Shutting Off Water To 150k Residents – Ukraine? No, Detroit!

The news that hundreds of thousands of people will lose water supplies is not a stunning headline anymore – poor old Ukraine… or Iraq. However, this time, the ‘it couldn’t happen here’ crowd might be stunned to hear that The Motor City is playing serious hardball with residents who have fallen behind on paying their water bills. Detroit’s Water and Sewerage Department has begun turning off the taps of 150,000 residents who are at least two months behind on payments. As one advocate notes, sick people have been left without running water and working toilets. People recovering from surgery cannot wash and change bandages. Children cannot bathe, and parents cannot cook.” Of course, given that these are generally voting members of the US public, we would be stunned if the Federal government did not create a new fund to ‘help’ them out of this ‘unfairness’.

 

As Yahoo reports, The Motor City is playing serious hardball with residents who have fallen behind on paying their water bills.

Detroit’s Water and Sewerage Department has begun turning off the taps of 150,000 residents who are at least two months behind on payments. People are being left without a drop to drink and no ability to bathe or use the toilet. Now a coalition of water and human rights activists has banded together to ask the United Nations to step in and end the disconnections.

 

Last week, advocates from the Detroit People’s Water Board, Food and Water Watch, Blue Planet Project, and Michigan Welfare Rights Organization submitted a comprehensive report to the U.N.’s special rapporteur that details the dire situation facing folks whose water has been cut off.

 

“Sick people have been left without running water and working toilets. People recovering from surgery cannot wash and change bandages. Children cannot bathe, and parents cannot cook,” write the report’s authors. And “families concerned about children being taken away by authorities due to lack of water and sanitation services in the home have been sending their children to live with relatives and friends, which has an impact on school attendance and related activities.”

In 2013, Detroit declared bankruptcy—it’s $18 billion in the hole. Half of the 323,000 customers served by the city’s Department of Water and Sanitation have either paid their bills late or simply can’t afford service, to the tune of $175 million.

Back in March, the department announced that it would be cutting service to residents who hadn’t paid up. Although the city claims that it started sending out notices about the disconnections in March, the report’s authors write that they heard “directly from people impacted by the water cutoffs who say they were given no warning and had no time to fill buckets, sinks, and tubs before losing access to water.”

 

“We really don’t want to shut off anyone’s water, but it’s really our duty to go after those who don’t pay, because if they don’t pay, then our other customers pay for them,” department spokesperson Curtrise Garner told Al Jazeera America. “That’s not fair to our other customers.”

However, activists claim the city has been unfairly overcharging Detroit residents for water to compensate for its significant financial woes.

According to the U.S. Census Bureau, 38.1 percent of Detroit residents are living below the poverty line. Despite the tough times many people are facing, they’ve been paying an average of $64.99 a month, significantly higher than the national average of about $40, and rates are only going up. The Detroit City Council just approved a nearly 9 percent rate increase for water.

“What we see is a violation of the human right to water,” Meera Karunananthan, an international campaigner with Blue Planet Project, told Al Jazeera America. “The U.S. has international obligations in terms of people’s right to water, and this is a blatant violation of that right. We’re hoping the U.N. will put pressure on the federal government and the state of Michigan to do something about it.”

Three U.N. human rights experts issued a statement on Wednesday, declaring that “disconnection of water services because of failure to pay due to lack of means constitutes a violation of the human right to water and other international human rights.”

“When I conducted an official country mission to the U.S. in 2011, I encouraged the U.S. government to adopt a federal minimum standard on affordability for water and sanitation and a standard to provide protection against disconnections for vulnerable groups and people living in poverty,” said Catarina de Albuquerque, who is the U.N.’s special rapporteur on the right to safe drinking water and sanitation. “I also urged the government to ensure due process guarantees in relation to water disconnection.”

 

One of the experts, Leilani Farha, who focuses on the right to adequate housing, also pointed out the racial implications of shutting off water to the nearly 83 percent black population. “If these water disconnections disproportionately affect African Americans, they may be discriminatory, in violation of treaties the U.S. has ratified,” said Farha.

Although the experts declared that “households [that] suffered unjustified disconnections must be immediately reconnected,” when was the last time the U.N. issued sanctions against an American municipality for human rights violations? In the meantime, 3,000 residents have lost their water, and Detroit plans to turn off the service of thousands more every week.

