Tag: news

Authored by Lionel Laurent, op-ed via Bloomberg.com,

Here’s a subject that Elon Musk might think twice before tweeting about.

Resource-rich Saudi Arabia, which in recent months amassed a $2 billion stake in the Twitter-mad billionaire’s electric-car company Tesla Inc., has declared economic war on Canada. The cause was a tweet by Canadian Foreign Minister Chrystia Freeland, whose call for the release of social activists arrested by the Gulf monarchy earned a stunningly disproportionate response this week.

Loonie Tunes

The absolute impact of Saudi’s spat is small, but fear of an escalation hit the Canadian dollar

Source: Bloomberg

Intraday times are displayed in ET.

Riyadh has halted new investments in Ottawa, expelled Canada’s ambassador, stopped the state airline flying there, suspended a student exchange program, pulled medical patients from Canadian hospitals, and started selling off Canadian assets (according to the Financial Times.) It’s out to punish the Canadians “no matter the cost,” a source close to the situation told the FT.

Musk should have reason to care. He’s half-Canadian, and studied in Canada. Had he built his cash-guzzling automaker north of the International Boundary, the Saudis would doubtless take a different view on that backing for Tesla – and the possibility of helping him take the company private again.

Indeed, it’s this apparent Saudi willingness to “weaponize” its overseas investments that should give western governments and business leaders pause for thought everywhere – and might explain in part why Canada’s allies have been slow to offer backing to Freeland and her prime minister, Justin Trudeau.

We’ve seen this style of economic warfare before – in the 1970s, Arab states wielded the “oil weapon” –  but this latest attack comes after a dramatic increase in Riyadh’s foreign investments.

Black Gold

Saudi Arabia’s sovereign wealth fund is spending abroad, but at what cost?

Source: Bloomberg

Note: Vision Fund investment is stated five-year goal

The Public Investment Fund, Saudi Arabia’s wealth fund, owns stakes in Uber Technologies Inc., German transport firm Hapag-Lloyd AG, Richard Branson’s Virgin Group, an infrastructure partnership with Blackstone Group and the biggest-ever technology investment vehicle with SoftBank Group Corp. Turning Saudi’s state investment arm into a $2 trillion powerhouse is core to Crown Prince Mohammed bin Salman’s strategy of diversifying the economy away from oil.

Few have seen fit to turn down this money. Yet we’ve already witnessed the collateral business damage the Saudis can inflict if another country displeases them. In September, a Riyadh-led economic blockade of Qatar forced that country’s wealth fund to sell shares in far-flung companies like Tiffany & Co. and Credit Suisse Group AG to prop up its domestic economy. 

The latest geopolitical spat is small in terms of absolute economic impact. Canada-Saudi trade is tiny, and Saudi doesn’t own many assets in the country. But it shouldn’t be dismissed lightly.

Canada’s western allies want to encourage “MBS” because they believe he offers the best chance of bringing the kingdom into the rich-country mainstream. Yet there’s a risk in handing too much economic leverage to a government that’s clearly ready to use it to halt even the most anodyne criticism of its human rights situation. As Donald Trump’s trade rhetoric shows, we’re moving into an era where these bi-lateral fights are becoming the norm. 

Those Saudi billions may come in handy – just ask Musk. But there are serious conditions attached. 

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California’s housing affordability crisis is progressively getting worse. It has now plummeted to its lowest level in 10-years, and less than one in five households can afford to purchase a median-priced single-family home in the Bay Area, according to new data released by the California Association of Realtors (CAR).

CAR released its second-quarter Housing Affordability Index report (HAI), based on the percentage of all households that can afford to purchase a median-priced, single-family home in the state. CAR also reports affordability indices for regions and counties within the state. The index is regarded as the most fundamental benchmark of housing well-being for home buyers.

The percentage of homebuyers who could afford to buy a median-priced, existing single-family home in the state declined from 31 percent in the first quarter to 26 in the second quarter; in the previous year, the index was at 29 percent, according to CAR’s HAI.

The second quarter marked the 21st consecutive quarter that CAR’s HAI printed below 40 percent; the index topped at 56 percent in the first quarter of 2012.

The report showed that prospective homebuyers would need to have minimum annual income of $126,500 to prequalify for the purchase of a $596,730 statewide median-priced, existing single-family home in the second quarter. Assuming a 20 percent down payment and an effective composite interest rate of 4.70 percent, the monthly payments of a 30-year fixed-rate loan would be around $3,160.

