Missile cruiser "Moskva" (RIA Novosti/Vitaliy Ankov)
Russia’s Moskva missile cruiser, dubbed a “carrier-killer” by NATO, has passed through the Straits of Gibraltar and is now heading toward the eastern Mediterranean to assume command of the Russian naval force there.
The Russian Navy said in a statement that the Moskva cruiser passed through the Straits of Gibraltar on September 10.
By Tim Bowler Business reporter, BBC News
The failure of investment bank Lehman Brothers five years ago brought UK and US banks to 'within hours' of collapse, says former UK chancellor Alistair Darling.
Its failure saw the start of a global crisis, with governments across the world scrambling to avert a possible financial meltdown, and five years' on the world's economy is still in the grip of a sustained recession.
Mr Darling, who was at the heart of decisions to bailout UK banks like RBS and Lloyds/HBOS says even before Lehman's collapse, "it was just a matter of time before we hit some sort of crunch."
"By the beginning of September it was obvious to me the banks were in dire straits and it was going to end in tears," he told BBC World Service's Business Daily programme.
On Friday 12 September 2008, the then US Treasury Secretary Hank Paulson asked Mr Darling if the UK would allow Barclays to buy Lehman Brothers.
"I said there was no way the British government could agree to a British bank buying an American bank that was by all accounts bust," he said.
"The losses would fall ultimately on the British taxpayer."
'Panic in the system'
The scale of the bailout needed to fix things was simply politically impossible”
The scale of the bailout needed to fix things was simply politically impossible”
Just days later on Monday 15 September, Lehman Brothers filed for bankruptcy in a move that sent shockwaves through the world's financial markets.
Doubts have since been raised as to whether the US authorities underestimated the problems facing the financial sector.
"I remember saying to my officials at the time, 'I wonder if they know what they are doing?'" said Mr Darling.
"It set in train events that brought our banks and the American banks within hours of collapse just three weeks later."
Lehman's failure "allowed panic to get into the system," he said.
"When Lehman went down, people started circling other banks as well, to look for the next one to go after, the situation got progressively worse."
Yet, while in hindsight the failure to support the bank triggered a wider financial crisis, there was little political support in the US for the authorities to save it.
"The scale of the bailout needed to fix things was simply politically impossible," says Harvard University economist Kenneth Rogoff.
"It was only by allowing Lehman to fail that the Federal Reserve, the Treasury and others could think about trying to campaign for the scale needed for the bailouts."
'That was scary'
The collapse of the bank might have been the starter for the financial crisis, but it did not have a single cause.
Analysts say that interest rates had been held too low for too long, allowing companies, countries and ordinary borrowers to build up too much debt.
We were heading for the brink, these were very dangerous times”
We were heading for the brink, these were very dangerous times”
Too many highly complex financial instruments had been created, with too little regulation and too little management oversight.
"With hindsight it is easy to criticise some of the decisions made, and investors rather than taxpayers should have born more of the pain," said Jessica Ground of fund managers Schroders.
"However, I think the positives from keeping the world going outweigh the negatives."
With the ripples of Lehman's collapse spreading far and wide, other governments were forced to quickly react to prop up their own exposed banks.
In the UK, Treasury officials had already been working on a banking contingency plan because "it was just a matter of time before we hit some sort of crunch," said Mr Darling.
"The question was could you hit it in a way that you could manage through it, or in a way that could have been catastrophic?"
The former chancellor recalls that his worst moment came three weeks later, in a phone call from the British bank, Royal Bank of Scotland (RBS).
"When I asked them how long they could last, they said 'well maybe two or three hours' - and they were the biggest bank in the world at the time. That was scary."
Critics have since argued that governments were too eager to throw public money at banks which should have been allowed to stand or fall on their own account.
It is not a scenario Mr Darling accepts.
"We were heading for the brink, these were very dangerous times.
"If these banks had all collapsed, it wouldn't have just been economic catastrophe, it would have been a social catastrophe."
The effects would have spread far beyond the banks themselves, he argues.
"I think it would have led to a lot of unrest all over the western world - dark times indeed."
If other banks like Lehman Brothers had been allowed to fail, "the rest of us would have been suffering for decades afterwards," he said.
Governments are unlikely to allow important banks to fail any time soon, he says, because the risks to economies and society at large are simply too great.
In other words, banks are still too important to fail.
"If you lose control of things you could end up with your entire banking system collapsing," warns Mr Darling.
"That is something that I think that no responsible government could ever entertain."
As we approach the five-year anniversary of “Lehman Day”—September 15, 2008—the day when Lehman Brothers collapsed, financial markets froze and the global financial system almost disintegrated, it’s good to get a reminder that the underlying issues that caused the debacle still haven’t been fixed.
The reminder comes from Alan S. Blinder, professor of economics and public affairs at Princeton University, former vice chairman of the Federal Reserve, and the author of the excellent history of the financial crisis, After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. He has now written an interesting article in the Wall Street Journal, entitled “Alan Blinder: Five Years Later, Financial Lessons Not Learned.”