*  *  *

So people didnt pay their bills… advocates claim demanding payment for services rendered is capitalist exploitation (and racist)… and now the UN explains how that doesn’t matter, water is a right? Tell that to Cambodians?

Welcome to the free market America




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The Pentagon Has A Problem: “Vetting Moderate Al Qaeda Rebels Can Be Tough” – So Here Is A Simple Solution…

When we reported yesterday that Obama had submitted yet another $500 million funding request to arm “moderate” Syrian rebels as opposed to extreme al-Qaeda cannibals and other ISIS faithful, we noted the glaring oversight at the heart of this plan when we asked “how will Obama make the distinction? Well, that’s what polling is all about. To wit: “Excuse me, would you describe yourself as a moderate or extreme al-Qaeda jihadist. Answering affirmatively to the former assures you your own US-made Humvee and a few thousand bullets to shoot at US soldiers across the border in Iraq.” Today, none other than the Pentagon’s rear admiral John Kirby confirmed precisely these worries when he said, via Bloomberg:

  • KIRBY SAYS A LOT OF WORK NEEDED TO VET MODERATE SYRIAN REBELS
  • KIRBY SAYS CONCERNED ABOUT AID `ENDING UP IN THE WRONG HANDS’

While we share his sentiment (which we doubt is much of a concern to the US MIC as it will merely provide one set of US-made weapons to destroy another set of US-made weapons) we repeat that there is a very simple solution. It comes from Andy Borowitz, who appears to have read our mind, and is breathtakingly simple.

Presenting: The Moderate Syrian Rebel Application Form

After announcing, on Thursday, that it would seek $500 million to help “train and equip appropriately vetted elements of the moderate Syrian armed opposition,” the White House today posted the following Moderate Syrian Rebel Application Form:

Welcome to the United States’ Moderate Syrian Rebel Vetting Process. To see if you qualify for $500 million in American weapons, please choose an answer to the following questions:

As a Syrian rebel, I think the word or phrase that best describes me is:

A) Moderate
B) Very moderate
C) Crazy moderate
D) Other

I became a Syrian rebel because I believe in:

A) Truth
B) Justice
C) The American Way
D) Creating an Islamic caliphate

If I were given a highly lethal automatic weapon by the United States, I would:

A) Only kill exactly the people that the United States wanted me to kill
B) Try to kill the right people, with the caveat that I have never used an automatic weapon before
C) Kill people only after submitting them to a rigorous vetting process
D) Immediately let the weapon fall into the wrong hands

I have previously received weapons from:

A) Al Qaeda
B) The Taliban
C) North Korea
D) I did not receive weapons from any of them because after they vetted me I was deemed way too moderate

I consider ISIS:

A) An existential threat to Iraq
B) An existential threat to Syria
C) An existential threat to Iraq and Syria
D) The people who will pick up my American weapon after I drop it and run away

Complete the following sentence. “American weapons are…”

A) Always a good thing to randomly add to any international hot spot
B) Exactly what this raging civil war has been missing for the past three years
C) Best when used moderately
D) Super easy to resell online

Thank you for completing the Moderate Syrian Rebel Application Form. We will process your application in the next one to two business days. Please indicate a current mailing address where you would like your weapons to be sent. If there is no one to sign for them we will leave them outside the front door.




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Carry Chaos – The Very Visible Hand In Yen Futures

With USDJPY near 4-week lows and, as BofAML's Macneil Curry warns "is setting up for a breakdown", we thought a look back at the total and utter chaos that last week's FOMC statement (and press conference) unleashed in futures markets. JPY futures were the only market in the world that was halted as the statement was revealed as Nanex shows below it seemed 'someone' decided that 'carry traders' needed to show the world just how positive what Janet said was… then within 24 hours, chaos was unleashed as the real world algos tried to come to terms with just what the Fed had done. With every asset class in the world predicated on JPY weakness, this market behavior shows just how illiquid and thin the world's risk really is.

 

Via Nanex,

Trading in Japanese Yen futures had two notable events within a 34 hour period. The first event was a trading halt after release of the U.S. GDP at 8:30 AM (EDT) on June 25, 2014: it was the only instrument in the world that we know of which halted then. The second event was extreme volatility during the opening of the next day's session at 18:00 on June 26, 2014.

