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As FAANG stocks lead the market lower during what has become a relentless Q4 selloff, Amazon is hoping to reassure anxious investors that the company’s relentless expansion and revenue growth will continue. To wit, the company is taking another big step toward establishing itself as the American WeChat or Alipay as it seeks to become the dominant player in electronic consumer payments in the US and beyond. According to the Wall Street Journal, the e-commerce giant is hoping to undercut Apple’s Apple Pay by persuading more brick-and-mortar merchants to accept its Amazon Pay digital wallet.

As it tries to build a foothold in payments outside of its Amazon Go stores, the company is reportedly focusing on building partnerships with restaurants and gas stations (businesses that have yet to be scalped by the Bezos revenue-absorption machine). To entice owners to give Amazon Pay a try, the company is dangling what appears to be a pretty enticing carrot: Amazon is promising to lower processing costs at a time when so-called “interchange” fees charged by Visa and MasterCard have been rising.

The mechanics of how customers will use the soon-to-be rolled out Amazon Pay haven’t been revealed: It’s unclear whether customers will scan product barcodes on their phones, or simply tap their phones at checkout kiosks. Apple has a slight advantage in the digital payments space – more than 5 million US merchants now accept its Apple Pay platform. However, unlike their Chinese peers where digital cash has become the de facto standard, US consumers have been reluctant to adopt digital wallets; fewer than 1% of all US card transactions. In China, paying street vendors in cash has become a thing of the past, as AliPay, TenPay and WeChat Pay have attracted more than half a million users.

Amazon Pay has been growing in digital sales. Over the past year, the number of online shoppers using Amazon Pay outside of Amazon.com has climbed to some 14% of online shoppers, according to Bernstein Research. But in-person payments are still lacing; Amazon is also pushing customers at its Whole Foods stores to start using Amazon Pay, which so far is only in regular use at Amazon’s handful of Amazon Go locations. 

The Amazon Pay push in the US follows the company’s introduction of the service in Japan, where Amazon believes it will have an easier time convincing consumers who already use digital wallets to switch to Amazon. Amazon Japan has partnered with Nippon Pay to utilize the service at businesses in Tokyo and Fukuoka, according to Nikkei Asian Review.

If the progress in China has any bearing on the pace of adoption in the US, soon, paying with cash – and even physical credit cards – will be a thing of the past. For better or worse, global consumer commerce is inexorably moving toward a cashless society. And Jeff Bezos wants to make sure that his company will take an early lead.

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Yields on Italian government bonds fell on Wednesday morning as the euro climbed following reports that Italy’s ruling coalition might be open to reviewing its budget plan. Though the Italian government swiftly denied the reports about being open to changes in its plan, the moves in the euro and yields persisted, as analysts said they didn’t appear to be news driven.

The spread between the 10-year BTP and 10-year German bund tightened to tightening as much as 16 basis points to 309 basis points.

Italian bank shares also eased off their highs of the session after the denials, but remained 2% higher on the day after sinking to two-year lows on Tuesday.

And in other signs that the confrontation between Italy and Europe is heading toward a precipice, the European Union confirmed Wednesday morning that it would officially reject Italy’s budget plan, an unprecedented move that will likely lead to billions of euros in fines being levied against Rome for violating the bloc’s budget rules.

The Italian government calls for an expansion of the country’s budget deficit to 2.4% of GDP to finance tax cuts, expanded pension benefits and other handouts to unemployed and desperate Italians.

“Our analysis today suggests that the debt doesn’t respect our budget rules. We conclude that opening a proceeding against excessive spending based n the debt is then justified,” the EU said, according to ANSA.

The Italian plan represents a “particularly grave disrespect” of EU budget rules, particularly the recommendation from the meeting of EU ecofin ministers last July 13. The statement confirms Brussels’ previous analysis.

European Commission Vice President Valdis Dombrovskis said Italy’s aggressive spending would eventually have a negative impact on growth.

“Despite already having very high debt, Italy is essentially planning significant additional spending, instead of the necessary budgetary prudence, and I want to say that the impact of this maneuver on growth will probably be negative from our point of view,” Dombrovskis said.

