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Daily Archives: January 13, 2014

Just Three Charts | Zero Hedge

Just Three Charts | Zero Hedge.

With today’s biggest drop in stocks in over 4 months, we are reminded of three recent charts that raise considerable questions as to the path forward. From Mclellan’s 1928 analog to Hussman’s bubble trajectory and the extremes of bullish sentiment, this week marks a ‘line in the sand’ for bulls to take this to the Hendry moon or for it not to be different this time…

Mclellan’s 1929 Analog…

Hussman’s Bubble Trajectory…

Based on the fidelity of the recent advance to this price structure, we estimate the “finite-time singularity” of the present log-periodic bubble to occur (or to have occurred) somewhere between December 31, 2013 and January 13, 2014.

And the Market’s Most Bullish Bias On Record…

Is it any wonder there are less BFTATH-ers left?

Charts: John Hussman, John Mclellan, and @Not_Jim_Cramer

Polar Vortex – The Sequel: Coming To A Frozen US City Near You | Zero Hedge

Polar Vortex – The Sequel: Coming To A Frozen US City Near You | Zero Hedge.

Just when everyone thought the infamous polar vortex is gone (if not quite forgotten, having dipped the temperatures in some part of the US to sub-Martian levels), it’s baaaack. Sky News reports that America is set to be hit by another blast from the polar vortex although this time Niagara falls may not freeze, as temperatures are likely to be higher than last week’s extreme conditions. “The polar plunge is expected to move south from Canada, bringing colder air and sub-zero temperatures to the US this week. Forecasters say it will sweep over the lower Mississippi Valley and Midwest on Tuesday and Wednesday, and then hit the East on Thursday. The main thrust of the cold air will follow up a couple of days later.”

Polar vortex to return to US

More from Sky:

“Following the retreat of Arctic air this weekend, waves of progressively colder air will move southward over Canada this week,” said Paul Pastelok, AccuWeather.com’s lead long-range forecaster. “We will likely see a piece of the polar vortex break off and set up just north of the Great Lakes spanning January 16 to 20.

“This next main arctic blast will not rival, nor will be as extensive as the event last week.”

Many areas are still recovering from last week’s polar vortex, which saw the mercury plunge to -12C (11F) in New York City and -24C in Chicago.

A Coast Guard cutter was brought in to keep shipping lanes open, but the ice was too thick to break in places.

Residents have flocked to the river banks to take pictures of the polar conditions.

Rick Wilson, from Yardley, Pennsylvania, told an ABC TV station: “Incredible. I came down here just to take pictures of this. My grandchildren would not believe this. This looks like something you’d find in Antarctica.”

Sky News weather producer Jo Robinson said: “After a milder spell, plunges of cold air are expected later in the week. “The first is expected across parts of Canada, the Midwest and eastern parts of the US over the next few days. “More significant cold air will affect those areas by the weekend, but thankfully it doesn’t look to be as cold as last week.”

Of course, what is bad news for anyone who needs to buy heating at surge pricing, is great news for apologists of bad economic data, because don’t look now, but January employment numbers just became “meaningless” and if the BLS issues another disappointing jobs report on the first Friday of February, it will be the weather’s fault. And, “logically”, if the report is great, it will be entirely due to the recovery.

What do I believe about the world complex? Or, why I think a collapse is inevitable.

Last evening (January 12, 2014) I sat down to create a compilation of beliefs I hold about the world complex. The first twenty that popped into my head were pretty easy with the last few (I only went as far as once through the alphabet) requiring a little thinking. In no particular order I offer this quickly composed list with some links to articles/websites to support them:

ECONOMY/FINANCES

a)     Economic markets are rigged.

  1. http://www.zerohedge.com/news/2013-12-11/are-markets-rigged
  2. http://www.zerohedge.com/news/2013-06-12/summarizing-known-rigged-markets
  3. http://www.zerohedge.com/news/2013-06-11/wmreuters-busted-latest-market-rigging-and-collusion-scandal-foreign-exchange

b)    Gold has been moving from the West to the East.

  1. http://www.zerohedge.com/news/guest-post-world’s-gold-moving-west-east
  2. http://www.zerohedge.com/news/2013-12-19/chinese-dont-want-dollars-anymore-they-want-gold-londons-gold-vaults-are-empty-why
  3. http://www.zerohedge.com/news/2013-05-08/chinese-gold-imports-soar-monthly-record-insatiable-demand

c)     The world’s primary reserve currency never lasts forever.

  1. http://www.zerohedge.com/news/2014-01-10/todays-reserve-currency-tomorrows-wallpaper
  2. http://www.zerohedge.com/news/2013-07-06/bundesbank-warns-chinas-currency-its-way-becoming-global-reserve-currency
  3. http://www.zerohedge.com/news/2013-10-13/guest-post-how-much-longer-will-dollar-be-reserve-currency

d)    Central banks have been coordinating their monetary policies from interest rates to ‘money printing’ to ‘forward guidance’ that is resulting in currency devaluations

  1. http://www.zerohedge.com/news/here-comes-mother-all-rumors-g-20-sources-say-central-banks-preparing-coordinated-action
  2. http://www.zerohedge.com/news/goldman-todays-coordinated-central-bank-bailout-it-isn’t-enough-save-anyone-or-solve-averything
  3. http://www.zerohedge.com/news/2013-10-03/guest-post-rise-and-fall-monetary-policy-coordination

e)     Central banks have been monetizing sovereign debt through increased holdings of government bonds.

  1. http://www.zerohedge.com/news/2013-01-07/japan-may-or-may-not-mint-quadrillion-yen-coins-it-will-monetize-european-debt
  2. http://www.zerohedge.com/news/ecb-monetizes-another-€10-billion-piigs-debt-trichet-says-prudent-ecb-not-fed
  3. http://www.zerohedge.com/news/2012-10-20/presenting-all-us-debt-thats-fit-monetize

f)     Sovereign nations are in extreme debt.

  1. http://en.wikipedia.org/wiki/Government_debt
  2. http://www.economist.com/content/global_debt_clock
  3. http://www.tradingeconomics.com/country-list/government-debt-to-gdp

g)    Private households are in extreme debt.

