they’re privately calling the former Marine officer and fighter pilot who’s supposed to keep his eye on Defense Secretary Jim Mattis “the commissar,” according to a high-ranking defense official with knowledge of the situation. It’s a reference to Soviet-era Communist Party officials who were assigned to military units to ensure their commanders remained loyal. Most members of President Trump’s Cabinet do not yet have leadership teams in place or even nominees for top deputies. But they do have an influential coterie of senior aides installed by the White House who are charged — above all — with monitoring the secretaries’ loyalty, according to eight officials in and outside the administration. This shadow government of political appointees with the title of senior White House adviser is embedded at every Cabinet agency, with offices in or just outside the secretary’s suite. The White House has installed at least 16 of the advisers at departments including Energy and Health and Human Services and at some smaller agencies such as NASA, according to records first obtained by ProPublica through a Freedom of Information Act request. These aides report not to the secretary, but to the Office of Cabinet Affairs, which is overseen by Rick Dearborn, a White House deputy chief of staff, according to administration officials. A top Dearborn aide, John Mashburn, leads a weekly conference call with the advisers, who are in constant contact with the White House.

Ivanka Trump Is Officially Unofficially in the West Wing - On Wednesday evening, Canadian prime minister Justin Trudeau invited a delegation of U.N. ambassadors to a new Broadway musical about a Canadian town that took in those stranded in North American airspace on 9/11. Seated next to him at the front of the theater was First Daughter Ivanka Trump, with whom he has become fast friends. The quasi-political, quasi-official nature of the evening was typical of many recent engagements concerning Trump, who is not technically a member of her father’s administration. Two days later, she sat next to German Chancellor Angela Merkel, across from her father, President Donald Trump, in a meeting about vocational training programs in the White House. Indeed, she has sat in on many such meetings with foreign leaders, helped craft portions of her father’s first joint address to Congress, lobbied representatives about including tax credits to help cover childcare costs in the budget, and traveled with her father on official factory tours in North Carolina and off-duty sunny weekends in Palm Beach. All of this has raised eyebrows about what, exactly, Ivanka Trump’s role is and whether it is appropriate for a First Daughter, who still retains ownership of an active fashion empire and a stake in the Trump Organization, to be sitting in on official meetings with foreign leaders and working on administration policy. Now the Trumps are attempting to clarify the matter in a particularly Trumpian fashion. As Politico first reported on Monday, the First Daughter still contends that she will not take an official role in the White House, but it is clear that she has been taking steps to cement that nebulous position within the West Wing. She is in the process of obtaining a security clearance and will soon start using government-issued communication devices, a source close to Ivanka told me, in order to comply with government records rules and protect information she has access to. For weeks, this person told me, she has been working out of her own office on the second floor of the West Wing.

Democrats raise doubts about Trump's high court nominee Gorsuch | Reuters: Neil Gorsuch, President Donald Trump's U.S. Supreme Court nominee, on Monday emphasized the need for judicial independence even as Trump castigates jurists who have ruled against him, while Democrats questioned whether he would rule against abortion rights and gun control while favoring corporations. With the ideological balance of the Supreme Court at stake, the Senate Judiciary Committee opened its confirmation hearing for Gorsuch, a conservative federal appeals court judge from Colorado. Republicans praised Gorsuch, 49, as highly qualified for a lifetime appointment as a justice. "I think we're off to a good start," Republican Chuck Grassley, the committee's chairman, said afterward, with senators getting their first shot at questioning Gorsuch on Tuesday. Committee Democrats noted Gorsuch has the chance to join the court only because Senate Republicans last year refused to consider Democratic former President Barack Obama's nomination of federal appellate judge Merrick Garland. Despite slim chances of blocking his nomination in the Republican-led Senate, Democrats raised questions about Gorsuch's suitability for the job. "Our job is to determine whether Judge Gorsuch is a reasonable, mainstream conservative or is he not," said the panel's top Democrat, Dianne Feinstein. Speaking publicly for the first time since Trump nominated him on Jan. 31, Gorsuch defended his judicial record in the face of Democratic criticism of his rulings. Gorsuch, speaking mostly in generalities that could not cause him any trouble, emphasized the need for "neutral and independent judges to apply the law," warned against judicial overreach, and referred to "the modest station we judges are meant to occupy in a democracy."

Dems Accuse Gorsuch of Skirting Major Legal Questions at SCOTUS Confirmation - Senate Democrats on Wednesday voiced frustrations with Supreme Court nominee Neil Gorsuch for what they feel has been a lack of specifics about his judicial philosophy during his confirmation hearings. "You have been very much able to avoid any specificity like no one I have ever seen before," Sen. Dianne Feinstein, the highest-ranking Democrat on the Senate Judiciary Committee, said. "And maybe that's a virtue, I don't know. But for us on this side, knowing where you stand on major questions of the day is really important to vote aye." "You have been very hesitant to even talk about various Supreme Court precedents…We've had justices nominated by Republican presidents who have been willing to discuss past precedent," Sen. Patrick Leahy, D-Vt., said. "I was just kind of hoping you would be as transparent as these prior nominees were."Democrats have failed to land many major blows to the 10th Circuit Court of Appeals as he carefully skirts questions about Supreme Court precedent and President Donald Trump's most controversial actions and statements. During Monday's hearing, Gorsuch called it "grossly improper" for him to speculate about how he would rule on Trump's controversial travel restrictions from six-Muslim majority countries. The order has been blocked by a federal judge and could end up before the Supreme Court. Gorsuch's hesitations did not slow Democrats from prodding him on a number of key rulings involving civil and reproductive rights. And while Gorsuch rattled off various merits of the rulings, he would consistently stopped short of delivering his own opinions on the decisions.

Sheldon Whitehouse’s Shockingly Awesome Gorsuch Statement - Matt Stoller - There’s been a lot of bullshit peddled by the press and by insiders that Neil Gorsuch can’t be beaten, that Democrats don’t have a message. He’s just so qualified, says the American Bar Association, Obama hack Neil Katyal (who is talking his book practicing before the court), and his former clerks. Essentially this is all coming from BigLaw firms. BigLaw firms — both on the Democratic and Republican sides — love a court that rules for their big business clients. He’s so qualified, they argue. Gorsuch is polite, rarely late, and has many leather bound books. Well Democratic Senator Sheldon Whitehouse, in his opening statement at the Gorsuch nominating hearings, isn’t having it. Gorsuch, he said, will fight for big corporations versus actual ‘humans’ in every arena possible.Whitehouse eviscerated Gorsuch as a payoff to a big conservative political machine. The special interests who financed the campaign to put Gorsuch on the court, he said, “obviously think that you will be worth their money”. Beyond that, he points out, John Roberts sat before the Senate Judiciary Committee and lied that he would just be an unbiased umpire calling balls and strikes. Roberts then went on the court and ruled for big business in every case that came before the court which involved big business. “Once burned, twice shy,” said Whitehouse. Gorsuch will join a court that ruled for big business in everything from class actions to labor to jury systems to voting rights. Whitehouse listed a litany of cases and their impacts, with this one as a particular kicker, “Help insulate investment bankers against fraud claims? Why not?”The special interests that financed this big business takeover of the court is not principled, said Whitehouse, it isn’t intellectual, it is simply a “delivery service” for big business. Gorsuch is highly qualified, Whitehouse noted. But fundamentally Gorsuch is a payoff to the special interest groups that will profit from his rulings.It’s important to note here that Whitehouse is making a broader claim about the court. His point isn’t just that Gorsuch should be rejected, but that Democrats should have no respect for the legitimacy of the court so long as the court serves a role as a cog in a corrupt big business machine. He’s pointing to a long-term strategy, regardless of whether Gorsuch wins. The Democrats are going to try and strip the court of the powers that it no longer deserves, because the routine bad faith big business friendly rulings that eviscerate our democratic traditions.

Why would Democrats ever let Neil Gorsuch be confirmed? -  He is a down-the-line conservative. He was appointed to a federal appeals court by George W. Bush, wrote a book arguing that judges should embrace an absolute right-to-life principle in assisted suicide cases, and has backed religious challenges to the Affordable Care Act (including in the Hobby Lobby case). He sided with corporations and against workers in a variety of cases, including one in which a Kansas State professor was fired for requesting more leave after a cancer diagnosis, and one involving a truck driver who was fired for abandoning his malfunctioning truck after waiting in a freezing, unheated cabin for three hours.There’s more: Gorsuch was nominated to the Supreme Court by President Donald Trump, who has attacked the federal judiciary repeatedly, and whose actions — restricting immigration from some Muslim countries, cracking down on undocumented immigrants, and rolling back environmental regulation — are certain to draw legal challenge after legal challenge. Some of those challenges will almost certainly come before the Supreme Court.If that weren’t enough, Gorsuch is nominated for the same seat that Merrick Garland was, and Senate Republicans’ refusal to so much as hold hearings for Garland still, understandably, enrages Senate Democrats, who feel the seat was stolen.Democrats are essentially helpless to stop many of Trump’s decisions. But not this one: Senate Democrats have the ability to block Gorsuch from joining the Court by filibustering. Unless Republicans can peel off eight Democrats to break that filibuster, Gorsuch won’t be able to join the Court. And yet the conventional wisdom in Washington is that Gorsuch — whose confirmation hearings began Monday and are schedule to end Thursday — is a sure thing, and will coast to a confirmation vote without much controversy. Politico's Burgess Everett reports that Democrats are weighing a deal that would see Gorsuch confirmed in exchange for "a commitment from Republicans not to kill the filibuster for a subsequent vacancy during President Donald Trump’s term."

Schumer a no on Gorsuch, will urge Dems to oppose | TheHill: Senate Democratic Leader Charles Schumer (N.Y.) says he will oppose Supreme Court nominee Neil Gorsuch and urge fellow Democrats to do the same. Schumer announced Thursday that Democrats will filibuster Gorsuch and force Republicans to muster 60 votes to advance him to a final up-or-down vote. “He will have to earn 60 votes for confirmation. My vote will be no, and I urge my colleagues to do the same,” he said on the Senate floor. Republicans have threatened to change the Senate’s filibuster rule to exempt Supreme Court nominees from procedural gridlock — a controversial tactic often referred to as the "nuclear option" that Democrats deployed in 2013 to protect Cabinet and lower-court judges from filibusters. Schumer, however, argued the problem is not with the chamber’s rules, but with a nominee who has regularly sided with powerful interests over average Americans in high-profile cases. “If this nominee cannot earn 60 votes, a bar met by each of President Obama’s nominees and George Bush’s last two nominees, the answer isn’t to change the rules. It’s to change the nominee,” he said. Schumer argued that the nominee was unable to convince him that he would serve as an independent check on President Trump, “who has shown almost no restraint from executive overreach.”He said Gorsuch “has long been someone who has advocated extreme deference to assertions of broad presidential power.”

Schumer Says He Will Oppose Gorsuch Nomination, Threatens Filibuster -- Moments ago, Senate Democratic Leader Charles Schumer said he would oppose the nomination of Supreme Court nominee Neil Gorsuch and urge fellow Democrats to do the same. Schumer's opposition comes minutes after Sen. Bob Casey said he would also oppose Gorsuch. "After careful deliberation, I have concluded that I cannot support Judge Neil Gorsuch’s nomination to the Supreme Court" Schumer said, adding the Supreme Court nominee "was unable to sufficiently convince me that he’d be an independent check” on Trump. Schumer also said that Gorsuch is "someone who almost instinctively supports the powerful over the weak." The Senate Democrat leader also announced that Democrats will filibuster Gorsuch and force Republicans to muster 60 votes to advance him to a final up-or-down vote. “He will have to earn 60 votes for confirmation. My vote will be 'no' and I urge my colleagues to do the same,” he said on the Senate floor. It was unclear as of now if Republicans would use the "nuclear option" as some have suggested in retaliation.

Republicans revamp U.S. health bill, boost benefits to older Americans | Reuters: U.S. House Republicans are working on changes to their healthcare overhaul bill to provide more generous tax credits for older Americans and add a work requirement for the Medicaid program for the poor, House Speaker Paul Ryan said on Sunday. Ryan said Republican leaders still planned to bring the healthcare bill to a vote on the House of Representatives floor on Thursday. Speaking on the "Fox News Sunday" television program, he said leaders were working to address concerns that had been raised by rank-and-file Republicans to the legislation. Republicans remain deeply divided over the healthcare overhaul, which is President Donald Trump's first major legislative initiative. It aims to fulfill his campaign pledge to repeal and replace the Affordable Care Act, popularly known as Obamacare, the signature healthcare program of his Democratic predecessor, Barack Obama. Democrats say the Republican plan could throw millions off health insurance and hurt the elderly, poor and working families while giving tax cuts to the rich. "We think we should be offering even more assistance than the bill currently does" for lower-income people age 50 to 64, Ryan, the top Republican in Congress, said of the tax credits for health insurance that are proposed in the legislation. Ryan also said Republicans were working on changes that would allow federal block grants to states for Medicaid and permit states to impose a work requirement for able-bodied Medicaid recipients.Trump told reporters in a brief conversation aboard Air Force One that he had meetings about healthcare reform in Florida at the weekend and that the effort to sell the proposal was going well.

 Paul Ryan Reveals Latest Changes To Republican Healthcare Bill -- As first discussed on Friday, in order to overcome vocal objections to Obamacare repeal by conservative republicans, the White House won the support of the Republican Study Committee members by agreeing to give states the option to impose work requirements on Medicaid recipients and the option to block grant Medicaid instead of the cap system in the bill.  Today, during the Sunday morning TV circuit, Paul Ryan elaborated further that House Republicans are working on additional changes to the Obamcare repeal bill which seek to provide more generous tax credits for older Americans, while confirming the addition of the work requirement for the Medicaid program for the poor. Speaking on Fox News Sunday, Paul Ryan said Republican leaders still plan to bring the healthcare bill to a vote on the House of Representatives floor on Thursday, adding that leaders were working to address concerns that had been raised by rank-and-file Republicans to the legislation. "We think we should be offering even more assistance than the bill currently does,"for lower-income people age 50 to 64, Ryan said of the tax credits for health insurance that are proposed in the legislation, one week after the CBO found it would cause higher premiums for people in their 50s and 60s. Ryan also said Republicans are working on changes that would allow federal block grants to states for Medicaid. Coming into the weekend, Republicans remained deeply divided over the shape of Obamacare repeal, President Trump's first major legislative initiative which aims to fulfill his core campaign pledge to eliminate Obama's Affordable Care Act. As noted last week, Trump has been "wooing" lawmakers to vote for the bill, Reuters reported. He won the backing of a dozen conservative lawmakers on Friday after an Oval Office meeting in which the president endorsed a work requirement and block-grant option for Medicaid.Striking an optimistic tone, the Wisconsin Republican said "we feel very good where we are," adding "we're still having conversations with our members. We're making fine-tuning improvements to the bill to reflect people's concerns, to reflect people's improvements." Ryan said he's also impressed with how President Trump is helping the GOP to "close this bill." "We feel like we're on track," Ryan said, "and we're right where we want to be."

AHCA would cost Americans roughly $33 billion a year in higher out-of-pocket costs by 2026 - Despite false rhetoric that current law burdens American households with high out-of-pocket costs, the replacement plan put forth by President Trump and Republicans in Congress, known as the American Health Care Act (ACHA), would substantially increase out-of-pocket costs. According to a new analysis by EPI Research Director Josh Bivens, Americans would pay roughly an additional $33 billion in the form of higher deductibles, copays, and coinsurance by 2026. Millions of Americans would also face substantially higher costs of insurance premiums, and millions more would be forced to go without any insurance at all. “Higher out-of-pocket costs are a feature of the AHCA, not a bug,” said Bivens. “Giving patients more ‘skin in the game’ is a flawed strategy to control the growing cost of health care. The only way it reduces costs is by forcing patients to cut back across-the-board on the care they receive, regardless of how effective or necessary this care is.” The AHCA would boost out-of-pocket costs in four broad ways:

  • It eliminates subsidies to help Americans pay out-of-pocket costs incurred when they have purchased health insurance through the ACA marketplace “exchanges.” By 2026, the elimination of these cost-sharing subsidies will increase out-of-pocket costs by roughly $16 billion per year.
  • It dismantles key regulations that govern the breadth of protections offered by insurance policies sold through the ACA exchanges. This will degrade the quality of insurance for all enrollees in nongroup (i.e., individual) markets, regardless of whether they receive subsidies for coverage. By 2026 this decrease in insurance plan quality will boost out-of-pocket costs by roughly $9 billion per year.
  • It takes Medicaid coverage away from 14 million Americans in 2026. Because Medicaid recipients face extremely low out-of-pocket costs, this shift alone will boost out-of-pocket costs faced by patients in 2026 by roughly $7 billion.
  • It moves 7 million Americans off of employer-sponsored insurance and into uninsured status. The primary damage done by this move will be to force these 7 million people to simply consume much less health care. But even with this reduction they will face roughly $460 million in higher out-of-pocket costs by 2026.

Opponents of single payer are moral monsters on par with AHCA proponents - Matt Bruenig -- The Republican health care plan, the American Health Care Act (AHCA), was unveiled recently. Its major provisions include changing the refundable tax credits of Obamacare so that they are more generous to younger people and less generous to older people and so that they are more generous to higher income people and less generous to lower income people. On top of that, the AHCA also cuts Medicaid substantially. As a result of these changes, the CBO estimates that by 2026, 24 million more people would be uninsured relative to current law. The liberal reaction to this proposal has been rightly horrified. Here’s Ezra Klein’s reaction, which was typical of the liberal thinksphere in general: The Congressional Budget Office’s analysis of the GOP’s American Health Care Act is one of the most singularly devastating documents I’ve seen in American politics. For a thorough explanation of the findings, read Sarah Kliff’s explainer. But here is the one-sentence summary: Under the GOP’s bill, the more help you need, the less you get. The choice between the Obamacare status quo and the AHCA future, if CBO is believed, is a choice between having 24 million people with health insurance or 24 million people without health insurance. When confronted with that choice, those that would choose AHCA over Obamacare are moral monsters. They are selecting a society with greater misery, greater suffering, and greater death. What if the choice was different though? What if the choice was between Obamacare and single-payer health insurance? How would the moral situation change? But in reality, the choice between single-payer and Obamacare is on par with the choice between Obamacare and AHCA. That is, a decision to favor AHCA over Obamacare is at least as horrific as the decision to favor Obamacare over single-payer. But don’t take my word for it. Just look in the very same CBO report that shows how bad AHCA is: In 2026, an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.

The Battle for Healthcare in the US -- In 2026, an estimated 52 million would be uninsured in the US, a dramatic reversal from the 2016 uninsured count of 28/29 million. Pretty much, the Republicans will put healthcare back to the way it was pre-2014 if Paul Ryan’s bill is passed by Congress and Donald signs the bill in its present form.   By 2018, 14 million could be uninsured with many of the uninsured practicing the tyranny of a minority, as John S. Mill might call it, upon the rest of the insured population as they drop out. Others will simply lose healthcare insurance as states withdraw from the Medicaid expansion and employers drop the coverage they were required to carry as they had 50 or more employees. Many of today’s insured will be unable to afford the increased premiums due to smaller subsidies. The elderly will be faced with smaller subsidies and a higher 5:1 ratio premium, which is up from the present 3:1 under the ACA program.   Doctors, clinics, and hospitals have seen increased numbers of patients coming through the front door rather than the rear door due to the expansion of Medicaid to 138% FPL and subsidies for healthcare insurance to those under 400% FPL. My own PCP has seen many new patients who have never been to a doctor before except at the ER. With the proposed reversal of the mandate to have healthcare insurance and the dropping of Medicaid, it will fall upon hospitals and doctors to still provide stabilizing care as defined by law to all who arrive at their door. Except this time, the subsidizing payments for care for the uninsured to hospitals and clinics will not be available as it was reduced with the advent of the PPACA. It appears the AHA is not too pleased with Paul Ryan’s AHCA bill either.  Our new Health and Human Services Secretary Tom Price had this to say; “You’re falling into the same old trap of individuals who are measuring the success of Medicaid by how much money we put into it. We ought not be measuring programs by how much money we put into it, we ought to be measuring them by whether or not they work.” Or take one aspirin and you will be alright in the morning. Interestingly, Republicans are happy with constituents paying a surcharge/mandate for not having healthcare insurance or healthcare. And if they suddenly have to have healthcare insurance, they pay the penalty to private companies rather than use it to fund subsidies. Who would have thought?

Obamacare Architects 'Sad,' 'Irritated' And 'Determined’ As Repeal Looms -“Disturbing.” “Tragic.” “Extraordinarily troubling.” “Disconcerting.” “Sad.” Those are just some of the words original architects of the Affordable Care Act used in interviews with The Huffington Post to describe the effort by President Donald Trump and congressional Republicans to speed through a bill to repeal major parts of the law and “replace” it with a more meager set of health care reforms.It’s easy to see why key figures behind the biggest expansion of the social safety net in decades would be aghast at what’s happening now. On Thursday ― seven years to the day since President Barack Obama signed the Affordable Care Act into law ― the House is tentatively scheduled to advance its repeal measure.“More people are going to get hurt under the Republican version than under the ACA. They may not like the ACA, but we could certainly work on it and improve it,” said former Sen. Max Baucus (D-Mont.), who chaired the Finance Committee during the period the Affordable Care Act passed Congress. The legislation that emerged from the committee in September 2009 formed the backbone of the eventual law.“But they’re going to hate the Republican version,” Baucus continued, “because it’s going to give much more benefits to the wealthy at the expense of others, and a lot of people are going to get hurt along the way.”

What’s at Stake in a Health Bill That Slashes the Safety Net - What do we lose when social insurance unravels? It is startling to realize just how much the social safety net expanded during Barack Obama’s presidency. In 2016, means-tested entitlements like Medicaid and food stamps absorbed 3.8 percent of the nation’s gross domestic product, almost a full percentage point more than in 2008. Public social spending writ large — including health care, pensions, unemployment insurance, poverty alleviation and the like — reached 19.3 percent of G.D.P., the most in decades and almost three percentage points more than in the year before Mr. Obama took office. Government in the United States still spends less than most of its peers across the industrialized world to support the general welfare of its citizens. But during the Obama administration the gap shrank to its smallest since the early 1980s. By these numbers, American social policy looks closer to that of the social democracies in Europe than at any time in a generation. It didn’t stick, though. Last week, President Trump’s sketch of a budget underscored how little interest he has in the nation’s social insurance programs — proposing to shift $54 billion next year to the military from the civilian discretionary budget that funds many of the government’s social efforts. And in the biggest step to shrink the social safety net since President Franklin D. Roosevelt started building it in the rubble of the Great Depression, Republicans in the House plan to vote this week to undo the Affordable Care Act. That law was Mr. Obama’s singular contribution toward an American welfare state, the biggest expansion of the nation’s safety net in half a century.

Conservative House Republicans say they have votes to block health law - Conservative House Republicans said Monday that they have enough votes to block the passage of the GOP’s legislation to dismantle ObamaCare if there is a vote on Thursday and all Democrats vote down party line.Members of the House Freedom Caucus, which has about 35 members, have called on House leaders to repeal more elements of ObamaCare, The Wall Street Journal reported.Top House Republicans hunting votes for their health care overhaul are proposing amendments aimed at providing more help for older people, curbing Medicaid and accelerating the repeal of some tax increases. The bill would let people deduct more medical costs from taxes. It would repeal many tax increases boosted by President Obama's 2010 statute this year instead of 2018. Older and disabled Medicaid recipients would get more generous benefits. But states could impose work requirements on the program.The bill would let the Senate approve tax credits more generous to people age 50 to 64. Congressional analysts say the current GOP legislation would hit many with big cost increases.GOP leaders released the changes late Monday, three days ahead of a planned House vote on the bill. “Based on what I’ve been told is in the manager’s amendment, and what I’ve been told tonight, I don’t know that it moves anybody or makes a compelling case from where their previous positions were,” Rep. Mark Meadows, R.- N.C., chairman of the House Freedom Caucus, told the paper.

Ahead Of Critical Vote GOP Unveils More Changes To Health Bill, But It's Not Enough --With just two days left until the House is set to vote this Thursday on the critical Obamacare repeal bill, where an adverse vote could lead to the biggest blow to Trump's domestic policy agenda yet, House Republican leaders on Monday night released the latest set of changes to their ObamaCare replacement bill, as they scrambled to win more votes for the legislation. According to the Hill, the changes include two measures that conservative Republican Study Committee members won at the White House on Friday: allowing states to require Medicaid recipients to work and allowing states to choose a Medicaid block grant over the cap system in the current bill.  The House changes - which come in the form of a manager's amendment -  also contain nods to calls from lawmakers to increase tax credits for older people to address projected cost spikes under the GOP bill, without actually making that change. Instead, the House bill would enact a different, placeholder provision to increase a medical tax deduction, with roughly the same cost, $85 billion over 10 years.  As summarized by Axios, the GOP leaders skipped some of the biggest changes they could have made instead punting on the key ; a list of the actual changes the House GOP is making is as follows:

  • States can now choose Medicaid per capita caps or block grants.
  • There will be an optional Medicaid work requirement (with extra federal funds for states that do it).
  • There will be a more generous Medicaid inflation adjustment for the costs of elderly and disabled.
  • Obamacare taxes get repealed a year earlier.

What they left out:

  • It doesn't end the Medicaid expansion earlier, as conservatives wanted. Rep. Joe Barton could still bring that to the Rules Committee on Wednesday.
  • It doesn't try to repeal Obamacare's insurance regulations. GOP leaders say that can't be done in a budget "reconciliation" bill, but conservatives want them to try.

Still, the overall structure of the bill remains the same after these changes which is why the head of a House conservative group said there still aren’t enough votes to pass the measure.

What’s In The Manager’s Amendment To AHCA? -- On March 20, 2017, the Republican House leadership released a manager’s amendment to the American Health Care Act. This amendment is intended to respond to critics of the original AHCA from the right and from the middle. It is less clear that it responds to concerns raised by the Congressional Budget Office report on the original AHCA, as will be discussed later.The original AHCA, as it passed the House Budget Committee, (Budget Committee Report) contained provisions that would:  […] The manager’s amendment leaves most of these provisions in place. It consists of two sets of amendments, labeled technical changes, (summary) and policy changes (summary). In fact, however, some of the policy amendments (which deal primarily with the Medicaid program and tax repeals) are quite technical, while a few of the technical amendments (which deal primarily with changes in the tax credit program as well as Medicaid) make significant policy changes. Speaker Ryan states that the technical changes were necessary for the House bill to comply with Senate reconciliation rules, although it is not easy to discern how they do this. The manager’s amendment would end the ACA’s mandatory expansion for childless, nondisabled, non-pregnant adults up to 133 percent of the poverty level and sunset the ability of states to decide to cover adults above 133 percent of poverty with an enhanced Medicaid match as of the end of 2017. States could cover the ACA expansion population, however, as an optional category with their normal Medicaid match after that date. Medicaid expansion enrollees enrolled prior to the end of 2019 would retain the enhanced match after 2019 (90 percent in 2020), but only so long as they remained continuously enrolled and only in states that had expanded Medicaid by March 1, 2017…. […]The amendments add an additional year to the relief the AHCA offered from the “Cadillac” plan excise tax, moving implementation from 2025 to 2026, and accelerate the repeal of all other ACA taxes from 2018 to 2017, including repeals of:

  • The $500,000 limit on business expense deductibility for compensation to insurance executives;
  • The branded prescription drug tax;
  • The health insurance tax (already subject to a moratorium for 2017);
  • The Medicare tax imposed on unearned income on taxpayers earning more than $200,000 ($250,000 for joint filers) 
  • The prohibition against paying for over-the-counter medications with tax subsidized funds from health savings accounts (HSAs), Archer MSAs, or flexible spending or health reimbursement arrangements;
  • The ACA’s increase in the penalty for the use of HSA and Archer MSA funds for non-medical purposes (reducing the penalty from 20 to 10 percent for HSAs and 20 to 15 percent for MSAs);
  • The ACA’s $2500 limit on contributions to flexible spending accounts;
  • The medical device excise tax;
  • The requirement that employers reduce their deduction for expenses allowable for retiree drug costs without reducing the deduction by the amount of retiree drug subsidy;
  • The repeal of the ACA’s Medicare 0.9 percent tax surcharge on taxpayers with incomes exceeding $200,000 ($250,000 for joint filers); and,
  • The ACA provision prohibiting the use of tax-subsidized account funds to purchase over-the-counter drugs.

Well, This Was the World's Easiest Chart to Make:-- CBPP has calculated how much tax money you'll save if Obamacare is repealed. Behold: You know what really gets me? Even among the millionaires, repeal will only net them about $50,000. That's like finding spare change in the sofa cushions for this crowd. Is clawing back a few nickels and dimes really worth immiserating 20 million people?

Why Medicaid Work Requirements Won’t Work - — Paul Ryan’s plan to replace Obamacare is headed to the House floor on Thursday for a vote that, even now, could go either way. That may sound surprising since Republicans have a sizable majority in the House. But if you’ve been following the debate over their replacement plan, the American Health Care Act, you know that, as harsh as it is, it’s not draconian enough for some members of Speaker Ryan’s party. In an attempt to win over those lawmakers, the Republican leadership has offered ideas to restrict coverage even further. One of the worst is a Medicaid work requirement.That may sound sensible to conservatives who, contrary to evidence, believe that Medicaid receipt discourages work. But it’s a mistake. Not only would this proposal make an already punishing bill even harsher, but it also constitutes an unnecessary add-on that has nothing to do with the purpose of Medicaid. Most poor people who can work do: A recent study of adults affected by Obamacare’s Medicaid expansion, for example, found that 87 percent of able-bodied beneficiaries were working, looking for work or in school.Of the remaining 13 percent, it found, “three-quarters report they are not working in order to care for family members and the rest report other reasons, like being laid off.” Most other able-bodied people already receiving Medicaid before the expansion are also working, raising the question of what problem, exactly, the proposed requirement is meant to solve. In fact, the Republicans get the issue backward: Medicaid already supports work. As a recent study of Medicaid in Ohio put it, recipients “reported that Medicaid has made it easier to secure and maintain employment.”

Trump, Koch brothers at odds over 'Trumpcare' vote | Reuters: Republicans considering whether or not to back U.S. President Donald Trump's healthcare reforms in a crucial House of Representatives vote this week face a painful choice. If they vote against, they could face the wrath of a vengeful and combative president. If they vote for it, they risk retribution from the billionaire brothers Charles and David Koch and other powerful right-wing players whose money can be pivotal in re-election races. As Trump faces the most formidable, high-stakes negotiation of his presidency, the fierce battle in the U.S. Congress over his plan to replace Obamacare is a test of whether Republicans will trust him with their political futures at the risk of alienating deep-pocketed conservative advocacy groups. As Trump and leaders in the House round up support for the bill ahead of a planned Thursday vote, some groups are threatening to retaliate against those who do support it, including the Club for Growth, the Heritage Foundation's political arm, and Americans for Prosperity, which is part of the expansive political pressure network established by the Koch brothers. All three groups are “keying” the vote, which means it will be a factor in determining whether the groups deem a lawmaker to be sufficiently conservative. That opens up the possibility that some Republicans who vote in favor of the bill could face a primary challenge in next year’s congressional elections and may not be able to count on help from the Kochs and others. Trump himself warned House Republicans in a meeting on Tuesday that their seats will be at risk next year if they do not support his healthcare bill, which would modify but not eliminate Obamacare, formally known as the Affordable Care Act, Democratic former President Barack Obama's signature healthcare legislation passed in 2010.

 Trump to GOP critics of health care bill: ‘I’m gonna come after you" --President Trump stormed Capitol Hill on Tuesday to sell the House Republican leadership’s plan to overhaul the health-care system, warning his party that not passing the legislation would yield a political crisis and sweeping electoral defeats. The president addressed a closed-door meeting of House Republicans days before the measure is expected to come to a vote on the House floor. Trump used both charm and admonishment as he made his case, reassuring skittish members that they would gain seats in Congress if the bill passed — and singling out Rep. Mark Meadows (R-N.C.), the chairman of the hard-line House Freedom Caucus, in front of colleagues. “I’m gonna come after you, but I know I won’t have to, because I know you’ll vote ‘yes,’ ” Trump said, according to several Republican lawmakers who attended the meeting. “Honestly, a loss is not acceptable, folks.”For Trump, who talked up the House bill the previous evening at a raucous rally in Kentucky, the presentation was the latest example of his mounting urgency to secure a major legislative victory in the early months of his presidency and repeal the signature law of President Barack Obama.  “That’s just the demeanor of this president. He wants to get this bill done,” said Sen. David Perdue (R-Ga.), a Trump ally. “I don’t hear that as a threat. It’s a statement of reality.” But Trump’s ability to translate his negotiation skills from the business world to the congressional realm — and to rouse his party behind him — remained unclear by late Tuesday as Meadows and other Republicans stayed firmly on the fence.

Kochs pledge millions to GOPers in 2018 -- if they vote no on health care bill -- In a last-minute effort to sink the Republican health care bill, a powerful network of conservative donors said Wednesday it would create a new fund for Republican 2018 reelection races -- but they'll only open it up to GOPers who vote against the bill. The advocacy groups helmed by Charles and David Koch have unveiled a new pool of money for advertisements, field programs and mailings that would exclude those who vote for the health care bill they oppose on Thursday. The effort, which they described as worth millions of dollars, is an explicit warning to on-the-fence Republicans from one of the most influential players in electoral politics not to cross them.The Koch-aligned networks oppose the bill because they think it does not do enough to scale back former President Barack Obama's health care policies. "We want to make certain that lawmakers understand the policy consequences of voting for a law that keeps Obamacare intact," Americans for Prosperity president Tim Phillips said. "We have a history of following up and holding politicians accountable, but we will also be there to support and thank the champions who stand strong and keep their promise."

Defying Trump, Freedom Caucus insists it'll oppose GOP ObamaCare replacement | TheHill: The conservative House Freedom Caucus said it remains opposed to the House GOP's ObamaCare replacement legislation Wednesday despite pressure from President Trump. Speaking to reporters outside a Freedom Caucus meeting after a White House meeting, the group called on leaders to start over on ObamaCare, saying the replacement bill does not have the votes to pass Thursday. "The opposition is still strong," said Rep. Mark Meadows (R-N.C.), the chairman of the group. "They don't have the votes to pass this tomorrow. We believe that they need to start over and do a bill that actually reduces premiums." A spokesman for the Freedom Caucus separately tweeted that more than 25 members remained opposed to the bill. House GOP leaders can only afford about 22 defections, given expected absences from the vote. "Nothing has changed," said Rep. Justin Amash(R-Mich.), adding "there was nothing new" from the White House meeting. Asked about Meadows's claim that there are not enough votes, Speaker Paul Ryan said on Fox News, "I don’t think anybody knows the answer to that." “There’s a claim that there’s 24 votes against it, we’re getting a lot of Freedom Caucus members to support this bill,” Ryan said. “We’ve been adding Freedom Caucus votes to this bill all week.”

CBO releases new score for ObamaCare repeal bill | TheHill: The Congressional Budget Office (CBO) on Thursday released a new score for a revised plan to repeal and replace ObamaCare that Republican leaders are struggling to pass in the House. The CBO found that this version of the healthcare plan contains significantly less deficit reduction than the original but would lead to essentially the same levels of coverage losses and premium increases. The legislation would reduce the deficit by $150 billion over 10 years, down from $337 billion in the original legislation, the report said. The plan would still result in 24 million more people being uninsured in 2026, a finding that has been a rallying cry for Democrats. Premiums would still initially rise by 15 percent to 20 percent before eventually becoming 10 percent lower, the CBO said. GOP leaders had pledged that they would wait for the CBO's new score before holding a floor vote on the legislation. That vote could happen as early as Friday. The CBO's score, however, does not reflect last-minute changes that could be made to win over conservatives, including repeal of ObamaCare's minimum coverage requirements. That change would be significant, but it is possible House Republicans could bring up the vote without that revised score.

Thursday's Defining Moment: Defeat Obamacare Lite Or Be Buried By The Welfare State  - David Stockman - Thursday's vote on Speaker Ryan's wrong-headed plan to repeal and replace Obamacare involves far more than keeping faith with a crucial campaign pledge or the Donald's notion that it's just the preliminaries to "cutting the hell out of taxes".In fact, the passage of Obamacare Lite would mean the triumph of a runaway Welfare State in aging and job-deficient America. It would eventually result in fiscal catastrophe and the certainty of tax increases - not cuts - as far as the eye can see.As we pointed out the other day, the nation's bloated and unsustainable health care system consumes 18% of GDP compared to 10-12% in most of the world's social welfare democracies. And it's an open-ended fiscal time bomb because unlike the state controlled single payor systems elsewhere, the US system is a mutant hybrid of socialism for the recipients and crony capitalism for the providers. Consequently, there is no brake on the volume and price of services. Health care demand is only limited by what the crony capitalist lobbies for every medical specialty and delivery system vertical can extract from payors---mainly the state. We refer here to the staggering sum of $24 trillion in health care entitlement spending. That's what government financing of medical programs will cost over the next decade. This total includes CBO's $16.5 trillion cost estimate for the Federal medical programs----plus $4 trillion in tax exclusion benefits for employer health plans and $3.5 trillion for the state share of Medicaid. For perspective, that sum is nearly 2X the projected $13.2 trillion cost of the entire Social Security system over the next ten years, which will have 8o million retires, dependents and disability recipients by 2027.

Freedom Caucus Closing In On Deal To Rewrite Health Care Bill At 11th Hour | The Huffington Post: ― Just hours before an expected Thursday vote in the House, congressional Republicans are considering massive changes to insurance coverage without even a basic idea of what those changes would mean.According to House Freedom Caucus members, the conservative group is negotiating directly with President Donald Trump and the White House on an amendment to the Republican health care bill, seemingly cutting out GOP leadership from the conversation as Speaker Paul Ryan (R-Wis.) and his deputies work to corral votes for a bill that is, in these latest provisions, a mystery even to them.The re-opening of negotiations is an admission of what has been clear all along ― that the bill as constructed by Ryan does not have the votes to pass on Thursday. It also represents a major reorganization of a significant chunk of the American economy in a matter of hours.Conservatives are using their considerable leverage on the measure ― the Freedom Caucus has demonstrated it has the votes to sink the legislation ― to extract concessions on the Essential Health Benefits section of the bill, which mandates that insurers offer plans covering 10 services: outpatient care, emergency room visits, hospitalization, maternity and newborn care, mental health and addiction treatment, prescription drugs, rehabilitative services, lab services, preventive care and pediatric services.“Negotiations are taking place,” Freedom Caucus member Randy Weber (R-Texas) told reporters Wednesday night. Asked if he thought they were going to get to a deal, Weber said it sounded like it.“The president’s moving our way,” he said.

The Center Folds - GOP Loses Obamacare Reform Votes From 'Tuesday Group' -- It is not just the Freedom Caucus tails of the Republican Party that are holding out from the Obamacare reform vote, GOP centrists in the House are fleeing from their party’s first major legislative test of President Trump's reign. As The Hill reports, centrist defections in the last 24 hours include Rep. Charlie Dent (R-Pa.), the co-chairman of the moderate Tuesday Group, which has roughly 50 members. Reps. Dan Donovan (R-N.Y.), David Young (R-Iowa), Chris Smith (R-N.J.), Frank LoBiondo (R-N.J.), and Jaime Herrera Beutler (R-Wash.), all centrists, have also announced their opposition to the bill. Reps. Leonard Lance (R-N.J.) and John Katko (R-N.Y.), two other centrists, earlier announced their opposition. That brings the number of centrist no votes to at least eight, though there could be more. Republican leaders can afford 22 defections and still pass their legislation, which all House Democrats are expected to oppose. Centrists warn that their constituents would lose coverage under the repeal bill, and some have even said that ObamaCare is better than the Republican bill. A group of centrists met with leadership in Speaker Paul Ryan’s (R-Wis.) office Wednesday night to discuss where they are on the legislation and their concerns. “Everybody’s frustrated, but some moved, some stayed the same, and some got more equivocal,” said a GOP lawmaker who attended the meeting. Finally, The Hill points out that deep cuts to Medicaid in the GOP bill, and the end of ObamaCare’s expansion of the program, are also major sources of centrist objections. “The overriding concern I have is the Medicaid expansion being significantly altered,” Smith, whose home state of New Jersey accepted the expansion, told the Asbury Park Press. “It affects so many of our disabled individuals and families, and the working poor.” Many centrists remain undecided, including electorally vulnerable members like Rep. Barbara Comstock (R-Va.).

House GOP postpones ObamaCare repeal vote | TheHill: House GOP leaders postponed Thursday’s planned vote on their ObamaCare replacement bill, sources told The Hill, in a devastating setback that signals Republicans are far short of the votes needed to pass the legislation. House Republicans will hold a special meeting at 7 p.m. Thursday to discuss the next steps. Majority Leader Kevin McCarthy (R-Calif.) and other negotiators are still hoping they can hold a vote on the underlying bill on Friday. “We’ll continue to work going forward. We’re always looking to gain more votes and find common ground so clearly we have more work to do,” House Ways and Means Committee Chairman Kevin Brady Kevin (R-Texas) said after the vote was delayed. “This is so critical for us to deliver on our [campaign] promise. For me, this is very clear: Stand with Trump and repeal this awful law, or stand with ObamaCare.” Republicans had aimed for a House vote on the seventh anniversary of the Affordable Care Act becoming law. But the day was filled with confusion and chaos for lawmakers, aides and observers of the high-stakes negotiations.

Thursday Humor: Medicare Part G? --Given today's vote fiasco, this seemed highly appropriate... If you are an older senior citizen and can no longer take care of yourselfand need Long-Term Care, but the government says there is no Nursing Home care available for you, what do you do? You may opt for Medicare Part G.

  • The plan gives anyone 75 or older a gun (Part G) and one bullet.
  • You may then shoot one worthless politician.
  • This means you will be sent to prison for the rest of your life where you will receive three meals a day, a roof over your head, central heating and air conditioning, cable TV, a library, and all the health care you need.
  • Need new teeth? No problem. Need glasses? That’s great. Need a hearing aid, new hip, knees, kidney, lungs, sex change, or heart? They are all covered!
  • As an added bonus, your kids can come and visit you at least as often as they do now!

And, who will be paying for all of this? The same government that just told you they can't afford for you to go into a nursing home.  And you will get rid of a useless politician while you are at it. And now, because you are a prisoner, you don't have to pay any more income taxes!   Is this a great country or what?

Trump Ultimatum: Vote on Health Care Friday or Obamacare Stays - NBC News: Office of Management and Budget director Mick Mulvaney made clear Thursday evening that President Donald Trump is done negotiating on the hotly-debated health care bill and wants a vote on Friday. And, if the president doesn't get a vote to repeal and replace Obamacare, he will move on to other priorities, Mulvaney said according to a source in the room during the tense talks with GOP members. A senior administration source confirms to NBC News the "very definitive, very clarifying" message from the president and the administration's intention to move on — should the health care bill fail to move forward — to other matters such as tax reform, trade and border security. If the bill does not pass, the president would see it as "people in Congress breaking their promises to their constituents to repeal and replace Obamacare" even with a Republican president in the White House," the source told NBC News. It was a long night for Trump aides who worked late to try and convince conservative House Freedom Caucus members to support the health care bill. Steve Bannon, Trump's chief strategist and senior counselor, met with the group's members to deliver a pointed message: stand and deliver.Republican leadership worked to underscore the message. For seven and a half years, we have been promising to repeal and replace this broken law because it is collapsing and failing families," House Speaker Paul Ryan told reporters Thursday evening. "And tomorrow we are proceeding." Trump and Ryan spoke for 45 minutes Thursday night, sources said. The conversation was described as an "entirely positive call." Rep. Tom Cole, R-Oklahoma, a member of the whip team, said he believed Trump's ultimatum is "credible" and predicted the bill's passage during Friday's vote. He added he isn't worried about how the Senate would respond

Paul Ryan Rushes to White House to Tell Trump Votes Are Lacking to Repeal Obamacare — House Speaker Paul D. Ryan, facing a revolt among conservative and moderate Republicans, rushed to the White House Friday afternoon to inform President Trump he did not have the votes to pass legislation to repeal the Affordable Care Act and to decide whether to pull the bill from consideration. The president and the speaker faced the humiliating prospect of a major defeat on legislation promised for seven years, since the landmark health legislation was signed into law. President Trump had demanded a vote regardless, which has been scheduled for Friday afternoon. But House leaders were leaning against such a public loss. The House opened debate Friday on what could be one of the most consequential pieces of legislation in years, a bill that could roll back a major, established social welfare program, a feat that is almost unheard of. The Republican legislation, called the American Health Care Act, would end the Affordable Care Act’s mandate that almost everyone have health care, replacing it with a system of age-based tax credits to purchase health insurance — a shift that would save the government hundreds of billions of dollars and would cut taxes, but could leave 24 million more Americans without coverage in a decade, the nonpartisan Congressional Budget Office said. Republicans said President Barack Obama’s signature domestic achievement, the 2010 health care law, had been a failure, disrupting coverage for millions of people and fueling big increases in health insurance premiums and out-of-pocket medical costs. Insurers in many states, they said, were losing hundreds of millions of dollars under the health law and have dropped out of the public marketplaces.

Obamacare replacement vote postponed in House as GOP fails to win support: Health care sure is hard. Very. The embattled bill seeking to replace major parts of Obamacare was yanked Friday from the floor of the House after it became clear that the measure would be defeated, in large part because of opposition from a relative handful of conservative and moderate Republicans. And President Donald Trump said that the overall Republican effort in Congress to repeal and replace Obamacare could be suspended for some time, as his administration pivots to the issue of tax reform. "We were very close, it was a tight margin," Trump said of the bill dubbed the American Health Care Act. "We have to let Obamacare go its own way for a little while," said Trump, who also predicted that Obamacare is "now likely to explode." "Obamacare is the law of the land, it's going to remain the law of the land," a disappointed House Speaker Paul Ryan, R-Wisc. told reporters. "We're going to be living with Obamacare for the foreseeable future." Hillary Clinton, who was defeated by Trump in last fall's presidential race, tweeted, "Today was a victory for all Americans." The failure of Republican leaders to pass their replacement plan — which they have repeatedly vowed to do — came a day after the seventh anniversary of the signing into law of the Affordable Care Act, as Obamacare is formally known, by President Barack Obama.NBC News reported that Trump asked that the bill be pulled after it became obvious that the measure would fail in a scheduled vote. A source told NBC that Ryan, during visit to Trump at the White House earlier Friday afternoon, had "pleaded to pull" the bill after telling the president that the GOP leaders had failed to convince enough of their fellow Republicans to support the plan.

In Major Defeat for Trump, Push to Repeal Health Law Fails -- House Republican leaders, facing a revolt among conservatives and moderates in their ranks, pulled legislation to repeal the Affordable Care Act from consideration on the House floor Friday afternoon in a significant defeat for President Trump on the first legislative showdown of his presidency. House Speaker Paul D. Ryan conceded, “We’re going to be living with Obamacare for the foreseeable future.” The defeat of the Republicans’ three-month blitz to repeal President Barack Obama’s signature domestic achievement exposed deep divisions in the Republican Party that the election of a Republican president could not mask. It also cast a shadow over the ambitious agenda that Mr. Trump and Republican leaders had promised to enact once their party assumed power on both ends of Pennsylvania Avenue. The drama of the day underscored the futility of the leaders’ efforts. Mr. Ryan rushed to the White House shortly after noon to tell Mr. Trump he did not have the votes for a repeal bill that had been promised for seven years — since the day Mr. Obama signed his landmark health care act into law. Mr. Trump, in a telephone interview moments after the bill was pulled, blamed Democrats and predicted that they would seek a deal within a year, he asserted, after “Obamacare explodes” because of high premiums. He also expressed weariness with the fight, which was a fraction of the length of time that Democrats devoted to enacting the Affordable Care Act. “The best thing that could happen is exactly what happened — watch,” he said. “It’s enough already.” Paul D. Ryan, the House speaker, said, “We going to be living with Obamacare for the foreseeable future,” after Republicans decided to pull the bill repealing Obamacare in a blow to President Trump.

Trump On What Happens Next: "Obamacare Will Explode" -- After the Republican ObamaCare replacement bill failed to generate enough Republican support to pass a House vote Friday, President Trump announced his planned path forward: "Let ObamaCare explode."  Having insisted there is no Plan B in case the bill failed, the White House found itself in a situation with no backup plan now. "We're going to go back and figure out what the next steps are," House Speaker Paul Ryan told reporters at a press conference just minutes after the shocking news that the GOP was pulling the bill hit the wires. Ryan called the failure of his bill "a setback, no two ways about it." Looking forward, Ryan said Obamacare is "going to remain the law of the land until it’s replaced. We didn’t have the votes to replace this law. So yeah, we’re going to be living with ObamaCare for the foreseeable future."A disappointed and embarrassed House Energy and Commerce Committee chairman Greg Walden was blunt with reporters: "This bill's done."In a statement to the media courtesy of Grabien, Trump said that if things get bad enough, Democrats will come aboard the reform effort. At that point, Trump said, it will become possible to pass a bill even better than Ryan's. "They're going to reach out whenever they're ready."Until then, Trump said that "we were very close and it was a very, very tight margin. We had no Democrat support. We had no votes from the Democrats. They weren’t going to give us a single vote so it’s a very difficult thing to do." Putting a positive spin on events, Trump then said that "I’ve been saying for the last year and a half that the best thing we can do politically speaking is let ObamaCare explode," Trump said of the path forward. "It is exploding right now. Many states have big problems, almost all states have big problems. I was in Tennessee the other day and they’ve lost half of their state in terms of an insurer. They have no insurer. And that’s happening to many other places."

Trump Travel Ban 2.0: Hawaii Judge Refuses To Limit His Order On Revised Travel Ban: U.S. District Judge Derrick Watson from Hawaii, in a court ruling Sunday rejected the government's request to clarify his temporary restraining order on President Donald Trump's revised travel ban. Watson told federal lawyers who protested against his ruling that "there is nothing unclear" about his restraining order against the ban. Watson ordered a temporary halt to Trump's revised travel ban Wednesday in response to a lawsuit from the state of Hawaii and said that there was "significant and unrebutted evidence of religious animus" behind the travel ban. Trump's revised travel ban restricts travel into the U.S. for 90 days by citizens of Sudan, Syria, Yemen, Iran, Libya and Somalia. It also restricts any kind of refugee resettlement from any country for 120 days. If Watson accepted the Justice Department's request to limit the ruling then this Hawaii ruling would have been quite similar to a Maryland federal court order by U.S. District Judge Theodore D. Chuang against the new travel ban, issued on Thursday. Chuang's order only covered the part relating to the issuance of visas from the six countries banned by Trump's travel order. However, Watson's temporary ruling covered both the parts and also restricted Trump from modifying the refugee resettlement program, the Associated Press reported. The Department of Justice filed a motion Friday against Watson's restraining order and asked him to take back his decision. The federal lawyers against Watson's restraining order also said that he should modify the ruling to specify that it did not apply to the refugee ban.

For Donald Trump, a Terror Attack Will Be an Opportunity Not a Curse - Can we breathe a sigh of relief after federal judges blocked President Donald Trump’s discriminatory executive orders? For a moment we can, but we are just a terrorism attack away from the White House gaining a new pretext for its wrathful crackdown against Muslims and immigrants.Among the alterations in American politics since Trump’s inauguration, this may be the most frightening one: a terror attack on U.S. soil will be used by the White House as an excuse for implementing an extra-legal agenda that could only be pushed through in a time of crisis. What the courts will not allow today, what protesters will hit the streets to defend tomorrow, what even the pliant Congress would have a hard time backing — the White House is almost certainly counting on all of this changing in the wake of a domestic terrorist attack.This macabre turn, in which terrorism becomes an opportunity rather than a curse, has ample precedents that tell us one thing: be prepared.  It wasn’t long ago that 9/11 was used as a pretext for invading Iraq. Although it was almost immediately clear that Iraq had nothing to do with the attacks on the World Trade Center and the Pentagon, Secretary of Defense Donald Rumsfeld told President George W. Bush on the evening of September 11, “Part of our response maybe should be attacking Iraq. It’s an opportunity.”  The Trump administration has already begun laying the groundwork for extreme initiatives if — or more likely when — a terror attack occurs on U.S. soil and is tied to ISIS, al Qaeda or another Muslim group, according to civil liberties lawyers and activists. Under the guise of protecting national security, a blitz of presidential actions could target not just immigrants and Muslims but other minority groups as well as the media and the judiciary. These initiatives will be “more dire and much more severe” than Trump’s first executive order in late January against the citizens of seven Muslim-majority countries, according to Vince Warren, executive director of the Center for Constitutional Rights.

US curbs laptops and tablets on flights from Mideast - Airline passengers travelling to the US from eight Middle Eastern and North African nations will be barred from carrying large electronic devices into the main cabin under new Trump administration rules.The US Transportation Security Administration on Tuesday told nine airlines that fly direct to America that they had four days to implement the new rule, which only impacts non-US carriers. The measure affects flights from 10 airports in Saudi Arabia, Jordan, UAE, Qatar, Kuwait, Turkey, Egypt and Morocco.Passengers flying from the targeted nations will have to place laptop computers and other big devices, such as tablets, ereaders and cameras, into their checked luggage under the measure, which only applies to flights bound for the US. Officials said the affected airlines were: Saudi Arabian Airlines, Royal Jordanian Airlines, Emirates, Etihad Airways, Qatar Airways, Kuwait Airways, Turkish Airlines, Egypt Air and Royal Air Maroc.The move marks a fresh attempt to tighten security after President Donald Trump vowed during the 2016 race to do more to tackle terrorism. It comes two weeks after he issued a revised travel ban that — before it was blocked by the courts — barred citizens of six largely Muslim nations from entering America. US officials said the electronic devices restriction was instituted after “evaluated intelligence” indicated that terrorists continued to target commercial aircraft with explosive devices. But they refused to elaborate or say whether the intelligence was new or had emerged during the Obama administration.

Airlines Want Protectionism – U.S. Bans Laptops, Tablets On Competition’s Flights -- February 2017: CEOs of Delta, United and American Hope Trump Will Block Arab Competition: The big three U.S. airlines maintain that Emirates, Etihad Airways, and Qatar Airways — airlines backed by governments of Qatar and the United Arab Emirates — are unfairly subsidized and that their expansion into the U.S. market represents unfair competition that should be blocked by regulators.  “The Gulf carriers have received over $50 billion in documented subsidies from their government owners since 2004,” the chief executives of the big three wrote in a recent letter to Secretary of State Rex Tillerson. “Mr. Secretary,” the letter continues, “we are confident that the Trump Administration shares our view on the importance of enforcing our Open Skies agreements, ensuring that U.S. airlines have a fair and equal opportunity to compete in the international market, and protecting American jobs.” March 2017: US bans laptops, tablets on flights from Turkey and Arab world.  Senior US officials told reporters that nine airlines from eight countries had been given 96 hours, beginning at 3:00 am (0700 GMT), to tell travelers to pack any device bigger than a smartphone in their checked luggage.  No US carriers are affected by the ban, but passengers on approximately 50 flights per day from some of the busiest hubs in Turkey and the Arab world will be obliged to follow the new emergency ruling...The ban will hit flights operated by Royal Jordanian, EgyptAir, Turkish Airlines, Saudi Airlines, Kuwait Airways, Royal Air Maroc, Qatar Airways, Emirates and Etihad Airways. The U.S. move is certainly not about security. What now hinders anyone to fly from Dubai to Paris and on to New York with a laptop and tablet in her carry on luggage? Why would that be more secure than a direct flight with Emirates Airline?  No. This is all about unwanted competition and an effort of the highly subsidized U.S. airlines to sell higher priced tickets with less service.

UK Joins US In Banning Use Of Laptops On Flights From 6 Mostly Muslim Countries -- One day after the Trump administration imposed restriction on carry-on electronic devices on planes coming to the United States from 10 airports in Muslim-majority countries in the Middle East and North Africa in response to unspecified terrorism threats, moments ago the UK issued a similar ban, restricting the use of carry on laptops and tablets for inbound flights for flights originating in the following middle-eastern nations: Turkey, Lebanon, Jordan, Egypt, Tunisia, and surprisingly, Saudi Arabia.  And so what last night appeared to some to be a capricious decision by the Trump administration, may have been prompted by some actionable intel since the UK has joined the action.  While we await more details, a reminder that on Monday afternoon, the DHS said passengers traveling from a selection of airports could not bring devices larger than a cellphone, such as tablets, portable DVD players, laptops and cameras, into the main cabin. Instead, they must be in checked baggage. The new restrictions were prompted by reports that militant groups want to smuggle explosive devices in electronic gadgets, officials told reporters on a conference call on Monday. They did not provide further details on the threat. The airports are in Cairo; Istanbul; Kuwait City; Doha, Qatar; Casablanca, Morocco; Amman, Jordan; Riyadh and Jeddah, Saudi Arabia; and Dubai and Abu Dhabi in United Arab Emirates.

Exclusive: U.S. embassies ordered to identify population groups for tougher visa screening | Reuters: U.S. Secretary of State Rex Tillerson has directed U.S. diplomatic missions to identify "populations warranting increased scrutiny" and toughen screening for visa applicants in those groups, according to diplomatic cables seen by Reuters. He has also ordered a "mandatory social media check" for all applicants who have ever been present in territory controlled by the Islamic State, in what two former U.S. officials said would be a broad, labor-intensive expansion of such screening. Social media screening is now done fairly rarely by consular officials, one of the former officials said. Four cables, or memos, issued by Tillerson over the last two weeks provide insight into how the U.S. government is implementing what President Donald Trump has called "extreme vetting" of foreigners entering the United States, a major campaign promise. The cables also demonstrate the administrative and logistical hurdles the White House faces in executing its vision. The memos, which have not been previously reported, provided instructions for implementing Trump's March 6 revised executive order temporarily barring visitors from six Muslim-majority countries and all refugees, as well as a simultaneous memorandum mandating enhanced visa screening.

Trump Wins: Virginia Judge Refuses To Block Revised Travel Ban On a day when all eyes are on Washington and the healthcare vote, President Trump just won an important victory as a Virginia judge refused to block his revised travel ban against six predominantly Muslim countries (even though, as Bloomberg reports, the directive remains on hold because of court orders in two other states).The ruling by U.S. District Judge Anthony Trenga in Alexandria bolsters the administration’s efforts to overturn a block on his executive order issued last week by judges in Maryland and Hawaii.Notably, AP reports that the FBI says authorities are aware that the federal judge in Hawaii who ruled against President Donald Trump's travel ban has received threatening messages.FBI spokeswoman Michele Ernst said Thursday the agency is aware of reports of threatening messages against U.S. District Judge Derrick Watson and is prepared to help if necessary.Watson blocked the federal government from enforcing its ban on new visas for people from six mostly Muslim countries and its suspension of the nation's refugee program. He issued his ruling last week hours before the travel ban was to go into effect.The U.S. Marshals Service is responsible for protecting federal judicial officials, including judges and prosecutors. The service says marshals don't discuss specific security measures but does provide additional protection when warranted.While Judge Trenga's decision won’t have any immediate effect, it is certain to be cited by administration lawyers as the cases move toward the U.S. Supreme Court.

FIFA Non-Grata: Muslim Ban USA Can't Host World Cup -- It's pretty evident that you should not host one of the world's most international sporting events if your country is run by a Muslim-banning race-baiter. Yet, that the organization running the World Cup is FIFA--hardly the model of "global governance"--may have placed the possibility in some question as the United States is considering a bid to host the 2026 event. Despite FIFA's odiousness, it is nonetheless remarkable that it won't go near an even more disreputable entity, the United States of America, run by one President Donald J. Trump. To be sure, there are procedural issues: what if one of the Muslim-banned countries qualifies for the World Cup? One has done so a number times before--Iran--and the others cannot be completely ruled out especially now that the competition has increased its number of participants from 32 to 48. Donald Trump’s travel ban could prevent the US from hosting the World Cup in 2026, Fifa has warned.Gianni Infantino, the president of world football’s governing body, said on Thursday that Trump’s revised executive order, which temporarily bars entry to the US for citizens from six majority-Muslim countries, could invalidate any bid from the US. The president’s policy, Infaninto suggested, is incompatible with tournament regulations.Infantino told reporters in London: “Teams who qualify for a World Cup need to have access to the country, otherwise there is no World Cup. That is obvious.”The above-mentioned bid requirement will probably disqualify Trump's USA: “We are now in the process of defining the bid requirements. In the world there are many countries who have bans, travel bans, visa requirements and so on and so forth. It’s obvious when it comes to Fifa competitions, any team, including the supporters and officials of that team, who qualify for a World Cup need to have access to the country, otherwise there is no World Cup. “The requirements will be clear. And then each country can make up their decision, whether they want to bid or not based on the requirements.”  Donald Trump will probably dismiss this all by saying that no Americans watch soccer anyway since he doesn't--a perfectly uninformed response from a remarkably ignorant America-firster.

IT companies: How Indian IT companies are devising strategy to beat Donald Trump's visa ban - The Economic Times: India’s technology outsourcing giants, unnerved by the administration of President Donald Trump, are changing their strategy on U.S. work visas even before new policies are implemented. While the White House has drafted an executive order that envisages changes to the way the H-1B program is administered, none have come into effect so far. With the application process kicking off next month, companies are preparing to face tougher new rules as they seek some of the 85,000 work permits allocated. “The key thing is that we will stop applying for H-1B visas for employees with lower levels of experience,” Krishnakumar Natarajan, executive chairman of IT services company Mindtree Ltd., told Bloomberg News. “Additionally, we will reduce the numbers of visa applications as a whole and I expect overall industry numbers to fall.” The U.S. is the most important market for India’s $110-billion IT services export industry, with companies changing their strategy even as they aggressively ramp up operations and set up development centers. “We are going local and building recruitment to reduce dependencies on H-1B visas,” said Bangalore-based Natarajan, a former chairman of industry body Nasscom. Until now, IT companies typically applied for multiples of the visas they expect to need because the system operates as a lottery. C.P. Gurnani, chief executive officer of Tech Mahindra Ltd., expects higher billing rates for customers as salaries for H-1B visa holders will probably rise, with the costs passed on to clients.The top companies, which account for 90 percent of the H1-B visas that Indian outsourcers get, are keenly matching skill requirements to applications, said Shivendra Singh, vice president and head of global trade development at Nasscom. “IT services providers are doing skillset mapping,” said Singh, providing further indication that the visa applications will be much more targeted.

Is Trump Going to Punt on H-1B Visa Reform? -- Yves Smith - At the end of January, Silicon Valley was up in arms that one of their pet means of keeping wages down, the H-1B visa program, appeared to be in Trump’s crosshairs. The president had issued an executive order calling for a review of all visa programs, with an eye to improving US employment and economic productivity. The new Administration had also circulated a draft calling for the head of Homeland Security to review work visa programs within 90 days. One of the idea featured in the document was that visas go to “the best and brightest” when the H-1B program uses a lottery that outsourcers like WiPro and Tata Consulting game effectively. Even if the Administration had acted immediately, that 90 day timeframe now looks too leisurely. As Bloomberg describes tonight, H-1B visa applications are due at the beginning of April, so if the Trump Administration fails to implement its fixes by then, it’s at least a year before they’ll have any effect. Moreover, the lack of apparent momentum on this front does not bode well for meaningful changes.  The article describes how the program has moved almost entirely away from its original goals. One aim was to import workers when employers couldn’t find qualified Americans. The second was to cap the number of H-1B holders, since both the bill’s drafters and industry lobbyists wanted companies to bring in “talent” via green cards and help them become citizens, rather than rent them. The result instead has been the creation of a large industry of foreign workers who largely work abroad. Not only do they undercut US wages and eliminate entry-level jobs, meaning the US is no longer developing its own tech professionals, but the fact that much of the work is done overseas also results in reduced taxes to states and municipalities.  And as Robert Cringley pointed out in 2015, the results aren’t good for the employers either:

Trump Administration Seeks Proposals For "Physically Imposing" 30-Foot-High "Aesthetically Pleasing" Border Wall --Following months of campaign promises to build a "big, beautiful, powerful wall" on the southern border of the United States, the Trump administration has just posted bid guidelines for contractors looking to submit proposals for the multi-billion dollar project (the full RFPs can be viewed here).  Among other things, the RFP calls for a 30-foot wall that could deter a physical breach for at least 1 hour...oh, and it also has to be "aesthetically pleasing in color"...but, only on the U.S. side.   Per Reuters:The U.S. Department of Homeland Security has issued requests for proposals for prototypes for a wall along the Mexican border, saying ideally it should be 30 feet (9 meters) high and the wall facing the U.S. side should be "aesthetically pleasing in color.""Designs with heights of less than 18 feet are not acceptable," the document said. It said the wall should have features that do not allow people to climb over it and should prevent digging below the wall."The wall shall prevent/deter for a minimum of 1 hour the creation of a physical breach of the wall (e.g., punching through the wall) larger than 12 inches (30 cm) in diameter or square using sledgehammer, car jack, pickaxe, chisel, battery-operated impact tools, battery-operated cutting tools, oxy/acetylene torch or other similar hand-held tools," it said.And don't even think about climbing over or digging under the wall either..."It shall not be possible for a human to climb to the top of the wall or access the top of the wall from either side unassisted (e.g. via the use of a ladder, etc.)," reads the RFP. "The wall design shall include anti-climb topping features that prevent scaling using common and more sophisticated climbing aids (e.g. grappling hooks, handholds, etc.)"  And the agency is also aware that some individuals may try and go under the wall."The wall shall prevent digging or tunneling below it for a minimum of 6 feet below the lowest adjacent grade," reads the RFP.

New Cali Law Requires Pensions To Sell Companies Building Trump's "Wall Of Shame" --A new piece of legislation recently introduced in California, Assembly Bill (AB) 946 or the"Resist the Wall Act," would require the California Public Employee Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) – the nation’s first and second largest pension funds - to liquidate within 12 months any investments in companies involved in the construction of President Trump's "Wall of Shame".  The bill also requires the two pension funds to report to the Legislature and the Governor by January 1, 2019 with a list of companies from which they have liquidated investments or plan to do so.Not surprisingly, the legislation was penned by a trio of Cali democrats including Assemblymembers Phil Ting (D-San Francisco), Lorena Gonzalez Fletcher (D-San Diego), and Eduardo Garcia (D-Coachella). In a press release posted to his website, Ting said that "Californians build bridges not walls" and declared for all of California that they want no part of Trump's "Wall of Shame." “Californians build bridges not walls.  This is a wall of shame and we don’t want any part of it.  Immigrant stories are the history of America and this is a nightmare,” said Ting.  “Asian Americans know the pains of being blocked from immigrating to the United States.  We endured that indignity under an act of Congress for decades.  We must stand together and fight this wall because it symbolizes weakness and hate to the world.”

Mexico's Finance Minister Warns Mexican Companies "Not To Participate In Construction Of The Wall" -- As Trump seeks proposals for an impenetrable, yet "aesthetically pleasing", 30-foot border wall, Mexico's government on Tuesday warned Mexican companies that it would not be in their best "interests" to participate in the project even though there will be no explicit legal restrictions or sanctions to stop them if they tried.  Per Reuters:"We're not going to have laws to restrict (companies), but I believe considering your reputation it would undoubtedly be in your interest to not participate in the construction of the wall," said Mexican Economy Minister Ildefonso Guajardo."There won't be a law with sanctions, but Mexicans and Mexican consumers will know how to value those companies that are loyal to our national identity and those that are not," Guajardo added.His comments echo those of Mexico's foreign minister Luis Videgaray, who said on Friday that Mexican companies that see a business opportunity in the wall should "check their conscience" first.Despite the warnings, Cemex, one of the world's largest cement producers, has said it is open to providing quotes to supply the raw materials for the border wall and competitor Grupo Cementos de Chihuahua has also signaled a readiness to work on the project. Meanwhile, the only Mexican company, out of some 720 in total, to put its name down on the U.S. government's website for business opportunities as an interested vendor for the wall construction, is a small, four-member concern from the central city of Puebla that wants to provide LED lights that it imports mostly from China.

 We’re All Minorities Now -- Pam Martens - The one percent now effectively owns Washington: the making of our laws, the writing of Executive Orders, the running of Federal agencies with the power to put crooks among the one percent in prison – or not, and they are now the overseers of gutting Federal programs that benefit the 99 percent.One thought comes to mind about this state of affairs. The abolitionist and writer, Frederick Douglass, once said:“Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.”The majority of Americans, whether they are yet aware or not, now walks in the shoes of Frederick Douglass. We’re all minorities now. The billionaires and their lackeys rule.  How did a society that fought a brutal and bloody revolution to throw off the yoke of one percent rule end up where we find ourselves today?After a decade of thinking and researching and writing about little else, we believe the major causes are as follows: a highly consolidated corporate media that failed to tackle these issues with regularity and force; a timid Internal Revenue Service that was afraid to take on the billionaire class for setting up faux citizen front groups that drowned out the voice and views of real citizens; and, of course, an abjectly corrupt system of billionaire financing of political campaigns. Below is a small sampling of articles from our archives which should have warned us that we were rapidly devolving as a democracy and that a full scale plutocracy was in our future.

