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he New Age of Protest

The New Age of Protest

Photograph Source: Marcus Coblyn – CC BY 2.0

Led by young people, climate strikers blocked traffic on two mornings at the end of last month in Washington, DC. On the first day, protestors chained themselves to a boat three blocks from the White House, and 32 activists were arrested. On the second day, activists targeted the EPA and Trump International Hotel. It was a not-so-subtle suggestion to commuters stuck in their cars on those mornings to think more favorably about public transportation or telecommuting. It was also a potent reminder, as Congress remains polarized on so many issues, that some paralysis is healthy in the nation’s capital.

The DC protests were part of a global climate strike that involved an estimated 6.6 million people. In New Zealand, 3.5 percent of the population participated. Melbourne, Berlin, and London each had rallies of 100,000 people. In Seattle, over a thousand workers walked out of Amazon headquarters, demanding that the company reduce its carbon emissions to zero.

It wasn’t just the children of the privileged in the industrialized world who were out on the streets. Protests took place in 125 countries and 1,600 cities, including 15 cities in the Philippines, throughout India, and all over Africa.

The global climate strike is just the latest mass protest this year. Demonstrations have roiled Hong Kong since the beginning of the summer. Tens of thousands of people poured into the streets in Moscow through the fall to protest restrictions on local elections. Thousands of Brazilians thronged major cities to condemn their president’s handling of the Amazon fires, and the same outrage prompted people to gather with placards in front of Brazilian embassies all over the world. Protests against Venezuela’s leadership that broke out on January 1 have recently dwindled even as demonstrations to remove Haiti’s president have heated up and security forces have cracked down on Iraqis protesting the corruption and inefficiency of their government.

 …click on the above link to read the rest of the article…

The open Amazon and its enemies: a call for action and optimism

The open Amazon and its enemies: a call for action and optimism

The Amazon, now on fire, has become the central political and geopolitical hot spot for humanity’s right to its own future. Optimism is the gasoline that must feed the fight. 

Tree in the Brazilian rainforest | Photo: Pablo Albarenga, all rights reserved.

June and July have been the hottest months on record in the Western Hemisphere as the climate crisis escalates. This summer, the ice in Greenland has been melting at an unseen rate under an unprecedented heat wave. Droughts and wildfires are on the rise ravaging significant forest surfaces, and the role of the rainforest as a carbon dioxide absorber is being jeopardized by a substantial acceleration in deforestation efforts.

The Amazon basin, which contains 40% of the world’s rainforest, plays a very complex yet central role as a buffer of climate change. It functions as a cooler of the atmosphere through moisture evaporation and it produces its own rainfall in the dry season while also capturing carbon and acting as the Earth’s lungs.

Aerial view of the Amazon River near Manaus, Brazil, at dawn. | Photo: Pablo Albarenga. All Rights Reserved

But lately, the Amazon’s vulnerability has become apparent, as fires have been spreading at an unprecedented rate. As Leonardo DiCaprio put it to his 34 million Instagram followers in a post: “the lungs of the Earth are in flames.” Data released by Brazil’s National Institute for Space Research shows that from January to July, 4.6 million acres of the Brazilian Amazon went ablaze, a 62 percent increase over last year. We are facing a full scale ecocide case here.

 …click on the above link to read the rest of the article…

The Amazon Inferno

The Amazon Inferno

Fires burning the southern region of the Brazilian state of Para. INPE, Brazil, August 2019. Courtesy Wikipedia.

One of the lasting highlights of my teaching at the University of New Orleans in 1991-1992 was  my travel to Brazil in January 1992 for a conference on climate change. This was a rehearsal for the June 1992 Earth Summit on Climate Change in Rio.

My conference took place in Fortaleza, a beautiful town in the state of Ceara in the northeast of Brazil. The conference passed quickly with meaningless speeches while the conference was besieged by indigenous people pleading unsuccessfully for a hearing.

However, I enjoyed a tour of the semi-arid countryside of Ceara. I sensed more than dryness and desert. I saw fragments of the Brazilian Atlantic forest. These moist woodlands are full of golden tall trees, marshes teeming with life, bleeding streams carrying away the red soil. Yet perpetual danger follows the trees, plants and animals. The loggers who devastated the Atlantic forest for more than 500 years keep coming, leaving a trail of plunder after them.