“There are doubts and questions about growth” forecast in the Italian plan and, despite the clarifications requested, these persist,” said EU Commissioner for economic affairs Pierre Moscovici. “We have no answers to these questions: where does this growth come from nor who will pay the bill,” apart from how the plan will increase the “risks to Italian citizens, banks and businesses” by increasing the deficit and debt.

Moscovici added that the EU would give member states a chance to comment before opening its excessive debt proceedings, but he said he doubts that anybody would agree with the Commission’s analysis.

“Today we are not opening the excessive deficit procedure. However, it is undeniable that we see this is the path which is opening up ahead of us,” EU Economic and Monetary Commissioner Pierre Moscovici told reporters in Brussels. “It is now up to the member states to give their feelings and their views on the basis of our report over the coming two weeks.”

“To be quite frank, I have no reason to believe that they would disagree with what the commission has done by way of analysis,” Moscovici said.

Prime Minister Giuseppe Conte responded that the Italian government is convinced that the plan is “excellent” and in the best interest of the Italian people and Europe. Conte said he hopes to convince European Commission President Jean Claude Juncker during a Saturday meeting. Deputy Prime Minister Matteo Salvini said he expects a letter from the EU announcing its punitive measures to arrive around Christmas.

Analysts said the procedings should take several months.

“This procedure will take several months, but stands to keep (government bonds) and the Italian banking sector under pressure. Favor euro underperformance in Europe and probably further choppy euro-dollar trading in a $1.1350-$1.1450 range,” ING Bank analysts told clients. 

The relief from tightening financial conditions was a surprising but not unwelcome development for investors, but with neither side showing any indication of backing down – and the Brexit threat still looming for the euro – they could prove short-lived as Conte prepares to travel to the Lions Den this weekend for what looks to be an epic confrontation with Juncker.

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After yesterday’s historic rout in the market, there were signs of stabilization in overnight trading with most markets trading higher, with the key catalyst a report from MNI that the Fed may end its rate hikes as soon as this coming spring.

US stocks were set to open sharply firmer after two days of losses that wiped out the S&P500’s gains for the year and left the tech-heavy Nasdaq index teetering on the brink of falling into the red. Losses were concentrated in the technology sector, as investors dumped their holdings of FAANG shares and pushed the Nasdaq index to seven-month lows and energy shares too had dropped in line with a 6 percent oil price slump S&P 500.

“High-flying momentum stocks have come off in a fairly spectacular fashion. At one point Apple and Amazon accounted for 40 percent of U.S. equity gains and people were just recycling money into the winners,” said David Vickers, senior portfolio manager at Russell Investments. “That’s come off the boil and set the cat among the pigeons… We’ve seen a lot of reflexivity, when selling begets selling, the market starts to turn over, people take profits, it leads to another leg down and so on.”

That fed through to Asia on Wednesday, taking MSCI’s index of ex-Japan Asia-Pacific shares almost half a percent lower, but it clawed most of the losses to trade flat, with MSCI’s all-country benchmark was flat too, attempting to snap two days of falls.

Chinese stocks closed in the green and near session highs, rebounding from Tuesday’s drop as Asia closed mixed, but it was Europe that showed the most promise with the Stoxx600 solidly in the green, led by Italy where BTPs rallied from the open, after a report that Deputy PM Salvini may be open to budget revisions; Salvini then denied the report, clarifying that he’s only open to tweaks and won’t compromise on the main issues.

Italians bond yields fell up to 16 basis points initially, putting 10-year yields on track for their biggest daily drop in almost a month but the market gave up some of its gains after the denials. Sentiment was then dented again, and the EUR snapped lower after Ansa reported that the European Union has rejected Italy’s 2019 budget – as expected – and that the Excessive Deficit Procedure would be warranted on Italy. Still, despite the expected escalation in the standoff between Italy and Europe, the Estoxx and DAX pushed higher but were off best levels with banks and telecoms leading gains as Italy’s FTSE MIB outperformed peers with local banks +1.5%.

However, it was a report from wire service MNI just after 6am that caught the market’s attention, when Market News International reported that the Federal Reserve is starting to consider at least a pause to its gradual monetary tightening and could end its cycle of interest rate hikes as early as the spring, citing senior people at the Fed they didn’t identify.

