week ending Dec 5

Fed Watch: The Final Countdown -- The latest read on the Fed’s preferred inflation metric was not particularly kind to policymakers:  Indeed, as Craig Torres at Bloomberg notes, this is only one of a number of indicators that should give a reality check to FOMC participants as December’s meeting approaches. A stronger dollar, weaker commodity prices, and falling inflation expectations suggest that the “transitory” negative weights on inflation might persist longer than the Fed anticipates.    In addition, since I last wrote, real time estimates of fourth quarter GDP weakened in the face of incoming data. And manufacturing is data is off to a weak start this month with a fall in the Chicago PMI. Indeed, manufacturing indicators are weaker than we would normally see at the onset of a tightening cycle, but the Fed is betting that these indicators are passé in a world dominated by services. And that side of the economy seems to be holding up nicely: We get fresh national readings from the Institute of Supply Management this week. Still, even if the numbers are on the soft side, there is little I think that will dissuade officials from hiking rates in December. With unemployment at 5% and wage growth picking up to confirm receding slack in the labor market, the general consensus on Constitution Avenue is that the time is ripe to nudge rates higher. Wait any longer, the thinking goes, you risk being unable to raise rates “gradually.” It will be interesting to see how the Fed would react to a weak November labor report, due Friday. It seems as long as the employment report is not a complete disaster, even numbers on the soft side would be enough to justify Fed action on the basis that the underlying trends remain in place. As Torres also notes, even if December is pretty much in the bag despite questions about inflation, the path of subsequent rate hikes will depend on confidence in the path of inflation.

Yellen sees US economy ready for rate hike - (AFP) - Federal Reserve Chair Janet Yellen stoked expectations of a looming rise in the benchmark federal funds rate Wednesday, saying she expects the US economy will continue to grow strongly.In a Washington speech, Yellen described conditions as nearly ripe for the first rate increase in nine years and said that domestic and international threats to US economic growth had diminished. Moreover, she warned, after having locked the rate near zero for seven years, waiting too long could pose big risks to the economy and financial markets. Yellen made no comment on whether the Fed will raise its benchmark federal funds rate at its next meeting on December 15-16. But in a sign that she is ready for the momentous step, she told the Economic Club of Washington that, after many months of the buildup to a rate increase, when it does happen, it is a day she is "looking forward to." Yellen said she still sees slack in the US jobs market and that inflation remains weak, both issues that have prevented the US central bank from tightening monetary policy throughout this year. But she believes that a sustained pace of growth over the next few years will take the jobs market toward full employment and spur an eventual uptick in prices, she said. "I anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labor market slack, and a rise in inflation to our two percent objective," she said.

Fed's Brainard calls for cautious, gradual approach to rate hikes: The Federal Reserve should go slow in raising rates, a top U.S. central banker said on Tuesday, adding that there may be limits to the Fed's ability to tighten monetary policy while other central banks keep it loose. Weak growth abroad has pushed up the value of the U.S. dollar, pushing down on inflation and the level of interest rates that the economy can withstand while still generating jobs and growth, Fed Governor Lael Brainard told the Stanford Institute for Economic Policy Research. One model in common use at the Fed suggests a 1-percentage-point cut in rates would be required over the medium term to offset the negative impact on employment of the stronger dollar, she said. With short-term borrowing costs now near zero, "(t)his shift down implies a delay in the date of liftoff and a shallower path for the federal funds rate over several years," Brainard said. "In effect, this spillover from abroad implies some limitations on the extent to which U.S. monetary conditions can diverge from global conditions." Brainard's warning against raising rates too quickly echo those of the Fed's most dovish voting policymaker, Chicago Fed chief Charles Evans, who earlier in the day repeated his view that the Fed has plenty of tools to make things right if it falls behind the curve on lifting rates, but few tools if it mistakenly raises rates too soon.

The Federal Reserve is about to take a big gamble by hiking rates -  It only took seven years, but zero interest rates are about to be a thing of the past. The question, though, is for how long. That's because any doubt that the Federal Reserve was going to start increasing interest rates later this month has been erased. The economy was already doing well enough that, in the Federal Reserve's estimation, the first rate rise in nine years seemed justified, but it would have been a little less so if jobs growth had stalled out in November. But how much further will the Fed let it fall? That's really what it's deciding when it decides how fast to raise rates the second and third and fourth times. It's said it will do that slowly—maybe 0.25 percentage points every other meeting—but will that speed that up if the recovery doesn't slow down? Well, that depends on what the Fed thinks the "natural rate" of unemployment is. The Fed used to think that was around 5.2 percent unemployment, but has since marked that down to 4.9 percent. But who's to say that it isn't even lower than that? The truth is we don't know. It's all guesswork. The only way to tell is to wait until wages actually start rising more.   Sounds simple, but there are two problems. The first is that the Fed is about to start raising rates even though wages aren't. Average hourly earnings were up just 0.2 percent in November and 2.3 percent in the past year, well below the 3.5 to 4 percent that be consistent with a healthy economy.   And the second is that the Fed wants unemployment to go below its natural rate, but not too much. The idea is that this would make inflation, which is far, far below its 2 percent target, start rising towards it without going over it. But how can you do the second if you're also doing the first? The only way is if your guess—and that's all it is, really—is right that economy is already at the natural rate of unemployment.

"But It's Just A 0.25% Rate Hike, What's The Big Deal?" - Here Is The Stunning Answer - But assuming the Fed is still intent on hiking at all costs, and does just that in two weeks time, a question many are asking is where will General Collateral repo trade in case the Fed does decided to push rates higher by 0.25%: after all the Reverse Repo-IOER corridor is the most important component of the Fed's rate hike strategy, one which better work or otherwise the Fed will be helpless to raise rates with some $3 trillion in excess liquidity sloshing around, and what little credibility it has will be gone for good. And much more importantly, what are the liquidity implications from such a move. For the answer we go to the repo market expert, Wedbush's E.D. Skyrm: Where will General Collateral trade when the fed funds target range is moved 25 basis points higher to .25% to .50%? In the most simple method, GC has averaged about .15% for the past month, which implies a GC rate around .40% after the Fed move. However, given the unprecedented amount of liquidity in the financial system, there's a belief the Fed will have problems moving overnight rates higher.We have two quantifiable events over the past few years where the Fed moved Repo rates higher or lower: quarter-end and the QE programs. Given there are so many moving parts, consider these to be very rough estimates: Beginning in 2015, when funding pressure began each quarter-end, the market, on average, took approximately $255B additional collateral from the Fed and, on average, GC rates averaged 20.5 basis points higher. In 2013 on my website, I calculated that QE2 moved Repo rates, on average, 2.7 basis points for every $100B in QE. So, one very rough estimate moved GC 8 basis points and the other 2.7 basis points per hundred billion. In order to move GC 25 basis points higher, in a very rough estimate, the Fed needs to drain between $310B and $800B in liquidity.

Fed Interest Rate Increases: Not When, But How - --It has seemed likely for about a year now that the Federal Reserve would raise interest rates in the later part of 2015. After all, back in December 2012 the Fed announced that "this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6½ percent." But when the unemployment rate fell below that level in in April 2014, the Fed kept putting out complex and ambiguous statements, but wasn't yet ready to move. Now the unemployment rate has dropped to 5.0%, according to the statistics released in November, and a rise in interest rates seems likely soon, whether it happens at the next meeting of the Fed Open Market Committee on December 15-16, or early in 2016. My focus here is not on when or how much the Fed will raise interest rates, but on the mechanics of how the policy will be carried out. The standard way of raising interest rates before 2007 was, as every intro textbook explains, "open market operations." However, the Fed's quantitative easing policies have made open market operations obsolete, at least for the foreseeable future.  Jane E. Ihrig, Ellen E. Meade, and Gretchen C. Weinbach explain why, and what will take its place, in "Monetary Policy 101: What’s the Fed’s Preferred Post-Crisis Approach to Raising Interest Rates?", published in the Fall 2015 issue of the Journal of Economic Perspectives.

Janet Yellen’s Confidence in the U.S. Economy It’s two weeks before the Federal Reserve’s December meeting, at which interest rates have a good chance of being raised for the first time in nearly a decade. And that means that investors and Fed watchers the world over are paying close attention to any statement from Federal Reserve Chairwoman Janet Yellen, who has two public appearances this week, the first of which was a speech on Wednesday at the Economic Club of Washington. In her prepared remarks, Yellen expressed confidence in the U.S. economy. Though Yellen said “we cannot yet, in my judgment, declare that the labor market has reached full employment,” she pointed to substantial gains the economy has made in recent years. Yellen also said that she anticipates that U.S. economic growth is on track in meeting the Fed’s employment and inflation targets.  The U.S. central bank’s target for the interest rate has been near zero since 2008. Yellen stressed that delaying a rate hike could be risky, potentially resulting in abrupt tightening: However, we must also take into account the well-documented lags in the effects of monetary policy. Were the FOMC to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals. Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession. Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability.

A puzzle Janet Yellen cannot solve with a rate rise - FT.com  - This week the US Federal Reserve received a small gift. On Wednesday statisticians released data showing that productivity in the American economy rose 2.2 per cent on an annualised basis in the third quarter of the year. That does not sound dazzling — but it was much higher than expected. And the data reinforce the impression of a US economy that has “recovered substantially” from the 2008 crisis, as Janet Yellen, Fed chair, observed this week. That might strengthen the Fed’s case that it is time to raise rates — even though higher productivity numbers also reduce the inflation risk. But the big question now is whether this good news will last. For the unpalatable fact facing policymakers, such as Ms Yellen, is that American productivity has recently presented a very peculiar mystery. So much so that, when the New York Federal Reserve held a private breakfast seminar on the subject this week, the session was packed with heavyweights. Never mind the fact that topic is one normally discussed only by geeks. The puzzle is that a gap has opened up in recent years between the statistics and what policymakers have been hearing with their own ears. If you talk to American business executives these days, they will invariably say that their operations have become hyper-efficient. That is partly because the 2008 recession forced companies to use labour and capital more effectively. The more important reason, however, is that technological innovations, such as cloud computing, are enabling companies to deliver more output for every dollar of capital investment and each worker. Meanwhile, the spread of innovations such as the smartphone has given consumers access to once- unimaginable computing at relatively low cost. But if you look at official statistics, it seems productivity has collapsed — not increased — this decade. According to data from the US Bureau of Labor Statistics, annual productivity growth in the 1990s was about 2.2 per cent, rising to 2.6 per cent between 2000 and 2007. This implies a trend growth of 3 per cent, when you add population increases. Since 2008, however, the rate has fallen to 1.3 per cent, the BLS data say. Indeed Alan Blinder, the Princeton economics professor, calculates that since 2010 the quarterly rate has slumped to 0.5 per cent.

Fed Funds Rate Trend Ticks Higher–First Time In 3 Months -- The 30-day moving average of the Effective Fed Funds rate is inching higher for the first time since early September. The revival of the upward bias for this key rate, although slight, is significant in the wake of yesterday’s speech by Fed Chair Janet Yellen, who said that the central bank is moving closer to raising interest rates later this month. Fed officials have been hinting for months that the first round of monetary tightening in nearly a decade is near. The Treasury market has been pricing in that future, albeit unevenly. Nonetheless, the 2-year maturity, which is widely followed as a harbinger of future policy action, has been trading at or near five-year highs lately. That’s old news. What’s new is the fractional rise in the trend of the Effective Fed Funds rate, which is set by the Fed’s Federal Open Market Committee. EFF can be volatile in the short run, which is why looking at this rate through a moving-average lens is useful for monitoring the trend. The 30-day average had been trending higher for much of this year before peaking in early September. In the wake of late-summer economic worries, triggered in part by China’s surprise announcement in August that it was devaluing its currency to support growth, the Fed delayed an expected rate hike in September. Three months later, the rate-hike scenario is back on track, with renewed if still-preliminary support in the EFF trend.

Did unconventional monetary policy give the economy some “below zero” properties? - Arsenios Skaperdas, in his job market paper (same link), says yes:   I examine the relationship between monetary policy and growth at the zero lower bound using industry data. I devise a simple inferential test of monetary policy’s industry effects. In the absence of the zero bound, and given previous Federal Reserve behavior, the federal funds rate would have troughed in the range of -2 to -5% since 2009. If unconventional policy failed to bridge this gap, this deficit should represent a very large contractionary monetary shock. I create a measure of historical industry interest rate sensitivity. Estimates from this measure imply that interest rate sensitive industries, such as construction, should have suffered a 4 to 10% decrease in revenues, since 2009, in comparison to insensitive industries. I do not find that this is the case. Furthermore, differences in cross-industry revenue growth rates, ranked by interest rate sensitivity, are similar to those seen in previous US economic recoveries. Finally, I quantify how much the results are due to unconventional monetary policy. I construct an implied stance of monetary policy, equivalent to an unbounded effective federal funds rate, directly from industry growth rates and macro variables. The evidence suggests that unconventional policy lowered the effective stance of policy below zero.

Why Negative Interest Rates Are Becoming the New Normal - Central bankers have long talked about the problem of the “zero lower bound.” That’s the idea that interest rates can’t be set below zero. It is an important concept because it would mean there is a limit on how much an economy can be stimulated using monetary policy. The last few years have exposed a problem with this idea. It now looks as if the zero lower bound isn’t a bound. And it isn’t at zero. That was made clear by a decision from the European Central Bank on Thursday. It cut its main target interest rate, already at negative 0.2 percent, to negative 0.3 percent, expanding its campaign to try to stimulate Europe’s economy and get inflation to rise toward its just-below-2 percent goal. (It is perhaps a sign of the times that after the news was announced the euro rose against the dollar and stocks fell; despite the easing of monetary policy, the markets had expected the E.C.B. to do more.) This isn’t supposed to happen. In theory, if banks charge a negative interest rate — that is, people with money deposited pay the bank, rather than the bank paying them — people should just withdraw funds from the banks entirely. Why pay for the privilege of parking money at a bank if you could instead withdraw cash, put it under your mattress and avoid the charge entirely? Economists have argued in the past that the only way to make significantly negative interest rates possible would be to eliminate cash money entirely, or else anytime rates fall below zero there could be mass withdrawals from the banking system (and mass purchases of safes, lockboxes and very secure mattresses).

The Problem with Negative Fed Interest Rates - Dean Baker  - Neil Irwin had a piece in the Upshot section of the NYT raising the possibility that the Fed could have negative interest rates on reserves, rather than its current near zero rate, as a way to provide an additional boost to the economy. The argument is that it is very inconvenient to carry cash, so deposits would not flee banks even if the interest rate were a small negative number. The problem is that this analysis does not consider the realities of the banked population. Banks have millions (tens of millions?) of customers with relatively low balances. These customers are marginally profitable to the banks. (Often the banks profit on fees from these people, like overdraft charges.) If banks had to pay interest on reserves then these accounts would be even less desirable for banks, since they now would have to pay interest on the reserves that the small account holders had brought to their bank. For this reason, they may opt to raise their fees for opening and maintaining a bank account. The result would be that more people would be getting by without bank accounts. Any serious discussion of negative interest rates has to deal with this problem.

The Trouble With Interest Rates - DeLong  --Of all the strange and novel economic doctrines propounded since the beginning of the global financial crisis, the one put forward by John Taylor, an economist at Stanford, has a good claim to being the oddest. In his view, the post-crisis economic policies being carried out in the United States, Europe, and Japan are putting a ceiling on long-term interest rates that is “much like the effect of a price ceiling in a rental market where landlords reduce the supply of rental housing.” The result of low interest rates, quantitative easing, and forward guidance, Taylor argues, is a “decline in credit availability [that] reduces aggregate demand, which tends to increase unemployment, a classic unintended consequence.” Taylor’s analogy fails to make sense at the most fundamental level. The reason that rent control is disliked is that it forbids transactions that would benefit both the renter and the landlord. When a government agency imposes a rent ceiling, it prohibits landlords from charging more than a set amount. This distorts the market, leaving empty apartments that landlords would be willing to rent at higher prices and preventing renters from offering what they are truly willing to pay.   With the economic policies Taylor criticizes, this mechanism simply does not exist. When a central bank reduces long-term interest rates via current and expected future open-market operations, it does not prevent potential lenders from offering to lend at higher interest rates; nor does it stop borrowers from taking up such an offer. These transactions don’t take place for a simple reason: borrowers choose freely not to enter into them.

New Fed Rule Limits Emergency Lending Power - In the lead-up to the financial crisis of 2008, the Federal Reserve had the ability to make huge emergency loans to almost any entity it chose, a power it used to help save Wall Street firms from possible collapse.  Now, seven years later, the Fed, under the direction of Congress, has adopted a new rule that would place restrictions on its extraordinary financial powers. The restrictions, which stem from the Dodd-Frank Act of 2010, aim to ensure that the Fed’s emergency loans are not used to shore up insolvent firms. The five members of the Fed’s board on Monday voted to approve the rule, which takes effect on Jan.  The Fed’s emergency loans point to a quandary at the heart of the financial system. Many specialists say central banks, so-called lenders of last resort, need to have a free hand to lend liberally in a crisis to keep panics from taking down healthy firms. But others say the availability of emergency loans encourages banks to pursue habits — like making excessive use of short-term borrowing to finance their activities — that make the system unstable in the first place. Dodd-Frank’s architects tried to maintain much of the Fed’s latitude while preventing banks from taking advantage of the Fed’s largess.

Commodity prices and exchange rates: The dramatic decline in the prices of a number of commodities over the last 16 months must have a common factor. One variable that seems to be quite important is the exchange rate. ... One would expect that when the dollar price of other countries’ currencies falls, so would the dollar price of internationally traded commodities. But it is a mistake to say that the exchange rate is the cause of the change in commodity prices. The reason is that exchange rates and commodity prices are jointly determined as the outcome of other forces. ...the Great Recession in 2008-2009 ... meant falling demand for commodities. It was also associated with a flight to safety in capital markets, which showed up as a surge in the value of the dollar. It’s not the case that the strong dollar then was the cause of falling dollar prices of oil and copper. Instead, the Great Recession was itself the common cause behind movements in all three variables. ... I had been giving a similar interpretation to the correlation since June 2014 ... – news about weakness in the world economy seemed to be a key reason for strength of the dollar..., and would also be a reason for declining commodity prices. However, developments of the last three weeks call for a different explanation. The October 28 FOMC statement and subsequent statements by Fed officials have made clear that a hike in U.S. interest rates is coming December 16. An increase in U.S. interest rates relative to our trading partners is the primary reason that the dollar appreciated 4% (logarithmically) since October 16. Over that same period the dollar price of oil and copper each fell 16%. ... I will offer the view, based on the market reaction so far, that if the Fed’s objective in raising rates is to lower U.S. inflation and GDP, it seems to have taken a significant step in that direction.

Fed's Beige Book: "Economic activity increased at a modest pace" - Fed's Beige Book "Prepared at the Federal Reserve Bank of Richmond and based on information collected before November 20, 2015. "The twelve Federal Reserve District reports indicate that economic activity increased at a modest pace in most regions of the country since the previous Beige Book report. Economic growth was modest in the Districts of Cleveland, Richmond, Atlanta, Chicago, St. Louis, Dallas and San Francisco. In the Minneapolis District the economy grew moderately, while in the Kansas City District growth was steady on balance with mixed conditions across sectors. In the New York District economic conditions leveled off since the previous report, and in the Philadelphia District aggregate business activity continued to grow at a modest pace. In the Boston District, growth was somewhat slower despite reports of revenue increases. And on real estate:   Housing markets grew at a moderate pace on balance, and home prices also increased modestly since the previous Beige Book. ... Residential construction grew at a modest to moderate pace since the previous report. The Cleveland and Chicago Districts reported moderate growth, while New York, Philadelphia, St. Louis, and Kansas City Districts reported modest growth in residential construction. In the New York and Atlanta Districts, residential construction was noted as steady. Commercial construction strengthened modestly in most Districts since the previous report. ... Commercial leasing activity generally grew at a moderate pace.

Atlanta Fed Slashes Q4 GDP Forecast From 2.3% To Just 1.4% In Under One Week - Less than a week ago, following the latest deteriorating US data, we noted that the Atlanta Fed had slashed its Q4 GDP forecast from a reasonable 2.3% to 1.8%. Then, earlier today, after the latest recessionary data from the US manufacturing sector, we expected further cuts to be imminent from the Federal Reserve which unlike its peers, actually has an accurate track record of predicting GDP growth. We were not disappointed, and moments ago the GDPNow website announced that the latest model forecast for real GDP growth in the fourth quarter of 2015 has now tumbled to a paltry 1.4 percent on December 1, down from 1.8 percent on November 25. "The decline occurred this morning after the Manufacturing ISM Report On Business from the Institute of Supply Management and the construction spending release from the U.S. Census Bureau." The Atlanta Fed is now nearly 50% below the consensus Q4 GDP estimate of 2.5% We are not sure when the last time the Fed started a tightening cycle with a 1.4% GDP baseline, but we are confident we will have to go quite far back in time to find the answer.

Is America creeping toward another recession? - It's been seven years since the 2008 collapse. And if you look at the timing of recessions in recent decades, we're due for another one awfully soon. Now, predicting recessions is an exceedingly tricky business. Almost by definition, you can't see them coming: Markets are dynamic systems, defined by actions and reactions and ever-shifting balances of forces. Still, you can at least keep an eye on the circumstantial evidence. And the data points that suggest the economy is taking a wrong turn are building up. Let's start with the Institute of Supply Management's manufacturing index, which comes out every month. The release for November arrived on Tuesday, and at 48.6, it's the worst we've seen since June 2009. More importantly, any number under 50 means the manufacturing sector is actually contracting.  The next data point comes via Stephen Foley at the Financial Times. Since the start of 2015, prices for leveraged loans — debt extended to companies and individuals who are already well in the hole — have dived considerably from their post-Great Recession trend. Demand for this sort of debt appears to be drying up thanks to a slowdown in the economy, as potential buyers worry that the loans may stop paying off as much, and that defaults will rise. Finally, back in mid-November, David Dayen talked to economist Dean Baker about the ratio of business inventories to their sales. Basically, the amount of unsold goods businesses are piling up in stock rooms and warehouses has been steadily rising since roughly 2012. And the ratio of unsold goods to sales now stands at almost 1.4 to one. Other than a massive increase and then sell-off of inventories in the immediate aftermath of the 2008 collapse, that ratio bounced along happily at just under 1.3 to one between 2006 and 2012.

Why This Sucker Is Going Down... Again -- David Stockman - George Bush famously told an assembled group of Congressional leaders in the aftermath of the Lehman filing that unless they immediately passed an open-ended Wall Street bailout “this sucker is going down”. They blindly complied. Yet for awhile it seemed of no avail. By the post-crisis bottom in Q1 2009, household net worth had plunged from $68 trillion to $55 trillion or by nearly 20%. That reflected a 60% collapse in the stock averages and a 35% meltdown of housing prices. For a fleeting moment it appeared that economic truth had come home to roost.  Namely, that permanent gains in wealth and living standards cannot be achieved by the kind of rampant speculation and debt-fueled financialization that had generated the phony boom of the Greenspan era.  But that didn’t reckon with the greatest and most unfortunate accident of modern financial history. The clueless White House advisors who counseled George Bush in September 2008 to violate the free market in order to save it, had also advised him to appoint Ben Bernanke to the Fed in 2002, and then to promote him to the post of Chairman of the Council of Economic Advisors in 2005 and finally to become head of the Fed in January 2006. But here’s the thing. Bernanke was an academic hybrid of the two worst economic influences of the 20th century——the out and out statism of John Maynard Keynes and the backdoor statism of Milton Freidman’s central bank based monetarism. So Bernanke lunatic money printing spree which took the Fed’s balance sheet from $900 billion on the eve of the crisis to $4.5 trillion did not prevent any semblance whatsoever of a Great Depression 2.0. What it did, instead, was inflate the mother of all financial bubbles. Not only was the phony household wealth that had b een destroyed by the last crisis entirely recovered, but it has been increased by another $18 trillion to boot.

Treasury Snapshot as We Approach the Month's End -- As we approach the end of November, let's take a close look at US Treasuries. The yield on the 10-year note ended the day on Friday at 2.22%, which is at the higher end of the year-to-date range of 1.68% to 2.50%. The yield on the 2-year note closed the week at 0.92%, two bps off its 5-year high set this past Monday. The first chart shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since 2007. The source for the yields is the Daily Treasury Yield Curve Rates from the US Department of the Treasury and the St. Louis Fed's FRED repository for the Fed Funds Rate. Here is a closer look at the 2- and 10-year yields along with the FFR. A log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time. Here is a long look since 1965, starting well before the 1973 Oil Embargo that triggered the era of "stagflation" (economic stagnation with inflation). The trendline (the red one) connects the interim highs following those stagflationary years. The red line starts with the 1987 closing high on the Friday before the notorious Black Monday market crash. The S&P 500 fell 5.16% that Friday and 20.47% on Black Monday.

Don’t Sweat the Debt: Why the Federal Budget is Not Really Out of Control -- The GOP primary has become an orgy of fear mongering, and not just about immigrants and terrorists. The candidates regularly portray the federal debt, too, as a dire threat to America’s future. Some samples:  An exploding debt certainly sounds scary, but are federal finances that far out of control? Not really. If we look at the numbers, we can see that the debt is far from the dire threat the Republican candidates make it out to be.  First of all, forget about the $18 trillion, $19 trillion, and $20 trillion numbers the candidates like to talk about. Those refer to the government’s gross debt, a large part of which is issued by the Treasury but held by other government agencies, especially the Fed and the Social Security Trust Fund. Those interagency transactions create no burden on the public, because what the Treasury pays out in interest and principal goes right back into another government account. The only thing that matters from an economic point of view is net debt, also known as debt held by the public. That came to a little over $13 trillion at the end of 2015. You would think $13 trillion sounds like enough without exaggerating, but, evidently, presidential candidates are pledged never to pass up a chance to overstate their case.

Deficit Worries Over a Permanent Extenders Package? - This week, Congress is working to put together a package that would make a hodgepodge of temporary tax provisions permanent. Although not all extenders in the package are worth keeping, it is a decent solution to make them permanent. At the very least, extenders such as bonus expensing—one of the best extenders—will be a permanent part of the tax code.  An odd narrative surrounding the permanent package has popped up. Many claim that making the tax extenders permanent would be costly to the Treasury. This narrative comes from a revenue estimate that states that the government could lose more than $800 billion in tax revenue over the next decade if this extenders package were made permanent. Politico characterized this package as “budget-busting.” I think this narrative is odd and a little misleading. A permanent extenders package probably won’t lose much more revenue over what the federal government was going to collect over the next decade anyway. The exception here being the expanded provisions contained in this package.  Let me explain.

Congress Reaches Deal on Five-Year Highway Funding Bill -- In the first time in more than a decade, Congress has reached a deal on a bill that would provide funding to the Highway Trust Fund for more than a year. The Fixing America's Surface Transportation (FAST) Act would authorize five years of Highway Trust Fund spending. It would pay for it by transferring approximately $70 billion in general fund revenues to the Highway Trust Fund and by enacting a number of minor revenue raising provisions, such as increasing motor vehicle penalty fees. The bill would also reauthorize the controversial Export-Import Bank. Recently, the Highway Trust Fund has been spending more annually than it receives in tax revenue. This results in its fund’s balance to deplete. Under current law, the Highway Trust Fund cannot borrow money. When its balance reaches zero, it needs to operate on a cash-flow basis, which can disrupt funding to state and local infrastructure projects. Congress has needed to address this issue nearly every year with an annual patch. This five-year deal would ease the pressure on Congress to quickly find patches to extend funding for the Highway Trust Fund. The problem, however, is that this plan, like others in the past, does not address the fund’s underlying problem. The Highway Trust Fund will continue to spend more than it receives in revenue. The CBO projects that each year the fund will spend between $56 billion and $62 billion, but will only receive about $40 billion in tax revenue. As a result, the trust fund will run out of funds and need to be revisited by Congress in 2020. The fund will require nearly $100 billion in additional revenue to sustain current spending through 2025.

Congress takes bizarre detour to fund U.S. roads and bridges -- To get to the $305 billion needed to fund the federal highway bill, Congress did everything short of searching the couch cushions or raising the gas tax. Thursday, it tapped the piggy bank of U.S. banks regulated by the Federal Reserve. It also planned to sell oil in the U.S. Strategic Petroleum Reserve in attempt to find new “pay-fors,” which, in the parlance of Congress, are the funding sources used to pay for things. The route to pay for the nation’s roads and bridges was circuitous at best. Tapping bank funds was perhaps the oddest detour. Every time a bank joins the Federal Reserve, there’s a buy-in of equal to 6 percent of the bank’s assets. That money goes to the central bank and is never returned. But banks are rewarded for the mandatory investment with a 6 percent dividend. It’s the dividend that House lawmakers voted to turn into road funding. The Senate agreed to do the same late Thursday. The dividend siphon could have been harmful for community banks, the kind that dominate Montana, were it not for a last-minute change. “On the federal dividend payment, we exempted banks under $10 billion,” said Sen. Jon Tester, D-Mont. “What that means is they still get the payment, which is really critical for community banks in our state.” After the exemption, banks will contribute nearly $7 billion in lost dividends to highway funding. The Federal Reserve will contribute another $53 billion in surplus money. The bill also counts on the Internal Revenue Service deploying private collection agencies to acquire $2 billion in unpaid taxes from the public. Another $5 billion is expected from customs fees. Oil reserve sales are expected to pitch in $6 billion.

Hillary Clinton's Infrastructure Plan - It was almost eight years ago that I started writing about spending on infrastructure as a means of countercyclical fiscal policy. There was an op-ed in The Washington Post, followed by an essay in The Ripon Forum, as the Great Recession was beginning. In the intervening time period, the American Society of Civil Engineers (ASCE) has updated its quadrennial Infrastructure Report Card. As of 2013, the costs to improve our D+ grade had reached $3.6 trillion. That far exceeds what we allocate to infrastructure investment over a reasonable period, and the additional $275 billion (perhaps coupled with private funds to reach a total of $500 billion) over 5 years that Hillary Clinton has proposed is a small step in the right direction.What I find interesting about the proposal is less in the details and more in the possible timing. At present, the labor market is cresting. My preferred measure of the labor market is the initial claims for unemployment insurance. The latest estimates are posted each Thursday morning at this page. The latest 4-week moving average of initial claims was 271,000. We have been below 300,000 for over a year now, a threshold which has historically been associated with a growing economy. Between now and 2017, we can expect that series to start creeping back up to values that are less consistent with a growing economy. The time to set the stage for better policy options is now. Congress should make a prioritized list of the nation's infrastructure needs from the menu laid out by ASCE and its own objectives for improving sectors like energy, commerce, and transportation. Have the list ready to go in January 2017 when the new president takes office and when the economy will likely benefit most from increased public spending. That we would look like a functioning republic again is just an added bonus.

The Federal Reserve Board’s 8 Percent Hike in the Social Security Tax -- Dean Baker -  In the last couple of weeks the prospect of a 0.2 percentage point increase in the payroll tax has become a major issue separating the two leading contenders for the Democratic presidential nomination. Sen. Bernie Sanders has proposed an increase of this size to pay for system of paid family leave that is part of his platform. While former Secretary of State Hillary Clinton also supports paid family leave, she opposes any tax increase on middle-class workers, and insists she can get the money elsewhere.The intensity of this debate over a tax increase of 0.2 percentage points (at $70 a year for a typical worker), should have people wondering why the candidates aren't talking about the prospect of a much larger tax increase imposed by the Federal Reserve Board. The Fed's tax increase could easily exceed 8 percent of the wages for ordinary workers, yet it is not drawing any attention from the presidential candidates. By making the labor market tighter or looser, the Fed affects workers' ability to get wage gains or to even keep their pay rising in step with prices. Prior to the collapse, workers' share of the income generated in the corporate sector had averaged close to 82 percent. This fell as low as 73 percent in the downturn. It has since edged up slightly, but it is still be below 75 percent. This means that wages are more than 8.0 percent lower on average than would be the case if the collapse of the housing bubble had not devastated the labor market. From the standpoint of workers' ability to pay for their food, rent and other bills it makes no difference whether the government taxes away another 8 percent of their pay or whether the Fed's policies push down their pay by 8 percent. Either way, they have 8 percent less money.

TPP unveiled | VOXEU  - After more than five years of missed deadlines, trade ministers from the 12 participating Asia-Pacific countries meeting in Atlanta finally concluded negotiations surrounding the Trans-Pacific Partnership (TPP) on 5 October 2015. A month later, the much anticipated negotiated text of almost 6,000 pages was finally released to the public on 5 November 2015 (New Zealand Foreign Affairs and Trade 2015). The public fanfare accompanying the original announcement led many to believe the agreement would soon come into force. Yet, there is a lot that needs to be done before that happens, and there is no certainty that it will. In this note, we examine two inter-related issues:

• What TPP has achieved on paper and what it has not achieved; and
• Where we go from here, as in the next steps involved, including the likely fate of TPP itself.

Investors have controversial new rights to sue countries. Here’s why this matters for the U.S. -- On Oct. 5, the U.S. finished negotiating a complex and controversial free-trade agreement with 11 other countries, called the Trans-Pacific Partnership, or TPP. Congress is gearing up to vote yes or no on the treaty.  And one provision is especially contentious: ISDS, or Investor-State Dispute Settlement. Some 3,000 international treaties already exist that allow foreign investors to sue the government of a sovereign country, legally challenging its actions, but outside the country’s own courts. Foreign investors have sued at least 120 different countries more than 650 times between 1990 through 2014. Ezra Klein at Vox writes, “The ISDS system isn’t likely to have much effect on Americans at all.”  It’s true that the U.S. has prevailed in the 13 lawsuits brought to judgment against it thus far. So is the outcry over ISDS – from Sen. Elizabeth Warren (D-Mass.) on the left to the Cato Institute on the right – much ado about nothing?  No, it isn’t.   First of all, while one putative justification for ISDS is that it encourages investment, it isn’t at all clear that it does. Second, it hurts to get sued, even if you don’t lose. Third, ISDS doesn’t depoliticize investors’ disputes, as it was supposed to.  Here’s what the research says about the politics around foreign investment, and how it has consequences for the United States, too.

TPP Strengthens Controversial IP Arbitration -- The US is the main force behind the TPP, a recently concluded free-trade agreement among 12 nations accounting for 40 percent of world trade. This agreement, which still needs to be ratified by the countries involved, would greatly reduce impediments to trade in goods and services. It also would require all signatory countries to accept a controversial arbitration process known as “Investor-State Dispute Settlement” or ISDS. ISDS isn’t new. Over the last 30 years, ISDS provisions have been put into more than 3,000 international trade agreements. However, ISDS has changed over time. It originally was intended to protect investors, such as mining companies, whose property was seized by foreign governments without appropriate compensation. ISDS allowed investors to complain to neutral arbitrators, who in turn could order expropriating governments to pay fair compensation.  But in recent years, investors’ lawyers (many of whom also work as ISDS arbitrators) have successfully expanded the scope of ISDS. Arbitrators have issued multimillion dollar awards against countries because ordinary government actions – protecting such things as health, labor rights, and the environment – interfered with foreign companies’ expected profits. In Metalclad Corp. v. Mexico, for instance, an ISDS panel ordered Mexico to pay $16.2 million to a US company because a Mexican municipality denied the company a permit to expand a toxic waste facility into an environmentally sensitive area. In Ethyl Corp. v. Canada, a US seller of gasoline additive MMT brought an ISDS action when Canada banned MMT because of its health and environmental dangers. After Ethyl won a preliminary ISDS decision, Canada settled the case by paying $13 million, lifting the ban, and advertising that MMT is safe (although Ethyl’s home country, the US, bans the use of MMT in gas).

How the TPP could impact regulation of everything from cars to medical devices - Vox: The Trans-Pacific Partnership, a mammoth deal the Obama administration finished negotiating last month, doesn't just deal with trade in physical goods. It also establishes a number of new rules governing how countries from Canada to Vietnam regulate the digital economy. Like most parts of the TPP, the new rules on electronic commerce largely reflect the priorities of US industry — in this case, large technology companies. Most of these rules — including protections for the free flow of information, a ban on requiring information to be hosted locally, and restrictions on taxes for digital goods — seem sensible. But the TPP also contains a major provision with implications for how governments can regulate "smart" products — potentially everything from cars to medical devices — in an increasingly software-intensive world. On its face, the rule doesn't seem to have very much to do with trade at all. It's worth asking whether it makes sense for these kinds of rules to be determined by a trade deal that was negotiated in secret and might remain in force for decades. If rules that seem sensible today become outdated in a decade or two, it won't be easy for the US or other countries to back out.

Congress Moves Again to Block Investigation of Congressional Insider Trading -- Lawyers for the House of Representatives have escalated their legal fight to block the first-ever congressional insider trading investigation. The case revolves around allegations that Brian Sutter, a former senior staff member of the Ways and Means Committee, passed along nonpublic information that was then disclosed to a consulting firm that shared the tip with it’s financial clients. A number of the hedge funds appeared to use the insider tip to trade on stocks that would be impacted. The Securities and Exchange Commission opened an investigation and served subpoenas on Sutter and the Ways and Means Committee. Despite passing a bipartisan law to address the very issue of congressional insider trading — the Stop Trading on Congressional Knowledge Act, or STOCK Act of 2012 — congressional attorneys have fought the SEC investigation at every turn. First they refused to comply with the subpoenas. Then, when the SEC sued, the House attorneys claimed that the case should not proceed because lawmakers and their staff are constitutionally protected from such inquiries. “Communications with lobbyists, of course, are a normal and routine part of Committee information-gathering,” they argued in a brief filed last year.  U.S. District Judge Paul Gardephe agreed with most of the SEC’s claims and ordered Congress to comply with the subpoena within 10 days. “Members of Congress and congressional employees are not exempt from the insider trading prohibitions arising under the securities laws,” he wrote. Gardephe reminded the attorneys that “Congress barred such claims of immunity when it adopted” the STOCK Act.

Auto-dealing congressman draws complaint -- A watchdog group has called for the investigation of the actions of an auto-dealing congressman who proposed an amendment that would exempt his industry from a safety requirement. The amendment, which passed the House of Representatives, was offered just before midnight on Nov. 11. It allows automobile dealers to rent or loan out vehicles even if they are subject to safety recalls. Rental car companies, meanwhile, don’t get the same treatment under the proposed law. It was sponsored by U.S. Rep. Roger Williams, R-Austin, a self-described “second-generation auto dealer.”The Campaign Legal Center in a letter sent Monday urged the House Ethics Committee and the Office of Congressional Ethics to review Williams’ actions and also recommended changes to clarify House rules concerning recusal and conflicts of interest by members. The request was prompted by a Center for Public Integrity report posted last week. The story was also posted by the Fort Worth Star-Telegram and the Texas Tribune.

Glass-Steagall Is Campaign Finance Reform - The financial wonkosphere just doesn't get it about Glass-Steagall.  Pieces like this one by Matt O'Brien concentrate on the questions of whether Glass-Steagall would have prevented the last crisis or whether it is better than other approaches to reducing systemic risk.  That misses the point entirely about why a return to Glass-Steagall is so important. No one argues that Glass-Steagall is, in itself, a cure-all.  Instead, the importance of a return to Glass-Steagall is political. But totally absent in much of the wonkospheric discussion is any awareness of the political impact of busting up the big banks.    Let's be clear about why Glass-Steagall matters:  the route to campaign finance reform runs through Glass-Steagall.   By splitting up the financial services industry into squabbling factions, the result will be a substantial reduction in the influence of any particular section of the industry. Divide et impera. (See here for a more detailed discussion.) A return to Glass-Steagall is every bit as important as rolling back the Citizen's United opinion for reducing the influence of money in politics (and because of the declining marginal utility of money, the fact is that those with more money can in fact buy more influence).    Yes, Glass-Steagall won't stop the rogue bazillionaires from attempting to buy elections, and it leaves concentrated influence uncurbed in many other powerful sectors of the economy.  But finance is the high-octane fuel for the entire economy. Reduce the volatility in the financial sector, and we'll reduce volatility across the board in the economy. A less volatile economy benefits those households with fewer means that cannot self-insure against volatility.  It is also likely to produce a more equitable distribution of wealth--there are no outsized profits to be made from speculative bubbles or from heads-I-win, tails-you-lose gambles.

HARA$$ the CFPB: Omnibus Edition -- It's appropriations season and efforts to harass the CFPB seem to be going into overdrive. The latest scheme:  hit the CFPB with financial reporting requirements unparalleled for any government agency.  This little nugget of petty harassment is found in section 504 of the House Financial Services Appropriations bill being considered for inclusion in the final budget package.  The bill would require the CFPB to submit quarterly reports to Congress that detail its obligations by object class, office and activity; an estimate of the same information for the coming quarter; the number of full-time equivalents in each office the previous quarter and an estimate for the coming quarter; and actions taken to achieve the goals, objectives and performance measures of each office. This level of reporting detail required is unprecedented for other agencies, as is the reporting timeline: two weeks after the close of each quarter.  It's hard to see what the point of section 504 is other than to harass the CFPB, tie up the agency in bureaucratic redtape, and distract from its mission. 

Here's Why "Philanthropic" Mark Zuckerberg Will Place Facebook Shares In A For-Profit LLC -- Yesterday, all the media hoopla over Mark Zuckerberg’s announcement to “give away” 99% of his Facebook shares to philanthropic causes, came and went in the expected torrent of internet commentary. However, what you might have missed are the specifics around how he decided to safeguard those shares, and how unusual the for-profit LLC structure is for a charity. Bloomberg reports: The decision by Mark Zuckerberg and his wife, Priscilla Chan, to gradually give away 99 percent of their Facebook fortune is big news not just for the huge sum involved—about $46 billion—but for how the couple chose to achieve their philanthropic goal. Rather than set up a private foundation or charitable trust as Bill and Melinda Gates did, the Chan Zuckerberg Initiative will be structured as a limited liability corporation. It’s a highly unusual step for a massive philanthropy. “I’ve never seen someone set up an LLC exclusively for a philanthropic purpose before,” says Jane Wales, vice president of philanthropy and society at the Aspen Institute. “Normally they set up a foundation for the tax advantages of doing so.” Here are some significant ways that LLC status will shape what Zuckerberg and Chan do with their wealth.

Mark Zuckerberg’s $45 Billion Loophole -  James Kwak -- Much of the Internet is giddy over Mark Zuckerberg and Priscilla Chan’s “pledge” to give “99%” of their Facebook stock to “charity.” Bill and Melinda Gates said, “The example you’re setting today is an inspiration to us and the world.” Unfortunately, it’s not a very good example.Since the last gilded age, the super-rich have generally given to charitable organizations or to their own charitable foundations. Well, Mark Zuckerberg has found a different way. Instead, he’s creating an LLC that he owns (the Chan Zuckerberg Initiative), giving his stock to the LLC, and telling us all that the LLC will do wonderful things for the world.  Quick primer: A limited liability company is just a type of business organization, like a partnership or a corporation. It has owners, who control it, either directly or through managers whom they appoint. It can do anything that any other profit-seeking business can do. It doesn’t pay taxes; instead, its profits, losses, or deductions simply get transferred to its owners’ tax returns. Its primary advantage is that it is extremely flexible: you can design an LLC more or less any way you want. That means they can, among other things: Write checks from the LLC to themselves as its owners, pay themselves salaries for running the LLC, borrow money from the LLC, borrow money personally using LLC shares as collateral, sell some of their shares in the LLC to other people, or take cash right back out in many other ways. Use the LLC to buy houses they live in, offices that they work in, etc. Invest in profit-making companies. Contribute to political campaigns or super PACs, engage in direct political activity, or lobby legislators. Pay for his own political campaigns, if he so chooses. . Essentially, Zuckerberg can do everything with the LLC’s money that he can do with his own money. So on the most substantive level, he hasn’t done anything except announce some vague intentions. ... This is the next step in the privatization of philanthropy. No more Giving Pledge. Instead, we’ll have the Keeping Pledge: I pledge to keep all of my wealth and use a lot of it to make the world better place, as long as I get to define “a lot” and “better.”

SEC Steps Up Probe of Pre-IPO Share Trading -- WSJ -- Federal securities regulators are intensifying a broad investigation into trading of pre-IPO shares, zeroing in on companies that help technology-firm employees and others resell their shares. In a Nov. 25 court filing, the Securities and Exchange Commission ordered an unregistered brokerage firm under investigation, NetCirq LLC, to comply with an SEC subpoena sent on April 7. NetCirq, which says on its website that it “resells private securities and portfolio interests creating a secondary market for private equity,” couldn’t be reached for comment. The filing, in a San Francisco federal court, says the SEC broadly is investigating whether trading of pre-IPO shares could violate securities laws under the Dodd-Frank Act because some of the transactions could be considered “swaps,” or agreements whose value is tied to a future event. The SEC filing is the first public confirmation by the agency of the investigation. In July, The Wall Street Journal reported on the initiation of the probe, which followed a Journal page-one article in March that delved into the role of middlemen in the growing market for private shares.

US regulators propose powers to scrutinise algo traders’ source code FT -- Futures trading is dominated by computers, and nothing is more valuable than the “source code” of these high-powered machines. Trading groups zealously safeguard this ever-evolving code — which they call their “secret sauce” — in online “repositories” that strictly control a coder’s access.  But US regulators want access to such information as they seek to reduce the risk of a trading accident. It is a proposal that alarms the industry and its ranks of automated trading firms. Under a rule proposed last week, source code repositories would be open to inspection by the Commodity Futures Trading Commission and the US Department of Justice without a subpoena.The idea of sharing source code with government officials is emerging as the most controversial element of the CFTC’s new regulation on automated trading — Reg AT for short — which attempts to catch up with the explosion in automated trading over the past 10 years.“While we think that the CFTC’s goal is perfectly reasonable, it’s inconceivable that any firm should be expected to leave its intellectual property on the doorstep of the government,” says Bill Harts, chief executive of Modern Markets Initiative, a trading industry group, whose members include Hudson River Trading and Tower Research Capital. While other elements of the 521-page document will elicit debate, source code raises hackles because of its inherent secrecy and the federal government’s history of cyber security.

Another Hedge Fund Bites The Dust: Trafigura Shuts Down Its Flagship Metals Fund -- Two months ago, with everyone focusing on Glencore, we urged readers to "Forget Glencore: This Is The Real "Systemic Risk" Among The Commodity Traders" in which we profiled the "other" major independent commodity trader, Trafigura, specifically looking at the quite daunting $21.9 billion in disclosed debt which suggests a debt/EBITDA of a staggering 10x. Since then the newsflow out of Trafigura has been troubling (perhaps justifying why its bonds continue to yield somewhere north of 8%) and culminating last week with the announcement that Duncan Letchford, chief executive officer of Trafigura’s hedge fund Galena Asset Management, is leaving the company. As Bloomberg, who first reported the high profile departure last week, wrote, "Letchford, who has served as a member of Trafigura’s management board since August 2012, is leaving to pursue other interests" adding that Letchford took over the role of Galena CEO in March 2014 from Jeremy Weir, who became CEO of Trafigura after co-founder Claude Dauphin was diagnosed with cancer." Letchford was the third senior executive to leave Trafigura in six months. His exit follows the resignation of Chief Financial Officer Pierre Lorinet, who left in September, and Simon Collins, the former head of metals who departed in May. And while the storm clouds continue to build above Trafigura, we now know the fate of Galena and why its CEO Letchford departed the company in a hurry last week: according to a follow up from Bloomberg, Trafigura has decided to close the flagship Galena Metals Fund, the latest hedge fund victim of the rout in raw materials markets from oil to copper.

Junk Bonds Having Worst Year Since 2008 Crisis: Three Red Flags -- Pam Martens  - There are three major red flags waving in the wind over the U.S. junk bond market. First, the market is now approximately $1.8 trillion, about double the amount of junk bonds outstanding at the height of the financial crisis in 2008. Also, yields have skyrocketed, showing a growing aversion to risk by investors. As the above chart indicates, the lowest rated junk bonds (also called “high yield”) which have a CCC or lower rating, have seen their yields double from 8 percent to 16 percent since July of last year. And, finally, downgrades to ratings are swamping the number of upgrades, a telling sign of an overall deteriorating market. According to the ratings agency, Moody’s, the ratio of upgrades to downgrades is at the worst level since the financial crash in 2008-2009.  What have junk bond investors gotten in return for taking on all of this high risk this year? They’ve gotten a negative return of 2.20 percent – also the worst since the 2008 crisis. Declining bond credit quality is no longer just centered in oil and shale companies that are bearing the brunt of collapsed oil prices. Lower rated credits issued by U.S. retail, media and pharmaceutical companies are also now experiencing declining bond prices and rising yields (bond prices move inversely to yield). According to Standard and Poor’s, on a global basis, companies have defaulted on $95 billion worth of debt this year, making it the largest year of defaults since the height of the credit crisis in 2009. Equally problematic, a large part of the junk bond issuance did not go toward strengthening corporate balance sheets to help companies weather the next crisis. As financial blogger Wolf Richter reported on November 16:  in 2015 so far, the proceeds from 46% of the newly issued junk bonds were used to refinance maturing bonds, paying early investors with money raised from new investors. Another 30% of junk bond issuance was used for M&A [mergers and acquisitions]. “And 16% of the junk bond issuance was used for ‘corporate purposes’ and ‘other,’ such as share buybacks, special dividends back to their private equity owners, and even some investments in productive activities, while 4% was used for LBOs [leveraged buyouts].

U.S. Junk Bonds See Highest Distressed Ratio Since '09, S&P Says - Plummeting oil and gas prices pushed the percentage of junk bonds trading at distressed levels to the highest since the markets were recovering from the financial crisis, according to Standard & Poor’s. The ratings firm’s so-called distress ratio increased to 20.1 percent in November, up from 19.1 percent in October and the most since September 2009, when it hit 23.5 percent. The ratio is calculated by dividing the number of distressed securities by the total amount of speculative-grade debt outstanding. “The oil and gas sector accounted for 113 of the 361 issues in the distress ratio, because drops in oil prices affected profitability for oil and gas companies, where spreads have widened considerably, and had a spillover effect to the broader speculative-grade spectrum,” Diane Vazza, head of Standard & Poor’s Global Fixed Income Research Group, said in a report. The distress ratio, along with other economic, financial and credit conditions, indicates “growing pressure” that the number of defaults might rise, according to the report. In the third quarter of 2015 spreads remained elevated, while defaults grew to 2.71 percent as of Oct. 31 from 1.61 percent a year earlier, according to data provided by S&P.

“Distress” in US Corporate Debt Spikes to 2009 Level - Wolf Richter - Investors, lured into the $1.8-trillion US junk-bond minefield by the Fed’s siren call to be fleeced by Wall Street and Corporate America, are now getting bloodied as these bonds are plunging.  Standard & Poor’s “distress ratio” for bonds, which started rising a year ago, reached 20.1% by the end of November, up from 19.1% in October. It was its worst level since September 2009. It engulfed 228 companies at the end of November, with $180 billion of distressed debt, up from 225 companies in October with $166 billion of distressed debt, S&P Capital IQ reported. Bonds are “distressed” when prices have dropped so low that yields are 1,000 basis points (10 percentage points) above Treasury yields. The “distress ratio” is the number of non-defaulted distressed junk-bond issues divided by the total number of junk-bond issues. Once bonds take the next step and default, they’re pulled out of the “distress ratio” and added to the “default rate.” During the Financial Crisis, the distress ratio fluctuated between 14.6% and, as the report put it, a “staggering” 70%. So this can still get a lot worse. The distress ratio of leveraged loans, defined as the percentage of performing loans trading below 80 cents on the dollar, has jumped to 6.6% in November, up from 5.7% in October, the highest since the panic of the euro debt crisis in November 2011.The distress ratio, according to S&P Capital IQ, “indicates the level of risk the market has priced into the bonds. A rising distress ratio reflects an increased need for capital and is typically a precursor to more defaults when accompanied by a severe, sustained market disruption.”And the default rate, which lags the distress ratio by about eight to nine months – it was 1.4% in July, 2014 – has been rising relentlessly. It hit 2.5% in September, 2.7% in October, and 2.8% on November 30. This chart shows the deterioration in the S&P distress ratio for junk bonds (black line) and leveraged loans (brown line):

Default risk increasing and not an independent credit checker anywhere -- How much credit would a credit checker check if a credit checker could check credit?  Just when you think nothing can stop the march of cheap (in this case US) debt…A simple question come for you, via UBS’s Matthew Mish and Stephen Caprio: will credit markets be able to absorb the refinancing needs of lower quality high yield and leveraged loan borrowers?   As they say, with reference to the charts above, the rapid growth in corporate credit markets has been arguably unprecedented and there’s a pretty decent chance it has outpaced the ability of research resources to keep up — or a bond liquidity cognitive bandwith problem, if you will, where even asset managers lack the human resources to properly evaluate the risks associated with these bonds. That means just about everyone is relying on credit agencies. Not historically the smartest move, and not helped now by the fact that rating agency analysts are also getting swamped and that, per UBS again, “since 2005 bond indices utilized the middle of the three rating agencies to assign credit quality. Prior to 2005, bond indices used the lower or more conservative of Moody’s/S&P credit ratings.” More so: The fallacies of this approach are that ratings competition actually favors issuers as it results in more aggressive credit ratings2, and deterioration in credit ratings is glacial and lagged versus prior cycles. If we instead utilize Moody’s ratings – the more conservative rating for a majority of the ratings – the proportion of triple Cs increases to 20% (Figure 2). And this is not a function of changes in rating methodologies with respect to incorporating loss in default ratings. According to Moody’s not only has the number of single B and triple C issuers surged post- crisis, but the proportion of issuers by count rated triple C is at all-time highs (27%, Figure 3). Note this figure would include high yield bonds as well as leveraged loans, the latter of which has been under particular scrutiny from the Fed due to elevated credit risk and poor underwriting concerns.

Corporate debt downgrades reach $1tn -- FT - More than $1tn in US corporate debt has been downgraded this year as defaults climb to post-crisis highs, underlining investor fears that the credit cycle has entered its final innings. The figures, which will be lifted by downgrades on Wednesday evening that stripped four of the largest US banks of coveted A level ratings, have unnerved credit investors already skittish from a pop in volatility and sharp swings in bond prices. Analysts with Standard & Poor’s, Moody’s and Fitch expect default rates to increase over the next 12 months, an inopportune time for Federal Reserve policymakers, who are expected to begin to tighten monetary policy in the coming weeks. S&P has cut its ratings on US bonds worth $1.04tn in the first 11 months of the year, a 72 per cent jump from the entirety of 2014. In contrast, upgrades have fallen to less than $500bn, more than a third below last year’s total. The New York-based rating agency has more than 300 US companies on review for downgrade, twice the number of groups its analysts have identified for potential upgrade. “The credit cycle is long in the tooth by any standardised measure,” Bonnie Baha, head of global developed credit at DoubleLine Capital, which manages $80bn, said. “The Fed’s quantitative easing programme helped to defer a default cycle and with the Fed poised to increase rates, that may be about to change.” Much of the decline in fundamentals has been linked to the significant slide in commodity prices, with failures in the energy and metals and mining industries making up a material part of the defaults recorded thus far, Diane Vazza, an analyst with S&P, said. “Those companies have been hit hard and will continue to be hit hard,” Ms Vazza noted. “Oil and gas is a third of distressed credits, that’s going to continue to be weak.”

The rise and fall of the unicorns | The Economist: Technology companies are unlikely to experience a meltdown as severe as the housing crisis, but an industry that only yesterday was all promise and optimism is showing signs of cooling.Valuations for private technology firms are rising at a slower clip than they were six months ago. On November 24th Jet, an e-commerce competitor to Amazon, announced that it had raised $350m (valuing the firm at $1.5 billion), a big sum for a loss-making startup, but a lower one than it had first hoped for. Recently Airbnb, a fast-growing room-rental firm, raised $100m, but reportedly stayed at its recent valuation of $25 billion, instead of rising further. Fred Giuffrida of Horsley Bridge, a firm that invests in private-equity funds, reckons that the valuations in late-stage rounds of financing have declined by around 25% in the past six to eight months. These rounds are also taking slightly longer to complete. In the last quarter several mutual funds, including Fidelity, have marked down the value of some of their holdings in unlisted tech firms. Fidelity wrote down Dropbox, a cloud-storage firm, by 20%; Snapchat, a messaging app, by 25%; and Zenefits (software) and MongoDB (databases) by around 50% each. All are “unicorns”, that is, tech firms which have yet to come to the stockmarket but are valued at $1 billion-plus. These are seen as having the brightest of prospects among startups of all kinds. Zenefits, for example, had raised money at a $4.5 billion valuation in May.

Secular stagnation and the financial sector (updated) - In my last post on private infrastructure finance and secular stagnation, I suggested a bigger argument that  The financialization of the global economy has produced a hugely costly financial sector, extracting returns that must, in the end, be taken out of the returns to investment of all kinds. The costs were hidden during the pre-crisis bubble era, but are now evident to everyone, including potential investors. So, even massively expansionary monetary policy doesn’t produce much in the way of new private investment. This isn’t an original idea. The Bank of International Settlements put out a paper earlier this year arguing that financial sector growth crowds out real growth. But how does this work and what can be done about it?  The financial sector is an intermediary between savers and borrowers (for investment or consumption). So, the costs of running the financial sector and the profits generated in that sector must be included in the margin between the rates of return by savers and those paid by borrowers, or else they must be shifted on to society at large (for example, through bailouts or tax subsidies).

Big Banks Suffer Rare Fail as Congressional Deal Cuts Nearly $1 Billion a Year in Handouts -- Big banks will lose a portion of a multibillion-dollar government handout they’ve enjoyed for over 100 years, thanks to a compromise highway bill released Tuesday. One estimate pegged the loss to the banks at $8 billion to $9 billion over a 10-year time frame. The bill, as it emerged from a House-Senate conference committee, pays for roads, bridges, and mass transit projects in part by reducing what is currently a 6 percent annual dividend on stock that the big banks buy to become members of the Federal Reserve system. Fed membership offers many perks, from access to processing payments to cheap borrowing. But the dividend could be the sweetest gift, because banks cannot ever lose money on the stock; they’re even paid out if their regional Fed bank disbands. Despite the total lack of risk, member banks have received the 6 percent dividend payout every year since 1913. So for example, JPMorgan Chase, which has held stock since then, has made back its investment six times over without risking any loss. And if the bank stock was in place before 1942, that dividend payment is tax-free. Originally — that is, 100 years ago — the Fed offered the dividend to entice banks into the new Federal Reserve system. But nationally chartered banks are today required by law to become members, and all banks must abide by the standards of membership. So the dividend is just a vestigial sweetener that never went away, pumping billions of dollars in public money to the banks for no discernible reason.

Banks to Have Fed Dividends Clipped to Pay to Fill Potholes; JPMorgan, Bank of America the Biggest Losers -- Yves Smith - Yesterday, the general public scored a small but important victory over the Fed and the banking-industrial complex. To help fund the highway trust, which repairs highways and bridges, Congress released a compromise to the highway funding bill that whacks a long-standing subsidy to banks. This measure has high odds of passing. Part of the funding will come from a cut the dividend the Fed pays to member banks on their non-voting preferred stock holdings. It will drop from 6% to the 10 Treasury bond yield at the time of the dividend payment, which currently is 2.3%, with a cap at 6% for banks with more than $10 billion in assets. This was a compromise from the original proposal, to cut the dividend to 1.5% for banks with over $1 billion in assets.  The banks that will see the biggest decline in income in 2016 as a result of this change will be JP Morgan and Bank of America, at roughly $200 million each. Media reports suggest that this change will produce $8 to $9 billion in revenue, but the experts to whom I’ve spoken estimate the take at $12 to $15 billion over the next ten years.  While this is not the most earthshaking change, it is nevertheless important for several reason. First, it is a sign of the decline in reputation and power of the Fed as well as of the banking lobby. This provision was included in the highway funding bill, which was where it was first proposed in its current form (the idea had initially surfaced as an idea in the Progressive Caucus’s budget proposal). It had been removed from the House version of the bill but was reinserted in the reconciliation talks.

Fed Formally Ending Bailout Powers -- The Dodd-Frank Act ended the Federal Reserve's ability to repeat the bailout of individual firms, with huge loans like those extended to AIG and Bear Stearns and also ended its power to create the kinds of lending programs that supported the ABS market and other weakened market sectors, with acronyms like TALF. In a vote later in the morning, the Fed Board is scheduled to approve the language defining the new regime, specifying that only loans aimed at "broad based" areas of the financial system are permitted and they would have to cover at least five entities. The loan proceeds could not be forwarded to insolvent firms and could have an initial duration of no longer than one year. In another financial crisis, however, Congress could act to restore the power to bailout an individual firm but no longer would the Fed have the ability to act quickly and on its own authority if a single firm threatened to bring down the financial system.

Fed ends 'too big to fail' lending to collapsing banks - Nov. 30, 2015: The Fed officially adopted a new rule Monday that limits its ability to lend emergency money to banks. In theory, the new rule should quash the notion that Wall Street banks are "too big to fail." Translation: the government has to save them during a crisis. The Fed's new restrictions come from the Dodd-Frank Act of 2010, which brought in a wave of reforms after the financial crisis. Under the new rule, banks that are going bankrupt -- or appear to be going bankrupt -- can no longer receive emergency funds from the Fed under any circumstances. If the rule had been in place during the financial crisis, it would have prevented the Fed from lending to insurance giant AIG (AIG) and Bear Stearns, Fed chair Janet Yellen points out.   Politicians like Senator Elizabeth Warren have pushed the Fed to end such emergency lending to banks that are going under. She does not think the Fed's new rule goes far enough.  "There are still loopholes that the Fed could exploit to provide another back-door bailout to giant financial institutions," Warren, a Democrat, told CNNMoney.

The Fed’s New Bailout Rule Expands Its Powers Rather than Limiting Them -- Pam Martens -  Yesterday, the Federal Reserve Board of Governors voted 5-0 to approve a new rule that was required under the 2010 Dodd-Frank financial reform legislation to rein in the type of vast, secret, and below-market-rate lending the Fed engaged in during the 2007 to 2010 financial crisis.  But rather than rein in its hubris, the Fed seems to have gone out of its way to emphasize that it has the power to make loans to “persons,” not just financial firms whose illiquidity might pose a threat to the nation’s overall financial stability.  But if individual “persons” should get in a financial bind, is it really the job of the Federal Reserve to put taxpayers at risk with emergency bailouts? We seem to have devolved from a central bank whose job it was to set monetary policy to a central bank with added supervisory oversight of Wall Street banks, vast emergency lending powers, a whopping balance sheet of its own of over $4 trillion and now it’s adding carefully crafted language to its rules that make it perfectly legal for the Fed to make loans with no set dollar limits to “persons.” The summary of the new rule that the Fed placed in the Federal Register repeatedly makes reference to its ability to lend to persons. For example...

Academic Study Shows Fed Engaged In Systematic Leaks To Insiders --Researchers at Duke University and the University of California at Berkeley point toquantitative evidence that The Fed consistently leaks non-public information about its meetings, driving an investment pattern that has led to market gains. The study, first reported by The Daily Californian, considers historical patterns in stock prices relative to the distribution of non-public Fed information. “The Fed uses ‘informal communication channels’ on even-numbered weeks after FOMC meetings,” the report said, pointing to leaks making it into media stories such as the Wall Street Journal as well as showing up in private financial advice. To support their claims, researchers point to private advice received by financial investors andnews reports that contained non-public information discussed in FOMC meetings. “The informal communication can steer market expectations by engaging with private forecasters and newsletters that influence market inference of current and future policy,” the report stated, citing the goal of managing market expectations. “Informal communication facilitates learning by the Fed from the financial sector about how the Fed’s assessment of the economy compares to that of the financial sector and about how markets are likely to react to a particular policy decision.”“The data collection exercise was extensive, but it served our goal to understand how the Fed processes information internally and how it communicates with the public and the financial markets in particular,” researchers Vissing-Jorgensen, Duke University assistant professor, Anna Cieslak and UC Berkeley assistant professor Adair Morse were quoted as saying. The report specifically points to leaks by a variety of Fed officials, including then New York Fed Vice Chairman Timothy Geithner leading information about the Fed’s plans regarding the discount facility to then Bank of America CEO Ken Lewis.

Feds Win Fight Over Risky-Looking Loans - WSJ: Federal Reserve official Todd Vermilyea left no doubt about what regulators thought of a risky-looking type of loan made to companies when he spoke at a banking conference last year. “No, no, no, no, no,” said Mr. Vermilyea, a senior associate director at the Fed. What happened after that shows how relentless pressure from regulators is forcing banks to do business differently in the wake of the financial crisis. Leveraged loans, which go to companies already deep in debt, fell about 20% in dollar volume through October from the same period last year. And underwriting standards on those loans have impr oved in the past year, according to a recent report by three federal banking agencies.“We learned a lesson” from the financial crisis, says one former regulator who pushed for a crackdown when leveraged loans surged in 2013 and standards slipped. “You can’t wait.” Regulators and banks have clashed repeatedly over how to best shield the financial system from the next crisis. The leveraged loan battle has been one of the thorniest because regulators extended their reach beyond individual banks and across the entire financial system. Banks also objected because their primary role in leveraged loans is as middlemen who arrange a loan and sell it in pieces to outside investors. The banks bear less risk if the borrower defaults than if they held on to the loans.

S&P downgrades raft of US banks -- Eight of the biggest US banks have been downgraded by Standard & Poor’s, as the credit rating agency judged that the likelihood of federal government support in a future crisis had dimmed. Bank of America, JPMorgan Chase, Citigroup and Wells Fargo were among the banks affected by the downgrade, taken as the Federal Reserve sought to finalise rules next year governing the amounts and type of capital banks must hold to withstand a huge shock to the system. Morgan Stanley, Goldman Sachs, Bank of New York Mellon and State Street — the other four groups designated as globally systemically important banks, or GSIBs — were also downgraded, a shift signalled by S&P last month. All eight holding companies have been docked one notch, while the operating companies are unaffected. In October the Fed projected that the six largest banks faced a $120bn capital shortfall under new rules that would require the institutions to hold big buffers of debt that could be converted into equity in a crisis. Banks are expected to hold total loss absorbing capacity — TLAC — of at least 18 per cent of their risk-weighted assets. The rule is one of the final elements of regulators’ efforts to bolster lenders deemed “too big to fail”.

Obama Administration Targets ‘Unbanked’ Households in New Initiative - The Obama administration launched a new initiative this week to boost banking access for millions of Americans who don’t currently have checking or savings accounts. The Treasury Department announced plans to partner with nonprofits and companies such J.P. Morgan Chase & Co., PayPal Holdings Inc., Coca-Cola and the Gates Foundation to reach low-income and other underserved populations in the U.S. and emerging countries through a series of pilot programs, grants, and other initiatives. “For many, it is hard to imagine how it would be possible manage financial affairs without basic products like a checking account or a credit card,” said Treasury Secretary Jacob Lew at a forum on Tuesday. “But the consequences of exclusion are real, and expanding access to financial services is important at every level of the global economy.” A growing body of work has found significant volatility in household earnings, particularly in the aftermath of the 2008 financial crisis, highlighting the need for rainy-day savings. The crisis has also highlighted the risks for consumers in paying higher rates and fees for access to nontraditional credit through auto-title or payday loans. In the U.S., some 26 million consumers didn’t have enough of a financial history in 2010 to get a credit score, Mr. Lew said, meaning that paying rent and utility bills on time wouldn’t be sufficient to gain access to credit. He also said more attention was needed to help boost Americans’ inadequate retirement and rainy-day savings.

Fannie Mae: Mortgage Serious Delinquency rate declined slightly in October --Fannie Mae reported today that the Single-Family Serious Delinquency rate declined slightly in October to 1.58% from 1.59% in September. The serious delinquency rate is down from 1.92% in October 2014, and this is the lowest level since August 2008.  The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. Note: These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  The Fannie Mae serious delinquency rate has only fallen 0.34 percentage points over the last year - the pace of improvement has slowed - and at that pace the serious delinquency rate will not be below 1% until 2017. The "normal" serious delinquency rate is under 1%, so maybe Fannie Mae serious delinquencies will be close to normal some time in 2017.  This elevated delinquency rate is mostly related to older loans - the lenders are still working through the backlog.

Freddie Mac: Mortgage Serious Delinquency rate declined in October, Lowest since October 2008  -- Freddie Mac reported that the Single-Family serious delinquency rate declined in October to 1.38%, down from 1.41% in September. Freddie's rate is down from 1.91% in October 2014, and the rate in October was the lowest level since October 2008.  Freddie's serious delinquency rate peaked in February 2010 at 4.20%.  These are mortgage loans that are "three monthly payments or more past due or in foreclosure".   Although the rate is declining, the "normal" serious delinquency rate is under 1%.   The serious delinquency rate has fallen 0.53 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until the second half of 2016.  So even though delinquencies and distressed sales are declining, I expect an above normal level of Fannie and Freddie distressed sales through 2016 (mostly in judicial foreclosure states).

Where a Fifth of Homeowners Are Still Underwater - Rising home values helped more underwater homeowners surface in the third quarter, but some of the areas worst hit by the housing crash are continuing to struggle. Nearly 1 million fewer homeowners were underwater in the third quarter of 2015 compared with the second quarter. This summer, 13.4% of homeowners across the country were underwater—meaning they owed more than their homes are worth—down from 16.9% a year ago, according to Zillow, a real-estate information company. Typically, the proportion of homeowners underwater is closer to 2% to 5%, according to Zillow. But today only San Jose and San Francisco have fewer than 5% of buyers underwater, at 3% and 4.7% respectively. Las Vegas, which has had the highest percentage of homeowners underwater for the past four and a half years, remained on top, with just over 22% of homeowners still owing more than their homes are worth. It is followed by Chicago at 20.6% and Atlanta at 18.6%. Some of the worst-hit markets also saw the biggest improvement in recent years. In Atlanta, the share of underwater homeowners dropped 8.5 percentage points compared with a year ago. In Las Vegas, the drop was 5.6 percentage points. “In these markets, there are just so many people that are underwater that if you’re blanketing them with home-value appreciation they are much more likely to see larger drops in that negative equity rate,”

MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey, Purchase Applications up 30% YoY  -- From the MBA: Mortgage Applications Slightly Decrease in Latest MBA Weekly Survey Mortgage applications decreased 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 27, 2015. This week’s results included an adjustment for the Thanksgiving holiday....The Refinance Index decreased 6 percent from the previous week. The seasonally adjusted Purchase Index increased 8 percent from one week earlier. The unadjusted Purchase Index decreased 28 percent compared with the previous week and was 30 percent higher than the same week one year ago.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.12 percent from 4.14 percent, with points increasing to 0.50 from 0.49 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The first graph shows the refinance index. Refinance activity remains low. 2014 was the lowest year for refinance activity since year 2000, and refinance activity will probably stay low for the rest of 2015. The second graph shows the MBA mortgage purchase index. According to the MBA, the unadjusted purchase index is 30% higher than a year ago.

