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Economic challenges piling up for the Biden administration

Economic data from September underscored how susceptible supply chains and the overall economy remain to the pandemic......»»

Category: topSource: washpostOct 13th, 2021

Economic challenges piling up for the Biden administration

Economic data from September underscored how susceptible supply chains and the overall economy remain to the pandemic......»»

Category: topSource: washpostOct 13th, 2021

Now A US Govt Official Is Telling Us That Supply Chain Nightmares Could Potentially Last For "Years"

Now A US Govt Official Is Telling Us That Supply Chain Nightmares Could Potentially Last For "Years" Authored by Michael Snyder via The Economic Collapse blog, The truth is starting to come out, and a lot of people aren’t going to like it.  When the supply chain problems and the shortages began, government officials repeatedly assured us that they would just be temporary, and most of us believed them.  But now it has become clear that they aren’t going to be temporary at all.  In fact, during a recent interview with Bloomberg, U.S. Transportation Secretary Pete Buttigieg admitted that some of the supply chain problems that we are currently facing could last for “years and years”.  I don’t know about you, but to me “years and years” sounds like a really long time. Of course that is not the only time that Buttigieg has made such a claim.  During another recent interview, he used the words “long term” to describe what we are facing… Buttigieg has said in recent interviews that “it’s an incredibly complicated situation,” but the government is holding virtual “roundtables” with port operators, labor unions and private companies. Nevertheless, he told MSNBC last Thursday, the “challenges” will continue, not only “going into the next year or two, but going into the long term.” Isn’t it remarkable how the outlook for our economic future has changed so dramatically in just a matter of a few months? Earlier this year, we were told that we would soon be entering a new golden era of prosperity. But now inflation and shortages are causing chaos everywhere we look. Earlier today, I came across a Daily Mail article that boldly declared that “stores across America have empty shelves” right now… Stores across America have empty shelves thanks to a series in supply chain problems that are prolonging inflation and could stretch into the new year, with some retailers like Costco and Walmart limiting the amount of toilet paper in some stores. More than 60 cargo ships are waiting to dock in California, carrying hundreds of thousands of containers, and may be stuck for months in a traffic jam after arriving from China and Asia. Millions of dollars of American goods are still sitting in warehouses in China, awaiting shipment. In addition to the unprecedented backlogs that we are witnessing at our major ports, it has also become far, far more expensive to send products across the Pacific Ocean. Just check out these numbers… The Washington Post reported the median cost of shipping a standard container from China to the U.S. West Coast hit a record $20,586. That’s nearly twice what it cost in July, which was twice what it cost in January, according to the Freightos index. “Consumers are confronting higher prices and shortages of cars, children’s shoes and exercise gear, as the holiday shopping season looms,” the Post said. That is crazy. And now the emerging global energy crisis is going to make it even more expensive to move stuff around the planet.  On Monday, the price of gasoline in the United States hit a new seven-year high… The national average price for gasoline hit a fresh seven-year high of $3.27 a gallon on Monday, up by 7 cents in the past week alone, according to AAA. Gas has nearly doubled since bottoming at $1.77 in April 2020. High gas prices will only exacerbate elevated inflation, squeeze the budgets of American families and hurt President Joe Biden’s political fortunes. In addition, we just learned that U.S. stockpiles of heating oil have hit a 20 year low… The U.S. may be heading into winter with the lowest stockpiles of heating oil to meet surging demand in more than two decades. Inventories of distillates — used as diesel for both transportation and heating oil — are enough to meet 31.2 days of demand, according to the Energy Information Administration. That’s the tightest it has been for this time of the year since 2000. Unfortunately, global energy supplies are going to get even tighter and prices are going to go even higher in the months ahead. Needless to say, the big corporations are going to feel forced to pass on rising costs to consumers.  In fact, the head of Kraft Heinz says that his company is already doing this… Miguel Patricio said the international food giant, which makes tomato sauce and baked beans, was putting up prices in several countries. Unlike in previous years, he said, inflation was “across the board”. The cost of ingredients such as cereals and oils has pushed global food prices to a 10-year high, according to the UN Food and Agriculture Organisation. If you are reading this article and you are thinking that this is perfectly setting the stage for many of the scenarios that I have described in my books, you would be 100 percent correct. We are entering a period of inflation that is going to absolutely shock most people. In fact, the UN says that the global price of food has already risen more than 32 percent over the past year… The United Nation’s Food and Agriculture Organization (FAO)’s September food price index – a measure of monthly changes in global food prices – reached 130 points, a level not seen since 2011. It represents a 32.8 percent increase from September 2020. I realize that I have thrown a lot of information at you very quickly in this article. Things are starting to move quite rapidly now, and we are being warned that conditions are going to continue to deteriorate in the months ahead. And as conditions deteriorate, the American people are going to becoming increasingly restless.  Already, polls are showing that Americans are quite dissatisfied with the current state of affairs.  Here is one example… Just 37% of Americans rate the economy as very or fairly good – the lowest percentage since March, and for the second straight month, more than half feel the economy is in bad shape. And most Americans are not convinced that the Biden administration’s domestic agenda would improve the economy. As I discussed yesterday, our economy is starting to break down on a very basic level. We have become so dependent on an efficient flow of goods and services, but these days there are breakdowns all over the system. I would like to tell you that things will get better soon, but I can’t do that. More supply chain problems are ahead, and some of them are going to be exceptionally painful. *  *  * It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon. Tyler Durden Wed, 10/13/2021 - 16:45.....»»

Category: blogSource: zerohedgeOct 13th, 2021

Port Of Los Angeles Prepares For 24/7 Operations To Tackle Massive Cargo Backlog 

Port Of Los Angeles Prepares For 24/7 Operations To Tackle Massive Cargo Backlog  With more than 80 container ships at anchor and 64 at berths across the Ports of Los Angeles and Long Beach, congestion at the nation's top ports continues to snarl supply chains. To alleviate bottlenecks threatening the holiday shopping season, the White House has released a memo stating the twin ports will be operating on a 24/7 basis to counter the backlog.  The shipping industry is in complete chaos, and bottlenecks at Ports of Los Angeles and Long Beach, a point of entry for 40% of containers, continue to experience massive backlog that is disrupting the time it takes goods to reach store shelves, creating price inflation for consumer goods and shortages. President Biden is expected to meet with "business leaders, port leaders, and union leaders to discuss the challenges at ports across the country and actions each partner can take to address the delays and congestion across the transportation supply chain," according to the White House.  "The President will meet with the leadership from the Ports of Los Angeles and Long Beach and the International Longshore and Warehouse Union (ILWU) to discuss the actions they are each taking to address these challenges in Southern California," the White House continued.  To solve such a crisis, it appears the Biden administration, businesses leaders, and port officials will "announce a series of public and private commitments to move more goods faster, and strengthen the resiliency of our supply chains, by moving towards 24/7 operations at the Ports of Los Angeles and Long Beach" at a press conference this afternoon.  Snarled supply chains first became an issue earlier this year for the administration when automakers began to experience production difficulties because of the lack of semiconductor chips. This forced Biden to announce a review of the problem in February.  Since then, the administration has done very little to alleviate shortages and bottlenecks as they push for more fiscal stimulus, one of the culprits of a massive demand-pull of overseas goods from Asia, straining logistical networks. The problem continues to worsen and adds inflation to the economy that is becoming more persistent than transitory. There's also the issue of consumer goods shortages ahead of the holiday season.  Here are the White House's commitments to resolve the shipping crisis:  The Port of Los Angeles is expanding to 24/7 operation. The Port of Long Beach expanded operations in mid-September. The Port of Los Angeles is now joining them by adding new off-peak night time shifts and weekend hours. This expansion means the Port of Los Angeles has nearly doubled the hours that cargo will be able to move out of its docks and on highways.  The International Longshore and Warehouse Union (ILWU) has announced its members are willing to work those extra shifts. This will add needed capacity to put towards clearing existing backlogs. This is an important first step, now the private businesses along the supply chain need to move their operations to 24/7. Large companies are announcing they will use expanded hours to move more cargo off the docks, so ships can come to shore faster. Unlike leading ports around the world, U.S. ports have failed to realize the full possibility offered by operation on nights and weekends. Moving goods during off-peak hours can help move goods out of ports faster. For example, at the Port of LA, goods move 25 percent faster at night than during the day. These commitments will help unlock capacity in the rest of the system—including highways, railroads and warehouses—by reducing congestion during the day. The commitments being announced today include: The nation's largest retailer, Walmart, is committing to increase its use of night-time hours significantly and projects they could increase throughput by as much as 50% over the next several weeks.  UPS is committing to an increased use of 24/7 operations and enhanced data sharing with the ports, which could allow it to move up to 20 percent more containers from the ports. FedEx is committing to work to combine an increase in night time hours with changes to trucking and rail use to increase the volume of containers it will move from the ports. Once these changes are in place, they could double the volume of cargo they can move out of the ports at night. Samsung is committing to move nearly 60% more containers out of these ports by operating 24/7 through the next 90 days. 72% of U.S. homes have at least one Samsung product, from appliances to consumer electronics. The Home Depot is committing to move up to 10% additional containers per week during the newly available off-peak port hours at the Ports of L.A. and Long Beach. Target, which is currently moving about 50 percent of its containers at night, has committed to increasing that amount by 10 percent during the next 90 days to help ease congestion at the ports. Across these six companies over 3,500 additional containers per week will move at night through the end of the year. Those boxes contain toys, appliances, bicycles, and furniture that Americans purchased online or at their local small business, and pieces and parts that are sent to U.S. factories for our workers to assemble into products. And this is just a start—these commitments provide a clear market signal to the other businesses along the transportation supply chain—rails, trucks, and warehouses—that there is demand to move additional cargo at off-peak hours. Secretary Buttigieg and Port Envoy Porcari will continue to work with all stakeholders to help more businesses access these expanded hours, and move the rest of the supply chain towards 24/7 operations. This effort is part of the ongoing work of the Biden-Harris Supply Chain Disruptions Task Force to continue to identify emerging bottlenecks to the economic recovery and take action to clear them to help families, workers, and businesses get the goods they need. Tyler Durden Wed, 10/13/2021 - 10:29.....»»