Earlier this year, I explained in this column why another financial crisis is inevitable. Now Professor Blinder presents six “smoking gun” reasons why the problems of the financial sector still aren’t fixed and in effect, why another financial crisis is still inevitable.
First, the Dodd-Frank Act of 2010 hasn’t been implemented. Even this “comparatively weak” legislative attempt at reform is “withering on the regulatory vine. Far from being tamed, the financial beast has gotten its mojo back—and is winning. The people have forgotten—and are losing.”
By Nikos Roussanoglou
The economic crisis and extremely sluggish demand in the real estate market have resulted in house prices nosediving by more than 50 percent since 2008, according to experts.
While there are plenty of great bargains to be found all around the Greek capital, funding real estate purchases is where the real problem lies as banks have all but given up on issuing new mortgages, even in cases when a house is clearly a bargain.
In most cases, meanwhile, asking prices are below the rate used by tax authorities, known as the “objective value,” meaning that buyers would be taxed on the estimated rather than the actual value of the purchase.
Lefteris Potamianos, vice president of the Athens-Attica Estate Agents’ Association, says that “interest is minimal, while there may even be some more margin for negotiation,” even in houses offered at a discount of more than 50 percent compared with 2008.
A typical example concerns a 70-square-meter first-floor apartment currently on sale for just 38,000 euros when its objective value is set at 50,000 euros. The flat is on Asclepiou Street, at the foot of Lycabettus Hill in central Athens, and was built in 1970. A similar flat on the market in 2008 was going for 80,000 euros, meaning a 52.5 percent drop in the current asking price.
In upscale Kolonaki in central Athens, another first-floor apartment built in 1975 and with an area of 114 sq.m. is currently on sale for 250,000 euros. Before the crisis such a property would have cost some 400,000 euros, i.e. 37.5 percent more than it does today.
In Zografou, east of the city center, a two-story maisonette on the second and third floors, covering 138 sq.m. in total, represents something of a bargain. Built in 1996, it includes parking and storage spaces, and costs 150,000 euros, while a few years ago it would have cost 250,000 euros – a 40 percent decline. A similar maisonette, of 170 sq.m. and with access to a 100-sq.m. terrace, is on sale in Neos Cosmos for 90,000 euros, against the 190,000 that it would have cost in 2008, i.e. a drop of 52.6 percent.
Finally, in Neo Psychico, north of the center, a third-floor flat complete with parking and storage spaces, is on sale for 220,000. A few years ago such a property would have cost around 370,000, or 40.5 percent more.
A SYRIZA party banner stands in the foreground of Thessaloniki's White Tower, as party leader Alexis Tsipras is on a visit to the northern port city, which will end with a press conference on Sunday.
As labor unions scale up their protests against economic reforms this week and technical-level troika inspections deepen, the conservative-led government is bracing for a clash with leftist SYRIZA which has thrown its support behind protesting civil servants from various sectors.
SYRIZA has publicly backed secondary school teachers, who launch five-day rolling strikes from Monday, as well as school guards and other employees who are actively protesting an overhaul of the civil service that the government must complete in order to clinch the next tranche of rescue funding from international creditors, worth 1 billion euros.
According to sources, Prime Minister Antonis Samaras and his advisers are not convinced that SYRIZA can topple the government by backing striking workers. One aide dismissed SYRIZA’s calls for a protracted wave of protests with the goal of bringing down the coalition as “a half-hearted stab at a revolution.”
However, there are said to be fears – in the leadership of both conservative New Democracy and socialist PASOK – of the possible repercussions of extended strike action in the education sector, particularly if a large number of schools are occupied by teachers and pupils. Sources told Kathimerini that SYRIZA is planning to support sitins at specific secondary schools across the country.
As SYRIZA intensifies its anti-reform rhetoric, the government is reportedly planning to respond by accusing the leftists of undermining efforts to put the country on the road to economic recovery just as the first few positive signs have appeared.
Apart from the looming clash on the domestic level, the government must also contend with the troika. Technical teams have been in Athens since last Thursday to survey Greece’s progress in completing a series of “prior actions” that will clinch the next aid package. These include putting 12,500 civil servants – including teachers and university staff – into a mobility scheme by the end of this month, and another 12,500 by the end of the year. The scheme, which puts employees on a reduced wage ahead of their transfer to another job or dismissal, has fueled strong protests. It remains unclear, however, what proportion of workers can afford to join protracted walkouts as strike days are deducted from paychecks.
China’s Carrier-Based J-15 Likely Enters Mass Production
By Zachary Keck
September 14, 2013
A number of recent reports in Chinese state-run media indicate that the country’s carrier-based J-15 multirole fighter jets have entered mass production.
The Shenyang J-15 (also called Flying Shark) is China’s carrier-based fighter aircraft. It was reversed engineered from a Russian Sukhoi Su-33 that China acquired from Ukraine, although it reportedly is equipped with some indigenous weapons, avionics and other features that Beijing claims greatly enhances its capabilities. The J-15 is also powered by the Chinese-built Taihang (WS-10) turbofan engine.