The asphalt road of our tour sliced through a flat region of small trees, bushes, goats and cattle grazing ranchland, and immense cashew plantations, producing Ceara’s number one cash crop.

We stopped in Caninde, a rural town celebrating St Francis, the ecology saint of the Catholic Church. Once in the St. Francis Cathedral, my eyes were immediately glued to banners.

The message in these colorful cloth banners was not what one would see in a church in North America. Here the burning issue was not hell or paradise or the ten commandments but liberation—the liberation of peasants from oppression. One banner said that the organization of the workers was terribly important for their emancipation; and another proclaimed that the concentration of wealth was the root of evil.

 …click on the above link to read the rest of the article…

Rainforest on Fire

RAINFOREST ON FIRE

On the Front Lines of Bolsonaro’s War on the Amazon, Brazil’s Forest Communities Fight Against Climate Catastrophe

THE RIVER BASIN at the center of Latin America called the Amazon is roughly the size of Australia. Created at the beginning of the world by a smashing of tectonic plates, it was the cradle of inland seas and continental lakes. For the last several million years, it has been blanketed by a teeming tropical biome of 400 billion trees and vegetation so dense and heavy with water, it exhales a fifth of Earth’s oxygen, stores centuries of carbon, and deflects and consumes an unknown but significant amount of solar heat. Twenty percent of the world’s fresh water cycles through its rivers, plants, soils, and air. This moisture fuels and regulates multiple planet-scale systems, including the production of “rivers in the air” by evapotranspiration, a ceaseless churning flux in which the forest breathes its water into great hemispheric conveyer belts that carry it as far as the breadbaskets of Argentina and the American Midwest, where it is released as rain.

In the last half-century, about one-fifth of this forest, or some 300,000 square miles, has been cut and burned in Brazil, whose borders contain almost two-thirds of the Amazon basin. This is an area larger than Texas, the U.S. state that Brazil’s denuded lands most resemble, with their post-forest landscapes of silent sunbaked pasture, bean fields, and evangelical churches. This epochal deforestation — matched by harder to quantify but similar levels of forest degradation and fragmentation — has caused measurable disruptions to regional climates and rainfall. It has set loose so much stored carbon that it has negated the forest’s benefit as a carbon sink, the world’s largest after the oceans.

 …click on the above link to read the rest of the article…

Why I Remain Hopeful When Things Look Grim

Why I Remain Hopeful When Things Look Grim

Hi. I’m sorry to my regular readers for not writing any articles in the last couple of days; I’ve just been staring transfixed at the fallout from the election of Jair Bolsonaro in Brazil, and the words which normally come bubbling up on their own just haven’t been there for me.

Bolsonaro is a fascist. I mean that in a very real, literal and non-alarmist way. I’ve seen a lot of conservatives in both the US and Australia defending him as just another right wing nationalist like Donald Trump, which is partly due to the fact that he has been straightforwardly labeled the “Trump of the tropics” and the “Brazilian Donald Trump” by the English-speaking mass media, and partly due to the fact that the political left has been warning of the danger Bolsonaro poses using the exact same language they used to warn about Trump.

So in a way it’s understandable that the two men would be lumped into the same group in public perception. The right (the MAGA hat-wearing “Build the wall” right, not the tiki torch-waving “Pinochet did nothing wrong” right) would probably mostly object to Trump calling for a civil war in America in which tens of thousands of Americans would be rounded up and murdered, advocating the physical assault of homosexuals in the street, openly proclaiming that he wants America to be a dictatorship etc, but these are all things Bolsonaro has publicly spoken in favor of. But because they’ve been hearing him described using the exact same labels and dire warnings that were hyperbolically applied to Donald Trump, who minus the rhetoric and hysteria has turned out to be a fairly conventional Republican president, conservatives assume Bolsonaro is fine. All the most severe linguistic tools were used up against Trump, so there were none left in the toolbox for Bolsonaro.