Big Labor signals an easy confirmation for Acosta as labor secretary -- Democratic senators and their allies in organized labor appear poised to give President Donald Trump’s second choice to head the Labor Department a pass, reserving their energy for other fights with a Republican-led Congress.While Alexander Acosta will certainly face grilling over a plea deal he approved as U.S. attorney for a billionaire in a child sex case, Democrats are signaling a relatively easy confirmation hearing Wednesday – especially compared with what was in store for Trump's first nominee, California fast food executive Andy Puzder.“He’s definitely a step forward in terms of his qualifications for the job by comparison with Puzder,” Lynn Rhinehart, general counsel for the AFL-CIO in Washington, told McClatchy. "We recognize that. But in terms of a formal endorsement, we need to wait for the hearing and hear about how he’s going to protect workers’ rights, health and safety.Other unions went further, saying they support Acosta. The unions include the International Association of Firefighters, the International Union of Operating Engineers, and the Laborers' International Union of North America. Those endorsements carry weight with some of the Senate Democrats who will participate in the confirmation hearing.

FBI's Comey says no evidence of Trump wiretap claim, confirms probe | Reuters: The head of the FBI publicly challenged U.S. President Donald Trump on Monday, denying the Republican's claim that former president Barack Obama wiretapped his 2016 election campaign and confirming his agency had launched a criminal investigation into any collusion between Trump's campaign and Russia. FBI Director James Comey told a congressional hearing he had seen no evidence to support a claim by Trump that Obama had wiretapped his campaign headquarters in Trump Tower in New York. The president created a controversy in early March when he tweeted without giving evidence that Obama had wiretapped the campaign as the Republican businessman took on Democrat Hillary Clinton in the presidential race. "With respect to the president's tweets about alleged wiretapping directed at him by the prior administration, I have no information that supports those tweets," Comey told the House of Representatives Intelligence Committee hearing. "And we have looked carefully inside the FBI. The Department of Justice has asked me to share with you that the answer is the same for the Department of Justice and all its components: the department has no information that supports those tweets," he said. The committee is investigating accusations that Russia tried to influence the 2016 election by hacking Democratic operatives and releasing embarrassing information. Russia denies the allegations.

Nunes: "The FBI Is Not Cooperating With Our Investigation Into Trump Wiretapping" - The FBI is not cooperating with the House of Representatives' investigation into the NSA's surveillance of the Trump campaign during the 2016 election, the chairman of the U.S. House Permanent Select Committee, Devin Nunes said in a press conference on Wednesday afternoon.In the aftermath of today's most stunning news report, namely the confirmation that Trump may have been right all along following the admission of House Intel Committee Chair Devin Nunes that the communications of Trump's aides and the president himself had been "incidentally" monitored, Nunes held an explosive press conference outside the White House in which told reporters that communications from the Trump team were picked up and disseminated within the government during the 2016 campaign. Nunes said sources within the intelligence community presented him with the information. He spoke to the press after briefing the administration.Nunes said that he had briefed the president about his concerns over the "incidental" collection of data, adding that the president "needs to know" that these intel reports exist, and adding ominously that "some of what I've seen seems to be inappropriate." Nunes also said that Trump, others in the transition team were put into the intelligence report and asked if Trump should be in these "normal" reports.But what was perhaps most troubling in Nunes presser is that in the aftermath of Monday's Congressional hearing with James Comey in which the FBI director said on the record there had been no surveillance of Trump, is the House Intel Commission chair's statement that the FBI is not cooperating with the investigation. "We don’t actually know yet officially what happened to General Flynn," Nunes said of how communications from Gen. Flynn's calls were leaked to the press. "We just know that his name leaked out but we don't know how it was picked up yet. That was one of the things that we asked for in the March 15th letter, was for the NSA, CIA, and FBI to get us all the unmasking that was done."

Potential 'smoking gun' showing Obama administration spied on Trump team, source says | Fox News: Republican congressional investigators expect a potential “smoking gun” establishing that the Obama administration spied on the Trump transition team, and possibly the president-elect himself, will be produced to the House Intelligence Committee this week, a source told Fox News. Classified intelligence showing incidental collection of Trump team communications, purportedly seen by committee Chairman Devin Nunes, R-Calif., and described by him in vague terms at a bombshell Wednesday afternoon news conference, came from multiple sources, Capitol Hill sources told Fox News. The intelligence corroborated information about surveillance of the Trump team that was known to Nunes, sources said, even before President Trump accused his predecessor of having wiretappedhim in a series of now-infamous tweets posted on March 4. The intelligence is said to leave no doubt the Obama administration, in its closing days, was using the cover of legitimate surveillance on foreign targets to spy on President-elect Trump, according to sources. The key to that conclusion is the unmasking of selected U.S. persons whose names appeared in the intelligence, the sources said, adding that the paper trail leaves no other plausible purpose for the unmasking other than to damage the incoming Trump administration. The FBI hasn’t been responsive to the House Intelligence Committee’s request for documents, but the National Security Agency is expected to produce documents to the committee by Friday. The NSA document production is expected to produce more intelligence than Nunes has so far seen or described – including what one source described as a potential “smoking gun” establishing the spying.

Fox report: GOP investigators expect evidence showing Obama surveilled Trump team --- Fox News reported Thursday that GOP congressional investigators are expecting to see evidence soon showing that the Obama administration surveilled President Trump's transition team. An unnamed source told the news channel that the "smoking gun" evidence will be produced to the House Intelligence Committee this week. The committee chairman Rep. Devin Nunes (R-Calif.) on Wednesday announced to the press that he had seen intelligence reports showing that members of Trump's transition team were "incidentally" swept up in legal intelligence collection of foreign targets. Nunes briefed the White House on what he had seen, but the documents or their source have not been made available to the rest of the committee. Capitol Hill sources told Fox News that the reports Nunes saw came from several sources. Despite Nunes saying that he believes the incidental collection was legal, sources told Fox that the intelligence will show that the Obama administration used legitimate surveillance as a cover to spy on Trump.  In his Wednesday remarks to the press and in interviews since, Nunes has stressed his concerns about the so-called "unmasking," or identification, of U.S. citizens picked up in the intel collection. He said the reports were circulated widely through the intelligence community. Sources told Fox that the unmasking of U.S. individuals was aimed at harming the new administration.

Could the President Spy on His Political Opponents? - The controversy continues over President Trump’s Twitter storm accusing President Obama of wiretapping him. On Monday, members of Congress peppered FBI Director James Comey with questions about the claims, who once again dismissed them as lacking support. Even Devin Nunes, the Republican chairman of the House Intelligence Committee, who originally defended Trump’s claims, has defected. “I don’t think there was an actual tap of Trump Tower,” the congressman said last week at a news conference. None of these statements seem to have affected President Trump, however, who continues to stand by his accusations.   But regardless of whether these claims turn out to be completely false, which is all but certain now, they do raise a question that shouldn’t be casually dismissed: Could President Obama’s administration have surveiled his political opponents under its interpretation of the law? Could President Trump’s administration now do the same?The answer, unfortunately, is yes. And that should make Republicans and Democrats nervous enough to work together to reform our surveillance laws. Many have dismissed President Trump’s accusations as the unsubstantiated ramblings of a Twitter addict with little understanding of how our intelligence laws work. These may be fair criticisms—today the president cannot simply order the intelligence agencies to wiretap his domestic political opponents. But many of our surveillance authorities have been interpreted so broadly that they put vast amounts of Americans’ data easily within the president’s reach. Without significant reform, exploiting this immense pool of data may one day prove irresistible. Thus, whether President Trump’s accusations are true or not, the potential for White House officials to abuse our spying laws for political purposes is real.   It is important to remember that surveilling political opponents in the name of security is something of an American pastime. In the 1960s, the FBI targeted political activists, including Martin Luther King Jr., claiming they posed “national security” threats. Cesar Chavez, the prominent labor and civil-rights activist, was similarly tracked for years because of his supposed communist ties.  

Comey: "The Russians Concluded Trump Was Hopeless Last August" --It appears that Russia fell for the same ruse that much of America, not to mention its press and punditry, was taken by, at least according to the FBI director: believing US polls. During his hearing before the House Intel Panel, FBI Director James Comey said that the Russians expected Hillary Clinton to win the presidency over Donald Trump as of August and September.“Late in the summer they concluded based on the polling that a lot of people were reading that Mr. Trump didn’t stand a chance,” said Comey, although it was not clear just how the FBI knew what the Russians "concluded" as of last summer.The FBI director's extrapolations then continued: “let’s just focus on undermining her,” Comey says of Russian thinking at the time, which however was also confusing as earlier in his testimony Comey said "we saw no efforts aimed at the vote itself."

Intel Chair: "No Collusion Between Trump and Russia... Leak Is The Only Crime" --Just as was predicted, based on the expectations management being undertaken by high-ranking Democrats, House Intelligence Committee Chairman Devin Nunes confirmed on Sunday that he's seen no evidence of collusion between President Trump's campaign and Russia.As The Hill reports, Nunes was asked during an interview on "Fox News Sunday" if he has seen any evidence of any collusion between "Trump world" and Russia to swing the 2016 presidential election."I'll give you a very simple answer: 'no,' " Nunes said. "Up to speed on everything I have up to this morning. No evidence of collusion."However, Nunes notes that the probe did discover one crime during the probe - related to the leaking of former Trump aide Michael Flynn's name and transcript..."The one crime we know that's been committed is that one: the leaking of someone's name ...,""That's what we're trying to get to the bottom of: were there any other names that were unmasked, leaked and leaked out?"And Rand Paul is demanding that whoever leaked transcript of former NSA Michael Flynn's contacts with Russian ambassador should "go to jail"

NYT’s ‘Tinfoil Hat’ Conspiracy Theory -  Robert Parry -- There are real reasons to worry about President Donald Trump’s foreign policy, including his casual belligerence toward Iran and North Korea and his failure to rethink U.S. alliances with Saudi Arabia and Israel, but The New York Times obsesses on Trump’s willingness to work with Russia. On Saturday, the Times devoted most of its op-ed page to the Times’ favorite conspiracy theory, that Trump is Vladimir Putin’s “Manchurian candidate” though evidence continues to be lacking.The op-ed package combined a “What to Ask About Russian Hacking” article by Louise Mensch, a former Conservative member of the British Parliament who now works for Rupert Murdoch’s News Corporation, and a connect-the-dots graphic that when filled out shows the Kremlin sitting atop the White House. But the featured article actually revealed how flimsy and wacky the Times’ conspiracy theory is.Usually, an investigation doesn’t begin until there is specific evidence of a crime. For instance, the investigative articles that I have written over the years have always had information from insiders about how the misconduct had occurred before a single word was published. In the early 1990s, for the investigation that I conducted for PBS “Frontline” into the so-called “October Surprise” case – whether Ronald Reagan’s campaign colluded with Iranians and others to sabotage President Jimmy Carter’s negotiations to free 52 American hostages in 1980 – we had some two dozen people providing information about those contacts from multiple perspectives – including from the U.S., Iran, Israel and Europe – before we aired the allegations.

By outsourcing key intelligence work, the government has made classified material more vulnerable -- When WikiLeaks released more than 8,000 files about the CIA’s global hacking programs this month, it dropped a tantalizing clue: The leak came from private contractors. Federal investigators quickly confirmed this, calling contractors the likeliest sources. As a result of the breach, WikiLeaks editor Julian Assange said, the CIA had “lost control of its entire cyberweapons arsenal.”Intelligence insiders were dismayed. Agencies “take a chance with contractors” because “they may not have the same loyalty” as officers employed by the government, former CIA director Leon Panetta lamented to NBC. But this is a liability built into our system that intelligence officials have long known about and done nothing to correct. As I first reported in 2007, some 70 cents of every intelligence dollar is allocated to the private sector. And the relentless pace of mergers and acquisitions in the spies-for-hire business has left five corporations in control of about 80 percent of the 45,000 contractors employed in U.S. intelligence. The threat from unreliable employees in this multibillion-dollar industry is only getting worse.

Comey Deals Trump a Political Blow When He Can Least Afford It - FBI Director James Comey dealt President Donald Trump a stinging rebuke on Monday at a time of acute political vulnerability for the White House. In his opening statement before the House Intelligence Committee, Comey confirmed that the FBI is investigating Russia’s interference in the presidential election, and whether any of Trump’s associates collaborated with Vladimir Putin’s government. On another day, in another time, that would be the bombshell. But Comey said more, establishing that the president’s charge his predecessor had wiretapped him was false. Working systematically, tweet by explosive tweet, under questioning from lawmakers Comey repeatedly insisted there was “no evidence” to substantiate Trump’s March 4 claims. Nothing to prove Barack Obama had ordered phones tapped at Trump Tower. Nothing to indicate Obama had somehow subverted Nixon-era safeguards enacted to prevent abuses of power and protect Americans from top-secret foreign electronic surveillance programs. No reason to conclude Obama had violated the rules of a decades-old intelligence alliance and solicited a foreign ally to carry out the spying. “I’m not going to try and characterize the tweets themselves,” Comey said. “All I can tell you is we have no information that supports them.”  Taken in sum, the same FBI director who boosted Trump’s political fortunes in the closing days of the presidential campaign by acknowledging his agency had reopened an investigation into rival Hillary Clinton’s use of private email dealt the president one of the worst political blows of his young administration. The damage comes at perhaps the worst possible time.

Lawmaker says U.S. foreign surveillance 'unmasked' Trump associates | Reuters: The Republican chairman of the U.S. House of Representatives intelligence committee set off a political firestorm on Wednesday when he said the communications of members of Donald Trump's transition team were caught up in incidental surveillance targeting foreigners. Representative Devin Nunes said at a news conference that it was possible President Trump's own communications were also intercepted and disseminated among U.S. intelligence agencies. The White House seized on Nunes' remarks, which had cited anonymous sources, to bolster Trump's unproven assertion that former President Barack Obama's administration spied on the incoming president. Nunes himself said there is no proof of that, as have other lawmakers of both parties and the FBI director. A short while later, Trump spokesman Sean Spicer cited Nunes' comments at his White House news briefing. "I do think it is a startling revelation, and there's a lot of questions that need to get asked," Spicer said. Democrats denounced Nunes' statements as highly unusual from the chairman of an intelligence committee, with the top Democrat on the committee saying its members had not been informed and implying that Nunes was giving political cover to the president. Intelligence reports about the communications appeared to "unmask" the identity of the Trump associates and the names were widely shared among the agencies, Nunes said. He said it was possible Trump's own communications were also collected.

Donald Trump will resign 'soon', says top Democrat Dianne Feinstein -- Donald Trump is going to “get himself out of office soon”, a leading Democratic senator has claimed. Dianne Feinstein suggested the President would quit before he was potentially forced out of office after anti-Trump protesters in Los Angeles demanded to know why more wasn’t being done by Congress to remove him from office. “We know he is breaking the law every day," a protester asked the 83-year-old political veteran. "He has obvious dealings with Russia. There’s so many things he’s doing that are unconstitutional. How are we going to get him out?”Hinting she might know more than she is able to let on, Ms Feinstein, who sits on the Senate Judiciary Committee, replied: “We have a lot of people looking into this. I think he’s going to get himself out.” She went on to cite several potential conflicts of interests surrounding the Trump business empire, but she declined to say whether she thought the President had done anything that was worthy of impeachment. “I can’t answer that right now,” she said.

The Conspiracy Against President Trump -  Paul Craig Roberts -- Listening yesterday to the broadcast of testimony by FBI Director Comey and National Security Agency Director Admiral Michael Rogers before the House Intelligence Committee (an oxymoron) made it clear that the Democrats, Comey, and Rogers intend conflict with Russia.The Republicans, for the most part, were interested to know how security leaks targeted at Trump Republicans came from meetings at which only the CIA Director, NSA Director, and FBI director were present. Of course, they did not get an answer, which shows how powerless congressional oversight committees are. Comey repeatedly said that he could not tell the committee anything, because it would confirm that a press leak was true. But, he said, speaking generally and of no specific leak, most leaks come from “someone who heard something” and passes it on to the media, which also explains the inaccuracy of some leaks. In other words, don’t blame us.The Democrats were out in force to demonize Russia, Putin, and everyone, especially Trump Republicans, who speaks to a Russian even if the person is still a private citizen, as was Gen. Flynn when he recommended to the Russian ambassador that Russia not respond in kind to President Obama’s expulsion of Russian diplomats over Christmas.The Democrats bestowed yet another demonic title on Putin. In addition to being “the new Hitler,” a “thug,” and a “Mafia don,” today Putin became a “tarantula in the center of the spy web.”The Democrats’ position was that Flynn, by discouraging a Russian tit for tat, had interfered with the Obama regime’s policy of worsening relations between the US and Russia. Some Democrats saw this as treason. Others saw it as proof that Flynn and Trump are in Putin’s pocket, and still others see it as even worse.The Democrats were also very concerned about lobbyists, if they be Republican, working for Russian interests, including Tillerson, the Secretary of State. The fact that every country employs lobbyists and that the lobbyists don’t always register as foreign agents, such as Israel’s lobbyists, or if news reports at the time were correct, neocon Richard Perle who represented Turkey in Washington. Democrats were also after Gen. Flynn for saying that he had not received money from the Russian government. Flynn received a fee for attending the 10th Anniversary celebration of RT in Moscow. Is RT, a news organization, the Russian government? Its budget is supported by the Russian government, but how does this differ from the US government’s support of the budgets of National Public Radio, Radio Free Europe/Radio Liberty, Voice of America? Does this mean that everyone who gives an interview to NPR, Radio Liberty, and VOA is an American agent in the pocket of the US president? If you attend a function of one of these organizations, does it make you an “American agent/dupe”? Will there be a list of these people?

Trump's Russian imbroglio prompts Republican rethink on surveillance law | Reuters: Some Republican lawmakers appear to be reassessing whether to make changes to a surveillance law that allows broad snooping of Internet communications, citing concerns over the handling of classified intercepts after leaks of conversations between Russian officials and American associates of President Donald Trump. The law, known as Section 702 of the Foreign Intelligence Surveillance Act, allows U.S. intelligence agencies to collect vast amounts of communications from foreigners, but often incidentally scoops up the communications of Americans. Until recently most Republicans have been quick to defend Section 702 and Congress had been expected to renew it without major changes before it expires at the end of the year. Though long criticized by privacy advocates, a new front of potential opposition to Section 702 has emerged as Republicans sputter about what they view as politically motivated leaks by the agencies amid probes of any collusion between the Russian government and Trump's 2016 presidential election campaign. The tensions burst into full view on Monday at a U.S. House of Representatives' Intelligence Committee hearing, during which FBI Director James Comey confirmed his agency was investigating those ties. Republican Representative Tom Rooney told Comey and National Security Agency Director Mike Rogers, who also testified, that concern over leaks would undermine support for Section 702, even though it appears to not have led directly to the leaks Republicans are fuming over.

NY Attorney General Hires Public-Corruption Prosecutor To Target Trump Administration; WSJ Reports -- Just days after the controversial dismissal of former Manhattan U.S. Attorney Preet Bharara by Jeff Sessions, (see "Trump Fires US Attorney Preet Bharara After He Refuses To Quit"), New York state’s attorney general, and well known Democrat donor, Eric Schneiderman, has decided to pick up the crusade against the Trump administration where Bharara left off by announcing the hiring of his top public-corruption prosecutor, Howard Master, to focus specifically on issues involving the Trump administration. According to the Wall Street Journal, the hiring of Master, whose title will be senior enforcement counsel, signals Schneiderman’s continued intent to take on the Republican president.  Eric Soufer, a spokesman for Schneiderman's office, confirmed Master’s hiring and said he “will be working on a wide range of civil and criminal investigations and enforcement matters, including public corruption, complex civil litigation” and potentially litigation against the Trump administration.

Full Speed Ahead for Murphy’s Law --Kunstler - Trump won by making promises that he’ll never be able to keep under the current circumstances. The main promise was to restore the standard of living enjoyed in bygone decades by former industrial workers and clerks. His promise was based on a misunderstanding of history: the notion that the industrial organization of daily life was a permanent part of the human condition. You could detect by the early 21st century that this was not so anymore. That was exactly why we tried to replace it with an economy of rackets. When there’s nothing left, a lot of people are going to try to get something for nothing, because there’s nothing else to do. Hence, the financialization of the economy. In the 1950s, finance made up about five percent of the economy. It’s mission then was pretty simple and straightforward: to manage the accumulated wealth of the nation (capital) and then allocate it to those who proposed to generate greater wealth via new productive activities, mostly industrial, ad infinitum. It turned out that ad infinitum doesn’t work in a world of finite resources — but the ride had been so intoxicating that we couldn’t bring ourselves to believe it, and still can’t.With industry expiring, or moving elsewhere (also temporarily), we inflated finance to nearly 40 percent of the economy. The new financialization was, in effect, setting a matrix of rackets in motion. What had worked as capital management before was allowed to mutate into various forms of swindling and fraud — such as the bundling of dishonestly acquired mortgages into giant bonds and then selling them to pension funds desperate for “yield,” or the orgy of merger and acquisition in health care that turned hospitals into cash registers, or the revenue streams on derivative “plays” that amounted to bets with no possibility of ever being paid off, or the three-card-monte games of interest rate arbitrage played by central banks and their “primary dealer” concubines. Some of what I’ve listed above may be incomprehensible to the blog reader, and that is because these rackets were crafted to be opaque and recondite. The rackets continue without regulation or prosecution because there is an unstated appreciation in government, and in the corporate board rooms, that it’s all we’ve got left. What remains of the accustomed standard of living in America is supported by wishing and fakery and all that is now coming to a climax as we steam full speed ahead into Murphy’s law: if something can go wrong, it will.

Why Schumer’s unrelenting resistance thrills conservatives - As a conservative, I’m thrilled by the arrival of unified Republican government. But the politician I’m most grateful to in Washington today is not President Trump, House Speaker Paul D. Ryan (R-Wis.) or Senate Majority Leader Mitch McConnell (R-Ky.). It’s Chuck Schumer (D-N.Y.). That’s because the Senate minority leader is doing more than anyone in our nation’s capital to ensure the passage of the most conservative health-care and tax reform possible — while working overtime to make sure that Democrats who voted for Trump in 2016 stay in the GOP fold in 2018 and beyond. The biggest fear many conservatives had after the 2016 election was that Trump would be too quick to cut deals with the Democrats. Trump holds heterodox positions on everything from spending, foreign policy and entitlements to the minimum wage, trade and health care. If Democrats were smart, they would have reached across the aisle to Trump and offered to work with him. Trump is a dealmaker, not an ideologue. He would have loved nothing better than to cut deals with Schumer. Indeed, Trump reportedly called Schumer the morning after the election offering to do just that. Instead of accepting Trump’s outstretched hand, Schumer’s Democrats are opposing virtually everything that Trump does. They are attempting to block not only his Cabinet nominees (Schumer even voted against Elaine Chao, wife of the majority leader and paragon of the GOP establishment, for transportation secretary) but also his sub-Cabinet appointments. And they have expressed zero interest in working with him on bipartisan legislation. The battle cry of the Democratic Party is “Resist!” This unrelenting resistance has pushed Trump to the right. Since Trump knows he can’t get Democratic votes for his health and tax plans, he does not need to make any concessions to win over Democrats. Conservatives criticizing the Trump-Ryan health-care plan as “Obamacare lite” should take a moment to consider how much worse the legislation would be if Schumer had decided to sit down with Trump at the bargaining table.

Supreme Court reins in president's appointment powers | Reuters: The U.S. Supreme Court on Tuesday put new restrictions on presidential powers, limiting a president's authority to staff certain top government posts in a case involving an appointment to the National Labor Relations Board. The court decided 6-2 to uphold a lower court's ruling that then-President Barack Obama exceeded his legal authority with his temporary appointment of an NLRB general counsel in 2011. In an opinion by Chief Justice John Roberts, the court said that under the Federal Vacancies Reform Act, a person cannot serve as the acting head of a federal agency once the president nominates him or her to permanently serve in the role if it is a position that requires U.S. Senate confirmation. SW General Inc, a Scottsdale, Arizona-based private ambulance company and a subsidiary of Envision Healthcare Holdings Inc (EVHC.N), had challenged the makeup of the NLRB as it sought to invalidate a board ruling that said it violated federal labor law by discontinuing bonus payments for longtime employees. The NLRB had argued that the law's restriction applied only to politically appointed "first assistants" who are first in line for acting positions when the heads of agencies leave office, and not to other officials. The ruling will give President Donald Trump and future presidents less flexibility in filling jobs that require Senate confirmation. Justices Sonia Sotomayor and Ruth Bader Ginsburg dissented, saying the court ignored the fact that since the law governing vacancies was adopted in 1998, more than 100 people have served in acting roles while the U.S. Senate considered their nominations for permanent jobs

Trump withdraws reappointment nomination of popular whistleblower advocate - Truth tellers are especially important and potentially vulnerable in an administration afflicted with serial mendacity. An important refuge from management retaliation for federal truth tellers — a.k.a. whistleblowers — is the Office of Special Counsel (OSC), a small, understaffed independent agency that regularly challenges the biggest dudes on the block. But now, whistleblowers and their advocates are worried that the office’s vigilance under Carolyn Lerner could be endangered by President Trump’s notice to the Senate “withdrawing from further Senate consideration” her reappointment nomination. This worry is fueled by the Trump administration’s early agency gag orders, as well as the stern White House rebuke of State Department workers who complained — on an approved, internal dissent channel — about Trump’s first immigration executive order left a chill. The “new administration hasn’t demonstrated any tolerance for those who dissent against its actions,” said Tom Devine, legal counsel of the Government Accountability Project, which represents whistleblowers. When Lerner became special counsel in 2011, the office was mired in the muck of controversy surrounding the previous special counsel. Just as employee advocates cheered her predecessor’s departure, they, and bipartisan members of Congress, are now hailing Lerner’s tenure and pushing for her retention. Trump could still decide to nominate her, making her appointment his rather than an Obama administration’s holdover. The White House did not respond to questions about Lerner’s nomination.

Regulating Wall Street: The Financial CHOICE Act and Systemic Risk -- With the shift in power in Washington, among other things, the people newly in charge are taking aim at financial sector regulation. High on their agenda is repeal of much of the Dodd-Frank Act of 2010, the most far-reaching financial regulatory reform since the 1930s. The prime objective of Dodd-Frank is to prevent a wholesale collapse of financial intermediation and the widespread damage that comes with it. That is, the new regulatory framework seeks to reduce systemic risk, by which we mean that it lowers the likelihood that the financial system will become undercapitalized and vulnerable in a manner that threatens the economy as a whole. The Financial CHOICE Act proposed last year by the House Financial Services Committee is the most prominent proposal to ease various regulatory burdens imposed by Dodd-Frank. We previously discussed the CHOICE Act from the perspective of small banks that pose no systemic risk. Our conclusion then and now is that, while there is good reason to ease the regulatory burden on what are called community financial institutions―banks with assets less than $10 billion that constitute 98 percent of FDIC-insured banks―this objective provides no rationale for the CHOICE Act’s downgrading of scrutiny on the largest intermediaries, such as the 37 institutions that meet the Dodd-Frank systemic threshold of $50 billion in assets (see chart). But the CHOICE Act is complex, containing provisions that would alter many aspects of Dodd-Frank, including capital requirements, stress tests, resolution mechanisms, and more. This month, more than a dozen faculty of the NYU Stern School of Business (including one of us) and the NYU School of Law published a comprehensive study contrasting the differences between the CHOICE Act and Dodd-Frank. Regulating Wall Street: CHOICE Act vs. Dodd-Frank considers the impact both on financial safety and on efficiency. In some cases, the CHOICE Act would slash inefficient regulation in a manner that would not foster systemic risk. The poster child is the proposed repeal of the Volcker Rule, the implementation of which has generated complex rules that seem to have little connection to systemic risk but induce burdensome trade-by-trade compliance costs.

OneWest exec as comptroller would give Mnuchin key ally — A big obstacle facing the Trump administration in deregulating banks so far has been that all the agencies are still led by Obama appointees. But that may quickly be changing. Speculation is growing that the White House plans to name Joseph Otting as the new comptroller of the currency. As former CEO of OneWest Bank, he worked under now-Treasury Secretary Steven Mnuchin. Observers said Otting’s appointment would be a crucial step in the new administration’s efforts to move past the regulatory ramp-up of the Obama years.

EPI comment on the proposal to extend the applicability date to the fiduciary rule -- Attention: Fiduciary Rule Examination, RIN 1210-AB79. To the Department of Labor: We are writing to express our strong support for the scheduled April 10, 2017, applicability date of the Department of Labor’s fiduciary rule. We are opposed to any delay. As the department notes, retirement savers and other investors would be harmed by the delay, while the financial industry would benefit. Crucially, the costs to savers of a delay far outweigh any benefits to the financial industry. The department should conclude that the delay is unjustified.Most savers do not know that it is currently legal in many cases for financial professionals to recommend higher-cost investment products that provide financial advisers with a higher commission but provide lower returns to advisers’ clients. Most people do not understand that, unlike lawyers and doctors, all financial advisers are not required to act in their clients’ best interests. The fiduciary rule would require that financial advisers provide retirement investment advice that is in the best interest of their clients. People who have worked hard to save for retirement need and deserve these common sense protections—protections that most people are shocked to discover aren’t already in place.The proposal to delay these important protections is simply unjustified. The regulatory impact analysis (RIA) of the proposed delay utterly fails to establish that the benefits of delay outweigh the costs. The RIA acknowledges that the delay could lead to losses for retirement investors who follow affected recommendations. The RIA estimates that those losses could amount to $147 million in the first year and $890 million over 10 years using a three percent discount rate, with an equivalent annualized loss of $104 million. However, the estimates of these losses miss important effects and necessarily lead the RIA to underestimate the losses. The RIA notes that the estimate is incomplete because, among other reasons, “it represents only one negative effect (poor mutual fund selection) of one source of conflict (load sharing), in one market segment (IRA investments in front-load mutual funds). Not included are additional potential negative effects of the proposed delay that would be associated with other sources of potential conflict.” For example, in addition to IRAs, the fiduciary rule also applies to 401(k)s, and the impact of delaying the rule in that nearly $5 trillion market segment is not taken into account in the department’s estimates.  Addendum: Methodology for estimating the losses to retirement investors of fiduciary rule delay

Taking on Trump’s Agenda: Nine Tough Questions for SEC Chair Nominee Jay Clayton on the Eve of His Confirmation Hearings --naked capitalism - Jerri-lynn Scofield - “We write to ask you, as a leader of the firm, our profession and our community, to speak out against President Trump’s Executive Order 13769 of January 27, 2017 and subsequent Executive Order 13780 of March 6, 2017—both entitled “Protecting the Nation from Foreign Terrorist Entry into the United States”—and the actions of the current administration relating to the Executive Orders.” The New York Times covered the issue, in an article headlined, Ex-Workers at S.E.C. Nominee’s Firm Urge Him to Denounce Travel Ban. The combination of the utter pointlessness of this gesture, combined with its inside-baseball nature- which could equally well be headlined as Ex-Associates at White Shoe Law Firm Firm Ask Partner to Address Issue Over Which He’ll Have Zero Authority in His New Job If Confirmed by the Senate– is just the latest entry recording The Grey Lady’s sad decline, as she casts her net wider and wider in plumbing the depths of issues with which to tag, tar, or embarrass the Trump administration. This may seem to be the most recondite– and I concede, boring matter– to address here. Please, dear readers, stick with me a bit. This letter raises serious concerns, and has sparked my  modest response– which  well-credentialed elites, not to mention the Democratic party, might target if they hope to rein in some of the worst of the many awful Trump administration policies– and, incidentally, ensure he’s a one-term president. I’ve made no secret of my former employment as an S & C associate, and possibly as a consequence of that fact, was mentioned by name in the cover letter to Yves– perhaps with the intention of getting me to sign onto the letter, or at least to comment on it. Consider this post my riposte (admittedly, a rather prolix one).

What Trump’s SEC Pick Needs to Explain - When Donald Trump announced that he would nominate Wall Street lawyer Jay Clayton to lead the Securities and Exchange Commission, he cited the need to “undo many regulations which have stifled investment in American business.” At Clayton’s confirmation hearing this week, senators should ask exactly what that means.Scrutiny of Clayton has so far focused on his close ties to the industry he would oversee. He has represented large financial institutions facing U.S. investigations, and he worked on big investment deals for Goldman Sachs and Barclays Capital. His wife is a wealth manager at Goldman Sachs. Possible conflicts of interest matter -- but Clayton’s thinking on regulation and oversight of capital markets needs to be examined, too.The SEC’s rulemaking -- much of it mandated by the 2010 Dodd-Frank Act -- has drawn criticism for doing too much and for doing too little. Some say its “risk retention” rule (which requires firms that repackage and sell loans to keep some of their own product) obstructs the flow of credit. Others complain that burdensome disclosure requirements prevent companies from offering their shares to the public. Traders say that the SEC’s failure to complete rules on credit derivatives is killing part of the market.The agency’s leader will have the power to harden or soften the rules, and will decide how strictly to enforce them. So which of these regulations does Clayton see as the biggest obstacles to investment? The SEC is also at the center of efforts to shed more light on markets, which would enable regulators to know what’s going on next time there’s a flash crash or some other crisis. It’s been working for more than six years to get market participants to build a system for recording all activity in stocks and options. Meanwhile it’s trying, along with other agencies, to put together the real-time derivatives data needed to spot dangerous concentrations of risk. Finally, the SEC is supposed to identify and punish misbehavior, to ensure that investors are treated as fairly as possible. Is Clayton satisfied with the aggressiveness and aim of the SEC’s enforcement actions? If not, what would he change?

Senate panel presses SEC nominee Clayton on conflicts | Reuters: Jay Clayton, the Wall Street attorney tapped by President Donald Trump to lead the U.S. Securities and Exchange Commission, on Thursday defended himself against Democrats' charges that multiple conflicts of interest would force him to miss too many SEC votes. Clayton, a partner at elite law firm Sullivan & Cromwell, is expected to win confirmation easily, although some Democrats on the Senate Banking Committee raised concerns about his ties to Wall Street and Goldman Sachs, a bank he represented during the financial crisis and that employs his wife, Gretchen. His wife plans to resign from the bank if Clayton is confirmed, and he said he will recuse himself from matters involving his or the firm's clients for two years. Some clients have included Barclays, Deutsche Bank, Bill Ackman's hedge fund Pershing Square Capital Management and former Ocwen Financial Corp Executive Chairman William Erbey. Clayton told the panel his Wall Street legal experience is a "strength," adding he did not think conflicts of interest would present problems in leading the agency that enforces securities laws and regulates U.S. stock, options and bond markets. "As far as the extent of my practice and whether the recusals that would be required for potential conflicts will impair my ability to act as chair of the Securities and Exchange Commission, I do not believe they will do so," he said. Clayton, a political independent, told the committee the Dodd-Frank financial reform law should be "looked at" to determine if it has achieved its goals.When pressed on certain parts of the law, such as whether the SEC should delay implementing a rule requiring companies to disclose the ratio of CEO pay to the median pay of workers, Clayton declined to wade into the debate until he could get more information from SEC staff.

The current state of US financial regulation: A Q&A with Peter J. Wallison - Peter J. Wallison, co-director of AEI’s program on financial policy studies and White House counsel to President Ronald Reagan, took the time to answer some questions on the current state of US financial regulation and more. (brief interview)

Fed Chair Yellen Repeats “Alternative Facts” from New York Times on Financial Crash -- Pam Martens - Last Wednesday Janet Yellen, the Chair of the Federal Reserve, regurgitated the notoriously fake information that has been spewing from columnists at the New York Times since 2012 on the causes of the epic Wall Street financial crash of 2007 to 2010. Yellen was taking questions during her press conference on the Fed’s announcement of a rate hike. John Heltman, a reporter for American Banker, posed the following question to Yellen:  “The administration recently reiterated its support for reinstatement of Glass-Steagall. Treasury Secretary Mnuchin has called for a 21st Century Glass-Steagall. Keeping in mind that there’s no specifics on this proposal, is the fundamental idea of separating commercial banking from investment banking a fruitful line of inquiry. Is this the right path to be pursuing?” Yellen answered as follows: “So, I’ve not seen any concrete proposals along this line. I don’t really know what a 21st Century Glass-Steagall would look like. I think my reading on the financial crisis is that wasn’t the major source of the financial crisis, in fact many of the problems emanated from firms that were investment banking units. To me, an important reform in the aftermath of the crisis was to make sure that investment banking activities that were a core part of the shadow banking system where leverage had built, that those were appropriately capitalized, had appropriate liquidity and their management was strengthened and that’s what we have tried to do. But obviously we would look at any proposals that are put forward. I’m not aware of anything concrete to react to.” Notice what Yellen doesn’t say. She doesn’t say that an official research report that has investigated the cause of the Wall Street crash finds no evidence that it was related to the repeal of Glass-Steagall. She doesn’t say that the books written by the regulatory insiders of that period found that repealing Glass-Steagall had nothing to do with the crash. All that she says is this: “my reading on the financial crisis is that wasn’t the major source of the financial crisis, in fact many of the problems emanated from firms that were investment banking units.” Yellen’s “reading” has clearly been coming from New York Times columnists who have demonstrated an inexplicable fealty to pumping out notoriously fake facts about the repeal of the Glass-Steagall Act while the publisher, managing editor and public editor of the New York Times have refused to correct those fake facts.

  Say Hello to $3 Trillion in Forgotten Debt - Companies have been on a borrowing binge, but you wouldn’t always know the full scale of their liabilities by looking at the balance sheet. This makes it hard for investors to compare businesses that fund their activities in different ways. Happily though, that\s about to change. How come? The answer is buried in the notes to financial statements (you know, the ones you don’t bother reading). It’s here that companies have parked about $3 trillion in operating lease obligations, according to Bloomberg data. For non-financial companies, those obligations equate to more than one quarter of their long-term (on-balance sheet) debt. Operating leases are actually pretty similar to debt. They represent money companies will be obliged to cough up in future to rent things like planes, ships and retail floor space. But right now you won’t find them on the balance sheet. These companies are among the largest users of operating leases: New accounting rules called IFRS 16 will force companies to include operating lease commitments as part of their reported debt and assets. Heavy lease users in the retail, telecoms, energy and airline sectors will probably be most affected.

Will New Required Reporting of $3 Trillion of Obligations Crimp Big Cos, Private Equity? -  Yves Smith - Bloomberg reported that a new accounting rules that will come into effect in 2019 will force companies to put a collective $3 trillion of obligations on their balance sheets as debt. The liability is operating leases, such as the sale and leaseback of a corporate headquarter, or leasing of a major capital asset, such as a delivery fleet. When I started out at Goldman, back in the days of green accounting paper and calculators, we always re-did the reported balance sheet to include capitalized operating leases. This was a bog-standard, first order presentation. And while any competent analysis of debt includes this adjustment, equity analysts typically do not give much weight to the additional risk created by operating leases. Unfortunately this habit has taken hold not just because equity is a different obligation, but also due to the fact, as Wall Street old hands will tell you, “Stocks are sold, not bought.” In other words, the wee problem is that even though this rule change ought to make no difference, since it’s merely a change in reporting, it almost certainly will. Despite the pretense that investors are rational and give a good look at a company’s financials before buying, in fact people are at the mercy of cognitive biases. It’s been demonstrated that people will respond very differently to precisely the same economic risk depending on how it is presented to them.  The Bloomberg story shows some big users of operating leases:  […]So how will this accounting rule change affect private equity players? The industry has yet to weigh in, but the effects appear to be mixed. On the one hand, it will increase EBIDTAs, and since deals are priced at a multiple of EBITDA, on the surface, this looks like a potential bonanza. From the Bloomberg article:The upshot: this is going to make companies appear far more leveraged. Debt will increase compared to equity. At the same time, earnings before interest, taxation, depreciation and amortization may increase because leases will be depreciated, not expensed. Retailers can typically expect an Ebitda uplift of more than 40 percent, PwC found.The author nevertheless argued, “The impact on reported liabilities is likely to prove most significant though.”  You’d expect private-market EBITDA multiples for retailers with high operating lease charges to fall. Whether they decline enough to fully reflect the impact of the accounting change will be seen in due course.

Regulators call for simpler capital rules, easier reporting standards -- Banking regulators are calling for a raft of regulatory changes, including streamlining capital, reporting and appraisal rules in order to reduce compliance burden. The agencies detailed their recommendations Tuesday in a report under the Economic Growth and Regulatory Paperwork Reduction Act, which requires regulators to identify outdated or redundant regulations every 10 years that can be updated or discarded.

Dilemmas for banks in new rate environment -- (slides) Banks eagerly raised their prime rates after the Federal Reserve’s latest rate hike, but the debate about how they should react on the deposit side is robust, and conversations are beginning on how to respond on the investment portion of the balance sheet. Here is a sample of the lively discussion that is emerging.

US "Too Big To Fail" Banks Top $1 Trillion - What Happens Next? - For the first time ever, the market cap of America's "Big Four" banks topped $1 trillionhaving surged 30% since Donald Trump was elected president. While to some this is cause for celebration, we note that the last time a nation's "big four" banks topped $1 trillion in market cap did not end well...As Bloomberg notes, the four biggest U.S. banks were worth the most on record versus China's "Big Four" this month, as JPMorgan, Wells Fargo, Bank of America, and Citigroup were worth over $250 billion more than Industrial & Commercial Bank, China Construction Bank, Bank of China, and Agricultural Bank of China combined. The four Chinese banks, the world's most profitable, were worth about the same as the U.S. foursome as recently as June.However, as the chart above shows, while the American quartet's combined market value closed above $1 trillion for the first time last month, China achieved that goals in June 2015... and it did not end well.

It’s Time to Pass the Financial Institutions Bankruptcy Act  -- John Taylor  -- Today the House Judiciary Subcommittee lead by Tom Marino held a hearing on the Financial Institution Bankruptcy Act (FIBA) which lays out in clear legislative language the “Chapter 14 type” reform proposals that Stanford’s Hoover Resolution Project have been working on since the financial crisis. Based on this hearing, which included top legal experts familiar with the bankruptcy code, including Bankruptcy Judge Mary Walrath, I am optimistic that the bill will become law soon.  The written testimony of all of the witnesses, including me, can be found here.  As I stated in my opening remarks at the hearing, FIBA, which adds a new Subchapter to Chapter 11, is an essential element of a pro-growth economic program. The legislation makes failure feasible under clear rules without disruptive spillovers. It would

  • help prevent bailouts
  • diminish excessive risk-taking
  • remove uncertainty associated with an ad hoc bailout process
  • reduce the likelihood and severity of financial crises and thereby lead to stronger economic growth.

Chapter 11 has many benefits, including its basic reliance on the rule of law, but for large complex financial institutions it has shortcomings because it is likely to be too slow and cumbersome to deal with runs on failing financial institutions. FIBA would also rely on the rule of law and strict priority rules of bankruptcy, but it would operate faster—over a weekend—leaving operating subsidiaries outside of bankruptcy entirely. It would do this by moving the original financial firm’s operations to a new bridge company that is not in bankruptcy.  This bridge company would be recapitalized by leaving behind long-term unsecured debt. It would thus let a failing financial firm go into bankruptcy in a predictable, rules-based manner without spillovers.

Laundered Russian Cash Went Through Big Banks, Guardian Says -- Cash that flowed from Russia through a vast money-laundering network sometimes ended up passing through the world’s largest banks, with U.K. firms including HSBC Holdings Plc handling almost $740 million, the Guardian reported, citing a cache of financial records it reviewed.  The documents contain details of about 70,000 banking transactions, including 1,920 involving firms based in the U.K. and 373 in the U.S., the newspaper said. The records indicate at least $20 billion moved out of Russia between 2010 and 2014, and that some of it ended up at overseas banks. The flows are tied to a network dubbed the Global Laundromat, the subject of a 2014 report by the Organized Crime & Corruption Reporting Project, an investigative journalism group that provided some of the documents, the paper said. HSBC handled $545 million of Laundromat cash, mostly routed through its Hong Kong branch, the Guardian said, without elaborating on the dealings. Royal Bank of Scotland Group Plc, majority owned by the U.K. government, processed $113 million, the paper said. Standard Chartered Plc, UBS Group AG, Citigroup Inc., Bank of America Corp., Barclays Plc and ING Groep NV handled amounts ranging from $2 million to $37 million, it said. All of the banks named in the story said they have strict money-laundering controls, though none challenged the data’s authenticity, according to the Guardian. The owners of offshore entities that moved money through the banks often kept their identities secret, the report noted.While companies that shield owners’ identities can be used legally, they can also be tools for laundering money, hiding assets or evading taxes. The U.S., among other countries, require banks doing business within their borders to perform due diligence on their clients to understand who the beneficial owners of such structures may be. Banks are supposed to confidentially alert authorities to transactions that may warrant further investigation.

It's Time To Get Painfully Honest: Banks Are Evil - Adam Taggart -- I don't talk to my classmates from business school anymore, many of whom went to work in the financial industry. Why?Because, through the lens we use here at PeakProsperity.com to look at the world, I've increasingly come to see the financial industry -- with the big banks at its core -- as the root cause of injustice in today's society. I can no longer separate any personal affections I might have for my fellow alumni from the evil that their companies perpetrate.And I'm choosing that word deliberately: Evil.In my opinion, it's long past time we be brutally honest about the banks. Their influence and reach has metastasized to the point where we now live under a captive system. From our retirement accounts, to our homes, to the laws we live under -- the banks control it all. And they run the system for their benefit, not ours.While the banks spent much of the past century consolidating their power, the repeal of the Glass-Steagall Act in 1999 emboldened them to accelerate their efforts. Since then, the key trends in the financial industry have been to dismantle regulation and defang those responsible for enforcing it, to manipulate market prices (an ambition tremendously helped by the rise of high-frequency trading algorithms), and to push downside risk onto "muppets" and taxpayers. Oh, and of course, this hasn't hurt either: having the ability to print up trillions in thin-air money and then get first-at-the-trough access to it. Don't forget, the Federal Reserve is made up of and run by -- drum roll, please -- the banks.

Bank wins right to sue regulator over Camels rating— After undergoing an exam in summer 2016, Builders Bank in Chicago received some bad news: Its CAMELS rating had reached a 4, the threshold at which an institution is considered a "problem bank" by regulators. But the $41.4 million-asset institution did not take this setback sitting down. It took the unusual step of suing the Federal Deposit Insurance Corp., claiming in court that the agency’s risk profile determination for the bank had been “flawed.” Against all odds, Builders Bank scored a critical victory in a case that could set a precedent for other financial institutions that feel they've been unfairly graded. In January, an appeals court found that Camels ratings — a risk-profile metric assigned by banking regulators that can affect how much an institution pays in insurance premiums — are challengeable in court. “Generally, the courts just refuse to hear those cases, saying that it was completely within the discretion of the bank regulatory agencies,”  In its decision, the Seventh Circuit Court of Appeals overturned a lower court's dismissal of Builders Bank’s lawsuit, arguing it had jurisdiction to review the case. The case has now been remanded, while the bank is pursuing a second lawsuit against the FDIC challenging the results of its latest examination. The appeals court found that even though bank regulators are at a liberty to determine capital level requirements, Camels ratings can face legal challenges because they are calculated based on a number of other variables. “The presence of capital as one of six components in a Camels rating does not necessarily mean that the rating as a whole is committed to agency discretion,” Judge Frank Easterbrook said in the ruling. “Suppose the FDIC’s team of examiners were to conclude that the bank had adequate capital deserving a rating of 1 but that other components were unfavorable, leading to an overall rating of 4." “The examiners may be right or wrong about those other issues," Easterbrook continued, "but a district court could ask whether the FDIC’s final rating was arbitrary, or supported by substantial evidence, without making any inroad on the agency’s discretion to evaluate a bank’s capital adequacy.”

Bitcoin’s fake news problem -- Izabella Kaminska --Bitcoin was designed to be self limiting and scarce so as to endow it with value. But the limitation wasn’t just applied to the number of coins in circulation, it was also applied to the number of transactions/data that can be processed in any given block interval.That latter constraint is now igniting a bitter schism in the community between those who feel the constraint must be removed to ensure bitcoin can scale universally and those who want it kept intact to allow cost structures to balance out organically. All will eventually be decided in a forking event. The forking is an opt-in software update called ‘Blockchain Unlimited’ intended to resolve bitcoin’s scaling limitation by expanding the amount of data that can be processed in any given block. To be successful it must be adopted by a majority of miners. Most miners, however, do not have a financial incentive to back an update that stands to increase their costs without necessarily increasing their revenues. Others fear that without constraints only the best equipped and most highly funded miners will survive a forking event, which would encourage further centralisation of the network. Ahead of the forking, nevertheless, constraints on bitcoin’s capacity are already leading to higher transaction fees: This has begun to undermine one of the most actively propagated myths about bitcoin/blockchain: that the network radically reduces the cost of payments and as a consequence can crush the cost of cross-border remittances.To the contrary, FT Alphaville always argued the network’s perceived cheapness was illusory — the product of investor inflow subsidisation and share dilution in the form of mining awards. If and when capital inflow subsidisation was to abate, we argued, the true cost of funding the network would be exposed — since miners would only be incentivised to keep processing if the transaction fees made it worth their while. This in turn would reveal a core truth about bitcoin: that the network is and always was a luxury payments system, not a universal one.

Coinbase granted N.Y. approval to offer Ether trades - Coinbase has received approval from New York financial regulators to offer trading of the digital currency ether, along with other products. The San Francisco-based exchange also received permission to offer trading of the digital currency Litecoin and to offer a debit card service called Shift Card, the New York State Department of Financial Services announced Wednesday.   Ether is the cryptocurrency associated with the Ethereum blockchain. Litecoin is an alternative virtual currency to bitcoin. In January, the regulator granted Coinbase a virtual currency and money transmitter license, known as a BitLicense.   Maria Vullo, superintendent of the New York agency, used the Coinbase approval to reiterate her stance that state regulators are in the best position to provide oversight to the fintech industry. The Office of the Comptroller of the Currency has proposed creating a charter for fintech companies. “New York will remain steadfast in pushing back against federal encroachment efforts like the OCC’s proposal to impose a one-size-fits-all national bank charter that increases risk and seeks to usurp state sovereignty,” Vullo said in a press release.

Banks pick IBM blockchain to expand digital ID project in Canada -- Canadian banks will use blockchain technology to manage consumers’ digital identities. The banks bought into the idea of managing digital identities for consumers five years ago. Initially they focused on authentication: letting customers maintain one username and password for multiple websites, mainly bank and government sites. The Concierge system, managed by SecureKey, was a way to simplify customers’ lives. The system stores 7 million Canadian consumers’ credentials currently with 250,000 added each month. On Monday morning, the banks, which include Bank of Montreal, Canadian Imperial Bank of Commerce, Desjardins Group, Royal Bank of Canada, Scotiabank and TD Bank, along with IBM and SecureKey, announced they would build on the progress by making it a fuller identity solution running on IBM’s blockchain. Diagram of the Concierge identity system. "We didn’t want to create honeypots of data where all the data went to one place,” says one of the architects. When the technology pieces are all in place, customers will be able to use an app to verify their identity to anyone, from an Airbnb owner to a bouncer at a bar, in such a way that the service provider sees only what it needs to see and all other personal information is private. The companies are piloting the technology now and plan an official launch later this year. It’s a model from which U.S. banks could learn. While few, beyond U.S. Bank and BBVA Compass, have expressed much interest in managing their customers’ identities, the Canadian banks say they believe offering this service could be critical to survival in the fast-moving world of digital commerce and eventually a source of revenue. “Increasingly the payment is the afterthought of the commerce transaction,” said Chuck Hounsell, senior vice president of payments at TD Bank. The bank providing the card or account the money is being drawn from is invisible.

Are Canadian banks headed toward a Wells Fargo–style scandal over sales tactics? - An investigative news segment of CBC-TV, radio and the web called “Go Public” said that it received more than 1,000 emails from employees at the five big Canadian banks complaining of extreme pressure to cross-sell products to their customers to meet aggressive sales targets. The emails came after a “Go Public” report last week that staff at TD Bank were being pressured to sell customers products they do not need. The emails came from employees at the Royal Bank of Canada, Bank of Montreal, Canadian Imperial Bank of Commerce, Toronto-Dominion and Bank of Nova Scotia across the country, all complaining that their employers are forcing them to mislead or even directly lie to their customers, CBC reported. “We are all doing it,” wrote one RBC financial adviser. In one example, a TD insurance broker in Barrie, Ontario, wrote, “We are straight up told to tell false stories (lie) to sell products.” In another instance, a financial-services manager who has subsequently left his job at BMO in Calgary said he quit after suffering a panic attack in his manager’s office on being told his career was in danger because he was not meeting sales targets. The manager directed him to attach high interest rates to mortgages, without letting customers know they are negotiable. He added that he was “pressured to lie and cheat customers” but refused to do it.

Regulators keep eye on sales incentives, exam issues — Regulators are focusing on sale incentive programs in the wake of the Wells Fargo fake account scandal last year, but are also trying not to drop the hammer too hard, a panel of agency officials said Tuesday. “We understand that all of you use and need incentives programs to incent the type of behavior that you want to see out of your employees, but we also want to see that you’re adopting appropriate compliance management systems” and manage risk that might cause harm to consumers, said Chris D’Angelo, associate director for supervision, enforcement and fair lending at the Consumer Financial Protection Bureau.

Supreme Court Decides For Workers and Against Private Equity in Important Bankruptcy Case, Jevic --Yves Smith - The Supreme Court ruling for Czyzewski v. Jevic Holding Corp. is just in, and it’s a rare and important ruling against bankruptcy-court-enabled private equity chicanery. We’ve attached the short and readable ruling at the end of this post.  A ruse that private equity firms have increasingly used when companies they own are about to go bust is to fire workers upon failure of the company, as opposed to giving them a 60 day notice as required by state and federal state and federal Worker Adjustment and Retraining Notification (WARN) Acts. The failure to make the WARN Act mandated payments makes workers creditors to the bankrupt estate, sitting below secured creditors but above unsecured creditors in the order of priority of payment stipulated in the Bankruptcy Code. It also potentially sets up a fraudulent conveyance suit against the former company owners. Fraudulent conveyance occurs when an owners pulls money out of a business even though they knows is it going to go bust. Since the owners are at the very bottom of the bankruptcy priority hierarchy, they have ripped off the creditors to their benefit. It’s not hard to see how this regularly happens with private equity owned firms, since they will often have paid monitoring and other fees to themselves even as the company is on death’s door.1 Needless to say, as private equity expert Eileen Appelbaum pointed out by e-mail, “Many workers have been cheated out of their WARN Act payments when PE-owned companies enter bankruptcy.” In the Jervic case, the Supreme Court ruling reversed Bankruptcy Court and appeals court decisions that would have stiffed the former Jervic employees entirely with respect to their WARN Act payments. The Supreme Court nixed the mechanism by which that happened: by upending the stipulated creditor hierarchy and putting the workers below unsecured creditors, when they should have priority over them instead.

Secretary Mnuchin's challenge: Rethink consumer finance -- Our nation's consumer finance laws, enacted nearly 50 years ago, are outdated. Reams of disclosures go unread and billions are spent by banks to comply with hypertechnical regulations. Perhaps more worrisome, the silent premise underlying many of these laws is that the key to assuring consumer financial health is making consumer debt more widely available and easier to obtain. This flawed premise played a large role in bringing our economy to its knees nine years ago. In President Trump’s Feb. 3 executive order spelling out principles to guide the administration’s financial regulatory policy, the first “core principle” is: “Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth." Under the executive order, Treasury Secretary Steven Mnuchin is instructed to identify any laws that inhibit implementation of the core principles. A prime candidate inhibiting implementation of the first core principle is the patchwork of outmoded consumer laws. They may have been the best that could be put in place at the time, but they are woefully out of step with the needs of consumers today. Identifying these laws as impediments to progress, however, is only a first step. To replace these laws with provisions more useful to 21st-century consumers, Secretary Mnuchin should consider creating a blue-ribbon Consumer Finance Advisory Committee.Under President Trump’s executive order on “core principles” for financial regulation, Treasury Secretary Steven Mnuchin is instructed to identify any laws that inhibit implementation of the core principles. A prime candidate is the patchwork of outmoded consumer laws. Bloomberg NewsCredit used responsibly can bring great benefits to consumers, but we need to do a much better job helping borrowers understand their credit options. When most of our consumer financial protection laws were written in the 1970s, mainframe computers at the Defense Department were less powerful than handheld devices owned by consumers today. We can use this technology and related analytic tools to empower consumers in ways that the authors of current laws could not have imagined in their time. This can go beyond just delivering disclosures electronically (as often happens today), to creating an interactive lending process to engage consumers in deciding what loan is appropriate for them.’

Message to Trump: CDFI funds still sorely needed -- The federal government operates three programs that are 100% dedicated to delivering responsible, affordable credit options to help low-income, low-wealth and other disadvantaged communities. They are the Community Development Financial Institutions Fund, the Small Business Administration’s Microloan program and the SBA’s Prime program. All three are threatened with devastating cuts under President Trump’s proposed 2018 budget. This is a shortsighted idea that hurts hardworking Americans. Ironically, the people who will be hurt the most are Trump voters. The majority (56%) of CDFIs are located in red states. For regions in many of these states, the nearest CDFI is the only affordable lender in close proximity, especially for those living in rural areas or within Native American communities.  Many American households, particularly those that are low-income, require credit to weather economic shocks such as unexpected expenses (i.e. car repair) or a sudden loss of a job. Obviously, access to credit helps people manage the unexpected expenses that are a part of life. In calling for the elimination of CDFI Fund grants, the president’s budget said that in contrast to when the fund was created 20 years ago, “private institutions [now] have ready access to the capital needed to extend credit and provide financial services to underserved communities.” But the reality is there are many people who are unable to qualify for mainstream credit or reside in areas without access to mainstream financial institutions.  CDFIs and other nonprofit lenders are often the only lenders that will provide a loan to someone who is credit invisible (lacking a credit history) or has poor credit. According to Experian, 64 million Americans have no credit history or a thin credit file. Sure, there are payday lenders and car title loan companies that may be able to help them, but at what cost?

Banks Slash Loan Books While Equities Hover Near All-Time Highs; Someone Is Massively Wrong - Over this past weekend we noted that the Fed's latest weekly commercial bank loan data revealed some rather shocking deterioration in year-over-year loan growth.  As shown in the chart below, after growing 4.6% one week ago, total loans and leases grew only 4.2% in the week ended March 8: the lowest growth rate since May 2014. However, it was once again the Commercial and Industrial loans creation - or lack thereof - which was more problematic, because after growing 4.0% on a year over year basis as of March 1, and 5.7% one month ago as of February 8, the growth rate has since tumbled to just 2.9%, a 1.1% decline in the growth rate over the past week. As shown in the chart below, on a cumulative 4-week basis the slowdown in C&I loan creation tumbled by 2.8% as of the latest period: this was the biggest monthly slowdown going back to the financial crisis. That said, many equity analysts have dismissed the sudden collapse in new business loans as the fortunate side effect of a long-term positive trend whereby corporates are tapping the fixed-rate bond market to take advantage of current low rates and extend out bank debt while reducing exposure to rising floating rates.  And while that's a very convenient explanation, particularly for equity bulls, it would seem to ignore the fact that C&I lending standards seemed to tighten at the precise moment that loan volumes started to drop...i.e., it wasn't a loan demand problem from borrowers but rather a loan supply problem from the banks that caused the collapse in issuance growth.  From Bloomberg:

Regulators Said to Weigh Appraisal Change That May Spur Lending --As President Donald Trump seeks to knock down government constraints on business loans, U.S. bank regulators have tentatively agreed to ease an appraisal requirement that could help commercial real estate borrowers, said people familiar with talks among the agencies. Regulators have decided the threshold for requiring appraisals on commercial property should be increased to $400,000 from $250,000, according to two people who asked that they not be identified because the discussions aren’t public. The threshold for residential real restate would remain at $250,000, they said. The change could cut costs for small-business borrowers at a time when Trump has put a particular focus on helping that sector. At the same time, appraisers would be hurt because their licensed services would no longer be needed on commercial real estate loans for less than $400,000 -- often including small businesses, warehouses, rental housing and farms. The move stems from an ongoing internal review of rules at the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. under a program known as the Economic Growth and Regulatory Paperwork Reduction Act. The appraisal standards have been publicly listed as one of the regulations under review, though the agencies haven’t yet indicated when they’ll finish. Spokesmen for the three agencies declined to comment on the appraisals plan.

Is Bank Lending A Concern? – Duy - I have seen some angst recently over declining growth in commercial bank lending. See, for example, the Wall Street Journal:Bank loans across all categories are increasing 4.6% annually, the slowest pace since 2014, according to weekly Fed lending data from March 1. The trend is particularly marked in business loans, which are increasing 3.9% annually, a rate that is a nearly six-year low.A number of factors are at play, including rising interest rates; bankers also said some business clients put borrowing on hold before the U.S. election and aren't confident enough to jump back in.The slowdown is noteworthy because it is occurring when many metrics show the U.S. economy strengthening.Looking at the weekly data, there does on the surface look to be some reason for concern: These low rates of growth are rarely seen outside of recessions. Still, optical econometrics suggests this is more of a lagging than leading indicator. Moreover, we have another indicator that also exhibited behavior only seen in recessions. Spot the odd man out: Recall a year ago when weak industrial production numbers raised recession concerns that proved unfounded. We could be seeing something similar in bank lending. Consider that industrial production might be a leading indicator for bank loans: Here I focus on the post-1984 period (the Great Moderation). Optical econometrics again suggests to me that lending lags industrial production. To quantify that a bit more, I converted the data to log differences (multiplied by 100), and ran it through a 13 lag vector autoregression. Granger causality tests (the f-tests here) indicate that loans (DLOANS) do not cause (or are predictive of) industrial production (DIND):  Impulse response functions (in this case, the responses are converted to impacts on the levels of the variables) illustrate the dynamics of the system:  The impact of a shock to industrial production on commercial lending (lower left chart) is delayed six months and then builds gradually over the next 18 months. The impact of a shock to lending on industrial production (upper right chart) is negligible. Ordering of the variables does not affect these results. If I use the full sample (data begin 1947:1), both variables Granger cause each other, but the impact of loans on industrial production in the short-run is minimal and dies out in the long-run:

Commercial & Residential Real Estate Bubble Again a Risk to Financial Stability; Fed’s Rosengren Worried -- Last year, Boston Fed President Eric Rosengren — considered a “dove” on the Fed’s policy-setting committee — started warning about the commercial real-estate bubble in the US and what its demise could do to banks. But in his speech on Financial Stability on March 22 in Indonesia, he added what I’ve come to call “Housing Bubble 2” to his ever more emphatic concerns.  Like all central bankers, he can’t warn publicly about an approaching problem because it could trigger the very problem he’d be warning about. In this manner, no one at the Fed saw the last bust coming. So Rosengren started out his presentation, “Financial Stability: The Role of Real Estate Values” – by clarifying this: “First, I am not here today to predict problems, but rather to suggest we continue working to head them off. The phrase, “continue working to head them off,” is ironic because he also pointed out what has caused these problems: “very low interest rates” that were “wholly necessary” and that he “strongly supported.” Rosengren finds that “the root cause of the financial crisis was a significant decline in collateral values of residential and commercial real estate” and “exposures across the banking system that are correlated and sizeable.” Real estate becomes a trigger for a financial crisis because of its high leverage. For banks, these properties are collateral. When property values tank, the collateral is impaired. Defaults rise. Then broader problems spread into the economy. Property owners experience a reduction in income. Homeowners see their paper wealth evaporate and financial stress rises. At some point, banks begin to fail. This chart shows the number of bank failures, regardless of size. In the decade before the Financial Crisis, the banks had become huge. Thus, fewer but huge banks failed:  But when these fewer huge banks failed, all heck broke loose. This chart shows the asset values of the failed banks, adjusted for inflation:

Bank of America reaches $7B relief target in DOJ settlement early -- Bank of America has completed its legal settlement obligation with the Department of Justice to provide $7 billion in consumer relief nearly two years ahead of schedule. The bank was credited with providing $37.8 million of consumer relief in the third quarter. Plus it received an additional $163.6 million of credit for reaching certain incentives to reach the target amount established in a 2014 settlement with the DOJ and six states. B of A needed to meet the terms of the settlement by August 2018.

CoreLogic: "Between 2007–2016, Nearly 7.8 Million Homes Lost to Foreclosure" - Here is a report from CoreLogic: US Residential Foreclosure Crisis: 10 Years Later. There are several interesting graphs in the report, including foreclosures completed by year. This graph for CoreLogic the Ten States with the highest peak foreclosure rate during the crisis, and the current foreclosure rate. Some states like Nevada and Florida have improved significantly. Other states, like New Jersey and New York, have only recovered slowly. Here is a table based on data from the CoreLogic report showing completed foreclosure per year.

Goldman's buying of default mortgages not without risk | TheHill: Goldman Sachs has launched an ambitious program to buy severely delinquent or nonperforming home mortgages as one element of a $5.1-billion settlement it has entered into with the federal government for its role in creating and selling mortgage-backed securities (MBS) in the years leading up to the financial crisis. According to a Wall Street Journal article, Goldman has spent $4.5 billion to acquire 26,000 delinquent mortgages from Fannie Mae. Goldman did not originate any of these mortgages. It also has purchased similar troubled mortgages from Freddie Mac and private sellers. Goldman intends to restructure the mortgages it has purchased with the expectation that the homeowners will then become current in making payments on them. In accordance with its settlement agreement, Goldman will provide $1.8 billion of relief to homeowners, presumably by a combination of writing down principal balances, lowering interest rates on the mortgages and extending the repayment period. Mortgages that have been successfully restructured, with homeowners current on making their mortgage payments, could then be sold to investors, most likely through newly created MBS. Goldman might even be able to sell some of those mortgages for more than their face value, thereby generating a profit that would reduce the cost of its settlement with the government. Restructuring delinquent mortgages is not without its risks, though, as Goldman undoubtedly appreciates, for not all home mortgages can be successfully restructured.Goldman also faces all the usual regulatory risks associated with mortgage restructuring. For a variety of reasons, as previously mentioned, not every delinquent mortgage can be successfully restructured, leaving Goldman no choice but to foreclose on the mortgage or simply abandon the property.

Fannie, Freddie revamp plan unlikely this year, dividends in focus | Reuters: An overhaul of Fannie Mae and Freddie Mac is highly unlikely to make it into this year's legislative calendar, Congressional staffers say, possibly shifting the new administration's immediate focus to allowing the mortgage financing institutions' to rebuild depleted capital. Fannie and Freddie stocks soared late last year when President Donald Trump's pick for Treasury Secretary Steve Mnuchin said the companies that have been in government conservatorship since the 2008 financial crisis should be privatized. Hedge funds and other investors have been lobbying for the removal of government controls over the mortgage giants' profits, which since 2012 have been transferred to the Treasury, and their eventual privatization. The shares dipped when Mnuchin seemed to backpedal on the privatization pledge during his January confirmation hearing and suffered another setback last month when a court rejected investors' suit against the dividend transfers. Congressional staffers say the Senate Banking Committee has begun weekly bipartisan staff briefings on Freddie and Fannie reforms, but it is starting from scratch. The House Financial Services Committee is focused on other legislation, such as renewing the flood insurance program and rolling back parts of the Dodd-Frank financial reform, pushing the mortgage giants' revamp down the to-do list, they say. Instead, investors' focus is shifting to how Mnuchin and Federal Housing Finance Agency Director Mel Watt, an Obama Administration holdover, will manage the dividends transfers. Analysts expect the two institutions to make a full $10 billion dividend payment for the fourth quarter on March 31. But investors will be looking for any indication from Watt or Mnuchin about whether they plan to allow the mortgage firms to retain profits later on and begin the slow recapitalization process.

GSE common securitization plan delayed to 2019 — The second phase of the plan to have Fannie Mae and Freddie Mac using a common, single mortgage-backed security will be pushed back to the second quarter of 2019, the Federal Housing Finance Agency said Thursday. Under the FHFA's guidance, the government-sponsored enterprises have been working to develop a common securitization platform that would allow the two mortgage giants to issue uniform mortgage-backed securities. Freddie started using the common security model in November, what was known as Release 1 of the plan. Originally, the second phase — known as Release 2 — allowing both Fannie and Freddie to use the CSP to issue a uniform MBS was projected for next year.

S&P/Experian: Mortgage Default Rate Up Slightly In January --The default rate for first mortgages was 0.72% in January – up from 0.71% in December but down from 0.84% in January 2016, according to the S&P/Experian Consumer Credit Default Indices.The default rate for second mortgages was 0.48%, up from 0.41% in December but down significantly from 0.65% in January 2016.In keeping with the typical seasonal pattern, the default rate for credit cards was 3.21%, up significantly from 2.95% in December and up from 2.52% in January 2016.The default rate for auto loans was 1.06%, up from 1.03% in December and up from 1.04% in January 2016.Although the increase in credit card defaults is common following the holiday season, this year, it spiked up more than expected. In fact, according to The Nilson Report, a card and mobile payment trade publication, outstanding credit card debt topped $1 trillion at the end of 2016, which is close to where it was when the Great Recession first hit in 2008. This should be of some concern for mortgage lenders, as credit card debt carries much higher interest and is, therefore, harder to pay down.