The California counties that recorded 10-year lows in housing affordability were Alameda, Merced, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Mateo, Santa Clara, Santa Cruz, and Sonoma.

Here are the areas where housing affordability is at crisis levels: Santa Cruz (12 percent), San Francisco, San Mateo, and Mono (all at 14 percent), and Alameda and Santa Clara (both at 16 percent).

According to CAR’s index, the most affordable counties in California during the second quarter were Lassen (64 percent), Kern (53 percent), Madera (52 percent), Tehama (51 percent) and Kings (50 percent).

Housing Affordability Peaked At 1Q 2012 

Housing Affordability — Traditional Index 

Affordability Peak vs. Current 

Minimum Annual Income Required During Affordability Peak vs. Current 

Monthly PITI During Affordability Peak vs. Current 

In a separate, but relevant report from CAR, data shows California’s real estate market could have already peaked.

California Home Sales Declined for the 1 st Time in 4 Months

Sales Lost Momentum as Mortgage RatesContinued to Climb

California is one of the largest housing markets in the nation, as it has been a forward leading indicator for the rest of the country. Amid a housing shortage, which has blossomed into a housing affordability crisis, sales this summer have started to tumble, even as more inventory comes online. The supply of homes for sale increased annually in June for the first time in three years, according to the National Association of Realtors, which has depressed sales for the third straight month.

And now it seems, California’s real estate market could be in the beginning stages of a correction to fair value, after nearly a decade of speculation forced much of the median-priced single-family homes out of reach of the middle class – contributing to the housing affordability index at a 10-year low.

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Amid increased anxiety over Ramaphosa’s white farmer land confiscation and reports of a $4.2 billion bailout of state-owned enterprises, the Emerging Market rout in Turkey has sparked a collapse in the Rand in early Asia trading.

The Rand crashed 10% against the dollar almost instantaneously as Asian FX markets opened…

As Bloomberg reports, South Africa is planning a 59 billion-rand ($4.2 billion) bailout for state-owned companies including the post office, arms manufacturer Denel SOC Ltd. and South African Airways, the Johannesburg-based Sunday Times reported, citing unidentified government officials.

The contagion from Turkey’s collapse is not helping as broad-based EM liquidations are dragging everything lower…

As the Emerging Market FX rout continues…

 

And offshore Yuan is sliding…

 

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Authored by WirePoints’ Mark Glennon, op-ed via The Wall Street Journal,

The Obama Center Can Afford More Than $1 Rent

It’s a political ‘institute,’ not a presidential library. So taxpayers shouldn’t be paying for anything…

When Barack Obama announced he would forgo a presidential library, the news was trumpeted as a win for good government. Instead, Mr. Obama would open an official center on Chicago’s South Side, funded entirely with private money. One author at Politico, who called presidential libraries a “scam,” wrote that Mr. Obama “will rip off the band-aid, removing government from what it has no business paying for.”

Now comes news that Illinois taxpayers will put up at least $174 million for roadway and transit reconfigurations needed to accommodate the Obama Center. If you don’t live in Illinois, you may be smirking – but you’ll be footing the bill, too. Eighty percent of such spending is generally reimbursed by the federal government, and Illinois officials confirmed to me that they expect to receive $139 million from Washington if they request it.

All that taxpayer money – and for what? Originally, Chicagoans imagined they’d be getting a true presidential library, akin to those they might have visited for Ronald Reagan in California or John F. Kennedy in Boston. But unlike those libraries, the Obama Center won’t be run by the National Archives and Records Administration. It won’t even house Mr. Obama’s records, artifacts and papers, which will be digitized and available online. Instead the center will be owned and operated by the Obama Foundation.

This wasn’t always the plan. In a 2014 request for proposal, the Obama Foundation said that the planned presidential library “will include an Institute that will enhance the pursuit of the President’s initiatives beyond 2017.” This institute now seems to have taken over the project. As the Chicago Tribune reported in February: “Obama said he envisions his center as a place where young people from around the world can meet each other, get training and prepare to become the next generation of leaders.” No doubt, his definition of “leaders” will be political.

