Month: December 2018

Education facilities in China have rolled out “intelligent uniforms” embedded with microchips to better monitor students’ attendance and whereabouts, said the Global Times. Eleven schools in Southwest China’s Guizhou Province and Guangxi Zhuang Autonomous Region have introduced smart uniforms, which are developed and manufactured by Guizhou Guanyu Technology.

As students arrive on school grounds, facial recognition cameras identify the time and date of arrival along with a short video that school administrators and parents can access via a mobile app.

If the student attempts to skip class, the mobile app will inform teachers parents of the truancy. A GPS system embedded in the uniform can even track the student beyond the school limits.

The microchips within each uniform can withstand up to 500 washes and 150 degrees Celsius, the company told Global Times.

Guizhou Guanyu Technology released a public statement via the Chinese social media site Weibo stating the uniforms “focus on safety issues”, and provide a “smart management method” that benefits students, teachers and parents. The company’s marketing manager boasted the uniforms’ capabilities on a personal Weibo account:

“You go to any school and ask the security guard how many students there are in the school today. He definitely can’t give you an answer, but we can,” the post read.

On its website, the company said the suits were designed to “fully implement the state policy of actively constructing smart campuses and smart education management for the development of education”.

Beijing has recently made statements calling on all education facilities to develop “smart campuses” in a move to digitize education. Lin Zongwu, principal of Number 11 School of Renhuai in Guizhou where more than 800 students have been wearing smart uniforms since 2016, told the Global Times that administrators could track students at all times, though the technology was used sparingly.

“We choose not to check the accurate location of students after school, but when the student is missing and skipping classes, the uniforms help locate them,” Zongwu said, adding the attendance rate had increased since the intelligent uniforms were introduced.

Guanyu Technology responded to sharp criticism on Weibo, saying the “the smart uniform does not track students’ every single move all the time,” adding that we “respect and protect human rights.”

In parallel with China’s development of a digital dictatorship to exert its authority over school children, the government is also rolling out its Social Credit System, a “ranking system” that monitors the behavior of its massive population, and ranks everyone based on their worthiness to the government, confirming that even George Orwell was an abject amateur in predicting just how far government would go to have supreme control over, well, pretty much every aspect of people’s lives.

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When trying to determine exactly how America’s economy changed during 2018, Bloomberg decided to abandon legacy macroeconomic data in favor of taking a look at the most prevalent social trends throughout the year – and subsequently, what they told us about the economy.

One trend that emerged in 2018 was the American population moving away from small metropolitan areas towards cities. The sidewalk scooter – once a mainstay back around the year 2000 – has made a comeback in cities like Washington and Los Angeles, signaling the changing demographic.

The saga over where Amazon was going to place their headquarters also told us something about the economy in 2018: job creation for big technology industries is concentrating as it grows.

The top 10 metropolitan areas for digital services held 44.3% of all jobs in 2017, but captured 49.1% of jobs added in the sector from 2015 to 2017.

2018 was also the year when the broader population realized that rent inflation was significantly outpacing wage gains. This was confirmed by the rising number people who live in urban areas that are struggling to pay bills. As a result, we’ve seen adults move into dorm-like home-sharing areas and WeWork-style shared working locations.

Naturally, social media like Instagram continues to play a big role in the economy, as online shopping continued growing in 2018. One of the most searched fashion brands of the year was Fashion Nova, which is a budget friendly clothing company that has made itself famous solely via social media. It was a more popular search on Google this year than brands like Louis Vuitton and Versace.

Sneakers also became a growing “alternative investment” in 2018. As we have written in the past about things like art and fine whiskeys, investors are looking to speculate in different markets and those who have been purchasing exclusive sneakers released in small batches have benefited from prices rising over the course of the last year.

And what would a year of social trends be without mentioning bitcoin? While the digital currency has fallen significantly over the course of the year, down from about $17,000 to about $3800 now, it has raised many questions about central banking and the economy that have acted as undertones for the economy this year. Namely: what will the future of money be?

Google searches for the term “self-care” also moved higher this year as items like vitamins, plant-based diets, blankets and even jade facial rollers became popular. The fact that consumers (probably millennials) have money to shell out for conspicuous feel good crap products like essential oils means that discretionary spending is likely still chugging along – at least, for now.

Finally, the job market has gotten so strong that it has put those looking for open positions in full control. Long gone are the days of courtesy and the traditional two week’s notice. Job seekers feel so empowered that some of those who have been dissatisfied with their jobs have even started the trend of “ghosting” employers by simply failing to turn up to work upon finding better employment. 