  1. http://www.oecd.org/std/fin-stats/
  2. http://www.zerohedge.com/news/2013-06-04/debt-nations
  3. http://www.economist.com/blogs/graphicdetail/2013/06/focus-1

h)    All fiat currency experiments eventually end.

  1. http://dailyreckoning.com/fiat-currency/
  2. http://www.youtube.com/watch?v=Oql8CTy6AcA
  3. http://georgewashington2.blogspot.ca/2011/08/average-life-expectancy-for-fiat.html

i)      Robotic technology is replacing increasing number of jobs.

  1. http://www.news.com.au/technology/science/robots-to-replace-almost-50-per-cent-of-the-work-force/story-fn5fsgyc-1226729696075
  2. http://robotswillstealyourjob.tumblr.com/post/48210312400/robots-are-taking-our-jobs-and-we-will-take-their
  3. http://www.amazon.com/Jobocalypse-Human-Jobs-Robots-Replace/dp/1482701960

j)      There exist trillions of dollars of IOUs supporting the financial system.

  1. http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html
  2. http://theeconomiccollapseblog.com/archives/the-coming-derivatives-panic-that-will-destroy-global-financial-markets
  3.  http://moneymorning.com/2011/10/12/derivatives-the-600-trillion-time-bomb-thats-set-to-explode/

k)    Unemployment has skyrocketed across western nations, especially for the young (under 25).

  1. http://www.theguardian.com/commentisfree/2013/nov/14/youth-unemployment-wreck-europe-economic-recovery
  2. http://business.time.com/2012/11/05/why-the-u-s-has-a-worse-youth-employment-problem-than-europe/
  3. http://www.workopolis.com/content/advice/article/study-why-youth-unemployment-in-canada-is-here-to-stay/

ENERGY

l)      Production of conventional oil has begun to decline.

  1. http://www.oildecline.com/
  2. http://www.theguardian.com/environment/earth-insight/2013/dec/23/british-petroleum-geologist-peak-oil-break-economy-recession
  3. http://www.csmonitor.com/Environment/Energy-Voices/2013/0412/The-decline-of-the-world-s-major-oil-fields

m)   New technologies and dirtier sources are being increasingly required to sustain fuel production.

  1. http://www.peakoil.net/future-oil-production-in-canada
  2. http://www.ft.com/cms/s/0/d005f176-4ad8-11e3-8c4c-00144feabdc0.html
  3. http://www.theoildrum.com/node/10017

n)    Fuel production barely sustains demand.

  1. http://omrpublic.iea.org/balances.asp
  2. http://www.economist.com/blogs/dailychart/2011/06/oil-production-and-consumption
  3. http://www.eia.gov/todayinenergy/detail.cfm?id=12891

o)   The Shale Oil Revolution is not.

  1. http://shalebubble.org/drill-baby-drill/
  2. http://www.resilience.org/stories/2013-10-21/major-study-projects-no-long-term-climate-benefit-from-shale-gas-revolution
  3. http://mondediplo.com/2013/03/09gaz

p)    Models of future fuel production rely on significant ‘yet-to-be-discovered’ sources.

  1. http://www.abo.net/en_IT/publications/reportage/togo/togo_1.shtml
  2. http://seekingalpha.com/article/236162-iea-forecast-economy-depends-on-yet-to-be-found-oil
  3. http://www.jeffrubinssmallerworld.com/2010/11/24/even-the-international-energy-agency-forecasts-peak-oil/

q)    Fossil fuel extraction, transportation, and use have polluted the planet with numerous toxins.

  1. http://www.ec.gc.ca/energie-energy/default.asp?lang=En&n=1F4E5D8A-1
  2. http://www2.epa.gov/nutrientpollution/sources-and-solutions-fossil-fuels
  3. http://www.ucsusa.org/clean_energy/our-energy-choices/coal-and-other-fossil-fuels/the-hidden-cost-of-fossil.html

ENVIRONMENT

r)     Climate extremes are increasing in frequency, duration, and magnitude.

  1. http://www.theguardian.com/environment/2013/dec/18/2013-extreme-weather-events
  2. http://www.climatecommunication.org/new/articles/extreme-weather/overview/
  3. https://www.ipcc.ch/pdf/special-reports/srex/SREX_FD_SPM_final.pdf

s)     Polar ice caps are melting.

  1. http://www.nrdc.org/globalwarming/qthinice.asp
  2. http://www.dw.de/polar-ice-sheets-melting-faster-than-ever/a-16432199
  3. http://uk.news.yahoo.com/what-if-the-world-s-icecaps-melted-overnight–120351663.html#PK3eE9D

t)      We are experiencing peak water.

  1. http://www.wired.com/science/planetearth/magazine/16-05/ff_peakwater?currentPage=all
  2. http://www.bloomberg.com/news/2012-02-06/peak-water-the-rise-and-fall-of-cheap-clean-h2o.html
  3. http://www.princegeorgecitizen.com/article/20130606/PRINCEGEORGE0304/306069987/-1/princegeorge/peak-water-limiting-energy-production

u)    Deserts are expanding.

  1. http://www.nature.com/climate/2009/0909/full/climate.2009.84.html
  2. http://www.bbc.co.uk/learningzone/clips/desertification-expansion-of-the-sahara-desert/1498.html
  3. http://www.globalpost.com/dispatch/news/science/131211/waterless-world-inner-mongolia-desert-wasteland

v)     Sea levels are rising.

  1. http://pri.org/stories/2014-01-10/sea-levels-rising-uk-starting-let-go-some-its-coastline
  2. http://ocean.nationalgeographic.com/ocean/critical-issues-sea-level-rise/
  3. http://www.env.gov.bc.ca/cas/adaptation/sea_level.html

w)   Honeybees have been decimated by human chemical use.

  1. https://www.commondreams.org/archive/2008/05/24/9177
  2. http://www.businessinsider.com/the-world-without-honeybees-2013-6
  3. http://www.prnewswire.com/news-releases/honeybee-population-decline-and-its-devastating-effects-are-topic-of-vanishing-of-the-bees-82364717.html

LIBERTY

x)    Governments are spying on their citizens.