A J-15 prototype conducted its first flight test in August 2009. In November last year it was announced that a PLA Air Force (PLAAF) pilot conducted the first take-off and landing from China’s aircraft carrier, Liaoning, using one of the J-15 tester jets. Throughout 2013 the PLAAF has continued holding take-off and landing exercises using the J-15 aircraft.
The People’s Daily Online carried a couple of reports this week on the J-15. Most of them begin by noting that “many keen military observers” have noted that the J-15s that have appeared on CCTV as of late have been painted gray with a People’s Republic of China flag on them, in contrast to the initial five J-15s that were painted yellow and were therefore marked as being intended solely for testing and development. The reports then note that the new paint job has led these “keen military observers” to speculate that the J-15 fighters have entered mass production.
One of the reports then asks Yin Zhuo, which it identifies only as a military analyst but who is also a former Rear Admiral in the PLA Navy (PLAN), to comment on this speculation. Admiral Yin begins by affirming that there has not been an official announcement yet on whether the J-15s have entered mass production, but nonetheless judges that the “navy paint finish on the J-15 indicates that it is now in formal service.”
He is then quoted as that online speculation about whether the aircraft has entered into mass production is “logical based on the facts that J-15 is already in service, and its technology is mature enough for mass production.” The rest of the article is devoted to Admiral Yin discussing what the implications will be if the J-15s have entered mass production, including the aircraft’s service life, which he estimates at 25-30 years.
“Once mass production is under way,” the People’s Daily paraphrases Admiral Yin as saying, “the aircraft design will be fixed other than in terms of possible changes to radar and electronic communication systems, or modernization of the engine after 10 to 15 years of service. However, the profile, basic finish, and performance standards of the aircraft have been established.”
Although hardly conclusive, the reports strongly suggest that mass production of the J-15 has begun, or at least that the Communist Party wants to create that impression.
Notably, the reports coincide with the Commander of PLAN, Admiral Wu Shengli, visiting the United States. The commander of the Liaoning carrier and the pilot who first landed on the carrier last November are accompanying Admiral Wu on the trip, according to Reuters.
“We have around 36 airplanes operating on board our ship,” Captain Zhang Zheng, the Liaoning commander told reporters in Washington this week, referring to aircraft carrier. “And we are still practicing and doing tests and experiments for the equipment and systems.”
Admiral Wu, on the other hand, told reporters that the Liaoning is just for training and experimentation and after a “final evaluation” the PLAN will decide on the development of a new aircraft carrier for the service.
Meanwhile, one of the other J-15 articles that appeared on the People’s Daily website compared it favorably relative to other countries’ carrier-based aircraft. Indeed, Admiral Yin, who was also quoted in that article, is paraphrased as saying that the J-15 “reaches a similar level to the U.S. F/A-18C/D Super Hornet” and is superior in terms of its air combat capability.
However, Want China Times flags a Xinhua report that quotes Sun Cong, the J-15s designer, noting that currently the aircraft cannot launch attacks against ships and ground targets when taking off from the Liaoning. That is because the aircraft carrier utilizes a ski-jump ramp and the J-15 would be too heavy to take off if it was carrying air-to-surface missiles and bombs. Thus, until the Navy acquires a Catapult-Assisted Take-Off But Arrested-Recovery (CATOBAR) carrier, the J-15, which is a multirole fighter, will be limited primarily to air superiority operations (and ship defense).
Notably, one of the People’s Daily reports observed that the J-15’s “front wheel is suitable for catapult launch similar to the carrier-based fighter of the U.S. Navy. The catapult launch was taken into consideration at the beginning of its design.”
In that context, Admiral Wu’s comments seem very interesting indeed.
An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246
September 13, 2013
By Richard Ghiasy, Stephan Mothe, and Frances Pontemayor
The IMF and World Bank should take a leaf from China’s focus on developing world infrastructure.
Since Deng Xiaoping’s administration launched its Reform and Opening Up policies in the late 1970s, China has integrated hundreds of millions of its citizens into the global economy, resulting in poverty alleviation on an unprecedented scale. This is in no small part due to sustained investment in both physical and social infrastructure. By focusing on upgrading its water, energy, transport and telecommunications systems, China has shown an intrinsic understanding of an indispensable developmental building block.
Expanding on its domestic successes, China has since been replicating this approach in the developing world, filling a public good vacuum that global development institutions, namely the International Monetary Fund (IMF) and the World Bank, have not tackled with the necessary intensity. In the process, China has been underwriting global poverty reduction in steel and cement; gaining not only access to the developing world’s resources and markets, but also stronger partnerships on many levels. Two regions – Central Asia and especially Sub-Saharan Africa (SSA) – stand out for the breadth and depth of Chinese involvement. Is China helping to pave their path to modernity?
Development via Infrastructure?