While a Dec. rate hike is all but assured, the debate will become more lively beginning at the central bank’s March meeting and certainly by June, MNI says. The paradox, of course, is that according to the Fed’s own dot plot there will be at least 3 hikes in 2019, so for one or more Fed presidents to engage in such an ECB-esque trial balloon of defiance of Chairman Powell must mean that the disagreements within the FOMC over the future of monetary policy are truly boiling over.

While it is still very much unlikely that the Fed will halt its rate hikes in the spring absent a rout in stocks and bonds, the MNI trial balloon sent futures back to session highs…

… and slammed the Bloomberg dollar index back to session lows.

US Treasuries and the Eurodollar strip also pared losses and faded Wednesday’s bear steepening after the MNI report; that said, Fed rate hike expectations are steady on Wednesday morning with December 2018 pricing in 19bps, and the next 25bps increase expected in March 2019. The U.S. 10Y TSY yield is 1bp to 3.07% with December T-Note futures -20 ticks to 119-04+; U.S. 2/10s +1bp to 26bps; U.S. 5/30s steady at 43bps.

Today’s modest gains immediately sparked positive commentary: “We view the sell-off as overdone and a bull-market correction, with valuations that have become more compelling,” Jason Draho, head of asset allocation, Americas, at UBS Global Wealth Management wrote in a note. “We recently increased our overweight to global equities on the view that the markets are already pricing in growth and trade risks.”

Still, while the Fed trial balloon helped preserve upside momentum in risk assets, investor sentiment remains susceptible to minute to minute volatility that’s rocked markets since October as traders have to contend with President Trump tape bomb unpredictability and demands for lower rates as corporate credit spreads at two-year highs reflect investor angst about borrowing costs.

In FX, the euro got an early boost and Italian bonds rallied after the abovementioned La Stampa report that Italy’s Deputy Prime Minister Matteo Salvini may be open to budget revisions; it trimmed gains after his League party denied the report, and as the EU was said see Rome’s budget at serious non-compliance risk. The pound was little changed against the dollar, after earlier rising on the back of broader weakness in the greenback; Britain’s budget deficit widened in October as spending rose at the fastest pace in 11 years. Australian dollar rebounds from a one-week low hit very early in Asia as a recovery in oil prices combined with exporter demand to trigger short-covering ahead of U.S. Thanksgiving holiday.

In commodities, WTI also halted yesterday’s dramatic rout near $54 a barrel after API showed that U.S. crude inventories unexpectedly fell last week against doubts over OPEC’s plans to cut output. Emerging-market shares and currencies were stable. Bitcoin advanced after a recent sell-off

Expected data include mortgage applications, durable goods orders, jobless claims and existing home sales. Deere and Metro are among companies reporting earnings

Market Snapshot

• S&P 500 futures up 0.5% to 2,653.75
• STOXX Europe 600 up 0.5% to 352.66
• MXAP down 0.4% to 149.96
• MXAPJ down 0.1% to 480.09
• Nikkei down 0.4% to 21,507.54
• Topix down 0.6% to 1,615.89
• Hang Seng Index up 0.5% to 25,971.47
• Shanghai Composite up 0.2% to 2,651.51
• Sensex down 0.7% to 35,212.54
• Australia S&P/ASX 200 down 0.5% to 5,642.77
• Kospi down 0.3% to 2,076.55
• German 10Y yield rose 1.6 bps to 0.366%
• Euro up 0.1% to $1.1381
• Italian 10Y yield rose 1.8 bps to 3.241%
• Spanish 10Y yield fell 0.9 bps to 1.638%
• Brent futures up 1.8% to $63.63/bbl
• Gold spot up 0.2% to $1,224.29
• U.S. Dollar Index down 0.1% to 96.77