It should be interesting to see how this trend continues in 2019, when the job market is predicted to remain extremely tight even as the economy slows down notably. We’ll check back in twelve months from now, when many of today’s “empowered” job seekers will likely be unemployed, holding out for positions they think they’re worth – in Mom or Dad’s basement.

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By Rahul Vaidyanath of The Epoch Times

Just about every economic measure is trending down in China, and not surprisingly, deflation fears are mounting. The China Beige Book (CBB) fourth-quarter preview, released Dec. 27, reported that sales volumes, output, domestic and export orders, investment, and hiring all fell on a year-over-year and quarter-over-quarter basis.

A much-weaker 2019 appears to be in the offing for China, but it’s not solely due to trade tensions with the United States. The domestic economy was already on weak footing and the CBB argues that government support is unlikely.

The CBB is a research service that speaks to thousands of companies and bankers on the ground in China every quarter. It contends that deflation is the bigger threat compared to inflation.

“Because of China’s structural problems, deflation has very clearly emerged as the bigger threat in a slowing economy than inflation. Consumer demand has weakened, and you see that reflected in retail and services prices,” said Shehzad Qazi, CBB managing director, in an interview.

While lower prices look good for consumers, policy-makers don’t like deflation for a number of reasons. With prices falling, companies produce less, often lay off workers, and reduce investment, leading to a vicious circle of sorts. While the trade war hurts export-sensitive regions, local orders have now weakened for two straight quarters.

Hiring fell for the first time since early 2016. Worse still, the fall was concentrated in services and retail, two sectors being counted upon to pick up the slack left by manufacturing’s woes.

Also, debt—of which China has plenty—becomes more problematic under deflation, as its value adjusted for inflation rises.

And it’s an issue for central bankers, who typically target 2 percent inflation for price stability. Rate cuts to spur the economy and inflation are less effective, since the real interest rates are higher when accounting for deflation.

“China is an aging, leveraged country, with excess industrial capacity. Appearances by inflation should be cheered,” according to the CBB Q4 preview. “They are also rare.”

Qazi says that the only inflation is in agriculture commodities, which is not what Beijing wants.

The early signs of deflation are broad-based. Wages, sale prices, and input costs are all trending lower, according to CBB surveys. The November reading on Chinese inflation showed a drop of 0.3 percent. The statistic showed four months of deflation earlier this year before turning positive again.

China’s 10-year government bond yield has been trending lower since the start of the year, partially reflecting the market’s anticipation of deflation worsening and the economy slowing.

Two metals symbolic of global growth—copper and aluminum—are languishing. The CBB reports that the net share of copper firms raising production capacity fell to 30 percent from 60 percent two quarters prior, while aluminum firms raising capacity fell to 18 percent, which is half the Q3 figure.

“Dr. Copper” is not far from its lowest level in a year. Aluminum prices are at their lowest in 18 months.

No Help

“A major misconception presently is that China will announce another massive stimulus plan in the coming weeks,” Qazi said.

He added that further measures to stimulate the economy are unlikely. This is because true fiscal stimulus has never been attempted, and government spending distributed via state banks ends up being akin to monetary accommodation, which is what the Chinese authorities insisted would not happen again under their watch.

“The bottom line is that we see pervasive weakness in the economy as we look to 2019,” Qazi said.

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President Trump is “reconsidering” his strategy to pull US forces out of Syria following an “eye-opening trip to Iraq” the day after Christmas, Bloomberg reports. 

Sen. Lindsey Graham (R-SC) who sits on the Senate Armed Forces Committee – a harsh critic of Trump’s announced pullout, said earlier Sunday that he would try to change Trump’s mind during a private lunch since the Islamic state isn’t quite defeated in the region as the President had previously stated. 

“I feel better about Syria than I felt before I had lunch,” said Graham after he left the White House. “I think the president is taking this really seriously, and the trip to Iraq was well timed.” Trump has apparently devised a strategy with his generals in the field that “makes sense” according to the Senator. 

Lindsey Graham said it was a successful lunch and the discussion he had with Trump made him “feel much better” about the decision to pull troops out of Syria >> https://t.co/tTa161IN8A pic.twitter.com/jNvIrkuxYt

— Washington Examiner (@dcexaminer) December 30, 2018

On Sunday morning, Graham told CNN‘s “State of the Union” that Trump had spoken with General Joseph Dunford, chairman of the Joint Chiefs of Staff. 