CoreLogic: House Prices up 6.8% Year-over-year in October -- The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).  From CoreLogic: CoreLogic US Home Price Report Shows Home Prices Up 6.8 Percent Year Over Year in October Home prices nationwide, including distressed sales, increased by 6.8 percent in October 2015 compared with October 2014 and increased by 1.0 percent in October 2015 compared with September 2015, according to the CoreLogic HPI. “Many markets have experienced a low inventory of homes for sale along with strong buyer demand, which is sustaining upward pressure on home prices. These conditions are likely to persist as we enter 2016,” said Dr. Frank Nothaft, chief economist for CoreLogic. “A year from now, as we finish out October 2016, we expect the CoreLogic national Home Price Index appreciation to slow to 5.2 percent.” “The rise in home prices over the past few years has largely been a healthy trend. The shadow inventory has been reduced significantly and home equity levels are now approaching pre-recession levels,” said Anand Nallathambi, president and CEO of CoreLogic. “As we move forward, the rise in home prices will need to be better correlated to family income trends over time to avoid homes becoming unaffordable for many. This is especially true in several metropolitan areas where home prices have grown rapidly.”

CoreLogic: Home prices rise 6.8% in October - Home prices nationwide, including distressed sales, increased by 6.8% in the month of October when compared with one year ago, according to CoreLogic’s latest Home Price Index. CoreLogic’s latest Home Price Index and HPI Forecast showed that home prices rose slightly in October over the previous month, rising 1% over September.  September’s Home Price Index was also up 0.6% compared to August. According to CoreLogic, its Home Price Index is built on “industry-leading” public record, servicing and securities real-estate databases and incorporates more than 30 years of repeat-sales transactions for analyzing home price trends. "The rise in home prices over the past few years has largely been a healthy trend. The shadow inventory has been reduced significantly and home equity levels are now approaching pre-recession levels,"  "As we move forward, the rise in home prices will need to be better correlated to family income trends over time to avoid homes becoming unaffordable for many,”  According to CoreLogic’s report, several metro areas have seen home prices grow by more than 6% over October 2014, including Atlanta-Sandy Springs-Roswell, Georgia; Houston-The Woodlands-Sugar Land, Texas; Los Angeles-Long Beach-Glendale, California; Phoenix-Mesa-Scottsdale, Arizona; Riverside-San Bernardino-Ontario, California; and Dallas-Plano-Irving, Texas, where home prices have risen 9.1% over October 2014.  CoreLogic’s report also showed that home prices are projected to increase by 5.2% percent on a year-over-year basis from Oct. 2015 to Oct. 2016, and the projected month-over-month gain will be just 0.1% from Oct. 2015 to Nov. 2015.

It's Official: Chinese Buyers Have Left The U.S. Housing Market - Overnight the NYT wrote a gargantuan, 3,800-word piece titled "Chinese Cash Floods U.S. Real Estate Market" discussing the impact of Chinese buyers on the US housing market. There are just two problems with the NYT's herculean effort: i) it is 5 years late in covering a topic this website has discussed extensively since 2010, and ii) it is wrong.  Recall that as we forecast in our take on a post-devaluation China in early September, with Beijing now actively cracking down on hot money outflows and instituting draconian capital controls, two things would happen: bitcoin - as China's most recent preferred mechanism of circumventing capital controls - would surge (it did), and Chinese investment in offshore real estate would tumble. It has. Because while the NYT was writing an article titled "Chinese Cash Floods U.S. Real Estate Market" that should have been published in 2010, the WSJ came out with a far more accurate piece, titled the opposite of the NYT piece, i.e., "Chinese Pull Back From U.S. Property Investments" about how Chinese buyers are no longer the marginal buyer of high end US real estate. Here, just as we predicted, is a summary of the state of the US housing market and the one key support pillar which is no longer there.Capping a five-year real-estate binge, Chinese nationals surpassed Canadian snowbirds as the top foreign buyers of U.S. homes for the year that ended in March—the most recent annual data—scooping up everything from $500,000 condos in New Jersey to $3 million vacation homes in California to $13 million Manhattan condos.But in recent weeks, some Chinese buyers have started to pull back, scared off by China’s stock-market selloff, slowing economic growth, currency devaluation and tightened restrictions on capital outflows. On Friday, China’s benchmark stock index fell by 5.5%, its biggest daily slide since August, as Beijing authorities stepped up a crackdown on the securities industry.

Why Paul Krugman Blew It on His ‘Solution’ for Gentrification -- naked capitalism - Yves here. As someone who has chosen to live in large cities as an adult (New York, Sydney, and for a few months on a project, London), I greatly prefer the vibrancy of areas with a mix of income levels, as opposed to the sterility of urban areas that cater strictly to the upper middle class and wealthy (and worse, since parts of London have a neutron-bombed feel by virtue of how many of the global wealthy have apartments there that they only occasionally inhabit).   One of the fallacies that this article addresses is the idea that promoting more development in cities leads to more affordable housing. The reality is that developers, absent carrots and sticks (incentives and requirements) will build housing for the moderate to seriously well-off, because the returns per square foot are higher. The increase in construction cost for putting in a few more amenities and using better materials and fixtures is disproportionately rewarded in higher sales prices and rents. And that higher-cost housing is just not fungible with “affordable” housing. One remedy that was very effective, and also attractive to developers was Section 8 housing, which provided tax breaks for building affordable rental housing. Steve Ross, now a Forbes 400 member (known best for developing New York City’s Time Warner Center, but he was a billionaire long before that), started out doing Section 8 housing.  (By Randy Shaw/ Originally published at Counterpunch)

NAR: Pending Home Sales Index increased 0.2% in October, up 3.9% year-over-year  -- From the NAR: Pending Home Sales Nudge Forward in October The Pending Home Sales Index, a forward-looking indicator based on contract signings, inched 0.2 percent to 107.7 in October from an upwardly revised 107.5 in September and is now 3.9 percent above October 2014 (103.7). The index has increased year-over-year for 14 consecutive months...The PHSI in the Northeast rose 4.5 percent to 93.6 in October, and is now 6.8 percent above a year ago. In the Midwest the index declined 1.0 percent to 103.9 in October, but remains 3.3 percent above October 2014.Pending home sales in the South decreased 1.7 percent to an index of 118.1 in October and are now 0.3 percent below last October. The index in the West climbed 1.7 percent in October to 106.2, and is 10.4 percent above a year ago.  This is below expectations of a 1% increase for this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in November and December.

October Pending Home Sales Fractionally Higher -- Earlier today the National Association of Realtors released the September data for their Pending Home Sales Index. "Pending home sales were mostly unchanged in October, but shifted marginally higher after two straight months of declines, according to the National Association of Realtors®. Gains in the Northeast and West were offset by declines in the Midwest and South." (more here). The chart below gives us a snapshot of the index since 2001. The MoM change came in at 0.2%. Investing.com had a forecast of 1.5%. Over this time frame, the US population has grown by 13.5%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001. The index for the most recent month is 15% below its all-time high in 2005. The population-adjusted index is 22% off its 2005 high.  The NAR explains that "because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing Home Sales by a month or two." Here is a growth overlay of the two series. The general correlation, as expected, is close. And a close look at the numbers supports the NAR's assessment that their pending sales series is a leading index.

Pending Home Sales Inch Up +0.2%, Economists Expected +1.0 to +1.5%  --Pending home sales for the month of October were nearly flat vs. economists expectations of something much higher.  The Wall Street Journal reports Pending Home Sales Rise 0.2% in October, economists had predicted a 1.5% increase. The Bloomberg Econoday consensus was for a +1.0% gain.  Sales of existing homes have been soft and are not likely to pick up in the next few months based on October's pending sales index which is up only 0.2 percent. Year-on-year, the index is up 3.9 percent which matches the rate of gain for final sales during October. Flatness, unfortunately, is the theme. The Northeast did the best in October, up 4.5 percent for a year-on-year plus 6.8 percent. The West is next with pending sales up 1.7 percent for a year-on-year gain of 10.4 percent. Bringing up the rear are the Midwest, down 1.0 percent on the month for a year-on-year plus 3.3 percent, and the largest region which is the South, down 1.7 percent in October for the only negative year-on-year reading of minus 0.3 percent. The National Association of Realtors cites low supply of available homes as a negative for sales and warns that prices in some markets are rising too fast, especially for first-time buyers. The association cites strength in the Northeast as an example, a region where price appreciation is lower and supply greater. Housing has undeniably cooled and so has retail spending. Manufacturing is in an outright recession. Jobs and autos have been the two main drivers of the economy. Jobs are a hugely lagging indicator.

Construction Spending increased 1.0% in October, Up 13% YoY -- The Census Bureau reported that overall construction spending increased in October: The U.S. Census Bureau of the Department of Commerce announced today that construction spending during October 2015 was estimated at a seasonally adjusted annual rate of $1,107.4 billion, 1.0 percent above the revised September estimate of $1,096.6 billion. The October figure is 13.0 percent above the October 2014 estimate of $979.6 billion.During the first 10 months of this year, construction spending amounted to $888.1 billion, 10.7 percent above the $802.3 billion for the same period in 2014.  Both private spending and public spending increased: Spending on private construction was at a seasonally adjusted annual rate of $802.4 billion, 0.8 percent above the revised September estimate of $795.8 billion. ... In October, the estimated seasonally adjusted annual rate of public construction spending was $304.9 billion, 1.4 percent above the revised September estimate of $300.8 billion.  This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been increasing, but is 41% below the bubble peak. Non-residential spending is only 3% below the peak in January 2008 (nominal dollars). Public construction spending is now 6% below the peak in March 2009 and about 15% above the post-recession low. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 17%. Non-residential spending is up 15% year-over-year. Public spending is up 6% year-over-year. Looking forward, all categories of construction spending should increase this year and in 2016. Residential spending is still very low, non-residential is increasing (except oil and gas), and public spending has also increasing after several years of austerity. This was above the consensus forecast of a 0.6% increase, also spending for August and September were revised up. Another solid construction report.

U.S. construction spending rises solidly to near 8-year high | Reuters: U.S. construction spending rose more than expected in October as outlays rose across the board, suggesting the economy remains on firmer ground despite some slowing in consumer spending and persistent weakness in manufacturing. Construction spending increased 1.0 percent to a seasonally adjusted $1.11 trillion rate, the highest level since December 2007, after an unrevised 0.6 percent gain in September, the Commerce Department said on Tuesday. Construction spending has risen every month this year and is likely to support the economy in the final three months of the year as it deals with the headwinds of a strong dollar and spending cuts by energy firms, which have undermined manufacturing. Frugal consumers are also holding back growth. Economists polled by Reuters had forecast construction spending rising only 0.5 percent in October. Construction outlays were up 13 percent compared to October of last year. Construction spending in October was buoyed by a 0.8 percent rise in private spending, which touched its highest level since January 2008. Outlays on private residential construction gained 1.0 percent and hit their highest level since December 2007, reflecting increases in home building and renovations. Investment in private non-residential construction projects rose 0.6 percent to a near seven-year high, with spending on manufacturing plants rising a solid 3 percent. Public construction outlays jumped 1.4 percent to a five-year high as a surge in federal government spending offset a dip in investment by state and local government.

October 2015 Construction Spending Growth Continues.: The headlines say construction spending grew. The backward revisions make this series very wacky. In any event, construction spending is growing much faster than the economy in general. Econintersect and US Census Analysis:

• Growth deceleration 2.4 % month-over-month and Up 11.7 % year-over-year.
• Inflation adjusted construction spending up 9.9 % year-over-year.
• 3 month rolling average is 13.5 % above the rolling average one year ago, and down 2.4 % month-over-month. As the data is noisy (and has so much backward revision) - the moving averages likely are the best way to view construction spending.
• Up 1.0 % month-over-month and Up 13.0 % year-over-year (versus the reported 14.1 % year-over-year growth last month).
• Market expected 0.4 % to 1.8 % month-over-month (consensus +0.6) versus the +1.0 % reported

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

GDPNow Forecast for 4th Quarter Dips to 1.4% Following Weak ISM and Strong Construction Reports -  US News reports US Construction Spending Jumps to 8-Year High, Lifted by Home Building, Federal Government.  The construction of single-family homes and apartments climbed 1 percent in October, also reaching their highest level since December 2007. Manufacturers boosted their construction spending by 3 percent. And federal government building soared 19.2 percent, the biggest increase since October 2006. The consensus estimate for construction spending was +0.6% but the actual month-over-month reading was +1.0%.  Construction is one of the highlights of the 2015 economy with spending up a solid 1.0 percent in October for the best rate since May. Despite mixed signals from the housing sector, spending on residential construction is very solid, up 1.0 percent in October for a seventh straight gain and all of them convincing. Year-on-year, residential construction is up 16.6 percent vs 13.0 percent for total spending. The monthly gain in the residential component is led by the key subcomponent of single-family homes, up a very strong 1.6 percent for a seventh straight gain. New multi-family homes, which have been leading the residential component all year, rose 1.4 percent. And these gains are not tied to remodeling which dipped slightly in the month. Private non-residential spending rose 0.6 percent in October with the year-on-year rate at plus 15.3 percent. Strength here is led by outsized gains for manufacturing that are offset in part by weakness in the power and especially the commercial subcomponents. As noted earlier today, this morning's ISM report this morning was a disaster. (See Manufacturing ISM Contracts; Lowest Reading Since June 2009; Glimmers of Hope Extinguished) but the construction report looked good.Like Bloomberg I would have expected construction to add to GDP, in isolation.  Actual GDPNow results were dramatically different.  Compared to the November 27 report that included new home sales, construction appears to have subtracted approximately 0.09 percentage points and ISM roughly another 0.31 percentage points. Other reports in between may have contributed but those should be the main factors.

What Americans Spent More on Last Year: Housing, Health Care --Consumer spending grew broadly but unevenly across the U.S. last year, driven largely by housing and utilities, health care, and other services. A new Commerce Department report out Tuesday showed personal-consumption expenditures ranged from a robust 7.4% increase in North Dakota to a more muted 2.1% rise in West Virginia. Nationwide, spending was up 4.2% last year versus 3.1% in 2013. The data only partially captures a big drop in oil prices–it shows spending on gasoline down across the country but likely wouldn’t reflect layoffs and a slowdown in investment across the energy sector, which didn’t fully materialize until this year. But the figures help confirm the uneasy sense that outlays on essentials–such as housing–are at least partly squeezing out some discretionary spending. The Commerce Department said housing and utilities and health care accounted for almost one-third of the rise in consumer spending nationwide in 2014.Consumer spending has been particularly muted in recent months, a potential weight on economic growth. Personal consumption accounts for about two-thirds of economic output. Those are also areas with relatively strong inflation. At the end of 2014, the consumer-price index was up 3% from a year earlier for medical care and 2.5% for housing while overall inflation had climbed only 0.8%. Across all states, spending on housing and utilities grew 4.1% in 2014, with North Dakota posting the biggest rise at 8%. The state economy boomed in recent years amid a revolution in oilfield technology. But persistently low crude prices have spurred layoffs and a curtailed investment this year.

Hotels: Finishing Year Strong -- Looking back at historical data, the only time hotel occupancy was this strong in November was in 2005 - and the high occupancy rate in the Fall of 2005 was the result of people displaced from their homes due to the damage from Hurricane Katrina. Here is an update on hotel occupancy from HotelNewsNow.com: STR: US results for week ending 21 November The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 15-21 November 2015, according to data from STR, Inc.  In year-over-year measurements, the industry’s occupancy increased 3.7% to 63.1%. Average daily rate for the week was up 3.8% to US$116.26. Revenue per available room increased 7.6% to finish the week at US$73.33. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.  Hotels are now in the Fall business travel season.

Restaurant Performance Index indicates faster expansion in October  --Here is a minor indicator I follow from the National Restaurant Association: Restaurant Performance Index Rose in October Driven by stronger same-store sales and a more optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) posted a moderate gain in October. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.1 in October, up 0.7 percent from a level of 101.4 in September. In addition, October represented the 32nd consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators....“The October gain in the RPI was buoyed by broad-based improvements in the current situation indicators,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, restaurant operators are somewhat more optimistic about both sales growth and the economy in the months ahead.”

Black Friday crowds thin in subdued start to U.S. holiday shopping -- America's annual Black Friday shopping extravaganza was short on fireworks this year as U.S. retailers' discounts on electronics, clothing and other holiday gifts failed to draw big crowds to stores and shopping malls. Major retail stocks including Best Buy and Wal-Mart closed lower while Target, picked out by one analyst for its promotion strategy, saw its shares tick up. Bargain hunters found relatively little competition compared with previous years. Some had already shopped Thursday evening, reflecting a new normal of U.S. holiday shopping, where stores open up with deals on Thanksgiving itself, rather than waiting until Black Friday. Retailers "have taken the sense of urgency out for consumers by spreading their promotions throughout the year and what we are seeing is a result of that," said Jeff Simpson, director of the retail practice at Deloitte. Traffic in stores was light on Friday, while Thursday missed his expectations, he said. As much as 20 percent of holiday shopping is expected to be done over the Thanksgiving weekend this year, analysts said. But the four days are not considered a strong indicator for the entire season. A slow start last year led to deeper promotions and a shopping rush in the final ten days of December.

Black Friday Total Sales Crash 10% (Despite Rise In Online Spend) -- We can hear the mainstream media now - "Great News Everyone!! The American consumer is back" - online sales on Black Friday rose 10% to $1.7 billion which ComScore says shows "strong spending." The only problem is - which we suspect will be oddly missing from the mainstream narrative, as ShopperTrak reports total sales on Black Friday crashed 10% to $10.4 billion. While blame has been placed on early opening on Thanksgiving, that is false too since spending on that day also plunged 10%. So, the sales news is unequivocally bad - which is hardly surprising given the collapse in consumer confidence. So to clarify... (via The Guardian) Total sales in the US on Black Friday fell 10% to $10.4bn this year, down from $11.6bn in 2014, according to research firm ShopperTrak.  The decline in sales on the traditional busiest shopping day of the year has been blamed on shops opening the day before. But this year, sales on Thanksgiving also dropped, and by the same percentage, to $1.8bn. A big reason for the decline is increased online shopping, as Americans hunt down deals on their smartphones, tablets and computers. So, fewer customers ventured out for the traditional busiest shopping day of the year, while online retailers saw sales jump... (via Comscore) Black Friday (November 27) followed with an even stronger spending day with $1.66 billion in desktop online sales, up 10 percent from Black Friday 2014. “While the holiday season opened a little softer than anticipated, Thanksgiving and Black Friday both posted strong online spending totals that surpassed $1 billion on desktop computers and grew at the rate we had expected,” said comScore chairman emeritus Gian Fulgoni. “This is also the second straight year that Thanksgiving has established itself as one of the more important online buying days, while Black Friday continues to gain in importance online with each passing year.

Black Friday breaks record with 185K gun background checks: More Americans had their backgrounds checked purchasing guns on Black Friday than any day on record, according to data released by the FBI this week. The National Instant Criminal Background Check System processed 185,345 requests on Nov. 27, one of the largest retail sales days in the country. "This was an approximate 5% increase over the 175,754 received on Black Friday 2014," wrote Stephen Fischer, the FBI's chief of multimedia productions. "The previous high for receipts were the 177,170 received on 12/21/2012." Previous spikes for background checks, conducted before a gun buyer can obtain a firearm, occurred after prominent mass shootings, like in December 2012 in the wake of the Sandy Hook Elementary School shooting. Other Black Friday shopping days in 2014, 2013 and 2012 occupied the FBI's "top 10" list of  the most background checks processed in a 24-hour period. Since 1998, FBI data shows that the bureau has processed requests for more than 220 million firearm purchases.

Americans Have Never Tried To Buy So Many Guns In November... Ever -- Two things happened after the most recent widely publicized US mass shootings/domestic terrorism acts: i) Obama once again made a concerted effort to push for gun-control, and ii)gun sales soared to record highs for November most likely in response to i). As we reported in September, citing the FT, "gun sales this year could surpass the record set in 2013, when gun purchases surged after the December 2012 Sandy Hook murders." And given that Black Friday background checks broke all previous records, it appears we are well on our way. ... the calls for tighter gun laws lead to an increase in weapons sales. “Once the public hears the president on the news say we need more gun controls, it tends to drive sales,” said Mr Hyatt, who owns one of the largest gun retailers in the US. “People think, if I don’t get a gun now, it might be difficult to get one in the future. The store is crowded.” "We don’t want our business to be based on tragedy but we have to deal with what we have no control over,” Mr Hyatt said. “And after these shootings and then the calls for tougher gun laws, we see a buying rush.” This is not surprising: as Wired noted back in 2013, sharp spikes in gun sales usually following mass shootings for several reasons.

$4.50 Gasoline In Los Angeles -- December 2, 2015 --The Los Angeles Times is reporting: Much of the nation is paying $2 or less for a gallon of regular gasoline for the first time since spring 2009. But in California, drivers are shelling out significantly more — and the price gap has gotten wider in recent weeks. The Los Angeles area has been hit particularly hard. L.A. motorists are paying an average price that is 75 cents a gallon more than the national average, compared with a 30-cent difference a year earlier. Fuel experts attribute the increased disparity largely to refinery outages. California gasoline typically costs more than in the rest of the country because of higher taxes and fees as well as a unique state-mandated blend that produces less pollution. But this year the gap has widened into more of a gulf. Some California service stations are selling gas for more than twice the national average price, which was $2.038 a gallon Tuesday, according to AAA's daily price survey. For instance, the Shell gas station at Olympic Boulevard and Fairfax Avenue in Los Angeles had regular gas as high as $4.50 a gallon in recent days.

U.S. Light Vehicle Sales at 18.2 million annual rate in November -- Based on a preliminary WardsAuto estimate, light vehicle sales were at a 18.18 million SAAR in November. NOTE: Daimler is expected to report tomorrow. That is up about 7% from October 2014, and up slightly from the 18.13 million annual sales rate last month. This was the third consecutive month over 18 million.  This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for November (red, light vehicle sales of 18.18 million SAAR from WardsAuto). This was above the consensus forecast of 18.0 million SAAR (seasonally adjusted annual rate). The second graph shows light vehicle sales since the BEA started keeping data in 1967. Note: dashed line is current estimated sales rate. This was another very strong month for auto sales and it appears 2015 will be the one of the best years ever for light vehicle sales.

November Car Sales Drive Toward Record - WSJ: U.S. new-car sales in November continued to run at a blistering pace, putting the auto industry on track to challenge the 17.35 million sales peak reached in 2000. A spate of Black Friday deals coupled with cheap gasoline and low financing costs helped auto makers overall deliver a 1.4% increase over the same month last year, offsetting what historically is a sluggish sales month. The tally brings the industry this year to 15.82 million vehicles through November. The results continued an annual sales pace that is tracking to be among the best in U.S. history, and raised industry optimism for a new annual record, barring a string of bad weather or other unexpected woes. Ford Motor Co. F -0.73 % said on Tuesday it would spend $1.3 billion, about a fifth of its typical annual capital-expenditure budget, to upgrade a pickup truck plant in Kentucky. “There is a lot of inventory and auto makers are going to come out with guns blazing,” said Ernie Boch Jr., chief executive of Boch Automotive, a Norwood, Mass., dealership. “Right now, I don’t see any signs of [demand] letting up.” With gasoline prices nationwide hovering around $2 a gallon, sales of the heavier vehicles that deliver substantially higher profits to auto makers are driving the industry. Nearly 59% of November’s volume was classified as light trucks, according to researcher Autodata Corp., including smaller SUVs. These light trucks represented three out of every four vehicles sold by Detroit auto makers last month, representing nearly the highest mix of pickup and SUV deliveries as a percentage of sales in history. More than 80% of Fiat Chrysler Automobiles FCAU -1.62 % NV sales last month were light trucks.

EV Sales Are Posted (Except For Ford) -- December 1, 2015 - Numbers for EVs sold in November, 2015, have been posted (Ford will announce Wednesday, tomorrow):

• Tesla: 3,200 -- most in any month; previous high this year, 2,800 in June; last month, 1,900
• Nissan Leaf: 1,054, down from 1,238; average monthly sales this year: 1,447
• Chevrolet Volt: 1,980, down from 2,035; average monthly sales this year: 1,207
• VW e-Golf: 472, down from 596 in October; average monthly sales this year: 32
• Toyota Prius PHV: huge hit, only 44 in November, down from a paltry 91 in October; average monthly sales for the year: 379
• Fiat 500e (estimate): 390, down from 425; average monthly sales this year: 539

The importance of record November vehicle sales --The preliminary information shows that vehicle sales for November set yet another post-recession record:  This is definitely *not* something that happens on the cusp of a recession. If the "shallow industrial recession" I have been writing about for most of this year is deepening, it hasn't deepened enough to take down the consumer. The 2001 recession was largely driven by a downturn in business investments -- but even there, vehicle sales did decline from a peak one year prior to the commencement of the downturn: If the global downturn were being imported into the US via the stronger $ with sufficient force to cause not just a more pronounced slowdown, but an outright contraction, it would show up in fewer vehicle purchases. We're simply not there.

Light Vehicle Sales Per Capita: Another Look at the Long-Term Trend - The charts below have been updated to include today's preliminary report on U.S. Light Vehicle sales. For the past few years we've been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series we focus on the population adjusted data. Let's now do something similar with the Light Vehicle Sales report from the Bureau of Economic Analysis. This data series stretches back to January 1976. Since that first data point, the Civilian Noninstitutional Population Age 16 and Over (i.e., driving age not in the military or an inmate) has risen 62.4%. Here is a chart, courtesy of the FRED repository, of the raw data for the seasonally adjusted annualized number of new vehicles sold domestically in the reported month. This is a quite noisy series, to be sure. The absolute average month-over-month change is 4.4%. The latest data point is the preliminary November count published by Motor Intelligence, which shows a seasonally adjusted annual rate of 18.19 million units, a 0.4% increase from the previous month. The first chart shows the the series since 2007, which illustrates the dramatic impact of the Great Recession. The blue line smooths the volatility with a nine-month exponential moving average suggested by my friend Bob Bronson of Bronson Capital Markets Research. The moving average reduces the distortion of seasonal sales events (e.g., Memorial Day and Labor Day weekend) and thus helps us visualize the trend. In the chart above, the latest moving average value is 1.1% below its record high in 2005. Here is the same chart with two key modifications:

• We've created a per-capita version using the FRED's CNP16OV series for the adjustment.
• We've indexed the numbers so that the first data point, January 1976, equals 100.

The moving-average for the per-capita series peaked in 1986. Twenty-nine-plus years later, it is now down 25.3% from that 1986 peak.

Auto Loan Madness Continues As US Car Buyers Take On Record Debt, Lunatic Financing Terms -- Way back in June, we noted that auto sales had reached 10-year highs on record credit, record loan terms, and record ignorance. We based that assessment on the following set of Q1 data from Experian:

• Average loan term for new cars is now 67 months — a record.
• Average loan term for used cars is now 62 months — a record.
• Loans with terms from 74 to 84 months made up 30%  of all new vehicle financing — a record.
• Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
• The average amount financed for a new vehicle was $28,711 — a record.
• The average payment for new vehicles was $488 — a record.
• The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

In short, the “renaissance” in US auto sales is being driven (no pun intended) by increasingly risky underwriting practices and this is leading directly to the securitization of shoddier and shoddier collateral pools in a return to the “originate to sell” model that drove the housing bubble over a cliff in 2008. As Comptroller of the Currency Thomas Curry recently put it, “what's happening in the auto loan market reminds me of what happened in mortgage-backed securities in the run-up to the crisis.” 

There Go The Truckers: Unprecedented 59% Plunge In November Heavy Truck Orders - The rout beneath the relative calm of the market surface continues today as another sector has gotten crushed today in reaction to the domestic and global collapse in trade, the spreading domestic manufacturing recession and the bursting of the commodity bubble: truckers, and especially the heaviest, Class 8 trucks, those with a gross weight over 33K pounds, those which make up the backbone of U.S. trade infrastructure and logistics.  What happened? Nothing short of a complete disintegration in the heavy trucking sector. Wells Fargo explains: November Class 5-8 orders decreased 40% yr/yr and 26% from October. The yr/yr decline was the eighth consecutive month of Class 5-8 contraction. The decline yr/yr was driven by weaker Class 8 order intake. Class 8 orders of 16,600 were below our channel check based 22,000-25,000 expectation, dropped 59% yr/yr and 36% from October (vs. the ten-year average 7% decrease in November from October), and was the weakest order month on a seasonally adjusted basis since August 2010. Clearly, November Class 8 orders slowed to weak levels and were beneath expectations. We estimate the Class 8 order intake translates into a Class 8 backlog decline of about 6-8% from October and 15-18% yr/yr. Further, we estimate that backlog to inventory fell to 1.6-1.7 from October’s 1.82 and remained beneath 2 for the third consecutive month.

Amazon Buys Thousands of Own Trucks as Transportation Ambitions Grow - Amazon goes to great lengths to get packages into customers’ hands as quickly as possible — even if it means employing drones. Those efforts will now include putting thousands of Amazon-branded trucks on the road. The ever-ambitious online retailer planned to announce on Friday morning that it had purchased “thousands” of trailers — the part of a tractor-trailer that stores the cargo — to make sure it had the shipping capacity to move products on time as its North American business continues its rapid growth. The trailers won’t be used to deliver packages to customer doors. Instead, they’ll be utilized to transport items from one Amazon warehouse, known as a fulfillment center, to another, as well as between fulfillment centers and sort centers, where Amazon organizes orders by zip code to be delivered to local post offices. A spokeswoman stressed that Amazon would continue to rely on existing trucking partners, which own and drive the tractor portion of the vehicles that will tow the Amazon trailers. “The reality is we utilize a lot of great companies, but we do see the need for additional capacity,” she said.

Rail Week Ending 28 November 2015: Contraction Growing Faster. Rail Traffic in November Down 10.4%.: Week 47 of 2015 shows same week total rail traffic (from same week one year ago) declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic contracted year-over-year, which accounts for approximately half of movements and weekly railcar counts continued in contraction. The 52 week rolling average contraction is continuing to grow. Rail counts for the month of Novembers showed a significant contraction. A summary of the data from the AAR: Carload traffic in November totaled 1,041,605 carloads, down 10.4 percent or 120,259 carloads from November 2014. U.S. railroads also originated 1,024,162 containers and trailers in November 2015, down 1 percent or 10,828 units from the same month last year. For November 2015, combined U.S. carload and intermodal originations were 2,065,767, down 6 percent or 131,087 carloads and intermodal units from November 2014.In November 2015, six of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with November 2014. This included: miscellaneous carloads, up 32.9 percent or 5,515 carloads; motor vehicles and parts, up 4.7 percent or 3,142 carloads; and non-metallic minerals, up 6.9 percent or 1,143 carloads. Commodities that saw declines in November 2015 from November 2014 included: coal, down 17.6 percent or 78,798 carloads; petroleum and petroleum products, down 20.1 percent or 12,570 carloads; and metallic ores, down 31.7 percent or 10,056 carloads.Excluding coal, carloads were down 5.8 percent or 41,461 carloads in November 2015 from November 2014.Total U.S. carload traffic for the first eleven months of 2015 was 13,046,761 carloads, down 5.1 percent or 699,664 carloads, while intermodal containers and trailers were 12,530,739 units, up 1.8 percent or 223,272 containers and trailers when compared to the same period in 2014. For the first eleven months of 2015, total rail traffic volume in the United States was 25,577,500 carloads and intermodal units, down 1.8 percent or 476,392 carloads and intermodal units from the same point last year.

CEOs’ Economic Outlook Dims as More Plan to Pull Back Investment - Chief executives’ view of the U.S. economy dimmed in recent months, a factor causing business leaders to pull back on plans to invest in their companies. CEOs’ outlook on the economy declined for the third straight quarter, according to a Business Roundtable survey released Tuesday. The same survey showed that 27% expect to decrease capital spending over the next six months—the largest share planning to scale back investment since the middle of 2009, when the economy was just emerging from recession. AT&T Inc. CEO Randall Stephenson, chairman of the Business Roundtable, said uncertainly in Washington, especially around tax policy, is driving worries about the economy. “Companies are putting capital budgets together right now and don’t have a clear line of sight on what their tax bill will be on those investments,” he said on a call with reporters Tuesday. “When the tax code is uncompetitive, like ours is, it has the effect of incentivizing investment elsewhere” in the world. CEOs that are members of the trade group representing the largest U.S. businesses are waiting to see if Congress will renew dozens of tax breaks for businesses, known as “tax extenders.” Firms need clarity on those polices, as well as highway funding and the fate of the Export-Import Bank, Mr. Stephenson said.Uncertainty around fiscal policy combined with worries about terrorism and a slowdown in China and other overseas economies are causing CEOs to be cautious, he said. The Roundtable’s CEO Economic Outlook Index dipped to 67.5 in the fourth quarter. That’s down from 74.1 in the third quarter and the lowest reading since executives saw the economy contracting during the recession. Readings above 50 indicate expansion. The CEOs forecast the economy to grow 2.4% next year, a pace roughly in line with the first six years of the expansion.

Why Business Investment Is Slumping in Five Charts -- U.S. business investment advanced just 2.2% from a year earlier in the third quarter, a slowdown that marks one of the worse performances of the six-year-old economic expansion. The trend seems at odds with ultralow interest rates, consistent hiring and steady, if unspectacular, overall economic growth. So what’s causing business investment to slump? Businesses may be suffering from a lingering hangover after a deep recession. The pullback in business spending during the recession was far deeper than any since the Great Depression, but the bounce back has been lackluster. That could indicate still-shaky confidence about the economy. Other analysts say the lack of investment reflects low expected returns and uncertainty around tax policy. At the same time, labor has been cheap. Wages are still growing at a very modest pace, despite a drop in the unemployment rate. Inexpensive labor could be leading businesses to hire additional workers rather than invest in technology that could make existing employees more productive. The decline in business investment over the past year has been driving by a steep drop-off in spending on structures. And that’s reflective of the slump in oil prices causing investment in what had been a fast-growing energy industry to collapse. Also, notice spending on equipment has dipped. One factor is that falling farm incomes, a reflection of commodity prices, have caused spending on tractors and similar equipment to decline. If they’re not investing, what are firms doing with ample sums of cash? For one, they’re buying back stock. That strategy rewards shareholders and improves earnings per share, but it means companies are not spending on potentially productivity-improving capital. Finally, businesses are receiving fairly uneven support from other aspects of the economy. Consumer spending has grown, but has not offered a breakout in demand. Government spending, which drives road construction and other infrastructure building, has fallen sharply during the expansion. And residential investment has swung wildly.

The Internet of Things is a safety issue, and therefore a business risk --From surveillance cameras to insulin pumps, office tower elevators to smart cars, almost every device imaginable is being given the smarts and the Wi-Fi. That means they can be hit with a cyber attack. And that means that illegitimately changing data can now have a physical impact. This year's demonstrations of hacks against smart cars and, in recent years, medical equipment are all obvious examples. Earl Perkins, a Gartner research vice president, says that for the digital business, data is no longer just a competitive differentiator, or the basis for better decision-making.  "Data becomes an agent of safety and protection as well," "Our decisions about protecting data can affect people's lives, and the environments that they live in. And it can do it to a greater degree than ever," he said. Even the so-called right to be forgotten might have a safety element."Why would someone perhaps be interested in being forgotten? Why would they want to seek privacy? It may be as much for safety reasons as it was for security reasons," Perkins said. One of the key concepts of information security is the CIA triad: An organisation's information security processes must perserve the data's confidentiality, integrity, and availability. Gartner now considers the safety aspect to be so important that they've expanded the the triad, adding safety as a fourth security goal.

Trade Deficit Widens as US Exports Dip - Exports and imports are both down again this month. Exports decreased more so the result is a widening of the trade deficit. The Bloomberg Econoday Consensus was for a balance of -40.6 billion. The actual number was -43.9 billion, at the top end of the range of expectations.  The nation's trade deficit came in at the high end of expectations in October, at $43.9 billion with details reflecting oil-price effects but also soft foreign demand. Exports fell 1.4 percent in the month while imports, pulled down by oil, fell 0.6 percent. The decline for goods exports, at 2.5 percent, is in line with last week's advance data but not for imports where goods declined 0.6 percent, vs the advance reading of minus 2.1 percent. Exports of services are once again solid at plus 0.7 percent. Low prices for oil held down imports of both crude and industrial supplies. Imported crude averaged $40.12 per barrel in the month vs $42.72 in September and, in a reminder of the commodity price collapse, vs $88.47 a year ago. Turning to finished goods, however, imports do show gains with capital goods up as well as autos and consumer goods. Country data show a narrowing with China to $33.0 billion, which ends five straight months of widening, and a widening with the EU to $13.4 billion. This report is mixed, confirming weakness abroad but showing some life at home. But, with exports down, the data do point to a slow start for fourth quarter GDP. Given that imports subtract from GDP, the report is not "mixed". Nor does a chart of imports and exports appear to be "mixed". Nor can anyone look at the following and see "signs of life".

October Trade Deficit Up from Revised September -- The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Since 1976, the United States has had an annual negative trade deficit. Here is an excerpt from the latest report:The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.9 billion in October, up $1.4 billion from $42.5 billion in September, revised. October exports were $184.1 billion, $2.7 billion less than September exports. October imports were $228.0 billion, $1.3 billion less than September imports. The October increase in the goods and services deficit reflected an increase in the goods deficit of $2.1 billion to $63.1 billion and an increase in the services surplus of $0.6 billion to $19.2 billion. Year-to-date, the goods and services deficit increased $22.2 billion, or 5.3 percent, from the same period in 2014. Exports decreased $84.7 billion or 4.3 percent. Imports decreased $62.5 billion or 2.6 percent. This series tends to be extremely volatile, so we use a six-month moving average. Today's headline number of -43.89B was worse than the Investing.com forecast of -40.50B. The previous month was revised upward by 1.66B.

Trade Deficit increased in October to $43.9 Billion -- The Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.9 billion in October, up $1.4 billion from $42.5 billion in September, revised. October exports were $184.1 billion, $2.7 billion less than September exports. October imports were $228.0 billion, $1.3 billion less than September imports.  The trade deficit was larger than the consensus forecast of $40.6 billion. The first graph shows the monthly U.S. exports and imports in dollars through October 2015.  Imports and exports decreased in October. Exports are 11% above the pre-recession peak and down 7% compared to October 2014; imports are 2% below the pre-recession peak, and down 5% compared to October 2014. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products (wild swings earlier this year were due to West Coast port slowdown). Oil imports averaged $40.12 in October, down from $42.72 in September, and down from $88.47 in October 2014. The petroleum deficit has generally been declining and is the major reason the overall deficit has declined since early 2012. The trade deficit with China increased to $33.0 billion in October, from $32.5 billion in October 2014. The deficit with China is a substantial portion of the overall deficit.

Export-Import Bank Is Revived - WSJ: Legislation signed by President Barack Obama on Friday resurrected the U.S. Export-Import Bank and ended a five-month lapse that revealed far stronger bipartisan backing for the agency than the pitched battle to shut it down suggested. The outcome now gives the bank a firm footing until September 2019, but the brawl over its existence this year left both economic and political scars. The Ex-Im Bank charter ran out in July, preventing the agency from writing new business, after key lawmakers bottled up legislation that would overhaul and renew it. The unprecedented pause in activity for the 81-year-old agency that finances American exports prompted companies to move business abroad or risk lost sales. Critics say the agency puts taxpayers at risk of losing money to finance sales of planes, satellites and industrial equipment that should be left to the private sector. A muscular lobbying effort by business groups successfully persuaded lawmakers that U.S. manufacturers, already squeezed by a stronger dollar, risked being left at a permanent disadvantage to foreign rivals. General Electric, Boeing, and trade groups publicized examples of business that was being outsourced or lost outright to foreign competitors.

US factory orders rise in Oct., ending streak of declines --— U.S. factory orders rebounded in October after two prior monthly declines, helped by rising demand for aircraft, computers and machinery. Factory orders rose 1.5 percent in October, the Commerce Department said Thursday. This follows monthly declines of -0.8 percent in September and -2.1 percent in August. Factory orders have tumbled 7.1 percent year-to-date.  Manufacturers have struggled to adjust to a stronger dollar hurting exports, lower oil prices and weak global economic growth. But they were helped in October as orders in the volatile aircraft category climbed 81 percent. Orders for computers and electronics advanced 1.9 percent. Machinery orders improved 1.2 percent. A separate category that serves as a proxy for business investment spending — and excludes aircraft and defense orders — improved 1.3 percent. Much of the broader drag on the industrial sector this year reflects lower oil prices. Through October, the value of shipments from oil refineries have plunged 33.4 percent compared to the same period in 2014.  U.S. manufacturing has lost much of its heft this year, as factories face less demand abroad for their products. China’s economic growth has slowed. Europe is struggling financially. And Japan has slid into recession. The stronger dollar causes U.S. goods to be more expensive overseas, which has eroded exports. The lower oil prices have led energy firms to slash orders for pipeline and equipment. Demand for autos and long-lasting consumer goods have not been strong enough to fully offset these headwinds for manufacturers.

Factory Orders Bounce In-Line With Expectations. Autos Surprise to the Downside  Factory orders bounced, nearly in-line with the Econoday consensus estimate of 1.4 percent. The actual rise was 1.5% percent.  Don't give too much praise to the economists for a correct guess because they had a durable goods advanced report last week as a guiding key. The overall results were a mixed bag, with some components rising others faltering.
Factory orders bounced sharply higher in October and, together with the bounce higher for manufacturing in the industrial production report, confirm what was a very solid month for the sector. Factory orders rose 1.5 percent in the month led by a 2.9 percent surge in durable goods orders (revised 1 tenth lower from last week's advance release). This gain offsets a no change result for non-durable goods orders.  Excluding transportation, and orders tied to the biennial Dubai airshow, new orders rose a less exciting 0.2 percent. But indications from core capital goods are very strong with new orders surging 1.3 percent on top of a 0.5 percent orders gain in September. Turning to capital goods industries, new orders for machinery jumped 1.2 percent with computer orders up 5.9 percent.A negative in the report is a surprising 2.0 percent decline for vehicle orders, a disappointment that may very well be reversed in coming months based on the sustained and unusual strength of vehicle sales. Looking at other readings, total shipments fell 0.5 percent in October which is not a good start to the fourth quarter with core capital goods shipments also down 0.5 percent. But future shipments are certain to benefit from October's orders gain. Inventories, which are widely seen as too high, did dip 0.1 percent but relative to shipments could do no more than hold steady at a ratio of 1.35. Unfilled orders are positive, ending two months of decline with a 0.3 percent gain.

October 2015 Manufacturing Improves But Still Not Good: US Census says manufacturing new orders improved. Our analysis says sales did improve but are still not good. Unadjusted unfilled orders' growth remains in CONTRACTION year-over-year. Part of the reason for the bad data is that the data is not inflation adjusted (deflation is occuring in this sector) - but it does not explain all the decline. Most of the data was soft, but civilian aircraft was the major tailwind. US Census Headline:

• The seasonally adjusted manufacturing new orders is up 1.5 % month-over-month, and down 7.1 % year-to-date (last month was down 7.2 % year-to-date)..
• Market expected month-over-month growth of 0.5 % to 1.8 % (consensus +1.4 %) versus the reported 1.5 %.
• Manufacturing unfilled orders up 0.3 % month-over-month, and down 2.1 % year-over-year.

Econintersect Analysis:

• Unadjusted manufacturing new orders growth accelerated 1.3 % month-over-month, and down 5.7 % year-over-year
• Unadjusted manufacturing new orders (but inflation adjusted) unchanged year-over-year - there is deflation in this sector.
• Unadjusted manufacturing unfilled orders growth unchanged month-over-month, and down 2.1 % year-over-year
• As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production was growth accelerated 0.4 % month-over-month, and up 1.9 % year-over-year.

Spot The Factory Orders Recession -- When it comes to the US manufacturing economy, things are now abundantly clear: it is in a recession, the only question is how acute this recession will be, and how long it will last. According to the latest factory orders data released moments ago by the Dept of Commerce, while the headline number rose a modest 1.5%, above the 1.4% expected, the reality is that the baseline number was so low a sequential rebound was inevitable. The real punchline is the Y/Y change, which is shown on the chart below: it shows that factory orders have now been negative over the prior year for a whopping 12 consecutive months, which is just 3 shy of the 15 months of Y/Y declines recorded during the great recession. See if you can spot the manufacturing recession:  Still can't? How about now using this chart which shows that US factory orders are back to where they were in late 2010! Finally, if it still not visible, here is a chart which will make the US manufacturing recession visible even to the most tenured central planner and/or economist.

Dallas Fed Mfg Survey November 30, 2015: The Dallas Fed's general activity index is in contraction for an 11th consecutive month, at minus 4.9 for November which is, however, improved from October's minus 12.7. The Econoday consensus was calling for an 11.0 point decline. Order readings are also negative, at minus 1.6 for new orders, which is a 6 point improvement, but at minus 7.3 for the growth rate of new orders which is little changed from October and in the negative column for the 13th month in a row. On the plus side is a second straight increase for production, up 4 tenths to 5.2. And readings on the business outlook are steady to higher. But price data in the report are pushing further into negative ground with finished goods prices at minus 12.1 for an 11th straight negative reading, underscoring the deflationary effects of low energy prices on the Texas economy. This report rounds out what is a flat to negative run of regional indications for the nation's manufacturing sector during November, a sector that continues to be hurt by weak export demand and low prices.

Dallas Fed Manufacturing Outlook: Second Consecutive Month of Growth --This morning we got the most recent Dallas Fed Texas Manufacturing Outlook Survey (TMOS). The latest index came in at -4.9, a 7.8 point increase from last month's -12.7. The Investing.com forecast was for a reading of -10.0. Here is an excerpt from the latest report: Texas factory activity increased for a second month in a row in November after exhibiting weakness in the first three quarters, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged up from 4.8 to 5.2. Perceptions of broader business conditions were mixed in November. The general business activity index was negative again but less so, rising nearly 8 points to -4.9. The company outlook index pushed up to 0.8—with the near-zero reading reflective of essentially unchanged outlooks from October—after three months in negative territory. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator. Here is a snapshot of the complete TMOS.

Regional Fed Manufacturing Overview: November  --Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, they suspended publication “…pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification.” They anticipate the next release to be fall of 2015.  Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data).  Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions - this averages out to approximately zero for the average, which is flat and neither expanding nor contracting. For comparison, here is the latest ISM Manufacturing survey.

Chicago PMI declines to 48.7 -- Chicago PMI: Nov Chicago Business Barometer Down 7.5 Points To 48.7 The Chicago Business Barometer decreased 7.5 points to 48.7 in November from 56.2 in October, as a sharp fall in New Orders put it back into contraction for the sixth time this year.  The significant decline in the Barometer is indicative of the see-saw pattern of demand seen in 2015, with output and orders shifting in and out of contraction. The November fall also suggests that activity over the final quarter of the year may well decelerate barring a bounceback in December. New Orders fell 15.3 points to 44.1 in November from 59.4 in October, leaving it at the lowest level since March. Production also fell sharply, although managed to hold just above the neutral 50 level that separates expansion from contraction. ...Chief Economist of MNI Indicators Philip Uglow said, “That the Barometer was unable to hold on to the gain seen in October is a reflection of the erratic pattern of demand seen throughout 2015. The slowdown in the global economy, the strong dollar and decline in oil prices have all impacted businesses this year to varying degrees.”  This was well below the consensus forecast of 54.0.

Chicago PMI Contracts Again, 6th Time in 10 Months; Service Economy Poised for a Big Slowdown? - - Volatility in the Chicago PMI likely has economists scratching their heads. Following last month's surge comes this month's contraction. It's been off and on for 10 months. No swing in either direction has lasted more than two months.  Yet, the overall trend has been weakening for a year and economists this month's forecast by a mile. The Econoday Consensus estimate was for a reading of +54.0 in a range of 52.8  to 56.5. The actual reading was 48.7.  Volatility is what to expect from the Chicago PMI which, at 48.7, is back in contraction in November after surging into solid expansion at 56.2 in October. Up and down and up and down is the pattern with prior readings at 48.7 in September (the same as November) and 54.4 in August. New orders are down sharply and are back in contraction while backlog orders are in a 10th month of contraction. Production soared nearly 20 points in October but reversed most of the gain in November. Despite November's weakness, employment is up slightly. Prices paid is in contraction for a fourth straight month. Though this report points to November weakness for the whole of the Chicago economy, the volatility of the report should limit its impact on the month's outlook.

November 2015 Chicago Purchasing Managers Barometer New Orders Fall Sharply to Lowest Since March: The Chicago Business Barometer significantly declined and now is in contraction. .This index is now wildly gyrating. From Bloomberg, the market expected the index between 52.8 to 56.5 (consensus 54.0) versus the actual at 48.7. A number below 50 indicates contraction. Chief Economist of MNI Indicators Philip Uglow said, That the Barometer was unable to hold on to the gain seen in October is a reflection of the erratic pattern of demand seen throughout 2015. The slowdown in the global economy, the strong dollar and decline in oil prices have all impacted businesses this year to varying degrees. While it looks likely that the Fed will begin to raise rates in December, the latest setback supports the case for a gradualist approach to monetary tightening. From ISM Chicago: The Chicago Business Barometer decreased 7.5 points to 48.7 in November from 56.2 in October, as a sharp fall in New Orders put it back into contraction for the sixth time this year. The significant decline in the Barometer is indicative of the see-saw pattern of demand seen in 2015, with output and orders shifting in and out of contraction. The November fall also suggests that activity over the final quarter of the year may well decelerate barring a bounceback in December. New Orders fell 15.3 points to 44.1 in November from 59.4 in October, leaving it at the lowest level since March. Production also fell sharply, although managed to hold just above the neutral 50 level that separates expansion from contraction.

Chicago PMI Plummets To 48.7, Below Lowest Estimate - One month ago, the Chicago PMI soared, printing at 56.2, far above the highest estimate. It was not meant to be, and printing moments ago at 48.7, a mirror image of last month, as this time it printed below the lowest estimate of 49, with consensus expected a 54.0 print. And the sellside proving it is useless once again: here are the October and November forecasts and the actual print. Confirming that that US is indeed in a manufacturing recession is the starting fact that the PMI has been below 50 (shrinking) for more months in 2015 (6) than it has been above this expansionary threshold. The weakness was broad based, with New Orders (down 15.3), Prices Paid, Production, and Inventories all falling. There was some good news as Supplier Deliveries, Employment and Order Backlogs posted modest increases. Here is the breakdown from MarketNews: The Chicago Business Barometer fell 7.5 points to 48.7 in November from 56.2 in October, as both Production and New Orders fell sharply. The significant decline in the Barometer is indicative of the see-saw pattern of demand seen in 2015, with output and orders shifting in and out of contraction. The November fall also suggests that activity over the final quarter of the year may well decelerate barring a bounceback in December. The decline into contraction for the sixth month this year was due to a 15.3 point drop in New Orders and a significant fall in Production that reversed nearly all of October's surge and left it only marginally above neutral.

Milwaukee ISM Bounce Dies As Employment, New Orders Plunge -- For the 10th month in the last 12, Milwaukee's ISM missed expectations. After bouncing hopefully off 6-year lows in October, November saw weakness return with a plunge in New Orders and weakness in employment (even as exports supposedly soared). This is the 8th straight month of contraction (sub-50) in the survey. PMI 45.34 46.66 -1.3 declining

• New Orders 39.60 46.67 -7.1 declining
• Production 47.14 48.87 -1.7 declining
• Employment 48.16 51.44 -3.3 declining
• Supplier Deliveries 48.92 46.66 2.3 faster
• Inventories 42.86 41.39 1.5 declining
• Customers' Inv (NSA) 50.00 53.57 -3.6 growing
• Prices (NSA) 21.43 23.33 -1.9 declining
• Backlog (NSA) 39.29 40.00 -0.7 declining
• Exports (NSA) 50.00 33.33 16.7 growing
• Imports (NSA) 50.00 50.00 0.0 growing

Manufacturing conditions in Midwest worst in three years --- Minnesota and Midwest manufacturers digested more bad news this week as factories reported the worst monthly business conditions in three years. The closely watched nine-state Mid-America Business Conditions Index, compiled by Creighton University, slumped to just 40.7 in November, down from the already dismal 41.9 index in October. Minnesota, which had long defied the manufacturing downturn pinching other central U.S. states, saw its manufacturing index fall to 41.1 from October’s 42.7 as factories here were battered by big declines in sales, production inventories and employment. Any index below 50 signals economic retraction, so economists are quite concerned about such lackluster numbers. “Our overall index has weakened significantly for states and industries heavily dependent on agriculture and energy, which are being hammered by a strong U.S. dollar,” Creighton’s state and regional indexes signal a sector in trouble and appear to corroborate problems highlighted in a series of weak corporate earnings reports. In six weeks, Minnesota-based behemoths such as 3M, Ecolab, Donaldson and Graco all reported sagging quarterly sales or profits and major problems with currency exchange rates that stem from the high U.S. dollar and the recession in Canada, which is Minnesota’s largest trading partner.

PMI Manufacturing Index December 1, 2015: Markit's U.S. manufacturing sample, which has been reporting much stronger levels of activity than others, reports slower rates of growth in November. The final index for the month is 52.8 for a 2 tenths improvement from the flash but down a tangible 1.3 points from October. Softness in new orders, rising at their slowest pace in just over two years, is the chief reason for the dip. Export orders are in contraction, once again the result of weak foreign demand made weaker for U.S. goods by the strength of the dollar. Weakness in new orders is compounded by the first contraction in backlog orders since November last year. With orders down, output moderated in the month and manufacturers cut back inventories of finished goods. Hiring is slowing and supplier delivery times are improving, both indicative of weakness. Price readings remain mute. Though levels in this report are still pointing to growth, their weakness relative to prior months points perhaps to contraction in November for the factory sector which, however, bounced back in October, at least based on the industrial production and factory order reports. Watch for the ISM report coming up at 10:00 a.m. ET.

ISM Manufacturing index decreased to 48.6 in November -- The ISM manufacturing index indicated contraction in November. The PMI was at 48.6% in November, down from 50.1% in October. The employment index was at 51.3%, up from 47.6% in October, and the new orders index was at 48.9%, down from 52.9%. From the Institute for Supply Management: November 2015 Manufacturing ISM® Report On Business® Economic activity in the manufacturing sector contracted in November for the first time in 36 months, since November 2012, while the overall economy grew for the 78th consecutive month,  "The November PMI® registered 48.6 percent, a decrease of 1.5 percentage points from the October reading of 50.1 percent. The New Orders Index registered 48.9 percent, a decrease of 4 percentage points from the reading of 52.9 percent in October. The Production Index registered 49.2 percent, 3.7 percentage points below the October reading of 52.9 percent. The Employment Index registered 51.3 percent, 3.7 percentage points above the October reading of 47.6 percent. The Prices Index registered 35.5 percent, a decrease of 3.5 percentage points from the October reading of 39 percent, indicating lower raw materials prices for the 13th consecutive month. The New Export Orders Index registered 47.5 percent, unchanged from October, and the Imports Index registered 49 percent, up 2 percentage points from the October reading of 47 percent. Ten out of 18 manufacturing industries reported contraction in November, with lower new orders, production and raw materials inventories accounting for the overall softness in November."  Here is a long term graph of the ISM manufacturing index. This was below expectations of 50.5%, and indicates manufacturing contracted in November.

November 2015 ISM Manufacturing Survey In Contraction For First Time in 36 Months: The ISM Manufacturing survey is now in contraction. The key internals were in contraction. Nothing much good in this report. The ISM Manufacturing survey index (PMI) marginally declined from 51.0 to 48.6 (50 separates manufacturing contraction and expansion). This was below expectations which were 49.7 to 51.0 (consensus 50.5). Earlier today, the PMI Manufacturing Index was released - from Bloomberg: Markit's U.S. manufacturing sample, which has been reporting much stronger levels of activity than others, reports slower rates of growth in November. The final index for the month is 52.8 for a 2 tenths improvement from the flash but down a tangible 1.3 points from October. Softness in new orders, rising at their slowest pace in just over two years, is the chief reason for the dip. Export orders are in contraction, once again the result of weak foreign demand made weaker for U.S. goods by the strength of the dollar. Weakness in new orders is compounded by the first contraction in backlog orders since November last year. With orders down, output moderated in the month and manufacturers cut back inventories of finished goods. Hiring is slowing and supply deliveries are improving, both indicative of weakness. Price readings remain mute. Though levels in this report are still pointing to growth, their weakness relative to prior months points perhaps to contraction in November for the factory sector which, however, bounced back in October, at least based on the industrial production and factory order reports. . The regional Fed manufacturing surveys indicated little growth or contraction in November, and now the ISM indicates manufacturing shows contraction.

ISM Manufacturing Index: First Contraction in 36 Months - Today the Institute for Supply Management published its monthly Manufacturing Report for October. The latest headline PMI was 48.6 percent, a decrease of 1.5% from the previous month and below the Investing.com forecast of 50.5. This was the first month of contraction in 36. Here is the key analysis from the report: "The November PMI® registered 48.6 percent, a decrease of 1.5 percentage points from the October reading of 50.1 percent. The New Orders Index registered 48.9 percent, a decrease of 4 percentage points from the reading of 52.9 percent in October. The Production Index registered 49.2 percent, 3.7 percentage points below the October reading of 52.9 percent. The Employment Index registered 51.3 percent, 3.7 percentage points above the October reading of 47.6 percent. The Prices Index registered 35.5 percent, a decrease of 3.5 percentage points from the October reading of 39 percent, indicating lower raw materials prices for the 13th consecutive month. The New Export Orders Index registered 47.5 percent, unchanged from October, and the Imports Index registered 49 percent, up 2 percentage points from the October reading of 47 percent. Ten out of 18 manufacturing industries reported contraction in November, with lower new orders, production and raw materials inventories accounting for the overall softness in November." Here is the table of PMI components.  The ISM Manufacturing Index should be viewed with a bit of skepticism for for various reasons, which are essentially captured in Briefing.com's Big Picture comment on this economic indicator.  This [the ISM Manufacturing Index] is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle.

Manufacturing Goes Into Contraction According to ISM Survey -- The November ISM Manufacturing Survey is truly awful.  It shows the manufacturing sector has just gone into contraction.  This is after months of warning as growth stuttered.  PMI was 48.6%.  The composite PMI decreased by -1.5 percentage points and new orders plunged by -4.0 percentage points.  The only real positive was the employment in manufacturing grew according to the survey.  Overall the report really shows a a contracting U.S. manufacturing sector, the first in three years.  Once again the canary in the economic coal mine is suffocating.  The ISM Manufacturing survey is a direct survey of manufacturers.  Generally speaking, indexes above 50% indicate growth and below indicate contraction.  Every month ISM publishes survey responders' comments, which are part of their survey.  This month the petroleum industry says low prices are here to stay, negatively impacting their business and others mention the artificially strong U.S. dollar impacting their China export sales.   New orders really nose dove by -4.0 to 48.9%.  This is in contraction.  The Census reported October durable goods new orders increased by 3.0%, where factory orders, or all of manufacturing data, will be out later this week.  Note the Census one month behind the ISM survey.  The ISM claims the Census and their survey are consistent with each other and they are right.  Below is a graph of manufacturing new orders percent change from one year ago (blue, scale on right), against ISM's manufacturing new orders index (maroon, scale on left) to the last release data available for the Census manufacturing statistics.  Here we do see a consistent pattern between the two and this is what the ISM says is the growth mark: A New Orders Index above 52.3 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders. Below is the ISM table data, reprinted, for a quick view.

Manufacturing ISM Contracts; Lowest Reading Since June 2009; Glimmer of Hope Extinguished --After flirting with contraction for three months, the Manufacturing ISM fell into negative territory with a 48.6 reading, below the lowest Econoday estimate of 49.7. The Econoday Consensus guess was 50.5, an improvement over the October reading of 50.1   After skirting right at the breakeven 50 line since September, ISM's manufacturing index broke below in November to 48.6 which is more than 1 point below Econoday's low-end estimate for the lowest reading since June 2009. The decline includes a significant dip for new orders which are down 4.0 points to 48.9 and the lowest reading since August 2012. At 43.0, backlog orders are in a six-month streak of contraction. With orders down, ISM's sample cut back on production, down nearly 4 points to 49.2, and cut back on inventories, down 3.5 points to 43.0. Employment firmed but remains soft at 51.3.  A convincing detail in the report is the breadth of weakness with only five of 18 industries reporting composite growth in the month. Transportation equipment, getting a boost no doubt from aircraft and motor vehicles, is among those in the plus column while the negative column includes petroleum as well as a number of capital goods industries including machinery, primary metals, and fabricated metals. Weakness in these industries points to weakness in business expectations.Exports have been the Achilles heal of the factory sector all year. New export orders in this report held steady at 47.5 for the sixth straight sub-50 reading. Another weak detail is a second month of contraction for import orders (49.0) which are suffering their worst run in four years. Prices paid remains in deep contraction at 35.5.

ISM Manufacturing Collapses To Worst Since June 2009 As New Orders, Prices Paid Plunge -- While it is hoped that the economy can continue to expand on the back of the "service" sector alone, history suggests that "manufacturing" continues to play a much more important dynamic that it is given credit for... and that is a major problem as ISM Manufacturing just fell below 50 for the first time since Nov 2012, crashing to 48.6 - the weakest since June 2009. Across the components, new orders collapsed (worst since Aug 2012), and prices paid crashed. When ISM Manufacturing dropped to this level in early 2008, people largely ignored it at first... What respondents had to say...

• "The oil and gas industry is realizing that [the] ‘low’ oil prices are now the new reality with expectations to continue at this level for some time." (Petroleum & Coal Products)
• "Still seeing deflation in raw materials." (Chemical Products)
• "Bookings and new orders are lower than expected." (Computer & Electronic Products)
• "Automotive remains strong." (Fabricated Metal Products)
• "Business is still good." (Transportation Equipment)
• "Downturn in China and European markets are negatively affecting our business." (Machinery)
• "Strong dollar is slowing our sales to China as they can buy in Europe." (Primary Metals)
• "Medical device continues to be strong." (Miscellaneous Manufacturing)
• "Incoming orders have leveled off from the summer." (Furniture & Related Products)
• "Month-over-month conditions are stable." (Food, Beverage & Tobacco Products)

November ISM index confirms intensified deflationary pulse. Can the Fed listen?  --For the last month in my "Weekly Indicators" column, I have been writing about an intensified deflationary pulse in the US economy.  For example, one month ago in my summary I wrote: "Several intensified trends are emerging.  The positive trend is increased spending by US consumers as imported deflation finally teams up with a little improvement in wage growth. The negative trends are increased downturns in rail, shipping, and steel - i.e., that part of the US economy most exposed to global weakness - which have been joined by intensified strength in the US$ and a nascent upturn in interest rates courtesy of an anticipated December rate hike by the Fed." This renewed pulse has now shown up in the November ISM index, which fell to a 3 year low of 48.6.  This is actual bad news, showing an economy that is near contraction.  The silver lining is, we have seen plenty of times before where the ISM index fell to this level without the economy going into recession.  In the below graphs I subtracted 48.6 from the reading, so that the November reading is at the 0 line.  Here is 1948- 1980:

ISM Non-Manufacturing Index Decreased to 55.9% in November -- The November ISM Non-manufacturing index was at 55.9%, down from 59.1% in October. The employment index decreased in November to 55.0%, down from 59.2% in October. Note: Above 50 indicates expansion, below 50 contraction.  From the Institute for Supply Management: November 2015 Non-Manufacturing ISM Report On Business® . "The NMI® registered 55.9 percent in November, 3.2 percentage points lower than the October reading of 59.1 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 58.2 percent, which is 4.8 percentage points lower than the October reading of 63 percent, reflecting growth for the 76th consecutive month at a slower rate. The New Orders Index registered 57.5 percent, 4.5 percentage points lower than the reading of 62 percent in October. The Employment Index decreased 4.2 percentage points to 55 percent from the October reading of 59.2 percent and indicates growth for the 21st consecutive month. The Prices Index increased 1.2 percentage points from the October reading of 49.1 percent to 50.3 percent, indicating prices increased in November after two consecutive months of decreasing. According to the NMI®, 12 non-manufacturing industries reported growth in November. After a strong month of growth in October, the non-manufacturing sector’s rate of growth slowed in November. Most respondents are still positive about business conditions."  This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. This was below the consensus forecast of 58.2 and suggests slower expansion in November than in October. 

ISM Non-Manufacturing: November Growth at Slower Rate -- Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 55.9 percent, down 3.2 percent from last month's 59.1 percent. Today's number came in above the Investing.com forecast of 60.2 percent. Here is the report summary:"The NMI® registered 55.9 percent in November, 3.2 percentage points lower than the October reading of 59.1 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 58.2 percent, which is 4.8 percentage points lower than the October reading of 63 percent, reflecting growth for the 76th consecutive month at a slower rate. The New Orders Index registered 57.5 percent, 4.5 percentage points lower than the reading of 62 percent in October. The Employment Index decreased 4.2 percentage points to 55 percent from the October reading of 59.2 percent and indicates growth for the 21st consecutive month. The Prices Index increased 1.2 percentage points from the October reading of 49.1 percent to 50.3 percent, indicating prices increased in November after two consecutive months of decreasing. According to the NMI®, 12 non-manufacturing industries reported growth in November. After a strong month of growth in October, the non-manufacturing sector’s rate of growth slowed in November. Most respondents are still positive about business conditions." Unlike its much older kin, the ISM Manufacturing Series, there is relatively little history for ISM's Non-Manufacturing data, especially for the headline Composite Index, which dates from 2008. The chart below shows Non-Manufacturing Composite. We have only a single recession to gauge is behavior as a business cycle indicator.

November ISM non-manufacturing confirms consumer growth - This morning's ISM services report shows some weakening, but still no cause for any immediate concern. Note that because the "ISM services" index only has about 8 years of data, in this post I am making use of "ISM non-manufacturing" which dates to 1997. Below I've done the same thing I did with ISM manufacturing two days ago: I subtracted 58.2 from the current reading so that it shows exactly at zero (blue). I also again included ISM manufacturing (red): There have been 4 times since 1997 that ISM non-manufacturing crossed its current bound to the downside: 1998, 2000, 2006, and 2011. The most bearish of those was October 2000, only 5 months before the onset of the next recession. The non-manufacturing reading was much weaker not just at the onset of the 2008 recession, but for 2 years prior! On the other two occasions, (1998 and 2011), there was no recession at all. Since the 2000 recession is the closest analogue to our current situation -- an industrial slowdown triggered by a strengthening dollar -- obviously there is some cause for concern, and the US$ bears watching exceptionally closely. At the same time, today's reading like yesterday's motor vehicle sales confirms that the consumer part of the economy continues to outweigh the industrial weakness.

US Services Economy Crashes To 2015 Lows (And Surges To 6-Month Highs) - Obamacare Blamed -- US Services PMI rose from 54.8 in October to 56.1 in November - the highest since May 2015 (but this is a drop from the flash print of 56.5 and 2nd biggest miss against expectations of the year). ISM Services crashed from 59.1 to 55.9 (drastically missing expectations) hovering near its lowest since April 2014. Weakness is across the board with Business Activity, New Orders, Employment, Backlog, Exports and Imports all down. Why is the service economy slipping? Simple, the "Affordable Care Act impacting our business, reducing revenue while increasing cost of care." US Servcies PMI missed expectations but has only been higher in May... Respondents noted...

• "Affordable Care Act impacting our business, reducing revenue while increasing cost of care. Several states consolidating medical/behavioral providers which have impacted existing business negatively." (Health Care & Social Assistance)
• "Customers’ outlook on their revenues is softening." (Management of Companies & Support Services)
• "Moderate activity level. Some suppliers are providing longer lead times due to their own increased backlog." (Professional, Scientific & Technical Services)
• "Conditions are holding steady for a profitable year and 4th quarter." (Finance & Insurance)
• "Overall food [cost of goods sold] (COGS) has remained generally lower throughout 2015 due to strong dollar, less exports to other countries and low corn prices." (Accommodation & Food Services)

Productivity and Costs December 2, 2015: Wage pressures, especially relative to output, are appearing in the productivity and costs report. Unit labor costs, measured quarter to quarter, jumped to a much higher-than-expected annualized rate of 1.8 percent in the third quarter, up 4 tenths from the first estimate and twice expectations. The revised jump reflects a 4.0 percent rise in compensation, up from an initial 3.0 percent, and an upward revision to hours worked, now at minus 0.3 percent vs minus 0.5 percent. What was supposed to contain labor costs was higher output, which indeed is revised 6 tenths higher to plus 1.8 percent. This helps lift productivity to a 2.2 percent rate, which is down from 3.5 percent in the second quarter but up from negative readings in the prior two quarters (minus 1.1 and minus 2.2 percent). A look at year-on-year rates shows how soft productivity growth is, at plus 0.6 percent in the quarter vs a post-war average of plus 2.2 percent. Labor costs are up 3.0 percent year-on-year. Though a rise in labor costs is not being signaled by other data, this report is certain to be considered closely by FOMC policy makers. Low productivity, and rising labor costs along with it, point to the effects of full employment and limited investment in new technologies.

3Q2015 (Final): Headline Productivity Improves, Costs Down - Or the Opposite?: A simple summary of the headlines for this release is that the growth of productivity exceeded the growth of costs (headline quarter-over-quarter analysis). The year-over-year analysis says the opposite. I personally do not understand why anyone would look at the data in this series as the trends are changed from release to release - and significantly between the preliminary and final release. The headlines annualize quarterly results (Econintersect uses year-over-year change in our analysis). If data is analyzed in year-over-year fashion, non-farm business productivity was up 0.6 % year-over-year, and unit labor costs were up 3.0 % year-over-year. Bottom line: the year-over-year data is saying that costs are still rising faster than productivity.Although one could argue that productivity improvement must be cost effective, it is not true that all cost improvement are productivity improvements. [read more on this statement] Further, the productivity being measured is "capital productivity" - not "labor productivity". [read more on this statement here] Even though a decrease in productivity to the BLS could be considered an increase in productivity to an industrial engineer, this methodology does track recessions. [The current levels are well above recession territory. Please note that the following graphs are for a sub-group of the report nonfarm > business.