  1. http://www.theguardian.com/world/2013/dec/02/revealed-australian-spy-agency-offered-to-share-data-about-ordinary-citizens
  2. http://www.theguardian.com/world/2013/dec/02/revealed-australian-spy-agency-offered-to-share-data-about-ordinary-citizens
  3. http://www.canada.com/nationalpost/news/story.html?id=dae581de-2490-45f8-90c7-919d01fbd4f4

y)    Governments are spying on each other and themselves.

  1. http://www.globalresearch.ca/nsa-spying-on-congress-to-manipulate-intimidate-blackmail-top-government-and-military-officials/5364273
  2. http://www.cbc.ca/news/politics/new-snowden-docs-show-u-s-spied-during-g20-in-toronto-1.2442448
  3. http://www.nytimes.com/2013/12/21/world/nsa-dragnet-included-allies-aid-groups-and-business-elite.html?_r=0

z)     Governments are manipulating the data they provide to the public.

  1. http://www.businessinsider.com/government-data-manipulation-pricestats-argentina-inflation-2012-10
  2. http://www.wealthdaily.com/articles/unemployment-data-manipulation/4767
  3. http://www.zerohedge.com/news/2013-11-19/government-investigate-government-over-jobs-manipulation-report

I know many people would prefer to hear a message of hope but when these ‘realities’ exist I can’t help but be fairly pessimistic about our chances of a ‘sustainable’ future or a ‘soft landing’ for our economic woes. Unless some unforeseen miracle can save us from ourselves, I can only conclude that the day of reckoning is quickly approaching; it’s a matter of when, not if. Some event, minor or major, will be that snowflake that begins a cascading collapse of our interrelated, complex world. And by collapse, I mean a sudden, devastating drop in the standard of living (similar to Dimitry Orlov’s Five Stages of Collapse) OR an elongated, slow contraction (similar to James Howard Kunstler’s The Long Emergency or John Michael Greer’s The Long Descent); to me, these are not too dissimilar and require simply a change in time perspective to interpret the change as either ‘sudden’ or ‘lengthy’.

To quote William Catton Jr., from his book Overshoot: “…the pressure of our numbers and technology upon manifestly limited resources has already put out of reach the previously acceptable solutions to many of our problems. There remains steadfast resistance to admitting this, but facts are not repealed by refusal to face them. On the other hand, even the ‘alarmists’ who have been warning of grave perils besetting mankind have not fathomed our present predicament…” (p. 5).

Update 1. January 17, 2014

1.  Far more ‘paper’ precious metals exists than actual ‘physical’ metal in existence (a type of ‘fractional reserve’ banking):

2. Large Western financial institutions (i.e. U.S. Federal Reserve; Bank of England) have sold/leased their gold holdings and misled their clients about this:

3. The United States government and/or people within it have carried out domestic assassinations of numerous leaders:

4. The Fukushima Daichii Nuclear Plant disaster is far worse than the corporate media is letting on:

5. ‘Democratic’ countries are becoming more secretive and totalitarian through ‘legislation’:

Interesting thoughts: Murray Rothbard, Anatomy of the State (ISBN 978-80-87888-43-8):
“…the government is not ‘us.’ The government does not in any accurate sense ‘represent’ the majority of the people…Briefly, the State is the only organization in society which attempts to maintain a monopoly of use of force and violence in a given territorial area; in particular, it is the only organization in society that obtains its revenue …by use of complusion; that is, by the use and the threat of the jailhouse and the bayonnet. Having used force and violence to obtain its revenue, the State generally goes on to regulate and dictate the other actions of its individual subjects…The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively ‘peaceful’ the lifeline of the parasitic caste in society….The State has never been created by a ‘Social Contract’; it has always been born of conquest and exploitation…”

Feel free to offer some further ‘beliefs’, and three ‘credible’ links, in the comments. I will update the list periodically.

Cheers,

Steve

Resource Insights: Living in a world we can’t understand

Resource Insights: Living in a world we can’t understand.

What is not intelligible to me is not necessarily unintelligent.

                         –Friedrich Nietzsche

As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns, the ones we don’t know we don’t know.

                         –Donald Rumsfeld, Former U.S. Secretary of Defense

We live in an age of enlightenment, in the belief that the entire universe is open to our inspection and more than this, that it is theoretically all intelligible to us. If we just apply enough science and enough rationality, nature will reveal all its secrets to us in ordered sets of data that we can then use to control the entire world around us.

That we can wrest a comfortable life from the Earth is, however, nothing special. Plants and animals do this without resorting to colleges, symposia or research laboratories. And, humans used to do it without these things as well. Ancient Greeks–if they survived childhood diseases, war and the occasional plague–regularly managed to live into their 60s and 70s among balmy Mediterranean breezes. It’s not that there hasn’t been any progress; it’s just that we may not have made as much progress as we think.

And yet, in the age of Big Data we have become ever more enamored with the representations of the world that we gather in the form of numbers and words, believing (wrongly) that the map is the territory.

My father used to annoy his business partners by offering quick-fire solutions to problems–solutions that worked with distressing regularity. When pressed, he often could not explain why these solutions would work, only that he knew they would. His partners, suspicious of things that could not be rendered into rational discourse, eventually bought him out. How could they trust such intuitions, even if they appeared to be on target?

In his book Antifragile: Things that Gain from Disorder (from which I’ve drawn several ideas for this piece) author Nassim Nicholas Taleb cites the above quotation by Nietzsche and calls it “the most potent sentence in all of Nietzsche’s century.” We tend to dismiss things we cannot understand: “If I cannot understand it, then it must not exist.” And there is the seemingly less pernicious, “If I cannot understand it, it must not be important.”

The second notion is actually more pernicious. I can show convincingly that a person who does not understand a well-supported fact is merely ignorant. But it is much harder to convince someone that something which he or she doesn’t understand–but doesn’t deny either–is actually important enough to pay attention to. Climate change comes to mind.

This is the conundrum of the modern world. The world is so complex that it seems hopeless to try to understand how all things human and natural work together. We live in an age that calls out for explanations of nature and society that provide something genuinely revelatory to the layperson. What we mostly get, however, is hucksterism and public relations, information designed to mislead rather than clarify. Under the circumstances, we are lucky if we occasionally discover a small and perhaps fleeting truth.