Black Knight: Mortgage Delinquencies Declined in February - From Black Knight: Black Knight Financial Services’ First Look at February Mortgage Data: Prepayment Activity Continues to Decline, Down 40 Percent So Far in 2017

• Prepayment speeds (historically a good indicator of refinance activity) declined 15 percent in February, marking a 40 percent overall year-to-date decline and the lowest monthly rate in three years
  • Delinquencies continued their seasonal decline, ticking down .98 percent from January
  • Foreclosure starts fell 18 percent from last month to 31 percent below last year’s levels
  • Active foreclosure inventory now stands at 470,000, the lowest such level since June 2007
According to Black Knight's First Look report for February, the percent of loans delinquent decreased 1.0% in February compared to January, and declined 5.5% year-over-year.
The percent of loans in the foreclosure process declined 1.9% in February and were down 28.5% over the last year.  Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.21% in February, down from 4.25% in January.The percent of loans in the foreclosure process declined in February to 0.93%. The number of delinquent properties, but not in foreclosure, is down 117,000 properties year-over-year, and the number of properties in the foreclosure process is down 185,000 properties year-over-year. Still improving, but the improvement has slowed.

Credit bureau, fintech firm partner on data-aggregation product for mortgages -- Experian has introduced software to speed up the processing and approval of consumer mortgage applications. Experian and a partner, Finicity in Salt Lake City, launched Digital Verification Solutions on Monday. The software verifies a loan applicant’s income and assets, using real-time financial-data aggregation. The product, developed with Finicity, allows for real-time verification of mortgage applicants' income and assets, and it reduces paperwork, Experian’s Alex Lintner says.  The product allows for real-time verification of income and assets for about 80% of all U.S. financial accounts, said Alex Lintner, president of consumer information services at Experian. It will also help reduce some paperwork, which should lead to cost savings for lenders, he said. In addition, the product creates a date stamp, called a financial transaction identification number, during the verification process. The date stamp allows lenders to audit the approval process after the fact and is meant to aid consumers who file disputes. Experian and Finicity’s product is part of a Fannie Mae pilot program, called Day 1 Certainty, that is attempting to provide automated loan validation technology to mortgage lenders. The use of financial-data aggregation has become an active area for fintech companies in the quest to speed up decision times. Plaid, a San Francisco startup, earlier this month partnered with the mortgage-software provider Ellie Mae to introduce a lending platform that offers “near-instant asset verification capabilities.”

Fannie rental securitization deal draws fire from industry groups — Industry groups are raising more concerns about a Fannie Mae financing deal involving the securitization of single-family rental homes, arguing it is too far removed from the government-sponsored enterprise's mandate. The Community Home Lenders Association and National Association of Realtors have both criticized the pending $1 billion securitization for Invitation Homes, a unit of Blackstone. Though Fannie has traditionally provided financing for mom and pop investors in single-family rental units, this "appears to take Fannie Mae into another line of buisness," said Scott Olson, who heads the home lender group.

CoreLogic: Influx of refis pushes risk index lower in Q4 -- Mortgage originations grew safer in the fourth quarter of 2016, according to CoreLogic, a global property information, analytics and data-enabled solutions provider. Mortgage became less risky in from the year before, according to the Q4 2016 CoreLogic Housing Credit Index. This is consistent with the low credit risk from the third quarter and the highest quality home loans originated since 2001. The index measures variations in home mortgage credit risk attributes over time, including borrower credit score, debt-to-income ratio and loan-to-value ratio. A rising HCI indicates that new single-family loans have more credit risk than during the prior period, while a declining HCI means that new originations have less credit risk. “Mortgage loans closed during the final three months of 2016 had characteristics that contribute to relatively low levels of default risk,” CoreLogic Chief Economist Frank Nothaft said. “While our index indicates somewhat less risk than both a quarter and a year earlier, this partly reflects the large refinance share of fourth-quarter originations,” Nothaft said. “Refinance borrowers typically have a lower LTV and DTI than purchase borrowers.” But this influx in refinances may have much less of an effect on the next quarter’s index as interest rates rise. “Refinance volume will decline with higher mortgage rates, and lenders generally will respond by applying the flexibility in underwriting guidelines to make loans to harder-to-qualify borrowers,” Nothaft said.

"Mortgage Rates at 2 Week Lows" -- From Matthew Graham at Mortgage News Daily: Mortgage Rates at 2 Week Lows Amid Political Uncertainty Mortgage rates were steady-to-slightly lower today, keeping them in line with the lowest levels in 2 weeks and very close to the lowest levels of the month.  For most lenders, that means conventional 30yr fixed rate quotes of 4.25% on top tier scenarios.  Some lenders are still up at 4.375% and an aggressive few are back down to 4.125%.  Last week, we discussed the motivations for the rate improvements in detail.  To recap: longer-term rates like mortgages had already risen in anticipation of the Fed rate hike.  It wasn't a surprise.  Instead, markets were focused on the Fed's forward-looking rate hike forecasts, which came out slightly slower than markets expected.  Thus, rates were overly-prepared for a fast rate hike timeline and had some room to return to early March levels.  From there, attention has turned to fiscal uncertainty as several policy objectives of the Trump administration have run into roadblocks.  Specifically, investors are concerned that tax cuts will be significantly delayed as the health care debate seems to be front and center.  The expectation of tax cuts (and other fiscal measures) was a major contributor to the move higher in rates and stocks after the election.  To whatever extent those measures are delayed, investors can easily question if rates and stocks are higher than they should be.   Here is a table from Mortgage News Daily: Home Loan Rates View More Refinance Rates

Mortgage rates sink as the ‘Trump Trade’ comes into question - Rates for home loans sank as investors re-assessed earlier bets that President Trump’s agenda would stir stronger inflation, mortgage finance provider Freddie Mac said Thursday. The 30-year fixed-rate mortgage averaged 4.23%, down 7 basis points during the week. The 15-year fixed-rate mortgage averaged 3.44%, down from 3.50% last week. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.24%, down from 3.28% last week. Those rates don’t include fees associated with obtaining mortgage loans. The 10-year Treasury yield fell about 10 basis points during the week as markets became increasingly uncertain about Washington’s ability to enact health care policy changes. Many analysts and investors see success with that legislation as a litmus test for the tax reform and fiscal stimulus measures that President Trump and Congressional Republicans have promised.

MBA: Mortgage Applications Decrease in Latest Weekly Survey - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 17, 2017. ... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 5 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.46 percent, with points increasing to 0.41 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. Refinance activity remains low - and would not increase significantly unless rates fall sharply. The second graph shows the MBA mortgage purchase index. Even with the increase in mortgage rates over the last few months, purchase activity is still holding up. However refinance activity has declined significantly since rates increased.

 FHFA House Price Index Flat in January - The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for the most recent month. Here is the opening of the report: U.S. house prices remained flat in January according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). The HPI has reflected positive monthly increases since early 2012, except for November 2013 and January 2017, when house prices were flat on a month-over-month basis. The previously reported 0.4 percent increase in December remains unrevised. [Link to report] The chart below illustrates the HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

Housing: Upside and Downside Risks -- In a note today, Merrill Lynch economist Michelle Meyer notes a few upside and downside risks for housing. A few excerpts:  The housing market is being hit by several cross currents. On the upside, the warmer than-normal weather in the winter likely boosted housing activity over the past few months. The risk, however, is that this could be pulling activity forward from the spring. In addition, the general improvement in the economy and gain in consumer confidence could be underpinning housing activity. The NAHB homebuilder confidence index has climbed higher, reaching a new cyclical high of 71 in March. Clearly builders are optimistic. However, on the downside, interest rates have increased which weighs on affordability. There are also a variety of potential policy changes which can impact the outlook for the housing market. High on the list is financial market deregulation and its impact on the flow of credit. In addition, there seems to be renewed focus on reforming the mortgage finance system and bringing Fannie Mae and Freddie Mac out of conservatorship. In addition, immigration reform could have significant impacts on the housing market over the medium term. CR note: If, later this year, the Fed starts to reduce their balance sheet, that might push up longer rates (and pushing up mortgage rates a little more). Another downside risk for housing is reduced foreign buying due to the strong dollar, U.S. political concerns, and capital controls in China.

Existing-Home Sales Drop in February - This morning's release of the February Existing-Home Sales decreased from the previous month to a seasonally adjusted annual rate of 5.48 million units from 5.69 million in January. The Investing.com consensus was for 5.57 million. The latest number represents a 3.7% decrease from the previous month and a 5.4% increase year-over-year.Here is an excerpt from today's report from the National Association of Realtors. Lawrence Yun, NAR chief economist, says closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. "Realtors® are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that's pushing up price growth and pressuring the budgets of prospective buyers," he said. "Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market." [Full Report]  For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2013. It can be found here.

NAR: "Existing-Home Sales Stumble in February" -- From the NAR: Existing-Home Sales Stumble in February Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, retreated 3.7 percent to a seasonally adjusted annual rate of 5.48 million in February from 5.69 million in January. Despite last month's decline, February's sales pace is still 5.4 percent above a year ago.  Total housing inventory 3 at the end of February increased 4.2 percent to 1.75 million existing homes available for sale, but is still 6.4 percent lower than a year ago (1.87 million) and has fallen year-over-year for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (3.5 months in January).This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in January (5.48 million SAAR) were 3.7% lower than last month, but were 5.4% above the February 2016 rate. The second graph shows nationwide inventory for existing homes. According to the NAR, inventory increased to 1.75 million in February from 1.68 million in January. Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory. Inventory decreased 6.4% year-over-year in February compared to February 2016. Months of supply was at 3.8 months in February. This was below consensus expectations. For existing home sales, a key number is inventory - and inventory is still low.

Existing Home Sales Tumble As NAR Warns Prices Becoming Increasingly Unaffordable -- After starting the year at the fastest pace in almost a decade, existing-home sales slid in February some 3.7%, below the 2.0% drop expected, as 5.48 million existing houses were sold last month which was marked by a paradoxe: on one hand, NAR reported that the median existing-home price in February was $228,400, up 7.7% from February 2016 and was the fastest increase since last January (8.1 percent). On the other hand, as the NAR itself admits, affordability has collapsed which together with too little inventory of homes for sale, meant that buyers and sellers were unable to meet in the middle, leading to the 3rd worst month in the past 6 years, the lowest since September 2016.As Lawrence Yun, NAR chief economist, said, closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. "Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that's pushing up price growth and pressuring the budgets of prospective buyers," he said. "Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market."Added Yun, "A growing share of homeowners in NAR's first quarter HOME survey said now is a good time to sell, but until an increase in listings actually occurs, home prices will continue to move hastily."Some other observations:

  • The median existing-home price 2 for all housing types in February was $228,400, up 7.7% from February 2016 ($212,100). February's price increase was the fastest since last January (8.1 percent) and marks the 60th consecutive month of year-over-year gains.
  • Total housing inventory 3 at the end of February increased 4.2 percent to 1.75 million existing homes available for sale, but is still 6.4 percent lower than a year ago (1.87 million) and has fallen year-over-year for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (3.5 months in January).
  • All-cash sales were 27 percent of transactions in February (matching the highest since November 2015), up from 23 percent in January and 25 percent a year ago. Individual investors, who account for many cash sales, purchased 17 percent of homes in February, up from 15 percent in January but down from 18 percent a year ago. Seventy-one percent of investors paid in cash in February (matching highest since April 2015).
  • First-time buyers were 32 percent of sales in February, which is down from 33 percent in January but up from 30 percent a year ago. NAR's 2016 Profile of Home Buyers and Sellers — released in late 2016 4 — revealed that the annual share of first-time buyers was 35 percent.

A Few Comments on February Existing Home Sales --Earlier: NAR: "Existing-Home Sales Stumble in February"  -- A few key points:
1) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus.  See: Existing Home Sales: Take the Under
2) The warmer weather probably had no impact on February sales (existing home sales are reported at closing).  Warmer weather in February might have boosted sales for March and early April.
3) The contracts for February existing home sales were entered after the recent increase in mortgage rates (rates started increasing after the election).
With the recent increase in rates, I'd expect some decline in sales volume as happened following the "taper tantrum" in 2013.   This is the first month with softer sales (and it is just one month), so maybe sales will hold up.
4) Inventory is still very low and falling year-over-year (down 6.4% year-over-year in January). More inventory would probably mean smaller price increases and slightly higher sales, and less inventory means lower sales and somewhat larger price increases.
To repeat: Two of the key reasons inventory is low: 1) A large number of single family home and condos were converted to rental units. In 2015, housing economist Tom Lawler estimated there were 17.5 million renter occupied single family homes in the U.S., up from 10.7 million in 2000. Many of these houses were purchased by investors, and rents have increased substantially, and the investors are not selling (even though prices have increased too). Most of these rental conversions were at the lower end, and that is limiting the supply for first time buyers. 2) Baby boomers are aging in place (people tend to downsize when they are 75 or 80, in another 10 to 20 years for the boomers). Instead we are seeing a surge in home improvement spending, and this is also limiting supply.   Of course low inventory keeps potential move-up buyers from selling too.  If someone looks around for another home, and inventory is lean, they may decide to just stay and upgrade.  I expect inventory will be increasing year-over-year by the end of 2017.  The following graph shows existing home sales Not Seasonally Adjusted (NSA).

New Home Sales increase to 592,000 Annual Rate in February --The Census Bureau reports New Home Sales in February were at a seasonally adjusted annual rate (SAAR) of 592 thousand.  The previous three months combined were revised down slightly. "Sales of new single-family houses in February 2017 were at a seasonally adjusted annual rate of 592,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.1 percent above the revised January rate of 558,000 and is 12.8 percent above the February 2016 estimate of 525,000."The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still fairly low historically. The second graph shows New Home Months of Supply. The months of supply declined in February to 5.4 months. The all time record was 12.1 months of supply in January 2009. This is now in the normal range (less than 6 months supply is normal). "The seasonally-adjusted estimate of new houses for sale at the end of February was 266,000. This represents a supply of 5.4 months at the current sales rate." Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973.

February New Home Sales Up 6.1% MoM, Beats Forecast - This morning's release of the February New Home Sales from the Census Bureau came in at 592K, up 6.1% month-over-month from a revised 558K in January. Seasonally adjusted estimates for November and December were also revised. The Investing.com forecast was for 565K. Here is the opening from the report: Sales of new single-family houses in February 2017 were at a seasonally adjusted annual rate of 592,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.1 percent (±17.3 percent)* above the revised January rate of 558,000 and is 12.8 percent (±18.0 percent)* above the February 2016 estimate of 525,000. The median sales price of new houses sold in February 2017 was $296,200. The average sales price was $390,400. [Full Report] For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

A few Comments on February New Home Sales -New home sales for February were reported at 592,000 on a seasonally adjusted annual rate basis (SAAR).  This was well above the consensus forecast, however the three previous months combined were revised down slightly.  Overall this was a solid report. February 2017 was warmer than normal in most of the country, and since new home sales are counted when the contract is signed, the nice weather might have had a positive impact on sales in February. Sales were up 12.8% year-over-year in February.  However, January and February were the weakest months last year on a seasonally adjusted annual rate basis - so this was an easy comparison. It will take several months of data to see the impact of higher mortgage rates - and this is the seasonally weak period - so we might have to wait for the March and April data to see if there was any impact. This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate).  Sales were up 12.8% year-over-year in January.For the first two months of 2017, new home sales are up 7.1% compared to the same period in 2016.  And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years.

Positive trends in most housing sales indicators continue - With the exception of existing home sales, the least important metric, the housing market continues to show surprising strength in the face of rising interest rates. Last week housing permits and starts were reported. Permits fell, while the more volatile starts rose: Neither set a post-recession record, although the three month moving average of starts, which takes away most of the volatility, did make another post-recession high. Yesterday morning new single family home sales were reported. These are, if anything, even slightly more leading than permits, but are much more volatile and heavily revised. These were up: But again, they did not set a new post-recession record. The two least volatile, but reliable, measures of the housing market are single family permits and residential construction. Single family permits have historically peaked on average at the same time as overall permits - but they are much less volatile: These did make a new post-recession high. Residential construction has not been reported for February yet, but as of January, on an inflation adjusted basis, if had the second highest reading of any since the end of the recession, and has recently re-established a rising trend: Finally, seasonally adjusted purchase mortgage applications continue to rise YoY, and on an absolute basis are just below last June's high (h/t Bill McBride a/k/a Calculated Risk): The bottom line is that the housing market is a solid positive for now. There has not been any downturn due to increased mortgage rates, at least not yet. This bodes well for the economy over the next 12 - 18 months.

Job surge fuels bidding wars for record-low supply of homes -  It’s the 2017 U.S. spring home-selling season, and listings are scarcer than they’ve ever been. Bidding wars common in perennially hot markets like the San Francisco Bay area, Denver and Boston are now also prevalent in the once slow-and-steady heartland, sending prices higher and sparking desperation among buyers across the country. “Homebuyers are going to find this spring that, in a lot of markets, the inventory of homes priced and sized at price levels they were hoping for will be very limited,” said Thomas Lawler, a former Fannie Mae economist who’s now a housing consultant in Leesburg, Virginia. “Unlikely places are getting significantly tighter.” Buyers are clamoring as an improved job market and growing confidence in the economy collide with rising mortgage rates -- yet there’s little new inventory for them to purchase. Housing starts remain well below levels before the last recession, and builders have focused on higher-end properties out of reach for many people. Homeowners have become even more reluctant to sell because, after all, where are they going to move? The three months through January had the fewest homes on the market on record, according to an analysis by Trulia. Prices jumped 6.9 percent in January from a year earlier, the biggest increase for any month since May 2014, data from CoreLogic Inc. show. And homes sold faster in the first two months of 2017 -- spending an average 58 days on the market -- than at the start of any year since at least 2010, according to brokerage Redfin.

AIA: Architecture Billings Index increased in February Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture Billings Index rebounds into positive territory The Architecture Billings Index (ABI) returned to growth mode in February, after a weak showing in January. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the February ABI score was 50.7, up from a score of 49.5 in the previous month. This score reflects a minor increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.5, up from a reading of 60.0 the previous month, while the new design contracts index climbed from 52.1 to 54.7. “The sluggish start to the year in architecture firm billings should give way to stronger design activity as the year progresses,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “New project inquiries have been very strong through the first two months of the year, and in February new design contracts at architecture firms posted their largest  monthly gain in over two years.”  
• Regional averages: Midwest (52.4), South (50.5), Northeast (50.0), West (47.5)
• Sector index breakdown: institutional (51.8), multi-family residential (49.3), mixed practice (49.2), commercial / industrial (48.9)

Bank Card Default Rates Rise Four Straight Months In February 2017 According To S&P/Experian Consumer Credit Default Indices - Data through February 2017, released today by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, shows the composite rate up two basis points from last month at 0.94% in February. The bank card default rate recorded a 3.22% default rate, up one basis point from January. Auto loan defaults came in at 1.05%, down one basis point from the previous month. The first mortgage default rate came in at 0.74%, up two basis points from January. The five major cities showed mixed results in February with two higher default rates, two lower, and one unchanged. Dallas had the largest increase, reporting 0.83%, up eight basis points from January. New York reported 0.94% for February, rising six basis points from the previous month. Chicago saw its default rate decrease four basis points to 0.99%. Miami reported a decrease, the first since October 2016, of 25 basis points at 1.42%. Los Angeles remained unchanged at 0.80%.    The national bank card default rate of 3.22% in February matches a 44-month high unseen since July 2013. When comparing bank card default rates among the four census divisions, the bank card default rate from the south is considerably higher than the other three census divisions.        "The increase in the Fed funds rate announced last week by the Federal Reserve will push up the interest rate charged on bank cards in the near future," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "The quarter percentage point increase will be gradually passed through to the charges faced by those borrowing with their credit cards. Based on the projections made by members of the Fed's policy committee, we could see three or possibly four additional increases this year. Given the prospect of higher interest rates and continuing economic expansion, the recent rise in bank card default rates is not expected to immediately reverse. Interest rates on auto loans and home mortgages are also likely to advance following the Fed's action.

The "Retail Apocalypse" Is Officially Descending Upon America Consumerism has long been a defining element of American society, but retail giants are now shutting down thousands of their locations amid a long-anticipated “retail apocalypse." BI reports that over the next couple months, more than 3,500 stores are expected to close:“Department stores like JCPenney, Macy’s, Sears, and Kmart are among the companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.”Some stores, like Bebe and The Limited, are closing all of their locations to focus more on online sales. Other larger chains, like JC Penney, are “aggressively paring down their store counts to unload unprofitable locations and try to staunch losses,Business Insider notes. Sears and K-Mart are following a similar trajectory moving forward.Sears is shutting down 150 Sears and Kmart locations, about 10% of their shops. JCPenney is shutting down 138 stores, about 14% of their total locations.These closures are the consequence of several different factors. First, the United States has more shopping mall square footage per person than other parts of the world. In America, retailers reserve 23.5 square feet per person; in Canada and Australia, the countries with the second- and third-most space have 16.4 and 11.1, respectively.Another reason retail brick and mortars are failing is the growth of e-commerce. Between 2010 and 2013, visits to shopping malls declined 50%, according to data from real estate research firm Cushman and Wakefield. Meanwhile, online sales from huge online outposts, like Amazon, have exploded.  Though Americans increasingly prefer to shop online, their preferences are also changing. Shoppers are choosing to spend their money on “restaurants, travel, and technology than ever before, while spending less on apparel and accessories,” Business Insider reports.

Sears and Kmart might not have enough money to stock their stores - The company that operates Sears, the department store chain that dominated retail for decades, warned Tuesday that it faces "substantial doubt" about its ability to stay in business unless it can borrow more and tap cash from more of its assets. "Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern," Sears Holdings said in a filing with the Securities and Exchange Commission. Sears Holdings operates both Sears and Kmart stores. While it said it is working to find ways to mitigate that doubt, it said that it can't be sure that it will be able to raise the cash to keep going. In January, Sears said it planned to close 150 stores. In the following month, the retailer initiated a restructuring program aimed at cutting $1 billion in costs annually and reducing debt by $1.5 billion helped by proceeds from the sale of one of its most valuable brands, Craftsman tools to Stanley Black & Decker. "We acknowledge that we continue to face a challenging competitive environment," Sears said in the filling. But it's bleeding cash: After its 2016 loss, it had to finance its cash needs for operating expenses from "investing and financing activities." Sears, which at the end of its fiscal year had about 140,000 employees, said that it expects to continue to try to generate cash from real estate sales and borrowing. The company said it is also exploring ways to "unlock value" through its Home Services and Sears Auto Center, Kenmore appliances and DieHard batteries and parts business by partnering with other companies, or other means. It says it hopes those actions are enough to ward off the "substantial doubt" that it warned about in the filing.

Sears Enters Death Spiral: Vendors Halt Shipments, Insurers Bail -- When we commented yesterday morning on the unexpected "going concern" notice in Sears' just filed 10-K which sent the stock crashing, we pointed out the immediate spin provided by Eddie Lampert's distressed retailer which promised that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements", to which however we added the footnote that "the question is what happens when vendors start demanding cash on delivery as concerns about SHLD.'s liquidity concerns continue to grow." As it turned out, we wouldn't have long to wait, because overnight Reuters reported that the worst case Sears scenario we envisioned for Sears is now taking shape and that suppliers to Sears have told Reuters they are doubling down on defensive measures, such as reducing shipments and asking for better payment terms, to protect against the risk of nonpayment as the company warned about its finances. The company's disclosure turned the focus to its vendors as tension is expected to mount ahead of the key fourth-quarter selling season amid rising concern about a potential bankruptcy, they said. Quoted by Reuters, the managing director of a Bangladesh-based textile firm said his company is using only a handful of its production lines to manufacture products for Sears' 2017 holiday sales. Last year, nearly half of the company's lines in its four factories were producing for Sears. "We have to protect ourselves from the risk of nonpayment,"said the managing director, who declined to be identified for fear of disrupting his company's relationship with Sears.Furthermore, precisely as we predicted, Mark Cohen, the former CEO of Sears Canada and director of retail studies at Columbia Business School said vendors will keep a close eye on Sears' finances. "Whatever vendors continue to support them are now going to put them on even more of a short string. That means they’ll ship them smaller quantities and demand payment either in advance or immediately upon delivery." He added: "Sears stores are pathetically badly inventoried today and they will become worse."

CPI Tamer in February -- Robert Oak - (11 graphs) The Consumer Price Index for February returned to Earth with a 0.1% monthly increase.  January stayed unrevised at 0.6%.  The monthly change was the smallest gain since July 2016.  The main cause was gasoline, again, which dropped -3.0% for the month.  Inflation with food and energy price changes removed increased 0.2%.  From a year ago overall CPI has now risen 2.7%.  Without energy and food considered, prices have increased 2.2% for the year.   CPI measures inflation, or price increases.Yearly overall inflation is shown in the below graph and we can see the 2.7% increase is really a balloon in comparison to previous annual gains. Core inflation, or CPI with all food and energy items removed from the index, has increased 2.2% for the last year. For the past decade the annualized inflation rate has been 1.9%. Core inflation is the figure the Federal Reserve considers for interest rate increase decisions and no surprise this is why they raised rates and probably will again based on these figures. Core CPI's monthly 0.2% percentage change is graphed below. Within core inflation, shelter increased 0.3%, with monthly rental costs increasing 0.3% and home ownership equivalent rent increased 0.3%. Shelter overall is up 3.5% for the year with rent increasing 3.9% annually. Recreation soared up 0.6%, the largest increase since 2001. New cars decreased by -0.2% and used cars and trucks decreased by -0.6%. Education increased 0.3% for the month.The energy index decreased -1.0% for the month and is now up 15.2% from a year ago. The BLS separates out all energy costs and puts them together into one index. For the year, gasoline has now increased 30.7%. Fuel oil is up 28% for the year, while dropped by -0.4% this month. Graphed below is the overall CPI energy index. Graphed below is the CPI gasoline index annual percentage change and for the month gas dropped by -3.0%. Graphed below is the rent price index which has been soaring for some time, now up 3.9% annually, and is shown in the below graph. Food prices increased by 0.2% for the month. Food and beverages have now not changed from a year ago. Groceries, (called food at home by the BLS), increased 0.3% for the month, and are down -1.7% for the year. Nonalcoholic beveridges increased 1.5%, the largest jump since January 2011. Dairy and related products increased 0.8% for the month, the largest gain since May 2014 and the second month in a row for the same jump. Eating out, or food away from home increased 0.2% for the month and is up 2.4% for the year.

Used Car Prices Plunge Most in Any Month Since 2008, Only 2nd February Decline in 20 Years - According to NADA Used Car Guide, wholesale prices on used vehicles are getting crushed. Let’s take a look at the details. Used Car Prices Since 1995. Used Car Prices by Type of Vehicle  In a reversal of what typically occurs in February, wholesale prices of used vehicles up to eight years old fell substantially last month, dropping 1.6% compared to January. The drop was counter to the 1% increase expected for the month and marked just the second time in the past 20 years prices fell in February (last years’ scant 0.2% being the other instance).NADA Used Car Guide’s seasonally adjusted used vehicle price index fell for the eighth straight month, declining 3.8% from January to 110.1. The drop was by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6% tumble. February’s index figure was also 8% below February 2016’s 119.4 result and marked the index’s lowest level since September 2010.Automakers grew incentive spending once again in February, making it the 23rd month in a row where spending was increased. On average, spending reached $3,594 per unit versus $3,043 per unit in February 2016 according to Autodata.Among the U.S. Big Three, GM raised incentives by 27.4% in February to an average of $5,125 per unit. Spending at Ford Motor Company rose by 20.9% to $4,012 per unit, while FCA increased incentives by 10.6% to $4,365. As for Import automakers, Toyota Motor Sales raised incentives by 7.9% in February, reaching an average of $2,267 per unit. American Honda grew incentives by 26.6%to $1,886, while Nissan North America increased spending by 20.1% to $4,080 for the month.

Ally Financial Issues Profit Warning Over Used Car Prices: Jamie Dimon Says “It’s Not Systemic” - Mish - A supply glut of used cars coupled with subprime lending finally came to the forefront with a Profit Warning From Ally Financial.Ally Financial Inc. warned profit may grow less than anticipated only a few months ago, the latest sign that automakers’ heavy discounting and aggressive use of leasing to boost sales has created a supply glut hurting lenders and rental-car companies. Earnings may increase as little as 5 percent this year, Ally said Tuesday, after Chief Executive Officer Jeffrey Brown in January predicted growth “shy of 15 percent but still very solid.” The caution raised by the Detroit-based company dragged on shares of rental companies and auto dealer groups including Hertz Global Holdings Inc. and AutoNation Inc. While Ally had expected a 5 percent drop in used-car prices in the near term, the lender saw a 7 percent slide in the first quarter, which could cost $15 million to $20 million, Halmy said during a Tuesday conference call with analysts.  “Used-vehicle prices continue to decline at a manageable rate, but a bit higher than last year’s pace,” he said. “We do expect the used-car market to rebound more in the second quarter.” “Auto we think is going to slow down because people will stress on credit,” Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said at the company’s investor day on Feb. 28. “You’re going to see some issues there, but it’s not systemic.”

Is This The Sound Of The Bottom Falling Out Of The Auto Industry? - Wolf Richter - Not quite, not yet, but it’s not good either.Let’s hope that the problems piling up in the used vehicle market - and their impact on new vehicle sales, automakers, $1.1 trillion in auto loans, and auto lenders - is just a blip, something caused by what has been getting blamed by just about everyone now: the delayed tax refunds.In its March report, the National Association of Auto Dealers (NADA) reported an anomaly: dropping used vehicle prices in February, which occurred only for the second time in the past 20 years. It was a big one: Its Used Car Guide’s seasonally adjusted used vehicle price index plunged 3.8% from January, “by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6% tumble.”The index has now dropped eight months in a row and hit the lowest level since September 2010. The index is down 8% year over year, and down 13% from its peak in 2014. The price decline spanned all segments, but it hit the two ends of the spectrum — subcompact cars and the luxury end — particularly hard. The list shows the change in wholesale prices from January to February in vehicles up to eight years old:

Vehicle Sales Forecast: Sales Over 17 Million SAAR in March -- The automakers will report March vehicle sales on Tuesday, April 4th.Note: There were 27 selling days in March 2017, unchanged from 27 in March 2016. From WardsAuto: Forecast: U.S. March Sales to Reach 17-Year High A WardsAuto forecast calls for U.S. automakers to deliver 1.61 million light vehicles in March, a 17-year high for the month. The forecasted daily sales rate of 59,776 over 27 days is a best-ever March result. This DSR represents a 2.6% improvement from like-2016 (also 27 days). March is anticipated to be the first month in 2017 to outpace prior-year. The report puts the seasonally adjusted annual rate of sales for the month at 17.2 million units, below the 17.4 million SAAR from the first two months of 2017 combined, but well above the 16.6 million from same-month year-ago. ... From J.D. Power: March U.S. auto sales seen up nearly 1.9 pct -JD Power and LMCU.S. auto sales in March will increase almost 1.9 percent from a year earlier, even as consumer discounts continue to remain at record levels, industry consultants J.D. Power and LMC Automotive said on Friday.March U.S. new vehicle sales will be about 1.62 million units, up about 1.9 percent from 1.59 million units a year earlier, the consultancies said. The forecast was based on the first 16 selling days of the month.The seasonally adjusted annualized rate for the month will be 17.3 million vehicles, up from 16.8 million a year earlier.  Looks like another strong month for vehicle sales, but incentives are at record levels and inventories are high.

U.S. Heavy Truck Sales increasing following Oil Price Related Slump --The following graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the February 2017 seasonally adjusted annual sales rate (SAAR). Heavy truck sales really collapsed during the great recession, falling to a low of 181 thousand in April and May 2009, on a seasonally adjusted annual rate basis (SAAR). Then sales increased more than 2 1/2 times, and hit 479 thousand SAAR in June 2015. Heavy truck sales declined again - probably mostly due to the weakness in the oil sector - and bottomed at 352 thousand SAAR in October of last year. With the increase in oil prices over the last year, heavy truck sales have been increasing too. Heavy truck sales were at 400 thousand SAAR in February 2017.

February Headline Durable Goods Orders Better Than Forecast -  The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:New orders for manufactured durable goods in February increased $3.9 billion or 1.7 percent to $235.4 billion, the U.S. Census Bureau announced today. This increase, up two consecutive months, followed a 2.3 percent January increase. Excluding transportation, new orders increased 0.4 percent. Excluding defense, new orders increased 2.1 percent. Transportation equipment, also up two consecutive months, led the increase, $3.3 billion or 4.3 percent to $80.4 billion. Download full PDFThe latest new orders number at 1.7% month-over-month (MoM) was above the Investing.com consensus of 1.2%. The series is up 5.0% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at 0.4% MoM, which was below the Investing.com consensus of 0.5%. The core measure is up 4.6% YoY.If we exclude both transportation and defense for an even more fundamental "core", the latest number is up 1.0% MoM and up 3.4% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It dropped 0.1% MoM and is up 2.7% Y oY.For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

“Dig once” bill could bring fiber Internet to much of the US -- Years in the making, a proposal to mandate the installation of fiber conduits during federally funded highway projects might be gaining some new momentum.If the US adopts a "dig once" policy, construction workers would install conduits just about any time they build new roads and sidewalks or upgrade existing ones. These conduits are plastic pipes that can house fiber cables. The conduits might be empty when installed, but their presence makes it a lot cheaper and easier to install fiber later, after the road construction is finished.The idea is an old one. US Rep. Anna Eshoo (D-Calif.) has been proposing dig once legislation since 2009, and it has widespread support from broadband-focused consumer advocacy groups. It has never made it all the way through Congress, but it has bipartisan backing from lawmakers who often disagree on the most controversial broadband policy questions, such as net neutrality and municipal broadband. It even got a boost from Rep. Marsha Blackburn (R-Tenn.), who has frequently clashed with Democrats and consumer advocacy groups over broadband—her "Internet Freedom Act" would wipe out the Federal Communications Commission's net neutrality rules, and she supports state laws that restrict growth of municipal broadband.Blackburn, chair of the House Communications and Technology Subcommittee, put Eshoo's dig once legislation on the agenda for a hearing she held yesterday on b roadband deployment and infrastructure. Blackburn's opening statement said that dig once is among the policies she's considering to "facilitate the deployment of communications infrastructure." But her statement did not specifically endorse Eshoo's dig once proposal, which was presented only as a discussion draft with no vote scheduled. The subcommittee also considered a discussion draft that would "creat[e] an inventory of federal assets that can be used to attach or install broadband infrastructure."

Chemical Activity Barometer increases in March - From the American Chemistry Council: Consumer, Business Confidence Reach Levels Not Seen in Decades; Optimism Reflected in Increased Chemical Industry ActivityThe Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), posted its strongest year-over-year gain in nearly seven years. The 5.5 percent increase over this time last year reflects elevated consumer and business confidence and an overall rising optimism in the U.S. economy. Speaking last week, Federal Reserve Chairwoman Janet Yellen also referenced a “confidence in the robustness of the economy” as a reason to move forward with an interest rate hike. The barometer posted a 0.5 percent gain in March, following a 0.5 percent gain in February and 0.4 percent gain in January. All data is measured on a three-month moving average (3MMA). Coupled with consecutive monthly gains in the fourth quarter of 2016, the pattern shows consistent, accelerating activity. On an unadjusted basis the CAB climbed 0.4 percent in March, following a 0.4 percent gain in February and a 0.6 percent increase in January.  Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.

Kansas City Fed: Regional Manufacturing Activity "Strengthened Further" in March - From the Kansas City Fed: Tenth District Manufacturing Activity Strengthened Further The Federal Reserve Bank of Kansas City released the March Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity strengthened further with strong expectations for future activity.“Our composite index accelerated again, and has only been higher one time in the last 15 years,” said Wilkerson.  “The future employment index was the strongest in the 23-year history of the survey." The month-over-month composite index was 20 in March, its highest reading since March 2011, up from 14 in February and 9 in March.  The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.  Activity in both durable and nondurable goods plants increased, particularly for metals, computer, electronic, and aircraft products.  Most month-over-month indexes rose further in March.  The production and shipments indexes increased considerably, while the new orders and order backlog indexes rose more moderately but remained high.  The employment index moderated slightly from 17 to 13, and the new orders for exports index also eased.  Both inventory indexes increased for the second straight month.  The Kansas City region was hit hard by the decline in oil prices, but activity is expanding solidly again. The regional Fed surveys released so far suggest another strong reading for the ISM manufacturing index for March.

Kansas City Fed Survey: Activity Strength Continues, Expected Activity Highest Ever - The Kansas City Fed Manufacturing Survey business conditions indicator measures activity in the following states: Colorado, Kansas, Nebraska, Oklahoma, Wyoming, western Missouri, and northern New Mexico.Quarterly data for this indicator dates back to 1995, but monthly data is only available from 2001. New seasonal adjustment factors were introduced in January 2017 and slight revisions were made to previous data as a result.Here is an excerpt from the latest report: –The Federal Reserve Bank of Kansas City released the March Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity strengthened further with strong expectations for future activity. “Our composite index accelerated again, and has only been higher one time in the last 15 years,” said Wilkerson. “The future employment index was the strongest in the 23-year history of the survey.” [Full PDF release here] Here is a snapshot of the complete Kansas City Fed Manufacturing Survey.

'Soft' Data Slammed: US Services, Manufacturing PMIs Plunge To 6-Month Lows - Following Europe's surging PMIs (to six year highs), US data was extremely disappointing. Both Services and Manufacturing PMI disappointed, tumbling to the lowest levels since before the election. Simply put, the 'soft' data is converging back lower to the dismal reality of the 'hard' data. Hope is hot in Europe...And not in USA... As Output slows dramatically.. Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“The US economy shifted down a gear in March. A slowing in the pace of growth signalled by the PMI surveys for a second straight month suggests that the economy is struggling to sustain momentum. The survey readings are consistent with annualized GDP growth of 1.7% in the first quarter, down from 1.9% in the final quarter of last year.“The employment readings from the survey have also deteriorated,suggesting private sector hiring is running at a reduced rate of around 120,000 per month.“Inflows of new business have moderated in both manufacturing and services, the latter seeing the most worrying slowing. Backlogs of work are also starting to fall again – something which is commonly followed by firms cutting back on their hiring.“Business confidence ticked higher in March, however, providing some brighter news on the outlook and a glimmer of hope that the growth trend will pick up again in the second quarter.”The bottom line is that 'animal spirits' are fading fast.

Weekly Initial Unemployment Claims increase to 258,000 -- The DOL reported: In the week ending March 18, the advance figure for seasonally adjusted initial claims was 258,000, an increase of 15,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 241,000 to 243,000. The 4-week moving average was 240,000, an increase of 1,000 from the previous week's revised average. The previous week's average was revised up by 1,750 from 237,250 to 239,000.  The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.

BLS: Unemployment Rates "significantly lower in February in 10 states", Arkansas and Oregon at New Lows --From the BLS: Regional and State Employment and Unemployment Summary:  Unemployment rates were significantly lower in February in 10 states, higher in 1 state, and stable in 39 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Nine states had notable jobless rate decreases from a year earlier, and 41 states and the District had no significant change. The national unemployment rate, at 4.7 percent, was little changed from January but 0.2 percentage point lower than in February 2016.  New Hampshire had the lowest unemployment rate in February, 2.7 percent, closely followed by Hawaii and South Dakota, 2.8 percent each, and Colorado and North Dakota, 2.9 percent each. The rates in both Arkansas (3.7 percent) and Oregon (4.0 percent) set new series lows. ... New Mexico had the highest jobless rate, 6.8 percent, followed by Alaska and Alabama, 6.4 percent and 6.2 percent, respectively.This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession. The size of the blue bar indicates the amount of improvement. The yellow squares are the lowest unemployment rate per state since 1976. The states are ranked by the highest current unemployment rate. New Mexico, at 6.8%, had the highest state unemployment rate. The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red). Currently no state has an unemployment rate at or above 7% (light blue); Only three states are at or above 6% (dark blue). The states are New Mexico (6.8%), Alaska (6.4%), and Alabama (6.2%).

Will Amazon Destroy More US Jobs Than China? - A MarketWatch article last week by Rex Nutting posited that Amazon could destroy as many as 2 million jobs, which are as many as one study said were lost to China. While the China estimate strikes me as low, Nutting’s math on Amazon appears reasonable. Basically, more and more people have become habituated to online shopping, even for categories like apparel. I have to confess I’ve done a fair bit of the little clothes shopping I’ve done in the last couple of years on line. On the one hand, I hate dealing with stores because finding anything is so hit or miss, but at least when you find something that looks good in the mirror, it’s usually a keeper. On the other hand, with online shopping, you can find targets more efficiently, but the “hit or miss” element shifts to fit, color, and quality of fabric/tailoring. And if you don’t have time or patience for returns, you wind up with stuff in your closet that eventually goes to a charity.  Here is the guts of Nutting’s argument: But for retail workers, Amazon is a grave threat. Just ask the 10,100 workers who are losing their jobs at Macy’s.  Or the 4,000 at The Limited. Or the thousands of workers at Sears  and Kmart, which just announced 150 stores will be closing. Or the 125,000 retail workers who’ve been laid off over the past two years. Retailers now employ 16.5 million, and Nutting backs out categories like gas stations that aren’t subject to competition from Amazon. Bear in mind that Amazon is trying to move into groceries, but Nutting deems those jobs to be safe for now. He deems the 12 million workers to be at risk, particularly the ones in stores classified as GAFO, for general merchandise (think everything from sporting goods to hardware and electronics), apparel and accessories, furniture and other sales.  GAFO merchants are still mainly brick and mortar operators, and rely heavily on malls, which is where Amazon is doing the most damage. Mall anchors like Macy’s have been particularly hard hit by competition from Amazon, and once a mall loses an anchor for good, it’s on its way to a death spiral.

 H1B Visa Abuse: What Do Software Engineers Earn in India and Pakistan? - Riaz Haq - A segment of CBS 60 Minutes, top rated American newsmagazine on television, has recently brought sharp focus on H1B visa abuse. It alleges that the H1B visas are being misused by Indian body shops to bring low-cost Indian software engineers to the United States to replace higher-paid American workers.   The visa category was originally intended to help fill gaps in the high-tech workforce with highly skilled employees from abroad in situations where there aren’t enough Americans. Instead, it has given rise to body shops that bring in workers from overseas, mainly from India, to replace higher-paid American workers.  Recent examples of the firing of American IT workers and their replacement by Indian workers at UC San Francisco and Walt Disney and Co have received a lot of media attention. What has particularly incensed the American public is the practice of forcing the American workers to train their replacements.A loophole in H-1B legislation that US companies are taking advantage of allows them to outsource jobs to Indian body shops without even looking for Americans, if those jobs pay approximately $60,000 or higher. Similar jobs in Silicon Valley pay an average of $110,000 a year.The average salary of a software engineer ($110,000) in Silicon Valley is about 20X more than the average salaries in India ($6,875) and Pakistan ($4,770). Indian body shops are masters of gaming the H1-B system.  Most of India's IT exports to the United States are made up of wages of H1B workers brought to the United States by a handful of Indian body shops like Cognizant, Tata Consulting Services (TCS) and Infosys.  In 2014, 86% of the H1B visas for tech workers were granted to Indians, according to available data.

Inside Alabama’s Auto Jobs Boom: Cheap Wages, Little Training, Crushed Limbs --Alabama has been trying on the nickname “New Detroit.” Its burgeoning auto parts industry employs 26,000 workers, who last year earned $1.3 billion in wages. Georgia and Mississippi have similar, though smaller, auto parts sectors. This factory growth, after the long, painful demise of the region’s textile industry, would seem to be just the kind of manufacturing renaissance President Donald Trump and his supporters are looking for. Except that it also epitomizes the global economy’s race to the bottom. Parts suppliers in the American South compete for low-margin orders against suppliers in Mexico and Asia. They promise delivery schedules they can’t possibly meet and face ruinous penalties if they fall short. Employees work ungodly hours, six or seven days a week, for months on end. Pay is low, turnover is high, training is scant, and safety is an afterthought, usually after someone is badly hurt. Many of the same woes that typify work conditions at contract manufacturers across Asia now bedevil parts plants in the South. “The supply chain isn’t going just to Bangladesh. It’s going to Alabama and Georgia,” says David Michaels, who ran OSHA for the last seven years of the Obama administration. Safety at the Southern car factories themselves is generally good, he says. The situation is much worse at parts suppliers, where workers earn about 70¢ for every dollar earned by auto parts workers in Michigan, according to the Bureau of Labor Statistics. (Many plants in the North are unionized; only a few are in the South.)

 DOL unequivocally has the authority to set an overtime threshold - Last year, the Department of Labor issued the “Overtime Rule,” which increases the profoundly outdated salary threshold below which most salaried workers are eligible for overtime pay from $23,660 to $47,476. In November, however, a district court in Texas issued a nationwide injunction against the rule. When asked whether he would defend the rule in court, Acosta volunteered that he in fact questions whether or not the Department of Labor even has the authority to set the salary threshold.     It is breathtakingly radical for a labor secretary nominee to be questioning the authority of the Labor Department to set the overtime threshold. The Labor Department has exercised this authority since 1938, and has done so under 10 presidents, including Franklin D. Roosevelt and George W. Bush. Congress has amended the Fair Labor Standards Act many times and has never objected to the salary test. The law is unambiguous; the Labor Department has the authority to set the threshold. Suggesting otherwise suggests a disturbing openness to drastically undermining foundational labor standards that protect workers’ time and earnings. Heading into the hearing, the question on many people’s minds was whether or not Acosta would demonstrate that, as secretary of labor, he would fight for workers’ rights and wages. His response to the overtime question provides a clear answer: NO.

Immigrants don’t make up a majority of workers in any U.S. industry  Immigrants are more likely than U.S.-born workers to be employed in a number of specific jobs, including sewing machine operators, plasterers, stucco masons and manicurists. But there are no major U.S. industries in which immigrants outnumber the U.S. born, according to a Pew Research Center analysis of government data.All told, immigrants made up 17.1% of the total U.S. workforce in 2014, or about 27.6 million workers out of 161.4 million. About 19.6 million workers, or 12.1% of the total workforce, were in the U.S. legally; about 8 million, or 5%, entered the country without legal permission or overstayed their visas. (Roughly 10% of unauthorized immigrants have been granted temporary protection from deportation and eligibility to work under two federal programs, known as Deferred Action for Childhood Arrivals and Temporary Protected Status.)There are two main ways to look at the kinds of work people do: by industry (that is, the business their employer is engaged in) and by occupation (the kind of work they do on the job). To get a sense of the work immigrants to the U.S. do most frequently, we relied on 2014 workforce estimates by Pew Research Center. The estimates, based on augmented data from the Census Bureau’s 2014 American Community Survey, cover all workers ages 16 and older who reported being in a civilian industry or occupation, including both lawful and unauthorized immigrants. Private households were the most immigrant-intensive “industry” in 2014. Of the 947,000 people working for private households, 45% were immigrants, with lawful immigrants slightly outnumbering unauthorized immigrants. The industries with the next-biggest shares of immigrant workers were textile, apparel and leather manufacturers (36%) and the farm sector: A third (33%) of the nearly 2 million agriculture workers in 2014 were born outside the U.S.

Farmworker wages in California: Large gap between full-time equivalent and actual earnings -- A report in the LA Times last week explored why farmers in the Central Valley are having a hard time finding enough workers, despite reportedly paying up to 40 percent more than the California minimum wage. “Today, farmworkers in the state earn about $30,000 a year if they work full time—about half the overall average pay in California,” notes the Times. “Most work fewer hours.” The second sentence here is key: most farmworkers are not employed 40 hours a week 52 weeks a year, so most earn far less than $30,000 per year. In fact, in 2015, workers who received their primary earnings from agricultural employers earned an average of $17,500—less than 60 percent of the average annual wage of a full-time equivalent (FTE) worker in California. Many farmworkers are paid an hourly rate higher than California’s minimum wage—$10.00 or $10.50 an hour in 2017, depending on whether the employer has 25 or less, or 26 or more employees, respectively—and workers who are paid piece rates, which reflect how much they pick or prune, often earn $12 to $14 an hour. Many young male farmworkers aim to earn $100 a day, which is $12.50 an hour for an eight-hour day and $14.30 an hour for a seven-hour day. But farmworkers typically are not employed in agriculture year-round. Many farm jobs are seasonal, and few workers migrate between California farming regions—those who pick vegetables in southern California deserts between January and May rarely move to the San Joaquin Valley to pick fruit between July and September.

U.S. Has Worst Wealth Inequality of Any Rich Nation, and It’s Not Even Close - I’ve discussed the Credit Suisse Global Wealth Reports before, an excellent source of data for both wealth and wealth inequality. The most recent edition, from November 2016, shows the United States getting wealthier, but steadily more unequal in wealth per adult and dropping from 25th to 27th in median wealth per adult since 2014. Moreover, on a global scale, it reports that the top 1% of wealth holders hold 50.8% of the world’s wealth (Report, p. 18). One important point to bear in mind is that while the United States remains the fourth-highest country for wealth per adult (after Switzerland, Iceland, and Australia) at $344,692, its median wealth per adult has fallen to 27th in the world, down to $44,977. As I have pointed out before, the reason for this is much higher inequality in the U.S. In fact, the U.S. ratio of mean to median wealth per adult is 7.66:1, the highest of all rich countries by a long shot. The tables below illustrate this. First, I will present the 29 countries with median wealth per adult over $40,000 per year, from largest to smallest. The second table also includes mean wealth per adult and the mean/median ratio, sorted by the inequality ratio. Let’s move now to the inequality data, where I’ll present median wealth per adult, mean wealth per adult, and the mean-to-median ratio, a significant indicator of inequality. These data will be sorted by that ratio.As you can see, the U.S. inequality ratio is more than 50% higher than #2 Denmark and fully three times as high as the median country on the list, France. As the title says, this is not even close.

The biggest special education ruling in years doesn’t actually resolve much - On Wednesday, in a unanimous decision on Endrew F. v. Douglass County School District, the Supreme Court raised the bar for special education services in public schools. Chief Justice Roberts’s opinion established that the standard for an “appropriate” education under the Individuals with Disabilities Education Act (IDEA) is “markedly more demanding than the ‘merely more than de minimis’ test applied by the Tenth Circuit.” The “more than de minimis” standard was a low bar, requiring some educational benefit as opposed to none. In deciding that districts must provide “meaningful” educational benefits, yesterday’s ruling was a win for Endrew and other students with disabilities. However, it was also purposefully limited and took only a small step toward clarifying IDEA.  Endrew, who has autism, was removed by his parents from Douglass County Public Schools because they viewed his Individualized Education Program, or IEP, as insufficient: they placed him in a private school, where he thrived, and sued the district for failing to provide a FAPE and asked for reimbursement of the private school tuition. In this case (and most others of this kind that make it to court), the debate hinged on the definition of “appropriate.” Endrew’s parents argued not only that the offered IEP was lacking, but also that the standard for “appropriate” education should be that students with disabilities receive educational opportunities that are “substantially equal to the opportunities afforded [to] children without disabilities.” The school district argued that the IEP was appropriate because it offered “some educational benefit,” satisfying the standard developed in Hendrick Hudson Bd. of Ed. v. Rowley. The Supreme Court took a middle ground and rejected both these arguments. Stating that Endrew’s parents’ argument was “plainly at odds” with the Rowley decision, the court did not raise the bar for IEPs to require equality of opportunity, which would have created a dramatically higher standard with enormous ramifications for school districts.The Court also rejected the district’s interpretation that Rowley merely requires “some educational benefit,” which is one of two interpretations that have been used across US district courts.

Oil And Gas States Forced To Cut Education Spending -- The oil price slump has put pressure on the budgets of the U.S. oil and coal states that have been struggling with lower energy tax revenues and difficult decisions about which public-sector financing they should reduce. Higher budget deficits have led to cuts across the board, and education has been one of the sectors on the chopping block. This week, Wyoming became the latest in a series of oil and coal producing states that have cut funds from education. Oklahoma, North Dakota and Alaska had already lowered some of the funding for various education programs throughout last year, when the sting of the low oil prices was most painful to monthly tax collections. Last year, six of the top eight oil-pumping U.S. states slipped into recession, S&P Global Ratings said in a report in January. Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, and Wyoming saw their economies shrink in 2016, while Texas and Montana had GDP growth much smaller than in 2015, estimates in the report show. While the oil price crash was affecting drilling and consequently, oil revenues of the states, U.S. coal production was also dropping. In the first quarter of 2016, U.S. coal output hit its lowest quarterly level since a major coal strike in the second quarter of 1981, the EIA said last June, with coal production from the Powder River Basin in Montana and Wyoming declining the most in tonnage and percentage since the previous quarter.  And Wyoming was the latest U.S. state to cut from education funds. Governor Matt Mead approved on March 13 a K-12 education spending plan that cuts $34.5 million from schools. Since around 30 percent of Wyoming’s spending on education comes from federal mineral royalties, and another 30 percent from property taxes often backed by these minerals, it’s hardly a surprise that the state has cut some of the education spend. Future funding for some of Wyoming’s educational programs could really depend on the state of the U.S. oil and coal industries,  Across the oil producing states, North Dakota’s Revised Executive Budget Recommendation 2017-2019 prioritizes K-12 education, but envisages a $31-million reduction to higher education. In the middle of last year, Alaska Governor Bill Walker cut a total of $150 million in budget allocations to schools, the university and the state education department. In Oklahoma, some school districts have switched to a 4-day school week to save funds in light of declining oil revenues.

School Choice Fight in Iowa May Preview the One Facing Trump — When she was shopping for a school for her daughter Alma, Mary Kakayo found a lot to like in St. Theresa Catholic, including its Catholic social justice theme, student prayer and hour of religious instruction every day.  For Ms. Kakayo and her husband, the best part may be that the school costs them only $85 per month. As it does for one-third of St. Theresa students, the state covers more than half of Alma’s $3,025 tuition in a program that resembles the Trump administration’s proposal for a federal private school choice plan. But few topics in education are more controversial than the idea of diverting public money to private institutions, and Iowa has become a study in the kind of political fights that may be in store for the administration. Despite Republican control of the governor’s mansion and both houses of the State Legislature, proposals to significantly expand school choice programs in Iowa are stalled, at least for now. The pushback has come from groups traditionally opposed to the idea — Democrats, school districts, teachers’ unions and parents committed to public schools — but also from some conservatives concerned about the cost to the state. Iowa is one of 31 states where legislators have proposed creating or expanding school choice programs this year, without Washington even lifting a finger. Even if just a few of the bills pass, the number of children attending private schools with public money could greatly increase, one reason the proposals are meeting resistance. A powerful force in the movement is Mr. Trump’s secretary of education, the philanthropist Betsy DeVos. She has spent decades arguing that public schools have a monopoly on education and fighting for tax dollars to be available for private tuition.

Why We Desperately Need To Bring Back Vocational Training In Schools - Throughout most of U.S. history, American high school students were routinely taught vocational and job-ready skills along with the three Rs: reading, writing and arithmetic. Indeed readers of a certain age are likely to have fond memories of huddling over wooden workbenches learning a craft such as woodwork or maybe metal work, or any one of the hands-on projects that characterized the once-ubiquitous shop class. But in the 1950s, a different philosophy emerged: the theory that students should follow separate educational tracks according to ability. The idea was that the college-bound would take traditional academic courses (Latin, creative writing, science, math) and received no vocational training. Those students not headed for college would take basic academic courses, along with vocational training, or “shop.” Ability tracking did not sit well with educators or parents, who believed students were assigned to tracks not by aptitude, but by socio-economic status and race. The result being that by the end of the 1950s, what was once a perfectly respectable, even mainstream educational path came to be viewed as a remedial track that restricted minority and working-class students. The backlash against tracking, however, did not bring vocational education back to the academic core. Instead, the focus shifted to preparing all students for college, and college prep is still the center of the U.S. high school curriculum.  Not everyone is good at math, biology, history and other traditional subjects that characterize college-level work. And not everyone goes to college. The latest figures from the U.S. Bureau of Labor Statistics (BLS) show that about 68% of high school students attend college. That means over 30% graduate with neither academic nor job skills. But even the 68% aren’t doing so well. Almost 40% of students who begin four-year college programs don’t complete them, which translates into a whole lot of wasted time, wasted money, and burdensome student loan debt. Of those who do finish college, one-third or more will end up in jobs they could have had without a four-year degree. The BLS found that 37% of currently employed college grads are doing work for which only a high school degree is required.

College Classes In Name Only? -- More than 900 American secondary schools offer the prestigious International Baccalaureate diploma program, and there are other ways to establish credit toward a college degree via tests given by Cambridge International Examinations and the College Level Examination Program (though the latter is meant to gauge credit-worthiness for learning obtained outside of school). The fastest-growing gorilla in this jungle, however, is “dual enrollment.” These are courses offered for college credit to students who are still enrolled in high school, typically in eleventh or twelfth grade. There are no current national numbers, but in 2010-11, about 1.4 million high school pupils took part in such courses and the growth rate then averaged seven percent per year. If we assume that has continued, we can estimate that roughly 2.1 million students are engaged in some form of dual enrollment in 2016-17. That’s getting close to the number of AP participants. (Some young people, of course, do both while in high school.) About three-quarters of dual enrollees take their college courses without leaving their schools. Their instructors may be college faculty members—generally the “adjunct” kind—dispatched to the high school for this purpose or, more often, regular high school teachers who have been approved by the college that offers the course, which is the same college that confers the credit on those who pass it. In some states—Indiana and Florida, for example—public high schools are required to offer at least a few such courses, either at every school or somewhere in the district. Colleges are crowding into the field, too, mainly public institutions and especially community colleges.The issue that swiftly arises, of course, is whether these “college level” courses are truly equivalent in content and rigor to those the students would otherwise take a year or two later on the campus of a postsecondary institution. Another issue is whether the instructor’s judgment that a student has passed such a course is indeed tantamount to deserving college credit. Then there’s the matter of what kind of credit they may receive: the generic kind—a random three hours toward an associate’s or bachelor’s degree—or the kind that enables one to skip the college’s entry-level course in a particular subject and commence one’s campus studies in Econ or Math 202 instead of 101. (Or no credit at all, if they enroll somewhere other than the college that sponsored the course they took in high school.)

Wellesley College Says Controversial Speakers "Impose On The Liberty Of Students" By Making Them Think Too Much -- In anti-intellectual email, Wellesley profs call engaging with controversial arguments an imposition on students In an email to fellow faculty yesterday afternoon, a committee of Wellesley College professors made several startling recommendations about how they think future campus speakers should be chosen. If implemented, the proposals by the faculty Commission for Ethnicity, Race, and Equity would have a profound impact on the quality and quantity of voices Wellesley students would be permitted to hear. FIRE has obtained the email, sent by one of the signatories to a faculty listserv, and republished it in full below. While paying lip service to free speech, the email is remarkable in its contempt for free and open dialogue on campus. Asserting that controversial speakers “impose on the liberty of students, staff, and faculty at Wellesley,” the committee members lament the fact that such speakers negatively impact students by forcing them to “invest time and energy in rebutting the speakers’ arguments.” And here we thought learning to effectively challenge views with which one disagreed was an important part of the educational process!

California State University system raising tuition by five-percent – KESQ  - The California State University Board of Trustees voted today to raise tuition by 5 percent for the 2017-18 school year to address a shortfall in funding from the state in the face of increased demand for programs. The trustees approved two amendments -- one to rescind the hike if sufficient state funding comes through, and another calling for reports over the next two years detailing how the additional dollars are spent. Barring more funding, annual in-state tuition will increase by $270, from $5,472 to $5,742. Similar increases were approved for non-resident tuition, along with increases in graduate, doctoral and teacher-credential programs. The changes are projected to generate $77.5 million in the 2017-18 school year. "I don't bring this forward with an ounce of joy. I bring it out of necessity,'' CSU Chancellor Timothy White said as students in the audience booed. According to a staff report, "more than 60 percent of all CSU undergraduate students receive grants and waivers to cover the full cost of tuition. Nearly 80 percent of all CSU students receive some form of financial assistance.''Those percentages will be maintained even with a tuition increase, CSU's chief financial officer told the board, in part because $39 million in financial aid will be added. But many students said they still can't afford an increase. Before the meeting, dozens gathered outside the CSU Chancellor's office, where a mock graveyard of headstones featuring the names of each of the CSU campuses was set up. Dozens of students in graduate caps and gowns made their way inside the board room, some wearing signs around their necks showing the amount of student debt they had accrued.

Trump Administration Rolls Back Obama Protections On Student Loans...Sorry, Snowflakes - Just days after reports emerged that student loan defaults are soaring, which is undoubtedly due to some combination of, among other things, poor job prospects for the millions of snowflakes who graduate each year with their $200,000 educations in anthropology and the moral hazard created by liberal politicians constantly calling for student debts to be 'forgiven' (a.k.a. forcefully jammed down the throats of taxpayers), the Trump administration has revoked rules put in place by Obama that barred student debt collectors from charging penalty fees on past-due loans.   Per the Washington Post:The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.The Obama administration issued the memo after a circuit court of appeals asked for guidance in a case against United Student Aid Funds (USA Funds) challenging the assessment of collection costs. Bryana Bible took the company to court after being charged $4,547 in collection costs on a loan she defaulted on in 2012. Though she had signed a “rehabilitation agreement” with USA Funds to set a reduced payment schedule to resolve her debt, the company assessed the fees.Education officials sided with Bible, prompting USA Funds to sue the department in 2015. Earlier this year, the company agree d to pay $23 million to settle a class-action lawsuit born out of the Bible case, though it did not admit any wrongdoing. Of course, it didn't take long for Elizabeth Warren to draft a letter to the Education Department urging them to not take away 'freebies' from America's entitled snowflakes. On Monday, Sen. Elizabeth Warren (D-Mass.) and Rep. Suzanne Bonamici (D-Ore.) sent a letter urging the Education Department to uphold the Obama administration’s guidance on the collection fees, which they said “results in an unnecessary financial burden on vulnerable borrowers.”“Congress gave borrowers in default on their federal student loans the one-time opportunity to rehabilitate their loans out of default and re-enter repayment,” the letter said. “It is inconsistent with the goal of rehabilitation to return borrowers to repayment with such large fees added.

Crisis in student loan servicing is building - When the housing market crashed and the subprime mortgage bubble burst, servicing operations were on the front line to mitigate lender and investor losses. It was soon discovered, however, through government and private lawsuits, and investigations, that improper servicing practices may have actually contributed to the crisis. Fast forward to today and the allegations leveled by the Consumer Financial Protection Bureau and private litigants against the nation's largest student loan servicer, Navient Corp., tread similar ground. If the allegations are true, poor servicing practices may be a hidden problem permeating the $1.3 trillion in outstanding student loan debt held by more than 44 million borrowers, contributing to rising delinquency rates. The transgressions alleged in the past against subprime mortgage servicers — robo-signing of foreclosure documents, deceiving borrowers regarding foreclosure alternatives, improper denials of loan modifications to qualified borrowers, and false and inaccurate credit reporting — were widely reported as having devastating effects on consumers’ financial lives. Servicing practices that unnecessarily increase what a borrower owes can contribute to delinquencies. But other misconduct, such as inaccurate credit reporting, can have more insidious effects on a borrower’s financial health. Adobe Stock Mortgage servicing problems became widely known through government actions, particularly against the five largest servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — resulting in a $25 billion settlement. This was followed by a wave of litigation and investigations involving nonbank and smaller servicers, including Ocwen Financial, Flagstar Bank and Residential Credit Solutions. Although specific loss mitigation options for student loans and mortgages have inherent differences, the claims against Navient go to the core of servicing activities in general — regardless of asset — and echo the mortgage debacle. The CFPB and several state attorneys general have alleged that Navient’s practices steered struggling borrowers toward paying more than necessary on their loans, obscured information necessary for borrowers to maintain lower payments, misled borrowers regarding requirements to release co-signers and improperly processed payments. Just like in the subprime mortgage servicer actions, at issue is whether there has been a failure to advise borrowers of modification options, as well as improper practices related to modification programs. This time, there are potentially devastating effects on student loan borrowers and their families.

Illinois teachers' pension spiking continues despite $130 billion deficit -- With an unfunded Illinois Teachers’ Retirement System liability estimated at $71.4 billion, taxpayers might think school boards across the state are reining in contributing salary costs. Such taxpayers would be wrong. In Crystal Lake Elementary School District 47, board members approved a four-year deal earlier this year that provides eligible, retirement-track teachers with 6 percent increases over three consecutive years, or raises of 6 percent, 6 percent and 5 percent, depending on age and years of service at retirement. Other teachers in the district not on the retirement track have been guaranteed 3 percent salary increases each year. A 10-year teacher contract recently approved in Palatine School District 15 provides back-to-back 6 percent salary increases for the four years leading to retirement for eligible teachers. A teacher entering the retirement track with an annual salary of $80,000 would be making $100,998 per year four years later. Although neither District 47’s or District 15’s contract exceeds statutory limits, both push limits to the maximum. And despite the state’s ever-growing chasm between pension obligations and ability to pay, each is an example of a common practice in Illinois public education. Pensions are calculated on a percentage (up to 75 percent) of the average of a teacher’s highest four consecutive years of salary within the final 10 years of service, according to the Illinois Teachers’ Retirement System website. So larger raises at the end of a teacher’s career mean larger annual pension benefits and greater costs to taxpayers.

A 40-year ‘conspiracy’ at the VA - Four decades ago, in 1977, a conspiracy began bubbling up from the basements of the vast network of hospitals belonging to the Veterans Administration. Across the country, software geeks and doctors were puzzling out how they could make medical care better with these new devices called personal computers. Working sometimes at night or in their spare time, they started to cobble together a system that helped doctors organize their prescriptions, their CAT scans and patient notes, and to share their experiences electronically to help improve care for veterans.Within a few years, this band of altruistic docs and nerds—they called themselves “The Hardhats,” and sometimes “the conspiracy”—had built something totally new, a system that would transform medicine. Today, the medical-data revolution is taken for granted, and electronic health records are a multibillion-dollar industry. Back then, the whole idea was a novelty, even a threat. The VA pioneers were years ahead of their time. Their project was innovative, entrepreneurial and public-spirited—all those things the government wasn’t supposed to be.  Of course, the government tried to kill it.

LGBT seniors marked for removal from survey on elder care services - The US Department of Health and Human Services has proposed the elimination of data collection for LGBT seniors from an annual survey that helps determine how billions of dollars are allocated for vital care services.The National Survey of Older Americans Act Participants (NSOAAP) collects information about services including senior centers, home-delivered meals and transportation. The proposed 2017 survey is missing a question about the sexuality of respondents, which has been included since 2014.“It’s a very bad sign because to strip LGBT older adults out of the survey suggests that the federal government believes that the needs of this elder population do not matter,” Michael Adams, chief executive officer of Services and Advocacy for LGBT Elders (Sage), told the Guardian. Alongside basic demographic data, NSOAAP respondents give information as detailed as how many servings of meat they eat per day and what level of help they need for activities such as walking, dressing and eating. Such information is used to measure the impact of government-funded services and is included in a report in the annual budget.Adams said it was important to identify LGBT seniors in the survey because they are underserved. “It doesn’t matter, frankly, whether LGBT elders are eating chicken or steak or fish in a senior center,” he said, “but what does matter is: are they eating in a senior center at all? Are they receiving care  management services? Are they receiving caregiver support?”

Millennials are skipping doctor visits to avoid high healthcare costs, study finds - Americans are feeling increasingly exposed to higher healthcare costs.  In particular, high-deductible health plans are on the rise. According to a September survey, the percentage of workers with an insurance plan that requires them to pay up to $1,000 out of pocket passed the 50% mark for the first time. That means consumers have a clearer picture of how much healthcare costs them. A new survey, conducted by consumer healthcare company Amino and market research company Ipsos, looked into how that change is affecting Americans' approach to healthcare. Of the 1,000 adults polled, 74% said their healthcare costs have gone up over the last few years.For millennials (survey respondents between the ages of 18-34), 27% said they will put off visiting a doctor to avoid high costs. And 29% of millennials worried about whether their insurance would cover basic costs, compared to just 13.5% of people over the age of 35.Under the Affordable Care Act, a number of routine and preventive services (like an annual exam) are for free or heavily subsidized. But because there are now more people with high deductibles, which leave them on the hook for at least $1,000 of their medical costs before insurance kicks in, there are some concerns about how much routine blood work or a new prescription might cost. The survey also found that more than half of Americans tend to be under-prepared for healthcare expenses: 55% got a bill that they didn't budget for. (Many people with high deductible health plans are eligible for health savings accounts, which they can use to fund that out-of-pocket cost until their deductible is met.)

Controversy at Mayo Clinic: Patients with private insurance get priority -- Mayo Clinic, one of the country's top hospitals, is in the midst of controversy after its CEO said that the elite medical facility would prioritize the care of patients with private health insurance over those with Medicare and Medicaid. The prioritization by the Rochester, MN-headquartered medical practice was recently revealed by the Minneapolis Star Tribune. And it has quickly drawn out some sharp critics—as well as sympathizers. In a statement to the Minnesota Post Bulletin, Dr. Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management, compared the prioritization to policies seen in developing countries. "This is what happens in many low-income countries. The health system is organized to give the most affluent preference in receiving health care,” he wrote.  Likewise, Minnesota Department of Human Services Commissioner Emily Piper, expressed surprise and concern by the statements of Mayo’s CEO, Dr. John Noseworthy. "Fundamentally, it's our expectation at DHS that Mayo Clinic will serve our enrollees in public programs on an equal standing with any other Minnesotan that walks in their door," she said. "We have a lot of questions for Mayo Clinic about how and if and through what process this directive from Dr. Noseworthy is being implemented across their health system." Specifically, Noseworthy said in a video to Mayo employees late last year: We’re asking… if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so… we can be financially strong at the end of the year.  In statements, Mayo has confirmed Noseworthy’s prioritization and added that about 50 percent of its patients are beneficiaries of government programs. "Balancing payer mix is complex and isn't unique to Mayo Clinic. It affects much of the industry, but it's often not talked about. That's why we feel it is important to talk transparently about these complex issues with our staff."

