Wednesday, April 1, 2020

Pakistan, China and Russia decide to conduct trade in local currencies skip dollars



The eight-member countries of the Shanghai Cooperation Organization (SCO), including China, Russia, and Pakistan, have made the principle decision to conduct bilateral trade and investment and issue bonds in local and national currencies instead of US dollars.

Business Recorder

Pakistan, China and Russia decide to conduct trade in local currencies skip dollarss/

Fed announces temporary change to its supplementary leverage ratio rule


Looks like it might be the game-changer we've (MNE) been looking for the last few years...  will have to look at it some more... looks good on surface...

Prior to this the Fed was quickly bankrupting the Depositories in a similar way they caused the GFC back in September 2008... they have been adding 100s of $B of non-risk assets for the last few months and even have accelerated the rate over the last two weeks...

It may have been so bad that the banks would not have even been able to originate the new SBA loans this week... they simply have had too many non-risk assets put on them by the Fed...

We may have at least dodged this bullet of incompetence... now we just have to deal the Wuhan Virus...

Need to see this new policy in a bit more detail but I'm optimistic at first look....

the Federal Reserve Board on Wednesday announced a temporary change to its supplementary leverage ratio rule. The change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies, and will be in effect until March 31, 2021. 
Liquidity conditions in Treasury markets have deteriorated rapidly, and financial institutions are receiving significant inflows of customer deposits along with increased reserve levels. The regulatory restrictions that accompany this balance sheet growth may constrain the firms' ability to continue to serve as financial intermediaries and to provide credit to households and businesses. The change to the supplementary leverage ratio will mitigate the effects of those restrictions and better enable firms to support the economy.










Neil Wilson - New Wayland


Neil Wilson is back. Below are links to his YouTube channel and TwitchTV.

I generally don't link to video and audio unless a transcript is provided. There's just too much being produced to keep up with. But a lot of people have been missing Neal, including me, so here are the links.

New Wayland

The New Wayland Breakfast Show

In the Face of Lockdown, China’s E-Commerce Giants Deliver — Chengyi Lin

Lessons from Alibaba and JD.com.
The difference between Jack Ma and Jeff Bezos.

Harvard Business Review
In the Face of Lockdown, China’s E-Commerce Giants Deliver
Chengyi Lin, affiliate professor in strategy at INSEAD in Fontainebleau, France

Also at HBR
Now is the time for major corporations to make good on their commitments.
Coronavirus Is Putting Corporate Social Responsibility to the Test
Mark R. Kramer
How AI, genomics, and automation are powering biotech breakthroughs....
Deep Nishar, Senior Managing Partner for the Americas at Softbank’s Vision Fund, tells Azeem Azhar why biotech is the next trillion-dollar market, and what breakthroughs to expect....

MMT-Related Links

The Corner (EU)

Fraser Institute
Modern Monetary Theory, Part 1: What is it and why is it gaining currency in these volatile times?

Modern Monetary Theory, Part 2: Will MMT hold down taxes?
Stephen Globerman

The Roanoke Review
Santopietro: Pandemic will change how we view economics


Britain, France and Germany bypass US sanctions to provide Iran with medical aid

Financial system Instex used for first time to send medical support to Iran as it battles severe coronavirus outbreak


Britain, France and Germany have for the first time used a complex financial system that bypasses US sanctions to send medical aid to Iran, raising hopes of salvaging the 2015 Iran nuclear deal. 


Britain, France and Germany have for the first time used a complex financial system that bypasses US sanctions to send medical aid to Iran, raising hopes of salvaging the 2015 Iran nuclear deal. 
According to the German foreign ministry, the medical supplies safely arrived in Iran after a transaction using the Instex system, which was set up in response to Donald Trump, the US president, withdrawing from the Iran nuclear deal in 2018 and imposing severe sanctions on the regime.  
Earlier this month, Britain, Germany and France had announced they would offer a €5million (£4m) package to help Iran tackle the coronavirus, as well as medical equipment for testing and protective clothing.
FT

Awara — Is the Coronavirus Pandemic Force Majeure?


How Russia is dealing with the legal issue.

Awara
Is the Coronavirus Pandemic Force Majeure?