1. September 2014 Japanese Yen (6J) Futures – June 25, 2014



2. September 2014 Japanese Yen (6J) Futures – June 25, 2014 – Zoom of Chart 1.



3. September 2014 Japanese Yen (6J) Futures  – June 26, 2014.



4. September 2014 Japanese Yen (6J) Futures – June 26, 2014 – Zoom of Chart 3.


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Totally normal, totally human, totally natural market behavior…

And since then JPY has rolled over dramatically and the 'pinned' Nikkei has given up all its gains (with only US stocks stubbornly ignoring it for now)…

 

But BofAML warns the break is coming in JPY – and thus pressure on all risk assets…

$/¥ is setting up for a breakdown. Get ready.

We reiterate our bearish view on $/¥, targeting 99.21, potentially as far as 97.40. Yes, we hold this view despite being bearish Treasuries. We are looking for a correlation breakdown between the two markets. While $/¥ has not yet closed below the 200d (now 101.70), we think that it is just a matter of time.

Indeed, the entire range trade from the Feb-04 lows, at 100.75, is setting up for a bearish resolution, from which a decent TRADEABLE downtrend should emerge. GET READY.




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Russia “Not Optimistic” After EU Peace Talks; Threatens To Limit Reselling Gas To Ukraine

With Petroshenko agreeing to extend today’s cease-fire deadline for 3 days, the Russians, unfortunately, are not optimistic after the ‘expert-level’ talks in Europe. Given this, it appears Russia is preparing its retaliation for possible further sanctions that are being waved by Europe and the US. As AP reports, Russia’s state-controlled gas company, Gazprom, says it could limit supplies to European customers that intend to re-sell the natural gas on to Ukraine. Whil enot naming specific countries, the Gazprom CEO explained he needed to clamp down on the so-called reverse-flow supplies the the cut-off Ukraine as they were “half-fraudulent schemes.”

 

Russia not optimistic…

  • *RUSSIA NOT OPTIMISTIC AFTER EXPERT-LEVEL EU TALKS JUST ENDED
  • *RUSSIA EXPECTS CONSTRUCTIVE APPROACH FROM EU, UKRAINE

And appear to be preparing for sanctions…

*GAZPROM MAY LIMIT EU COS. SENDING GAS IN REVERSE GAS TO UKRAINE

 

Russia’s state-controlled gas company, Gazprom, says it could limit supplies to European customers that intend to re-sell the natural gas on to Ukraine.

 

Gazprom’s CEO Alexei Miller said Friday that the company is closely monitoring the situation and may curb shipments to European nations that would pump the Russian gas to Ukraine in the so-called reverse supplies, which he has described as a “half-fraudulent scheme.” He wouldn’t name any specific countries.

 

Gazprom this month cut gas shipments to Ukraine amid a debt and pricing dispute. Supplies to Europe via Ukraine and other pipelines haven’t been affected, however. Ukraine has sought to counter the Russian move by trying to negotiate gas supplies from other European countries that buy Russian gas.

And if the West thinks sanctions will slow them down… think again…

  • *GAZPROM TO REPLACE CENTRAL ASIAN GAS SUPPLIES WITH RUSSIAN FUEL
  • *GAZPROM, CHINA TO SIGN CONTRACT ON ADDITIONAL 30BCM/YR OF GAS

 

So D-Day is now Tuesday…




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The Pitchforks are Coming…– A Dire Warning from a Member of the 0.01%

If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.

From Nick Hanaeur’s excellent Politico Op-Ed: The Pitchforks are Coming…For Us Plutocrats

Over the past several years, I have been extremely critical of the 0.01% as a socio-economic class, often referring to them as criminal oligarchs. This has nothing to do with the incredible sums of money they have amassed. I’m simply not interested in chasing that kind of wealth, nor am I an envious person. I don’t care how much money anyone has. What I do care about is the kind of power that such money can buy, and how that power can is then abused to purchase politicians and run roughshod over entire societies. I have also been disgusted with the fact that the 0.01% as a class seem self-absorbed, apathetic and delusional when it comes to the catastrophe the current economic and financial system is reaping upon the planet. So busy are they patting themselves on the back and scrambling to acquire that next billion to see what is rapidly unfolding beyond their moats.

continue reading

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The Panic Behind The Propaganda: Why The Fed Wants You To Sell Your Bonds

As Barclays’ Joe Abate warns, delivery fails in the Treasury market have surged recently. While not at the scale of the 2008 crisis yet, we suspect the spike is what is panicking the Fed to say “the market is wrong”, talk up short-end rates, and implore the public to sell-sell-sell their bonds. The Fed’s market domination has meant massive collateral shortages (as we have detailed previously) and now more even that during last year’s taper-tantrum, the repo market is trouble.