CEO Economic Confidence Implodes, Drops To Lowest In Three Years --What rate hike? Following a relentless barrage of recessionary industrial and manufacturing data, moments ago the Business Roundtable released its latest, fourth quarter 2015 CEO Economic Outlook Survey, and it is an absolute disaster. According to the report, for the third quarter in a row, CEOs expressed growing caution about the U.S. economy’s near-term prospects and indicated they are moderating their plans for capital investment over the next six months, according to the Business Roundtable fourth quarter 2015 CEO Economic Outlook Survey, released today. The Business Roundtable CEO Economic Outlook Index – a composite of CEO projections for sales and plans for capital spending and hiring over the next six months – declined 6.6 points, from 74.1 in the third quarter of 2015 to 67.5 in the fourth quarter.

Companies Shy Away From Spending - WSJ: Companies appear reluctant to step up spending on the basic building blocks of the economy, such as machines, computers and new buildings. The broadest measure of U.S. business investment advanced 2.2% from a year earlier in the third quarter, the Commerce Department said last week, marking one of the worse performances of the six-year-old economic expansion. Other measures show an even gloomier picture. A gauge of capital expenditures—orders for nondefense capital goods excluding aircraft—declined 3.8% through the first 10 months of the year compared with the same period in 2014, according to government estimates. Weak investment restrains economic output, one key reason the economy has struggled to grow faster than 2% in recent years. The weakness also saps the economy’s future potential. Capital expenditures are an important ingredient in improving employee productivity, which has grown at an anemic pace in recent years but is critical to workers’ wages and corporate profits.Many factors have conspired to limit growth in investments during this economic expansion. Businesses hesitated to commit to projects amid uneven consumer demand and concerns about the regulatory environment. Thousands of firms have decided to bolster share prices by spending money on stock buybacks and dividends, rather than plow funds back into facilities and equipment, moves that would boost worker productivity and eventually wages. Some analysts say the buybacks are evidence companies see little prospect of achieving good returns through capital investments.

Weekly Initial Unemployment Claims at 269,000  -- The DOL reported: In the week ending November 28, the advance figure for seasonally adjusted initial claims was 269,000, an increase of 9,000 from the previous week's unrevised level of 260,000. The 4-week moving average was 269,250, a decrease of 1,750 from the previous week's unrevised average of 271,000.  There were no special factors impacting this week's initial claims.  The previous week was unrevised at 260,000. The following graph shows the 4-week moving average of weekly claims since 1971.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims declined to 269,250.

November layoffs hit 14-month low at 30,953: Challenger: Layoffs by U.S.-based employers fell to a 14-month low in November, but total job cuts for 2015 were on track to hit a six-year high, according to global outplacement firm Challenger, Gray & Christmas. November payroll reductions fell 39 percent from the previous month to 30,953, the lowest level since September 2014. Still, the report brings year-to-date layoffs to 574,888, setting up 2015 to be the worst year for job cuts since 2009. Employers typically make bigger cuts in the fourth quarter as they adjust staffing levels to meet earnings goals, said John Challenger, the firm's CEO. "The November decline could be the quiet before a December storm or it could signal a lower-than-expected downsizing to close out the year," he said. "If recent history is any indication, it could be the latter, as December job cuts have been lower than the annual average since the end of the recession." The Challenger report comes a day before the Labor Department's crucial November employment data, which is expected to show the creation of 195,000 jobs. On Wednesday, payroll processing firm ADP and Moody's Analytics reported that private companies added a better-than-expected 217,000 positions

November 2015 Job Cuts Fall to 14 Month Low. But Annual Cuts On Track to Reach 6 Year High.: After a four-month stretch that saw more than a quarter of a million job cuts announced by U.S.-based firms, planned layoffs in November fell to the lowest level in more than a year. The nation's employers announced workforce reductions totaling 30,953 in November, 39 percent fewer than the 50,504 planned job cuts in October. Last month's layoff total was 14 percent lower than November 2014, when 35,940 job cuts were reported. November represents the smallest job-cut month since 30,477 planned cuts were announced in September 2014. The 14-month low comes on the heels of a four-month period during which 256,263 job cuts were recorded. To date, employers have announced 574,888 job cuts in 2015. That is 28 percent more than the 450,531 job cuts announced through November 2014. With just one month remaining in the year, job cuts are on pace to be the heaviest since 2009, when 1,272,030 layoffs were tabulated. While oil-related job cuts have dominated the headlines in 2015, they accounted for just 1,355 in November, the fewest since June (278). Industrial goods ranked as the top job-cutting industry last month, with firms in the sector announcing 7,398 planned layoffs. That is up 109 percent from the 3,390 job cuts announced in this sector in October. Industrial goods firms have announced 54,845 job cuts so far this year. That ranks fourth behind energy (92,727), government (70,029), and retail (65,609).

U.S. Job Creation Index Steady in November: -- Gallup's U.S. Job Creation Index registered +31 for November. This is similar to the record high of +32 recorded in each of the previous six months. The +31 to +32 scores found since April represent the highest the index has been since Gallup began measuring employees' perceptions of job creation at their workplaces in 2008. The index bottomed out at its low of -5 in early 2009 amid the economic recession, meaning that at that point, more workers reported their company was reducing the size of its workforce by letting workers go than said it was expanding its workforce by hiring more workers. Since then, the index has slowly improved, reaching its new highs in 2015. The results are based on interviews with 16,933 U.S. full- and part-time workers conducted Nov. 1-30 as part of Gallup Daily tracking. Gallup asks employed workers nationwide each day whether their employer is increasing, reducing or maintaining the size of its workforce. In November, 42% of workers said their employer was hiring workers and expanding the size of its workforce -- similar to the 43% in October. Meanwhile, 11% said their employer was letting people go and reducing the size of its workforce -- the same as in October. The difference between these two estimates produced the U.S. Job Creation Index of +31 for the month.

ADP: Private Employment increased 217,000 in November -- From ADP: Private sector employment increased by 217,000 jobs from October to November according to the November ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis...Goods-producing employment rose by 13,000 jobs in November, down from 22,000 the previous month. The construction industry added 16,000 jobs after gaining over 30,000 in each of the two previous months. Meanwhile, manufacturing rebounded from two straight months of shedding jobs to add 6,000 in November. Service-providing employment rose by 204,000 jobs in November, a strong increase from an upwardly revised 174,000 in October. ... Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong and steady. The current pace of job creation is twice that needed to absorb growth in the working age population. The economy is fast approaching full employment and will be there no later than next summer.” This was above the consensus forecast for 183,000 private sector jobs added in the ADP report.  The BLS report for November will be released Friday, and the consensus is for 190,000 non-farm payroll jobs added in November.

Anticipating November Employment: ADP Report at 217K - dshort - Advisor Perspectives: The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). Today we have the November estimate of 217K new nonfarm private employment jobs from ADP, a jump from October's 196K, which is an upward revision from 182K. The 217K estimate came in above the Investing.com forecast of 190K for the ADP number. The Investing.com forecast for the forthcoming BLS report is for 200K nonfarm new jobs (the actual PAYEMS number). Here is an excerpt from today's ADP report: "The strongest gains in the service sector since June led to greater employment growth in November," said Ahu Yildirmaz, VP and head of the ADP Research Institute. "The increase was driven in large part by a rebound in professional/business service jobs." Mark Zandi, chief economist of Moody’s Analytics, said, "Job growth remains strong and steady. The current pace of job creation is twice that needed to absorb growth in the working age population. The economy is fast approaching full employment and will be there no later than next summer." Here is a visualization of the two series over the previous twelve months.

ADP: US Private Employment Growth Accelerated In November -- US companies added 217,000 workers in November, according to this morning’supdate of the ADP Employment Report. The gain—the most since June—marks a modest improvement over October’s upwardly revised increase of 196,000. The faster rate of growth offers a degree of support for the government’s numbers that show a dramatic rebound in payrolls in October. But even after today’s upbeat release from ADP, the year-over-year trend continues to slip for this dataset. Private-sector payrolls advanced 2.06% for the year through November, fractionally below October’s 2.13% rise. That’s a tiny and arguably insignificant round of deceleration. Nonetheless, the latest downtick is the tenth straight month of lower annual increases. For the moment, however, the downward bias isn’t particularly worrisome… as long as growth holds above the 2% pace, which is strong enough to lower the jobless rate and keep the economy moving forward. “The current pace of job creation is twice that needed to absorb growth in the working-age population,” said Mark Zandi, chief economist of Moody’s Analytics, which produced today’s report in collaboration with ADP. “The economy is fast approaching full employment and will be there no later than next summer.” Today’s update suggests that Friday’s official November jobs report from Washington will stick close to the sharply higher level of growth in October, when payrolls increased by 268,000, according to the Labor Department—nearly double the rise in the previous month.

November 2015 ADP Job Growth at 182,000 - Above Expectations: ADP reported non-farm private jobs growth at 217,000. The rolling averages of year-over-year jobs growth rate remains strong but the rate of growth continues in a downtrend (although insignificant this month).

• The market expected 140,000 to 230,000 (consensus 185,000) versus the 217,000 reported. These numbers are all seasonally adjusted;
• In Econintersect's November 2015 economic forecast released in late October, we estimated non-farm private payroll growth at 130,000 (based on economic potential) and 145,000 (fudged based on current overrun of economic potential);
• This month, ADP's analysis is that small and medium sized business created 66 % of all jobs;
• Manufacturing jobs grew by 6,000.
• 94% of the jobs growth came from the service sector;
• October report (last month), which reported job gains of 182,000 was revised up to 196,000;
• The three month rolling average of year-over-year job growth rate has been slowing declining since February 2015 - it is now 2.12% (down from 2.17% last month)

ADP changed their methodology starting with their October 2012 report, and ADP's real time estimates are currently worse than the BLS.

November Employment Report: 211,000 Jobs, 5.0% Unemployment Rate -- From the BLS:  Total nonfarm payroll employment increased by 211,000 in November, and the unemployment rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in construction, professional and technical services, and health care. Mining and information lost jobs... The change in total nonfarm payroll employment for September was revised from +137,000 to +145,000, and the change from October was revised from +271,000 to +298,000. With these revisions, employment gains in September and October combined were 35,000 more than previously reported....In November, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $25.25, following a 9-cent gain in October. Over the year, average hourly earnings have risen by 2.3 percent.  The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 211 thousand in November (private payrolls increased 197 thousand). Payrolls for September and October were revised up by a combined 35 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In November, the year-over-year change was 2.64 million jobs. That is a solid year-over-year gain. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate increased in November to 62,5%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio was unchanged at 59.3% (black line).The fourth graph shows the unemployment rate. The unemployment rate was unchanged in November at 5.0%. This was above expectations of 190,000 jobs, and revisions were up ... a solid report.

November Jobs Report – The Numbers - Employers added more jobs than economists expected in November, and job growth was stronger in prior months than previously reported. Employers added 211,000 jobs in November, and job growth was stronger in prior months than previously reported. Payrolls climbed 298,000 in October, up from the previous estimate of 271,000. They grew 145,000 in September, up from a prior estimate of 137,000. The economy has added an average 210,000 jobs a month this year, down from last year’s strong pace of 260,000 but still healthy enough to chip away at unemployment. The unemployment rate held steady at 5%, staying within the Federal Reserve’s estimated range of longer-run unemployment. Other developments painted a positive picture: The number of Americans with jobs increased 244,000, while the number of those considered unemployed rose 29,000. The jobless rate has fallen from 5.8% a year ago and from 10% in October 2009. A broader measure of unemployment—which includes people who aren’t looking for work and those stuck in part-time jobs—clicked up to 9.9% in November from 9.8% in October, but is down from 11.4% a year ago.  Wage growth was steady last month, though it dipped from October’s strong pace. Private-sector workers, on average, earned $25.25 an hour in November, up 2.3% from a year prior. Wage growth had reached 2.5% year-over-year in October. Other measures, including employment costs, have shown a decent pickup in wages, indicating workers are gaining leverage as unemployment falls and the labor market tightens. Wage growth has broadly hovered around 2% since the recession. Hiring may be solid, but the nation’s labor force remains depressed. The share of working-age Americans who have jobs or are actively looking for work clicked up a tenth of a percentage point to 62.5% in November. The number of Americans in the labor force grew by 273,000. However, the rate remains near the lowest level since the 1970s. It’s not just because older Americans are retiring; many Americans in their prime working years have given up the job search. Job growth was solid for industries tied to the domestic economy. The construction industry led last month’s job creation, adding 46,000 jobs. Retailers added 31,000. But other sectors prone to shifts in the global economy slumped. Mining, which includes oil and gas extraction jobs, fell by 11,000 and is down 123,000 since December 2014. Manufacturing –hit by a strong dollar and a slide in oil prices that has caused a decline in energy-sector investment—slipped by 1,000 last month.

November jobs report: truly a mixed report, but enough for the Fed - HEADLINES:

• 211,000 jobs added to the economy
• U3 unemployment rate unchanged at 5.0%

With the expansion firmly established, the focus has shifted to wages and the chronic heightened unemployment.  Here's the headlines on those:

• Not in Labor Force, but Want a Job Now: down -416,000 from 6.052 million to 5.636 million
• Part time for economic reasons: up 319,000 from 5.767 million to 6.086 million
• Employment/population ratio ages 25-54: up from 77.2% to 77.4%
• Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.01 from $21.18 to $21.19,  up +2.0%YoY. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

September was revised upward by 8,000.  October was also revised upward by 27,000, for a net change of +35,000.

November New Jobs Better Than Forecast; October Revised Upward - Here are the lead paragraphs from the Employment Situation Summary released this morning by the Bureau of Labor Statistics: Total nonfarm payroll employment increased by 211,000 in November, and the unemployment rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in construction, professional and technical services, and health care. Mining and information lost jobs. Today's report of 211K new nonfarm jobs in November was higher than the Investing.com forecast of 200K. October's surprising nonfarm payrolls was revised further upward by 27K. The unemployment rate remained at 5.0%. Here is a snapshot of the monthly percent change in Nonfarm Employment since 2000.The unemployment peak for the current cycle was 10.0% in October 2009. The chart here shows the pattern of unemployment, recessions and the S&P Composite since 1948.The next chart shows the unemployment rate for the civilian population unemployed 27 weeks and over. This rate has fallen significantly since its 4.4% all-time peak in April 2010. It is now at 1.3%, a post-recession low, down from 1.4% the previous month.  The next chart is an overlay of the unemployment rate and the employment-population ratio. This is the ratio of the number of employed people to the total civilian population age 16 and over. The inverse correlation between the two series is obvious. We can also see the accelerating growth of women in the workforce and two-income households in the early 1980's. Following the end of the last recession, the employment population has been range bound between 58.2% and 59.4% — the lower end of which that harkens back to the 58.1% ratio of March 1953, when Eisenhower was president of a country of one-income households, the Korean War was still underway, and rumors were circulating that soft drinks would soon be sold in cans. The latest ratio of 59.3% is now almost at its 59.4% post-recession high.

Second Strong Payroll Number +211,000; December Rate Hike Assured - Following last month's payroll surge comes a second strong month. The Bloomberg Consensus estimate was 190,000 jobs and the headline total was 211,000. The unemployment rate was steady to 5.0%, the lowest since April 2008. A rate hike in December is now assured. BLS Jobs Statistics at a Glance:

• Nonfarm Payroll: +211,000 - Establishment Survey
• Employment: +244,000 - Household Survey
• Unemployment: +29,000 - Household Survey
• Involuntary Part-Time Work: +319,000 - Household Survey
• Voluntary Part-Time Work: -12,000 - Household Survey
• Baseline Unemployment Rate: +0.0 at 5.0% - Household Survey
• U-6 unemployment: +0.1 to 9.9% - Household Survey
• Civilian Non-institutional Population: +206,000
• Civilian Labor Force: +273,000 - Household Survey
• Not in Labor Force: -97,000 - Household Survey
• Participation Rate: Unchanged at 62.4 - Household Survey (a 40-year low)

US Private Payrolls Post A Healthy Gain In November -- Private payrolls in November increased by a solid 197,000 (seasonally adjusted) last month, according to this morning’s release from the US Labor Department. Although that’s well below the previous month’s upwardly revised gain of 304,000, today’s update is probably strong enough to give the green light to the Federal Reserve to start raising interest rates later this month. This much is certain: the November rise in nonfarm private payrolls offers fresh support for arguing that the macro trend for the US remains convincingly positive. At the same time, a potential headwind for 2016 is blowing a bit harder in today’s data: deceleration in the year-over-year change. As you can see in the chart below, the annual pace (black dots) stumbled last month, dipping to a 2.15% rise in November vs the year-earlier level. That’s still a solid advance, but the ongoing slide in the annual rate is becoming worrisome… if it continues. Indeed, the 2.15% yearly gain in private payrolls through November is the slowest pace since March 2014 and it marks a falling trend that’s prevailed for much of the past year. This is hardly a problem in the here and now and it may not be an issue any time soon. But it’s a trend to keep an eye on for the simple reason that there’s a potential conflict brewing, namely: the arrival of monetary tightening at a time when the growth rate for payrolls has peaked and looks set to inch lower still. We’ve seen this movie before, of course, and we’re reasonably sure how the end game plays out. The plot runs like this: the Fed starts squeezing policy when the macro trend is weakening, which eventually leads to recession.

BLS Jobs Situation Was Good (Not Great) in November 2015.: The BLS job situation headlines seems good. However, after opening the hood, the deceleration in the year-over-year growth rate continues. The rate of growth for employment dramatically decelerated this month (red line on graph below)

• The unadjusted jobs added month-over-month was normal for times of economic expansion.
• Economic intuitive sectors of employment were mixed.
• This month's report internals (comparing household to establishment data sets) was fairly consistent with the household survey showing seasonally adjusted employment growing 244,000 vs the headline establishment number of growing 211,000. The point here is that part of the headlines are from the household survey (such as the unemployment rate) and part is from the establishment survey (job growth). From a survey control point of view - the common element is jobs growth - and if they do not match, your confidence in either survey is diminished. [note that the household survey includes ALL jobs growth, not just non-farm).
• The household survey added 273,000 people to the workforce.

A summary of the employment situation:

• BLS reported: 211K (non-farm) and 197K (non-farm private). Unemployment unchanged at 5.0%.
• ADP reported: 217K (non-farm private)
• In Econintersect's November 2015 economic forecast released in late October, we estimated non-farm private payroll growth at 130,000 (unadjusted based on economic potential) and 145,000 (fudged based on current overrun of economic potential);

Job Growth Strong Again in November, but Household Survey Still Shows Evidence of Weakness -- Dean Baker -- The Labor Department reported that the economy added 211,000 jobs in November. With modest upward revisions to the gains reported for the prior two months, the average growth over the last three months has been a strong 218,000. Construction accounted for 46,000 of the new jobs, likely helped by unusually warm weather in the Northeast and Midwest. Restaurants added 31,500 jobs, retail added 30,700, and professional and technical services added 28,400. Job growth in the health care sector was relatively weak at 23,800. Other data in the establishment survey was less encouraging with a drop of 0.1 hour in the length of the average work week. This drop, combined with the weak reported growth in the hourly wage, led to a modest drop in the average weekly wage. The unemployment rate remained at 5.0 percent. There was also no change in the labor force participation rate or the employment-to-population ratio, both of which remain far below pre-recession levels. Other data in the household survey also are consistent with a weak labor market. The number of involuntary part-time workers jumped by 319,000 after large declines in the prior two months. There was no change in the average duration of unemployment spells, with the median duration edging downward slightly to 10.8 weeks. The percentage of unemployment due to voluntary job leavers edged up slightly to 10.0 percent. This is still a number consistent with a recession labor market, as are the duration measures and the share of involuntary part-timers workers.

Where The Job Gains Were: 319,000 "Part-Time Jobs For Economic Reasons" Added - On the surface, the December jobs number was better than expected, adding a 211,000 jobs at least according to the Establishment survey. However, a less pretty picture emerges when looking at the Household survey, and specifically the composition of full-time vs part-time workers. This is what the BLS said about the composition of job additions from the Household Survey: The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 319,000 to 6.1 million in November, following declines in September and October.  For those unfamiliar, this is a category of workers that includes "individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job." As such this includes far more than merely workers hired on a temporary basis by retailers to fill seasonal worker needs. Furthermore, this 319K increase in part-timers for economic reasons more than accounts for the total increase in employed workers according to the Household survey, which rose by 244K to 149,364,000. Charted, it shows that the November jump was the highest since September 2012.

Comments: Solid November Employment Report --This was a solid employment report with 211,000 jobs added, and employment gains for September and October were revised up. Also wages increased, from the BLS: "In November, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $25.25, following a 9-cent gain in October. Over the year, average hourly earnings have risen by 2.3 percent." A few more numbers:  Total employment is now 4.5 million above the previous peak.  Total employment is up 13.3 million from the employment recession low. Private payroll employment increased 197,000 in November, and private employment is now 4.9 million above the previous peak. Private employment is up 13.7 million from the recession low. In November, the year-over-year change was 2.64 million jobs. Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year. Retailers hired 604.5 thousand workers (NSA) net in October and November. The 25 to 54 participation rate increased in October to 80.8%, and the 25 to 54 employment population ratio increased to 77.4%.  The participation rate for this group might increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s. This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.3% YoY in November - and although the series is noisy - it does appear wage growth is trending up.

Is the Economy Now Close to Full Employment? -- Friday’s employment report was certainly reassuring: Even though real household spending and core capital-goods shipments decelerated notably during the autumn, the economy has still been able to produce solid gains in nonfarm payrolls. Nonetheless, the latest data also bolsters the judgment– expressed by Federal Reserve Chairwoman Janet Yellen in her remarks this week–that the labor market hasn’t yet reached full employment. Labor-force participationmoved upward last month, particularly among adults aged 25 to 54 years who are in their prime working years. Individuals who had previously dropped out of the labor force now comprise about one-third of the pool of people who are unemployed and actively searching for work. And many other labor-force re-entrants move directly into jobs without ever being classified as unemployed. Nonetheless, labor force participation rates for youths and prime-age adults remain well below pre-2008 levels. Wage growth remains subdued. Average hourly earnings for all employees previously showed some hints of acceleration, but the 12-month change has now fallen back to 2.3%, which is well within its recent range of variation. Moreover, that wage measure is sensitive to compensation trends for the highest-paid employees, namely, executives and supervisors. By contrast, as shown in the chart below, the 12-month change in average hourly earnings for production and nonsupervisory workers now stands at 2%, virtually identical to its average pace over the past five years. These wage developments provide further evidence that the labor market has plenty of room to expand further before reaching full-employment levels.

New Home Sales vs. Labor Force and Civilian Population; Factors Behind Decreasing Sales -  Reader Tim Wallace pinged me with a couple interesting charts on new home sales. The charts compare new home sales to the labor force and also to the civilian non-institutional population. The numbers compare November 2015 to November in prior years. The numbers are not seasonally adjusted.  New Home Sales vs. Labor Force and Civilian Non-Institutional Population For the above chart the labor force and population are in 1000's but new home sales are in 10's. Sales peaked in 5005. New Home Sales as Percentage of Labor Force and Civilian Non-Institutional Population For the above chart all numbers have the same scale so the percentages are accurate. As a percentage of labor force, new home sales peaked in 2005 at 0.856% and are currently at 0.315%. On a labor force adjusted basis, new homes are about 37% of what they were in 2005. Population Comparison As a percentage of population, new home sales peaked in 2005 at 0.564% and are currently at 0.197%. On a population adjusted basis, new homes are about 35% of what they were in 2005. These dramatically lower percentages are a function of numerous variables. Factors Behind Decreasing Sales

1. An enormous amount of overbuilding in the bubble years
2. The aging of the population with millennials moving home, caring for their parents  
3. A change in the attitudes of millennials regarding debt and family formation
4. A change in the attitudes of everyone regarding the now discredited notions: home prices always go up, homes are your retirement, etc.
5. The affordability of new homes
6. Student debt

The November Jobs Report in 14 Charts - Employers added 211,000 jobs in the U.S. last month, and revisions to earlier employment reports showed 35,000 more jobs in September and October than previously estimated. The latest report from the Labor Department offered a snapshot of the health of the domestic economy. Here’s a look at the highlights:The unemployment rate was unchanged at 5% in November, though a broader rate of underemployment rose to 9.9% from 9.8% in October. The increase could reflect an uptick in labor-force participation, which rose slightly in November to 62.5% from 62.4%. The share of adults with employment was unchanged at 59.3%. Among people in their prime working years, 80.8% are in the labor force, up from 80.7% last month. The share of people ages 25 to 54 with a job climbed to 77.4% from 77.2% in November. Both figures still remain below their prerecession levels. The U.S. economy has added 2.6 million jobs over the prior 12 months. That is down from a high of 3.2 million registered in February, and the lowest 12-month total since May 2014. Hiring has been strong this year. Employers have added, on average, 210,000 jobs every month. That is down from 253,000 jobs per month through the first 11 months of last year, but it is higher than any other year since 1999. Average hourly earnings were up 2.3% from a year earlier. Average weekly earnings slid to a gain of 2% because the average workweek dipped in November. The unemployment rates for people with higher levels of education have been persistently lower throughout the recession and subsequent recovery. White men and black men both faced much higher unemployment rates than women during the recession. The gap between male and female unemployment has closed for whites, but not for blacks. As of November, black men had an unemployment rate of 9.9%, compared with 8% for black women. As the recovery has progressed, a shrinking share of the unemployed are jobless because of permanent layoffs. A growing share are new entrants (think first-time job hunters) or re-entrants (people returning to the labor market, perhaps after returning to school, taking time to raise a child or renewing a job hunt after having given up).  Spells of unemployment are getting shorter. Among those currently unemployed, the median length of unemployment is around 10.8 weeks. That’s come down a lot since the 25 weeks recorded in mid-2010, but remains higher than during most of the 1990s and 2000s economic expansions. The share of unemployed workers who have been looking for work for more than six months has steadily fallen but still remains slightly higher than it did eight years ago when the economy fell into recession. Hiring in goods-producing sectors has flattened this year amid the downturn in the energy patch and softness in manufacturing. Government hiring has also been flat. The economy has now added more than 8 million full-time jobs since the recession officially ended in June 2009. Almost all of the jobs added over the last 6½ years have been full-time positions. The economy now has slightly more full-time jobs than it did when the recession began in December 2007.

This Isn’t ‘Big Data.’ It’s Just Bad Data.- Peter Orszag --With response rates that have declined to under 10 percent, public opinion polls are increasingly unreliable. Perhaps even more concerning, though, is that the same phenomenon is hindering surveys used for official government statistics, including the Current Population Survey, the Survey of Income and Program Participation and the American Community Survey. Those data are used for a wide array of economic statistics -- for example, the numbers you read in newspapers on unemployment, health insurance coverage, inflation and poverty. An article in the latest issue of the Journal of Economic Perspectives underscores the alarming decline in the quality of the data from these surveys. Take the Consumer Expenditure Survey, which plays a crucial role in the construction of the consumer price index. In the mid and late 1980s, less than 15 percent of households contacted for the survey failed to respond. By 2013, the non-response rate had risen to more than 33 percent. The explanation is likely that families increasingly view surveys, whether by political pollsters or government officials, as too time-consuming, annoying, and intrusive of privacy.It's possible to correct for this rising lack of participation in the surveys, by adjusting the weights attached to the households that do respond. Unfortunately, lack of participation is just a small part of the growing crisis in household surveys. A far bigger problem stems from the responses to the questions asked. Many responses are simply missing, either because the family refused to answer or because the interviewer failed to record the response. The government statistical agencies then often impute a response, by using statistical techniques to guess at what the response would have been based on responses from other similar families.

Wages Are Growing 2.3%, But Your Paycheck Probably Isn’t - Consistent job growth is supporting steadier paycheck gains, but raises are uneven and concentrated in high- and low-wage jobs. Average hourly earnings advanced 2.3% from a year earlier in November, the Labor Department said Friday, a pace that’s roughly been maintained over the past two years. That streak of steady wage gains has coincided with the economy adding an average of 234,000 jobs per month since November 2013, a clear acceleration compared with earlier in the expansion. But those wage improvements are not being spread evenly across industries. Wage gains at the high end and low end of the spectrum are growing well faster than the 4.5% advance for all private-sector workers since November 2013. Meanwhile, typically middle-class jobs such those in manufacturing, transportation and education and health services are growing at a substandard pace.The strongest wage gains have occurred in utilities, up 7.7% since November 2013, which is also the highest-paying broad industry group, as categorized by the Labor Department. Just behind is information, up 6.5% over two years, a gain that likely reflects strong demand for technology-focused workers.On the other end, wages in the leisure and hospitality sector—mainly restaurant workers—are also up 6.5% over two years. Retail wages are up 5.6%. Those gains reflect both a tightening on the low end of the labor market and minimum-wage increases put in place in many states.Manufacturing wages are up 3.7% over two years. In the related transportation and warehousing sector, wages are up just 1.5%. That data suggests that manufacturing pay is more influenced by global wage rates than domestically focused service-sector fields.

October Median Household Income at a New Post-Recession High -- The Sentier Research monthly median household income data series is now available for October. The nominal median household income rose $392 month-over-month and is up $2,910 year-over-year. That's an increase of 0.7% MoM and a 5.4% YoY increase. Adjusted for inflation, the latest income was up $279 MoM and $2,845 YoY. The real numbers equate to increases of 0.5% MoM and 5.3% YoY. In real dollar terms, the median annual income is 1.9% lower (-$1,110) than its interim high in January 2008 but well off its low in August 2011. Sentier Research, an organization that focuses on income and demographics, offers a more up-to-date glimpse of household incomes by accessing the Census Bureau data and publishing monthly updates. Sentier Research has now released its most recent update, data through November (available here). The first chart below is an overlay of the nominal values and real monthly values chained in the dollar value as of the latest month. The red line illustrates the history of nominal median household, and the blue line shows the real (inflation-adjusted value). Callouts show specific nominal and real monthly values for the January 2000 start date and the peak and post-peak troughs.

What’s aging got to do with the U.S. labor market recovery? - The U.S. economy added 211,000 jobs in November, according to employment data released today by the U.S. Bureau of Labor Statistics. The employed share of the nation’s population in their prime working years (ages 25 to 54) jumped to 77.4 percent but still remains below healthy levels. One oft-cited explanation for the low overall employment rate—the aging of the U.S. population—does not satisfactorily explain the slow labor market recovery.  Hourly wages for private-sector workers in the United States grew by 2.3 percent at an annual rate last month—well below a goal of at least 3.5 percent, which is consistent with long-term productivity growth and inflation targets. As has been true every month this year, production and non-supervisory workers saw smaller pay increases, at an annual rate of 2.0 percent, suggesting rising wage inequality. Wages grew somewhat faster in retail industries (2.7 percent) and the leisure and hospitality sector (2.6 percent), which includes restaurants. Retail-sector and restaurant wage increases this year are primarily a consequence of minimum wage increases, political pressure, and an improving labor market.  Some argue that the failure of employment rates to return to their pre-recession levels despite the long-term drop in the unemployment rate is due to demographic changes, not the weakness of the recovery. As Baby Boomers age and retire, they are naturally less likely to be employed, pushing down the overall employment rate. But demographic changes are not a plausible explanation for the weak employment recovery following the Great Recession. Although the aging of the U.S. workforce does mechanically lower the overall employment rate, demographic changes play a relatively inconsequential role for the employment of prime-age individuals—a group that has also seen only a partial rebound in employment during the recovery. (See Figure 1.)

The Incredible Shrinking Incomes of Young Americans - American families are grappling with stagnant wage growth, as the costs of health care, education, and housing continue to climb.. But for many of America's younger workers, "stagnant" wages shouldn't sound so bad. In fact, they might sound like a massive raise. Since the Great Recession struck in 2007, the median wage for people between the ages of 25 and 34, adjusted for inflation, has fallen in every major industry except for health care. These numbers come from an analysis of the Census Current Population Survey by Konrad Mugglestone, an economist with Young Invincibles. In retail, wholesale, leisure, and hospitality—which together employ more than one quarter of this age group—real wages have fallen more than 10 percent since 2007. To be clear, this doesn't mean that most of this cohort are seeing their pay slashed, year after year. Instead it suggests that wage growth is failing to keep up with inflation, and that, as twentysomethings pass into their thirties, they are earning less than their older peers did before the recession. The picture isn't much better for the youngest group of workers between 18 and 24. Besides health care, the industries employing the vast majority of part-time students and recent graduates are also watching wages fall behind inflation. (40 percent of this group is enrolled in college.) There are a few reasonable follow-up questions to these stunning graphs.

Age Discrimination May Hurt Women More --  Evidence keeps piling up that the deck is stacked against older workers who find themselves unemployed. And new research shows that pervasive age discrimination in hiring is most acute for those like Claudette Lindsey: older, unemployed women. Older men seem to suffer far less age discrimination than older women, and older women face more discrimination than younger women. Those are the conclusions of two robust economic studies recently published, but not yet peer-reviewed, by the National Bureau of Economic Research (NBER). The authors of these papers conducted large-scale field experiments known as résumé correspondence studies to test for discrimination in the job market. The design is simple enough: Researchers send out a bunch of fake résumés that are identical except for some characteristics such as the applicant’s name or year of graduation. They then see which fake applicants get a callback. These types of experiments are an improvement on previous studies of discrimination, which followed groups of people and interpreted any differences in outcomes as the result of discrimination, even if the groups’ underlying characteristics were radically different. “For decades, research on discrimination would just look at observational data — on men and women, blacks and whites,” David Neumark, an economist at the University of California at Irvine and an author of one of the new age-discrimination studies, said in an interview.

Changing labor laws may hurt public employees' clout - Changed labor laws -- with some states curtailing collective bargaining rights -- may lessen political participation by teachers and other public employees, traditionally cornerstones in the election of Democrats, a Baylor University study has found.  Such a shift could affect the distribution of political power across society -- including in the 2016 elections -- depending in part on an upcoming decision by the Supreme Court of the United States. Justices next year will consider whether public sector non-union employees can be forced to pay mandatory dues for collective bargaining -- a requirement in most states with unions.  Some non-union individuals have sued, saying that paying mandatory fees violates their right to free speech. They say that in effect they are paying for speech they may not support, said Patrick Flavin, Ph.D., study co-author and assistant professor of political science in Baylor's College of Arts & Sciences.  The study --"When Government Subsidizes Its Own: Collective Bargaining Laws as Agents of Political Mobilization" -- is published in American Journal of Political Science.

Refugees settle quickly and grow the economy, experts say -- Bunyan’s story is emblematic of the give-and-take many seeking asylum in the United States experience. Though the safety and financial support provided by their new home grants refugees the opportunity to build new lives, the communities in which they are resettled often find themselves reaping the economic benefits that come with an expanded tax base, supplemented workforce and greater diversity of businesses.   “Refugees over time tend to contribute to growth and economic vitality in any community, and we certainly feel that in Boise,” said Patty Haller, assistant director of the Idaho Office for Refugees. “Most Boiseans see refugees in our community as a very positive influence.”  If refugees weren’t self-sufficient, that would be a problem, but that’s not what’s happening. Zeze Rwasama, director of the College of Southern Idaho’s Refugee Center As the national debate over admitting Syrian refugees continues, many economists and refugee advocates across the nation fear that public officials are missing a salient point: Although refugees require a minimal amount of cash assistance to get them on their feet, their rapid integration into the workplace and atypical upward mobility have been shown to boost GDP growth and employment rates for the nations that offer them legal residence – the United States among them.

Number Of Millennials Living In Parents' Basement Climbs (Again); Weddings Blamed (Again) -- Three weeks ago, we noted with some alarm that the number of women age 18 to 34 living with their parents is now the highest since record keeping began more than seven decades ago.   According to a study by the Pew Research Center in Washington, 36.4% of young women have now moved back to the basement, so to speak. The culprit: weddings. No, really. From Bloomberg:   Eternal happiness can wait. Millennials are much less likely to be married than their parents were at their age, and marriage often serves as an impetus to move out.  Of course the real reason why 18-34 year-olds are moving home is because the US economic "recovery" is characterized by a labor market that, far from being a "robust" creator of breadwinner jobs, actually churns out bartenders and waiters. The sad thing is, between lackluster wage growth, crippling student debt, and bad decision making when it comes to picking a college major, some millennials are finding out that serving drinks is a far better way to make ends meet than taking a full-time job for a meager salary that all but guarantees you a spot among America's growing peasantry. On Monday, we get still more evidence of the above, this time from the Commerce Department, who reports that 31.5% of 18-34 year-olds now live with their parents. As you can see from the following, this is one graph that is the definition of "up and to the right":

Is balanced growth really the answer?: A recent must-read article by journalist Alec MacGillis documents a phenomenon that he suggests must “give Democrats the willies:” the increasing political opposition to safety net programs, even among those who’ve been helped by them. ...  MacGillis argues that this outcome is in part driven by resentments of those who believe they’ve pulled themselves up by their bootstraps (even if the government helped them pull) against those they view as milking public support without trying to improve their lot. Such sentiments are amped up by prominent conservatives like House Speaker Paul D. Ryan...  It’s an argument as old as poverty itself (see, e.g., English Poor Laws of 1601). I recall similar polemics during the welfare reform debate of the 1990s... MacGillis believes that shared growth would go a long way toward altering these political dynamics in favor of a necessary role for policy in the list of areas just noted:“The best way to reduce resentment … would be to bring about true economic growth in the areas where the use of government benefits is on the rise … if fewer people need the safety net to get by, the stigma will fade, and low-income citizens will be more likely to re-engage in their communities — not least by turning out to vote.” By “true economic growth,” he means growth that reaches far beyond Wall Street, and even Main Street, to the hollows of Appalachia; growth that would fill the growing black hole in heart of coal country, where opportunity is fading and downward mobility is upon the land. ...

DEA Agent Speaks Out: We Were Told Not to Enforce Drug Laws In Rich Communities: As the lies that keep the drug war alive begin to come unglued, many of the police officers and government agents who made it possible are now going public with the truth of their experience. Matthew Fogg, a former US Marshal, and DEA agent is one of those people.  Fogg appeared in an interview for Brave New Films, where he discussed the drug war and how race and class play a part the enforcement of drug laws. In the interview, Fogg said, “We were jumping on guys in the middle of the night, all of that.   So when I would go into the war room, where we were setting up all of our drug and gun and addiction task force determining what cities we were going to hit, I would notice that most of the time it always appeared to be urban areas.That’s when I asked the question, well, don’t they sell drugs out in Potomac and Springfield, and places like that? Maybe you all think they don’t, but statistics show they use more drugs out in those areas than anywhere. The special agent in charge, he says ‘You know, if we go out there and start messing with those folks, they know judges, they know lawyers, they know politicians. You start locking their kids up; somebody’s going to jerk our chain.’ He said, ‘they’re going to call us on it, and before you know it, they’re going to shut us down, and there goes your overtime.’”

Law enforcement took more stuff from people than burglars did last year - Here's an interesting factoid about contemporary policing: In 2014, for the first time ever, law enforcement officers took more property from American citizens than burglars did. Martin Armstrong pointed this out at his blog, Armstrong Economics, last week.  Officers can take cash and property from people without convicting or even charging them with a crime — yes, really! — through the highly controversial practice known as civil asset forfeiture. Last year, according to the Institute for Justice, the Treasury and Justice departments deposited more than $5 billion into their respective asset forfeiture funds. That same year, the FBI reports that burglary losses topped out at $3.5 billion.  Armstrong claims that "the police are now taking more assets than the criminals," but this isn't exactly right: The FBI also tracks property losses from larceny and theft, in addition to plain ol' burglary. If you add up all the property stolen in 2014, from burglary, theft, motor vehicle theft and other means, you arrive at roughly $12.3 billion, according to the FBI. That's more than double the federal asset forfeiture haul. One other point: Those asset forfeiture deposit amounts are not necessarily the best indicator of a rise in the use of forfeiture. "In a given year, one or two high-dollar cases may produce unusually large amounts of money — with a portion going back to victims — thereby telling a noisy story of year-to-year activity levels," the Institute for Justice explains. A big chunk of that 2014 deposit, for instance, was the $1.7 billion Bernie Madoff judgment, most of which flowed back to the victims.

'Pay-to-stay': Jails regularly charge inmates for food, basic services -- A new report on Illinois policy of suing former inmates to recoup incarceration costs highlights a common practice across the US, as at least 43 states allow 'room and board' or medical fees to be collected from inmates in state or county prisons. A 1982 state law allows Illinois corrections officials to sue inmates for their periods of incarceration, but the practice was rarely used until recently. Since 2010, Illinois has sued 31 former inmates or parolees, with 11 suits occurring in the first 10 months of 2015, according to the Chicago Tribune. Nearly half (14 cases) were dismissed, though the state has still recovered more than $500,000 since 2010. Many of Illinois lawsuits have targeted those non-violent offenders whom corrections officials have often discovered have at least modest amounts of money, whether as inheritance, trust fund or a separate settlement with the state. Critics of 'pay-to-stay' laws like Illinois' say the targeting of what little amount of money inmates have is at the very least unreasonable, given the sentences they have served. Some 80 percent of the inmates are indigent, according to the Brennan Center for Justice. "If you don't have a way to support yourself, you go to the underground economy. That's criminal, and you go back to prison," Alan Mills, executive director of the Uptown People's Law Center, a legal assistance outlet for inmates, told the Tribune. "That's horrible public policy."

Mass Shootings in America -- A website, Shooting Tracker, examines the number of mass shootings in the United States.  Shooting Tracker tracks the number of mass shootings which are defined as shootings where four or more people are shot but not necessarily die as a result of their injuries.  All of the data is sourced from reliable media coverage of the events. Let's start with a list of the mass shootings thus far in 2015, excluding the most recent mass shooting in San Bernardino, California on December 2, 2015: (table)So far in 2015, there have been 351 mass shootings in the United States with a total of 447 people killed and 1292 people injured.  That works out to an average of 4.68 casualties per mass shooting.  It also works out to one mass shooting every 1.06 days.  On some days, there were multiple mass shootings; for example, July 17, 2015 saw five mass shootings that killed a total of 4 people and injured another 21 people.  In only 59 cases for all of 2015 was the identity of the shooter provided with the remainder being either unknown or undisclosed. Rather than looking at the details for 2013 and 2014, I will just provide you with a summary for each year:

Inequality and the City, by Paul Krugman -- New York, New York, a helluva town. The rents are up, but the crime rate is down. . Truly, it’s a golden age for the town I recently moved to — if you can afford the housing. But more and more people can’t.And it’s not just New York. ... The story for many of our iconic cities is ... one of gentrification... Specifically, urban America reached an inflection point around 15 years ago: after decades of decline, central cities began getting richer, more educated, and, yes, whiter. Today our urban cores are providing ever more amenities, but largely to a very affluent minority. ... We’re not just talking about the superrich here, or even the 1 percent. At a guess, we might be talking about the top 10 percent. And for these people, it’s a happy story. But what about all the people, surely a large majority, who are being priced out of America’s urban revival? Does it have to be that way? The answer, surely, is no, at least not to the extent we’re seeing now. Rising demand for urban living by the elite could be met largely by increasing supply. There’s still room to build, even in New York, especially upward. Yet while there is something of a building boom in the city, it’s far smaller than the soaring prices warrant, mainly because land use restrictions are in the way.And this is part of a broader national story. ... Yes, this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.

Declining prices hit energy-producing states hard — While other states were tightening their belts during the dark days of the Great Recession, Wyoming was socking away billions of dollars in energy revenues in the bank, building new schools and funding an endowment that offers college scholarships to its high school grads. But with the recent slide in energy prices, fuel-rich states like Wyoming and Alaska are now facing the same sort of budget crises that had hit the rest of the nation. Commodity prices have plunged over the past two years. That’s forced some energy states to dip into their “rainy day funds.” And state officials say they’re worried that they don’t know when the rain’s going to stop. Several energy-producing states were counting on oil prices to hold steady at $50 to $60 a barrel or more this year when they mapped out their budgets this year. Their plans are crumbling now that crude prices are barely breaking $40. Natural gas prices also are down sharply and the future for coal looks bleak. “There’s no question about it, we’re going to face a serious shortfall,” Wyoming Gov. Matt Mead said this week when he rolled out his budget proposal for the coming two years.The problem may be most dramatic in Alaska, which long has relied on oil revenues to help fund state government. Alaska now faces an estimated budget gap of about $3.5 billion, even after a round of furloughs, eliminating positions and other austerity measures. Alaska hasn’t ruled out the prospect of additional cuts or even new taxes — a shocking notion in a deeply conservative state proud of its lack of an income tax. Lawmakers in Oklahoma also recently raided that state’s constitutional Rainy Day Fund for about $150 million to help close a $611 million hole in the budget for the current fiscal year.

Illinois budget talks restart with no hint of compromise - Reuters: As Illinois enters its sixth month without a budget, Republican Governor Bruce Rauner and the state's legislative leaders reopened spending talks on Tuesday, but displayed few signs of ending their record-long fiscal stalemate. It was the first time the five have met face to face on the budget since May. Tuesday’s meeting came after a coalition of government watchdog groups implored the governor and legislative leaders to at least sit down to jumpstart stalled talks on a 2016 budget deal. Senate President John Cullerton, a Chicago Democrat, declared the partially closed-door session productive just for "the fact we had a meeting," along with the promise of more meetings starting next week. In pre- and post meeting comments, participants largely clung to the same ideological talking points that have left Illinois without a spending plan since July, starving social-service agencies, depriving payouts to lottery players and resulting in two credit downgrades by bond rating agencies. Rauner stuck to his demands that the Democrat-controlled state legislature sign off on term limits, changes to how the state draws legislative boundaries and union-weakening erosions to collective-bargaining laws and insisted those all would give Illinois the missing and much-needed economic lift other states have felt.

A Wealthy Governor and His Friends Are Remaking Illinois - The richest man in Illinois does not often give speeches. But on a warm spring day two years ago, Kenneth C. Griffin, the billionaire founder of one of the world’s largest hedge funds, rose before a black-tie dinner of the Economic Club of Chicago to deliver an urgent plea to the city’s elite.They had stood silently, Mr. Griffin told them, as politicians spent too much and drove businesses and jobs from the state. They had refused to help those who would take on the reigning powers in the Illinois Capitol. “It is time for us to do something,” he implored.Their response came quickly. In the months since, Mr. Griffin and a small group of rich supporters — not just from Chicago, but also from New York City and Los Angeles, southern Florida and Texas — have poured tens of millions of dollars into the state, a concentration of political money without precedent in Illinois history.Their wealth has forcefully shifted the state’s balance of power. Last year, the families helped elect as governor Bruce Rauner, a Griffin friend and former private equity executive from the Chicago suburbs, who estimates his own fortune at more than $500 million. Now they are rallying behind Mr. Rauner’s agenda: to cut spending and overhaul the state’s pension system, impose term limits and weaken public employee unions.

Puerto Rico takes dramatic step to avoid default : Facing a major debt deadline, Puerto Rico on Tuesday scrambled to free up $355 million to stave off a default. In addition, the governor announced an unprecedented plan that would take money from one group of bondholders to pay another. "Starting today, the commonwealth of Puerto Rico will have to claw back revenues pledged to certain bonds issued in order to maintain essential public services," Gov. Alejandro Garcia Padilla said at a Senate Judiciary Committee hearing. "We have taken this difficult step in the hope that Congress will act soon." The clawback refers to using revenues supporting certain commonwealth tax-supported bonds issued by the U.S. territory, including the Puerto Rico Sales Tax Financing Corporation (COFINA), and the Highway and Transportation Authority (HTA), to pay for debt backed by Puerto Rico's Constitution.A large portion of the payment due Tuesday to bondholders of the Government Development Bank is general obligation-guaranteed, meaning it carries that constitutional payment priority. Also falling under that category is about $330 million due Jan. 1 on general obligation bonds, which are backed by the full faith, credit and taxing power of Puerto Rico. Clawbacks have been a concern among bondholders, as well as the major insurers of Puerto Rico's paper, including Assured Guaranty's CEO Dominic Frederico, as detailed by BTIG analyst Mark Palmer. "Frederico said that the Puerto Rico issuing entity on which he is most focused is the Highway and Transportation Authority in large part because of the general obligation bonds' potential clawback of the revenues supporting that debt,"

2.7 Million Kids Have Parents in Prison. They’re Losing Their Right to Visit. -- "Going to prison is often an isolating event. It is assumed that once a person is incarcerated, their former life will simply vanish."  Around 70% of wives do vanish, in fact.  "But for the kids they leave behind, it doesn’t work that way: That prisoner remains a parent. Among the many collateral consequences of mass incarceration is its impact on children, and the number who are affected is staggering. According to a 2010 study (the most recent data available), 54 percent of the people serving time in US prisons were the parents of children, including more than 120,000 mothers and 1.1 million fathers. Over 2.7 million children in the United States had an incarcerated parent. That’s one in 28 kids, compared with one in 125 about 30 years ago. For black children, the odds were much worse: While one out of every 57 white children had an incarcerated parent, one out of every nine black children had a parent behind bars."  Yes, you read that right.  White children today are more likely to have an incarcerated parent than, 30 years ago, any child was.  And for children of color, it is so much worse it is difficult to grasp.

When children are breached – inside the massive VTech hack -- I suspect we’re all getting a little bit too conditioned to data breaches lately. They’re in the mainstream news on what seems like a daily basis to the point where this is the new normal. Certainly the Ashley Madison debacle took that to a whole new level, but when it comes to our identities being leaked all over the place, it’s just another day on the web. Unless it’s our children’s identities, that’s a whole new level. When it’s hundreds of thousands of children including their names, genders and birthdates, that’s off the charts. When it includes their parents as well – along with their home address – and you can link the two and emphatically say “Here is 9 year old Mary, I know where she lives and I have other personally identifiable information about her parents (including their password and security question)”, I start to run out of superlatives to even describe how bad that is. This is the background on how this little device and other online assets created by VTech requested deeply personal info from parents about their families which they then lost in a massive data breach:

More Michigan schools may face higher borrowing costs: Nearly 50 Michigan school districts have had their bond ratings downgraded this year by Moody’s Investors Service, meaning it could cost them more to borrow money. Moody's released a report Monday saying it has lowered the ratings for 47 of the 206 Michigan school districts it rates, and that the number is expected to climb over the rest of the 2016 fiscal year. School districts are facing credit pressures tied to an ongoing loss of general funds, declining enrollment, an increase in unfunded pension liabilities and a lack of flexibility to raise revenues, according to the report. Having a higher bond rating makes it easier and cheaper for an entity like a school district to borrow money. The list of downgraded districts includes Farmington Public Schools, L’Anse Creuse Public Schools, Plymouth-Canton Community Schools, Warren Consolidated Schools and Wayne-Westland Community Schools. The report also noted a bright spot: Of the 58 districts that ended the 2014 fiscal year with a deficit, it said, 41 improved or eliminated their deficits in fiscal year 2015, including Warren Consolidated Schools, Mt. Clemens Community Schools and Brighton Area Schools. Moody’s said 41 of the 47 districts have experienced a median decline in general fund reserves by about 45% over the last five years. The report also said stagnant per-pupil state funding remains barely above the level it was in 2009.

Investors buying shares in college students: Is this the wave of the future? -- If college is an investment, students don't have to be the only ones reaping the returns. Or for that matter, taking on the risks. In one novel alternative to private student loans, investors could front students the money to pay for college in exchange for a percentage of their future earnings. But what are the dangers to students who accept these so-called income-share agreements? Who would benefit the most? This week, Purdue University took a step toward answering some of those questions by partnering with Vemo Education, a Virginia-based financial services firm, to explore the use of income-share agreements, or ISAs, to help students pay for college. Through its research foundation, the school plans to create ISA funds that its students can tap to pay for tuition, room and board. In return, students would pay a percentage of their earnings after graduation for a set number of years, replenishing the fund for future investments. Purdue is relying on Vemo, along with nonprofits 13th Avenue Funding and the Jain Family Institute, to flesh out the terms.

Binge drinking in the United States, in seven simple charts -- Black Friday is synonymous with shopping. But Blackout Wednesday -- as the day before Thanksgiving has become known in some quarters -- means a heavy dose of drinking for many Americans. And no wonder: Almost the whole country has the next day off. College students head back home. Friends and family reunite. There's a big meal planned the next day that can help soothe a hangover.The result is one of the heaviest drinking days of the year, comparable to other alcohol-laden holidays such as New Year's Eve and St. Patrick's Day. It also marks the beginning of one of the most perilous periods of the year for drunken-driving accidents.Blackout Wednesday seems an appropriate time to take stock of binge drinking in the United States, which causes an estimated tens of thousands of deaths each year and accounts for billions of dollars in health care costs. The following charts illustrate some of what we know from the most recently published federal data on the nation's heaviest drinkers -- who they are, where they live, even how much money they make.

Online Classes Appeal More to the Affluent - Free online educational courses may not be democratizing education as much as proponents believe, a new study reports. John D. Hansen, a doctoral student at Harvard University’s School of Education, and his colleagues looked at registration and completion patterns in 68 massive open online courses, or MOOCs, offered by Harvard and M.I.T. The data covered 164,198 participants aged 13 to 69. In a study published in the journal Science, Mr. Hansen and his colleagues reported that people living in more affluent neighborhoods were more likely to register and complete MOOCs. Each increase of $20,000 in neighborhood median income raised the odds of participation in a MOOC by 27 percent, the researchers found.Yet the vast majority of MOOC participants are not the very affluent, who are comparatively small in number. Mr. Hansen said that it ought to be possible to adapt or redesign online courses so that they are more appealing and accessible to lower-income people. “Just because it is free and available online, it does not necessarily mean that the chief beneficiaries or users are going to be the less advantaged,” Mr. Hansen said.

Private College Strains Growing as Emmanuel Joins Muni Defaults - The finances of small U.S. colleges have big problems. The latest example: Emmanuel College, an 800-student Christian school in Franklin Springs, Georgia, that failed this month to pay investors holding $25 million of bonds. It joins Dowling College, which this year became the first municipal-bond-market borrower rated by Moody’s Investors Service to default since 2013. Investors have put heightened scrutiny on such niche schools since Sweet Briar College in Virginia abruptly tried to shutter this year, only to be rescued by a last-minute alumna campaign. Others may not be so lucky: Moody’s estimates that the pace small college closures will triple to 15 a year by 2017, leaving bondholders at risk of seeing their investments disappear along with the school. “There’s no reason to think that things are going to get better for these colleges, so you’d expect to see more” defaults, said Matt Fabian, a partner at Concord, Massachusetts-based Municipal Market Analytics. “Investors in small colleges need to be extra careful.” Colleges are struggling to increase tuition as the pool of graduating high school seniors shrinks and students balk at taking costly loans. That disproportionately affects small, private colleges that rely heavily on tuition -- instead of endowments -- and have fewer students bear the costs, said Edith Behr, an analyst with Moody’s. For the second straight year, tuition revenue will drop for about 30 percent of private universities, according to the credit-rating company.

An introduction to the geography of student debt - Today, the Washington Center for Equitable Growth, with Generation Progress and Higher Ed, Not Debt, released its interactive, Mapping Student Debt, which compares the geographic distribution of average household student loan balances and average loan delinquency to median income across the United States and within metropolitan areas. The stark patterns of student debt across zip codes enable us to begin to analyze the role that debt plays in people’s lives and the larger economy.  One element of the student debt story that has already been explored is that borrowers with the lowest student loan balances are the most likely to default because they are also the ones likely face the worst prospects in the labor market. Our analysis using the data displayed in the interactive map is consistent with these findings. The geography of student debt is very different than the geography of delinquency. Take the Washington, D.C. metro region. In zip codes with high average loan balances (western and central Washington, D.C.), delinquency rates are lower. Within the District of Columbia, median income is highest in these parts of the city. Similar results–low delinquency rates in high-debt areas–can be seen for Chicago, as well. (See Figure 1.) For the country as a whole, there’s an inverse relationship between zip code income and delinquency rates. As the median income in a zip code increases, the delinquency rate decreases, corroborating findings that low-income borrowers are the most likely to default on their loan repayments. (See Figure 2.)  What explains this relationship? There appear to be two possible, and mutually consistent, theories.

Federal Borrowing to Fund Student Loans: How much does has the U.S. federal government cumulatively borrowed in order to loan money to U.S. students? Would you believe the answer is nearly $1 trillion dollars?  From January 2009 through October 2015, the U.S. government has borrowed over $820 billion to fund its Federal Direct Student Loan Program, with the cumulative amount sitting at $964 billion as of the end of October 2015. Over that same time, the total U.S. national debt had increased by $7.5 trillion, which means that over one out of every ten dollars that the U.S. government has borrowed since President Obama was sworn into office has gone to fund student loans.  Meanwhile, since 2009, the U.S. student loan default rate has ranged between 11.8% to 14.7%, which is to say that over one out of every eight federal government-funded student loans are not being paid back according to their contractual terms.  U.S. News and World Report's Student Loan Ranger weighs in on the federal government's student debt problems: Despite an increase in the use and awareness of options such as the income-driven repayment plans, 11.6 percent of student loan borrowers had loans 90 days​ or more past due during the last quarter, which ended at the end of September. That's higher than the delinquency rate for car loans, mortgages and even credit cards.  A footnote reminds readers that these student loan delinquency numbers don't take into account the fact that up to half of the loans in "good standing" are likely not in repayment at all but are postponed because the borrowers are still in or recently separated from school, or are temporarily putting off payment. This means that delinquency rates actually could be twice as high. Doing some quick back of the envelope math, as of September 2015, the U.S. government's Federal Direct Student Loan program now accounts for 79% of all outstanding student loans in the United States.

Student Loan Interest Accruing Faster than Garnishment Limits? -- The New York Times recently ran a very sad, if extreme and unrepresentative, story of student loan debt. There's lots one can say about the article, but two points really jumped out at me.  First, it's a real problem that the Department of Education cannot refuse to lend on the basis of a borrower's unsustainable debt load.  The DoE should be allowed to refuse to lend to overleveraged consumers, both as a consumer protection matter and as a protection of the public fisc. There's a problem begging for a bipartisan legislative fix.  Second, by my back of the envelope calculations, the DoE simply cannot collect most of the debt from Ms. Kelly. Let's assume that the only real source of recovery for the DoE is by garnishing Ms. Kelly's income. Her other assets are either legally off-limits to creditors or not valuable enough to go after. As far as I can tell, the maximum garnishment amount will not even cover the interest accruing on the loans. In other words, her loans will negatively amortize even with full-bore collection activity.  The article didn't report Ms. Kelly's income as a parochial school high school teacher. Let's guess that it's around $50,000 annually and that her annual disposable income is around $39,000.  The most DoE can garnish is 15% of disposable income (basically post-tax).  That would be $5,850/year.  Thus, if Ms. Kelly's $410,000 in debt is accruing interest at much over 1.4% per year, it will continue to grow even while in collection absent voluntary payments.  The interest will accrue faster than the garnishment will reduce the debt. If that isn't a sign that something has gone seriously wrong with a lender-borrower relationship, I don't know what is.

CalPERS Used Sleight of Hand, Accounting Tricks, to Make False “There is No Alternative” Claim for Private Equity -- Yves Smith - One of the striking elements of the CalPERS private equity workshop for the ostensible benefit of its board last month was the length to which the giant pension fund was willing to go to distort data and abuse analytical methods to make the case that only private equity could offer the allegedly superior returns needed to meet CalPERS’ targets. These tricks were obvious to finance experts, which means that it is almost certain that CalPERS’ staff and the experts on its panel understood full well that they were pulling the wool over the board’s and public’s eye.  The fact that CalPERS could not make an honest case for private equity suggests that there was no honest case to be made.  Here is a short form dissection of the CalPERS trickery from our illegally-curtalied public comments:

How CalPERS Lies to Itself and Others to Justify Investing in Private Equity -  Yves Smith - Please see the preceding posts in our CalPERS Debunks Private Equity series:

• Executive Summary
* Investors Like CalPERS Rely on ILPA to Advance Their Cause, When It is Owned by Private Equity General Partners
* Harvard Professor Josh Lerner Gave Weak and Internally Contradictory Plug for Private Equity at CalPERS Workshop
* CalPERS Used Sleight of Hand, Accounting Tricks, to Make False “There is No Alternative” Claim for Private Equity

The CalPERS November private equity workshop contained so many misleading and even flat out untrue statements that it would tax reader patience to go through them all and unpack why the remarks were off base. Nevertheless, over the next few posts, we’ll focus on some of the most important of these canards, both in the context of the workshop and regular statements CalPERS’ staff have made about private equity investing.  We’ll focus on two related ones today, since they are based on the deeply flawed limited partner belief, carefully nurtured by the general partners, that being their “partner” actually means that the investors are anything more than a meal ticket to the private equity general partners.

More on How CalPERS Lies to Itself and Others to Justify Investing in Private Equity - Yves Smith - Please see the preceding posts in our CalPERS Debunks Private Equity series:

• Executive Summary
* Investors Like CalPERS Rely on ILPA to Advance Their Cause, When It is Owned by Private Equity General Partners
* Harvard Professor Josh Lerner Gave Weak and Internally Contradictory Plug for Private Equity at CalPERS Workshop
* CalPERS Used Sleight of Hand, Accounting Tricks, to Make False “There is No Alternative” Claim for Private Equity
• How CalPERS Lies to Itself and Others to Justify Investing in Private Equity

One of the surprisingly widespread behaviors we’ve observed in the limited partner community is the degree to which they choose to believe things that that great social commentator Will Rogers called “just ain’t so.” So CalPERS, and its November workshop to its board members, serves as a lens into the questionable justifications for investing in private equity. As we indicated, the workshop offered so many targets, in terms of questionable logic and practices, that we’ve struggled a bit to figure out which ones to highlight. Today we’ll review three: the way investors defend and even prefer to rely on flattering general partner accounting over economic reality; the sloppy thinking behind the idea that private equity is a “long term investment”; and yet another eye-popping defense of the flawed return measurement, internal rate of return (“IRR”).

CalPERS Board, Scandal-Ridden Fiduciary Counsel, Plan to Break California Law in Effort to Silence Board Member for Asking Too Many Questions, Seeking Records -- Yves Smith - The starkest proof of how CalPERS’ board is willing go to extreme, and in this case, illegal steps to defend staff rather than oversee it came in its Governance Committee meeting earlier this month. We’ve chronicled how the board fell in line with recommendation by the board’s tainted fiduciary counsel, Robert Klausner, and staff for fewer board meetings, even though CEO Anne Stausboll offered no factual support for of her assertion that her subordinates are overworked or that she has considered, much less exhausted, alternatives for streamlining the process or increasing staffing. Moreover, to the extent that having the board engage in adequate supervision is taking a lot of employee time, Stausboll’s stage management of the monthly board meetings via illegal private briefings is a major contributor.  In the next section of this board meeting, Klausner and most of the board participated in what one observer called a “hating on JJ Jelincic” session. Board member JJ Jelincic has engaged in what is an unpardonable sin: He asks too many questions at board meeting and occasionally requests documents from staff. If you’ve looked at board videos (as we have) the alleged “too many questions” are few in number save when staff obfuscates and Jelincic tries to get to the bottom of things.

We Discuss Private Equity, CalPERS, and its Tainted Counsel on Harry Shearer’s Le Show This Sunday - Harry and I just recorded the program on private equity, CalPERS, and Robert Klausner that will run this Sunday. We both had fun and I think you’ll find it an enjoyable as well as informative conversation. Harry Shearer’s Le Show is broadcast in Los Angeles at 10:00 AM on Sunday on KCSN 88.5 FM and in New Orleans on WMNO on Sunday at 8:00 PM. You can also stream it or download a podcast from his site here. Be sure to catch it!

MyRA: Worst Retirement Option Ever? - When it comes to retirement, Americans are in trouble. Earlier this year, a report published by Employee Benefit Research Institute (EBRI) and Greenwald and Associates showed 28% of American workers have less than $1,000 in savings to put toward retirement and more than half have less than $25,000.  This comes at a time when more and more Americans are realizing our government’s Social Security fund may not be around to depend on as expected. It’s set to dry up just 22 years from today. But our government, as always, thinks it has a solution to help those Americans rest easy at night — MyRA. At the beginning of the month, MyRA became available to the masses — a new government-developed retirement account. It’s a concept presented in President Obama’s 2014 State of the Union, and we had hoped the savings plan wouldn’t come to fruition. At the time, we warned this was something you should avoid like the plague.  There are many reasons for this, several of which were covered in our previous article about it. But what truly makes it a horrible retirement option is that it serves no purpose or benefit to us as Americans — just the government. The program is pitched as a principal-protected retirement option that invests solely in U.S. Treasurys. But its purpose for being developed was to bridge the gap between those who have retirement plans available through work and those who don’t. There’s just one problem with this: Roth IRAs, which is what the MyRA is, already exist and can be funded with as little as a few hundred dollars. So the gap that supposedly exists doesn’t really exist at all. . But it generates a paltry 3% return at best. Almost any other diversified mutual fund will generate substantially better returns over time.

The problem with Obamacare’s mental-health ‘parity’ measure - Obamacare expanded health insurance to millions of Americans. But what good is insurance if there are no doctors available to treat them? This month, I found out, first hand. I saw a woman falling through the cracks of the new health-care system, and I tried to help her. The woman — let’s call her Isabella — is a naturalized U.S. citizen and housekeeper for a friend of mine. A few weeks ago, Isabella began having what seemed to be debilitating panic attacks. She was unable to work. She stopped eating. She would frequently burst into tears. She said she thought things would be easier if she were dead. She called at all hours asking for advice. During previous episodes, she had gone to the emergency room or paid doctors out of pocket who gave her prescriptions with no counseling for medicines such as Xanax that provided temporary relief at best. She badly needed mental-health treatment — and there was none available. Obamacare provides mental-health “parity,” meaning mental health is covered as well as any other condition — in theory, an important advance. But in practice, parity was meaningless for Isabella. She is enrolled in one of the CareFirst BlueCross plans from the Obamacare exchange, but when my friend and I searched for psychiatrists within 30 miles of Washington who took her plan, the CareFirst Web site returned none.  What if you’re not well-off, well-educated or well-connected and you start hearing voices in your head telling you to shoot people — but you are told by place after place that no doctor is available to see you?

Disease victims often shut out of workers' comp system | Center for Public Integrity: — Finding the first bit of evidence that Gene Cooper’s job damaged his brain and destroyed his health was the easy part. That only took his wife four years, eight doctors and at least a dozen tests. The hard part: Getting his former employer to pay. Eight years have passed since Sandra Cooper filed a workers’ compensation claim on her husband’s behalf. She prevailed after 4 ½ years of wrangling, when a judge agreed that chemical exposure on the job at a flooring factory was the reason Gene Cooper — a bright father of two with a quirky sense of humor — had transformed into a nursing-home patient who couldn’t speak and sometimes stared into space when his family visited. That was 2012. Sandra Cooper is still trying to get medical bills and lost wages covered today, nearly two years after he died. The trouble Cooper has had isn’t unusual for this type of case. What’s unusual is that she’s gotten anything out of workers’ compensation at all. Americans hurt at work have a difficult enough time with the state-by-state system when their injury is so obvious and immediate — such as an amputation — that it can’t be blamed on anything but the job. When it comes to chemically induced illnesses and other job-triggered diseases that creep up over time, according to researchers and the federal agency overseeing occupational safety, workers’ comp rarely works at all.

America to Working Class Whites: Drop Dead! --  According to economist Anne Case and Angus Deaton, the white working class in the 45- to 54-year-old age group are dying at an immoderate rate. While the lifespan of affluent whites continues to lengthen, the lifespan of poor whites has been shrinking. As a result, in just the last four years, the gap between poor white men and wealthier ones has widened by up to four years. The New York Times summed up the Deaton and Case study with this headline: “Income Gap, Meet the Longevity Gap.” This was not supposed to happen. For almost a century, the comforting American narrative was that better nutrition and medical care would guarantee longer lives for all. So the great blue-collar die-off has come out of the blue and is, as the Wall Street Journal says, “startling.”  It was especially not supposed to happen to whites who, in relation to people of color, have long had the advantage of higher earnings, better access to health care, safer neighborhoods, and of course freedom from the daily insults and harms inflicted on the darker-skinned. There has also been a major racial gap in longevity — 5.3 years between white and black men and 3.8 years between white and black women — though, hardly noticed, it has been narrowing for the last two decades. Only whites, however, are now dying off in unexpectedly large numbers in middle age, their excess deaths accounted for by suicide, alcoholism, and drug (usually opiate) addiction.  There are some practical reasons why whites are likely to be more efficient than blacks at killing themselves. For one thing, they are more likely to be gun-owners, and white men favor gunshots as a means of suicide. For another, doctors, undoubtedly acting in part on stereotypes of non-whites as drug addicts, are more likely to prescribe powerful opiate painkillers to whites than to people of color.

Gallup poll: Nearly 1 in 3 still delay medical care because of costs - Almost a third of Americans (31 percent) say they or a family member have postponed medical treatment in the past year because of related costs. This is nearly unchanged from the 33 percent who said this in 2014, according to a recent Gallup poll. Gallup conducted its annual Health and Healthcare poll between Nov. 4 and Nov. 8. Since 2001, at least 19 percent of Americans — and closer to a third beginning in 2006 — said the cost of some healthcare services are so high that they or a family member has had to put off a medical procedure to avoid the cost, according to the report. Among the uninsured, 53 percent of Americans said they or a family member has had to postpone medical care due to costs from 2014 to 2015, though this rate is down from the 57 percent of uninsured Americans who said this in 2012 to 2013, according to the report. All Americans who put off treatment are more likely to say they did so for a serious condition (19 percent) than a nonserious condition (12 percent). Nationally, the proportion of adults saying they delayed treatment for a serious condition has risen since Gallup first asked this question in 2001, reaching a record high of 22 percent last year before dropping to 19 percent this year. The percentage of adults postponing treatment for a nonserious condition has remained relatively stable, according to Gallup. Americans have consistently named healthcare costs as one of the top two "most urgent health problems" in the U.S., with less than one-fourth of Americans responding they are satisfied with the cost of healthcare nationally.