China’s modern leaders took note of the role that large infrastructure projects played in the development of the world’s two largest economic hubs, the United States and Europe. Investing as much as 9 percent of GDP in infrastructure in the 1990s and 2000s, China laid the foundations for its current success. At its peak, in the years between 2001 and 2006, more was spent on roads, tracks, airports and other fixed assets than had been spent in the previous fifty years put together. Nearly every corner of the country is being linked, regardless of soil, latitude or climate conditions; high-speed train lines already connect most of the major urban hubs and highways will connect more than 90 percent of cities with a population of more than 200,000 by the end of 2015. In that same year, China’s total highway length is expected to surpass that of the U.S. As of this year, China’s mobile phone users reached a staggering 1.11 billion; and it has achieved an Internet penetration rate of 42.1%, giving it the world’s largest online population. Allocation of public resources to infrastructure has allowed China to maximize and exploit its competitive advantages and has made it a magnet for foreign enterprises and investors. Infrastructure both embodies and catalyzes development.
China’s social infrastructure, its hospitals and schools, are not too far behind. Although significant deficiencies persist, both the health and education systems have made great strides despite the challenges of managing such a vast population. Life expectancies have risen steadily over the past thirty years, while maternal and infant mortality have plummeted. The country’s top universities are pumping out graduates with the knowledge and attitudes necessary to compete on the global stage, and are increasingly attracting top foreign talent as well. According to a McKinsey study, by 2030, China will account for 30% of the world’s new college‐educated workers. With the Chinese government spending over US$250 billion a year on education, it would not be surprising to see Tsinghua, Peking or Fudan universities begin to challenge the best of the West over the next few decades. Thanks to their lower fees as well as grants and scholarships from the Chinese government, many of these schools’ international students are from developing nations. Upon visiting six African nations on his first international trip as China’s president, Xi Jinping announced 18,000 new scholarships for African students to study in Chinese universities over the next three years. Many of the recipients will return home with honed skills and fresh ideas on how to jumpstart their countries’ economies. Increasingly, they will arrive to find their governments on honeymoon with Beijing – not Washington.
Despite a historical legacy first built on financing construction and reconstruction, the IMF and World Bank have promoted different objectives in their engagements with the developing world since the 1960s – increasingly shaped by social aid. The success of the Marshall Plan in putting Western Europe back on its feet after World War II paved the way for that model to be applied in the newly decolonized nations of Africa. Thus, for much of the 1950s and 60s, the Bretton Woods institutions avidly promoted infrastructure and industrialization as the prime means of accelerating the region’s economic development. However, during Robert McNamara’s tenure as U.S. Secretary of Defense, Cold War considerations led to an overhaul of institutional strategies...
The Netherlands will not meet its EU deficit target in 2014 despite €6bn of additional austerity measures that are being planned. The CPB Netherlands Bureau of Economic Analysis, an independent public think-tank, said today that the deficit will be about 3.3% of gross domestic product in 2014 compared with 3.2% of GDP this year. The Netherlands has overshot the 3% of GDP target since 2008.
The Eurozone's fifth-largest economy will contract 1.25% in 2013 and grow 0.5% in 2014, the bureau said compared with an August forecast growth of 0.75% for 2014. The Netherland's has been hit by a housing bust and household debt is at 128% of GDP.
Unemployment in 2013 will rise 150,000 to 620,000 people (7%) and in 2014 to 685,000 (7 ½%). Meanwhile, non-energy exports will rise 4 1/4% in 2014. The macroeconomic effects of the new austerity package are limited by a one-time tax cuts in 2013. The median 2013 purchasing power is reduced by 1 ¼% in 2014 to ½%.
Written by Tim Ambler | Monday 16 September 2013
The FT reports that Bob Diamond is giving his support to our long and oft expressed view that bank regulation should be global, not national or EU. See for example “Saving the City”, March 2013. Big banks now operate in a global market and a single market requires a single set of regulations. Any more, or any fewer, in the major banking countries distorts competition. A major bank failing in one country may well bring down others and at the very least have knock-on effects. This is one of the most important lessons from 2008.
The EU is a particular worry as each member state seeks to impose handicaps on the others in order to enhance its own financial services industry. Furthermore, Brussels seeks to take over all financial regulation from member states. These politicians fail to see that such shenanigans can only damage not just London but the EU financial services industry as a whole.
Basel III has its faults, not least in loading up capital requirements at the wrong time. Higher capital requirements may have been a good idea pre-2008 but introducing them now inhibits the very lending to SMEs that is essential to growth. Likewise moves to downsize banks or introduce new Chinese walls may be a good idea in due course but not just now. Yes, of course we need to get away from banks, or any other financial institutions, being too big to fail but they are not about to do so. Financial crashes come around every 50 years or so, so on that metric the next one is not due for 45 years.
Faulty or otherwise, Basel is the only global financial regulatory structure we have and we need to work with it and improve it. The fact that we do not have an imminent crisis makes this the ideal time to introduce the radical revolution we need. The EU and national governments should turn over all financial market regulation to Basel. Who should monitor and supervise those global regulations is a more difficult problem but in the short term it will have to be by nation state, in the UK by the Bank of England.
But let us not get caught up in that. First things first means that banking regulation needs to go global now.
Published: September 16, 2013 Updated 4 minutes ago
By BARRY HATTON — Associated Press
LISBON, PORTUGAL — Portugal wants its bailout creditors to soften the country's 2014 deficit target, a senior official said Monday, as foreign inspectors began their latest review of whether the country is complying with the debt-cutting demands of its rescue program.