…click on the above link to read the rest of the article…

The Consequences of System Failure

The Consequences of System Failure

In short, every major political institution has been increasingly discredited as Brazil has spiraled deeper and deeper into a dark void. And from the abyss emerged a former army captain and six-term congressman from Rio de Janeiro, Jair Bolsonaro, with the slogan “Brazil above everything, God above everyone,” and promises to fix everything with hardline tactics.

– From today’s Intercept article: Jair Bolsonaro Is Elected President of Brazil. Read His Extremist, Far-Right Positions in His Own Words.

It’s been only a little over two years since the people of Great Britain surprised the world by voting to leave the European Union. Just a few months later, this nascent trend of political shock continued with the election of Donald Trump.

This tectonic shift toward political upheaval has continued to spread throughout much of the world, with Italy and Brazil being two more recent examples. That something very major and very global is happening is undeniable at this point, yet everyone seems to have their own pet reasons for why it’s occurring. I continue to stick to the same thesis I’ve had for nearly a decade, which is that the dominant global economic/financial paradigm led and managed by the U.S. has failed and is experiencing a slow, painful and dangerous death.

This reality was temporarily papered over by the shady and extremely corrupt financial bailouts of a decade ago. An event that focused all government resources on rescuing the already rich and powerful, while keeping bank executives out of prison.


They claim they “prevented another Great Depression.”
In reality, they just bailed themselves out and created the wild political environment we have today.


Ten years ago, all of America’s resources were irresponsibly and aggressively marshaled toward the sole purpose of resuscitating a dead system and keeping it on life support.

…click on the above link to read the rest of the article…

Brazil Reserves and Production Update, 1H2018

Brazil Reserves and Production Update, 1H2018

brazil c&c production

Brazil and Petrobras show something in common with US LTO: even with a lot of debt and desire, and a strong resource base it is difficult to raise production in the face of high decline rates. It may also be a lesson for the world as oil prices rise and activity picks up; it is by far the most active conventional oil region with many major projects at various stages of completion, but facing delays and schedule crowding so oil production has continued a slow decline, contrary to expectations from last year. In July new production again did not quite match overall decline, mostly because of delays in start-ups of FPSOs planned for this year, and at 2575 kbpd was down 14 kbpd or 0.5% m-o-m and 48 kbpd or 1.8% y-o-y (data from ANP).

chart/

Two FPSOs were started in 2017: Lula Extension Sul (P-66) at 150 kbpd nameplate and Pioneiro de Libra, an extended well test project on the Mero field, at 50 kbpd. Both are now about at design throughput. Two other FPSOs completed ramp up in 2017. In 2018 three FPSOs have started up: Atlanta a small early production system at 20 kbpd, Bezios-1 (P-74) in the Santos basin at 150 kbpd and FPSO Cidade de Campos dos Goytacazes on the Tartaruga Verde field in Campos, also at 150 kbpd. There were three other FPSOs due for the Buzios field (P-75, 76 and 77) but at least one is delayed till next year. There are now four planned FPSOs remaining to be started up this year, all in the fourth quarter: P-75 and P-76 plus P-67 (Lula Norte) and P-69 (Lula Extremo Sul) in the Lula field (each 150 kbpd nameplate).

…click on the above link to read the rest of the article…

World Finance Leaders Scramble For A Solution To Escalating Trade War, Rising Rates

The main takeaway from the IMF and World Bank Group annual meeting in Bali, which hosted financial ministers and central bank governors from around the world this weekend, was that global trade tensions were having a profound effect on global growth and need to be solved.

Most of the participants – save for China and Mexico – seemed united and in agreement that trade talks have to continue. Bank of Japan Governor Haruhiko Kuroda stated that it was essential to have dialogue on trade while at the same time, the president of Brazil’s central bank, Ilan Goldfajn, noted that the trade wars were one of the biggest threats to emerging markets. Indonesia’s president Jokowi Widodo said starkly that “winter is coming” for the global economy if there is no solution on trade.

However, not everybody was prepared to find a solution at any cost. Bank of China governor Yi Gang stated that he was preparing for the worst, despite still seeking a constructive resolution to the problem. Gang stated at the meeting: “You see a lot of people in China now preparing for this trade tension to be a prolonged situation. The downside risks from trade tensions are significant.”