Category: blogSource: zerohedgeOct 13th, 2021

America"s Funding Challenges Ahead

America's Funding Challenges Ahead Authored by Alasdair Macleod via GoldMoney.com, This article looks at the Fed’s funding challenges in the US’s new fiscal year, which commenced on 1 October. There are three categories of buyer for US Federal debt: the financial and non-financial private sector, foreigners, and the Fed. The banks in the financial sector have limited capacity to expand bank credit, and American consumers are being encouraged to spend, not save. Except for a few governments, foreigners are already reducing their proportion of outstanding federal debt. That leaves the Fed. But the Fed recently committed to taper quantitative easing, and it cannot be seen to directly monetise government debt. That is one aspect of the problem. Another is the impending rise in interest rates, related to non-transient, runaway price inflation. Funding any term debt in a rising interest rate environment is going to be considerably more difficult than when the underlying trend is for falling yields. There is the additional risk that foreigners overloaded with dollars and dollar-denominated financial assets are more likely to become sellers.Not only are foreigners overloaded with dollars and financial assets, but with bond yields rising and stock prices falling, foreigners for whom over-exposure to dollars is a speculative position going wrong will undoubtedly liquidate dollar assets and dollars. If not buying their own national currencies, they will stockpile commodities and energy for production, and precious metals as currency hedges instead. The Fed will be faced with a bad choice: protect financial asset values and not the dollar or protect the dollar irrespective of the consequences for financial asset values. And the Federal Government’s deficit must be funded. The likely compromise of these conflicting objectives leads to the risk of failing to achieve any of them. Other major central banks face a similar quandary. Funding ballooning government deficits is about to get considerably more difficult everywhere. Introduction Our headline chart in Figure 1 shows the excess liquidity in the US economy that is being absorbed by the Fed through reverse repos (RRPs). With a reverse repo, the Fed lends collateral (in this case US Treasuries overnight from its balance sheet) to eligible counterparties in exchange for overnight funds, which are withdrawn from public circulation. As of last night (6 October), total RRPs stood at $1,451bn, being the excess liquidity in the financial system with interest rates set by the RRP rate of 0.05%. Simply put, if the Fed did not offer to take this liquidity out of public circulation, overnight dollar money market rates would probably become negative. The chart runs from 31 December 2019 to cover the period including the Fed’s reduction of its funds rate to the zero bound and the commencement of quantitative easing to the tune of $120bn every month —they were announced on 19th and 23rd March 2020 respectively. Other than the brief spike in RRPs at that time which was a wobble to be expected as the market adjusted to the zero bound, RRPs remained broadly at zero for a full year, only beginning a sustained increase last March. Much of the excess liquidity absorbed by RRPs arises from government spending not immediately offset by bond sales. Figure 2 shows how this is reflected in the government’s general account at the Fed. The US Treasury’s balance at the Fed represents money not in public circulation. It is therefore latent monetary inflation, which is released into the economy as it is spent. Since March 2021, the balance on this account fell by about $800bn, while reverse repos have risen by about $1,400bn, still leaving a significant balance of liquidity to be absorbed arising from other factors, the most significant of which is likely to be seepage into the wider economy from quantitative easing (over two trillion so far and still counting). The US Treasury has draw down on its general account because had it accumulated balances from bond funding in excess of its spending ahead of the initial covid lockdown. And its debt ceiling was getting closer, which is currently being renegotiated. But this is only part of the story, with the Federal deficit running at about $3 trillion in the fiscal year just ended. That is a huge amount of government “fiscal stimulus”, and clearly, the private sector is having difficulty absorbing it all. The scale of this deficit, debt ceilings aside, is set to increase under the Biden administration. If the US economy is already drowning in dollars, it is likely to worsen. Assuming the debt ceiling negotiations raise the Treasury borrowing limit, the baseline deficit for the new fiscal year must be another $3 trillion. Optimists in the government’s camp have looked for economic recovery to increase tax revenues to reduce this deficit enough together with selective tax increases to allow the government to invest additional capital funds in the crumbling national infrastructure. A more realistic assessment is that unexpected supply disruption of nearly all goods and rising production costs are eating into the recovery, which is now faltering. And it is raising costs for the government in its mandated spending even above the most recent assumptions. It is increasingly difficult to see how the budget deficit will not increase above that $3 trillion baseline. This article looks at the funding issues in the new fiscal year following the expected resolution of the debt ceiling issue. The principal problems are its scale, how it will be funded, and the impact of price inflation and its effect on interest rates. Assessing the scale of the funding problem There are three distinct sources for this funding: the Fed, foreign investors, and the private sector, which includes financial and non-financial businesses. Figure 3 shows how the ownership of Treasury stock in these categories has progressed over the last ten years and the sum of these funding sources up to the mid-point of the last US fiscal year (31 March 2021). Over that time total Treasury debt more than doubled to nearly $30 trillion. The funding of further debt expansion from these levels is likely to be a significant challenge. Initially, the Fed can release funds by reducing the level of overnight RRPs, some of which will become absorbed directly, or indirectly, in Treasury funding. But after that financing will become more problematic. Since 2011, the Fed’s holdings of US Treasury debt have increased from 11% to 19% of the growing total, reflecting QE particularly since March 2020. At the same time the proportion of total Treasury debt owned by foreign investors has fallen from 32% to 24% today, and now that they are highly exposed to dollars, they could be reluctant to increase their share again, despite continuing trade deficits. Private sector investors, whose share of the total at 57% is virtually unchanged from ten years ago, can only expand their ownership by increasing their savings and through the expansion of bank credit. But with bank balance sheets lacking room for further credit expansion and consumers inclined to spend rather than save, it is difficult to envisage this ratio increasing sufficiently as well. Clearly, the Fed has been instrumental in filling the funding gap. But the Fed has now said it intends to taper its bond purchases. Unless foreign investors step in, the Fed will be unable to taper. Excess liquidity currently reflected in outstanding RRPs can be expected to be mostly absorbed by expanding T-bill and short-maturity T-bond funding, which might buy three- or four-months’ funding time and not permit much longer-term bond issuance. But after that, the Fed may be unable to taper QE. Foreign funding problems While we cannot be privy to the bimonthly meetings of central bankers at the Bank for International Settlements and at other forums, we can be certain that there is a higher level of monetary policy cooperation between the major central banks than is generally admitted publicly. On matters such as interest rate policy it is important that there is a degree of cooperation, otherwise there could be instability on the foreign exchanges. And to support the dollar’s debasement, policy agreements between important foreign central banks may need to be considered. This is because the dollar’s role as the reserve currency gives the US Government and its banks not just an advantage of seigniorage over the American people, but over foreign holders of dollars as well. Dollar M1 money supply is currently $19.7 trillion, approximately 50% of global M1 money stock.[i] Therefore, its seigniorage and the world-wide Cantillon effect from increasing public circulation is of great advantage to the US Government, not only over its own people but in transferring wealth from foreign nations as well. This is particularly to the disadvantage of any other national government which, following sounder monetary policies, does not expand its own currency stock at a similar rate while being forced to use dollars for international transactions. Ensuring currency debasement globally is therefore a compelling reason behind monetary cooperation between governments. By agreeing on permanent currency swap lines with five major central banks (the ECB, the Bank of Japan, the Bank of England, the Bank of Canada, and the Swiss National Bank) they are drawn into supporting a global inflationary arrangement which ensures the stock of dollars can be expanded without consequences on the foreign exchanges. Ahead of its massive monetary expansion on 19 March 2020, to keep other central banks onside temporary swap arrangements were extended to nine other central banks, ensuring their compliance as well.[ii] But notable by their absence were the central banks whose governments are members and associates of the Shanghai Cooperation Organisation, which will have found that their dollar holdings and financial assets (mainly US Treasuries) have been devalued without consultation or recompense. It is therefore not surprising that foreign governments other than those with permanent swap lines are increasingly reluctant to add to their holdings of dollars and US Treasuries. By selectively excluding major nations such as China from swap line arrangements, by default the Fed is pursuing a political agenda with respect to its currency. International acceptability of the dollar is being undermined thereby when the US Treasury is becoming increasingly desperate for inward capital flows to fund its budget deficits. Even including allied governments, all foreigners are now reducing their exposure to US dollar bank deposits, by 12.9% between 1 January 2020 and end-July 2021, and to US T-Bills and certificates by 20.7% over the same period. The only reason for holding onto longer-term assets is in expectation of speculative gains. The situation for longer-term Treasury bonds is not encouraging. The US Treasury’s “major foreign holders” list of holders of longer-maturity Treasury securities, shows the list to be dominated by Japan and China, between them owning 31.5% of all foreign owned Treasuries. Japan’s cooperative relationship with the Fed was confirmed by Japan increasing her holdings of US Treasuries, but only by 1.3% in the year to July 2021, while China and Hong Kong, which between them hold a similar amount to Japan, reduced theirs by 3%.[iii] The ability of the US Treasury to find foreign buyers other than for relatively smaller amounts from offshore financial centres and oil producing nations therefore appears to be potentially limited. We should also note that total financial assets and dollar cash held by foreigners already amounts to $32.78 trillion, roughly one and a half times US GDP — dangerously high by any measure. This total and its breakdown is shown in Table 1. If foreign residents are to increase their holdings in US Treasuries, it is most easily achieved by foreign central banks on the permanent swap line list drawing them down and further subscribing to invest in T-Bills and similar short-term securities. As well as being obviously inflationary, that recourse has practical limitations without reciprocal action by the Fed. But a far greater danger to Federal government funding comes from dollar liquidation of existing debt and equity holdings, especially if interest rates begin to rise, bearing in mind that for any foreign holder of dollars without a strategic reason for holding a foreign currency, all such exposure, even holding dollars and dollar-denominated assets, is speculative in nature. The question then arises as to what foreigners will buy when they sell their dollars. Governments without a strategic imperative may prefer at the margin to adjust their foreign reserves in favour of the other major currencies and gold. But out of the total liabilities shown in Table 1 official institutions only hold $4.284 trillion long- and short-term Treasuries, which includes China and Hong Kong’s holdings, out of the $7.2 trillion total shown in Figure 2 earlier in this article. The $3 trillion balance is owned by private sector foreign investors. Excluding China and Hong Kong’s $1.3 trillion, US Treasury debt held by foreign governments is under 10% of all foreign holdings of dollar securities and cash. What is held by foreign private sector actors therefore matters considerably more, bearing in mind that it can all be classified as speculative, being a foreign currency imparting accounting risk to balance sheets and investment portfolios. If interest rates rise because of price inflation not proving to be transient, it will lead to significant investment losses and therefore selling of the dollar, triggering a widespread repatriation of global funds. A global increase in bond yields and falling equity values will also force sales of foreign securities by US investors. But with US investors being less exposed to foreign currencies in correspondent banks and with a significantly lower level of foreign investment exposure, the net capital flows would be to the disadvantage of the dollar. Some of the proceeds from dollar liquidation by foreigners are likely to lead to commodity stockpiling and at the margin some of it will hedge into precious metals, driving their prices higher. The long-term suppression of precious metal prices would to come to an end. Domestic problems for the Fed Clearly, the resumption of government deficit funding will no longer be supported by foreign purchases of US Treasuries at a time when trade deficits remain stubbornly high. This throws the funding emphasis onto the Fed and domestic purchasers of government debt. But as stated above, the private sector will need to reduce its consumption to increase its savings. Alternatively, banks which have limited capacity to do so will have to expand credit to purchase Treasury bonds, which is not only inflationary, but diverts credit expansion from the private sector. Consumers are charging in the opposite direction from increasing savings, drawing them down in favour of increased consumption. This is partly due to them returning to their pre-covid relationship between consumption and savings, and partly due to a shift against cash liquidity in favour of goods increasingly driven by expectations of higher prices. With their fingers firmly crossed, the latter is believed by central bankers and politicians to be a temporary phenomenon, the consequence of imbalances in the economy due to logistics failures. But the longer it persists, the more this view will turn out to be wishful thinking. Increasing prices for energy and essential goods, which are notoriously under-recorded in the broader CPI statistics, are emerging as the major concern. So far, few observers appear to accept that they are the inevitable consequence of earlier currency debasement. There is a growing risk that when consumers realise that rising prices are not just a short-term and temporary phenomenon, they will increasingly buy the goods they may need in the future instead of buying them when they are needed. This alters the relation between cash liquidity-to-hand and goods, increasing the prices of goods measured in the declining currency. And so long as consumers expect prices to continue to rise, it is a process that is bound to accelerate until it is widely understood by the currency’s users that in exchange for goods, they must dispose of it entirely. If that point is reached, the currency will have failed completely. It is this process that undermines the credibility of a fiat currency. Before it develops into a total rout, it can only be countered by an increase in interest rates sufficient to stop it, as well as by strictly limiting growth in the stock of currency. And even then, some form of convertibility into gold may be required to restore public trust. This, the only cure for fiat currency instability, is too radical for the establishment to contemplate, and is a crisis that increases until it is properly addressed. The rise in interest rates exposes all the malinvestments that have grown and persisted while interest rates were suppressed from the 1980s onwards, finally ending at the zero bound. The shock of widespread business failures due to rising interest rates will impact early in the currency’s decline when it becomes obvious that initial increases in interest rates will be followed by yet more. Importantly, the supply of essential goods is then further compromised by business failures instead of being alleviated by improving logistics. And consumer demand shifts even more in favour of the essentials in life and away from luxury and inessential spending. The poor are especially disadvantaged thereby and the middle classes begin to struggle. The private sector’s growing economic woes further undermine government finances. Unemployment increases and tax revenues collapse, adding to the budget deficit and therefore to the government’s funding requirements. Mandatory costs increase more than budgeted. Interest charges, currently about $400bn, add yet more to the deficit. Today, in all the major currencies control over interest rates by central banks is being challenged. Like the Fed, other major central banks are also insisting that rising prices are temporary, while markets are beginning to suspect the reality is otherwise. All empirical evidence and theories of money and credit scream at us that statist control over interest rates is being eroded and lost to market-driven outcomes. The consequences for markets and government funding costs There is growing evidence that accelerating monetary expansion in recent years is feeding into a purchasing power crisis for major currencies. Covid and logistics disruptions, coupled with lack of inventories due to the widespread practice of just-in-time manufacturing processes have undoubtedly made the situation considerably worse. But in the history of accelerating inflations, there have always been unexpected economic developments. Shifting consumer priorities expose hitherto unforeseen weaknesses, so it would be a mistake to disassociate these problems from currency debasements. It is leading to a situation which confuses statist economists, who tend to think one-dimensionally about the relationships between prices and economic prospects. For them, rising prices are only a symptom of increasing demand. And so long as expansion of demand remains under control and is consistent with full employment, it is their policy objective. They do not appear to understand rising prices in a failing economy. But classical economics and on the ground conditions militate otherwise. Inflation is monetary in origin, and it is the destruction of the currency’s purchasing power that is evidenced in rising prices. And when the public sees prices of needed goods rising at an increased pace, they begin to rid themselves of the currency. And far from stimulating production and consumption, high rates of monetary inflation act as an economic burden. Monetary policy now faces the dual challenge of rising prices and rising interest rates as the economy slumps. When central banks would expect to reduce interest rates, they will now be forced to increase them. When deficit spending is deployed to stimulate the economy, it must now be curtailed. Just when they matter most, bond yields will rise along their yield curves from the short end, and equity market values will be undermined by changing yield relationships. Falling financial asset values become a consequence of earlier monetary inflation undermining a currency’s purchasing power. The Fed, the Bank of England, the Bank of Japan, and the ECB have all acted together to accommodate government budget deficits, to be funded as cheaply as possible by suppressing interest rates. That they have acted together has so far concealed the consequences from bond markets, whose participants only compare one government bond market with another instead of valuing bond risks on their own merits. And through regulation, banks have been made to view investment in government bonds as being risk-free for counterparty purposes. All this is about to change with the turn in the interest rate trend. Monetary policy will have two basic options to weigh; between supporting the currency’s purchasing power by increasing interest rates, or to support financial markets by suppressing them. If the latter is deemed more important than the currency, it will most likely require more quantitative easing by the Fed, not less. Expressed another way, either central banks will pursue the current policy of maintaining domestic confidence and the wealth effect of elevated financial asset values and let the currency go hang. Alternatively, they can aim to support their currencies, and be prepared to preside over a collapse in financial asset values and accept the knock-on consequences. It is a dirty choice, with either policy option likely to fail in its objective. The end of the neo-Keynesian statist road, which started out lauding the merits of deficit spending is in sight. Mathematical economics and the state theory of money are about to be shown for what they are — intellectualised wishful thinking. As the most distributed currency, the dollar is likely to lead the way for all the others, slavishly followed by the Bank of England, the Bank of Japan, and the ECB. And all their high-spending governments, addicted to debt, will face unexpected funding difficulties. Tyler Durden Mon, 10/11/2021 - 17:40.....»»