Bill Mitchell – These worn out debt narratives – Stop It! It’s ridiculous!

Today is Wednesday and I have been tied up a lot with various meetings – all on-line these days. I don’t enjoy them as much as face-to-face, given that I spent a considerable part of each day in front of my computer or with my head in books and so the human contact is a welcome variation. But needs must, as they say. Anyway, just a few snippets today, being Wednesday. I can say that in between all this Zooming and writing, I have now nearly put together a complete on-line learning system which I am now trialling. This will be the support platform for – MMTed – which I hope to make operational sometime in the coming months. One of the issues that I touched on yesterday, which is now starting to crawl out of the slime, is the “what will happen to all the debt when the crisis is over” story. And, it is not just a narrative being promoted by the Right or the conservatives. The Federal Labour Party spokespersons and those hanging around the edges have started to push the narrative. As the Prime Minister told us the other day in relation to the people who are panic buying “Stop it! It’s Ridiculous!” I think he was actually talking about those (morons) who are starting the deficit hysteria before the deficits have even actually risen much. For their own health, I urge them to “stop it”. Imagine how apoplectic they are all going to be once the deficit goes to 10 per cent or more and the RBA is buying up all the debt. My god....
Bill Mitchell – billy blog
These worn out debt narratives – Stop It! It’s ridiculous!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

David Marsh - Sheng’s world view: western neoliberalism ‘bankrupt’


As central banks act, ‘independence is a myth’


Sheng recognises the social impact of central banks taking widespread action to curb upsets. ‘Central bank independence has always been a myth, like the emperor with no clothes. When push comes to shove, we have seen central banks funding government deficits carte blanche.’ Injecting liquidity ‘is the right short-term move because we are in wartime conditions of grave uncertainty. But quantitative easing has been increasingly interpreted as central banks funding the 1% through asset bubbles and taxing the savings of the middle and lower classes.’  The US debate is about rescuing the corporations, the economy or the population. ‘That’s a tough call. If the “precariat” says the money is not coming to me, social revolution is the next call.’

An Alarmist Take on the CoronaVirus - SARS-CoV-2, COVID-19





The Times - Vodka made from carbon dioxide could be a tonic in climate fight



I'll drink to that!

Air Co takes captured carbon dioxide and turns it into vodka, offering the tantalising possibility that men and women of good conscience can drink to save the planet.

The Times - Vodka made from carbon dioxide could be a tonic in climate fight

DJ Sprite - Be Mine GF



I came across this in an instruction video yesterday showing you how to put solid tyres on your bike. I thought I would never be able to find out who made it but Shazam bought it up. It's rather nice!

Tuesday, March 31, 2020

The Cheapest Way For Trump To Save U.S. Oil — Lourcey Sams


Protectionism. This would be a kiss of death for free trade, one of the three pillars of economic liberalism, the other two being free markets and free capital flows.

How Eight Conglomerates Dominate Japanese Industry — Matt Jancer

“Chaebols”, large business groups controlled by founder families, are usually considered a crucial ingredient of South Korea’s economic miracle. But after a process of consolidation, big chaebol firms such as Hyundai established exclusive supply chains with suppliers of parts and components and began to engage in price squeezing and intellectual property extortion in bargaining with its suppliers....

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
The Darkest Side of Monopsony: The South Korean Case
Sangin Park

See also

Each keiretsu can have as many as 30 sub-companies—from breweries to camera and auto makers.…

Smithsonian Magazine
How Eight Conglomerates Dominate Japanese Industry
Matt Jancer

Zero Hedge — "There Are Basically No Sales": U.S. Auto Industry Enters Total Collapse As A Result Of Nationwide Lockdown


There were no sales in China either.

Zero Hedge
"There Are Basically No Sales": U.S. Auto Industry Enters Total Collapse As A Result Of Nationwide Lockdown
Tyler Durden

Oil Price Rises After Trump Phones Putin — Gary Littlejohn


Mostly analysis instead of oil politics.

The Vineyard of the Saker
Oil Price Rises After Trump Phones Putin
Gary Littlejohn for The Saker blog

TASS — China's Hainan offers more than 30,000 jobs to foreign specialists


China is hiring.