Who Benefits From the Mayo Clinic Explicitly Putting Commercially Insured Patients Ahead of Some Government Insured Patients? --Amidst all the chaotic noise emanating from Washington, DC, little snippets of news keep slipping out reminding us that the US health care system remains monumentally dysfunctional, and that the dysfunction serves the interests of the system’s insiders. On March 15, 2017, the Minneapolis Star-Tribune first reported that the CEO of the august Mayo Clinic had stated in a late 2016 speech to Clinic personnel that henceforth the institution would preferentially accept patients with private insurance over those with public (Medicaid or Medicare) insurance under certain circumstances.when two patients are referred with equivalent conditions, he said the health system should ‘prioritize’ those with private insurance.‘We’re asking … if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so … we can be financially strong at the end of the year to continue to advance, advance our mission,’ [CEO Dr John] Noseworthy said in a videotaped speech to staff late last year. The Star Tribune obtained a transcript of the speech, and Mayo has confirmed its authenticity.  In response to the Star-Tribune, spokesperson Kari Oestreich stated:Mayo remains committed to publicly funded patients — who make up half the health system’s business — even with the new policy.‘We can provide the care they require for complex medical issues,’ he said. ‘However, we need to balance requests from these patients with their specific needs — if it’s necessary for them to come to Mayo — as well as the needs of commercial paying patients.’ CEO Noseworthy felt that the problem was that publicly insured patients did not bring in enough money:In his speech, Noseworthy said a recent 3.7 percent surge in Medicaid patients was a ‘tipping point’ for Mayo.‘If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,…’ Note that this tipping point was apparently reached under the US Affordable Care Act (ACA, or “Obamacare”) and had nothing to do with any attempts to “repeal and replace Obamacare” by the current Trump administration.

Psych Ward Reviews shows the dire state of mental health care in the U.S. -- The state of psychiatric care in America, and around the world, lives at the intersection of our debates about access to healthcare and our prejudices about mental illness. Many mental health advocates repeat a version of the phrase that if you break your leg you see a doctor, so it should be the same if your brain is “broken.” And yet many with mental illness are told to suck it up, walk it off, or that it’s not that big of a deal. This makes for a sorry state at psychiatric care facilities, where both caretakers and patients are often ill-informed about what makes for good treatment. To revisit the analogy, we know that if you break your leg and your doctor doesn’t put you in a cast, they’re a bad doctor. But most of us don’t have the same understanding when it comes mental health. This is why Kit Mead is attempting to open the conversation by collecting reviews of psychiatric wards across the globe. Psych Ward Reviews provides firsthand reviews from anonymous patients and staff, including details that may have affected treatment. Some are pretty jarring. “My mental health leaving the hospital was far worse than when I arrived (after a suicide attempt!),” said one patient of Washington Adventist Hospital in Takoma Park, Maryland. “While still medically unstable, they took me upstairs and put me in a chair in the hallway where I waited for more than 1.5 hours before someone admitted me. They then took me into a closed bathroom and strip-searched me. I could barely stand.” The site also allows for patients to note other prejudices that lead to mistreatment, such as if they were abused because of their sexuality, gender identity, or race. “If you’re a minor and trans, forget about it. They will NOT respect you in any way,” said another patient of Prairie St. John’s Psychiatric Hospital in Fargo, North Dakota. Mead attributes many of these negative experiences to an apathy toward mental health, which then gets compounded with other prejudices. “It doesn’t seem to be a commercial resource that people want to invest in,” they told the Daily Dot over email. “The quality of inpatient care and the human rights violations in psych hospitals don’t seem to concern as many people as it should.”

 Today’s men are not nearly as strong as their dads were, researchers say -  A new study in press at the Journal of Hand Therapy (yes, a real thing) finds that millennial men may have significantly weaker hands and arms than men the same age did 30 years ago. Researchers measured the grip strength (how strongly you can squeeze something) and pinch strength (how strongly you can pinch something between two fingers) of 237 healthy full-time students aged 20 to 34 at universities in North Carolina. And especially among males, the reduction in strength compared to 30 years ago was striking. The average 20-to-34-year-old today, for instance, was able to apply 98 pounds of force when gripping something with his right hand. In 1985, the average man could squeeze with 117 pounds of force. Now, there is a caveat here. The participants in the North Carolina study were recruited from college and university settings, so they’re not representative of the population as a whole. If you were to look exclusively at young adults who never went to college, for instance, you might get different results. Millennial women fared much less worse in the study. Their average right-hand grip force is roughly the same today as it was 30 years ago, at about 75 pounds. Millennial women between 30 to 34 actually squeezed much harder than their forebears did, coming in at 98 pounds of force compared to 79 pounds in 1985. But this was offset by decreases in strength among younger millennial women. To look at it another way: In 1985, the typical 30-to-34-year-old man could squeeze your hand with 31 pounds more force than the typical woman of that age could. But today, older millennial men and women are roughly equal when it comes to grip strength.

American Carnage --We should all be dead,” said Jonathan Goyer one bright morning in January as he looked across a room filled with dozens of his coworkers and clients. The Anchor Recovery Community Center, which Goyer helps run, specializes in “peer-to-peer” counseling for drug addicts. […]  There have always been drug addicts in need of help, but the scale of the present wave of heroin and opioid abuse is unprecedented. Fifty-two thousand Americans died of overdoses in 2015—about four times as many as died from gun homicides and half again as many as died in car accidents. Pawtucket is a small place, and yet 5,400 addicts are members at Anchor. Six hundred visit every day. Rhode Island is a small place, too. It has just over a million people. One Brown University epidemiologist estimates that 20,000 of them are opioid addicts—2 percent of the population. Salisbury, Massachusetts (pop. 8,000), was founded in 1638, and the opium crisis is the worst thing that has ever happened to it. The town lost one young person in the decade-long Vietnam War. It has lost fifteen to heroin in the last two years. Last summer, Huntington, West Virginia (pop. 49,000), saw twenty-eight overdoses in four hours. Episodes like these played a role in the decline in U.S. life expectancy in 2015. The death toll far eclipses those of all previous drug crises. And yet, after five decades of alarm over threats that were small by comparison, politicians and the media have offered only a muted response. A willingness at least to talk about opioid deaths (among other taboo subjects) surely helped Donald Trump win last November’s election. In his inaugural address, President Trump referred to the drug epidemic (among other problems) as “carnage.” Those who call the word an irresponsible exaggeration are wrong.

The risk of a single 5-day opioid prescription, in one chart - Now that it’s clear opioid painkillers have helped cause the worst drug epidemic in history, health experts are scrambling to figure out when dependency on these powerful prescription drugs starts — and how to prevent it.A new study from the Centers for Disease Control and Prevention looked at the relationship between the number of days of someone’s first opioid prescription and their long-term use. It found that that number has a huge impact: Patients face an increased risk of opioid dependency in as few as four days of taking the drugs. As you can see in the chart below, opioid prescriptions longer than five days in length significantly increased the likelihood of continued opioid use both one and three years later."There’s nothing magical about five days versus six days, but with each day your risk of dependency increases fairly dramatically," said Bradley Martin of the CDC, one of the study authors.The study, which analyzed 1.3 million non-cancer patients, also found that only 6 percent of patients prescribed a one-day supply of opioids were still taking the drugs a year later, but that number doubled to 12 percent if patients were prescribed a six-day supply and quadrupled to 24 percent if patients were given a 12-day supply. Some in the medical community have pushed back against CDC guidelines released last spring that advise initial opioid prescriptions be limited to seven days or less, arguing that short prescriptions puts patients at risk of "inhumane treatment." According to Martin, this argument doesn’t hold up well since, for one, we don’t have good data on the effectiveness of opioids to treat long-term pain.

Law Enforcement Struggles With New Opioid Craze: Elephant Tranquilizers  - From southern Ohio down to Alabama and increasingly up the Eastern Seaboard, drug users are dying by the scores in a strange new way: by overdosing on elephant tranquilizer. The drug, called carfentanil, comes from labs in China—usually mailed to users who buy it online or shipped to cartels in Mexico who smuggle it across the southern border—and is 10,000 times more potent than morphine. Federal law enforcement officials across the eastern half of the country told The Daily Beast they have seen an alarming increase in the number of people dying by overdosing on this drug, and that they’re searching for the toughest prosecutorial strategies to try to stop the deaths.  The problem is metastasizing as Congress pushes for a health care overhaul many experts fear could make the opiate problem even worse. It’s an epidemic that killed more people than car accidents did in 2015, and has federal prosecutors increasingly looking to get offenders responsible for those deaths sentenced to decades in prison—a strategy some prosecutors hope could prevent deaths, but which isn’t without controversy. The carfentanil deaths started last summer in Northeast Ohio. Though the opioid epidemic has torn through the United States for years, with heroin and prescription painkiller-linked deaths steadily climbing, it took dystopian twist in Akron in July. That’s where people first started overdosing on carfentanil, according to Russ Baer, a DEA special agent who follows the issue. Zoos use the drug to tranquilize elephants and rhinos, and Chinese labs manufacture it and ship it to the U.S. and Mexico, he said. Some American users have it delivered directly in the mail, but law enforcement officials concurred that the bulk of it moves from Chinese manufacturers to Mexican cartel distributors, who ship it up into the United States, often cutting into shipments of heroin, cocaine, or fentanyl (another synthetic opioid that is 50 times stronger than heroin) as a cheap way to make those drugs much stronger. Low-level distributors then sell those drugs to users, who are often unaware that a product they think is just cocaine or heroin includes a secret ingredient that makes it much more potent—and lethal.

When CVS stopped selling cigarettes, some customers quit smoking | Reuters: - The retail pharmacy company CVS Health helped its customers quit smoking by pulling cigarettes off the shelves two years ago, a new study suggests. Smokers who purchased cigarettes exclusively at CVS stores were 38 percent less likely to buy tobacco after the national chain stopped selling cigarettes, the study shows. In addition, cigarette sales dropped 1 percent - or by 95 million packs - in 13 states in the eight months after CVS left the tobacco market in September 2014, according to the report in the American Journal of Public Health. “It shows that responsible behavior by a pharmacy has public health benefits for the whole population,” Stanton Glantz said in a phone interview. He directs the Center for Tobacco Control Research and Education at the University of California, San Francisco, and was not involved with the study. The results provide “very strong evidence” that removing tobacco from CVS’ more than 7,800 stores reduced smoking, Glantz said. “It was a big enough effect that you could see it in the population level, which is very impressive,” he said. The findings heartened Dr. Troyen Brennan, CVS Health’s chief medical officer and one of the study’s authors.“We think that this research definitely shows that if pharmacies didn’t sell cigarettes, fewer people would smoke, more people would live longer, and fewer people would die,” he said in a phone interview.

Two thirds of cancers are unavoidable even if you live a healthy life, study finds: Two thirds of cancers are unavoidable even if you live a healthy life, a study has shown. Scientists in the US found cancers are caused by random mistakes in the genetic code that occur when cells divide. The findings challenge the widespread view that cancer mutations are generally inherited or triggered by environmental factors. Instead, the vast majority of cancers are probably down to unlucky defects in replicating DNA that occur out of the blue, they suggest.Lead scientist Dr Cristian Tomasetti, from Johns Hopkins Kimmel Cancer Center in the US, said: "It is well-known that we must avoid environmental factors such as smoking to decrease our risk of getting cancer."But it is not as well-known that each time a normal cell divides and copies its DNA to produce two new cells, it makes multiple mistakes."These copying mistakes are a potent source of cancer mutations that historically have been scientifically undervalued, and this new work provides the first estimate of the fraction of mutations caused by these mistakes."The research, published in the journal Science, indicates that almost two-thirds of cancer-causing mutations are due to DNA copying errors. Cancers triggered by copying errors could occur "no matter how perfect the environment", according to co-author Dr Bert Vogelstein, also from the Johns Hopkins Kimmel Cancer Center.

'Alarming' superbugs a risk to people, animals and food, EU warns | Reuters: Superbug bacteria found in people, animals and food across the European Union pose an "alarming" threat to public and animal health having evolved to resist widely used antibiotics, disease and safety experts warned on Wednesday. A report on antimicrobial resistance in bacteria by the European Food Safety Authority (EFSA) and the European Centre for Disease Prevention and Control (ECDC) said some 25,000 people die from such superbugs in the European Union every year. "Antimicrobial resistance is an alarming threat putting human and animal health in danger," said Vytenis Andriukaitis, the EU's health and food safety commissioner. "We have put substantial efforts to stop its rise, but this is not enough. We must be quicker, stronger and act on several fronts." Drug resistance is driven by the misuse and overuse of antibiotics, which encourages bacteria to evolve to survive and develop new ways of beating the medicines. Wednesday's report highlighted that in Salmonella bacteria - which can cause the common and serious food-borne infection Salmonellosis - multi-drug resistance is high across the EU. Mike Catchpole, the ECDC's chief scientist, said he was particularly concerned that some common types of Salmonella in humans, such as monophasic Salmonella Typhimurium, are showing extremely high multi-drug resistance. "Prudent use of antibiotics in human and veterinary medicine is extremely important," he said. "We all have a responsibility to ensure that antibiotics keep working."

Asset managers campaign to limit use of antibiotics - FT -- Seventeen large investors have joined a $2tn coalition of asset managers campaigning to limit antibiotics in food supply chains over fears the overuse of these drugs damages human health and hurts financial returns. The coalition was launched last year to pressure the world’s largest food companies, including McDonald’s and Domino’s Pizza, to reduce excessive use of antibiotics in their poultry and meat supply chains. Aegon Asset Management, the €332bn investment arm of the Dutch insurer, and Candriam, the Franco-Belgian fund house with €100bn in assets, are among the big investors to have joined the initiative, helping to double the assets under management collectively overseen by the group. The coalition, which now comprises 71 investors, has gained support following warnings from the World Health Organization that irresponsible use of the vital medicines is leading to a “post-antibiotic era”, where humans could die from common infections and minor injuries. The fear is that the widespread use of the medicines in animals such as pigs and chickens is leading to antibiotic resistance in humans. Last month the Wellcome Trust, the world’s second-largest private funder of medical research, said that without new antibiotics, deaths from drug-resistant infections could reach 10m a year. Natalie Beinisch, engagement manager at Aegon Asset Management, said: “[Antibiotic resistance] is a complex, huge, train wreck-type issue that is coming at us. We want to see progress at the [food] organisations we are reaching out to.”

India has a drug-resistant tuberculosis crisis but lacks the right tools to detect cases - Six months after she started treatment for multi drug resistant tuberculosis, Nirupa vomited blood. The 28-year-old resident of Asodha village in Hapur district of Uttar Pradesh had been suffering from tuberculosis for more than a year.  Forty percent of all people who develop multi drug-resistant tuberculosis or MDR-TB die. For patients with extremely drug-resistant tuberculosis, the mortality rate is even higher at 60%. In 2013, Nirupa failed the first line of tuberculosis treatment that lasted six months. Despite taking her medicines regularly, she did not recover. In March 2014, she was detected with MDR-TB.   . Nirupa’s test for drug resistant tuberculosis was performed at Meerut’s Subharti’s Medical College where doctors conducted a line probe assay test that shows resistance against the two drugs rifampicin and isoniazid.Six months later her sputum still showed the presence of bacteria. This indicated that her treatment was not working well, and she was still infectious. The reports showed that Nirupa was resistant to one more drug called levofloxacin. The doctors changed her medicines again, replacing levofloxacin with a drug called moxyfloxin. Within a month, Nirupa started feeling better and has now been declared cured. But she need not have suffered for so long. Patients like Nirupa suffer due to a gaping hole in India’s Revised Tuberculosis Control Programme. The programme does not offer a culture test to patients who have not been diagnosed with multi drug-resistant tuberculosis. Two rapid molecular tests for tuberculosis available now are the line probe assay and the cartridge based nucleic acid amplification test or CB-NAAT. Both these tests provide quick results. While CB-NAAT has a turn around time of about two hours, line probe assay can give results in two days. The more comprehensive culture tests can take between one and two months to process as the tuberculosis bacteria grow notoriously slowly.

EPA Sued for Approving Dow's Deadly Pesticide Combo - Farmers, conservation groups and food and farm justice organizations stood up today to protest against the contamination of rural communities, our food supply and the environment by filing a federal lawsuit against the Trump administration .  The groups are suing the U.S. Environmental Protection Agency (EPA) under new administrator Scott Pruitt for approving Dow AgroScience's Enlist Duo , a mixture of the weed-killing chemicals glyphosate and 2,4-D—both of which are known to be highly toxic. The novel combo pesticide is sprayed directly on corn, soybean and cotton plants that are genetically engineered by Dow specifically to survive exposure to the pesticide. The EPA approved the use of the pesticide in 34 states.  Farmers will be hit hard by the human health damages of Enlist Duo and are put at risk financially by 2,4-D's known tendency to volatilize, drift and damage neighboring crops . The U.S. Department of Agriculture projects that Enlist Duo's approval will lead to as much as a seven-fold increase in agricultural use of 2,4-D—a component of the infamous Vietnam-era defoliant "Agent Orange," which has been linked to Parkinson's disease, non-Hodgkins lymphoma and other reproductive problems. The other component of Enlist Duo is glyphosate, the active ingredient in Monsanto's flagship pesticide Roundup. Glyphosate was classified as a probable human carcinogen by the World Health Organization in 2015.  "Scott Pruitt and the Trump administration are endangering farmers and the environment by caving to Big Ag and approving this highly toxic pesticide combo," said Sylvia Wu, staff attorney for Center for Food Safety and legal counsel in the case. "Fortunately, we have laws written to protect farmers and the environment, and we intend to have the Court enforce them."

Monsanto Weed Killer Roundup Faces New Doubts on Safety in Unsealed Documents -- The reputation of Roundup, whose active ingredient is the world’s most widely used weed killer, took a hit on Tuesday when a federal court unsealed documents raising questions about its safety and the research practices of its manufacturer, the chemical giant Monsanto. Roundup and similar products are used around the world on everything from row crops to home gardens. It is Monsanto’s flagship product, and industry-funded research has long found it to be relatively safe. A case in federal court in San Francisco has challenged that conclusion, building on the findings of an international panel that claimed Roundup’s main ingredient might cause cancer. The court documents included Monsanto’s internal emails and email traffic between the company and federal regulators. The records suggested that Monsanto had ghostwritten research that was later attributed to academics and indicated that a senior official at the Environmental Protection Agency had worked to quash a review of Roundup’s main ingredient, glyphosate, that was to have been conducted by the United States Department of Health and Human Services. The documents also revealed that there was some disagreement within the E.P.A. over its own safety assessment. The files were unsealed by Judge Vince Chhabria, who is presiding over litigation brought by people who claim to have developed non-Hodgkin’s lymphoma as a result of exposure to glyphosate. The litigation was touched off by a determination made nearly two years ago by the International Agency for Research on Cancer, a branch of the World Health Organization, that glyphosate was a probable carcinogen, citing research linking it to non-Hodgkin’s lymphoma.Court records show that Monsanto was tipped off to the determination by a deputy division director at the E.P.A., Jess Rowland, months beforehand. That led the company to prepare a public relations assault on the finding well in advance of its publication. Monsanto executives, in their internal email traffic, also said Mr. Rowland had promised to beat back an effort by the Department of Health and Human Services to conduct its own review.

Monsanto Weed Killer Deserves Deeper Scrutiny As Scientific Manipulation Revealed - The puzzle pieces are starting to fall into place, but so far it’s not a pretty picture.  A series of internal Monsanto Co. documents revealed this week via a court order show that the company’s long-standing claims about the safety of its top-selling Roundup herbicide do not necessarily rely on sound science as the company asserts, but on efforts to manipulate the science.  Congressman Ted Lieu of California has called for an investigation by Congress and the Department of Justice to look into the matter, and he is advising consumers to “immediately” stop using Roundup. “We need to find out if Monsanto or the Environmental Protection Agency misled the public,” Lieu said in a statement.” Hundreds of pages of emails and other records became part of a public court file this week over Monsanto objections after a federal judge in San Francisco ordered they would no longer be kept sealed despite potential “embarrassment” to Monsanto. U.S. District Judge Vince Chhabria is overseeing more than 55 lawsuits brought by individuals filed by people from around the United States who allege that exposure to Monsanto’s Roundup herbicide caused them or their loved ones to develop non-Hodgkin lymphoma. In addition to those cases, which are moving forward jointly in what is known as “multdistrict litigation (MDL), hundreds of other cases making similar claims are pending in state courts.  Questions about the key ingredient in Roundup, a chemical called glyphosate, have been circulating for years amid mounting research showing links to cancer or other diseases. The International Agency for Research on Cancer in 2015 classified glyphosate as a probable human carcinogen and many international scientists have reported research that shows the chemical can have a range of harmful impacts on people.

USDA Drops Plan to Test for Monsanto Weed Killer in Food - The U.S. Department of Agriculture (USDA) has quietly dropped a plan to start testing food for residues of glyphosate , the world's most widely used weed killer and key ingredient in Monsanto's branded Roundup herbicides .  The agency spent the last year coordinating with the U.S. Environmental Protection Agency (EPA) and U.S. Food and Drug Administration (FDA) in preparation to start testing samples of corn syrup for glyphosate residues on April 1, according to internal agency documents obtained through Freedom of Information Act requests. Documents show that at least since January 2016 into January of this year, the glyphosate testing plan was moving forward. But when asked about the plan this week, a USDA spokesman said no glyphosate residue testing would be done at all by USDA this year.  The USDA's plan called for the collection and testing of 315 samples of corn syrup from around the U.S. from April through August, according to the documents . Researchers were also supposed to test for the AMPA metabolite, the documents state. AMPA (aminomethylphosphonic acid) is created as glyphosate breaks down. Measuring residues that include those from AMPA is important because AMPA is not a benign byproduct but carries its own set of safety concerns, scientists believe.   The USDA spokesman, who did not want to be named, acknowledged there had been a glyphosate test plan but said that had recently changed: "The final decision for this year's program plan, as a more efficient use of resources, is to sample and test honey which covers over100 different pesticides." Glyphosate residue testing requires a different methodology and will not be part of that screening in honey, he said.  The USDA does not routinely test for glyphosate as it does for other pesticides used in food production. But that stance has made the USDA the subject of criticism as controversy over glyphosate safety has mounted in recent years. The discussions of testing this year come as U.S. and European regulators are wrestling with cancer concerns about the chemical, and as Monsanto, which has made billions of dollars from its glyphosate-based herbicides, is being sued by hundreds of people who claim exposures to Roundup caused them or their loved ones to suffer from non-Hodgkin lymphoma. Internal Monsanto documents obtained by plaintiffs' attorneys in those cases indicate that Monsanto may have manipulated research regulators relied on to garner favorable safety assessments and last week, Congressman Ted Lieu called for a probe by the Department of Justice into Monsanto's actions.

GMO-Ethanol Corn Contaminates Non-GMO White Corn Used in Tortillas -  Enogen, a genetically modified corn for ethanol production, has contaminated non-GMO white corn grown in Nebraska and used to make flour for tortillas and other products. According to Derek Rovey, owner of Rovey Specialty Grains in Inland, Nebraska, a few of his contract farmers who grow non-GMO white corn had their crops contaminated by Enogen corn. "We've had some growers who've had some problems [with Enogen]. Their corn was right next to Enogen fields," said Rovey. Enogen's GMO trait was detected in the white corn using GMO strip tests, said Rovey. He also said that flour made using his company's white corn tested positive for Enogen last summer. Enogen GMO corn can contaminate food corn through cross pollination in the field or improper segregation during grain handling. B.J. Katzberg, a corn seed dealer for Pioneer Hi-Bred, said one of his customer farmers had to abandon 25,000 bushels of corn due to Enogen contamination. He also knows of other farmers who've had Enogen contamination of their non-GMO white corn, including one who had to remove 600 feet of his cornfield and sell it to an ethanol plant.  Farmers whose white corn crops are GMO-contaminated face market rejection and lost income, as they have to sell their corn to a cheaper market such as those for animal feed or, ironically, ethanol.

Case Study: The Politics and Anti-Science of GM Potatoes - Britain’s Sainsbury Laboratory, a typical publicly funded corporate research division, continues its program to develop inferior, dangerous, highly expensive “hi-tech” GM potatoes as a substitute for already existing non-GM potatoes which are much less expensive and superior in every way. Why would anyone want to do something so pointless and stupid? As with every other GMO and the GM endeavor as such, the only reasons are religious cultism and corporate power. Sainsbury has applied to British regulators for permission for an open-air field trial. Field trial applications always are flimsy where it comes to substantive information, since both corporate applicant and pro-corporate regulator are in the business of making the project go forward with only the minimum politically necessary fake “regulation” to hinder it along the way.  This information is at best irrelevant to real-world conditions, and usually fraudulent even on its own terms. But this charade allows the corporate applicant and the regulator to claim to the public that the GMO has been tested and assessed for safety.  The current Sainsbury application is attempting an innovation on this fraudulent process. They haven’t performed even the fake analysis, and indeed “most of the transgenic plants described in this application are currently in the transformation pipeline”, meaning that they don’t yet exist even in the laboratory stage. Vegetatively propagated direct-food GMOs like potatoes are the most dangerous because 1. They’re direct food or just minimally processed, which means genetically modified and other mutated genetic fragments will be least broken down during processing; 2. Since they’re clones they carry along unexpurgated all the mutations of the entire genetic engineering process. (As opposed to crops like maize where the original genetically engineered plants then may have been back-crossed with another variety, and therefore may have had some of the mutations bred out of them. Not so for cloned potatoes.) Plus, industrial potatoes are among the most pesticide-laden crops.

Experts urge revision to pesticide guidelines following toxicity study --- Scientists at the University of York have discovered for the first time that the sequence of exposure to pesticides and pollutants – not just the dosage - significantly affects the levels of toxicity for surrounding wildlife. Previously, it was always assumed that ‘the dose makes the poison’, in terms of chemicals causing detrimental health effects on organisms. Yet it has now been found that when organisms are exposed to two toxicants in sequence, the toxicity can differ if their order is reversed. This is due to the fact that some chemicals cause lingering damage to organisms’ systems, causing a slow recovery time, resulting in ‘carry over toxicity’ which then compounds the effects of a second pollutant. Exposing freshwater shrimp (Gammarus pulex) to different toxicants, it was found that more damage was caused when pollutants producing a slow recovery time were dispensed first, followed by chemicals that organisms recover quickly from. This is in contrast to the sequence being reversed, when a toxicant with a fast recovery time, followed by a slow, was administered. Even when toxicant exposure was days apart, and the toxicants dispensed were for different actions (i.e. different pesticides that use separate mechanisms for distinctive targets), researchers found shrimp mortality exceeded predicted expectations in the former sequence. This shows that current chemical risk assessment guidelines could severely underestimate the risks associated with differing exposure sequences.

 Haunted by the mystery deaths in Nicaragua’s brutal sugarcane fields - The illness is described as “chronic kidney disease of undetermined cause” and it is responsible for 75% of deaths of young and middle-aged men in Nicaragua. Workers in the sugarcane industry are worst affected, and the disease has been destroying families and communities for 20 years. Yet the cause remains unknown.  . At least 20,000 people – most of them young agricultural workers – have died from chronic kidney disease in Nicaragua since it first came to the notice of doctors in the late 1990s. Other countries in central America – such as Costa Rica – are also badly affected. “In the west, chronic kidney disease affects between 5% and 10% of people, most of them elderly or affected by diabetes,” said kidney expert Ben Caplin of University College London. “Less than 1% of people aged around 30 have chronic kidney disease in the UK. By contrast, in parts of Nicaragua that figure is 20% to 30% for people in the same age group.” Caplin said that the only treatment for the condition was dialysis, but few machines are accessible to the poor in central America. Prevention remains the main hope for countering the condition. However, this prospect is limited by the fact that the cause of the spread of the disease through the young male population of Nicaragua is unknown. “There is probably an occupational element,” said Caplin. “Conditions for sugarcane workers are absolutely brutal. They have to work in incredible heat – more than 40C – and they have limited personal protection against the toxic agents being used in fields. The sugarcane is also burned before being gathered and that releases all sorts of things into the air and the soil. So heat stress or pollution are possible agents. “In addition, infectious diseases could be involved. There are a huge range of potential causes but until we find out what they are, we cannot hope to halt these deaths.” The tragedy, said Caplin, is that the disease has been known about for more than a decade yet no effective action to counter it has been taken. “I think it is an indictment of public and occupational health across the world that we have not sorted this out. If this was happening in the west it would have been dealt with long ago,”

Bird-flu outbreak in Asia puts producers in a bind - : Avian influenza is spreading across Asia in what may be the worst outbreak in seven years, as the human death toll rises and chickens are culled in Japan, South Korea and China in an effort to contain the disease. In January and February, 140 people in China died from bird flu, according to the latest data from the country’s National Health and Family Planning Commission, the highest number since 2010, when 147 died. The outbreak is also upending the poultry industry, as wariness over chicken products weighs on prices in China, while other markets rely on imports from countries such as the U.S. to ease domestic-supply shortages. The United Nations’ Food and Agriculture Organization said that as of early March, there were more reported human cases of H7N9—the current strain of bird flu in China—than the combined number of human cases caused by other types of the virus anywhere in the world.

Multi-year study finds 'hotspots' of ammonia over world's major agricultural areas --   The first global, long-term satellite study of airborne ammonia gas has revealed "hotspots" of the pollutant over four of the world's most productive agricultural regions. Using data from NASA's Atmospheric Infrared Sounder (AIRS) satellite instrument, the University of Maryland-led research team discovered steadily increasing ammonia concentrations from 2002 to 2016 over agricultural centers in the United States, Europe, China and India. Increased atmospheric ammonia is linked to poor air and water quality. The study, published March 16, 2017 in the journal Geophysical Research Letters, also describes the probable causes for increased airborne ammonia in each region. Although the specifics vary between areas, the increases in ammonia are broadly tied to crop fertilizers, livestock animal wastes, changes to atmospheric chemistry and warming soils that retain less ammonia. The results could help illuminate strategies to control pollution from ammonia and ammonia byproducts near agricultural areas. … Gaseous ammonia is a natural part of Earth's nitrogen cycle, but excess ammonia is harmful to plants and reduces air and water quality. In the troposphere--the lowest, densest part of the atmosphere where all weather takes place and where people live -- ammonia gas reacts with nitric and sulfuric acids to form nitrate-containing particles that contribute to aerosol pollution that is damaging to human health. Ammonia gas can also fall back to Earth and enter lakes, streams and oceans, where it contributes to harmful algal blooms and "dead zones" with dangerously low oxygen levels. "  Little ammonia comes from tailpipes or smokestacks. It's mainly agricultural, from fertilizer and animal husbandry," . "It has a profound effect on air and water quality -- and ecosystems.

Climate change to blame for flatlining wheat yield gains: CSIRO - Australia's wheat productivity has flatlined as a direct result of climate change, according to CSIRO research. While 2016 set a new national wheat harvest record, the national science organisation's findings indicate that result masks a more troubling long-term trend. While Australian wheat yields tripled between 1900 and 1990, growth stagnated over the following 25 years. A CSIRO study which monitored 50 sites across Australia's wheat zone between 1990 and 2015 found that climate change was the clear cause of the decline. Across those sites, average maximum temperatures increased by more than 1 degree over 26 years during the months when crops were growing — a significant increase. Rainfall during the growing period declined by about 72 millimetres, or 28 per cent. Zvi Hochman, a senior research scientist with CSIRO Agriculture and Food said the team considered whether other factors could have shared the blame, such as investment in research and development (R&D), changing patterns of land use, and soil fertility. But those could all be ruled out: investment in grains R&D was stable, changing land-use patterns should have favoured wheat production, and soil management improved as farmers adopted new techniques such as zero-till. “The chance of that just being variable climate without the underlying factor [of climate change] is less than one in 100 billion.”

Trump’s pick for Secretary of Agriculture didn’t mention climate once during his hearing --  On Thursday, President Donald Trump’s pick to run the Department of Agriculture — former Georgia Gov. Sonny Perdue (R) — got his confirmation hearing before the Senate Agriculture Committee. And despite testifying for over two-and-a-half hours about everything from SNAP benefits to immigration, one topic was noticeably absent from the hearing: climate change.If approved as Secretary of Agriculture, Perdue would take the reins of a federal agency with more than 100,000 employees and a budget of $140 billion. He would also preside over an agency that has a lot of influence on the United States environment and climate: agriculture produces around 9 percent of the United States’ greenhouse gas emissions, making it the fifth largest producer of greenhouse gases, by economic sector, in the country. Perdue has a sketchy past when it comes to climate and the environment. As Georgia governor, he applauded the expansion of factory farms, and fought EPA clean air regulations. He has rejected mainstream climate science in the past, calling it “so ridiculous and so obviously disconnected from reality.” As Secretary of Agriculture, Perdue would have the opportunity to either expand or minimize the work on climate and conservation largely started by his predecessor Tom Vilsack, who presided over the founding of the USDA’s regional climate hubs and the creation of the USDA’s voluntary steps to reduce greenhouse gas emissions. Farmland covers a little less than half of the United States, and when climate-fueled extreme weather hits — from intense precipitation and floods to droughts — it impacts farmers ability to successfully grow crops and bring those crops to market. Perdue’s own thoughts on climate are therefore extremely important to help both farmers and lawmakers understand how he would help the agriculture community deal with the more extreme weather already being seen across the country, from droughts out West to extreme precipitation events in the East.

Changing climate could worsen foods’ nutrition -- Climate change could shrink the mineral and protein content of wheat, rice and other staple crops, mounting evidence suggests.Selenium, a trace element essential for human health, already falls short in diets of one in seven people worldwide. Studies link low selenium with such troubles as weak immune systems and cognitive decline. And in severely selenium-starved spots in China, children’s bones don’t grow to normal size or shape. This vital element could become sparser in soils of major agricultural regions as the climate changes, an international research group announced online February 21 in Proceedings of the National Academy of Sciences.  Likewise, zinc and iron deficiencies could grow as micronutrients dwindle in major crops worldwide, Harvard University colleagues Samuel Myers and Peter Huybers and collaborators warned in a paper published online January 6 in the Annual Review of Public Health. Futuristic field experiments on wheat and other major crops predict that more people will slip into nutritional deficits late in this century because of dips in protein content, Myers reported February 16 at the Climate and Health Meeting held in Atlanta. “If we’d sat down 10 years ago and tried to think what the effects of anthropogenic carbon dioxide emissions might be on human health, none of us would have anticipated that one effect would be to make our food less nutritious,” Myers said. “But we can’t fundamentally disrupt and reconfigure most of the natural systems around our planet without encountering unintended consequences.”

Get ready for higher fruit prices — the freeze devastated some crops in the South - After one of the warmest winters in recent memory, plants sprang to life well before they should have blossomed. Even on Feb. 1, as Phil the groundhog was declaring six more weeks of winter, spring had already arrived — as much as 20 days earlier than normal in the Southeast.Then last week, the jet stream took a dive and allowed freezing temperatures to reach the Deep South. It was a massacre for fruit crops.Of the fruits (and farmers) that were affected, peaches and blueberries were the hardest hit, the Associated Press reported Monday night. Agriculture officials estimate the loss could be a whopping $1 billion, and South Carolina and Georgia are bearing the brunt of that burden.Georgia may be the “peach state,” but South Carolina is the second-largest peach grower behind California. The state’s agriculture department estimates an 85 percent loss in peaches this year. Blueberries in Georgia were cut 80 percent by the freeze. “We saw blueberry fields that had the potential to be the biggest and best crop of Georgia’s production history that you would now not be able to find enough blueberries that survived the cold to make one pie,” Georgia Agriculture Commissioner Gary Black told the AP. Strawberries and apples were damaged, too, though not to the extent of the blueberries and peaches, which appear to be a disaster from reports. The destruction occurred Thursday night, when temperatures bottomed out in the 20s, breaking records:

People are walking miles for clean water in drought-struck Kenya — and finding none - Imagine walking three or four miles to get a drink. It’s hot, it’s dry — there’s no water where you live. You arrive at what used to be the nearest river but it’s now a beach-like strip of dirt. Yes, there is water, but it’s opaque with mud at the bottom of a small well dug in hopes of finding moisture beneath the former riverbed.The effects of climate change in the developing world is rarely illustrated in such a clear way; the water is gone, and people are enduring the fight of their lives for food and a safe drink.ActionAid, which shared the drone video about the search on March 20, estimates that 2.7 million people need aid in Kenya alone.  “Women and girls are walking up to nine kilometers in search of water,” the nongovernmental organization reports. That also means there’s no water to grow or raise food. If you don’t die of thirst, you may die of starvation. Pinning environmental disasters on climate change is difficult, but not in the case of Africa. Scientists have watched climate change cut back on rainfall and increase temperatures in arid and semiarid regions of “the cradle of humanity,” mainly Ethiopia, Somalia and Kenya.“Africa is projected as the continent that will experience climate deviations earlier and more severely than any other region,” Richard Munang, coordinator of the Africa Regional Climate Change Program for the U.N. Environment Program, told The Washington Post in 2016. As The Washington Post has reported, the people who live in these conditions don’t understand why or how it’s happening, but they know things are different now.

Nigeria's Water Bill Could Criminalize Drinking Water For Millions - Lagos, Africa's most populous city, is in the midst of a major water crisis.  It’s a bitter irony not lost on its residents: Lagos, Nigeria, is surrounded by an abundance of water, but millions of inhabitants in Africa’s most populous city can’t drink it.The coastal city that’s bordered by a lagoon is in the throes of a water crisis. Only 1 in 10 people have access to water that the state utility provides. The rest — some 19 million residents — rely on informal water sources, either drilling their own boreholes to drink from or fetching water from lakes or rivers. Those that can afford it pay exorbitant amounts to local “mai ruwa,” or water vendors, who peddle their wares in often-unsanitary jerry cans, or bottles and cellophane sachets.Yet, activists say, the Lagos House of Assembly passed legislation last month that could threaten even this last-resort source of drinking water — an imperfect, but critical lifeline for most Lagosians.Opponents of the Lagos Environment Bill say politicians did not follow due legislative process before it was signed into law on March 1 ― and its final language has still not been made available to the public two weeks after the fact. It could criminalize the private extraction of water, including the drilling of boreholes and purchasing water from private sellers, activists warn. “One of our rights as citizens is to live, to have good water to drink, good environment,” said Agnes Sessi, president of the African Women Water, Hygiene and Sanitation Network, this month in reaction to the new law. “If government has failed to provide water for us, they do not have the right to take away our efforts to provide for ourselves. Do they want us to die?”

How Fast Fashion Is Killing Rivers Worldwide - In the opening scene of the new documentary RiverBlue , deep magenta wastewater spills into a river in China as the voice of fashion designer and activist Orsola de Castro can be heard saying "there is a joke in China that you can tell the 'it' color of the season by looking at the color of the rivers." In China, the factory of the world, it is estimated that 70 percent of the rivers and lakes are contaminated by the 2.5 billion gallons of wastewater produced by the textile industry. This sobering film is being screened worldwide this year, which premiered March 21 to a sold out crowd at the U.S. at the 25th Annual Environmental Film Festival in Washington, DC. The film will be featured at the Cleveland International Film Fest April 3-5 and at many other festivals throughout the U.S., Canada and Mexico.  The film examines the destruction of rivers in Asia caused by the largely unregulated textile industry. It also connects today's consumer appetite for fast fashion as a cause of this environmental degradation and explores how manufacturing innovation could help solve this global problem.  Co-directed by award-winning documentarians David McIlvride and Roger Williams and produced by Lisa Mazzotta, RiverBlue: Can Fashion Save the Planet was almost three years in the making and follows internationally celebrated river conservationist, Mark Angelo, as he paddles the rivers devastated by a toxic brew of chemical waste from the denim and leather industries. Angelo explained that these waterways in China, India and Bangladesh are devoid of life even as local communities rely on these rivers for drinking and bathing. The water in these rivers has become a public health crisis with a high incidence of cancer and gastric and skin issues afflicting those who work in the industry or live nearby.

Senate Approves Legislation to Kill Wolves, Bears in Alaska Wildlife Refuges - The U.S. Senate used the Congressional Review Act Tuesday to strip away regulatory safeguards implemented by the Obama administration in 2016 to protect wolves, bears and other predators on national wildlife refuges in Alaska. In a strict, party-line vote, Senate Republicans approved today's measure, which will allow the unsportsmanlike killing of wolves and their pups in their dens and the gunning down of bears at bait stations.  "This isn't hunting—it's slaughter," said Brett Hartl, government affairs director at the Center for Biological Diversity . "Killing wolves and bears in this cruel, unsportsmanlike fashion is outrageous, especially in national wildlife refuges that belong to all Americans. Repealing these protections also undermines the critical role predators play in healthy ecosystems."  The U.S. Fish and Wildlife Service finalized regulations in August 2016 that protected predators from new predator-control tactics approved by Alaska's Board of Game. Alaska's predator-control activities are intended solely to artificially inflate prey populations, such as moose, for human hunting. These tactics include killing black bear cubs or mothers with cubs at den sites; killing brown bears over bait; trapping and killing brown and black bears with steel-jaw leghold traps or wire snares; killing wolves and coyotes during denning season; and killing brown and black bears from aircraft. The House of Representatives passed Joint Resolution 69 to overturn the rule using the authority under the Congressional Review Act, in a highly partisan vote on Feb. 16. With the Senate's approval of the Resolution, the measure now goes to President Trump for his signature.  "Senate Republicans have shown just how mean-spirited and petty they are with today's vote," Hartl said. "Passing a law to allow baby bears to be killed in their dens should be beneath the dignity of the Senate, but apparently it's not."

Ganga, Yamuna declared human entities: What exactly does this order mean? - In a landmark judgment, Uttarakhand high court declared Ganga and Yamuna rivers "living entities" on Monday, days after a similar order was passed in New Zealand. The ruling raises hope that the process of cleaning these pollution-battered rivers will gain pace now. "It's a beautiful order," says Supreme Court Advocate Nipun Saxena. "This judgment is a historic precedent because it uses the concept of legal person, which was only used for (religious) idols until now, and extends its application to rivers," says Saxena. A similar move was made by New Zealand Parliament five days ago, making Whanganui River the first water body in the world to be granted 'living entity' status. So what does this ruling mean for Ganga and Yamuna?

  • #1 Now that they are considered 'living entities', Ganga, Yamuna, and their tributaries hold the same legal rights as a person. Like you, they are not natural persons, but in the eyes of law, they will be seen as "a legal or juristic person".
  • #2 The ruling means that Ganga and Yamuna are essentially like minors -- incapable of holding or using the property -- and need to be placed under the care of a manager and/or a guardian. These caretakers will be responsible for ensuring the rivers are not misused, abused or misappropriated for personal use.
  • #3 Ganga and Yamuna will be represented by court appointed individuals, who will file and contest cases in the rivers' names. For example, Uttar Pradesh and Uttarakhand have come under fire for not taking necessary steps for the protection and preservation of the sacred rivers. After this ruling, they can be sued on the rivers' behalf.
  • #4 Another implication of the ruling is that case against polluters can be filed directly under the rivers' name (example: River Ganga through Advocate General versus XYZ) instead of those falling victim to the pollution. This can potentially make the case for cleaning Ganga and Yamuna stronger, and also lead to a spurt in the number of cases filed in the name of the two rivers.

 How a private water company brought lead to Pittsburgh’s taps - In the summer of 2015, the city’s water utility was laying off employees in an effort to cut costs. By the end of the year, half of the staff responsible for testing water throughout the 100,000-customer system was let go. The cuts would prove to be catastrophic. Six months later, lead levels in tap water in thousands of homes soared. The professor who had helped expose Flint, Michigan’s lead crisis took notice, “The levels in Pittsburgh are comparable to those reported in Flint.”  The cities also share something else, involvement by the same for-profit water corporation. Pittsburgh’s layoffs happened under the watch of French corporation Veolia, who was hired to help the city’s utility save money. Veolia also oversaw a change to a cheaper chemical additive that likely caused the eventual spike in lead levels. In Flint, Veolia served a similar consulting role and failed to detect high levels of lead in the city’s water, deeming it safe. For-profit water corporations see America’s crumbling infrastructure as a business opportunity. Either they buy struggling water systems or market their services to cities like Pittsburgh that need the help. At the same time, they use their political clout to cut taxes, choking off the public money necessary to sustain vital water infrastructure. Veolia, along with other corporations like American Water, is a member of the National Association of Water Companies (NAWC), which actively lobbies for lower taxes.Last Wednesday, Pittsburgh Mayor Bill Peduto announced the city would provide filters for drinking water, which is the right thing to do. But he’s also considering partnering with another for-profit water company to clean up Veolia’s mess. Partnering with corporations that must turn a profit should be off the table. For-profit water corporations will always have a financial incentive to cut service, shrug off maintenance, and fire employees. When they’re in charge, the high costs of doing business are passed on to residents: privately owned water systems charge 59 percent more than those that are publicly owned. Every public dollar that goes to executives and shareholders is a dollar that could be invested in making water clean and affordable.

Dozens of Mich. water systems top Snyder’s lead limit: Nearly 380,000 Michigan residents get their water from systems that would fail to meet a tough new lead-safety standard proposed by Gov. Rick Snyder, including those in Monroe, Bay City, Benton Harbor and Holland Township. More than three dozen public water systems currently have tested lead levels exceeding the safety threshold Snyder plans to implement by 2020, which would be the nation’s most stringent standard. The Snyder administration has not yet specified what corrective action the communities would need to take. Most are small systems with few customers — well water at condominiums, trailer parks and retirement communities, for instance — but others have much larger footprints.In Monroe, where the municipal treatment plant serves about 49,000 area residents, James Smith said he already keeps a regular supply of bottled water at the home he shares with his wife, two daughters and grandson. “Monroe is not as big as Flint, but it’s old, so we can’t be doing much better,” Monroe water has lead levels matching — but not quite exceeding — the federal action level that Snyder wants to build on. At 15 parts per billion in 90th percentile testing completed late last year, the city’s water supply would not comply with the governor’s tougher new rule. Statewide lead test results provided by the Michigan Department of Environmental Quality show the potential impact of Snyder’s continuing push to limit exposure to the dangerous toxin after his administration and emergency manager were blamed for a slow response in Flint. Six small public water supplies had lead levels exceeding the federal action limit of 15 ppb in their most recent monitoring periods, which ranged from 2014 to 2016, according to the state. By contrast, Detroit’s water supply that covers the region tested at 4 ppb last year.

Exclusive: Lead poisoning afflicts neighborhoods across California | Reuters: Dozens of California communities have experienced recent rates of childhood lead poisoning that surpass those of Flint, Michigan, with one Fresno locale showing rates nearly three times higher, blood testing data obtained by Reuters shows. The data shows how lead poisoning affects even a state known for its environmental advocacy, with high rates of childhood exposure found in a swath of the Bay Area and downtown Los Angeles. And the figures show that, despite national strides in eliminating lead-based products, hazards remain in areas far from the Rust Belt or East Coast regions filled with old housing and legacy industry. In one central Fresno zip code, 13.6 percent of blood tests on children under six years old came back high for lead. That compares to 5 percent across the city of Flint during its recent water contamination crisis. In all, Reuters found at least 29 Golden State neighborhoods where children had elevated lead tests at rates at least as high as in Flint. “It’s a widespread problem and we have to get a better idea of where the sources of exposure are,” said California Assembly member Bill Quirk, who chairs the state legislature’s Committee on Environmental Safety and Toxic Materials.  (To see the Reuters interactive map of U.S. lead hotspots, click here reut.rs/2h55POf) Last week, prompted in part by a December Reuters investigation pinpointing thousands of lead hotspots across the country, Quirk introduced a bill that would require blood lead screening for all California children. Now, just a fraction of the state’s children are tested. The newest zip code-level testing data was released by the California Department of Public Health in response to a longstanding Reuters records request and adds to a limited set of numbers previously disclosed by the state. The numbers offer a partial state snapshot, covering tests conducted during 2012 – the most recent year for which information was provided – and in about one-fourth of the state’s more than 2,000 zip code areas.

 Trump EPA Cuts Will Hamper Efforts to Enforce Lead Standards for Drinking Water – naked capitalism - Jerri-Lynn here:  Lack of access to clean drinking water is a national disgrace not confined to the unfortunate residents of Flint, Michigan alone. Trump’s proposed 31% cut to the Environmental Protection Agency’s (EPA) budget will only hamper efforts to correct this problem– which predates his administration.This Real News Network interview with Erik D. Olson, director of The Health Program at the Natural Resources Defense Council (NRDC), discusses the current state of water safety in the United States. He’s the co-author of a 2016 report that found that 18 million people in the U.S. are currently served by water systems with lead violations. (video & transcript)

Race is the biggest indicator in the US of whether you live near toxic waste   -- Go looking for the local landfill or toxic waste treatment facility in any US county with a mostly white population, and you’ll likely find it in the black or Latino neighborhoods. That’s because in the US, your race is the single biggest factor that determines whether you live near a hazardous waste facility.In 2016, a study published in Environmental Research Letters found “a consistent pattern over a 30-year period of placing hazardous waste facilities in neighborhoods where poor people and people of color live.”“In fact, places that are already disproportionately populated by minorities, and where their numbers are growing, have the best chances of being selected,” Paul Mohai, a professor and the founder of the environmental justice program at the University of Michigan who coauthored the paper, wrote in an email. The paper followed decades of reports finding much the same: As reported by The Nation, in 1983 the Government Accountability Office found that black people made up the majority of communities near landfills, and a 2007 report, authored by a group of university-affiliated experts in environmental policy and published by the United Church of Christ, found that things had actually gotten worse since the 80s: “[M]any of our communities not only face the same problems they did back then, but now they face new ones because of government cutbacks in enforcement, weakening health protection, and dismantling the environmental justice regulatory apparatus.” Any remaining environmental justice regulation in the US is likely to be further dismantled in the near future. The Trump administration’s proposed budget for the US Environmental Protection Agency would gut the agency’s environmental justice work by 78%, and likely cut into the EPA’s civil rights office‘s resources, which was set up to handle disparities in geographical distribution of pollution. Mustafa Ali, the head of the environmental justice program at the EPA, has already resigned.

Lawmakers vow to fight proposed cuts in Chesapeake, Great Lakes clean-ups | Reuters: President Donald Trump's proposal to defund programs to clean up the Chesapeake Bay and the Great Lakes, two of the country's largest water systems, brought scorn on Thursday from a bipartisan array of lawmakers who vowed to fight the cuts. Members of Congress said the proposal to wipe out Environmental Protection Agency funds to clean up the Great Lakes and the fragile Chesapeake Bay ecosystem threatened the environment as well as tens of billions of dollars in economic benefits. Senator Rob Portman, a Republican of Ohio, rejected the proposed spending cut for the Great Lakes program. "I have long championed this program, and I'm committed to continuing to do everything I can to protect and preserve Lake Erie," he said in a statement, referring to the Great Lake that forms his state's northern border. Without specifically addressing the clean-up program cuts, White House Budget Director Mick Mulvaney said the administration's proposed 31 percent reduction in EPA spending reflected the president's view that a big shift was needed in government policies on the environment. "You can expect reductions in the EPA that don't line up with the president's view on things like global warming and alternative energies," Mulvaney told reporters during a briefing on the budget plan, which would slash the EPA budget by $2.6 billion. Trump has called climate change "a hoax." The White House did not immediately respond to a request for comment about lawmakers' criticism of the programs' elimination.

Are Enviro's Trying To Kill Farming In California? 2017 Water Allocations Imply 'Yes' - Several times over the past two months we've written about the historic floods that have descended upon California during the 2016-2017 rainy season (see here and here for some examples).  In fact, the flooding was so severe that it very nearly caused the complete failure of a major dam in Northern California and resulted in the evacuation of 200,000 residents in neighboring cities (see "Nearly 200,000 People Are Evacuating Over "Imminent Failure" Of California's Oroville Dam - Live Feeds").  Needless to say, per the following chart, 2016/2017 was the wettest year that has been recorded in the state of California in decades and likely one of the wettest ever. And while the flooding had devastating consequences for several Northern California towns, those consequences were, at least, somewhat offset by the state's sprawling network of canals and reservoirs, on which taxpayers and farmers have spent billions of dollars going back to the early 1900's, that allow for the quick and easy movement of water around the state for storage purposes. Moreover, that excess water storage was welcome news to California's farmers in the Central Valley because it implied that after years of drought, fallowed acreage, economic losses and 0% water allocations from the state and federal water projects, that they might actually get a full allocation for the 2017 crop year and live to fight another day.  Therefore, you can imagine our complete 'shock' to learn that, despite record precipitation, California's Central Valley Water Project has only allotted farmers 65% of their contracted water allocations for 2017.  Which, combined with the state's restrictions on groundwater pumping (the "Sustainable Groundwater Management Act"), will make it almost impossible to economically farm ground in the state of California over the coming years. 

Record precipitation, snowpack in California expected to increase hydro generation in 2017 - For the first time since 2011, California’s drought is significantly weakening—a result of one of the wettest winters on record. California has experienced record levels of precipitation this winter, and unlike last winter, cooler temperatures over the 2016–2017 winter season have enabled the precipitation to build up snowpack (the total accumulated snow and ice on the ground). High precipitation and snowpack levels, both of which supply hydroelectric generators throughout the year, suggest that hydroelectric generation in California in 2017 will significantly exceed 2016 levels. Although the drought state of emergency declared by California authorities in January 2014 is still in place, drought conditions have noticeably improved, and the northern half of the state is no longer classified in any stage of drought severity. The area of the state classified as being in exceptional drought (D4), the most extreme category, has dropped to zero, a significant improvement over the 40% and 35% of the state’s land area classified as being in exceptional drought in March 2015 and 2016, respectively. However, 8% of the state—mostly regions in the south—is still in a moderate drought (category D1) status or worse. Mandatory water restrictions, enacted for the first time in the state’s history in April 2015, remain in effect in California. State officials are expected to wait until the full winter season ends in April to amend or rescind the state’s emergency drought declaration.  Snowpack levels have increased significantly from the near-zero levels measured in the Sierra Nevada Mountains in April 2015. As of March 21, 2017, the California Department of Water Resources reported that statewide snowpack was 158% of normal for that date. A more important metric when considering snowpack is the snow water equivalent (SWE)—the total amount of water contained within the snowpack. California’s SWE levels have noticeably increased this year, and as of March 21, the California Department of Water Resources reported that the statewide snow water equivalent was also 158% of average for that date.

California races nature, clock to make key dam repairs (AP) — California is not just fighting nature as it attempts to repair the damaged main spillway at the nation's tallest dam, pounded last month by surging storm waters. It's also racing the clock. Safety experts say there is no time for delays in the state plan to restore the critical main spillway at the 770-foot Oroville Dam, and they warn that California would face a "very significant risk" if the spillway is not in working order by fall, the start of the next rainy season. A Nov. 1 target to fix the spillway presents "a very demanding schedule, as everyone recognizes," said a report prepared by an independent team of consultants and submitted to federal officials last week. A copy of the report was obtained Wednesday by The Associated Press. Also Wednesday, the state Legislative Analyst's Office warned that tens of billions of dollars are needed for repairs and updates for aging dams, levees, wetlands and other projects in California's flood-management system. Authorities have not provided a current estimate for the cost of repairs needed on the Oroville dam spillways The spillway is used to release water when the reservoir is nearing full capacity. During the releases, water was even seeping from seemingly undamaged stretches of the main spillway, the five-member team found. Only 12 inches thick, the concrete spillway is heavily patched, at some places by clay stuffed into holes below the concrete. "This calls into question whether the portions of the slab that appear undamaged by the failure should be replaced,"

When US Dams Begin To Crack - In his joint address to Congress, U.S. President Donald Trump touted a $1 trillion infrastructure investment plan as a means to stimulate the economy while constructing, if not rebuilding outright, crucial projects around the country. Trump later met with U.S. business leaders on March 8 seeking support from the private sector for the plan. It is key to implementing the administration's infrastructure goals, primarily as a way to keep costs revenue neutral, so the federal government does not have to increase spending. Specifically, some locks and dams are on the president's priority list. A handful of projects, however, is only a drop in the bucket of aging, in some cases cracking, U.S. water systems. Officials have been asked to identify new and existing projects that need to be completed in general. The National Governors Association has already presented a list of more than 400 "shovel ready" projects. While details remain scarce, it appears the strategy is to have the private sector fund the majority of any planned projects, using federal funds only when necessary. But relying on the private sector will inevitably skew the infrastructure initiative toward projects that have a better potential for financial returns, such as ports, airports and toll roads. Meanwhile, there are more than 80,000 dams in the United States, with an average age of 52 years. The suburban sprawl and growing populations have also put more people downstream of dams that once only served agricultural land, increasing the risk to human life should one fail. California, Colorado, the Northeast and the Rust Belt are just some of the areas where the most high-risk dams and the oldest dams overlap. The American Society of Civil Engineers estimates that more than 4,000 of these dams are in need of repairs, costing an estimated $21 billion. With the Trump administration set on having the private sector lead construction efforts, there likely won't be the same interest, if any, in investing in many of these types of projects, making it more difficult to fund dam and other water infrastructure. All of this is happening just a month after a near collapse of the Oroville Dam in northern California.  At the Oroville Dam, failure of the main spillway required the use of an emergency earthen spillway, which quickly began eroding.

California Earthquakes: San Andreas Fault Could Cause Coast To Instantly Sink Below Sea Level - Add "sinking below sea level" to California’s list of natural disaster worries. Portions of the Golden State could be at risk of abruptly dropping into the sea during a severe earthquake like the “Big One” scientists have been predicting for years, according to a study published Monday. By assessing seismic activity, scientists have estimated in the past that a massive earthquake should strike California along the 800-mile San Andreas Fault line once every 150 years, meaning the hotspot should see one very soon. Now they’ve forecast that — along with the devastation the earthquake itself would cause — portions of the state could very possibly plummet below sea level. “It’s something that would happen relatively instantaneously,” Matt Kirby, a California State University, Fullerton professor who worked on the study, told Reuters. “Probably today if it happened, you would see seawater rushing in.”The study, published in the journal Scientific Reports by researchers from Cal State Fullerton and the United States Geological Survey, analyzed data that showed previous earthquakes caused portions of the Long Beach coastline to sink suddenly by 1 1/2 to 3 feet. Should something similar happen today, the area could end up below sea level. Aside from the San Andreas Fault, scientists located another fault system running from San Diego to Los Angeles that could cause up to a 7.4 magnitude earthquake in the region, according to a study published earlier in March by the Scripps Institute of Oceanography at the University of California San Diego.

Malawi deploys military to protect its fast-dwindling forests | Reuters: - Malawi’s government is trying a new way to protect its fast-dwindling forests: Sending in the army. With deforestation threatening the capital’s water supply, the government has launched 24-hour military patrols of the country’s major forests, with authorization to arrest loggers and confiscate their equipment, said Sangwani Phiri, a spokesman for the Ministry of Natural Resources, Energy and Mining. The move is “a bid to avert unwarranted illegal cutting down of trees,” he said in a telephone interview with the Thomson Reuters Foundation. The strategy, using soldiers from the Malawi Defence Forces (MDF), is one already being used by other southern African countries including Botswana and South Africa, and is common practice in parts of other countries, including India and Vietnam, he said. Malawi’s government estimates that the country’s 3.4 million hectares (8.4 million acres) of predominantly natural forests are being depleted at a rate of 1.8-2.6 percent annually, largely for charcoal production. “We are targeting all forest areas across the country, but we are starting with the Mua, Livulezi, Dzalanyama, Viphya and Mulanje Mountain forests, whose rate of depletion has been worrisome,” Phiri said.

Global Heat Continues With Second-Hottest February -- February was the second hottest on record for the planet, trailing only last year’s scorching February — a clear mark of how much the Earth has warmed from the accumulation of heat-trapping greenhouse gases in the atmosphere.  The month was 2°F (1.1°C) above the 1951-1980 average, according to NASA data released Wednesday. That was 0.36°F (0.2°C) lower than February 2016, which ranks as the most anomalously warm month in NASA’s global temperature records, which go back 137 years.  One of the clear hotspots on the globe was once again the Arctic, as was the case in January and last year, which was the hottest year on record. Temperatures there were about 7°F (4°C) above average during February. Those high temperatures have kept Arctic sea ice to record low levels; the Arctic looks to see a record low winter maximum sea ice area for the third year in a row.

Earth sizzles to 2nd-warmest winter since records began nearly 140 years ago: The planet sizzled to its second-warmest winter on record, failing to oust the 2015-2016 season from the top spot, federal scientists announced Friday. The global temperature for the months of December, January and February soared to 1.6 degrees above average this winter, according to National Oceanic and Atmospheric Administration data. That's a huge amount in climate science, where records are often broken by hundredths or tenths of degrees. Still, this winter was nowhere close to the past season's record, when the planet sweltered to a tremendous 2 degrees above average. Last month also marked the second-warmest February on record for the planet, trailing only 2016, NOAA said. It became the 41st consecutive February and the 386th consecutive month with above-average temperatures. The most recent cooler-than-average month dates back to July 1985. NOAA's global climate records began in 1880. Separate analyses of global temperatures from NASA and the Japan Meteorological Center, concurred with NOAA's assessment. The latest data is not unexpected. The past three years — 2014, 2015 and 2016 — each set warm records for the globe, according to NASA.

Earth begins 2017 with near-record warm temperatures - 2016 was the planet’s undisputed warmest year on record. Because of a cyclical cooling of the oceans, few expected temperatures in 2017 to follow its superheated course. But 2017 has started off plenty toasty, ranking second warmest in recorded history, according to data released by the National Oceanic and Atmospheric Administration last Friday. And you can’t rule out it catching up to 2016. NOAA said the planet’s temperature in February was 1.76 degrees above the 20th-century average, 0.3 degrees below the record warm February in 2016. “Warmer- to much-warmer-than-average conditions were present across much of the world’s land surfaces, with the most notable warm temperature departures from average across much of the contiguous U.S., southeastern Canada, and across much of central and eastern Russia,” NOAA’s report said. North America had its warmest February since 2000 and its fourth warmest on record, NOAA added. Arctic temperatures have been especially warm in recent months. In fact, they ranked highest in recorded history for the period between December and February according to Berkeley Earth, a nonprofit group that analyzes temperature data.

The Extreme Temperature Index: Identifying Which Records are Most Significant -- In 2007, when Bob Henson and I were first discussing the potential for a new climate study based on U.S. ratios of record surface highs to lows, we thought that it would be fantastic to engineer an index that would allow for ranking, rating, and comparing individual tallies. Up to now, I’ve carried out my research without such an index. My most recent analysis uses record ratios to show that U.S. nights are actually warming faster than days, most likely due to carbon pollution interacting with moisture. Studies like this one pit one tally of a set record against another. One problem that Bob and I recognized early on is that a report, or tally, of a surface record could be a tied record coming from a station with only a period of record (time that a station has been reporting reliable temperature measurements) of 30 years, or a report from a station with a period of record well over 100 years breaking an old record by several degrees. So we have been proverbially comparing apples to oranges. Bob and I thought there ought to be some simple mathematical index taking into account variables hidden in those individual record tallies. The first two variables were obvious: (1) the period of record, or the length of time that regular observations have been collected at a given location, and (2) the difference (e.g., degrees Fahrenheit) between the old record and new. Bob also thought that the difference between the average maximum and minimum at each location on each given date is a factor and should be built into an algorithm or index. The name we came up with is the Extreme Temperature Index (ETI).

Global warming is increasing rainfall rates It’s a well-known scientific principle that warmer air holds more water vapor. In fact, the amount of moisture that can be held in air grows very rapidly as temperatures increase. So, it’s expected that in general, air will get moister as the Earth warms – provided there is a moisture source. This may cause more intense rainfalls and snow events, which lead to increased risk of flooding. But warmer air can also more quickly evaporate water from surfaces. This means that areas where it’s not precipitating dry out more quickly. In fact, it’s likely that some regions will experience both more drought and more flooding in the future (just not at the same time!). The dry spells are longer and with faster evaporation causing dryness in soils. But, when the rains fall, they come in heavy downpours potentially leading to more floods. The recent flooding in California – which followed a very intense and prolonged drought – provides a great example.  Okay so what have we observed? It turns out our expectations were correct. Observations reveal more intense rainfalls and flooding in some areas. But in other regions there’s more evaporation and drying with increased drought. Some areas experience both. Some questions remain. When temperatures get too high, there’s no continued increase in intense rain events. In fact, heavy precipitation events decrease at the highest temperatures. There are some clear reasons for this but for brevity, regardless of where measurements are made on Earth, there appears to be an increase of precipitation with temperature up until a peak and thereafter, more warming coincides with decreased precipitation.  A new clever study by Dr. Guiling Wang from the University of Connecticut and her colleagues has looked into this and they’ve made a surprising discovery. Their work was just published in Nature Climate Change. They report that the peak temperature (the temperature where maximum precipitation occurs) is not fixed in space or time. It is increasing in a warming world.  The idea is shown in the sketch below. Details vary with location but, as the world warms, there is a shift from one curve to the next, from left to right. The result is a shift such that more intense precipitation occurs at higher temperatures in future, while the drop-off moves to even higher temperatures.

Gulf of Mexico waters are freakishly warm, which could mean explosive springtime storms -   Water temperatures at the surface of the Gulf of Mexico and near South Florida are on fire. They spurred a historically warm winter from Houston to Miami and could fuel intense thunderstorms in the spring from the South to the Plains.In the Gulf, the average sea surface temperature never fell below 73 degrees over the winter for the first time on record, reported Eric Berger of Ars Technica. Galveston, Tex., has tied or broken an astonishing 33 record highs since Nov. 1, while neighboring Houston had its warmest winter on record. Both cities have witnessed precious few days with below-normal temperatures since late fall.  More often than not, temperatures have averaged at least 10 degrees warmer than normal. “The consistency and persistence of the warmth was the defining element of this winter,” said Matt Lanza, a Houston-based meteorologist, who has closely tracked the region’s temperatures. “A steamy Gulf has meant that any time winds blow out of the south, we’re not going to cool down that much overnight, and daytime temperatures can warm pretty quickly,” wrote Berger, who also pens the Houston weather blog Space City Weather. To the south of Galveston and Houston, Brownsville, McAllen and Harlingen all posted their warmest winters on record, by large margins. The abnormally warm temperatures curled around the Gulf, helping Baton Rouge and New Orleans reach their warmest Februaries on record. Meanwhile, a ribbon of toasty sea surface temperatures streamed north through the Straits of Florida supporting record-setting warmth over parts of the Florida peninsula.The warm water temperatures in the Gulf of Mexico, in particular, could mean that thunderstorms that erupt over the southern and central United States are more severe this spring. Berger explained in his Ars Technica piece: “While the relationship is far from absolute, scientists have found that when the Gulf of Mexico tends to be warmer than normal, there is more energy for severe storms and tornadoes to form than when the Gulf is cooler.”

Residual heat from last El Niño could spark new one this year - (UPI) -- For climate scientists and meteorologists, predicting the emergence of El Niño and La Niña is one of their most difficult tasks. Currently, researchers at NASA's Jet Propulsion Laboratory in Pasadena, Calif., are trying to do just that. Their latest analysis of sea levels in the Pacific Ocean -- along with several climate models -- suggests a new El Niño could emerge with the help of heat left behind by the last warm water event. Sea level maps populated by data from the Jason-3 satellite mission show a bulge of high seas surrounding Hawaii, a band of warm water leftover from the last El Niño. The last El Niño formed in 2015 and grew to an impressive size, influencing global weather patterns. It reached full strength in January of 2016, but faded in the spring. The pattern's warming influence remained, however, and scientists believe its residual heat prevented a full-blown cooling pattern. "Did the warm bulge suppress the trade winds in the eastern and central Pacific, muting the conditions required for a full-blown La Niña to form?" JPL climatologist Bill Patzert asked in a news release. "As all El Niño researchers know, no two El Niño or La Niña episodes are exactly the same." The El Niño and La Niña phenomena are the warm and cool phases of what's known as the El Niño Southern Oscillation, which is part of a larger ocean temperature pattern called the Pacific Decadal Oscillation. The PDO alternates between warm and cool, or positive and negative phases, in irregular periods of 5 to 20 years. PDO phases strongly influence the ENSO pattern. Patzert and his colleagues are currently modeling PDO patterns in an effort to determine whether the remnants of the last El Niño will grow into a new cross-Pacific band of weather-altering warm water.

Abnormal El Nino in Peru unleashes deadly downpours; more flooding seen (Reuters) - A sudden and abnormal warming of Pacific waters off Peru has unleashed the deadliest downpours in decades, with landslides and raging rivers sweeping away people, clogging highways and destroying crops. At least 62 people have died and more than 70,000 have become homeless as Peru's rainy season has delivered 10 times as much rainfall than usual, authorities said Friday. About half of Peru has been declared in emergency to expedite resources to the hardest hit areas, mostly in the north where rainfall has broken records in several districts, said Prime Minister Fernando Zavala. Peru is bracing itself for another month of flooding. A local El Nino phenomenon, the warming of surface sea temperatures in the Pacific, will likely continue along Peru's northern coast at least through April, said Dimitri Gutierrez, a scientist with Peru's El Nino committee. Coastal El Ninos in Peru tend to be preceded by the El Nino phenomenon in the Equatorial Central Pacific, which can trigger flooding and droughts around the world, said Gutierrez. But this year's event in Peru has developed from local conditions. The U.S. weather agency has put the chances of an El Nino developing in the second half of 2017 at 50-55 percent. While precipitation in Peru has not exceeded the powerful El Nino of 1998, more rain is falling in shorter periods of time - rapidly filling streets and rivers, said Jorge Chavez, a general tasked with coordinating the government's response. "We've never seen anything like this before," said Chavez. "From one moment to the next, sea temperatures rose and winds that keep precipitation from reaching land subsided." Some scientists have said climate change will make El Ninos more frequent and intense.