“I got a call from General Dunford,” said Graham. “The president is reconsidering how we do this.“

The White House didn’t immediately respond to a request for comment on whether Trump is considering reversing the decision, announced by tweet earlier this month, to pull U.S. troops from Syria. That move, which came against the advice of the president’s top national security advisers, triggered the resignation of Defense Secretary Jim Mattis.

Trump has already has backed away from the notion of an immediate withdrawal, saying a week ago that the pullout of U.S. troops from the area would be “slow & highly coordinated.” –Bloomberg

Sort of like how Trump’s “immediate” and full declassification of the Justice Department’s Russiagate documents turned into a “slow & highly coordinated” handoff to the DOJ Inspector General. 

When asked whether President Trump would be to blame if ISIS became more powerful after US troops leave Syria, Graham responded that the blame belongs to former President Barack Obama due to his decision to withdraw from Iraq in 2011. 

“Everything we’re dealing with today falls on Obama’s watch. He’s the one who withdrew from Iraq,” said Graham.

“But he did it because there was a Status of Forces Agreement in Iraq, right?” shot back CNN host Dana Bash. 

“Listen. No, that’s a bunch of bullshit. Pardon my French. That’s a complete lie. That’s a complete, absolute lie,” said Graham, to which Bash asked “That didn’t happen?” 

“ISIS came about as a result of our withdrawal from Iraq. The caliphate was established in Syria because Obama sat on the sidelines and watched the place be dismembered,” said Graham, adding of Trump: “He was dealt a bad hand by Obama and he needs to play it better than he’s playing it. Keeping the troops in Iraq is great.” 

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“Households with elevated levels of debt are more vulnerable to increases in interest rates”, the Canada Mortgage and Housing Corporation redundantly observes in its latest bulletin and warns that “with interest rates on the rise, highly indebted households could see their increased required payments exceed their budgets.”

Naturally, this increased debt payment burden usually come at the cost of reduced consumption, decreased savings or opting to make lower repayments on principal amounts. Some households might even default on their loans if their incomes are not sufficient to cover higher expenses and credit charges.

And, as the CMHC ominously warns, if an increasing number of borrowers begin to default on their loans, financial institutions may decrease lending activities in response.

These negative effects could then impact other areas of the economy. Research has shown that recessions in highly indebted countries tend to exhibit a greater loss in output, higher unemployment, and last longer compared to countries with lower debt levels.

Here are some of the latest troubling observations on Canadian household debt levels from the CMHC:

Household debt to disposable income near record levels

The debt-to-income (DTI) ratio is a measure of the relative vulnerability of indebted households. While households may be able to service their debt during periods of low interest rates, some may face challenges when rates rise. Highly indebted households have usually few debt consolidation options to respond to increasing debt service costs.

Total household debt relative to disposable income has been trending higher as indebtedness has been rising faster than incomes, with mortgage debt being a major contributor, counting for two-thirds of all outstanding household debt in Canada. While the increasing trend in the Canadian DTI ratio has now paused, it remains near a record high, hovering around 170% in Canada and varies significantly among Canada’s metropolitan areas (see chart 1). Vancouver and Toronto have the highest DTI ratios in the nation, at 242% and 208%, respectively. Thus, the DTI ratio in Vancouver is more than double the level in Saint John (106%).

While the DTI ratio in Canada has not changed much over the last 9 quarters, that is not the case for all centres. Significant year-over-year percentage point changes have occurred in Edmonton (-8.3), Calgary (-7.9), Hamilton (5.9) and Victoria (4.2). The drops in Calgary’s and Edmonton’s DTI ratios were driven by income growth, as total debt levels only decreased slightly. For Hamilton and Victoria, DTI ratios increased as a result of strong growth in mortgage debt and installment loans.

Chart 1. DTI ratios are highest in Vancouver and Toronto

Servicing costs of mortgage debt relatively constant

Even though mortgage debt has risen, the share of household income needed to service mortgage debt has not varied dramatically over the last several years. The increasing share of income that goes to repayment of the principal represents equity accumulation, while the share that goes to interest is the cost of credit. The total cost of mortgage payments relative to total disposable income has hovered around the 6% mark for the past 10 years. The interest portion of household mortgage payments has, for the most part, been trending lower for about 25 years (see chart 2).