Category: personnelSource: nytOct 11th, 2021

Why small businesses are essential to US national security

The decline of small-business suppliers in the defense marketplace puts the US at risk of losing key domestic capabilities. Boeing and Raytheon employees install of an APY-10 radar antenna on P-8A Poseidon aircraft in November 2009. Boeing The US Defense Department relies on American businesses for everything from spare parts to major weapons platforms. Small businessess are an essential part of that industrial base, and their innovations often filter through to everyday life. Farooq A. Mitha is the director of small-business programs at the Department of Defense. Small businesses are the engine of our economy, the heartbeat of our communities, and the source of our global economic strength. We often hear this from our nation's leaders, but what we do not often hear is the importance of small businesses to our national security.Since the middle of the 20th century, the Department of Defense (DoD) has relied on contributions from small businesses to make significant advances in our defense capabilities. These contracts with small businesses enable citizens to benefit from technological advances in their everyday lives.Companies we all know, such as Qualcomm and Symantec, and technologies like GPS and modern-day LASIK surgery were developed from defense or other federal agency contracts. In fact, even Moderna's mRNA technology used in its COVID-19 vaccine was funded with a grant from the Defense Advanced Research Project Agency, known as DARPA, to research mRNA therapeutics in 2013.Federal law requires government agencies award a minimum of 23% of all contracts annually to small businesses, and DoD awards its proportional share. Last year, DoD's awards to small companies amounted to over $80 billion, with 45% of those dollars going to disadvantaged and women-owned businesses, and those are just prime contracts. General Dynamics employees work on an Abrams tank gun turret at the Lima Army Tank Plant, in Lima, Ohio, April 23, 2012. REUTERS/Matt Sullivan While there are tens of thousands of small businesses with DoD prime contracts, there are almost an equal number of small businesses supporting the defense mission as sub-tier suppliers to large companies that produce major platforms and systems for DoD. These companies are innovators developing cutting-edge technologies, manufacturers producing critical parts and components, and service providers that bring some of the nation's best talent to our workforce.However, over the past decade we have seen some alarming trends. The number of small-business suppliers in the federal marketplace - specifically in the defense marketplace - have declined. If this decline continues at the current pace, our nation is at risk of losing key domestic capabilities.Further, small businesses continue to struggle with bureaucratic red-tape, including competing in an environment where larger businesses are generally favored. Small businesses face disproportionate barriers to entering that marketplace.At a time when our nation faces unprecedented competition from adversaries, supply-chain vulnerabilities from climate change and the global pandemic, and a wealth of talent from underserved communities going untapped, these trends must be reversed.That's why President Joe Biden in his first months in office signed several executive orders focusing on increasing equity in our federal procurements, increasing the resiliency and diversity of our domestic supply chains, and promoting competition in the American economy. Small businesses are at the nexus of all of these efforts.To support these presidential priorities, we in DoD took immediate action.First, we wanted to hear directly from small businesses to better understand the challenges they face and work to address them. To that end, we recently posted a notice on the Federal Register asking companies to let us know what barriers to entry they are facing. Workers assemble F-35s at Lockheed Martin's factory in Fort Worth, Texas, October 13, 2011. REUTERS/Lockheed Martin/Randy A. Crites We are streamlining entry points in the defense marketplace for small businesses by making my office's website, www.business.defense.gov, a single entry point for small businesses who want to learn how to do business with DoD and which small-business programs are available.We are also helping companies become ready to do business with DoD by increasing the connectivity between our Procurement Technical Assistance Centers, which support companies pursuing and performing on DoD contracts, with our acquisition workforce and by providing cyber-security resources to small businesses through Project Spectrum.We know there are companies in the commercial marketplace that have never done business with us. We know these companies have advanced technologies and capabilities we need to support our mission in areas like additive manufacturing, robotics, and artificial intelligence. To engage these companies, we have efforts such as the Defense Innovation Unit and others that are using flexible, commercial-style contracts to do businesses with these innovative commercial firms.There is more work to be done to strengthen and ensure a vibrant small-business industrial base. This requires DoD work closely with the private sector, and we are up to the challenge.Small businesses do more with more, and their innovations, agility, and diversity are pivotal, not only to DoD but to national security. Small businesses remain vital for our nation to address the myriad of global challenges we face today.Farooq A. Mitha serves in the Biden administration as the Director of Small Business Programs at the Department of Defense.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 11th, 2021

Labor Strikes Target Big Food As Workers Seize On Industry Turmoil

Labor Strikes Target Big Food As Workers Seize On Industry Turmoil By Chris Casey of Food Dive, At food plants around the country this year, workers have been making themselves heard about the state of wages, working hours and conditions. Just this week, roughly 1,400 Kellogg workers at ready-to-eat cereal plants in four states — Michigan, Pennsylvania, Nebraska and Tennessee — went on strike after their contract expired. In a statement, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) said its goal is to "obtain a fair contract that provides a living wage and good benefits." Anthony Shelton, BCTGM's president, said Kellogg workers "have been working long, hard hours, day in and day out, to produce Kellogg ready-to-eat cereals for American families" but that the company has responded by cutting benefits and threatening to send jobs to Mexico if employees don't accept the company's proposals. "Kellogg is making these demands as they rake in record profits, without regard for the well-being of the hardworking men and women who make the products that have created the company’s massive profits," Shelton said in a statement.  Just a couple weeks earlier, more than a thousand workers returned to their jobs at Mondelēz Nabisco factories in five states after a walkout that lasted nearly six weeks. It also was led by BCTGM. The workers were protesting what they considered unfair changes in overtime rules and shift lengths. This came a few months after hundreds of Frito-Lay employees in Topeka, Kansas, were on strike in July for 19 days, demanding better hours and higher pay. That same month, dozens of Teamster truck drivers gathered to strike against Coca-Cola in West Virginia, rejecting a contract that would reportedly have made them pay more for health insurance and give them less commission. Some of these strikes, including those at Mondelēz and Frito-Lay plants, have reached their conclusion after the manufacturers came to terms with workers and their unions. And some, like the strike affecting Kellogg plants, are only ratcheting up. The turmoil reflects a unique set of conditions — a labor shortage, growing demand and supply chain disruptions in the midst of a pandemic — that has given labor unions extra leverage, and food manufacturers a greater incentive to meet their demands.  CPGs are currently hobbled by a massive labor shortage. There are now 4.9 million more people who are either not working or not looking for work compared to pre-pandemic times, The Washington Post recently reported. At the same time, demand for food has skyrocketed, rising 8.7% in the second quarter of this year alone, as people spend more time at home, the Consumer Brands Association reported. This has left CPG manufacturers scrambling to increase production with fewer workers and a shaky, fragile supply chain — all while dealing with continued uncertainty over the outlook for COVID-19. The leverage that workers and labor advocates currently enjoy is a recent change in fortunes. The power of unions, specifically in the food manufacturing sector, had deteriorated during the past four decades as companies avoided meeting worker demands by moving many jobs overseas, according to Bryant Simon, labor scholar and history professor at Temple University. But the COVID crisis, Simon believes, has provided a unique opportunity for American factory workers to reassess their pivotal role in the food industry. "Workers are like, ‘Look, I’m not going to work on these terms anymore, and you’ve given me a chance to explore some other options,' " Simon said. Uncertain outcomes The Mondelēz strike demonstrates how all of these factors can come into play. The dispute began in May when workers were offered a new contract that would increase hourly shifts from eight hours to 12, without additional overtime pay for the first five days of the week. A Mondelēz spokesperson told CBS News at the time that the changes were intended to “promote the right behaviors” among workers.  Meanwhile, some Mondelēz employees at its Chicago factory told The New York Times they had worked 16-hour shifts during the pandemic to keep up with the increased demand for the snack giant’s most popular products, such as Oreos. Workers were also worried that their jobs would be sent to Mexico, similiar to what happened in 2016, when Mondelēz cut nearly 1,000 jobs at plants in Chicago and Philadelphia.  Mondelēz International spokesperson Laurie Guzzinati told Food Dive in August that the contract negotiations were “not about'' moving jobs to Mexico and that the company was committed to keeping its U.S workforce.  Workers in Portland, Ore., launched the first walkout on Aug. 10, with signs reading “No contract, no snacks,” “Weekends are family time” and “Spit out that Oreo” populating the picket line. As the strikes spread to other states — Illinois, Virginia, Colorado and Georgia — they quickly made national headlines. Actor Danny DeVito and Vermont Sen. Bernie Sanders came out in support of the workers.  The snacks giant told Food Dive that it began negotiating with the union “as soon as the action took place in Portland.” In its last quarterly earnings call on Sept. 9, Mondelēz’s CEO Dirk Van De Put said that after the company requested contract changes to increase capacity at its plants as well as product inventory, it “foresaw that it would not be an easy conversation." He said Mondelēz was making a new offer to the union, which included increased wages, a higher 401(k) match and more flexible hours. The company was not willing to reinstate its pension plan.  The new terms sealed the deal. In a statement after its members voted to approve the new four-year contract, BCTGM said that they "made enormous sacrifices" to reach a deal "that preserves our Union’s high standards for wages, hours and benefits for current and future Nabisco workers." BCTGM did not respond to multiple requests for comment by Food Dive. The Kellogg strikes, meanwhile, may not be coming to a quick, amicable conclusion any time soon. BCTGM called for a strike a month after Kellogg announced plans to invest $45 million in restructuring its ready-to-eat cereal supply chain, which includes cutting more than 200 jobs at its Battle Creek factory. The company said it is shifting production to more efficient production lines, even as it struggled with shortages of factory line workers and truck drivers at many of its plants. BCTGM representatives said last week that Kellogg did not provide workers with a “comprehensive offer” during contract negotiations like it had stated. In a statement to Food Dive, Kellogg spokesperson Kris Bahner said the company is "disappointed by the union’s decision to strike," and that its proposed new contract provides wage and benefits increases "while helping us meet the challenges of the changing cereal business." Bahner said the company hopes to reach an agreement with the union soon.  Raising the stakes of negotiations even further: Kellogg filed a lawsuit on Tuesday against BCTGM in the U.S. District Court of Nebraska, saying that it "seeks to recover damages for ongoing breaches of a labor agreement." The cereal giant said the union's "improper actions" have the intention of inflicting “significant economic harm” to the company before a contract agreement is able to be met. What’s next for labor Despite this test of wills between labor and food manufacturers, the “ultimate leverage” for workers in 2021 is their ability to create negative publicity for their parent company through strikes to make them appear “union-busting” in hopes of spurring a consumer boycott of their products, said Erik Loomis, a labor expert and University of Rhode Island professor. Loomis said this can bring about more immediate benefits to unions compared to legal frameworks, which are often not on the side of workers and could take months or years to result in better contracts. The use of social media to spread organization efforts and make the public aware of working conditions makes today’s strikes different to those of the past, according to Simon with Temple University. In the case of Mondelēz, calls for a boycott of Nabisco snacks like Oreos and Wheat Thins gained traction on social media during the strikes, with users uploading photos of shelves stocked with unsold Oreos and Chips Ahoy! cookies at grocery stores. However, relying on public support to dictate change has its drawbacks. Simon said wage increases for food manufacturing workers is a larger “ideological hurdle” because many consumers ultimately may not be willing to pay more for food products to support higher wages. This is despite the fact that the annual mean salary of a food factory employee is under $33,000, significantly lower than the roughly $56,000 national average for all jobs, according to Bureau of Labor Statistics data. Food prices have also been rising during the pandemic as manufacturers pass along higher costs for ingredients, manufacturing, packaging and transportation.  Loomis expects strikes to continue due to the supply chain crisis, and as workers see more examples of successful organizing taking place. Meanwhile, under the Biden administration, the political climate is also friendlier to unions. The PRO Act (Protecting the Right to Organize), which passed Congress in March with five Republicans joining, is supported by The White House. One of its biggest elements — monetary punishments for companies that infringe on workers’ union-based rights — was added as part of the budget reconciliation bill package currently being debated in the Senate. “You’re going to see more strikes within the legal sense,” Loomis said. “Even outside of that, workers will take matters into their own hands when they feel it is necessary to do so." Tyler Durden Thu, 10/07/2021 - 18:15.....»»