China blames climate change for record sea levels | Reuters: Chinese coastal sea levels hit record highs in 2016, driven by climate change as well as El Nino and La Nina events, the country's sea administration said. According to an annual report published on Wednesday by China's State Oceanic Administration, average coastal sea levels in 2016 were up 38 millimeters compared to the previous year, and saw record-breaking highs in the months of April, September, November and December. "Against the background of global climate change, China's coastal air and sea temperatures have soared, coastal air pressure has fallen and sea levels have also soared," it said. It warned that high sea levels would lead to problems like coastal erosion as well as more frequent and severe typhoons. It added that vulnerable coastal regions needed to step up their flood prevention efforts by improving drainage systems and building dykes and dams. Underground water extraction also needed to be cut in order to ease the risk of subsidence. China's coastal waters have risen 3.2 millimeters per year since 1980, higher than the global average increase over the period. Sea temperatures over the 1980-2016 period have been rising by an average of 0.21 degrees Celsius per decade. The administration said at a press briefing on Wednesday that marine disasters caused 60 deaths and direct economic losses of 5 billion yuan ($725.95 million) in 2016. It also warned that marine pollution remained severe.

Climate Change May Be Intensifying China’s Smog Crisis — Chinese leaders, grappling with some of the world’s worst air pollution, have long assumed the answer to their woes was gradually reducing the level of smog-forming chemicals emitted from power plants, steel factories and cars. But new research suggests another factor may be hindering China’s efforts to take control of its devastating smog crisis: climate change. Changing weather patterns linked to rising global temperatures have resulted in a dearth of wind across northern China, according to several recent studies, exacerbating a wave of severe pollution that has been blamed for millions of premature deaths. Wind usually helps blow away smog, but changes in weather patterns in recent decades have left many of China’s most populous cities poorly ventilated, scientists say.The findings, some of the first to link climate change to smog, may escalate pressure on Chinese leaders to move more swiftly to shutter steel factories and coal-fired power plants amid rising public anger over smog caused by soot and gases like sulfur dioxide. The research could also push China to assume an even more forceful role in international efforts to curb climate change by reducing carbon emissions, at a time when the United States, under President Trump, appears to be backing away from the issue. “Everyone used to think that controlling smog hinged on reducing regional pollution,” said Liao Hong, a professor at Nanjing University of Information Science and Technology and the co-author of a climate change study published this week. “Now it’s clear that it will require a global effort.”

Climate Change Has ‘Permanently’ Changed the Great Barrier Reef - At the Great Barrier Reef in Australia, there’s new evidence that climate change may have already pushed the world’s most productive ecosystems into a new normal — prompting a rapid and radical re-think in conservation strategies. A global bleaching event — a frequently fatal condition triggered when warmer than normal ocean temperatures cause corals to expel their tiny, symbiotic algae — is entering its third year. Scientists are urgently working with conservationists to figure out what is happening and what it all means for the future. In a new study, published Wednesday as the cover story in the journal Nature, Hughes and his colleagues — the paper includes an astounding 45 co-authors — find that 91 percent of the Great Barrier Reef has bleached at least once during three major bleaching events in 1998, 2002, and 2016. The most recent of these events — triggered in part by a strong El Niño — was so severe that there is no similar analog in the thousands of years of ancient coral cores scientists use to study past climates. “The first widespread record of an El Niño causing coral bleaching was in 1982–83,” Hughes said. “An even bigger event, far bigger, occurred in 1998. That was the first time that the Great Barrier Reef bleached. So we went from a pre-bleaching period where El Niños were harmless, and because of the rising baseline temperature, they’ve become the triggers of bleaching events.” That rising baseline temperature is directly related to climate change.The study’s authors further argue that, over the last decade or two, global warming has changed conditions on the Great Barrier Reef so quickly that old conservation methods no longer work. One of the study’s conclusions is that “local management of coral reef fisheries and water quality affords little, if any, resistance to recurrent severe bleaching events.” That’s mostly because steadily warming oceans have shortened the recovery time between bleaching events. Quick-growing corals in the Great Barrier Reef require 10 to 15 years to fully recover from a mass-bleaching event, and long-lived species may require many decades. That kind of breathing room is “no longer realistic,” according to Hughes and his colleagues, as long as global temperatures keep rising. As a result, “the assemblage structure of corals is now likely to be permanently shifted at severely bleached locations in the northern Great Barrier Reef.”

The Great Barrier Reef is dying -  THE MEASURED warming of the planet is not hypothetical. Nor are its effects, which are happening now, not decades from now. An ecological catastrophe is unfolding off Australia’s coast: Humans are killing the Great Barrier Reef, one of the world’s greatest natural wonders, and there’s nothing Australians on their own can do about it. We are all responsible.An ocean water temperature spike last year caused a massive “bleaching” event, in which colorful corals turned an antiseptic, sickly white. Scientists believe that the reef will never be the same.“The chances of the northern Great Barrier Reef returning to its pre-bleaching assemblage structure are slim given the scale of damage that occurred in 2016 and the likelihood of a fourth bleaching event occurring within the next decade or two as global temperatures continue to rise,” a major new study in the journal Nature reported last week. Alarmingly, but perhaps not surprisingly, the Australian government reports that sections of the reef are getting slammed again this year. Corals are polyp creatures that build their iconic limestone structures in cooperation with photosynthesizing algae. When ocean temperatures increase, the algae emit poisons. The corals then reject their symbiotic partners and succumb to disease and death. This occurred across a vast section of the northern Great Barrier Reef last year.  Under normal conditions, corals can often recover from big bleaching shocks, but conditions are no longer normal. Higher background ocean temperatures mean that dangerous spikes are more likely. Corals decades of years old may be replaced by “weedier,” faster-growing species — or by none at all.  Germany's ambitious " Energiewende ," or energy transition, aims for at least an 80 percent share of renewables by 2050, with intermediate targets of 35 to 40 percent share by 2025 and 55 to 60 percent by 2035.

Coral reefs have another enemy: Dead zones - Dead zones affect dozens of coral reefs around the world and threaten hundreds more, according to a new study by Smithsonian Institution scientists released Monday. This is the first study to find such a link, said study lead author Andrew Altieri of the Smithsonian Tropical Research Institute in Panama. After seeing a massive coral reef die-off on the Caribbean coast of Panama in September 2010, Altieri and his team suspected it was caused by a dead zone — a low-oxygen area that kills marine life — rather than by warm or acidic ocean water, both of which are well-known causes of coral die-offs. "Ocean warming and acidification are recognized global threats to reefs and require large-scale solutions, whereas the newly recognized threats to coral reefs caused by dead zones are more localized," Altieri said.He said his findings can be extrapolated to coral reefs worldwide, adding that such dead zones may be common in the tropics but have gone largely unreported, simply because scientists never looked for them.  "Based on our analyses, we think dead zones may be underreported by an order of magnitude." said Nancy Knowlton of the Smithsonian's National Museum of Natural History and study co-author. "For every one dead zone in the tropics, there are probably 10 — nine of which have yet to be identified," she said.A dead zone occurs at the bottom of a body of water when there isn't enough oxygen in the water to support marine life. Also known as hypoxia, it's created by nutrient runoff, mostly from over-application of fertilizer on farms in the spring.The Gulf of Mexico has an annual dead zone that typically forms in the summer, which varies in size from year to year. The Chesapeake Bay also has an annual dead zone. Nutrients such as nitrogen can spur the growth of algae, and when the algae die, their decay consumes oxygen faster than it can be brought down from the surface, the National Oceanic and Atmospheric Administration said. As a result, fish, shrimp and crabs can suffocate and die.

German greenhouse gas emissions rise as 2020 target looms - Germany’s carbon dioxide emissions rose by 4m tonnes to 906m tonnes, an increase of 0.7 per cent, according to a study by Arepo Consult carried out for the opposition Green party. The Greens said the figures meant it would become “even harder” for Germany to attain its declared goal of reducing greenhouse gas by 40 per cent by 2020 compared with 1990 levels. So far, it has managed to lower emissions by only 27.6 per cent. To reach the 40 per cent target, “annual emissions will have to fall by 40m tonnes on average every year by 2020”, the party said. A key reason for the increase was rising emissions in the transport sector, the Greens said. That was backed up by figures from the Federal Environment Agency, which showed carbon dioxide emissions from transport rose by 5.4m tonnes, or 3.4 per cent in 2016 — partly because of an increase in freight traffic, which expanded by 2.8 per cent.

Scientists Sound the Alarm: CO2 Levels Race Past Point of No Return - The National Oceanic and Atmospheric Administration (NOAA) reported that carbon dioxide levels in 2016 broke records for the second year in a row with an increase of 3 parts per million (ppm).  The measurements are coming from the Mauna Loa Baseline Atmospheric Observatory in Hawaii and were confirmed by NOAA's Earth System Research Laboratory in Boulder, Colorado. The numbers show that the rate of CO2 in the atmosphere is now at 405.1 ppm, the highest it has been in more than 10,000 years. Pieter Tans, lead scientist of NOAA's Global Greenhouse Gas Reference Network, said the findings are accurate and disturbing. "The rate of CO2 growth over the last decade is 100 to 200 times faster than what the Earth experienced during the transition from the last Ice Age," Tans said in a press release. "This is a real shock to the atmosphere."A shock, indeed. An atmosphere of 400 ppm is dubbed the "carbon threshold," a point of no return. To sum it up, levels this high throw the whole balance of the climate cycle into chaos, making it more difficult to predict climate changes and causing sea level rise, severe tropical storms, drought and flooding.Emissions from fossil-fuel consumption have remained at historically high levels since 2011, and according to Tans, these emissions are contributing to the dramatic spike in atmospheric CO2 levels, which, up until the industrial revolution in 1760, averaged about 280 ppm. Even if humans were to stop burning fossil fuels today, the carbon will continue to be trapped for at least the next few decades. Back in October 2016, when levels finally reached the 400 ppm threshold, Tans said, "It's unlikely we'll ever see CO2 below 400 ppm during our lifetime and probably much longer."

Planet Enters 'Uncharted Territory' - Global temperatures are on the rise again as 2016 has been marked as the hottest on record . The World Meteorological Organization (WMO), which published its annual assessment of the climate today, said the unusually warm weather has continued into 2017.   Global warming, experts say, is largely driven by human activity and the release of carbon dioxide emissions. But an El Niño weather pattern consisting of naturally warm weather in the equatorial Pacific region is also a contributor.   "Even without a strong El Niño in 2017, we are seeing other remarkable changes across the planet that are challenging the limits of our understanding of the climate system. We are now in truly uncharted territory," World Climate Research Programme Director David Carlson said in a release.   In the WMO's annual State of the Global Climate , it said that in the years since 2001, temperatures have been at least 0.4 degrees Celsius above the long-term average for the 1961-1990 base period. And those temperatures continue to be consistent with a warming trend of 0.1-0.2 degrees Celsius per decade, it added.  Furthermore, the 2015-16 El Niño weather events have only increased the warming, it continued, noting that g lobal sea levels rose during the El Niño event, with 2016 levels hitting new highs. Meantime, global sea ice extent fell by more than 4 million square kilometers below the average November levels.  Warm ocean temperatures have also contributed to "significant" coral bleaching while it has impacted marine food chains, ecosystems and fisheries.

New Evidence Confirms Risk That Mideast May Become Uninhabitable - New evidence is deepening scientific fears, advanced few years ago, that the Middle East and North Africa risk becoming uninhabitable in a few decades, as accessible fresh water has fallen by two-thirds over the past 40 years. This sharp water scarcity simply not only affects the already precarious provision of drinking water for most of the region’s 22 countries, home to nearly 400 million inhabitants, but also the availability of water for agriculture and food production for a fast growing population. The new facts are stark: per capita availability of fresh water in the region is now 10 times less than the world average. Moreover, higher temperatures may shorten growing seasons in the region by 18 days and reduce agricultural yields a further 27 per cent to 55 per cent less by the end of this century. Add to this that the region’s fresh water resources are among the lowest in the world, and are expected to fall over 50 per cent by 2050, according to the United Nations leading agency in the field of food and agriculture. Moreover, 90 per cent of the total land in the region lies within arid, semi/arid and dry sub/humid areas, while 45 per cent of the total agricultural area is exposed to salinity, soil nutrient depletion and wind water erosion, adds the UN Food and Agriculture Organization (FAO). Meanwhile, agriculture in the region uses around 85 per cent of the total available freshwater, it reports, adding that over 60 per cent of water resources in the region flows from outside national and regional boundaries.

Thousands of underground gas bulges, formed by thawing permafrost, set to 'explode' in Siberia -- Local Siberian media has reported that the very ground that people stand on is moving under their feet in the arctic regions of Siberia. Scientists have discovered 7000 gas filled bubbles according to the Siberian Times.  These, bulges or 'bulgunyakh' in the local Yakut language, were originally discovered last year by researchers in Siberia's remote Bely Island. At that time only 15 of these bubbles had been identified, but a survey in the wider region of the Yamal and Gydan peninsulas has revealed the massive number of 7000 which some scientists fear may explode at any time.There is startling photo evidence in the Siberian Times article that is worth your time to see. From the article: The region has seen several recent examples of sudden 'craters' or funnels forming from pingos after what scientists believe are caused by eruptions from methane gas  released by the thawing of permafrost which is triggered by climate change. 'We need to know which bumps are dangerous and which are not,' said Titovsky. 'Scientists are working on detecting and structuring signs of potential threat, like the maximum height of a bump and pressure that the earth can withstand.' Our pictures and video of this remarkable gas release are seen here, although this phenomenon appears different to the exploding pingo events. These bubbles  - such as one seen in our video on Bely Island - have been called 'trembling tundra'. 'Their appearance at such high latitudes is most likely linked to thawing permafrost which in is in turn linked to overall rise of temperature on the north of Eurasia during last several decades,' said a spokesman.  YouTube Video.

7,000 Gas Bubbles Expected to 'Explode' in Siberia -  A pair of researchers discovered 15 methane-filled bubbles in Siberia's Bely Island last July that wobbled like a waterbed when stepped on. Well, we really hate to burst these bubbles, but further research into the wider Yamal and Gydan peninsulas has uncovered about 7,000 more of these mysterious mounds. Scientists believe that these bumps are caused by thawing permafrost releasing methane.  The scariest part? Scientists say the gas bubbles are expected to explode and can create anything from small potholes to massive craters like the ones that have been appearing across the region in recent years. "At first, such a bump is a bubble, or 'bulgunyakh' in the local Yakut language," said Alexey Titovsky, director of the Yamal Department for Science and Innovation, according to The Siberian Times . "With time, the bubble explodes, releasing gas. This is how gigantic funnels form." The sudden appearance of giant craters in the Siberian permafrost has been linked to climate change . The exact explanation behind the craters is unclear but the most prominent theory is that unseasonably high temperatures have released methane stored in the permafrost, causing a sort of explosion that forms the craters. "We need to know which bumps are dangerous and which are not," Titovsky emphasized about the new discovery. "Scientists are working on detecting and structuring signs of potential threat, like the maximum height of a bump and pressure that the earth can withstand."  Researchers Alexander Sokolov and Dorothee Ehrich discovered the first 15 of these bulges last summer. When Sokolov and Ehrich punctured one of the spots, the air that escaped contained 200 times more methane and 20 times more carbon dioxide than the surrounding air.   Scientists accurately predicted back then that more bubbles would be found due to 2016's record-hot temperatures

Lowest maximum on record (again) - Arctic Sea Ice blog - (see graphics) After a drop of almost 262 thousand km2 in just three days, it looks highly likely that the maximum for sea ice extent was reached two weeks ago, according to the data provided by JAXA, the Japan Aerospace Exploration Agency (via ADS-NiPR ; it used to be provided by IJIS).It's a new lowest maximum record, and the third time in a row that extent stayed below the 14 million km2 mark. The previous lowest max on record was reached in 2015 (13.942 million km2), almost beaten last year (13.959 million km2), but this year SIE went lower still and peaked at 13.878 million km2.This graph by commenter Deeenngee, posted on the Arctic Sea Ice Forum, visualizes maximums from the past and the trajectory to this year's max: It looks highly likely that the max has been reached for NSIDC daily SIE as well (graph provided by Jim Hunt from the Great White Con blog), a third record low in a row if my eyes don't deceive me:The drops are mostly driven by sea ice reductions in the Bering and Okhotsk Seas, but will soon be joined by drops on the Atlantic side of the Arctic as well, as the ice is pretty thin there, according to the Uni Bremen SMOS thin sea ice map. Given the wind forecast, I also expect further sea ice retreat from the southern shores of Novaya Zemlya (similar to what happened in 2011 and 2012): It looks highly unlikely that there will be a sudden surge of sea ice growth at the edges given the current GFS temperature anomaly forecast for the coming week (as provided by the Climate Change Institute at the University of Maine):An anomaly of 5 °C is pretty high, although it doesn't mean temperatures will be going above zero. But it's close, and given the fact that these temps will be accompanied by clouds over the Barentsz and Kara seas, melt onset is likely in these regions, which will make them extra vulnerable once the melting season gets going for real. Needless to say, SIE is currently lowest on record (graph created by Jim Pettit):

Arctic ice falls to record winter low after polar 'heat waves’ - The extent of Arctic ice has fallen to a new wintertime low, as climate change drives freakishly high temperatures in the polar regions.The ice cap grows during the winter months and usually reaches its maximum in early March. But the 2017 maximum was 14.4m sq km, lower than any year in the 38-year satellite record, according to researchers at the US National Snow and Ice Data Centre (NSIDC) and Nasa.“I have been looking at Arctic weather patterns for 35 years and have never seen anything close to what we’ve experienced these past two winters,” said NSIDC’s director, Mark Serreze. 2017 is the third year in a row the Arctic’s winter ice has set a new low. The new record comes a day after the UN’s World Meteorological Organisation warned that the record-breaking heat that made 2016 the hottest year ever recorded has continued into 2017, pushing the world into “truly uncharted territory”. The dramatic melting of Arctic ice is already driving extreme weather that affects hundreds of millions of people across North America, Europe and Asia, according to emerging research.The extreme low in winter Arctic ice follows a very warm autumn and winter, the NSIDC scientists said, with air temperatures 2.5C above average across the Arctic Ocean. Temperatures have soared even higher in places, creating polar “heatwaves”. Data from the European Space Agency’s CryoSat-2 satellite also shows that this winter’s ice cover was slightly thinner than over the past four years. “Thin ice and beset by warm weather – not a good way to begin the melt season,” said NSIDC’s lead scientist, Ted Scambos. Prof Julienne Stroeve, at University College London, said: “Such thin ice going into the melt season sets us up for the possibility of record low sea-ice conditions this September.”  The Arctic ice cap fell to its second lowest summer extent on record in September 2016, just ahead of the lowest ever mark set in 2012.

Sea Ice Falls to Record Lows in Both the Arctic and Antarctic - The Arctic and Antarctic have experienced record lows in sea ice extent so far in 2017, according to the latest data from the U.S. National Snow and Ice Data Center ( NSIDC ). At about this time each year, the Antarctic reaches its lowest extent for the year while the Arctic reaches its highest. The new satellite data, released Wednesday , confirms that there is less sea ice globally than at any time in the entire 38-year satellite record. The NSIDC doesn't usually release data for both poles simultaneously, but has done so this time because of what scientists have dubbed an "exceptional" year in 2017. The news comes as the World Meteorological Organization confirmed this week that 2016 "made history" with record high global temperatures and low sea ice. Many of last year's extreme conditions have continued into 2017, the report noted. With just 14.42m square kilometers on March 7, this year's winter maximum in the Arctic ranks as the smallest in the satellite record, for the third year in a row. This year's maximum extent is 1.22 million square kilometers below the 1981 to 2010 average maximum of 15.64 million square kilometers, NSIDC confirmed Wednesday.  Record low sea ice extent in February continued a string of records over the winter months, from October through February. A " heatwave " in mid-November caused some parts of the Arctic to be 15ºC warmer than usual, for example. Meanwhile, at the other end of the planet, Antarctic sea ice has been experiencing its minimum extent for the year.  With 2.11m square kilometers of ice, this year's low marks an all-time record low for the satellite era. Reached on March 3, the summer minimum caps off an unusually vigorous melt season, with new records set in every month since November .

Climate change financing dropped from G20 draft statement | Reuters: Opposition from the United States, Saudi Arabia and others has forced Germany to drop a reference to financing programs to combat climate change from the draft communique at a G20 finance and central bankers meeting. A G20 official taking part in the meeting said on Friday that efforts by the German G20 presidency to keep the wording on climate change financing had run into resistance. "Climate change is out for the time being," said the official, who asked not to be named. At their last meeting in July 2016 in the Chinese city of Chengdu, the G20 financial leaders said they encouraged all signatories of the Paris Agreement on climate change to bring the deal into force as soon as possible. But U.S. President Donald Trump, who took office in November, has called global warming a "hoax" concocted by China to hurt U.S. industry and vowed to unpick the Paris climate accord that is supposed to curb rising temperatures. Under the Chinese G20 presidency, finance ministers last year called on all governments to implement financial commitments made under the Paris deal in a "timely" way and promised to continue working on climate finance in 2017. Trump's administration on Thursday proposed a 31 percent cut to the Environmental Protection Agency's budget, as the White House seeks to eliminate climate change programs and trim initiatives to protect air and water quality. Asked about climate change programs, Mick Mulvaney, Trump's budget director, told reporters on Thursday "we consider that to be a waste of (Americans') money.""I think the president is fairly straightforward. We're not spending money on that," he said.

Can market based regulation reduce greenhouse gas emissions? Evidence from the United States - Market-based mechanisms such as ‘cap-and-trade’ have become increasingly popular policy tools for reducing harmful emissions. But designing these schemes so that emissions are curbed efficiently requires understanding key elements of an industry’s structure, notably the degree of market power and the extent to which unregulated foreign producers compete with domestic firms. This research investigates these issues in the US cement industry, an emissions-intensive sector exposed to foreign competition. The findings suggest that the optimal regulatory policy in such industries may be to rebate compliance costs partially on the basis of output or to impose border tax adjustments.

Halve carbon emissions each decade to combat warming: study | Reuters -- Scientists proposed on Thursday a legislative and economic framework to halve the world's carbon dioxide emissions every decade from 2020 and combat climate change, by issuing hefty penalties on carbon emitters. The proposal, published in the journal Science, outlines a "carbon law" policy, seeking to accelerate a global shift already under way toward clean energies such as solar and wind power. Its concept is similar to a carbon tax, which charged on businesses and households for every tonne of carbon emitted. The policy is envisaged by its authors as a mechanism for countries to enforce the 2015 Paris agreement. Almost 200 governments agreed to phase out net greenhouse gas emissions in the second half of the century by shifting from fossil fuels. But since signing the agreement, signatories have done little to work out what this means in practice. As a result, an international team of scientists suggested the Paris goals could be reached by 2050 if carbon emissions were halved every decade from 2020, falling to 20 billion tonnes by 2030 from 40 in 2020. The driver of change would be a charge of $50 per tonne from 2020. By 2050, the price would rise to $400. Currently, the European Union charges 5 euros ($5.39) for each tonne of carbon emissions. Such wrenching economic shifts would be needed "to make a zero-emissions future an inevitability rather than wishful thinking," they wrote in the journal.

Trump lays plans to reverse Obama's climate legacy — President Trump is poised in the coming days to announce his plans to dismantle the centerpiece of President Barack Obama’s climate change legacy, while also gutting several smaller but significant policies aimed at curbing global warming.The moves are intended to send an unmistakable signal to the nation and the world that Mr. Trump intends to follow through on his campaign vows to rip apart every element of what the president has called Mr. Obama’s “stupid” policies to address climate change. The timing and exact form of the announcement remain unsettled, however.The executive actions will follow the White House’s release last week of a proposed budget that would eliminate climate change research and prevention programs across the federal government and slash the Environmental Protection Agency’s budget by 31 percent, more than any other agency. Mr. Trump also announced last week that he had ordered Scott Pruitt, the E.P.A. administrator, to revise the agency’s stringent standards on planet-warming tailpipe pollution from vehicles, another of Mr. Obama’s key climate change policies. While the White House is not expected to explicitly say the United States is withdrawing from the 2015 Paris Agreement on climate change, and people familiar with the White House deliberations say Mr. Trump has not decided whether to do so, the policy reversals would make it virtually impossible to meet the emissions reduction goals set by the Obama administration under the international agreement.

President Trump Has a Wrecking Ball (and it’s Aimed at the Climate) -  Union of Concerned Scientists - The wrecking ball that is the Trump presidency is taking aim at the foundation of our country’s response to climate change. The Trump Administration is announcing a re-opening of the fuel efficiency/emissions standards for cars, which can only mean one thing—weakening or repealing them. And it is expected that he will soon issue a directive to EPA to repeal the Clean Power Plan, and may also order EPA to rescind a waiver that it granted to California to set its own vehicle standards. If the Trump administration succeeds in rolling back all three, the effect will be to increase by billions of tons the emission of global warming gases and other pollutants that endanger our health; burden our children with much higher costs of fighting climate change; cede the United States’ clean energy prominence to other countries, and make it much harder to meet the goals we set for ourselves as part of the 2015 international Paris Agreement on Climate. We must fight this reprehensible rollback with everything we’ve got.

In-depth: What Donald Trump’s budget means for US spending on climate change -- On Thursday, President Trump unveiled his first budget proposal. Entitled “America First: A budget blueprint to make America Great Again”, the document outlines how the new administration plans to “reprioritise Federal spending”, redirecting funding away from a suite of government agencies in favour of increases in defence and immigration enforcement spending. The president’s proposed budget allocates $19.1bn for the US National Aeronautics and Space Administration (NASA), representing a 0.8% cut from current levels. However, keeping an overall headline figure belies major changes to the agency’s priorities. The budget proposes cutting NASA’s Earth science budget by $102m to $1.8bn, with four Earth science missions scrapped completely; DSCOVR, OCO-3, PACE and CLARREO Pathfinder. The Deep Space Climate Observatory (DSCOVR) is an active satellite, launched in 2015 as a joint project between NASA, NOAA and the US Air Force. It collects data on Earth’s atmosphere to generate space weather alerts and forecasts. More relevant to climate science, DSCOVR carries two Earth-observing instruments. It’s for these that the budget proposes to terminate funding.  The second NASA programme potentially facing the scrap heap under the proposed budget is the Orbiting Carbon Observatory 3 (OCO-3) This is the successor to OCO-2, an instrument that is currently circling Earth’s poles, making very precise measurements of atmospheric CO2.The third NASA programme potentially in the firing line for funding cuts is the Plankton, Aerosol, Cloud, ocean Ecosystem (PACE) mission. Planned for launch in 2022-2023, the mission will provide information on aerosol and clouds, as well as monitoring ocean biodiversity.Finally, funding may also be pulled for the preliminary stage of the Climate Absolute Radiance and Refractivity Observatory (CLARREO) programme. Hosted on the International Space Station, the CLARREO Pathfinder mission is intended to test techniques used to monitor and attribute climate change.

Former EPA Officials: Trump Budget Is Even Worse Than It Seems - As the environmental world copes with the budget outline unveiled by President Trump on Thursday, two former EPA administrators and a longtime environmental justice official have more sobering news: It's actually worse than you think.  The budget blueprint handed down from the White House sent the unmistakable message that it plans to take a hacksaw to climate action. And no agency fell more directly in its path than the Environmental Protection Agency. "Literally and figuratively this budget is a scorched earth budget," said Gina McCarthy, EPA administrator under President Obama. "It represents really an all-out assault on clean air and clean water and our ability to have safe homes, schools and places to work."  The budget outline proposes a 31 percent cut to the total EPA budget, including a 45 percent reduction in state funds and the elimination of 3,200 positions under new administrator Scott Pruitt, a longtime antagonist of the agency. Those cuts, McCarthy pointed out, represent one in five agency employees. Forty two percent of the scientists in the Office in Research and Development—the agency's scientific research arm—will lose their jobs, she said. "This budget is even more challenging than it looks at first glance," McCarthy said, because the total proposed budget includes $2.3 billion in State Revolving Funds, which are given directly to states to dole out to communities for infrastructure improvements. "When you take that out of the picture, the rest of the budget is going to be cut from $6 billion to $3.4 billion. That's actually a 43 percent cut in the ability to implement all of the clean water and clear air and clean land programs," she said. "Not to mention our ability to address the greatest environmental challenge of our time which is climate change." McCarthy was joined on a conference call Friday by Carol Browner, a fellow former EPA administrator, Mustafa Ali, who recently resigned as EPA advisor for environmental justice, and Nicole Hernandez Hammer, a climate advocate for the Union of Concerned Scientists. Browner, who led the  EPA for the entirety of the Clinton administration from 1993-2001, is no stranger to attacks on the agency. Two years after President Clinton was elected, Rep. Newt Gingrich (R-Ga.) became Speaker of the House as part of a wave of Republican momentum in the midterm elections, based on promises to cut government waste and limit regulations. "We were shut down more than once because of failure to fund the EPA," said Browner. But the government shutdowns resulted in a blowback in popular opinion. "What the Republican Congress discovered then is that the American people like their clean air. They like their clean water. They want the environmental cops on the beat," she said. Now, with a budget proposal that she said "puts polluters first," Browner said she could only hope that Congress will remember that lesson.

The EPA needs lots of money to gut itself -- When you listen to the president’s advisors, they indicate near total hostility for the EPA’s mission. Stephen Bannon, a senior advisor to Trump, has famously preached the “deconstruction of the administrative state.” Mick Mulvaney, the White House budget director, told reporters on Thursday that: “We’re not spending money on [climate change] anymore. We consider that to be a waste of your money.” Certainly Pruitt shares many of these goals. During his confirmation process, he could not name a single rule under the Clean Air Act or Clean Water Act that he supported. As attorney general of Oklahoma, he sued the agency 14 times, and he’s said that the EPA should cede much of its power back to states (even as he reportedly prepares to fight California’s special ability to restrict air pollution). Pruitt is a savvy attorney who knows the EPA’s guiding statutes well. His statements and behavior suggest that he doesn’t want to temporarily injure the agency by defunding it. Instead, he wants to permanently hobble it by inscribing weak rules that will outlast his term as administrator and the Trump presidency. But that will take a lot of employees and a lot of time. “It’s really staff intensive to rescind a rule and then replace it,” says Ann Carlson, a professor of environmental law at the University of California Los Angeles. “To the degree that you have a vision about how the agency should operate, you need a staff and leadership.” And Pruitt will have to rescind and replace a lot of rules. President Trump has already asked him to replace car fuel-efficiency standards and the Waters of the United States rule, which sets the legal authority of the Clean Water Act. The EPA is also expected to withdraw Obama’s Clean Power Plan soon, which limits greenhouse-gas emissions from the power sector. Every one of these revisions or revocations will set an onerous bureaucratic process in motion that will last for years. Every time an EPA policy changes, agency employees have to draft the text of a new rule, then hire outside consultants to calculate its economic effects and public-health consequences. Other employees process the tens of thousands of public and industry comments that greet the proposal or withdrawal of any rule. Each of these comments must be read, categorized, and replied to.

Greens launch ad campaign against EPA cuts | TheHill: A environmental group has launched a six-figure ad campaign against proposed budget cuts to the Environmental Protection Agency (EPA). An ad from the Environmental Defense Fund (EDF) says cutting the agency’s budget will lead to “more asthma attacks, more lead in drinking water, more health problems, more pollution.” It warns lawmakers to “be ready” to be held responsible for those issues should they vote to cut the EPA’s budget. ADVERTISEMENT“We will fight to educate Members of Congress about the impact this draconian budget would have and will fight to educate the public about who is responsible if such cuts become law,” Elizabeth Thompson, EDF’s vice president for political affairs, said in a statement. EDF’s ads will run in Washington, D.C., and Orange County, Calif., starting Wednesday, according to the group. The ad campaign is the first to highlight spending cuts proposed by the Trump administration. Officials have proposed a 31 percent reduction in the EPA’s $8.3 billion budget, taking aim at climate change programs, state grants and dozens of agency offices. The agency would shed thousands of jobs under the plan.

Trump repeal of climate rules means U.S. Paris target now out of reach -- Whether the U.S. meets its emissions-reduction commitments under the Paris climate accord is pivotal to the success of the global agreement, but the Trump administration's policies have all but ensured the U.S. will fall far short. One recent analysis says the country will miss its target by more than 1 billion metric tons. Under President Barack Obama, the United States pledged to reduce greenhouse gas emissions 26-28 percent from 2005 levels by 2025. That means emissions must be cut about 1.7 billion metric tons, according to figures from the Environmental Protection Agency's latest greenhouse gas inventory. The nation is a third of the way to that target, but the rest was to be achieved via an array of regulations, especially the Clean Power Plan, that are now targeted for elimination by President Donald Trump. Not only was the goal dependent on those rules, it would have also required even more rigorous policies from Obama's successor because reductions from those rules would not have been enough, numerous studies have found. InsideClimate News compiled a chart showing exactly how far the United States still has to go to meet its Paris pledge. We discovered that the U.S. has already achieved an emissions reduction of 572 million metric tons, a third of the Paris target. That was largely the result of coal being driven out of the market under competitive pressure from natural gas and renewables, greater efficiency throughout the economy and a broad range of regulations. Most of the remaining two-thirds counted on the Clean Power Plan and other Obama-era rules. Even if those were implemented, the chart shows, the U.S would still fall 17 percent short of meeting its Paris pledge.

19 House Republicans call on their party to do something about climate change --While the Trump administration is veering sharply toward climate science denial, 19 House Republicans have taken steps to pull the party in the direction of reality, and the need to combat the threats posed by human-caused climate change. Last week, Congresswoman Elise Stefanik (R-NY), Congressman Carlos Curbelo (R-FL), and Congressman Ryan Costello (R-PA) led a group of 17 House Republicans in introducing a resolution that calls on Congress to develop policies to tackle climate change.  The Republican Climate Resolution recognizes that environmental stewardship is a conservative principle, that policies should be based on scientific evidence and quantifiable facts, that climate change is having negative impacts and is viewed by the Department of Defense as a threat multiplier, and that we can and must take meaningful action to address these threats in a manner that doesn’t constrain the American economy:...be it Resolved, That the House of Representatives commits to working constructively, using our tradition of American ingenuity, innovation, and exceptionalism, to create and support economically viable, and broadly supported private and public solutions to study and address the causes and effects of measured changes to our global and regional climates, including mitigation efforts and efforts to balance human activities that have been found to have an impact. The Resolution has thus far been signed by House Republicans representing districts in New York, Pennsylvania, Florida, Nevada, Nebraska, Virginia, New Jersey, Utah, Washington, and South Carolina.

White House delays release of climate executive action | TheHill: The White House has pushed back the release of an executive order related to federal climate change policies, sources confirmed on Monday. President Trump was expected to sign an order as early as Monday beginning the process of ending several climate initiatives advanced by the Obama administration. But the White House has pushed back that timetable until potentially next week, two sources told The Hill. Politico first reported news of the delay. Trump is widely expected to use his executive order to roll back several climate change policies put in place and championed by Obama. The order will likely ask regulators to begin the process of undoing the Clean Power Plan, the administration’s signature climate rule designed to cut power-sector carbon emissions. Trump is also aiming to lift a moratorium on new coal-mine leasing on public land. The order could also take aim at other climate measures — such as methane regulations or government global warming metrics — supported by Obama and environmentalists. Trump promised throughout his presidential campaign to deregulate the energy industry, and he populated his administration and transition team with officials aiming to do just that. But the White House has not said when that order might come out.

White House: Trump isn’t considering a carbon tax | TheHill: The Trump administration isn’t considering advocating for a tax on carbon dioxide emissions, a White House official said Wednesday. The official sought to clarify the administration’s position after White House press secretary Sean Spicer seemed to be unclear on the matter at a Tuesday press briefing. “I think there's a robust debate going on with respect to comprehensive tax reform,” Spicer said in response to a reporter’s question on whether a carbon tax is under consideration by President Trump. “Obviously, there's a lot of people who recognize that we haven’t [had] comprehensive tax reform since 1986 and that there’s a lot of pieces in this that we need to examine and get to and there’s a lot of voices and opinions that get shared with him,” he continued. The White House official shot down the possibility. “The Trump administration is not considering a carbon tax,” the official said. Carbon taxes or other pricing mechanisms for greenhouse gases have long been popular among Democrats and some conservative economists as a simple way to discourage the use of fossil fuels and fight climate change. But elected Republicans are nearly united in their opposition to a carbon tax, owing both to skepticism of the science of climate change and the economic impact of a significant new tax.

Trump may walk away from the Paris Agreement despite $19 trillion upside -- The United States could soon walk away from a trillion-dollar opportunity if some influential players in the Trump administration have their way. The Paris Climate Agreement may global boost the economy by $19 trillion over the next three decades as countries invest in renewable energy, energy efficiency and zero-emissions transportation, according to a report by two global energy agencies.  Such investments are essential for meeting the targets of the Paris treaty — a landmark deal that aims to limit global warming in order to avoid dangerous impacts including sea level rise and extreme weather events. Trump is considering pulling the U.S. out of the global agreement. If he does so, the U.S. could miss out on many of the economic benefits identified in the report, which was commissioned by the German government.  Beyond protecting the planet, all the world's clean-energy spending will grow the global economy by around 0.8 percent by 2050, the International Renewable Energy Agency (IRENA) said Monday in a new study, which it produced with the International Energy Agency (IEA).  In addition, renewable energy investments could yield an additional 6 million jobs through the same period, the report found. "Critically, the economic case for the energy transition has never been stronger," Adnan Amin, director-general of IRENA, an intergovernmental organization, said Monday in a statement. A key point in the report, though, is that delaying the transition to a cleaner energy system would be more costly. "We are in a good position to transform the global energy system, but success will depend on urgent action, as delays will raise the costs of decarbonization," Amin added.

Trump freezes Obama-era energy rules -  President Trump’s regulatory moratorium expires Tuesday, but not before the administration delayed a half-dozen Obama-era energy standards. The Department of Energy (DOE) said Monday it is postponing five efficiency rules, including test procedures for walk-in coolers and freezers, central air conditioners, heat pumps and compressors. The agency is also delaying energy conservation standards for ceiling fans and construction standards for federal buildings.The Transportation Department’s National Highway Traffic Safety Administration (NHTSA) also chimed in Monday delaying new sound requirements for hybrid and electric vehicles. These efficiency standards played a key role in President Obama’s climate agenda, but Trump has put their future in jeopardy. Most of these rules will be delayed until May, June or July, but the ceiling fan and construction standards won’t go into effect until September. The delays will give the Trump administration more time to potentially roll back the rules.

Trump’s Budget: Valuing Military Over Energy -- Last week President Trump unveiled his budget blueprint, which detailed savage cuts to most areas of discretionary spending while boosting defense outlays by a whopping $54 billion. Nearly all government agencies were major losers under the President’s budget, except for those dealing with defense and border security.The Department of Energy would see a 5.6 percent cut, or a reduction of $1.7 billion. But digging into those numbers, certain areas of DOE were winners while others were losers. Areas of DOE dealing with clean energy, smart grid technologies, and electric vehicles are either entirely eliminated or suffer steep cuts. Meanwhile, DOE’s nuclear weapons programs, where the bulk of the agency’s funding is allocated, would see an 11 percent increase. The blueprint also includes $120 million to restart the licensing for the Yucca Mountain nuclear waste storage facility in Nevada, which has been on ice for years. One item that stood out was the elimination of funding for a much-heralded energy R&D unit within the DOE that is crucial for long-term energy innovation. Known as the Advanced Research Projects Agency-Energy (ARPA-E), the agency is modeled after the highly-respected DARPA, a section of the Pentagon that has been responsible for military tech innovation since its inception in the 1950s in response to the launching of Sputnik. ARPA-E funds high-risk, high-reward technologies that would not otherwise receive funding from the private sector because of the risk. The agency is relatively young, created a decade ago and funded with an initial $400 million as part of the 2009 stimulus package. ARPA-E has funded several hundred projects with its relatively paltry budget, everything from energy storage to biofuels, promising new renewable energy technologies, carbon capture and much more. The funded projects have, in turn, attracted an additional $1.8 billion in private sector financing, and 56 projects have moved forward to form new companies.

California air regulators vote to keep tough fuel standards - (AP) — California air regulators voted Friday to keep the state's tough vehicle emissions standards through 2025. The state Air Resources Board voted unanimously at a meeting in Riverside to continue with the standards for 2022 to 2025 after reaching a conclusion similar to one by the U.S. Environmental Protection Agency under the Obama administration. More recently, however, President Donald Trump said he wants to re-examine the rules governing gas mileage and set a uniform fuel mileage requirement for automakers in the U.S. Trump's move prompted environmental and consumer advocates to call on California to affirm its commitment to keeping the tougher standards. "The program is delivering cleaner cars that save consumers money and are fun to drive. That's how we do it in California," board chair Mary D. Nichols said. The standards — followed by a dozen mostly Northeastern states, including New York and Massachusetts — require new cars and trucks to average 36 miles per gallon in real-world driving conditions by 2025. Also on Friday, the board voted to pursue policies to support having more than 4 million zero-emission vehicles in California by 2030 and further reduce vehicle greenhouse gas emissions from 2025 to 2030, the agency said. Environmental groups predict Trump will weaken the standards that were affirmed in the waning days of the Obama administration to control greenhouse gas emissions that contribute to global warming.

ICCT Skewers Trump Regulatory Rollback Argument: Estimates Lower Costs for Meeting CAFE Standards than EPA - It may be far cheaper than previously estimated for American car manufacturers to meet fuel efficiency standards — slashing greenhouse gas emissions, improving air quality, and helping drivers keep the cost of filling their gas tanks low — because the Environmental Protection Agency (EPA) might have overestimated the price tag on innovation by as much as 40 percent, a newly published report by the International Council on Clean Transportation (ICCT) concludes. The report comes a week after President Donald Trump visited Detroit and his administration launched efforts expected to roll back federal standards requiring automakers to make new cars far more fuel efficient by 2025. However, the federal government isn’t the only regulator in the U.S. with the authority to set emissions standards for cars. “Our research casts fresh doubt on automakers’ claims that the standards are too difficult and costly to meet,” said Nic Lutsey, ICCT program director and the lead author of the paper, which drew on data supplied by major auto parts manufacturers like Honeywell, BorgWarner, and Johnson Controls. “If the U.S. wants to be a global leader, and remain a stable market for vehicle technology investments here, they will stick with the standards.” President Trump has claimed that “industry-killing regulations” are leaving American automakers at a competitive disadvantage and that rolling back the Corporate Average Fuel Economy (CAFE) standards will protect American jobs.“We’re going to work on the CAFE standards so you can make cars in America again,” President Trump said in a speech in a Detroit suburb last week, as his administration made its first moves toward rolling back federal emissions standards. “We want to be the car capital of the world again.”But Lutsey told DeSmog that Trump’s approach might actually make things worse for U.S. automakers. “Perhaps more than a possible weakening of the U.S. standards, the uncertainty of the standards remaining under consideration through 2018, presents a risk for U.S. vehicle technology investments.” “While the U.S. standards are being reconsidered, Europe and China, which already have more stringent standards, continue work to make them tougher yet,” he added.

Trump Promises to Bring Back Coal as Two More Coal Plants Set to Retire -- Speaking at a rally in Kentucky Monday night, President Trump told the crowd his administration is "preparing new executive actions to save our coal industry and to save our wonderful coal miners from continuing to be put out of work."  The president also promised to "turn the EPA from a job-killer into a job creator." The timing of the executive order in question, which reportedly includes ordering a rewrite of the Clean Power Plan and threats to the social cost of carbon, was pushed back again by the White House on Monday. The president will reportedly sign the order by the end of this month. Speaking of job killers versus job creators, Senate Majority Leader Mitch McConnell vowed Saturday to oppose the Trump budget's proposed cuts to the Appalachian Regional Commission, which helps with economic revitalization in areas devastated by coal's decline. Hours before Trump's rally, electric company Dayton Power & Light announced plans to close two of its coal-fired plants in Ohio by next June. The company announced in a statement that, "without significant changes in market conditions," the J.M. Stuart and Killen plants would not be "economically viable beyond mid-2018." "Despite claims to the contrary, King Coal is not coming back," said Michael Bloomberg. "Four coal-fired power plants have been slated for retirement since November, reflecting strong demand for clean energy over polluting coal."  The plants, which sit at the heart of a region Trump promised to revitalize, generate 3,000 megawatts of energy and employ nearly 500 workers. In a settlement reached earlier this year with groups including the Sierra Club , the company will invest in 300 megawatts of solar and wind projects by 2022 and provide a $2 million fund for the communities affected by the plants' closures.

Big Oil Replaces Rigs With Wind Turbines - Big oil is starting to challenge the biggest utilities in the race to erect wind turbines at sea. Royal Dutch Shell Plc, Statoil ASA and Eni SpA are moving into multi-billion-dollar offshore wind farms in the North Sea and beyond. They’re starting to score victories against leading power suppliers including Dong Energy A/S and Vattenfall AB in competitive auctions for power purchase contracts, which have developed a specialty in anchoring massive turbines on the seabed. The oil companies have many reasons to move into the industry. They’ve spent decades building oil projects offshore, and that business is winding down in some areas where older fields have drained. Returns from wind farms are predictable and underpinned by government-regulated electricity prices. And fossil fuel executives want to get a piece of the clean-energy business as forecasts emerge that renewables will eat into their market. “It is certainly an area of interest for us because there are obvious synergies with the traditional oil and gas business,” s “As the oil and gas industry we know, we cannot get stuck where we are and wait for someone else to take this leap.” Even as oil production declined in the North Sea over the last 15 years, economic activity has been buoyed by offshore windmills. The notorious winds that menaced generations of roughnecks working on oil platforms have become a boon for a new era of workers asked to install and maintain turbines anchored deep into the seabed. About $99 billion will be invested in North Sea wind projects from 2000 to 2017, according to Bloomberg New Energy Finance. A decade ago, the industry had projects only a fraction of that size. While crude still supplies almost a third of the world’s energy, oil executives are starting to adjust to demands for cleaner fuels. Even so, emerging fossil-fuel alternatives including wind and solar power are starting to limit growth in oil demand. Those technologies and electric cars may displace as much as 13 million barrels of oil a day from global demand by 2040, more than is currently being produced by Saudi Arabia, according to Bloomberg New Energy Finance.

Dark Days Ahead For UK’s Solar Industry - Solar power in Britain has been comfortably subsidized for years now, allowing it grow substantially in a short amount of time. Last year, the subsidies stopped. Now, the government plans to enact further change with a new tax policy. 44,000 solar rooftop panels, previously exempt from business taxes, will now face a wall of expenses as the government finally takes its share of profits. This does not bode well for the UK’s solar industry, which seems to be extremely sensitive to governmental policy changes – when subsidies were cut last year, the industry lost 12,000 jobs and growth fell 85 percent. The solar industry, of course, is outraged by the direction the government is moving. Many are claiming these taxes will undermine all the progress the government has sought after for so long in the renewable energy sphere. The plans released by the Treasury aren’t just antagonizing lobbyists, however. The Environmental Audit Committee (EAC), part of the British government, announced its own distaste for the new tax increases, citing that the plan prioritizes reducing power bills for individuals as opposed to environmental concerns.

Government ‘stacking the deck’ against renewable energy, says SNP - Ministers have been accused by the SNP of “stacking the deck” against renewable energy and in favour of nuclear power. Callum McCaig, the party’s energy spokesman, suggested the Government was guilty of “inflating” the cost of greener energies such as onshore wind. Mr McCaig compared the strike price – the amount the Government has guaranteed to pay per unit of electricity generated – set for the new Hinkley nuclear power station with the price set for renewables. “The strike price for Hinkley was £92.50 in 2012 compared to a much lower £82.50 for offshore wind in 2015. Yet when looking at the value-for-money assessment, the Government assumes a £90 strike price for onshore wind. Why are they inflating the price of renewables in comparison to Hinkley?”

Germany Converts Coal Mine Into Giant Battery Storage for Surplus Solar and Wind Power -- Germany is embarking on an innovative project to turn a hard coal mine into a giant battery that can store surplus solar and wind energy and release it when supplies are lean.  The Prosper-Haniel coal mine in the German state of North-Rhine Westphalia will be converted into a 200 megawatt pumped-storage hydroelectric reservoir that acts like a giant battery . The capacity is enough to power more than 400,000 homes, Governor Hannelore Kraft said, according to Bloomberg .   Founded in 1863, the Prosper-Haniel coal mine produces 3,000,000t/y of coal and is one of the few active coal mines remaining in Germany. But the mine is slated for closure in 2018, when federal subsidies for the industry dry up. Kraft said that the miners in the town of Bottrop will remain employed at the site as it converts to its new function. Pumped-storage facilities are not a new idea, as such systems are already in operation around the world. However, this is the first time that a coal mine will be used as part of the infrastructure. Engadget explained how such a facility would work:  Similar to a standard hydroelectric power plant, pumped hydroelectric storage stations generate power by releasing water from a reservoir through a turbine to a second reservoir at a lower altitude. Rather than releasing the outflow, however, the water is then stored in the lower reservoira until it can be pumped back up to the top reservoir using cheaper, off-peak power or another renewable energy source. In the case of the Prosper-Haniel plant, the lower reservoir will be made up of more than 16 miles of mine shafts that reach up to 4,000 feet (1,200 meters) deep. The station's 200 megawatts of hydroelectric power would fit into a mix of biomass, solar and wind power. It's not a perpetual motion machine, but the water stored in the surface reservoir will effectively act as as backup "battery" that could kick in and fill any gaps in the energy mix whenever the other sources fall short.

A brief review of underground coal mine energy storage -- As reported in last week’s Blowout the latest solution to the problem of storing intermittent renewable energy for re-use is to convert an underground coal mine into a pumped hydro facility. The mine in question is Prosper-Haniel in the Ruhr region of Germany, which is scheduled to shut down next year. Following shutdown it is anticipated that the mine workings will form the lower reservoir and that an upper reservoir will be constructed on the surface (inset) – basically the same concept as the Flat Land Energy Storage (FLES) scheme discussed in Euan Mearns’ earlier post. Here we take a quick look at this approach.The advantage of underground mine energy storage (“mine storage” for short) is that while FLES requires the excavation of an underground chamber there are a large number of inactive underground mines that offer potential for large amounts of ready-made energy storage. Based on the preliminary reviews conducted here, however, it seems likely that mine hydro will be just as problematic and no more economic than FLES, and not that much cheaper than battery storage. Information on the Prosper-Haniel project is hard to come by. The consortium running the project, which includes the University of Duisburg-Essen and mine owner RAG AG, does not publish any technical details on its website and media reports give only vague estimates (As much as 1 million cubic meters of water could be allowed to plunge as deep as 1,200 meters, turning turbines at the foot of the colliery’s mine shafts, according to Power Engineering International. Yet a million cubic meters of water and a head of 1,200m represent a gross storage capacity of about 3GWh, an encouraging result given that there are thousands of shut-down underground coal mines in the world that might be candidates for conversion into pumped hydro projects.The two main sources of information used in this review are:

 South Australia’s power woes expose deeper problems with nation’s energy security - Australia is rapidly stumbling into a major energy crisis, and there’s little evidence to suggest the federal and state governments can agree on the solutions to fix it. This horrifyingly stark picture is painted by the blandly titled 'Gas Statement of Opportunities' released by the Australian Energy Market Operator today.  To understand what's coming, look no further than my home state of South Australia. In short, the sudden and unexpected closure of ageing coal plants at Hazelwood in Victoria this month and Port Augusta in South Australia last year are putting enormous pressure on power supply. From next summer, on hot days, there may not be enough electricity in either state to go around. In South Australia, wholesale prices are regularly spiking to the market-allowed maximum of $14,000 per megawatt hour. In a healthy market, you’d expect those dire warnings to prompt new investment. But only the crazy-brave are willing to build new coal power. Old coal generators are shutting down with little notice. In the absence of a carbon price, no-one’s willing to build new gas plants either. And despite advocacy for a carbon price from the likes of the CSIRO to the Business Council of Australia to BHP Billiton, to one of the nation’s biggest coal power producers in AGL, the Federal Government won’t even consider one.

Snowy Mountains fix for Australian power crisis -- The nation’s iconic Snowy Mountains power scheme will be “turbocharged” with a 50 per cent increase in capacity to guarantee more electricity for households and employers, as Malcolm Turnbull moves today to invest $2 billion to ensure energy security. Mr Turnbull will claim today that the 50 per cent expansion of the Snowy “will make renewables reliable” by providing storage for intermittent wind and solar power, releasing the electricity to the market when needed. Built from 1949 to 1975, the Snowy has nine power stations along a network of dams producing 4100 megawatts of electricity at full capacity. Today’s proposal will add 2000MW by using the ¬existing reservoirs to power new turbines in a new network of tunnels, without requiring an increase in dam capacity or any change to the water released for environmental flows and irrigation. The plans are backed by Snowy Hydro, the operator of the current scheme, but will need approval from the NSW and Victorian governments given the utility is jointly owned by the commonwealth, NSW and Victoria.

Iran can have a 100% renewable grid by 2030 - Iran has the capacity to build a 100% renewable energy system by 2030 with about $187 billion of investment, a Finnish university study has found.  According to the Lappeenranta University of Technology, the country would need to develop about 49 gigawatts of solar power, 77 gigawatts of wind energy and 21 gigawatts of hydropower to achieve a zero-emissions grid.  Iran is seeking 5,000 megawatts of renewable energy by 2020, with more than 4,000 megawatts expected to come from wind power. The country has approximately 141 megawatts of installed wind power. The Finnish researchers found that wind and solar power is the most economical clean energy option – 50 to 60 percent less costly than new nuclear capacity or fossil fuel-based power with carbon capture. A green grid could also make water desalinization cost-effective in the face of water scarcity which is becoming a serious problem and affecting almost all Iranian provinces. “A 100 percent renewable energy system for Iran is found to be a real policy option,” the Lappeenranta University of Technology (LUT)’s study concluded. “This requires fundamental change in how we think carbon, but it could potentially open major new business opportunities,” said LUT’s Professor Christian Breyer.

 Coal in 'freefall' as new power plants dive by two-thirds --The amount of new coal power being built around the world fell by nearly two-thirds last year, prompting campaigners to claim the polluting fossil fuel was in freefall. The dramatic decline in new coal-fired units was overwhelmingly due to policy shifts in China and India and subsequent declining investment prospects, according to a report by Greenpeace, the US-based Sierra Club and research network CoalSwarm.The report said the amount of new capacity starting construction was down 62% in 2016 on the year before, and work was frozen at more than a hundred sites in China and India. In January, China’s energy regulator halted work on a further 100 new coal-fired projects, suggesting the trend was not going away. Researchers for the groups said a record amount of coal power station capacity was also retired globally last year, mostly in the US and EU, including Scotland closing its last one.One of the reasons for the fall in new plants was that too much capacity had been built in recent years, particularly in China. Tim Buckley, director of energy finance studies at the IEEFA, a pro-green energy thinktank, said the falling demand for coal power in China and India and plans to curtail new power stations shows that the world has overestimated the need for the fossil fuel. The report, which tracked power stations through publicly available information, company reports and satellite imagery, said 65GW of new coal-fired units had started construction between January 2016 and January 2017, down 62% on the 170GW the year before. Most coal power stations are around 1GW or greater in capacity. Lauri Myllyvirta, a Beijing-based energy analyst at Greenpeace and author of the report, said the fall in China was largely down to government policy to clean up air pollution and encourage clean energy. That policy shows no sign of stopping – at the weekend, Beijing ordered its last coal-fired power plant to close in a bid to improve the capital’s air quality.

Waning global appetite for coal-fired power raises climate hopes - The world’s hunger for new coal power plants has abruptly and unexpectedly slumped, improving the chance of averting the most dangerous levels of global warming, a group of environmental organisations says. In China and India, home to 86 per cent of coal-fired power stations built globally in the past decade, construction of new projects has been frozen at more than 100 sites, the Sierra Club, Greenpeace and other groups say in a report published on Wednesday. Worldwide, more coal power is now on hold than the amount that developers began building over the past year, it notes. A record amount of capacity has been shut in the past two years, mostly in the EU and US. “This is good news. It’s not what any of us were expecting,” said Paul Fisher, a former senior regulator at the Bank of England and now a senior associate at the Cambridge Institute for Sustainability Leadership, a university body. The slowdown means the main goal of the Paris climate change accord — keeping global temperature rises below 2C compared with pre-industrial revolution levels — may be “within feasible reach”, says the report, the third annual survey of the global coal plant pipeline.

Unfinished business: Coal miners across South Africa walk away from clean up - Just outside the town of Ermelo in Mpumalanga – South Africa’s most important coal mining province – Johan Vos’ farm is littered with derelict and working mines. At one abandoned site, mining infrastructure sits partially submerged and rusting in a large pool formed among exposed mine waste. Smoke pours from a nearby hill as a fire rages out-of-control in the tunnels below. The wreckage belongs to Golfview Mining (Pty) Ltd, part of Anker Coal and Mineral Holdings South Africa (Pty) Ltd, which in turn is part of the Anker group based in the Netherlands. But rather than finish cleaning up Vos’ land, Golfview is looking to sell. Sights like this are increasingly common in South Africa. As the global market for coal slowly declines, slimmer margins are forcing international mining companies, including majors BHP Billiton and Anglo American, to shed their coal assets. Documents obtained from the country’s Department of Mineral Resources (DMR) by Climate Home reveal a small minority of mining companies hold the majority of the country’s funds for rehabilitation. However, these big miners rarely apply for, and are almost never granted, closure certificates, the documents needed to legally close a mine and pass remaining liability to the government. Instead, junior miners, such as Golfview, are left with the remnants of mines and insufficient funds to properly clean up when the resource is exhausted.

Two Ohio coal-fired plants to close, deepening industry decline | Reuters: Electricity company Dayton Power & Light said on Monday it would shut down two coal-fired power plants in southern Ohio next year for economic reasons, a setback for the ailing coal industry but a victory for environmental activists. Republican President Donald Trump promised in his election campaign to restore U.S. coal jobs that he said had been destroyed by environmental regulations put into effect by his Democratic predecessor, Barack Obama. Dayton Power & Light, a subsidiary of The AES Corporation, said in an emailed statement that it planned to close the J.M. Stuart and Killen plants by June 2018 because they would not be "economically viable beyond mid-2018." Coal demand has flagged in recent years due to competition from cheap and plentiful natural gas. The plants along the Ohio River in Adams County employ some 490 people and generate about 3,000 megawatts of power for coal. The closure follows negotiations between Dayton Power & Light, the Public Utilities Commission of Ohio and stakeholders like the environmental group the Sierra Club over whether the company should be allowed to raise electricity prices to pay for upgrades to keep the plants open. "They are by far our largest employer and it will absolutely be devastating to our community here in Ohio," Michael Pell, president of First State Bank in Winchester, Ohio, said in a telephone interview. Pell, one of several local community leaders who have lobbied to keep the plants going, has become a spokesman for Adams County on the issue. He said that as the industry moves away from coal, state and federal authorities should help the county create other jobs and clean up environmental damage from the plants.

 The legacy of Ohio’s abandoned mines   - Today, there are few working mines left in southeastern Ohio, but the region still bears the scar from years of extraction. Thousands of mines were opened and closed before there were any environmental protections on the books. They left their mark in the soil and in the streams. That mark can be difficult, if not impossible, to remove. The Ohio Department of Natural Resources partnered with local environmental groups, scientists, engineers and AmeriCorps volunteers to monitor 183 miles of streams, 47 miles of which they have successfully restored. The project took decades and cost more than $30 million, demonstrating the challenges of cleaning up after coal.“It’s really hard, difficult, in some cases impossible to ever restore those streams,” said Natalie Kruse, an associate professor of environmental studies at Ohio University, who was involved in the restoration effort. “We can’t just damage streams through mining and expect it to go back to the way it was.”Coal generates pollution at every stage of its life. Burning coal fuels asthma, bronchitis and global climate change. Mining operations contaminate water supplies in surrounding areas.Iron from coal deposits has colored streams orange. Sulfur has turned water more acidic, impairing its ability to support life. “When the chemistry is that bad, there’s literally no fish life,” said Marissa Lautzenheiser, a watershed coordinator at Rural Action, a nonprofit involved with the stream restoration project. “We’re struggling at reclaiming the ecosystems,” said Lautzenheiser. “Once the industry left, a lot of people didn’t even realize the area once had a lot of coal mining. It’s hard to explain to people. Most people don’t know why the water is orange.”

Northeast US coal burn increased in March even as retirements will impact power gen mix: – (podcast) It seems Mother Nature decided to skip most of winter in the Northeast US this year, but a recent cold snap bumped up power and gas prices in March and the region's generation mix is still changing. Charles Noh and Eric Wieser, with the power pricing team, examine how day-ahead power prices were lifted by increased load and higher spot gas prices and how much more gas is expected in the region as coal units are slated to be retired.

Mississippi Power's Kemper Plant Blows Deadline After Leak (AP) — After a March 9 tubing leak, Mississippi Power Co. said Thursday that it's unsure when its $7.1 billion Kemper County power plant will be finished. With the plant three years behind schedule, Atlanta-based Southern Co. said in a stock filing that it won't meet the latest deadline of mid-March. Kemper is designed to capture 65 percent of the carbon dioxide from the burning coal, releasing only as much of the climate-warming gas as a typical natural gas plant does. Kemper's two gasifiers convert soft lignite coal mined at the site into a synthetic gas using high pressure and heat. The tubes broke in a cooling unit that reduces the heat of the gas that comes out of the gasifier before piping it into a chemical plant that removes carbon dioxide and other chemicals. The gas is then burned in turbines to generate electricity Spokesman Jeff Shepard said the company has started repair work and doesn't have to repair the other gasifier. "It's not a design problem," he said. "It's repairing some leaks." Shepard said Mississippi Power is still evaluating how much longer the delay will set back the plant. Time is money at Kemper: The utility says a month's delay would force the company to absorb another $25 million to $35 million in losses. Customers, meanwhile, could be asked to pay another $20 million in interest and legal costs. Southern shareholders have already absorbed $2.8 billion in losses from the plant, while Mississippi Power's 186,000 customers could ultimately be asked to pay $4.2 billion.

Judge rules Dominion's coal ash site pollutes Virginia water (AP) -- Arsenic is illegally flowing out of one of the sites where Virginia's biggest utility stores coal ash, polluting surrounding waters, a federal judge ruled Thursday. Though U.S. District Judge John Gibney Jr. found Dominion Virginia Power had violated federal law with the discharges from a retired power plant in Chesapeake, he didn't impose a civil penalty, saying he saw no evidence the discharge was harmful. Nor did he order the utility to remove the ash from the water's edge to a synthetically lined landfill as the Sierra Club, the plaintiff in the lawsuit, wanted. "The ponds and landfill convey arsenic directly into the groundwater and, from there, directly into the surface water" in violation of the U.S. Clean Water Act, Gibney wrote. He went on to say it was not possible to determine how much arsenic is going into the surrounding waters, but said "the discharge poses no thrat to health or the environment." The judge cited an expert hired by Dominion who "found no human health or environmental concerns" in water, sediment and fish surrounding the plant - data he said the Sierra Club did not dispute at a four-day bench trial last July. The judge ordered Dominion to do more tests and collaborate with the Sierra Club on a remediation plan. "Dominion is pleased that the court has confirmed there has been no threat to health or the environment resulting from the coal ash stored at its former Chesapeake Energy Center," a company statement said.

Coal ash: 'Why in the world would we be importing it?' (AP) -- Shipping containers full of coal ash from China, Poland and India have come into the U.S. through the Port of Virginia as foreign companies find a market for the same industrial waste that America's utilities are struggling to dispose of. Critics call it a missed opportunity. Coal ash is treasure as well as trash, useful for projects from roads to concrete to wallboard. They want Virginia to mandate more recycling of the ash that's already here, threatening to contaminate water sources or create an environmental disaster. "We have millions of tons of this sitting along our riverbanks," said Travis Blankenship, former government affairs manager for the Virginia League of Conservation Voters. "Why in the world would we be importing it from other states and countries?" The nation's shift away from coal for electricity has reduced the supply of fresh coal ash, forcing industries that depend on it to look farther afield. Some turn to companies that have figured out how to reprocess ash discarded years ago in pits and ponds. Others look overseas. The Port of Virginia handled just one shipping container of coal ash in 2015, from India. Last year, there were about 22, from China and Poland. It all went on to Ohio and Wisconsin, according to a port spokesman who didn't know the final destinations. Meanwhile, more ash has been trucked in from other states for concrete production in Virginia.

How Trump Could Save Coal with Wood Pellets -- The use of U.S.-produced wood pellet fuel blended with coal in large utility power stations could sustain coal mining jobs, create tens of thousands of new jobs in another sector that is experiencing significant job losses—the forest products sector—and stimulate billions of dollars of new investment in new U.S. manufacturing plants. By supporting the blending of industrial wood pellet fuel with coal in pulverized coal (PC) power plants, policy will lock in the need for PC power plants, therefore guaranteeing significant demand for coal. This strategy, which the Trump administration could follow, is a win-win-win for the coal and forest products sectors, and the environment. It offers many advantages, including: use of existing power stations; much lower capital cost than new natural gas plants; reliability and no derating; flexible, baseload or on-demand generation; already demonstrated at scale in many locations; lessening of utilities’ dependency on natural gas; lower carbon emissions; creation and sustaining of jobs; and lower sulfur oxide, nitrogen oxide and mercury emissions.

U.S. judge signs Peabody bankruptcy exit after environmental deal | Reuters: A U.S. judge formally approved Peabody Energy Corp's (BTUUQ.PK) plan to emerge from bankruptcy late Friday after the coal producer struck a settlement with the U.S. government over legacy environmental claims at a gold and metal mining subsidiary. Under a last-minute deal with the U.S. Department of Justice, Peabody agreed to create a $43 million trust to manage environmental liabilities stemming from its dormant Gold Fields Mining subsidiary, according to court papers.St. Louis-based Peabody, the world's largest private-sector coal producer, owns mines in Australia and the United States and supplies the global market with the metallurgical coal used in steelmaking and the thermal coal used to generate electricity. Peabody expects to exit bankruptcy in early April with about $2 billion of debt amid dramatically improved short-term prospects for its business versus a year ago, when it sought Chapter 11 protection with more than $8 billion of debt. In the environmental settlement, the Department of Justice was negotiating on behalf of the Environmental Protection Agency, the Interior Department, five states and seven Indian tribes. The parties filed claims worth billions of dollars, which Peabody disputed but said it agreed to settle to avoid drawn-out litigation. Peabody agreed earlier in March to cover about $1 billion in future coal mine cleanup costs with third-party bonds.

Chinese utilities urge regional government to curb soaring coal prices | Reuters: China's top power groups are lobbying the local government in the western region of Ningxia to require their main thermal coal supplier to cut prices as they are bleeding cash due to surging coal costs and falling power prices, two sources said. A glut of renewable and coal-fired power capacity in the Ningxia Autonomous Region has pushed down electricity prices, forcing utilities to sell their power at a discount after the government liberalized its power market. Prices in the region are the lowest in the country. Seven of China's largest electricity generators including the Ningxia subdivision of China Datang Corp, China Guodian Corp, China Huadian Group, China Huaneng Group and Chinalco Ningxia Energy Co asked Ningxia regional authorities to force China's largest miner Shenhua Group Corp [SHGRP.UL] to lower its coal price to 260 yuan ($37.79) per ton from 320 per ton. The companies submitted the proposal in a document, seen by Reuters, to the Ningxia government on March 17. In the proposal, the companies also asked the government to temporarily suspend the region's new wholesale power trading market and increase the volume of coal to the region from Inner Mongolia. The move follows a months-long rally in thermal coal prices in China, the world's top consumer of the fuel, amid fresh concerns about tighter supplies and robust demand even as winter draws to an end.

Despite pollution, coal plant is cleared to reopen in New Delhi   — The 43-year-old Badarpur Thermal Power Station, a coal-burning plant on the edge of what has been called the world’s most polluted city, New Delhi, was quietly cleared to resume pumping smoke into the air last week. In Parliament, around the same time, India’s environment minister dismissed a major study of global air pollution that found that high levels of particles in India cause more than a million people to die prematurely each year. The report, he told Parliament, was based on “models, simulations and extrapolations.” And Indian officials have indicated in recent weeks that they will not observe a deadline for coal-burning power plants across the country to adhere to stricter emissions standards. Instead, the deadline may be shifted from the end of this year to a later, unknown, date. Every winter, when cold air pushes down a blanket of pollutants and fine particulate matter on Delhi, newspapers are full of horror stories about air quality — more recently, the “Airpocalypse” — and political leaders call for urgent solutions. But every spring, the clouds break, and city officials appear to suffer from a collective amnesia. “The moment the air quality goes moderate, they’re willing to go back to normal — it’s basically work as usual,” said Aishwarya Madineni, an air pollution researcher based in Bangalore.