The fails are greater than during last year’s taper tantrum.

But well below the 2008 crisis levels (for now)

Which is why The Fed is in panic mode to get everyone selling bonds.

As Abate write in his note,

Delivery fails in the Treasury market have surged recently. On Monday, the DTCC reported that incomplete deliveries reached a 52-week high at $120bn (Figure 1). And a week earlier, Treasury fails – as measured by the Federal Reserve – exceeded 6% of daily dealer Treasury transactions volumes. By contrast, usage of the Fed’s securities lending program has been relatively constant at around $15bn/day. Recall that each day the Fed auctions securities from its securities portfolio (at a 5bp fee) for dealers to borrow overnight to cover their shorts. In effect, the securities lending program is a backstop source of specific issue supply that dealers can access temporarily to prevent market disruptions caused by fails or incomplete deliveries.

But what if the Fed does not own any of the issues that dealers need? Indeed, this appears to be driving the surge in recent fails, which have been concentrated in the OTR 5s and 10s. Operation Twist and the sale of all the Fed’s <3y paper has meant that the Fed does not own any securities that mature until early 2016. Without maturing paper, the Fed is unable to buy OTR issues at Treasury auctions. The fact that the OTR issues are trading special in the repo market also means that the Fed avoids buying these securities in its (diminishing) QE purchases.

In the absence of Fed supply, dealers face a choice: fail and pay a 300bp fee for not completing the promised delivery or offer a sufficiently low financing rate to coax supply of the issue back into the market. In effect, the 300bp fails charge becomes the threshold determining how rich an issue will trade in the repo market or whether it will fail.4 Regularly scheduled re-openings and supply lured in from customer holdings in lendable accounts will eventually cheapen these issues. But in the meantime, the issues are likely to trade deeply special.

A quick reminder of what the repo market is… (via IMF)

Think of the bilateral repo market via the analogy for old clothing trade: Typically, merchants in developed countries shrink wrap old clothes in shipping container sized bundles (under pressure) and send the plastic wrapped block to poor countries. There, a clothing broker buys it, and resells it by weight to jobbers. So if the block weighs 500 pounds and they sell it in 10 pound lots, all 50 people gather around. But some people pay slightly more to be at the front of the crowd, and some pay slightly less to be at back. Then the jobber pops the bundle open with a big knife and the shrink wraps literally explodes; everyone gathered around jumps for the best pieces. Collateral desks are a bit like those jobbers. Big lots come in from hedge funds and security lenders, and the large bank’s collateral desk paws through it, searching for gems. Those gems go out bilateral to customers who’ll pay a premium. The remainders go to the guys in the back of the line (for example, triparty repo)

But why do I care about some archaic money-market malarkey? Simple, Without collateral to fund repo, there is no repo; without repo, there is no leveraged positioning in financial markets; without leverage and the constant hypothecation there is nothing to maintain the stock market’s exuberance (as we are already seeing in JPY and bonds).

Crucially, it should be inherently obvious to everyone that the moves we see in the stock market is not about mom and pop choosing to invest in the stock market (or not) as the ‘cash on the slidelines’ fallacy is “completely idiotic’ but about the marginal leveraged machine (or human) quickly jumping oin momentum.

The spike in “fails to deliver” highlights a major growing problem in the repo markets that provide that leverage… and thus the glue that holds stock markets together.

Wondering why JPY and bond yields have diverged so notably from stocks in recent days… repo effects (it’s just a matter of time before it hits stocks)…

So that explains why the Fed is so desperate to talk you into selling your bonds – most notably the short-end by demanding you listen to what Yellen said about raising rates.. as that reduces the shortfall of collateral that repo needs and restocks the banks with repo-able funds.