Mexico also stepped in to voice its support for China. Former Mexican president Ernesto Zedillo told China that they should follow the example set by Mexico and Canada during their negotiations with the United States, because they both were able to secure the terms that they wanted, even though some may disagree violently with this hot take.

Zedillo said, “Mexico and Canada made clear that they’d rather not have Nafta than having the deal that the U.S. wanted. In the end, Mexico and Canada got their way in every single issue that had been drawn as a red line. So I hope China doesn’t blink.”

…click on the above link to read the rest of the article…

Good Times…

Good Times…

My son wanted to know why it is that Venezuela (a topic that gets discussed around the dinner table at home) chose such painfully, obviously asinine policies.

After much thought I explained it thus.

Hard times create strong men. Strong men create good times. Good times create weak men. Weak men create hard times.CLICK TO TWEETI’d seen it before somewhere and so I dug it up. Here it is in a different form.

We bipeds don’t change. I’ve come to realise not to fight it, just see it for what it is and make sure you’re positioned accordingly…for your friends family and those you care about. Speaking of which you should consider joining our family.

No special offers, no steak knives, no wild ridiculous promises – simply rational analysis and positioning for a macro world we’ve never encountered before. EVER! That’s both exciting and terrifying at the same time.

We’re Bad

At literally everything. We buy high, sell low, look to what Johnny next door is wearing, what car he drives. We get taken in and scammed by shysters, we believe in the unbelievable.

Which brings me swiftly to EM where fund managers desperate for yield dived into the fire over the last few years. Now the inevitable pain is hitting as default fears mount for “BATS” as the emerging-market rout deepens.

Turkey’s implied default odds climbed to highest since 2008 and over in the land of great steaks default risk in Argentina is …ahem…substantial.

As Bloomberg points out:

  • Argentina’s implied default probability over the next five years climbed this month to 41 percent, the highest since Mauricio Macri’s government ended the nation’s decade-long legal battle with most holdout creditors.
  • Turkey’s implied default odds during that span rose to 31 percent, the highest since the 2008 global financial crisis.
  • Brazil’s implied default odds increased to 18 percent, the highest since the country’s worst-ever recession deepened in late 2016.
  • South Africa’s implied default odds soared to 15 percent, the highest since Donald Trump’s election in November 2016.

…click on the above link to read the rest of the article…

Major Currencies All Over The World Are In “Complete Meltdown” As The $63 Trillion EM Debt Bubble Implodes

Major Currencies All Over The World Are In “Complete Meltdown” As The $63 Trillion EM Debt Bubble Implodes

The wait for the next global financial crisis is over.  Major currencies all over the planet are in a “death spiral”, many global stock markets are crashing, and economic activity is beginning to decline at a stunning rate in quite a few nations.  Over the past 16 years, the emerging market debt bubble has grown from 9 trillion dollars to 63 trillion dollars.  Yes, you read that correctly.  Now that emerging market debt bubble is imploding, and as a result emerging market currencies all over the globe are in “complete meltdown”.  In fact, at least 20 different currencies have fallen by double-digit percentages against the U.S. dollar so far in 2018, and nobody is quite sure what is going to happen next.

You may be tempted to think that this must be a good thing for the United States since the value of the U.S. dollar has been rising, but it is not.

During the “boom years”, trillions of dollars were borrowed by emerging market economies, and a high percentage of those loans were denominated in U.S. dollars.  Now that their currencies are crashing, it is going to take much more local currency to service those U.S.-denominated debts, and a whole lot of them are going to start going bad.

That means that many financial institutions here in the United States and over in Europe are going to end up holding enormous piles of bad debt, and the losses could potentially be astronomical.

The dominoes are starting to fall, and even the mainstream media is admitting that what we are facing is really bad.  For example, the following comes from a CNBC article entitled “The emerging market crisis is back. And this time it’s serious”

…click on the above link to read the rest of the article…

The First Global Domino Tips

The First Global Domino Tips

It’s hard to believe it was only about three months ago. Time flies when disaster unfolds all around you. In early June, Brazil’s central bank arranged a press conference where its President Ilan Goldfajn would set everyone straight. The currency was falling, he admitted, but it would be easily handled by closely following the Portuguese version of the global central bank handbook.