Is the Indian Nuclear Doctrine Evolving? -- If India fears imminent use of nuclear weapons by Pakistan, will it go first, upending its doctrine of ‘no first use’, and conduct a comprehensive first strike, taking out Pakistan’s nuclear arsenal? In other words, has India’s nuclear doctrine undergone a shift? Vipin Narang, a respected expert, raised the possibility at the Carnegie International Nuclear Policy Conference, causing a stir. The conference, held every two years to discuss nuclear weapons, proliferation and associated topics, is a gathering of the world’s top nuclear strategists. Narang, a professor of political science at the Massachusetts Institute of Technology who specialises in nuclear proliferation and strategy, said in his prepared remarks that there was increasing “evidence that India will not allow Pakistan to go first”. India’s opening salvo may not be conventional strikes trying to pick off just Nasr batteries that can carry tactical nuclear weapons, but a full “comprehensive counterforce strike” that attempts to “completely disarm Pakistan of its nuclear weapons” so that India doesn’t have to expose its cities to nuclear destruction, Narang said. A counterforce strike refers to an attack on a country’s nuclear assets. The analysis caused shock and awe among the nuclear elite, many of whom remain deeply suspicious and wary of India’s nuclear programme. George Perkovich, vice president of Carnegie and an opponent of the 2008 India-US nuclear deal, said ultimately it was about “psychological mind games” and sending signals. He questioned India’s capacity to conduct a “comprehensive” strike while warning of the massive costs involved in developing such capabilities.

China Needs to Accelerate Nuclear Power Development to Meet 2020 Target - China needs to speed up building planned nuclear reactors and make quick new approvals over the next few years to meet a target for 2020 and keep projects rolling beyond that, an ex-chairman of China National Nuclear Corporation [CNNNC.UL] said. Delays at so-called third-generation reactors, both the Westinghouse AP1000 and French state firm Areva’s European Pressurised Reactor (EPR), have dragged on China’s pace of nuclear power development for the past few years, after Beijing had already suspended new project approvals for three years following the Fukushima meltdowns. At the world’s maiden AP1000 project in the eastern province of Zhejiang, developed by Westinghouse and its struggling Japanese parent Toshiba, delays for the fine-tuning of designs have inflated costs of the first two reactors by at least 10-20 percent, said Sun. The European Pressurized Reactor (EPR) developed by French Areva and being built in South China’s Guangdong province has also seen delays, similar to EPR projects in Finland and France, said Sun. Beijing will need to approve six to eight new reactors a year between 2018 and 2020, to accelerate post-2020 development, said Sun, adding that another slowdown would waste China’s recently developed nuclear equipment manufacturing capacity.

 Sweden Readies Network Of Nuclear Fallout Bunkers As Fears Grow Of Russian Attack -- It's difficult to argue that international geopolitical tensions aren't somewhat elevated at the moment.  Russia, and it's army of 'hackers', has suddenly become the convenient enemy of every political party around the world that once enjoyed majority support among voters but can't quite come to terms with the fact that their own actions, rather than a well-orchestrated Russian propaganda campaign, may be the cause of the wave of nationalism sweeping across the globe.  Not to mention the fact that it's almost impossible to predict the daily provocations that will come from leaders in Iran and North Korea. And while most of us are simply making note of the heightened international tensions, before more or less going on with our usual daily routines, the Swedes are preparing for the worse and readying a vast system of nuclear fallout bunkers just in case Russia decides to invade over the next couple of months. According to The Sun, Sweden is home to a system of 65,000 bunkers that were established in the Cold War to protect the population from nuclear war with the Soviet Union and, as of right now, they're all being prepped for immediate usage. According to MSB, the bunkers currently protect against blast and radiation as well as chemical or germ warfare.But with fears growing over threat posed by Vladimir Putin and his resurgent Russia they are being reviewed to make sure they are ready.Russian military drills in the region have raised fears among neighbouring nations that an attack could happen in the coming months.

Senate panel passes bill to license advanced nuclear plants | Reuters: A U.S. Senate committee easily passed a bill on Wednesday to enable the nuclear regulator to license advanced nuclear reactors that backers say are safer than conventional plants and can help deal with a growing waste problem. The Nuclear Energy Innovation and Modernization Act requires the Nuclear Regulatory Commission to develop a regulatory framework to enable the licensing of advanced nuclear reactors that could come into development in 10 or 15 years. The bill passed 18-3 in the Environment and Public Works Committee. Republican Senator James Inhofe, said the bill is "critical for the revitalization and improvement of our nation's nuclear energy industry." The bill has brought together some Republicans eager to prevent the United States from falling behind China and Russia in nuclear innovation and Democrats who want to foster technologies that do not emit gases blamed for climate change. But the legislation faces a cloudy future. The nuclear industry faces competition from cheap natural gas prices and the growing wind and solar power industries. It was uncertain whether the full Senate would debate the bill or if the measure would be absorbed into broader energy legislation. Democratic Senator Sheldon Whitehouse said the bill would help the United States keep its lead in innovation while finding possible solutions to the waste now kept in pools and in casks at conventional nuclear plant sites. "If we can get there, we will have done this country and the world a vital public service," Whitehouse said of the potential for the advanced reactors to reduce the waste problem.

Architect of Federal Fracking Loophole May Head Trump Environmental Council – Steve Horn - Confidential sources have told Politico that Bill Cooper — current congressional staffer and former fossil fuel industry lobbyist and attorney — is under consideration to head President Donald Trump's White House Council on Environmental Quality (CEQ).CEQ works to coordinate various federal agencies dealing with environmental and energy public policy issues and oversees the National Environmental Policy Act (NEPA) review process for proposed infrastructure projects.Cooper served as legal counsel for the U.S. House Energy and Commerce Committee on what is today known as the “Halliburton Loophole,” a clause which exempts hydraulic fracturing (“fracking”) from U.S. Environmental Protection Agency (EPA) enforcement of the Safe Drinking Water Act. The Halliburton Loophole was slipped into the Energy Policy Act of 2005 and became law under President George W. Bush. A 2005 newsletter published by the Interstate Oil and Gas Compact Commission (IOGCC) credits Cooper specifically for his work in getting the clause inserted into the bill.  In a Truth in Testimony form Cooper submitted before testifying at a 2013 House Committee on Energy and Commerce hearing, he also cited the central role he played in negotiating and writing the Energy Policy Acts of 2002 and 2003, both of which had Halliburton Loophole provisions. On that form, Cooper also listed his experience as an oil and gas industry attorney.

Bill to weaken clean energy standards progresses despite Kasich opposition - The latest proposal to weaken Ohio's clean-energy standards is on a fast track, as a key lawmaker said today that he wants to see the measure pass on the House floor within a matter of weeks. But that doesn't change the underlying reality that Gov. John Kasich opposes the plan, a stance he reiterated this week. House Bill 114 had its first hearing before the House Public Utilities Committee today. The measure says the renewable-energy mandates would become optional, and energy efficiency standards would be reduced. This is a revision to a 2008 law that set the rules, which must be followed by electricity utilities. The committee chairman, Rep. Bill Seitz, R-Cincinnati, said he intends to move quickly to pass the bill, with votes in committee and on the House floor within weeks. Opponents of the bill say the clean-energy rules should remain in place because they are good for the economy and the environment. Also, opponents note that Kasich vetoed a similar bill in December. "The House is picking a fight it can't win," said Samantha Williams, an attorney for the National Resources Defense Council. "They should be taking the lead to support an industry that employs 100,000 Ohioans and saves money for families and businesses, rather than pulling the rug out from under it." The bill's chief sponsor, Rep. Louis Blessing, R-Cincinnati, said mandates have an "inequitable nature" because some energy sources are favored over others. Lawmakers could try to override a Kasich veto, which requires a two-thirds vote. Some members wanted to attempt an override in December, but no vote took place.

Dozens protest two proposed injection wells in Brookfield - Warren Tribune Chronicle — More than three dozen people — most holding signs with slogans about the dangers of fracking — attended a rally Thursday afternoon at the Brookfield Center green to protest two proposed injection wells in the towship.The rally, which drew approximately 40 people, was organized by the Youngstown-based Frackfree America National Coalition. Highland Field Services LLC, a Pittsburgh subsidiary of Houston-based Seneca Resources Inc., is planning to drill two wastewater injection wells north of Wyngate Mobile Home Park, where at least 400 people live. Rob Boulware, manager of stakeholder relations at Highland Field Services LLC, said he understands the issue of fracking is a very passionate subject for people. “I would urge folks to take the time to go through and find some of the facts,” Boulware said. “There’s a lot of misinformation out there.”Trumbull County Commissioners and Brookfield trustees have sent letters to the Ohio Department of Natural Resources, Division of Oil and Gas, opposing the wells. The public has until Tuesday to submit their own comments to the ODNR.A petition against the injection wells was available at the rally for attendees to sign and by 2 p.m. there were approxmately 500 signatures. The petition also will be sent to the ODNR, organizers said. Bill Sawtelle, 67, of Brookfield, said he didn’t understand why the injection wells would be placed in such a populated area, especially where many residents still rely on well water that could potentially be contaminated. While the Wyngate Mobile Home Park uses city water, the road from state Route 7 to the injection well site could see dozens of trucks going past the park 24/7, Sawtelle said.

Firefighters: Increased disclosure needed for fracking emergencies -  A Youngstown firefighter urged state lawmakers March 22 to require increased disclosure to emergency responders of chemicals used in horizontal hydraulic fracturing. Sil Caggiano, deputy chief for Mahoning County Hazmat, said a loophole in state law prevents firefighters and others responding to emergencies at fracking sites from accessing complete information about what they're dealing with. "We are asking our first responders to respond to emergencies without key pieces of information to accurately assess the situation and make the best decision possible to help the public .," he said. Caggiano was one of the featured speakers during a midday press conference at the Statehouse, then offered testimony later as part of budget deliberations in the Ohio House. Under current state law, companies aren't required to fully disclose all of the chemicals used as part of fracking activities, with some chemicals protected as trade secrets, Caggiano said  He asked members of the Ohio House Finance Subcommittee on Agriculture Development and Natural Resources Wednesday to include an amendment in the biennial operating budget requiring disclosure of all fracking-related chemicals to first responders. "First responders have a huge responsibility to the public, and they carry this responsibility bravely despite the risks," he said in his committee testimony. "We should be striving to make their jobs easier, not putting barriers between them and the information they need to protect themselves and us." Melanie Houston, director of oil and gas for the Ohio Environmental Council, said more than 3 million Ohioans live within half a mile of oil and gas developments.  "For millions of our neighbors, oil and gas activity is a fact of life," she said. "Not requiring fracking companies to disclose trade secret chemicals to those we entrust with our safety, even during a disaster, is just plain irresponsible. We must take responsible steps to ensure these communities are safe and protected."

 Why rust belt states are tackling methane when Trump won't - States have different reasons for targeting methane leaks, even if they tend to draw the same conclusion at the end of the day: Methane mitigation is good for the environment and for companies on which tens of thousands of American jobs depend.This was Ohio Gov. John Kasich’s pitch when he proposed common-sense steps the Buckeye State could take to rein in oil and gas pollution.Kasich was able to avoid major opposition to the measure by pointing to environmental and political problems other states were experiencing as a result of their inaction, and by showing that it was in Ohio’s and its industry’s best interest to get ahead of the curve. “We’re going to have to have some additional regulation to make sure that industry stays safe,” he told the Ohio Chamber of Commerce in 2014. That year, the state required companies to reduce leaks at well sites. In February 2017, Ohio expanded these requirements to also cover compressor and transmission stations – the facilities that help push gas through the pipeline, and that account for about one-third of the industry’s total methane leakage. Companies, which must now check their equipment for gas leaks at new or modified equipment once a quarter, have complied and gone about their business. At the same time, new jobs are cropping up in a whole new industry focused on detecting and capping methane leaks.   Across the state border in the Keystone State, public concern over hydraulic fracturing, or “fracking,” has already been growing for several years due to insufficient oversight. Environmental violations at drill sites have been well-documented by the state; Pennsylvanians have been shocked by images of oil spills, leaking tanks and dead vegetation. Not surprisingly, Pennsylvania is next in line to tackle methane waste. In January 2016, Gov. Tom Wolf announced his intent to adopt the toughest methane pollution rules in the nation. While welcomed by many, the governor’s approach to reducing methane emissions has run into resistance in the state legislature as of late. Some politicians have apparently been swayed by misleading rhetoric about the costs of reducing gas leaks, and threats that environmental protections “kill jobs.” All these lawmakers need to do, of course, is to peek across the border to Ohio, or call states out West that can attest that methane policies won’t hurt operators’ bottom line. They even spawn new job growth.

Study: Natural Gas Power Plants Emit up to 120 Times More Methane Than Previously Estimated – Steve Horn - Researchers at Purdue University and the Environmental Defense Fund have concluded in a recent study that natural gas power plants release 21–120 times more methane than earlier estimates. Published in the journal Environmental Science and Technology, the study also found that for oil refineries, emission rates were 11–90 times more than initial estimates. Natural gas, long touted as a cleaner and more climate-friendly alternative to burning coal, is obtained in the U.S. mostly via the controversial horizontal drilling method known as hydraulic fracturing (“fracking”).The scientists measured air emissions at three natural gas-fired power plants and three refineries in Utah, Indiana, and Illinois using Purdue's flying chemistry lab, the Airborne Laboratory for Atmospheric Research (ALAR). They compared their results to data from the U.S. Environmental Protection Agency’s (EPA) Greenhouse Gas Reporting Program.“Power plants currently use more than one third of natural gas consumed in the U.S. and the volume used is expected to increase as market forces drive the replacement of coal with cheaper natural gas,” the Environmental Defense Fund (EDF)said in a press release. The nonprofit commissioned and funded the study with a grant from the Afred P. Sloan Foundation.“But if natural gas is going to deliver on its promise, methane emissions due to leaks, venting, and flaring need to be kept to a minimum.”Methane is a more potent greenhouse gas than carbon dioxide but hangs around the atmosphere for a shorter time, with a global warming effect 84–87 times that of CO2 over a 20-year period, according to the EPA. “[Methane is] a better fuel all around as long as you don't spill it,” Paul Shepson, an atmospheric chemistry professor at Purdue, said in a press release. “But it doesn't take much methane leakage to ruin your whole day if you care about climate change.”

Google Street View cars are eyes on the ground for urban methane leaks - A set of Google Street View mapping cars, specially equipped with cutting-edge methane analyzers, are allowing Colorado State University researchers to "see" invisible methane leaks from natural gas lines beneath our streets. The technical and computational challenges of measuring methane, and the complex methodologies used to collect, analyze and publicize the data, are detailed in a new paper in the journal Environmental Science and Technology March 22. The groundbreaking project is led by Joe von Fischer, CSU associate professor in biology, in partnership with the non-profit Environmental Defense Fund (EDF), and Google Earth Outreach. von Fischer's CSU co-authors include researchers from statistics (Dan Cooley), atmospheric science (Russ Schumacher), and soil and crop sciences (Jay Ham), as well as experts from University of Northern Colorado and the nonprofit science collective Conservation Science Partners. Data from the project are helping utilities, regulators and advocacy groups reduce wasteful and environmentally damaging leaks faster and more cost effectively. Besides being the main ingredient in natural gas, methane is also a potent greenhouse gas, with over 80 times the warming power of carbon dioxide over a 20-year timeframe. Growing awareness of this climate risk has spurred new interest in finding and fixing low-level leaks throughout the natural gas supply chain, including local utility systems, where many low-level leaks can persist for many years. That need has spawned a new kind of science.

DEP moves to prevent more fracking-induced quakes - The state Department of Environmental Protection has attached requirements to future permits of Hilcorp Energy for any fracking specific to an area of Lawrence County where mild earthquakes occurred last year. Seth Pelepko of DEP’s Bureau of Oil and Gas Planning and Program Management, addressed the relationship between Hilcorp’s drilling to four low-level earthquakes that began at about 4:15 a.m. April 25 in Mahoning, North Beaver and Union townships.  “What we can say based on data that’s available ... is that this is the first time (in Pennsylvania) we have seen that spatial and temporal correlation with operator activity,” he noted, referring to the earthquakes. Patrick McConnell, acting DEP secretary, showed that the earthquakes that occurred in that area of the county on those dates registered between 1.8 and 2.3 on the Richter Scale, and were considered “microseismic.” A microseismic event registers at 3.0 or less and is generally not felt but is recorded by seismometers. Pelepko explained that the occurrences locally that day were from “an induced tectonic seismic event,” meaning that the contributing factors of the quakes were caused, and not naturally occurring. A compilation of observations suggests there was a relationship between the event and operator activities, he said. Hilcorp’s New Castle Development Pad in North Beaver Township lies within a five-mile radius of the reported epicenters. Hydraulic fracturing activities began at the pad on March 30. The Utica Shale was being hydraulically fractured at 7,900 feet below the ground surface, a separation of 2,500 to 3,000 feet from crystalline rock, he said. Hilcorp was using a technique known as “zipper fracturing,” which the DEP explained as hydraulic fracturing operations that are carried out concurrently at two horizontal well bores that are parallel and adjacent.“Hilcorp immediately and voluntarily stopped all activities and discontinued those activities indefinitely as of noon on April 25,” Pelepko said, adding that the last earthquake was on the morning of April 26. Pelepko added that the well site lies north of the Rome Trough, a noted geological feature that is an elongated depression. Fracturing there is much closer to basement rock, he said, making the area more prone to seismic activity.

Can Natural Gas Liquids save PA’s economy? - The Mariner East II pipeline, a $2.5 billion underground pipeline that runs from Ohio to Pennsylvania for more than 300 miles, is well on its way to completion.A recent study conducted by IHS Markit discusses the impact of natural gas liquids (NGL) on the region. One of those impacts, of course, is infrastructure.The Study, titled Prospects to Enhance Pennsylvania’s Opportunities in Petrochemical Manufacturing, forecasts $2.7 to 3.7 billion in investments in NGL. In addition, the region will have a “once-in-a-generation opportunity to develop and implement a strategy that will cultivate a manufacturing renaissance and transform our economy across the Commonwealth,” said Pennsylvania Gov. Tom Wolf.Wolf said that the state must continue the legacy began by Shell Pennsylvania Chemicals to invest in the state in order to “ensure that we make the most of this chance to create good paying jobs for Pennsylvanians.”So when protesters were denied a petition to halt construction of the Mariner II East Pipeline, it’s not surprising in the least. The pipeline will carry approximately 375,000 barrels of NGLs per day in the 20 inch diameter pipeline. The liquids will be fed to the Marcus Hook Industrial Complex in Southeastern Pennsylvania and other destinations for both domestic use and for export.The IHS Markit study forecast that a coordinated strategy in the Marcellus and Utica plays could lead to $3.7 billion in investment into NGL assets alone, including gas processing facilities, NGL pipelines like the Mariner East II, and storage facilities.  The Team Pennsylvania Foundation and our board sponsored the IHS Markit study in partnership with DCED to help Pennsylvania maximize the in-state economic benefits of our natural gas resources by generating new, high-paying manufacturing jobs; attracting investment; growing the supply chain and output in the plastics sector; and generating state and local revenue,” said Ryan C. Unger, President and CEO of the Team Pennsylvania Foundation. “We look forward to participating in the strategic planning process as part of a cross-agency and multi-stakeholder effort to ensure that our natural resources are utilized to create jobs right here in Pennsylvania.”

Watchdog piles on criticism of offshore drilling regulator -- A watchdog is alleging numerous problems at the federal government’s offshore drilling regulator, including in its inspection and environmental stewardship programs. A new report from the Government Accountability Office (GAO) is the latest on the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) from Congress’s watchdog, which previously identified problems ranging from revenue collection to employee retention and organizational restructuring. BSEE was created in 2011 as part of the reorganization of offshore drilling oversight following the 2010 Deepwater Horizon disaster at a BP-operated well. Since its creation, GAO has issued numerous reports finding deficiencies at the agency, which largely revolve around significant leadership problems and communication problems with lower-level employees. “Leadership seems to be a continual problem at BSEE since its formation after the Deepwater Horizon incident,” Rep. Blake FarentholdR-Texas), chairman of the House Oversight Committee subpanel with authority over Interior, said at a Tuesday hearing on the report. “The GAO has found a disconnect — and more importantly, a distrust — between BSEE headquarters and its region,” he said. “This distrust has caused significant duplication and reduced the agency’s efficiency.” The watchdog in its Tuesday report concluded that BSEE has made “limited progress” in the last five years in implementing reforms in how it oversees offshore safety and environmental compliance, including developing a “risk-based” approach to drilling inspections.

As Trump targets energy rules, oil companies downplay their impact | Reuters: President Donald Trump’s White House has said his plans to slash environmental regulations will trigger a new energy boom and help the United States drill its way to independence from foreign oil. But the top U.S. oil and gas companies have been telling their shareholders that regulations have little impact on their business, according to a Reuters review of U.S. securities filings from the top producers. In annual reports to the U.S. Securities and Exchange Commission, 13 of the 15 biggest U.S. oil and gas producers said that compliance with current regulations is not impacting their operations or their financial condition. The other two made no comment about whether their businesses were materially affected by regulation, but reported spending on compliance with environmental regulations at less than 3 percent of revenue. The dissonance raises questions about whether Trump’s war on regulation can increase domestic oil and gas output, as he has promised, or boost profits and share prices of oil and gas companies, as some investors have hoped. According to the SEC, a publicly traded company must deem a matter "material" and report it to the agency if there is a substantial likelihood that a reasonable investor would consider it important. "Materiality is a fairly low bar," said Cary Coglianese, a law professor at the University of Pennsylvania who runs the university’s research program on regulation. "Despite exaggerated claims, regulatory costs are usually a very small portion of many companies’ cost of doing business."

Mars rallies amid tighter US Gulf Coast sour crude market - With crude imports via Louisiana down 5% year on year, according to US customs data, and a tight Colombian Vasconia market, differentials for Gulf Coast sour benchmark Mars have steadily rallied since late November, according to S&P Global Platts data. Platts assessed prompt Mars at WTI minus $1.55/b on Monday, its strongest level since February 2016. The Gulf Coast has seen less Vasconia in part due to increased exports of the Colombian grade to Asia, as well as tighter volumes in general, due to the Cano Limon pipeline being offline. On Monday, outright Vasconia was assessed at $47.70/b and the cost of freight to ship crude on an Aframax tanker from Covenas, Colombia to the USGC was assessed at 90 cents/b.When compared with the assessed second-month Mars outright value of $47.41/b, the economics for selling Vasconia competitively into the USGC do not line up, even if producers were able to supply higher levels of the grade. It is possible that buyers looking for Vasconia are having to replace those volumes with Mars. While Platts does not currently track Gulf Coast refining margins for Vasconia, coking margins for Mars have pushed above $11/b in February and into March.

Slow US pipeline safety reforms get caught in presidential transition: (podcast) How safe are US pipelines seven years after the fatal natural gas pipeline explosion in San Bruno, California, and the 20,000-barrel heavy crude spill in Marshall, Michigan? Regulations designed in response to the accidents moved so slowly in the Obama administration that they never reached adoption. Now the regulations stand to get caught up in the Trump administration's regulatory purge. Keith Coyle, an attorney at Babst Calland, talks with senior oil editor Meghan Gordon about what changes the industry still wants to make in those rules and what chance they have of being adopted.

Oil Giants Upending Shale Turf Where Wildcat Drillers Once Ruled -- Big Oil is muscling in on shale country. Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp., are jumping into American shale with gusto, planning to spend a combined $10 billion this year, up from next to nothing only a few years ago. The giants are gaining a foothold in West Texas with such projects as Bongo 76-43, a well which is being drilled 10,000 feet beneath the table-flat, sage-scented desert, and which then extends horizontally for a mile, blasting through rock to capture light crude from the sprawling Permian Basin. While the first chapter of the U.S. shale revolution belonged to wildcatters such as Harold Hamm and the late Aubrey McClendon, who parlayed borrowed money into billions, Bongo 76-43 is financed by Shell. If the big boys are successful, they’ll scramble the U.S. energy business, boost American oil production, keep prices low, and steal influence from big producers, such as Saudi Arabia. And even with their enviable balance sheets, the majors have been as relentless in transforming shale drilling into a more economical operation as the pioneering wildcatters before them.   Bongo 76-43, named after an African antelope, is an example of a leaner, faster industry nicknamed “Shale 2.0” after the 2014 oil-price crash. Traditionally, oil companies drilled one well per pad—the flat area they clear to put in the rig. At Bongo 76-43, Shell is drilling five wells in a single pad for the first time, each about 20 feet apart. That saves money otherwise spent moving rigs from site to site. Shell said it’s now able to drill 16 wells with a single rig every year, up from six in 2013. With multiple wells on the same pad, a single fracking crew can work several weeks consecutively without having to travel from one pad to other. At Bongo 76-43, Shell is using three times more sand and fluids to break up the shale, a process called fracking, than it did four years ago. The company said it spends about $5.5 million per well today in the Permian, down nearly 60 percent from 2013.

Marathon buys bolt-on 21,000 acres of Permian - Marathon Oil has snapped up another 21,000 acres of Permian basin for $700million in cash.It brings the American operators position in the oil rich area to over 90,000 net acres.The latest acreage to added to the firm’s portfolio is largely in the Northern Delaware basin of New Mexico and was bought from Black Mountain Oil & Gas and other private sellers.Marathon Oil President and CEO Lee Tillman said: “Today’s 21,000 acre bolt-on in the Northern Delaware is an excellent fit with the basin entry acquisition we announced earlier this month. “The combined deals provide us more than 90,000 acres in the Permian, over 70,000 of which is concentrated in the Northern Delaware,” .“While we expect to pursue additional trades and grassroots leasing, this bolt-on achieves the scale necessary for efficient long-term development in the basin.”The Black Mountain acquisition is expected to close in second quarter 2017 with an effective date of March 1, 2017.

Texas challenges PHMSA underground natural gas storage rule - The Texas attorney general Friday challenged the authority of the US Pipeline Hazardous Materials Safety Administration to enact a rule to regulate underground natural gas storage facilities. Attorney General Ken Paxton filed a petition for review in the 5th Circuit Court of Appeals of the rule, which PHMSA crafted in the aftermath of the massive methane release from the Aliso Canyon storage facility in California in 2015. Paxton claims the final rule, which took effect on January 18, improperly overrides the state's authority to regulate underground storage under the Texas Railroad Commission. "Without completing any notice or comment period, the PHMSA unilaterally and impermissibly converted the American Petroleum Institute's non-mandatory recommendation into mandatory provision," Paxton said in a statement."Despite state laws and programs that regulate these facilities with respect to conservation, environmental protection and protection of property rights, the PHMSA effectively stripped the states of authority over their own natural gas facilities and completely disregarded traditional state regulatory roles," he said. According to the TRC, there are 18 salt cavern storage facilities and 13 facilities that store natural gas in depleted underground reservoirs in Texas. Under the PHMSA final rule the commission would be required to fully adopt PHMSA's regulation of those facilities, Paxton said. The , which was filed within 90 days of the date of publication of the final rule in the Federal Register on December 19, challenges the rule s "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law."

After fracking-caused earthquakes, Pawnee Nation courts to try energy companies - For nearly three decades prior to 2008, Oklahoma averaged only two earthquakes a year of magnitude 2.7 or higher. Then the state experienced a boom in hydraulic fracturing, or fracking. By 2014 the annual number of reported earthquakes had spiked to around 2,500.In 2015 earthquakes in Oklahoma nearly doubled to 4,000, including 857 with a magnitude 3.0 or higher — amounting to more than in the rest of the lower 48 states combined. The quakes, more than three a day, were linked to the underground disposal of wastewater, a byproduct of fracking for oil and gas. After Oklahoma restricted the number and volume of wastewater injection wells, the number of earthquakes dropped to 2,500 in 2016. However, in September 2016 a 5.8-magnitude earthquake struck nine miles from the center of the Pawnee Nation in north-central Oklahoma. It caused extensive damage to buildings in the town of Pawnee, which has about 2,200 residents. The Oklahoma Corporation Commission responded by shutting down 37 injection wells within a 725-square-mile radius of the epicenter. The Pawnee Nation responded March 4 by filing a lawsuit accusing 27 oil and gas companies with causing the earthquakes.The Indigenous tribe is seeking compensation for damage to hundreds of homes and public property, including the former Pawnee Nation Indian School, a nearly 100-year-old building listed in the National Register of Historic Places. The lawsuit is also seeking punitive damages. While other lawsuits have been filed against the gas and oil industry for earthquake-related damage in Oklahoma, what makes this case unique is that it will be heard in the tribe’s district court. The jury will be selected from 3,200 members of the Pawnee Nation.If the oil and gas company defendants appeal the jury’s decision, a five-member tribal Supreme Court gets to hear the case, and their decision will be final. The tribal court’s judgment will then go to a state district court for enforcement. There is no appeal of a tribal supreme court ruling. In 2016 the U.S. Supreme Court upheld the authority of Native American courts to judge complaints against nontribal entities.

SCOOP/STACK gas takeaway needs and the Midship announcement. --Cheniere Energy last Friday announced it has signed precedent agreements (firm capacity deals) with foundation shippers for its 1.4-Bcf/d Midship Pipeline project, which is targeted for an early 2019 in-service date. The announcement marks the latest milestone for midstream companies looking to move natural gas production from the SCOOP/STACK shale plays in central Oklahoma to growing demand markets in the Southeast and along the Texas Gulf Coast. Production from SCOOP and STACK grew by 1.0 Bcf/d, or 60%, in the past three years to 2.7 Bcf/d in 2016 and is expected to grow by another 1.5 Bcf/d by 2021. Besides Midship, there are other projects vying to move SCOOP/STACK gas to market. But how much capacity is really needed and by when? Today we look at the Midship project and its role in alleviating potential takeaway constraints. We’ve written extensively in recent weeks about the growing interest in Oklahoma’s South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko Canadian Kingfisher (STACK) shale plays. Cheniere’s announcement is the latest confirmation that the market is gearing up for substantial natural gas production growth out of the SCOOP/STACK shale plays. As we’ve described in our “Stardust” blog series, the SCOOP and STACK have emerged as two of the fastest growing shale producing regions in the U.S.  Drilling activity in this 11-county tract of central Oklahoma primarily targets crude oil, natural gas liquids (NGLs) and condensates in the Woodford and Meramec formations of the Anadarko Basin (see Scoop-y Doo and All Come to Look for a Meramec), but that brings with it significant volumes of associated natural gas. The value-add of multiple product streams, combined with the well performance and drilling efficiencies achieved in the region, provide some of the most attractive economics in the country for producers, including healthy double-digit internal rates of return (IRRs)—even at sub-$50/bbl crude oil prices. Related analysis of breakeven gas price also shows that even if oil were to drop to $30/bbl and gas prices fell to zero, producers in several of the best counties in SCOOP and STACK still would at least break even (see Part 3).

Forecasting lease operating expenses in the E&P sector, part 3. -- As we have noted in Been Down So Long, You Go Your Way, I’ll Go Mine, and Different Strokes by Different Folks, there has been a sharp decline in E&P capital spending over the past two years. But the decline in production during 2016 was nowhere near the magnitude of the capital-spending cut, and over the past few months U.S. production has been on the upswing. That’s in part because producers have improved their economics through enhancements in drilling and completion (D&C) efficiencies and a focus on production “sweet spots”. This has allowed many E&Ps to survive—and even thrive—during this period of lower prices (see Top 10 RBN Energy Prognostications for 2017, #8). But capital spending is only one part of the story on costs. LOEs also play an essential role when it comes to assessing an E&P’s overall financial health. In Part 1 of this blog series, we covered the basics of what LOEs are (what’s in the LOEs “basket”), why they matter, and why reported LOEs should never be taken at face value. We also provided a clear definition of LOEs to guide us through the process of determining what should and shouldn’t be included in LOEs: Lease operating expenses are the direct and indirect costs incurred to maintain the production of a well on the path (trajectory along decline curve) consistent with the capital investment history of the well. In Part 2, we considered the full scope of LOEs, and provided a table that showed common LOE accounts and explained what types of expenses are included within each of them. We also noted that one category of LOEs—Bulk Fluid Expenses—includes the cost of dealing with the sometimes very large volumes of produced water (wastewater) that come out of the ground with crude oil, natural gas and natural gas liquids (NGLs). As we’ll get to in a bit, produced water disposal costs have become a major and in some cases critically important element of LOEs, particularly in plays like the Permian Basin and Mississippi Lime where the ratio of produced water to crude produced is quite high.

Mammoth's Dealmaking Guarantees Frack Crews 'Always Have Sand' - Natural Gas Intelligence --Oklahoma City-based Mammoth Energy Services Inc., which has seen a mad dash for sand since the start of the year, has snapped up three U.S. oilfield service suppliers, including a major sand operator, to ensure it can feed its fracture crews in Appalachia and Oklahoma's stacked reservoirs.Mammoth is acquiring Sturgeon Acquisitions LLC, which owns Taylor Frac LLC, Taylor Real Estate Investments LLC and South River Road LLC, as well as Stingray Energy Services LLC and Stingray Cementing LLC. The all-stock deal, valued at $133.8 million, should be completed in May.The Stingray businesses operate primarily in the Northeast and would add water transfer, refueling, equipment rentals and cementing to Mammoth's portfolio. Taylor, now a major sand supplier for Mammoth in Appalachia, is the linchpin of the deal, CEO Arty Straehla said during a conference call."We want to make sure our fracking crews always have sand. The market has tightened to a position where we had to do that so we could pull in and supply ourselves."Because of the "increasing demand for sand" by North America's unconventional producers, "we believe this will differentiate our service offering, giving our customers confidence that their wells will be completed without the need to source sand from third-parties," he said.Mammoth's deal is coming in ared-hot market for proppant. As the oil and natural gas recovery has taken hold in North America, sand operators are reporting better-than-expected demand, which in turn is driving up sand pricing and tightening the transportation market.

Fracking Sand Update -- WSJ -- March 23, 2017 --This story has been reported on the blog for at least the past two years -- it began with an article by Mike Filloon.   He was a bit early perhaps but now everyone is reporting it: the latest threat to US oil drillers -- the rocketing price of sand. At The Wall Street Journal:

  • pushing towards $40/ton
  • up from $15 to $20/ton in 2H16
  • demand could outstrip supply by 2018 (next year)
  • sector will need 120 million tons, double the demand in 2014 at the height of the US drilling boom
  • accounts for 5% to 7% of the cost of a well 4Q16
  • in 3Q14: record at $50/ton
  • Permian: 2,000 lbs/foot on wells that measured 5,500 feet
  • Louisiana: Chesapeake record -- 50.2 million lbs; well roughly 1.8 miles long (typical length for a long lateral in the Bakken)
  • Pioneer: has its own sand mines; will test at 3,000 lbs/foot this year (2017)
  • 5 million lbs: 100 railcars
  • West Texas: using twice that amount/well -- requires two mile-long unit trains (a unit train = 100 boxcars)

Repeal of Obama drilling rule stalls in the Senate - The GOP’s effort to roll back contentious Obama-era regulations is hitting a snag. Some Republican senators are coming out against a resolution that would repeal an Interior Department regulation governing oil and natural gas drilling on federal land. The rule is designed to cut down on the release of methane, a potent greenhouse gas. A measure canceling the rule passed the House in February on a vote of 221-191. That’s the slimmest margin for any of the resolutions the House GOP has passed this year under the Congressional Review Act (CRA) reversing regulations from the Obama administration. Despite support from Senate leadership and the oil and gas industry, the methane legislation has not come up for a vote in the upper chamber, and its future there is uncertain. Sen. Lindsey Graham (R-S.C.) told The Hill that a CRA resolution, which prevents the government from writing any future rule that is “substantially the same” as the one overturned, is too blunt an instrument in this case. “I think we can replace it with a better reg, rather than a CRA,” Graham said. Sen. Susan Collins (R-Maine) said she is “leaning against” the resolution. “I have not made a final decision, but I am leaning against it based on what I’ve heard so far,” Collins said last week.

Historic Win in Colorado Fracking Lawsuit -  In a 2-1 decision Thursday, the Colorado Court of Appeals reversed the Colorado Oil and Gas Conservation Commission's order denying a youth-brought rulemaking petition against fracking and a lower court's order upholding the denial. The court remanded the case to the district court and the commission, finding that the commission erred in its interpretation of Colorado law:  "We therefore conclude that the commission erred in interpreting [the Oil and Gas Conservation Act] as requiring a balance between development and public health, safety and welfare."  "The clear language of the act ... mandates that the development of oil and gas in Colorado be regulated subject to the protection of public health, safety and welfare, including protection of the environment and wildlife resources."  The commission had argued that the Oil and Gas Conservation Act required it to strike a balance between the regulation of oil and gas operations and protecting public health, the environment and wildlife resources.  The six plaintiffs in the case are members of the Boulder-based youth group Earth Guardians .  The youth hand-delivered their petition for rulemaking in November 2013 to the commission. Their petition asked the commission to develop and implement a rule to stop the permitting of fracking until and if, oil and gas development can be done without causing harm to humans and without impairing Colorado's natural resources, including atmospheric resources and climate change .  "By its decision today, the court has concluded that the commission has full statutory authority to adopt Petitioner's proposed rule," Julia Olson, plaintiffs' counsel and executive director of Our Children's Trust , said. "The commission can no longer decide to prioritize oil and gas development over the health and safety of Coloradans. This is an enormous victory for these youth. We look forward to helping the youth of Colorado go back before the commission on remand."

2016 Colorado Oil and Gas Toxic Release Tracker - In 2016, oil and gas companies reported more than 500 spills in Colorado.  Publicly available data from the Colorado Oil and Gas Conservation Commission (COGCC) indicates there were 509 spills in 2016, more than one per day. The number of spills last year marked a decline from the 615 reported spills and incidents in 2015, reflecting the decrease in drilling activity. As drilling and production increase in Colorado — which is expected as the price of oil and gas may increase in the coming years — we also expect to see spills increase. Monitoring these incidents help to inform Coloradans about the impacts of oil and gas development within the state.In 2016, operators reported 257 spills of “produced water,” salty wastewater often laden with toxic chemicals, along with 115 spills involving oil and 60 spills of condensate. Noble Energy reported the most spills, followed by Kerr McGee and Pioneer Natural Resources. Combined, the five companies reporting the most spills accounted for nearly half of all incident reports. The vast majority of spills reported, 82 percent, took place on private land. Nearly half of all spills took place in Weld County. In reporting oil and gas spills, Colorado requires companies to disclose the distance from livestock, wetlands and occupied buildings, something not required by neighboring states, such as New Mexico and Wyoming.Nearly 32 percent of all spills occurred within 1,500 feet of an occupied building, including 50 incidents that occurred less than 500 feet from an occupied building. 58 incidents reported impacts to groundwater and 200 incidents occurred within 1,500 feet of a water well.

Fracking led to more than 6,000 spills in 10 years, study finds —Spills related to fracking are more frequent than previously thought, a new study finds – and understanding the causes of these spills may help prevent future incidents.In a study published Tuesday in the journal Environmental Science & Technology, a team of researchers identified 6,648 spills in Colorado, New Mexico, North Dakota, and Pennsylvania between 2005 and 2014. The researchers calculated that between 2 and 16 percent of wells will spill contaminated water, hydraulic fracturing fluids, or other substances every year, with the majority of incidents occurring in the first three years after a well becomes operational. The definition of a spill varies from state to state, presenting a challenge for the study’s authors in comparing states. But analyzing this data, they say, is vital to addressing the challenges posed by fracking spills and makes a data-driven conversation about fracking possible.“Analyses like this one are so important, to define and mitigate risk to water supplies and human health,” said Kate Konschnik, director of the Harvard Law School’s Environmental Policy Initiative, in a Duke University news release. “Writing state reporting rules with these factors in mind is critical, to ensure that the right data are available – and in an accessible format – for industry, states and the research community.” In its report about the safety of fracking, the US Environmental Protection Agency did not quantify the risk posed by the resource extraction technique, The Christian Science Monitor reported in December. It did, however, point to several cases of drinking water contamination, concluding that there was insufficient evidence to know how widespread a problem contamination was. The EPA itself identified 457 spills across 8 states between 2006 and 2012, because it focused solely on the period when fracking was taking place, rather than looking at the entire life of the well. By providing more comprehensive data on the number of spills, the recent report may offer a starting point for determining the scope of contamination.

North Dakota Oil Spill Vastly Underestimated as Trump Approves KXL - The amount of crude oil that spewed near Belfield, North Dakota from the ruptured Belle Fourche pipeline in December was vastly underestimated. The original estimate was around 176,000 gallons of oil. After further review, pipeline operator True Companies now reports about 12,615 barrels (529,830 gallons) of oil spilled, spokeswoman Wendy Owen told Inforum . The cause of the leak has not been determined. The spill contaminated a hillside and Ash Coulee Creek which empties into the Little Missouri River. The break was also significant because it happened less than 200 miles away from the Oceti Sakowin Camp, where Water Protectors were protesting the heavily contested Dakota Access Pipeline (DAPL). The new number makes the Belle Fourche spill one of the largest in state history and perhaps the largest oil pipeline spill that contaminated a North Dakota water body, Bill Suess, spill investigation program manager for the state's Department of Health, told Inforum.  North Dakota's largest spill happened in September 2013 when a Tesoro Corp. pipeline leaked about 840,000 gallons of fracked oil in a wheat field near Tioga, causing one of the biggest onshore oil spills in recent U.S. history. That spill has still not been cleaned up more than three years later.

Appeals Court Refuses to Stop Oil in Dakota Access Pipeline - (AP) — An appeals court on Saturday refused a request from two American Indian tribes for an "emergency" order that would prevent oil from flowing through Dakota Access pipeline. The decision by the U.S. Court of Appeals for the District of Columbia Circuit means the $3.8 billion pipeline to move North Dakota oil to a distribution point in Illinois could be operating as early as Monday, even as the tribes' lawsuit challenging the project moves forward.The Standing Rock and Cheyenne River Sioux tribes have challenged an earlier ruling by U.S. District Judge James Boasberg not to stop final construction of the pipeline, and they wanted the appeals court to halt any oil flow until that's resolved.The appeals court said the tribes hadn't met "the stringent requirements" for such an order.The tribes had asked Boasberg to direct the Army Corps of Engineers to withdraw permission for Dallas-based developer Energy Transfer Partners to lay pipe under Lake Oahe in North Dakota, which the Corps manages for the U.S. government. The stretch under the Missouri River reservoir is the last piece of construction for the pipeline.The company is wrapping up pipe work under the lake and has said oil could start flowing between Monday and Wednesday.The tribes fear the pipeline could harm their water supply and their right to practice their religion, which relies on clean water. ETP disputes that. The tribes' appeal rests on the religion argument. Boasberg has said he doesn't think the tribes have a strong case on appeal. He also said ETP would be "substantially harmed" by a delay in pipeline operations.

Company: Dakota Access pipeline on track, despite 'threats' (AP) — The company building the Dakota Access pipeline said Monday that the project remains on track to start moving oil this week despite recent "coordinated physical attacks" along the line. The brief court filing late Monday from Dallas-based Energy Transfer Partners didn't detail the attacks, but said they "pose threats to life, physical safety and the environment." The filing cited those threats for redacting much of the rest of the 2½-page report, but ended: "These coordinated attacks will not stop line-fill operations. With that in mind, the company now believes that oil may flow sometime this week." A spokeswoman for the company declined to elaborate on the types of attacks. A spokesman for the Morton County sheriff's office, the center of months of sometimes violent conflicts between protesters and law enforcement, didn't immediately respond to an email. The Standing Rock and Cheyenne River Sioux tribes have battled the $3.8 billion pipeline in court for months, arguing it's a threat to water and their right to practice their religion. The company has maintained the pipeline, which will move oil from North Dakota's Bakken oil field more than 1,000 miles across four states to a shipping point in Illinois, will be safe.An appeals court on Saturday refused a request from the tribes for an emergency order to prevent oil from flowing through the pipeline. The tribes have challenged an earlier ruling by U.S. District Judge James Boasberg not to stop final construction of the pipeline, and they wanted the appeals court to halt any oil flow until that's resolved. The appeals court said the tribes hadn't met "the stringent requirements" for such an order.

Dakota Access pipeline vandalism highlights sabotage risks -The developer of the Dakota Access pipeline has reported "recent coordinated physical attacks" on the much-protested line, just as it's almost ready to carry oil. Texas-based Energy Transfer Partners didn't give details, but experts say Dakota Access and the rest of the nearly 3 million miles of pipeline that deliver natural gas and petroleum in the U.S. are vulnerable to acts of sabotage. It's a threat that ETP takes seriously enough that it has asked a court to shield details such as spill response plans and features of the four-state pipeline that the company fears could be used against it by activists or terrorists. Authorities in South Dakota and Iowa confirmed Tuesday that someone apparently used a torch to burn a hole through empty sections of the pipeline at aboveground shut-off valve sites. Mahaska County Sheriff Russell Van Renterghem said the culprit in Iowa appeared to have gotten under a fence around the facility, but Lincoln County Sheriff's Deputy Chad Brown said the site in South Dakota wasn't fenced. The Iowa incident was discovered March 13 and the South Dakota incident Friday. Because pipelines mainly run underground, aboveground shut-off valves are natural targets, according to Jay O'Hara, a spokesman for the environmental group Climate Direct Action. That group targeted valves on pipelines in October in North Dakota, Minnesota, Montana and Washington state, though the pipeline companies said activists didn't succeed because none of the sites were operating when the attacks happened. Explosives, firearms and heavy machinery also have been used to try to sabotage pipelines. Securing pipelines is difficult because they often travel long distances through remote and even uninhabited territory, said Kerry Sundberg, a professor at Mount Royal University in Calgary, Alberta, who studies energy infrastructure security and environmental crime. Sundberg said "it's stupid and dangerous" to tamper with pipeline shut-off valves. Modern oil pipelines are "incredibly sophisticated" systems that move huge volumes of petrochemicals at high pressures, he said. Simply closing a valve can cause the pressure upstream to increase quickly, creating a significant risk of a spill that endangers the environment and anyone in the area where the pipe suddenly bursts, he said.

California regulator to vote on United States' strictest methane rule - (Reuters) - California's air pollution regulator is due to hold a vote on Thursday on methane emission regulations that it says would be the strictest in the United States in controlling the second-most prevalent greenhouse gas in the atmosphere.The new standards, proposed by the California Air Resources Board, would tighten efficiency requirements in the production and transportation of natural gas, and also for some oil-handling equipment, and would mandate prompt repair of discovered leaks, said Dave Clegern, a spokesman for the board.The regulations are expected to pass Thursday's vote by the board, people familiar with the process told Reuters.In October 2015, the massive Aliso Canyon natural gas leak forced thousands to evacuate in Los Angeles' Porter Ranch area. It took nearly four months to plug and has been estimated to have had a larger climate impact than the 2010 Deepwater Horizon oil spill.Methane, the main component of commercially distributed natural gas, is produced at dedicated wells and during the extraction of oil. Pound for pound, it traps significantly more heat in the atmosphere than carbon dioxide, the most prevalent greenhouse gas.Thursday's vote comes shortly after U.S. President Donald Trump proposed major cuts to the Environmental Protection Agency's budget and as the U.S. Senate prepares to vote on repealing a rule limiting methane venting and leaking on federal and tribal lands.Clegern said the timing of the vote was unintentional and that it followed years of active work on the measure.“If the federal government won’t protect the people and the environment from oil and gas pollution, it has to be up to the states,” said Tim O’Connor, a director at the Environmental Defense Fund, which worked with the agency on the rule.

California just put serious limits on methane leaks - The California Air Resources Board voted unanimously on Thursday to enact regulations that will curb the amount of methane the oil and gas industry can leak and vent during production and storage. The new rule — years in the making — requires oil and gas companies to monitor infrastructure and repair leaks. It is a massive step forward for California’s air quality programs, advocates say, and it is the strictest in the nation. The Air Resources Board expects the new rule will reduce methane leaks by 45 percent over the next nine years. The oil and gas industry contributes about a third of the United States’ overall methane emissions. Not only is methane a powerful greenhouse gas, trapping heat 86 times more effectively than carbon dioxide over a 20-year span, but leaking and flaring natural gas also adds benzene (a carcinogen) and NOx compounds (which create ground-level ozone) into the air we breathe. Still, the environmental dangers of leaking methane haven’t stopped Congress or Trump’s Environmental Protection Agency (EPA) from taking steps this year to reduce accountability from the oil and gas industry. In February, the House passed a Congressional Review Act to rescind a Bureau of Land Management rule that required oil and gas operators on public lands to limit their methane leaks and flaring. EPA Administrator Scott Pruitt, who opposed the methane rule in his previous role as Oklahoma attorney general, has also rescinded a request for information from oil and gas operations that would have been used for the EPA to develop rules that could have applied to existing infrastructure.

Another Cook Inlet pipeline feared to be vulnerable, as gas continues to leak - As the wait continues for the ice to melt in Alaska's Cook Inlet so a months-long underwater natural gas pipeline leak can be halted, federal regulators are now raising concerns about an adjacent pipeline owned by the same company. That one carries an even bigger environmental threat: oil.The Pipeline and Hazardous Materials Administration (PHMSA) warned that a 52-year-old oil pipeline could be vulnerable to the same forces that caused the natural gas pipeline to crack and start leaking in late December. The agency ordered the company to conduct inspections beyond its regular oversight and shut down the oil pipeline if deemed unsafe."It appears that conditions exist on the MSG Hazardous Liquid System that pose a pipeline integrity risk to public safety, property or the environment," wrote Chris Hoidal, the western region director of PHMSA.Brutal weather conditions in Cook Inlet—extreme tides, forceful currents and floating ice—are particularly harsh on oil and gas infrastructure, as well as workers.Hilcorp Alaska owns the pipelines and the four oil platforms they connect to. Pipeline A carries the gas that powers the platforms. It is spewing almost pure methane into the inlet. Two of the oil platforms are manned 24 hours a day and pump a combination of oil and water, which is carried back to shore via Pipeline B. "If a leak or rupture of 'B Pipeline' occurred, the environmental damage has the potential to be significantly greater than the presently-known environmental damage from the leak occurring on the 'A Pipeline,'" Hoidal wrote in the letter to Hilcorp. The agency previously orderedHilcorp to fix Pipeline A by May 1 or shut it down, as well as carry out rigorous safety tests.

There’s almost zero rationale for Arctic oil exploration, says Goldman Sachs analyst: Drilling the Arctic region for oil cannot be justified against the background of the major shift in the global oil production paradigm, Goldman Sachs' lead European commodities equity specialist said on Thursday. "Overall the idea that we have to go into the Arctic to find new resources I think has been dispelled by the enormous cheap, easier to produce and quicker time-to-market resources in the Permian onshore U.S.," Michele Della Vigna, commodity equity business unit leader in EMEA at Goldman Sachs, told CNBC's Squawk Box on Thursday. "We think there is almost no rationale for Arctic exploration," he asserted, noting that while certain areas, such as the Russian Arctic, potentially have workable elements given that the location is much closer to the coast and easier to explore, other areas, such as Alaska, can fairly be considered more in the vein of vanity projects. "Immensely complex, expensive projects like the Arctic we think can move too high on the cost curve to be economically doable," Della Vigna explained, pointing to a new "oil order" as represented by a much shorter and cheaper production cycle driven by the U.S.Della Vigna sees rapid ongoing progress being made in power generation, where he says wind and solar energy systems in different regions are already perfectly competitive - even without subsidies - and are now taking more than 1 percent market share each year. The Goldman Sachs specialist noted that these sources of renewable energy are clearly winning out against hydrocarbons. He also pointed to the oversupply of gas, a dynamic which he sees persisting for the next 5 – 6 years due to "massive" LNG (liquid natural gas) capacity coming onstream from the U.S. and Australia, as lowering the price of that energy source. "We think cheap gas with more competitive renewables will be the perfect combination to lower the carbon footprint of the world and shift away a lot of the demand from coal. Coal is going to be the stranded asset," he predicted.

Trump says he told aide to threaten Keystone XL pipeline company over arbitration case - President Trump ordered one of his top economic advisers to threaten a pipeline company that he would “terminate” a project if they didn’t drop what he described as a “$14 billion” lawsuit against the United States, the president told a crowd on Tuesday night. Trump, in a speech at a fundraiser in Washington, said the directive was given to National Economic Council Director Gary Cohn, a former president of Goldman Sachs, though he didn’t specify which company was being told to drop their lawsuit. Trump said the company did drop the lawsuit, adding “Isn’t that easier?” “Being president gives you great power,” Trump said. Cohn has emerged as one of Trump’s top advisers, with an expanding portfolio that includes virtually all economic and jobs-related issues. Trump has personally threatened several companies since winning the election, telling Boeing and Lockheed Martin for example that he might block some of their contracts, but this is the first time he’s revealed ordering a top adviser to deliver such a message. In June, TransCanada, the Canadian firm that has tried to develop the Keystone XL pipeline since 2008, filed a $15 billion claim against the United States, alleging the Obama administration’s refusal to allow the construction of the pipeline was “based on an arbitrary political calculation.” The claim alleged that blocking the pipeline deal was a violation of the North American Free Trade Agreement, and the case was filed in the International Center for the Settlement of Investment Disputes.

Trump State Department to Approve Keystone XL Pipeline Permit by Monday - Nearly a decade after it first applied for a presidential permit, TransCanada is getting the green light from the Trump administration for its $8 billion Keystone XL pipeline . POLITICO reported that the U.S. State Department's undersecretary for political affairs, Tom Shannon, will approve by Monday the cross-border permit needed for the project to proceed. Sec. of State Rex Tillerson , former ExxonMobil CEO, recused himself from the Keystone decision since Exxon stands to profit from the pipeline. The Keystone XL was blocked by President Obama two years ago because the pipeline would "not serve the national interests" of the United States. But the November election changed everything. On Jan. 24, President Trump signed an executive order that invited TransCanada to reapply for a presidential permit. The company did so two days later. Environmental groups and grassroots citizens have long opposed the pipeline, painting it as a symbol of the threat of climate change .  Once complete, the 1,200-mile pipeline will carry Alberta tar sands to processing and export facilities in the southern U.S.

Trump approves Keystone pipeline | TheHill: The Trump administration gave the Keystone XL pipeline its key federal permit Friday, clearing a major hurdle for the project that former President Barack Obama rejected in 2015. The State Department announced Friday morning that its under secretary for political affairs, Tom Shannon, issued the permit, two months after President Trump signed a memorandum to revive the project after Obama’s rejection. “In making his determination that issuance of this permit would serve the national interest, the under secretary considered a range of factors, including but not limited to foreign policy; energy security; environmental, cultural, and economic impacts; and compliance with applicable law and policy,” State said.  The decision closes a significant chapter in the long-running saga over the controversial oil sands pipeline, which has been a flashpoint in the debate surrounding climate change and dependence on foreign oil. Obama rejected the application in November 2015, arguing, in part, that it would harm the United States' standing in the world as a leader in fighting climate change. “Ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky,” he said at the time.

How drag-reducing agents (DRAs) are changing the economics of pipeline takeaway capacity - The ability to increase the capacity of existing and planned crude oil pipelines with minimal capital expense has genuine appeal to midstream companies, producers and shippers alike. Enter drag reducing agents: special, long-chain polymers that are injected into crude oil pipelines to reduce turbulence, and thereby increase the pipes’ capacity, trim pumping costs or a combination of the two. DRAs are used extensively on refined products pipelines too. Today we continue our look at efforts to optimize pipeline efficiency and minimize capex through the expanded use of crude-oil and refined-product flow improvers.

API: US petroleum demand highest for February since 2008 - Oil & Gas Journal: Total US petroleum deliveries, a measure of demand, moved up 0.1% in February compared with a year ago to average 19.7 million b/d, marking the highest February deliveries since 2008, according to the latest report from the American Petroleum Institute. Total petroleum deliveries also increased in February compared with the month before, rising 2.2%. For year-to-date, total US petroleum deliveries increased 0.7% compared with the same period last year, API said. The overall US economy showed gains for the second time in the year, adding 235,000 jobs, according to the US Bureau of Labor Statistics. The unemployment rate changed little at 4.7% in February. Gasoline deliveries, a measure of consumer gasoline demand, were up in February vs. the previous month, but down from the prior year as well as the prior year-to-date. Total motor gasoline deliveries decreased 3.8% from February 2016 to average 8.9 million b/d—the second highest February demand in 9 years. “Crude oil production broke the 9 million-b/d threshold for the first time since March 2016. This increase in production combined with more widespread jobs gains is good news for the economy, which appears to be moving in the right direction,” said API Chief Economist Erica Bowman. Crude oil production increased 0.7% in February vs. January, but was down 1.3% from February 2016 to average just above 9 million b/d in February. This was the highest crude oil production for any month since March 2016. Production of natural gas liquids fell 2.7% in February vs. January but was up 2.9% from February 2016 to average 3.4 million b/d.US total petroleum imports in February averaged nearly 10.4 million b/d, down 2.7% from the prior month, but up 3.6% from the prior year. These were the highest February imports in 5 years. For year-to-date, total petroleum imports were also higher, up by 6.7% compared with year-to-date 2016.

North American Shale breakeven prices fall by 55% -- Since 2013, the average wellhead breakeven price (BEP) for key shale plays has decreased from US$80/bbl to US$35/bbl. This represents a decrease of over 55%, on average.  As Figure 1 indicates, the wellhead BEP decreased across all key shale plays, with the Permian Midland experiencing the largest decrease, falling by over 60% from US$98/bbl in 2013 to US$38/bbl in 2016 (for horizontal wells only). Due to a higher average royalty, different decline profile and hydrocarbon split, the Eagle Ford experienced one of the highest wellhead BEP among the main shale oil plays in 2016. There are several reasons behind the observed drop in BEP.  The drop is partly attributable to structural changes such as improved well performance (which can be measured by improvements in the EUR) and the improved efficiency gains (which can be measured by the effect of lower drilling and completion cost, a result of more effective operations). Another set of drivers behind the falling BEP can be referred to as plummeting oil price. With clear cycles describing the petroleum industry historically, the cyclical changes experienced from 2014 will be reverted with an oil price recovery. Among the key cyclical drivers for the shale wellhead BEP are high grading (measuring the effect of operators focusing their drilling operations in the best acreages) and lower unit and production costs.  Even though the wellhead BEP is often considered the "raw" or "initial" breakeven, this is not the actual breakeven realized by the companies. If we include the effect of facility costs and the price discounts, we can compare the average acreage BEP across main shale plays, expressed in WTI price. As Figure 2 indicates, in this comparison, the different zones of the Eagle Ford Shale (EFS) – namely the East Oil zone, Dry Gas zone and Wet Gas/Condensate zone, have lower WTI BEP compared to the Permian Delaware's Bone Spring/Avalon or Wolfcamp formations. Note that the differences between the WTI BEP and the wellhead BEP are play-specific and can be within the range of 10-15 dollars.

E&Ps expanding stakes in the hottest plays: winners and losers. - U.S. oil and natural gas exploration and production companies, anticipating continuing low crude oil and natural gas prices, have been reshaping their portfolios to focus on a half-dozen top-notch resource plays whose production economics can hold up even through the roughest of patches. The biggest of these asset purchases and sales grab the headlines, but countless other, smaller deals are having profound effects too. Taken together, this piranha-like devouring of E&P assets in the Permian Basin, SCOOP/STACK and other key production areas is transforming who owns what in the plays that matter most, and positioning a select group of E&Ps for success. Today we review highlights from “Piranha!” —a just-released market study from RBN.  If you told U.S. E&Ps three years ago, when crude oil was selling for north of $100/barrel (bbl), that most of them soon would be thriving at crude prices less than half that level they would have questioned your sanity. But that is exactly what happened. Despite predictions of widespread bankruptcies and credit defaults after the plunge in oil prices that started in the summer of 2014, most of the upstream industry has weathered the crisis remarkably well, primarily through the “high-grading” of portfolios, impressive capital discipline, and an intense focus on operational efficiencies. This has certainly been a different kind of rebound than past ones. In stark contrast to major industry consolidations that followed other price downturns, where the largest companies gobbled up smaller and weaker companies in huge merger and acquisition (M&A) deals, this cycle has been characterized instead by hundreds—if not thousands—of small transactions. E&Ps are concentrating their assets, and building out significant contiguous acreage positions in their core operating areas while generating funds for operations and acquisitions through equity offerings, debt refinancings and sales of non-core assets. The strongest and most aggressive of the U.S. E&Ps have been behaving like schools of piranha, eating away at small pieces of other companies and simultaneously fragmenting and reconstituting the E&P sector, with most successful companies focusing their resources, operations and investments on a few attractive plays where an advantageous combination of geology, geography and economics provide attractive investment returns.  

U.S. crude oil exports went to more destinations in 2016 – EIA - In 2016, U.S. crude oil exports averaged 520,000 barrels per day (b/d), 55,000 b/d (12%) more than in 2015 despite a year-over-year decline in production. However, the rate of U.S. crude oil export growth has slowed significantly from its pace over 2013-15 when annual U.S. crude production grew rapidly. Meanwhile, increased crude oil imports in 2016 have substituted for some domestic crude oil at U.S. refineries, allowing for increased refinery runs despite lower production and higher exports. Following the removal of restrictions on U.S. crude oil exports in December 2015, the United States exported crude oil to 26 different countries in 2016, compared with 10 the previous year. In 2015, 92% of U.S. crude oil exports went to Canada, which was exempt from U.S. crude oil export restrictions. After the lifting of restrictions, Canada remained the top destination, but in 2016 received only 61% of U.S. crude exports (Figure 1).  Aside from Canada, European destinations such as the Netherlands, Italy, the United Kingdom, and France rank high on the list of U.S crude oil export destinations. The next largest regional destination is Asia, including China, Korea, Singapore, and Japan. In 2016, the United States exported to eight different Central and South American destinations including Curacao, Colombia, and Peru (Figure 2). Some nations listed as receiving crude oil exports from the United States in EIA export statistics, such as the Marshall Islands, Bahamas, Panama, and Liberia, are unlikely to be actual final destinations. Ports in the United States are not deep or wide enough to allow safe navigation and loading of the largest and most economic ships to transport crude oil, such as Very Large Crude Carriers (VLCC). Instead, U.S. crude oil is exported on smaller vessels and is then transferred to larger vessels in deeper waters outside of port. The U.S. Customs and Border Protection documentation requires the final destination of an export to be listed, if known. In some cases, cargoes that undergo ship-to-ship transfer or that do not have a buyer prior to loading will cite the jurisdiction of the transfer or the registration flag of the vessel to which the cargo is being transferred, not the cargo's actual final destination. Many vessels are registered in nations such as the Marshall Islands, Bahamas, Liberia, and Panama—meaning the exported crude oil was likely destined elsewhere.

New projects, shale boom could trigger oil oversupply by 2018-19: Goldman | Reuters: New production projects and a fresh shale boom could boost oil output by a million barrels per day (bpd) year-on-year and result in an oversupply in the next couple of years, according to Goldman Sachs. "2017-19 is likely to see the largest increase in mega projects' production in history, as the record 2011-13 capex commitment yields fruit," the U.S. investment bank said in a research note on Tuesday. OPEC's landmark decision to limit output for the first time in eight years in a bid to arrest the existing supply glut reduced price volatility and increased stability, unintentionally helping the shale producers, the bank said. "OPEC's decision in November 2016 to cut production was rational, in our view, and fit into its role of inventory manager of last resort," Goldman said. "However, the unintended consequence was to underwrite shale activity through a bullish credit market at a time when delayed delivery of the 2011-13 capex boom could lead to record non-OPEC production growth in 2018." The Organization of the Petroleum Exporting Countries agreed to curb its output by about 1.2 million bpd from Jan. 1 this year. Russia and 10 other non-OPEC producers agreed to jointly cut by an additional 600,000 bpd. OPEC is likely to weigh the risk of long-term market share loss against the benefit of stability before taking a call on extending production curbs, with the industry expected to bring "onstream a multi-year pipeline of giant developments that tails off only by 2020," Goldman said.

U.S. Shale Is Pushing OPEC To Breaking Point -- The trend in the United States of accelerating oil production does not seem to be slowing down. Recent reports show that oil production from U.S. shale producers will increase in April, according to the Energy Information Administration. High market prices are currently being supported by OPEC cutbacks, and these higher profits are funding the growth of American drilling. The release from the EIA predicts that net oil production will increase by 109,000 barrels per day in April. The seven major oil and gas basins that were included in the report will then have an output over nearly 5 million barrels per day collectively. The monthly projections from the EIA have been climbing month after month since December. In the United States, the main benefactors have been drillers at the Permian Basin, in Western Texas and southern New Mexico. The basin has been producing high volume since the end of 2016. The EIA expects the Permian drillers to see a gain of 70,000 barrels per day next month in their projections.

OPEC Out Of Moves As Goldman Sachs Expects Another Oil Glut In 2018 - Oil prices are heading down again on swelling U.S. crude oil inventories, with Brent dropping below $50 per barrel for the first time this year. The OPEC deal that has taken more than 1 million barrels per day of oil off the market has not succeeded in reversing this bearish trend for inventories. And with the deal at its midway point, focus is shifting towards an extension of the cuts through the end of the year. But OPEC’s usual strategy of jawboning the market back up ahead of these negotiations seems to be wearing thin amid record high crude oil inventories. "OPEC has used up most of its arsenal of verbal weapons to support the market. One hundred percent compliance by all is the only tool they have left and on that account they are struggling," said Ole Hansen, head of commodity strategy at Saxo Bank. "OPEC's market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience,"investment bank Jefferies said in a research note. Although projections from Wall Street banks tend to vary quite a bit, there is a growing chorus warning about another slide in crude prices. At this point, the big variable is whether or not OPEC decides to extend the deal when it meets in May – an extension would likely stabilize prices and might even push them back up into the mid-$50s or higher. No extension and oil could fall much further into the $40s. Looking out a bit further, things get much more complicated. Even if the supply/demand imbalance is taking a long time to correct itself, rising demand and tepid supply growth suggest that the glut will ease over time. At least that is the general consensus. However, Goldman Sachs warns that another downturn could come over the next three years, sparked by a new wave of supply stemming from megaprojects planned years ago. These projects cost billions of dollars and take many years to bring online, and many of them were initiated back when oil prices traded at $100 per barrel. “2017-19 is likely to see the largest increase in mega projects production in history, as the record 2011-13 capex commitment yields fruit,” Goldman said in a note.“This long-lead-time wave of projects and a short-cycle revival, led by U.S. shales, could create a material oversupply in 2018-19.” Goldman identified a handful of projects in Brazil, Russia, Canada and the Gulf of Mexico that will reach completion and add to global supply between 2017 and 2019. Combined with new shale output, these projects could add another 1 million barrels per day next year.

How OPEC Lost The War Against Shale, In One Chart -- At the start of March we showed a fascinating chart from Rystad Energy, demonstrating how dramatic the impact of technological efficiency on collapsing US shale production costs has been: in just the past 3 years, the wellhead breakeven price for key shale plays has collapsed from an average of $80 to the mid-$30s...... resulting in drastically lower all-in breakevens for most US shale regions.  Today, in a note released by Goldman titled "OPEC: To cut or not to cut, that is the question", the firm presents a chart which shows just as graphically how exactly OPEC lost the war against US shale: in one word: the cost curve has massively flattened and extended as a result of "shale productivity" driving oil breakeven in the US from $80 to $50-$55, in the process sweeping Saudi Arabia away from the post of global oil price setter to merely inventory manager. This is how Goldman explains it: Shale’s short time to market and ongoing productivity improvements have provided an efficient answer to the industry’s decade-long search for incremental hydrocarbon resources in technically challenging, high cost areas and has kicked off a competition amongst oil producing countries to offer attractive enough contracts and tax terms to attract incremental capital. This is instigating a structural deflationary change in the oil cost curve, as shown in Exhibit 2. This shift has driven low cost OPEC producers to respond by focusing on market share, ramping up production where possible, using their own domestic resources or incentivizing higher activity from the international oil companies through more attractive contract structures and tax regimes. In the rest of the world, projects and countries have to compete for capital, trying to drive costs down to become competitive through deflation, FX and potentially lower tax rates.

Are Banks About To Derail The New U.S. Shale Boom? - Just when international oil benchmarks are sliding down, banks are preparing to review the credit lines of U.S. E&Ps. Starting in April, lenders will reassess companies’ creditworthiness on the basis of reserves, production trends, current prices, and future prospects for the industry, among others. Should anything spark worry, banks will be quick to start reducing their exposure, cutting credit lines and arresting producers’ recovery at a crucial point. This year, U.S. E&Ps have announced an overall spending increase of $25 billion from 2016, an 11-percent rise, as a clear sign of continuing optimism after the November OPEC-non-OPEC deal that aimed to shave 1.8 million barrels of crude off daily global supply.  Besides boosting spending plans, producers have been adding rigs at a respectable pace: at the end of last week, active oil and gas rigs in the United States totaled 789, an increase of 313 over a year ago. They are also investing in more efficient drilling technologies, aiming for ever lower production prices in the aftermath of the oil price crash. The banks could put a stop to all this if they deem the outlook for oil prices or any other element of their assessment methodology unfavorable. For oil prices, more bad news seems to be on the way if we are to trust Goldman Sachs.The investment bank said in a note  yesterday that record-high investments in 2011-2013 could start bearing fruit this year and the next two, adding around a million barrels of crude to global daily production on an annual basis in the period 2017-2019. That will only happen if the mega projects that swallowed the huge investments deliver as expected, which is by no means certain. This message contrasts with an earlier one, contained in another note to investors, which saw global oil supply tightening thanks to the OPEC deal. In fact, at the time – a month ago – Goldman was of the opinion that the draw in global stockpiles would completely offset the rise in U.S. shale output.But for now, Brent crude is now trading below $51 and WTI has dropped below $48 a barrel.Investors are watching OPEC again for a possible extension of the production cut deal, but it’s still uncertain if it will happen, and even if it does, no one knows what the effect of an extension would be.