*  *  *

Is that why a noted dove Jim Bullard was so visibly hawkish yesterday?

The irony of course of the Fed explaining how rates will rise faster is that it spooks stock investors who have grown used to exuberant liquidity supply and roitates them to bonds… which merely exacerbates the problem the Fed has




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“To My Fellow Filthy Rich Americans: Wake Up, People. The Pitchforks Are Coming”

Excerpted from Nick Hanauer’s OpEd in Politico (read more here),

Memo: From Nick Hanauer

To: My Fellow Zillionaires

You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor.

I tell you all this to demonstrate that in many ways I’m no different from you. Like you, I have a broad perspective on business and capitalism. And also like you, I have been rewarded obscenely for my success, with a life that the other 99.99 percent of Americans can’t even imagine.

But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?

I see pitchforks.

At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.

But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.

And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.

Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. I know you fellow .01%ers tend to dismiss this kind of argument; I’ve had many of you tell me to my face I’m completely bonkers. And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction.

Here’s what I say to you: You’re living in a dream world. What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.

 

(read more here)




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Pentagon Admits Armed Drones Flying Over Baghdad; Top Shiite Cleric Joins US Calling For Maliki Ouster

With Iraq closing a last minute deal with Russia to reinforce its depleted airforce by purchasing second-hand Su fighter jets, suddenly the US found itself scrambling: the last thing it wants is to hand over control of Iraq’s skies to foreign-made warplanes. Which is perhaps why as CBS just reported, a Pentagon official has officially confirmed that the US is now flying armed drones over Baghdad. “The flights, which are not round the clock, are for the protection of the embassy and are not the precursor to air strikes” according to the same source.

So despite its reticence to engage in yet another Iraqi war, the US has now sent not only “military experts” but is once again doing what it does best: killing people by remote control. Not only that, but the people it (supposedly) intends to kill (for protection purposes of course) are the same Jihadist militants which Obama just requested another $500 million to equip and train. Because if you can’t find enough support for a limited regional war, the next best thing is to wage a proxy war… against yourself. And since the US military industrial complex is arming both sides, it is a win-win once again for any neo-con interests.

In other Iraqi news, the days of the current PM Maliki, who has now burned all bridges with the US, appear numbered after Iraq’s top Shiite cleric – Iranian-born Grand Ayatollah Ali al-Sistani – on Friday called on political blocs to agree on the next prime minister before the newly elected parliament sits next week, stepping up pressure on political leaders to set aside their differences and form an inclusive government in the face of Sunni militants who have seized large swaths of territory. However, from a geopolitical perspective this opens up a new can of worms: since the new PM will certainly be even more pro-US in a country in which Russia has invested generously to build out its oil infrastructure, this means that Putin will likely have to intercede once again to make sure the new PM is just as agreeable to Russian interests as the current one. Which also means that a whole lot of money is being spent behind the scenes.

The reclusive al-Sistani, the most revered figure among Iraqi Shiites, rarely appears or speaks in public, instead delivering messages through other clerics or, less frequently, issuing edicts.

 

Prominent Shiite leaders are pushing for the removal of al-Maliki, whose bloc won the most seats in April’s elections – 92 out of the legislature’s 328 – but who has been widely accused of monopolizing power and alienating Sunnis with a heavy-handed response to years of militant violence.

 

Even al-Maliki’s most important ally, neighboring Iran, is said to be looking at alternatives.

According to Reuters, a western diplomat, speaking on condition of anonymity, predicted that Maliki was now done.

“It looks like the debate is whether it is going to be Tareq Najem from inside State of law or someone from outside Maliki’s alliance,” the diplomat said, referring to Maliki’s one-time chief of staff and a senior member of his Dawa party.

 

“It is generally understood it will not be Maliki,” the diplomat said. “Security was his big thing, and he failed.”

 

Allies of Maliki said Sistani’s call for a quick decision was not aimed at sidelining the premier, but at putting pressure on all political parties not to draw out the process with infighting as the country risks disintegration.

Meanwhile, on the military front, a senior Iraqi army official told The Associated Press that Iraqi commandos aboard four helicopters landed at a soccer pitch inside a university campus in the insurgent-held city of Tikrit late Thursday and clashed with militants of the Islamic State of Iraq and the Levant for several hours.