Sometimes you just have to admire the unrivalled brazenness of these guys and gals. Or, as I put it at the time, Goldfajn just called everyone stupid. He would have to believe that of us because Brazil has been through this before. Not in some long distant past disgrace, but just a few years ago. In fact, as he spoke, Brazil still hadn’t yet begun its recovery from the last time.

I couldn’t resist what I still think was appropriate snark in response:

We are just short of five years from when the last Banco chief called a press conference in 2013 to declare pretty much the same exact thing. Only then, Banco acted and had initiated a swap program that by early 2015 had extended to more than $115 billion. It ran so smoothly, the Brazilian economy is today celebrated as the model for how all EM crises should be handled.

Just kidding. Of course not. The real crashed and with it the Brazilian economy.

Is that ahead for Brazil, repeating the nightmare? Today’s statistics for Q2 2018 aren’t looking good, not that anyone who isn’t stupid would have expected otherwise.

Brazil’s economy had been decelerating for some time before. The currency, meaning dollar, and economy go hand in hand in that regard. Both BRL as well as Brazil’s economy each fell into an obvious “L” pattern. That’s not a very good template to follow in either direction, but it makes the potential re-emerging downslope that much more precarious.

Economic Doom Returns: Emerging Market Currencies Collapse To Record Lows As Global Financial Chaos Accelerates

Economic Doom Returns: Emerging Market Currencies Collapse To Record Lows As Global Financial Chaos Accelerates

After a little bit of a lull, the international currency crisis is back with a vengeance.  Currencies are collapsing in Argentina, Brazil, India, Turkey and other emerging markets, and central banks are springing into action.  It is being hoped that the financial chaos can be confined to emerging markets so that it will not spread to the United States and Europe.  But of course the global financial system is more interconnected today than ever before, and a massive wave of debt defaults in emerging markets would inevitably have extremely serious consequences all over the planet.  It would be difficult to overstate the potential danger that this new crisis poses for all of us.  Emerging market economies went on an unprecedented debt binge over the past decade, and a high percentage of those debts were denominated in U.S. dollars.  As emerging market currencies collapse, it is going to become nearly impossible to service any debts denominated in U.S. dollars, and that could ultimately mean absolutely enormous losses for international lenders.  Our system tends to do fairly well as long as everybody is paying their debts, but once the dominoes begin to tumble things can get messy really quickly.

Let’s start our roundup today with India.  While India is currently not in as bad shape as some of the other emerging markets, the truth is that they could get there pretty rapidly if they keep going down this path.

On Thursday, concerns about rising oil prices drove the Indian rupee to a brand new all-time record low

The Indian rupee fell to a record low on Thursday morning, following a declining trend all year — which economists attributed to rising oil prices, broader emerging market concerns, and strong month-end dollar demand.

…click on the above link to read the rest of the article…

No Other Banks Are This Exposed to Turkey, Argentina, Brazil…. Emerging Markets Haunt Spanish Banks

No Other Banks Are This Exposed to Turkey, Argentina, Brazil…. Emerging Markets Haunt Spanish Banks

To diversify from the euro-debt-crisis, the biggest Spanish banks pushed deeply into Emerging Markets. Now, they’re in a new crisis. 

Almost exactly six years ago, the Spanish government requested a €100 billion bailout from the Troika (ECB, European Commission and IMF) to rescue its bankrupt savings banks, which were then merged with much larger commercial banks. Over €40 billion of the credit line was used; much of it is still unpaid. Yet Spain’s banking system could soon face a brand new crisis, this time not involving small or mid-sized savings banks but instead its alpha lenders, which are heavily exposed to emerging economies, from Argentina to Turkey and beyond.

In the case of Turkey’s financial system, Spanish banks had total exposure of $82.3 billion in the first quarter of 2018, according to the Bank for International Settlements. That’s more than the combined exposure of lenders from the next three most exposed economies, France, the USA, and the UK, which reached $75 billion in the same period.

According to BIS statistics, Spanish banks’ exposure to Turkey’s economy almost quadrupled between 2015 and 2018, largely on the back of Spain’s second largest bank BBVA’s madcap purchase of roughly half of Turkey’s third largest lender, Turkiye Garanti Bankasi. Since buying its first chunk of the bank from the Turkish group Dogus and General Electric in 2010, BBVA has lost over 75% of its investment under the combined influence of Garanti’s plummeting shares and Turkey’s plunging currency.