Portugal promised to reduce its debt and overhaul its economy in return for the 78 billion-euro ($104 billion) bailout in 2011, when countries sharing the euro currency, including Portugal, became mired in a financial crisis.
But the coalition government has, like bailed-out Greece, struggled to meet the financial targets stipulated in the agreement amid a deep recession. Consequently, the bailout providers — the country's fellow euro members, the European Central Bank and the International Monetary Fund — have in the past two years eased the deficit target, though they have expressed reluctance at doing so again.
Deputy Prime Minister Paulo Portas told reporters the government has been fighting since April to change the 2014 target, currently set at 4 percent of gross domestic product, though he didn't say what the new target should be. Unconfirmed reports said the government wants it set at 4.5 percent. The government says such a step would allow it to shift emphasis to financing growth measures.
Public hostility to the austerity program has grown amid tax hikes, cuts to services and a 16.5 percent jobless rate. The government almost collapsed in July as the coalition partners fell out over the scale and scope of austerity.
The creditors are keen for Portugal to abide by the bailout program, arguing the country needs to show investors it can get back on a sustainable financial footing so it can return to borrowing on international markets in June next year when the program ends.
The government has run into legal impediments in its efforts to cut public sector pay and pensions, with the Constitutional Court rejecting cuts three times over the past year. Those and other difficulties have helped push the yield on Portuguese 10-year bonds — an indicator of market confidence — above 7 percent in recent days. That interest rate is regarded as unaffordable.
The inspectors are expected to produce a report on Portugal's progress and economic outlook next month.
European Union officials warned Italy yesterday not to let politics ruin recovery prospects and upset debt markets in a week that could signal the end of Erico Letta’s fragile, five-month-old government.
Olli Rehn and Manuel Barroso threw their weight behind Letta, who also appealed for stability this weekend before a Senate vote on Wednesday on whether Silvio Berlusconi should be expelled from Parliament following a conviction for tax fraud.
“I believe it is of paramount importance to keep political stability in the country to ensure a recovery, mainly because the latest data show the economy remains relativity weak, without clearly indicating a return to growth,” Rehn, the EU’s top economic official, told Italian business daily Il Sole 24 Ore.
Italian industrial output was much weaker than expected in July, falling 1.1 per cent and undermining expectations that the country might emerge from its longest post-war recession in the third quarter.
Political instability has thwarted attempts to make the economy more competitive and whittle down Italy’s government debt burden, one of the world’s biggest.
Berlusconi’s centre-right allies have threatened to sink the government if Wednesday’s vote goes against him.
Letta’s left-right coalition, which needs the backing of Berlusconi’s People of Freedom party to survive, has bickered since it was formed in April but the infighting has intensified since Berlusconi was sentenced last month.
Barroso, the president of the European Commission, said he did not want to interfere with Italy’s internal politics but it was his duty to demand a greater sense of responsibility from all political forces.
“Italy needs systemic stability. It’s one of the big countries of the eurozone: when signs of political instability emerge there are repercussions on the markets,” Barroso told Rome-based daily Il Messaggero. “In this moment being wise is fundamental”
Letta himself made an impassioned appeal for political stability on Saturday, warning that a political crisis would push up borrowing costs and throw Italy into chaos.
In the latest auction, borrowing costs on three-year bonds reached their highest level in almost a year.
Rehn said he was confident Italy would find a way to meet its targeted budget deficit of 2.9 per cent of output this year, adding that it was up to the government to decide how to achieve that.
However, he said Italy had done less than was expected of it in terms of economic reforms and this had weighed on growth and employment.
Fri Sep 13, 2013 4:33pm EDT
* Speculative net shorts in 5-year T-notes most since 2008
* Speculators turn net short in two-year T-note futures
(Reuters) - Speculators reduced net bearish bets on U.S. 10-year Treasury note futures in the latest week after a weaker-than-expected August U.S. payrolls report, according to Commodity Futures Trading Commission data released on Friday.
The Labor Department on Sept. 6 reported U.S. payrolls grew by 169,000 jobs in August, short of the 180,000 forecast by economists polled by Reuters. The downward revisions of job numbers originally reported for June and July were even more troubling to economists.
The amount of speculators' bearish, or short, positions in 10-year Treasury futures exceeded bullish, or long, positions by 85,324 contracts on Sept. 10, according to the CFTC's latest Commitments of Traders data.
A week ago, speculators held 103,094 net short positions in 10-year T-note futures.
While the latest jobs figures missed forecasts, the data did not dash expectations the Federal Reserve would pare its $85 billion monthly bond-purchase program.
The Federal Open Market Committee, the U.S. central bank's policy-setting group, will meet on Tuesday and Wednesday, with its policy decision due out at the close of the two-day meeting.
"The data is consistent with the market gradually building a short base into next week's likely FOMC tapering announcement," Gennadiy Goldberg, an interest rate strategist at TD Securities, wrote in a research note.
Treasury 10-year T-note futures on the Chicago Board of Trade for December delivery rose 5/32 in price on the day at 123-19/32, while the yield on cash 10-year Treasury notes fell 1.7 basis points to 2.888 percent.