Which raises the question of why the state and city are giving the Obama Center official support. Back when it was still being sold as an official presidential library, the city of Chicago took steps to allow the project to be built in Jackson Park. Under a deal approved by the City Council in May, the Obama Foundation will lease 19.3 acres in perpetuity for $1. A nonprofit group called Protect our Parks has filed a federal lawsuit alleging that this violates state law. The suit calls the Obama Center a “bait and switch,” since the “public purpose” of a presidential library no longer exists.

Then there’s the road and transit money. Last fall WTTW, a Chicago public television station, was reporting skeptically on “preliminary plans” for Illinois to cough up $100 million to “assist” the Obama Center: “How could a public financing proposal fly in a state that is bleeding red ink, especially when the Obamas have promised 100 percent private funding?”

In response, a spokeswoman for the Obama Foundation insisted to WTTW that “construction and maintenance will be funded by private donations, and no taxpayer money will go to the foundation.” That may be true in the narrow sense, but the state’s appropriation for roadway and transit fixes is serious cash. Imagine the cries of corporate welfare if Chicago lured a big company to town with direct infrastructure spending of $174 million.

So why no fuss about ponying up to help the Obama Center? There are two answers:

The first is that Illinois’s machine politicians dropped the appropriation this summer into a 1,246-page budget bill, which was then presented to rank-and-file legislators only hours before the vote.

The second is that after a few Republicans objected to spending state money for the Obama Center, they were told not to fret: Federal reimbursements were on the way. “We were assured by Republican leadership not to worry,” state Rep. Jeanne Ives told me, “since 80% of the cost would be picked up by the federal government.”

If he tried, President Obama could probably raise more than enough private money to forgo sweetheart deals. Does anybody really think the Obama Foundation can’t afford more than $1 rent? Yet Chicago’s loyal Democrats are only too happy to give him the land free, then pour tax money into the road reconfigurations the project requires. “The state’s $174 million investment in infrastructure improvements near the Obama Center,” Mayor Rahm Emanuel said, “is money well spent.” Mr. Emanuel was President Obama’s first chief of staff.

So if you wind up visiting Chicago some years from now, and you spot a tall stone tower teeming with future leaders of the Democratic Party, give yourself a pat on the back. No matter where in America you’re from, your tax money will have helped to make the Obama Center possible.

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Authored by Jack Hunter via The American Conservative,

A new report suggests the Kentucky senator is single-handedly preventing war with Iran…

Not long ago, Donald Trump’s national security advisor John Bolton was promising regime change in Iran by the end of this year. Uber-hawk Bolton has long wantedwar with Tehran. Secretary of State Mike Pompeo isn’t much different, and has even advocated bombing Iran. Secretary of Defense James Mattis has previously recommend U.S. airstrikes against Iranian targets.

Today, Bolton says the U.S. does not to seek regime change in Iran. So does Pompeo. So does Mattis.

Why?

President Trump has been known to be hawkish on Iran. Politico observedWednesday: “Trump has drawn praise from the right-wing establishment for hammering the mullahs in Tehran, junking the Iran nuclear deal and responding to the regime’s saber rattling with aggressive rhetoric of his own….” There are also powerful factions in Congress and Washington with inroads to the president that have been itching for regime change for years. “The policy of the United States should be regime change in Iran,” says Senator Tom Cotton, once rumored to be Trump’s pick to head the CIA.

So what, or who, is stopping the hawks?

Politico revealed Wednesday some interesting aspects of the relationship between Senator Rand Paul and the president, particularly on foreign policy: “While Trump tolerates his hawkish advisers, the [Trump] aide added, he shares a real bond with Paul: ‘He actually at gut level has the same instincts as Rand Paul…’.”

On Iran, Politico notes, “Trump has stopped short of calling for regime change even though Secretary of State Mike Pompeo, Secretary of Defense James Mattis, and Bolton support it, aligning with Paul instead, according to a GOP foreign policy expert in frequent contact with the White House.”

But this part of the story was the most revelatory:

“’Rand Paul has persuaded the president that we are not for regime change in Iran,’ this person said, because adopting that position would instigate another war in the Middle East.”

This is significant, not because Trump couldn’t have arrived at the same position without Paul’s counsel, but because it’s easy to imagine him embracing regime change, what with virtually every major foreign policy advisor in his cabinet supporting something close to war with Iran. “Personnel is policy” is more than a cliché.