But the biggest fear, as expressed by the ECB on August 10, is that Turkish borrowers might not be hedged against the lira’s weakness and begin to default en masse on foreign currency loans, which account for a staggering 40% of the Turkish banking sector’s assets. If that happens, the banks most exposed to Turkish debt will be hit pretty hard.

…click on the above link to read the rest of the article…

 

Weekly Commentary: Turkey (Nudged Over the Cliff)

Weekly Commentary: Turkey (Nudged Over the Cliff)

The Turkish lira sank 13.7% in chaotic Friday trading. The lira’s 21.0% “worst week in 17 years” collapse pushed y-t-d losses to 41.1%. Turkish 10-year yields spiked to almost 21%, before retreating somewhat. After beginning the year at 155, Turkey sovereign credit default swaps (CDS) spiked 166 bps during Friday trading (up 199 bps for the week) to 437 bps (high since Feb. 2009).
EM Contagion Effects gained momentum this week. Friday trading saw the Argentine peso hit 3.8% and the South African rand sink 2.7%. For the week, the Argentine peso fell 6.6%, the South African rand 5.5%, the Brazilian real 4.0%, the Hungarian forint 2.2%, the Romanian leu 2.1%, the Polish zloty 2.2% and the Mexican peso 1.8%. On the (local) bond yield front, 10-year yields in Brazil jumped 66 bps, Russia 40 bps, Hungary 15 bps and South Africa 13 bps. As global “hot money” frets faltering liquidity and the next shoe to drop, Brazilian equities sank 5.9% (as Brazil sovereign CDS jumped 24 bps to 237 bps).

August 10 – Bloomberg (Lionel Laurent): “Turkish President Recep Tayyip Erdogan has been standing firm as investors dump his country’s assets at an alarming pace, saying: ‘They have got dollars, we have got our people, our right, our Allah.’ European banks with substantial investments in Turkey will hope some of that divine providence rubs off on them, too, after sticking with a bet that has gotten more perilous over time.”

Fears of contagion this week were not limited to the emerging markets. With significant exposure to Turkey, European bank stocks were slammed in Friday trading. Unicredit sank 4.7% and ING Groep fell 4.3%. The big German banks, Deutsche Bank and Commerzbank, dropped 4.1% and 3.5%. European Banks (STOXX600) fell 1.9% Friday.

August 10 – Financial Times (Claire Jones, Ayla Jean Yackley and Martin Arnold): “The eurozone’s chief financial watchdog has become concerned about the exposure of some of the currency area’s biggest lenders to Turkey – chiefly BBVA, UniCredit and BNP Paribas – in light of the lira’s dramatic fall…

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“I’m Totally Freaked Out”: Brazil’s Elite Fleeing Bloodshed And Chaos

Amid the economic, political, and social collapse, Brazil has been described by many as being in the midst of a “zombie apocalypse” as years of corruption and violence spectacularly implodes all at once.

Horrified by the out of control violence and pessimistic about the nation’s political and economic outlook, thousands of wealthy Brazilians are now fleeing the country.

Thiago Lacerda, a high-profile actor, is one of the thousands of celebrities, bankers, lawyers and affluent Brazilians considering emigration before the next round of turmoil.

“I’m totally freaked out by what’s been happening, especially here in Rio [Rio de Janeiro],” Mr. Lacerda told The Wall Street Journal.

The 40-year-old actor said he has considered moving his family to Europe for the safety of his three children. “In several years, they’re going to want to go out, to start dating, without worrying about getting shot.”

Naercio Menezes Filho, director of the center for public policy at Insper, a São Paulo business school, commented on the situation and pointed out — the elite fleeing the country is the newest trend amid the threat of gang violence and economic instability.

According to a study published in June by Brazilian polling agency Datafolh, about 52 percent of the wealthiest Brazilians — those with a monthly income of more than $2,500 — want to emigrate, while 56 percent of college graduates have plans on leaving the country.

“The hope that Brazilians once had in their country has gone out the window, and many people are now reaching the conclusion that things are unlikely to change in the next few years,” said Mr. Menezes Filho.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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