Category: blogSource: zerohedgeOct 7th, 2021

Velan Inc. Reports Its Second Quarter 2021/22 Financial Results and a Significant Increase in Sales and Improved Margins that Combine for One of the Best Quarters of the Last Ten Years, With Net Income¹ of $5.0 Million, and Backlog² Remaining High

MONTREAL, Oct. 07, 2021 (GLOBE NEWSWIRE) -- Velan Inc. (TSX:VLN) (the "Company"), a world-leading manufacturer of industrial valves, announced today its financial results for its second quarter ended August 31, 2021. Highlights: Sales for the quarter amounted to $101.9 million, an increase of 33.6 million or 49.1% compared to the same quarter of the previous fiscal year. This quarter's sales level represents the highest volume in the last six quarters. Gross profit for the quarter of $31.4 million, or 30.8%, an increase of $14.3 million or 580 basis points from the same quarter of the previous year. The gross profit percentage of 29.1% for the first six-month of the fiscal year is the highest in recent history, a performance essentially driven by the improved sales volume, a more profitable product mix delivered, as well as the margin improvement activities undertaken over the past fiscal years within the scope of the V20 restructuring and transformation plan. Net income1 of $5.0 million and EBITDA2 of $10.7 million for the quarter represent a significant improvement compared to last year's results. The better results are explained primarily by an increased gross profit, driven by an improved sales volume and product mix, despite notably lower Canada Emergency Wage Subsidies («CEWS»). Strong order backlog2 of $575.8 million at the end of the quarter. Net new orders ("bookings")2 of $81.6 million for the quarter, a decrease of $19.7 million or 19.5% compared to the same quarter of the previous fiscal year. The Company's book-to-bill ratio of 0.80 for the quarter has a stronger relation to the improved sales volume rather than the softer quarter in terms of bookings. Nonetheless, the book-to-bill ratio for the six-month period stands at a positive 1.12. The Company's net cash amounted to $68.1 million at the end of the quarter, an increase of $5.2 million since the beginning of the fiscal year. Yves Leduc, CEO of Velan Inc., said, "I am very pleased with our company's best quarterly results in years, but I am certainly not surprised. We are seeing the convergence of many of the positive factors reported in previous quarters, whose effects had either been slowed by the global economic crisis or were simply expected to materialize over time. Let's start with our sales, growing near 50% over the same period last year. Our Italian operations were able to overcome most of the shipping hurdles experienced in the first quarter, we achieved notable progress in reducing our North American operations' production delays caused by the many changes deployed during the first year of the pandemic, and both our Indian and Chinese operations are having a record production year. Still experiencing one of the highest backlogs in years, we did see a slower quarter in bookings, but they have outpaced billings in the first six months of the year and, good news, we are observing a recovery of our North American MRO business, as distributors are steadily increasing their stock. Another important aspect of our performance is the sustained growth in our margins. The quarter's gross margin and the first six months' were the highest recorded in at least ten years, at respectively 30.8% and 29.1%, compared to 25% and 24.4% last year, and 23.3% at the end of fiscal year 2019 when our V20 plan was announced. Here again, there should be no surprise, as the main goal of the plan was to drive our North American operations' margins up. And we are indeed meeting the goal through the elimination of significant structural costs in North America, the now completed transfer of our small forged valve production to India, and the much greater focus put on profitable orders from our new strategic businesses. As a result of those improvements and the growth in sales, to which each of our divisions is contributing, our EBITDA after six months improved by close to $10 million compared to the same period last year, despite lower Canadian federal subsidies and higher liability costs than last year to date. In summary, thanks to the relentless efforts and resilience of our employees in the last years, we are laying the base for a return to profitable growth. This does not mean we are out of the woods. On the coronavirus front, the global pandemic is far from over and we remain vigilant, committed to maintain our excellent record in keeping our work environment as safe as possible for our employees. Meanwhile, the negative effects of the economic crisis on global logistics and the price of metals are affecting our operations worldwide, and driving growth will require ruthless focus and execution as industry demand remains soft. Aware of those challenges, we take nothing for granted and are moving ahead with confidence." Financial Highlights Three-month periods ended   Six-month periods ended   (thousands of U.S. dollars, excluding per share amounts) August 31, 2021   August 31, 2020   August 31, 2021   August 31, 2020             Sales $ 101,893   $ 68,340   $ 176,422   $ 144,993   Gross profit   31,391     17,053     51,385     35,445   Gross profit %   30.8 %   25.0 %   29.1 %   24.4 % Net income (loss)1   5,015     (5,112 )   (58 )   (6,998 ) Net income (loss)1 per share – basic and diluted   0.23     (0.24 )   (0.00 )   (0.32 ) EBITDA2   10,657     (2,497 )   9,716     141   EBITDA2 per share – basic and diluted   0.49     (0.12 )   0.45     0.01   Second Quarter Fiscal 2022 (unless otherwise noted, all amounts are in U.S. dollars and all comparisons are to the second quarter of fiscal 2021): Sales amounted to $101.9 million, an increase of $33.6 million or 49.1% for the quarter. Sales were positively impacted by the Company's North American operations increased large project orders shipments primarily destined for the petrochemical and power markets. Sales were also positively impacted by the shipment of previously delayed orders by the Company's Italian operations. The delays were due to various customer-related and global logistics factors. Bookings2 amounted to $81.6 million, a decrease of $19.7 million or 19.5% for the quarter. This decrease is primarily attributable to lower large project orders recorded by the Company's French and North American operations. Gross profit amounted to $31.4 million, an increase of $14.3 million or 84.1% for the quarter. The gross profit percentage for the quarter of 30.8% was an increase of 580 basis points compared to last year‘s second quarter. The improvement in gross profit percentage for the quarter is primarily attributable to the higher sales volume, which helped to cover the Company's fixed production overhead costs more efficiently. The Company's improved margins are also stemming from the margin improvement activities implemented over the course of the past fiscal years within the scope of the V20 restructuring and transformation plan. Additionally, the Company's gross profit also benefited from favorable movements in unrealized foreign exchange translation primarily attributable to the fluctuation of the U.S. dollar against the euro and the Canadian dollar for the quarter when compared to the prior year. Finally, the increase in gross profit percentage was such that it could more than offset the impact of a lower amount of CEWS of $1.7 million for the quarter compared to last year. The subsidies are allocated between cost of sales and administration costs. Net income1 for the quarter amounted to $5.0 million or $0.23 per share compared to a net loss1 of $5.1 million or $0.24 per share last year. EBITDA2 for the quarter amounted to $10.7 million or $0.49 per share compared to a negative $2.5 million or $0.12 per share last year. The improvement in EBITDA2 for the quarter is primarily attributable to an increase in gross profit, thanks to the reasons mentioned above, the absence of restructuring and transformation costs in the current fiscal year which totaled $1.7 million in the previous quarter and a reduction in other expenses of $1.4 million for the quarter due to land clean-up costs of a former factory incurred in the second quarter of the prior year. On the other hand, these improvements were partially offset by an increase in administration costs of $4.3 million or 21.8% for the quarter which is primarily attributable to a decrease of $1.4 million in CEWS received by the Company compared to last year, an increase in sales commissions due to the higher sales volume and a general increase in administration expenses that had been significantly lowered when the global pandemic broke out last year. The subsidies are allocated between cost of sales and administration costs. The favorable movement in the Company's net income1 for quarter was primarily attributable to the same factors as explained above coupled with an unfavorable movement in income taxes. First Six months Fiscal 2022 (unless otherwise noted, all amounts are in U.S. dollars and all comparisons are to the first six months of fiscal 2021): Sales amounted to $176.4 million, an increase of $31.4 million or 21.7% for the six-month period. Sales were positively impacted by the Company's North American operations increased large project orders shipments primarily destined for the petrochemical and power markets. For the six-month period, the Company's French operations were able to show an improved sales volume due to their strong performance in the first quarter of the current fiscal year. Finally, the Company's MRO sales for the six-month period were negatively affected by the persistent unfavorable market conditions triggered by the novel coronavirus ("COVID-19") global pandemic which has significantly affected the Company's distribution channels' bookings in the previous fiscal year. The lower distribution channels' bookings in the latter part of the prior year translated in lower shipments of such orders in the first quarter of the current year. Bookings2 amounted to $197.9 million, an increase or $19.9 million of 11.2% for the six-month period. The increase is primarily attributable to large project orders recorded by the Company's Italian and North American operations, notably in the marine and oil and gas markets. The increase is also attributable to higher MRO orders recorded by the Company's North American operations. The Company is encouraged by the recovery of its MRO order bookings, which were severely impacted by the global pandemic at the end of the prior fiscal year, and ultimately adversely affected the sales of its current fiscal year as explained in the prior paragraph. The increase in bookings for the six-month period was partially offset by a reduction in large project orders recorded by the Company's French operations. As a result of bookings outpacing sales in the current six-month period, the Company's book-to-bill ratio2 was 1.12 for the period. Furthermore, the total backlog2 increased by $13.3 million or 2.4% since the beginning of the fiscal year, amounting to $575.8 million as at August 31, 2021. Gross profit amounted to $51.4 million, an increase of $15.9 million or 45.0% for the six-month period. The gross profit for the first six-month period of 29.1% represented an increase of 470 basis points compared to the same period last year and is also the highest in recent history. The improvement in gross profit percentage is primarily attributable to the higher sales volume, which helped to cover the Company's fixed production overhead costs more efficiently. The Company's improved margins are also stemming from the margin improvement activities implemented over the course of the past fiscal years within the scope of the V20 restructuring and transformation plan. Additionally, the Company's gross profit also benefited from favorable movements in unrealized foreign exchange translation primarily attributable to the fluctuation of the U.S. dollar against the euro and the Canadian dollar for the six-month period when compared to the prior year. Finally, the increase in gross profit percentage was such that it could more than offset the impact of a lower amount of CEWS of $3.1 million for the six-month period compared to last year. The subsidies are allocated between cost of sales and administration costs. Net loss1 for the six-month period amounted to $0.1 million or $0.00 per share compared to a net loss1 of $7.0 million or $0.32 per share in the prior period. EBITDA2 for the six-month period amounted to $9.7 million or $0.45 per share compared to $0.1 million or $0.01 per share in the prior period. The improvement in EBITDA2 for the six-month period is primarily attributable to and improved gross profit, primarily due to an increased sales volume, while reflecting the notably improved product mix and margins resulting from the Company's targeted efforts under V20, described earlier. The Company's gross profit also benefited from favorable movements in unrealized foreign exchange translation for the six-month period when compared to the prior year. The improvement is also attributable to the absence of restructuring and transformation costs in the current fiscal year which totaled $2.9 million in the previous six-month period as well as a reduction in other expenses of $1.4 million for the six-month period primarily due to land clean-up costs of a former factory incurred in the second quarter of the prior year. On the other hand, these improvements were partially offset by an increase in administration costs of $10.4 million or 27.8% for the six-month period, primarily attributable to a decrease of $2.5 million in CEWS received by the Company compared to last year, an increase in sales commissions due to the improved sales volume for the period, a general increase in administration expenses that had been significantly lowered when the global pandemic broke out last year as well as an increase of $1.4 million in the costs recognized in connection with the Company's ongoing asbestos litigation. The favorable movements in the Company's net loss1 for the six-month period was primarily attributable to the same factors as explained above coupled with an unfavorable movement in income taxes. Dividend At the end of fiscal 2020, the Board of Directors deemed appropriate to suspend the quarterly dividend. The decision remains unchanged and will be reviewed on a quarterly basis. Conference call Financial analysts, shareholders, and other interested individuals are invited to attend the second quarter conference call to be held on Thursday, October 7, 2021, at 04:00 p.m. (EDT). The toll free call-in number is 1-800-768-2878, access code 21998213. A recording of this conference call will be available for seven days at 1-416-626-4100 or 1-800-558-5253, access code 21998213. About Velan Founded in Montreal in 1950, Velan Inc. (www.velan.com) is one of the world's leading manufacturers of industrial valves, with sales of US$302.1 million in its last reported fiscal year. The Company employs close to 1,700 people and has manufacturing plants in 9 countries. Velan Inc. is a public company with its shares listed on the Toronto Stock Exchange under the symbol VLN. Safe harbour statement This news release may include forward-looking statements, which generally contain words like "should", "believe", "anticipate", "plan", "may", "will", "expect", "intend", "continue" or "estimate" or the negatives of these terms or variations of them or similar expressions, all of which are subject to risks and uncertainties, which are disclosed in the Company's filings with the appropriate securities commissions. While these statements are based on management's assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that it believes are reasonable and appropriate in the circumstances, no forward-looking statement can be guaranteed and actual future results may differ materially from those expressed herein. The Company disclaims any intention or obligation to update or revise any forward-looking statements contained herein whether as a result of new information, future events or otherwise, except as required by the applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Non-IFRS and supplementary financial measures In this press release, the Company has presented measures of performance or financial condition which are not defined under IFRS ("non-IFRS measures") and are, therefore, unlikely to be comparable to similar measures presented by other companies. These measures are used by management in assessing the operating results and financial condition of the Company and are reconciled with the performance measures defined under IFRS. Company has also presented supplementary financial measures which are defined at the end of this report. Reconciliation and definition can be found on the next page. Net earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA") Three-month periods ended   Six-month periods ended   (thousands, except amount per shares) August 31, 2021$ August 31, 2020$   August 31, 2021$   August 31, 2020$             Net income (loss)1 5,015 (5,112 ) (58 ) (6,998 )           Adjustments for:         Depreciation of property, plant and equipment 2,394 2,450   4,808   4,975   Amortization of intangible assets 451 626   1,009   1,194   Finance costs – net 526 44   1,055   362   Income taxes 2,271 (505 ) 2,902   608             EBITDA 10,657 (2,497 ) 9,716   141   EBITDA per share         Basic and diluted 0.49 (0.12 ) 0.45   0.01   The term "EBITDA" is defined as net income or loss attributable to Subordinate and Multiple Voting Shares plus depreciation of property, plant & equipment, plus amortization of intangible assets, plus net finance costs plus income tax provision. The terms "EBITDA per share" is obtained by dividing EBITDA by the total amount of subordinate and multiple voting shares. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Definitions of supplementary financial measures The term "Net new orders" or "bookings" is defined as firm orders, net of cancellations, recorded by the Company during a period. Bookings are impacted by the fluctuation of foreign exchange rates for a given period. The measure provides an indication of the Company's sales operation performance for a given period as well as well as an expectation of future sales and cash flows to be achieved on these orders. The term "backlog" is defined as the buildup of all outstanding bookings to be delivered by the Company. The Company's backlog is impacted by the fluctuation of foreign exchange rates for a given period. The measure provides an indication of the future operational challenges of the Company as well as an expectation of future sales and cash flows to be achieved on these orders. The term "book-to-bill" is obtained by dividing bookings by sales. The measure provides an indication of the Company's performance and outlook for a given period. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.   1 Net earnings or loss refer to net income or loss attributable to Subordinate and Multiple Voting Shares2 Non-IFRS and supplementary financial measures – see explanation above. Velan Inc. Consolidated Statements of Financial Position     (Unaudited)    (in thousands of U.S. dollars)    As at     August 31, 2021 February 28, 2021     $ $ Assets               Current assets       Cash and cash equivalents             76,448           74,688 Short-term investments               1,703                285 Accounts receivable            126,075         135,373 Income taxes recoverable                3,590             3,798 Inventories           240,225         204,161 Deposits and prepaid expenses               9,969             8,670 Derivative assets                    74                196             458,084         427,171      .....»»

