August 18, 2015

Richard Wolff: Déjà Vu: Germany Tightens Its Economic Power Over Europe

Déjà Vu: Germany Tightens Its Economic Power Over Europe

Monday, 17 August 2015 00:00
By Richard D. Wolff, Truthout | News Analysis


Germany's leaders herded their European counterparts into imposing harsh austerity on Greece. It was the price, they insisted, that Greece had to pay to receive bailout credits from the European Union, European Central Bank and International Monetary Fund (IMF). The Europeans required those bailout credits to be used mostly to pay back loans the Greek government had gotten earlier from private banks (chiefly German, French and Greek). Those credits could not be used to get Greece out of the 2008 crash that afflicted all of Europe.

Those private banks had gladly and profitably pushed too many loans onto the Athens government for many years. When the 2008 global crash brought forward the moment when the Greek government could no longer carry its bloated, excess private debts, default loomed. Had that happened, those private banks would have required second bailouts (their first occurred in 2008-2009) from their governments. But the speed and generosity of those first bailouts had enraged much public opinion in France, Germany and Greece. A second bailout, required if Greece had defaulted, would have finished those countries' leaders' political careers. Cleverly, the leaders arranged for those institutions to lend to Greece to pay off its private creditors: no need then for second bailouts.

To cover this maneuver with "public relations" distractions, German Chancellor Angela Merkel and others promised to require Greece to undergo a tough austerity treatment, portrayed as economic pain and punishment that Greeks brought on themselves. It was necessary "medicine" that would soon deliver economic recovery. All leaders everywhere promised and still promise recovery to austerity's victims. In fact, since 2010, austerity brought Greece further economic decline, not recovery. Indeed, recoveries proved elusive or painfully slow for most Europeans as they struggled with austerities of varying intensities.

Germany pushed hardest for the harshest Greek austerity. That too was a maneuver for domestic political advantage. Merkel loudly depicted herself as protecting Germans from higher taxes (to pay Germany's share of any future institutions' bailouts of European countries like Greece that did not repay their debts). Merkel and her finance chief rigidly refused to relieve Greece of its debts (even though the IMF and countless experts said openly that Greece's debts were simply "unsustainable" and could never be paid). Merkel's refusal meant that Greeks' tax payments would go not for roads, schools and hospitals, nor to rebuild a crisis-shattered economy, nor to pay and pension Greek public workers. Greeks' taxes must instead be used to service Greece's debts to the institutions for limitless years into the future. Merkel's posturing served her domestic political purposes, but at a huge cost for Europe. ..............(more)

http://www.truth-out.org/news/item/32380-deja-vu-germany-tightens-its-economic-power-over-europe

August 17, 2015

Pentagon plans sharp increase in drone use for both surveillance and strikes

(MarketWatch) The Pentagon plans to sharply expand the number of U.S. drone flights over the next four years, giving military commanders access to more intelligence and greater firepower to keep up with a sprouting number of global hot spots, a senior defense official said.

The plan to increase by 50% the number of daily drone flights would broaden surveillance and intelligence collection in such locales as Ukraine, Iraq, Syria, the South China Sea and North Africa, said the official, who provided exclusive details of the plan to The Wall Street Journal. It would be the first significant increase in the U.S. drone program since 2011, reflecting pressure on military efforts to address a cascading series of global crises.

While expanding surveillance, the Pentagon plan also grows the capacity for lethal airstrikes, the most controversial part of the U.S. drone program and its rapid growth under President Barack Obama . Strikes by unmanned aircraft have killed 3,000 people or more, based on estimates by nonpartisan groups. ...................

http://www.marketwatch.com/story/pentagon-plans-sharp-increase-in-drone-use-for-both-surveillance-and-strikes-2015-08-17?link=MW_home_latest_news

August 17, 2015

Toronto: TTC Testing Talking Buses

Toronto Transit Commission (TTC) customers on Bayview Avenue and Bathurst Street will be among the first to hear their bus pull up to their stop and announce to them where it's going.

The TTC's External Route Announcement trial will run until the end of 2015 on vehicles #8200, #8300, #8350 and #9050 (articulated bus) on the 11 Bayview and 7 Bathurst routes.

The external announcements, heard from outside the bus through a speaker near the front door, are designed to assist customers with visual impairments to more clearly determine whether or not to board the bus that has just arrived at their stop. The bus automatically identifies itself by broadcasting its destination when the front door opens (i.e. "7 Bathurst to Steeles" or "11 Bayview to Davisville via Sunnybrook&quot . .....................(more)

http://www.masstransitmag.com/press_release/12103721/ttc-testing-talking-buses

August 17, 2015

Jeff Bezos says he’d quit the Amazon described in New York Times bombshell

Amazon.com’s Jeff Bezos has responded in blunt terms to a New York Times exposé about his company, firing back that he would resign if working at the e-commerce giant were as awful as the article suggests.