Chart 2. Principal repayment share has been increasing

Household debt composition determines sensitivity to interest rate changes

The composition of debt influences how quickly changing interest rates impact households. Line of credit loans and mortgages with variable interest rates would be the first to feel the impact of higher interest rates. Consumers holding existing credit products with fixed interest rates, such as auto loans, would not be affected at all on these items. Given that three quarters of mortgages have fixed rate terms, rising rates would not impact these loans until renewal. A rise in the mortgage rate would impact about half of all mortgage loans within the first year following an increase.

The effect on household finances following a hike in interest rates is a function of how quickly debt service charges increase. Analysis of debt composition by metropolitan area provides comparisons on how quickly various shares of household debt are impacted by a change in interest rates. Segmenting the DTI ratio by debt product provides the share of each product’s debt burden relative to income.

Vancouver households have a 177% mortgage debt-to-income ratio and a 31% HELOC debt-to-income ratio. Thus the debt-to-income ratio tied to real estate in Vancouver is approximately 208%, more than 3 times the ratio in Saint John. Toronto has the second highest DTI ratios for mortgages and HELOCs, at 145% and 25%, respectively. For all of Canada, the DTI ratio secured by real estate is approximately 133% (see chart 3).

It is interesting to note that the DTI ratio not secured by real estate is highest in Halifax at 47%, with DTI ratios of 20% for installment loans, 10% for credit cards, 9% for LOCs, and 8% for auto loans. At 30%, Victoria has the lowest DTI ratio not secured by real estate compared to the national average (39%).

Chart 3. Mortgages are the main contributor to the total debt burden

 

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The UN has resorted to blaming big tech for failing to crack down on human traffickers who use their platforms to lure migrants “to their deaths” with false promises of safe passage into Europe, according to the Independent. 

Companies such as Facebook and WhatsApp are “enabling criminal activity” by traffickers who entrap victims who are unaware of the dangers they face, according to the UN’s migration agency.

The warning comes amid a surge in migrants attempting to reach the UK by crossing the Channel in small boats, with almost 100 people intercepted by both British and French authorities while attempting to reach the UK from France since Christmas Day. –Independent

UK Home Secretary Sajid Javid has declared the migrant crossings a “major incident,” cutting short his family holiday to meet with his French counterpart and officials from Britain’s Border Force, as well as the National Crime Agency, in order to take “personal control” of the situation, according to immigration minister Caroline Nokes. 

There have been over 17,700 deaths recorded in the Mediterranean Sea in just under five years. And that’s apparently been enabled by Facebook and other tech firms which provide the ability to communicate. 

Leonard Doyle, spokesperson for the International Organisation for Migration (IOM), said migrants were being “lured to Calais” over the internet as smugglers operate via social networks “without any real oversight” from the companies controlling them.  

He said that while tech firms had taken measures to curb other exploitative activities such as child pornography, efforts to prevent people-smuggling has been “microscopic” compared with the damage it causes. –Independent

Charities call BS

Charities operating on the ground in Northern France disagree with the notion that social media firms have enabled human trafficking, and instead blame “the persecution faced by migrants in their home countries.” Also enabling criminal human traffickers, according to the Independent are European governments which have failed to inform refugees of their rights to asylum – and how to do so. 

Clare Moseley, founder of charity Care4Calais, disputed the focus on social media, saying: “It’s deeply upsetting to see people taking the risk of crossing the Channel. We never expected to see them resort to something so desperate. 

“But this isn’t happening because of social media; it’s happening because they are being persecuted and killed and tortured in the places that they’re coming from.”

Josh Hallam, field manager for Calais-based charity Help Refugees, said smugglers were able to take control of the information flow because government bodies were not providing it. 

“The reason so many people are risking their lives is because of the lack of state-funded information – knowledge of their asylum rights and so on – so they cannot make informed decisions,” he said.

“People are not coming because they think it will be an ‘opportunity’. People are fleeing army conscription in Eritrea, war in Syria and Afghanistan, all of the political issue in Ethiopia. –Independent

According to Doyle, however – “People like to point fingers over the migration crisis, but a big part of it must be that the guy or the girl in the village with nothing but a cracked smartphone can actually meet a smuggler in a heartbeat. This person will often have no prior knowledge, no sense that this is a trap, no sense that this is going to end up in their prostitution, their slavery, their murder, their drowning. But the tech companies that have done so much to bring technology to its current place are not investing in civic communication to help counter-balance the nonsense people get from social media. If someone does a search right now anywhere in the world for child pornography, up immediately will come a flag saying this is illegal, don’t go any further, you’re committing an illegal act. But they won’t do that for migration. It’s our technology companies that are luring them to their deaths, and luring them to Calais. It’s not the companies that are doing it, but they’re enabling this criminal activity to happen, almost without any real oversight.”