Category: earningsSource: benzingaOct 7th, 2021

CIA creates new unit to focus on "key rival" China, calling it the "most important geopolitical threat we face"

The intelligence agency described China as a "key rival," but underscored that "the threat is from the Chinese government, not its people." CIA Director William Burns. Graeme Jennings/Pool via AP The CIA created a new unit to focus on China, calling it a "key rival." CIA Dir. William Burns said China is the "most important geopolitical threat" the US faces. The Biden admin. has made countering China the centerpiece of its foreign policy agenda. See more stories on Insider's business page. The CIA on Thursday announced it's established a new China Mission Center, in yet another sign of the Biden administration's heavy focus on countering Beijing and its expanding influence across the globe. CIA Director William Burns in a statement said the unit will "further strengthen our collective work on the most important geopolitical threat we face in the 21st century, an increasingly adversarial Chinese government."The CIA said the mission center is designed to "address the global challenge posed by the People's Republic of China that cuts across all of the Agency's mission areas."The intelligence agency described China as a "key rival," but underscored that "the threat is from the Chinese government, not its people." Burns also emphasized that the CIA will continue to "focus sharply" on other "important threats" such as Russia, Iran, North Korea, and terrorism. Additionally, the CIA said it's setting up a Transnational and Technology Mission Center to "address global issues critical to US competitiveness - including new and emerging technologies, economic security, climate change, and global health."The Biden administration has placed China at the center of its foreign policy agenda. President Joe Biden in a speech earlier this year said the US and China are in a "competition" to "win the 21st century."China has accused the US of employing a "Cold War mentality," essentially alleging that Washington is vying to turn Beijing into a boogeyman. Relations between the US and China hit a low point under President Donald Trump, who increased tensions via a trade war and by blaming the COVID-19 pandemic on Beijing. Biden has not strayed far from his predecessor when it comes to China. The Biden administration, for example, has maintained Trump era tariffs against China."For too long, China's lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world," US Trade Representative Katherine Tai said on Monday at the Center for Strategic and International Studies in Washington, DC. "To be successful, we must be direct and honest about the challenges we face and the grave risk from leaving them unaddressed."Read the original article on Business Insider.....»»

Category: personnelSource: nytOct 7th, 2021

US Secretary of State Antony Blinken urged the Chinese government to "act responsibly" when handling the Evergrande crisis

This is the first time a senior official in Biden's administration has spoken on the Evergrande crisis since the property developer missed two offshore bond payments in September. Secretary of State Antony Blinken urged the Chinese government to handle the potential fallout from Evergrande's impending collapse in a responsible manner. Chris J Ratcliffe/Getty Images Antony Blinken urged the Chinese government to handle the Evergrande crisis responsibly. Blinken said that China's economic decisions have "profound ramifications" on the entire world. The Chinese real estate developer is the world's most indebted company, with liabilities exceeding $300 billion. See more stories on Insider's business page. US Secretary of State Antony Blinken urged China to act "responsibly" when dealing with the fallout of the debt crisis that looms with Evergrande's impending collapse."China has to make sovereign economic decisions for itself, but we also know that what China does economically is going to have profound ramifications, profound effects, on literally the entire world because all of our economies are so intertwined," Blinken said on Wednesday in an interview with Bloomberg. Blinken added that Evergrande's could have a "major impact" on the Chinese economy and said that the US looks to China to "act responsibly and to deal effectively with any challenges."This is the first time a senior official in Biden's administration has spoken on the Evergrande crisis since the property developer missed two offshore bond payments in September. The Chinese real estate giant is currently the most indebted company in the world and owes more than $300 billion in liabilities. Evergrande's failure to pay off its debt caused tremors in both the Asian and international markets. It has also sparked fears of a potential contagion of property developers defaulting on bond payments that could spread within the Chinese market and beyond.The Evergrande debt crisis is affecting the US stock market too. Just this week, stocks in the US and the global markets slipped after the company suspended trading of its shares in Hong Kong. However, the Chinese government has indicated that a direct bailout of Evergrande is unlikely to happen. Instead, government-owned firms and state-linked property developers are being nudged to buy out Evergrande and divide its assets in a piecemeal manner. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 7th, 2021

Sen. Susan Collins floats GOP support for a debt-limit hike in exchange for Democrats abandoning Biden"s $3.5 trillion social-spending plan

Democrats dismissed Collins' idea. The standoff intensified with President Joe Biden saying it's up to Sen. Mitch McConnell whether the US defaults. U.S. Sen. Susan Collins (R-ME) speaks at a hearing of the Senate Health, Education, Labor and Pensions Committee on September 23, 2020 in Washington, DC. Alex Edelman-Pool/Getty Images Sen. Collins floated GOP support for a debt limit hike if Democrats abandoned Biden's economic agenda. Democrats flatly dismissed Collin's suggestion as a non-starter. Republicans are refusing to raise the debt limit, intensifying a standoff that's pushing the US closer to default. See more stories on Insider's business page. Sen. Susan Collins of Maine suggested Senate Republicans could back a debt limit hike if Democrats abandoned the $3.5 trillion social spending package containing the bulk of President Joe Biden's economic agenda.On Monday, she told reporters that "some Republicans would vote to raise the debt limit if they knew the Democrats were going to abandon the $3.5 trillion package, which appears unlikely but that's an agreement that could be reached."The Maine Republican echoed Senate Minority Leader Mitch McConnell and urged Democrats to lift the debt ceiling unilaterally through reconciliation. It's the same maneuver the party is using to approve their hefty social spending plan relying on only Democratic votes and bypassing unanimous GOP opposition. McConnell issued a fresh warning in a letter to Biden on Monday. "For two and a half months, we have simply warned that since your party wishes to govern alone, it must handle the debt limit alone as well," the letter said, adding Democrats were "sleepwalking toward significant and avoidable danger."Congressional Democrats aim to expand Medicare and Medicaid, ensure families can access and afford childcare, add four years to public education with universal Pre-K and tuition-free community college, and renew monthly cash payments to families in their spending proposal. They seek to pass it by the end of the month, but their hopes for quick passage is crashing into Republican resistance aimed at derailing Biden's agenda.Democrats are insisting they won't renew the nation's ability to pay its bills on their own, arguing it's a responsibility for both parties to assume. The debt limit refers to the amount the US can borrow to pay off existing debts. Raising it does not authorize future spending. Democrats flatly dismissed scrapping Biden's sprawling domestic agenda in exchange for GOP support to lift the debt ceiling as a non-starter."Senate Republicans are holding our economy hostage," Rep. Don Beyer of Virginia, chair of the Joint Economic Committee, said in a tweet. "Mitch McConnell claimed he isn't making demands for lifting the debt ceiling, but Susan Collins gave the game away: They're demanding the President abandon the agenda the American people elected him to pass.""This reflects the general attitude of the Republican conference to burn it all down when out of power," a Senate Democratic aide granted anonymity to speak candidly told Insider.The impasse over the debt limit heightened on Monday as Biden assailed Senate Republicans for blocking Democratic efforts to approve a debt limit hike with bipartisan support. He called their moves "hypocritical, dangerous, and disgraceful" during a Monday press conference.He also couldn't guarantee the US would be able to avoid a potentially catastrophic default. "That's up to Mitch McConnell," he said.For their part, Republicans like McConnell agree the debt ceiling must be raised. Yet they're pushing for Democrats to use reconciliation, which would require a specific number that Republicans could use to hammer Democrats as budget busters in next year's midterms.The Treasury Department has warned that it may not be able keep the government's financial obligations beyond October 18. Such an event could cause turmoil in financial markets and plunge the US back into a recession. Democrats have sharply challenged the GOP's rationale for opposing lifting the debt cap, arguing both parties are responsible for piling onto the federal debt with emergency spending during the pandemic and domestic spending increases under President Donald Trump. Republicans also lifted or suspended the debt ceiling three times under the Trump administration."Every single day we delay taking action, we increase the chances of doing irreversible damage to our global financial system, our economic recovery, and trust in our country's ability to pay its debts," Senate Majority Leader Chuck Schumer said in a floor speech on Monday.Democrats are able to lift the debt ceiling on their own. But it could be a time-consuming endeavor stretching on for at least two weeks with no guarantee they can successfully pull it off ahead of Oct. 18 due to the strict guidelines governing reconciliation.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 5th, 2021

Sen. Susan Collins floats GOP support for a debt limit hike in exchange for Democrats abandoning Biden"s $3.5 trillion social spending plan

Democrats dismissed Collin's idea as a non-starter. The debt limit standoff intensified with Biden saying its up to McConnell whether the US defaults. U.S. Sen. Susan Collins (R-ME) speaks at a hearing of the Senate Health, Education, Labor and Pensions Committee on September 23, 2020 in Washington, DC. Alex Edelman-Pool/Getty Images Sen. Collins floated GOP support for a debt limit hike if Democrats abandoned Biden's economic agenda. Democrats flatly dismissed Collin's suggestion as a non-starter. Republicans are refusing to raise the debt limit, intensifying a standoff that's pushing the US closer to default. See more stories on Insider's business page. Sen. Susan Collins of Maine suggested some Republicans would back a debt limit hike if Democrats abandoned the $3.5 trillion social spending package containing the bulk of President Joe Biden's economic agenda.On Monday, she suggested that "some Republicans would vote to raise the debt limit if they knew the Democrats were going to abandon the $3.5 trillion package, which appears unlikely but that's an agreement that could be reached."The Maine Republican echoed Senate Minority Leader Mitch McConnell and urged Democrats to raise it unilaterally through reconciliation. It's the same maneuver the party is using to approve their hefty social spending plan relying on only Democratic votes and bypassing unanimous GOP opposition.Democrats aim to expand Medicare and Medicaid, ensure families can access and afford childcare, add four years to public education with universal Pre-K and tuition-free community college, and renew monthly cash payments to families in their spending plan.Democrats are insisting they won't renew the nation's ability to pay its bills on their own. The debt limit refers to the amount the US can borrow to pay off existing debts. Raising it does not authorize future spending. They also flatly dismissed scrapping Biden's sprawling domestic agenda in exchange for GOP support to lift the debt ceiling as a non-starter."Senate Republicans are holding our economy hostage," Rep. Don Beyer of Virginia, chair of the Joint Economic Committee, said in a tweet. "Mitch McConnell claimed he isn't making demands for lifting the debt ceiling, but Susan Collins gave the game away: They're demanding the President abandon the agenda the American people elected him to pass.""This reflects the general attitude of the Republican conference to burn it all down when out of power," a Senate Democratic aide granted anonymity to speak candidly told Insider.The impasse over the debt limit heightened on Monday as Biden assailed Senate Republicans for blocking Democratic efforts to approve a debt limit hike with bipartisan support. He called it "hypocritical, dangerous, and disgraceful" during a Monday press conference.He also couldn't guarantee the US would be able to avoid a potentially catastrophic default. "That's up to Mitch McConnell," he said.Democrats have sharply challenged the GOP's rationale for opposing lifting the debt cap, arguing both parties are responsible for piling onto the federal debt with emergency spending during the pandemic and domestic spending increases under President Donald Trump. Republicans also lifted or suspended the debt ceiling three times under the Trump administration.Democrats are able to lift the debt ceiling on their own. But it could be a time-consuming endeavor stretching on for at least two weeks with no guarantee they can successfully pull it off ahead of an Oct. 18 default deadline due to the strict guidelines governing reconciliation.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 4th, 2021

Biden Trade Rep Vows To Chart "New Course" On Trade With China While Copying Trump Playbook