Obamacare in Action: 74% Say Insurance Costs Went Up, Record 36% Say "By a Lot"; Plan for Still More Hikes - Obamacare was supposed to lower costs by pooling everyone together, by creating other efficiencies, and by admittedly overcharging millennials for healthcare. Actual results continue to pour in, nearly all of them negative. Today Gallup reports More Americans Say Health Premiums Went Up Over Past Year.  Nearly three in four American adults (74%) who pay all or some of their health insurance premiums say the amount they pay has gone up over the past year. This percentage is up marginally from the 67% who last year said their costs increased, but it is generally in line with what Gallup has found in yearly updates since 2003.  These latest data, from Gallup's annual Health and Healthcare poll, come as many insurers have raised premiums -- as well as deductibles, copays and coinsurance -- for plans under the Affordable Care Act (ACA). Meanwhile, growth in national spending on healthcare has accelerated, increasing 5.3% in 2014, according to a report from the Centers for Medicare and Medicaid Services. According to the American Academy of Actuaries, premium costs, in general, will increase for the next several years because of various market factors, and Americans should plan for such increases.

Senate approves bill repealing much of ObamaCare | TheHill: The Senate on Thursday passed legislation repealing the core pillars of ObamaCare, taking a major step toward sending such a bill to the president’s desk for the first time. Republicans hailed it as a political messaging victory and a fulfillment of their promise from the 2014 midterm election to force President Obama to veto the landmark healthcare reform law named after him.  The measure passed 52-47 after the Senate voted to significantly strengthen the bill originally passed by the House and brought straight to the floor by Majority Leader Mitch McConnell (R-Ky.). The House will need to approve the amended legislation before it can be sent to the White House. Thursday’s vote was a major event in the Senate, as Democrats never allowed a stand-alone vote on an ObamaCare repeal bill when they controlled the chamber. Democrats were also unable to block the GOP measure, which was brought to the floor under budget reconciliation rules that prevented a filibuster. “For too long, Democrats did everything to prevent Congress from passing the type of legislation necessary to help these Americans who are hurting,” McConnell said on the floor. “Today, that ends.” The measure guts the law by repealing authority for the federal government to run healthcare exchanges, and scrapping subsidies to help people afford plans bought through those exchanges. It zeros out the penalties on individuals who do not buy insurance and employers who do not offer health insurance.

Is the ACA in trouble? | Brookings Institution -- United Health Care’s surprise announcement that it is considering whether to stop selling health insurance through the Affordable Care Act’s health exchanges in 2017 and is also pulling marketing and broker commissions in 2016 has health policy analysts scratching their heads. The announcement is particularly puzzling, as just a month ago, United issued a bullish announcement that it was planning to expand to 11 additional individual markets, taking its total to 34.  United’s stated reason is that this business is unprofitable. That may be true, but it is odd that the largest health insurer in the nation would vacate a growing market without putting up a fight. Is United’s announcement seriously bad news for Obamacare, as many commentators have asserted? Is United seeking concessions in another area and using this announcement as a bargaining chip? Or, is something else going on? The answer, I believe, is that the announcement, while a bit of all of these things, is less significant than many suppose.  To make sense of United’s actions, one has to understand certain peculiarities of United’s business model and some little-understood aspects of the Affordable Care Act.

Why Electronic Health Records aren't more usable | CIO: It shouldn’t come as a surprise that most doctors are unhappy with their electronic health record (EHR) systems, which tend to be clunky, hard to use and may actually get in the way of truly excellent patient care. Federal government incentives worth about $30 billion have persuaded the majority of physicians and hospitals to adopt electronic health record (EHR) systems over the past few years. However, most physicians do not find EHRs easy to use. Physicians often have difficulty entering structured data in EHRs, especially during patient encounters. The records are hard to read because they're full of irrelevant boilerplates generated by the software and lack individualized information about the patient. Alerts frequently fire for inconsequential reasons, leading to alert fatigue. EHRs from different vendors are not interoperable with each other, making it impossible to exchange information without expensive interfaces or the use of secure messaging systems. EHRs are designed to support billing more than patient care, experts say. They add to, rather than reduce, the workload of doctors. And they don't follow the principles of user-centered design (UCD), which puts the needs of the user at the forefront of the design and development of products and systems.

India approves sale of generic Hepatitis C drugs: India has approved the sale of generic versions of hepatitis C drugs. The move will bring down the standard course of sofosbuvir and ledipasvir (generic versions of Sovaldi and Harvoni) to $1,000 compared to $90,000 in U.S. and Europe. The Central Drugs Standard Control Organization (CDSCO) , the national regulatory body for Indian pharmaceuticals and medical devices, equivalent to FDA in the U.S., granted a waiver of local trials for generic versions of drugs used in treating Hepatitis C. The sofosbuvir- ledipasvir combo is seen as a very potent cure for Hepatitis C with about a 90 percent cure rate, as compared to old interferon treatment which had serious side effects. The drugs are expected to hit the market in weeks costing a fraction of the branded versions. The generic drugs will help in treating millions of hepatitis C patients in developing countries, especially in Africa and South Asia. Globally, more than 130 million people are infected with the hepatitis C virus, and 350,000 to 500,000 people die from the infections each year, according to the World Health Organization. The move is also expected to increase the flow of patients from the U.S. and Europe to India where insurers and governments have limited the use of these drugs to the sickest patients to control costs. A standard 12-week course of branded medicines costs over $90,000 in the US and over €50,000 in the EU.

Antimicrobial Resistance on the Global Agenda - November marked a setback in the fight against drug-resistant infections. Scientists announced that they had found bacteria that were resistant to colistin, known as an antibiotic of last resort. Even more alarming, they discovered that the gene providing the resistance could migrate from one strain of bacteria to another, meaning other types of infections could also become untreatable. The announcement prompted public health experts to renew their warnings that the world risks slipping into a deadly, post-antibiotic era.  But November also brought some good news – even if it received less notice. When the G-20 met in Antalya, the leaders of the world’s largest economies agreed that antimicrobial resistance was a threat to global growth. Buried in the last paragraph of the communiqué issued at the conclusion of the summit was an agreement to put the issue on the agenda of the organization’s next meeting. “We agree that attention should be given to global health risks, such as antimicrobial resistance, infectious disease threats, and weak health systems,” read the communiqué. “These can significantly impact growth and stability.”  This is an important development. The G-20 would be an ideal forum in which to take international action against antimicrobial resistance. The countries most at risk from the problem include Brazil, Russia, India, and China (the BRICs), none of which is a G-7 member. These countries are also among those most likely to find solutions to the challenge. Furthermore, the attendees at the G-20’s summits include heads of state and economic ministers, without whom no solution can be implemented.

Erin Brockovich: The Biotech Industry is Jeopardizing Our Health  - The new movie Consumed tackles the controversial world of genetically modified organisms (GMOs) in unprecedented fashion, offering insight into their risks. Its message could not be more timely in the wake of the recent news that the Food and Drug Administration (FDA) has approved the first genetically engineered salmon for human consumption. The fish, like all genetically engineered ingredients in this country, will not be labeled, leaving American consumers in the dark. Like many food and environmental safety activists around the world, I’m outraged. The biotech industry and the FDA have hijacked not only our basic rights as consumers, but also our fundamental human rights in the face of corporate monopolization of our food supply. They are jeopardizing our health and the environment more than ever before. When will the government agencies put in place to protect us stop servicing the bottom line of corporations? In detailed comments submitted to the FDA, Michael Hansen, senior scientist at Consumers Union, argues the FDA review process was based on “sloppy science” and the genetically engineered salmon could pose many risks. “Because FDA’s assessment is inadequate, we are particularly concerned that this salmon may pose an increased risk of severe, even life-threatening allergic reactions to sensitive individuals,” he writes. Hansen also notes that “this analysis does not conform to FDA standard for assessment of a New Animal Drug.” That’s right, the genetically engineered salmon is being regulated as an “animal drug”—not a food, an “animal drug.”  The FDA does not label genetically engineered foods, including the newly approved salmon, because they have deemed them “substantially equivalent” to their non-genetically engineered counterparts. Yet they are so different that they are the first organisms in history to be patented. The logic is confounding.

Fattest-Ever U.S. Cattle Herd Signals End to Record Beef Prices  -- Cattle in the U.S. are now the fattest they’ve ever been, signaling an end to the seven-year run of record beef prices just as losses begin to mount for American feedlot owners.Tom Fanning, who manages a feedlot herd of 30,000 in Buffalo, Oklahoma, says he loses $100 to $300 on each animal he sells to slaughtering plants, even though they are bigger and produce more meat than ever. Its worse for other producers. On average, industry losses began in December and ballooned to $420 a head this month, the Livestock Marketing Information Center estimates.  Cattle futures have plunged 22 percent from an all-time high a year ago as the U.S. herd began a long-awaited expansion and consumers switched to cheaper chicken and pork. That’s squeezed feedlot owners who buy year-old steers and raise them on a diet of mostly corn for more than four months. To ease the pain, operators like Fanning are taking advantage of ample, low-cost grain supplies by holding cattle for almost a month longer than normal, which means the animals get bigger and generate more revenue. On average last month, the animals weighed 1,390 pounds (630 kilograms) when sold to beef processors, an all-time high, U.S. Department of Agriculture data show. The 2.6 percent increase over a year earlier was the biggest annual gain in more than a decade. In Iowa, the largest corn-growing state, some cattle have topped 2,000 pounds and are being held 30 to 60 days days longer than normal,

World food prices fall 1.6 percent in November: FAO -- World food prices fell in November for the first time in three months, pulled down by a strong dollar and ample supplies, the United Nations food agency said on Thursday. The Food and Agriculture Organization's (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 156.7 points in November against a revised 159.3 points the month before. The 1.6 percent decreased follows two consecutive months of gains, although food on international markets in November remained 18 percent cheaper than one year ago, FAO said. The index has been sliding for most of the past 20 months, thanks partly to an abundant global supply, and is still less than two points above a six-year low hit in August. A strengthening dollar, which is the benchmark currency for commodities, may drive prices lower in coming months, FAO senior economist Abdolreza Abbassian told Reuters. "All the indications are for the (dollar) exchange rate to rise, especially if the Fed raises interest rates," Abbassian said. "Exchange rates have been driving the decline in prices. One cannot exclude further downward pressure on prices in coming months," he said. One exception may be sugar, he said.

How much does animal agriculture and eating meat contribute to global warming? - The burning of fossil fuels for energy and animal agriculture are two of the biggest contributors to global warming, along with deforestation.  Globally, fossil fuel-based energy is responsible for about 60% of human greenhouse gas emissions, with deforestation at about 18%, and animal agriculture between 14% and 18% (estimates from the World Resources Institute, UN Food and Agriculture Organization, and Pitesky et al. 2009). So, animal agriculture and meat consumption are significant contributors to global warming, but far less so than fossil fuel combustion.  Moreover, fossil fuels are an even bigger contributor to the problem in developed countries, which use more energy and have increased livestock production efficiency (Pitesky et al. 2009).  For example, in the United States, fossil fuel-based energy is responsible for about 80% of total greenhouse gasemissions as compared to about 6% from animal agriculture (estimates from the World Resources Institute and Pitesky et al. 2009).On of the main ways in which the livestock sector contributes to global warming is throughdeforestation caused by expansion of pasture land and arable land used to grow feedcrops.  Overall, animal agriculture is responsible for about 9% of human-caused carbon dioxideemissions globally (UN FAO). Animal agriculture is also a significant source of other greenhouse gases.  For example, ruminant animals like cattle produce methane, which is a greenhouse gas about 20 times more potent than carbon dioxide.  The livestock sector is responsible for about 37% of human-caused methane emissions, and about 65% of human nitrous oxide emissions (mainly from manure), globally (UN FAO). Producing beef requires significantly more resources (e.g. land, fertilizer, and water) than other sources of meat.  As ruminant animals, cattle also produce methane that othersources (e.g. pigs and chickens) don't.

China ‘cloning factory’ to produce cattle, racehorses and pets - The world’s biggest animal “cloning factory” is due to open in China, producing one million calves a year, sniffer dogs and even genetic copies of the family pet.The £21 million “commercial” facility will edge the controversial science “closer to mainstream acceptance”, Chinese media said, following the development of a technique which began when Dolly the sheep became the first cloned mammal when she was born in Scotland in 1996. The centre may cause alarm in Europe, where the cloning of animals for farming was banned in September due to animal welfare considerations. But Xu Xiaochun, chairman of Chinese biotechnology company BoyaLife that is backing the facility, dismissed such concerns. “Let me ask one question. Was this ban based on scientific rationale or ethical rationale or political agenda?” Mr Xu told The Telegraph. “Legislation is always behind science. But in the area of cloning, I think we are going the wrong way and starting to kill the technology.”   Interest in agricultural biotechnology has been rapidly increasing in China, where farmers are struggling to provide enough beef for the country’s growing middle classes. Prices of the meat are said to have tripled from 2000 to 2013.  Mr Xu said his new facility will clone racehorses and a handful of dogs for people with “emotional ties” to their pets, but its main focus was producing cattle.

China to Clone 1 Million Cows a Year to Meet Country’s Rising Demand for Beef  - Boyalife, the first stem cell bank in China, is now underway in cloning cows to meet the country’s skyrocketing demand for beef, according to the company. The company hopes to initially produce 100,000 cow embryos annually (“more than 6 times the size of the largest American cattle farms,” Popular Science points out) and eventually increasing that number to 1 million annually. The product could be available on Chinese shelves by next year. Xu Xiaochun, board chairman of Boyalife Group, said that Chinese farmers are struggling to produce enough beef cattle to meet market demand. In 2014, a Rabobank report said that global beef demand growth will continue to come mainly from China, with its current population of 1.357 billion. China’s beef demand will grow an additional 2.2 million tonnes by 2025, the bank said. In addition to beef cattle, the facility will clone animals including drug sniffing dogs, pet dogs and racehorses, Boyalife said. The center, which will be the largest facility of this kind worldwide, will also include a gene storage area and a museum.“We are going [down] a path that no one has ever travelled,” Xu told The Guardian. “We are building something that has not existed in the past.” “This is going to change our world and our lives,” Xu added. “It is going to make our life better. So we are very, very excited about it.”

Should Our Children Be Genetically Engineered? -- On the eve of the U.S. National Academies of Sciences and Medicine International Summit on Human Gene Editing, Center for Genetics and Society and Friends of the Earth released a new report today, Extreme Genetic Engineering and the Human Future: Reclaiming Emerging Biotechnologies for the Common Good.  With the breakneck speed of recent developments in genetic engineering and synthetic biology that could be used to alter human DNA, the report examines health, regulatory, social and ethical questions. The Center for Genetics and Society also released an open letter today, signed by more than 130 advocates and scholars, calling for a ban on heritable genetic modification of human beings.  “Genetic modification of children was recently the stuff of science fiction,” said lead author Pete Shanks, consulting researcher with the Center for Genetics and Society and author of “Human Genetic Engineering: A Guide for Activists, Skeptics, and the Very Perplexed.” “But now, with new technology, the fantasy could become reality. Once the process begins, there will be no going back. This is a line we must not cross.” Dana Perls, report co-author and food and technology campaigner with Friends of the Earth explains, “History has shown us that rushing new technologies to market before we understand their impacts on people, our society and our environment can result in negative unintended consequences. We have seen this with the first generation of genetically engineered crops—and the stakes are infinitely higher when it comes to the question of genetically engineering our children.”

Hotter weather could reduce human fertility -- Policymakers are tasked with addressing climate change in the face of uncertainty: the 2013 IPCC report projects average global temperatures will increase by anywhere from 5 to 10 degrees Fahrenheit (3 to 6 degrees Celsius) in the coming century if we continue on our path of greenhouse gas emissions. The uncertainty is compounded by the fact that the consequences of any temperature change are unknown, including how something as basic as human fertility might be affected. Understanding how climate change will affect fertility is an important economic concern. According to World Bank estimates, in the United States and many European countries, a woman has fewer than two children on average by the end of her reproductive life. These “below-replacement” birth rates are already putting stress on programs that are funded by the working-age population, like Social Security. Any additional decline in births due to climate change could only make this worse.

PNAS Study: Population Growth Will be Constrained by the Limits of Trading Virtual Water (Food) - A new study has been released by the Proceedings of the National Academy of Sciences (PNAS), which calls into question the unsustainable global food export system based upon unsustainable export volumes of virtual water. The first two sentences sums it up: Population growth is in general constrained by food production, which in turn depends on the access to water resources. … Most of the water we use is to produce the food we eat. With the world’s population that has doubled every 40 years, there is a growing concern that water limitations will soon impede humanity to meet its food requirements. The study refers to a global water unbalance and challenges the long-term sustainability of the food trade system as a whole, based upon current food export rates. It projects that growing demographic requirements of water-rich nations will result in less exports to water-poor regions. Water-rich regions are likely to soon reduce the amount of virtual water they export, thus leaving import-dependent regions without enough water to sustain their populations. The concern is that virtual water trade is allowing for some populations to exceed the limits imposed by their local water resources, and that by sustaining demographic growth above the regional carrying capacity, virtual water trade has mitigated the effects of drought and famine in many regions of the world.

European HIV Infections Hit Record High, CDC Blames "Migrants And Refugees" -- The number of newly diagnosed HIV cases in Europe has hit an all-time high of 142,000, according to The World Health Organization. "Despite all the efforts to fight the disease," WHO officials note that the rise of the epidemic is primarily attributed to Eastern Europe, where new diagnoses have more than doubled. But it is comments from European Centre for Disease Prevention Control acting director Andrea Ammon that raised a number of witch-huntery eye-brows when she explained migrants and refugees were at a high risk of infection after they arrived in Europe, because social exclusion made them more likely to engage in risky behavior. “Despite all the efforts to fight HIV, this year the European Region has reached over 142,000 new HIV infections, the highest number ever,” says Dr Zsuzsanna Jakab, WHO Regional Director for Europe. As The Indepedent reports, The World Health Organisation said the figure was the largest the continent had suffered since case reports began in the 1980s. “This is a serious concern”. This rise of the epidemic is primarily attributed to Eastern Europe, where new diagnoses have more than doubled in the past decade. WHO says the increase in the Eastern region is mainly due to heterosexual transmission and injected drug use. However, sex between men is still the most common mode of HIV transmission across the continent. European Centre for Disease Prevention Control acting director Andrea Ammon said: “Europe has to scale up its efforts to reach out to this group. This includes looking at new strategies such as pre-exposure prophylaxis for HIV and access to care for EU citizens residing in other EU countries.”

Graph of the Day: Thyroid cancer incidence in children and adolescents from Belarus after the Chernobyl accident, 1986-2002 - (IAEA) – The objective of this workshop was to develop a state-of-the-art scientific understanding of radiation-induced thyroid cancer, and to share knowledge and experience in this area in order to support the efforts of the Japanese government and the Fukushima Prefecture to enhance public health. Experience in holding effective social dialogues, in order to best understand and appropriately address social concerns, was also a workshop focus. The workshop began with a half-day tutorial session, followed by two days of plenary presentations and discussion, including panel sessions summarising the results of each session. A closing panel provided overall results and conclusions from the workshop. A Rapporteur provided a workshop summary report and assisted the session co-chairs in summarising key points. This document [pdf] brings together the available presentations (slides), dealing with:  (lists dozens of papers)  Summary of the Workshop Results Proceedings of the International Workshop on Radiation and Thyroid Cancer [pdf]

How Long Can Florida's Citrus Industry Survive? -- While others are thinking about the holidays, in Florida November is the beginning of citrus season.."We began our harvest about three weeks ago," . "And we'll harvest all the way about until the beginning of June." .In Florida, citrus is so important, oranges are on the state's license plate. But a disease, citrus greening, has taken a severe toll on Florida's signature crop. Researchers and growers are working on a solution but they received a shock recently: The U.S. Department of Agriculture said, after years of decline, there would be an additional 20 percent drop in Florida's orange production this season.Now some in Florida are questioning how much longer the citrus industry can survive. Florida's agriculture secretary, Adam Putnam, says the future of the state's $10 billion citrus industry hangs in the balance. "If the estimate plays out, it will be half of what we harvested just four years ago," he says. "We are at a tipping point, and some would say we've blown past the tipping point." That's the point at which there's no longer enough fruit to sustain all the juice plants and packing houses. If enough shut down, it could spell the end of an industry that provides some 76,000 jobs in Florida.

In the fields, a search for monarch butterflies -- The population of monarch butterflies has declined so dramatically in recent years that the iconic insect is being considered for the U.S. Fish and Wildlife Service’s endangered species list. In Nebraska and across the other areas of the Midwest, a stop on the monarch migration route, efforts are underway to determine the scope of the decline.Carrying notebook and camera, Tom Weissling wades through waist-high grass and plants at Nine Mile Prairie west of Lincoln, Neb. The associate professor in the University of Nebraska-Lincoln’s Department of Entomology periodically stops, looks closely at plants and takes notes and pictures. It’s how he spent a lot of his summer, combing the state for signs of something that’s getting harder to find: monarch butterflies. Weissling is also looking for milkweed. The connection is important because monarchs lay their eggs exclusively on milkweed, and it’s the only thing the larvae will eat. Weissling’s rough survey took him to about two-thirds of Nebraska’s counties, and is something of a starting point in determining the decline of monarchs in the state. An Iowa State University report estimated an 81 percent decline in the monarch population in the Midwest between 1999 and 2010, with a 58 percent decline in milkweed presence during the same time.

Controversial trade deal draws heavy lobbying from U.S. agribusiness -- A new trade deal aimed at cutting thousands of taxes and opening markets with 11 Pacific Rim nations has drawn heavy lobbying from some of America’s largest agribusinesses. The deal – known as the Trans-Pacific Partnership – was reached in early October. It is designed to ease the flow of goods between partner nations by lowering restrictive trade policies and regulations. The free trade agreement has been a work in progress for nearly a decade, growing from a small arrangement between four countries to a mega deal whose members make up roughly 40 percent of the world’s economy and include Japan, Mexico, Canada, Vietnam, Australia and Peru. Privately held food giant Cargill has consistently lobbied on the Trans-Pacific Partnership throughout the past five years, lobbying records show. “The Trans-Pacific Partnership, or commonly what is known as TPP, has been something that Cargill has supported from its very start,” said Devry Boughner Vorwerk, Cargill’s vice president of corporate affairs. “Being a Minnesota-based company, this is really important because our growth as an American company is based on our ability to grow outside of the United States.” In addition to Cargill and the American Farm Bureau Federation, Monsanto, the Biotechnology Industry Organization, Caterpillar, Dairy Farmers of America, the National Pork Producers Council, Louis Dreyfus Commodities, several state-level farm bureaus and a long list of other agribusiness powerhouses have all reported lobbying on the trade deal.

The secretive trade agreements that could scupper climate change ​action​ --While all the focus and hope for tackling climate change is on COP 21 in Paris, starting today, secretive global trade deals are already negating any commitments that might be made at the summit. The texts from the various trade agreements, including the Trans-Pacific Partnership (TTP), make it clear that they will increase production, trade and consumption of fossil fuels. At a most basic level, trade deals are designed to open up markets and increase trade of the highest emitting foods – meat and dairy. For example, TPP will boost US pork and beef exports to Asia and US dairy exports to Canada. TTIP is expected to open Europe’s border to more US beef. Australia’s dairy exports to China, up 300% in the past eight years, are a big reason why the two countries just signed a trade pact. The flow of cheap imports resulting from these deals will play a part in increasing global consumption of meats by 76% by 2050. Trade agreements also favour food production from intensive farms and large-scale plantations. When China joined the World Trade Organisation and opened its market to soybean imports the result was a dramatic expansion of soybean plantations in the forests and savannahs of the southern cone of Latin America and a corresponding rise in intensive pig production in China, fed on the imported beans. New trade deals will likely do the same for maize imports. Meanwhile, the EU economic partnerships with Africa threaten to undercut traditional backyard poultry, perhaps the lowest emitting source of meat on the planet, with frozen cuts of industrial chicken from Europe, which are high up on the emissions scale. Obama has just retaliated against attempts by South Africa to protect its own local poultry industry.

Climate Watch: L.A.’s Water Woes - As the world convenes in Paris next week to try to slow climate change, the concept of the weather changing dramatically and irrevocably over the next decades still seems foreign to many Americans. Part of the reason is that it is happening slowly — without a monumental event, equivalent to a major terrorist attack, to trigger a rapid and comprehensive response. But Americans only have to look out west to get a glimpse of what kind of problems the country will face if the predictions of the vast majority of scientists come true. In Los Angeles, water has always meant life and growth. Over the course of the past century, the city’s officials have gone to great lengths to ensure that this invaluable resource is available in sufficient quantity to quench the thirst of Los Angelenos. Due to current droughts, they — along with others in California — are now facing their biggest challenge. It might just prove to be insurmountable and, in that case, the parching of America’s second most populous city might provide the wakeup call that has so far been lacking. The four-part documentary “Cadillac Desert” provides a fascinating glimpse into the importance of fresh water and the challenge of providing it to an increasing number of people that need increasing amounts of it. Ahead of the Paris climate summit, WhoWhatWhy presents the first part of the series, which highlights the dependence of Los Angeles on fresh water.

California drought leaves migratory birds high and dry – ‘In back-to-back droughts, even the strong birds get pushed to the limit’ – The Pacific Flyway is a major north-south flyway for migrating birds, extending from Alaska down to Patagonia. California is part of the flight path, and the state's extended drought in now threatening the health of these travelers.  In the northern part of California's Central Valley is a beautiful city called Lodi, and while it's known for being a center of the state's wine production industry, Lodi has another distinction, owing to the city location along the Pacific Flyway. Lodi is also known for its annual "Lodi Sandhill Crane Festival," started 20 years ago.  Sandhill cranes, with their red heads, 7-foot (2.13 m) wingspan, and a trilling call, are a welcome sight every fall, and provide a dramatic, almost awe-inspiring sight as they land by the thousands in the wetlands near Sacramento each evening during the fall and winter. […] Up to six million ducks, geese, and swans, as well as millions of shorebirds, seabirds and songbirds depend on the Sierra Nevada's snowpack in the winter to leave freshly melted snow alive with grasses and insects. However, the drought has dried up many of the state's wetlands, and insects, fish, and plants are gone. The drought and added stress to migrating birds is evident as over the past two years, many have died, or been depleted of so much energy they are unable to reproduce, affecting the overall populations. Added to this is the number of ducks and geese, crowded onto parched river banks, devoid of the nourishing plants that are usually present, dying from botulism and cholera, which race through their feeding grounds.

Agribusiness using wastewater from fracking to irrigate crops: Ask anyone who’s lived through California’s drought: Water scarcity is getting scary. And banning long showers isn’t even a drop in the bucket when it comes to finding a solution. The biggest water sponge by far is food production, yet agri-giants continue to douse their vast fields like there’s no tomorrow. Do you know how much water today’s industrialized food system sucks up? Just one little almond takes 1 gallon. A single walnut? 2 gallons. A head of lettuce? 12. A cluster of grapes clocks in at a whopping 24 gallons. Here’s the worst part: Big Oil says not to worry, because it can offer a gusher of H2O to food producers. Believe it or not, companies are now selling their fracking wastewater to agribusiness for irrigating fruit and vegetable crops. This is water that Exxon- Mobil and other drillers mix with a witch’s brew of some 750 toxic chemicals before power-blasting it into underground rock formations.The drillers have had to reclaim and store this contaminated water, but – “eureka,” as someone must have shouted – rather than store it, they decided to spray it on America’s fruits and vegetables. It’s perfectly safe, the always-trustworthy oil industry tells us, because they treat the water to remove all the nasty, cancer-causing chemicals they use first. But studies have discovered toxins remaining in some of the “treated” water too, and a California science panel found that state regulators have no adequate testing process, nor any controls in place, to stop the contamination of crops.

Ranchers denied the drought while collecting drought subsidies -- It was an anti-government rebellion in the Nevada sagebrush – with hefty taxpayer subsidies for the rebels. In June, tough-talking ranchers in remote Battle Mountain, Nevada, defied the federal government, herding cattle onto public rangeland that had been closed to grazing to protect it during the West’s scorching drought. That act of defiance capped two years of protest against grazing restrictions imposed by the U.S. Bureau of Land Management, which manages thousands of square miles of arid federal land in Nevada. In the end, the federal government backed down from the confrontation in Battle Mountain. The BLM canceled the drought closures and opened the range, just as the cattlemen wanted. By denying the severity of the drought – and by claiming that “rogue” federal bureaucrats threatened them with economic ruin – the ranchers won the day. But even as the conflict played out, some of these same ranchers were collecting drought subsidies from the federal government. On one hand, they denied the drought. On the other hand, they embraced it.According to records obtained by Reveal, two ranching families at the center of the Battle Mountain protests received $2.2 million from a federal drought disaster relief program. Dan Filippini, the protest leader who turned hundreds of cattle loose on the closed range, was paid $338,000 by the U.S. Department of Agriculture’s Livestock Forage Disaster Program in 2014, records show.Another $750,000 federal payout went to a trust and corporation associated with the Filippini family, which long has been active in ranching in Nevada. Meanwhile, significant payments also went to the family of Battle Mountain cattleman Peter Tomera, . The records show that the government paid $250,000 to a Tomera family trust and another $360,000 to a family corporation.

New NASA study shows Brazil’s drought deeper than thought – Southeast losing 56 trillion liters of water in each of the past three years– Empty water reservoirs, severe water rationing, and electrical blackouts are the new status quo in major cities across southeastern Brazil where the worst drought in 35 years has desiccated the region. A new NASA study estimates that the region has lost an average of 15 trillion gallons of water per year from 2012 to 2015. Eastern Brazil as a whole has lost on average 28 trillion gallons of water per year over the same time period. Augusto Getirana, a hydrologist at NASA's Goddard Space Flight Center, in Greenbelt, Maryland, analyzed the amount of water stored in aquifers and rivers across Brazil from 2002 to 2015, interested in understanding the depth of the current drought. A new data visualization of 13 years of GRACE data shows the distribution of water across Brazil. Blues indicate increases in water, mostly occurring in the western regions of Brazil in the rainforest. Meanwhile red and orange shows where water stores have declined, occurring mainly in the north and southeast.. Southeastern Brazil was hardest hit by drought conditions, said Getirana. To make matters worse, Brazil relies on rivers that feed into reservoirs and dams that generate about 75 percent of the electrical power for the country. By September 2014, for example, the Cantareira reservoir system that provides water for 8.8 million people in São Paulo's metro region reported that it was filled to 10.7 percent of its total capacity, a situation that has led to major water rationing.

World weather agency issues El Nino warning - – The “El Nino” phenomenon, which sparks global climate extremes, is this year the worst in more than 15 years, the U.N. weather agency said in the middle of November, warning it was already causing severe droughts and flooding. The World Meteorological Organization said El Nino, which occurs every two to seven years, had resurfaced a few months ago, become “mature and strong,” and was expected to become even more powerful by the end of the year. “Severe droughts and devastating flooding being experienced throughout the tropics and subtropical zones bear the hallmarks of this El Nino, which is the strongest in more than 15 years,” WMO chief Michel Jarraud said in a statement. El Nino is triggered by a warming in sea surface temperatures in the Pacific Ocean. It can cause unusually heavy rains in some parts of the world and drought elsewhere. The U.N. agency said this year’s event was expected to push water surface temperatures in the east-central Pacific Ocean more than 2 degrees Celsius above normal, making it one of the four strongest El Ninos since 1950. Previous particularly strong El Ninos occurred in 1972-73, 1982-83 and 1997-98. Typically, El Nino events reach their maximum strength between October and January, but often continue to wreak havoc through the first quarter of the year. The phenomenon usually leaves countries such as India, Indonesia and Australia drier, increasing chances of wildfires and lower crop production. In recent months, bone-dry conditions caused by the El Nino have sparked some of the worst forest fires in Indonesia’s history.

El Nino worst in over 15 years, severe impact likely: UN: The "El Nino" phenomenon, which sparks global climate extremes, is this year the worst in more than 15 years, the UN weather agency said Monday, warning it was already causing severe droughts and flooding. The World Meteorological Organization said El Nino, which occurs every two to seven years, had resurfaced a few months ago, become "mature and strong", and was expected to become even more powerful by the end of the year. "Severe droughts and devastating flooding being experienced throughout the tropics and sub-tropical zones bear the hallmarks of this El Nino, which is the strongest in more than 15 years," WMO chief Michel Jarraud said in a statement. El Nino is triggered by a warming in sea surface temperatures in the Pacific Ocean. It can cause unusually heavy rains in some parts of the world and drought elsewhere. The UN agency said this year's event was expected to push water surface temperatures in the east-central Pacific Ocean more than two degrees Celsius above normal, making it one of the four strongest El Ninos since 1950.

The Most Intense El Niño Ever Observed Is Already a Worldwide Disaster -- Last week, I wrote about new evidence that shows Earth’s climate system has moved into an unprecedented state over the last several months, at least since the invention of agriculture 10,000 years ago. This week, our planet doubled down—raising new concerns about adverse impacts worldwide, some of which have already begun.  El Niño—a periodic warming of the tropical Pacific Ocean—is the most immediate reason for this year’s global heat wave, but global warming has also been stashing heat in the oceans for decades now. There’s now a 99.9 percent chance that 2015 will be the warmest year on record and most likely by a wide margin.  Fresh data this week show that the current El Niño is now the most intense ever measured, at least on a weekly basis, pushing ahead of huge events in 1982–83 and 1997–98, and likely 1877–78 as well. (Ocean data from the 19^th century is less reliable than that from the Space Age.) On Twitter, one federal meteorologist said the new data were so extreme, he was initially in disbelief that they were accurate.  Broader measures of El Niño are updated only monthly or seasonally, and this El Niño is still strengthening, so we still don’t know for sure how huge it will become. But one thing’s for sure: Humanity has never before had to deal with global oceans quite like this. “This event is playing out in uncharted territory. Our planet has altered dramatically because of climate change,” said Michel Jarraud, the secretary-general of the World Meteorological Organization, in a statement on the latest data. “This naturally occurring El Niño event and human induced climate change may interact and modify each other in ways which we have never before experienced.”

Ethiopia: Large-scale food emergency projected for 2016 after worst drought in more than 30 years – 15 million people likely to need food assistance – Alarm bells are ringing for a food emergency in Ethiopia. The UN says 15 million people will need help over the coming months.The government, wary of stigma and therefore hesitant to ask for help, has nevertheless said more than eight million Ethiopians need food assistance.  Extra imports to stem the crisis are already pegged at more than a million tonnes of grain, beyond the government’s means. Inevitably, comment and media coverage compare the current situation with 1984 – the year Ethiopia’s notorious famine hit the headlines. Reports suggest this is the worst drought in 30 years. One declares it a “code red” drought. So how bad actually is it?  The country of close to 100 million people is huge, spread over an area of more than a million square kilometres that ranges from semi-desert to swamp to mountain ranges and fertile farmland. The weather systems and agricultural patterns are diverse and complex.  This year, the weather has been prone to even greater variation due to the global climate phenomenon El Niño, last seen in 1997-1998.  Ethiopia produces more than 90 percent of its own food. Last year, the cereal harvest was estimated to be 23 million tonnes, but imports in recent years averaged 1.2 million tonnes – just five percent of that. So even if 2015 and 2016 are bad years (the impact of a poor harvest is felt months later as food stocks run out), the vast majority of Ethiopian people will support themselves and eat produce from their own country. But in a giant like Ethiopia, 15 percent of the population is 15 million people – more than the entire humanitarian caseload of the Syrian crisis. An extra five percent of cereals is another 1.2 million tonnes.The costs and logistics become formidable at this scale. […]

At least half of coral around Hawaii island hit by ‘unprecedented level of coral bleaching’: – The results of Bleachapalooza, the recent statewide attempt to survey coral bleaching, shows that it’s been more severe on West Hawaii compared to the east side of the state — with some species showing nearly 100 percent bleaching, one of the organizers reported. “These reports have been crucial to gaining a better understanding of the extent, duration, and future recovery of coral from this unprecedented level of coral bleaching,”   In all, 32 of the 75 statewide reports were around West Hawaii. And those reports showed that bleaching was severe and widespread on this side. At least half of every observed coral had signs of bleaching. For some species, such as smooth lobe and cauliflower, almost the entire population was completely bleached white on most reports, wrote Kramer The “alarming change in coral color” was visible from the surface and shoreline, Kramer said, with surfers in Pine Trees in Kohanaiki and other areas submitting reports. Coral bleaching is where a stressed coral turns translucent, appearing almost dead. It makes it more likely that the individual polyps will die, potentially killing a whole colony. That can be devastating for the marine life that feeds off coral, and even for tourism and watergoers who dive and snorkel to catch glimpses of that life in action. As temperatures drops and the animals recover, it’s still unclear how permanent the damage will be. Bleaching can be caused by numerous stressors, but the most common is high water temperatures.

A Year for Records: Temperatures, Acres Burned - 2015 is on track to be the hottest on record.   For those wondering about statistical significance (e.g., this person), from NOAA: The average global sea surface temperature of +0.71°C (+1.28°F) was the highest for January–October in the 136-year period of record, surpassing the previous record of 2014 by 0.08°C (0.14°F). This margin is larger than the uncertainty associated with the dataset. The average land surface temperature departure from average of +1.28°C (+2.30°F) was also the highest on record for October, surpassing the previous record of 2007 by 0.17°C (0.31°F). As previously noted, this has been a devastating year for wildfires in the US. Here are the latest statistics on acres burned, both annual and year-to-date (20 November). The current 9.8 million exceeds the previous record in 2006, of 9.5 million (3.2% higher). It’s a record!  Using a regression of log acres burned on log acres burned year-to-date, one can obtain an estimate for acres burned in 2015. Based on this estimate, and a regression of fire suppression costs on acres burned and a time trend (Adj.-R² = 0.64), one can estimate CY 2015 expenditures. Estimated Federal fire suppression costs for CY 2015 are 2.5 billion 2014$.

Hottest five-year period on record is 2011-2015, says WMO -  The World Meteorological Organisation (WMO) announced today that 2015 is likely to top the charts as the hottest year in modern observations, with 2011-15 the hottest five-year period on record. With two full months still to add in, the global average surface temperature for January to October in 2015 was 0.73C above the 1961-1990 average. This already puts it a long way above 2014, in which average global temperature reached 0.57C above the 1961-1990 average. This year’s record is down to a combination of rising greenhouse gases and a boost from the strong El Niño underway in the Pacific, says the WMO. Today’s announcement is timed to coincide with the gathering of world leaders on Monday to begin talks in Paris aimed at striking a deal to reduce global emissions.To put today’s news another way, global temperature in 2015 is likely to pass the “symbolic and significant” threshold of 1C above preindustrial levels, says the WMO.

Indonesia: fires threaten to send even modest climate ambitions up in smoke -- At the Paris climate negotiations, Indonesia will bring to the table a target of an unconditional 29% emissions reduction by 2030, increasing to 41% on condition of international assistance. Indonesia’s emission reduction plan (or Intended Nationally Determined Contribution) is therefore slightly higher than its 2009 commitment to reduce emissions by 26% by 2020. There are three problems with Indonesia’s INDC. The target is not ambitious; the plan is incoherent; and with the recent massive forest fires in Indonesia that have yet to be accounted for in the INDC it does not accurately reflect emissions for Indonesia.  Such a problematic INDC would affect the global efforts to adequately tackle climate change, since Indonesia is one of the biggest carbon emitters in the world. The forest fires have pushed the country into the top ranks of global greenhouse gas emitters.  For Indonesia to meaningfully contribute to the global target, Indonesia’s emissions should be stable or decrease even when the nation’s economy grows. The latest assessment from Intergovernmental Panel on Climate Change suggests this way of decoupling GDP growth from emissions growth to be ideal. However, Indonesia may find that difficult to do given that its economies depend on high emission sectors such as agriculture, forestry and energy.

Climate Change Blamed for Southern India’s Worst Flooding in More Than a Century - The heaviest rainfall in more than a century triggered massive flooding in Southern India, reports Reuters, as thousands have been driven from their homes. Since heavy rain began on Nov. 12, more than 1,000 people have been injured and 269 have died. The area saw as much as 14 inches of rain in a 24-hour period earlier this week (twice the amount of rain the area averages for all of December), according to Khaleej Times. And it’s not over yet. The national weather service predicted three more days of “torrential downpours” in the southern state of Tamil Nadu—home to nearly 70 million people. “There will be no respite,”said Laxman Singh Rathore of the India Meteorological Department. Local businesses and even the airport have been shut down due to the flooding. Roads remain impassible, and 3 million people have been cut off from basic services. Relief has come from helicopters dropping food, water and medicine, and the military has employed fishing boats to pick up some 18,000 stranded residents.

Indian city’s historic rainfall — nature’s fury or construction frenzy? - On Thursday at the global climate change talks in Paris, former Vice President Al Gore was quick to cite the torrential rains in India’s fourth-largest city as evidence that the effects of global warming are already causing havoc. “The answer is coming from nature itself, “ Gore said, noting that “record-breaking downpours” in the southeastern city of Chennai had caused The Hindu newspaper to stop publishing for the first time since the 19th century -- 1878 to be precise. At least 269 people have died with more than 3 million affected in the catastrophic flooding that paralyzed the city this week and turned thousands from their homes. India’s Natural Disaster Response Force has rescued over 9,000 residents trapped by the rising water, and more than 50,000 are living in temporary camps, with power and much transit yet to be restored. Meteorologists have cited the El Nino weather effect for the excessive rain that began Nov. 12, with 14 inches falling in 24 hours earlier this week. But urban planners and environmentalists in India say that Chennai’s flood woes, on the other hand, are its own fault. They say years of rampant development and poor storm water management has led to the flooding disaster that has affected more than 3 million people.

Deep Ocean: Climate change’s fingerprint on this forgotten realm: Most of the habitable space on earth is not on land, today’s paper begins. More than 90% of it is in the deep ocean. Over the time we’ve been industrialising, the oceans have absorbed about a third of the carbon dioxide that’s gone into the atmosphere. That has slowed the pace of atmospheric warming to some extent, but it has come with consequences. Carbon dioxide dissolves in seawater to form carbonic acid. With a typical pH ranging between an alkaline 7.8-8.4, this extra acid has pushed the pH of seawater down by 0.1, on average. The oceans have also taken up more than 90% of the heat trapped by greenhouse gases in the atmosphere, raising temperatures at the surface by 0.1C per decade since at least the 1970s. But some of the heat finds its way much deeper. Seawater at about 700m has warmed by about 0.015C per decade since the 1970s, according to the latest report from the Intergovernmental Panel on Climate Change (IPCC). Measurements from 700m down to 2,000 metres suggest that section of the ocean has warmed in the last decade or so, too (though the data doesn’t extend before that). The amount of oxygen in seawater has dropped in many parts of the global ocean, leading to the expansion of what are known as “oxygen minimum zones.” This is partly because warmer water holds less oxygen, but the main reason is that warming makes ocean layers less inclined to mix, meaning less oxygen is transported from the surface to deeper layers.  Deep sea ecosystems are particularly vulnerable because the species that live there have evolved to survive within very narrow limits.

Remember The Oceans! Or Not... Ah, the beleaguered oceans. These will not be discussed at the COP 21 meeting in Paris. Christiana Figueres, the top U.N. climate official, explained why at reddit. The Climate Change Convention is structured based on emissions of greenhouse gasses within national territories. Despite the fact that oceans are being directly affected by rising temperatures, they are not included in the Convention or in the negotiations due to their transboundary nature.This does not mean we can forget about the oceans. I permanently carry a blue marble with me everywhere I go to remind me of the oceans. But those in Paris have mostly forgotten about the oceans, despite Christiana's blue marble (see below). I stole the title of this post from a recent article by Eric Holthaus at Slate. Eric goes through all the arguments about what we're doing to marine ecosystems and why we should care despite the fact that the oceans lie outside the boundaries of national territories. I won't review that material here, so read Eric's article. (You should always read my sources if you care about the subject IMHO.) Those concerned about the oceans have been marginalized, but they haven't given up. A bunch of organizers have designated December 4th as Oceans Day in Paris (this coming Friday, press release). Speeches will be given, various discussion panels hosted. A Google search indicated that there were no news articles—zero, zip, nadda, I mean none at all—previewing this event. That's the problem with the Earth's oceans—they have a massive PR problem

Fact, Not Opinion: Climate Change Is Happening and Is Caused by Human Activities | Dr. Kevin E. Trenberth: If planet Earth went to see a doctor because of its persistent and growing fever, the results would likely be: (i) the symptoms are clear: the planet's temperature and atmospheric carbon dioxide are increasing; (ii) the diagnosis would be that these two things are linked and human activities are causal; (iii) the prognosis would be an outlook for more warming at rates that can be disruptive and will cause strife; and (iv) the treatment is "mitigation" which means reducing fossil fuel use to lower carbon dioxide emissions, and "adaptation" which means planning for the consequences.  Patrick Daniel Moynihan once famously said "You are entitled to your own opinion but not your own facts."  Yet a recent report that examined sixth grade textbooks in the U.S. found that climate change was addressed as if it were opinion, not fact. Rather that showing the clear evidence that climate change is not only really happening, and that humans use of fossil fuels are the dominant cause, the textbooks make widespread use of wimpy words like "could," "may" or "might" that emphasize the uncertainties behind climate change, while definitive words such as "find," "determine," "measure" and "obtain" are less frequently used. The most frequently used word associated with scientists is "think." The message communicated in the textbooks is that climate change is possibly happening, that humans may or may not be causing it, and that it is unclear if we need to take immediate mitigating action, the researchers found. Far too many politicians treat climate change this way as well.

From Rising Seas to Walruses, the Arctic’s Endangerment Affects Us All - The impacts of anthropogenic climate disruption (ACD) are nowhere as evident as they are in the Arctic, where temperatures are rising at least twice as fast as the average global temperature increase.  The most obvious ramification of this has taken the form of dramatically milder winters in the far north, coupled with temperature increases in the waters of the Arctic Ocean - both of which are dramatically increasing the melting of the sea ice, which is leaving more of the water's surface exposed, thus allowing more heat to reach the ocean during the summer. This process is likely the most well-known and most important feedback loop in ACD today - and because of it, land ice and permafrost in the Arctic are melting at a record pace.  Despite the remoteness of the Arctic, the region is deeply linked to the rest of the planet: Everything from our weather, to coastal flooding, to what we eat is tied to the Arctic and the events that are rapidly changing it.  Since the cold waters of the Arctic absorb more carbon dioxide than the more temperate waters that fill most of the rest of the globe, the Arctic Ocean is far more sensitive to ocean acidification. Add to that the fact that declining summer sea ice is exposing even more of that ocean, which is allowing even more carbon dioxide from the air into the waters.   The Arctic Circle contains an area that is roughly 6 percent of the Earth's surface, yet the dramatic evidence of its impact on the rest of the planet is mounting. Some of that evidence is now taking the form of melting land ice that is generating sea level rise.  The pace of global sea level rise is increasing, largely due to what is happening in the Arctic, according to the recently released report Arctic Matters: The Global Connection to Changes in the Arctic, a report by The National Research Council of the National Academies.

Japan stuns world by announcing it will resume whaling in Antarctic Ocean despite ban - Japan has attracted heavy criticism from other countries and conservation groups after announcing it will resume whaling operations in the Antarctic Ocean under the guise of collecting “scientific data”. In new documents submitted to the International Whaling Commission (IWC), Joji Morishita, IWC commissioner for Japan, said his nation would begin a new whaling program in the Antarctic Ocean – also known as the Southern Ocean or Austral Ocean – with plans to catch 333 minke whales per year beginning in early 2016. This is one-third the amount of animals caught annually in Japan’s previous whaling program in the area. “In order to achieve conservation of [Antarctic] resources while pursuing their sustainable utilisation and to understand and predict the effects of factors such as climate change, it is scientifically imperative to obtain an accurate understanding of many aspects of the Antarctic marine ecosystem including its animals and their dynamics through collection, accumulation, and analysis of scientific data,” Japan’s whaling research plan advises.  Japan’s previous whaling operations in the Antarctic Ocean ended after a ruling issued by the International Court of Justice (ICJ) in March 2014. Japan had claimed that its whaling in the region was justified on research grounds under the 1946 International Convention for the Regulation of Whaling, but the court ruled otherwise, finding that the sum of its research output in almost a decade – just two studies based on research on nine whale specimens – didn’t add up with the bulk of slaughter. “In light of the fact the [research program] has been going on since 2005, and has involved the killing of about 3,600 minke whales, the scientific output to date appears limited,” said presiding judge Peter Tomka of Slovakia.

Research reveals the reality of runaway ice loss in Antarctica: By studying rocks at different elevations beside the East Antarctic Ice Sheet (EAIS), the team concluded that a period of rapid glacier thinning occurred in the recent geological past, and persisted for several centuries. Satellite observations show that parts of the Antarctic ice sheet are currently thinning in response to a warming ocean. Of particular concern is the potential for 'marine ice sheet instability', where an initial retreat of ice margins into deepening valleys could lead to continued, unstable ice loss. The new research, led by Postdoctoral Research Fellow Dr Richard Jones, indicates that the processes leading to instability can be initiated by just minor climate warming. "The finding is very important for predicting Antarctica's future contribution to sea level change," says Dr Jones. "Particularly when considering that the EAIS contains enough vulnerable ice to raise sea level by tens of metres. "It might only require a small amount of climate variation to initiate runaway ice loss, and it could continue for centuries to millennia," says Dr Jones. While this process has been posited for many years, the study presents the first directly recorded evidence that it has taken place in the past, providing new insight into the future behaviour of rapidly changing parts of Antarctica today.

'No Planet B,' marchers worldwide tell leaders before U.N. climate summit | Reuters: More than half a million people from Australia to Paraguay joined the biggest day of climate change activism in history on Sunday, telling world leaders gathering for a summit in Paris there is "No Planet B" in the fight against global warming. In the French capital, where demonstrations were banned by the authorities after attacks by Islamic State militants killed 130 people on Nov. 13, activists laid out more than 20,000 shoes in the Place de la Republique to symbolize absent marchers on the eve of the summit. Among the high heels and sandals were a pair of plain black shoes sent by Pope Francis, who has been a vocal advocate for action to prevent dangerous climate change, and jogging shoes from U.N. Secretary-General Ban Ki-moon.

COP21: Pope's adviser urges Catholics to join climate marches - BBC News: The Pope's closest adviser on ecology has urged Catholics to join global climate marches planned for Sunday. In an internal letter to bishops, Cardinal Peter Turkson says people should be "encouraged" to exercise their "ecological citizenship". The letter says that climate negotiators meeting in Paris need to hear the voice of "God's people". Activists say the call is evidence of a step-change in the Church's approach to climate change. Major demonstrations across the world have been planned to mark the start of the global climate conference, known as COP21. In Paris, planned big rallies have been cancelled in the wake of the 13 November attacks which killed 130 people. Nearly 1,000 people thought to represent a security risk have been barred from entering the country, said Interior Minister Bernard Cazeneuve. A handful of other activists have been placed under house arrest under emergency powers introduced following the attacks. But elsewhere protesters have taken to the streets to demand action.

California Gov. Jerry Brown pushes climate pact in Paris, brings mixed record on environment: — California Gov. Jerry Brown is heading to the U.N. Climate Change conference, which opens Monday, where he will promote the state's efforts to curb greenhouse gas emissions and urge other states and provinces to sign on to his climate pact. So far, 57 jurisdictions from 19 countries have added their signatures to a memorandum promising to reduce greenhouse gas emissions 80 percent below 1990 levels by 2030. Brown, a Democrat, has toured the world talking about climate change this year, seeking to build a legacy on the issue before he leaves office in 2018. But at home in California, he has also faced repeated criticism for supporting expanded oil drilling and refusing to ban hydraulic fracturing — positions climate activists say undermine his global warming message.

GOP Threatens To Disrupt Obama's Climate Agenda At Paris Summit: -- Republicans in Congress are threatening to disrupt a key piece of President Barack Obama's pledge to combat global warming, just days before world leaders begin climate negotiations in Paris. Obama, with teams of advisers and cabinet members, arrives in Paris next week, hoping to wrap up years-long negotiations with nearly 200 countries with a sweeping agreement that sets specific goals to stave off a catastrophic increase in global temperature. But back in Washington, Republicans are working to prevent a deal, warning Obama they will use any tool necessary to block funding he has promised to help poor nations fight climate change. Sens. John Barrasso (R-Wyo.) and Jim Inhofe (R-Okla.) pressed the president in a letter to be “forthcoming” with developing nations, telling them that Congress hasn't approved the $3 billion the U.S. has promised to the fund. “The president, but certainly officials overseas, need to know that they shouldn’t count on the money,” Barrasso told The Huffington Post in a brief interview. “Bring it to Congress and come clean with the folks in Paris that he has to bring that back here to the Senate to get approval before they’re going to see any money.” With little to leverage, Republicans see the Green Climate Fund as a critical chord they can sever to undermine a world climate agreement. The United Nations-controlled account, which helps developing countries combat rising sea levels, drought, and other extreme weather related to climate change, is a critical element of the Paris talks.

As Paris Climate Talks Kick Off, Beijing Issues Its Highest Smog Alert Of The Year --Motorists wait at a junction as vehicles pass beneath a traffic sign reading "Visibility low, slowdown the speed" on a heavily polluted day in Beijing, Monday, Nov. 30, 2015. Beijing on Sunday, Nov. 29 issued its highest smog alert of the year following air pollution in capital city reached hazardous levels as smog engulfed large parts of the country despite efforts to clean up the foul air. The capital city of China issued its highest smog warning of the year on Sunday, just a day before world leaders — including Chinese President Xi Jinping — gathered in Paris for the U.N. climate talks. Beijing declared an “orange level” alert Sunday — the second-highest level there is in the country, and one that required factories to either shut down or reduce pollution. The city maintained the level into Monday, the first day of the Paris climate talks. On Sunday, pollution readings were as high as 17 times the level that the World Health Organization considers safe for breathing.  The smog is affecting 23 cities in northern China and stretches 204,634 square miles across the country — an area bigger, Quartz points out, than Spain or California.

Smog chokes Chinese, Indian capitals as climate talks begin - The capitals of the world's two most populous nations, China and India, were blanketed in hazardous, choking smog on Monday as climate change talks began in Paris, where leaders of both countries are among the participants. China's capital Beijing maintained an "orange" pollution alert, the second-highest level, on Monday, closing highways, halting or suspending construction and prompting a warning to residents to stay indoors. The choking pollution was caused by the "unfavourable" weather, the Ministry of Environmental Protection said on Sunday. Emissions in northern China soar over winter as urban heating systems are switched on and low wind speeds have meant that polluted air has not been dispersed. In New Delhi, the U.S. embassy's monitoring station recorded an air quality index of 372, which puts air pollution levels well into "hazardous" territory. A thick smog blanketed the city and visibility was down to about 200 yards (metres). Air quality in the city of 16 million is usually bad in winter, when coal fires are lit by the poor to ward off the cold. Traffic fumes, too, are trapped over the city by a temperature inversion and the lack of wind. However, the government has not raised any alarm over the current air quality and no advisories have been issued to the public. Thirty thousand runners took part in a half marathon at the weekend, when pollution levels were just as high. In Beijing, a city of 22.5 million, the air quality index in some parts of the city soared to 500, its highest possible level. At levels higher than 300, residents are encouraged to remain indoors, according to government guidelines.

China plans to launch carbon-tracking satellites into space  -- China plans to launch satellites to monitor its greenhouse gas emissions as the country, estimated to be the world's top carbon emitter, steps up its efforts to cut such emissions, official news agency Xinhua said on Monday. News of the plan comes as more than 150 world leaders arrived in Paris for climate change talks and Chinese President Xi Jinping and U.S. President Barack Obama said they would work together towards striking a deal that moves towards a low-carbon global economy. According to the Xinhau report, the country's first two carbon-monitoring satellites will be ready by next May after four years of development led by Changchun Institute of Optics and Fine Mechanics and Physics, part of China's Academy of Sciences. No launch date was given and no other details of the plan were announced. The government and research institute were not available to comment. If successful, it would be the world's third country to send satellites into orbit to monitor greenhouse gases, coming after Japan which was the first country to do so in 2009, followed by the United States last year. The satellites will be key for expanding research into emissions - currently, China is only able to collect data from the ground, whereas the probes will also monitor oceans, which make up 71 percent of the world's surface.

Modi tells rich nations of their duty to lead climate change fight - FT -- India’s prime minister has issued a blunt warning that rich nations still have a moral imperative to lead the fight against global warming, highlighting the challenges facing the UN climate talks starting in Paris on Monday. Weighing into one of the most divisive issues at the talks, Narendra Modi writes in Monday’s Financial Times that advanced countries that “powered their way to prosperity on fossil fuel” must continue to shoulder the greatest burden. “Anything else would be morally wrong,” he says. Many wealthy countries insist there can be no deal unless large emerging economies take on more responsibility for fighting climate change. The Indian premier’s comments underline the difficulties confronting negotiators from nearly 200 countries at the two-week Paris meeting due to produce the first global climate accord in 18 years. Mr Modi, whose country is the world’s fourth-largest carbon emitter after China, the US and the EU, said he would launch an international alliance among 121 solar-rich countries in the tropics. Writing in the FT, he says: “We expect the same from the world with respect to responding to climate change. The principle of common but differentiated responsibilities should be the bedrock of our collective enterprise.” This principle underpinned the 1997 Kyoto protocol, the last global climate treaty agreed, which only required wealthy nations to cut their emissions. “Justice demands that, with what little carbon we can still safely burn, developing countries are allowed to grow. The lifestyles of a few must not crowd out opportunities for the many still on the first steps of the development ladder,” he writes. The Indian PM will join more than 130 world leaders who will open the meeting with a string of eye-catching pledges on ways to cut fossil fuel use, a central aim of the new agreement.

Developing countries will need $270bn more to adapt to climate change – study -- Developing countries will have to pay $270bn extra each year to adapt to the impacts of climate change if global pledges to cut greenhouse gas emissions do not increase, according to a new report by Oxfam. Plans submitted by more than 170 countries ahead of crunch UN climate change talks in Paris next week are likely to lead global temperatures to rise by 2.7-3C above pre-industrial times.  According to the aid agency’s report, it would cost developing countries $790bn every year to adapt to this scenario, 50% more than the $520bn it would cost them to adapt to a 2C world, the target for avoiding catastrophic climate change agreed at previous UN conferences. If these adaptation costs are not met, in a 3C world the economies of developing countries are likely to shrink by $1.7tn every year, equivalent to 1.3% of their GDP, the report says. Tim Gore, Oxfam’s head of food and climate policy, told the Guardian that developing countries are “stuck between a rock and a hard place” unless pledges become more ambitious. Although the pledges, known as Intended Nationally Determined Contributions,, have already been submitted to the UN, many parties including the US, China and the EU want to see a review mechanism built into any deal at Paris to increase the pledges in the future.

India opposes deal to phase out fossil fuels by 2100 at climate summit - India would reject a deal to combat climate change that includes a pledge for the world to wean itself off fossil fuels this century, a senior official said, underlying the difficulties countries face in agreeing how to slow global warming.  To keep warming in check, some countries want the Paris agreement to include a commitment to decarbonize -- to reduce and ultimately phase out the burning of fossil fuels like coal, oil and gas that is blamed for climate change -- this century. India, the world's third largest carbon emitter, is dependent on coal for most of its energy needs, and despite a pledge to expand solar and wind power has said its economy is too small and its people too poor to end use of the fossil fuel anytime soon. "It's problematic for us to make that commitment at this point in time. It's certainly a stumbling block (to a deal)," Ajay Mathur, a senior member of India's negotiating team for Paris, told Reuters in an interview this week. "The entire prosperity of the world has been built on cheap energy. And suddenly we are being forced into higher cost energy. That's grossly unfair," he said. India also wants to see rich nations' pledges to cut greenhouse gas emissions subjected to tougher reviews than those of developing nations, and Mathur warned against an "external penal regime that will only turn people back". India, whose 1.2 billion people produce far lower emissions per capita than the world average, in October committed to slow the rate of growth in its carbon output by a third over the next 15 years.

Nations most at risk of climate change urge lower warming cap -- Leaders from a group of 43 countries most vulnerable to the impacts of climate change called on the first day of U.N. climate talks for a new deal that puts the world on track to limit global warming below 1.5 degrees Celsius. To achieve that goal - which is tougher than the expected 2 degree Celsius cap at the talks - would require cutting carbon emissions to zero and adopting 100 percent renewable energy by 2050, the nations said. Meeting it would demand much higher ambition at the talks than is now on the table, with experts saying current pledges from over 180 nations to curb planet-warming emissions add up to a temperature rise of at least 2.7 degrees Celsius. Global warming is expected to hit 1 degree C this year. Costa Rica's Minister of Foreign Affairs Manuel Gonzalez said his country's experience was that committing to reduce emissions could boost rather than harm economic growth. "Keeping warming to a minimum of below 1.5 degrees won't simply deliver safety and prosperity, it will also deliver justice," he said.

10,000 Form Human Chain in Paris Demanding World Leaders Keep Fossil Fuels in the Ground - Thousands of Parisians and activists from around the world joined hands to form a human chain along Boulevard Voltaire in Paris this afternoon. According to Agence France Presse, nearly 10,000 people took part in the demonstration. “We joined hands today against climate change and violence,” said Hoda Baraka, Global Communications Manager for 350.org. “People here in Paris, and hundreds of thousands who are taking part in climate marches worldwide, have a clear message for world leaders: keep fossil fuels in the ground and finance a just transition to 100 percent renewable energy.” The chain stretched all the way from the Oberkampf metro stop, just down the boulevard from Place de Republique, passed the Bataclan theater, where the tragic attacks of Nov. 13 took place, and down to Place de la Nation. Parents, children, activists and delegates to the COP21 climate talks from around the world joined hands together to call for peace and climate justice. As the gathering took place in Paris, hundreds of thousands of people took part in Global Climate Marches around the world. Some of the largest marches drew thousands to tens of thousands of people in Quezon City, Sydney, Melbourne, Cairo, London, Tokyo, Barcelona, Berlin, Johannesburg and more. Demonstrators called on politicians to end the use of fossil fuels and finance a just transition to 100 percent renewable energy.

Powerless: Left and Media Vilify 90 Percent of Energy Supply -- Certain types of energy are certain targets for the 190 governments’ representatives gathering in Paris this week  and from green activists surrounding the melee. The goal of the U.N. climate conference in Paris, known as COP21, is to get an international agreement on reducing carbon emissions, out of fear that climate change is a global threat. But the agenda of some developing nations to make rich nations like the U.S. pay them billions of dollars to fund a transition to “clean energy” reveals one reason clean energy goals aren’t realistic. The environmentalist left has a dream: to see the end of fossil fuels followed by total reliance on solar, wind, biofuels and the like. At least that’s what many of them say as they wage campaigns against coal, protest the Keystone XL pipeline, call for fracking bans and fossil fuel “divestment.”The liberal news media have helped them in this crusade for a “clean” and “green” renewable Utopia. Only there are problems ...  It turns out environmental groups can’t even agree among themselves about which forms of energy to support. Take the Sierra Club for example. It was for natural gas before it was against it. Many liberal environmentalists and the media also flip-flopped on ethanol promoting it as “the wave of the future,” but recanted after its use spawned food riots and environmental damage. Other eco-activists adamantly oppose hydroelectric dams, call for their destruction and celebrate the more than 1,200 dams torn down between 1912 and 2014. Even though dams can be used to generate hydroelectric power, a carbon emission free energy source.

Rich countries pressured to pay poor nations for climate havoc at COP21 - It’s only day two of the Paris climate talks and already there’s a world of difference between the lofty and inspiring words by state leaders made Monday, and what country negotiators are actually saying to vulnerable nations behind the scenes about what will done to protect them from future climate chaos.“The leaders made very, very good laudable statements," said Bangladeshi climate negotiations expert Saleemul Huq. "I don't see their negotiators following very good instructions from their leaders." Officially, the Paris climate target is to constrain two degrees of dangerous planetary warming — but that's not enough, says Huq, with the International Centre for Climate Change and Development, based in Dhaka. His densely populated country in south Asia is expected to get overwhelmed with sea level rise. “Two degrees will protect most people, it will not protect all. If we want to protect all, then the temperature target needs to be 1.5C,” said Huq. “The difference… is roughly 100 million people falling through that crack, and most of them will be developing countries.” He said a more ambitious 1.5 Celsius target for capping planetary warming is agreed to by 106 countries, the majority of the 195 UNFCC nations. “So if this was a democracy, they would win. But it just so happens they are not particularly powerful countries. And the ones that are rich and powerful… are not on their side."

Rich countries pressured to pay poor nations for climate havoc at COP21 -- The climate negotiations entered their final day, and we geared up for our most audacious action. Several buses brought four hundred activists to different locations near the conference hall. Adrenaline running, we walked fast toward the gates and the guards. After a week of discussing sea level rise, eating vegan food, blocking car traffic, and marching in the streets dressed as polar bears and turtles, we were out to make a real difference. Chaining our bodies to the gates and each other, we tried to prevent the negotiators from leaving the hall until they had come up with a proper agreement, all the while chanting: “No more bla bla bla — action now!” That was twenty years ago, at the very first United Nations Climate Change Conference (COP), in Berlin. The negotiators, needless to say, snuck out the backdoors. Since then, a tidal wave of bureaucratic logorrhea has rolled over the planet every December, as the COPs have degenerated into annual exhibits in the latest innovations in officialese. No tangible measures other than the construction of various vacuous carbon markets have materialized; CO2 emissions from fossil fuels have not declined, not leveled off, not increased a little more slowly, but soared by 50 percent under the cover of two decades of ever more bla bla bla. And now the demonstrations at COP21 in Paris have been banned. This decision by the French state was not an anomaly, brought about by the November 13 massacre. Repression has intensified at every summit since the fateful COP15 in Copenhagen.

Paris: 600 Fake Ads Denounce Climate Conference Hypocrisy - Amidst the French state of emergency banning all public gatherings following the terrorist attacks on 13 November in Paris, the ‘Brandalism’ project has worked with Parisians to insert unauthorised artworks across the city that aim to highlight the links between advertising, consumerism, fossil fuel dependency and climate change. The artworks were placed in advertising spaces owned by JC Decaux -one of the world’s largest outdoor advertising firms and an official sponsor to the COP21 climate talks. Other prominent corporate sponsors of the climate talks such as AirFrance, GDF Suez (Engie) and Dow Chemicals are parodied in the posters – whilst heads of state such as Francois Hollande, David Cameron, Barack Obama, Angela Merkel and Shinzo Abi also feature. The artworks were created by over 80 renowned artists from 19 countries across the world including Neta Harari, Jimmy Cauty, Banksy-collaborator Paul Insect, Escif and Kennard Phillips – many of whom featured at Banksy’s Dismaland exhibition in England this summer. Joe Elan from Brandalism said, “By sponsoring the climate talks, major polluters such as Air France and GDF-Suez-Engie can promote themselves as part of the solution – when actually they are part of the problem.”

How to Think About the Paris Climate Talks  -- Gaius Publius -- The Paris climate talks — officially COP 21, or the 21st “conference of the parties” to the UN’s climate treaty-making body, the Framework Convention on Climate Change (FCCC) — are much in the news these days, and I imagine most people have no idea how to think about them. That is, they don’t think much will happen there that will help, and beyond that, it’s just numbers and speeches, stuff that flies over people’s heads.  So here are four points to consider as you listen to the reports and analyses. For easy reference, these are:

• The most ambitious emission pledges on the table would still result in catastrophe.
• Two degrees warming is still too much.
• Paris, at best, is baby steps and a scoreboard.
• The media can spin, but nature bats last.

If you remember these things, especially the first and the second, you’ll have the least you need to know to understand the Paris climate conference. I’m drawing much if this from Mark Hertsgaard’s recent article in The Nation, as well from Bill McKibben’s Paris conference piece in Foreign Policy. Both pieces are worth a full read.

COP-21 climate deal in Paris spells end of the fossil era - A far-reaching deal on climate change in Paris over coming days promises to unleash a $30 trillion blitz of investment on new technology and renewable energy by 2040, creating vast riches for those in the vanguard and potentially lifting the global economy out of its slow-growth trap.  Economists at Barclays estimate that greenhouse gas pledges made by the US, the EU, China, India, and others for the COP-21 climate summit amount to an epic change in the allocation of capital and resources, with financial winners and losers to match.  They said the fossil fuel industry of coal, gas, and oil could forfeit $34 trillion in revenues over the next quarter century – a quarter of their income – if the Paris accord is followed by a series of tougher reviews every five years to force down the trajectory of CO2 emissions, as proposed by the United Nations and French officials hosting the talks.  By then crude consumption would fall to 72m barrels a day - half OPEC projections - and demand would be in precipitous decline. Most fossil companies would face run-off unless they could reinvent themselves as 21st Century post-carbon leaders, as Shell, Total, and Statoil are already doing.  The agreed UN goal is to cap the rise in global temperatures to 2 degrees centigrade above pre-industrial levels by 2100, deemed the safe limit if we are to pass on a world that is more or less recognisable.  Climate negotiators say there will have to be drastic "decarbonisation" to bring this in sight, with negative net emissions by 2070 or soon after. This means that CO2 will have to be plucked from the air and buried, or absorbed by reforestation.  Such a scenario would imply the near extinction of the coal industry unless there is a big push for carbon capture and storage. It also implies a near total switch to electric cars, rendering the internal combustion engine obsolete.

Paris Climate Talks Avoid Scientists’ Idea of ‘Carbon Budget’ - After two decades of talks that failed to slow the relentless pace of global warming, negotiators from almost 200 countries are widely expected to sign a deal in the next two weeks to take concrete steps to cut emissions.The prospect of progress, any progress, has elicited cheers in many quarters. The pledges that have already been announced “represent a clear and determined down payment on a new era of climate ambition from the global community of nations,” said Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, in a statement a month ago.Yet the negotiators gathering in Paris will not be discussing any plan that comes close to meeting their own stated goal of limiting the increase of global temperatures to a reasonably safe level. They have pointedly declined to take up a recommendation from scientists, made several years ago, that they set a cap on total greenhouse gases as a way to achieve that goal, and then figure out how to allocate the emissions fairly. The pledges countries are making are voluntary, and were established in most nations as a compromise between the desire to be ambitious and the perceived cost and political difficulty of emissions cutbacks.In effect, the countries are vowing to make changes that collectively still fall far short of the necessary goal, much like a patient who, upon hearing from his doctor that he must lose 50 pounds to avoid life-threatening health risks, takes pride in cutting out fries but not cake and ice cream.