According to Europol’s Migrant Smuggling Center, 90% of migrants arriving in the EU were brought there by human traffickers belonging to a criminal organization – while the IOM pegs human trafficking as the third largest business for international criminals.

While the IOM says they have been in discussions with social media providers about the smuggling of people, Doyle has his doubts. 

“They claim they’re doing something, but they’re not. Why? Because they depend on shareholder value, so anything that interferes with that is affecting the stock price, which is already in trouble,” said Doyle. “Facebook has people working on this but it’s nothing compared with the impact. The amount of attention this gets compared with the damage it does is microscopic.”

Describing the process smugglers use to gain clients online, Mr Doyle said the first step were usually to “herd people like sheep” to a carefully protected WhatsApp group that tells them “when to move, what to do, what to say and how to deal with the authorities”.

Maybe it’s a combination of both? 

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China’s practice of “disappearing” political dissidents, corrupt public officials and virtually anybody deemed a threat to Communist Rule has been widely documented in the Western media (but not so well-documented in state-controlled mainland media). But in 2018, the regime of President Xi Jinping widened its dragnet to include a broader mix of high-profile figures, including a movie star, foreign nationals and even the head of the an international law enforcement organization.

Even prominent Marxists weren’t spared the most terrifying of judicial punishments – a clandestine rendition to a Chinese “reeducation camp” (where most of the missing presumably ended up). This year more than any other in recent memory laid bare the lengths to which the Communist Party will go to quash any perceived threats, be they activists and dissidents, or senior level bureaucrats.

With this in mind, we present the Associated Press’s “Disappeared List” for 2018 (text courtesy of the AP):

Foreign Pawns:

China threatened “grave consequences” if Canada did not release hi-tech executive Meng Wanzhou, shortly after the Huawei chief financial officer was detained in Vancouver in December for possible extradition to the US.

The apparent consequences materialised within days, when two Canadian men went missing in China. Both turned up in the hands of state security on suspicion of endangering national security, a nebulous category of crimes that has been levied against foreigners in recent years.

Former Canadian diplomat Michael Kovrig was taken by authorities from a Beijing street late in the evening, a person familiar with his case said. He is allowed one consular visit a month and has not been granted access to a lawyer, as is standard for state security cases.

Also detained is Michael Spavor, who organises tours to North Korea from the border city of Dandong.

Tax-Evading Actress

Fan Bingbing was living every starlet’s dream. Since a breakthrough role at the age of 17, Fan has headlined dozens of movies and TV series, and parlayed her success into modelling, fashion design and other ventures that have made her one of the highest-paid celebrities in the world.

All this made her a potent icon of China’s economic success, until authorities reminded Fan – and her legion of admirers – that even she was not untouchable.

For about four months, Fan vanished from public view. Her Weibo social media account, which has more than 63 million followers, fell silent. Her management office in Beijing was vacated. Her birthday on September 16 came and went with only a handful of greetings from entertainment notables.

When she finally resurfaced, it was to apologise.

“I sincerely apologise to society, to the friends who love and care for me, to the people, and to the country’s tax bureau,” Fan said in a letter posted on Weibo on October 3.

She admitted to tax evasion. State news agency Xinhua reported that Fan and the companies she represents had been ordered to pay taxes and penalties totalling 900 million yuan (US$130 million).

“Without the party and the country’s great policies, without the people’s loving care, there would be no Fan Bingbing,” she wrote. It was a cautionary tale for other Chinese celebrities.

Xinhua concurred in a commentary on her case: “Everyone is equal before the law, there are no ‘superstars’ or ‘big shots.’ No one can despise the law and hope to be lucky.”

Security insider

Unlike most swallowed up by China’s opaque security apparatus, Meng Hongwei knew exactly what to expect.

Meng (no relation to the Huawei executive), a vice-minister of public security, was serving as head of Interpol, the France-based organisation that facilitates police cooperation across borders.

When he was appointed to the international post, human rights groups expressed concern that China would use Interpol as a tool to rein in political enemies around the world.

Instead, he was captured by the same security forces he represented.

In September, Meng became the latest high-ranking official caught in Xi’s banner anti-corruption campaign. The initiative is a major reason for the Chinese leader’s broad popularity, but he has been accused of using it to eliminate political rivals.

Xi pledged to confront both high-level “tigers” and low-level “flies” in his crackdown on corruption – a promise he has fulfilled by ensnaring prominent officials.