We often believe that the explainers know what they are talking about because they speak with such conviction. The economists, the Wall Street analysts, the technical geniuses, the captains of industry, the billionaires, the airwave pundits, they must know something we don’t or they wouldn’t be that successful. But what they know isn’t necessarily what they are telling us. And, what they are telling us is, in any case, almost always designed to advance their interests, not ours.

In such a world, how shall we get through the day? It is best to start from humble premises:

 

  1. Nature knows better than we do in most things. It’s been tested for a lot longer than any human invention.
  2. No one knows the future, but we should strive to make ourselves less vulnerable to damage from extreme events which are the ones that can really hurt us.
  3. Beware of anyone who tells you he or she knows the future with certainty. Unless you are speaking with, say, a scientist calculating the orbit of a planet, such a person is a fraud.
  4. Our social relations–our loves and friendships–are more important than anything else because they are our true anchors in an uncertain world.
  5. The longer a practice or design has been around, say, a book versus an e-reader, the longer it is likely to be around. It has endured the test of time.
  6. There is wisdom in insecurity to quote Alan Watts. We actually live in an insecure and uncertain world. Those who promise to free us from our anxiety and insecurity are merely trying to manipulate us for their own gain. (I would distinguish such people from bona fide practitioners who help those with paralyzing anxiety reduce it to a manageable level.) Do not trust people or pills that promise to end your anxiety. Even if you get temporary relief, the actual uncertainty in your life and the universe will remain.
  7. Just because the world is uncertain doesn’t mean it is implacably hostile. Sometimes good things come from an uncertain future if we are wise enough to be on the lookout for them.

 

None of these principles will deliver you from all of life’s difficulties. But they can help you avoid hucksters who simply wish to exploit you by placing you in harm’s way while they reap the benefits.

Only when we accept that we have a rather limited understanding of the world we live in are we able to act in ways that are prudent for ourselves and our communities and respectful of the Earth and of our fellow beings, human and otherwise.

Kurt Cobb is an authorspeaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

TransCanada Begins Injecting Oil Into Keystone XL Southern Half; Exact Start Date A Mystery | DeSmogBlog

TransCanada Begins Injecting Oil Into Keystone XL Southern Half; Exact Start Date A Mystery | DeSmogBlog.

 

Keystone XL’s southern half is one step closer to opening for business. TransCanada announced that “on Saturday, December 7, 2013, the company began to inject oil into the Gulf Coast Project pipeline as it moves closer to the start of commercial service.”

The Sierra Club’s legal challenge to stop the pipeline was recently denied by the U.S. Court of Appeals for the Tenth Circuit, so the southern half, battled over for years between the industry and environmentalists, will soon become a reality.

According to a statement provided to DeSmog by TransCanada, “Over the coming weeks, TransCanada will inject about three million of [sic] barrels of oil into the system, beginning in Cushing, Oklahoma and moving down to the company’s facilities in the Houston refining area.”

In mid-January, up to 700,000 barrels per day of Alberta’s tar sands diluted bitumen (dilbit) could begin flowing through the 485-mile southern half of TransCanada’s pipeline, known as the Gulf Coast Project. Running from Cushing, Oklahoma to Port Arthur, Texas, the southern half of the pipeline was approved by both a U.S. Army Corps of Engineers Nationwide Permit 12 and an Executive Order from President Barack Obama in March 2012.

BloombergThe Canadian Press and The Oklahoman each reported that the Gulf Coast Project pipeline is now being injected with oil. Line fill is the last key step before a pipeline can begin operations.

“There are many moving parts to this process — completion of construction, testing, regulatory approvals, line fill and then the transition to operations,” TransCanada spokesman Shawn Howard told DeSmog. “Line fill has to take place first, then once final testing and certifications are completed, the line can then go into commercial service.”

Residents living along the length of the southern half will have no clue about the rest of the start-up process, as TransCanada says it won’t provide any more information until the line is already running. “For commercial and contractual reasons, the next update we will provide will be after the line has gone into commercial service,” the company announced.

When DeSmog asked whether the company is currently injecting conventional oil or diluted bitumen sourced from the Canadian tar sands, TransCanada’s Howard replied:

“Many people like to try and categorize the blend, etc., however we are injecting oil into the pipeline. As you’ve likely seen me quoted before, oil is oil and this pipeline is designed to handle both light and heavy blends of oil, in accordance with all U.S. regulatory standards.

I am not able to provide you the specific blend or breakdown as we are not permitted (by our customers) from disclosing that information to the media. There are very strict confidentiality clauses in the commercial contracts we enter into with our customers, and that precludes us from providing that. The reason is that if we are providing information about a specific blend, when it is in our system, etc. – that has the potential to identify who our customers may be or allow others to take financial positions in the market and profit from that information when others do not have access to the same information. This has much farther reaching impacts for the financial markets (and ultimately all of us).”

Riddled with Anomalies

The Keystone XL line fill comes just weeks after Public Citizen released an investigation revealing potentially dangerous anomalies such as dents, faulty welding and exterior damage that the group suggests could lead to pipeline ruptures, tears and spills.

“[Public Citizen] and its citizen sources uncovered over 125 anomalies in that half of the line alone,” DeSmogBlog reported on November 12. “These findings moved Public Citizen to conclude the southern half of the pipeline shouldn’t begin service until the anomalies are taken care of, and ponders if the issues can ever be resolved sufficiently.”

Public Citizen posted these photos on Flickr:


Pinholes in the applied coating can lead to exposing underlying pipe damage to leakage.


Multiple coating patches over new pipe about to be placed into the trench during initial construction.


Close up of section of Keystone XL southern half’s pipe marked “junk” by TransCanada.


Front of a cut out section of pipe on citizen David Whatley’s land marked “Dent Cut Out.”


A dent anomaly on the exterior cut out section of pipe. The dent was about the size of a brick.

Precedent of Spills

Public Citizen’s report also pointed out that the original TransCanada Keystone tar sands pipeline has had a dozen spills already, a fact that makes a lot of pipeline critics anxious about KXL.