The 10-year note yield had broken above 3 percent for the first time in 25 months before the release of the August jobs report.
Speculators turned net long in 30-year bond futures after being net short the previous two weeks. They had a net long of 17,0635 contracts on Tuesday, compared with a net short of 8,963 a week ago, according to the latest weekly CFTC Commitments of Traders figures.
While reducing their net shorts in these T-note futures, speculators turned more bearish on shorter and ultra long-dated bond contracts, the latest data suggested.
Net short ultra-long T-bond futures in the latest week grew to 7,261 contracts on Tuesday from 2,175 the prior week .
Speculative net short in five-year Treasury note futures surged to 128,756, the most since January 2008. Last week, the net short in five-year T-notes was 44,917 .
Speculators' short positions in two-year T-note futures exceeded longs by 28,673 contracts on Tuesday, compared with a net long of 6,320 last week. It was a first time in more than three months that speculators held more shorts than longs .
Plan to plant chilli peppers along migration routes in bid to deter animals from eating crops and damaging farmland
India's government is to encourage farmers to plant chilli peppers along routes favoured by wild elephants in an effort to deter them from eating crops.
Clashes between India's 21,000 wild elephants and the country's 1.2 billion inhabitants are increasingly common.
About 400 Indians are killed each year by elephants, and nearly 1m hectares of farmland damaged. In return, many elephants die annually in makeshift traps set by villagers or when hit by trains.
"We think planting chilli pepper may be worth trying. Several experts and state governments have also suggested that cropping changes should be attempted to avoid crop damage – a very serious problem in Karnataka, Orissa and West Bengal, among other states," SS Garbyal, of the ministry of environment and forest, told the Indian Express newspaper.
The offbeat suggestion was made at a brainstorming meeting organised by the ministry to examine ways to reduce growing human-animal conflict, the newspaper reported.
The use of chilli – mixed with dung and made into fences – has been tested successfully in Namibia.
An alternative method involves lighting blocks of dried chilli which then emit a choking smoke.
Indian officials hope the animals will learn to avoid chilli-sown areas. Success, however, will depend on dry weather and wind direction.
India's booming population and economic growth have placed the historic grazing lands of elephants under enormous pressure. To avoid exhausting fodder in one area, herds migrate.
Attempts to create safe corridors for their travel have been hit by bureaucratic sloth and lack of enforcement.
Latest estimates put India's elephant population at 21,000 – the largest in Asia. About half of these are found in northeastern states of Assam, Arunachal Pradesh and Meghalaya.
With developments encroaching on the forests where the elephants live, they are increasingly coming into contact with humans.
In recent years there have been instances of elephants becoming addicted to the fermented sugarcane used to make local hooch in rural areas and repeatedly revisiting villages where illicit distillation takes place.
Buy farmland, advised Mark Twain, because, as the punch line goes, they ain’t making any more of it. Fast forward to 2013 and that advice, as a look at prices for farmland shows, seems as prescient as ever.
As any farmer will readily tell you, the agriculture business has had a tough run. Agriculture was once an economic mainstay. Turn back the clock to 1950 and the sector employed nearly a fifth of Canada’s work force. Today, agriculture accounts for less than 2 per cent of the country’s employed workers, while its share of gross domestic product is also a shadow of what it once was. Farm prices have languished for decades, as Canada’s population has shifted from rural to urban. By the 1990s, North America was losing two acres of productive farmland to development every minute.
If global food prices are any indication, such investments could be a solid bet. Over the last decade, global food prices have more than doubled, according to the United Nations FAO Food Price Index, which tracks monthly changes in prices for international food commodities. The food riots stemming from that price inflation were part of the spark that set off the Arab Spring. So far this year prices have been falling, but they still remain within shouting distance of the record highs reached in 2011.
The strength in global food prices is no accident. The growth in global food demand is unrelenting. Part of the reason is due to population growth. The world is at 7-billion people and counting. But that’s not the only thing straining food supply. World grain demand has also soared, as households in fast-growing Asian countries trade in rice bowls for cheeseburgers. It takes seven pounds of grain to raise a pound of beef. That’s a whole lot more than it takes to make a loaf of bread. The newfound economic clout in emerging economies such as China and India, which between them have roughly 2.5 billion people, has allowed more people to diversify their diets. In turn, global meat consumption has bounded ahead at double the rate of population growth over the last two decades.
All that demand for protein bodes well for the world’s breadbaskets. That is if Mother Nature doesn’t get in the way first. A severe drought a few years ago forced Russia, the world’s third largest producer of wheat, barley and rye, to suspend grain exports for nearly a year. Before that a drought in China caused a spike in grain prices that affected everything from the price of pasta in Italy to the cost of tortillas in Mexico. Closer to home the US Midwest has been grinding through one of the worst droughts in more than half a century.
Climate change scientists warn that droughts and other agricultural shocks will be even more common in the future. Against a backdrop of climbing temperatures, Canada sits in an interesting spot. With a wealth of arable land and 7 per cent of the world’s fresh water, Canada’s agricultural potential is considerable. It’s also possible the amount of land under cultivation in Canada could actually increase as global temperatures continue to rise and the wheat belt climbs farther north.