Meng was missing for weeks, before Chinese authorities said he was being investigated for taking bribes and other crimes. A Chinese delegation delivered a resignation letter from Meng to Interpol headquarters.

His wife Grace Meng said she did not believe the charges against her husband. The last message he sent to her was an emoji of a knife.

Daring photographer

Lu Guang made his mark photographing the everyday lives of HIV patients in central China. They were poor villagers who had contracted the virus after selling their own blood to eke out a living – at a going rate of $7 a pint, they told Lu.

A former factory worker, Lu traversed China’s vast reaches to capture reality at its margins. He explored environmental degradation, industrial pollution and other gritty topics generally avoided by Chinese journalists, who risk punishment if they pursue stories considered to be sensitive or overly critical.

His work won him major accolades such as the World Press Photo prize, but his prominence likely also put him on the government’s radar.

This November, Lu was travelling through Xinjiang, the far west region that has deployed a vast security network in the name of fighting terrorism. He was participating in an exchange with other photographers, after which he was to meet a friend in nearby Sichuan province. He never showed up.

More than a month after he disappeared, his family was notified that he had been arrested in Xinjiang, according to his wife Xu Xiaoli. She declined to elaborate on the nature of the charges.

Student Marxists

In the past, political activists jailed in China were primarily those who fought for democracy and an end to one-party rule. They posed a direct ideological threat to the Communist Party.

This year, the party locked in on a surprising new target: young Marxists.

About 50 students and recent graduates of the country’s most prestigious universities convened in August in Shenzhen, an electronics manufacturing hub, to rally for factory workers attempting to form a union.

Among them was Yue Xin, a 20-something fresh out of Peking University. Earlier this year, she made headlines by calling for the elite school to release the results of its investigation into a decades-old rape case.

This time, she was one of the most vocal leaders of the labour rights group, appearing in photographs with her fist raised in a Marxist salute and wearing a T-shirt that said “Unity is strength” – the name of a patriotic Chinese Communist song.

Yue, a passionate student of Marx and Mao Zedong, espoused the same values as the party. She wrote an open letter to Xi and the party’s central leadership saying all the students wanted was justice for the workers at Jasic Technology.

Her letter quoted Xi’s own remarks: “We must adhere to the guiding position of Marxism”.

Yue called Marx “our mentor” and likened the ideas of him and Mao to spiritual sustenance.

Nonetheless, she ended up among those rounded up in a raid on the flat the activists were staying at in Shenzhen. While most have been released, Yue remains unaccounted for. She has been missing for four months.

Some of these individuals might resurface in 2019 (particularly the foreigners whom the Canadian government has demanded be released). But most of those who are disappeared by Beijing are never seen or heard from again.

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A recent Philly.com article noted that, despite the supposed economic “boom”, professionals like real estate agents, farmers, business executives and even computer programmers are all still living paycheck to paycheck. Responding to a Washington Post inquiry on Twitter, millennials, Generation Xers and baby boomers that work in a range of geographic areas claim that they have simply been unable to save as rent, childcare and student loans have all gotten in the way.

Americans living paycheck to paycheck were highlighted in a recent report from the Federal Reserve that showed four in ten adults say they couldn’t produce $400 in an emergency without going into debt or selling something. And now a partial government shutdown that is seeing nearly 800,000 federal workers not getting paid has fueled the discussion on Twitter about how brief income lapses can be disastrous for some households.

My husband is a Park Ranger in the Great Smoky Mountains National Park, and he had to sign his furlough papers. We have a 4 yr old and a 4 month old, and we don’t know when his next check will come. Mortgage is due, Christmas 2 days away. #ShutdownStories

— Taylor Futch (@TaylorFutch1) December 24, 2018

Another Twitter user wrote: “Broke my lease to accept new fed job for which I have to attend 7 months of training in another state. Training canceled with shutdown. Homeless. Can’t afford short(?)-term housing/have to work full-time for no pay/returning Christmas presents.”

Those involved in the conversation on Twitter have been using the hashtag #ShutdownStories in response to Rep. Scott Perry of Pennsylvania, who asked reporters last week: “Who’s living that they’re not going to make it to the next paycheck?”

Heidi Shierholz, a former chief economist at the Department of Labor, has the answer: “It’s astronomical what people need just to make it month to month. Given the high cost of transportation, housing, health care. … There is often no wriggle room.”

This holiday season, about 2,000 employees working basic government jobs like housekeeping and security are all not getting paid as a result of the shutdown: “My supervisor told me we won’t be getting paid, so my bills won’t be getting paid,” one State Department cleaner said matter of factly.