Paul and Trump apparently like making fun of some White House staffers, as Politico also reported: “the Kentucky senator and the commander-in-chief have bonded over a shared delight in thumbing their noses at experts the president likes to deride as ‘foreign policy eggheads,’ including those who work in his own administration.”

Eggheads indeed. For every foreign policy “expert” in Washington who now admits that regime change in Iraq was a mistake (and a whole slew of them won’t even cop to that), you will find the same people making the case for regime change in other countries, including Iran, explaining how this time, somehow, America’s toppling of a despot will turn out differently.

“So let’s understand that the people pushing for regime change in Iran are seeking to destabilize and harm the country…” writes TAC’s Daniel Larison. “Just as many of the same people did when they agitated for regime change in Iraq and again in Syria, they don’t care about the devastation and chaos that the people in the country would have to endure if the policy ‘works.’”

These are the same Washington foreign policy consensus standard bearers who would likely be shaping U.S. foreign policy unfettered if 2011 Libya “liberator”Hillary Clinton had become president—or any other Republican not named Trump or Paul.

When it comes to who President Trump can turn to for a more sober and realist view of foreign policy, one who actually takes into account past U.S. mistakes abroad and tries to learn from them, at the moment it appears to be Paul against the Washington foreign policy world.

President Trump hired regime change advocates as advisors presumably because he wanted their advice, yet there’s evidence to suggest that at least on Iran, certain hawks’ wings might have been clipped.

Most importantly, on arguably the most crucial potential foreign policy decision the president can make – one that could potentially start another disastrous U.S. Middle Eastern war – it appears to be Rand Paul who is literally keeping the peace.

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Authored by Tsvetana Paraskova via Oilprice.com,

The Philippines is trying to curb its inflation running at five-year highs by ordering the companies to make available for sale cheaper but dirtier fuel, backtracking on a ban on such dirty fuels introduced two years ago and aimed at improving air quality.

The Philippines’ Energy Secretary Alfonso Cusi is taking steps to address slowing economic growth and high commodity prices by telling companies to sell low-cost fuels, and the government-owned Philippine National Oil Company-Exploration Corporation (PNOC-EC) to import low-priced fuel, the energy ministry says.

“For the purpose of reducing the impact of rising petroleum prices in the world market, all industry players are hereby directed to provide at the retail level Euro-II compliant automotive diesel oil as a fuel option for the transport and industrial customers,” says the order.

The Philippines switched to Euro-IV compliant fuels in January 2016, replacing the Euro-II standard, which allowed for much higher sulfur content in diesel.

Euro-IV compliant fuels have sulfur content of 50 parts per million (ppm), compared to 500 ppm for Euro-II fuels.

The energy ministry’s plan, however, now needs to be approved by the environment department.

“We’re studying it right now, giving consideration to their plan to cushion inflation. We’re also looking at the implications for emissions,” Jonas Leones, Undersecretary at the Environment and Natural Resources department, told Reuters on Friday.

On Thursday, the Philippines’s central bank raised again the key interest rate, by 50 basis points to 4 percent—the third such increase this year following rate hikes in May and in June. The August rate decision was widely expected, with all 19 analysts polled by Reuters forecasting a rate hike.

Inflation in the Philippines jumped to an annual rate of 5.7 percent in July, up from 5.2 percent in June.

Economic growth, on the other hand, slowed down to 6.0 percent in the second quarter -nearly a three-year-low and below analyst expectations of 6.7-percent growth.

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Energy traders were on alert when Reuters reported last week that Chinese energy giant, PetroChina – the world’s first company to hit (and lose) a $1 trillion market cap long before Apple – was in advanced discussions with Qatar to purchase liquefied natural gas (LNG) under short- and long-term agreements. The superficial explanation was that China needed to secure generous amount of LNG to supply its push to replace coal with cleaner burning natural gas to reduce air pollution. And sure enough, after Beijing started the program last year, China had overtaken South Korea as the world’s second-biggest buyer of LNG.

The deal also made sense from the perspective of the “blockaded” Qatar, the world’s biggest LNG producer, as the isolated Middle Eastern country sought buyers for a planned output expansion.

As it turns out there was another reason for the PetroChina supply diversification: PetroChina may temporarily halt purchases of spot U.S. liquefied natural gas spot cargoes through the winter to avoid potential tariffs as a result of the trade war between the U.S. and China, Bloomberg reported on Sunday according to sources with knowledge of the strategy.