Scientists Dispute 2-Degree Model Guiding Climate Talks - WSJ -- The single most important benchmark underpinning this week’s talks in Paris on climate change—two degrees Celsius—has guided climate-treaty discussions for decades, but scientists are at odds on the relevance of that target. Many researchers have argued that a rise in the planet’s average global air temperature of two degrees or more above preindustrial levels would usher in catastrophic climate change. But many others, while convinced the planet is warming, say two degrees is a somewhat arbitrary threshold based on tenuous research, and therefore an impractical spur to policy action. “It emerged from a political agenda, not a scientific analysis,”   “It’s not a sensible, rational target because the models give you a range of possibilities, not a single answer.” Policy makers tend to assume the two-degree target expresses a solid scientific view, but it doesn’t. The exhaustive reports published by the United Nations Intergovernmental Panel on Climate Change are considered to be the most comprehensive analysis of the science of global warming. Yet the two-degree limit isn’t mentioned in a single IPCC report. Still, many scientists back the goal because they see it as giving policy makers a clear-cut target to shoot at in the fight against global warming. The vast majority of climatologists agree that the earth is getting warmer and that the emission of greenhouse gases by human activity is the main driver of this change. But the question of when a catastrophic tipping point might be reached is up in the air. Some significant phenomena widely attributed to warming—such as dramatic summer melting of Arctic sea ice and glacial retreat in Greenland—are already evident today, even though the average temperature is one degree Celsius above preindustrial levels and thus some ways from the two-degree benchmark.

Scientists say Paris climate pledges aren't enough to save the planet's ice --  This year the vast majority of the world’s nations have issued pledges, or “intended nationally determined contributions” (INDCs), promising a range of emissions cuts as a foundation for an agreement at the Paris climate conference that opens Monday.  These commitments, on their own, only have the potential to forge a path that would limit warming to 2.7 degrees Celsius above pre-industrial levels at best, according to the U.N. And other assessments have been even more pessimistic than that, producing higher estimates like 3.5 degrees Celsius by 2100.That’s well above the 2 degrees C that has been dubbed the final marker of a climatic “safe” zone. And now, a group of scientists who study the “cryosphere” — all the ice and snow in the Earth’s system, at the poles but also in frozen permafrost and mountain glaciers — have unleashed a stark assessment of just how inadequate these currently pledged emissions cuts are (barring a major enhancement of ambitions in Paris). Indeed, they say that if the INDCs are the end of the story, often irreversible changes will usher in that, unfolding over vast time periods, will dramatically raise seas and pour dangerous additional amounts of carbon into the atmosphere. “Reacting with ‘too little, too late’ may lock in the gradual but unavoidable transformation of our Earth, its ecosystems and human communities, in a terrible legacy that may last a thousand years or more,” says the document, issued by the International Cryosphere Climate Initiative (ICCI) and reviewed by a number of leading ice scientists focusing on Greenland, Antarctica, permafrost, Arctic sea ice, and more.

As scientists worry about rapidly warming world, U.S. public doesn’t – ‘If the American population were left to lead on the issue of climate, it’s just not going to happen’– Americans are hot but not too bothered by global warming. Most Americans know the climate is changing, but they say they are just not that worried about it, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. And that is keeping the American public from demanding and getting the changes that are necessary to prevent global warming from reaching a crisis, according to climate and social scientists. As top-level international negotiations to try to limit greenhouse gas emissions start in Paris, the AP-NORC poll taken in mid-October shows about two out of three Americans accept global warming and the vast majority of those say human activities are at least part of the cause. However, fewer than one in four Americans are extremely or very worried about it, according the poll of 1,058 people. About one out of three Americans are moderately worried and the highest percentage of those polled — 38 percent — were not too worried or not at all worried. Despite high profile preaching by Pope Francis, only 36 percent of Americans see global warming as a moral issue and only a quarter of those asked see it as a fairness issue, according to the poll which has a margin of error of plus or minus 3.7 percentage points. "The big deal is that climate has not been a voting issue of the American population," said Dana Fisher, director of the Program for Society and the Environment at the University of Maryland. "If the American population were left to lead on the issue of climate, it's just not going to happen."

Two-thirds of Americans want U.S. to back global climate deal: NYT/CBS poll - Two-thirds of Americans think the United States should join a legally binding global climate change agreement, a poll by CBS News and the New York Times released on Monday said. But the poll, conducted between Nov. 18 and Nov. 22, showed Americans were divided on what domestic measures the United States should take to curb greenhouse gas emissions. The poll showed 63 percent of Americans favored regulations to cut carbon emissions from power plants, while 31 percent opposed them. The public was split on whether the United States should restrict drilling for oil and gas on public lands, with 49 percent in favor and 45 percent opposed. Far fewer of those polled supported any new taxes on electricity or gasoline use. The show of public support comes as the United States tries to play a leadership role in securing a global climate agreement in Paris over the next two weeks of negotiations.

Obama takes his reckless energy plan to the United Nations -- Mitch McConnell - It would obviously be irresponsible for an outgoing president to purport to sign the American people up to international commitments based on a domestic energy plan that is likely illegal, that half the states have sued to halt, that Congress has voted to reject and that his successor could do away with in a few months’ time. But that’s just what President Obama is proposing to do at a U.N. climate conference in Paris starting Monday. The president’s international negotiating partners at that conference should proceed with caution before entering into an unattainable deal with this administration, because commitments the president makes there would rest on a house of cards of his own making. President Obama assumed office with smashing majorities in both houses of Congress. Democrats used the opportunity to pass one left-wing policy after the next. But even with the left at its generational zenith, the president could not persuade his party to pass an anti-middle class energy tax that would have punished the poor and shipped more American jobs overseas. This frustrated Obama. When the American people voted to strip his party of congressional control, he was frustrated further. So he decided to impose a similarly regressive energy policy, his so-called Clean Power Plan , by executive fiat. Obama’s Harvard Law School mentor, Professor Laurence Tribe, has likened this to “burning the Constitution.” What his power plan will do is unfairly punish Americans who can least afford it. It could result in the elimination of as many as a quarter of a million U.S. jobs. It could raise energy costs in more than 40 states, with double-digit increases in states such as my home state of Kentucky.  Few expect this anti-middle class power plan to last much beyond the months remaining in Obama’s term though. The courts appear likely to strike it down, the next president could tear it up, more than half of the 50 states have filed suit against it, and — critically — a bipartisan majority in both chambers of Congress just approved legislation to expressly reject it.

Secret trade talks could weaken climate targets set in Paris, warn campaigners - Secret trade talks in Geneva could outlaw subsidies for renewable energy, undermining climate discussions in Paris that aim to cut greenhouse gas emissions, anti-poverty campaigners have warned. The Geneva summit involving 22 countries including the US, Mexico, Australia and the 28 EU member states, aim to create a “level playing field”, with the possible consequence that fracking companies could dispute subsidies for solar or wind power. According to leaked documents, a draft chapter of the Trade in Services Agreement (TiSA) would, if adopted, force governments to accept “technological neutrality”. Disputes over subsidies to renewables would be resolved in a tribunal system outside national government control. “This chapter shall apply measures affecting trade in energy related services, irrespective of the energy source dealt with, technology used, whether the energy source is renewable or non-renewable, and whether the service is supplied onshore or offshore,” says the draft obtained by WikiLeaks.EU officials have consistently argued that achieving climate targets will not be undermined by trade talks. The EU has set targets that include a cut of at least 40% in greenhouse gas emissions by 2030 compared with 1990. Brussels must also reach a target of 27% energy consumption from renewables within the same timescale.

The House Just Voted To Overrule America’s Biggest Action On Climate Change --The House passed two joint resolutions Tuesday to kill the Clean Power Plan, the Obama Administration’s rule to restrict carbon emissions from the electricity sector. The resolutions passed 242-180 and 235-188 and will now head to the White House.  The Clean Power Plan would reduce emissions by 32 percent from 2005 levels by 2030. Under the rule, states are required to design and implement flexible compliance plans that could include increases in efficiency and clean energy. Together the resolutions cover emissions restrictions on both new and existing power plants. They passed the Senate last month.  Nearly a third of the country’s emissions are from the power sector, largely due to coal-fired power plants, making the Clean Power Plan a critical component of U.S. efforts to reduce carbon emissions and address climate change.  During the House hearing Tuesday, Rep. Ed Whitfield (R-KY), who sponsored similar resolutions, called the Clean Power Plan “extreme and unprecedented,” saying it asked too much of America’s electricity sector, especially in the context of global emissions. He also criticized the administration’s role in curbing carbon emissions. The Congressional Review Act, which authorized Tuesday’s resolutions, allows Congress to overturn executive actions.  “There’s no technology available to meet the stringent emission standard set by EPA, and yet China, India, and every other country in the world can build a new coal plant, if they decide to do so,” Whitfield said. “Why should this president penalize America and put us in jeopardy… just so he can go to France and claim to the be world leader on climate change?”

Naomi Klein says politicians leading world to "very dangerous future" - In sharp contrast to the hopefulness that some environmentalists are expressing at the COP21 climate summit, iconic Canadian activist and author Naomi Klein delivered a stinging rebuke against it—stating her doubts that the global talks will deliver the kind of radical, transformative change needed to prevent catastrophic climate change."I refuse to leave our future in the hands of the world leaders cloistered in Le Bourget,” she said in downtown Paris, well removed from the summit site northeast of the city. "We have left our messianic fantasies at home. We've done the math. We know politicians have come to the table with emissions reduction targets that will lead us to an extremely dangerous future, three to four degrees.” "This is not ambition." Klein was speaking at a free public event downtown that drew about 500 people away from the summit. The author is promoting her new movement, the "Leap Manifesto" —an attempt to bind together social activist, labour, environmental and indigenous groups to push for greater climate ambition from governments. And while environmental observers from Greenpeace to Équiterre have said they're surprisingly pleased with Trudeau and his climate negotiators so far — Klein says current country emissions targets at COP21 are "completely unacceptable."

Is the 2 °C world a fantasy? - The year is 2100 and the world looks nothing like it did when global leaders gathered for the historic climate summit in Paris at the end of 2015. Nearly 8.8 billion people now crowd the planet. Energy consumption has nearly doubled, and economic production has increased more than sevenfold. Vast disparities in wealth remain, but governments have achieved one crucial goal: limiting global warming to 2 °C above pre-industrial temperatures. After forging a climate treaty, governments immediately moved to halt tropical deforestation and to expand forests around the globe. By 2020, plants and soils were stockpiling more than 17 billion tonnes of extra carbon dioxide each year, offsetting 50% of global CO2 emissions. Several million wind turbines were installed, and thousands of nuclear power plants were built. The solar industry ballooned, overtaking coal as a source of energy in the waning years of the twenty-first century. But it took more than this. Governments had to drive emissions into negative terri­tory — essentially sucking greenhouse gases from the skies — by vastly increasing the use of bioenergy, capturing the CO2 generated and then pumping it underground on truly massive scales. These efforts pulled Earth back from the brink. Atmospheric CO2 concentrations peaked in 2060, below the target of 450 parts per million (p.p.m.) and continue to fall. That scenario for conquering global warming is one possible — if optimistic — vision of the future. Climate modellers have developed dozens of rosy 2 °C scenarios over several years, and these fed into the latest assessment by the Intergovernmental Panel on Climate Change (IPCC). The panel seeks to be policy-neutral and has never formally endorsed the 2-degree target, but its official message, delivered in April 2014, was clear: the goal is ambitious but achievable.

Bill Gates isn’t a climate savior - Daniel Gross  On the eve of the Paris climate talks, Microsoft founder Bill Gates made splashy news by announcing that he and a group of fellow billionaires would create a new fund that would invest in clean energy research. Gates alone would kick in up to $2 billion. The Breakthrough Energy Coalition has been hailed as a great breakthrough. Many of today’s smartest and richest industrialists are teaming up to bring their capitalist-superhero powers to bear on a world-threatening problem. Now, I like Bill Gates as much—perhaps moreso—than most people.  But I’m skeptical about his latest philanthropic act. He and his Superrich Friends might have more impact if they were to invest their money differently.  First, Gates’ coalition is the creation of a slice of the business establishment: hedge-fund magnate George Soros, Hewlett-Packard Enterprise CEO Meg Whitman, venture capitalist Vinod Khosla, and other graying magnates. And history has generally proven that one generation’s establishment, no matter how smart and rich, doesn’t necessarily know what it takes to create the next generation’s energy or transportation standard. Second, while it sounds like a lot of money—$2 billion is two with nine zeroes behind it—it’s really not that much, even if it all goes to primary research.* Cleantech, the cluster of industries that includes wind and solar, hydro, nuclear, batteries, electric cars, energy efficiency, software, and a host of services, is a massive, rapidly growing global industry. In 2014, about $100 billion was invested in wind energy alone, according to the Global Wind Energy Council. The U.S. Department of Energy loan program, which famously invested a few hundred million dollars in Solyndra, has less famously made $30 billion in loans, investments, or loan guarantees in the past several years.

COP21 and Beyond: Outlines of an Actually-Effective International Climate Policy Architecture - In this series, I attempt to outline key issues facing policymakers as they meet in Paris at the UN’s Conference of the Parties-21 starting on November 30th and possibly culminating in a global climate treaty by the end of the conference on December 11th, called a “deadline” by the organizers. COP21 is being viewed as a last chance for humanity to seriously address climate change in concert and therefore face humanity’s most serious and ominous existential crisis. Human survival as a species may very well be at stake. Contents: Shedding the Kyoto Paradigm

• Assuming the Can Opener: Another Damaging Legacy of Neoclassical Economics
• Kyoto: All Funding is Private Investment; Public Investment Unthinkable

Outline of an Actually-Effective International Climate Policy Framework

1. Declare a Climate Emergency
2. Guard & Enhance Human & Political Rights During the Long Emergency
3. Target 1.5 °C Warming or Less
4. Net-Zero Worldwide GHG Emissions by 2035
5. Commit to (Aggressive) Mechanisms First
6. Primary Mechanism: National Climate Mobilizations Led by National Governments
7. Secondary Mechanism: Ascending Carbon Tax & Tariff Regime
8. Tertiary Mechanism: Coordinated Treaty on Emergency Global Cooling
9. Remove Fossil Fuel Economic Interests from UNFCCC
10. Reinforce National Sovereignty via the UN Against Treaties that Undermine Climate Regulation

No Decoupling, No Free Lunch -- George Monbiot published a remarkable column recently called False Promise. In so doing he called my attention to a 2013 paper entitled The material footprint of nations. It would hard to overstate the importance of this study, as Monbiot explains.  The belief that economic growth can be detached from destruction appears to be based on a simple accounting mistake. Before we get into this, remember that "mistake" is a Flatland word. Here at DOTE we interpret the word "mistake" as typical exercise in human self-delusion. We can have it all; that is the promise of our age. We can own every gadget we are capable of imagining —' and quite a few that we are not. We can live like monarchs without compromising the Earth’s capacity to sustain us. The promise that makes all this possible is that as economies develop, they become more efficient in their use of resources. In other words, they decouple. There are two kinds of decoupling: relative and absolute. Relative decoupling means using less stuff with every unit of economic growth. Absolute decoupling means a total reduction in the use of resources, even though the economy continues to grow. Almost all economists believe that decoupling — relative or absolute — is an inexorable feature of economic growth. On this notion rests the concept of sustainable development. It sits at the heart of the climate talks in Paris next month and of every other summit on environmental issues. But it appears to be unfounded.

Imagining a World Without Growth - Could the world order survive without growing?It’s hard to imagine now, but humanity made do with little or no economic growth for thousands of years. In Byzantium and Egypt, income per capita at the end of the first millennium was lower than at the dawn of the Christian Era. Much of Europe experienced no growth at all in the 500 years that preceded the Industrial Revolution. In India, real incomes per person shrank continuously from the early 17th through the late 19th century.As world leaders gather in Paris to hash out an agreement to hold down and ultimately stop the emissions of heat-trapping greenhouse gases that threaten to make Earth increasingly inhospitable for humanity, there is a question that is unlikely to be openly discussed at the two-week conclave convened by the United Nations. But it is nonetheless hanging in the air: Could civilization, as we know it, survive such an experience again?  The answer, simply, is no. Economic growth took off consistently around the world only some 200 years ago. Two things powered it: innovation and lots and lots of carbon-based energy, most of it derived from fossil fuels like coal and petroleum. Staring at climactic upheaval approaching down the decades, environmental advocates, scientists and even some political leaders have put the proposal on the table: World consumption must stop growing. The Stanford ecologist Paul Ehrlich has been arguing for decades that we must slow both population and consumption growth. When I talked to him on the phone a few months ago, he quoted the economist Kenneth Boulding: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

Abundance, not scarcity: Some greens imagine a world without economic growth. But there's a better way - AEI - Economic growth — material abundance and the opportunity for human advancement it generates — is the beating, sustaining heart of modern civilization. Longer lives, more interesting lives, safer lives. Mass flourishing — with lots of cool stuff and more on the way. But so long to all of that, say some environmentalists.  Giving up growth means abandoning civilization and foregoing an even more prosperous, fantastic future. Here is the awful math about climate change and growth: To keep temperatures from increasing by no more than 2 degrees Centigrade, scientists speculate, the global economy by 2050 would have to emit no more than six grams of carbon dioxide for every dollar of economic output. As Porter notes,  “The United States economy emits 60 times that much.” So energy austerity is no solution. De-growth, de-population, and a return to nature is no solution. A redistribution of prosperity from the rich world to the developing world — a Great Leveling — is no solution. A perpetual 1970s for everyone forever is no solution. Instead, we need abundant clean energy for a populous, high-energy planet and beyond. For the second time this week, let me quote from the Economodernist Manifesto: In the long run, next-generation solar, advanced nuclear fission, and nuclear fusion represent the most plausible pathways toward the joint goals of climate stabilization and radical decoupling of humans from nature. If the history of energy transitions is any guide, however, that transition will take time. During that transition, other energy technologies can provide important social and environmental benefits.

The latest forecasts on climate change -- Severe climate change will happen: no expert I consulted believes we will do enough to prevent dangerous climate change. The stated goal of Paris is to stop average temperatures rising by 2C. To achieve that, we need to cut the carbon intensity of our economies by 6.3 per cent a year, says PwC, the accountancy firm. We have missed that goal in each of the seven years since PwC began tracking this target. We are on track to “blow our carbon budget” before 2035, says PwC. No sudden turnround is coming. It’s fun to blame this on climate change deniers but they are a sideshow. Rather, as French magazine Charlie Hebdo points out, today’s governments need carbon emissions, because global growth depends on China’s coal-fired economy. Leaders of rich countries need votes today. Leaders of poor countries either don’t care about anything except pillaging their own states or are already overwhelmed by more urgent needs. Here is what severe climate change might look like in different regions:  Most rich countries will manage to protect themselves. “Life will probably be more uncomfortable in the northern hemisphere but we will be able to deal with it,”  One possible future for the rich world is as a giant Netherlands. The Dutch, protected by dykes and dams, are confident they can cope with several centuries of rising seas. The country’s cost of staying dry is only about €60 per inhabitant a year. Other rich countries will build similar protection.  Canada and Russia see benefits in the short term. Geden explains Russian thinking: “We can’t use large areas of our country because they are so cold. Why should we worry about warming?” Indeed, climate change may be a Russian policy goal. Poor countries won’t protect their citizens. Most don’t do that now, let alone in 2050 when populations will have mushroomed, and arable land and water will have grown scarce in many places. You won’t want to experience climate change in Bangladesh or Haiti, and you won’t be able to experience it on Tuvalu as its islands sink beneath the Pacific Ocean.

COP21 – The Elephant in the Room -- Hanging out in the halls of Le Bourget one often hears the phrase, “the elephant in the room,” in reference to unspoken but huge issues that may threaten the negotiations if they are disturbed. In our view, the room is actually full of elephants, and it is a wonder delegates can even squeeze in to find their seats. A new one that has made its appearance this year is the notion of measuring not merely a nation's consumption of fossil fuels (and presumedly penalizing nations that consume more than they should) but also measuring production of fossil fuels (at the wellhead or mineshaft, before they are burnt). This is a big deal.  In a way it is not all that new, because we spoke of it in our book, The Post Petroleum Survival Guide and Cookbook, back in 2006. Our theme then was that production and consumption were two sides of the same coin; reducing consumption would also entail reducing production, but it was not necessarily a bad thing. Producing less could actually lead to a better life for people. Our model was the dedicated beach bum who is content to work only enough to provide minimal needs and whose main products were serotonin and suntans. In recent times we see more writers and thinkers coming to the same conclusion. We recently listened to an interview on the Kunstlercast with Chris Martenson and Adam Taggart, authors of Prosper!: How to Prepare for the Future and Create a World Worth Inheriting.

The price of oil and the price of carbon - Fossil fuel prices are likely to stay ‘low for long’. Notwithstanding important recent progress in developing renewable fuel sources, low fossil fuel prices could discourage further innovation in and adoption of cleaner energy technologies. The result would be higher emissions of carbon dioxide and other greenhouse gases Policymakers should not allow low energy prices to derail the clean energy transition. Action to restore appropriate price incentives, notably through corrective carbon pricing, is urgently needed to lower the risk of irreversible and potentially devastating effects of climate change (Stern 2015). That approach also offers fiscal benefits. Oil prices have dropped by over 60% since June 2014. ... Natural gas and coal – also fossil fuels – have similarly seen price declines that look to be long-lived. Coal and natural gas are mainly inputs to electricity generation, whereas oil is used mostly to power transportation, yet the prices of all these energy sources are linked, including through oil-indexed contract prices. The North American shale gas boom has resulted in record low prices there. ... Progress in the development of renewables could be fragile, however, if fossil fuel prices remain low for long. ... The current low fossil-fuel price environment will thus certainly delay the energy transition. That transition – from fossil fuel to clean energy sources – is not the first one. Earlier transitions were those from wood/biomass to coal in the 18th and 19th centuries and from coal to petroleum in the 19th and 20^th centuries. One important lesson is that these transitions take a long time to complete. But this time we cannot wait.

The IMF Is Pushing for Carbon Taxes, But at What Price? - As world leaders try to hash out a controversial deal to cut greenhouse gases in Paris, the International Monetary Fund is ramping up calls for carbon taxes. But at what cost? Even the world’s premier economic counselor is struggling to answer that question. “Without global coordination on carbon prices, the cost to the world economy….will be unnecessarily high,” IMF’s new chief economist, Maurice Obstfeld, writes in a new blog post with Rabah Arezki, head of the fund’s commodity research team. A host of factors are complicating the issue. The economists say an era of low fossil-fuel prices is discouraging development of low-emission energy technology and intensifying the need for governments around the world to impose carbon taxes. “Action to restore appropriate price incentives, notably through corrective carbon taxation, is urgently needed to lower the risk of irreversible and potentially devastating effects of climate change,” Mssrs. Obstfeld and Arezki said. Today’s global supply glut is unlike those of the past, the two economists warn. Historically, low energy prices choked investment in new production, pulling prices back up. “The dynamic adjustment to low oil prices may, however, be different this time around,” they said.

Financial engineering to save the planet --Izabella Kaminska -  One of the problems with green energy finance is the nature of the asset. Unlike fossil fuel developments, which spread the capital cost of development and production across the lifespan of the asset, most renewable projects have to be entirely capital funded up front. According to Citi’s Anthony Yuen and Ed Morse, that means the cost of financing is the key determinant in making these projects competitive and viable — an increasingly pressing objective in the context of falling fossil fuel prices, which reduce the competitive position of renewables in the energy complex. In an upcoming report, Financing a Greener Future, the experts even argue it’s probably a more important determinant than changes in global climate change policy. The COP21 meeting in Paris matters, but — says the report –bottom up, local and national policies matter moreIn fact, what the climate change campaigners in Paris may never have bargained for is the degree to which fossil fuel abundance and elasticity has disrupted the economic incentives associated with going green. For renewables, it’s arguably even worse, because the real cost comparison isn’t even oil, it’s even cheaper coal or natural gas.From Citi: As gas prices have continued their march lower in the midst of staggering productivity gains in hydraulic fracturing, gas’s inroads into coal’s once safe territory have gone farther. Additionally, new environmental regulations, such as the Clean Power Plan that more strictly regulates coal pollution, have added liability to building new coal plants and forced more coal-fired power plants to retire In the rest of the world, however, the story is very different. In nearly every economy except the US, coal remains a much cheaper source of power generation. Even in Europe, with a €9/ton carbon burden, burning coal is still far more profitable than burning gas, due in large part to the high costs of imported gas (see below chart). In addition to oversupply, mining costs have compressed by 30% in the last three years, even with lower prices, cushioning producers.

Unlocking Climate Finance - In Central America, per capita greenhouse-gas emissions are between one-fifth and one-tenth of those in industrialized countries. Governments in the region are pledging to cut emissions by as much as 25% by 2030, and to implement other measures to mitigate and adapt to climate change; overall, these efforts are expected to require at least $4 billion a year in investments. By comparison, replacing blighted coffee trees with rust-resistant varieties would cost an estimated $1 billion. In order to help Central American farmers tackle this challenge, the Inter-American Development Bank (IDB) has partnered with two global coffee companies – Starbucks and ECOM – as well as other multilateral agencies and donors to devise a pragmatic, business-based solution. Our $100 million program is designed to provide an example of how financing to combat the effects of climate change can be delivered to those who need it the most. The IDB program offers long-term loans for replacement of coffee trees to small-scale farmers who traditionally have little or no access to financing of any kind. Equally important, the program provides farmers with the training needed to confront increasingly frequent outbreaks of crop diseases. Farmers who tend their new trees well can triple their coffee output in three years. And if these loans can be shown to be good investments, more banks might be persuaded to finance climate-related agricultural projects. But there is a major obstacle to greater participation in climate finance among capital-market players: demand can be extremely dispersed. Boosting energy efficiency may be one of the most cost-effective ways to reduce greenhouse-gas emissions; but in Latin America, improvements in this area would entail persuading tens of millions of small businesses to switch to more environmentally friendly refrigerators, power tools, or delivery trucks.

Owner Of Mine That Spilled Toxic Waste Into A Colorado River Compares The EPA To Rapists -- Photos of the bright-orange colored Animas River in southwestern Colorado made international headlines in August after three million gallons of toxic mining sludge poured into it. Contractors working for the U.S. Environmental Protection Agency accidentally released the waste while attempting to clean up the site, abandoned by its original owners decades ago. But now, three months later, the owner of the Gold King Mine told the Durango Herald that it’s he who feels “victimized” by the EPA. Todd Hemmis took the comparison even further, comparing the EPA’s actions to rape. “They’ve been so thoroughly arrogant, incompetent, and frankly criminal in their outlook, that it’s kind of like dealing with the mafia…It is very much an act of rape,” he said. “I don’t mean to denigrate women who’ve gone through it, and for that matter, some men, but it’s been such an ugly penetrative act on an unwilling victim.” And he added that the EPA’s tactics to work with him were “the same cooperation the Nazis expected from the people getting off the trains” and that the agency was “very reminiscent of what you’d see in early 1940s in Europe.”

Research Confirms ExxonMobil, Koch-funded Climate Denial Echo Chamber Polluted Mainstream Media - A new study published today in the Proceedings of the National Academies of Science (PNAS) shows that the climate denial echo chamber organizations funded by ExxonMobil and Koch family foundations produced misinformation that effectively polluted mainstream media coverage of climate science and polarized the climate policy debate.  The abstract and full text of the study can be found here: Corporate funding and ideological polarization about climate change. The analysis of 20 years’ worth of data by Yale University researcher Dr. Justin Farrell shows beyond a doubt that ExxonMobil and the Kochs are the key actors who funded the creation of climate disinformation think tanks and ensured the prolific spread of their doubt products throughout our mainstream media and public discourse. “The contrarian efforts have been so effective for the fact that they have made it difficult for ordinary Americans to even know who to trust,” Dr. Farrell told the Washington Post which was first to cover the news of the study’s release. “This counter-movement produced messages aimed, at the very least, at creating ideological polarization through politicized tactics, and at the very most, at overtly refuting current scientific consensus with scientific findings of their own,” Dr. Farrell said.

Green investors take note: climate-focused mutual funds dabble in oil - (Reuters) - Several of the world's biggest climate-focused mutual funds have stakes in traditional oil and gas companies mixed in with their solar, wind and clean tech holdings, a potential shock to green investors seeking to avoid fossil fuels altogether. Six of the 20 biggest funds that mention "climate change" or "global warming" in their titles or marketing materials have oil and gas stocks, including two funds with investments in companies proposing new pipelines from Canada's carbon-intensive oil sands reserves, according to Reuters data. "This really underscores that prospective investors should carefully read a fund's details and not just its label," said Meg Voorhes, head of research at the Forum for Sustainable and Responsible Investment in Washington, D.C. Investing in climate risk is an important theme as world leaders gather in Paris to hash out an agreement to rein in global warming. Climate funds are a relatively new tool for environmentally minded investors, and remain a tiny part of the $30 trillion-plus mutual fund universe. ( http://tmsnrt.rs/1l5i4YJ )  A climate fund offered to European investors by HSBC, the HSBC GIF Global Equity Climate Change fund, holds stock in U.S. oil producer and refiner Chevron Corp, South African energy company SASOL Ltd and British oil and gas producer BG Group Plc.  "It is not so much about avoiding companies that are carbon emitters, but about investing in companies that have sought to adapt their businesses to meet the challenge," said HSBC

Half A Million Square Kilometers Of Heavy Smog Force Beijing To Issue "Orange Alert", Close Factories -- On Sunday, Beijing issued its highest smog alert of the year, upgrading it from the yellow of the past two days to orange, second only to red. According to local CCTV, heavy smog coveredan area of half a million square kilometers around Beijing-Tianjin-Hebei region, as heavy air pollution hits 31 cities. Xinhua reports that the municipal weather center said humidity and a lack of wind would mean the smog will linger for another two days, before a cold front arrives on Wednesday. On Sunday, the reading for PM2.5, airborne particles smaller than 2.5 microns in diameter, hit 274 micrograms per cubic meter in most parts of the capital. Indicatively, the World Health Organization (WHO) considers only 25 micrograms to be a safe level. Beijing has recommended that residents minimize outdoor activities and urged people with respiratory diseases as well as the elderly to stay at home. In March, four types of pollution alerts - blue, yellow, orange and red - were introduced by Beijing's Environmental Protection Bureau. All factories are to be shut down during orange alerts. Heavy vehicles, such as construction trucks, are also completely banned during orange and red alerts. Furthermore, construction sites should stop the transportation of materials and waste while heavy-duty trucks are banned from the roads.

Beijing’s smog off the scale but still no sign of top red alert -- Frustration is mounting in Beijing over the municipal government’s response to air pollution, which on Tuesday grew so bad that it went beyond the worst official terms to describe it. Smog blanketed the capital for a fifth straight day on Tuesday, sending visibility in some areas down to 200 metres and the city’s pollution index well beyond “hazardous”, the highest level on the smog scale.Concentrations of PM2.5 particles, those most dangerous to human health, were particularly severe in the city’s south. But the authorities still did not issue the top pollution alert for what is the worst case of air pollution in Beijing this year. A red alert, the highest in the four-tier system, would force schools to shut down and cars to stay off the road on alternate days. It should be issued when severe air pollution persists for more than 72 hours, but the capital remains on orange alert, one step below red. A Beijing Environmental Protection Bureau official said the orange alert had already led to shutdowns at factories and construction sites, The Beijing News reported. The official said the red alert was not necessary because a cold front was expected to clear the air on Wednesday morning. But many residents, especially parents, are not convinced.

How Europe's Good Environmental Intentions are Inadvertently Destroying America's Forests - In 2007, the European Union set a target to reduce greenhouse gas emissions by 20 percent below 1990 levels by the year 2020.  And the growing demand for biomass in Europe — where forests are often highly regulated — has been filled in large part by the American wood pellet industry. According to a new, first-of-its-kind report (with an accompanying fact sheet) authored by the Natural Resources Defense Council in conjunction with the Conservation Biology Institute, there's a big problem with this arrangement: Due to increasing European demand, wood pellet production has put 15 million acres of unprotected forests in the southeastern United States at risk. These regions, which make up an area nearly the size of West Virginia, include critical habitat for more than 600 imperiled, threatened or endangered species. In addition, pollution from logging in these regions has put more than 18,000 miles of impaired freshwater rivers and streams at new risk. The report's authors paint an evocative picture of an endangered ecosystem that is being pushed to the edge by a destructive logging industry:  Rare and precious, these mature forests are the heart of the region's natural ecosystem, supporting globally outstanding biodiversity and unique natural communities that provide a host of vital ecosystem services to the people of the region. . Abundant cavities in tree trunks and branches are home to woodpeckers, flying squirrels, and owls. Along backwater rivers, Atlantic white cedar once formed extensive swamps. In the region's bogs, carnivorous plants such as Venus flytraps and pitcher plants are now found only in small areas. These forests provide habitat for one of the highest concentrations of endangered species in North America, including numerous songbirds, Louisiana black bears, endangered bats and butterflies, and even rare varieties of synchronous fireflies, about which researchers are still learning.

Export of wood pellets from US to EU more environmentally friendly than coal -- As the export of wood pellets from the U.S. to the European Union has increased six-fold since 2008, questions have been raised about the environmental impact of the practice. According to a new paper from a University of Illinois expert in environmental economics, even after accounting for factors ranging from harvesting to transportation across the Atlantic Ocean, wood pellets still trump coal by a wide margin in carbon emissions savings. The greenhouse gas intensity of wood pellet-based electricity is between 74 to 85 percent lower than that of coal-based electricity, says published research co-written by Madhu Khanna, a professor of agricultural and consumer economics at Illinois. "One of the concerns with wood pellet production has been that it's going to lead to an increase in the harvesting of trees in the southern part of the U.S., and that the emissions that go into both the production of these pellets and their transportation to Europe will result in a product that is not going to save a lot of greenhouse gas emissions when it displaces coal-based electricity in Europe," Khanna said. But Khanna and her co-authors found that across different scenarios of high and low demand for pellets, the greenhouse gas intensity of pellet-based electricity generated from forest biomass such as pulpwood and milling residues is still significantly less than that of coal-based electricity.

Ethanol production hits record as distillers are flush with corn: Flush with grain from the third-largest U.S. corn harvest, ethanol distilleries are cranking out unprecedented amounts of the biofuel. Ethanol production last week reached a record 1 million barrels a day, for an annualized rate of 15.5 billion gallons, the U.S. Energy Information Administration said in a report Wednesday. Demand for the additive to be blended into gasoline has been at an all-time high for most of 2015 as drivers take to the road amid cheap pump prices. Ethanol makes up about 10% of gasoline consumption. Farmers harvested 13.654 billion bushels of the grain this year, according to a Nov. 10 Agriculture Department report. "If you have plenty of corn, there's no constraints on production,"  "To get this kind of number means that everybody was running full tilt." Ethanol-makers went through a period of robust margins over an 18-month period that began in the second half of 2013, allowing producers to pay off debt and make investments in plants to improve yields,

EPA bumps up US Renewable Fuel Standard volumes for 2015-2016, in final ruling : Biofuels Digest: In Washington, the U.S. Environmental Protection Agency announced final volume requirements under the Renewable Fuel Standard program today for the years 2014, 2015 and 2016, and final volume requirements for biomass-based diesel for 2014 to 2017. This rule finalizes higher volumes of renewable fuel than the levels EPA proposed in June, boosting renewable production and providing support for robust, achievable growth of the biofuels industry. “The biofuel industry is an incredible American success story, and the RFS program has been an important driver of that success—cutting carbon pollution, reducing our dependence on foreign oil, and sparking rural economic development,” said Janet McCabe, the acting assistant administrator for EPA’s Office of Air and Radiation. “With today’s final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time. Our standards provide for ambitious, achievable growth.” The final 2016 standard for cellulosic biofuel — the fuel with the lowest carbon emissions — is nearly 200 million gallons, or 7 times more, than the market produced in 2014. The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35 percent, higher than the actual 2014 volumes; the total renewable standard requires growth from 2014 to 2016 of more than 1.8 billion gallons of biofuel, which is 11 percent higher than 2014 actual volumes. Biodiesel standards grow steadily over the next several years, increasing every year to reach 2 billion gallons by 2017.

U.S. solar industry in urgent push to extend tax incentive - As world leaders convene in Paris to forge a pact to curb carbon emissions, the U.S. solar industry is pushing to seal a smaller deal in Washington that for it is arguably more urgent: preventing a key clean energy incentive from disappearing. Solar supporters want U.S. lawmakers to extend a 30 percent tax credit for solar installations, possibly as part of a package of renewed temporary tax breaks Congress is working to pass in the next two weeks, industry lobbyists and executives said. The tax credit is currently slated to step down to 10 percent for commercial solar systems, and expire for residential systems, at the end of 2016. The industry says extending the 30 percent tax credit now will help companies gear up for investments next year, rather than spending 2016 preparing for a rollback. The Investment Tax Credit for solar energy systems has helped underpin an annual growth rate of 76 percent in solar installations over the last decade, according to the Solar Energy Industries Association. Nearly 200,000 people work in the U.S. solar industry, and SEIA estimates 100,000 jobs would be lost in solar and related industries in 2017 if the policy lapses.

Dubai to Make Rooftop Solar Mandatory by 2030 -- Dubai, the largest city in the United Arab Emirates, announced last week that it will mandate rooftop solar for all buildings beginning in 2030. The mandate is part of the larger Dubai Clean Energy Strategy 2050. The initiative was launched by Sheikh Mohammed bin Rashid, vice president and ruler of Dubai, to “make the emirate a global center of green energy,” reported The National. The Clean Energy Strategy sets ambitious renewable energy targets: 7 percent of the city’s energy from clean energy resources by 2020, 25 percent by 2030 and 75 percent by 2050. “Our goal is to become the city with the smallest carbon footprint in the world by 2050,” Sheikh Mohammed said. Solar will account for 25 percent of the emirate’s power requirements by 2030, said Gulf News. Nuclear and “clean coal” will comprise 7 percent each, and gas will make up 61 percent. “The strategy we are launching today will shape the energy sector over the next three decades,” Sheikh Mohammed said at the inauguration of the second phase of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai. The solar park is considered the largest of its kind and will produce 5,000 megawatts of energy by 2030. Sheikh Mohammed unveiled several key details of the city’s plans at the inauguration, including the Dubai Green Zone, which aims to attract clean energy projects, and a $27.2 billion Dubai Green Fund, which will provide low-interest financing for those projects. “Every investment in the development of clean energy sources is at the same time an investment to protect the environment for future generations,” Sheikh Mohammed said. “It is an effort to build our sustainable economic sectors which do not depend on nonrenewable energy resources and are unaffected by volatile energy prices.

Uruguay makes dramatic shift to nearly 95% electricity from clean energy - As the world gathers in Paris for the daunting task of switching from fossil fuels to renewable energy, one small country on the other side of the Atlantic is making that transition look childishly simple and affordable. In less than 10 years, Uruguay has slashed its carbon footprint without government subsidies or higher consumer costs, according to the country’s head of climate change policy, Ramón Méndez. In fact, he says that now that renewables provide 94.5% of the country’s electricity, prices are lower than in the past relative to inflation. There are also fewer power cuts because a diverse energy mix means greater resilience to droughts. It was a very different story just 15 years ago. Back at the turn of the century oil accounted for 27% of Uruguay’s imports and a new pipeline was just about to begin supplying gas from Argentina. Now the biggest item on import balance sheet is wind turbines, which fill the country’s ports on their way to installation. Biomass and solar power have also been ramped up. Adding to existing hydropower, this means that renewables now account for 55% of the country’s overall energy mix (including transport fuel) compared with a global average share of 12%.

Bankruptcy Looms For Spain's Green Energy Giant : Parallels -- At the Paris climate summit earlier this week, Spanish Prime Minister Mariano Rajoy pledged to "de-carbonize" his economy. But back home, Spain's biggest renewable energy company is on the verge of becoming the country's biggest-ever bankruptcy. Abengoa S.A. was founded more than 70 years ago in the sunny southern Spanish city of Seville. Back then, it was a traditional electric company.Nowadays it runs solar, biofuel and desalination plants, plus power lines and telecom equipment, all over Spain and abroad — from Brazil, to India, to the United States. It employs nearly 29,000 people worldwide. One of the company's flagship projects is the Solana parabolic trough solar plant near Gila Bend, 70 miles west of Phoenix, Ariz. — the world's biggest solar plant of its kind. Abengoa also runs several big desert solar plants in California, and half a dozen ethanol and biofuel plants in places like Kansas and Missouri. The company's U.S. headquarters are near St. Louis. With more than 300 sunny days a year, Spain had been emerging as a leader in renewable energy in Europe, and exporting its technology abroad. But two years ago, Rajoy's government cut its subsidies for solar and wind power in Spain.  Unemployment was near 27 percent, and the Spanish government was struggling to pay interest on its debts.   The cutbacks devastated Spain's renewables sector. The U.S. government has guaranteed some $2 billion of Abengoa's loans, because of the estimated $3 billion Abengoa has invested in job-creating projects in Arizona and other U.S. states. Last week, the Basque steel company Gonvarri pulled out of a deal to invest some $370 million in Abengoa — money the renewables giant needed to stay afloat.

WikiLeaks Releases Trade in Services Agreement (TISA) Secret Documents - Not really a surprise. After all that's why it needed to be passed before any of the representatives in Congress voting on it read it in full.  But it is rather startling.  Boy, do the owners think we're dumb. WikiLeaks Releases Trade in Services Agreement (TISA) Secret Documents: Today, Thursday, December 3, 10am EST, WikiLeaks releases new secret documents from the huge Trade in Services Agreement (TiSA) which is being negotiated by the US, EU and 22 other countries that account for 2/3rds of global GDP. Coinciding with the ongoing climate talks in Paris, today's publication touches on issues of crucial relevance including the regulation of energy, industrial development, workers' rights and the natural environment. WikiLeaks is also publishing expert analyses of the documents. The Trade In Services Agreement is the largest trade treaty of its kind in history. The economies of the 52 countries involved in the negotiation, which is being led by the United States, are mostly the supply of services. According to World Bank figures, services comprise 75% of the EU economy, 80% of the US economy and the majority of the global economy. Notably excluded in the TiSA negotiations are the emerging economies and the BRICS (Brazil, Russia, India, China and South Africa). The "Energy Related Services Annex Proposal: Questions and Answers" document sets out TiSA designs to create an international market in energy-related services for foreign suppliers. While heads of state prepare to sign climate accords in Paris, TiSA negotiators are meeting behind closed doors in Geneva to forge new limits on energy regulation. The "Annex on Environmental Services" reveals that TiSA will aim to ensure that national environmental protections within TiSA countries will be "harmonized down", promoting the interests of multinational companies providing water purification, sanitation and refuse disposal services over worker safety, public health and the natural environment.  Assessing the agreement, Friends of the Earth calls TiSA "an environmental hazard", pointing out that public services of an environmentally sensitive nature are in danger of being privatized. Commenting on the "Annex on Road Freight Transport and Related Logistical Services", the International Transport Workers Federation (ITF) calls TiSA a "race to the bottom," observing that the Annex joins other Annexes published by WikiLeaks to form an overarching trade liberalization agenda, fragmenting the trucking industry, opening up sensitive areas of the transport sector to international competition, and contributing to the ongoing privatization of public services, undercutting workers' rights, public health and safety, and the ability of national governments to plan and direct their own industrial and infrastructural development.

America’s Incoherent Coal Policy - These are tough times for the coal industry. Coal-burning plants generate less than forty per cent of the electricity in the U.S., down from more than half just a few years ago. At least twenty-six coal companies have gone bankrupt since 2008. The Obama Administration’s Clean Power Plan requires power companies to cut carbon emissions, which almost certainly means using less coal. And if this week’s climate-change summit in Paris succeeds in establishing firm goals for cutting emissions coal will undoubtedly be the biggest loser. So it’s no surprise that congressional Republicans, who cast a symbolic vote last week to scuttle the Clean Power Plan, complain of a “war on coal.” But if there really is a war the U.S. government doesn’t seem to know what side it’s on.   Consider, for instance, the Powder River Basin—an immense area of northeastern Wyoming and southeastern Montana, which contains the richest coal deposits in the U.S. In the past few decades, Powder River has become our most important coal-producing region. More than forty per cent of the coal we burn is mined there—nearly five hundred million tons every year. Unlike the Appalachian coal fields back East, almost the entire basin belongs to the government, which leases the coal rights to mining companies. You might think that regulators would manage this land with an eye toward the coal’s impact on the environment in the U.S., or at least would insure that the government was getting a fair price for its assets. But you’d be wrong; nearly ninety per cent of federal coal leases have had just one bidder. That’s held down the price of leases, in effect handing the coal industry a giant subsidy. A study released in September by a coalition of research groups found that production subsidies in the basin amount to nearly three billion dollars a year.

If we care about the climate, why are we planning so many coal-fired power plants? - The world is preparing to build 2,440 coal-fired power stations, which may seem odd given that world leaders recently launched high-profile talks in Paris to come up with a global agreement to limit global warming. According to Climate Action Tracker, an environmental NGO, the pollution from that many coal plants—which have either been announced, are in pre-permit phase, are permitted, or are under construction—would ruin any chance for limiting global warming to less than 2°C, a commonly held goal (pdf). In fact, the coal plants alone would mean overshooting emissions goals by 400%.  Climate Action Tracker, a research consortium that recommends that all the planned plants (mapped here) be scrapped, notes that these plans are regularly altered and, indeed, canceled. But why are countries still planning to build so many coal plants? Historically, China pegged its greenhouse gas emissions to GDP, meaning that reductions in emissions per unit of production would still result in higher pollution overall as its economy grew. Another reason why so much coal-fired electricity capacity is planned when it’s incompatible with climate goals is the thorny matter of equality. India still pegs its emissions-reduction goals to GDP growth, giving itself room to develop its economy. Poorer countries argue that they should be able to emit more carbon now than richer countries, which made economic gains from emissions in the past. A third reason is technology. Coal is a big polluter, but it’s still one of the most reliable ways to generate constant “baseload” electricity. Fossil-fuel stations will be required for years to come, many believe, given the intermittent nature of renewable technologies. Finding a reliable way to store electricity when the wind isn’t blowing or the sun isn’t shining would would see the industry “revolutionized”

Power generation: Coal’s the reality for now, global lessons in efficiency - Indian Express: At the 21st Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC), COP 21 in Paris, a resolution on limiting the use of coal across countries was one of the proposals put up for consideration. In the Indian context, this is of particular relevance as coal-fired power stations form the backbone of the Indian power generation sector and will continue to remain so in the foreseeable future, the Centre’s concerted efforts to ramp up renewables such as solar notwithstanding.  In fuel-starved Japan, utilities are setting up a new wave of coal-fired stations as a replacement to many of their ageing coal units. According to data compiled by Kiko Network, a Kyoto-based environmental group, there are over 40 new coal-fired units slated for construction. By comparison, the coal-rich US has only one coal-fired project coming up — Southern Company’s Kemper project, a demonstration project for new carbon-capture technology. Germany too had enunciated a broad roadmap of moving away from the dependence on coal. But accompanied by its more recent plans to phase out nuclear power, new estimates show that Germany’s lignite and anthracite coal power output in 2014 had rebounded to its highest level in more than 20 years, something that researchers blame on cheap CO2 emissions permits and the winding down of nuclear projects. In India, there is no escaping the reality that coal will continue to be the mainstay of the power generation sector. An area where India can hope for lessons from countries such as Japan is in the efficiency of coal plants, which, in India, comes in at about 25-30 per cent as compared with an average of over 35 per cent in the US. Japan’s coal plant operational efficiency is above 40 per cent, according to an analysis by Dutch consultancy Ecofys. J-Power, a Japanese state-owned utility until 2004, claims to have the most world’s most efficient coal plant at nearly 45 per cent.

'Clean coal' technology fails to capture world's attention - The Kemper County power plant was supposed to be up and running by now, showing the world how to burn coal without spewing climate-warming carbon pollution into the air. Instead, the coal plant towering over pine trees and pastures in rural Mississippi is looking like another monument to the unfulfilled promise of carbon capture technology. Construction costs have ballooned to $6.5 billion, at least three times the original estimate, making Kemper one of the most expensive power plants ever built and pushing up electric bills for Mississippi Power’s 186,000 customers. After repeated delays, the project now has a completion date of June 30, or two years behind schedule, and there are doubts even that deadline will be met. Even some of those who supported the plant have turned against it, advising others to think long and hard before trying something similar. “I can’t imagine that a regulator would approve this. I can’t imagine that a company would approve this,” said Cecil Brown, a Democrat recently elected to the Mississippi Public Service Commission. As a state legislator, he voted in ways that aided construction of the Kemper plant. Carbon capture entails catching the carbon emissions from a power plant or cement or steel factory and injecting them underground for permanent storage. It’s a proven technology that would allow the world to keep burning coal, oil and gas for energy while releasing little of the heat-trapping gas that scientists say is the main cause of global warming.

Fossil fuel companies risk wasting $2tn of investors' money, study says --  Fossil fuel companies risk wasting up to $2tn (£1.3tn) of investors’ money in the next decade on projects left worthless by global action on climate change and the surge in clean energy, according to a new report. The world’s nations aim to seal a UN deal in Paris in December to keep global warming below the danger limit of 2C. The heavy cuts in carbon emissions needed to achieve this would mean no new coal mines at all are needed and oil demand peaking in 2020, according to the influential thinktank Carbon Tracker. It found $2.2tn of projects at risk of stranding, ie being left valueless as the market for fossil fuels shrinks.   The report found the US has the greatest risk exposure, with $412bn of projects that could be stranded, followed by Canada ($220bn), China ($179bn) and Australia ($103bn). The UK’s £30bn North Sea oil and gas projects are at risk, the report says, despite government efforts to prop up the sector. Shell, ExxonMobil and Pemex are the companies with the greatest sums potentially at risk, with over $70bn each. The failure of the fossil fuel industry to address climate change is laid out in a second report on Wednesday, in which senior industry figures state there is “a significant disconnect between the changes needed to reduce greenhouse gas emissions to the [2C] level and efforts currently underway”.

Nuclear crossroad: California reactors face uncertain future— Six years ago, the company that owns California’s last operating nuclear power plant announced it would seek an extended lifespan for its aging reactors. Pacific Gas and Electric Co. envisioned Diablo Canyon as a linchpin in the state’s green energy future, with its low-carbon electricity illuminating homes to nearly midcentury. Now, with a much changed nuclear power landscape, the company is evaluating whether to meet a tangle of potentially costly state environmental requirements needed to obtain renewed operating licenses. If it doesn’t move forward, California’s nuclear power age will end. That prospect is remarkable considering it was once predicted that meeting California’s growing energy needs would require a nuclear power plant every 50 miles along its coast. But vast fields of solar panels, wind turbines that in places are as common as fence posts and developments in power storage speak to changed times.

Westinghouse CEO wants next-gen nuclear reactor — Westinghouse Electric Co.’s CEO Danny Roderick in January challenged his employees to come up with the next big thing in nuclear energy — the next generation reactor. It had been a very long time since such words were uttered at the Cranberry-based nuclear company. “His charter was to take a clean sheet approach and come up with the most economic (option),” said Cindy Pezze, chief technology officer. The central question was: “How can we get to a more economic future for nuclear?” No new nuclear reactor has been built in the U.S. on time and on budget, and the overruns haven’t been trivial. That track record, along with cheap and plentiful natural gas and a lack of environmental policy that incentivizes low carbon generation, has held back the nuclear renaissance predicted a decade ago. Even operating nuclear plants with capital costs far behind them are having trouble competing. A handful are headed for premature retirement. For that reason, economics and scale are top priorities. “I think that the industry in total — that includes the vendors, the government — is looking at this saying, ‘We have to figure out a way of doing this more efficiently than we have done in the past,'” Pezze said. “Everyone is talking about (how) we need to have some change.” The Westinghouse team wasn’t given a budget or a cost target for the new reactor design and Pezze declined to speculate.

Is Dr. James Hansen Actually Anti-Nuke?  - Dr. James Hansen has repeatedly billed himself as an advocate of nuclear power. Yet sometimes things are so far removed from reality as to not be what they appear to be.Hansen published an article with three co-writers Thursday in The Guardian. It advocates nukes as a solution to global warming. All have impressive resumes in the fight to save the Earth. But their argument for nukes makes sense only as parody. Consider this direct quote: “A build rate of 61 new reactors per year could entirely replace current fossil fuel electricity generation by 2050.” 61 new reactors per year! But that’s just for starters.Another 54 new reactors per year must cover “population growth and development in poorer countries.” So “this makes a total requirement of 115 reactors per year to 2050 to entirely decarbonize the global electricity system in this illustrative scenario,” the authors said in The Guardian article.“We know that this is technically achievable because France and Sweden were able to ramp up nuclear power to high levels in just 15-20 years,” they said.Yikes! Breathe deep! Or be awestruck by the brilliance of the parody.Right now less than 440 commercial reactors more or less operate worldwide, depending on how one counts those shut since Fukushima.Now multiply 115 new reactors a year from now until 2050. Can you do it with a straight face?Team Hansen provides no calculations on the cost, size or reliability of these projected nukes.We do hear about “next-generation nuclear power with a closed fuel cycle.”But none exist today.None could be designed, financed or built in time to save us from climate chaos. All would drain the on-going boom in wind and solar. And, what about: Raw materials? Construction capacity? Siting? Regulation? (think China) Insurance? Ecological impacts? Heat emissions? Terror threats? (think ISIS) Decommissioning?

Newly-Completed Fukushima 'Containment' Wall Already "Slightly Leaning" -- Just weeks after re-starting the building of a giant ice-wall to contain groundwater leaking from the Fukushima nuclear plant, TEPCO has been forced to admit that a 780-meter protective wall built alongside the crippled power station (completed only last month and designed to prevent contaminated groundwater from seeping into the sea)  is already "slightly leaning." While this sounds a lot like being half-pregnant, TEPCO remains 'optimistic' that the wall will hold. But you can't say the government is not trying - in an effort to 'calm' the public, scientists have developed a special scanner to accurately measure the amount of radioactive material inside the bodies of young children... which is odd given just how "contained" Abe said it was. The 780-meter coastal wall along the damaged reactor of the Fukushima No. 1 nuclear power plant was built to stifle the flow of tainted water into the sea from 400 tons to 10 tons a day.  The “impermeable” barrier has an underground section that reaches 30 meters deep.TEPCO officials have claimed that such a structure should reduce the amount of radioactive cesium and strontium flowing into the sea to one fortieth of previous levels, while the tritium levels should be reduced to one-fifteenth.  But, as RT reports, the "impermeable sea wall" is leaning already... Completed only last month and designed to prevent contaminated groundwater from seeping into the sea, the wall is already “slightly leaning,” plant operator TEPCO has announced. TEPCO however remains optimistic and has said that the slight lean does not affect the wall’s ability to block radioactive water. The operator is now reinforcing the wall with steel pillars. Inspection into the construction was completed in late October and alsodiscovered cracks along the perimeter of the wall in the embankment’s pavement. Officials have blamed rising groundwater levels for the cracks – and keep repairing them to make sure that rain does not increase the groundwater levels even further.

Radiation from Japan nuclear disaster spreads off U.S. shores - Radiation from Japan's 2011 nuclear disaster has spread off North American shores and contamination is increasing at previously identified sites, although levels are still too low to threaten human or ocean life, scientists said on Thursday. Tests of hundreds of samples of Pacific Ocean water confirmed that Japan's Fukushima nuclear power plant continues to leak radioactive isotopes more than four years after its meltdown, said Ken Buesseler, marine radiochemist with the Woods Hole Oceanographic Institution. Trace amounts of cesium-134 have been detected within several hundred miles (km) of the Oregon, Washington and California coasts in recent months, as well as offshore from Canada's Vancouver Island. Another isotope, cesium-137, a radioactive legacy of nuclear weapons tests conducted from the 1950s through the 1970s, was found at low levels in nearly every seawater sample tested by Woods Hole, a nonprofit research institution. "Despite the fact that the levels of contamination off our shores remain well below government-established safety limits for human health or to marine life, the changing values underscore the need to more closely monitor contamination levels across the Pacific," Buesseler said in an email.

Local Officials Fight State For More Say In Location Of Wind Turbines - WOSU --There’s a new fight brewing over green energy laws, as some local officials want more control over the location of wind turbines. When wind energy companies started laying out plans in northwest Ohio, landowners were hoping for the same kind of deal that mineral owners got. But the state’s new laws on where wind turbines can go have greatly limited development projects. These are known as setback laws. Susan Munroe, a Van Wert county commissioner, is fighting for a bill to give local officials the right to create their own setbacks. “What may work in one community, may not work in another. It’s a practical and really, very conservative way to approach economic development to give that authority to each county instead of having like an overriding state rule," Munroe said.That so-called overriding state rule went under the radar after being slipped into a budget update bill last year. Some wind energy officials say those new laws significantly handcuffed pending projects. Ronald Wyss lives in Hardin County. He would like to sign with a new wind farm project but the revamped laws won’t let him put a wind turbine on his land.  “What they’re basically doing is making it impossible for my acres to be joined to the existing approved project which takes away from my ability to reap the benefits of allowing them to lease my property for wind development," said Wyss.  Republican Representatives Tony Burkley and Tim Brown, both from northwest Ohio, introduced a bill to send this power back to the local level. But Republican Senator Bill Seitz of Cincinnati says it’s important to keep these laws uniform across the state. He adds that leaving it up to local officials opens the door to potential conflicts of interest.

Hand recount confirms defeat of anti-fracking charter amendment -  — A hand recount of an anti-fracking charter amendment, the so-called Bill of Rights, confirmed that the issue was indeed defeated in the Nov. 3 general election. During a special meeting Tuesday, the Mahoning County Board of Elections certified a new vote total — 6,151 against and 5,852 for the amendment. The official result on election night was 6,143 against and 5,839 for the anti-fracking issue, according to the county elections board. About 15 people attended Tuesday’s board meeting, including anti-fracking supporters who praised the thoroughness and accuracy of the recount process.“The [election board] counters I worked with checked and double-checked. I saw very little room for error,” said Ed Knight, an anti-fracking advocate.“The process went smoothly, and the results of the hand count and the scanners matched,” said Ray Beiersdorfer, one of the backers of the anti-fracking amendment. Beiersdorfer said the margin of the anti-fracking loss went from 345 on election night, to 304 after provisional ballots were counted, to 299 after the hand recount.

City Council Should Focus on Abolishing, Not Rerouting, NEXUS Pipeline -- Oberlin Review Editorial - In a special meeting on Monday, Nov. 30, City Council decided to hire the law offices of D.C.-based Carolyn Elefant to represent the city of Oberlin in a lawsuit aimed at rerouting the NEXUS pipeline. The proposed 250-mile pipeline, to be constructed and operated by Houston-based Spectra Energy, is slated to run from Ontario, Canada to Kensington, Ohio — a town just 76 miles southeast of Oberlin. Based on the intended route, the pipeline will run as close as 95 feet from residences on Reserve Avenue as well as near the Welcome Nursing Home and the fire station, among other city buildings. The Medina County-based Coalition to Reroute Nexus, along with the city officials of Green, Ohio, devised a rerouting plan that would add 9.9 miles to Spectra’s route and move the three-foot-wide pipeline farther from Oberlin and closer to the village of Wellington, which lies about 9 miles directly south on Main Street. This relocation would avoid the pipeline’s proximity with residences and city buildings, which concerned citizens in case of a spill on their property or the wetlands nearby.While efforts by CORN and communities from Medina, Fulton, Erie and Summit Counties to reroute the NEXUS project are commendable, protests against Spectra have evolved from committed community discussions about abolishing the pipeline to “not in my backyard” opposition from landowners. Students for Energy Justice, previously Oberlin Anti-Frack, and Communities for Safe and Sustainable Energy — Oberlin’s community environmental group — opposed the reroute plan for precisely this reason.What is the point of rerouting the pipeline where it would cause the same disturbances in someone else’s backyard? These environmental organizations should take advantage of their large membership bases and community following to back the pipeline’s abolition. Indifference toward the abolition or reroute debate will only allow for a diversion plan that, if implemented, would burden another community with the environmental and public health dangers of the fracking industry — not to mention perpetuate the cycle of environmental injustice.

Tests show no water contamination at Athens injection well - Akron Beacon Journal -  After an anti-fracking protest led to an arrest at a K & H injection well site in 2014, activists in Athens, Ohio have since been on a mission to prove that injection wells cause groundwater contamination to aquifers, despite the fact that there has not been one single case of groundwater contamination in Ohio from injection wells. Today, we learned that new testing for volatile organic compounds in Ohio private water wells located near the K & H injection wells in Athens, Ohio showed no signs of oil and gas influence, according to reports from the Ohio University Voinovich School. The news comes after Athens County Commissioners announced joint partnerships last month with Ohio University to conduct a study to undertake the impact from injection wells on private water wells. Testing was conducted this fall and will be repeated in March. The injection well site and water sampling are located close to both the Hocking and Ohio Rivers. It is also the same injection well site where an anti-fracking activist was arrested in 2014 for protesting. According to the Columbus Dispatch, the activist was “not convinced those measures (regulatory measures by the Ohio Department of National Resources to protect groundwater) will keep the county’s drinking water safe”. The same sentiment was echoed by the Buckeye Forest Council, and other activists groups who called upon the U.S. EPA to audit Ohio’s injection well program, citing groundwater contamination from injection wells as a root source to their claims that Ohio’s program is unsafe. In their letter they claimed, “The Profoundly Weak Federal Requirements for Class II Injection Well Delegation under Section 1425 of the Safe Drinking Water Act.” However, as EID has reported time and time again, the allegations against Ohio’s Class II Underground Injection Control (UIC) program are simply not factual. Ohio has some of the most stringent regulations in the country, and has been regulating the process since 1983, when EPA gave the state primacy over its program.

Proposed fracking in Ohio national forest gets hearings - Akron Legal News (AP) — Both opponents and supporters of opening Wayne National Forest in southeastern Ohio to oil and gas drilling have been out in force at public hearings recently. The U.S. Bureau of Land Management has proposed allowing drilling beneath about 31,900 acres of the forest through hydraulic fracturing, or fracking. It is determining who owns mineral rights, assessing potential environmental risks and gathering public input.  An activist coalition including the Buckeye Forest Council, Sierra Club and other fracking opponents has called for a "full-scale environmental report" before proceeding. Environmental concerns led the bureau to drop an earlier drilling proposal in 2011. Many landowners and companies favorable to fracking also have spoken out. About 250 of them showed up to a hearing last Wednesday night.Those in attendance heard the complicated issue arose following more than 100 expressions of interest from approximately 20 oil and gas companies looking to set up well pads in Monroe, Noble and Washington counties in eastern Ohio, according to The Marietta Times. "Wayne National Forest is in a patchwork quilt sprinkled with private properties," said Becky Clutter, 53, who owns 20 acres surrounded by the forest on three sides in Monroe County. "And like a quilt there's the surface properties owned by both the forest and private entities, but then there's that batting beneath it which is the mineral rights."  Clutter has for the past month been organizing a group of landowners in all three counties in support of this movement. At the hearing her organization, Landowners for Energy Access and Safe Exploration, gathered 200 signatures in support of opening the areas to drilling. Others voiced concern about the potential environmental and tourism impacts of drilling in the protected federal forest.

Letter: Concerned about fracking chemicals - - Fracking or hydraulic fracturing is one means by which gas and petroleum from source rocks may migrate to reservoir rocks. This process is used to release petroleum, natural gas, shale gas, tight gas and coal seam gas. This practice has come under scrutiny internationally, and its possible has environmental impacts, including contamination of ground water, risks to air quality, the migration of gasses and hydraulic fracturing chemicals to the surface, contamination from spills, and the health effects of these. Here in Ohio, after tens of thousands of gallons of fracking chemicals flowed into a creek, officials with the state and federal environmental protection agencies who oversee the safety of drinking water, were forced to wait for five days before learning the identity of some chemicals. According to NRDC the incident occurred -- "after a fire started at the well site, triggering multiple explosions, fuel, fracking chemicals, and radioactive elements were all being stored onsite and were lost during the incident. The spill flowed into the Ohio River, and two days later they found about 70,000 dead fish." But Haliburton, the company hired to frack the well, withheld information on some of the chemicals at the site until five days after the accident occurred! In Ohio, companies are allowed to keep chemicals secret, even from the state, if they claim, they are a confidential "trade secret."  It is kind of dangerous to realize that although the law states that the division "shall not disclose the information," it is not clear enough if the information can be shared with other agencies or emergency responders like local fire departments.

Ohio’s horizontal shale well production breaks records in third quarter — During the third quarter of 2015, Ohio’s horizontal shale wells produced 5,696,780 barrels of oil and more than 245 billion cubic feet of natural gas, according to figures released Thursday by the Ohio Department of Natural Resources. The report shows the state’s production continues to set records as horizontal shale well production totals have increased by more than 100 percent from 2014’s third-quarter totals. Additionally, Ohio’s horizontal shale wells have produced more oil and gas in the first nine months of this year than all of Ohio’s wells produced in 2014. Related: Ohio’s Utica Shale development grows by $5.7 billion or 20.4 percent since last spring In 2014, Ohio’s wells produced 15,062,912 barrels of oil and more than 512 billion cubic feet of gas for the entire year. The report lists 1,134 wells, 1,087 of which reported production results. Forty-seven wells reported no production as they are waiting on pipeline infrastructure. Of the 1,087 wells reporting production results, the average amount of oil produced was 5,241 barrels; the average amount of gas produced was more than 226 million cubic feet. The average number of third-quarter days in production was 78.  In the Mahoning Valley, production from Columbiana County’s 65 wells totaled 43,133 barrels of oil and 6,899,553 billion cubic feet of gas; production from Mahoning County’s 13 wells totaled 5,409 barrels of oil and 929,013 million cubic feet of natural gas; and production from Trumbull County’s five wells totaled 2,438 barrels of oil and 148,915 million cubic feet of natural gas.

Marathon to invest $4.2B next year -  Marathon Petroleum Corp. plans to invest $4.2 billion into its business next year, with much of the money aimed at building up the refining giant’s pipeline infrastructure. Expanding that pipeline segment, which moves crude oil, natural gas, and other petroleum products throughout Marathon’s refining network, has been a key focus of Chief Executive Officer Gary Heminger. During a presentation on Thursday to analysts and investors, Mr. Heminger said by 2020 Marathon expects cash flows from the pipeline transportation operations to nearly equal that of the company’s refining and marketing business. Marathon, through its MPLX LP subsidiary, is just days removed from closing on a $10 billion deal to acquire MarkWest Energy Partners LP. MarkWest is a leading natural gas processor and a major player in the shale gas region of the eastern United States. “This wasn’t just a shooting-from-the-hip type of transaction,”. “We’ve studied this for the last two years on where do we see the business going strategically, and it was very evident that the natural gas liquids side of the business is where the predominance of investment was going to be.”

Hydraulic fracturing risks outweigh drop in oil prices - Although hydraulic fracturing, or “fracking,” has increased job opportunities in 32 states and decreased oil costs across the U.S., University of Cincinnati students and faculty presented research Monday regarding downfalls of the drilling process.   Problems arising from fracking include a downgrade in U.S. drinking water quality, as well as the health concerns of well workers and community members in surrounding areas, according to Amy Townsend-Small, an assistant professor of geology, ecologist and the course instructor for Monday’s symposium. “I was a proponent for fracking, but now, I don’t know,” Townsend-Small said. She explained the flowback water — a remaining 10 to 15 percent of water returning to the surface following the drilling process — becomes so contaminated during the process of hydraulic fracturing that there is little to no ability for further use of the water. “It’s saltier than seawater,” Townsend-Small said. “It uses too much energy, the cost isn’t worth it.” Utica shale formation substantially uses more water than any other oil formation in the U.S., according to the U.S. Geological Survey (USGS), with each well requiring approximately 5.1 million gallons of water per fracking operation. From 2001 to 2014, Ohio has totaled 4 billion gallons of water for the use of fracking. .The flowback water is handled in multiple ways following the operations, including, but not limited to, underground disposal, treatment followed by disposal to surface water bodies or recycled for use in future fracking operations, according to USGS. A February 2015 report conducted by Food & Water Watch summarizes that respirable silica can cause silicosis, lung cancer and holds association with disease like tuberculosis, chronic obstructive pulmonary disease, kidney disease, among other autoimmune diseases.

Impact fees buy goodwill in drilling communities: Although many of drilling crews have left northern Pennsylvania gas fields for now, there was a time when the rush of workers created higher rents and more crime. In Bradford County – one of the busiest drilling communities – new criminal cases filed with the district attorney’s office jumped more than 40 percent from 2007 through 2013. In the next two busiest places, Susquehanna and Tioga counties in Pennsylvania, criminal caseloads grew by more than 20 percent and 40 percent respectively. At the same time, housing agencies and community groups reported a flood of complaints that tenants were being priced out of apartments. The labor pool for the gas rush consisted largely of young, single men, many from outside the area with few if any community ties. They had the muscle and stamina necessary for long hours on the job in all kinds of conditions. But some of them also managed to live up to the roughneck stereotype – itinerant, brawling and boozing. “When you have a lot of people move to an area without friends, family or social networks, you are going to run into problems,” Along with the housing crunch, issues ranged from increased traffic accidents and bar fights, Barrett said. There were also spikes in property damage, vandalism and theft – not all necessarily acts of workers, but a result of more people, and more equipment and belongings making for accessible targets.Pennsylvania’s answer was to impose an “impact fee” in 2012. Unlike a severance tax used by established oil and gas states, the Pennsylvania impact fee is levied annually on new wells for 15 years, beginning with the year the well was drilled. The more new wells that are drilled in an area, the more the community receives – up to half a municipality’s budget. The fee varies based on the age of the well, the type of well and the price of gas.

Livestock Falling Ill In Fracking Regions - Are dying cattle the canaries in the coal mine? Farmers and ranchers are sounding alarms about the risks to human health of hydraulic fracturing.   In Pennsylvania, the oil and gas industry is already on a tear—drilling thousands of feet into ancient seabeds, then repeatedly fracturing (or “fracking”) these wells with millions of gallons of highly pressurized, chemically laced water, which shatters the surrounding shale and releases fossil fuels. New York, meanwhile, is on its own natural-resource tear, with hundreds of newly opened breweries, wineries, organic dairies and pastured livestock operations—all of them capitalizing on the metropolitan area’s hunger to localize its diet. But there’s growing evidence that these two impulses, toward energy and food independence, may be at odds with each other. Tonight’s guests have heard about residential drinking wells tainted by fracking fluids in Pennsylvania, Wyoming and Colorado. They’ve read about lingering rashes, nosebleeds and respiratory trauma in oil-patch communities, which are mostly rural, undeveloped, and lacking in political influence and economic prospects. The trout nibblers in the winery sympathize with the suffering of those communities. But their main concern tonight is a more insidious matter: the potential for drilling and fracking operations to contaminate our food. The early evidence from heavily fracked regions, especially from ranchers, is not reassuring.