And even outside of the government shutdown, professionals across the nation are having trouble making ends meet. The chairman of liberal arts at a southern California college, Sol Smith, said that he’s simply unable to save with four daughters and higher healthcare costs.

“I see no way out. I am 40, have built a strong career, have 17 years experience, and if something were to happen to me, my wife and kids would be homeless within a year when my life insurance ran out,” he said.

Lani Harrison says she has trouble buying groceries after paying her $2,249 rent on her LA apartment she shares with her husband, who is a software engineer. They are raising three kids. She earns $40 per appointment as a certified car seat installer.

She said: “Each month, we have to stretch his paycheck to make things work. We really don’t have any savings. Many months we go under.”

When she confides in friends about her financial situation, she’s “often surprised” that their stories are similar. Dillon Holt, who works as a housekeeping assistant in Nashville, said he’s down to one piece of chicken in his freezer. He says his checking account often sits around $0 and that he’s unable to put away any money for the future or for an emergency. “I make $12.50, work 40-50 hours a week. I still don’t have a savings account,” he said.

Finally, for Emily Webb, who works as an arts administrator in Columbus, Ohio and as a waitress on the side, it is “a precarious dance” to stay afloat each month.

Webb has a master’s degree but can’t keep up with her student loans. She said: “It’s a scramble at the end of a paycheck to deposit my tips and make sure none of my automatic payments bounce.” 

Her one piece of good fortune? She’s finally been able to pay off her nine-year-old car. 

“The plastic part of the back bumper was slowly sliding off the back of it. I got rear-ended by an uninsured driver two years ago, so I reattached it with zip ties,” she said.

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If it was Trump’s intention to spike futures with his Saturday tweet updating on the current state of US-China trade negotiations, he succeeded (at least for now).

Recall that on Saturday morning, Trump tweeted that he “Just had a long and very good call with President Xi of China. Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!”

Just had a long and very good call with President Xi of China. Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!

— Donald J. Trump (@realDonaldTrump) December 29, 2018

A subsequent report by the WSJ cautioned to take Trump’s tweet with a grain of salt, especially since given the market volatility Trump is liable to be exaggerating the chances of a deal, especially since trade optimism is expected to boost markets, Trump’s favorite “barometer” of his administration.

… people familiar with the state of negotiations said the president may be overstating how close the two sides are to an agreement. They note Mr. Trump has looked to calm markets, which have gyrated in recent days, in part, because of concern that the trade fight between the US and China could spin out of control.

The tweet also followed a Friday CNBC report that the White House had spoken with a prominent hedge fund investor how to halt the market rout, who responded that the president should end his criticism of Powell on Twitter, stop administration turnover and reach a trade deal with China in order to help markets.

And while there is a long way to go before a deal is reached, the algos will certainly not be blamed for crashing the market this time because with the open for S&P futures for trading at 6pm, the Emini future spike, as much as 20 point, and was last trading 0.7% higher, just above 2,500 (which incidentally is exactly where SocGen predicted in November 2017 the S&P will close 2018). Then again, with the S&P so far failing to rise above Friday’s high of 2,520 it would not be at all surprising to see the entire kneejerk reaction higher fade once algos realize that this is just Trump doing everything in his power to prop up stocks on the last day of the year, especially with the offshore yuan trading largely unchanged on the Trump prnouncement.

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A former Kremlin spy and state-linked arms dealer claims he acted on behalf of Russian oligarch Oleg Deripaska to chase down a $19 million debt owed by former Trump campaign chairman Paul Manafort, according to a “months-long investigation” by TIME magazine. 

The ex-spy, Victor Boyarkin, says he was tasked with pressuring Manafort to repay the debt, stemming from a 2014 lawsuit in the Cayman Islands claiming Manafort disappeared with the money.  The Russian oligarch said earlier this year from New York that Manafort was part of a group that disappeared with $26 million a decade ago. 

“He owed us a lot of money… and he was offering ways to pay it back,” Boyarkin told TIME after the magazine ambushed him at an early October conference in Greece organized by former KGB agent and state railway boss Vladimir Yakunin (“How did you find me here?” Boyarkin repeatedly asked). 

And while Manafort was fired from the Trump campaign less than 48 hours after Donald Trump received his first national security briefing as a candidate, TIME is essentially implying that Manafort – indebted to a Russian billionaire – would have promoted a pro-Kremlin agenda from within the Trump camp. What this months-long TIME investigation boils down to is innuendo, as special counsel Robert Mueller – who has approached Boyarkin – has not charged Manafort with anything related to his alleged outstanding debt to Deripaska.