The Times piece, published on Saturday, put a fresh spotlight on the work environment at the hard-driving company.

“I strongly believe that anyone working in a company that really is like the one described in the NYT would be crazy to stay,” the Amazon AMZN, +0.42% founder and CEO wrote in an email to employees that was obtained by MarketWatch. “I know I would leave such a company.”

The Bezos message also said the article “claims that our intentional approach is to create a soulless, dystopian workplace where no fun is had and no laughter heard. Again, I don’t recognize this Amazon and I very much hope you don’t, either.” ...........(more)

http://www.marketwatch.com/story/jeff-bezos-says-hed-quit-the-amazon-described-in-new-york-times-bombshell-2015-08-17?dist=lcountdown

August 17, 2015

Summer heatwave engulfs Middle East

Summer heatwave engulfs Middle East
Temperatures have soared past 50C in some countries recently and caused scores of deaths in Egypt.


[font size="1"]In Egypt's capital, Cairo, temperatures reached 42C on Sunday (EPA)[/font]


Summer heat is the norm in the Middle East, where the climate is largely that of a sub-tropical desert. Yet, even by the standards of the region, this summer is proving to be exceptionally hot and, for some, humid.

Egypt seems to have been particularly hard-hit. At least 93 deaths have been reported in the country due to the heat, with most victims being elderly.

In the country's capital, Cairo, temperatures reached 42C on Sunday, 7C above average. During August temperatures have reached or exceeded the monthly average on all but one day. In the south of the country conditions have been even worse.

Aswan, on the banks of the Nile, has experienced temperatures at least 3C above average throughout the month, with peak temperatures of 47C. ..........................(more)

http://www.aljazeera.com/news/2015/08/summer-heatwave-engulfs-middle-east-150817092432196.html

August 17, 2015

Dentist smiles over illegal bear kill in new photos

Newly released photos show the world's most hated dentist flashing his pearly whites over the carcass of a hulking black bear during an illegal hunt in Wisconsin nine years ago.

ABC News obtained the photos of trophy hunter Walter Palmer through a Freedom of Information Act request from Wisconsin's Department of Natural Resources.

Palmer has become reviled around the globe for slaughtering the beloved Zimbawean lion Cecil after his guides allegedly baited it out of a national park and into a kill zone. .........................(more)

http://www.sfgate.com/world/article/Dentist-smiles-over-illegal-bear-kill-in-new-6444790.php

August 17, 2015

New York Manufacturing Index tumbles to recession-era levels

(MarketWatch) A reading of New York-area manufacturing conditions fell swiftly and brutally in August, one that could make the likelihood of an interest-rate hike next month — or even this year — more remote.

The Empire State general business conditions index nose-dived to a reading of negative 14.9, from positive 3.9 in July, marking the worst level since April 2009, the New York Fed said. The index, on a scale where any positive number indicates improving conditions, was far worse than the positive 4.5 forecast in a MarketWatch-compiled economist poll.

It wasn’t just weakness at the headline. The new-orders component sank to negative 15.7 from negative 3.5, and the shipments index sank to negative 13.8 from positive 7.9.

Readings for unfilled orders, delivery time, inventories and average employee workweek also were negative, and the index for prices received just barely stayed positive at 0.9 from 5.3 in July. ................(more)

http://www.marketwatch.com/story/empire-state-index-tumbles-to-recession-era-levels-2015-08-17

August 17, 2015

Yet More Private Equity Grifting: The SEC Enables “Broken Deal Expense” Con

from Naked Capitalism:


Yet More Private Equity Grifting: The SEC Enables “Broken Deal Expense” Con
Posted on August 17, 2015 by Yves Smith


There’s so much chicanery afoot in private equity that I sometimes don’t write about important aspects on a timely basis.

One of the big ones that most investors manage to kid themselves about is how the general partners’ fee structures really work. The widely-cherished fantasy is that the prototypical 2% annual management fee (the “2” in the “2 and 20″ formula; the “20” is a 20% profit share once a hurdle rate has been met) is meant to pay for the overhead of the firm. For instance, as a 2010 article in Business Law Today stated:

The ILPA (Institutional Limited Partners Association) Principles state that management fees should be set on the basis of a disclosed fee model that reflects the manager’s budgeted expenses to cover professional and staff salaries, rent, and operating and overhead expenses.

The reality is that the general partners seek to have as much of that 2% management fee as possible be pure profit to them. How do they do that?

One ruse is by charging many of the elements of the general partner’s operation back to portfolio companies as expenses. We’ve discussed a major example at some length, of how the general partner will present a “team” when a fund is being marketed. The investors will often size up the number of bodies relative to what they expect the total management fee payments to get a rough and ready sense of reasonableness. But as exposed by the Wall Street Journal and the New York Times, many of those “team” members wind up on the investors’ dime, by being charged to portfolio companies. As the New York Times’ Gretchen Morgenson explained:

One example involves senior advisers hired by private equity firms to help oversee acquired companies… Traditionally, these executives have been employed directly by the private equity firms, meaning that the firms, not their investors or the portfolio companies, have paid the executives’ salaries, which can be substantial. In other cases, they are paid by portfolio companies, which means that the salaries may be considered a fee to be partially reimbursed to the investors.