Pennsylvania Game Commission reaps revenue from shale gas under game lands -- Gov. Tom Wolf’s reinstatement this year of a ban on new leases for oil and gas drilling beneath state parks and forests does not extend to land owned by the Pennsylvania Game Commission, whose lease revenue has increased nearly fivefold in four years. “Because the Game Commission is an independent agency, we could not bind them to an executive order,” said Wolf’s spokesman, Jeff Sheridan. The commission’s revenue from such leases increased from $4.7 million in fiscal year 2011 to $22.1 million, or 20 percent of its $100.5 million budget in the fiscal year that ended June 30. The money helps support operations and training of new staff at the agency. Three shale gas producers will pay the most to the commission this year in lease fees and royalty payments: Seneca Resources, $2.9 million; Southwestern Energy, about $2 million; and Chesapeake Energy, $857,000. The operations benefit hunters with upgraded access roads, said Seneca spokesman Rob Boulware. The company and the Marcellus Shale Coalition have worked with hunters to make sure there are no safety issues, he noted, such as during the deer season that starts Monday. “A lot of our folks, because we’ve been here for over 100 years … our employees live in these areas where we work,” he said, adding that many employees hunt. Drilling has increased greatly over the past decade with shale exploration, but industry activity on state land and the Allegheny National Forest dates back more than a century.

America's biggest gas field finally succumbs to downturn - The drilling boom of the past seven years is over, even though thousands of existing wells in the Marcellus region still produce a fifth of U.S. natural gas supply. Now, exclusive data made available to Reuters points to a slump in drilling that could hit production next year, defying government and industry expectations of a further rise in output. Preliminary figures provided by DrillingInfo, which monitors rig activity, showed drilling permits issued for the 90,000-square mile (233,100 sq km) reservoir beneath Pennsylvania, Ohio, and West Virginia, slumped to 68 in October from 76 in September. There were still 160 permits issued in June and over 600 a month at the peak in 2010.  (Graphic: reut.rs/1kQn7vS)  "The fact that it is slowing and the speed at which it is slowing" sums up the state of U.S. shale gas industry, Allen Gilmer, chief executive officer of DrillingInfo, told Reuters.  Recent months are subject to revisions, DrillingInfo said, but a retreat of such magnitude, combined with falling output from older wells, would mark a turning point for the Marcellus - and the whole U.S. gas market. The Energy Information Administration now forecasts overall U.S. gas output to hit a record in 2016 for the sixth year in a row. A drop in Marcellus production could snap that streak and help prop up prices that have fallen by two thirds since 2010.  The Marcellus area makes up nearly half of those shale reserves and the government expects the region to keep producing more in the coming years, albeit at a less furious pace.  To be sure, the impact of the slump in drilling permits could be mitigated by other factors. New pipelines coming online in 2016 will allow hundreds of wells already drilled to be hooked up to the grid. A harsh winter could also boost heating demand for natural gas. Still, the retreat could weigh on Marcellus production well into next year, said Grant Nulle, an oil and gas economist at the EIA.  An as yet unpublished outlook from the EIA, which does not take into account the permit numbers, anticipates lower Marcellus production only through March, and a rise for the rest of the year. The EIA does not expect a full year's decline until 2019.

Hedge protection for gas producers continues to melt away - U.S. oil and gas companies currently have hedge protection in place for less than one-fifth of their expected 2016 production, and the strike price of the remaining derivatives is significantly lower than in previous years. With a bleak gas price outlook for 2016, the result could be even more severe capital spending reductions, potential production curtailments, and increased financial stress for mid-size and smaller firms. In today’s blog, we examine what has happened to producer hedging protection and the implications for capital spending and production trends.  In recent weeks there have been a spate of reports from banks and consultants that warn of more pricing problems facing U.S. gas producers.  During 2015, about half of gas production was hedged out.  But that will drop like a rock in 2016, down below 20% according to most reports.  Worse yet, the price of those hedges is also headed south.  Given the potential impact on producer drilling activity and ultimately on production, we thought it would be a good idea to look at the numbers.  Current natural gas market conditions make this a particularly bleak time to be exposed to market prices. Henry Hub spot prices averaged $2.07/MMbtu in November; the lowest level seen since 1998, and according to NGI the spot price plunged below $2.00/MMbtu in the first week of November for the first time since the summer of 2012. As we pointed out in “Breakdown: U.S. Natural Gas Storage Hits 4 Tcf for the First Time”, working natural gas inventories recently reached an all-time high.

Pipelines a familiar reality for school district, park system - The proposed PennEast natural gas pipeline would run through several state parks and near the Dallas district schools. But neither entity is a stranger to pipelines. Officials from the Dallas school district, which has other pipelines close to its campus, say they have a good working relationship with the pipeline company. And the state agency in charge of the parks has requirements in place to try to minimize damage whenever a new pipeline comes through. PennEast Pipeline Co., LLC, wants to build a $1 billion pipeline that would stretch 114 miles from Dallas Township to Mercer County, N.J. Currently the project is in the stage where it is under review by the Federal Energy Regulatory Commission. FERC Spokeswoman Tamara Young-Allen said the agency’s “staff is in the process of doing all the analyses needed to prepare their draft environmental impact statement.” PennEast submitted its application to FERC on Sept. 24, starting a 30-day period for interested parties to intervene or file comments that ended Oct. 29. More than 1,500 people, organizations and government entities filed to intervene, or have legal standing in the case. Although the deadline has officially passed, there will be another comment period after the draft environmental impact statement is complete, Young-Allen said.

Fracking’s promise: When it comes to drilling, New York zigs while Pennsylvania zags - Underlying the debate over the promises and perils of fracking is an often-overlooked number: 1.35 trillion. That’s the cubic feet of natural gas New Yorkers consumed last year, according to the federal Energy Information Association. New Yorkers use more than twice the volume of gas consumed by Connecticut and Massachusetts combined. The economics and risks of leasing, drilling and fracking tend to headline the shale gas story. Yet the promise of fracking is as much about how gas is consumed as how it’s produced. As the top natural-gas-consuming state east of Louisiana, New York is a major player. By enacting a ban on fracking earlier this year, the administration of New York Gov. Andrew Cuomo has shown zero tolerance for shale gas risks to the environment and health. Yet New York’s appetite for cheap gas produced by the shale boom in Pennsylvania and Ohio is big and growing bigger — a jump of nearly 18 percent from 2009, according to figures from the federal EIA. For New Yorkers looking for cheap energy, the gas boom in Pennsylvania has lived up to its promise. This is the last story in a three-part series:

• Part One: The Environment — The shale gas juggernaut rolling into Pennsylvania came with assurances that fracking never polluted water sup- plies. An examination of the record shows pollution was obscured by regulatory breakdowns and lack of disclosure.
• Part Two: Impact on New York —Consumption of Pennsylvania’s cheap fracked gas is surging in New York, where protests, pipelines and new natural gas facilities are part of the current landscape, and the future of a fracking ban is questionable.

Frackos Incited to Violence at Seneca Lake: “Open Season on Protestors” - Original audio source It’s easy to incite gun nuts to violence. Sara Palin was a master at inciting political assassinations. She even provided gun nuts with maps and targets.  Carly Fiorina is the reigning champion with Planned Parenthood as the “target audience”. Now it’s the Seneca Lake gas storage protestors turn to be targeted by local frack shils, that have publicly declared open season on protestors:   On Wednesday, November 18, County legislator Philip C. Barnes posted a comment on Facebook below a photograph of We Are Seneca Lake protesters that was part of our announcement of last Sunday’s Finger Lakes March for Climate Action in Watkins Glen. The comment read, “Remember Deer season starts Saturday.” To the steering committee, this warning was troubling. Whatever its intent, we felt that Mr. Barnes’ message could function as an veiled incitement to others to consider violence against us and was inappropriate coming from an elected official. To joke on social media about climate protestors meeting with stray bullets in downtown Watkins Glen—just days after events in Paris—was, to us, reckless and offensive. We write now to share with you what steps we have taken and to report the response we’ve received.

James Hansen: Fracking is ‘Screwing Your Children and Grandchildren’ -- Speaking to Carbon Brief at the COP21 climate conference in Paris, Dr. James Hansen, one of the world’s most prominent climate scientists, has strongly criticized the UK government’s pursuit of fracking for shale gas. Asked what he thought of the UK government’s policy of seeking to copy the U.S.’s fracking revolution, Hansen said:  Well, that’s screwing your children and grandchildren. Because if you do that, then there’s no way to avoid the consequences [of] multi-meter sea-level rise. But we can’t do that. And that’s what the science says crystal clear. And yet politicians pretend not to hear it, or not to understand it. Hansen, the former director of the NASA Goddard Institute for Space Studies who famously warned the U.S. Congress about global warming in 1988, also responded to Carbon Brief’s questions about other areas of UK energy policy, such as the proposed new Hinkley C nuclear plant Somerset (“more expensive than it should be”), carbon capture and storage (“a mirage”) and the reining back on support for renewables. Asked if he thought there were risks switching from coal to gas, Hansen said: If gas were truly used as a very temporary bridge to replace coal … But that’s not what’s happening. If you build a new power plant, you don’t plan to shut it down in 10 years. There’s way too much gas in the ground. It would put us way over 2C, 3C, 4C. There’s a huge amount of gas in the ground. What political leaders have not been willing to do is face the truth that you can’t burn all of that. They’re allowing, even bragging about, having found the technology to get more of the gas out of the ground with fracking. Listen here:

Sanders aligns against proposed natural gas pipeline — U.S. Sen. Bernie Sanders, I-Vt., is the first presidential candidate to publicly take a position on the proposed Northeast Energy Direct pipeline. And the Democratic hopeful’s opposition to the project has many Northeast Energy Direct pipeline opponents praising him. In prepared remarks given during the New Hampshire Democratic Party’s annual Jefferson-Jackson Dinner Sunday night, Sanders said he’s against the proposed natural gas transmission pipeline because “climate change is the greatest environmental challenge of our time. “And that is why — right here in New Hampshire — I believe the Northeast Energy Direct pipeline that would carry fracked natural gas for 400 miles through 17 communities is a bad idea — and should be opposed,” he said. The pipeline route is planned to run through southern New Hampshire communities including Fitzwilliam, Richmond, Rindge, Troy and Winchester, and continues to meet strong resistance from residents and local officials in towns along the proposed path. Among their concerns for the pipeline are its potential environmental and health effects, and the federal government possibly taking property by eminent domain for the project. “God bless the Brooklyn-born Senator from Vermont for taking a position that our very own local elected officials have been too cowardly to do till now,” Susan L. Durling, co-founder of the pipeline opposition group Winchester Pipeline Awareness said in a Facebook message that elected officials need to “start worrying about the planet they will leave their kids and grandchildren, and not about the campaign contributions they get.”

Maine stops providing details of oil by rail shipments to public – Maine will no longer disclose to the public any details about shipments of crude oil by rail through the state, an official said on Wednesday, a move that has angered activists who say the information is critical to public safety. The state’s Department of Environmental Protection on Wednesday declined a reporter’s request for monthly volumes of crude oil shipped by rail, citing a June law that prohibits emergency responders from disclosing certain details about rail shipments of hazardous materials through the state. “When people are aware of what’s coming through their community, they pay attention,” said Bob Klotz, a spokesman for 350 Maine, an activist group that has protested oil-by-rail cargoes in the state. “To take that information away is very concerning.” The U.S. and Canada are grappling with environmental and safety risks posed by a surge in oil-by-rail cargoes, following several fiery derailments of trains carrying Bakken crude oil in North America. A U.S. Department of Transportation Executive Order in 2014 required railroads to inform emergency responders about large cargoes of Bakken oil passing through their states. But many railroad companies, citing security concerns along their tracks, have lobbied to keep that information from the public. A spokesman for the Association of American Railroads, which represents freight railroad operators, declined to comment on the Maine law, but said the group supports the federal order requiring cargoes be disclosed to emergency responders.

Anti-fracking movement a religious conspiracy - The anti-fracking movement is a religious conspiracy.Yes, I said religious, because the movement is part of a progressive narrative aided by environmental fanatics that view fossil fuels as the world's greatest danger.This movement is led by a president who also believes that manmade climate change is our most pressing danger, while Christians are beheaded, Jihadist terrorists kill innocents and threaten Western democracies, and millions of refugees are being driven out of their homeland.Anyone who rejects this narrative is labeled a "denier," because to them manmade climate change is an absolute truth, even though it is not backed by credible scientific evidence and an army of scientists rejects it. Therefore, it really is a religion.They even call for non-believers to be vilified and subject to criminal prosecution.Welcome to the 1630s when Galileo was convicted of heresy and spent his last years under house arrest. That's when science became a religious pastime. Looks like the current pope is headed in the same direction.The key precept of this religion is that global warming will kill this planet and that the culprit is CO2, a minor greenhouse gas which comes from burning fossil fuels. Therefore, we must eliminate this energy source.Since fracking allows us to produce more oil and gas and will increase our reserves for another 100 plus years, and lower fuel prices, and increase the use of clean-burning natural gas, and permit us to achieve energy self-sufficiency soon, it must be stopped.Their greatest fear is that your fossil energy will be cheaper and cleaner and their expensive and inefficient alternative methods will not be competitive.

Challenging times continue for oil and gas companies -- "Lower for longer” are the words being used to describe the oil and natural gas economic outlook for 2016, creating another whack at West Virginia’s energy sector. U.S. natural gas production could decline in 2016 for the first time in a decade, driven by low oil prices after 10 years of gangbusters growth from shale plays. To understand the decline in the shale market, look no further than the north-central part of West Virginia. The U.S. Energy Information Administration says production in that fast-growing field will decline primarily because of depressed gas prices. Recent data supports signs of a slowdown. The number of rigs in the state’s oilfields has dwindled in recent months to its lowest since 2011, and drillers — including Chesapeake Energy Corp. and Cabot Oil & Gas Corp. — have temporarily shut down some production due to weak regional prices. “Relatively low gas prices, combined with low oil prices, have slowed drilling in the Marcellus (Shale) so production from new wells is only offsetting the decline in old wells,” said EIA lead upstream analyst Dana Van Wagener. The EIA forecast prices in parts of the Marcellus would remain below $2 through 2016 and not exceed $4 until 2020. “Many of the noncore areas of the Marcellus need prices to be sustained near $5 or above to be economic to develop,”

Virginia groups want stronger safeguards on fracking - (AP) — Environmental and public interest groups are urging officials to halt any new fracking efforts in Virginia until they complete a thorough review of the state's standards. The groups say Virginia's current safeguards on fracking are inadequate and outdated. They're urging Gov. Terry McAuliffe to conduct a comprehensive review before approving any new permits for oil and gas drilling that would require fracking. Fracking, or hydraulic fracturing, is a high-pressure technique for extracting oil and gas from shale deposits. The groups pushing for the review are the Virginia Organizing Washington County Chapter, Clean Water Action, Virginia Sierra Club and Shenandoah Riverkeeper. Virginia's Department of Mines Minerals and Energy has proposed changes to some aspects of the state's fracking laws. But the groups say more are needed.

20 Florida counties and 40 cities have passed ordinances to ban fracking: Dozens of Florida cities and counties oppose a plan to give the state control over the oil and gas exploration process known as fracking. The Tallahassee Democrat (http://on.tdo.com/1Hv8W9C) reported on Saturday that 20 counties and nearly 40 cities in Florida have passed regulations banning fracking. The cities and counties represent about 8 million people or 43 percent of the state's population. Two Republican legislators, Rep. Ray Rodrigues of Estero and Sen. Garrett Richter of Naples, have proposed bills that would give the state authority to regulate oil and gas exploration, production, processing, storage and transportation. Local leaders say the move wrongly takes away their right to regulate activities in their areas and that fracking could harm the environment and hurt Florida's tourism economy. The Florida Association of Counties' general membership voted unanimously in November to oppose the legislation. The association also voted in favor of a moratorium on fracking until independent and comprehensive studies on fracking are completed. "Whether you like fracking or don't like fracking, to have the county's powers usurped by the state is just the complete antithesis of local government," Wakulla County Commissioner Howard Kessler said he's concerned about the impact hydraulic fracturing could have on the environment, public health and major industries like tourism and agriculture.

Fracking bill moves forward in Florida Legislature -- A bill that would create regulations for fracking was approved by a House committee Wednesday despite strong opposition from environmentalists who said the method of oil and gas drilling could contaminate drinking water and cause health problems. The bill calls for the Department of Environmental Protection to conduct a $1 million study on how fracking would affect surface and groundwater and underground geology and then set regulations for the fracking industry. It will also look at how water and chemicals will be disposed of and any potential for contamination once a well has been plugged. The Agriculture and Natural Resources Appropriations Subcommittee voted 9-3 for the bill (HB 191) after hearing about 30 members of the public and lobbyists comment on the measure, nearly all of whom opposed it out of environmental and health concerns. The vote was along party lines, with Republicans in favor and Democrats against. Republican Rep. Cary Pigman, who is a medical doctor, said he is skeptical of studies that indicate fracking has a greater health risk than traditional oil and gas drilling, adding any health issues may be a result of the product rather than the process. "No one is disputing that there are volatile hydrocarbons around the fractured well site, but there's also volatile hydrocarbons at a gas station, there's also volatile hydrocarbons in your car," Pigman said. "You don't want to live right next to an oil well; you don't want to live right next to a car that's leaking gas."

Fracking Legislation Approved: Local governments won’t be able to stop fracking for natural gas under legislation approved by a House Committee in the State Capitol today. the measure was opposed by cities and counties, but sponsor Ray Rodrigues of Ft. Myers says drilling is safe and local governments should be able to put up roadblocks. “Two municipalities have interjected themselves into the permitting process. This bill is clarifying there is no implied preemption. we’re going to make that express so that you know oil and gas regulation resides with he state” says Rodrigues. In additional to local government opposition. Most environmental groups, are against Fracking Dave Cullen of the Sierra club says there are two reasons not to allow fracking. the first is that Florida shouldn’t be looking to fossil fuel for the future. “The other is the potential for the contamination of the water we depend on. And it’s not only for our drinking, but our clean water supports so much of our economy. Our tourism, our commercial and recreation fishing, All of those things need clean water” says Cullen. The committee approved the measure on a 9 to 3 vote along party lines with all three Democrats voting no.

Fracking bill surfaces again despite opposition, and is getting House support - The three-year effort to make it easier for oil and gas companies to bring the controversial drilling technologies known as fracking to the state is making headway in the Florida House, despite opposition from environmentalists and local governments. The House Agriculture and Natural Resources Appropriations Subcommittee on Wednesday voted 9-3 for the bill (HB 191).  A companion bill has not yet had a hearing in the Senate. The proposal would establish new regulations over fracking, remove the ability of local governments to write local ordinances, and require state regulators to conduct a $1 million, one-year study to determine what impact the chemicals used in the process would have on the state drinking water supply before the rules are written in 2017. The regulations would include how the contaminated water and chemicals will be disposed of and the study will consider the potential for water contamination once a well has been plugged. Unlike last year, the measure does not include a new public records exemption for the chemicals used in the process but continues to allow companies to shield the names of the chemicals under the trade secrets law.

Permian Delaware and Midland Crude Gathering Build Out Continues.  While crude oil takeaway capacity out of the Permian Basin from major hubs is probably overbuilt for the time being that is not the case for gathering systems bringing barrels from the wellhead to mainline terminals. Production in the Permian has slowed since the drop in oil prices reduced drilling activity but is still increasing from sweet spots in the Midland and Delaware basins in West Texas where pipeline gathering can save producers as much as $2/Bbl in trucking fees. Today we continue our review of gathering infrastructure build out to deliver more crude to takeaway hubs in the Permian.

National Fuel teaming with Texas firm to drill up to 80 wells -- National Fuel Gas Co. has signed a deal to partner with a Texas investment firm to fund the development of as many as 80 natural gas wells in the Marcellus Shale region in Pennsylvania, the Amherst-based energy company said. The deal with IOG Capital, which will give the Dallas-based firm an 80 percent stake in each of the wells, will reduce National Fuel’s cash needs during a time of low natural gas prices, while allowing it to continue to fund the development of new wells that are needed to fill up the expanding network of pipelines that National Fuel is building to move gas from Pennsylvania to markets in Canada, Western New York and elsewhere. But because National Fuel will get only about 26 percent of the revenues produced by the wells drilled under the first portion of the agreement, the deal also will weaken the company’s earnings during the current fiscal year, reducing its expected profits by about 5 percent, or 15 cents per share. The joint development agreement will cut National Fuel’s capital spending within its oil and gas drilling business almost in half from what the company initially had planned for the current fiscal year. With IOG now providing most of the funding for as many as 80 Marcellus wells, National Fuel now expects to spend about $225 million on new wells this year, down from its earlier forecast of about $425 million.

Report: Oil, gas helps fund Texas schools -- A report by North Texans for Natural Gas explains how the oil and natural gas industry contributes more than $4 billion per year to the Texas education system. Texas schools benefit from oil and gas royalties that are paid into the state’s Permanent School Fund and the Permanent University Fund. Local independent school districts also benefit from property taxes paid by the oil and natural gas industry. The report shows oil and gas revenue deposited $676 million into the Permanent School Fund in 2014. Tax revenues also added $1 billion to the Foundation School Fund. Texas universities also benefit from oil and gas revenues. The Permanent University Fund was established in 1923 when 2.1 million acres of land was set aside to help pay for higher education. Since 1923, royalties from oil and natural gas have added billions of dollars to the fund. In 2014, those royalties generated $1 billion for the Permanent University Fund. According to the report, oil and natural gas production generated over $1.5 billion in property tax revenue for Texas schools in 2014. For more than 100 school districts, this revenue accounts for more than half of the total tax base. Several companies have also partnered with local high schools to create programs that train students interested in entering the oil and gas field.

Bush's agency joins lawsuit alleging federal land overreach — Land Commissioner George P. Bush and his little-known but powerful agency, Texas’ General Land Office, joined a lawsuit Tuesday suing the federal government for what the suit calls an unconstitutional seizure of land. Filed last month by seven landowning families, the lawsuit accuses the federal Bureau of Land Management of a “blatant land grab” involving a 116-mile tract along the Red River that marks the border between Texas and Oklahoma, but whose waters have shifted for decades — raising ownership and demarcation questions. “Unfortunately, with this president and with this bureaucracy composed of unelected folks, we can’t leave this to chance,” Bush — whose grandfather and uncle were president and whose father, Jeb, is seeking the 2016 GOP White House nomination — told The Associated Press. If the Bureau of Land Management gets its way, 113 acres of public land could fall under federal control and, unchecked, the agency could set a precedent that jeopardizes Texas’ entire 13 million acres of public territory, Bush said. The lawsuit, which his office joined in a motion filed in U.S. District Court in Wichita Falls, “sends a clear message that the federal government shouldn’t be in the business of seeking to claim ownership over the state’s assets,” he said. Three Texas counties and a county sheriff’s office also have filed motions to join.

Another Earthquake Hits Oklahoma: Officials Worry Stronger Quake Could Threaten National Security -- Officials in frack-happy Oklahoma are continuing to express concern over the state’s alarming earthquake boom. If a strong one strikes the northwestern city of Cushing—one of the largest crude oil storage facilities in North America, if not the world—it could disrupt the U.S. energy market and become a national security threat, NPR reports.  Mike Moeller, senior director of mid-continent assets for Unbridle Energy, explained to NPR that, so far, the state’s uptick in tremors have not affected company operations. However, Moeller noted that the company’s 18 tanks, which hold between 350,000 to 575,000 of oil, are not built to withstand serious earthquakes, especially since earthquakes used to be so rare in Oklahoma. As EcoWatch reported in September, before 2009 Oklahoma had two earthquakes a year, but now there are two per day. Oklahoma has more earthquakes than anywhere else in the world, a spokesperson from the Oklahoma Corporation Commission said earlier this month.  The possibility of a Big One striking Cushing, which holds an estimated 54 million barrels of oil, could be a national security issue. “I have had conversations with Homeland Security. They’re concerned about the tanks mostly,” Daniel McNamara, a U.S. Geological Survey Research geophysicist, told NPR. He added that the faults underneath Cushing could be prime for more shaking.

Oklahoma Corporation Commission’s response to earthquakes spurs further debate -- The earthquakes just keep coming. Four days after a 4.7 magnitude earthquake was recorded southwest of Cherokee, a 4.4 magnitude earthquake was recorded Monday near Hennessey and Tuesday a 3.0 magnitude quake sprang up about 40 miles southeast of Norman, capping off a run of 23 earthquakes of magnitude 3.0 or higher in a seven-day period. In response to Thursday’s quake, the Oklahoma Corporation Commission released a plan calling for two disposal wells to stop operations and for many others to cut down in volume. Oklahoma Geological Survey Director Jeremy Boak said it’s a smart move because he said there’s a clear link between disposal wells and seismic activity in Oklahoma and he would like to see a balanced approach that allows scientists and policy makers to gather more information. Jack Dake, a land manager for Baron Exploration Company, said the OCC’s measured approach is a good one, but may not be worth the trouble. Make, who has been in the industry since 1978, doesn’t believe that human activity is responsible for Oklahoma’s uptick in quakes and believes the commission may be taking action just to take action. “The commission was one of the first groups to look at earthquake causation and to consider whether or not oil and gas activities were a factor,” Dake said. “The commission has reason behind what they’re doing, but it’s not proof. This is simply to see if, and that’s a big if, if it’s related and perhaps there is no more prudent effort that the OCC can institute than what they’ve done, but as of today, to the best of my knowledge and belief, no one knows whether this means anything or not, other than they feel like the commission is doing something.” The commission’s efforts are focused on injection disposal wells. According to Boak, about 95 percent of the water being injected into disposal wells is formation water — water that was already present in the ground prior to fracking operations.

Disposal well plan expected after latest Oklahoma quakes — The Oklahoma Corporation Commission was working Wednesday to finalize a plan for wastewater disposal well operators to shut down or reduce volume in north-central Oklahoma, which has been rattled by a swarm of earthquakes. Commission spokesman Matt Skinner said the agency’s oil and gas division was working on a plan that could be released this week. The largest quake early Monday was measured by the U.S. Geological Survey at magnitude of 4.7 and struck about 15 miles southwest of Medford. That was followed by at least 15 earthquakes of a magnitude 2.5 or greater in the last few days. Jeremy Boak, the new director of the Oklahoma Geological Survey, said that while there has been a slight reduction in the number of significant earthquakes in the region over the last several months, it’s difficult to determine exactly how the changes in disposal well volume is affecting the seismic activity. “I think that some of the decline we’ve seen since July does in fact relate to reduced injection,” Boak said. “But when you shut in a well, it takes a while for it to take effect, because we’ve injected a very large amount of water in there. Just slowing it down or cutting some of it off does not produce an immediate response.”Meanwhile, Gov. Mary Fallin announced Tuesday the creation of a “fact-finding work group” to explore ways that wastewater, a byproduct of oil and natural gas operations, may be recycled or reused instead of being injected underground.About 1.5 billion barrels of wastewater was disposed underground in Oklahoma in 2014, according to statistics released by Fallin.

Environmentalists want stronger methane rule - Environmentalists on Tuesday joined local activists to express support for proposed Environmental Protection Agency regulations on oil and gas industry atmospheric methane emissions. Alex Renirie and Camilla Feibelman of the Sierra Club held a conference call with Victoria Gutierrez of Diné Citizens Against Ruining Our Environment and Tweeti Blancett, a sixth-generation New Mexico rancher and former state legislator. Feibelman said the four were using the call to announce that a coalition of environmentalists in New Mexico had collected 25,000 public comments in favor of the Obama administration’s proposed rule even as President Barack Obama was in Paris talking with the leaders of other nations about ways of slowing climate change. However, Renirie said the proposed EPA rules on methane don’t go far enough. For example, the proposed rule lacks specific language on flaring to make it “an option of last resort,” she said. “This rule limits emissions only on newly installed or modified equipment in the oil and gas industry, but not on distribution,” she said. Renirie also said that the proposed rule should include tighter restrictions such as more frequent leak detection and repair, or LDAR, inspections. She would also like to see liquid-unloading events, storage tanks and compressors at wellheads included. Oil and natural gas producers in New Mexico emitted more than 250,000 metric tons of methane in 2013, she said. According to the EPA, the oil and gas industry leads all U.S industries in methane emissions.

Life around New Mexico’s gas wells: how fracking is turning the air foul: "My daughter has asthma. She is not the only one around here, something is wrong here, our air quality shouldn’t be this way.” Shirley “Sug” McNall is leaning up against a fence staring at a natural gas well about 40 meters from a playground behind the primary school where her daughter used to teach in Aztec, New Mexico. She believes that the gas industry and the explosion of fracking in her state is responsible for serious impacts on local air quality which are affecting people’s health. Her fears were boosted last year when Nasa satellites identified a methane bubble over Aztec visible from space. The bubble suggests that during drilling and production the natural gas industry is not capturing all of the gas they unlock from deep in the ground and significant amounts of this methane and other chemicals are leaking into the sky. McNall believes that other more dangerous gasses are being released too. McNall’s fears that the emissions from the gas industry are potentially dangerous are backed up by scientists. Dr Detlev Helmig is a research professor at the University of Colorado in Boulder. His group works with the US National Oceanic and Atmospheric Administration (Noaa), Nasa and other groups to monitor the emissions coming from the gas industry. His study from a Utah gas field shows that “on the order of 7-8 % of the overall produced natural gas is vented into the atmosphere,” suggesting that gas companies are releasing hundreds of millions of tons of pollutants straight into the air. Leaks in Uintah, Utah are so bad that in his words, “the air is worse than downtown LA”.And it is not only methane that is leaking out of these gas wells but a host of other dangerous gasses, collectively known as volatile organic compounds (VOCs). They read like a devil’s cookbook of nastiness, for example benzene, which causes leukemia and other health problems ; polycyclic aromatic hydrocarbons that can cause cancer ; and toluene, which is known to cause birth defects at high doses .

Utility steps up efforts to plug massive California methane leak | Reuters: The head of Southern California Gas Co said it would take at least three more months to plug a massive underground leak of natural gas that has been seeping into the air since mid-October and now accounts for a quarter of the state's entire methane emissions. The utility's president and chief executive officer, Dennis Arriola, also said on Tuesday the company would begin this week drilling a relief well designed to intersect the damaged pipeline hundreds of feet beneath the surface and inject it with fluids and cement. The utility's latest strategy and time frame for addressing the stench of gas fumes that have sickened nearby residents for weeks and led to the temporary relocation of 200 families was laid out during a Los Angles City Council hearing. SoCal Gas, one of the biggest gas utilities in the nation, is owned by San Diego-based Sempra Energy. Its leaking storage field at Aliso Canyon, just outside the northern Los Angeles community of Porter Ranch, is the second largest such facility in the Western United States by capacity, after a field in Montana. The company pumps gas into storage wells some 8,500 feet below the site during the summer and draws on those supplies to meet higher energy demand in the winter. The leak, detected on Oct. 23, is believed to have been caused by a broken injection-well pipe several hundred feet beneath the surface of the 3,600-acre field.

Class-action lawsuit filed over Porter Ranch gas leak - A group of Porter Ranch residents are suing Southern California Gas Co. and a state regulatory agency over a gas leak at a nearby storage facility that has gone on for more than a month. Residents have been complaining of health problems, including nausea, headaches and nosebleeds, since the leak began at the Aliso Canyon facility on Oct. 23. The leak from an underground well is releasing large quantities of methane, a greenhouse gas. It is also releasing mercaptans, odorants added to the gas to aid in leak detection. County health officials said the mercaptans could produce the symptoms being reported by the Porter Ranch residents.  A group of residents and the local advocacy group Save Porter Ranch filed a suit in Los Angeles Superior Court on Wednesday, alleging that the company and state officials had been negligent in allowing the leak to occur and had shown “willful disregard for public health” through their “failure to abate the harm after more than a month.” Attorney R. Rex Parris, who is representing the plaintiffs — and is mayor of the city of Lancaster in northern Los Angeles County — said Wednesday that the plaintiffs are concerned not only about the chemicals being released into the air, but about potential contamination of the water table.

Montana's inability to fund infrastructure leaves communities in trouble -- For six years, eastern Montana communities have sent more than $200 million in annual oil and gas production taxes to Helena. Aside from the usual share that returns to county and school coffers, no cash has come back to cities to help offset the cost of expensive infrastructure projects forced by the Bakken boom. “It leaves a bitter taste in your mouth that they’re not helping when we send them all this money,” he said as he slipped receipts into the register drawer. “We’re taking care of ourselves and getting it done ourselves. The local cities have had to bear the brunt of infrastructure costs.” Even outside oil-impacted areas, the repetitive failures of legislators and the governor to approve major infrastructure and building bills have left communities statewide with few choices. Local leaders can delay critical projects and watch construction costs climb, or they can raise rates on local residents, who sometimes struggle to pay when water and sewer bills as much as triple in a few short years. And that’s on top of any local levies sought for the projects and updated property appraisals by the state Department of Revenue, which will spike many Montana tax bills.

Colorado wells booming despite oil slump — Despite a general slowdown in oil drilling across the Denver-Julesburg Basin and elsewhere, Weld County is on track to top 100 million barrels of oil this year. More than 89 percent of the state’s production this year is coming from Weld, The Greeley Tribune reported. That’s up from 85 percent last year. Industry analysts say operators are getting more oil from every well by drilling the best parts of the basin. They’re also using improved techniques for well fracturing, or fracking. “We are seeing a relentless drive to push down costs across the basin,” said Reed Olmstead, manager of North America supply analytics, upstream strategy and competition at IHS Energy in Englewood. Statewide oil production for 2015 so far is at 79.46 million barrels. For the first half of 2015, Weld oil production averaged 8.7 million barrels per month, according to the Colorado Oil & Gas Conservation Commission. Statewide oil production for 2015 so far is at 79.46 million barrels.

Radioactive Frack Waste – Too Much of A ‘Good’ Thing! -  If the Oil & Gas Industry were held to the same environmental standards as other American Industries, they would not be ale to operate with a profit due the enormous amount of pollution and extensive environmental degradation – and public health problems – they create!   “Scientists warn that if this radioactive waste is dumped in regular landfills, water running off from the landfills after rainstorms could carry radioactive materials into rivers, streams and drinking water supplies…”  had this been uncovered as part of a terrorist plot, you can bet Homeland Security would be all over it… Western State Regulators Struggling to Keep Up With Radioactive Fracking and Drilling Waste - The question of how to handle the toxic waste from fracking and other oil and gas activities is one of the most intractable issues confronting environmental regulators. Not only because of the sheer volume of waste generated nationwide, but also because some of the radioactive materials involved have a half-life of over 1,500 years, making the consequences of decision-making today especially long-lasting.Every year, the oil and gas industry generates roughly 21 billion barrels of wastewater and millions of tons of solid waste, much of it carrying a mix of naturally occurring radioactive materials, and some of it bearing so much radioactive material that it is not safe to drink or even, on far more rare occasions, to simply have it near you. Over the past decade, states have often proved ill-prepared to handle the flood of waste from the shale drilling rush, sometimes because drillers struck oil or gas in a region with little prior experience with drilling’s unique hazards, and other times because the political sway of a wealthy and well-connected industry or a lack of resources for environmental regulation left state rules vague or poorly enforced, environmentalists say.Both types of problems are highlighted in a new report, titled No Time To Waste, published Nov. 19 by the Western Organization of Resource Councils (WORC), that examines how radioactive wastes are handled under various state laws.

Groups appeal suspension of federal oil, gas drilling rules — Environmental groups have appealed a judge’s decision to suspend new rules for oil and gas drilling on federal land across the U.S. pending the outcome of a legal challenge to those rules. The rules should be allowed to take effect to protect land, water and wildlife from practices including hydraulic fracturing, the Sierra Club and others argue in court documents. On Sept. 30, U.S. District Judge Scott Skavdahl in Wyoming disagreed and blocked the rules from taking effect while the lawsuit contesting them moves ahead. The environmental groups, which have sided with the federal government in the case, appealed Skavdahl’s decision Nov. 27 to the 10th U.S. Circuit Court of Appeals. The case itself remains before Skavdahl in Casper.   The plaintiffs are Wyoming, Colorado, Utah, North Dakota, the Ute Tribe and two petroleum industry groups, the Western Energy Alliance and the Independent Petroleum Association of America. They say the rules would be costly for industry and cause economic harm to the states. The rules initially were set to take effect June 24 but Skavdahl suspended them the day before, telling federal officials to submit more information about how they developed their regulations. The rules would require petroleum developers to disclose to regulators the ingredients in the chemical products they use to improve the results of fracking. Developers also would have to pressure-test well bores to make sure they wouldn’t leak.

Bakken pipeline hearing questions environmental impact of project - The Iowa Utilities Board’s evidentiary hearings for the Bakken pipeline are now through its second week of testimony and will begin to wrap up the proceedings that were scheduled to last 10 days. The hearings will be used to decide if Texas-based company Dakota Access LLC and its parent company Energy Transfer Partners will be allowed to use eminent domain to acquire rights to land needed by the companies to build a crude oil pipeline through the state. The pipeline would transport crude oil from North Dakota’s Bakken Shale through South Dakota and Iowa en route to a hub in Pakota, Ill., that connects to a Texas-bound pipeline. It would extend 343 miles through Iowa and traverse 18 counties in the state, including Story and Boone. The pipeline would initially carry 320,000 barrels each day but could reach up to 450,000 barrels per day. During the first two weeks of the hearings, the IUB, which includes Chairwoman Geri Huser, a former Democratic state legislator, as well as Nick Wagner and Libby Jacobs, both former Republican state legislators, all appointed by Iowa Gov. Terry Branstad, listened to testimony from experts in various fields, Dakota Access and Energy Transfer Partners personnel, witnesses supporting the project and witnesses opposing the project. The witnesses that support the construction of the pipeline have argued that the pipeline will lead to energy independence and the creation of jobs for people who would be hired to build the pipeline. The opposition voices have stated their fears about possible environmental impacts if a spill were to occur and that the jobs created would only be temporary, which would not help the state’s economy in the long run. There is also concern that the oil traveling through the pipeline would not do anything to benefit Iowans, which is a requirement if eminent domain is to be used.

State regulators to decide on Dakota Access pipeline — South Dakota regulators are expected to decide Monday whether to grant a construction permit for a pipeline that will cross through the state as it carries oil from North Dakota to Illinois. The 1,130-mile Dakota Access Pipeline proposed by Dallas-based Energy Transfer Partners would move at least 450,000 barrels of crude daily from the Bakken oil patch in western North Dakota through South Dakota and Iowa to an existing pipeline in Patoka, Illinois, where shippers can access Midwest and Gulf Coast markets. It needs approval in all four states. South Dakota’s Public Utilities Commission held a public hearing on the project in late September and early October. Supporters of the project cite a need for energy security, point to the jobs it would create and maintain that transporting oil by pipeline is safer than moving it by rail or truck. Opponents worry the pipeline could contaminate water supplies, farmland and archaeological sites, and harm habitat for wildlife, including endangered species. Opponents have submitted written comments to the commission since the hearing, and Dakota Access has offered a set of stipulations for its permit. In addition to complying with state and local laws, officials say they would offer quarterly reports to the commission, hire a liaison officer approved by the commission to deal with landowner disputes and log landowner concerns. The commission will decide whether to grant a construction permit, grant a permit with conditions or deny a permit, the Argus Leader newspaper reported.

South Dakota Approves Its Segment Of The ETP Dakota Access Pipeline -- The Gazette is reporting: The South Dakota Public Utilities Commission voted 2-1 Monday to approve the Bakken crude oil pipeline, but added conditions to better protect landowners along the route.  “It is crucial that we do this right so that our farmers and ranchers can get back to doing what they do best, producing food for the world,” Chairman Chris Nelson said.  The 1,134 mile pipeline proposed by Energy Transfer Partners of Texas would carry Bakken crude from North Dakota to Patoka, IL, crossing 18 Iowa counties. The $3.7 billion pipeline would initially carry 450,000 barrels of crude per day and could be expanded to 570,000 barrels.  In South Dakota, the pipeline travels 272 miles and extends through 13 counties. The conditions include requirements for construction and reclamation to better protect landowners.  Commissioner Gary Hanson, the lone dissenting vote, argued that the pipeline route would unduly harm development for the communities in the Sioux Falls area. Hanson said he suspects the decision to grant the permit will be appealed to the South Dakota court system.

Train safety provisions included in U.S. transportation bill - The mammoth five-year federal transportation bill that lawmakers hope to send to President Barack Obama early next week includes provisions, championed by Sen. Tammy Baldwin (D-Wis.), that would require railroads to share critical safety information with local communities. “This legislation provides the transparency we’ve been begging and asking Canadian Pacific railroad for,” Milwaukee Common Council President Michael Murphy said during a news conference Wednesday outside a fire station at 100 W. Virginia St. “It isn’t too much to ask a company that is using our public right of way to let us know if their bridges are safe and secure,” he said. As if to illustrate Murphy’s point, a Canadian Pacific train pulling oil tankers rumbled across the bridge over S. 1st Street a few blocks to the north. Milwaukee is in a rail corridor that ferries crude oil from North Dakota to refineries in metropolitan Chicago and beyond. Since spring, Murphy and other city officials have been sparring with Canadian Pacific over its refusal to share with city engineers the results of its inspection of a rusty-looking bridge crossing W. Oregon St. at S. 1st St. Canadian Pacific officials have insisted the bridge is safe, but they announced in August that the railroad plans to encase 13 of the bridge’s steel columns in concrete to protect them from further corrosion. “Five to six months ago, the Milwaukee Common Council asked for information on bridges,” Ald. Terry Witkowski said. “We were greeted with silence.” “With the stroke of a pen, the ball game has changed,” he said.

Bakken Refinery Rush Cools Down --  The 20 Mb/d Dakota Prairie refinery commenced operation on May 4, 2015 – becoming the first brand new U.S. crude processing plant to startup in nearly 40 years. The rationale behind this refinery and plans for others like it was surging demand for diesel driven by the shale oil boom in North Dakota. However the market conditions that prompted interest in building refineries in the Bakken region have changed considerably in the past year and led to an unprofitable first quarter for Dakota Prairie. Today we explain why the new refinery made sense at one time and what has changed in the past year.  Despite the oil price crash last year (2014) and consequent fall off in drilling - North Dakota is still producing over 1.1 MMb/d of crude as of September (according to the North Dakota Industrial Commission – NDIC) – the vast majority of which (all but about 100 Mb/d) leaves the State for Midcontinent or Coastal refineries by rail or pipeline. Up until May 2015 the only refinery operating in North Dakota was the Tesoro Mandan facility that processes about 70 Mb/d of crude. As we have previously described - the lack of local refining capacity in a state sitting on top of bounteous crude supplies as well as the prospect of high margins - attracted the attention of several companies looking to build new refineries. We first covered the topic back in April 2013 when plans for three new refineries were getting off the ground. A year later in June 2014, at least 5 companies were planning to build “micro” refineries that hoped to process 20 Mb/d of crude each. . However - as we shall see – changing demand for diesel fuel in North Dakota and a reduction in the price advantage for Bakken crude made the new refinery’s first quarter unprofitable and appears to have chilled progress on the other projects.

More than 17K gallons of saltwater spill near Watford City — North Dakota oil regulators say more than 17,000 gallons of saltwater have spilled from a disposal well near Watford City. The North Dakota Oil and Gas Division says Wyoming-based True Oil LLC on Monday reported that the 17,640 gallons were released, contained and recovered at the disposal well located about 15 miles southwest of Watford City. The cause of the spill is listed as a pump leak. The division says a state inspector has been at the site of the release. Saltwater, or brine, is an unwanted byproduct of oil production. It is many times saltier than sea water and can easily kill vegetation.

The U.S. Has An Oil Train Problem -  Recipe for disaster: Put a flammable substance under pressure into a metal container, then rumble it at 50 miles an hour down a metal rail, across hundreds or even thousands of miles, through towns and cities and over bodies of water. Repeat, as necessary.  The United States is coming to the end of the costliest year on record for oil train explosions, Bloomberg News reported Tuesday, as crude oil travelling by rail has reached its highest levels ever. This past year saw a town in North Dakota evacuated after a May derailment and explosion; another major derailment and explosion in Illinois in March; and a February derailment and explosion in West Virginia, which destroyed a home, forced the evacuation of 1,000 people, and caused the governor to declare a state of emergency.  At the beginning of 2010, the United States was shipping about one million barrels of oil by rail every month. By mid-2014, though, that number was around 25 million. Imports from Canada increased 50-fold during that time. The resulting surge in accidents — including a Quebec derailment in 2013 that killed 47 people — prompted the Department of Transportation to enact new safety rules in May 2015.  But those rules didn’t prevent costs from ballooning from $7.5 million in damage in 2014 to $29.7 million in 2015, according to Department of Transportation data. Still, carloads of petroleum products have declined significantly since their peak in December 2014, and Bloomberg reporter Mathew Philips suggests that we are unlikely to see this amount of crude by rail in the future.

Oil companies lose pipeline case that could be worth hundreds of millions to Alaska - A federal agency has ruled that the oil-company owners of the trans-Alaska pipeline had so badly managed an upgrade project, they can’t recover their costs by charging higher fees for moving oil, a decision that could save the state and independent producers hundreds of millions of dollars over the life of the pipeline. The “imprudently” managed project to update four pump stations and control systems along the 800-mile line, known as Strategic Reconfiguration, lasted years longer and cost hundreds of millions dollars more than anticipated, said the Federal Energy Regulatory Commission in a 67-page decision issued last week. The ruling means the pipeline’s oil company owners, primarily BP, ConocoPhillips and ExxonMobil, will collect at least $1.5 billion less in rates than they otherwise would have collected in the decades to come, said Robin Brena, lead counsel for prevailing parties Anadarko Petroleum and Tesoro Alaska, two companies that don’t own a piece of the Trans-Alaska Pipeline System. The lower rates, roughly estimated at 20 percent, will help refiners and independent producers and shippers, a group that currently includes refiner Tesoro, as well as Anadarko, a minority partner in ConocoPhillips’ Alpine field, and others, such as North Slope newcomer Hilcorp Alaska. The state will also benefit to the tune of about $500 million in additional revenues because lower rates mean lower transportation costs that the oil companies can deduct from royalty and severance taxes paid to the state, Brena said. “It increases the value of the resource and opens up the basin for independents,”

U.S. oil companies' restructuring plans founder as prices plunge  -- When Samson Resources Corp filed this year's biggest energy-related bankruptcy in September, the oil and gas company said it had a deal to emerge from Chapter 11 protection by year-end. Just a few weeks later, plunging gas prices had left the deal in tatters. Samson joins about a half dozen troubled energy producers that have sought court protection from creditors this year and discovered asset values have evaporated or that a restructuring plan has unraveled as commodity prices plunge. Bankers, lawyers and advisers involved in the cases blame the steep drop in energy prices and the industry's huge need for constant, capital-intensive drilling and exploring to sustain production. In the past 16 months, the price of oil has sunk to around $40 per barrel from about $100, ending years of elevated crude prices that fueled oil companies' debt-financed expansion. "It can be a really tough spot especially when you have the bottom drop out," said Michael Cuda, a bankruptcy lawyer with Squire Patton Boggs in Dallas, who represents a lender in the Samson case. "A lot of assets suddenly become valueless," he said, speaking of energy companies generally.

Schlumberger to cut more jobs as drilling downturn bites -- Oil service company Schlumberger announced another round of job cuts on Tuesday, adding to 20,000 already this year, as low oil prices and a slowdown in drilling was expected to continue into next year. The layoffs, which will incur a pretax restructuring charge of about $350 million in the fourth quarter, are the latest sign of continued pain in the oil industry as oversupply continues to weigh on prices and cut profits for even the largest companies. The size, location and timing of the cuts were unclear. “The latest leg down in activity has led us to again evaluate our staffing levels against expected activity. Following which, we will further right-size the organization based on the activity outlook for 2016,” said Patrick Schorn, Schlumberger’s president of operations, at a speech on Tuesday in New York. “It has become clear that any recovery in activity has been pushed out in time,” he said. A glut of oil and a steep drop in prices from over $100 a barrel in June last year to $40 this week has rattled the industry and forced drillers to idle rigs and let workers go. Schlumberger, the biggest oil service company globally, has led the jobs cull in a series of layoffs this year. Rival service firm Baker Hughes has cut over 16,000 jobs, while Halliburton has cut around 18,000. Oil producers, including Chevron and Shell, have added to those numbers.

"On The Cusp Of A Staggering Default Wave": Energy Intelligence Issues Apocalyptic Warning For The Energy Sector -- The Energy Intelligence news and analysis creator and aggregator is not one to haphazradly throw around hyperbolic claims and forecasts. So when it gets downright apocalyptic, as it did this week in a report titled "Is Debt Bomb About to Blow Up US Shale?", people listen... and if they are still long energy junk bonds, they panic. The summary: "The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices -- which few experts foresee in the near future -- an over-leveraged, under-hedged US E&P industry faces a truly grim 2016. How bad could things get?" The full report by Paul Merolli, a senior editor and correspondent at Energy Intelligence: The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices — which few experts foresee in the near future — an over-leveraged, under-hedged US E&P industry faces a truly grim 2016. How bad could things get and when? It increasingly looks like a number of the weakest companies will run out of financial stamina in the first half of next year, and with every dollar of income going to service debt at many heavily leveraged independents, there are waves of others that also face serious trouble if the lower-for-longer oil price scenario extends further.

House backs sweeping energy bill to boost oil, natural gas - — Defying a White House veto threat, the Republican-controlled House on Thursday approved a sweeping bill to boost U.S. energy production, lift a four-decade ban on crude oil exports and modernize the aging electric grid. The first major energy legislation in nearly a decade, the bill would also speed natural gas exports and hasten approval of natural gas pipelines across public lands. It also would advance cross-border projects such as the Keystone XL oil pipeline, which lingered for more than seven years before being rejected last month by President Barack Obama. The vote was 249-174. The Senate still must consider the measure. “The days of energy scarcity are long in the rearview mirror, and passing (the energy legislation) takes an important and necessary step forward,” said Rep. Fred Upton, R-Mich., the chairman of the House Energy and Commerce Committee and the bill’s chief sponsor. Passage of the legislation comes just days after Obama traveled to Paris for an international conference on climate change. Administration officials involved in negotiations are pressing for a far-reaching agreement designed to put the world on a path toward reducing the carbon pollution blamed for global warming. Democrats criticized the House bill as “backward-looking,” saying it promotes fossil fuels such as oil and gas while doing nothing to support renewable forms of energy such as solar and wind power.

Manslaughter charges dropped for BP supervisors in oil spill - The Gulf of Mexico rig explosion that killed 11 workers and unleashed the nation’s worst offshore oil spill also led to criminal charges against four BP employees, who faced prison time if convicted. But the Justice Department’s decision to drop manslaughter charges against two BP rig supervisors makes it increasingly likely that nobody will spend a day behind bars for crimes associated with the deadly disaster. One of those rig supervisors, Donald Vidrine, pleaded guilty Wednesday to a misdemeanor charge of violating the Clean Water Act after a judge agreed to dismiss 11 counts of involuntary manslaughter against him and Robert Kaluza. The cases against two other former BP employees already have been resolved — one with an acquittal and another with a sentence of probation. Keith Jones, whose son Gordon Jones died in the rig explosion, attended Wednesday’s hearing with his other children and expressed disappointment that prosecutors dropped the most serious charges against Kaluza and Vidrine. “As a result of this court proceeding today, no man will ever spend a moment behind bars for killing 11 men for reasons based entirely on greed,”

The Obama Administration Should be Investigated over Handling of Keystone Pipeline -- The Keystone Pipeline was turned into one giant debate over ‘Environmental Concerns’ it became a symbol for the fake environmentalists to rally around, and became politicized far beyond the scope of common sense reasoning on the issue. Pipelines that deliver natural gas, oil, and other petroleum products underlie and support every major US city and geographical region, they have been one of the core infrastructure elements, and a mainstream of efficient, safe transportation of energy for the last 50 plus years. If one stepped back and took a Bird`s eye view of a map of the contiguous United States with an overlay of existing pipelines interwoven on this map, one would see just how much modern civilization relies on this successful infrastructure invention in the pipeline.We have seen what the alternatives to Keystone Pipeline were for safely transporting oil from Canada to the United States in the form of railroad transportation which is a much more dangerous, environmentally hazardous, and inefficient mode of transportation of this energy resource. There have been three major railroad disasters over the last two years all revolving around the issue of oil transportation via trains, which is just ludicrous even on the most critical interpretation of logistics when seen through the warped lenses of the lunatic environmentalist.The Keystone Pipeline debate isn`t really about the environment at all, but rather money. I find it rather convenient that one of the biggest supporters of the Obama administration is namely Warren Buffet who just so happens to have major railway exposure both in terms on owning a railroad outright, but also owning shares in other railroad companies. Who benefits and is hurt if Keystone Pipeline gets blocked or tied up in legislative procedure and governmental red tape?  I hazard to bet if Warren Buffet bought a pipeline company instead of a railroad company that Keystone would have been passed long ago.

Fire erupts at Mexico's biggest oil refinery, some hurt – A fire broke out at Mexico’s biggest oil refinery on Tuesday and some staff were evacuated, a spokesman for state-run oil company Pemex said, the latest in a string of incidents to hit the company’s refineries. The Red Cross said nine people were injured, while Pemex said eight people suffered minor injuries and were being treated. A Pemex spokesman said the fire had been controlled and that the refinery, which supplies fuel for the domestic market, was operating normally except for an alkylation unit. The refinery has the capacity to process 330,000 barrels per day. Photographs taken by emergency services workers showed a blazing fireball and a thick black plume of smoke rising up into the sky from the facility located in the city of Salina Cruz in the southern state of Oaxaca. Luis Velazquez, a civil protection agency official in Oaxaca, said that nearby schools had been evacuated and that local hospitals were on red alert to treat any injured. “This is a highly populated zone,” he said.

Pemex sees total debt rising above $100 billion next year - Total debt at Petroleos Mexicanos may rise to more than $100 billion in 2016 as the state-run oil producer plans to issue more debt amid a slump oil prices and continued production declines. Pemex, as the world’s eighth-largest oil producer is known, estimates it will borrow $21 billion in 2016, with as much as $20 billion budgeted for national and international debt issuance and a reduction in bank loans, according to an investor presentation posted on the company’s website. The company plans debt payments of $5.3 billion next year, meaning the existing $87 billion in debt would be increased by an estimated $15.7 billion. The state-owned producer reported a record $10.2 billion loss in the third quarter as crude output heads towards an eleventh straight year of declines. Moody’s Investors Service, which downgraded Pemex’s credit rating on Nov. 24, expects Pemex’s “credit metrics will deteriorate further, and its financial leverage will remain high as its capital spending needs continue to be financed with debt in the context of low oil prices and declining production,” Mauro Leos, senior analyst at Moody’s, wrote in a Nov. 30 research note. Pemex will improve its financial standing through a series of joint ventures with oil companies to increase production at mature fields and with the modification of its pension structure, which was approved last month. The company, which sold a 50 percent stake in the pipeline company Gasoductos de Chihuahua for $1.3 billion in July, will likely consider selling additional assets next year to free up capital, according to Moody’s.

Exxon seeks first fracking permit in Colombia - Exxon Mobil Corp. has filed for an environmental permit to explore for shale oil and natural gas in Colombia using hydraulic fracturing technology, in a bid to become the first driller to use the controversial technique in the Andean nation. The company submitted an environmental impact assessment for fracking in the VMM-37 block to Colombia’s environmental agency ANLA, Exxon said in an e-mailed response to questions Thursday. If an agreed work program is completed, the Irving-based company will acquire a 70 percent interest in the unconventional play, with 30 percent for Sintana Energy Inc., according to a 2012 statement. ANLA had no requests for fracking permits, the agency said in e-mailed response to questions in February. It did not respond to a request for comment last week. Exxon’s move comes amid a slump in global oil prices that has dissuaded other companies including state-controlled Ecopetrol SA from seeking permits. Colombia published rules last year governing how companies can explore for oil and natural gas using hydraulic fracturing. Production regulations will be published in the first quarter of 2016, although whether fracking actually takes place next year will depend on oil prices, according to the Agencia Nacional de Hidrocarburos, or ANH. “Fracking is not fancy work but it is expensive,” . “And of course companies won’t put money into something that’s expensive right now.”

Proposed KZN fracking raises agricultural concerns -  The KwaZulu-Natal Agricultural Union (KWANALU) has warned of the possible dangers to agriculture should proposed fracking, to search for gas, go ahead in the province. An American-based petroleum company has made an application for the exploration rights for minerals which include oil, gas and coal bed methane in large parts of the province. These areas include Pietermaritzburg, Ulundi, Colenso and Richmond. Environmental Activists are against the move, saying it could pose grave dangers to the environment and the limited water supply in the drought-stricken province. Fracking is a process which entails drilling and injecting fluid into the ground under high pressure to fracture shale rocks and release natural gas. Activists say the chemicals used during this process could have negative impacts on the environment. They say fracking could also contaminate the limited water supply currently available in the province. Concerned community member, Penelope Malinga from Mphophomeni in the Midlands, says the large water quantities used during the process is a waste. “KZN is water stressed and we live in one of the places where it’s the headquarters of the water factories of KwaZulu-Natal just below the Drakensburg and some of these areas which are in their exploration zone are within those water factories most of them are. The exploration of gas in these areas would lead to the pollution of the water the water that is underneath the ground and the surface water as well,”

Botswana sells fracking rights in national park - The Botswana government has quietly sold the rights to frack for shale gas in one of Africa’s largest protected conservation areas, it has emerged. The Kgalagadi transfrontier park, which spans the border with South Africa, is an immense 3 6,000 sq km wilderness, home to gemsbok desert antelope, black-maned Kalahari lions and pygmy falcons. But conservationists and top park officials – who were not informed of the fracking rights sale – are now worried about the impact of drilling on wildlife. Prospecting licences for more than half of the park were granted to a UK-listed company called Nodding Donkey in September 2014, although the sale has not been reported previously. That company changed its name earlier this month to Karoo Energy. Park officials said that no drilling has yet taken place, but the Guardian found oil sediment on the ground near a popular camp site. There was an overwhelming smell of tar and a drill stem protruded from an apparently recently drilled hole. It is not known who had carried out the drilling or when. Scientist Gus Mills worked and lived in Kgalagadi for 18 years studying cheetahs and hyenas. He said he is worried about the impact on wildlife and environment. “The development that is going to have to go on there, with infrastructure that has to be moved in, seems to be yet another nail in the coffin of wild areas in the world.”

Can The Oil Industry Really Handle This Much Debt? -- As the crude industry has been wrestling with low oil prices that declined by over 50 percent since its highest close at $107 a barrel in 2014, many exploration and production companies worldwide and in the U.S., in particular, have faced large shortfalls in revenue and cash flow deficits forcing them to cut down on capital expenditures, drilling and forego investments in new development projects. High debt levels taken on by the U.S. oil producers in the past to increase production while oil prices soared, have come back to haunt oil and gas companies, as some of the debt is due to mature by the end of this year, and in 2016. Times are tough for U.S. shale oil producers: Some may not make it, especially given that this month, lenders are to reassess E&P companies’ loans conditions based on their assets value in relation to the incurred debt. Throughout the oil price upturn that lasted until the middle of 2014, companies sold shares and assets and borrowed cash to increase production and add to their reserves. According to the data compiled by FactSet, shared with the Financial Times, the aggregate net debt of U.S. oil and gas production companies more than doubled from $81 billion at the end of 2010 to $169 billion by this June In the first half of 2015, U.S. shale producers reported a cash shortfall of more than $30 billion. The U.S. independent oil and gas producers’ capital expenditures exceeded their cash from operations by a deficit of over $37 billion for 2014. In July – September 2015, after a couple months of a rebound, a further slump in crude futures prices fluctuated between $39-47/bbl, thus putting more strain on the oil-and-gas producers, and making them feel an even tighter squeeze.

U.S. oil and natural gas reserves both increase in 2014 - Today in Energy - U.S. Energy Information Administration (EIA): U.S. crude oil and lease condensate proved reserves increased by 9% to 39.9 billion barrels, and natural gas proved reserves increased by 10% to 389 trillion cubic feet in 2014, according to EIA's U.S. Crude Oil and Natural Gas Proved Reserves report. U.S. crude oil and lease condensate proved reserves reached the highest level since 1972, and natural gas proved reserves surpassed last year's record level.   Proved reserves are volumes of oil and natural gas that geologic and engineering data demonstrate with reasonable certainty to be recoverable under existing economic and operating conditions Because they depend on economic factors, proved reserves shrink or grow as commodity prices and extraction costs change. EIA's estimates of proved reserves are based on an annual survey of domestic oil and natural gas well operators. Texas had the largest increase in proved reserves of crude oil and lease condensate, representing 60% of the nation's total net increase in 2014. This increase was driven by development of tight oil plays (e.g., Wolfcamp, Bone Spring) in the Permian Basin and the Eagle Ford Shale play. North Dakota had the second-largest increase, 362 million barrels, which came mostly from the Bakken tight oil play in the Williston Basin.

Quiet Gulf Hurricane Season End Leaves Oil Drowned in Oversupply  - Oil bulls can say farewell to another quiet Atlantic hurricane season in the Gulf of Mexico, which ends Monday without a storm-induced price rise to lift crude from its once-in-a-generation slump. Barely an oil worker was evacuated from the Gulf of Mexico and the biggest storm this year -- the strongest hurricane ever in the Western Hemisphere, actually -- tore through the Pacific. The subdued June-November season overlapped with a four-month stretch of oil prices averaging less than $50 a barrel, the longest run since the global financial crisis. As well, the epicenter of U.S. production has moved onshore to shale fields spanning North Dakota and Texas. “Once upon a time we would have been watching very closely to what’s happening in the Gulf of Mexico,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “We’ve seen a few disasters from hurricanes, but the shale phenomenon has really taken the sting out of lost Gulf production.” Aided by shale oil developments, U.S. production is at such a rate that oil stockpiles are more than 100 million barrels, or about one-third, above the five-year average, buffering the impact from hurricanes. While prices surged 44 percent in 2008 after Hurricane Ike struck, markets barely blinked four years later after Hurricane Isaac hit and curbed more than 90 percent of crude output in the Gulf of Mexico.

U.S. propane stocks hit record despite strong exports -- Liquefied petroleum gases (LPG) are the fastest-growing category of hydrocarbon exports from the United States, with volumes up almost four-fold since 2012. Exports have grown from less than 200,000 barrels per day in 2012 to an average of 743,000 bpd so far in 2015 and as much as 821,000 bpd in July, according to the U.S. Energy Information Administration. LPG exports include a range of light hydrocarbons ranging from ethane, ethylene, propane and propylene to normal butane, butylene, isobutane and isobutylene which are pressurized for convenient transportation. LPG is produced from natural gas processing plants, condensate splitters and oil refineries and has a wide range of applications from petrochemical feedstocks to motor fuel, grain drying and residential heating and cooking. Unlike crude oil, LPG is treated as a refined product and can be exported with few restrictions, a position the U.S. Department of Commerce confirmed in 2014. Traditionally, most LPG has been marketed in neighboring countries, including Canada, Mexico, Central America and the Caribbean.Exports to Europe, Africa and especially Asia have surged and now account for nearly half of all the LPG shipped abroad. China has overtaken Canada and Mexico as the most important export market for U.S. LPG, taking more than 24 million barrels, almost 100,000 bpd, in the first eight months of 2015.

Oil tanker rates jump to seven-year high as ships forced to wait - Fuel Fix: Oil tanker rates soared to the highest in seven years amid an acceleration in the number of bookings and signs that the ships are being delayed when unloading due to a lack of space in on-land storage tanks. Day rates for 2 million-barrel carrying ships sailing to Japan from Saudi Arabia, the industry’s benchmark route, surged to $111,359, the highest since July 2008, according to the Baltic Exchange in London. The Organization of Petroleum Exporting Countries is helping to keep the world flooded with oil by persisting with a strategy of defending its share of the global crude market, rather than propping up prices. It meets Friday to discuss that policy. Oil tankers are increasingly having to store cargoes while they wait for space to clear in on-land storage tanks that are too full, according to Erik Nikolai Stavseth, a shipping analyst at Arctic Securities ASA in Oslo. Vessels able to hold more than 100 million barrels of crude were waiting days or weeks at a time off the coasts of oil consuming countries in mid-November, vessel-tracking data compiled by Bloomberg show. “We’ve seen the number of vessels for storage move higher,” Stavseth said. “There have been several reports of congestion in Chinese ports” while the flow of cargoes being transported toward the U.S. Gulf is also rising, employing a growing number of vessels, he said.

Oil slides 4 percent on U.S. stock build, OPEC worry | Reuters: Oil prices tumbled more than 4 percent on Wednesday as surging U.S. stockpiles and a rallying dollar prompted traders to dump crude contracts amid signs the world's largest oil producers will not cut production when they meet this week. Warmer-than-usual weather in the Northeastern United States, a major market for heating oil, also weighed on the petroleum complex. U.S. crude's West Texas Intermediate (WTI) futures hit contract lows after government data showed a 10th straight week in crude builds. Brent futures approached new lows since March 2009, with the Organization of the Petroleum Exporting Countries (OPEC) widely expected to uphold at its meeting in Vienna on Friday a decision from last year to pump oil vigorously to protect market share from non-OPEC members like the United States and Russia. The dollar's .DXY surge to 12-1/2-year highs further pressured prices for oil and other commodities denominated in the greenback.[USD/] "From the looks of it, we could be trading below $40 a barrel by the time OPEC concludes on Friday,"

Crude Oil Price Dives Below $41 a Barrel After Inventory Report - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 1.2 million barrels last week, maintaining a total U.S. commercial crude inventory of 489.4 million barrels. The commercial crude inventory remains near levels not seen at this time of year in at least the past 80 years.  Tuesday evening, the American Petroleum Institute (API) reported that crude inventories rose by 1.6 million barrels in the week ending November 27. For the same period, analysts had estimated a decrease of 300,000 barrels in crude inventories. Total gasoline inventories increased by 100,000 barrels last week, according to the EIA, and remain well above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged about 9.2 million barrels a day for the past four weeks, down by 0.9% compared with the same period a year ago. The Organization of the Petroleum Exporting Countries (OPEC) begins its last meeting of the year on Friday, and while the Saudis say they are willing to listen to arguments for production cuts there is, in all likelihood, little chance that will happen. Non-OPEC production, particularly in the United States, has dropped and, though there is still a lot of extra crude oil sloshing around in storage tanks and VLCCs, the impact of lower U.S. production won’t be felt immediately, or even in the next few months.

Crude oil storage and capacity has increased at Cushing, OK, and along the Gulf Coast – EIA - Commercial crude oil inventories in Cushing, Oklahoma (located in Petroleum Administration for Defense District 2) and the U.S. Gulf Coast (PADD 3) totaled a record-high 309.4 million barrels as of the week ending November 27. Based on the recently released storage capacity and line fill data in the September Petroleum Supply Monthly (PSM), EIA estimates 70.2% utilization of working crude oil storage capacity in Cushing and the Gulf Coast on a combined basis, only slightly below the record utilization level of 71.2% set in the week ending April 24 of this year. The U.S. Gulf Coast region contains 55% of the nation's crude oil storage capacity, and Cushing contains another 13%. As of the week ending November 27, these two locations contained 67% of the nation's crude oil inventories. They are also home to most of the growth in crude oil storage capacity over the past four and a half years. Since March 2011, the Gulf Coast and Cushing have accounted for about 85% of the nation's increase in crude oil storage capacity, growing by 55.7 million barrels and 25.0 million barrels, respectively. Although storage utilization levels along the Gulf Coast and at Cushing are often assessed separately, their combined utilization is currently most relevant given the increased pipeline capacity to move crude oil south from Cushing to the Gulf Coast during a time of high global crude oil inventory builds. Despite relatively high crude oil inventories and storage capacity utilization, there are still more than 100 million barrels of capacity available in these two areas. More information about the interplay between crude oil storage patterns and financial markets is available in This Week in Petroleum.

Crude Tumbles As Inventories Surge For 10th Week In A Row And Production Rises Despite Demand Drop -- Confirming last night's API report, DOE reports that total crude inventories rose for the 10th week in a row (up by 1.177mm barrels) This is a huge surprise relative to the 1mm draw that was expected as total product demand dropped 1.6% relative to last year. Which all makes panicked cash-flow sense as production rose by 37k bpd. Production rises to highest since Aug 28th... And the reaction... Charts: Bloomberg

US crude oil fell below $40 a barrel for just the second time since the recession - Quartz: It’s that time of the week when the Energy Information Administration releases its weekly peek (pdf) at US oil production. For the past year or so it’s been a dizzying climb as stockpiles climbed to record highs. Though supplies had begun to fall earlier in the year as shale producers finally pumped the brakes on their pumping, the latest figures show that commercial supplies are fewer than 2 million barrels shy of a fresh record high. Since commodity markets abhor a glut—and are especially shaky ahead of the upcoming OPEC meeting, which is expected to do little to end the stalemate with US shale producers—things went south quickly. Nine of the 15 worst-performing stocks in the S&P 500 today were energy companies. West Texas Intermediate crude, the US domestic oil benchmark, briefly dipped below $40 a barrel today (Dec. 2). That’s something it hadn’t done since August’s global market meltdown, when it fell to $38.60 before quickly recovering. The last time before that? June 2009.