One of the helicopters developed mechanical problems after takeoff from Tikrit, 80 miles north of Baghdad, but landed safely in the provincial military headquarters. The official had no word on casualties and declined to specify the mission’s objectives. He spoke on condition of anonymity because he was not authorized to brief the media.

The official also said 200 troops have arrived at a key refinery north of Baghdad under attack by militants for more than a week. The reinforcing troops join a 100-strong contingent that has been defending the Beiji refinery, Iraq’s largest and the source of about a quarter of the country’s oil product needs, including fuel for power stations.

Finally, for the visual learners, here is the latest Iraqi situation report from the Institute for the Study of War




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Russia Announces It Will Send “Humanitarian Aid” To East Ukraine

While Poroshenko extends today’s ceasefire (under threat of militaryt action if nothing is solved by then); the phrase “hearts and minds” comes to mind as Russia unleashes its latest softly-softly headline in providing ‘humanitarian aid’ to the eatern regions of Ukraine. While ‘asking’ Ukraine to help determine the route for the aid, the press release explains this is ‘aid’ for the eastern regions of Donetsk and Luhansk following “numerous appeals” by the people. It appears that the “aid” does not include US-Iraq-style “special advisors.”

 

As Russia explains…

Humanitarian assistance to the eastern regions of Ukraine

 

June 27 the Russian Foreign Ministry sent a note to the Foreign Ministry of Ukraine regarding the provision of humanitarian aid the eastern regions of Ukraine.

 

The note says that in connection with numerous appeals by the people of Donetsk and Luhansk requesting urgent humanitarian assistance, Russia has prepared to send a motorcade to deliver humanitarian cargo weighing 60 tons, consisting of food and personal hygiene products. Ttrucks will head out on June 28 toward Donetsk and Lugansk, and possibly also in other regions of Ukraine, where there are refugees.

 

The note expressed hope that such humanitarian assistance will assist the residents of the regions and refugees, and will help reduce the number of the latter in the future.

 

Russian Foreign Ministry appealed to the Ministry of Foreign Affairs of Ukraine with a request to assist in the implementation of humanitarian action, including in terms of determining the route of motorcade through Ukraine.

*  *  *

So no ‘boots on the ground’ from Russia – but winning hearts-and-minds as Ukraine loses control of its gas and water supply.




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What’s Behind The Rise In U.S. Industrial Production?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The domestic energy boom is behind the expansion of Industrial Production.

In contrast to other measures of economic activity that are stagnant or declining, U.S. industrial production has been rising: Industrial Production and Capacity Utilization (Federal Reserve data)

Is this evidence that manufacturing is on-shoring, i.e. returning from overseas? While there is anecdotal evidence for on-shoring, it appears that energy production (classified as part of mining in government statistics) is the big driver of rising industrial production.

Longtime correspondent B.C. submitted these two charts breaking down industrial production into mining, manufacturing and total production. While manufacturing has recently returned to pre-recession levels of late 2007, energy production (included in mining) has soared as the energy industry has put fracking and new wells into production. B.C. Commented: "The remarkable untold story: Ex mining and oil and gas extraction, US Industrial Production has been in contraction for most of the period since Peak Oil in 2005-08."

The red line is the ratio of total production to mining/energy. Its decline reflects the dominance of mining/energy in the rise of industrial production as a whole.

The second chart is percent change from a year ago. This shows the rate of manufacturing expansion has been declining since 2010 while mining/energy has been on a tear, spiking as high as 10% gains per year.

Here is a chart of the U.S. oil/gas rig count:

For context, here is a longer term look at the U.S. rig count. Note that the number of active rigs in the early 1980s was considerably higher than the present count.

For context, here is total U.S. energy consumption. The takeaway here is the reliance on oil, gas and coal, i.e. the fossil fuels:

One last bit of context: U.S. oil imports. While the increase of 3+ million barrels a day in domestic production is welcome on many fronts (more jobs, more money kept at home, reduced dependence on foreign suppliers, etc.), the U.S. still needs to import crude oil.

U.S. Imports by Country of Origin (U.S. Energy Information Administration)

*  *  *

Do these charts look sustainable?




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