Increasing exports contribute to large draw on propane inventories this winter – EIA blog - U.S. propane inventories, which had been above historical norms since mid-2014, declined by 59 million barrels from the beginning of October 2016 through early March 2017, the largest decline on record for this period, despite unseasonably mild temperatures. Inventories at the beginning of October were nearly 29 million barrels above the previous five-year average, but by March 3, fell to just slightly below the preceding five-year average for the first time since May 2014, based on data from EIA’s Weekly Petroleum Status Report. The strong inventory draws occurred despite weak heating demand this winter and mainly reflect rapid growth in propane exports.   Although propane has uses in the petrochemical and agricultural sectors, its dominant domestic use is as a heating fuel for homes and businesses during the winter. Because of the seasonal pattern in propane consumption, propane inventories typically peak between late September and mid-October and fall to their lowest levels in March. The inventory draw this winter, as of March 10, was nearly 23 million barrels larger than the draw last winter (2015–16) and 19 million barrels larger than during the winter of 2013–14, which featured several extremely cold weather events.  As domestic propane consumption has remained relatively flat or declined on an annual basis, U.S. exports of propane have continued to increase. Rising production and lower seasonal heating demand over the past two winters, in particular, have meant that more propane has been available for export. U.S. propane is exported to many different countries where it is used as a petrochemical feedstock, for transportation fuel, and for space heating. Similar to the United States, the use of propane as a heating fuel in other countries is seasonal, and the destination mix for U.S. exports of propane can be influenced by patterns of seasonal heating demand in different countries. However, most of the growth in U.S. propane exports serves growing demand from the expanding petrochemical sector in Asia.

Market implications of the huge surge in LPG -- mostly propane -- exports. - Five years ago, the U.S. was a net importer of propane and butanes, those products collectively called LPG, or liquefied petroleum gasses. Back then, demand from residential, commercial, refining and chemical markets slightly exceeded supply for the products. But then came shale, and LPG production from natural gas processing more than doubled, from 0.8 Mb/d to 1.7 Mb/d. Suddenly the U.S. was a net exporter—a very big exporter at that. Last year roughly half of all LPG from U.S. gas processing plants was exported, with the vast majority shipped to overseas markets. All those exports are now having an outsized impact on pipeline flows, inventories and prices. Consequently, it is increasingly important to keep close tabs not only on export volumes but on which export terminals are handling all these volumes, and where the LPG is heading. Today we discuss the current state of the LPG export market and insights on it from RBN’s most recent NGL Voyager Report. Warning, today’s blog includes a subliminal promo for the report.   At RBN, we define U.S. LPG as three members of the natural gas liquids (NGLs) family of products: propane, normal butane and isobutane. All three are produced from two sources: 1) the 800 or so natural gas processing plants in the U.S., and 2) U.S. refineries. About 75% of LPG production comes from processing plants, and those facilities have been responsible for almost 100% of the growth in LPG production over the past five years. Refinery production has been about flat. On an annual basis, refineries use more normal butane and isobutane than they produce. So really, refinery net LPG production is propane. Note also that the Energy Information Administration (EIA) uses a slightly different definition of LPG, including ethane in the total. Furthermore, when showing product balances, EIA includes the petrochemicals propylene with propane, butylene with normal butane, and isobutylene with isobutane. Just something to keep in mind when you are comparing numbers from one source to another.

U.S. oil and gas industry reaps the benefits of international trade: Kemp (Reuters) - Rising exports have thrown a lifeline to U.S. shale producers and refiners, giving them an additional outlet at a time when the domestic market has been at risk of becoming saturated. The United States exported record quantities of natural gas, propane, gasoline, distillate fuel oil and light crude last year while continuing to import the heavy oils needed by its refineries (http://tmsnrt.rs/2moUMBU).  Gas exports increased by almost 30 percent in 2016 and have more than tripled in the last decade, limiting the build up of unused gas and supporting prices in recent months despite the warmest winter on record.  Record propane exports eliminated a surplus and returned stocks to average levels despite low heating demand. ("Increasing exports contribute to large draw on propane inventories this winter", EIA, March 17) Exports are also starting to reverse a surplus of domestically refined gasoline and distillate fuel oil despite lacklustre demand for both at the start of 2017. Most of the natural gas and other fuels have been sold to Latin America, where local producers and refineries have been unable to keep up with growing consumption.As a result of the shale revolution, the United States has emerged as the dominant supplier in an increasingly integrated hemispheric fuel market owing to the efficiency and competitiveness of its Gulf Coast refineries. ("Latin America struggles to stem pricey fuel imports", Reuters, March 16)Free trade in both crude and refined fuels, as well as in natural gas, has played a critical role in helping U.S. shale producers and refiners to weather the slump in oil and gas prices since 2014.The United States has benefited from rising exports even in commodities such as crude where it remains a large net importer overall.Crude exports averaged 520,000 barrels per day (bpd) in 2016, up from 465,000 bpd in 2015 and just 25,000 bpd in 2006.Exports are still outnumbered more than 15:1 by imports, which averaged almost 7.9 million bpd in 2016, according to the U.S. Energy Information Administration.But exports have enabled shale producers to avoid a refinery bottleneck and realise higher prices for their oil than would have been possible in the domestic market.Most U.S. refineries are configured to run on a medium-sour blend of crude with an API gravity of around 31-33 degrees and an average sulphur content of about 1.5 percent. Crude from the main shale plays is mostly lighter, with an API gravity of 40 degrees or more, and contains less than 1 percent sulphur. U.S. refiners have mostly replaced imported light crude with domestic shale oil, resulting in a sharp drop in light crude imports especially from Africa (http://tmsnrt.rs/2n3DvLB). Refiners have blended light domestic crude with more heavy sour crudes imported from Canada and the Middle East to maintain their target API gravity and sulphur content. Surplus domestic crude, mostly light and sweet, that U.S. refineries cannot absorb even with blending is being exported in record volumes to refiners as far away as Asia (http://tmsnrt.rs/2moAl8e). Blending explains the apparent paradox that U.S. crude imports and exports have both been rising at the same time.

ICE to launch first ever US LNG futures contract - The Intercontinental Exchange is to launch the first ever US LNG futures contract in May this year, it said Wednesday. In an exchange note to customers, ICE said it planned to list the new contract on May 4, subject to completion of necessary regulatory processes. US LNG supplies are set to grow quickly in the coming years, turning the country into a leading global supplier of destination-free, flexible LNG.The new ICE contract, whose size will for 2,500 MMBtu, will be a monthly cash future settled against the Platts LNG Gulf Coast Marker price assessment. "By providing the marketplace with a US Gulf Coast LNG futures contract, along with the prospect of future additional products, domestic and international market participants now have a risk management solution that lays the foundation for a more effective means of hedging their spot and forward exposure," vice president, North American power and natural gas markets, J.C. Kneale said. Such a tool, Kneale said, would be "particularly useful as the global LNG market continues to evolve and grow." Only one LNG export facility is currently operational in the US, the Cheniere Energy-operated Sabine Pass terminal, but a number of other plants are due to start up in the coming years. US LNG production capacity is expected to rise to some 70 million mt/year by 2020, making it the world's third largest LNG exporter after Qatar and Australia.

World's top LNG buyers form alliance to push for flexible contracts | Reuters: he world's biggest liquefied natural gas (LNG) buyers, all in Asia, are clubbing together to secure more flexible supply contracts in a move which shifts power to importers from producers as oversupply grows. Korea Gas Corp (KOGAS) said on Thursday it had signed a memorandum of understanding in mid-March with Japan's JERA and China National Offshore Oil Corp (CNOOC) to exchange information and "cooperate in the joint procurement of LNG." Together, the three companies purchase a third of global LNG production, giving them a strong hand to challenge restrictive contract terms that have squeezed buyers' finances. Influential buyers' clubs are largely unheard of in commodity markets where it is the producers, such as the Organisation of Petroleum Exporting Countries (OPEC), who wield power, enforcing production quotas to manage prices. A painful period of high LNG prices before 2014 left Asian importers scrambling to contain losses and led to the first talks between India, Japan, South Korea, China and Taiwan about joint purchases. Several joint LNG-buying deals have been set up since then but none approach the scale of the latest agreement, which is the first involving the game's biggest players. Under Thursday's agreement, the buyers aim to extract concessions from producers that would give them supply flexibility, such as having the right to re-sell imports to third parties, something they are not allowed to do currently under so-called destination restrictions.

Tanker's U-Turn Shows How Shale Is Changing World Gas Trade - -- A cargo of chilled natural gas hauled from Louisiana in late December has become a symbol of how global trade is changing for a fuel increasingly seen as a cheap, cleaner-burning option for countries from Latin America to China and India.The tanker Maran Gas Achilles passed through the Panama Canal and was headed toward Asia at a speed of 20 knots when, suddenly, it made a sharp u-turn in the Pacific. Next stop: Mexico’s Manzanillo terminal on the southwest coast, where it unloaded. The abrupt route change shows how the U.S., which began shale gas exports just last year, is creating a new paradigm in an industry that once revolved almost entirely around long-term contracts with set destinations. As the new kid on the block, exporters of U.S. liquefied natural gas -- led by Cheniere Energy Inc. and Royal Dutch Shell SA -- are seeking the best price at any given time. As U.S. exports grow, it’s a strategy that could shift the economics of LNG toward an emerging spot market akin to oil. “The U.S. puts gas into places on short notice at a good price,” said Jason Feer, head of business intelligence at ship broker Poten & Partners Inc., in a telephone interview. “It’s been flexible. The market’s becoming more short term and the U.S. has been very effective at meeting those needs.” The U.S. stands to become the world’s third-largest exporter by 2020, when it’s expected to ship about 8.3 billion cubic feet a day of capacity, or 14 percent of the world’s share, according to London-based consultant Energy Aspects Ltd. That growth is a testament to the power of the shale boom of the last decade, helping to reduce the country’s reliance on foreign energy sources.Drilling technologies such as hydraulic fracturing have made it profitable to tap vast resources of carbon fuels trapped in rock thousands of feet below the surface. The results: A natural gas supply glut stuck stubbornly in place since mid-2015, and billions of dollars redirected toward new export facilities by Cheniere,  Dominion Resources Inc., Kinder Morgan Inc. and others.

Latin America struggles to stem pricey fuel imports | Reuters: Latin American countries are becoming more reliant on costly fuel imports amid floundering efforts to bolster domestic oil output and expand refinery capacity. Incomplete reform projects and budget cuts that have stalled investments are aggravating the situation for many Latin American countries. For refiners in the United States, it is a bonus: they have in their own backyard a ready market for rising fuel exports. Overall, the 30 nations in the region bought 2.32 million barrels per day (bpd) of diesel, gasoline and other fuels last year from the United States, up 67 percent from 2011, according to the Energy Information Administration. Demands for United States imports are rising in the region's biggest economies, up 199,000 bpd or 29 percent last year in Mexico and 75,000 bpd or 94 percent in Brazil, contributing to the gains. "We need to build joint ventures to find the capital the refineries require," said the head of Mexico's oil regulator, Juan Carlos Zepeda, referring to his own country. "And we need to produce more gas," he added in comments earlier this month. But getting there will take time and in Mexico, energy reform is likely to lead to more imports as the retail market is liberalized, before upstream reforms can boost domestic production. Cheaper fuel prices have made it easier for these countries to buy in recent years. Latin America's bill for fuel imports from the United States fell to about $47 billion last year from $51 billion in 2015.

Argentina's Tecpetrol plans 150-well Vaca Muerta gas program - - Tecpetrol, the fifth-biggest oil producer in Argentina, plans carry out a large scale development program in the Vaca Muerta shale play, targeting natural gas, the country's government said Thursday. The country's president, Mauricio Macri, said he would meet with Tecpetrol CEO Carlos Ormachea at 4 pm local time (1900 GMT) in Buenos Aires to announce the plan, according to a brief statement. The plan is to drill 150 wells over the next three years on Fortin de Piedra, a block in the wet gas window of Vaca Muerta, one of the world's biggest unconventional plays. The government said the proposed investment comes on the back of a hydrocarbon reform program that has extended licenses for developing unconventional plays by 10 years to 35 years, and the extension of gas pricing incentives program. Earlier this year, the government extended the pricing incentives so that producers with approved investment plans would receive $7.50/MMBtu at the wellhead for output through 2018, $7/MMBtu in 2019, $6.50/MMBtu in 2020 and $6/MMBtu in 2021, before market pricing takes effect in 2022. The average wellhead price in 2016 was $4.76/MMBtu for YPF, the state-run company that produces 34% of the country's 124 million cu m/d of gas, according to company records.

Norway's natural gas output edged down to 10.2 Bcm in February: NPD -  Norway's gas production totaled 10.2 Bcm in February, the fifth straight month that Norway produced more than 10 Bcm of saleable gas, but output was down both year-on-year and month-on-month, preliminary data from the Norwegian Petroleum Directorate showed Tuesday. Total gas output last month averaged 365 million cu m/d, down from the average 370 million cu m/d produced in January. The February volume was 3.2% down on the same month of 2016, but was significantly higher than the forecast for last month of 9.8 Bcm.A number of unplanned outages affected output on the Norwegian Continental Shelf last month, including at the Oseberg, Kristin, Kvitebjorn and Troll fields. But supplies are still running at high levels. For March, the NPD is forecasting saleable gas production of 10.8 Bcm, which would be a little less than the same month last year. Across the summer, the NPD sees production at 8.3-9 Bcm/month, when output will be impacted by seasonal maintenance. Production is then expected to rise to 10.5 Bcm in October 2017, comparable with production in the same month last year.

 Chevron Calls End of LNG Mega Project After $88 Billion Spree --Chevron Corp. has signaled the end of major new LNG projects in Western Australia and is unlikely to sanction an expansion of its Gorgon and Wheatstone export developments as it focuses on boosting returns from $88 billion of investment. The climate for developing large greenfield LNG projects has shifted to smaller developments given a slump in the price of oil to under $50 a barrel, according to Nigel Hearne, a managing director with the company’s Australia unit. “The mega projects of the past decade are giving way to smaller, more targeted investments with quicker economic returns,” Hearne said in a speech in Perth on Tuesday. “As it stands there is unlikely to be another large greenfield LNG development” in Western Australia. Chevron’s two major Australian LNG facilities have suffered from cost blowouts, delays and poor timing. Oil’s worst slump in a generation and an LNG supply glut reduced revenue from projects across the industry. While the third LNG train from the $54 billion Gorgon project is in the process of starting up, further expansions are unlikely in the current climate with Chevron focusing future investments on “shorter-term” returns. “I can’t see in the near-term us investing in a fourth train at Gorgon or a third train at Wheatstone,” Hearne said in Perth. Chevron is focused on generating returns on its existing investments and paying a “dividend back for the money” already spent. The first train from the $34 billion Wheatstone project remains on schedule for mid-2017, he said.

India targets national LNG auto fuel norms in fiscal year 2017-18 - Natural Gas | Platts News Article & Story: The Indian government has in-principle cleared the decks for LNG to be used as an auto fuel, with draft norms for its application in road vehicles to be ready in the new fiscal year from April, officials told S&P Global Platts on Monday. As the industry awaits detailed guidelines and the timing for the official implementation of the decision, India's plan to push toward LNG comes at a time when many countries are assessing an array of options to not only reduce transportation costs but also curb emissions as part of their commitment to tackle global warming. The standards for LNG as a transportation fuel will be developed in consultation with the ministries of highways, shipping, and the environment, the officials said, adding that the basic norms for a national auto fuel LNG policy would be ready after internal consultations among the ministries conclude. CNG pumps like diesel and gasoline retail stations would be a reality in the near future, an official said.

Analysis: Indian refiners set sights on Russian crude oil -  Two of India's largest refiners, Reliance and the state-owned Indian Oil Corporation, are setting their sights on buying Russian Urals crude as the key export grade shows signs of competing with some Middle Eastern sour barrels, market sources told S&P Global Platts Friday. In what traders are describing as an opportunistic move, the price of Urals crude exported from the Black Sea port of Novorossiisk is becoming more attractive to some refiners in India, as the OPEC-led production cuts have reduced exports of Middle Eastern sour crudes, pushing up their price differentials. It is very unusual for India to buy Russian crude oil, but there are signs the economics are proving more favorable than they have in the past due to more interest from the East for Dated-Brent related crudes, supported by lower freight amid robust demand for sour crudes.Traders said increased interest for Urals oil from Reliance, which runs the world's largest refinery in Jamnagar, and IOC, which operates 11 refineries in the country, bodes well for the Russian Urals market. Traders said IOC had bought a Urals cargo for end-March loading while Reliance was looking for a parcel for end-March/early-April loading dates. Representatives from Reliance and IOC were unavailable for comment. "The Asian grades have really gotten expensive [over the last few months mainly driven by OPEC cuts] and India is now looking for alternative crudes that are cheaper -- Urals is one of them," said a trader. Sources said India has expressed interest for Urals late last year, with a couple of instances seen, but that before that there have been very few cargoes of Urals exported to India in the past five years.

India to supply 2,200 mt/month of gasoil via rail to Bangladesh: BPC official - Oil | Platts News Article & Story: India has agreed to supply 2,200 mt/month of 0.035% sulfur gasoil from the Numaligarh refinery to Bangladesh via rail for 15 years, Bangladesh Petroleum Corporation director of operations and planning Sayed Mohammad Mozammel Haque said Wednesday. State-owned BPC has agreed to pay a premium of $5.50/b to Mean of Platts Arab Gulf gasoil assessments on a CFR basis for the cargoes, Haque said. BPC had earlier imported several gasoil lots via rail from the Numaligarh refinery, owned by Indian state-run Bharat Petroleum Corporation Ltd or BPCL, at a premium of $7/b to MOPAG gasoil assessments, CFR, under a "friendship gesture," he added. BPC and BPCL agreed to lower the premium and continue the trade at a meeting held in India last week, Haque said.

Rosneft Signs Deal To Supply 10 LNG Cargoes To Egypt In 2017 (Reuters) - A trading unit of top Russian oil producer Rosneft has signed a deal to supply 10 liquefied natural gas (LNG) cargoes to the Egyptian Natural Gas Holding Company this year. The first delivery by Rosneft Trading SA (RTSA) is expected in May, Rosneft said. "This agreement will help to further strengthen the strategic partnership between Rosneft and Egypt in an important area of energy security," the company said. RTSA delivered three LNG cargoes to Egypt in 2016. Once an energy exporter, Egypt has become a net importer because of declining oil and gas production and increasing consumption. It is trying to speed up production at recent discoveries to fill its energy gap as soon as possible. Rosneft does not produce its own LNG yet but plans to launch production jointly with ExxonMobil later this decade.

Is A Russian-Iranian Energy Pact In The Making?  -- In the lead-up to President Rouhani’s visit to Moscow, expected to take place in late March, a plethora of news regarding joint Russo-Iranian energy projects has been circulating on the Internet. A three-year long negotiation process regarding a 100,000 barrels-per-day swap contract is believed to be agreed upon, premised on Iran providing Russia (most likely, Rosneft) oil from Kharg Island or other hubs in the Persian Gulf in return for cash and Russian goods that Iran would “require”. Teheran also woos LUKOIL, currently Russia’s only major oil producer in the Caspian, to participate in swap deals bound for Iran’s Neka Port (in return for Iranian crude provided from Kharg Island or other Persian Gulf hubs), albeit on a much smaller scale at 4000 to 5000 barrels per day. To top it all up, numerous Russian oil companies have committed themselves to developing Iran’s hydrocarbon fields.The lifting of most of Iran’s sanctions encouraged almost all oil & gas majors to consider investing in its largely untapped oil and gas fields. Total, apart from spearheading Phase 11 of the South Pars development project, now intends to resuscitate the halfway-constructed, currently-frozen Iran LNG initiative. Royal Dutch Shell signed a memorandum of understanding on conducting technical studies at the Azadegan and Yadavaran fields next to the Iraqi border, as well as the offshore Kish field not far away from the supergiant South Pars field. Yet the good will demonstrated by Moscow during negotiations prior to the lifting of nuclear sanctions, as well as Russia’s instrumental role in turning the tide in Syria’s sanguineous civil war in support of President Assad’s regime have elevated the Moscow-Teheran axis to new heights.

Japan's Top Oil Experts Seek Solutions to Chinese Fuel Flood Problem  Huddled deep within Tokyo’s government district, nearly two dozen of Japan’s top oil experts pore over a problem plaguing its energy industry: how can they stop China from pushing its crude refiners into a corner? The task force, summoned by the trade ministry, needs a strategy to save oil refiners battered by years of declining demand at home. The processors, including JX Holdings Inc. and Idemitsu Kosan Co., now face rising competition for sales in Asia, the world’s biggest oil market. The ministry fears that China’s move to adopt stricter fuel standards will spur regional rivals into producing higher quality products, forcing Japan out of the market. China is the biggest among a slew of other threats for Japan. The gradual slowdown of economies such as South Korea’s have led to rising exports to an increasingly saturated market. Meanwhile, other developed countries including the U.S. are also fighting for its share in Asia after China’s diesel and gasoline shipments overseas capped a record year in 2016. Members of the task force include Seisuke Iwai, a senior official at industry group Petroleum Association of Japan, Norimasa Shinya, an energy analyst at Mizuho Securities Co., Fuminori Hasegawa, senior vice president at Mitsubishi Corp. and Katsuhiro Sato, a partner at McKinsey & Co. in Japan. Their mission has taken on a sense of urgency following China’s move at the start of this year to curb the amount of sulfur used in vehicle fuels in an effort to reduce air pollution. The new rule has encouraged suppliers like China Petroleum and Chemical Corp., the world’s biggest oil refiner known as Sinopec, to pledge about $29 billion in facility upgrades to enable it to pump cleaner fuel. At the same time in Japan, the popularity of electric hybrid vehicles has reduced the country’s gasoline demand, contributing to an oversupply in refined products.

Beset by delays, Myanmar-China oil pipeline nears start-up | Reuters: Nearly a decade in the making, a project to pump oil 770 km (480 miles) across Myanmar to southwest China is set for imminent start-up, with a supertanker nearing the port of Kyauk Phyu, marking the opening of a new oil trading route. Dogged by sensitive relations between Naypyitaw and Beijing, the $1.5 billion oil pipeline has been sitting empty for two years, but the two sides are now close to a deal, said Myanmar-based government and industry sources, despite some last-minute tensions. An agreement between China's PetroChina and Myanmar's government will allow the state energy giant to import overseas oil via the Bay of Bengal and pump it through the pipeline to supply a new 260,000-barrels-per-day (bpd) refinery in landlocked Yunnan province. The new oil gateway fits with China's "One Belt, One Road" ambitions, linking it with central Asia and Europe, and will provide a more direct alternative route to sending Middle Eastern oil via the crowded Malacca Straits and Singapore. It would also be a rare win for China in Myanmar after a diplomatic offensive aimed at forging better ties with its resource-rich neighbor, which has often been wary of Beijing's economic clout. Aung Myat Soe, deputy director of planning under the state-owned Myanmar Oil and Gas Enterprise (MOGE), said the project was awaiting a final sign-off by the Minister of Electricity and Energy. Major issues including transport tariffs and Myanmar's tax take on the oil have been settled, but port fees have yet to be finalised, said a Myanmar-based industry source familiar with the matter.

Oil theft is fuelling terrorism and drug cartels, says thinktank -- Oil theft is fuelling terrorist groups and drug cartels around the world, according to a new analysis. Mexican drug gangs can earn $90,000 (£72,000) in seven minutes from tapping a pipeline of refined oil, while insurgents in Nigeria financially benefit from a share of the third of the country’s refined oil exports that is lost to theft, said the Atlantic Council. The Washington DC-based thinktank, which mapped the scale of crime in the oil refining and processing end of the sector, said the issue had largely been ignored by authorities and law enforcement agencies so far. “This has been an invisible issue for many years, people do not recognise downstream oil theft as a problem. It’s a multibillion-dollar thing that affects many people all over the world,” said Ian M Ralby, the author of the analysis, which follows up on a study published in January. “These are global concerns because they affect the global economy and they affect global security,” he added. The crimes take many forms, from straightforward theft from pipelines to smuggling to avoid taxes. Donkeys laden with jerry cans are used to smuggle oil across the closed border between oil-rich Algeria and Morocco. As a result an estimated 660,000 cars in Morocco and Tunisia run on fuel smuggled from Algeria, and border cities have sprung up to provide a property market to launder some of the funds. “Many, many drops start to flood a house,” said Ralby of the cumulative impact. Along with Nigeria, Mexico is one of the biggest oil theft hotspots, where an estimated $1bn of oil is stolen each year, with the Zetas cartel controlling nearly 40% of that market alone. Drug barons tapping pipelines in Mexico are also known to leave them open afterwards for farmers to win support. Europe is not exempt from the problem, with the analysis finding the EU lost about €4bn (£3.5bn) in hydrocarbon revenues in 2012. Ralby said a huge industry was taking shape in which refined crude from Libya, which has Africa’s largest oil reserves, was being illegally transferred ship-to-ship in the Mediterranean and passed off as legitimate oil imports to the EU.

Venezuela Scrambles to Sell Off Oil Assets and Avoid Default -- In an effort to handle its overdue debts, Venezuela is all but giving away oil assets. President Nicolás Maduro is reportedly so desperate to pay the US $3.7 billion in debts that he is selling off the assets to Russia. They offered to sell Russia a share of PetroPiar, which is 30-percent owned by Chevron and which PDVSA has a 70-percent stake in. It also expropriated ConocoPhillips’ 40-percent shareholdings, which has not been paid yet. Likewise, PDVSA offered Rosneft 10 percent of a project developed to extract the extra-heavy oil from the Orinoco Oil Belt. If the transactions go through, Chevron would be affected negatively, as it would be associating with Rosneft, a company that faces sanctions imposed by the United States. Venezuela has also reportedly been talking to a Japanese investment bank to try to obtain fresh funds. Venezuela managed to pay US $725 million in overdue debt last month, but with difficulty, as it came 30 days late

Libyan oil output rises to 700,000 barrels per day after port fighting ends: NOC | Reuters: Libya's oil production has reached 700,000 barrels per day (bpd), the National Oil Corporation (NOC) said on Wednesday, recovering from a drop earlier this month caused by fighting at two key oil ports. "We are working very hard to reach 800,000 barrels by the end of April 2017, and, God willing, we will reach 1.1 million barrels next August," NOC Chairman Mustafa Sanalla was quoted as saying in a statement. The NOC said in a separate statement it hoped to produce 55,000 bpd in the coming weeks from the Abu Attifel and Rimal fields, which are currently closed for maintenance. The fields are operated by Mellitah Oil and Gas, a joint venture between the NOC and Italy's ENI. The NOC said Mellitah is currently producing 41,000 bpd from onshore and offshore fields, as well as 43,000 bpd of condensate. Libya's output fell to around 600,000 bpd after eastern security forces lost control on March 3 of the major oil terminals of Es Sider and Ras Lanuf, before regaining them 11 days later. Sanalla has said he expects to retain control over operations at the ports, despite some officials in eastern Libya appearing to cast doubt over continuing cooperation with the NOC in Tripoli. Workers at the ports have been gradually returning to their posts, and a tanker is expected to load of crude at Es Sider on Saturday or Sunday, according to shipping sources. Production at Waha oilfield, which was halted this month, has risen to 35,000 bpd, a field engineer said. Waha Oil Co, which operates the field, is hoping to raise production from all its fields to 80,000 bpd by the end of March and to more than 100,000 bpd by mid April.

Saudi ‘Mission Impossible’ Makes Longer OPEC Oil Cuts Inevitable -- Saudi Arabia has set a near-impossible target to end the current round of OPEC oil-production cuts, indicating that a policy rollover into the second half of the year is a near certainty. OPEC, which pumps about 40 percent of the world’s oil, and several non-OPEC countries including Russia agreed in December to reduce production for six months in an effort to bring supply and demand into balance. At the time, the producers said they could extend the deal for an extra six months. In an interview with Bloomberg Television on Thursday, Saudi Energy Minister Khalid Al-Falih said that OPEC would extend the cuts after they expire in June if oil stockpiles were “still above the five-year average.” Because oil stocks are so far above that level, the target will probably still be out of reach when the Organization of Petroleum Exporting Countries gathers in Vienna on May 25. “It looks impossible for total OECD company stocks on land to fall back by mid-year to the five-year average, which OPEC has set as a key benchmark as to whether it should extend its deal,” oil consultants FGE told clients in a note.

The Single Biggest Threat To An OPEC Deal Extension - If OPEC fails to agree to extend their production cuts for another six months, Iraq could be a major reason why.For many years after the 2003 U.S. invasion, Iraq was exempt from OPEC’s production quotas in order to help the country rebuild. But in recent years, Iraq has succeed in ramping up its output, overtaking Iran to become OPEC’s second largest oil producer. Today, production stands at 4.4-4.5 million barrels per day (mb/d).As OPEC’s second largest producer, Iraq is pivotal to the success of the deal signed late last November to prop up prices.But Iraq has lagged behind other OPEC members in its efforts to reduce output. It agreed to cut production by roughly 210,000 bpd from October levels, requiring it to average an output level of 4.351 mb/d over the course of the six-month compliance period between January and June.Those figures were agreed on an October baseline (although Iraq has argued with OPEC over which numbers to use for months). In December, just before the deal was set to take effect, Iraq ramped up output to 4.642 mb/d. It then cut production by 166,000 bpd in January, but from that higher December level, taking it down to 4.476 mb/d, according to OPEC’s secondary sources, or only slightly below its baseline and still above its targeted level as part of the deal. No matter; the OPEC deal is a six-month average, so Iraq could still lower output in subsequent months and comply with its commitments. Iraqi officials reassured its OPEC peers that further reductions were forthcoming. But in February, the reductions were a bit underwhelming. Iraqi output dropped by just 62,000 bpd to 4.414 mb/d. Again, Iraq has more time to bring its average down, but it is one of the few countries not already complying with its production cap. The other is the UAE – a surprise development considering the country’s close alliance with Saudi Arabia. As a fellow member of the Gulf Cooperation Council, UAE policy closely follows what goes on in Riyadh. So, the UAE is less of a worry for compliance – it will likely fall into line soon.

Oil Shorts Soar By 2nd Most In History As OPEC Hope Fades --During a week that saw WTI crude prices erase all post-OPEC-production-cut-deal gains, after the Saudis admitted 'cheating' (but rapidly back-pedalled), oil speculators added almost 80,000 contracts to their short positions - the 2nd most in 34 years. This surge in shorts reduced the massive record net long crude positioning by the 2nd most in history - but clearly it remains extremely one-sided still... This is the 3rd weekly drop in a row for the net long position, as hedge funds cut their net bullish positions by the most ever to 14-week lows. All of which happened as oil prices drifted lower waiting and watching for OPEC's next move (as OilPrice's Matt Smith explains)... prices are struggling as market participants try to weigh up whether OPEC is going to continue its production cuts (or even implement them in the first place).

Bets soar that NYMEX crude futures will head lower: US CFTC -  Money managers' position in NYMEX crude futures took a bearish turn in the latest reporting period, according to US Commodity Futures Trading Commission data released Friday. The CFTC data confirmed what analysts suspected was a drastic shift in speculative positioning recently after crude futures fell sharply March 8 and kept declining until a week later, when prices found some support. A sharp buildup in speculative net length left the market vulnerable to the downside, analysts said. Net length rose after OPEC's supply-cut deal was announced November 30, and accelerated this year. It reached a record-high 405,328 contracts the week ending February 21, according to CFTC data.The following two reporting periods saw money managers cut back slightly on net length, but longs still outnumbered shorts by a nearly 7:1 ratio. But for the week that ended March 14, longs-to-shorts stood at a 3:1 ratio, driven by both long liquidation and shorts entering the market. Speculative length fell 34,579 contracts to 383,767 contracts, while the size of the short position jumped 67,779 contracts to 128,947 contracts, CFTC data showed. NYMEX crude futures fell $5.42 to $47.72/b in the week ending March 14, a low going back to November 29. Crude futures have since been above $48/b, suggesting the selling pressure from money managers has eased.

Hedge funds rush for exit after oil trade becomes crowded: Kemp (Reuters) - Hedge funds cut their bullish bets on oil by the largest amount on record in the week to March 14, according to the latest data published by regulators and exchanges. Hedge funds and other money managers cut their combined net long position in the three main futures and options contracts linked to Brent and WTI by a record 153 million barrels in just seven days (http://tmsnrt.rs/2n6ahxr). The reduction in the net long position coincided with the sharp fall in oil prices, which started on March 8 and continued through March 14. The adjustment was split almost evenly between the liquidation of old long positions and the establishment of new short positions. Hedge fund managers reduced long positions by 84 million barrels while short positions were increased by 70 million barrels.Fund managers' net long position has been reduced by a cumulative total of 230 million barrels over the last three weeks from a peak of 951 million barrels on Feb. 21 (http://tmsnrt.rs/2n0kxpj).Most fund managers are still bullish about the outlook for oil but that bias is less pronounced than it was a month ago. Hedge fund long positions outnumber short positions by a ratio of 4.4:1, but that come down from a ratio of 10.3:1 on Feb. 21 (http://tmsnrt.rs/2mM2e6q).   Before the recent sell off, hedge fund managers had boosted their net long position in Brent and WTI by 530 million barrels between the middle of November and the middle of February.Funds amassed a record 1.05 billion barrels of long positions, while short positions were cut to just 102 million barrels, the smallest number since oil prices started slumping in 2014. But large concentrations of hedge fund positions, and an imbalance between the long and short sides of the market, often precede a sharp reversal in oil prices.

Rig count hangover bruises crude oil prices (UPI) -- Under broader pressure from the so-called Brexit, crude oil prices moved lower early Monday on a hangover from higher U.S. exploration and production work.Energy companies working in shale oil basins in the United States have adapted to lower price points so that, once the market does recover, they're more efficient at returning to work. After forecasting production declines for 2017, U.S. federal data instead show steady gains and production so far in March has been at around 9 million barrels per day.Data last week from oilfield services company Baker Hughes showed an increase in the number of rigs deployed in the United States for the ninth week in a row. Rig counts serve as a rough estimate of exploration and production, which in itself is indicative of energy sector spending and confidence.Gains in production from the United States, and producers from the Organization of Petroleum Exporting Countries eager to defend a market share, pushed oil to historic lows last year. OPEC in November agreed to manage collective production, leaving the United States in a unique position to influence crude oil prices.With Baker Hughes data still a factor in trading, the price for Brent crude oil was down 1.3 percent from Friday's close to $51.09 per barrel about a half hour before the start of trading in New York. The U.S. benchmark for the price of oil, West Texas Intermediate, was off 1.7 percent from the previous close to $47.94 per barrel. For the broader economy, concerns could emerge from the British decision to invoke Article 50 of the Lisbon Treaty next week, triggering the official start of negotiations to leave the European Union.

Oil prices continue sliding as production limit optimism fades - Crude prices dipped over a percent on Monday, as investors lose confidence in oil following strong drilling data from the United States and pessimism about OPEC-led output cuts.  "Speculative investors have thrown in the towel it seems. We've got record selling in the week ending March 14, and the bleeding has not stopped yet," said Carsten Fritsch, senior commodities analyst at Commerzbank in Frankfurt, as quoted by Reuters."The continued increase in US oil rigs adds to the bearish sentiment," he added.Brent crude was down 58 cents at $51.18 per barrel, while US benchmark WTI slid 74 cents to $48.In the US, drillers added 14 oil rigs in the week to March 17, according to Baker Hughes. At 631 rigs, this is the biggest count since September 2015. This indicates the US shale oil industry, hit by low energy prices, is returning to the market. The recovery is likely to see the biggest increase in shale production in six months in April. The data from the US thwarts the Organization of the Petroleum Exporting Countries (OPEC) deal with Russia and other producers to cut production to prop up prices. “It was obvious that with a reversal in prices, the US shale production was going to pick up. But the magnitude of the improvement was really not known,” said one Gulf delegate, as quoted by the Financial Times.

Oil Heads Lower As Traders Sell The Rumor - Oil prices seesawed a bit to start off the week, awaiting news from the EIA on changes to crude oil inventories. After a sharp decline in prices two weeks ago, WTI and Brent have been hovering in a relatively narrow range – WTI in the upper-$40s and Brent in the lower $50s. That continues to be the trend this week.OPEC sources told Reuters that the group is increasingly leaning towards a six-month extension of its production cuts. However, one major hurdle will be keeping Russia and other non-OPEC countries on board with the reductions. "An extension is needed to balance the market," an OPEC delegate told Reuters. "Any extension of the cut agreement should be with non-OPEC." Another OPEC source agreed that non-OPEC countries are necessary. "The ministers will meet in May to decide, but everyone has to be on board." Russia has not yet met its production cut requirements under the OPEC deal, but Russian officials said that they would meet the promised 300,000 bpd reduction by the end of April, and keep output at that level for the duration of the deal through June. Astute readers might note that Russia would still fall short of its pledge, which was to keep the six-month average 300,000 bpd below October levels. Reducing by 300,000 bpd for only three months is not exactly the same thing.  Hedge funds and other money managers recently slashed their bullish bets, achieving the sharpest reduction in net-length on record. The liquidation of bullish positions will continue to put downward pressure on prices. Oil prices are now in a bearish trend and there is still a great deal of downside risk. ExxonMobil, Royal Dutch and Chevron are set to spend a combined $10 billion on drilling in the Permian Basin this year. The majors have been reluctant to go all-in on shale in years past, having traditionally produced their oil and gas from much larger projects, leaving shale production to dozens of smaller and medium-sized companies. But the majors are in the midst of a crucial makeover, backing out of megaprojects and pouring more money into short-cycle shale projects that tie up cash for short periods of time. “The majors arrived late,” Greg Guidry, head of Royal Dutch Shell’s shale unit, told Bloomberg. “We want to be as nimble as the independents but levering the capabilities of a major.” Shell says that it can breakeven with new shale wells in the Permian with oil trading at $20 per barrel.

WTI/RBOB Plunge After Inventory Hits Record High, Production Surges -- After a sizable build in crude and draw in gasoline overnight from API, WTI and RBOB are lower (legged down on Libya production news). DOE data confirmed the API data with asizable crude build and gasoline and distillates extending their draw streak. US crude production rose once again - the highest in 13 months. DOE:

  • Crude +4.945mm (+3mm exp)
  • Cushing +1.42mm (+1.1mm exp)
  • Gasoline -2.81mm (-2.4mm exp)
  • Distillates -1.91mm (-1.5mm exp)

Crude inventory expectations had risen into the print and DOE data confirmed a notable build. Gasoline drew down but less than API and Cushing saw another notable build...

Crude Inventory Build Sends Oil Prices Into A Nosedive - Amid growing worry about the direction that oil prices are heading into, the Energy Information Administration reported a 5-million-barrel build in U.S. commercial oil inventories for last week, bringing total US crude oil inventories to 533.1 million barrels.The report comes a day after API’s latest estimate dealt yet another blow to prices, pegging inventories at 4.53 million barrels more than a week before.  Last week’s EIA figures were also discouraging: for the seven days to March 10 the authority reported a modest decline of 200,000 barrels, reinforcing concern that the glut will continue despite some cuts in production made by OPEC and 11 non-OPEC producers.In its latest report, the EIA also reported a draw in gasoline inventories of 2.8 million barrels, with refinery processing rates averaging 15.8 million barrels of crude daily. Gasoline production was up to 9.8 million barrels in the period. U.S. inventories have seen major builds over the last few months, contributing substantially to a dampening of optimism for the immediate future of oil prices. The latest news from the OPEC camp as well as a recent note to investors from Goldman Sachs is painting a gloomy picture.While some OPEC members are on board with a production cut extension, Saudi Arabia early this month declared it will not partake in measures that will only support U.S. shale producers’ ramping up of production. It later softened its stance, so the prospects of an extension look brighter. Goldman Sachs warns that mega projects expected to start commercial production this year could add a million barrels to global supply, erasing any gains made thanks to the OPEC cut, extended or not. The extension dilemma is indeed a tough one: OPEC can either agree to extend the cuts and risk losing more market share, or start raising production from July 1, bringing prices further down.Meanwhile, U.S. producers are facing pressure from banks: if WTI falls to $45, lenders are more likely than not to start cutting credit lines, hampering the industry’s recovery. Amid these developments, at the time of writing Brent crude was trading at $50.16 a barrel and WTI was at $47.63.

Oil drops to lowest since November as U.S. inventories swell | Reuters: Oil prices slipped on Wednesday to their lowest since late November, with Brent testing the $50 per barrel support, after data showed record high U.S. crude inventories rising faster than expected, raising doubts over the viability of OPEC-led output cuts. The Energy Information Administration (EIA) said U.S. inventories climbed almost 5 million barrels to 533.1 million last week, far outpacing forecasts of a 2.8 million-barrel build. [EIA/S] "The fact that this supply has increased almost 55 million barrels this year in the face of significant OPEC production cuts is evolving as a major bearish development that poses a significant threat to the viability of the OPEC agreement in our opinion," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note. Global benchmark Brent shed 32 cents, or 0.6 percent, to settle at $50.64 a barrel, its lowest close since Nov. 30 when OPEC countries agreed to cut output. The contract fell as low as $49.71 in morning trade. On its first day as the front-month, U.S. West Texas Intermediate (WTI) crude futures for May slipped 20 cents, or 0.4 percent, to settle at $48.04 per barrel. The session low was $47.01, its lowest since Nov. 30. A deal between the Organization of the Petroleum Exporting Countries and some non-OPEC producers to reduce output by 1.8 million barrels per day (bpd) in the first half of 2017 has done little to reduce bulging global oil stockpiles. OPEC, which sources say is leaning toward extending cuts, has broadly delivered on pledged reductions, but non-OPEC states have yet to cut fully in line with commitments. "OPEC has used up most of its arsenal of verbal weapons to support the market. One hundred percent compliance by all is the only tool they have left and on that account they are struggling,"

Brent crude oil's dip below $50 adds to pressure on Opec - Brent crude oil fell below $50 a barrel for the first time this year after US crude inventories climbed to a fresh record, raising fears that Opec’s attempts to tighten the market are falling short.US crude inventories rose by 5m barrels in the week ended March 17, the US Energy Information Administration reported on Wednesday, triggering an immediate bout of selling that pushed Brent below $50 for the first time since November.The latest price slump means Brent has reversed all of its gains since Opec agreed to cut production alongside allies like Russia late last year in an attempt to end the two-year price slump that has upended the oil industry.It will heap pressure on the 13-member oil producers cartel to either increase cuts or roll over the initial six-month cut period when it meets in May, as signs of a rebound in US oil output is blunting their efforts. “There are growing doubts among market participants about whether the Opec production cuts will be able to quickly restore balance on the oil market,”  Oil company stocks were hit by the latest price drop, which saw Brent hit a low of $49.71 a barrel, while US benchmark West Texas Intermediate dropped as low as $47.01 a barrel. BP, Royal Dutch Shell and ExxonMobil shares all slipped. The rise in US crude stocks comes as shale drillers ramp up efforts after an earlier rebound in prices relieved the pressure on their balance sheets, which had been hard hit by the two-year slump. US drillers have added rigs for nine straight weeks, leading analysts to revise up their forecasts for how much the country might produce this year. That poses a challenge to Opec who hoped the rebound in shale output would be limited. Saudi Arabia, the most powerful member of Opec, has warned other producer nations who signed up to the supply reduction deal that they must comply with the cuts, saying the kingdom — which has shouldered the bulk of cuts so far — will not be taken for granted.  A report on Wednesday said that the kingdom may seek the involvement of Opec members that were previously largely exempt from the deal, such as Iran, should any deal be extended.

US rig count increases 20 this week to 809; Texas up 8 - (AP) - The number of rigs exploring for oil and natural gas in the U.S. increased by 20 this week to 809. A year ago, 464 rigs were active. Houston oilfield services company Baker Hughes Inc. said Friday that 652 rigs sought oil and 155 explored for natural gas this week. Two were listed as miscellaneous. Texas increased by eight rigs and Oklahoma added seven. New Mexico rose by three while Alaska, California, North Dakota, Pennsylvania and West Virginia gained one each. Louisiana declined by two and Wyoming by one. Arkansas, Colorado, Kansas, Ohio, and Utah were all unchanged. The U.S. rig count peaked at 4,530 in 1981. It bottomed out last May at 404.

Rig count breaks 800, Permian back on top -- After a small slump last week, the Permian basin is back on top in U.S. rig count gains released March 24. The Baker Hughes U.S. rig count gained a total of 20 new rigs this week, with a total of 809 rigs exploring for oil and gas. Baker Hughes reported 21 new rigs exploring for oil and gas, totaling 652, and one addition labeled as miscellaneous. The gas rig count dropped by 2 to 155. Rig count changes by Basin:  By state, only Louisiana and Wyoming lost rigs. Texas gained 8, Oklahoma gained 7, and New Mexico gained 3. Alaska, the state that could see significant gains in upcoming months following a large discovery of oil reserves, gained 1 this week.The price of West Texas Intermediate (WTI) crude oil opened Friday at $47.67. At 3:00 pm EST, oil was up slightly from Thursday at $48.01. However, this is still lower than just a few weeks ago, when WTI consistently hit between $52 and $54 per barrel. The continuing increase in oil inventories is part of the reason for the market dip. U.S. inventories increased by around 5 million barrels from the previous week. At 533.1 million barrels, U.S. crude oil inventories are at the upper limit of the average range for this time of year, according to the latest from the Energy Information Administration (EIA). As forecasters attempt to analyze what’s in store, a meeting of five representatives from Kuwait, Algeria, Venezuela, and the non-OPEC nations of Russia and Oman on Sunday will likely drive oil prices next week. The agreement to cut production among these countries could be extended, helping to keep the price of oil higher and help prevent another deep slip. However, the United States is not among the countries who have agreed to cut production. Naeem Aslam, chief market analyst at Think Markets said, “OPEC has done their part, but U.S. inventory data is still rising, keeping the lid on the oil price,” reported Sara Sjolin from Marketwatch.

U.S. Oil Rig Count Continues To Rise Despite Saudi Warnings -- The United States oil rig count jumped by 21 this week, to its highest level since September 2015, according to Baker Hughes’ latest rig on domestic drilling activity. The number of oil rigs currently active in the United States now sits at 652, which is an increase of 280 year over year. The sizeable jump in rigs signals an indifference by American shale producers towards warnings issued by the Saudi Arabian leadership against increased production. The KSA, which serves as the de facto leader of the Organization of Petroleum Exporting Countries (OPEC), entered into an agreement with its fellow bloc members and 11 NOPEC nations to cut production by 1.8 million barrels. So far, Riyadh has been doing the heavy-lifting, while its partners cut less than expected and enjoyed higher profits from an oil barrel stable above the $55 point. But cheap shale output from the U.S. threatens the effectiveness of the OPEC agreement, which aims to eliminate the supply glut. Gas rigs were down by two to 155, an increase of 63 over a year ago. State-wise, Texas and Oklahoma gained eight and seven rigs, respectively. New Mexico saw a three-rig rise, while Alaska, California, North Dakota, Pennsylvania, and West Virginia gained one each. The Permian Basin saw the most number of rigs added, bringing 7 additional rigs online to reach 315. The Permian Basin now has 168 more rigs in production than this time last year. Cana Woodford, Eagle Ford, and Marcellus Basins all saw 2-rig increases, and Barnett, Granite Wash, Mississippian, and the Williston Basin all added one. There were no decreases this week in the number of operational rigs per basin. By state, Texas was the biggest winner this week with an additional 8 rigs, with Oklahoma coming in a close second with an increase of 7 rigs.

Oil prices ready for 3rd weekly loss in a month - Oil prices edged slightly higher Friday, but were set to log their third weekly loss in a month, as traders continued to weigh signs of OPEC-led cutbacks in global crude production against data pointing to the likelihood of further gains in U.S. output. May West Texas Intermediate crude rose 8 cents, or just under 0.2%, to $47.78 a barrel on the New York Mercantile Exchange. It touched intraday highs above $48 early Friday following news that Saudi Arabia, the Organization of the Petroleum Exporting Countries’ biggest producer, said it cut oil exports to the U.S. in March by around 300,000 barrels a day. For the week, WTI oil prices were poised for a loss of about 2.1%. May Brent crude added 2 cents, or less than 0.05%, to $50.58 a barrel—on pace for a weekly loss of about 2.3%.  “In the oil market, it is the upcoming OPEC meeting on Sunday which will drive prices next week,” said Naeem Aslam, chief market analyst at Think Markets.  Five representatives of the countries that signed up to the output agreement—Kuwait, Algeria, Venezuela, and non-OPEC nations Russia and Oman—will meet in Kuwait on Sunday to review the current level of compliance. Most members of the Organization of the Petroleum Exporting Countries are adhering to their pledges to make cuts, but data suggest not all non-OPEC producers are sticking to their quotas. And then there’s the U.S., which isn’t part of the agreement. “OPEC has done their part, but U.S. inventory data is still rising, keeping the lid on the oil price,” said Aslam.

Record U.S. Stockpiles Keeping Oil Prices Low - Oil dropped as U.S. crude supplies rose to an all-time high while investors await a meeting between OPEC and its allies that may signal whether they’ll extend output curbs. Futures fell on both sides of the Atlantic, sending Brent to its lowest close since November. American crude output continued to rise along with inventories last week, an Energy Information Administration report showed on Wednesday. While OPEC won’t formally decide until May whether to prolong production cuts, officials will meet this weekend in Kuwait to discuss their deal’s progress. West Texas Intermediate and Brent crudes dipped below $50 a barrel this month for the first time in 2017 as rising U.S. inventories weighed on output cuts by the Organization of Petroleum Exporting Countries and other producers. Saudi Energy Minister Khalid Al-Falih has said the group would extend the deal if oil stockpiles remain high. The Russian cuts are “slower than what I’d like,” Al-Falih said in an interview with CNBC March 7. "There’s a lot weighing on the market and I believe it’s a matter of time before we move lower," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. "Saudi patience is being tried by Russia and others that aren’t abiding by the agreement." WTI for May delivery dropped 34 cents to close at $47.70 a barrel on the New York Mercantile Exchange. Total volume traded was about 20 percent below the 100-day average. Prices are up 20 percent from a year ago. Brent for May settlement fell 8 cents to $50.56 a barrel on the London-based ICE Futures Europe exchange. Its the the lowest close since Nov. 30. The global benchmark ended the session at a $2.86 premium to WTI. Crude supplies rose by 4.95 million to 533.1 million barrels last week, the EIA report showed on Wednesday. Prices tumbled upon the release of the data before erasing most of the loss as attention shifted to fuel stockpile gains. Gasoline inventories fell to 243.5 million barrels, while supplies of distillate fuel, which includes diesel and heating oil, slipped to 155.4 million barrels.

Saudi pledges stable oil supply as market confused by data | Reuters: Output or exports? OPEC members have argued for decades over which of the two they should monitor to gauge compliance with oil-output cuts. This month, Saudi Arabia has thrown a third metric – supply - into the debate. The move saw oil prices declining, with confused traders fearing Riyadh would pump more crude, thus complicating OPEC’s efforts to reduce a global glut and prop up the market. But sources in Riyadh argue that those worries are overblown. They say that while Saudi production could fluctuate slightly from month to month, supply will remain stable at around 10 million barrels per day (bpd), fully in line with the Saudi OPEC quota. "What we are watching closely is the supply. Saudi Arabia will not supply the market more than 10 million bpd," a Saudi-based industry source said. On Jan. 1, a deal between the Organization of the Petroleum Exporting Countries and some non-OPEC states to curb production by 1.8 million bpd came into effect. Production is the volume of crude pumped from the wellhead, while supply is the amount of crude sent to the market, domestically and for export. This may vary from production on a monthly basis based on movement of barrels in or out of storage. For the past couple of years, the difference between Saudi production and supply figures has not been large. Discrepancies in January and February were notable after the OPEC agreement as the market has focused more on production and compliance. Riyadh's plea for OPEC and market watchers to focus on Saudi supply rather than production or exports is driven by the kingdom's unique position in OPEC as a holder of huge stockpiles.Saudi Arabia, the world's top oil exporter, has long been OPEC's only holder of significant spare capacity, a cushion to help smooth possible shortages in global supply.

Exclusive: Saudi exports to U.S. to fall by 300,000 barrels per day in March - official | Reuters: Saudi Arabia's crude exports to the United States in March will fall by around 300,000 barrels per day from February, in line with OPEC's agreement to reduce supply, a Saudi energy ministry official said on Thursday. The United States imported about 1.3 million bpd from OPEC's top exporter in February, according to U.S. Energy Information Administration data. "Exports may fluctuate week on week, but on average in March exports will be down," the official said, responding to a Reuters request to comment on the EIA data. Saudi exports are then expected to remain around March's level for the next few months, the official said. The official noted that export data showed higher Saudi oil exports in January and February, but these shipments were the result of cargo loaded in November and December. Saudi Arabia has made the largest cut in production after the agreement reached last year by both the Organization of the Petroleum Exporting Countries and non-OPEC producers to reduce output by 1.8 million bpd. Oil prices have been in a downtrend for two weeks on concerns that OPEC cuts so far have not dented record U.S. crude inventories. U.S. crude has declined nearly 10 percent since March 7 as speculators reduced big bets that oil would keep rising. It settled on $47.70 on Thursday. Crude stocks in the United States, the world's largest oil consumer, were a record 533 million barrels last week, the EIA said. In the week ended March 17, U.S. imports from Saudi Arabia unexpectedly rose by more than 200,000 bpd to 1.28 million bpd, after a sharp decline the prior week.The official said lower Saudi exports to the U.S. is likely to affect stockpiling in the U.S. 

Saudi Arabia tries to drain oil stocks while protecting customer relationships: Kemp - (Reuters) - Saudi Arabia faces a difficult balancing act as it tries to work down excess global crude stocks while protecting relationships with important refining customers in the United States and Asia.Saudi Aramco exports most of its crude direct to refiners under long-term contracts that prohibit resale to other refiners or independent traders.Aramco's business has been built around nurturing strategic relationships with customers and emphasising its reliability as a supplier.The model is very different from most other OPEC and non-OPEC producers that rely more heavily on spot sales to refiners and traders.Aramco's strategic relationships and term contracts help it realise value in the long run but reduce its flexibility in the short term.And Saudi Arabia's commitment to reduce production under the accord with other OPEC and non-OPEC countries reached towards the end of 2016 creates a tension with its customer-focused strategy. The kingdom has an obvious interest in reducing excessive global crude stockpiles in an attempt to push oil prices higher.In fact, Aramco has so far cut production even more than required under the OPEC/non-OPEC agreement to accelerate the rebalancing process.But Aramco is also keen to protect is preferential-supplier status with refiners across Asia and the United States which means protecting volumes as far as possible.Contracts with refiners contain some limited flexibility to vary the volume supplied each month which allows for some adjustment.But Saudi Arabia does not want to cut its own supply if the shortfall will simply be made up by increases from other exporters producing similar crude oils.Iran, Iraq, Oman and Russia all produce medium and heavy sour crudes with similar characteristics to Saudi crude.For that reason, the kingdom insisted they were all bound by production limits in the OPEC/non-OPEC agreement. But even with the OPEC/non-OPEC agreement, it is still difficult to cut exports without leaving important customers disappointed and looking for alternatives.

Saudi Arabia may insist on Iran oil output cuts to continue OPEC deal: sources -  Geopolitical rivals Saudi Arabia and Iran may be headed for another OPEC showdown, as the producer group enters negotiations over extending oil production cuts in force since January. Saudi Arabia may demand that Iran, which is allowed a slight rise in output under the deal, commit to an output reduction as a condition of continuing the cuts, people familiar with the kingdom's thinking told S&P Global Platts. The provision is among several that Saudi Arabia, tired of seeing its market share eroded as it bears most of the burden of OPEC's agreed cuts, is likely to come to the table with, sources say. These include stipulations on members who have exceeded their quotas and exempt members nearing full production capacity, notably Nigeria.But it is Iran that is likely to be the biggest sticking point given historic distrust between the two countries, as talks among OPEC members ramp up amid signs that the global inventory glut remains stubbornly high. "We do expect that the Saudis will have demands on both poorly complying deal participants and those exempted like Iran for the second half," said Bob McNally, president of energy consultancy Rapidan Group. "We expect some tension ahead of the May 25 meeting, but as we have seen ministers will temper disgruntlement with supportive public comments so as not to spook investors," he added. Saudi energy officials declined to comment on their plans, with one telling Platts on condition of anonymity that "it is too early" to discuss the particulars of negotiations that have yet to start. Iranian energy officials did not respond to requests for comment. Any move to rein in Iran's production is likely to be met with significant resistance, experts say.

OilPrice Intelligence Report: No OPEC Deal Extension Without Cut From Iran -- Fitch Ratings slashed Saudi Arabia’s credit rating by one notch to A+ from AA- over concerns about public finances. The downgrade comes as Saudi Arabia and other major oil producers struggle with the dilemma of allowing oil prices to sink lower or make painful production cuts in order to keep prices elevated. Fitch also questioned whether or not the proposed economic reforms in Riyadh will be implemented. “The scale of the reform agenda risks overwhelming the government’s administrative capacity,” Fitch said.   Speculation about whether or not OPEC will extend its production cut deal for another six months will be one of the most significant variables affecting oil prices in the short run. S&P Global Platts reports that Saudi Arabia might only agree to an extension if Iran agrees to cut its production, something that it did not have to do as part of the initial deal. Iran agreed to a cap on production slightly higher than its October baseline for the January to June period, but Saudi Arabia is growing tired of taking on the bulk of the sacrifice for the market adjustment and might stipulate that other countries make a larger sacrifice if the deal is to be extended through the end of the year.   OPEC officials are huddling in Kuwait this weekend to gauge the health of the oil market and figure out next steps. They won’t make any decisions until May at least, but they will likely discuss the painfully slow pace of market adjustment. A survey of 13 oil market analysts by Bloomberg concludes that OPEC has little choice but to continue their production cuts. “They’ll probably think they need to grin and bear it longer,” Citi’s Ed Morse said. “The glue that bound them together to begin with, which was higher prices, is the glue that will continue to bind them together.” Libya offered oil bulls a glimmer of hope in early March when it lost nearly 100,000 bpd in production because of fighting between competing factions over the country’s largest oil export terminals. However, production is back up to 700,000 bpd and Libya’s National Oil Company (NOC) has hopes of making much larger gains this year. If Libya adds another 400,000 bpd by August, it will be hugely bearish for oil prices. The markets are not taking into account this supply potential, and it could blindside investors.

An OPEC Deal Extension Isn't As Simple As It Sounds - It’s been six months now that oil prices have been reacting to OPEC, first to the possibility of an agreement, and then to the production cut deal itself, forged by OPEC to rebalance the market. The deal--initially aired as ‘an agreement to agree on a deal’ in September and signed at the end of November—will likely impact the market for at least the next six months. The agreement clearly states that it is production that OPEC producers are vowing to cut, but Iraqi oil minister Jabbar al-Luaibi has recently claimed—rather emphatically—that it is exports, not production, that serve as the baseline for the cuts. And according to Iraq, the agreed-upon cuts have been all about exports all along. Of course, exports are the logical ‘by-product’ of production of oil exporting nations, but each of those producers feels the weight of production cuts differently. Each OPEC nation has a specific domestic demand for oil based on population numbers and the share of oil and petroleum products in the energy mix and electricity generation. Each member has unique buyers of their crude, along with differing agendas in keeping and/or growing market shares in various corners of the world. To cut exports rather than production would hit hard the bottom lines of those who are heavy exporters, so it’s quite clear why an oil cartel whose self-proclaimed mission is to secure “a steady income to producers” chose to cut “production” instead of “exports” in its latest supply-cut agreement.OPEC producers—especially Saudi Arabia, which shoulders the biggest share of cuts—are desperately trying to maintain their most important market shares such as those in Asia, while measuring exports bound for other destinations in its attempt to comply with the production cuts.  The cartel would have never used the language ‘exports’ in a deal to cut supply, because cutting their exports would mean they would hold a smaller market share. Having a smaller footprint globally would, in turn, mean that OPEC would wield less influence over the price of oil. It’s doubtful OPEC would ever agree to such an unappealing scenario.

Saudi king's Asia tour trumpets Aramco's moves downstream | Reuters: Saudi King Salman's lavish tour of Asia, arriving in each country on a golden escalator with 400 tonnes of luggage, had a hardnosed marketing mission - to cement the kingdom's place as leading oil supplier to the world's biggest consumer region. The string of deals inked on his three-week tour to Malaysia, Indonesia, Japan and China also point to a fresh strategy, one to increase Saudi leverage over refined product and petrochemical markets, known as the downstream sector. "Our strategy is about growth in the downstream," said Amin Nasser, chief executive officer of state oil company Aramco, told Reuters on Sunday. "The growth in that sector is very important, and anything integrated between refining, petrochemical, with marketing and distribution, is of interest to us." Saudi Arabia's main influence on oil markets has been via the Organization of the Petroleum Exporting Countries (OPEC), of which it is the de-facto leader. But OPEC's ability to control prices by turning the oil pumping spigots on and off has waned as non-OPEC producers like Russia and, more recently, U.S. shale drillers, have ramped up output and eroded its grip on market share. One indication of a shift in Saudi strategy came on the first leg of the tour in Kuala Lumpur. Aramco signed a deal to take a $7 billion investment, in a joint venture with Malaysia's state oil company Petronas in a refinery and petrochemical project known as RAPID (Refinery and Petrochemical Integrated Development).

Saudi Arabia Downgraded By Fitch To A+ On Soaring Fiscal Deficit, Deteriorating Balance Sheet --With Saudi Arabia scrambling to respond to surging US shale production in what many analysts warn is a lose-lose decision, as either Saudi Arabia will lose market share under the current status quo, or government revenue will tumble should the Vienna 2016 production cut deal be cancelled, moments ago Fitch poured some fuel on the fire, when it downgraded the Saudi Kingdom from AA- to A+, as a result of the country's soaring deficit, declining reserves, and a deteriorating balance sheet.Full report below:   Fitch Ratings has downgraded Saudi Arabia's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'A+' from 'AA-'. The Outlooks are Stable. The issue ratings on Saudi Arabia's senior unsecured foreign-currency bonds have also been downgraded to 'A+' from 'AA-'. The Country Ceiling has been downgraded to 'AA' from 'AA+' and the Short-Term Foreign and Local Currency IDRs have been affirmed at 'F1+'. The downgrade of Saudi Arabia's Long-Term IDRs reflects the continued deterioration of public and external balance sheets, the significantly wider than expected fiscal deficit in 2016 and continued doubts about the extent to which the government's ambitious reform programme can be implemented. Government deposits declined by SAR240bn to SAR841bn (35% of 2016 GDP) between June 2016 and January 2017, only about half the peak level of SAR1,643bn in August 2014, although this decline partly reflects transfers between the government and the Public Investment Fund (PIF). General government debt rose to 9.7% of GDP, from 4% in 2015. This included sales of local-currency bonds during the first three quarters of last year and a USD17.5bn Eurobond issued in October. The government balance sheet remains strong relative to 'A' and 'AA' category peers but will become less of a support for the rating unless the deterioration in public debt dynamics is arrested.The deterioration in the government balance sheet reflects the large central government budget deficit of SAR416bn or 17.3% of GDP in 2016, up from SAR362bn in 2015 and much higher than the budget target of SAR326bn. The deterioration was mainly due to the clearance of arrears on capital expenditure of SAR75bn. The arrears arose in 2015 because payments for many projects were halted while the government was seeking greater visibility on the entirety of outstanding project commitments.

Are U.S.-Saudi Relations Turning Sour? -- Time will tell, but cries of victory in Washington” by Saudi Arabian Deputy Crown Prince and Defense Minister Mohammed bin Salman seemed hollow and perhaps even apocryphal. He needed some sign of success when he emerged from his White House meeting with U.S. Pres. Donald Trump on March 14, 2017: Saudi Arabia is running out of options and is pushing its traditional allies - some of which are not happy with it - to show solidarity, particularly over the wars in Yemen, Iraq, Syria, and Libya. And at a time when the Kingdom’s economic fortunes are delicate and worsening, presaging internal political pressures.Prince Mohammed seemed to want to sweep Pres. Trump into the Saudi camp - and to speak for all Muslims and how the Trump Administration would be good for them — but he was, in fact anxious to exorcise the President’s apparently blossoming friendship with Egyptian Pres. Abdul Fattah al-Sisi, now Prince Mohammed’s nemesis. So the Saudi-Egyptian animosity extended to Washington as it became clear that the new U.S. Administration would not automatically continue any Middle Eastern policies of the former U.S. Administration.The stakes are of global significance to the U.S., but if Washington had to choose, it would choose the geopolitical (Mediterranean-Suez-Red Sea) and cultural weight of Egypt. Saudi Arabia’s recent rivalry with Egypt — or, rather, the falling out between Saudi Deputy Crown Prince Mohamed and Egyptian Pres. al-Sisi — has meant that the government of each state has attempted to sway the U.S. to its side, but with Washington giving away little as to its preference. It does not wish to fully alienate Saudi Arabia at this stage, or its neighbor and fellow-Wahhabist state, Qatar, but Egypt’s strategic position cannot be ignored.

800 Families File Lawsuit Against Saudi Arabia Over 9/11 -- Eight-hundred families of 9/11 victims and 1,500 first responders, along with others who suffered as a result of the attacks, have filed a lawsuit against Saudi Arabia over its alleged complicity in the 2001 terror attacks, according to an exclusive report by local New York outlet Pix 11. The legal document, filed in a federal court in Manhattan, describes the Saudi role in the attacks. Pix 11 reports: “The document details how officials from Saudi embassies supported hijackers Salem al-Hazmi and Khalid Al-Mihdhar 18 months before 9/11. The officials allegedly helped them find apartments, learn English and obtain credit cards and cash. The documents state that the officials helped them learn how to blend into the American landscape.” For years, suspicions have swirled that some Saudi officials had ties to the gruesome attacks. The recent release of FBI reports produced shortly after the attacks provided details to justify growing skepticism against the Saudis. These details were further bolstered by therelease of 28 pages originally withheld from the 9/11 commission report. Though the U.S. government downplayed the findings, even some lawmakers expressed concern.

Aid Officials Beg Congress to Help Yemen, While Trump Sends More Bombs - As the Trump administration resumes weapons shipments to Saudi Arabia for its devastating bombing campaign in Yemen — including precision-guided weapons the Obama administration had suspended on human rights grounds — a State Department official told Congress that the two-year-long conflict has led to the largest starvation emergency in the world. Gregory Gottlieb, an acting assistant administrator for the U.S. Agency for International Development (USAID), told the Senate Foreign Relations Committee Wednesday that the conflict — which the U.S. is a silent partner to — has left the majority of the Yemeni people struggling to find food.“In Yemen, more than 17 million people — an astounding 60 percent of the country’s population — are food insecure, including 7 million that are unable to survive without food assistance,” said Gottlieb. “This makes Yemen the largest food security emergency in the world.”Gottlieb was testifying at a Senate hearing on foreign aid funding and humanitarian crises in Nigeria, South Sudan, Yemen, and Somalia.USAID is the foreign assistance arm of the State Department — the same department that signs off on arms sales to Saudi Arabia. Since Saudi Arabia began bombing Yemen in March 2015, the U.S. has approved more than $20 billion in weapons sales to Saudi Arabia — and looked the other way as the Saudi-led coalition has bombed civilian infrastructure, hospitals, and children’s schools. Last week the UN warned that the majority of Yemen’s population is suffering and on the brink of famine. Stephen O’Brien, the UN’s undersecretary-general for humanitarian affairs, criticized both sides of the conflict for restricting the flow of aid, but said that the Saudi-imposed naval blockade was particularly devastating for the desert country, which imports most of its food. The Saudi-led coalition has persistently attacked fisherman, who account for another major food source in Yemen.

Starving Yemen to Death -- Yemen and Somalia are running out of time to be saved from famine: The world has only three to four months to save millions of people in Yemen and Somalia from starvation, as war and drought wreck crops and block deliveries of food and medical care, the International Committee of the Red Cross said Wednesday. There is urgent need for aid in both countries, as well as in Nigeria and South Sudan, but Yemen’s civilian population faces the most severe and widespread crisis. It is in Yemen where outside intervention and blockade have done the greatest harm. As a result, seven million people are on the verge of starving to death and another ten million people are not far behind. It can’t be emphasized enough that this is something that has been done to the people of Yemen on purpose by the Saudi-led coalition with the political and military support of the U.S. and Britain. All of these governments are not merely allowing millions of Yemenis to starve to death, but have worked to cause their starvation.  If Yemen’s war has generally been neglected by the rest of the world, its humanitarian crisis has been similarly ignored. Appeals to fund relief efforts have gone unfulfilled, and the sheer scale and severity of the crisis has been overlooked by most. Even now that the crisis is beginning to receive some attention, it is almost too late. By the time that famine is officially declared in Yemen, it will be too late for millions of people, many of whom will have already died. Unlike in some other conflicts where U.S. influence is limited or non-existent, our government has the leverage to make the coalition halt its campaign and lift its blockade of the country, but it has to be willing to use it. There is no hint that the new administration would even consider this course of action, but if they don’t they will go down along with the previous administration as enablers of one of the worst man-made famines in modern times.