TASS
China's Hainan offers more than 30,000 jobs to foreign specialists

Sputnik — China's GDP Growth to Decline to 2.3% in Baseline Scenario in 2020 - World Bank


Forget about that crash the media was forecasting.

Sputnik
China's GDP Growth to Decline to 2.3% in Baseline Scenario in 2020 - World Bank

also

Bounceback?
  • China on Tuesday said the official Purchasing Manager’s Index for March was 52.0, beating expectations for an economy hit by the coronavirus outbreak.
  • Analysts polled by Reuters had expected the official PMI to come in at 45 for the month of March, from a record low of 35.7 a month earlier.
CNBC
China says manufacturing activity expanded in March, defying expectations of a contraction
Huileng Tan

RT — Beijing won't just 'watch Huawei be slaughtered on the chopping board', company chief warns US


China ready to fire back in the trade war?
"The Chinese government will not just stand by and watch Huawei be slaughtered on the chopping board," Chairman Eric Xu told reporters at the launch of Huawei's annual report.
"Why wouldn't the Chinese government ban the use of 5G chips or 5G chip-powered base stations, smartphones and other smart devices provided by American companies, for cybersecurity reasons?"
Hmm. The chairman of Huawei may not speak for the Chinese government, but it is unlikely he would put this out without checking.

HOW COVID-19 KILLS--I'm a Surgeon--And Why We Can't Save You

It ain't pretty. I think he is trying to drive out complacency.

I've been debating with some climate change deniers for 3 weeks, but they are also Covid-19 deniers too. They say it's nothing.


The Economic Outlook — Bill McBride


Bill McBride is an analyst worth listening to on the economy even though he specializes in real estate. He doesn't have an axe to grind. He doesn't see a fast snapback.

Best line:
(Note: This was NOT a "stimulus" package, this was disaster relief).
Calculated Risk
The Economic Outlook
Bill McBride

What the Shift to Virtual Learning Could Mean for the Future of Higher Ed — Vijay Govindarajan and Anup Srivastava


Difficult to estimate now how this pandemic will change education other than to say some effects are highly likely. The digital revolution is now here of necessity and necessity is the mother of invention. Not only higher education is being effected but also primary and secondary. In addition, many are working at home for the first time. The obvious benefit is reduced transaction costs and less need for resources directed to physical plant, transportation, etc. So some change is inevitable and this can be looked at as a test case.

Harvard Business Review
What the Shift to Virtual Learning Could Mean for the Future of Higher EdVijay Govindarajan and
Anup SrivastavaVijay Govindarajan, Coxe Distinguished Professor of Management at Dartmouth’s Tuck School of Business, and Anup Srivastava. Canada Research Chair in Accounting, Decision Making, and Capital Markets and Associate Professor at Haskayne School of Business, University of Calgary

Firing of Whistleblowing Emergency Room Doctor Ming Lin By Blackstone-Owned TeamHealth Demonstrates Outsized Role of Private Equity in Hospital Staffing — Yves Smith

However, the furor over the mistreatment of Dr. Lin did largely manage to skip over the question of how TeamHealth [owned by Blackstone] is even legally in the position to effectively provide hospital services when they are not licensed to do so. Several groups protested Dr. Lin’s ouster and one, the American Academy of Emergency Medicine, focused squarely on this issue.
Similar to insurance companies approving and denying care prescribed by physicians. Screwing with provision is one thing but practicing medicine without a license is another.

WTF?

Naked Capitalism
Firing of Whistleblowing Emergency Room Doctor Ming Lin By Blackstone-Owned TeamHealth Demonstrates Outsized Role of Private Equity in Hospital Staffing
Yves Smith

Bill Mitchell — The government should pay the workers 100 per cent, not rely on wage subsidies