“The government should investigate, and shouldn’t let crude flow until that is done,” Tom Smith, Director of Public Citizen’s Texas office said in a press statement accompanying the report. “Given the stakes – the potential for a catastrophic spill of hazardous crude along a pipeline that traverses hundreds of streams and rivers and comes within a few miles of some towns and cities – it would be irresponsible to allow the pipeline to start operating.

“TransCanada’s history with pipeline problems speaks for itself and I fear we could be looking at another pipeline whose integrity may be in question.”

Despite this precedent of spills, Keystone XL’s southern half is about to become a reality, with the fate of the border-crossing northern half of Keystone XL still resting in the hands of President Obama and Secretary of State John Kerry.

Photo Credit: Wikimedia Commons

Bangkok shutdown protests under way – Asia-Pacific – Al Jazeera English

Bangkok shutdown protests under way – Asia-Pacific – Al Jazeera English.

Thai opposition protesters have stepped up their rallies, gathering in thousands in seven major intersections in the capital, in their attempt to “shutdown” of Bangkok to ultimately unseat Prime Minister Yingluck Shinawatra.

The demonstrators want the embattled prime minister to step down to make way for an appointed government that would oversee electoral reforms to curb the political dominance of her billionaire family and tackle a wider culture of money politics.

Thai anti-government protesters set to paralyse Bangkok

Thousands of flag-waving protesters, some wearing T-shirts with the slogan “Bangkok Shutdown”, massed at strategic points in the city on Monday, including outside a major shopping mall that was set on fire during deadly political unrest in 2010.

“We will fight regardless of whether we win or lose. We will not compromise or accept negotiation,” protest leader Suthep Thaugsuban told crowds at a rally late on Sunday.

The firebrand opposition politician – who faces a murder charge in connection with a deadly military crackdown on political protests when he was deputy prime minister in 2010 – was set to lead a march through the city centre later on Monday.

But it was still unclear how much support he would enjoy among city residents, some of whom voiced fears that the action would hurt their livelihoods.

“Of course it affects me – I’m very stressed,” said hair salon owner Tong, 69. “No customers are coming now as my regular customers cannot drive here.”

Also on Monday, Shinawatra invited leaders of anti-government protesters and political parties to discuss an Election Commission proposal to push back the date of the snap election she called from February 2, a senior aide said.

Ministers have until now said a delay would be impossible under the constitution, but the Election Commission has said it could be pushed back and one member has suggested May 4.

Army deployed

Authorities say they are ready to declare a state of emergency if there is fresh unrest, and roughly 20,000 police and soldiers will be deployed for security.

But they have not tried to stop the demonstrators taking over parts of the city in the run-up to the February 2 elections, which they have set out to disrupt.

My generation is fed up with corruption in the country. We don’t care who will lead it in the future. Just as long as they are not corrupt.

Marisa Buerkle, anti-government protester,

The protesters have vowed to stop officials going to work and cut off power to key state offices as part of the shutdown efforts, which authorities have warned could lead to further bloodshed.

“My generation is fed up with corruption in the country,” Marisa Buerkle, an anti-government protester, told Al Jazeera. “We don’t care who will lead it in the future. Just as long as they are not corrupt.”

Eight people, including a policeman, have been killed and dozens injured in street violence since the protests began over two months ago.

The civil strife is the worst since 2010, when more than 90 people were killed in street clashes between pro-Thaksin protesters and the military.

“It’s going to be very volatile,” said Pavin Chachavalpongpun, a former Thai diplomat and associate professor at the Centre for Southeast Asian Studies at Japan’s Kyoto University.

He said there was a risk of “political violence”, with protesters under pressure to achieve their objective of removing the government before the election, which would probably return Yingluck and her party to power.

“In a way there is no turning back for the protesters, they have come too far,” he added.

The current political crisis is the latest chapter in a saga of political instability and periodic unrest that has gripped Thailand since Yingluck’s older brother, former prime minister Thaksin Shinawatra, was ousted by royalist generals seven years ago.

The billionaire tycoon-turned-politician, who lives abroad to avoid a jail term for corruption, has large electoral support particularly in northern Thailand, where he is adored for a swathe of popular policies.

But he is reviled among the country’s elites and by many in the Bangkok middle class and Thai south, who see him as authoritarian and accuse him of buying votes.

The protesters want an appointed “people’s council” to run the country and oversee vaguely defined electoral reforms, such as an end to alleged vote buying, before new elections are held in about a year to 18 months.

The impasse has revived fears of a judicial or military ousting of the government, in a country which has seen 18 actual or attempted coups since 1932.

U.K. to Pay Up To $3M a Well to Councils Allowing Shale Gas – Bloomberg

U.K. to Pay Up To $3M a Well to Councils Allowing Shale Gas – Bloomberg.

Prime Minister David Cameron will give millions of pounds to local authorities that allow shale gas developments to go ahead, part of a drive to create more jobs and encourage investment in the U.K.

Councils will be allowed to keep 100 percent of the business rates they collect from shale gas sites, double the current 50 percent figure, in a move that may be worth 1.7 million pounds ($2.8 million) per site in central government funding per year, according to figures released by Cameron’s office. Business rates are taxes to help pay for local services, charged on most non-domestic properties.

“That’s going to be quite a significant boost for that local council’s coffers,” Business MinisterMichael Fallon told the BBC. “We want local councils and local people to benefit from this exploration. We expect 20-40 wells to be drilled in exploration over the next couple of years.”

Research by business lobby group The Institute of Directors showed investment could reach 3.7 billion pounds a year and support 74,000 jobs in the oil, gas, construction, engineering and chemicals industries, Cameron’s office said. It also said the industry will make proposals today on how best to secure a role for British companies in the supply chain as shale gas production develops in the U.K.

“A key part of our long-term economic plan to secure Britain’s future is to back businesses with better infrastructure,” Cameron said in an e-mailed statement. “That’s why we’re going all out for shale. It will mean more jobs and opportunities for people and economic security for our country.”

Total SA (FP) today became the largest oil company to invest in U.K. shale gas through a $47 million deal to take stakes in two exploration areas in eastern England.