WTI Breaches $40 Level; Brent Falls to a 6-Year Low at $42.49/bbl - The WTI front-month contract settled on the NYMEX at $39.94/bbl Wednesday, down about 4 percent; Brent on the ICE, settled at $42.49/bbl, down about 4.4 percent. WTI’s fall below the $40/bbl level was the first time since August of this year, and Brent’s collapse was a low not seen since March 2009. In Wednesday’s trading, WTI fell more than 3 percent and traded close to the $40/bbl level after the Energy Information Agency (EIA) released its Weekly Petroleum Status report showing an unexpected build in crude inventories of 1.2 million barrels (versus expectations of a 300,000 barrel draw), representing the tenth consecutive week of a stock increase. WTI breached the $40/bbl threshold later in the day, an important psychological level that could possibly open up doors to prices tumbling further in the coming weeks. The report also showed that oil production in the United States rose week-over-week by 37,000 barrels per day (bpd) to 9.2 million bpd – further evidence that the greatly anticipated rollover in U.S. output (from a high of 9.6 million bpd in April 2015) is not playing out despite drastic cuts in rig count and operators' spending budgets. Many market observers view a significant falloff in U.S. oil output as a potential indicator that the global oil supply/demand situation is moving toward equilibrium. Oil markets rose briefly Wednesday morning on reports that an Iranian oil minister had been quoted saying that there was “OPEC agreement” around an output cut. The market soon read-through the headlines after it was apparent Saudi Arabia was not a party to that agreement. Some traders were expecting to see from the EIA report that there was some decrease in U.S. crude inventories due to destocking activity that typically takes place at the end of the year among refiners and other holders of crude in order to benefit from a lower tax base (if using a LIFO accounting method, or “last-in-first-out”, companies can value inventories at January oil prices). But, with prices significantly lower than in January 2015, plus other factors at play, the incentive to drawdown inventories might not be as strong this year and instead, inventories showed a surprise increase.

Oil-Rig Count Slides for Third Consecutive Week - WSJ: The U.S. oil-rig count fell by 10 in the most recent week, according to Baker Hughes Inc., BHI 0.00 % marking the third consecutive week of declines. The number of U.S. oil-drilling rigs, which is viewed as a proxy for activity in the oil industry, has fallen sharply since oil prices started falling last year. At the count of 545, there are 66% fewer rigs from a peak of 1,609 in October 2014. A modest increase was reported three weeks ago, snapping a 10-weak decline, though that improvement appears to have been short-lived. According to Baker Hughes, the number of gas rigs rose by three to 192. The U.S. offshore-rig count was 25 in the latest week, down 5 from last week and 33 from a year earlier. For all rigs, including natural gas, the week’s total declined by 7 to 737. Oil prices recently were down 2.3% to $40.12 a barrel.

Oil Unmoved As US Rig Count Tumbles To May 2010 Lows -- For the 13th week of the last 14, US Oil rig counts declined. Down 10 to 545 rigs, this is the lowest since May 2010 as the temporary respite in the early Fall has given way to reality and rig counts track the lagged crude price lower...Charts: Bloomberg

US oil ends 2.7% lower on OPEC decision, rig count: Oil prices settled lower on Friday after OPEC announced it had agreed to roll over its policy of maintaining crude production in order to retain market share. Also on Friday, oilfield services firm Baker Hughes reported its weekly count of U.S. oil rigs fell by 10 to a total of 545, compared with 1,030 a year ago. This is the third consecutive week of declines. Internationally traded Brent was down 80 cents, or 1.8 percent, at $43.05 at 2:33 p.m. EDT, having fallen earlier this week to a low of $42.43, within cents of August's 6-½ year trough. U.S. crude settled 2.7 percent lower at $39.97 a barrel. OPEC had been widely expected to stick with its year-old policy, despite pressure from poorer members of the cartel for a cut in output to prop up the price of oil. During OPEC's press conference, OPEC President Emmanuel Ibe Kachikwu said the producer group was taking a "wait and watch" approach. The cartel will meet again in June 2, 2016 to reassess policy. He said OPEC members would keep current actual production levels steady. The target heading into the meeting was 30 million barrels per day. OPEC sources had earlier told Reuters it had agreed to raise its output ceiling to 31.5 million bpd at its meeting in Vienna, in what appeared to be an effective acknowledgement of existing production. But the official statement did not mention a target production level.

Oil price predictions for 2016 lower still: poll - Depressed oil prices are likely to linger longer as analysts dropped their predictions further for next year, according to a Reuters poll, assuming OPEC will not cut output when it meets on Friday. The average price forecast for benchmark North Sea Brent crude futures for 2016 at $57.95 a barrel is 57 cents below last month’s poll, the survey of 31 analysts showed. Analysts surveyed by Reuters have become increasingly bearish as the year has worn on. Six months ago, the monthly poll showed they expected Brent to average $70.90 next year and they have cut their estimates every month since then. OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy’s chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20. Standard & Poor’s rating agency forecasts Saudi Arabia’s budget deficit will rocket to 16 percent of GDP in 2015 from 1.5 percent in 2014. But analysts said a cut from OPEC would be highly unlikely, given its pressure on non-OPEC producers to curtail output. “We are seeing capex reductions with oil companies in 2015 and 2016 and, secondly, the lower oil price environment has arrested the growth of U.S. shale supply,” . “There is no reason for Saudi Arabia to change its strategy because it’s working and needs to continue this a little while longer in order to entrench the gains it has achieved.”

Yergin: Why oil prices cannot stay this low: The next two quarters will be tough on crude prices, but 2016 will be a year of transition for oil markets, IHS Vice Chairman Dan Yergin said Friday. Yergin told CNBC's "Squawk Box" he expects oil markets to begin to balance next year or in 2017. "The oil market "can't stay low like this because you're not going to have the investment you need," he said." "By 2020, the world oil market is going to need another 7 million barrels a day of production." "Right now, the whole mantra is slow down, postpone, cancel projects," he added. Multinational energy companies and U.S. shale oil producers have slashed capital spending in order to protect their balance sheets as their revenues plummet and cash flow dries up. Crude prices began to sink from historic highs last fall, and the downturn accelerated after OPEC announced it would not cut supply to balance oil markets. Despite expectations that high-priced American crude production would collapse at $70 a barrel, U.S. producers can perform well at $55 to $60 per barrel. However, current prices in the $40 to $50 range are creating "great pain," he said.

Saudi Oil Imports Into The US Plummet -- Most recent EIA data, in thousands of bopd, how much Saudi Arabian oil is imported into the US. The most recent data is from September, 2015. It's been this low before, but not often: Total imports haven't changed a whole lot. It looks like Kuwait, Iraq, and west Africa are making up the difference, at least for this most recent reporting period. Remember, Saudi Arabia has a huge refinery along the US Gulf coast.  This was totally unexpected. US gasoline demand has fallen below what it was one year ago:

Understanding the new global oil economy  --Why have oil prices fallen? Is this a temporary phenomenon or does it reflect a structural shift in global oil markets? If it is structural, it will have significant implications for the world economy, geopolitics and our ability to manage climate change. With US consumer prices as deflator, real prices fell by more than half between June 2014 and October 2015. In the latter month, real oil prices were 17 per cent lower than their average since 1970, though they were well above levels in the early 1970s and between 1986 and the early 2000s. (See charts.) A speech by Spencer Dale, chief economist of BP (and former chief economist of the Bank of England) sheds light on what is driving oil prices. He argues that people tend to believe that oil is an exhaustible resource whose price is likely to rise over time, that demand and supply curves for oil are steep (technically, “inelastic”), that oil flows predominantly to western countries and that Opec is willing to stabilise the market. Much of this conventional wisdom about oil is, he argues, false. A part of what is shaking these assumptions is the US shale revolution. From virtually nothing in 2010, US shale oil production has risen to around 4.5m barrels a day. Most shale oil is, suggests Mr Dale, profitable at between $50 and $60 a barrel. Moreover, the productivity of shale oil production (measured as initial production per rig) rose at over 30 per cent a year between 2007 and 2014. Above all, the rapid growth in shale oil production was the decisive factor in the collapse in the price of crude last year: US oil production on its own increased by almost twice the expansion in demand. It is simply the supply, stupid. What might this imply? One implication is that the short-term elasticity of supply of oil is higher than it used to be. A relatively high proportion of the costs of shale oil production is variable because the investment is quick and yields a quick return. As a result, supply is more responsive to price than it is for conventional oil, which has high fixed costs and relatively low variable costs. This relatively high elasticity of supply means the market should stabilise prices more effectively than in the past. But shale oil production is also more dependent on the availability of credit than is conventional oil. This adds a direct financial channel to oil supply.

Tehran Presents New Model for Oil-Development Contracts - WSJ --Iran on Saturday presented a new model for oil contracts it could offer to foreign oil firms as it seeks to attract Western investors ahead of an end to sanctions.  Though the terms of the contracts’ framework had been previously released, the official release coincided with the first international summit specifically focused on the new deals.  Iran announced it would revise its oil contracts two years ago following the election of moderate President Hassan Rouhani and the clinching of an interim nuclear agreement with world powers. Bijan Zanganeh, Iran’s oil minister, told investors he is looking for opportunities for $30 billion in spending in 52 fields soon to be on offer. With the investment, Iran plans to double its production to 5.7 million barrels a day by the end of the decade, compared with 2.7 million barrels a day today.  Under Iran’s previous oil contract model for foreign oil firms, called buybacks in the industry, investors were required to keep the costs of oil projects within an agreed level; most investors lose money on the deals if they find more oil than expected. The proposed new deals will allow more flexibility in recovering costs—including the possibility of choosing repayment in oil or cash—Iranian oil officials said in the presentations. Investors will also be allowed to remain involved in projects for 15 to 20 years—in contrast to previous deals that only entailed developing fields for 5 years or until they reached production.

Iran offers 50 oil projects to foreign investors: media – Iran offered on Saturday about 50 oil and gas projects to be developed by foreign investors with local partners under a new scheme it hopes will initially generate $25 billion in investments, state media reported. Iran reached a deal with world powers in July, under which sanctions will be lifted in return for it scaling down its nuclear program. It has outlined plans to rebuild its main industries and trade relationships following the agreement, targeting oil and gas projects worth $185 billion by 2020. Some 135 energy companies attended a conference in Tehran to hear the terms of a new energy contract – which it calls its integrated petroleum contract (IPC). “The estimate is that if we can draw about $25 billion (in foreign investments) in a first phase, that would be a very good figure,” Oil Minister Bijan Zanganeh told reporters in remarks carried by state television. Iran needs Western oil companies to help revive its aging oilfields and develop new oil and gas projects and the new oil contracts are part of its drive to attract Western investors. “The current (crude oil) prices and even less will not create a problem for the projects’ reimbursement or profits because of low finished cost in our industry,” Shana quoted Zanganeh as saying, adding that Iran’s production cost was $10 per barrel.

OPEC Rivals Become Unwitting Allies in Push for Oil-Market Share  |  Rigzone: -- Almost by accident, OPEC adversaries Saudi Arabia and Iran are about to work as a team. When the Saudi kingdom decided last year that OPEC should keep pumping to counter a surge in U.S. shale oil, Iran spearheaded resistance to the idea, saying output cuts were needed to buoy prices. Still a critic, Iran is nonetheless poised to amplify the strategy as it ramps up crude exports with the end of sanctions. “Iran’s return is effectively the Saudi policy on steroids,” said Mike Wittner, head of oil-market research at Societe Generale SA in New York. “The policy is that low-cost Middle East crude should be gaining market share, and that it’s shale and other expensive non-OPEC supply that should be cut. So to use the Saudis’ own logic, as far as Iranian production goes -- bring it on.” By rebuffing calls to cut supply, the Organization of Petroleum Exporting Countries has sought to protect its market share by battering other producers with lower prices. That’s paying off, according to the International Energy Agency, as some U.S. shale drillers scale back and global oil majors slash investment, leaving OPEC to fill the gap. The 12-member group is likely to keep its output policy unchanged when it meets in Vienna on Dec. 4, a Bloomberg survey shows.

More Russian oil drilling shows its resolve to OPEC -– Russian oil firms are drilling more, showing the world’s top crude producer is ready for a longer fight for market share with OPEC, as its industry can carry on even if oil prices reach $35 per barrel. As OPEC prepares to meet on Friday in Vienna, Russia is sending a low key delegation for talks which are very unlikely to result in any output deal. OPEC oil ministers have repeatedly said they would only cut production in tandem with non-OPEC. According to Eurasia Drilling Company (EDC), the largest provider of land drilling services in Russia and offshore in the Caspian Sea, Russian drilling measured in meters rose 10 percent in the first six months of this year from a year ago, despite a decline in oil prices to less than $50 per barrel from their peaks of $115 in June 2014. “Despite the recent fall in oil prices, Russian production continued to accelerate as oil producers remained profitable even in the lower oil price environment, helped by the effect of a weak rouble on costs and lower taxes, which decline in a lower oil price environment,” Bank of America Merrill Lynch said in recent research. Moscow has surprised the Organization of the Petroleum Exporting Countries by ramping up output to new record highs this year despite low oil prices, which OPEC had hoped would depress production from higher cost producers. Moscow responded by steeply devaluing the rouble, giving an edge to its exporters. In many OPEC Gulf producers currencies are firmly pegged to the dollar.

Saudi Interbank Rates Soar, Deposits Flee As Cash Crunch Intensifies  -- If you frequent these pages, you’re probably well aware that the Saudis are in trouble.  Exactly a year ago, Riyadh decided to embark on an epic quest to send crude prices plunging on the way to, i) bankrupting the US shale complex and ii) achieving “ancillary diplomatic benefits,” like tightening the screws on Moscow’s energy-dependent economy in hopes of forcing Putin to give up Assad.  Long story short, the kingdom’s plan didn’t work.  Thanks to ZIRP, legions of yield-starved investors in the US ensured that capital markets remained open to otherwise insolvent drillers, allowing US producers to stay in business longer than the Saudis anticipated. Meanwhile, not only did Putin not give up Assad, he actually sent the Russian air force to Latakia and to add insult to injury, Moscow’s warplanes are now bombing Saudi-financed Sunni militias in Syria.  Meanwhile, slumping crude prices wreaked havoc on the kingdom’s finances. As we’ve documented extensively, the Saudis are now staring down a deficit on both the fiscal and current accounts with the former amounting to some 20% of GDP and the latter representing the first negative balance in at least 15 years.

Saudi Borrowing Rate Soars in November as Bank Deposits Drop - Saudi Arabian banks are feeling the squeeze from falling oil prices. The rate at which banks in the biggest Arab economy lend overnight to each other jumped the most in seven years in November, the fifth straight month of increases, following a slump in deposits the previous month that forced lenders to seek more funds from each other. "The drop in deposits in October, in absolute amount, is probably the biggest since the 1990s," Murad Ansari, a bank analyst at EFG-Hermes Holding SAE, said by phone from Riyadh on Monday. "There are payment delays from the government to contractors, which is one of the reasons for the decline in private sector deposits, and public sector deposits are shrinking as the government is running a deficit." The jump in bank borrowing costs provides further evidence of the impact oil’s 37 percent price drop in the past 12 months is having on a nation that gets about 90 percent of government revenue from energy. Traders are already boosting bets the Saudi riyal may be devalued. Standard & Poor’s last month lowered the country’s credit rating. Now liquidity in the banking system is being squeezed, with demand for deposits dropping 4.7 percent in October as businesses, individuals and government entities withdraw cash.

Saudi wake-up call --  Inside the sprawling royal court in Riyadh, a team of technocrats is putting the final touches to plans for a drastic overhaul of the Saudi Arabian economy. Backed by an army of highly paid western consultants, the royal aides have identified billions of dollars of waste and government largesse that the desert kingdom can no longer afford.Ten months after acceding to the throne, King Salman bin Abdulaziz, 79, faces the daunting challenge of managing a new era in Saudi Arabia. The world’s largest oil producer and longstanding US ally has adopted a policy that protects its market share rather than the price, which has more than halved since June 2014. But while the effect has been cushioned by $640bn in foreign-exchange reserves, the age of $100-a-barrel oil has receded and budget surpluses have been replaced by yawning deficits.“The collapse in oil prices is a wake-up call,” says an official in Riyadh. “We’ve had a long history of bad practices because of our overreliance on oil.”The belt-tightening comes at one of the most testing times in the kingdom’s history, with the Sunni Saudi monarchy locked in a regional power struggle with Shia Iran and sectarian tensions flaring across the region. Determined to reassert its leadership role in the Sunni Muslim world and confront Tehran, Riyadh in March launched a military campaign in neighbouring Yemen to push back Iran-backed Houthi rebels.Amid the turmoil of the Arab uprisings that convulsed the region in 2011, Saudi Arabia has positioned itself as one of the last bastions of stability compared with Iraq, Syria and Yemen, the failing states from which the Sunni jihadis of Isis have projected terrorist power across the Middle East and beyond. A senior western diplomat in Riyadh says: “Whatever you think about the policies of the government, the stability of Saudi Arabia really matters.”

Sovereign wealth funds in the new era of oil - As a result of the oil price plunge, the major oil-exporting countries are facing budget deficits for the first time in years. The growth in the assets of their sovereign wealth funds, which were rising at a rapid rate until recently, is now slowing – and some have started drawing on their buffers.  In the short run, this phenomenon is not cause for alarm. Most oil exporters have enough buffers to withstand a temporary drop in oil prices. But what will happen if low oil prices persist, and how will policymakers react? We explore here the fallout from low oil prices on sovereign wealth funds in oil-exporting countries and find that that they have important domestic implications. The impact on global asset prices will depend on the extent of unwinding of the sovereign wealth funds of oil exporters that will not be compensated by portfolio adjustment in other parts of the world that will in turn depend on their economic prospects.

OilPrice Intelligence Report: Energy Markets On Edge As OPEC Meeting Nears- It is a busy week for the world of energy. The Paris climate change talks could mark a more determined international effort to transition away from oil, gas, and coal. While nothing monumental is expected from the negotiations, countries will continue to pursue policies at the national level to reduce emissions. More important for energy markets in the near term is a summit taking place in Vienna at the end of the week, where OPEC convenes for its latest meeting. The summit is expected to be more contentious than the June meeting as the cartel’s strategy of pursuing market share is bearing little fruit. OPEC may be holding on to market share, but U.S. oil production is contracting much more slowly than many expected. That is leaving the more vulnerable members of OPEC reeling. Countries like Venezuela, facing an economic crisis, are pressing fellow OPEC members to overhaul its strategy and cut output. Saudi Arabia, by all accounts, is expected to stay the course. In fact, OPEC may announce a “technical” increase in its oil production quota, but that will simply reflect the inclusion of Indonesia’s output.  Speaking of OPEC’s strategy, Saudi Arabia and Russia are increasingly fighting over the European market. Selling oil and refined products to Central and Eastern Europe has long been the domain of Russia. But Saudi Arabia is aggressively seeking to capture customers by discounting its oil, and it is encroaching on Russia’s turf in Poland and Sweden, places that Saudi Arabia has not been in years. The strategy is not only cutting into Russia’s market share, but it is also forcing Russia to discount its own oil in order to keep up. That has the Urals benchmark trading at a wider discount to Brent, further sapping revenues to Moscow. Meanwhile, Iran is planning to return 500,000 to 1 million barrels per day in lost production once sanctions are removed, which could heat up competition in Europe. Iran sold a significant portion of its exports to Europe before the 2012 sanctions were slapped on. No doubt it wants to regain its lost share.

Saudis Prepared To Listen At OPEC Meeting - As energy analysts closely watch for any clues emerging from Vienna, where OPEC is set to meet on December 4, global oil markets remain stubbornly oversupplied. Last year, OPEC surprised the world by leaving its output quota untouched amid rapidly growing global supplies, a decision that sent oil prices spiraling downwards.As the group’s strategy became clear, there were fewer surprises in the follow up meeting in June 2015. This time around, however, while an about-face is not expected, given Saudi Arabia’s determination to see its course of action through, there will at least be a lot more debate and protest from fellow OPEC members. Not all of OPEC’s member countries are as well-endowed as Saudi Arabia, and a few are facing economical and financial pressure with varying degrees of hardship.Venezuela and Libya stand out in terms of facing full-blown crises, but Iraq, Iran, Ecuador, and Nigeria are also suffering from the fiscal vice of low oil prices. Of course, no production cut can work unless all members agree to a plan and implement it cohesively. Aside from a select few Gulf States, most of the OPEC membership is expected to heavily lobby Saudi officials to cut production. But in reality, Saudi Arabia will be the one to determine OPEC’s next step. As the only country with significant spare capacity, not to mention cash reserves and the political wherewithal to actually impose production cuts, Saudi Arabia will decide whether or not OPEC moves to cut its output quota. Despite al-Naimi’s assurances that the Saudi delegation won’t dictate policy to OPEC, his voice is the only one that counts.

Venezuela, Ecuador to Propose Output Cuts: OPEC Reality Check  |  Rigzone: -- As the last of the OPEC ministers make their way to Vienna, Venezuela and Ecuador said they would seek curbs on production at Friday’s meeting in order to boost prices. Venezuela will propose a 5 percent production cut, state newspaper Correo Del Orinoco reported, citing President Nicolas Maduro. Ecuador will suggest ways to improve oil prices through output controls, the South American nation’s oil ministry said on its Twitter account. While the majority of OPEC members would agree to a reduction in output, Saudi Arabia and other Persian Gulf Arab countries are opposed, Shana reported Wednesday, citing Mehdi Asali, director general of OPEC and energy forums at the Iranian Ministry of Petroleum. The group needs to reach a consensus among all members before it can change its output target. OPEC pumped 32.1 million barrels a day in November, exceeding its 30 million-barrel quota for an 18th month, according to a Bloomberg survey of companies and analysts. Iran has said it plans to pump an additional 500,000 barrels a day once international sanctions over its nuclear program are lifted. Ministers are expected to decide against cutting production on Dec. 4 even as crude prices languish near a three-month low. That will leave most OPEC members unable to balance their budgets, with only Qatar able to do so if Brent crude averages $57.50 a barrel next year, as forecast.

OPEC likely won’t move to boost oil price amid infighting — Cheap oil that could get even cheaper: That’s the challenge OPEC ministers face as they try to cut their losses at a time when supply is outstripping demand. But their hands appear tied. Ahead of their meeting Friday, there is recognition that the 12-member Organization of the Petroleum Exporting Countries will be unable to nudge up prices, at least in the short term. Non-OPEC countries like Russia and the U.S. continue to challenge OPEC for customers. And within the cartel, Iran and Iraq want to start pumping more, even though regional rival Saudi Arabia appears unwilling to play along by reducing its own output. The Saudis and other OPEC states are looking to maintain their market share at a time when low prices are already cutting into their revenues. The upshot is the meeting will likely decide to maintain the official OPEC level of 30 million barrels a day, urge members to cut back on overproduction and hope for better times next year. That means oil could get even cheaper. Iran’s comeback is tied to the looming end of sanctions imposed over its nuclear program. Embargoes on Iranian oil are to be lifted over the next few months once a nuclear deal it signed with six world powers goes into force. Senior oil official Amir Hossein Zamaninia said last week Iran hopes to bring an extra 500,000 barrels on the market by early next year. He said he hopes the extra output will be accommodated within OPEC’s formal ceiling of 30 million barrels a day.

Saudis throw down oil production cut challenge -- Saudi Arabia has thrown down a challenge to other big oil producers ahead of this week’s Opec meeting, saying it would back output cuts as long as they were supported by countries both inside and outside the cartel. The kingdom, Opec’s de facto leader, has set a very high bar for a deal that is unlikely to be met by the time of Friday’s meeting in Vienna, but it leaves open the possibility of an agreement in 2016. Its move indicates a further softening in tone from the world’s largest oil exporter, which led the cartel’s landmark shift in policy a year ago, arguing that keeping the taps open would put pressure on high-cost rival producers. Opec’s strategy shift upended the oil industry and triggered the biggest price slump in at least a decade. But in recent weeks Riyadh has sought to counter the mantra of “lower for longer” prices that has taken hold in the industry. “The only thing that we are sure of is that Saudi Arabia has changed its tone versus a year ago,” said Olivier Jakob of Petromatrix, an oil consultancy. “That does not automatically translate into a cut at this meeting, but on our side we cannot write that nothing has changed in the Saudi approach versus a year ago.” A senior Opec delegate said there was no question of Saudi Arabia lowering its production without backing from Iraq and before Iran’s full return to international markets. Co-operation from producers outside the cartel, such as Russia, would also be needed. Moscow has repeatedly rejected calls to join output cuts and has raised production to record levels. “In order for there to be a cut in production, non-Opec must participate, Iraq has to participate and the Iran output picture has to be clear,” the delegate said.

OPEC Won’t Cut, Markets Remain Oversupplied -- Today is OPEC day, and as expected, the meeting in Vienna has roiled oil markets. There was little expectation of an agreement on production cuts, despite the majority of OPEC members pleading with Saudi Arabia to reverse course and cut back the cartel’s output target level, which stood at 30 million barrels per day (mb/d) heading into the meeting.  There were rumors that Saudi Arabia floated the idea of agreeing to a production cut of 1 million barrels per day, but only if several major non-OPEC oil producers also agreed to restrict output. The Saudi proposal reportedly included countries like Mexico and Russia, a longshot bid to spread the burden across oil producers worldwide. It would obviously also put restrictions on output from several OPEC members that are in serious financial trouble. More news ahead of the meeting: an internal OPEC report concluded that even if the group decided to cut its production target, it probably wouldn’t be enough to significantly boost prices, due to the vast levels of oil currently in storage. The OPEC report was not made public, but was obtained by The Wall Street Journal. It illustrates the anxiety within OPEC, and its likely inability to increase prices. Only a massive cut in output levels – something that is off the table for OPEC member countries – could increase prices substantially in the short-term. Thus, there was little room for agreement on changing course. At the time of this publishing, it appears that OPEC emerged from its meeting with no decision on a change in the production target. Confusingly, media reports surfaced that said OPEC agreed to lifts its output target to 31.5 mb/d, a 1.5 mb/d increase over the current target.

OPEC sticks to output policies as global glut grows | Reuters: OPEC maintained its policy of pumping near-record volumes of oil at a meeting on Friday, according to sources at the group, taking no steps to reduce one of the worst crude gluts in history which has driven down prices. The group, which produces a third of global oil, decided to increase its collective output ceiling to 31.5 million barrels per day (bpd) from the previous 30 million, the two OPEC sources said, in a move that effectively acknowledged that members are pumping well in excess of the current ceiling. Benchmark Brent oil futures LCOc1 - which are near a six-year low - lost nearly $2 on the news, falling 1.5 percent to trade slightly above $43 a barrel by 1455 GMT. It was not immediately clear if rejoining member Indonesia, which produces 0.9 million bpd, was included in the new ceiling. One source said Indonesia was not included. Either way, the decision failed to address growing global supply. The poorer members of the Organization of the Petroleum Exporting Countries (OPEC) have been piling pressure on its wealthier members, led by Saudi Arabia, to curb supply. But Riyadh and its Gulf allies decided on Friday to stick to their strategy of defending market share, hoping that lower prices would ultimately drive higher cost producers, such as U.S. shale oil firms, out of the market.

OPEC Said to Lift Oil Target in Line With Current Output  -  Rigzone -- OPEC agreed to set a new oil-output ceiling of 31.5 million barrels a day, a level that’s in line with the group’s most recent production estimate. Crude fell as much as 3.6 percent in New York. The increase is from a previous output target of 30 million barrels and does not include production from Indonesia, which joined the producer group after a break of almost seven years, according to a delegate with knowledge of the matter, who asked not to be identified because the decision hasn’t been made public. OPEC pumped about 31.4 million barrels a day of crude in October, according to estimates in its monthly market report.  OPEC’s policy is squeezing incomes for its members, whose combined annual revenue could fall to $550 billion from an average of more than $1 trillion in the past five years, the International Energy Agency said Nov. 10.“The OPEC member countries have lost so much money,” Iranian Oil Minister Bijan Namdar Zanganeh said Thursday in the Austrian capital.Venezuela, whose foreign currency reserves are at the lowest level in 12 years, led calls for a reduction in output, supported by Ecuador. Iran is poised to boost output after sanctions over its nuclear program are lifted and it won’t seek permission from OPEC to do so, Zanganeh said last month. OPEC requires consensus among members to alter its output ceiling.  Global oil stockpiles have risen to record levels as Saudi Arabia, Russia and Iraq boosted supply, the IEA said on Nov. 13. The market is oversupplied by as much as 2 million barrels a day, Zanganeh said this week, equivalent to about 2 percent of global output.

Crude Tanks As OPEC Refrains From Cutting Production - Given it is ‘National Dice Day’, it is apt that OPEC has left it to chance how the market will react to an adjustment to its production quota. The cartel appears to be setting an output ceiling of 31.5 million barrels per day, as opposed to the prior arbitrary quota of 30 million. This does not mean the cartel is raising production; it is instead putting its production target more in line with reality. Nonetheless, the market wonders whether this includes new member Indonesia, or whether it is to account for impending Iranian barrels returning to market. Either way, the crude complex is getting absolutely trounced. A couple of hilarious tidbits have come from the two key countries at this meeting: Saudi and Iran. The first one is from the inimitable Saudi oil minister, Ali al-Naimi, who said ‘there is absolutely no disagreement anywhere (in OPEC)’. Which is rather hard to believe. The second is from Iran, who has said it can join future OPEC output cut discussions…once production is back up to 4 million barrels per day.

Oil near $40 a barrel as OPEC rolls over policy: Oil prices fell on Friday after sources said OPEC had agreed to roll over its policy of maintaining crude production in order to retain market share and raise its output ceiling. Internationally traded Brent was down 91 cents, or 2 percent, at $42.93 at 10:13 a.m., having fallen earlier this week to a low of $42.43, within cents of August's 6-½ year trough. U.S. crude was trading down $1.12, or 2.7 percent, at $39.96 per barrel. OPEC had been widely expected to stick with its year-old policy, despite pressure from poorer members of the cartel for a cut in output to prop up the price of oil. OPEC sources said it had agreed to raise its output ceiling to 31.5 million bpd at its meeting in Vienna, in what appeared to be an effective acknowledgement of existing production. OPEC supply rose in November to 31.77 million barrels per day (bpd) from 31.64 million in October, according to a Reuters survey, based on shipping data and information from sources at oil companies, OPEC and consultants. "Overall, it looks like business as usual. The production cut needs to come from outside OPEC, so attention turning back to U.S. producers,"

Oil Holds Losses as OPEC Opts to Maintain Production Levels - WSJ: —Oil prices held their losses Friday after the Organization of the Petroleum Exporting Countries said the group would maintain production at current levels and reassess the situation later. Light, sweet crude for January delivery recently fell 89 cents, or 2.2%, to $40.19 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, dropped 51 cents, or 1.2%, to $43.33 a barrel on ICE Futures Europe. The OPEC meeting was marked by deep fissures within the group, as many members pushed hard for a cut in production that might push oil prices up from their recent $40-$50 a barrel range, less than half what they were 18 months ago. In addition, oil prices came under pressure as the dollar rose against other major currencies on stronger-than-expected U.S. employment data. A stronger U.S. currency weighs on dollar-priced commodities, including oil, by making them more expensive for buyers using foreign currencies. The dollar has posed a headwind for oil prices, with the WSJ Dollar Index up about 8% on the year. “The generally strong dollar trend [is] just one additional bearish item that the oil complex will need to contend with” this month.

Kemp: OPEC Risks Pyrrhic Victory With Oil Policy  |  Rigzone: As ministers from the Organization of the Petroleum Exporting Countries meet in Vienna, some may wonder if the strategy of maintaining output to defend market share risks securing a Pyrrhic victory. OPEC has put shale producers on the defensive and forced the cancellation of many ambitious oil projects with its strategy of going for volume over price. But members are gradually running out of money and the shale industry is waiting for any upturn in prices to start ramping up production again. Meanwhile Iran is set to boost its oil exports once sanctions lifted, which will make the supply glut worse, and the risks of recession in developed and developing countries alike are increasing. Some OPEC members, led by Saudi Arabia, remain hopeful that they will secure an eventual victory. The question is whether all the short-term pain will be worth it in the longer run. In November 2014, OPEC ministers decided to maintain their production unchanged even though oil prices had already fallen $40 per barrel, 37 percent, over the previous five months.In choosing this course, which was led by Saudi Arabia but endorsed by other members, ministers expressed concern about the increase in non-OPEC supply and the continued rise in both developed and developing country stocks. Twelve months later, oil consumption is growing at some of the fastest rates in over a decade, U.S. shale production has peaked for the time being and non-OPEC oil output is forecast to decline in 2016.

ISIS: Oil as a Strategic Weapon –- According to FT, ISIS oil strategy has been long in the making since the group emerged in Syria in 2013. The group saw oil as a funding source for their vision of an Islamic state, and identified it as fundamental to finance their ambition to create a caliphate. ISIS controls most of Syria's oil fields where it created a foothold in 2013. Crude is the militant group's biggest single source of revenue.  ISIS has derived its financial strength from being the monopoly oil producer in a huge captive market in Syria and Iraq. Despite a US-led international coalition to fight ISIS, FT describes a "minutely managed" sprawling ISIS operation akin to a national oil company in just two years with an estimated crude production of 34,000-40,000 barrels per day (bpd).  The group sells most of its crude directly to independent traders at the wellhead for $20-$45 a barrel earning the group an average of $1.5 million a day. Without being able to export, ISIS brought hundreds of trucks and started to extract the oil and transport it. According to an FT interview of a local sheikh, an average of 150 trucks is filled daily with about $10,000 worth of oil per truck. Most traders can expect to make a profit of at least $10 per barrel. The arbitrage had the potential to go a lot more than $10 a barrel when oil prices were high. Russia has accused Turkey of buying ISIS oil (allegedly the son of Turkey's President is involved, and also allegedly the U.S. is aware of it), reselling it to Japan and Israel for huge profits. Smugglers have been using boats, pumps, carrying on foot, by donkey or horse. Some see the oil production from ISIS as a contributing factor to the global oil glut pushing down oil prices. However, the biggest threat to ISIS oil production has been the depletion of Syria's aging oilfields despite the group's efforts to recruit skilled oil workers. ISIS does not have the technology of major foreign oil companies to counter the production decline.

Three quarters of Israel’s oil imported from Iraqi Kurdistan: Israel is importing over three-quarters of its oil from Iraqi Kurdistan, according to the Financial Times. Between May and August 11, the newspaper reports, Israel imported 19 million barrels of Kurdish oil, equivalent to 77 percent of average demand in Israel, worth almost $1 billion. This information came from shipping data, trading sources and satellite tanker tracking. The Kurdistan Regional Government (KRG) did not admit selling oil to Israel. However, a senior government adviser in Erbil said: "We do not care where the oil goes once we have delivered it to the traders... Our priority is getting the cash to fund our Peshmerga forces against Daesh [the Islamic State group] and to pay civil servant salaries." Nineteen million barrels of oil would represent about one third of the KRG’s oil exports during this period, which go through the Turkish Mediterranean port of Ceyhan. Other destinations for the KRG’s oil include Italy and Cyprus. The KRG reached a budget deal with Baghdad last year under which the KRG would export 550.000 barrels of crude oil through official state channels in return for a 17 percent share of central government revenues. However the deal has effectively collapsed as falling oil revenues have meant Baghdad has only made limited payments to the KRG.

Raqqa's Rockefellers: How Islamic State oil flows to Israel: Oil produced from fields under the control of the Islamic State group is at the heart of a new investigation by al-Araby al-Jadeed. The black gold is extracted, transported and sold, providing the armed group with a vital financial lifeline. But who buys it? Who finances the murderous brutality that has taken over swathes of Iraq and Syria? How does it get from the ground to the petrol tank, and who profits along the way? The Islamic State group uses millions of dollars in oil revenues to expand and manage vast areas under its control, home to around five million civilians. IS sells Iraqi and Syrian oil for a very low price to Kurdish and Turkish smuggling networks and mafias, who label it and sell it on as barrels from the Kurdistan Regional Government. It is then most frequently transported from Turkey to Israel, via knowing or unknowing middlemen, according to al-Araby's investigation. The Islamic State group has told al-Araby that it did not intentionally sell oil to Israel, blaming agents along the route to international markets.

‘Commercial scale’ oil smuggling into Turkey becomes priority target of anti-ISIS strikes -- Islamic State’s daring and impudent oil smuggling into Turkey should become a high-priority target in order to cripple the terrorist group, President Putin said, backed by French President Francois Hollande. Both agree that the source of terrorist financing must be hit first and foremost.  Commercial-scale oil smuggling from Islamic State controlled territory into Turkey must be stopped, Putin said after meeting Hollande in Moscow. “Vehicles, carrying oil, lined up in a chain going beyond the horizon,” said Putin, reminding the press that the scale of the issue was discussed at the G20 summit in Antalya earlier this month, where the Russian leader demonstrated reconnaissance footage taken by Russian pilots. The views resemble a “living oil pipe” stretched from ISIS and rebel controlled areas of Syria into Turkey, the Russian President stressed. “Day and night they are going to Turkey. Trucks always go there loaded, and back from there – empty.” “We are talking about a commercial-scale supply of oil from the occupied Syrian territories seized by terrorists. It is from these areas [that oil comes from], and not with any others. And we can see it from the air, where these vehicles are going,” Putin said.

ISIS' Oil and the Turkish Connection --With Turkey sitting on the doorstep of the Syrian civil war and their recent involvement with the downing of a Russian fighter, it is important to have a better understanding of the commercial relationship between one of the key players in Syria and how it raises money to fund its operations. A paper by George Kiourktsoglou and Dr. Alec Coutroubis looks at suspicious trends in illicit oil trade through an examination of spikes in tanker charter rates from ports on the Mediterranean that could be used by ISIS to export their crude and compares it to ISIS operations over the period from the late spring of 2014 when ISIS began to take over oil fields in Syria.  By early 2015, ISIS controlled approximately 60 percent of Syria's oil assets and seven of Iraq's oil producing assets.  Before the conflict, Syria's production capability stood between 385,000 and 400,000 BOPD, however, according to the Brookings Institute, ISIS is only producing around 50,000 BOPD.  In addition, ISIS controls about 80,000 BOPD of oil producing assets located in Iraq which were producing about 20,000 BOPD last year.  Here is a map showing Syria's oil and natural gas infrastructure:  ISIS controls Syria's oil infrastructure that is located in the eastern part of the country, adjacent to the border region shared with Iraq.  These fields were originally assets owned by the Al-Furat Petroleum Company, an affiliate of Royal Dutch Shell.   The authors of the study note that ISIS has set up a network of middlemen in neighbouring countries that can be used to trade crude for much-needed cash.  The oil is lightly refined on site (if it is refined at all) and the oil is trucked to its export point in convoys of up to 30 trucks.  A large tanker truck carrying 30,000 litres of crude can make a profit of up to $4000 for one trip to port lasting a few days.   Here is a map from the study showing the string of smuggled crude oil trading hubs that have been set up by ISIS along European route E90:  The authors then looked at all potential oil loading terminals that fall within or close to the region that ISIS controls and looked at the charter rates for tankers from the period falling after July 2014.  This led the authors to focus on the port at Ceyhan located in Turkey.  For those of you who aren't aware, Ceyhan is located in southeastern Turkey on the far northeastern coast of the Mediterranean Sea as you can see on this screen capture from Google Earth:

Russia says it has proof Turkey involved in Islamic State oil trade -- Russia’s defence ministry said on Wednesday it had proof that Turkish President Tayyip Erdogan and his family were benefiting from the illegal smuggling of oil from Islamic State-held territory in Syria and Iraq.  Erdogan responded by saying no one had the right to “slander” Turkey by accusing it of buying oil from Islamic State, and that he would stand down if such allegations were proven to be true. But speaking during a visit to Qatar, he also said he did not want relations with Moscow to worsen further. At a briefing in Moscow, defence ministry officials displayed satellite images which they said showed columns of tanker trucks loading with oil at installations controlled by Islamic State in Syria and Iraq, and then crossing the border into neighbouring Turkey. The officials did not specify what direct evidence they had of the involvement of Erdogan and his family, an allegation that the Turkish president has vehemently denied. “Turkey is the main consumer of the oil stolen from its rightful owners, Syria and Iraq. According to information we’ve received, the senior political leadership of the country – President Erdogan and his family – are involved in this criminal business,” said Deputy Defence Minister Anatoly Antonov. “Maybe I’m being too blunt, but one can only entrust control over this thieving business to one’s closest associates.”  “In the West, no one has asked questions about the fact that the Turkish president’s son heads one of the biggest energy companies, or that his son-in-law has been appointed energy minister. What a marvellous family business!”

Putin Says Has More Proof ISIS Oil Routed Through Turkey, After Erdogan Slams Claim --“I’ve shown photos taken from space and from aircraft which clearly demonstrate the scale of the illegal trade in oil and petroleum products,” Vladimir Putin told reporters on the sidelines of the G-20 summit in Antalya. Putin was of course referencing Islamic State’s illicit and highly lucrative oil trade, the ins and outs of which we’ve documented extensively over the past two weeks:

• The Most Important Question About ISIS That Nobody Is Asking
• Meet The Man Who Funds ISIS: Bilal Erdogan, The Son Of Turkey's President
• How Turkey Exports ISIS Oil To The World: The Scientific Evidence
• ISIS Oil Trade Full Frontal: "Raqqa's Rockefellers", Bilal Erdogan, KRG Crude, And The Israel Connection

Turkey’s move to shoot down a Russian Su-24 warplane near the Syrian border afforded the Russian President all the motivation and PR cover he needed to expose Ankara’s alleged role in the trafficking of illegal crude from Iraq and Syria and in the aftermath of last Tuesday’s “incident,” Putin lambasted Erdogan. “Oil from Islamic State is being shipped to Turkey,” Putin said while in Jordan for a meeting with King Abdullah. In case that wasn’t clear enough, Putin added this: “Islamic State gets cash by selling oil to Turkey.”

Columbia University Researchers Confirm Turkey’s Links to ISIS - A team of Columbia University researchers from the United States, Europe, and Turkey confirmed last week that the Turkish government has provided to ISIS: military cooperation, weapons, logistical support, financial assistance, and medical services. This detailed investigation was headed by David L. Phillips, Director of the Program on Peace-building and Rights at Columbia University’s Institute for the Study of Human Rights. He had served as Senior Advisor and Foreign Affairs Expert for the U.S. Department of State. Here are brief excerpts from the extensive research documenting the direct links between Turkey and ISIS:

1. Turkey Supplied Military Equipment to ISIS

• An ISIS commander told The Washington Post on August 12, 2014: “Most of the fighters who joined us in the beginning of the war came via Turkey, and so did our equipment and supplies.”
• Kemal Kiliçdaroglu, head of the Republican People’s Party (CHP), disclosed on Oct. 14, 2014, documents from the Adana Office of the Prosecutor, revealing that Turkey supplied weapons to terrorist groups. He also produced transcripts of interviews with truck drivers who delivered the weapons to the terrorists.
• According to CHP Vice President Bulent Tezcan, Turkish agents drove three trucks loaded with rockets, arms, and ammunition to ISIS in Syria, on January 19, 2014.
• Cumhuriyet newspaper quoted Fuat Avni as stating that Germany and the United States had audio tapes confirming that Turkey provided financial and military aid to terrorist groups associated with Al Qaeda on Oct. 12, 2014.
• Documents made public on Sept. 27, 2014, revealed that Saudi Prince Bandar Bin Sultan financed the transportation of arms to ISIS through Turkey.

Facts Back Russia on Turkish Attack -- Although the Obama administration is not about to admit it, the data already available supports the Russian assertion that the Turkish shoot-down was, as Russian President Vladimir Putin asserted, an “ambush” that had been carefully prepared in advance. The central Turkish claim that its F-16 pilots had warned the two Russian aircraft 10 times during a period of five minutes actually is the primary clue that Turkey was not telling the truth about the shoot-down. The Russian Su-24 “Fencer” jet fighter, which is comparable to the U.S. F-111, is capable of a speed of 960 miles per hour at high altitude, but at low altitude its cruising speed is around 870 mph, or about 13 miles per minute. The navigator of the second plane confirmed after his rescue that the Su-24s were flying at cruising speed during the flight. Close analysis of both the Turkish and Russian images of the radar path of the Russian jets indicates that the earliest point at which either of the Russian planes was on a path that might have been interpreted as taking it into Turkish airspace was roughly 16 miles from the Turkish border – meaning that it was only a minute and 20 seconds away from the border.Furthermore according to both versions of the flight path, five minutes before the shoot-down the Russian planes would have been flying eastward – away from the Turkish border. In order to carry out the strike, in fact, the Turkish pilots would have had to be in the air already and prepared to strike as soon as they knew the Russian aircraft were airborne.

Donald Trump Dares To Say That Turkey ‘Looks Like They’re On The Side Of ISIS’-  Donald Trump just said something that he was not supposed to say, and it is something that Barack Obama will never admit. During an appearance on Sirius XM’s “Breitbart News Daily” on Tuesday morning, Trump stated that the Turkish government “looks like they’re on the side of ISIS more or less based on the oil”. This makes Trump the first presidential candidate to tell the truth about this to the American people. By now, just about everyone knows that ISIS is using Turkey as a home base, and I have previously written about how Turkey is “training ISIS militants, funneling weapons to them, buying their oil, and tending to their wounded in Turkish hospitals”. But a major U.S. politician, especially one running for the White House, could get into really hot water for saying these kinds of things about our NATO ally. You see, the truth is that the American people are not supposed to know that Turkey is actually on the same side as ISIS and has been facilitating the sale of hundreds of millions of dollars of oil that has been stolen by ISIS.  The following comes from Politico… Donald Trump aligned himself with Vladimir Putin on Tuesday, saying that Turkey appears to be on the side of Islamic State. “Turkey looks like they’re on the side of ISIS more or less based on the oil,” Trump said in an interview with Sirius XM’s “Breitbart News Daily” Tuesday morning, echoing comments from the Russian president on Monday.

General Wesley Clark: ISIS Serves Interests Of US Allies Turkey And Saudi Arabia "Let’s be very clear: ISIS is not just a terrorist organization; it is a Sunni terrorist organization. That means it blocks and targets Shi’a. And that means it’s serving the interests of Turkey and Saudi Arabia - even as it poses a threat to them." - Retired Gen. Wesley Clark Former NATO Supreme Allied Commander General and retired U.S. General Wesley Clark revealed in an interview with CNN that the Islamic State (Daesh, ISIS) remains geostrategically imperative to Sunni nations, Turkey and Saudi Arabia, as they clamor for strategic power over Shi’a nations, Syria, Iraq, and Iran. He explained that “neither Turkey nor Saudi Arabia want an Iran-Iraq-Syria-Lebanon ‘bridge’ that isolates Turkey, and cuts Saudi Arabia off.” When asked by the CNN host if Russian President Vladimir Putin’s suggestion that Turkey was “aiding ISIS” had any validity, he responded: “All along there’s always been the idea that Turkey was supporting ISIS in some way. We know they’ve funneled people going through Turkey to ISIS. Someone’s buying that oil that ISIS is selling; it’s going through somewhere - it looks to me like it’s probably going through Turkey - but the Turks haven’t acknowledged that.”

Chairman of the U.S. House Foreign Affairs Subcommittee on Europe, Eurasia, and Emerging Threats: "Either [Turkey] Shouldn’t Be in NATO or We Shouldn’t" -- Congressman Dana Rohrabacher – Chairman of the House Foreign Affairs Subcommittee on Europe, Eurasia, and Emerging Threats – wrote last week:Assad, like Iraq’s Saddam Hussein, is no threat to the United States or the Western world. If Assad is forced out of power he will eventually be replaced by an Islamic terrorist committed to raining down mayhem on Western countries. Today we witness the spectacle of American decision- makers, in and out of the Obama administration, joining forces with a Turkish regime that grows more supportive of the radical Islamist movement. There is ample evidence of President Erdogan’s complicity in ISIS’s murderous rampage through Syria and Iraq. Yet, we hold our public rebukes for the Russians, who are battling those terrorists. A Russian plane on an anti-terrorist mission did violate Turkish airspace, just as Turkish planes have strayed into Greek airspace hundreds of times over the last year. This overflight was no threat to Turkey. Still, it was shot down, as was a Russian helicopter on the way to rescue the downed Russian pilot. Why do Americans feel compelled to kick Russia in the teeth? Russia’s military is attacking an enemy that would do us harm. Why ignore the hostile pro-terrorist maneuvering of Turkish strongman Erdogan?

ISIS Oil Plot Thickens: Turkish MP Has Evidence Erdogan's Son-In-Law Involved In Illegal Crude Trade -- Of course the thing about being an autocrat - and thats most certainly what Erdogan is despite the West’s ridiculous contention that Turkey is a democracy - is that you make a whole lot enemies in your own country and while you can suppress dissent with force, eventually it all catches up to you and between Russia™s accusations and opposition political parties still stinging from AKP™s move to nullify June’s election outcome by starting a civil war and calling for snap elections, Erdogan may be in trouble.  Underscoring that contention is CHP lawmaker Eren Erdem who says he, like Moscow, will soon provide proof of Erdogan’s role in the smuggling of Islamic State oil. "I have been able to establish that there is a very high probability that Berat Albayrak is linked to the supply of oil by the Daesh terrorists,†Erdem said at a press conference on Thursday (seemore from Sputnik). Berat Albayrak is Erodan’s son-in-law and is Turkey’s Minister of Energy and Natural Resources.

Are These The Tankers Bilal Erdogan Uses To Transport ISIS Oil?  -- Regular readers are by now well acquainted with Bilal Erdogan, the son of Turkish autocrat Recep Tayyip Erdogan. Although Erdogan senior masquerades as President of a democratic society, he is in reality a despot who just weeks ago, capped off a four-month effort to nullify an undesirable ballot box outcome by scaring the electorate into throwing more support behind the ruling AKP in a do-over vote designed specifically to undermine the pro-Kurdish HDP, which put up a strong showing in the last round of elections, held in June.  As the world’s interest in Islamic State’s illicit oil trade has grown over the past 60 or so days, so too has the scrutiny on how the group gets its stolen crude to market. In the seven days since Turkey shot down a Russian Su-24 near the Syrian border, Moscow has done its best to focus the world’s collective attention on the connection between ISIS and Turkey. It’s common knowledge among those who pay attention to such things that Ankara is part of an alliance that includes Riyadh, Doha, and Washington whose collective goal is to fund and arm the Syrian opposition. What’s up for debate is the extent to which that alliance supports ISIS and, to a lesser extent, al-Nusra.  Earlier today, Vladimir Putin explicitly accused Ankara of attempting to protect ISIS oil routes by shooting down Russian warplanes which have destroyed hundreds of Islamic State oil trucks in November.  Erdogan of course denies the allegations, but as we’ve shown, it would be very easy for Turkish smugglers to commingle ISIS and KRG crude (which, by the way, is also technically illegal), effectively using Kurdish oil to mask Turkey’s participation in the Islamic State oil trade.  Here’s what Syrian Information Minister Omran al-Zoub said on Friday:“All of the oil was delivered to a company that belongs to the son of Recep [Tayyip] Erdogan. This is why Turkey became anxious when Russia began delivering airstrikes against the IS infrastructure and destroyed more than 500 trucks with oil already. This really got on Erdogan and his company’s nerves. They’re importing not only oil, but wheat and historic artefacts as well."

Turkey Tries to Lure NATO Into War Against Russia -- When Turkey shot down a Russian bomber in Syria on November 24th, Turkish officials did so with the confidence that America’s anti-Russian military alliance, NATO, would protect Turkey against any possible military retaliation by Russia. And, so, Russia restricted its retaliation to merely economic measures.  Sunni Turkey is the increasingly fundamentalist and anti-Shiite NATO member-nation; and, as such, it’s doing what it can to draw the rest of America’s anti-Russian alliance, NATO, into a war by all of them to defeat Russia, because Russia is allied with the Shiite-led nations of Iran and Syria — nations that the Sunni aristocracies (especially the Sauds of Saudi Arabia, and the Thanis of Qatar) want to control, so as to have complete dominance over the Islamic world. Once they achieve that, they can then overtly and publicly support their jihadists to take over Western nations, as well, so as to establish the intended global “Caliphate.”  Turkey’s government is doing all it can to bring down the non-sectarian Shiite leader of its neighboring nation of Syria, Bashar al-Assad. America’s war to take over Russia (first taking down Russia-ally Saddam Hussein in 2003, then Russia-ally Muammar Gaddafi in 2011, then Russia-ally Viktor Yanukovych in 2014, and now trying to take down Russia-ally Bashar al-Assad) is therefore being tugged at by NATO’s lone Sunni member Turkey. Turkey wants America and ‘the West’ to join their (and their Sunni friends, Saudi Arabia’s and Qatar’s) anti-Shiite war, so as to unify the Islamic powers as being all-Sunni, and thus enable them together to crush the other religions and beliefs.

Russia Sends NATO A Clear Message By Arming Fighter Jets With First Air-To-Air Missiles -- A month ago, US and Russian military officials signed a memorandum of understanding that included steps their pilots should take to avoid an inadvertent clash over Syria as they carry out separate air strikes against armed groups. That MoU has now been shredded, as it certainly did not involve Russian fighter jets operating above Syria being armed with short and medium range air-to-air missiles as a direct threat to other fighter jets also operating above Syria - mostly those of Turkey, France and the US. Which is precisely what Russia has done as disclosed in an announcement moments ago by the Russian defense ministry, and furthermore, has released a clip as a warning to not only Turkey, but all NATO forces in the region, that any further provocations at its jets will be met with an immediate and proportional response. Igor Klimov, spokesman for the Russian Air Force, said that "today, Russian Su-34 fighter-bombers have made their first sortie equipped not only with high explosive aviation bombs and hollow charge bombs, but also with short- and medium-range air-to-air missiles The planes are equipped with missiles for defensive purposes." "The missiles have target-seeking devices and are capable of hitting air targets within a 60km radius."

Russia Retaliates: Putin Reveals Sanctions Against Turkey - While many in The West had hoped for a "see, we told you so" strongman military response from Vladimir Putin, it appears the Russian leader has, for now, taken a more practical approach. The wide-ranging sanctions unleashed on Turkey (by its 2nd largest trade partner) include a ban on Turkish workers (with estimates that 90,000 will be fired by Jan 1 2016),restrictions on imported goods and services provided by Turkey, and scraps visa-free travel and bans charter flights (implicitly hurting a major part of Turkey's domestic industry). Finally, Putin calls for "strengthening of port control and monitoring to ensure transport safety," hinting at the fears many have voiced over whether Turkey shutting the Bosphorous in an escalation would be seen as an act of war. As Interfax reports, Russian President Vladimir Putin has signed a decree "On measures to ensure Russian national security and to protect Russian citizens from criminal and other unlawful actions and the application of special economic measures with respect to the Turkish Republic," the Kremlin press office said on Saturday. The decree introduces temporary ban or restrictions on import by Russia of certain types of goods, whose country of origin is Turkey, which are stipulated in the list determined by the Russian government (except the good imported for personal use in an amount permitted by the law of the Eurasian Economic Union). The decree also bans or restricts organizations, which fall under the Turkish jurisdiction, from providing certain types of services in Russia,which are stipulated in the list determined by the Russian government. In addition, employers and contractors of services which are not stipulated in the list determined by the Russian government, are banned, starting from January 1, 2016, from employing Turkish citizens who were not employed or contracted by such employers and contractors as at December 31, 2015.

How Russia is Smashing the Turkish Game in Syria: So why did Washington take virtually forever to not really acknowledge ISIS/ISIL/Daesh is selling stolen Syrian oil that will eventually find is way to Turkey?Because the priority all along was to allow the CIA – in the shadows – to run a “rat line” weaponizing a gaggle of invisible “moderate rebels”.As much as Daesh – at least up to now– the Barzani mob in Iraqi Kurdistan was never under Washington’s watch. The oil operation the Kurdistan Regional Government (KRG) runs to Turkey is virtually illegal; stolen state-owned oil as far as Baghdad is concerned.Daesh stolen oil can’t flow through Damascus-controlled territory. Can’t flow though Shi’ite-dominated Iraq. Can’t go east to Iran. It’s Turkey or nothing. Turkey is the easternmost arm of NATO. The US and NATO “support” Turkey. So a case can be made that the US and NATO ultimately support Daesh.What’s certain is that illegal Daesh oil and illegal KRG oil fit the same pattern; energy interests by the usual suspects playing a very long game.The same desperation applies to the Aleppo-Azez-Killis route, which is also essential for Turkey for all kinds of smuggling. The advanced arm of the “4+1” alliance – Russia, Syria, Iran, Iraq, plus Hezbollah – is taking no prisoners trying to re-conquer these two key corridors.

Turkey's Trump Card: Erdogan Can Cut Russia's Syrian Supply Line By Closing Bosphorus - On Saturday, Russia unveiled a raft of economic sanctions against Turkey in retaliation for Ankara’s brazen move to shoot down an Su-24 warplane near the Syrian border. Charter flights to Turkey are now banned, Turkish imports will be curbed, visa-free travel is no more, Russian tourism companies are forbidden from selling travel packages that include a stay in Turkey, and Turkish firms will face restrictions on their economic activity.  “It’s not just Turkey that has economic interests, Russia too has economic interests in relation to Turkey,” Turkish PM Ahmet Davutoglu said on Saturday, adding that he hoped Putin would act in a "cool-headed" manner.  Russia does indeed have economic interests in Turkey. Ankara paid Gazprom some $10 billion last year and Turkey accounts for nearly a third of the company's nat gas exports: Ultimately, it's difficult to say who has the stronger hand. Russia and Turkey - despite an otherwise tenuous relationship set against a history of confrontation (see The Czar vs. the Sultan from Foreign Policy) - have developed a lucrative trade partnership that neither side is particularly keen on scrapping. That said, the stakes are high and now that Moscow has hit back with sanctions, the ball is in Ankara's court.  Despite bombastic rhetoric from Erdogan (whose tone has softened at bit over the last 48 or so hours), Turkey cannot shoot down another Russian warplane. If they do, they risk an outright military confrontation with Russia. So unless Erdogan intends to plunge NATO into an armed conflict with the Russians, he'll need to find other ways to retailiate and refusing to buy from Gazprom probably isn't the the first, best option from a practical point of view.  What Turkey could do, however, is close the the Bosphorus Strait which would effectively cut Russia's supply line to Latakia.

Turkey Denies Russian Ships Access via Bosporus --What is becoming clear is that Turkey has most likely NOT acted alone against Russia. They have more likely than not fired the first shot in what may become World War III. Turkey has been buying the oil from ISIS and thus funding them. Yet at the same time, they are part of NATO and have probably acted with the FULL consent of NATO including the Obama Administration. The entire Syrian incident I reported back in 2013 that from the outset it was secretly all about getting a pipeline through Syria to Europe so Saudi Arabia could compete with Russia in supplying Europe with natural gas.There is absolutely no way this shooting down of a Russian plane was Turkey alone nor was it an accident. The plane was over Turkey air space for a few seconds and was shot down in Syria. There was a TV crew there to film the event and within 15 minutes NATO was informed. This was a DELIBERATE act to provoke war. Now Turkey is escalating it further by blockading all Russian ships to prevent them from accessing the Bosporus. This is clearly an act of war and Russia has defended Syria and its economic interests no different than the USA who has had far less of any economic interest at stake in any other situation.

Tensions With Russia Add to a Chill in Turkey’s Economy - Yet despite the prosperous appearance, a chill has already settled over Eskisehir’s economy, and Turkey’s, as exports to China and the Middle East falter. And as Russia has halted most tourism to Turkey and threatened to stop food imports from the country after Turkish F-16 fighter jets shot down a Russian combat jet along the Syrian border last Tuesday, the risk of further economic trouble is clear.With unemployment already surging here, “our economy has slowed down,” Eskisehir (pronounced Es-ki-SHARE) itself has a large sugar refinery, using sugar beets from nearby fields as its raw material; the city exports about $30 million worth of cookies, cakes, crackers and other foods to Russia, according to the local chamber of commerce. Turkey had been stepping up food exports to Russia in recent months as political frictions between Russia and the West led to a reduction in Russian food imports from the European Union.Russia had also been one of Turkey’s biggest sources of tourists until the past year, when the combination of the fall of the ruble and Western sanctions on Russia for its support of Ukrainian insurgents began steeply eroding the number of Russians who could afford to travel. The decline in tourism was a worry for economists here even before the Russian jet was shot down.“The trade deficit is out of hand, exports cannot meet the import bill, so tourism revenues are a major item in our balance sheet,”

Central, eastern Europe protest Russian gas pipeline project — Slovakia’s economy minister says his country will join forces with other Central and Eastern members of the European Union to protest a recent deal to expand a pipeline that delivers natural gas directly from Russia to Germany. The plan, known as Nord Stream 2, already received angry reactions from some, including Ukraine and Slovakia, as the pipeline bypasses the traditional transit countries for Russian gas to Europe. It is meant to expand the current Nord Stream pipeline under the Baltic Sea that directly links Germany with Siberia’s gas reserves. Vazil Hudak says the plan goes against the interest of the entire EU and harms Ukraine. He says the nations will send a letter to EU leaders, demanding the deal is on the agenda of the EU summit in December.

Mainstream Media: “Gas Pipelinestan War is About Gas Pipelines!”  -- Two years after the oil and gas industry press was talking about it – the popular press has figured out what the Syrian Gas Pipeline War is about- gas pipelines – including lines that go through Turkey. Imagine that. Factor in this detail and suddenly the war begins to make more sense, here’s how it works: As Harvard Professor Mitchell A Orenstein and George Romer wrote last month inForeign Affairs, Russia currently supplies Europe with a quarter of the gas it uses for heating, cooking, fuel and other activities.In fact 80 per cent of the gas that Russian state-controlled company Gazprom produces is sold to Europe, so maintaining this crucial market is very important. But Europe doesn’t like being so reliant on Russia for fuel and has been trying to reduce its dependence. It’s a move that is supported by the United States as it would weaken Russian influence over Europe. Before the civil war, two competing pipelines put forward by Qatar and Iran aimed to transport gas to Europe through Syria.Qatar’s plans were first put forward in 2009 and involved building a pipeline from the Persian Gulf via Saudi Arabia, Jordan, Syria and Turkey.The gas field located 3000 metres below the floor of the Persian Gulf is the largest natural gas field in the world. Qatar owns about two-thirds of the resource but can’t capitalise on it fully because it relies on tankers to deliver it to other countries and this makes its gas more expensive than Russia’s.It was hoped the pipeline would provide cheaper access to Europe but Syrian President Bashar al Assad refused to give permission for the pipeline to go through his territory. Some believe Russia pressured him to reject the pipeline to safeguard its own business. In the meantime Iran, which owns the other smaller, share of the Persian Gulf gas field, decided to lodge its own rival plan for a $10 billion pipeline to Europe via Iraq and Syria and then under the Mediterranean Sea. These plans apparently had Russia’s blessing, possibly because it could exert more influence over Iran, which, unlike Qatar, did not host a US air base.

Russian oil tanker grounded in north Pacific— Russian emergency services say cleanup operations are underway after an oil tanker was grounded, damaging one of its fuel tanks. The tanker Nadezhda hit a reef during a storm on Saturday near the port city of Nevelsk on Sakhalin Island in Russia’s Far East. It was carrying 786 tons of fuel oil and diesel fuel. The amount of oil spilled and the extent of any environmental damage was not immediately clear. The emergency services said operations were taking place on Sunday to collect spilled oil and also contaminated soil from along the shore, while oil remaining on the vessel was being pumped onto other tankers. Sakhalin Island, located in the north Pacific just north of Japan, is a major producer of oil and natural gas.

Copper at 6-year low as demand from China wanes -   CBC News: Copper is trading at a six-year low as that reflects a decline in world demand even as production ramps up. Copper contracts traded below the $2 US level on Canadian markets on Monday, a low not seen since 2009. Today, they're barely off that floor at $2.05 lb. The red metal, often seen as bellwether of the world economy, peaked at $4.48 in 2011, a time when thieves pulled copper out of walls and stole wiring to make money from the metal. But China's slowdown has resulted in less demand for copper and in the rest of the world, demand is flat or lower. The price of copper is down 27 per cent since the beginning of the year. "A lot of it does have to do with China," "China demand fell because construction is down."  Copper exports by Canada topped $6 billion in 2014 and production here grew by 10 per cent last year, despite the falling prices, Statistics Canada figures show. That's because many companies invested in new mines in 2011, which have come on stream only recently, pushing production higher. "Prices have fallen, but so have the cost curves,". She pointed to lower fuel prices and the exchange rate, as mining companies pay their Canadian workers Canadian dollars, but the metal is priced in U.S. dollars. One of the reasons copper production has remained high in the face of falling demand is that currencies in key copper-producing countries like Chile, Australia and Canada have fallen sharply against the U.S. dollar. That means the cost to produce the metal in these countries is sustainable at lower prices.

Iron ore plunges to new 10-year low: Iron ore has failed to find a floor in offshore trade, plunging a further 3 per cent to a new 10-year nadir. At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US41.60 a tonne, down 2.8 per cent from its prior close of $US42.80 a tonne. The benchmark price is the lowest since The Steel Index began releasing its data in 2008 and the weakest mark seen since 2005 when miners used to set yearly benchmark contracts with Chinese steelmakers. The latest fall has come as traders eye more tonnes coming onto the market through the first shipment from Gina Rinehart’s mammoth $10 billion Roy Hill project.   “The market’s concerned with the 55 million tonnes that it will bring on but you wouldn’t think it would have a serious impact on price,” . Indeed, much of the firm’s output is tied up in long-term contracts, but any more supply in an oversupplied market is seen as a negative by market watchers. There was, however, a couple of positive stories to emerge overnight as the US dollar weakened and leading iron ore miner Vale announced a reduction in its guidance. The Brazilian giant now expects to mine between 340 million and 350 million metric tonnes of the commodity next year, about 10 per cent below a previous forecast of 376 million tonnes. Still, Vale expects global iron ore exports to hit 1.6 billion tonnes in 2016, well shy of likely demand between 1.35 billion and 1.4 billion tonnes.

China’s steel industry has its own take on your so-called *law* of supply and demand  - In the grand old tradition of China ignoring the supposed laws that govern markets and then getting away with it until it… doesn’t, the middle kingdom’s steel mills have been doing their very best to ignore the reality train hurtling towards them on tracks they helped to build. From the FT’s Gabriel Wildau on Friday:  China’s biggest 101 steel companies, which helped fuel the country’s industrial revolution and housing frenzy, lost a combined Rmb72bn ($11bn) in the first 10 months of 2015, or more than double the profits garnered last year. The reversal in fortunes highlights the unwinding of rapacious demand for basic materials — in just two years the country produced more cement than the US did in the entire 20th century — as economic growth slows. You’d think they’d be cutting supply and dealing with overcapacity, right? Due to those slumping metal prices and a slowing economy? Right? RIGHT? Wrong. Per the FT again: China has shuttered 50m tonnes of steel manufacturing capacity this year, just 4 per cent of its total 1.14bn tonnes of capacity, according to HSBC. The bank calculates China would need to cut an additional 120m to 160m tonnes of capacity next year for the industry-wide utilisation rate to reach a “relatively healthy” level of 80 per cent. So why is it not happening? Why are many not even cutting back production. Here’s Macquarie from late November after a field trip which left them “gloomy”: The big question about the steel sector under discussion was this: given the heavy losses mills incur at the moment (Fig 5), how long they can continue to hold out? Our speakers generally thought any capacity closure is extremely difficult and that few closures are actually urgent at the moment for a number of reasons. One of them is that we have constantly heard that local governments simply wouldn’t allow steel mills to be closed down for the sake of local employment and fiscal income.

Commodity prices and exchange rates -- The dramatic decline in the prices of a number of commodities over the last 16 months must have a common factor. One variable that seems to be quite important is the exchange rate. Here’s a graph over a longer period of the dollar price of oil, the dollar price of copper, and the dollar price of a weighted average of other countries’ currencies with weights based on the volume of trade between the U.S. and each country. The graph is plotted on a logarithmic basis, so for small changes the height of each series corresponds to the percent difference between the price at the indicated date and the price at the end of June 2014 (see my primer on the use of logarithms in economics if you’re curious about those statements or why it might be helpful to plot series this way). The plunge down in all three measures since June 2014 that was highlighted in the first set of graphs is seen to be a broader pattern of striking positive co-movements among these variables.  One would expect that when the dollar price of other countries’ currencies falls, so would the dollar price of internationally traded commodities. But it is a mistake to say that the exchange rate is the cause of the change in commodity prices. The reason is that exchange rates and commodity prices are jointly determined as the outcome of other forces. Depending on what those other forces are, one might see stronger or weaker co-movement between commodity prices and exchange rates.

Beijing factories shut amid smog nightmare - (AFP) - Beijing ordered hundreds of factories to shut and allowed children to skip school as choking smog reached over 25 times safe levels on Tuesday, casting a cloud over China's participation in Paris climate talks. A thick grey haze shrouded the capital with concentrations of PM 2.5, harmful microscopic particles that penetrate deep into the lungs, as high as 634 micrograms per cubic metre. The reading given by the US embassy dwarfs the maximum recommended by the World Health Organisation, which is just 25 micrograms per cubic metre Swathes of northern China were hit and levels in Jinan, a provincial capital hundreds of kilometres away, reached over 400. Authorities in Beijing ordered the closure of 2,100 highly polluting businesses, the state-run China Daily said, and advised citizens to stay indoors. The capital told primary and middle schools to stop outdoor activities and gave students permission to stay home, adding the city would provide online instruction, the official Xinhua news agency reported. Airlines cancelled over 30 flights from Beijing and Shanghai, many to highly polluted Shaanxi province which is a key coal producer. The smog nightmare came after Chinese President Xi Jinping vowed "action" on greenhouse emissions at the climate change summit in Paris. Most of the country's greenhouse gas emissions come from coal burning which spikes in winter along with demand for heating and is the main cause of smog.

China factory activity hits three-year low in November: official PMI | Reuters: Manufacturing activity in China hit a three-year low in November, an industry survey showed Tuesday, supporting the case for more accommodative policies as authorities seek to prop up growth in the world's second largest economy. China's National Bureau of Statistics' official Purchasing Managers' Index (PMI) hit 49.6 in November, its lowest reading since August 2012 and down from the previous month's reading of 49.8. This was below a Reuters poll forecast of 49.8 and marked the fourth straight month of contraction in the sector. A reading below 50 points suggests a decline in activity on a monthly basis while a reading above signifies an expansion. "With soft growth momentum and deflation pressures creeping up, we expect the authorities to further ease monetary policy and continue to implement an expansionary fiscal policy in order to prevent further slowdown of the economy in 2016," Li-Gang Liu and Louis Lam, ANZ economists said in a research note released after the data. Separately, the Caixin/Market China Manufacturing PMI edged up to 48.6 in November, beating market expectations of 48.3, which would have been unchanged from the previous month. The index has shown contraction for nine straight months. The private sector Caixin survey focuses more on small-to-medium-sized private firms, which are showing more stress from the prolonged economic slowdown and high financing costs, while the official versions look more at larger, state-owned firms.