Top Overnight News

• German Chancellor Angela Merkel warned the U.K. it can’t set unilateral terms for leaving the European Union as Prime Minister Theresa May heads to Brussels to try to complete a contentious Brexit deal
• The Brexit divorce deal can’t be improved, and EU governments have made that clear, said Northern Ireland Secretary Karen Bradley
• Saudi Arabian oil production surged to a record near 11 million barrels a day this month after the kingdom received stronger-than-usual demand from clients preparing for a disruption in Iranian supplies, according to industry executives who track Saudi output
• Oil at one point slumped more than 7 percent in London and New York on Tuesday. The selloff — just like the previous Tuesday — was exacerbated by banks selling futures to rebalance their positions as prices fell, said people active in the market who are familiar with the matter
• OPEC’s bad dream only deepens next year, when Permian producers expect to iron out distribution snags that will add three pipelines and as much as 2 million barrels of oil a day
• The U.S. on Tuesday accused China of continuing a state-backed campaign of intellectual property and technology theft even as the world’s two largest economies have descended into a tit-for-tat tariff war

Asian stocks mostly weakened as the global stock rout continued into the region following the losses in US, where the DJIA dropped over 500 points to turn negative YTD and in which energy names were pressured as oil slumped nearly 7%. ASX 200 (-0.5%) and Nikkei 225 (-0.3%) were led lower by spill-over selling seen across the commodity-related sectors, while Wesfarmers shares plummeted nearly 30% after the spin-off of its Coles unit which had its stock market debut today. Hang Seng (+0.5%) and Shanghai Comp. (+0.2%) opened with firm losses but then rebounded off their lows with price action choppy amid ongoing trade uncertainty and after criticism from USTR Lighthizer’s report that China has not altered its unfair practices and appears to have conducted further unreasonable actions in recent months. Finally, 10yr JGBs failed to benefit from the widespread risk averse tone with price action subdued amid a lack of BoJ presence in the bond market and after the weakness in T-notes as US investors closed positions heading in to Thanksgiving.

Top Asian News

• The American Carnage Isn’t Tanking Stock Markets in Asia
• China Refrains From Injecting Cash for Longest Time Since August
• Beijing to Judge Every Resident Based on Behavior by End of 2020
• China Said to Eye Steel Mega-Deal as Baowu Chief Joins Rival
• Yuan Debt in the Bag for Philippines as Xi-Duterte Ties Grow

European equities are higher across the board (Eurostoxx 50 +0.8%) as the region stemmed the stock rout seen in Asia and Wall Street. Italy’s FTSE MIB (+0.6%) was initially outperforming with Italian banks higher amid initial reports from Italian press that Deputy PM Salvini could potentially be open to budget revisions, which were later dismissed by League sources ahead of the budget ultimately being rejected. In terms of sectors, financial names lost the top spot to telecom names, who are outperforming after French telecoms jumped following comments from Orange (+1.7%) CEO which renewed M&A gossip. Elsewhere, Indivior (-13.6%) fell to the foot of the Stoxx600 (+0.4%) after the Co. lost a US court ruling that had prevented Dr. Reddy’s from selling a generic version of a treatment for opioid addiction.

Top European News

• Merkel Warns U.K. It Can’t Dictate Brexit Terms for EU Summit
• Rudd Says Parliament Would Block No Deal: Brexit Update
• Laundromat Whistle-Blower Testifies in Brussels: Danske Update
• Nyrstar Wins Lifeline From Trafigura With $650 Million Deal
• Airbus Names New CFO, COO to Replace Wave of Exiting Execs

In FX, the DXY index has maintained its recovery momentum into the midweek session, but is off best levels amidst a welcome reprieve in riskier assets and broad sentiment ahead of Thanksgiving. The DXY has drifted back from another uptick towards 97.000, though remains underpinned ahead of 96.500 and recent lows. The Greenback also retains an underlying bid as G10 and EM counterparts struggle to recoup losses beyond round number/psychological/technical resistance against the backdrop of heavy option expiries at strikes within close proximity to prevailing prices (and with major fundamental issues still prescient of course).