Europe’s third-biggest oil producer will acquire a 40 percent stake in licenses held by Dart Energy Ltd. (DTE) and operated by IGas Energy Plc (IGAS), the Paris-based company said in a statement.

To contact the reporter on this story: Kitty Donaldson in London atkdonaldson1@bloomberg.net

U.S. FATCA tax law catches unsuspecting Canadians in its crosshairs – Canada – CBC News

U.S. FATCA tax law catches unsuspecting Canadians in its crosshairs – Canada – CBC News.

Calgary mom Carol Tapanila is worried about losing the savings she's put aside for her adult son, who is developmentally disabled.Calgary mom Carol Tapanila is worried about losing the savings she’s put aside for her adult son, who is developmentally disabled. (CBC)

A Calgary woman’s developmentally disabled son is caught in a U.S. tax quagmire that she fears may cost him the money she spent years setting aside for his financial future.

“He’s entrapped,” said Carol Tapanila, the 70-year-old mother. “There’s no way out. He is entrapped into U.S. citizenship.”

Her 40-year-old son was born in a Calgary hospital, but automatically received U.S. citizenship because both his parents were American. That simple fact may soon create financial woes for the Tapanila family.

Starting in July, a new U.S. tax law, the Foreign Account Tax Compliance Act (FATCA), goes into effect. It requires banks around the world to sift through client accounts to find anyone with U.S. connections and send that information to the U.S. Internal Revenue Service.

The law is aimed at Americans who are hiding offshore accounts, but the information sharing is likely to unearth many unsuspecting Canadians with U.S. citizenship, like Tapanila’s son, who didn’t realize they were required to file U.S. taxes.

Tax law expert Allison Christians calls the Tapanila case “ridiculous” and a “classic example of why the law is unjust.”

marion-wrobel-cbaCanadian Bankers Association’s Marion Wrobel says that FATCA is expensive and does nothing to make banking safer or more sound. (CBC)

The law “was intended to find rich American tax cheats hiding out in Switzerland,” said Christians, who teaches tax law at McGill University, but it “will now punish poor, disabled Americans living in other countries, who are only American by birth.”

These so-called “accidental Americans” also include an Ottawa woman who was born in the U.S. to Canadian parents and moved back north at one year of age.

This woman, who asked to remain anonymous, said her husband is livid that their joint account information will soon be shared with U.S. tax authorities.

Both fear that FATCA will reveal her U.S. citizenship and saddle them with hefty penalties for failing to file U.S. tax returns that will eat into their retirement savings.

“It’s stressful. I think about this every day,” said the woman. “It’s like a big weight over your head that never really goes away, and I’m starting to wonder when and if it’s ever going to go away?”

Info-sharing deals

In advance of the law taking effect, more than a dozen countries have inked intergovernmental information-sharing agreements with the U.S.

These arrangements allow either for banks to hand over information directly to the Internal Revenue Service, or indirectly via their national tax agencies.

Canada is currently in negotiations with the U.S. The banking industry notes that FATCA will affect many Canadians indirectly because of the extra costs of industry compliance.

“We have to comply with FATCA,” said Marion Wrobel, vice-president of policy and operations at the Canadian Bankers Association. “While we don’t like it and we’ve lobbied against it, FATCA is going to be a reality.”

If banks refuse to comply, they face severe financial penalties — a 30 per cent withholding tax on all American-sourced income or sales of American-based assets.

But financial institutions also face costs to comply. Some estimate the manpower and administrative systems required to find clients with U.S. connections could cost up to $100 million per institution, said Wrobel.

“It is expensive, and as far as we see it, it adds nothing,” said Wrobel. “It doesn’t make the banks any safer or sounder.”

Thousands on legal advice

For Tapanila, the financial burden has already been costly. She spent thousands of dollars seeking legal advice on how to renounce her son’s U.S. citizenship. Under the law, a parent, guardian and trustee cannot renounce on someone’s behalf.

‘I wanted my son to have something when I was gone from this Earth.’– Carol Tapanila

She refuses to file U.S. taxes for her son, fearful that it would chip away at the funds she’s stashed in a Registered Disability Savings Plan (RDSP) and a Tax Free Savings Account (TFSA).

“I see no common sense in it,” she says. “Put me in jail. I don’t care. But I’m not going to do that.”

RDSPs as well as TFSAs are considered “offshore trusts” by U.S. tax authorities. That makes any gains from these plans — which include contributions from Tapanila and matching ones from the government — taxable by the IRS.

The CBA’s Wrobel said that, based on his talks with the federal government, he’s hopeful that the U.S.-Canada agreement will include exemptions for registered savings accounts.

That would provide some relief, but Tapanila notes that the cost of filing U.S. taxes every year could actually be the largest drain on her savings.

Accounting firms estimate that personal tax filings can cost from $500 to $5,000 a year because of the complexity of U.S. tax law.

“I wanted my son to have something when I was gone from this Earth and so I was a saver,” said Tapanila. “And now I don’t want the U.S. to take one penny that should go to my children.

“I want my hard-earned Canadian money that I’ve saved to go to my children, not to the U.S. or some compliance tax lawyers year after year after year after year.”

Neil Young Blasts Harper Government For Allowing Oilsands Development

Neil Young Blasts Harper Government For Allowing Oilsands Development.

TORONTO – Canadian rock icon Neil Young launched a blistering attack on the Harper government and Alberta’s oilsands at a news conference on Sunday, saying that he was “shattered” after visiting a Fort McMurray industrial site he compared to the atomic bomb-devastated wreckage of Hiroshima, Japan.

Joined on the Massey Hall stage by representatives from the Athabasca Chipewyan First Nation, Young was especially scathing in his criticism of Prime Minister Stephen Harper’s “hypocritical” administration, which Young said was ignoring science to irresponsibly drive corporate profits.

“Canada is trading integrity for money,” said the environmentally engaged 68-year-old rocker. “That’s what’s happening under the current leadership in Canada, which is a very poor imitation of the George Bush administration in the United States and is lagging behind on the world stage. It’s an embarrassment to any Canadians.”