China Manufacturing Slumps To 3-Year Lows And Soars To 5-Month Highs - Following the earlier onslaught of weak (and strong) economic data, China has revelaed its official and Caixin-based PMI surveys for Manufacturing and Services. Sure enough, whileChina's official manufacturing data missed (to Aug 2012 lows), Ciaxin's survey beat, surging to June 2015 highs. The question now is - given The IMF's inclusion of the Yuan in the SDR basket - will The PBOC devalue (as offshore Yuan implies) to juice a collapsing manufacturing sector? Just as we projected... Now Markit PMI has to show China Mfg rising and services dropping to make the confusion complete. China Manufacturing... The official print missed expectations and heads deeper into a 4-month contraction.. butthe Caixin survey surged to 5-month highs, beating expectations China Services... [delayed for now - no explanation from source] Finally we note that China services PMI is indeed likely to outperform manufacturing at every turn going forward. If we see China services PMI fall off a cliff with manufacturing, then it exposes the gaping wound that reforms are not working and that the glorious five-year plan transition away from the smokestack isn't working... Charts: Bloomberg

Chinese Auto Sales Crash, Inventories Soar In November -- Despite ongoing exuberance at auto sales in America (which disappointed) - as crashing credit standards enable every Tom, Dick, and Muppet to buy too much 'depreciating asset' for their incomes - there are numerous problems few are talking about for automakers worldwide. Aside from "plans to buy a car" tumbling in the latest confidence surveys, and inventories-to-sales surging, China just poured ice cold water on any hope of stability in that 'growth' market as auto dealers issue the highest inventory alert since June. November data from China shows demand plunging, sales collapsing, and inventories soaring - a triple whammy of "no, things are not 'stabilizing'."  As sales begin to disappoint... First, Inventories are at record (absolute) highs and at recession-signalling ratios to current sales... Second, and that is a problem because the much-hyped and hoped-for future sales to soak all this excess inventory up is not coming soon... As the consumer confidence survey shows the lowest level of "plans to buy an auto" since January 2013... And finally, Third, do not look to China for any help at all... China November Vehicle Inventory Alert Index rose to 61.8% (from 54.1% in Oct.), the Beijing-based China Automobile Dealers Association says in e-mailed statement. Source: CAAM Automakers appear to have two options, offer buy-one-get-one-free to all new Syrian refugees or cut production dramatically in hopes of easing inventory excess. Good luck. ...

China's economic woes continue as manufacturing enters recession - China's manufacturers struggled again in November despite Beijing’s efforts to spur on the world’s second-biggest economy, figures have shown. The latest snapshot showed manufacturing activity slipping for the fourth month in a row, falling further below the 50 no-change mark to 49.6 in November from 49.8 the previous month. That signals Chinese manufacturing in recession despite a string of interest-rate cuts — most recently in October. China’s annual growth is set to dive to its lowest level for 25 years in 2015, falling below 7%. The Bank of England also flagged up risks over the Asian giant today as its financial stability report suggested “the risk of a sharper slowdown in China remains”, adding: “This could have significant spillovers to the global economy.”Growth in the three months to September slowed to an annual pace of 6.9%. The official index, compiled by the Chinese Federation for Logistics and Purchasing, includes larger state-owned businesses. A second survey — weighted to smaller, private Chinese manufacturers — also signalled industry contraction, although services firms showed signs of accelerating growth. Economists at ANZ Bank said the data could prompt yet another rate cut from China’s policymakers.

Silk Roads, Night Trains and the Third Industrial Revolution in China … by Pepe Escobar -- The US is transfixed by its multibillion-dollar electoral circus. The European Union is paralyzed by austerity, fear of refugees, and now all-out jihad in the streets of Paris. So the West might be excused if it’s barely caught the echoes of a Chinese version of Roy Orbison’s “All I Have to Do Is Dream.” And that new Chinese dream even comes with a road map.  The crooner is President Xi Jinping and that road map is the ambitious, recently unveiled 13th Five-Year-Plan, or in the pop-video version, the Shisanwu. After years of explosive economic expansion, it sanctifies the country’s lower “new normal” gross domestic product growth rate of 6.5% a year through at least 2020.  It also sanctifies an updated economic formula for the country: out with a model based on low-wage manufacturing of export goods and in with the shock of the new, namely, a Chinese version of the third industrial revolution. And while China’s leadership is focused on creating a middle-class future powered by a consumer economy, its president is telling whoever is willing to listen that, despite the fears of the Obama administration and of some of the country’s neighbors, there’s no reason for war ever to be on the agenda for the US and China.  Given the alarm in Washington about what is touted as a Beijing quietly pursuing expansionism in the South China Sea, Xi has been remarkably blunt on the subject of late. Neither Beijing nor Washington, he insists, should be caught in the Thucydides trap, the belief that a rising power and the ruling imperial power of the planet are condemned to go to war with each other sooner or later.

China credit card capital controls fact of the day - Chinese billionaire Liu Yiqian, who doesn’t exactly struggle to afford a plane ticket, can now likely fly free, in first class, with his whole family, anywhere in the world, for the rest of his life. All because he bought a painting. Liu was the winning bidder for Amedeo Modigliani’s Reclining Nude at a Christie’s auction earlier this month, offering $170.4 million — and when the sale closes, he’ll be putting it on his American Express card. Liu, a high-profile collector of Chinese antiquities and art, has used his AmEx in the past when he’s won art auctions. He put a $36-million tea cup from the Ming Dynasty on his AmEx last year, according to reports, and put other artifacts on his card earlier this year. He and his wife said they plan on using their American Express card to pay for the Modigliani, according to news reports after the sale. And this: China allows its citizens to transfer no more than $50,000 out of the country in any year, and using his [Liu’s] card could help him get around this limit because he’s just paying back American Express or the bank in China who issues his card. Hmm…the full story is here, via Ted Gioia.

Chinese banks miss out on the party as Asian M&As pass $1 trillion mark - A surge in Chinese cross-border technology and telecoms deals has helped mergers and acquisitions in Asia Pacific cross $1 trillion for the first time but mainland banks are missing out on the payoffs as they badly trail global rivals in advisory work. While low fees have helped Chinese banks to win market share from U.S. and European counterparts in stock offerings and loans, they figure nowhere among the 10 biggest M&A advisers by value of deals, Thomson Reuters data up to the end of November showed. China's biggest investment bank, CITIC Securities (600030.SS), ranked 11th, advising on $68.7 billion worth of deals. The number of Chinese banks among the top 20 M&A advisers in the region fell to seven from eight and their market share slumped to 13.8 percent from 33.7 percent last year. The Chinese banks' struggles to emerge as leading advisers on big ticket acquisitions have curtailed their fee income growth at a time when the lending business is under pressure due to a slowing domestic economy. "When Chinese companies go global, they will tend to call on banks and advisers who have global reach so there's still a strong role for the international banks and advisers,"

That Makes 5: Chinese Yuan a Part of IMF SDR - Here's another step towards the Chinese currency becoming a globally important one. Everyone sort of expected this, but for the Chinese, it's a major achievement nonetheless. While the inclusion of the yuan in the basket of currencies the IMF uses as reference will not result in a massive surge in RMB holdings there, the symbolism matters quite a lot. As in, China becomes the first developing country to have its currency included in the SDR. From the IMF blurb:  The Executive Board of the International Monetary Fund (IMF) today completed the regular five-yearly review of the basket of currencies that make up the Special Drawing Right (SDR). A key focus of the Board review was whether the Chinese renminbi (RMB) met the existing criteria to be included in the basket. The Board today decided that the RMB met all existing criteria and, effective October 1, 2016 the RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, the Japanese yen and the British pound. Launching the new SDR basket on October 1, 2016 will provide sufficient lead time for the Fund, its members and other SDR users to adjust to these changes. At the conclusion of the meeting, Ms. Christine Lagarde, Managing Director of the IMF, stated: “The Executive Board's decision to include the RMB in the SDR basket is an important milestone in the integration of the Chinese economy into the global financial system. It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems. The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy.”

Small News On The Yuan - Paul Krugman  -- So the IMF has included the renminbi in the SDR, adding a world of hurt to newspaper reports; now everyone will have to deal with China’s awkward currency nomenclature. But how much difference does this make for the real economy? Almost none.  That’s not what you usually hear. Today’s commentary by the usually excellent Neil Irwin compares the rise of the RMB to the gradual replacement of sterling by the dollar “as the predominant currency for global trade and finance.” He goes on to say that  This development was a crucial piece of the nation’s rise to superpower status. Actually, no, it wasn’t. America became a superpower because its economy was huge — by 1913 it was already about as big as the combined economies of Western Europe, and it was even more dominant after World War II. The international role of the dollar was at best a minor footnote to this story. Ask yourself, what special privileges does being a reserve currency bring? People who don’t actually work in international monetary economics tend to make claims about America having a unique ability to run trade deficits, or to borrow in its own currency, or to extract large amounts of resources from other countries due to “exorbitant privilege,” but none of that is true. At most, the dollar’s special role might mean slightly lower borrowing costs — although there’s little evidence of that — and a de facto zero-interest loan from people holding currency — pieces of green paper with portraits of dead presidents — outside the country.  And it’s far from clear that China will get even these minor payoffs: putting the currency in the SDR should have very little bearing on the willingness of individuals to hold yuan in cash, or even to buy RMB-denominated bonds.

China’s Symbolic Currency Win - Earlier today, the International Monetary Fund (IMF) Board approved the inclusion of the Chinese renminbi (RMB) as a fifth currency in the special drawing rights (SDR), the IMF’s currency, as of October 2016.  The move was expected and IMF Board approval was never in doubt once the U.S. government signaled that it would not oppose the step. My read is that the Fund staff acted properly in arguing that the RMB now meets the test of being freely useable for international transactions by its members (though some have argued that the IMF was bending its rules for political reasons). Of course, Chinese financial markets remain significantly restricted for private investors, but the SDR’s current primary use is for transactions between members of the IMF (governments). From that narrow perspective the RMB can be judged to be widely used and widely traded because a country receiving RMB as a result of IMF transactions should be able to switch it to any other basket currency at low cost, at any time of the day or night, somewhere in the world. So too perhaps are more than a dozen other currencies freely useable by this measure, but the SDR is for now limited to the largest of those currencies by a separate (export share) measure. Consequently, next year the RMB goes into the basket with a weight of 10.9 percent (compared to current weights, most of China’s share comes from the U.S. dollar which will retain a 41.7 percent share; the other shares will be 30.9 percent for the euro, 8.3 percent for the yen, and 8.1 percent for the pound sterling).

China's gold star - Ben Bernanke -- If your elementary school was like mine, when you did a good job on your homework you got it back with a gold star pasted on top. The gold star was not valuable itself—you couldn’t deposit it in the bank—but it recognized your good efforts and, maybe, motivated you to work hard on the next assignment.  China received the equivalent of a gold star this week, when the International Monetary Fund agreed to include the Chinese currency, the renminbi, as part of an IMF-managed asset called the Special Drawing Right, or SDR. Like the awarding of a gold star, inclusion in the SDR is almost entirely symbolic. SDRs, which are defined by the IMF as a fixed combination of the dollar, the euro, the British pound, the yen, and now the renminbi, were created in 1969 to provide an alternative medium for governments and central banks to hold international reserves. However, in practice they are not much used, except for internal accounting within the IMF, and the renminbi’s inclusion in the SDR confers no meaningful additional powers or privileges on China. If SDR inclusion is only symbolic, then what’s the big deal about the IMF’s decision? Well, the Chinese authorities, who very much want their country to be recognized as a global economic power, care a lot about symbolism. And SDR inclusion does recognize both the increasing economic power of China and the important steps the Chinese have taken over the years to open up their capital markets, to meet international norms in financial regulation, and to increase the extent to which market forces help determine the renminbi’s value. Recognizing China’s progress in these areas, and encouraging more progress, are reasonable steps for the IMF and the global community to take.

The IMF Confirms Yuan Inclusion In SDR Basket: Now Comes The Hard Part For China --IMF staff earlier this month proposed that the yuan be added to the basket of currencies used to value the SDR, a reserve asset created by the institution in 1969, and today that decision is confirmed (as expected). The IMF’s Executive Board decision today means that the yuan will be included in the SDR basket from Oct. 1, 2016, effectively anointing the yuan as a major reserve currency and represents recognition that the yuan’s status is rising along with China’s place in global finance. However, as politically-motivated as this decision may have been, now comes the hard part for China.  The inclusion puts new pressure on Beijing to change everything from how it manages the yuan, also known as renminbi, to how it communicates with investors and the world. China’s pledges to loosen its tight grip on the currency’s value and open its financial system will come under new scrutiny. As The Wall Street Journal reports, “The actual inclusion of the yuan in the SDR is a nonevent for most investors. The sound you’ll hear is a collective yawn,” said David Loevinger, a managing director at fund manager TCW in Los Angeles and a former U.S. Treasury official focusing on China. “The lack of data and policy transparency remains a risk for investors.” While IMF inclusion is largely symbolic, it could open Beijing to criticism of its financial policies when the fund conducts its five-year review of the currencies in its basket. Formally, inclusion would add the yuan to the IMF’s special drawing rights, or SDRs, a virtual currency IMF uses for emergency lending to its members and countries can use to bolster their reserves.

Is the IMF Cutting Corners for China? -  Is the International Monetary Fund cutting corners to bring China into the fold? Over the last six months, the IMF has officially escorted China into the top tier of global economic powers by bestowing legitimacy to the country’s currency policies. The IMF reversed years of fund criticism by declaring the yuan fairly valued. It added China to a list of countries that report their foreign exchange reserves. And Monday it included the yuan in its elite basket of lending currencies. The IMF’s actions are designed in part to spur Beijing to press ahead with promised economic reforms and ensure the government takes greater responsibility on the global stage. But some IMF watchers say the IMF is giving the Asian powerhouse too much credit for a work that’s still in progress. Instead of encouraging economic liberalization, the fund may be accommodating the world’s second-largest economy as China gains new global clout. The risk is that now Beijing has won IMF backing, it could put off its plans to open up its markets. A decelerating economy is creating headwinds for reformers. Beijing has sought to reassure. Yuan inclusion in the IMF’s lending basket “does not mean the end of financial sector reform,” said Chinese finance vice minister Zhu Guangyao

China Services PMI Jumps To 4-Month High (And Drops Near 2015 Lows) -- Just like Chinese Manufacturing, the Services PMI surveys from official sources and Caixin contradict each other. Providng hope for every bull, bear, and greater fool, official government data suggests the services economy is doing great and stimulus is working as it jumps to 4-month highs. However, Caixin's Services PMI shows a sudden drop near 2015 lows suggesting the need for moar stimulus now... Yuan (on- and off-shore) are both flat following the fixing but stocks are reversing yesterday's divergence (CSI-300 and Shanghai flat to lower, ChiNext and Shenzhen jumping higher).Charts: Bloomberg

The Lull Before The Storm—–It’s Getting Narrow At The Top, Part 2 - David Stockman -- The danger lurking in the risk asset markets was succinctly captured by MarketWatch’s post on overnight action in Asia. The latter proved once again that the casino gamblers are incapable of recognizing the on-rushing train of global recession because they have become addicted to “stimulus” as a way of life: Shares in Hong Kong led a rally across most of Asia Tuesday, on expectations for more stimulus from Chinese authorities, specifically in the property sector…More stimulus from China? Now that’s a true absurdity—-not because the desperate suzerains of red capitalism in Beijing won’t try it, but because it can’t possibly enhance the earnings capacity of either Chinese companies or the international equities. In fact, it is plain as day that China has reached “peak debt”. Additional borrowing there will not only prolong the Ponzi and thereby exacerbate the eventual crash, but won’t even do much in the short-run to brake the current downward economic spiral. That’s because China is so saturated with debt that still lower interest rates or further reduction of bank reserve requirements would amount to pushing on an exceedingly limp credit string. To wit, at the time of the 2008 crisis, China’s “official” GDP was about $5 trillion and its total public and private credit market debt was roughly $8 trillion. Since then, debt has soared to $30 trillion while GDP has purportedly doubled. But  that’s only when you count the massive outlays for white elephants and malinvestments which get counted as fixed asset spending. So at minimum, China has borrowed $4.50 for every new dollar of reported GDP, and far more than that when it comes to the production of sustainable wealth. Indeed, everything is so massively overbuilt in China——from unused airports to empty malls and luxury apartments to redundant coal mines, steel plants, cement kilns, auto plants, solar farms and much, much more—-that more borrowing and construction is not only absolutely pointless; it is positively destructive because it will result in an even more costly adjustment cycle.

You should fear a China hard landing: It's the market doom-and-gloom scenario: A "hard landing" for the world's second-largest economy. China's economy has slowed steadily since 2010, when gross domestic product (GDP) growth last topped 10 percent. China's President Xi Jinping is predicting 6.5 percent GDP growth next year and the International Monetary Fund is forecasting 6.3 percent. However, Oxford Economics, an advisory firm, has put the world through a stress test to show what would happen if Chinese growth slowed to 2.4 percent in 2016 and only recovered to 5 percent after five years.  The scenario might seem extreme, but Societe Generale warned in October that there was a 30 percent risk of a China hard landing. In the French bank's model, this would see Chinese GDP fall to 3 percent in 2016. Oxford Economics warns that the risks to Chinese growth were "substantial" and "would have a profound effect on the global economy." Here is a look at some of frightening implications of a China hard landing.

Asia's factories still struggling as U.S. rate hike looms - Factory activity deteriorated across much of Asia in November, with China sinking to a three-year low, as policymakers braced for an expected rise in U.S. interest rates later this month that could jolt the global economy. Business surveys showed few signs of vigour across the trade-reliant region apart from Japan, with sluggish demand at home and abroad forcing manufacturers from China to Indonesia to throttle back production, cut selling prices and shed more jobs. "Asia's economy looks decidedly wobbly going into year-end. Exports continue to struggle amid sluggish demand in the West and other emerging markets," said HSBC economist Frederic Neumann. "A Fed rate hike would represent a further pinch. With growth having been highly credit dependent in recent years, higher interest rates in the U.S. will inevitable add to the region's challenges." Global policymakers and investors are bracing themselves for the first hike in U.S. rates since 2006, which most analysts see coming at the Federal Reserve's Dec. 15-16 meeting. After many months of speculation, a rate increase might remove some of the uncertainty that has caused large swings in emerging-market currencies and stock markets. But Asian exporters will be on edge, hoping rising U.S. rates at a time of global weakness will not backfire and stunt demand in one of their biggest markets. "Industrialised Asia is still feeling the hurt from reduced external demand,"

Gov't eyes record Y73 tril FY 2016 budget excluding debt servicing — The government plans record-high spending of over 73 trillion yen ($595 billion) to fund its operations and programs in fiscal 2016, with defense outlays likely topping 5 trillion yen for the first time, sources close to the matter say. And the entire budget for the year starting next April 1 is expected to total a record 97 trillion yen, when debt-servicing and other nondiscretionary costs are included. Growing welfare spending as a result of the country’s graying population is a major factor behind the burgeoning public spending, despite the government’s efforts to tighten fiscal discipline. Ministries and other government offices earlier requested a total of 76.3 trillion yen to fund their operations in the upcoming budget, a draft of which will be approved by the Cabinet of Prime Minister Shinzo Abe next month before being submitted to the Diet. The Finance Ministry is now trimming the requests, but the total is still expected to top this fiscal year’s 72.89 trillion yen. Defense costs are likely to surpass the 4.98 trillion yen under the initial fiscal 2015 budget, with the government planning to enhance the capability to protect remote islands and counter cyberattacks, the sources said.

India’s biased debate on intolerance -- In most countries the idea that a cartoon piggy bank could incite a mob to violence would scarcely be plausible. Not so in India, where on Monday enraged Muslim protesters in the western state of Maharashtra attacked multiple offices of the prominent regional newspaper Lokmat. The mobs were set off by a cartoon accompanying a story Sunday on Islamic State finances. It showed assorted currency symbols pouring into a piggy bank whose snout carried an image from the jihadist group’s flag—a white seal with black Arabic lettering that reads “Muhammad is the messenger of God.” These words are also part of the Muslim declaration of faith. The attacks on Lokmat illustrate India’s selective debate on intolerance. The country’s journalists, writers and actors have been accusing Prime Minister Narendra Modi of diluting the country’s traditions of pluralism and interfaith harmony by not standing up to his party’s Hindu hotheads. Now, instead of standing up for freedom of expression, Lokmat is apologizing for the offense. Meanwhile, some of India’s most vocal campaigners against intolerance appear to have suddenly lost their voices.

Pakistan Students Crowned World Champions in World Education Games 2015 --Pakistanis were crowned World Champions and won the Maths World Cup, with Malaysia taking second place and the Literacy World Cup and Australia claiming third place overall and the Science World Cup, according to a report in Australia's The Educator publication.  World Education Cup 2015 saw student competitors from 159 countries earn 169 million UNICEF points, and raise more than $100,000 which will help 33,000 kids go to school.  The event was hosted by 3P Learning, an Australian company internationally renowned for its online education resources including Mathletics. Its CEO, Tim Power, said he had seen a big improvement in the results of STEM education subjects. World Education Games is a free downloadable program for registered schools for students to use Tuesday through Thursday. Pakistan's winning team members included Ali Saud Khan (Grade 9), Abeeha Saud (grade 4) and Emaan Fatimah (Grade 7) from Beaconhouse school in Mandi Bahauddin, Lahore, according to The Express Tribune newspaper. The goal of the annual event is to ensure that students have 21st century skills to be prepared for the jobs of tomorrow.

Global defaults climb to six-year peak of $78b so far this year - Companies have defaulted on $78 billion (Dh286.3 billion) worth of debt so far this year, according to Standard & Poor’s, with 2015 set to finish with the highest number of worldwide defaults since 2009. The figures are the latest sign financial stress is beginning to rise for corporate borrowers, led by US oil and gas companies. The rising tide of defaults comes as investors reassess their exposure to companies, who have borrowed heavily in recent years against the backdrop of central bank policy suppressing interest rates. Without a rebound in oil and commodity prices, and the Federal Reserve seen lifting its policy rate higher for the first time in nine years, strategists predict a further rise in corporate defaults for 2016. The amount of debt owed by US companies relative to the size of their profits has been increasing, according to Alberto Gallo, macro credit strategist for RBS, with the proportion of the most indebted borrowers rising since mid- 2014. “This tail of highly-levered borrowers is likely to be vulnerable to rising rates,” he said in a note to clients. Corporate defaults occur when a borrower misses the payment on a bond, or files for bankruptcy protection from creditors, and the number of borrowers with a credit rating to do so in 2015 passed the century mark on Monday, according to S&P.

And The First To Admit Defeat In Currency Wars Is...Earlier today, the South African Rand (ZAR) weakened to an all-time low against the USD, falling for a fourth day in a row after a report earlier on Monday showed that South Africa’s trade deficit widened more than expected in October to the biggest shortfall in nine months. The South African Reserve Bank then conveniently said the currency may depreciate further because the first interest rate increase by the Federal Reserve in almost a decade hasn’t fully been priced in by currency markets.“The rand has been very sensitive to changing probabilities of the Fed hiking rates, suggesting that the first increase is not yet fully priced in,” the central bank said in a report released on Monday in the capital, Pretoria. “It is also unclear whether the rand will stabilize after liftoff, as attention shifts to the pace and timing of additional rate adjustments.” It did just as suggested and the rand dropped as much as 0.6 percent to 14.4888 per dollar before paring losses to 14.4873 by 7:25 p.m. in Johannesburg. According to Bloomberg, that extended the rand’s decline this year to 20 percent, the most of 24 emerging-market currencies tracked by Bloomberg after the Colombian peso and Brazilian real.

Global growth bounces back a bit -- Global economic data published in November have shown a further uptick in worldwide activity growth after the significant dip that was reported after mid-year. It now appears almost certain that the 2015 Q3 dip in world activity was not the precursor of a slide towards global recession. Instead, it seems to have been another of the minor mid-course corrections that have been a consistent feature of the moderate upswing in global activity that started in 2009. Although the recent flow of data has therefore been somewhat reassuring about the global cycle, serious problems are still prevalent in the world economy. China has not suffered a hard landing; but severe deflation in the manufacturing sector remains unchecked, and the economy is clearly slowing as rebalancing between old and new sectors takes effect. Most other emerging economies are now embarking on a major deleveraging cycle, and this may drag on EM growth rates for several more years. Growth in the advanced economies as a whole has been stable at about trend rates throughout 2015; but underlying productivity growth remains extremely weak by past standards. Therefore the advanced economies do not appear sufficiently robust to withstand an intensification of the EM shock, should that occur. Overall, the global economy continues to grow below trend rates, so at some deep level the deflationary pressures in the system are not abating. However, the specific deflationary impetus from the commodity price collapse is now passing its maximum effect so recorded rates of headline and core inflation are likely to rise significantly in the next few months.

Fitch: Rising Sovereign Risk from Private Sector Debt in EM | Reuters: Fitch Ratings says in a new report that private sector debt has risen rapidly in key emerging markets (EM) over the past 10 years, surpassing government debt levels and potentially exposing their economies, financial systems and sovereign creditworthiness to downside risks. Such vulnerabilities are heightened by the slowdown in GDP growth, prospective interest rate rises as the Fed prepares for 'lift-off', currency volatility and the fall in commodity prices. The report uses a new data set for 'wide' non-financial private sector debt, which includes domestic bank credit, debt securities issued in the domestic and international capital markets and other external debt of the corporate sector, and is a broader definition of non-financial private sector debt than the series compiled by the Bank for International Settlements. It captures the debt of both households and non-financial corporates, borrowed from both banks and capital markets and from domestic lenders and non-residents. The report focuses on seven large 'BBB'-range sovereigns: Brazil (BBB-/Negative), India (BBB-/Stable), Indonesia (BBB-/Stable), Mexico (BBB+/Stable), Russia (BBB-/Negative), South Africa (BBB/Negative) and Turkey (BBB-/Stable). Six are either rated at 'BBB-' or 'BBB' with a Negative Outlook, and are therefore close to the speculative-grade threshold. Focusing on key countries allows greater granularity than EM totals and averages, which are skewed by China. Wide private sector debt for the seven large EM countries has risen to an average of 71% of GDP at end-2014 from 46% in 2005. Fitch forecasts it to reach 77% by end-2015, exacerbated by the impact of currency depreciation on foreign-currency debt. It is highest in Brazil at 93% of GDP and lowest in Mexico at 47%.

How Demographics Rule the Global Economy - WSJ - Previous generations fretted about the world having too many people. Today’s problem is too few. This reflects two long-established trends: lengthening lifespans and declining fertility. Yet many of the economic consequences are only now apparent. Simply put, companies are running out of workers, customers or both. In either case, economic growth suffers. As a population ages, what people buy also changes, shifting more demand toward services such as health care and away from durable goods such as cars. Demographics help explain why a historically weak recovery in the U.S. has nonetheless seen the unemployment rate drop by half. The economy doesn’t need as many new jobs to employ the smaller net flow of entrants into the workforce. For example, home builders are simultaneously suffering from shrinking demand since the homeownership rate is declining, and from labor shortages as the baby boomers retire. Mounting pensions are an important reason peripheral European countries like Greece have such intractable debt burdens and why Germany is so reluctant to stimulate its own economy despite a balanced budget. Meanwhile, the movement of so many people into the highest-saving period of their lives has produced a bulge of excess savings that has held down interest rates and inflation, making it difficult for central bankers to use their traditional tools to revive economic growth. Demographic forces are assumed to be slow-moving and predictable. By historical standards, though, these aren’t, says Amlan Roy, a demographics expert at Credit Suisse. They are “dramatic and unprecedented,” he says, noting it took 80 years for the U.S. median age to rise seven years, to 30, by 1980, and just 34 more to climb another eight, to 38. There is no simple answer for how business and government should cope with these changes, since each country is aging at different rates, for different reasons and with different degrees of preparedness.

Vulture Capitalists Are the Real Winners of Argentina’s Elections  - Yves Smith - Yves here. This important Real News Network segment did not get the attention it deserved by virtue of running right after Turkey Day. And it is important to note that interviewee Henry James is far too polite in how he characterized the New York ruling by Judge Griesa against Argentina. Most bankruptcy efforts regard his calls on Argentina’s restructuring (for instance, in trying to assert that his ruling has force in jurisdictions not subject to US law) have typically ranged from dubious to utterly batshit. (video interview and transcipt)Brazil posts biggest ever primary deficit for October | Reuters: Brazil had its worst primary budget deficit for the month of October on record, central bank data showed on Monday, evidence of the continued deterioration of the country's finances despite government efforts to rein in spending. The primary deficit jumped to 11.530 billion reais ($3.00 billion) in October from a gap of 7.318 billion in September and a surplus of 3.729 billion in October of last year. Market analysts surveyed by Reuters expected a deficit of 13.750 billion reais in October. Although the country's overall budget deficit narrowed to 29.414 billion in October from the previous month, on an annual basis the gap rose to the equivalent of 9.5 percent of gross domestic product. In May, that gap in 12 months was equivalent to 7.92 percent of GDP. A sharp drop in tax revenues has hobbled President Dilma Rousseff's efforts to shore up Brazil's finances with spending cuts and tax hikes this year. The finances of the once-booming economy have deteriorated to the point where Rousseff canceled a trip to Asia this week to save money and froze 10 billion reais in spending to comply with the country's budget law.

Brazil GDP Slips for Third-Consecutive Quarter - WSJ: —Brazil’s recession deepened in the third quarter into what economists say is the country’s worst crisis since the Great Depression, as political gridlock and a giant corruption scandal have halted investment and forced consumers to pare spending to the bone. Gross domestic product shrank 4.5% in the third quarter from a year earlier, the biggest contraction since Brazil started measuring GDP by the current system in 1996, Brazil’s statistics agency said Tuesday. The figures were dismal across the board and have already led economists to cut their forecasts for 2016. “That report reads like an obituary,” said André Perfeito, chief economist at Gradual Investimentos in São Paulo. “There were no positive signals in this for the Brazilian economy in the next few quarters, and we still can’t say we’ve hit bottom.” Mr. Perfeito added that he cut his GDP forecast for next year to a contraction of 3% from one of 2%. Much of the slowdown can be pinned on a political crisis that has stalled the passage in Congress of austerity measures needed to shore up Brazil’s fast-deteriorating finances.  Brazil’s bleak economic performance is a disappointment to many observers who at the start of the year hoped President Rousseff could contain a gaping budget deficit and set the stage for a recovery by year-end. Instead, fiscal reform hit a wall in Congress, the recession deepened, tax revenue fell and inflation accelerated, forcing the central bank to raise its benchmark interest rate to a growth-stifling nine-year high of 14.25%. Consumer and business confidence has plummeted, fueling layoffs and cutbacks. Unemployment recently hit a six-year high of 7.9%. “This could be the longest and deepest contraction since the 1930s,” said Luciano Rostagno, an economist at Votorantim Brokerage in São Paulo. “It’s just decline after decline in investment. That reflects the high level of pessimism about the economy in every sector.”

Brazil’s economy shrinks by record 4.5% -  FT -- Brazil’s gross domestic product fell by a record 4.5 per cent year-on-year in the third quarter, confirming fears that Latin America’s largest country is on track for its worst recession since the Great Depression. Lower commodity prices, fiscal contraction and the fading of a consumer credit boom have battered what was once one of the world’s fastest-growing economies. Brazil has also taken a hit from the sweeping “Car Wash” investigation into corruption at Petrobras, the state-owned oil company, which has paralysed congress and the corporate sector.   Brazil’s statistics agency, the IBGE, said on Tuesday that GDP in the three months to September fell 1.7 per cent against a revised second quarter, worse than analysts’ expectations. The year-on-year fall was “the biggest since the start of the historical data series in 1996”, the IBGE said. The slowdown is generating a perfect storm of negative economic data. Unemployment rose to 7.9 per cent in September, up from 4.7 per cent in October last year, inflation is running at more than 10 per cent for the first time since 2002 and Brazil’s government budget deficit is now at 9.5 per cent of gross domestic product. The poor GDP figures pile more pressure on Brazil’s left-leaning president, Dilma Rousseff, who is trying to implement fiscal austerity measures while battling low approval ratings and calls for her impeachment in Congress. “It seems likely that GDP will fall by something like 3.5 per cent this year [rather than the 2.5 per cent we had expected],”

Brazil Congress gives Rousseff nod to run hefty 2015 deficit | Reuters: President Dilma Rousseff's cash-strapped government won approval from Congress on Wednesday to drop its fiscal savings target and run a hefty deficit this year, a crucial vote that will allow it to pay its bills in December. A severe recession has reduced tax revenues and plunged Brazil into a fiscal crisis that has shaken investors' confidence in the once-booming economy and fueled political disputes over belt-tightening measures. Congressional approval to change the target from a 1.1 percent primary surplus originally planned to a deficit of up to 2 percent of gross domestic product will allow Rousseff to avert a government shutdown by unfreezing billions of reais in spending. On Friday, Rousseff's administration was forced to freeze 10.7 billion reais ($2.78 billion) in spending to comply with Brazil's fiscal responsibility law after Congress delayed passage of the bill. The law obliges the government to cut spending to meet the fiscal savings goal. The government warned Congress on Monday that it could not pay rent, water and electricity bills of its ministries in Brasilia until the bill was approved. Lawmakers agreed to ease the consolidated primary fiscal deficit goal to a shortfall of up to 117 billion reais in case the government decides to pay massive debts with state-run banks. The primary fiscal balance, or savings prior to debt servicing, is an important gauge of a country's capacity to repay its debt.

In Addition To Swimming In Feces, Olympians Will Have To Pay For AC In Brazil --In late July we said Brazil was sliding into a depression. Accompanying our depression call was the following assessment of Brazil’s preparations for the upcoming Olympic games in Rio:  The Brazilian economy hit its metaphorical, and literal, bottom earlier today when AP reported that, with the Brazil Olympics of 2016 just about 1 year away,"athletes in next year's Summer Olympics here will be swimming and boating in waters so contaminated with human feces that they risk becoming violently ill and unable to compete in the games."  In other words, competitors in Brazil's olympic games will be swimming in shit.Brazil was, and still is, literally up shit creek without a paddle.  Well as you might have surmised based on the release of a series of economic data so bad that analysts are having trouble coming up with new ways to describe the situation, the outlook for next year’s summer games hasn’t improved. In fact, things have worsened materially to the point that now, athletes will be asked to pay for their own air conditioning.  As Bloomberg reports, “following a new round of cost-cutting by the Rio 2016 organizers,athletes will be asked to pay for the air conditioning in their dorm rooms, stadium backdrops will be stripped to their bare essentials, and fancy cars and gourmet food for VIPs are out.”

Canada's Budget Deficit To Be Billions Bigger Than 'Optimistic' Liberal Forecasts: PBO: Canada's budget watchdog says the federal government's medium-term deficits will likely be billions of dollars higher than what was predicted in "optimistic" Liberal forecasts. The parliamentary budget office says the government is on track to deliver annual shortfalls that will be as much as $10.8 billion higher than expected. In the near term, however, the budget office predicts the government will perform better than the projections in Finance Minister Bill Morneau's recent fiscal update. In fact, the budget office says the government is currently headed for a $1.2-billion surplus this fiscal year — a $4.2-billion swing from the Liberals' $3-billion shortfall projection for 2015-16. Parliamentary budget officer Jean-Denis Frechette projects a 2016-17 deficit that's $900 million smaller than Ottawa's forecast, but shortfalls between 2017-18 and 2020-21 that are $2.3 billion, $3.6 billion, $6.3 billion and $10.8 billion higher than current projections. The fresh projections mean additional pressure on the Liberals to live up to their election vows to keep their expected annual deficits from climbing and to balance the books in four years. Both the budget office and government numbers were crunched before factoring in the billions of dollars in election-campaign spending commitments by the Liberals.

Plunging oil, potash prices pushing Saskatchewan deficit to $262M - Q: How does a resource-rich province, like Saskatchewan, go from a projected $107-million surplus in March to a $262-million deficit nine months later? A: When your resource revenues decline by nearly $400 million. Plunging oil and potash prices and production are continuing to push the province’s finances into the red, according to the mid-year financial report released by Finance Minister Kevin Doherty on Monday. While the size of the deficit is no surprise, the speed of the change is breathtaking. Non-renewable resource revenues for fiscal 2015-16 are projected at $2.07 billion, down $388 million from the budget and down $148 million from the first-quarter report, released in August. The main culprits are oil prices, which have been on a long, steep decline from over US$100 in mid-2014, and more recently potash prices, which are down about US$15 per tonne from budget. Oil prices are forecast to average US$49.50 per barrel (WTI) in fiscal 2015-16, same as the first-quarter forecast, but down from the budget forecast of US$57.15, the mid-year report said. Every dollar decline in the WTI trims provincial revenues by $23 million, according to the 2015-16 budget. Not surprisingly, projected oil production is also down 5.3 million barrels from 178 million barrels in the budget, although up five million barrels from the first-quarter report. As a result of lower prices and lower production, projected oil revenue is down $204.4 million, while Crown land sales are down $72.5 million from budget estimates.

Looney Plunges As Canadian GDP Collapses Most Since 2009 -- Who could have seen that coming? It appears, for America's northern brethren, low oil proces are unequivocally terrible. Against expectations of a flat 0.0% unchanged September,Canadian GDP plunged 0.5% - its largest MoM drop since March 2009 and the biggest miss since Dec 2008. With Canada's housing bubble bursting, it's time for the central planners to get back to work and re-invigorate the massive mal-invesment boom (and ban pawning of luxury goods). In the past year, we have extensively profiled the collapse of ground zero of Canada's oil industry as a result of the plunge in the price of oil, in posts such as the following:

• "Canada Crude Contagion: Calgary Home Prices Drop Most In 2 Years"
• "Canada's Biggest Oil Casualty To Date: Calgary's Nexen Shutters Oil Trading Desk"
• "The Canadian Housing Bubble Has Begun To Burst"
• "Canada's Oil Patch Confidence Crashes"
• "Canada Mauled by Oil Bust, Job Losses Pile Up – Housing Bubble, Banks at Risk"
• "The Stage Is Set For A Massive Housing Market Correction in Canada's Oilpatch"

Since then it has gotten far, far worse for Canada... GDP is down 0.5% MoM (and unchanged YoY - the worst since Nov 09)

It's cargo theft season in Canada, as thieves target truckloads of goods -- Cargo theft is one of the most lucrative criminal activities in Canada, but it rarely makes headlines. And yet it’s costing consumers and the economy an estimated $5 billion a year. “A decade or so ago, it was probably a more opportunistic crime,” David Bradley of the Ontario Trucking Association told W5. “But what I think has occurred is that organized crime syndicates have seen that it’s relatively low risk, high reward, and there seems to be a market for just about anything somewhere in the world.” Stolen cargo - the stuff loaded in trailers and hooked onto trucks - can range from high priced electronics, cars and booze to everyday products like cheese, candy, toilet paper and household detergents. Once thieves get their hands on a load, selling it is easy. Organized crime groups know who is in the market for a particular product and often have buyers lined up, or the goods are sold off piecemeal to corner stores and flea markets. Some buyers have no idea they’re paying for a stolen product, while others don’t ask questions. “There’s a lot of willful blindness,” said Detective Sergeant Paul LaSalle, the head of the Auto Cargo Theft Unit at York Regional Police, one of just two specialized teams in the country. If selling the stolen goods is easy, stealing them in the first place is even easier. “The transportation industry is growing really quickly,” said Mike Grabovica, the owner of Birdseye, a company that sells security systems. “So carriers are looking for additional yards to supplement their increased inflow of business and these additional yards tend to be highly unsecured.”

TTIP’s Regulatory Cooperation And The Politics Of ‘Learning’  Recently, the TTIP negotiations have entered a new a phase in spite of wide public criticisms. The European Commission (EC) has made a number of concessions with regard to the main target of criticism – the Investor to State Dispute Settlement (ISDS) – by proposing an ‘Investment Court System’ that addresses some of the greatest concerns. The focus on the ISDS has, however, somewhat unfortunately diverted attention from another institutional development, namely, the equally important and equally dangerous ‘Regulatory Cooperation’. What is Regulatory Cooperation? The TTIP is not meant to be a traditional trade agreement. Along with trade rules agreed in the treaty negotiations, TTIP comes with a set of framework institutions, and mandates future regulatory cooperation regarding those ‘barriers to trade and investment’ not decided upon in the original agreement. In other words, TTIP is a ‘living agreement’, an agreement that actualizes itself. TTIP’s Regulatory Cooperation (RC) will be put into operation at two different levels. At a first level, the TTIP requires certain key commitments concerning how states conduct domestic regulatory activities. In particular, the RC requires a broad domestic commitment to stakeholder consultation and impact assessments. At a second level, the TTIP creates new institutions. Two main mechanisms are envisaged. On the one hand, regulators from both sides of Atlantic are expected to engage in the so-called ‘bilateral mechanism’. At the request of a state party (and their stakeholders), regulators will engage in a bilateral exchange regarding proposed policy activities.

German retail sales dip on the month in October - RTÉ News: German retail sales fell unexpectedly on the month in October, new figures show today. But a solid rise on the year strengthened expectations that private consumption will remain a key growth driver for Europe's largest economy in the final quarter of the year. Retail sales, a notoriously volatile indicator often subject to revision, inched down 0.4% on the month in real terms in October after stagnating the previous month, the Federal Statistics Office said today. That was below the Reuters consensus forecast for a 0.4% rise. On the year, retail sales climbed by 2.1%, missing the consensus forecast for a 2.9% rise. From January to October, retail sales increased by 2.8% in real terms compared with the same period last year - the strongest increase since 1994. "People keep spending money because their job situation is good, and the record-influx of refugees also increases demand," an official at the Statistics Office said. German consumers are benefitting from record employment, rising wages and nearly stable prices while low interest rates are giving them little incentive to save and cheap energy is freeing up additional cash for spending.

German Economist Concludes Refugees Will Ultiimately Cost Germany €900 Billion -- In contrast to the absurd Keynesian position that refugees will pay for themselves via higher growth rates, German economist Bernd Raffelhüschen estimates that over the long haul Refugees Will Cost Germany €900 brillion. Via translation ... Bernd Raffelhüschen, director of the Research Center for Generational Contracts totals the cost of all government spending on refugees, including social insurance, over the life of a refugee. At his Market Economy Foundation presentation, Raffelhüschen stated that "even with an integration of migrants into the labor market within six years, administrative fees in the long term will cost 900 billion euros." The article did not say the number of migrants on which the number was based, or whether the influx would continue and at what pace.
If one assumes 4 million total refugees, then each refugee would cost €225,000. Spread out over 30 years, the cost would be €7,500 per year. I am not sure I buy the notion the cost will be that much "even with an integration of migrants into the labor market within six years". Then again, I am quite confident a big percentage of the migrants will not be in the labor force within six years.

German Officials Warn of New Security Risk: Local Extremists Recruiting Refugees - WSJ: —The Paris attacks have raised fears of terrorists slipping into Europe by posing as refugees. But in Germany, the top migrant destination, security officials have another worry: Local extremists will recruit the newcomers to join the Islamist cause once they arrive. German authorities warn that migrants seeking out Arabic-language mosques in search of the familiar are increasingly ending up at those attended by Islamist radicals. In interviews, security officials from Berlin to the southwest German state of Saarland said they have registered a sharp rise in the number of asylum-seekers attending mosques they believed attracted extremists. Federal officials said they have counted more than 100 cases in which Islamists known to them have tried to establish contact with refugees. According to state and local agencies across the country, Islamists have offered migrants rides, food, shelter and translation help. In some cases, they have invited them to soccer games and grill parties, or brought them copies of the Quran and conservative Muslim clothing. “They start by saying, ‘We will help you live your faith,’ ” said Torsten Voss, the head of the German domestic intelligence agency’s Hamburg branch. “The Islamist area comes later—that is, of course, their goal.” Security officials across Germany describe the potential radicalization of migrants, still entering the country by the thousands every day, as a challenge that adds to Europe’s existing security threats. With Germany expecting to take in roughly one million asylum-seekers from the Middle East and elsewhere this year, authorities are scrambling to prevent new pockets of radicalism from forming.

E.U. Offers Turkey 3 Billion Euros to Stem Migrant Flow - Under heavy pressure from Germany to get a grip on the migrant crisis in the Continent after months of dithering, the European Union agreed to a deal on Sunday with Turkey that aims to slow the chaotic flood of asylum seekers into the 28-nation bloc.Chancellor Angela Merkel of Germany, speaking to reporters late Sunday, acknowledged that the agreement, under which Europe will provide 3 billion euros, about $3.2 billion, and other inducements in return for Turkish help on migrants, would not immediately halt the flow of asylum seekers from the Middle East and elsewhere. But Ms. Merkel said it would help “keep people in the region” and out of Europe.The meeting, the seventh gathering of European leaders since the spring regarding the divisive question of migration, came days after Turkey shot down a Russian warplane and added a new element of uncertainty to a crisis that has overwhelmed Europe. Another cloud hanging over the Brussels gathering was the arrest last week of two prominent Turkish journalists, a move that deepened concerns among human rights activists and some European politicians that Turkey had taken an authoritarian turn under President Recep Tayyip Erdogan.

EU welcomes Greek request for border aid -- The European Commission on Friday welcomed a decision by the Greek government to request help from European Union-flagged patrols and emergency workers in monitoring its borders and screening asylum seekers fleeing conflict in the Middle East, amid reports that Brussels is mulling the formation of a special force to beef up the Schengen Area. Speaking in Brussels on Friday, Commission spokesman Margaritis Schinas said that Greece’s decisions to activate the bloc’s Civil Protection Mechanism, to allow EU agency Frontex to help with the registration of migrants on the border with the Former Yugoslav Republic of Macedonia (FYROM), and to trigger the Rapid Border Intervention Teams mechanism (RABIT) for extra patrols in the Aegean were “in the right direction.” Schinas said that Greece, which is in the front line of Europe’s migration and refugee crisis, has pledged to set up another four so-called hot spots on an equal number of Aegean islands. A first hot spot is already in operation on Lesvos. “We hope to have concrete, tangible progress on the ground” before an EU summit on December 17 where migration will be on the agenda, he added. Greece’s decision came amid reported threats from several EU governments that the country risked being kicked out of the Schengen zone of passport-free travel because of its leaky frontier.

Greek political leaders fail to agree on pension reforms - US News: (AP) — The leaders of five of the seven parties represented in Greece's Parliament have failed to agree on pension reforms after a six-hour meeting, prompting the prime minister to criticize the opposition for being "irresponsible" and "unserious." Alexis Tsipras, who didn't back moves by other governments while he was in opposition, had hoped to get the opposition parties to agree on a statement that called for no further pension cuts and present this as a bargaining chip in talks with Greece's creditors. Tsipras' left-led government last summer signed Greece's third bailout deal since 2010, agreeing to deep spending cuts, including on pensions, in return for financial assistance to keep the heavily indebted country afloat. The leaders did agree Sunday to demand more EU assistance to help it with the migrant crisis.

Young Greek women selling sex for the price of a sandwich, new study shows - Young Greek women are selling sex for the price of a sandwich as six years of painful austerity have pushed the European country to the financial brink, a new study showed Friday. The study, which compiled data on more than 17,000 sex workers operating in Greece, found that Greek women now dominate the country’s prostitution industry, replacing Eastern European women, and that the sex on sale in Greece is some of the cheapest on offer in Europe. “Some women just do it for a cheese pie, or a sandwich they need to eat because they are hungry,” Gregory Laxos, a sociology professor at the Panteion University in Athens, told the London Times newspaper. “Others [do it] to pay taxes, bills, for urgent expenses or a quick [drug] fix,” said Laxos, who conducted the three-year study. When the economic crisis began in Greece, the going rate for sex with a prostitute was 50 euros ($53), the London newspaper quoted Laxos as saying. Now, it’s fallen to as low as two euros ($2.12) for a 30-minute session. Laxos said the some 400 such desperate cases he found may be “nominal compared with the thousands of other sex workers operating nationwide, but they never existed as a trend until the financial crisis.” He said Greek women now account for 80 percent of the prostitution trade in Greece. He said his wide-ranging study showed that the number of desperate young women — the ones offering the cheapest sex — appeared to be on the rise. “It doesn’t look like these numbers will fade,” he told the Times. “Rather they are growing at a steady and consistent pace.”

The $400 billion ripoff that could destroy the Greek bailout: As if Greece didn't have enough economic market woes, last week foreign investment funds managed to take control of four of the country's largest banks — Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank — through $6.42 billion worth of capital increases and a complex set of legal manipulations. As a result, bank shares sold like penny stocks, diluting state ownership in these important institutions that have assets totaling $358 billion.The country's stake in the National Bank of Greece dropped to 24 percent from 57 percent, and in Eurobank it fell to 2.4 percent from 35 percent, while its stake in Alpha Bank was reduced to 11 percent from 64 percent and in Piraeus Bank it dropped to 22 percent from 67 percent. This translates to a loss of almost $44 billion that Greek taxpayers gave to bail out the banks over the past three years. Greek stock market and legal experts believe that the maneuvers were engineered after a statutory legal provision was amended by the Greek Parliament that allowed private investors to price bank shares using a so-called "book-building method." Under this method, the share price in capital increases is not predetermined, and investors set the price at which they want to buy the shares.

Greeks strike over pension reform as discontent over cuts swells - Striking Greek workers will take to the streets on Thursday, disrupting transport, shutting schools and keeping ships docked at port in the second major protest against planned pension cuts in three weeks. The 24-hour walkout by Greece's two biggest unions, representing about 2.5 million workers and pensioners, is a test of the leftist-led government's resolve to implement unpopular austerity measures in the face of growing resistance at home. Prime Minister Alexis Tsipras' government majority has shrunk to three seats as it pushes through reforms agreed with its foreign creditors in July, forcing the prime minister to seek opposition backing for future legislation. But opposition parties have so far refused to give their support to tough pension reforms that Greece has promised to submit by December under its EU and IMF bailout. Greeks, too, have responded angrily to the latest measures, exasperated after years of economic crisis which has shrunk their incomes, shut businesses and pushed up unemployment. "Enough is enough. We can't take it anymore," private sector union GSEE said in a statement announcing the strike.

Portugal: the Left Takes Charge: After several weeks of political brinkmanship, Portugal’s rightwing president, Anibal Cavaco Silva, finally backed off from his refusal to appoint the leader of a victorious left coalition as prime minister and accept the outcome of the Oct. 4 national elections. Silva’s stand down has ushered in an interesting coalition that may have continent-wide ramifications.Portugal’s elections saw three left parties—the Socialist Party, the Left Bloc, and the Communist/Green Alliance take 62 percent of the vote and end the rightwing Forward Portugal Party’s majority in the 230-seat parliament. Forward Portugal is made up of the Social Democratic Party and the Popular Party.Even though Forward Portugal lost the election—it emerged the largest party, but garnered only 38 percent of the votes—Silva allowed its leader, former Prime Minister Passos Coelho, to form a government. That maneuver lasted just 11 days. When Coelho introduced a budget loaded with austerity measures and privatization schemes, the left alliance voted it down, forcing the government to resign.

AP analysis: Is Portugal about to go down the same road as Greece? | CJOnline.com: — An anti-austerity alliance including radical leftist parties takes power. A shaky economy and huge debts menace the national economy. The rest of Europe watches with a wary eye. Sound familiar? It’s not Greece, but another eurozone country: Portugal. A nation that just months ago was hailed as an example of how to follow through with budget austerity measures has become a new source of concern in Europe. A left-wing coalition has unseated a center-right government that introduced the deep spending cuts and steep tax hikes demanded since 2011 by creditors during Portugal’s 78 billion euro ($82.6 billion) bailout. The developments echo what happened in Greece, whose radical leaders this year almost crashed the nation out of the eurozone. Here is a look at whether Portugal is likely to go the way of Greece.

National Front Leading Polls for French Regional Elections Dec 6, Dec 13; Center-Right Squeezed -- French Regional Elections are coming up on December 6 and December 13.  At stake are the presidencies of the 18 Regions of France. 12 Regions are on continental France, plus Corsica and 5 more overseas. The regions do not have legislative autonomy, but they do manage sizable budgets. And the regional elections are often taken as a mid-term opinion poll. European polls are frequently inaccurate, but as it stands, the center is being squeezed by Marine Le Pen's Eurosceptic and anti-immigration National Front party (FN) on the right, and on the other side by the radical left.  Via translation, 20 Minutes reports National Front Ahead in Regional Election Polls.  According to an exclusive survey by Harris Interactive for 20 Minutes, less than one in two French (43%) claiming to vote in the 1st round believes that the attacks will play their choice. And only one in four surveyed believes this will play "a lot" (26%). "There is not today, when questioned French, immediate relationship between this situation of tension and electoral behavior," said Jean-Daniel Levy, director of the department "Politics and Opinion" Harris Interactive.  According to the survey, the National Front collects 27% of voting intentions ahead of the radical socialist Left Party-Party with (26%),and Republicans-UDI-MoDem (25%). Then come the lists of Europe-Ecology-The Greens (7%) left the Communist Party-Front (5%) tied with sovereignist party France Arise.

Europe: Here We Go Again -- The European economic crisis just keeps getting worse. The European Commission is now planning to pool all money for bank bailouts among nations. That means the funds set aside in Germany to weather German bank failures can be used in France. Meanwhile, the EU is preparing to relax the stability policy (austerity) because of refugees and terror. This emergency position will allow countries to now increase their debt under the exception of “Acts of God”. This clause can pretty much justify anything. Furthermore, now tens of thousands of pensioners in Germany have to pay taxes on their pensions for the first time in 2016. A pension increase of 2.5% will result in a lower net take-home for the first time and this will exceed the basic allowance in the coming year. The Ministry of Finance expects to be characterized with 310 million euros in additional tax revenue.

Euribor Hits Record Low in First Ever Dip Below 0.10%; Negative Mortgage Rates Increasingly in Play  --Via translation from La Vanguardia, Euribor at Historic Lows, Mortgage Interest Drops by €166 Per Year.  The 12-month Euribor, on which most Spanish mortgages are based, closed the month of November at 0.079%, setting a new record low and falling for the first time below 0.1%. The monthly closing represents a decline of 0.256 percentage points since November last year.  A citizen with a mortgage of 120,000 euros will get a will save almost 14 euros per month, 166 euros per year. XTB analyst Jaime Díez explained to Europa Press that the index has experienced a 50% drop since the beginning of the month based on "fruit of the proximity of the next meeting of the European Central Bank" to be held this Thursday by president Mario Draghi.  Actually, negative interest rates on mortgages happened in April of this year, just not on 12-month Euribor.The above table from on Euribor Rates. Anyone with a mortgage rate tied to 6-month Euribor or less now gets paid to have a mortgage. In Spain, most mortgages are tied to 1-year Euribor.

German 2-yr yields hit new low as markets hope Draghi has what it takes | Reuters: German two-year yields hit record lows in deep negative territory on Thursday, with financial markets expecting ECB President Mario Draghi to go full throttle on inflation with a package of rate cuts and ramped-up bond buying. Draghi, who has a reputation of promising big and delivering even more, has all but committed to action, leaving investors guessing only on the combination of measures and their aggressiveness. Money markets are pricing in a cut of at least 10 basis points in the European Central Bank's deposit rate to minus 30 basis points, while economists in a Reuters poll expect an increase in asset-buying to 75 billion euros a month from 60 billion euros. Other options include the introduction of a two-tier deposit rate system, extending the quantitative programme (QE) beyond September 2016, expanding the pool of eligible assets to include municipal debt and even - a long shot - non-performing loans. With a comprehensive package already in the price, investors are wondering whether Draghi could disappoint for a change, but they are not willing to bet on it. The below-forecast November inflation data that came in at 0.1 percent turned many doubters into believers and short-term German yields touched new record lows on Wednesday.

ECB disappoints markets with bare-minimum easing package | Reuters: The European Central Bank eased policy further on Thursday to fight stubbornly low inflation but kept much of its powder dry, disappointing high market expectations for greater stimulus. The ECB cut its deposit rate deeper into negative territory and extended its asset buys by six months -- widely anticipated moves that some investors considered the bare minimum after the bank had for weeks stoked expectations of stimulus moves. The bank will also start buying municipal debt but keep its overall asset purchases unchanged, potentially lowering its government bond buys as the new instrument crowds out other assets. The euro EUR= jumped as much as 3.1 percent against the dollar after the policy announcement and bond yields surged. Disappointed investors had anticipated a 25-percent increase in monthly asset buys, with some even pricing in a bolder deposit rate cut than the move to -0.3 percent from -0.2 percent. The euro traded 2.4 percent higher on the day at $1.0865 at 1510 GMT, on course for its biggest one-day gain since March. Defending the moves, ECB President Mario Draghi said the market just needed to take time to understand them, adding they could always be adapted.

Dollar Surges, Bonds Sink as ECB's Rate Cut to -0.3% and Pledge of More QE Until March 2017 "or Beyond" Not Dovish Enough --ECB president Mario Draghi's announcement today regarding more QE fell far short of the sky-high expectations of market participants.  Draghi Recap:

1. ECB would continue its €60bn-a-month bond buying program for another 6 months until March 2017 “or beyond”.
2. ECB reduced key interest rate to a historic low of minus 0.3 percent.
3. ECB pledged to buy more assets with the proceeds of its existing bond purchases.
4. ECB announced it would buy municipal bonds in addition to standard government debt.

Somehow that was not enough to excite the market. Here's an amusing quote courtesy of the Financial Times. “The ECB delivered at the very low end of expectations,” said Andrew Balls, chief officer for fixed income at Pimco. “There wasn’t much to get excited about . . . markets were expecting an increase in the monthly purchase size.”

ECB Day: markets tumble as Draghi disappoints investors - as it happened - European stock markets have posted their biggest losses in over two months.  Shares fell sharply after Mario Draghi failed to deliver the major stimulus packages which had been expected. The wave of selling rippled from Frankfurt and Paris to Madrid and Milan, as traders expressed disappointment that the ECB hadn’t expanded its QE programme, or hit the banks with tougher negative interest rates. Every share on the German DAX closed slower, sending the index down by 3.5% -- which looks like its biggest one-day decline since mid-September. The London also fell sharply in sympathy. The FTSE 100 shed 145 points, or over 2%.The euro, though, continues to drive higher - and is currently up around 3%.Tony Cross of Trustnet Direct says the ECB triggered a wave of selling.All eyes were on the ECB and the expectation that Mario Draghi would unleash some weighty stimulus measures in another attempt to kick-start the Eurozone economy.Although the deposit rate was cut, the market had been factoring in a drop of more than the delivered 10 basis points here, whilst the extension of the bond-buying programme had been fully priced in, too. The result has been a sweeping sell-off for stocks, both within the Eurozone and also in the UK.

IMF backs new ECB stimulus, says willingness to act key | Reuters: The International Monetary Fund on Thursday backed the European Central Bank's move to cut a key interest rate and extend its asset purchases and said it should remain willing to act until price stability was achieved. "The ECB's decisions today help address increased downside risks to the recovery," IMF communications director Gerry Rice told reporters at a regular news briefing. "Today's actions and its strong commitment to adjust the program if needed will help meet the price stability objective. The ECB should continue to strongly signal its willingness to act and use all the instruments available until its price stability mandate is met."

All Heck Breaks Loose after Draghi Fails to Outdo his Own Hype - Something big is broken. Hedge funds – already beaten up by lousy returns or massive losses this year and struggling with redemptions as frustrated investors are bailing out – are now watching their European bets get demolished by an evil surprise: Draghi failed to outdo his own hype. German investors are largely conservative. They like to put their money in brick and mortar to own something real and profit slowly. People with smaller ambitions squirrel their money away at the bank to collect a tiny amount of interest, back when there still was interest. Many invest in life insurance products for retirement cash flows. But they aren’t big stock-market jockeys. So when the German DAX today plunged 4.5% within a couple of hours, from 11,315 just before Draghi’s fateful announcement to 10,789 at the close, it wasn’t frustrated Germans dumping their darlings. The French are even less into stocks than the Germans. They don’t trust them. They like their government-sponsored savings accounts. So when the French CAC 40 plunged 3.6% even as Draghi was speaking, it wasn’t the French he’d disappointed. It was his former colleagues and rivals at Goldman Sachs and other banks and hedge funds, and they were dumping European equities.And neither the French nor the Germans suddenly went out of their way to load up on the euro, though it jumped 4% within hours, a breath-taking move for a major currency, from a seven-month low of $1.055 just before the meeting to $1.098 as I’m writing this.

As the Euro Nudges Up, Could U.S. Inflation Be Next? - Greg Ip - If you believe the popular narrative, the world is now embroiled in a currency war, with the U.S. as the losing party. In the past year, the euro has plummeted and the dollar soared as the European Central Bank bought bonds and cut interest rates into negative territory, while the Federal Reserve has halted its own bond buying and is preparing to raise rates. Yet when the ECB, as expected, expanded its bond program, known as quantitative easing, and cut rates further on Thursday, the euro rallied from $1.05 to $1.09. In part, that’s because the ECB eased less than many hoped. More important, though, is that the ECB’s actions have already done their work: The euro is dirt cheap based on fundamentals, and the Fed is soft-pedaling its own tightening plans. Heading into Thursday’s ECB meeting, traders were deeply bearish on the euro, a common precursor to a rally. They weren’t as bearish as in March, which led Bianco Research to speculate that the euro had still further to fall. Nonetheless, odds are its long slump, and the dollar’s epic appreciation, are nearing an end, which could have important effects on inflation, growth and markets in coming months. Currencies routinely “overshoot” to well above or below their long-run value. Last August, just before ECB President Mario Draghi hinted that QE was coming, the euro stood at $1.34, which was about 5% above its purchasing-power parity. That’s the value, by International Monetary Fund calculations, that make a basket of goods and services equal in price between the U.S. and the eurozone. By March, with QE and negative rates in full swing, the euro had fallen to $1.05. It rallied thereafter before falling again to around $1.05 Thursday, just before the ECB’s announcement. That put it 17% below purchasing power parity, its most undervalued since 2002

Swiss economy grinds to standstill in third quarter - The country’s Gross Domestic Product changed by zero percent in the three-month period from the second quarter, based on provisional statistics, the State Secretariat for Economic Affairs (Seco) said in a report. While stagnating compared to the previous quarter, the economy grew by 0.8 percent from the third quarter of 2014. Prices dropped by 1.2 percent over the same period, Seco said. The report comes a day after the KOF economic institute issued a report calling for a “slightly dimmed outlook” for the Swiss economy, which has outpaced that of the European Union for the past several years. Its economic barometer fell, largely driven by a “marked deterioration of sentiment reflected by the indicators on Swiss manufacturing activity”, KOF said. “Apparently, the Swiss manufacturing sector is still struggling with the franc appreciation shock,” KOF said. The franc has sharply risen in value against the euro since the Swiss National Bank decided in January to abandon a policy, maintained for more than three years, of a price floor for the euro of 1.20 francs. The bank said the policy was unsustainable owing to the weakness of the euro. The franc subsequently jumped in value, flirting briefly with parity against the euro until falling back slightly after the central bank introduced negative interest rates on large franc deposits.

HSBC whistleblower given five years’ jail over biggest leak in banking history -- The whistleblower who exposed wrongdoing at HSBC’s Swiss private bank has been sentenced to five years in prison by a Swiss court. Hervé Falciani, a former IT worker, was convicted in his absence for the biggest leak in banking history. He is currently living in France, where he sought refuge from Swiss justice, and did not attend the trial. The leak of secret bank account details formed the basis of revelations – by the Guardian, the BBC, Le Monde and other media outlets – which showed that HSBC’s Swiss banking arm turned a blind eye to illegal activities of arms dealers and helped wealthy people evade taxes.  While working on the database of HSBC’s Swiss private bank, Falciani downloaded the details of about 130,000 holders of secret Swiss accounts. The information was handed to French investigators in December 2008 and then circulated to other European governments. It was used to prosecute tax evaders including Arlette Ricci, the heir to France’s Nina Ricci perfume empire, and to pursue Emilio Botín, the late chairman of Spain’s Santander bank. Switzerland’s federal prosecutor had requested a record six-year term for Falciani for aggravated industrial espionage, data theft and violation of commercial and banking secrecy.  It was the longest sentence ever demanded by the confederation’s public ministry in a case of banking data theft. The trial was also the first conducted by the country’s federal criminal court in which the accused had not been present.

Denmark holds referendum on relationship with EU - BBC News: Danes are going to the polls in a referendum on whether to adopt EU justice and policing laws, in a vote overshadowed by the Paris attacks. The result is expected to be evenly poised between the Yes and No camps. Denmark's centre-right government, backed by the opposition, wants to abandon some Danish opt-outs from EU home affairs legislation which were secured in 1993. They say a No vote will mean losing membership of the Europol crime agency. But the anti-immigration Danish People's Party (DPP), which props up Liberal Prime Minister Lars Lokke Rasmussen's government in parliament, was calling on voters to reject the proposals, to avoid giving away further sovereignty to Brussels. The referendum is being seen as a test of whether the Danes will accept or reject greater integration within a 28-member bloc that is being tested more than ever by the migrant crisis, the BBC's Gavin Lee reports from Copenhagen. Although a Yes vote would not affect Denmark's opt-out on immigration, the DPP argues that it could eventually lead to immigration policies being dictated by the EU. The No campaign's logo is "More EU - No Thanks!"

Vatican leaks trial engulfed by bizarre sex, Silvio Berlusconi blackmail and secret services claims: A series of outlandish claims of sex, blackmail and espionage have hit a controversial Vatican trial about the leaking of confidential documents. Most of the furore revolves around the only female defendant, Francesca Chaouqui, a PR expert appointed by Pope Francis to a special commission tasked with cleaning up Vatican sleaze.She and her former boss, Father Lucio Angel Vallejo Balda, are accused of passing secret information on the Holy See's murky financial dealings to Italian journalists Gianluigi Nuzzi and Emiliano Fittipaldi, who are also on trial. While the reporters have put up a common front, accusing the Vatican of attacking press freedom and falling short of international standards for justice, the same can not be said of Balda and Chaouqui, who have instead engaged in a war of words, blaming each other for the leaks. In November, after the pair was arrested by authorities in the tiny city state, Chaouqui was quickly released upon agreeing to co-operate with authorities. She later claimed Balda was solely responsible. The Spanish clergyman's shocking response arrived a few weeks later in the form of a deposition to his defence lawyer passed on to Italian newspaper La Repubblica, in which he claimed he was pressured into leaking the documents by Chaouqui after having sex with her. The 54-year-old said he was seduced by the PR agent – 23 years his junior – in December 2014. After that encounter, believing she was a spy and fearing a possible scandal, he felt compelled to act as she pleased.

UK households owe record £2.1bn in water bills - Britain’s water companies are owed a record £2.1bn by cash-strapped customers, with bad debts adding £21 to the average annual water and sewerage bill, according to the industry regulator. The average water and sewerage bill is £385 a year, but in some parts of the UK it is higher. For example, the average South West Water bill is £532, though this is offset by a £50 government subsidy for every household. These bills are leaving more than 2.5 million households unable or struggling to pay. There has been a 17% increase in the revenue outstanding at water companies since 2010, jumping from £1.9bn to £2.2bn, Ofwat says. The regulator is pressuring firms to do more to promote “social tariffs”, introduced in 2013, to help customers pay. Yorkshire Water said its social tariff has cut bills for 10,000 vulnerable customers by an average of £150 a year. But four of the major water companies are yet to introduce social tariffs, while others have been underpromoted. The regulator says that while in real terms bills have risen in line with inflation in recent years, it recognises they are part of a widening debt issue, with 56% more households seeking help from debt charities since 2012. Critics argue that the absolute level of water and sewerage bills has been inflated by surging profits and pay at the companies since privatisation. Average water bills have risen by about 40% more than inflation since the utility companies were privatised under Margaret Thatcher’s government in 1989-90.

RBS and Standard Chartered singled out as BoE unveils stress test results - Telegraph: All of Britain's biggest banks are strong enough to survive another major recession, the Bank of England said, although Royal Bank of Scotland and Standard Chartered came close to failing their annual stress tests. The fictional scenario tested the banks’ financial strength against a hypothetical crash in China and emerging markets, spreading economic chaos around the world. Such a recession would hit RBS hard, knocking its leverage ratio to 2.9pc, below the 3pc minimum and indicating the bank is overstretched. However, the tests were based on RBS’ finances at the end of 2014. Since then, the bank has shored up its balance sheet enough to satisfy Bank of England officials who say they won't be ordering RBS to take further action. Standard Chartered, which specialises in emerging markets, felt the strain of the stress tests, missing its tier one capital target of 6pc. But it too is already taking action, including a $5.1bn rights issue designed to build up the capital buffer. As a result, it has not been ordered to take further action. Other banks - Lloyds, Barclays, HSBC, Santander UK and Nationwide Building Society - passed the tests by a more substantial margin. However, they will have to pass higher hurdles in the coming years as the annual tests get progressively tougher.

How TTIP fits perfectly with the Deregulation Act, which can overrule all other laws if they affect growth or corporate interests -Low impact living info, training, products & services: The Deregulation Bill, proposed by Tory privatiser Oliver Letwin, slipped into law at the end of the last Parliament. It can change all other law, according to criteria of ‘growth’ ie business interests. It fits perfectly with the EU’s deregulatory agenda, and that of TTIP and the other new ‘trade’ agreements, which have largely come out of the City of London via the UK government anyway.Summary: The UK Deregulation Act has attracted little attention. However it is meta-regulation that enforces the prioritising of the interests of business to deregulate over the public interest in maintaining and developing social and environmental protections, across the UK legislative and regulatory spectrum. The UK Act mirrors the deregulatory agenda within the EU and in the EU’s ‘trade’ deals. This Act must be repealed by a future elected government.

Chilling UK Government "Advice" Asks Parents To Spy On Their Kids -- This is WAY beyond ‘if you see something, say something.’ In a series of pamphlets circulated among local governments in the United Kingdom, British parents are now being encouraged to spy on their own children, and to report any instances of possible ‘radicalization’.  Of course this advice comes with a nifty set of instructions for how to spot a terrorist in your own home:  The first three “signs”:

• Out of character changes in dress, behaviour and changes in their friendship group;
• Losing interest in previous activities and friendships;
• Secretive behaviour and switching screens when you come near—

Imagine that– a teenager who doesn’t want mom and dad to see what he’s doing on his iPhone? Or a 14-year old who starts dressing differently and hanging out with a different group of friends?  Funny, this sounds like. . . pretty much every teenager on the planet.