• EUR/CAD – The single currency is holding up relatively well given more toing and froing on the Italian budget, but ultimately ongoing recalcitrant stance from Rome after reports about potential revisions were renounced in advance of the EU’s official rejection and potential if not probable EDP implementation (scheduled release time 11.00GMT, but appears to have been preannounced). However, 1.1400 is proving almost as obstinate and a decent 1 bn option expiry could well be keeping the headline pair in check. Meanwhile, the Loonie is off worst levels after sliding through 1.3300 and could be gleaning some encouragement from a partial recovery in oil prices in the run up to Canadian wholesale trade data.
• GBP/CHF/JPY – All bucking the overall trend, albeit barely in terms of the Pound and Franc, as Cable pivots 1.2800 and Eur/Gbp straddles 0.8900 on Parliament approval aspirations as UK PM May heads to Brussels for more discussions on the Brexit draft and the coup to oust her seems to have fizzled out. Meanwhile, Usd/Chf has only tentatively bounced from near 0.9900 lows within a 0.9935-55 range vs Usd/Jpy back on the 113.00 handle vs a base around 112.30 at one stage on Tuesday when risk-off flows were rife, but bidding interest prevented further downside. Note, a raft of option expiries could be key into the NY cut, stretching from 111.90-112.00 to 114.00 and totalling some 11 bn.
• EM – Rand in focus for several reasons, as Usd/Zar hovers near 14.0000 ahead of Thursday’s SARP policy meeting and following softer than expected SA inflation data, with a decent 1.1+ bn options expiring between 13.9000-14.0000 along with speculation about more strike action.

In commodities, WTI (+1.6%) and Brent (+1.4%) took a breather from yesterday’s selloff, where prices fell almost 7% with the decline attributed to supply concerns, negative risk sentiment and Trump’s protective approach to Saudi relations. Prices are underpinned by the latest API inventory data which printed a surprise drawdown in headline crude stockpiles. Traders will be keeping an eye on today’s DoE release for any hints of increased US shale production. Today will also see the release of the EIA natural gas storage data, which has been rescheduled due to the US Thanksgiving Holiday. Elsewhere, the metals complex is in positive territory with gold (+0.2%), silver (+0.7%) and copper (+0.5%) all supported by the pullback in the USD. Goldman Sachs said slump in oil reflects over supply concerns for 2019 and that technical position factors have exacerbated the volatility, while it also cited low liquidity heading into Thanksgiving as well as broader selling in commodities and cross-assets amid rising growth concerns.

US Event Calendar

• 8:30am: U.S. Durable Goods Orders, Oct. P, est. -2.6%, prior 0.7%; Durable Goods Orders Less Transportation, Oct. P, est. 0.4%, prior 0.0%
• 8:30am: U.S. Initial Jobless Claims, Nov. 17, est. 215k, prior 216k; Continuing Claims, Nov. 10, est. 1650k, prior 1676k
• 10am: U.S. U. of Mich. Sentiment, Nov. F, est. 98.3, prior 98.3

 

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It appears that an aggressive lobbying campaign by the US and the UK has succeeded in stopping a qualified Russian candidate from winning the presidency of Interpol.

One day after four US senators, Secretary of State Mike Pompeo, and the home office of the UK expressed outrage at the notion that Interpol Vice President Alexander Prokopchuk, a general in the Russian Interior Ministry, had emerged as the front-runner to become the international police agency’s next president. Both the US and UK urged Interpol members to vote instead for Kim Jong Yang, who assumed the role of acting president after the last president, Meng Hongwei, disappeared in China following rumors of a corruption prosecution, according to the Financial Times.

.@SenatorShaheen, @marcorubio, @chriscoons, and I oppose Russian leadership of Interpol. Russia routinely abuses Interpol for the purpose of settling scores and harassing political opponents, dissidents, and journalists. Read our full statement here: https://t.co/1GpKqcI9An

— Senator Roger Wicker (@SenatorWicker) November 19, 2018

On Wednesday, UK Home Secretary Sajid Javid praised Kim’s “clear win” which he said “comes despite Russia’s best efforts.” He added the result was an “encouraging victory for rules and rights-based security co-operation.”

As a key global partner in security cooperation, it is vital for @INTERPOL_HQ’s credibility that its next President is from a country that follows international rules & norms, and respects human rights. Acting President Kim Jong Yang has UK’s full support

— Sajid Javid (@sajidjavid) November 20, 2018

Warmly welcome the election Kim Jong Yang as President of @INTERPOL_HQ. His clear win comes despite Russia’s best efforts. Encouraging victory for rules and rights-based security cooperation

— Sajid Javid (@sajidjavid) November 21, 2018

Meanwhile, the Kremlin criticized the international opposition to Prokopchuk as yet another example of the West meddling in affairs concerning Russia.