Biden Trade Rep Vows To Chart "New Course" On Trade With China While Copying Trump Playbook Update (1025ET): Effectively confirming that President Biden is copying his entire China policy from his predecessor, President Trump, while feebly trying to pass it off as his own, President Biden's US Trade Rep, Katherine Tai, laid out her plans to confront her Chinese counterparts about their adherence (or lack thereof) to the "Part 1" Trade deal negotiated by President Trump, before laying out a history of anti-competitive state-direction and subsidization in China's economy that has helped to gut American manufacturing and other industries as well. After explaining how China undermined the American steel industry, destroying productivity and jobs, while citing semiconductors as the next target for state-directed development (benefitted, undoubtedly, by all the technology they can steal). Other industries from semiconductors to even agriculture, have also been impacted. Per Tai, Beijing has already spent $150 billion in subsidies on this. "These efforts have reinforced a zero-sum environment where China's success has come at the expense of other economies in the US," Tai said, sounding an awful lot like her predecessor, Robert Lighthizer. "This is why we need to take a new, and pragmatic approach to dealing with China...as our economic relationship with China evolves, so too should our tactics to defend our interests." "Our strategy must address these concerns while also being flexible and agile that may confront future challenges from China that might arise," she added. As for the upcoming round of virtual talks, Tai said "in the coming days I intend to have frank discussions with my counterpart in China. They will include the Phase 1 agreement...I am committed to working through the many challenges ahead in this bilateral process in order to deliver meaningful results." As for whether she intends to launch a Section 301 investigation into whether the Chinese have been violating their promises made in the Phase 1 deal, Tai wouldn't confirm. Ultimately, the US is seeking to negotiate with Beijing about its industrial anti-competitive policies, but Tai said the Biden Admin's goal is "not to inflame trade tensions with China." Being a dutiful bureaucrat, Tai stopped to plug her boss's domestic agenda, saying "China has been investing in their infrastructure for decades, if we are going to compete we need to make similar investments at home." Ultimately, Tai says, the US will also work with its economic "partners" to help force China to abandon its anti-competitive, economically destructive practices. However... "Above all else, we must defend, to the hilt our economic interests and that means taking ll steps necessary to protect ourselves through the waves of damage over the years via unfair competition." "We must chart a new course to change the dynamic of our bilateral trade relationship." "And we will work with partners to strengthen rules for global trade." She continued. "There is a future where all of us in the global economy can grow and succeed, where prosperity is inclusive within our own borders, and across those borders too. The path we have been on, did not take us there." Whether there's any reason to hope for this, we simply can't say. Asking China to abandon its state-directed model of capitalism is certainly a tall order. Also, this new approach to China shouldn't be credited to Biden: Rising up to confront China was likely one of the key critical issues that set Trump apart and above during the 2016 campaign. And his trade negotiations with the Chinese took up nearly half of his first term. After taking a potshot at Trump, Tai's partner in the dialogue,  Bill Reinsch, Senior Adviser and Scholl Chair in International Business at CSIS, asked: "Can China be changed, or are we going to spend the next decade doing the impossible?" Before answering, Tai acknowledged that Trump deserves some credit here: "I don't think it's fair to say that I have characterized the last administration's policies as 'failed'..." Reinsch then followed up: "So basically, you're here to to enforce what Trump negotiated, right?" Tai admitted "that is the starting point, because that is the structure and that is the architecture of the trade relationship we have right now." Moving on to a discussion of the upcoming talks with her counterparts in Beijing, Tai acknowledged that per the Phase 1 agreement, "there are things that they committed to that they have not done." Finding out why those promises haven't been kept will be key. "I think we have to have really honest conversations with China about all of the elements of the Phase 1 agreement. These are commitments China made, and commitments that workers in certain sectors have worked to. "We will have to address where the relationship goes from the starting point." Somebody should probably tell her...when it comes to commitments related to state subsidies, cyber-espionage and other intrusions, Beijing doesn't exactly have a great track record. But at least she's willing to admit here that there's little possibility of the two sides starting negotiations on a second part of the trade framework. * * * As we previewed a few days ago, President Biden's US Trade Representative Katherine Tai is preparing to deliver a major speech outlining the Biden Administration's policies and diplomatic priorities regarding its relationship with China. The speech will be held ahead of talks where, Tai has said, she will confront the Chinese about promises from the "Phase 1" trade deal that allegedly haven't been kept. According to Reuters, Tai is expected to criticize China for not meeting its commitments and for abusing "global trading norms": "For too long, China's lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world." She also is expected to say that China made promises to American industries, especially agriculture, and that they must be kept. Tai is also expected to say that she intends to have 'frank conversations' with her counterpart in China. "That will include discussion over China's performance under the Phase One Agreement and we will also directly engage with China on its industrial policies." Tai will not rule out the use of any trade tools, to bring China into compliance with the deal, officials said, but did not offer a time frame for such actions. The deal is scheduled to expire at the end of 2021. She's also expected to pursue a virtual meeting with Chinese VP Liu He to discuss the trade deal "soon". Right now, the administration doesn't plan to try to pursue negotiations of a "Phase 2" deal. Readers can watch live below: Here's a description of the event, courtesy of CSIS: We are pleased to welcome Ambassador Katherine Tai, U.S. Trade Representative, to CSIS for a conversation on the Biden-Harris Administration’s trade agenda. Ambassador Tai previously served as Chief Trade Counsel and Trade Subcommittee Staff Director for the House Ways and Means Committee in the United States Congress. In this capacity, she played an important role in shaping U.S. trade law, negotiations strategies, and bilateral and multilateral agreements. As U.S. Trade Representative, Ambassador Tai serves as the president’s principal trade advisor, negotiator, and spokesperson on trade issues. She is responsible for developing U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries. Ambassador Tai will deliver a speech outlining the Biden-Harris Administration’s approach to the bilateral trade relationship with China. Following the speech, Ambassador Tai will participate in a conversation with Bill Reinsch, Senior Adviser and Scholl Chair in International Business at CSIS, followed by audience Q&A. We hope you will be able to join us for an engaging and informative discussion. * * * Finally, Rabobank's analysts had this to say: "And so back to Tai and either a US signal of détente and can-kicking, or of disengagement and ‘Yes, we can’ kicking. Politico suggests we should buckle up, with Tai telling them: "I would say that the 301 tariffs are a tool for creating the kind of effective policies, and [are] something for us to build on and to use in terms of defending to the hilt the interests of the American economy, the American worker and American businesses and our farmers, too." "She also challenges the notion that tariffs are ultimately paid by American consumers, saying it’s a more complicated calculation than many suggest. Now *there* is a kick to the guts of the neoclassical trade consensus!" Tyler Durden Mon, 10/04/2021 - 10:57.....»»

Category: worldSource: nytOct 4th, 2021

Stocks Pressured After Fitch Warns Debt Ceiling "Brinksmanship" Threatens US AAA Rating

Stocks Pressured After Fitch Warns Debt Ceiling "Brinksmanship" Threatens US AAA Rating Ready for a rerun of August 2011? As a reminder, just over 10 years ago, S&P downgraded the US after that year's debt ceiling debacle prompted the rating agency to do the unthinkable and lob an A from the untouchable AAA US rating (prompting a very unhappy response from both the market and the then-Obama administration). Well, moments ago Fitch lobbed the first official warning shot across the bow of the world's reserve currency, writing that with the Drop-Dead Date in just 17 days, any debt-cap "brinkmanship" between Democrats and Republicans may put pressure on Fitch's AAA rating of the US. In the statement, Fitch said that the failure of the latest efforts to suspend the U.S. federal government’s debt limit indicates that the current stand-off could be among the most protracted since 2013. Additionally, the rating agency believes that the debt limit will be raised or suspended in time to avert a default event, but if this were not done in a timely manner, political brinkmanship and reduced financing flexibility could increase the risk of a U.S. sovereign default. "It's unfortunate when Congress uses this as a negotiating tactic, it's a bad scenario overall," said Randy Frederick, managing director of trading and derivatives for Schwab Center for Financial Research. "Eventually, foreign creditors might be unwilling to buy U.S. debt and if that happens, rates are going to go sharply higher and if rates shot up because people were unwilling to buy treasuries that would have a very negative impact on the market." And, as we have explained previously, Fitch also pointed out that prioritization of debt payments, assuming this is an option, would lead to non-payment or delayed payment of other obligations, which would likely further undermine the U.S.’s AAA status. To be sure, the bond market is already paying close attention, although with three more weeks to go, the "kink" in T-Bills remains somewhat subdued compared to prior debt ceiling episodes. As for stocks, while it is difficult to attribute the continued drop in today's market to the Fitch warning, it certainly did not help when it came out just minutes after the cash open. Full Fitch statement below: Fitch Ratings: Debt Limit Brinkmanship Could Put Pressure on US ‘AAA’ RatingFitch Ratings: Debt Limit Brinkmanship Could Put Pressure on US ‘AAA’ Rating Fitch Ratings-London/New York-01 October 2021: The failure of the latest efforts to suspend the U.S. federal government’s debt limit indicates that the current stand-off could be among the most protracted since 2013, Fitch Ratings says. Fitch believes that the debt limit will be raised or suspended in time to avert a default event, but if this were not done in a timely manner, political brinkmanship and reduced financing flexibility could increase the risk of a U.S. sovereign default. Prioritization of debt payments, assuming this is an option, would lead to non-payment or delayed payment of other obligations, which would likely undermine the U.S.’s ‘AAA’ status. The U.S. Senate on Monday failed to advance a Democratic proposal to both suspend the debt limit and avoid a government shutdown on 1 October. On Thursday, Congress passed a continuing resolution that averted a government shutdown but did not raise the debt limit. Meanwhile, Treasury Secretary Janet Yellen wrote to Congressional leaders with an updated estimate of 18 October for the date at which the federal government would be likely to exhaust the scope of extraordinary measures used to meet its obligations without incurring new debt (the X-date). The debt limit impasse reflects a lack of political consensus that has hampered the U.S.’s ability to meet fiscal challenges for some time, and which is reflected in the Negative Outlook on the U.S.’s ‘AAA’ rating since July 2020. The scope for bipartisan cooperation appears to have narrowed since Congress passed several Covid-19 relief bills with support from both sides of the House and Senate. The Republicans strongly oppose the Democrats’ ‘Build Back Better’ plans while Democratic lawmakers have yet to agree on the size of their budget reconciliation package, currently USD3.5 trillion. The Republicans argue that the Democrats can and should amend their reconciliation bill to raise the debt limit by a dollar amount rather than suspend it. Democrats have been unwilling to do this, arguing that the majority of the increase in debt during the two-year suspension that ended on 1 August took place under a Republican administration as a result of measures that passed with bipartisan support. Amending the reconciliation bill appears the most viable option for raising the debt limit, but the process would take some time in the Senate. We view reaching the Treasury’s X-date without the debt limit having been raised as the principal tail risk to the U.S. sovereign’s willingness and capacity to pay. If this appeared likely we would review the U.S. sovereign rating, with probable negative implications. In 2013, Fitch placed the U.S. rating (which was on Negative Outlook) on Rating Watch Negative (RWN) on 15 October, two days before the announced X-date. Although the debt limit was suspended on 16 October, this suspension lasted less than four months, and we maintained the RWN to assess the implications for the U.S. sovereign rating. The Treasury would still have limited capacity to make payments beyond the X-date but these would depend on volatile revenue and expenditure flows. Cash at the Treasury was USD172.9 billion on 28 September, compared with monthly spending of USD439 billion in August, including USD58 billion on gross interest payments. The Federal Reserve and Treasury reportedly discussed prioritization of interest and debt repayments as part of their contingency planning in 2011 and 2013. Prioritization could reduce the immediate risk of a missed payment, but also reduce the urgency among lawmakers to resolve the debt ceiling impasse ahead of the X-date. As Fitch has said previously, the economic impact of debt prioritization and the potential damage to investor confidence in the full faith and credit of the U.S. (which enables its 'AAA' rating to tolerate such high public debt) may not be compatible with an 'AAA' rating. Interest payments of about USD8 billion are payable on 1 November. The Treasury may be able to roll over T-bills and other maturing debt during this period, but the cost of doing so could rise. In the event of a missed payment, Fitch would downgrade the U.S. sovereign IDR to 'Restricted Default' (RD) until it judged the default event was cured. On obligation ratings, Fitch would downgrade only the affected instruments to a default rating level, while non-defaulted instruments that continued to perform would retain their then-current ratings. The Country Ceiling would likely remain 'AAA'. This treatment would be consistent with Fitch’s approach to previous sovereign default events in which a limited number of debt instruments have defaulted while other instruments continue to perform. Once the default was cured, the U.S. sovereign IDR would reflect Fitch’s assessment of the U.S. government’s credit profile, with consideration given to willingness to pay, the effectiveness of government and political institutions, the coherence and credibility of economic policy, the potential long-term impact on the government's cost of funding and cost of capital for the economy as a whole, and the implications for long-term economic growth. We would also continue to assess the prospects for future fiscal measures to contain government deficits in the face of long-term spending pressures and to place public debt on a downward path over the medium to long term.   Tyler Durden Fri, 10/01/2021 - 10:49.....»»