Could it be that in the coming years we’ll also see farmers actually start reclaiming acres from far-flung suburbs? The idea is much more plausible now than it was only a few years ago. It was depressed farm prices that allowed prime agricultural land to be paved over in the first place. As food becomes more precious and more expensive, it will only add to the market forces that will push some of those farms to come back.
While I agree that farmland is hot property, around here it is mostly the Chinese and other offshore investors who are quietly snapping it up. In the 1950s the work ethic was strong enough to work the land as family farms etc., but many of the farmers are getting old now and don't have kids willing to make the same effort and sacrifices.
Therefore, migrant workers from Jamaica and Mexico have to come into do the work that locals used to do, and when it comes time to sell the buyers are invariably from overseas.
The irony will be that as farms come back the food they produce will more and more be destined for export.
The Kremlin has warned Ukraine that if the country goes ahead with a planned agreement on free trade with the EU, it faces inevitable financial catastrophe and possibly the collapse of the state. Russia is making a last-minute push to derail the integration agreement, which is due to be signed in late November. Instead, Moscow wants to lure its neighbour into its own alliance, a customs union with Belarus and Kazakhstan, which critics have referred to as a reincarnation of the Soviet Union. Russia has made it clear that Ukraine has to choose between the two options and cannot sign both agreements. At a discussion forum in the Black Sea resort of Yalta over the weekend, European politicians gathered to pepper Ukraine's president and political elite with encouragement to cement the country's turn away from Moscow and towards Brussels. At the same palace where in 1945 Joseph Stalin, Winston Churchill and Franklin Roosevelt met and carved up Europe, there were angry exchanges between western politicians and the Kremlin's point man on Ukraine. Petro Poroshenko, Ukraine's trade minister, gave Sergei Glazyev, adviser to Russian president Vladimir Putin, a public dressing down in a discussion session during which the Kremlin man was faced with jeering and catcalls for demanding that Ukraine abandon the EU pact and turn to Russia. The minister said that it was the Kremlin's heavy-handed tactics and threats of a trade war that had made European integration inevitable. "For the first time in our history more than 50% of people support European integration, and less than 30% of the people support closer ties with Russia," said Poroshenko. "Thank you very much for that Mr Glazyev." Radek Sikorski, the Polish foreign minister, accused Russia of a "19th century mode of operating towards neighbours", and said that it is only when Ukraine is properly allied with Europe that Russia will begin to respect the country. "Poland's relations with Russia are better now that we are a member of the EU and Nato," said Sikorski. "When the question is open people feel entitled to exert pressure; when the question is closed they have to live with a sovereign country." Glazyev, speaking on the sidelines of the discussion, said the exact opposite is true: "Ukrainian authorities make a huge mistake if they think that the Russian reaction will become neutral in a few years from now. This will not happen." Instead, he said, signing the agreement will make the default of Ukraine inevitable and Moscow will not offer any helping hand. "Russia is the main creditor of Ukraine. Only with customs union with Russia can Ukraine balance its trade," he said. Russia has already slapped import restrictions on certain Ukrainian products and Glazyev did not rule out further sanctions if the agreement is signed. The Kremlin aide added that the political and social cost of EU integration could also be high, and allowed for the possibility of separatist movements springing up in the Russian-speaking east and South of Ukraine. He suggested that if Ukraine signed the agreement, Russia would consider the bilateral treaty that delineates the countries' borders to be void. "We don't want to use any kind of blackmail. This is a question for the Ukrainian people," said Glazyev. "But legally, signing this agreement about association with EU, the Ukrainian government violates the treaty on strategic partnership and friendship with Russia." When this happens, he said, Russia can no longer guarantee Ukraine's status as a state and could possibly intervene if pro-Russian regions of the country appeal directly to Moscow. "Signing this treaty will lead to political and social unrest," said the Kremlin aide. "The living standard will decline dramatically … there will be chaos." Ukraine's cabinet of ministers signed the agreement last week, and the choice for European integration is about the only thing that all major Ukrainian politicians agree on. However, European leaders have frequently said in the past that they will only sign if President Viktor Yanukovych orders the release of Yulia Tymoshenko, the former prime minister jailed for seven years in 2011 on charges of abuse of office, which most observers believe to be politically motivated. She is currently under armed guard in a hospital, being treated for back problems. Assorted European leaders again told Yanukovych over the weekend that he must free Tymoshenko. There are also concerns in Brussels about human rights, rule of law and corruption among the political elite in Ukraine. Ironically, however, the Russian pressure has led many Europeans to put their quibbles on the back burner. "Russia's threats has made both Ukraine and Europe more serious about integration," said Oleksiy Haran, a Ukrainian political analyst. "It's now a matter of principle." https://www.theguardian.com/world/2013/sep/22/ukraine-european-union-tra...
Two suicide bombers killed 71 people in an attack during a Christian church service in Pakistan’s northwestern city of Peshawar, according to police and a city commissioner.