“We are witnessing the foreign mass media’s campaign to discredit the Russian candidate for Interpol president,” ministry spokesperson Irina Volk told newswire Interfax. “We think it is inadmissible to politicise Interpol as a professional international organisation combining the efforts of…countries in the fight against transnational crime and terrorism.”

Western democracies feared that the election of Prokopchuk would transform Interpol into a tool of the Russian state (ignoring the many safeguards in place that limit the Interpol president’s power). Specifically, they feared Russia would use the organization to prosecute political dissidents (something that China neglected to do when one of its top security officials served as president). Interpol has denied claims that it is vulnerable to abuse by authoritarian regimes due to provisions in its constitution that specifically guard against this.

The General Assembly is INTERPOL’s supreme governing body. Here’s how it works. #INTERPOLGA pic.twitter.com/zP1XEOlZ6Z

— INTERPOL (@INTERPOL_HQ) November 19, 2018

Opposition to Prokopchuk was particularly intense in the Baltics, where Lithuania threatened to quit the organization should Prokopchuk be elected.

Eimutis Misiunas, Lithuania’s interior minister, said Russia could use Interpol to crack down on Lithuanian officials.

Together with other EU countries and Nato allies we are the main voices advocating that if the Russian candidate is selected, Interpol could become a politicised instrument for the regime,” Mr Misiunas said.

Human rights activists say Moscow has unfairly filed “red notices” with Interpol asking countries to target and arrest dissidents and other political opponents who have fled Russia, including financier Bill Browder, who is seen in the West as a hero but is suspected of crimes as serious as murder in Russia.

Russia’s Interior Ministry said Prokopchuk would work “exclusively in the interests of the international police community” should he be elected. Now that Prokopchuk has been blocked, the irony of the campaign against him has been laid bare: The West argued against Prokopchuk, claiming that he would “politicize” Interpol’s enforcement actions. But by doing so, these same Democracies turned a technocratic election into another proxy beef in their long-running campaign against Russia.

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Via Global Macro Monitor,

Whenever we see markets tanking as they have been for the past few days with the Dow down almost 1,000 points (3.7 percent) since Friday’s close, we think counterparty risk may be spooking traders and investors.   We suspect, and we could be wrong, there is a growing concern over Deutsche Bank’s (DB) stock making new all-time lows.

We see a lot of hits on our blog today on our past posts about Deutsche Bank.

Biggest Globally Systemically-Important Bank (GSIB)

Deutsche Bank, which has been labeled by the IMF as the biggest contributor to global systemic risk,  hit a new all-time low in Frankfurt this morning, closing at around €8.17,  down over 91 percent from its pre-GFC high and almost 50 percent year-to-date.  The latest hit comes from its involvement with Danske Bank, who is wrapped up in a money laundering scandal in Estonia.

Whenever a GSIB stock is making a new low,  it’s time to sit up, stand up and listen.

No Lehman

Deutsche is no Lehman Brothers. The Germans will never let its flagship fail and neither would world policymakers.

The bank is not dependent on wholesale funding from the markets and finances itself mainly through a large deposit base.  The DB chart below illustrates its 77 percent deposit-to-loan ratio.

Also see the IMF chart on the bank’s horrendous return-on-equity, which many believe is the reason why the stock is tanking and not over balance sheet concerns.

Nevertheless, DB has, the last time we looked, the world’s largest derivatives book, and as the stock goes lower the risk of spooking its counterparties moves higher.   The German government and EU regulators must be cognizant of these risks,  not dilly-dally,  and show firm resolve to the markets

The lower the stock goes the higher the probability the German government will be called upon for a capital injection.  Deutsche Bank will not be allowed to fail as the world will end as we know it.

German Sovereign CDS

DB’s credit default swaps have risen from 120.7 bps in September to 155.7 bps, but have not yet taken out the May 188 bps high, however.