Under the plan, PetroChina would boost buying of spot cargoes from other countries or swap U.S. shipments with other nations in East Asia to avoid paying additional tariffs, said the people, who asked not to be identified because the information isn’t public. PetroChina, a unit of the state-owned China National Petroleum Corp., couldn’t immediately comment when contacted by Bloomberg.

In retaliation to the latest round of tariffs imposed on China by the US, Beijing responded that it was considering a 25% tariff on U.S. LNG, which had been missing from previously targeted goods, direct hitting American gas exporters.

The move comes ahead of the winter heating season when demand and prices typically peak and shows two things: i) that Xi Jinping may be willing to suffer some pain to avoid backing down from U.S. President Donald Trump’s trade dispute, and ii) China is planning on lasting out the trade war for the long haul, suggesting that a near-term solution looks unlikely.

“If the tariff is implemented before winter, it would potentially increase the competition for non U.S. supply to the Asian market and hence drive up spot prices in Asia this winter,” Maggie Kuang, an analyst with Bloomberg NEF in Singapore said in an email. “Australia, Qatar, and Southeast Asia will most likely benefit.”

Meanwhile, US LNG exporters such as Cheniere would be hit hardest as a result of the import halt. PetroChina in February signed a 25-year deal to buy LNG from Cheniere Energy with a portion of that supply expected to start this year. That said, while China is currently the third-largest buyer of LNG, American cargoes only made up about 5.7% of its imports over the last year, according to Sanford C. Bernstein.

China may may have a more strategic view: yesterday Iran announced that another state-owned Chinese giant, China National Petroleum Corp (CNPC) had taken over the share of France major Total in the development of the giant South Pars oil field, giving the Chinese company an 80.1% stake in the project.

Clearly unconcerned about the threat of US sanctions, and taking advantage of the ongoing chaos in the middle east, China – which recently launched its own petroleum futures contract which many say is the first step toward internationalizing the PetroYuan – is aggressively ramping up its influence in the Gulf with the intention of becoming a dominant force in the regional energy market.

Meanwhile, Russia is making no secret of its intention to dedollarize its oil industry, with the unstated purpose of shifting toward the Petroyuan axis.

As we reported earlier today, speaking in an interview for the Rossiya 1 TV channel, Russia’s Finance Minister Anton Siluanov said that Russia “aims to keep reducing its investments in American securities” following new U.S. sanctions and said that the “US dollar is becoming an unreliable tool for payments in international trade.” The minister also hinted at the possibility of using national currencies instead of the dollar in oil trade.

“I do not rule it out. We have significantly reduced our investment in US assets. In fact, the dollar, which is considered to be the international currency, becomes a risky tool for payments,” Siluanov noted.

And with Russia hinting that it is close to giving up on the dollar entirely in oil trade and shifting to a petroyuan-based regime, how long before other nations follow suit, especially as China no longer shows any qualsm when it comes to severing existing US energy ties – whether in retaliation to trade war or otherwise – and pursuing alternative sources of production?

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President Trump is giving special counsel Robert Mueller until September 1st for a sit-down interview under limited conditions, as an interview beyond that window “could interfere with the midterm elections,” reports the Wall Street Journal, citing Trump attorney Rudy Giuliani. 

Trump’s attorneys sent Mueller’s team a proposal indicating that the president would be willing to take questions on collusion with Russia in the 2016 elections, but not obstruction of justice alleged to have occurred after he took office – as Giuliani has previously said it could become a perjury trap. 

“We certainly won’t do [an interview] after Sept. 1, because we’re not going to be the ones to interfere with the election,” Mr. Giuliani told the Journal. “Let him [Mr. Mueller] get all the bad publicity and the attacks for that.”

“I think we made the offer we can live with,” said Giuliani. 

Based on a prior meeting with Mr. Mueller, Mr. Giuliani said he had believed prosecutors wanted to wrap up the inquiry by September. “Now they’re not really rushing us,” he said.

Mr. Mueller has made some moves that suggest the inquiry itself could stretch beyond the midterm elections and certainly past the September timeline Mr. Giuliani laid out. –WSJ

Last week the special counsel subpoenaed Roger Credico, comedian and radio host that former Trump adviser Roger Stone claims was a back channel to Wikileaks. Credico has denied this – instead calling himself a “confirming source” due to his contacts with WikiLeaks attorneys. He is set to testify in front of Mueller’s grand jury on September 7. 