Recently, however, some private equity firms have found a way around this. Salaries of executives hired as unaffiliated contractors are not subject to reimbursements, private equity filings show, and by making these people contractors, rather than employees, firms can avoid reimbursing the investors for their costs. The private equity firms also increase profits by shifting the salary of the contractor to the payroll of portfolio companies.

In a July newsletter, Michael Flaherman, a former CalPERS board member and head of its investment committee, now a researcher at Harvard’s Safra Center for Ethics, stressed how another large-scale gimmick for shifting costs from private equity general partner overheads to fund investors has gone largely unnoticed. ................(more)

http://www.nakedcapitalism.com/2015/08/yet-more-private-equity-grifting-the-sec-enables-broken-deal-expense-con.html

August 17, 2015

Housing Affordability in San Fran & Bay Area Plunges; Stocks, Interest Rates Could Trigger Epic Bust

Housing Affordability in San Francisco & Bay Area Plunges; Stocks, Interest Rates Could Trigger Epic Bust
by Wolf Richter • August 16, 2015


The median house price in San Francisco has jumped 103% since the first quarter 2012 to $1.35 million in July; the median condo price has jumped 74% to $1.125 million. These aren’t palaces; condos include 1-bedroom and smaller units!

And incomes in San Francisco, it turns out, haven’t soared in lockstep (the Census Bureau pegged the median household income at $75,604 in 2013 though it has risen since). A similar scenario has played out in other Bay Area counties. And thus housing affordability has plunged. “Housing crisis” – that’s what a lot of people call it.

The Housing Affordability Index (HAI) for the 2nd quarter, just released by the California Association of Realtors, shows that only the top 10% of households in San Francisco can afford to buy a median house, and this despite historically low mortgage rates!

By comparison, 30% of the households in California and 57% of the households in the US can afford to buy a median home. To be considered “affordable,” the mortgage payment, property taxes, and insurance costs can’t be more than 30% of household income. This chart from a new report by Paragon Real Estate shows the absurdity in the 9 Bay Area counties, compared to California and the US:



So how much household income does it take to be able to buy that median house in San Francisco? A chunk! The minimum qualifying income is $268,000 – almost six times as much the $45,000 it takes in the US overall. But household incomes are only about a third higher in San Francisco. Absurd? ..............(more)

http://wolfstreet.com/2015/08/16/housing-affordability-san-francisco-bay-area-plunges-stocks-interest-rates-to-trigger-epic-bust/

August 16, 2015

More Dutch Cities to Experiment With Universal Basic Income

http://www.truthdig.com/eartotheground/item/more_dutch_cities_to_experiment_with_universal_basic_income_20150814


via truthdig:



Taking the lead from the city of Utrecht, other Dutch cities are considering social experiments with basic income—an income unconditionally granted to all its residents on an individual basis, without a means test or work requirement.

As the Basic Income Earth Network explains, basic income is “a form of minimum income guarantee that differs from those that now exist in various European countries in three important ways: it is paid to individuals rather than households; it is paid irrespective of any income from other sources; and it is paid without requiring the performance of any work or the willingness to accept a job if offered.”

From Quartz:

Tilburg, a city of 200,000 habitants close to the border with Belgium, will follow Utrecht’s initiative, and the cities of Groningen, Maastricht, Gouda, Enschede, Nijmegen and Wageningen are also considering it.
Supporters of basic income say it is a good mechanism to alleviate poverty and social exclusion. A recent study conducted in 18 European countries concluded that generous welfare benefits make people likely to want to work more, not less.

Ralf Embrechts, director of the Social Development Association of Tilburg and one of the promotors of the program, said that’s the theory the program is designed to test.

“We want to discover, if you trust people and give them a basic income without any rules or obligations—so, unconditionally—that they will do the right thing,” he explained in an email to Quartz.

If Tilburg’s basic income project gets the green light from Netherland’s state secretary of social affairs, the town will provide an extra paycheck to a pilot group of 250 people starting in January 2016, said Tillburg officials said. The city has not confirmed the amount of the stipend, but in Utrecht checks will range from around €900 ($1,000) for one adult to €1,300 ($1,450).

Although the classic basic income theory proposes universal payments across the population, the two Dutch experiments will only focus on residents who are already recipients of social assistance. Those in the program will be exempt from the severe job-seeking requirements and penalties in Dutch law.

Authorities aim to test how citizens react without that sword of Damocles over their heads. Will the money encourage them to find a job or will they sit in their couches comfortably?

Several cities across the world have experimented with basic income, from India to Canada, where the famous Mincome program took place in the 1970s, in the town of Dauphin, Manitoba.

Read more here.

—Posted by Roisin Davis