Deutsche Bank is relatively big.  It’s total assets are equivalent to about 47 percent of German GDP, which compares to JP Morgan,  the largest U.S. bank,  and though larger than DB is asset size, is only around 12 percent of GDP.   The large bank to GDP size throughout Europe is a reflection the continent is way overbanked.

Buying German sovereign 5-year credit default swap protection at 13 basis points seems like a good, cheap, positive asymmetric bet on DB event risk to us.   If the Merkel government is called upon to bail out DB, the sovereign’s CDS rates move higher, in our opinion.   The cost of being wrong is a few basis points of carry over the next few months.

No peep from the talking heads today about DB, folks, so this definitely has the potential to hit the market by surprise. Keep it on your radar.

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Will initially murky after news of Carlos Ghosn’s arrest first broke, the details of the alleged misdeeds for which he is being prosecuted by Japanese authorities are beginning to trickle out. Initially, reports that Ghosn underreported his income in filings submitted to the Tokyo Stock Exchange sounded suspiciously staid when weighed against the potential 10 year sentence that Ghosn is facing. But in a shocking new report published Tuesday, the Nikkei Asian Review is reporting that Ghosn’s misuse of company resources included an audacious fraud to create what amounted to a private slush fund that purchased homes and other luxuries explicitly for use by the CEO.

With the help of representative director Greg Kelly (who was charged by Tokyo authorities alongside Ghosn), the executive set up a fund that was purportedly seeded with 6 billion yen to invest in “startups”. But investigators haven’t found any evidence to suggest that any of the money was used in this way.

Instead, the money was used to purchase luxury properties in Rio De Janeiro and Beirut (Ghosn was born in Brazil and spent his high school years in Lebanon) between 2010 and 2015. The homes were used by Ghosn and his family. All told, the fund spent some 2 billion yen ($18 million) on the homes. Ghosn was then able to use them explicitly for personal purposes. All told, Ghosn is accused of underreporting his pay by the equivalent of about $44 million.

The transactions were done through a Dutch subsidiary, created around 2010, with 6 billion yen ($53.4 million at current rates) in capital, ostensibly set up for investment purposes. The sources said it was funded entirely by the Japanese automaker. The official line within Nissan was that the unit would invest in startups, though there is little evidence to support this claim.

The revelations come the day after Nissan accused Ghosn of “numerous… significant acts of misconduct.” The statement was made following an internal investigation over several months, sparked by a tipoff from a whistleblower. He is accused of understating his compensation and misusing company assets and funds. He could not be contacted for comment. He is due to be dismissed as Nissan chairman on Thursday.

[…]

According to the sources, funds from the Dutch company were apparently used to purchase a condominium in Rio de Janeiro and a luxury home in Beirut, both of which were provided to Ghosn for his personal use. In addition, Nissan is said to have shouldered maintenance and renovation costs. The combined outlays are believed to have exceeded 2 billion yen.

These transactions were overseen by representative director Greg Kelly, according to the sources. Nissan alleged on Monday that “Kelly’s deep involvement [had] also been confirmed.”

But how did these revelations come to light in the first place? Nissan has said it launched an investigation into the allegations after being tipped off by a whistleblower. According to Nikkei, whistleblowers took advantage of a new law that allowed them cooperate with the government’s investigation without risking any charges.

People involved with Nissan used a newly established plea bargain scheme in the investigation, according to sources familiar with the matter. The scheme, introduced in June, reduces or exempts criminal disposition in exchange for cooperating with prosecutors. Ghosn’s case is the second known use of the scheme.

It’s believed that Ghosn resorted to misappropriating company resources because his pay (he was paid about 1.1 billion yen, or $10 million in 2016) was roughly half what executives at other major automakers received (though he also received another 7.4 million euros ($8.45 million) for his work at Renault).

Whatever the reason, the motivation is clear: An increasingly unaccountable Ghosn felt he deserved more – and decided to reach out an take it unilaterally.

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Authored by John Wright. op-ed via RT.com,

As the UK political establishment rips itself to pieces over Brexit, a far greater crisis continues to afflict millions of victims of Tory austerity…

A devastating UN report into poverty in the UK provides incontrovertible evidence that the enemy of the British people is the very ruling class that has gone out of its way these past few years to convince them it is Russia.