“I told them to go dig a ditch,” Boyarkin said of Mueller’s contact.

But those connections could be potentially important to the Special Counsel’s inquiry. They would mark some of the clearest evidence of the leverage that powerful Russians had over Trump’s campaign chairman. And they may shed light on why Manafort discussed going right back to work for pro-Russian interests in Eastern Europe after he crashed out of the Trump campaign in August 2016, according to numerous sources in the TIME investigation. –TIME

According to the TIME report, Boyarkin was the “friend” referred to 2017 reports by the Washington Post and The Atlantic as “our friend V,” which was initially suspected to be Russian President Vladimir Putin. 

Emails sent just two weeks before Trump accepted the GOP nomination revealed that Manafort attempted to offer “private briefings” about the US presidential race to Deripaska – as one of the emails reads to “get whole.” 

Boyarkin’s history with Manafort goes back to 2006, according to the former Kremlin operative, who said that Deripaska asked the two of them to “redraw the map of Eastern Europe” according to TIME. 

Montenegro, a tiny Balkan nation on the Adriatic Sea, was an important testing ground for Manafort’s relationship with Deripaska. The oligarch had invested heavily in that country, buying control of a vast aluminum smelter in 2005 that accounted for roughly half of Montenegro’s exports and a sixth of its entire economy. The following year, he decided to support the Montenegrins’ drive to become an independent country. That meant breaking away from its more powerful neighbor, Serbia – and convincing the world to recognize Montenegro as an independent state.

To get this done, Deripaska offered the help of several of his advisers, including Manafort. “They were a good team,” says a senior official in Montenegro who was involved in that vote. “They helped get the support we needed from our international partners,” both in Russia and the West, says the official, who spoke to TIME on condition of anonymity. After the people of Montenegro voted by a margin slightly above 55% to declare independence from Serbia in May 2006, all the world’s major powers recognized the results. –TIME

In short, Manafort – who was convicted in August on eight charges of bank and tax fraud connected to his lobbying work in Ukraine – helped steer Montenegro towards independence – a move which was likely supported by the Kremlin. “There was never any real resistance from Moscow [to the independence vote],” said a senior official in the tiny country, who added “Better the Russians come here with suitcases of money than with columns of tanks.”  

Unfortunately for Deripaska, the deal unraveled after Montenegro seized the aluminum plant he controlled – leading to a massive 2014 lawsuit by the billionaire – after which the country sped up its plans to join the NATO military alliance and seek protection under the West’s wing. 

So what did Manafort do? Deeply in debt to the Russian billionaire, Manafort allegedly leveraged his old connections in Montenegro – reconnecting with anti-NATO politician Nebojsa Medojevic to try and scuttle Montenegro’s NATO ambitions. 

At first the tip seemed implausible. Why would one of the world’s most prominent political advisers – still fresh from the chairmanship of the Republican presidential campaign – consider working with a group seen as pro-Russian upstarts in a Balkan nation of 600,000 people?

The senior Montenegrin official suggested an answer. “If Manafort got involved here in 2016, it would only be through the Russians,” he said.

At the time, Russian money was indeed flowing into Montenegrin politics. According to the sanctions list posted Dec. 19, Deripaska and Boyarkin were “involved in providing Russian financial support to a Montenegrin political party ahead of Montenegro’s 2016 elections.” –TIME

Unfortunately for Medojevic and the Anti-NATO faction, “the meeting [with Manafort] was a disappointment, and that no deal came out of it.” 

For Medojevic and the rest of the opposition, the elections in Montenegro did not go smoothly. The day before the vote, a group of men was arrested and charged with plotting to overthrow the government of Montenegro, assassinate its leader and seize power by force – all with abundant help from Moscow. The Montenegrin authorities later charged two agents of Russia’s military intelligence service with masterminding the alleged coup. Several of the leaders of the opposition in that country, including Medojevic, are currently on trial for charges that stem from the alleged coup attempt. –TIME

The next year, Montenegro’s parliament ratified its membership in NATO, while pro-Russian demonstrators protested outside. According to Russia’s foreign ministry, lawmakers were “trampling all democratic norms and principles.” 

TIME closes by noting that “it remains unclear whether Manafort actually provided any services in Montenegro in 2016. His lawyers deny he did any work for any Montenegrin politicians that year. Nor is it clear whether Manafort owes debts to Deripaska and, if so, how much.” 

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