The attackers detonated explosives inside the church while as many as 600 people listened to a sermon, Zaheer ul Islam, Peshawar’s deputy commissioner, told state-run Pakistan TV. The death toll reached 71 people with 110 injured, Shaukat Yousafzai, health minister for Khyber Pakhtunkhwa province, told reporters in comments broadcast on Dunya TV.
The blasts, among the deadliest of about 85 bomb and suicide attacks in Pakistan this year, come two weeks after political leaders agreed to initiate dialogue with militants in the region, including the Taliban. Prime Minister Nawaz Sharif’s three-month-old government advocated talks with the groups to stem the violence and revive the country’s economy.
“Terrorists have no religion and targeting innocent people is against the teachings of Islam and all religions,” Sharif said in a statement. “Such cruel acts of terrorism reflect the brutality and inhumane mindset of the terrorists.”
Sharif also expressed solidarity with the Christian community, according to the statement. Muslims account for more than 96 percent of the country’s 193 million people, according to the CIA World Factbook.
Feroz Shah, a spokesman for Zaheer’s office, confirmed that two bombers attacked the church. Sahibzada Anees, Peshawar’s police commissioner, told Pakistan TV that one of the bombers was dressed in a police uniform.
“Dialogue with militants cannot take place in such a situation,” Hasan Askari Rizvi, a Lahore-based independent security analyst who formerly taught at Columbia University inNew York, said by phone. “They are responding to the government’s offer of dialogue with the bullet. They are viewing the offer as a sign of the government’s weakness.”
The bombing is the second major attack since Sharif’s government decided to initiate talks with militants on Sept. 9. Two army officers, including a major-general, were killed last week in a roadside blast in northwestern Pakistan.
No one has claimed responsibility for today’s killing. Pro-Taliban Pakistani militants have been blamed for a campaign of suicide bombings. Pakistan’s Taliban is a loose group of militant and sectarian organizations that oppose the country’s security ties with the U.S. and want to impose their own interpretation of Islamic law.
As many 1,222 people, including 425 police and security officials and 797 civilians, have been killed in 858 terrorist attacks across Pakistan from Jan. 1 to Aug. 31, according to statistics presented to parliament by the Interior Ministry this month. That included 25 suicide attacks and 60 bomb blasts.
Eurozone tensions bubble as Merkel storms to victory
7:10PM BST 22 Sep 2013
German exit polls on Sunday evening indicated that Mrs Merkel’s conservative bloc won 42pc of the vote and is on course to win an historic absolute majority. A projection by broadcaster ARD put Merkel’s conservatives on 42.5pc, just over the combined total for the left parties who together scored 41.6pc.
Support for the centre-left Social Democrats stood at 26pc, with the environmentalist Greens and far-left party each securing around 8pc of the vote. But Mrs Merkel’s current partners, the Free Democratic Party, risk losing their Bundestag seats as their share teeters on the 5pc threshold.
German voters also displayed rising levels of anti-euro sentiment after a new eurosceptic party, the Alternative for Germany, looked to have come within a whisker of entering parliament, with an exit poll reading of 4.9pc.
Even if Mrs Merkel is forced to form a so-called 'grand coalition’ with her leftist rivals, a major shift from her dogged defence of German interests seems unlikely.
The left-leaning party, led by Peer Steinbrueck, is perceived as softer on debt-gripped eurozone nations, but agreed with Mrs Merkel’s broad approach in the eurozone during its election campaign.
Following a summer of inertia in the run-up to the German elections, the eurozone debt crisis looked set to bubble up as anti-austerity protests flared up in Spain and the Netherlands over the weekend.
Governments in both countries face ferocious opposition to spending cuts aimed at trimming high debt levels.
Greece meanwhile is braced for another week of public sector strikes against planned job cuts, just as its EU-IMF troika of lenders arrive in the country to discuss its next €1bn (£845m) tranche of bail-out cash. Last week, thousands of Greek civil servants protested against troika-imposed measures to cut 4,000 state jobs and re-deploy 25,000 workers.
Brussels is also gearing up for a new wave of bank bail-outs as it awaits the outcome of a major review which is expected to unveil weaknesses in the bloc’s financial system.
A closely-watched survey of private sector activity in the eurozone is today expected to highlight the deep economic divisions in the bloc. Core nations are driving an overall improvement in the bloc, which exited an 18-month recession earlier this year, while peripheral nations remain mired in recession.
Al-Qaeda's Iraq/Syria Leader Killed
Submitted by Tyler Durden on 09/22/2013 - 12:00
UDPATE: Death toll rises to 68
UPDATE: Massive explosion reported at Kenya's Westgate Mall
Kenyan President Kenyatta this morning confirmed his nation's unrelenting "war on terror" reflecting that they have dealt with terrorists before and will again. Urging nations not to issue travel warnings, he reassured a nation that the attackers (believed to be the Somali militant group Al-Shabaab) in the upscale (frequented by ex-pats) Mall "are cornered." The slaying of at least 59 people makes this one of the worst attacks in Kenya's history and as the dreadful images below show, the terrorists appeared to have no limits. As news breaks of the army readying a rescue mission and confirmation that "many" civilians are still trapped, the situation is fluid to say the least.