Professor Philip Alston, in his capacity as the United Nations Special Rapporteur on extreme poverty and human rights, spent two weeks touring the United Kingdom. He did so investigating the impact of eight years of one of the most extreme austerity programs among advanced G20 economies in response to the 2008 financial crash and subsequent global recession.

What he found was evidence of a systematic, wilful, concerted and brutal economic war unleashed by the country’s right-wing Tory establishment against the poorest and most vulnerable section of British society – upending the lives of millions of people who were not responsible for the aforementioned financial crash and recession but who have been forced to pay the price.

From the report’s introduction:

“It…seems patently unjust and contrary to British values that so many people are living in poverty. This is obvious to anyone who opens their eyes to see the immense growth in foodbanks and the queues waiting outside them, the people sleeping rough in the streets, the growth of homelessness, the sense of deep despair that leads even the Government to appoint a Minister for Suicide Prevention and civil society to report in depth on unheard of levels of loneliness and isolation.”

Though as a citizen of the UK I respectfully beg to differ with the professor’s claim that such social and economic carnage seems “contrary to British values,” (on the contrary it is entirely in keeping with the values of the country’s Tory establishment, an establishment for whom the dehumanization of the poor and working class is central to its ideology), the point he makes about it being “obvious to anyone who opens their eyes,” is well made.

For it is now the case that in every town and city centre in Britain, it is impossible to walk in any direction for more than a minute before coming across homeless people begging in the street. And the fact that some 13,000 of them are former soldiers, casualties of the country’s various military adventures in recent years, undertaken in service to Washington, exposes the pious platitudes peddled by politicians and the government as reverence for the troops and their ‘sacrifice,’ as insincere garbage.

Rich & powerful distract us with imagined threats to cling onto their gains (Op-Ed by Tomasz Pierscionek) https://t.co/jgmoHO5h4m

— RT (@RT_com) April 30, 2018

Overall, 14 million people in the UK are now living in poverty, a figure which translates into an entire fifth of the population. Four million of them are children, while, according to Professor Alston, 1.5 million people are destitute – that is, unable to afford the basic necessities of life.

And this is what the ruling class of the fifth largest economy in the world, a country that parades itself on the world stage as a pillar of democracy and human rights, considers progress.

The values responsible for creating such a grim social landscape are compatible with the 18th not 21st century. They are proof positive that the network of elite private schools – Eton, Harrow, Fettes College et al. – where those responsible for this human carnage are inculcated with the sense of entitlement and born to rule ethos that defines them, are Britain’s hotbeds of extremism.

Professor Alston:

“British compassion for those who are suffering has been replaced by a punitive, mean-spirited, and often callous approach apparently designed to instill discipline where it is least useful, to impose a rigid order on the lives of those least capable of coping with today’s world, and elevating the goal of enforcing blind compliance over a genuine concern to improve the well-being of those at the lowest levels of British society.”

Here, set out above in bold relief, is the barbarism that walks hand in hand with free market capitalism. It is the same barbarism that was responsible for pushing post-Soviet Russia into a decade-long economic and social abyss in the 1990s, and the values that have pushed 14 million people in the UK into the same economic and social abyss in our time.

Austerity, it bears emphasizing, is not and never has been a viable economic response to recession in a given economy.

Instead, it is an ideological club, wielded on behalf of the rich and big business to ensure that the price paid for said economic recession is borne exclusively by those least able to bear it – namely, the poor and working people. It is class war by any other name, packaged and presented as legitimate government policy.

However, in Britain’s case in 2018, this is a war like no other because, as Professor Philip Alston’s report lays bare, only one side in this war has been throwing all the punches and only one side has been taking them.

With Christmas season upon us, the scale of human suffering across the UK ensures that the elaborate ad campaigns inviting us to shop and indulge to our heart’s content – ads depicting the middle class dream of affluence and material comfort – take on the character of a provocation. In fact, they call to mind the truism that wars take place when the government tells you who the enemy is, while revolutions take place when you work it out for yourself.

In austerity Britain, who the enemy is has never been more clear.

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