The buzz-word at the moment in Australian government and policy circles is ‘hibernation’ – the government is hoping, that the economy can behave like a crocodile and find some ‘river bank’ and have a ‘good sleep’ until the pandemic is over, at which time, it will burst forth into a new growth phase and unless the virus mutates into something worse in the meantime then all will be well. Their policy interventions to date – while they have been like dragging a chain as their conservative instincts are being dragged very quickly into the demands and realities of real world macroeconomics, which is different to the nonsense that is taught by mainstream economists in our now depleted universities – have been crafted to ensure nothing important changes in a structural sense in our socio-economic lives. The problem is that the existing system, which they are hoping to put into hibernation for a while, is putrid to the core and needs major changes if we are to achieve a socio-ecological transformation. Remember the failings of neoliberalism? Remember climate change? Remember the poles melting? Remember the engineered cuts to workers who rely on penalty rates at weekends to maintain a sense of material prosperity? Remember the 13.7 per cent labour underutilisation rate? Remember the failed public transport and energy sectors, privatised and lacking in investment? Remember the financial markets that were exposed by the recent Royal Commission as corrupt, inefficient and downright dangerous to the our material and psychological prosperity? We don’t need a hibernation. We need the Government to take advantage of the dislocation that is currently occurring to make some basic changes. Like wiping out the gig economy. Like … read on. At present, the stimulus interventions, which are mostly about saving capitalism from itself. We should be demanding much more....
Bill Mitchell – billy blog
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Noam Chomsky: Coronavirus - What is at stake?

I thought this interview with Chomsky really hit the button. It's pretty chilling.


The coronavirus crisis is revealing that the powers that be of the European Union have learned nothing from the Eurocrisis. 

They are currently betraying the interests of the majority of Europeans in the same way that they have done so in 2010 -- by failing to mobilize existing money and public financial instruments in the interests of the many. With their current decisions, they are jeopardizing public health, public goods and the interests of Europeans. 




Monday, March 30, 2020

Moon of Alabama — Trump, Putin Will Discuss The End Of U.S. Shale Oil

Trump would have to make a strategic offer that Russia could not resist to get some cooperation on oil prices.But what strategic offer could Trump make that would move Putin to agree to some new deal?...
And what reason has Russia to believe that Trump or his successor would stick to any deal? As the U.S. is non-agreement-capable it has none.
The outcome of the phone call will therefore likely be nothing....
Moon of Alabama
Trump, Putin Will Discuss The End Of U.S. Shale Oil

See also

Reminiscence of the Future

The US is over a barrel.

Andrei Martyanov
Trump Wants To Talk.

Biden’s Foreign Policy Teams Hints at War with China, Conflict with Russia — Alan Macleod


More of the crazy.

Mint Press News
Biden’s Foreign Policy Teams Hints at War with China, Conflict with Russia
Alan Macleod

Bitcoin Exchange — Modern Monetary Theory (MMT) vs BTC to be the Main Event of 2020


Bitcoin struggling to remain relevant?

Bitcoin Exchange
Modern Monetary Theory (MMT) vs BTC to be the Main Event of 2020
AnTy

Radical imagination and the intellectual edifice — Jim Vrettos interviews Michael Hudson



Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
Radical imagination and the intellectual edifice
Jim Vrettos interviews Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

U.S. Oil Production In Process Of ... Peaking Brian Romanchuk

My base case view matches what is priced into the markets: the crude oil market is glutted and demand is falling off a cliff. Storage constraints are in sight, and I am not seeing an immediate catalyst for a demand rebound. The nearly inevitable outcome is that drilling drops dead, and capacity is shuttered. At some point, one will be able to take the chart of U.S. crude liquid products (conventional oil plus the products of fracking), stick a red line through the maximum value, and all other values on the chart will below that maximum. In common parlance, this behaviour is known as a "peak." As a long-suffering card-carrying Peak Oil believer, I will be flooding the internet with "I told ya so!" missives.
I accept that one can generate some scenarios where a peak does not occur near this point. Meanwhile, I am not saying that this will be a maximum for all time; this is a "local maximum." However, I am not incredibly optimistic that the U.S. will be able to take another run at the 20 million barrels per day level any time soon....
US oil production depends on the cartel to maintain prices above market price owing to the high production cost of US oil relative to other major producers. The US as swing producer was never going to happen.

The practical alternative is for the US to nationalize oil have the government eat the difference between market price and production cost. While this would be anti-capitalistic and seemingly would be rejected out of hand, nationalization would be justifiable based on national self-sufficiency in vital resources.

Bond Economics
U.S. Oil Production In Process Of ... Peaking
Brian Romanchuk