According to emails the Journal says it reviewed, Stone told Credico in September 2016 to “please ask [WikiLeaks founder Julian] Assange” for information that could hurt Hillary Clinton, the Democratic presidential nominee. As we noted on Thursday, if Trump had in fact colluded with Russia, and Russia hacked Clinton’s emails, it seems odd that Stone would need to reach out to Credico in a private email to obtain some of them. 

Mueller’s final report

Giuliani also told the Journal that he’d prefer even a critical final report from Mueller vs. letting it drag on. “I’d take that,” said Rudy. “A negative report gets it over with. We can answer it with, I think, a better report from us, and then we get to wait and see what happens in Congress.”

And whatever Mueller submits to the DOJ’s Rod Rosenstein, Trump’s attorneys already have their own report, according to Giuliani.

Regulations governing Mr. Mueller’s office state that at the end of his work, he must provide the attorney general with a confidential report explaining his decisions. Attorney General Jeff Sessions, has recused himself from the investigation, meaning the report would instead go to Rod Rosenstein, the deputy attorney general.

Mr. Trump’s attorneys are preparing their own report, part of which rebuts accusations from James Comey, the Federal Bureau of Investigation director fired by Mr. Trump in May 2017, according to Mr. Giuliani. –WSJ

Comey, in particular, claimed that Trump asked him not to pursue the FBI investigation into former national security adviser, Michael Flynn – while Trump denies ever speaking with Comey on the subject. The former FBI Director subsequently produced a memorandum he says he made to document the interaction to Trump, which he leaked to the press through his good friend, employee and attorney, Daniel Richman. Richman, a Columbia law professor, worked under Comey at the FBI as a “special government employee” as early as June 30, 2015 – who served “at the pleasure of the Director,” according to Fox News.  

Richman’s allegedly unpaid work included “defending Comey’s handling of the Clinton email case, including the controversial decision to reopen the probe shortly before the presidential election.”

FBI records show that as a special government employee, Richman would “serve at the pleasure of the Director [Comey],” with an initial term of one year. Richman’s stated responsibilities included the use of encryption by terror suspects — known as “Going Dark.” In August 2015, his projects were expanded to include “an examination of the implications of federal investigations being brought to state and local prosecutors.” 

–Fox News

So – not only did Richman serve as the conduit for Comey’s leak three months after he left the FBI, Richman defended Comey to the media while serving at Comey’s pleasure as a “special government employee.” He was typically identified as a law professor by the media, and sometimes as a policy adviser to Comey, reports Fox. 

Richman was sent talking points about the Clinton investigation according to government transcripts, which compared Clinton’s use of an unsecured private server to that of retired Gen. David Petraeus, who shared classified information with his mistress and biographer, Paula Broadwell. The talking points also mentioned Sandy Berger, Bill Clinton’s former national security adviser who pleaded guilty to the unauthorized removal and retention of classified material from the National Archives. 

In other words, if Mueller issues a negative final report on Trump – and maybe regardless, Trump’s is going to drag the entire Comey – Richman connection back into the sunlight as part of a counter-report that’s sure to be a stunning read. 

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With attendance at Baltimore schools plumbing 13-year lows, and multiple high schools with zero students proficient in math, it is perhaps no surprise that Baltimore schools delayed implementing a grade policy in August that would have prevented six schools from fielding any sports teams.

The Daily Caller’s Rob Smishock reports that  Baltimore City Public Schools’ (BCPS) policy would have restricted student athletes who had not achieved at least a 2.0 (“C”) GPA in summer school or the last quarter of the preceding academic year from competing in fall sports like football, reported The Baltimore Sun. The old rule only mandated that students not have failed more than one class per quarter.

“We’re making sure we’re being fair to students who are affected by this and may not have fully understood what was at play before,” BCPS executive director of whole child services and support Sarah Warren told The Sun.

“There’s been situations that have come across my desk where a student may have been living with their grandmother, and their grandmother passes,” BCPS chief academic officer Sean Conley said. “This student may have been an A or B student, but then the grades just plummeted. We want to make sure we’re looking at the student as more of a totality than at just that one moment.”

Over 50 percent of the district’s students live in poverty, many are homeless, and many have to deal with the city’s high crime rate.