 Pentagon Denies Bombing Syrian Mosque, But Its Own Photo May Prove That It Did - The Pentagon spokesperson insisted that the U.S. airstrike in the rebel-held village of Al-Jina in northern Syria on Thursday night did not hit a mosque. “The area was extensively surveilled prior to the strike in order to minimize civilian casualties,” Navy Captain Jeff Davis wrote in an email. “We deliberately did not target the mosque.” He even unclassified and circulated a photo. And he pointed out that on the left, you can see a small mosque, still standing.  But to the people on the ground, the photo tells a different story. Activists and first responders say the building that was targeted was a part of the mosque complex — and that the charred rubble shown in the photo was where 300 people were praying when the bombs began to hit. More than 42 people were killed and dozens more injured, according to monitoring groups and local activists. First responders with the Syrian Civil Defence —  known as the “White Helmets” — rushed to treat the wounded and dig corpses out of the rubble. An administration official told the Washington Post that two armed, Reaper drones fired “roughly [the] entirety of their Hellfire payload and followed up w/ 500 lb bomb.” The building “was holding a meeting of al Qaeda members,” Maj. Adrian Rankine-Galloway, a Pentagon spokesperson told The Intercept. Davis said military officials “believe dozens of core al Qaeda terrorists were killed.” According to the monitoring group Airwars, locals say the building the drones struck is part of a mosque and religious school, which was built as an expansion several years ago. Local activist Mohamed al Shaghel told the New York Times that the people in the building had “no affiliation with any military faction or any political side.”

Syria war: ‘Worst man-made disaster since World War II’ -- Six years to the day since protesters poured into the streets of Daraa, Damascus and Aleppo in a "day of rage" against the rule of President Bashar al-Assad, Syria's uprising turned global war is far from over. Six years of violence have killed close to half a million people, according to the Syrian Centre for Policy Research, displaced half of the country's prewar population, allowed the Islamic State in Iraq and the Levant (ISIL, also known as ISIS) to seize huge swaths of territory, and created the worst humanitarian crisis in recent memory. International diplomatic efforts have repeatedly failed to bring the protracted conflict closer to an end and the growing role of outside actors has changed the nature and trajectory of the war. The UN estimates the war has pushed close to five million people to flee the country, many of whom have risked their lives seeking sanctuary in Europe. Hundreds of thousands of others exist precariously in tents and tin shelters in Syria's neighbouring countries. An entire generation of Syrian children has either been pushed out of school or forced to cope with interrupted curriculums, makeshift classrooms, or unqualified teachers. According to UNICEF, 2016 was the worst year yet for Syrian children. Nearly three million children - the UN estimated amount of Syrians born since the crisis began - know nothing but war. The country's healthcare system, particularly in places like Aleppo, is decimated. More than four-fifths of the country live in poverty. Basic infrastructure, such as the electricity grid, water lines and roads, is in shambles. As of 2015, 83 percent of Syria's electric grid was out of service, according to a coalition of 130 non-governmental organisations.

US-led coalition air strike in Syria kills more than 30 people in school near Isis-held Raqqa, says human rights watchdog 0 At least 33 people have been killed in an air strike on a school sheltering displaced people near the Isis-held city of Raqqa, Syria, a monitoring group has said. The UK-based Syrian Observatory for Human Rights said it was believed the US-led coalition had carried out the attack. Observatory activists counted at least 33 bodies at the site of the strike, near the village of al-Mansoura, west of Raqqa, Observatory director Rami Abdulrahman told Reuters. The air strike took place earlier this week, he added.

  • #Raqqa 1-Airstrikes by Coalition warplanes destroyed completely Al Badia School in Mansora Town the school have more then 50 families #Syria— الرقة تذبح بصمت (@Raqqa_SL) March 21, 2017
  • 2-all the families are Displaced civillans from #Raqqa & #Aelppo countryside ,Their fate remains unknown #Syria #ISIS — الرقة تذبح بصمت (@Raqqa_SL) March 21, 2017
"The massacres committed by [the] US-led coalition in Raqqa is unacceptable," the group later tweeted. "The international community must intervene to stop this." The group said families were still unaccounted for.

Air strikes on Isis-held Mosul 'leave 230 civilians dead', reports local media | The Independent: A correspondent for Rudaw, a Kurdish news agency operating in northern Iraq, said that 137 people – most believed to be civilians – died when a bomb hit a single building in al-Jadida, in the western side of the city on Thursday. Another 100 were killed nearby. “Some of the dead were taking shelter inside the homes,” Hevidar Ahmed said from the scene. Women and children treated for chemical weapon exposure in Mosul A spokesperson for Central Command, which coordinates US military action in Iraq, told The Independent they were aware of the loss of civilian life as reported by Rudaw and the information had been passed on to the civilian casualty team for “further investigation”. “[The US-led coalition] takes all reports of civilian casualties very seriously and assesses all incidents as thoroughly as possible. Coalition forces work diligently to be precise in our air strikes and ensure that all strikes comply with the [internationally agreed] Law of Armed Conflict,” Captain Timothy Irish said. A daily assessment report from Central Command stated that five strikes near Mosul on Thursday had destroyed five Isis units and a sniper team, as well as 11 fighting positions, vehicles and artillery equipment. No other fighting force in the country has the capability to launch an aerial attack of the scale reported.

US military investigating if airstrikes caused nearly 300 civilian deaths  --  The US military is investigating whether it was responsible for the deaths of nearly 300 Syrian and Iraqi civilians in three different sets of airstrikes this month.Civilian casualties have been alleged in all three instances, but each situation is different and complex, a US defense official said. So far, there is no indication of a breakdown in US military procedures governing airstrikes, the official stressed, and the US is not contemplating a pause in military operations.But the potential that the US is responsible for some, or all, of the deaths is considered serious enough that Central Command, which oversees operations in Iraq and Syria, is working around the clock trying to assess exactly what happened, the official said.The possibility of US military responsibility in civilian deaths illustrates the growing challenge of conducting increased airstrikes in the densely populated neighborhoods of both west Mosul and Raqqa, officials said.  The most extensive case involves western Mosul. The US military is trying to determine if sometime between March 17 and March 23, bombs dropped in a neighborhood by US warplanes resulted in the deaths of more than 200 civilians. The incidents military officials are looking into are based largely on local reports and social media accounts of the strikes.

US: Team Up with Kurds Not Turkey to Destroy Islamic State - The problem with letting the Turks hold Raqqa and presumably the entire Euphrates Valley that is now held by ISIS is that the Turks are endeavoring to hem in the Kurds. To do this, Turkey hopes to establish its Arab proxies in a new “Euphrates state” in eastern Syria. This would partition Syria into three states: a western Asad-ruled state; an eastern Turkish and Sunni Arab rebel-ruled state, and a northern Kurdish state.Asad’s army has already taken a large swath of territory east of Aleppo, which cuts off Turkey’s access to Raqqa from al-Bab. Turkey has proposed taking Raqqa from the north at Tel Abyad. This approach would penetrate the Kurdish region at its middle and cut it in two. This objective of splitting the autonomous Kurdish region in two is the main reason Turkey offered to take Raqqa.If the United States helps or allows Turkey to attack the Kurds at Tel Abyad, it will have no Kurdish allies to attack Raqqa or any other part of ISIS territory.Why are the Kurds willing to take Raqqa even though they do not have territorial interests in and around Raqqa? They are investing in their relationship with the United States. They assume that it will serve them well over the long run when it comes to their political aspirations. They will get a lot of good training; they will get a dollop of heavy weaponry from the United States, which I doubt it can reclaim after the fight; they are building a command and control network for their force.  By the time this operation is over, one can guess that the Kurds of Syria will have four reasonably well trained, well organized, and well armed brigades that they did not have before.  One also suspects that there will be some military loot in Raqqa, which will fall their way.*

Saudi Aramco inks term crude supply with China's CNOOC for Huizhou refining project -  Saudi Aramco has signed a one-year crude supply contract with China National Offshore Oil Corp. for its upcoming Phase 2 Huizhou refining project, as Saudi Arabia steps up efforts to secure its share in its largest market, where its top supplier status was recently threatened. Under the contract that was signed earlier this year, the Saudi national oil company will supply one VLCC per month of Arab Medium crude oil to CNOOC for a year, starting from the second half of 2017, sources close to the two companies said Wednesday. CNOOC expects to start up the 200,000 b/d Phase 2 project in Huizhou, southern China, in May 2017. CNOOC may also consider raising the lifting volume of Saudi crude once the Phase 2 project is running, one source said. The initial volume translates to a total supply of 22 million-26 million barrels over 12 months, considering each VLCC can carry around 1.8 million-2.2 million barrels of crude. Unlike the existing Phase 1 crude processing units, which are designed to process heavy, sweet crude, CNOOC's Phase 2 refining project is designed to process sour crude from the Middle East. The plant will also process domestic crude produced at CNOOC's own offshore oil fields, a source with CNOOC said. Once the Phase 2 project starts commercial operations, Huizhou refinery's total primary crude processing capacity will be raised to 22 million mt/year. Analysis: Chinese independent refiners' crude oil imports set to slow on quota issues - Crude imports by China's independent refiners are expected to slow down in the coming months as several refiners have used up most of their allocation from the first round of import quotas and will need to wait until June for the second round before resuming purchases. Watch Market Movers, Mar 20-25: Potential changes in China's oil, gas sector; OPEC, non-OPEC oil output cut compliance Independent refiners need government-allotted quotas to import crude oil. A total of 45.64 million mt of quotas were allocated to 19 independent refineries in the first round in January. The refiners have submitted applications for a second batch of quotas, but the government is only expected to allocate fresh quotas in June leaving the refiners with the option of either reducing throughput or buying barrels from the domestic spot market, market sources said.China's independent refineries imported a total of 60 million mt (1.2 million b/d) of crude oil in 2016, according to S&P Global Platts estimates. This represented 16% of China's total imports of 381 million mt in 2016. The quota allotted to each refiner in the first round was based on the volume the refiner had imported in the first 10 months of 2016. This resulted in some refiners getting sufficient quotas in the first round to sustain themselves for the entire year, but refiners that imported a relatively small volume in the first 10 months of 2016 are suffering from a quota shortage, especially if they raised runs this year.

China calls for two-state solution to Israel-Palestine conflict -- Chinese President Xi Jinping has called for a two-state solution to the Israel-Palestine conflict "as soon as possible". During his talks with Prime Minister Benjamin Netanyahu in Beijing, he emphasised the need for a peaceful Middle East in the interest of the international community. "The conflict between Israel and Palestine has had a long lasting impact on the Middle East," said Xi in his talks, aimed at boosting trade cooperation with the visiting Israeli leader. "China appreciates that the Israeli side will continue to tackle the Israeli-Palestinian issue on the basis of the 'two-state solution'." So far, China has not played any role in Middle East politics and diplomacy despite its heavy reliance on oil-producing countries in the region. In 2016, nearly one-third of Israel's foreign investment came from China. Traditionally, Beijing also maintains cordial relations with Israel's conventional Middle East adversaries — Palestine, Iran, and Saudi Arabia. On his part, Netanyahu, whose office has clarified that the trade investment cooperation remains on top of the country's agenda, has made it clear that Israel is happy to be Beijing's "junior partner" in development. "We have always believed, as we discussed on my previous visit, that Israel can be a partner, a junior partner, but a perfect partner for China in the development of a variety of technologies that change the way we live, how long we live, how healthy we live, the water we drink, the food we eat, the milk that we drink – in every area," Netanyahu was quoted as saying.

 China is fighting toilet paper thieves with facial recognition software - Biometric authentication is moving from phones to laptops and onward to... public bathrooms. Chinese authorities in Beijing are now combating a toilet paper stealing epidemic by locking the supplies away behind a dispenser powered by facial recognition software, according to a report from The New York Times.   The unorthodox method ensures that the public bathroom at the Temple of Heaven Park disposes only a small amount of paper — approximately two feet in length — for each person once every nine minutes, following an initial face scan to store the identity of the user. The change marks the first time in a decade the park has taken such drastic measures to reduce its chronic toilet paper theft.  Naturally, this has left some residents quite upset. It’s apparently not uncommon for some people in China to use public facilities as a way to stock up on free supplies like hand soap, paper towels, and toilet paper. According to The New York Times, some facilities in Shanghai and other Chinese cities decline to provide any toilet paper whatsoever for this reason, while others provide only a common roll for everyone to use.  But it’s not just the free TP crackdown that has some residents mad. No, it’s the amount of toilet paper being dispensed, or rather the lack thereof. “The sheets are too short,” Wang Jianquan, a retired mall manager, told the paper. The devices that dispense the paper cost $750, the report says, and may start popping up throughout the entire park if the initial test run proves effective.

China Debt Risks Go Global Amid Record Junk Sales Abroad -- China’s riskiest corporate borrowers are raising an unprecedented amount of debt overseas, leaving global investors to shoulder more credit risks after onshore defaults quadrupled in 2016. Junk-rated firms, most of which are property developers, have sold $6.1 billion of dollar bonds since Dec. 31, a record quarter, data compiled by Bloomberg show. In contrast, such borrowers have slashed fundraising at home as the central bank pushes up borrowing costs and regulators curb real estate financing. Onshore yuan note offerings by companies with local ratings of AA, considered junk in China, fell this quarter to the least since 2011 at 31.3 billion yuan ($4.54 billion). Global investors desperate for yield have lapped up offerings from China. Rates on dollar junk notes from the nation have dropped 81 basis points this year to 6.11 percent, near a record low, according to a Bank of America Merrill Lynch index. Some investors have warned of froth. Goldman Sachs Group Inc. said last month that it sees little value in the country’s high-yield property bonds. Hedge fund Double Haven Capital (Hong Kong) has said it is betting against Chinese junk securities. “Today’s market valuations are tight and investors are focusing on yields without taking into account credit risks,” said Raja Mukherji, Hong Kong-based head of Asian credit research at Pacific Investment Management Co. “That’s where I see a lot of risk, where investors are not differentiating on credit quality on a risk-adjusted basis.”

Be afraid: China is on the path to global technology dominance - I have often jested that the main difference between the United States and China is not that one is capitalist and the other communist. Rather, it is that one is run by lawyers and the other by engineers. Nowhere is this truer than in the astonishing “catch-up” occurring on the mainland in the explosion of digital technologies and their application to the daily lives of hundreds of millions of ordinary Chinese consumers. As long as China is governed by engineers, I reckon this breakneck transformation will shock, intimidate and challenge us for decades to comeAsk people in the US or Europe about Chinese technology and most will still cast a dismissive smile and say China remains home of the cheap and cheerful copycat stuff that fills Walmart shelves. The dangerous naivity of this view was brought home forcefully at our APEC Business Advisory Council (ABAC) meetings last year – the first in San Francisco and the second in Shenzhen. The first thing we noticed was that our internet worked noticeably faster in Shenzhen than around San Francisco. The second was that our  Chinese colleagues were paying for everything via AliPay on their smartphones.In awe of the smart technologies on display at PayPal, Google and Dolby sound studios, we were blown away by Huawei, where 40 per cent of its 170,000 staff are working on pure research, and the foundations being are being laid for roll-out of 5G across the whole of China by 2020.

Beijing Goes Global: China Expands Marine Force 400%; First Overseas Military Base Almost Complete -For most of its recent history, China has largely been a land power with no significant naval capabilities. They haven’t been able to exert much military influence beyond their coastline for hundreds of years. In fact, one of the reasons why Western powers had no trouble bullying China during the 19th and 20th centuries, was because the Imperial Navy under the Qing dynasty was incredibly weak. With that in mind, it’s no surprise that lately, China has been putting a lot of effort into building an effective overseas naval force.Not only have they been busy constructing their first combat-ready aircraft carrier, the Chinese have also been developing new aircrafts to accompany it. Of course, a navy can’t really exert much military influence if it doesn’t have soldiers to deploy. That’s why Chinese officials have recently announced that they are preparing to rapidly expand the ranks of the People’s Liberation Army Marine Corps.Chinese media is reporting the People’s Liberation Army’s ambitious new plans following the announcement of a 7 per cent increase to $200 billion in defence spending last week.Among the details to emerge is a move to boost China’s marine corps — highly trained and well equipped troops intended for rapid deployment and offensive missions launched from the sea — from an existing 20,000 troops to more than 100,000. Chinese officials have stated this is to protect arterial maritime trade routes and enforce its growing overseas interests.

Will US Go To War With China? Rubio, Cardin Introduce Bill Penalizing Chinese Aggression In South China Sea -- Sen. Marco Rubio of Florida and Sen. Ben Cardin of Maryland introduced a bipartisan bill Wednesday that would penalize Chinese nationals and organizations for participating in China’s “illegitimate” construction of artificial islands across the South China Sea. The legislation would "impose sanctions and prohibit visas for Chinese individuals and entities who contribute to construction or development projects, and those who threaten the peace, security or stability of the South China Sea or East China Sea," according to a statement from Rubio’s office. China maintains claim to nearly 90 percent of the East China Sea, despite a mandate from an international tribunal last July awarding neighboring countries control of all islands located within their exclusive economic zones. The countries of Taiwan, Vietnam, Malaysia and Brunei also have rights to exploit the South China Sea’s extensive reserves of oil and gas, where $5.3 trillion of trade passes through every year.  Exclusive economic zones, which were created in 1982 by the U.N. Convention on the Law of the Sea, gave coastal nations exclusive rights over all natural resources within 200 miles of their shores. Beijing dismissed the ruling and continues to deploy armed fishing boats and warships within other nations’ exclusive economic zones to enforce its claims.  China has reportedly constructed more than 3,000 acres of artificial militarized islands across the South China Sea, where an estimated 11 billion barrels of oil and 190 trillion cubic feet of natural gas sit below the surface. 

North Korea Blows Up US Aircraft Carrier, Bomber In New Propaganda Video - North Korea's disgruntled dictator - whose fate is looking more precarious by the day - Kim Jong-un has released a propaganda video in which a US aircraft carrier is blown up while a US strategic bomber shot down in flames.  The clip also includes footage from the communist state’s recent ballistic missile launches are shown alongside a simple message: “a knife will be stabbed into the throat of the carrier.” The video declares: “The bomber will fall from the sky after getting hit by a hail of fire.”  Footage also shows the USS Carl Vinson nuclear-powered aircraft carrier up in flames. The 2 minute clip has emerged just days after Kim threatened to reduce the US “to ashes” as tensions with North Korea continue to increase, which in turn followed a warning by Tillerson that the US is preparing for a "first strike" against the irrational dictator, while US special forces conduct drills in South Korea to "eliminate" the country's ruler. It comes after a statement earlier this month warned Donald Trump of nuclear destruction if America fires “even a single bullet” towards Pyongyang. In it the country warned that “the Korean People’s Army will reduce the bases of aggression and provocation to ashes with its invincible Hwasong rockets tipped with nuclear warheads and reliably defend the security of the country and its people’s happiness in case the US and the South Korean puppet forces fire even a single bullet at the territory of the DPRK.”

North Korea Threatens US With "First-Strike" Nuclear ICBM -- In the latest troubling development to come out of North Korea's increasingly irrational leadership, Reuters reports that the communist country has nothing to fear from any U.S. move to broaden sanctions aimed at cutting it off from the global financial system and will pursue "acceleration" of its nuclear and missile programs, according to a Pyongyang envoy. This includes developing a "pre-emptive first strike capability" and an inter-continental ballistic missile, according to Choe Myong Nam, deputy ambassador at the DPRK (North Korean) mission to the United Nations in Geneva.The latest development follows a previous report also from Reuters, in which it said the Trump administration is considering sweeping sanctions as part of a broad review of measures to counter North Korea's nuclear and missile threat. "I think this is stemming from the visit by the Secretary of State (Rex Tillerson) to Japan, South Korea and China...We of course are not afraid of any act like that," Choe told Reuters. "Even prohibition of the international transactions system, the global financial system, this kind of thing is part of their system that will not frighten us or make any difference." He called existing sanctions "heinous and inhumane".

US Military Officials Expect North Korean Missile Launch Within Days -- On the same day as Kim Jong Un threatens the US with "first-strike' nuclear ICBM and unveilspropaganda showing the destruction of American forces, AP reports U.S. military officials expect another North Korean missile launch in the next several days. Earlier today a Pyongyang envoy stated that North Korea will pursue "acceleration" of its nuclear and missile programs. This includes developing a "pre-emptive first strike capability" and an inter-continental ballistic missile, according to Choe Myong Nam, deputy ambassador at the DPRK (North Korean) mission to the United Nations in Geneva. The latest development follows a previous report also from Reuters, in which it said the Trump administration is considering sweeping sanctions as part of a broad review of measures to counter North Korea's nuclear and missile threat. "I think this is stemming from the visit by the Secretary of State (Rex Tillerson) to Japan, South Korea and China...We of course are not afraid of any act like that," Choe told Reuters. "Even prohibition of the international transactions system, the global financial system, this kind of thing is part of their system that will not frighten us or make any difference." He called existing sanctions "heinous and inhumane".

 Exclusive: Taiwan central bank seeks to limit fund flows, sources say, as currency surges | Reuters: Taiwan's central bank is asking some custodian banks to stem the flow of fresh capital into its financial markets, two people with direct knowledge of the matter told Reuters on Wednesday, as the local dollar hovers at more than two-year highs. The sources said custodian banks - which handle cash and securities for foreign participants investing in a market - were told to advise their clients not to remit new funds. The central bank later took issue with the sources' comments. In a statement, it said the reported comments "do not match the facts" but did not elaborate. "I'm dumbfounded. The clients have already bought stocks and you don't let them remit in. How do you settle the trade?" said one of the people with direct knowledge of the matter. The move could ease upward pressure on the Taiwan dollar TWD=TP, which has gained nearly 6 percent against the U.S. dollar so far this year. Taiwan's central bank, wary of being labeled a currency manipulator by U.S. President Donald Trump, has pulled back on its interventions to weaken the currency. The central bank governor has also attributed the strong currency to massive fund inflows, with investors attracted by Taiwan companies' stock dividends. When asked about the issue earlier, a central bank official would only say Taiwan has liberalized its capital account so capital flows can freely move, including foreign funds investing in local shares.

What Was the Point of Demonetisation? - Demonetisation was not necessary to eliminate corruption in India and was largely unsuccessful in meeting its declared goals, even as it caused significant damage to the economy and adversely affected the material conditions and rights of the Indian people. It singularly failed to achieve the main objective it was meant to serve, namely, dealing a blow to the “black economy”; instead all it managed to do was to shift vast amounts of cash from the possession of the people who were using it as means of circulation to the vaults of the banks where it lay idle. This is precipitating a recession in the real economy, while simultaneously it entails demands on the government, ironically, to use budgetary resources to pay interest to banks as compensation for holding this cash. The question that naturally arises in this context is: what was the point of this entire exercise? Why was such a major policy decision taken at all, and that too without any evidence of the necessary preparation that would have eased some of the problems faced by the people? Attempts to find answers to this question have ranged from invoking the political context and the impending state elections to underscoring deeper issues of the dynamics of class relations under neo-liberalism. The argument about political expediency suggests that by adopting this measure all of a sudden, the ruling party caught the opposition in states like Uttar Pradesh unaware and inflicted upon it an acute financial stringency since the cash with these parties got frozen by demonetization; on the other hand the ruling Party itself had advance notice of the measure and had taken adequate precautions to preserve its own financial position. Under the garb of attacking “black money”, demonetisation was a way of stealing a march, financially, over the opposition parties in the forthcoming elections.

Hardline priest Yogi Adityanath's elevation a sign Modi is moving toward Hindu India | Reuters: A saffron-robed Hindu holy man was sworn in on Sunday to lead Uttar Pradesh, sealing what appears to be a shift in course by Prime Minister Narendra Modi that could redefine the world's largest democracy as a Hindu nation. The choice as Uttar Pradesh chief minister of Yogi Adityanath, a firebrand Hindu ascetic with a history of agitation against minority Muslims, stunned observers who said it marked a departure from the platform of development for all on which Modi rose to national power in 2014. "Modi is saying India is a Hindu country and shall remain so," veteran journalist and commentator Shekhar Gupta told Reuters. "Hindus will rule, so you had better behave." A spokesman for Modi's Bharatiya Janata Party (BJP) however said the government did not make any distinction between citizens on the basis of religion. Adityanath, 44, was elected by state lawmakers on Saturday, a week after the BJP won a landslide victory in India's most populous state by mobilising the Hindu vote. The BJP won the biggest majority for any party in the state legislature in 40 years.

 Africa′s new sovereign debt crisis - Finance ministers and central bankers from the G20 group of the world's most influential industrialized and emerging economies met in Baden Baden, Germany on the 17/18 March. The German NGO Erlassjahr.de (Jubilee Germany), which campaigns for debt relief, saw this as an opportunity to draw attention to the growing debt problems of many developing countries. The NGO has identified as many as 40 African countries which are showing signs of heavy indebtedness. "This is not surprising because today's economic indicators are telling a story very similar to the situation in the late 1970s and early 1980s which led to the Third World debt crisis," said Jürgen Kaiser, political coordinator at Jubilee Germany. In the wealthy industrialized countries, interest rates are very low, but in Africa investors can fetch returns of between seven and 15 percent. This leads to large capital flows from the North to the South. "The low interest rates encourage countries to take out big loans which they then have difficulty paying back," Kaiser said. The situation becomes particularly precarious when commodity prices fall. This leads to a subsequent decline in tax revenue in economies that are dependent on oil, natural gas, coal or other raw materials.This latest debt crisis may come as a surprise to some people because numerous developing countries had a large share of their debts written down under the Heavily Indebted Poor Countries (HIPC) Initiative. However, commentators who were convinced at the time that that this initiative launched by the World Bank, the International Monetary Fund and the G-8 group of leading industrialized nations, including Germany, would solve the developing nations' debts problems turned out to be wrong.

“No return to slavery!”: A million take to the streets against Temer’s Neoliberal Reforms -- March 15th 2017 saw the biggest demonstrations yet against the Post-Coup Government of Michel Temer. Called a “Day of Paralysation & Mobilisation”, a rare general strike, with public transport frozen in many parts of Brazil, was combined with massive street protests across the country, which were not confined to major cities. Despite being midweek, an estimated total of one million people participated around the country. As has come to be expected, there has been minimal or no coverage from Brazil hegemonic media, and almost zero internationally. While reversals to decades of advances in workers rights and living standards are depicted by mouthpieces of transnational capital such as the Economist as positive reforms, angry Brazilians on the streets were calling them a “return to slavery”. Called by Frente Brasil Popular and Povo Sem Medo, CUT Trade Union, various Social Movements and Left Parties, the strike closed Ports, Metros, Bus Terminals, Post Offices and Schools. It was the most significant show of resistance yet to the accelerated Neoliberal Programme that Brazil now faces, which includes an unprecedented 20 year constitutional freeze on public education and health spending and mass privatisations of resources and public patrimony. Central to this programme is pension reform, something long demanded by the international markets, which will increase retirement age to beyond life expectancy for much of the population, and will equalise the retirement ages for women and men. What this will mean in effect, is only the wealthy will be able to afford to retire.

As Venezuelan "Bread War" Escalates, Maduro Warns Bakers "You Will Pay, I Swear" -- As The BBC reports, the Venezuelan government says it will expropriate bakeries which fail to abide by new government regulations aimed at tackling bread shortages.In a growing row between the government and bakers, officials said that bakeries could face fines if people had to queue to get their bread. Severe shortages of basic goods mean that Venezuelans often have to queue for hours to buy essential items. The government says the shortages are caused by an "economic war". Venezuela does not produce wheat and relies on imports bought in by the government which it then sends to mills where it is ground and then distributed. The government blames bakers for the bread shortages, accusing them of using the flour allocated to them to bake pastries rather than simple baguette-style bread in order to maximise their profits. Croissants and other sweet baked goods are more expensive than baguettes and French-style breads, as the prices for the latter are controlled by the socialist government. So the government has decided that more price controls will fix the problem and has unveiled new rules for bakers...

  • Use 90% of flour to bake savoury bread and only 10% for pastries and cakes
  • Provide a constant supply of bread throughout the day from 07:00 to 19:00
  • Ensure next day's supply by holding over bread from the previous day

And the rules will be strictly enforced...On Sunday, President Nicolas Maduro announced that inspectors would be sent to 709 bakeries in the capital, Caracas, to ensure they were complying with the new rules.He said that those "speculators who hide the bread from the people will face the weight of the law". "They're going to pay, I swear. Those responsible for the bread war are going to pay and they better not complain that it was a political persecution," he added.

 Exclusive: Almost half of Canadians want illegal border crossers deported - Reuters poll - Nearly half of Canadians want to deport people who are illegally crossing into Canada from the United States, and a similar number disapprove of how Prime Minister Justin Trudeau is handling the influx, according to a Reuters/Ipsos opinion poll released on Monday. A significant minority, four out of 10 respondents, said the border crossers could make Canada "less safe," underlining the potential political risk for Trudeau's Liberal government. The increasing flow of hundreds of asylum-seekers of African and Middle Eastern origin from the United States in recent months is becoming a contentious issue in Canada. Although there has been broad bipartisan support for high levels of legal immigration for decades in Canada, Trudeau is under pressure over the flow of the illegal migrants. He is questioned about it almost every time he appears in parliament, from opponents on the left, who want more asylum-seekers to be allowed in, and critics on the right, who say the migrants pose a potential security risk. Canadian opposition parties seized on the poll results, with both those on the left and the right saying they underscored their positions. Canadians appeared to be just as concerned about illegal immigration as American, according to the poll, which was conducted between March 8-9. Some 48 percent supported "increasing the deportation of people living in Canada illegally." (For graphics on asylum process, immigration poll see tmsnrt.rs/2nyY8CJ) When asked specifically about the recent border crossings, the same number - 48 percent - said Canada should "send these migrants back to the U.S." Another 36 percent said Canada should "accept these migrants".

 G20 finance heads to agree on forex, struggle on trade, climate change | Reuters: The world's financial leaders will renounce competitive devaluations and warn against exchange rate volatility, a document showed on Friday, but are likely to struggle to find common ground on trade and financing against climate change. The difficulty stems from a major shift in the views of the United States, where the new Trump administration is considering protectionist trade measures to curb imports and considers efforts to try to halt global warming a "waste of money". Finance ministers and central bank governors of the world's top 20 economies are meeting in the spa town of Baden Baden in Germany to discuss world economic issues and will publish a joint communique on Saturday. A draft of the statement showed that, for now, the issue of trade and protectionism is not mentioned at all. This breaks with a decade-old tradition of the G20 endorsing free trade and rejecting protectionism. "It's about the right wording, it's about the openness of the world trade systems in the final communique," German Finance Minister Wolfgang Schaeuble said before talks began. U.S. Treasury Secretary Steven Mnuchin said on Thursday in Berlin that the Trump administration had no desire to get into trade wars, but certain trade relationships need to be re-examined to make them fairer for U.S. workers. G20 officials said the United States was ready to accept a phrase backing "free and fair" trade, given that the meaning of "fair" was open to interpretation. Europe was keen on adding that trade should be "rules-based", meaning subject to rules of the World Trade Organisation (WTO). European delegations have also explicitly rejected protectionism. Facing a stand-off, Schaeuble, whose country holds the rotating presidency of the G20 this year, has floated the idea that the issue of trade might be left out of the communique altogether to avoid a clash.

G20 finance ministers drop anti-protectionist pledge - BBC News: Finance ministers from the world's biggest economies have dropped an anti-protectionist commitment after opposition from the US. G20 ministers left the two-day meeting without renewing their long-standing pledge to bolster free trade. Last year, the group of the world's 20 largest economies vowed to "resist all forms of protectionism". But since then, President Donald Trump has taken office, and is aggressively pursuing an "America First" policy. His policies include penalties for companies which manufacture their products abroad. Speaking after the meeting ended, US Treasury Secretary Steve Mnuchin said he would not read too much into his country's desire to change the language behind the communique, as "what was as in the past" releases was "not relevant". Mr Mnuchin added he had been "very clear that we do believe in free trade but we believe in balanced trade".The communique, which was published at the end of the meeting in Baden-Baden with the agreement of all attending delegates, also failed to include a vow on climate change. Mr Trump has already promised to slash environmental funding. The exclusion of the two issues in the communique was disappointing, French Finance Minister Michel Sapin said. "I regret that our discussions today were unable to reach a satisfying conclusion on two absolutely essential priorities that our world and which France would have liked to see the G20 continue to take firm and concerted action on." However, it did include pledges on a determination to fight tax avoidance, clamp down on terrorist financing and strengthen private investment in Africa.

 G-20 meeting was ‘disappointing’ and ‘disturbing’: Yale’s Stephen Roach --  Former Morgan Stanley Asia Chairman Stephen Roach said Monday that the G-20 financial leaders' dropping their traditionally strong support of free trade was "disturbing" and reflected rising protectionism in the U.S. "It's pretty disappointing when you get finance ministers from leading countries in the world who, out of the blue, are unable to validate the commitment to anti-protectionism which is the underpinning globalization," Roach, a senior fellow at Yale University's Jackson Institute of Global Affairs, told CNBC from the China Development Forum in Beijing. "That's an obvious reflection of the shifts in the political winds in the United States and indicative of a U.S. economy that is backing away from multilateralism," Roach said. "It was a disturbing meeting." Finance ministers and central bank governors of the world's 20 biggest economies were unable to follow through with their commitment to endorse free trade in the G-20 communique, as the new Trump administration seeks to put "America first." Instead of "globalization as a force that is bringing us together, (Trump) feels it is a force that is punishing American middle-class workers," Roach explained. The economist explained that point with the example of an Apple iPhone having parts from over 50 countries in a "world that is linked through global supply chains." "To unwind these types of supply chains…would really turn back the clock on companies like Apple and others that straddle so many countries to bring goods and services to consumer around the world for incredibly low prices," he said.

 Ukraine munitions blasts prompt mass evacuations - BBC News: Some 20,000 people are being evacuated after a series of explosions at a massive arms depot in eastern Ukraine described by officials as sabotage. The base in Balakliya, near Kharkiv, is around 100km (60 miles) from fighting against Russian-backed separatists. The dump is used to store thousands of tonnes of ammunition including missiles and artillery weapons. Rescue teams are overseeing a huge evacuation effort for people living in the city and nearby villages. The total area of the dump spans more than 350 hectares, the military says. Everyone within a 10km (6 miles) radius of the dump is being evacuated, the Interfax news agency quoted an aide to President Petro Poroshenko as saying. Munitions from the depot are used to supply military units in the conflict zone in nearby Luhansk and Donetsk, reports say.The authorities are investigating various ways the explosions may have been caused, Defence Minister Stepan Poltorak said, including the possibility of an explosive device being dropped from a drone.

Merkel Offers 'Olive Branch' To Russia As "Solution To Many International Conflicts" -- After admitting to notable differences with President Trump during a press conference with Japanese PM Abe, German Chancellor Angela Merkel poured some cold water on the neocon narrative as she appeared to offer an olive branch to Russia - hardly painting Putin as the enemy of all and destroyer of worlds. Speaking at a news conference in Hanover with Japanese Prime Minister Shinzo Abe, German Chancellor Angela Merkel rebuked President Trump's comment that Germany owes U.S. and NATO “vast sums," saying that no country spends its entire defense budget on NATO, reiterating her view that projects such as crisis prevention, foreign aid count toward defense budget, not just military spending. Hmm... spot the odd one out! And finally Merkel stated that: "we want to have possibilities for scaling back sanctions when the Minsk accord is implemented, because we want to include Russia as an international actor in the solution of many conflicts." Clearly offering an olive branch to Putin - something that we are sure the Democrats and Neocons (who now seem to be acting in unison) will, we are sure, reject as soon as possible. So with Trump seeking better relations with Russia... and Merkel seeing Russia as a potential partner in solving the world's problems, how long before NSA/CIA leaks expose the German Chancellor as a 'puppet' - because, if not, how else can such a well-respected global leader possibly reach out to the enemy of all and destroyer of worlds?

Germany-Turkey rift widens as Erdogan accuses Merkel of ‘Nazi measures’ - France 24: Turkish President Recep Tayyip Erdogan on Sunday launched a scathing personal attack against German Chancellor Angela Merkel, accusing her of using "Nazi measures" in an intensifying dispute between Ankara and Berlin. Tensions flared after German authorities refused to allow some Turkish ministers to campaign for a 'yes' vote in the April 16 referendum on expanding Erdogan's powers, and he responded by saying Berlin was behaving like Nazi Germany. "When we call them Nazis they (Europe) get uncomfortable. They rally together in solidarity. Especially Merkel," Erdogan said in a televised speech. "But you are right now employing Nazi measures," Erdogan told Merkel using the informal 'you' in Turkish."Against who?" asked Erdogan. "My Turkish brother citizens in Germany and brother ministers" who went to the country to hold campaign rallies for a 'yes' vote in next month's referendum. Erdogan “wants to stoke up tension”, said Jasper Mortimer, FRANCE 24’s correspondent in Ankara. “He wants to make himself look big by putting down the most powerful political figure in Europe.” Mortimer added that “everything that Erdogan does these days is dictated by his need to win the referendum on constitutional change”, which would increase the scope of his presidential powers. Authorities in Germany have blocked some Turkish ministers from holding rallies, infuriating Ankara.

Economics Of The Standoff Between Turkey And The Netherlands - As the diplomatic squabble between Turkey and the Netherlands continues to fester,concerns are raised about whether — and to what extent — the tensions will harm bilateral relations, particularly in economics where the two countries have robust trade and investment connections. For Turkey, the Netherlands offers a large and expanding export market. Trade between the two countries has roots in the 17th century when the Ottomans exported wool and cotton (later tobacco as well) to the Netherlands and imported clothes and linen in return. Commerce between the two countries remained strong into modern times; in 2016 the bilateral trade volume was US$6.6 billion.The Netherlands is the 10th largest export destination for Turkey, and perhaps more importantly from the Turkish perspective, it is also a fast-growing market. Last year Turkish exports to the Dutch market amounted to $3.6 billion, against $3 billion in imports. And while the annual increase in imports was 3.4%, exports expanded much faster, at 13.8%. For the Turkish economy, which is suffering an acute current-account deficit, the increasing trade surplus with the Dutch is a precious commodity.On the other side of the equation, Turkey is and has always been a favored destination for Dutch investment. A process that started in 1930 when the Dutch company Philips set up shop in the newly established Republic of Turkey has reached new levels since then, making the Netherlands by far the largest source of foreign direct investment in Turkey today. According to data by the Turkish Central Bank, Dutch investment stock in Turkey was $22 billion in 2016, compared with $11.2 billion in US investments in second place, and $9.8 billion from Austria in third place.Turkey is home to 2,700 companies funded by Dutch capital. This figure includes those transnational companies registered in the Netherlands for legal and tax-related purposes. This sizeable Dutch involvement in the Turkish economy benefits both sides. For Dutch multinationals such as Unilever, ING Bank, Philips, Perfetti, Royal Dutch Shell and Philip Morris, Turkey is not only a favorable production base but also a lucrative market and a trading and logistics hub for access to the Middle East and North Africa, Balkans, Caucasus and Central Asia.

Turkey Threatens Europeans: You "Will Not Walk Safely In The Streets" If Current Attitude Persists --Having already told Europe "we'll blow your mind" with a threat to unleash 15,000 immigrants per month,Turkish President Tayyip Erdogan escalated his rhetoric this morning warning Europeans across the world would not be able to walk safely on the streets if they kept up their current attitude.Tensions have accelerated since Turkey became embroiled in a row with Germany and the Netherlands over the barring of campaign appearances by Turkish officials seeking to drum up support for an April referendum on boosting Erdogan's powers. Today's comments are the most aggressive yet...(via Reuters)"If Europe continues this way, no European in any part of the world can walk safely on the streets. We, as Turkey, call on Europe to respect human rights and democracy," Erdogan said at event for local journalists in Ankara.As we noted previously, should Turkey execute on its threat, it is likely that the anti-immigrant, populist wave that has swept Europe in 2015 and 2016, and which has subsided modestly in the subsequent period, will find a second, and very dangerous to the European establishment, wind.

Germany election: Martin Schulz stakes anti-populist bid - BBC News: The candidate named by Germany's Social Democrats to challenge Chancellor Angela Merkel, Martin Schulz, has vowed to fight populism if his party wins the elections due in September. At an SPD party meeting in Berlin, he denounced Eurosceptics and the "racist" rhetoric of US President Donald Trump. The convention unanimously confirmed Mr Schulz as the candidate who will lead the Social Democrats to the election. It has been the junior partner in Germany's "grand coalition" since 2013. The party hopes that Mr Schulz, a former president of the European Parliament, will boost its chances of governing without Mrs Merkel's CDU. Opinion polls suggest the Social Democrats trail the CDU, although Mr Schulz's personal rating compares favourably with that of Mrs Merkel, who plans to run for a fourth term.

Eight Myths About Migration and Refugees Explained – SPIEGEL --  Migration was the issue of the year in 2016 and it will likely remain important in 2017. The topic is, however, just as hotly debated as it is poorly understood. The so-called "refugee crisis" in Europe and the omnipresent images of overfilled boats arriving on Mediterranean shores give the impression that migration is threatening to spin out of control and that radical action is needed to curtail the uncontrollable influx of migrants. The fear of mass migration has fueled the rise of extreme nationalist parties throughout Europe and helped Donald Trump win the presidential election in the U.S. This call for tougher migration policies is juxtaposed by another, albeit somewhat weaker, opinion voiced by the business sector, human rights and religious organizations and left-liberal parties. They argue that migration tends to be beneficial for both origin and destination societies, and that we should not see refugees as a burden but as a potential resource. But in this polarized debate, the rather more sobering facts unfortunately get lost. Both the left-wing and right-wing narratives on migration are rooted in a series of myths that reveal a striking lack of knowledge about the nature, causes and consequences of migration processes. This text examines eight of the myths that I have often encountered in my research.

 Deutsche Bank Prices €8 Billion Stock Offering At 35% Discount Two weeks after Deutsche Bank first announced it would raise €8 billion in capital as part of a comprehensive restructuring, the German lender on Sunday announced the terms of its upcoming massive dilution.In a nutshell, Deutsche Bank said it will raise €8 billion ($8.6 billion) by selling stock at a 35% discount to Friday's closing price in a rights offering. The TERP (Theoretical ex-right price) of €15.79, is based on the last closing price of €17.86. The transaction subscription price is €11.65. The Subscription price represents a 26% discount to TERP based on the March 17 closing price.The mechanics of the offering: Deutsche Bank will issue 687.5 million new shares at €11.65 apiece, it said in a statement Sunday, in-line with the firm’s March 5 announcement on the planned sale. The offer compares with the stock’s closing price of €17.86 on Friday, and is almost 41% lower than where the stock traded when Bloomberg first broke the news of the imminent capital raising on March 3.As part of the rights offering, DB shareholders may subscribe for 1 new ordinary share for every 2 existing shares held. The subscription rights expected to be traded on German exchanges March 21-April 4, and on NYSE March 21-31. As Bloomberg adds, the reference price for rights is expected to be approximately €2.07.The sale of equity will be the fourth capital infusion for Deutsche Bank since 2010.Chief Executive Officer John Cryan, who had previously said he didn’t want to tap shareholders, reversed course this month after the shares almost doubled from their September low and Deutsche Bank was unable to find a buyer for a consumer banking unit. Still, even after DB's shares decline this month ahead of the capital increase, the stock is still up 80% from the record low on Sept. 30, amid what Bloomberg call "renewed optimism for banks as investors speculate economic growth and rising borrowing costs could revive earnings."

France Suffers Week Of Terror As Poll Shows Majority Of French No Longer Feel Secure --France has been rocked by a series of terror attacks occurring just days apart as a new poll shows that increasing numbers of French citizens no longer feel safe anywhere in their own country. The attacks come after France's Foreign Minister Jean-Marc Ayrault claimed there was "no connection" between Islam and terrorism while on a state visit to Indonesia. On March 16th, 2017 an envelope bomb sent to the offices of the International Monetary Fund (IMF) in Paris exploded after it was opened, injuring an IMF staff member. Authorities were said to be investigating the incident for any connection to an explosive package that had been sent to the German Finance Ministry the day before. The same day, a 17 year old armed with a rifle, two pistols and hand grenades injured three in an attack at Tocqueville high school in Grasse, France. The best friend of the shooter was arrested in the aftermath of the incident. The UK's Foreign Office subsequently issued a high terror warning to British nationals in France "due to ongoing threats to France by Islamist terrorist groups, and recent French military intervention against Daesh." The French government also extended the country's state of emergency until July 15, 2017, the fifth such extension since the Paris terror attacks in November 2015. On March 17th, 2017, French news source Le Figaro a man slit the throats of a father and son in Paris before sitting and quietly waiting for authorities to arrive. Both Le Figaro and Le Parisien cited witness and police sources who stated that the attacker shouted the Takbir ("Allahu Akbar or Arabic phrase meaning "God is great") during the incident, though police officials called for caution in "speculating over the motive" for the double murder.  The next day, a man was shot by police at Orly airport in Paris after trying to seize an officer's pistol. The individual was known to security forces, had shot at a police officer in Northern Paris earlier that day and was a radicalized Muslim on a security watchlist. The BBC's report on the incident neglected to mention the attacker's name, nationality and history of radicalization in an apparent attempt to conceal his ties to Islamic extremism. In the midst of the week's terror, a March 2017 poll conducted by IFOP-Fiducial found that 6 out of 10 French citizens no longer feel safe anywhere in the country, and 69% felt that French police and gendarmerie were understaffed. 55% said they would like to see France exit the EU's open border Schengen zone.

 Polls in Austria show erosion of far-right Freedom Party's lead | Reuters: The far-right Freedom Party's lead in opinion polls over the Social Democrats in Austria has shrunk to within the margin of error after more than a year of dominance marked by Europe's migration crisis, several recent surveys have shown. The latest survey, by pollster Market for newspaper Der Standard published on Monday, had similar findings to other recent polls, showing the Freedom Party (FPO) on 30 percent, the Social Democrats (SPO) on 29 percent, and the SPO's coalition partner, the conservative People's Party (OVP), on 20 percent. The shift is a fresh blow to the anti-immigration FPO after its candidate lost a close-fought presidential run-off election last year. The party had hoped to ride a populist wave after Britain's vote to leave the European Union. Movements in support for far-right parties are being closely watched across Europe. The anti-Islam, anti-EU party of Dutch politician Geert Wilders took second place in an election last week, while National Front leader Marine Le Pen is expected to reach the second round of France's presidential vote in May. The Austrian poll findings suggest the centrist coalition government, or at least Chancellor Christian Kern's SPO, is gaining traction with a new policy program aimed at eroding FPO support, which includes a ban on Muslim face-covering veils and a range of security measures.

Italy is Falling Out of Love with Europe – FT - Foreigners often underestimate Italy’s ability to sidestep calamity. That said, the stakes are higher now than in 1992. Solutions may prove harder to find. The reason lies in the radically different EU and Mediterranean contexts in which Italy finds itself.Some of contemporary Italy’s challenges appear similar to those of the early 1990s.The party system is once again in fragments. The ruling centre-left Democratic party (PD) split last month. The right is divided. The most popular opposition party is the anti-establishment Five Star Movement.Since November 2011 four prime ministers have taken office not because voters chose them, but because of a financial emergency, factional squabble, party coup and failed constitutional reform.Matteo Renzi, the former premier and PD leader, suffered a blow this month when it emerged that Tiziano Renzi, his father, and Luca Lotti, a close political ally, had been caught up in a judicial probe into suspected graft in public procurement.The most disturbing comparison between 1992 and the present day concerns the Italian economy, which is projected this year to be the slowest-growing in the eurozone. Public debt is more than 132 percent of gross domestic product. Unemployment is almost 12 per cent; the youth jobless rate is over 37 percent.As a consequence, ever more Italian politicians question the merits of eurozone membership. So do Italian voters. In a Eurobarometer poll published in December, 47 percent called the euro “a bad thing” for their country and only 41 percent “a good thing”. This is the big difference with 25 years ago.As long as the moderate left or right governs Italy, it may be possible to contain this disenchantment with the EU and the euro. But the PD’s fissures are the latest sign that the party system is cracking under the strain. The Five Star Movement is waiting in the wings.

 Gesine Schwan: Schauble wanted and wants to overthrow SYRIZA -- Gesine Schwan gave an interview to Τageszeitung with references in Greece. Schwan is a historical member of SPD, Political Theory Professor at the Free University of Berlin and influential personality of the German left intelligentsia. "I believe that the Greek people will not give up. The German government policy strongly harmed Greece,” she says characteristically. Schwan accused Schauble, concerning the Greek debt issue, saying that “Schauble does not have a rational, economic perspective for the country. He is only interested to overthrow SYRIZA. This is what he always wanted and still wants. His actions are deeply ideological. For that reason we must achieve a governmental change in Germany, this Autumn.” In another question on whether she sees a repeat of the situation of summer 2015, Schwan says: “Theoretically yes. Yet, the fear for a breakup of Europe itself, especially after the decision of Great Britain for Brexit, is now bigger.” Under these circumstances, Schwan estimates that Schauble's persistence on a rhetoric about Brexit has nothing positive to bring to the whole discussion. She even describes this stance as "unreasonable" from an economic perspective and "authoritarian" from a legal one. "We have to press them", Schauble claims, but Schwan estimates that through this way, Germany will not take back the money lent to Greece. Besides, as she notes: "Until now we have not paid anything to Greece, we have just guaranteed".

 Euro zone's Dijsselbloem wants bailout fund turned into a European IMF | Reuters: The European Stability Mechanism (ESM) -- the euro zone's bailout fund -- should ultimately be turned into a European version of the International Monetary Fund, the head of euro zone finance ministers said on Monday in a German newspaper. "I think it would make a lot of sense for the euro zone bailout fund ESM to be developed into a European IMF in the medium to long term," Jeroen Dijsselbloem told the Frankfurter Allgemeine Zeitung (FAZ). He said that would also mean that Greece's current "troika" of lenders - the European Commission, European Central Bank and the IMF - would need to be broken up in the longer term. "The ECB feels increasingly uncomfortable in its troika role, and rightly so I think," Dijsselbloem said, adding that the European Commission had other "important tasks" that it should concentrate on. He said the ESM should "build up the technical expertise that only the IMF has at the moment". German Finance Minister Wolfgang Schaeuble has also proposed turning the ESM into a European monetary fund to improve the management of crises in Europe. "With the approval of an ESM programme, the participation of creditors in the restructuring of debt could in future be anchored in accordance with clear and predictable principles," Schaeuble wrote in an opinion piece for the FAZ. A transparent and predictable mechanism for restructuring public debt would help strengthen market discipline, reinforcing the "no bailout" principle in the EU treaty, Schaeuble said.

 Dijsselbloem Must Go, But That Solves Nothing - Ilargi - If Southern Europeans were a race, say there were something like a Mediterranean race,Jeroen Dijsselbloem would definitely be a racist. Since there is not, the -demissionary- Dutch Finance Minister and -still- president of the Eurogroup of eurozone finance ministers,escapes the label, albeit narrowly. He will still enter history as a misogynist, though. It’s hard to tell if the man is simply really ‘thick’, or there’s something else going on, but his latest remarks have disqualified him for any position, at any time in the future, in European politics. Or they should have; in Europe these days it’s hard to tell.It’s not as if his actions as Eurogroup head should not have already disqualified him, but nobody seemed interested or smart enough to understand why, except for the Greeks. But unfortunately for Brussels, Dijsselbloem is not even the actual problem, he’s a mere symptom. First, here’s what he said to German daily Frankfurter Allgemeine Zeitung on Monday. Let’s start with the Telegraph’s version: Dijsselbloem Says Southern Europe Blew Cash On ‘Drinks And Women’The head of the eurozone’s finance ministers has been criticised for stating that southern European countries blew their money on “drinks and women”. Jeroen Dijsselbloem, the Dutch finance minister who leads the group, made the comments in an interview on Monday with German newspaper Frankfurter Allgemeine Zeitung (FAZ). “During the crisis of the euro, the countries of the north have shown solidarity with countries affected by the crisis,” he said. “As a Social Democrat, I attribute exceptional importance to solidarity. “But you also have obligations. “You cannot spend all the money on drinks and women and then ask for help.” Inside the European parliament, MEPs turned on Mr Dijsselbloem on Tuesday, calling his remarks “insulting” and “vulgar”. Gabriel Mato, a Spanish MEP, said the remarks were “absolutely unacceptable” and an “insult” to southern member states – claiming he had lost his neutrality as finance chief. What the remarks make clear is that he never had “neutrality as finance chief”. And it gets better: he accuses Greece, Italy, Portugal, Cyprus, Spain, even Ireland (?!) of not ‘showing the same solidarity as northern eurozone states’. Boy, that’s rich. The Greeks should show more solidarity while being dragged down to a 3rd world country level by the ‘northern eurozone states’. That reeks of Stockholm Syndrome; Greece should be grateful for being beaten into submission. Because there are -slightly- different translations of the remarks (the interview might have been done in Dutch or English or German originally, I don’t know, and can’t find the original), and therefore also different interpretations, here’s another version, from Politico.eu : Dijsselbloem Not Fit To Be Eurogroup President, Says Socialist MEP Leader..

Banks Scramble For Free ECB Money: €233.5 Billion Allotted To 464 Banks In Final TLTRO Operation --As previewed last night ahead of today's fourth and final ECB TLTRO-II operation which took place earlier this morning, a big take up was expected with market consensus expecting €115bn, and some forecasts as high as €300BN. The final number came almost in the middle, with the ECB reporting it had allotted €233.5 billion among 474 bidders, more than double the amount expected. Following the news, European stocks climbed, led by mining and bank shares, as lenders borrowed more than double what was forecast under the European Central Bank’s TLTRO program.The Stoxx Europe 600 Index advanced 0.3 percent to 375.21 as of 11:31 a.m. London time, set to end three days of losses. European miners extended their gains to 0.9 percent, following metals prices higher, and the banks sector rose 0.6 percent. Lenders were allotted 233.5 billion euros in final round of Targeted Longer-Term Refinancing Operations, the ECB said.As we further noted last night, from a rates perspective, what matters is whether these funds will trigger flows into the bond or swap markets as banks set up carry trades. As ABN AMRO noted, carry trades have certainly looked attractive and currently there is a possible spread of around 80bp between the rate on the TLTRO and similar maturity peripheral bonds. However, there is little evidence that banks have used TLTRO-II funds for carry trades over the last few months.While it remains to be seen if this latest TLTRO will spur further risk on trades, the initial reaction to the far greater than expected take up favorable, sending both risk assets, US equity futures and European bond markets higher.The final TLTRO result can be summarized as follows:The ECB announced €233 bn of take-up (by 474 banks) in the fourth and final TLTRO-2 auction. TLTRO-2 is a four-year facility, provided on a full allotment and fixed rate (at 0%) basis. The rate can fall to -0.4%, assuming loan growth targets are met.

 EU has finally run out of patience with Britain --Sir, Jonathan Ford, in “Brussels will also suffer if it punishes Britain for Brexit” (Inside Business, March 13) accuses the European Commission of “contentious legal positions” that he considers “designed to tilt talks in an antagonistic direction”, and claims the UK would be “foolish” to accept them. Mr Ford fails to notice that it is Prime Minister Theresa May’s decision to go for a hard Brexit that has antagonised even the many anglophile people in Europe, just as it has a majority of Scots and Irish people. British attitudes have not changed since Winston Churchill’s views in an article of 1930: “We are with Europe, but not in it. We are linked, but not comprised. We are interested, but not absorbed.” After years of British ambiguities, diffidence, equivocations, grievances and misgivings, which the EU had to patiently endure, Brexit is the last straw in the tragedy of a Britain that could not make up its mind about Europe. After its dissatisfaction with the European Free Trade Association as a substitute for EU membership, according to Professor Paul De Grauwe of the London School of Economics Britain’s main strategy in joining the EU was to prevent the union from becoming too strong, believing this could best be done from inside. It therefore kept challenging the core fundamental EU values, obtaining special status with a number of opt-outs from EU law. Prof De Grauwe claims that Mrs May’s Leave strategy remains the same: to weaken the integrationist forces by insisting on a special deal whereby it maintains the benefits of the union while not sharing in the costs. But this would fatally weaken the EU. Which is why Britain cannot expect a blank cheque to rewrite its relations with the EU — and this risks fatally weakening the United Kingdom in turn. Having been an active participant as a commission official in the 1975 referendum, I can only regret wasting so much time to keep Britain in.

No other countries will quit EU after Britain - EU chief Juncker | Reuters: European Commission President Jean-Claude Juncker is not worried about other EU countries leaving the bloc after Britain because Brexit will make them see it is not a good option, he said in a newspaper interview. Asked by Bild am Sonntag newspaper if other member states would follow Britain's example in quitting, Juncker said: "No. Britain's example will make everyone realise that it's not worth leaving." He added: "On the contrary, the remaining member states will fall in love with each other again and renew their vows with the European Union." The EU's 27 leaders plan to declare "Europe is our common future" during a meeting in Rome next week to mark 60 years of the bloc. Juncker said Britain would need to get used to being treated as a non-member. "Half memberships and cherry-picking aren't possible. In Europe you eat what's on the table or you don't sit at the table," he added. Juncker said more countries would join the EU in future, although not during his time in office, which runs until 2019, because none of the candidates fulfils the conditions yet.

A sensible Brexit deal is more probable than you think - Wolfgang Munchaü -- The debate about Brexit is largely informed by confirmation bias. If you are a Brexiter, you are likely to ignore any information that leaving the EU would be bad for the economy, or that the negotiations are going to be fiendishly difficult. If you are a Remainer, you keep doubling down with exaggerated warnings about economic doom. You may also say the EU will deny Britain a decent exit deal. You will do so because you are angry, or because you are already looking forward to your moment of sweet revenge — when you can say: “I told you so”. And there are still some people who hope — or fear — that the whole thing can still be undone. It cannot. The reality of the great Brexit battles ahead is that they are comparatively boring. After Prime Minister Theresa May triggers Brexit, which is expected to happen next week, the UK will be out of the EU by July 2019 at the latest, possibly few months earlier. And, contrary to the warnings I keep hearing, I believe that the chances of an exit deal under Article 50 of the Treaty on European Union are not all that bad. Of course, it is not that hard to think of a scenario in which a British politician walks out of these negotiations huffing and puffing after a provocation. The biggest issue will be money. It always is. Margaret Thatcher wanted her money back during the 1980s. For several years the EU did almost nothing but sort out the British rebate — or “discount”, as the Germans appropriately called it. This was as bitter a conflict as any I can recall. But, eventually, they reached a deal. They always do.The fight over the UK exit bill should not be as difficult. There is talk, unconfirmed, about €60bn. This is financially not in the same league as the great fights of the past. The problem about the exit bill is lack of legal basis and precedent. The treaties are silent; there is no rule book. The problems are solvable as long as both sides adhere to a simple principle: that Brexit should be an opportunity neither for the EU to earn a quick buck, nor for the UK to dodge the direct costs to the union that will result from its decision. While it is only fair for the UK to pay for the costs of Brexit, it would not be fair for the EU to extract a price for market access. Fortunately, there is an ample choice of numbers between zero and 60bn. There are 18 months for the two sides to discuss the details of the Article 50 exit procedure. This will not include a trade deal, only the terms of the divorce. Separately, the EU and the UK will negotiate an interim arrangement that would remain in place until a final trade pact is negotiated and ratified. The interim agreement would take effect after Brexit takes legal force.

U.K. to Trigger Brexit on March 29, May's Spokesman Says - Prime Minister Theresa May will file divorce papers to leave the European Union on March 29, launching two years of complex negotiations that will pit the U.K.’s desire for a trade deal against the bloc’s view that Britain must not benefit from Brexit. More than 40 years after the U.K. joined the EU and nine months since it voted to leave, Britain’s envoy to the bloc, Tim Barrow, informed EU President Donald Tusk on Monday of May’s plan to invoke Article 50 of the Lisbon Treaty, the mechanism for quitting that has never been used. At stake in the looming talks is whether Britain -- the world’s sixth biggest economy -- can regain powers over immigration and lawmaking without derailing trade with its largest market or threatening London’s status as the region’s leading financial center. England’s 310-year-old union with Scotland is also in jeopardy, while the border separating Northern Ireland -- a U.K. province -- from the Republic of Ireland could become a hard one.“I want to ensure we get the best possible deal for the United Kingdom,” May said during a visit to Swansea, Wales. The premier said her goals included getting “a good free-trade deal” with the EU and an agreement to collaborate on security after Brexit. “We are going to be out there, negotiating hard, delivering on what the British people voted for,” she said.

The road from Article 50 to Brexit: what happens next? - FT -  Theresa May is about to trigger Article 50 of the Lisbon treaty, officially informing the EU of the UK’s intention to withdraw. The issue gripping London and Brussels is what happens after the British prime minister notifies the bloc of the country’s plans on Wednesday March 29.Unless both sides agree on an extension, the UK and the EU have two years to agree a divorce deal before the bloc’s treaties cease to apply to Britain.This is the timeline set out in Article 50 itself — 262 words that were scrawled at the kitchen table of John Kerr, a veteran UK diplomat, and which will shape the UK’s future.

  • March-April 2017: EU-27 adopt guidelines -After Mrs May activates Article 50 on March 29, the EU will draw up “guidelines” on handling Britain’s withdrawal. Donald Tusk, president of the European Council of leaders, said this month that the EU can give a first response within 48 hours.
  • May-June 2017: EU-27 agrees negotiating directives Once the guidelines have been decided, the EU-27 must formally nominate the European Commission as its lead negotiator, and develop confidential directives giving the Brussels body a more detailed mandate. The Commission will make a proposal and the EU will spend roughly four weeks discussing these terms. The mandate must then be approved by EU-27 ministers. No negotiations can take place until this happens. Diplomats are pencilling in late May or early June as the moment formal face-to-face talks with the UK can begin.
  • May 2017: Great Repeal Bill begins --Britain will kick off a large part of its preparations with the Great Repeal Bill, a legislative measure set to be outlined in the Queen’s Speech in May and intended to provide legal continuity for the country after Brexit.
  • 24 September 2017: Germany goes to the polls - Brexit discussions will be well under way by the time Germans vote for a new government (France will have chosen its new president by May 7). The latest German polls show the incumbent Angela Merkel level pegging with Martin Schulz, a former president of the European Parliament.
  • December 2017: divorce talks and trade relations Michel Barnier, the EU’s chief negotiator, wants a “divorce-first” approach to negotiations, delaying talks on a future trade deal until Britain has agreed principles on an exit bill and the rights of EU migrants. He expects these initial divorce discussions to last until December.

Even Before Brexit Triggered, EU Again Signals It Is Not Budging on “Shape of the Table” Issue -  Yves Smith - We’ve written repeatedly that Brexit boosters and their allies in the UK media are acting as if the EU will accede to their pet wishes, for no logical reason whatsoever. The most common fantasies seem to that the UK has more bargaining leverage and that the EU needs to be nice and/or fair to the UK, when divorces rarely have those as driving considerations.  Yet more confirmation of the depth of this delusion comes in a Politico update on Brexit. Theresa May has announced that she will trigger Article 50 on March 29. Yesterday, the Financial Times described some of the key dates in the timetable. Notice how attenuated the start of the process is: After Mrs May activates Article 50 on March 29 the EU will draw up “guidelines” on handling Britain’s withdrawal. Donald Tusk, president of the European Council of leaders, said this month that the EU could give a first response within 48 hours. But the formal guidelines will need to be endorsed by a summit of the remaining 27 EU countries. Mr Tusk announced on Tuesday that the event would be held on April 29 — even though some countries are worried about holding a big gathering in-between the two rounds of the French election. Once the guidelines have been decided, the EU-27 must formally nominate the European Commission as its lead negotiator and develop confidential directives giving the body a more detailed mandate. The commission will make a proposal and the EU will spend roughly four weeks discussing these terms. The mandate must then be approved by EU-27 ministers. Negotiations cannot take place until this happens. Diplomats are pencilling in late May or early June for the start of formal face-to-face talks with the UK. The UK is already, or one might say yet again, getting a warning of what the EU’s stance on “guidelines” or what is often referred to as “the shape of the table,” meaning negotiating parameters and process. EU officials continued to tell the press, in this case Politico, that the UK will get no breaks in the negotiation process.

Goldman, Morgan Stanley Signal London Job Moves Ahead of Brexit --Senior Goldman Sachs Group Inc. and Morgan Stanley executives said they’re preparing to shift staff and operations from London to elsewhere in the European Union as Prime Minister Theresa May sets up the U.K.’s exit from the bloc. A day after May’s office announced she will open two years of divorce talks with the EU on March 29, Richard Gnodde, co-head of investment banking at Goldman Sachs, told CNBC on Tuesday that his bank will initially relocate hundreds of London-based employees to expand other offices after the split. “We’ll hire people inside of Europe itself, and there will be some movement,’’ he said. Brexit may disrupt the financial industry more than others if the U.K.’s separation from the EU costs banks their ability to easily serve consumers and companies across the region. U.S. banks currently work throughout the bloc from bases in London, but the so-called passporting rights enabling that are unlikely to be extended once the U.K. has pulled out. Will Brexit Trigger Exodus of Banks From London? Goldman Sachs is considering making Frankfurt its hub inside the EU and could move as many as 1,000 employees, including traders and senior managers, a person familiar with the matter has said. Morgan Stanley President Colm Kelleher told a conference in London that he would “certainly” have to move some people, though the bank will avoid making “grand statements.” “It’s not going to be the end of London,’’ he said. “But clearly we will have to adjust.” Morgan Stanley is scouting for office space in Frankfurt and Dublin for an enlarged EU hub, people with knowledge the matter said in February. The bank may initially move about 300 workers to one of the cities.

 Brexit, Nationalism and the Damage Done - Brexit is English nationalism made flesh, but the English underrate its destructive potential as a form of communal identity. Concepts like “nationalism” and “self-determination” have traditionally been seen as something that happens to foreigners. An English failing today is an inability to recognise the egocentricity implicit in such nationalism and the extent to which it alienates and invites confrontation with other nations in the British Isles and beyond.A classic example of this blindness to the consequences of this new type of nationalism came this week when Theresa May denounced Nicola Sturgeon for “playing politics with the future of our country” in demanding a second referendum on Scottish independence. This immediately begs the question about the nature and location of this “country” to which such uncritical loyalty is due. If the state in question is the UK, then why do the advocates of Brexit ignore the opposition – and take for granted the compliance – of Scotland and Northern Ireland in leaving the EU?It is worth recalling the degree to which British politics was divided and poisoned by fierce disputes over Irish independence for the whole of the nineteenth century and early twentieth century, right up to the moment that Ireland achieved self-determination in 1921. What used to be called “the Irish Question” has now been reborn as an all-consuming issue by “the Scottish Question” and, whatever the timing and outcome of a second Scottish referendum, it is not going to go away. Supposing that Theresa May really believes, as her patronising rejection of another poll in Scotland might suggest, that “the Scottish Question” can be indefinitely delayed, then she will be joining a long dismal list of British leaders down the centuries who made the same mistake about Ireland. English politicians have frequently had a tin ear when it comes to other people’s nationalism, imagining that it can be satisfied by material concessions or rebutted by arguments about independence inflicting unacceptable economic damage. English people often have an equally muddled or myopic vision of their own nationalism, using the terms “English” and “British” as if they were synonymous or marked a distinction of no great account. They therefore do not see how their nationalism has changed significantly in the last few years and is making the continuation of the UK less and less likely. The transformation is also obscured because the ingredients of nationalist identity are in any case hazy since a successful nationalist movement becomes the vehicle for all sorts of grievances and protests.

Barnier warns UK of queues and shortages if Brexit talks fail - Britain will face nuclear fuel shortages, truck queues at Dover and “serious disruption” to air traffic if Brexit talks fail, the EU’s chief negotiator has warned as he outlined conditions for an “ambitious” UK-EU trade deal. In a wide-ranging speech ahead of Article 50 exit talks, Michel Barnier warned Britain it must agree “principles for an orderly withdrawal” before trade talks, including its financial dues and the rights of 4m UK and EU migrants. Speaking shortly after reports of a shooting incident at the British parliament, Mr Barnier expressed his “solidarity” with the UK over the “serious events unfolding in London”. Mr Barnier, while endorsing UK Prime Minister Theresa May’s call for a “bold and ambitious free-trade agreement”, insisted that ambition must also maintain “a level playing field” on tax, labour law and consumer rights. “The sooner we agree on the principles of an orderly withdrawal, the sooner we can start preparing this future relationship,” he said. “On the other hand if we do not address these uncertainties and put off difficult subjects to the end of the negotiations, we will be heading for failure.” Mr Barnier did not completely rule out the possibility of agreeing a free-trade deal in time for Britain’s exit — one of London’s key demands. However, he said the new partnership would “take time” and that transition arrangements may be necessary. Brushing aside one of Mrs May’s red lines over the future role of European judges, Mr Barnier explicitly stated the EU’s demand that interim measures “will be within the framework of European law” and the European Court of Justice. Such a transition could not allow Britain to pick and chose access to areas of the single market.