“I want my grandchildren to grow up and look up and see a blue sky and have dreams that their grandchildren are going to do great things,” he added later. “And I don’t see that today in Canada. I see a government just completely out of control.

“Money is number one. Integrity isn’t even on the map.”

Young was speaking hours before he was set to take the same stage for a concert, the proceeds of which were to be directed to the Athabasca Chipeyan First Nation Legal Fund. The tour, which also features Canuck jazz chanteuse Diana Krall, was set to roll through Winnipeg and Regina before wrapping in Calgary on Jan. 19.

The stage was already dressed for Young’s show: a colourfully paint-smeared piano, a half-dozen guitars arranged in a circle, a majestic organ, a wooden First Nations figure and, behind it all as a massive backdrop, a red banner reading “Honor the Treaties.”

The Athabasca Chipewyan First Nation represents a community living roughly 200 kilometres downstream of current oilsands development. The group is embroiled in a legal battle to protect their traditional territory from further industrialization.

Young, who was born in Toronto before launching his storied music career in Winnipeg, was ferocious in his condemnation of what he sees as a violation of treaty rights.

“The name Canada’s based on a First Nations word. The word Ottawa’s based on a First Nations word, Ontario’s based on a First Nations word, Manitoba, Saskatchewan, Quebec — these are all First Nations word. This is where Canada came from,” said Young.

“We made a deal with these people. We are breaking our promise. We are killing these people. The blood of these people will be on modern Canada’s hands.”

Young said that “a while ago” he decided to drive his electric car from San Francisco to northern Alberta. Along the way, he stopped to meet Athabasca Chipewyan First Nation Chief Allan Adam — who sat next to Young onstage on Sunday — and visit others in the community.

It was on this trip that Young also decided to see the oilsands first-hand. The visit certainly left a mark.

“(I) drove around the tarsands in my electric car viewing and experiencing this unbelievable smell and toxicity in my throat — my eyes were burning,” he recalled. “That started 25 miles away from the tarsands. When I was in Fort Mac, it got more intense. My son, who has cerebral palsy, has lung damage, (so) he was wearing a mask to keep the toxic things in the air out of his lungs and make it easy for him to have lungs after he left.”

They soon came upon a “huge industrial site.”

“It looked very big and very impressive. Extremely well-organized. A lot of people were working — hard-working people, who I respect,” Young remembered. “That was one of 50 sites. The one we saw was the cleanest one. It’s the best-looking one. It’s the poster child.

“And it’s one of the ugliest things I’ve ever seen.”

During the week’s concerts, Young said he planned on screening the 12-minute Greenpeace film “Petropolis,” which he said was “probably the most devastating thing you will ever see.”

“It’s the greediest, most destructive and disrespectful demonstration of just something run amok that you could ever see,” he said. “There’s no way to describe it, so I described it as Hiroshima, which was basically pretty mellow compared to what’s going on out there.

“I still stand by what I said about Fort Mac and the way it looks. Not because the houses in Fort Mac look like Hiroshima, but because Fort Mac stands for 50 sites, the name Fort Mac stands for diseases that these First Nations people are getting, pollution, everything that’s happening there.”

He soon segued into another attack on the Harper government.

“This oil is all going to China. It’s not for Canada, it’s not for the United States, it’s not ours. It belongs to the oil companies. And Canada’s government is making this happen. It’s truly a disaster to anyone with an environmental conscience.”

Jason MacDonald, a spokesman for Harper, countered that “projects are approved only when they are deemed safe for Canadians and (the) environment” and stressing that the resource sector creates “economic opportunities” and “high-wage jobs” for thousands of Canadians.

“Canada’s natural resources sector is and has always been a fundamental part of our country’s economy,” MacDonald wrote in an email to The Canadian Press.

“Even the lifestyle of a rock star relies, to some degree, on the resources developed by thousands of hard-working Canadians every day. Our government recognizes the importance of developing resources responsibly and sustainably and we will continue to ensure that Canada’s environmental laws and regluations are rigorous. We will ensure that companies abide by conditions set by independent, scientific and expert panels.”

At one point during the hour-plus media session, Young was asked what he would say if granted a private consultation with Harper. Initially he demurred, muttering that the query “blew (his) mind.”

Later, however, he said he’d be open to such a meeting.

“I don’t think I’m going to get to see him anyway, but if he does want to see me, I’m ready to go see him. I would welcome the opportunity,” said Young, noting that he invited government representatives to attend the news conference and provide their side of the story, but the invitations were declined.

Environmental activist David Suzuki, who moderated the session, pointed out that he had personally tried to meet with Harper three times but had been rebuffed on all occasions.

“Well, you got a bad reputation,” Young replied with a smirk.

Young has been politically active on other matters recently as well. On his website, he’s posted messages questioning the pollution level in Shanghai and shaming Harper for competing “with Australia’s pro-coal government for the worst climate record in the industrialized world.”

The restlessly prolific guitar wizard hasn’t released new music since issuing “Americana” and “Psychedelic Pill” within a few months of each other in 2012. In 2009, he released an album about fossil fuels called “Fork in the Road.” He was asked Sunday whether this new campaign might similarly inspire new music.

“I don’t plan it. If I write something, it’ll come to me,” said Young, clad in a tassled light brown jacket, his face shaded by a black hat. “I think it will happen, but I don’t know.”

China’s Peer-To-Peer Lending Bubble Bursts As Up To 90% Of Companies Expected To Default | Zero Hedge

China’s Peer-To-Peer Lending Bubble Bursts As Up To 90% Of Companies Expected To Default | Zero Hedge.

When it comes to the topic of China’s epic credit bubble (which continues to get worse as bad debt accumulates ever higher), we have beaten that particular dead horse again and again and again and, most notably, again. However, since in China the concept of independent bank is non-existent, and as all major financial institutions are implicitly government backed, by the time the “big” bubble bursts, it will be time to hunker down in bunkers and pray (why? Because while the Fed creates $1 trillion in reserves each year, and dropping post taper, China is responsible for $3.6 trillion in loan creation annually – yank that and it’s game over for a world in which “growth” is not more than debt creation). But just because the big banks can continue to ignore reality with the backing of the fastest marginally growing economy in the world (inasmuch as building empty cities can be considered growth), the same luxury is not afforded to China’s smaller lender, such as its peer-to-peer industry.