Category: personnelSource: nytOct 1st, 2021

Democrats Reach Agreement To Raise $600 Cap for Biden"s Proposal On IRS Reporting, Surveillance

Democrats Reach Agreement To Raise $600 Cap for Biden's Proposal On IRS Reporting, Surveillance Authored by Katabella Roberts via The Epoch Times, Democratic lawmakers have said they plan to raise the threshold of President Joe Biden’s radical proposal that all bank transactions of more than $600 be reported to the Internal Revenue Service (IRS). The initial proposal (pdf)—which Biden says is aimed at curbing tax evasion—would require banks and other financial institutions to report to the IRS any deposits or withdrawals totaling more than $600 annually to or from all business and personal accounts. The new reporting requirement would take effect in 2022 and would apply to both private individual and commercial business accounts owned by a taxpayer. But House Ways and Means Committee Chairman Richard Neal (D-Mass.) said on Sept. 23 that he and other Democratic leaders are planning to scrap the $600 annual figure and set a higher threshold, of which the details are still being worked through. “We’ve reached an agreement to not have the $600,” Neal told Bloomberg.  A Democratic aide noted that they’re focusing on increasing the current threshold to $10,000 but said that figure could well change. Under the Bank Secrecy Act, U.S. financial institutions are currently mandated to report to the government all wire transfers over $10,000, as well as suspicious cash transactions, to prevent criminal activities such as money laundering. However, Biden and Democratic allies in Congress claim the threshold needs to be lowered to close the “tax gap,” which is the difference between what current federal law requires to be collected by the government and how much actually goes into the Treasury. The president has maintained that the new reporting rule will mean “the wealthy can no longer hide what they’re making and they can finally begin to pay their fair share of what they owe.” “That isn’t about raising their taxes. It’s about the super-wealthy finally beginning to pay what they owe—what the existing tax code calls for—just like hardworking Americans do all over this country every Tax Day,” Biden said at a press conference on Sept. 16. At that same conference, the president noted that 55 of the biggest and most profitable corporations in America paid no federal income taxes in 2020, on what amounted to $40 billion in profit. “That’s not right. And my economic plan will change that. Not punish anybody, just make them pay their fair share,” he said. Sen. John Boozman (R-Ark.), joined by fellow Republican senators, speaks on a proposed Democratic tax plan, at the U.S. Capitol in Washington on Aug. 4, 2021. (Kevin Dietsch/Getty Images) Despite his reassurances, Biden’s new proposal has faced stiff opposition from banks as well as Republicans and some Democrats who are concerned that the move could see the IRS having access to too much of taxpayers’ personal data. Earlier this month, the American Bankers Association (ABA), along with more than 40 business and financial groups, sent a letter to House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.) objecting to the “ill-advised” proposal, citing concerns over financial privacy. “This proposal would create significant operational and reputational challenges for financial institutions, increase tax preparation costs for individuals and small businesses, and create serious financial privacy concerns,” the group wrote. “We urge members to oppose any efforts to advance this ill-advised new reporting regime.” Sen. John Boozman (R-Ark.) told The Epoch Times on Sept. 23 that the move would effectively “weaponize the IRS” and said he believes the Biden administration’s unprecedented rise in federal spending is the motivation behind expanding the IRS’s powers. “What they’ve done is, they are weaponizing the IRS, they’re pushing many, many billions of dollars into that and they will be hiring tens of thousands of new agents,” Boozman said.  “So this is all about looking at everybody’s transactions and then hoping that perhaps they find something that’s not getting reported so they can come after you and get that income. “They want this new authority to look at transactions of $600 or more rather than $10,000 or more because they have a $3.5 trillion, or some say up to a $5 trillion bill, depending on how you score it, so they desperately need pay-fors. This shows how desperate they are.” Boozman is co-sponsoring legislation with Sen. Mike Crapo (R-Idaho) known as the Tax Gap Reform and IRS Enforcement Act (pdf) that would establish “guardrails” to prevent abuse by IRS employees of tax records. Rep. Kevin Brady (R-Texas) has introduced the proposal in the House of Representatives. Tyler Durden Wed, 09/29/2021 - 09:45.....»»

Category: blogSource: zerohedgeSep 29th, 2021

Fact check: Conspiracy theory falsely claims Trump advisor Jason Miller sparked Haitian migration

On social media, a false claim is circulating that migration from Brazil was a Trump plot to cause problems for the Biden administration. Jason Miller, communications director for the Trump transition team, arrives at Trump Tower, December 8, 2016 in New York City. Drew Angerer/Getty Images On social media, viral posts have accused a former Trump advisor of sparking a border crisis. But migrants are following the same path thousands of others took during the Trump administration. The increase in asylum-seekers is "not the work of any single individual," an expert told Insider. See more stories on Insider's business page. Haitians who arrived in the thousands at the US-Mexico border in recent weeks did so for a multitude of personal but similar reasons.Having already fled the poorest country in the Western hemisphere, many found menial work in recent years as temporary laborers elsewhere. But discrimination, a lack of permanent legal status, and a pandemic that wrecked economies across the Americas compelled many to head north in search of the refuge.But some Americans have reduced the spontaneous actions of people abroad to political fights here at home. That has meant the likes of Fox News' Tucker Carlson pushing the white-nationalist conspiracy theory that liberals are scheming to "replace" white voters, the same claim that has galvanized far-right terrorists from El Paso to New Zealand.This time around, however, it's not just right-wing demagogues pushing a curious explanation for the ancient practice of crossing borders for a better life.On social media, a global conspiracy has been alleged by a number of people who would abhor any comparison between them and former President Donald Trump, who claimed "migrant caravans" that occurred under his administration were organized by billionaire George Soros. But the claims are remarkably similar in their general thrust: that someone with a political agenda must be behind mass migration."Evidence is piling up that Jason Miller organized a caravan of Haitian migrants from Brazil to create the 'border crisis' that the GOP is talking about," claims one post that has been shared thousands of times. Another user framed their conspiracy as just asking questions. "Did Trump adviser Jason Miller organize the 15,000 Haitians to travel from Brazil to Del Rio, Texas? Was this all just a publicity stunt to attack Biden and stoke MAGA anti-immigrant fire?"And there are many other posts like them - enough that, by Monday, a co-creator of The Big Bang Theory was publicly wondering about it.-Bill Prady (@billprady) September 27, 2021The conspiracy theory goes that Miller, a former senior advisor to Trump who was interrogated by police while on a visit to Brazil in early September, worked with the country's right-wing president, Jair Bolsonaro, to gin up a political controversy. As far as evidence goes, that is the extent of it, the lack of detail filled with pure conjecture: that he was there; that Bolsonaro is the Trump of South America; and that you should connect the dots.At the same time as some liberals are pushing a conspiracy theory involving Haitians, Trump, and Brazil, their conservative counterparts - unaware that these migrants fled Haiti years before - are sharing memes on Facebook suggesting those who "want the USA destroyed" flew from the island nation to the US-Mexico border, as Reuters reported.It's all nonsense, according to Michelle Mittelstadt of the Migration Policy Institute, a nonpartisan think tank in Washington, DC."The story of Haitian migration to and from Brazil is a nuanced one and owes to complex and changing factors, not the work of any single individual," she told Insider. Many began to arrive after the 2010 earthquake in Haiti, when Brazil's previous center-left government had offered them humanitarian visas. There, they found ample work, with the country experiencing a construction boom ahead of the 2014 World Cup and the 2016 Olympics.Then the jobs faded away. Haitians began to look elsewhere, such as Chile, where they encountered racism and a higher cost of living. "These conditions were exacerbated with the arrival of the pandemic, which significantly worsened economic conditions, particularly for migrants working informally," Mittelstadt said. With the arrival of Biden in the White House, there was a "perception of easing immigration policies," and so thousands of Haitians made their way north, following a path previously taken by tens of thousands of others in the years before.At the border, thousands have seen firsthand how wrong their perceptions were. Although many of those who camped out under the international bridge in Del Rio, Texas, have had their asylum claims processed - after images of Border Patrol agents on horseback charging at the huddled masses - thousands of others were put on deportation flights back to Haiti, the White House cited its disputed authority under Title 42, a Trump-era policy that exploited the pandemic to justify closing the border to asylum seekers.It's an unpleasant reality for liberals who hoped the Biden administration would quickly dismantle the last president's border regime, not just make it softer around the edges. It's also difficult for those on the right convinced that Democrats are committed to anything close to "open borders." To cope, people on both sides of the aisle have resorted to partisan fantasies that reduce migrants to faceless pawns of shadowy political actors.Have a news tip? Email this reporter: cdavis@insider.comRead the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 27th, 2021

Mitch McConnell"s Senate GOP votes for the US to default on its debt and for the government to shut down

Republicans are stepping up efforts to derail Biden's domestic agenda, and ensuring political brinksmanship over the debt ceiling will heighten. From left, Senate Minority Whip John Thune of South Dakota, Senate Minority Leader Mitch McConnell of Kentucky, and Senate Republican Policy Committee Chair Roy Blunt of Missouri. Kevin Dietsch/Getty Images Senate Republicans blocked a measure to avert a federal default and fund the government. It ensures that political brinksmanship will intensify over the debt ceiling, bringing the US closer to potential economic chaos. Democrats could lift the ceiling on their own, but there's no guarantee of success. See more stories on Insider's business page. Senate Republicans led by Minority Leader Mitch McConnell blocked a measure on Monday evening that would have averted both a debt default and a government shutdown, bringing the US another step closer to a financial debacle as Republicans escalate efforts to derail President Joe Biden's domestic agenda.All 50 GOP senators voted against the House-approved legislation that suspends the debt ceiling until December 2022 and funds the government through December 3, heightening the brinksmanship over the federal government's ability to pay its bills that has roiled Congress for months. The measure also included $28 billion disaster aid funding for communities ravaged by a recent pair of hurricanes, along with aid to resettle Afghan refugees in the US.McConnell has insisted since June that Republicans will not sign onto a debt limit hike - or a hike of how much the US government can borrow - even as he said in September it was necessary to do so because "America must never default." Republicans contend Democrats can take unilateral action to raise the ceiling and finance their party-line spending this year from the stimulus law and a $3.5 trillion social spending package."There's no confusion about who runs this country, [Democrats] have both chambers," Republican Sen. Kevin Cramer of North Dakota told Insider last week. Republicans say they can support a stop-gap bill to fund the government past September 30, but only if it doesn't include a debt ceiling increase.Democrats have assaulted the GOP's rationale for opposing lifting the debt cap, arguing that both parties are responsible for piling onto the federal debt with emergency spending during the pandemic and domestic spending increases under the Trump administration. Some Democratic lawmakers are proposing to get rid of the debt ceiling entirely.The debt ceiling clash evokes a previous showdown between Republicans and the Obama administration in 2011 that caused turmoil in financial markets and led to a first-ever US credit downgrade. Now Republicans are voting against raising the debt ceiling in an effort to try to force Democrats to raise the debt ceiling on their own, even though Republicans voted to raise it three times under the Trump administration.It's not immediately clear whether Democrats will push for a party-line debt ceiling increase using reconciliation, the same process they're employing to sidestep Republicans on their social spending plan. The tactic allows Democrats to pass their package with a simple majority vote.But it could be a time-consuming endeavor stretching on for weeks with no guarantee Democrats can pull it off due to the strict guidelines governing reconciliation."We've never done one to create a debt limit spinoff, it's not like this is a well-understood concept," Charlie Ellsworth, a former Democratic Senate Budget Committee aide and now a partner at Pioneer Public Affairs, told Insider. "There's a lot of things that need to be worked out for that pathway to be pursued."The consequences of a potential default could be immense and ripple throughout the American economy. The Bipartisan Policy Center projects the Treasury will run out of cash to meet the government's financial obligations sometime between Oct. 15 and Nov. 4.After that, millions of seniors could face an abrupt halt in Social Security checks, and US soldiers could miss out on scheduled paychecks. The White House has warned of potential federal funding cuts for safety net programs like Medicaid.This story will be updated.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 27th, 2021

We need to protect communities hit "first and worst" by climate change, state lawmakers say

The climate-change, racial-justice, environmental-justice, and economic-justice crises intersect, and a holistic solution is needed to solve them all. Insider "The challenge is that we've got a limited timeframe to get this right," US Rep. A. Donald McEachin, a Democrat from Virginia, said during Climate Week NYC Thursday. REUTERS/Carlo Allegri We need holistic environmental-justice solutions, state lawmakers said at Climate Week NYC Thursday. Communities impacted most by climate change also face other challenges that need to be considered. One step forward is the Environmental Justice for All Act, which addresses disproportionate effects. Subscribe to our weekly newsletter, Insider Sustainability. Low-income and indigenous communities as well as communities of color are hit "first and worst" by climate change, whether it's destructive hurricanes, droughts, or extreme heat, policymaker panelists said during a Climate Week NYC event Thursday - and holistic environmental-justice solutions are needed. The session, titled "Building a Just Climate Future: Centering Equity in Climate Solutions," focused on how the climate-change, racial-justice, environmental-justice, and economic-justice crises intersect, and panelists discussed some of the Biden administration's and other initiatives created to solve the problems. The panel was sponsored by environmental law organization Earthjustice and moderated by Jill Tauber, the group's vice president of litigation for climate and energy."The challenge is that we've got a limited timeframe to get this right," US Rep. A. Donald McEachin, a Democrat from Virginia, said during the session. "If we're going to pass on a cleaner earth, we've got to take some action and take it now. The challenge really is that Congress is not set up to move that quickly."Along with the climate crisis, the country is dealing with the pandemic and systemic racism, and "we must look at how we address all of them in totality, making sure we leave no one behind," Michele L. Roberts, a member of the White House Environmental Justice Advisory Council (WHEJAC) and national co-coordinator for the Environmental Justice Health Alliance, said. WHEJAC and the White House Environmental Justice Interagency Council were created to prioritize environmental justice and address current and historical environmental injustices. While a solution likely won't be found overnight, Roberts said the Biden administration's initiatives to address climate change and end environmental racism offer hope."The first part is admitting the problem," she said. "Then, we can begin to build from there."Through the Justice40 Initiative, President Biden set a goal of providing 40% of the benefits of federal investments in climate and clean energy to disadvantaged communities. The president signed an executive order adding environmental justice to the mission of each federal agency by instructing them to create programs, policies, and activities to address the disproportionate health, environmental, economic, and climate effects on disadvantaged communities.In the current divisive political climate, Harold Mitchell Jr., a WHEJAC member and executive director of the ReGenesis Project, a South Carolina-based environmental-justice organization, told the panel that the council is helping groups in some red-leaning states identify and overcome any barriers that local governments could put in place to prevent the programs from succeeding. "We have to be real and understand that what is promised may not hit the ground into those disadvantaged pockets unless we're strategic," he said.The councils include members of the communities most affected by climate change and environmental justice, giving them a voice in the decision-making process, Roberts said.In March, McEachin and Rep. Raul Grijalva, an Arizona Democrat, introduced the Environmental Justice for All Act, which would create several environmental-justice requirements, advisory groups, and programs to address the disproportionate health and environmental effects on communities of color, low-income groups, and indigenous communities. McEachin said the bill was written by the people directly affected by these problems."Environmental-justice communities are different communities with different sets of problems and we have different solutions," he said. "The act says let's go to the people, let them come up with solutions. Let's make sure that we give them sufficient funding and get out of their way."Many of these communities have been affected by environmental justice for decades, and to prioritize the groups going forward, Roberts said, "We need to make sure when we talk about green energy that it is clean, equitable, and just - all three words, not just one."McEachin said everyone, not just those affected by environmental justice, needs to get engaged, organize on a grassroots level, contact their lawmakers, and urge others to do the same."You may not be able to get it done your way, but let's pass some compromise and get something positive done, because, you know, as I wake up in the morning, we're one day closer to the climate catastrophe that we're all trying to avoid," he said. "We needed to take action yesterday. We need to take action today. And we're going to need to take action tomorrow."Read the original article on Business Insider.....»»