“Our kids face so much adversity outside of school,” Benjamin Franklin High School athletic director Richard Jackson told The Baltimore Sun. “I’d hate to have to throw even more adversity when they get to school.”

BCPS did not respond immediately to a request for comment regarding whether miscommunication on the district’s part concerning the new policy prevented students from being ready to meet the 2.0 GPA standard or why BCPS student athletes could not meet that standard when their peers from neighboring districts have had to meet it for years.

The Sun speculated that the delayed implementation and revision would permit 225 more students to take part in BCPS athletics. But student athletes will need to meet the 2.0 GPA cutoff by Nov. 9, the end of the district’s first quarter, to compete in winter sports.

Students who wish to compete in college NCAA sports need to maintain a minimum GPA of 2.3.

We are reminded of Baltimore resident and disabled Army veteran, Victor Able, Sr., outburst of rage last year, fed up with the public education that his son, a 12th grader on the verge of graduation, received from City Neighbors Charter School after he recently tested at 4th grade level in math and 5th grade level in reading.  Able says his son was simply passed to the next grade year after year so that his school could continue to receive extra federal funding even though it failed to deliver results. After his complaints fell on deaf ears at city council and the mayor’s office, Able has now hired an attorney to address a system he says is “broken.”  Per Fox News:

According to the IEP report, the 12th grader reads at a 5th grade level; does math at a 4th grade level.

“It’s not supposed to happen,” stated Able. “I don’t want him to fall out into the streets.”

“They failed my son,” said Able. “Not just my son, a whole lot of kids. The system is broken. They need to stop and fix it.”

Able told Project Baltimore he has hired an attorney and has a meeting with the school later this month.

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In the first tentative step toward the final option available for Erdogan to halt the Lira’s accelerating collapse – which crashed as low as 7.2362 earlier after the Wellington FX open following the the Turkish president’s latest belligerent comments – namely capital controls, the Turkish Banking Regulation and Supervision Agency imposed a limit on the amount of foreign currency and lira swap and swap-like transactions, which are not to exceed 50% of the bank’s shareholder equity.

Furthermore, new transactions are halted “until current over-shootings mature.”

Whether this tentative move to limit the amount of TRY FX speculation will work remains to be seen: the kneejerk reaction to its announcement helped send the lira from below 7.00 vs the USD to as low as 6.75 in very thin trading conditions, but it has since slumped back toward the 7.00 barrier.

As a reminder, some view capital controls by Turkey as a short-term band aid, and potentially the worst possible “solution”, as it could be the catalyst that spreads contagion to other emerging markets. On Friday, Robert Marchini, a political strategist at Zenith Asset Management laid out to Bloomberg how he see the “worst case scenario” for Turkey:

Regarding Turkey as a potential ‘Black Swan’-level event, I’m skeptical the collapse of the currency per se would be enough of an incident. The market has known for a while Erdogan was leading the country in an economically reckless direction. The real question was when it all would blow up (although I don’t think anyone thought it would go down this quickly.) More specifically, I think that the [EU] banks’ exposures to both external debt and local operations, while significant, are not at a crisis level.

Where the real risk lies, and one that I think has not been adequately considered, is the markets’ reaction to [potential] capital controls. Should Erdogan impose capital controls, in addition to banks’ writedowns on [now-toxic] Turkish assets, investors’ reaction is likely to be panic and to yank capital out of other EMs before either A. That EM’s currency falls further and/or B. That EM’s government gets the same idea as Turkey.

This becomes somewhat of a self-fulfilling prophecy, and in my opinion is where the real possibility for contagion lies.

Separately, in another troubling development, Bloomberg cites an Asia-based FX trader who said that as TRY vol soars “some clients are choosing to watch their own orders rather than leave it with a bank, adding to widening pressure on price spreads.” The trader also said that banks are “preferring clients declare their side on deals rather than ask for two-way prices.”

This may be a reflexive reaction to the pandemonium in the aftermath of the SNB’s decision to remove the 1.20 peg against, resulting in massive stop losses and numerous accounts getting margined out.

As to what it means for the lira, with Erdogan refusing to even consider a rate hike or an IMF intervention, even as diplomatic ties with the US frayed further when the Turkish president hinted that he would seek “alternative alliances” and had a “weapon” against Trump, whom he accused of instigating the currency collapse, it is difficult to see how besides the occasional kneejerk short squeeze to a headline here or there, the ongoing FX collapse is halted.

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