Granted, in the grand scheme of things P2P in China is small, although in recent years, as a key part of shadow banking, it has been growing at an unprecedented pace: according to research published last year by Celent consultancy, the country’s P2P lending market grew from $30m in 2009 to $940m in 2012 and is on track to reach $7.8bn by 2015. Here’s the problem: it won’t. In fact, China’s P2P lending boom just went bust because as the FT reports, “dozens of the P2P lending websites that sprang up in recent years have shut as borrowers default on loans. The biggest companies are unscathed so far, but the rapid collapse of smaller rivals highlights the mounting difficulties in the Chinese micro-lending industry as economic growth slows and monetary conditions tighten… Of the nearly 1,000 P2P companies operating in China, 58 went bankrupt in the final quarter of last year, according to Online Lending House, a web portal that tracks the industry. Several more had already run into trouble this year, it added.”

And it’s only going to get worse:

“The main reasons are the intense competition in the P2P industry, the liquidity squeeze at the end of the year and a loss of faith by investors,” said Xu Hongwei, chief executive of Online Lending House. He estimated that 80 or 90 per cent of the country’s P2P companies might go bust.

Oops. None of this is unexpected: after the Chinese banking system nearly collapsed in June, following an explosion in overnight lending rates on just the mere threat of tapering of liquidity by the PBOC (since repeated several times with comparable results), it was inevitable that there would be unexpected consequences somewhere.

That somewhere is manifesting itself in the one industry that was supposed to gradually alleviate the lending burden for the SOEs.

People in the industry had hoped that P2P lenders would fill a hole in China’s financial system by helping small businesses obtain funding and by giving investors higher returns than they can obtain from banks.

 

While proponents believe that will still eventually prove to be the case, many believe the industry has expanded too quickly and with insufficient oversight.

 

“A lot of P2Ps have blindly copied each other and they don’t have a business plan that is robust enough to react to market changes. They’ve just focused on sales, scale and bragging to each other,” said Roger Ying, founder of Pandai, one of the websites that is still active.

 

Wangying Tianxia, a Shenzhen-based lender, was one of the biggest P2Ps to fail, according to the Shanghai Securities News, an official newspaper. Between its founding in March last year to its failure in October, Rmb780m ($129m) of loans were disbursed via its platform.

 

A second China-wide cash crunch at the end of December heaped more pressure on P2P lenders. Fuhao Venture and Guangrong Loans posted notices on their websites in the first week of the new year warning investors that loan repayment might be delayed.

So, condolences to China’s P2P business model: if it is any consolation, you are merely the first of many debt-related dominoes to tumble in China.

But while the Chinese government has already thrown in the flag on P2P – after all at just over a $1 billion in notional how big can the damage be – it is desperately scrambling to give the impression that all is well in the other, much more prominent areas of its credit bubble. Which is why the WSJ reports that “China’s government is gearing up for a spike in nonperforming loans, endorsing a range of options to clean up the banks and experimenting with ways for lenders to squeeze value from debts gone bad.

Write-offs have multiplied in recent months. Over-the-counter asset exchanges have sprung up as a way for banks to find buyers for collateral seized from defaulting borrowers and for bad loans they want to spin off. Provinces have started setting up their own “bad banks,” state-owned institutions that can take over nonperforming loans that threaten banks’ ability to continue lending.

 

“In recent years, Chinese banks have been exploring new avenues to resolve their bad loans,” said Bank of Tianjin, which is based in northeastern China. The lender recently listed more than 150 loans for sale on a local exchange. “We will continue to recover, write off, spin off and use other avenues in order to resolve bad loans,” it said.

 

China’s banks reported 563.6 billion yuan ($93.15 billion) of nonperforming loans at the end of September. That is up 38% from 407.8 billion yuan, the low point in recent years, two years earlier.

Amusingly, just like in the US, where nobody dares to fight the Fed, in China the sentiment is that nothing can possibly go wrong at a level that impairs the entire nation: “Analysts think it is unlikely that Beijing would let major banks go bust. Still, investors suspect the cost of a cleanup could be a sizable economic burden and could become even greater if growth continues to slow.”

Good luck with that, here’s why:

“The last time Beijing confronted bad-loan problems, in 1999 and 2000, the sums involved had crippled the banking system. Banks became far less able to make new loans, forcing the government to take action. Some 1.3 trillion yuan of bad debt was spun off the books of the biggest state banks and swept into four purpose-built bad banks.

 

This time, to avoid a costly bailout in the future, the government is pushing the banks to clean up their mess early. It is giving them new tools to do so: the exchanges to sell bad assets, provincial-level bad banks and permission to raise fresh capital using hybrid securities, complex products that combine aspects of debt and equity.”

One small problem: sell them to who? After all China is a closed system, and the US hedge funds have their hands full will pretending Spain and Greece are recovering and sending their stock markets to the moon because of the endless stream of lies emanating from the government data aparatus, all of it made up.

A potential constraint on the bad-debt cleanup is the inexperience of buyers at pricing and dealing with distressed debt, never a significant asset class in China. Finding buyers for a failed factory or commercial property seized as collateral can be difficult, particularly in cities with weaker economies.

 

“There’s an immature market for collateral. So the banks’ capacity to resolve loans is more determined by the market than their own abilities,” said Simon Gleave, regional head of finance services at KPMG China.

Analysts see the bad-loan problem as a growing issue. Although figures as of the end of September indicate bad debt represents only about 1% of total loans in

 

China’s banking system, a range of major industries are plagued with overcapacity and local governments are struggling to repay money borrowed to fund a construction binge. Investors broadly believe the actual bad-loan figure is much higher. The share prices of Chinese banks listed in Hong Kong have fallen, to trade below their book value.

And while all of the above is accurate, here is the biggest constraint: it is shown as the blue line in the chart below:

Applying a realistic, not made up bad debt percentage, somewhere in the 10% ballpark, and one gets a total bad debt number for China of… $2.5 trillion, and rising at a pace of $400 billion per year.

No, really. Good luck.

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