Category: worldSource: nytSep 24th, 2021

The Afghanistan Debacle Was A Major Wake Up Call For NATO

The Afghanistan Debacle Was A Major Wake Up Call For NATO Via Global Risk Insights, Overview of Prior EU Bureaucratic Actions  The vestiges of the Trump administration’s “America first” foreign policy have forced Europe to consider more autonomous defense initiatives. The EU lacks the military capabilities required to confront mounting geo-strategic concerns. Limited defense budgets increase Europe’s reliance on US expenditures, and uneven national allocations to NATO threaten the political viability of the alliance.  To rectify strategic shortcomings, the EU introduced the European Defense Fund (EDF). The EDF establishes the industrial foundation required for a resilient European defense program. The EU’s 2016 Global Strategy report included the EDF. The strategy sought to integrate Europe’s foreign policy and allocate resources toward external security threats. In 2018, the EU established The Capability Development Plan (CDP) to “address long-term security and defense challenges”.  The CDP encourages supranational cooperation and promotes capability cohesion with NATO.  In the midst of COVID’s economic disruption, bridging the capability gap remains an aspirational strategic objective. The notional budgetary allocations to the EDF and CDP (proposed within EU defense and security briefs prior to 2020) may decrease to account for the fiscal and political uncertainty caused by the pandemic. Military Realities Beyond the broad, rather philosophical debate surrounding European strategic autonomy, the Afghanistan imbroglio reveals military deficiencies that are unique to the EU. The disparity in military expenditures across Western states may prove unsustainable as geostrategic competition intensifies.  Inadequate defense budgets preceded the capability deficiencies that plagued NATO’s European member states in Afghanistan. In an interview with Foreign Policy, retired British General Richard Barrons states that without the US, “NATO is a very limited concept and very limited force”.  As the future strategic risks and threat perceptions of Europe and the US diverge, Europe will be responsible for defending its own interests. A shift toward a more autonomous European foreign policy will include improving the ability of the EU to intervene and protect their strategic priorities. Russian belligerence in Eastern Europe adds a measure of urgency to the question of strategic autonomy.  The lingering ambiguity regarding US willingness to fulfill Article V commitments remains a driver of EU security policy initiatives. NATO-Russia force balance improvements on NATO’s eastern flank will be a strategic priority as Russia calculates the cost of future belligerence. Improving force readiness and maintaining operative-forward deployment positions in Eastern Europe may support European defense autonomy and promote capability cohesion within NATO.  Political Implications Emmanuel Macron continues to advance his conception of ‘European Sovereignty’.  In a February interview with the Financial Times, Macron said that he defends strategic autonomy “not because I am against NATO or because I doubt our American friends…but because I think we need a fair sharing of the burden and Europe cannot delegate the protection of its neighborhood to the USA.” Angela Merkel agrees that Europe must “take [its] fate into [its] own hands”.  Macron faces reelection with an approval rating hovering around 40% and Merkel steps down as chancellor in September.  Therefore, transitional stability is a reasonable concern. Policy continuity among the EU’s principal members may determine the efficacy of Europe’s independent security agenda. The resurgence of the ‘America First’ mentality is a threat to transatlantic defense cooperation. Hardline voters in Republican strongholds may determine the extent to which US foreign policy reflects isolationist doctrine. A 2024 general election triumph by a viable Republican candidate might call into question America’s commitment to Article V and to NATO itself. Public opinion may determine how, and to what degree, European policymakers pursue strategic autonomy through increased budgetary expenditures. Though 61% of Europeans hold a favorable opinion of NATO, all but five member states oppose, in the majority, defending a NATO ally should Russia attack.  Such polling data suggests an overreliance on US protection, the aggregate fragility of Article V commitments, and the necessity of a more independent European security apparatus.  Outlook Theresa May, while addressing Parliament, framed the question of European strategic autonomy, “What does [the Afghanistan pullout] say about us as a country? What does it say about NATO, if we are entirely dependent on a unilateral decision by the U.S.?”.  Forward-facing policy proposals will address the capability disparities within NATO and without it. Public opinion and the political will of elites to increase military expenditures against possible political headwinds determine, in part, the ultimate impact of such initiatives. A more functional independent European security may inoculate the EU against the inherent uncertainty of quadrennial US presidential transitions. The volatility of US domestic politics will contribute to European skepticism regarding US commitment to the collective defense provision of the NATO charter.  Transatlantic incredulity will introduce urgency into policy planning and may provide political justification for increased defense spending. The Afghanistan pullout has renewed calls to improve EU intervention capabilities. France and Germany have proposed the creation of an “initial entry force”. The conceptual force includes 5,000 troops supported by aircraft and ships. Such an EU rapid-reaction force, employed in concert with increased global development expenditures, may provide stability for struggling democracies abroad. Pursuing a balanced, synergistic combination of hard and soft power projection will make the EU a more capable NATO partner and a more formidable international actor. US-Russia-China trilateral relations will play a large role in shaping the transatlantic alliance in the medium and long term. In the short term, while US and EU threat perceptions regarding Russia and China differ, regional NATO cooperation in the Middle East will be a necessity. It is unclear what the nature of Russian and Chinese influence will look like on the ground, but the willingness of the two powers to engage with the Taliban is telling. The urgency with which NATO and the EU respond to these developments may determine the scale of imminent irregular migration crises. In a September 1st guest essay for the New York Times, Josep Borrell Fontelles (the EU’s high representative for foreign affairs and security policy) underscores the instructive nature of the Afghanistan withdrawal. He writes that “Some events catalyze history: The Afghanistan debacle is one of them.” Whether Europe will pursue more efficacious security policies remains unclear.  Tyler Durden Thu, 09/23/2021 - 02:00.....»»

Category: blogSource: zerohedgeSep 23rd, 2021

Is Gazprom About To Lose Its Natural Gas Export Monopoly?

Is Gazprom About To Lose Its Natural Gas Export Monopoly? Authored by Venand Melikstian via OilPrice.com, The long-awaited Nord Stream 2 (NS2) pipeline is arguably the world’s most contentious energy project. While its completion was uncertain for a long time, favorable political, economic, and environmental developments have worked in its favor. Recently, Gazprom, the owner and operator of the pipeline, announced its completion. However, legal challenges remain which threaten its quick startup, a startup that would be in Russia’s long-term and Europe’s short-term interest. By now, most readers who follow international energy developments know the Russian gas pipeline project has split Europe. Eastern Europe, which has a distrust of Moscow due to historic reasons, objected to the project as it fears that it would increase Russia’s influence. The Germans, who stand to gain the most, insisted for a long time on the commercial character of the initiative. Berlin implicitly accepted the political implications of the project when it struck an agreement with the U.S. to support Ukraine and by warning Russia on the weaponization of NS2. The U.S. under the Trump administration sought to dislodge the project through sanctions which significantly slowed construction activities. European companies such as Allseas canceled their contracts as they feared Washington's ire. Gazprom, therefore, was forced to utilize two less sophisticated ships that needed to be brought in from the pacific region. The sanctions seriously delayed the project, but Gazprom's persistence has ultimately borne fruit as the pipeline is finished now. However, legal impediments could lessen Russian optimism. First, the German regulator BNetzA needs to approve NS2’s certification application before the gas can run through the pipeline. The draft decision needs to be sent to the European Commission who will give advice. Afterward, the German BNetzA will make a final decision. The process could take four months until January 8th, 2022.  Furthermore, the European unbundling legislation is another serious impediment to NS2’s activation. According to European law, the producer and system operator cannot be the same legal entity for more than 50 percent of the transport capacity. The pipeline’s capacity can only be fully used when another producer is allowed to use NS2. However, since the break-up of the Soviet Union, Moscow has insisted on Gazprom’s monopoly on the export of natural gas through the country’s massive pipeline infrastructure to Europe. By ensuring the company’s monopoly, the Russian government intends to maximize its financial potential and the state's income. Rosneft has previously attempted to break this monopoly through its good relations with Moscow. To no avail. Over the years, the state-owned company has become the Russian energy industry’s poster-child due to its successes domestically and abroad. Rosneft’s CEO, Igor Sechin, is a confidant of President Putin and regularly does the state’s bidding by making investments that comply with Moscow's policies despite modest financial gains.  This time, however, the state could change its position as the Energy Ministry is preparing a report on ending Gazprom’s export monopoly through NS2. According to Interfax, which cited Deputy Prime Minister Alexander Novak, Rosneft has applied for permission to use the remaining 50 percent of the pipeline. It is an easy solution to a difficult problem as it is very unlikely that the European Commission will provide an exception to the unbundling legislation even when there’s a supply crisis on the European gas market. By allowing Rosneft to use the pipeline, Moscow could send a conciliatory message towards the EU where the European Parliament has asked the Commission to start a probe on possible market manipulation by Gazprom. Despite Moscow’s pivot to Asia, the Russian energy industry remains highly dependent on the lucrative European market. Rosneft’s attempt to break Gazprom’s monopoly is aimed at improving the political standing of the company in Moscow while increasing the flow of revenue to the state’s coffer.  Tyler Durden Thu, 09/23/2021 - 03:30.....»»

Category: blogSource: zerohedgeSep 23rd, 2021

Jim Rogers Warns The "Worst Bear Market Of Our Lifetime" Is Fast Approaching

Jim Rogers Warns The "Worst Bear Market Of Our Lifetime" Is Fast Approaching Via Wealthion.com, Legendary investor Jim Rogers has seen more market ups and downs than most people alive today. And he has successfully made money - a LOT of money - in the process. But given today’s macro-environment, he’s more concerned about the market’s future prospects than he’s ever been before. In fact, he confidently predicts we will experience a massive economic and financial correction that will result in the biggest bear market of our lifetime. Too much debt. Rising inflation. Currency debasement. Malinvestment. Central bank intervention. Geopolitical stress. The current macroeconomic environment has it all. Rogers predicts collapse will begin in the weaker countries/companies first, and then cascade it way towards the US, eventually plunging the entire system into deep recession, if not a downright Depression. Here in Part 1 of our interview with Jim, he explains how bad he thinks things will get and why. Using his international viewpoint, he also unpacks China’s future prospects given its current challenges (including Evergrande) and the potential for greater competition from an opening of commerce between South and North Korea. And in Part 2,  Jim offers his advice to prudent investors looking to survive the coming bear market he predicts, and provides his outlook on a number of different commodities, including oil, uranium, farmland and precious metals. “I caution all of you, it’s been 11 years since we’ve had a serious bear market... and I would suggest to you that maybe next time when we have a serious bear market it’s going to be the worst in my lifetime,” Rogers previously told an international forum hosted by Russia. Reflecting on the piling-on of more and more debt by policymakers to paper over every crack in any economy or market, Rogers previously noted that "eventually, the market is going to say: ‘We don't want this, we don’t want to play this game anymore, and we don’t want your garbage paper anymore’." And when that happens, Rogers warns that central banks will print even more and buy even more assets. “And that’s when we will have very serious problems... We all are going to pay a horrible price someday but in the meantime it’s a lot of fun for a lot of people.” *  *  * Global investor Jim Rogers co-founded the Quantum Fund, a global-investment partnership. During the next 10 years, the portfolio gained 4200%, while the S&P rose less than 50%. Rogers then decided to retire – at age 37 – and has been sharing his wisdom with investors ever since, as well as having some pretty amazing life adventures. Tyler Durden Tue, 09/21/2021 - 15:39.....»»

Category: blogSource: zerohedgeSep 21st, 2021