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Thread: The Global Economy

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  1. #121
    ^ (Continued from above)

    ‘EXCESSIVELY DEFERENTIAL’

    Few foresaw an investing revolution when Jack Bogle of Vanguard introduced the first index fund, now called the Vanguard 500 fund, in 1976. Rather than trying to beat the market, Bogle simply sought to match it - while chopping fees to investors. Bogle, who died in January, often recalled how early index funds were disparaged as mediocre, even called “un-American.”

    After the 2008 financial crisis whipsawed retirement account balances, many investors stopped trying to beat the market and embraced the lower fees of passive funds. At the end of August, passive U.S. stock funds managed $4.27 trillion - up from less than $1 trillion before the crisis, and slightly more than the $4.25 trillion in actively managed U.S. stock funds, according to research firm Morningstar Inc.

    Challenging company management in proxy votes creates adversarial relationships that do not serve the business interests of the index funds, Lucian Bebchuk, a Harvard University corporate governance scholar, wrote in a May research paper. The index fund firms are “excessively deferential” to the managers of their portfolio companies, he wrote, because that approach better serves their corporate mission to grow their assets-under-management - and the fees that come with managing those assets. Bebchuk and several other academics say the index fund providers do not want to rankle senior management at publicly traded U.S. corporations because they also want to make money selling index funds to their employees through company retirement plans.

    Effectively monitoring the thousands of firms in stock-market indexes would also require considerable staff and resources with little tangible payoff to an index fund’s bottom line. Because the funds all own the same stocks – under formulas calibrated to track a broad index – they can’t compete with one another on market performance. Instead, they compete with aggressive discounting of fees.

    Those low costs are also the biggest selling point of all index funds over their actively managed competitors, which must charge more to pay for teams of managers who constantly research companies and cull low performers from their portfolios.Index funds’ business model and cost pressures don’t allow for much company research, said Ron Gilson, a professor at the law schools of Columbia University and Stanford University who follows the industry.

    “There’s not much room for them to be investing in stewardship, particularly when real stewardship is expensive and you’re charging some customers close to a zero management fee,” Gilson said in an interview.

    BlackRock, for instance, has 45 people on its team that handles proxy votes, according to a company report in August. The votes cover about 16,000 corporate meetings per year. Last year, the Los Angeles County Employees Retirement Association (LACERA) moved about $10 billion in equity index assets into accounts that would allow the retirement plan to take over proxy voting – and take it away from external portfolio managers including BlackRock, according to publicly available meeting minutes.

    With expanded voting power, LACERA’s support for management proposals dropped to 80% in 2018 from 93% the previous year, when BlackRock had more sway, according to LACERA board presentations. Support for shareholder proposals rose to 74% in 2018, up from 56% support in 2017. LACERA declined to comment.

    BACKING EXECUTIVE PAY

    During the 2018 proxy season, top index fund providers supported corporate leaders through some trying times for shareholders of the companies in the bottom 10% of the Russell 3000 index.

    The three funds’ backing of a big raise for PG&E chief executive Geisha Williams - to $8.6 million in 2018 from $4.2 million the year before - came after the company suspended its dividend. The executive pay package received overwhelming support from other investors, even though a stable dividend is a key reason for owning utility stocks. PG&E stock lost a quarter of its value in 2017. The utility sought Chapter 11 bankruptcy protection earlier this year after severe wildfires in 2017 and 2018 resulted in more than $30 billion in liabilities amid investigations into whether the utility’s equipment had caused the blazes.

    When the index fund companies helped defeat the proposal to split the chairman and CEO roles at GE in 2018, their huge stakes in the company allowed them collectively to cast 1.3 billion votes against the measure out of a total of 2.8 billion votes in opposition. Investors supporting the measure cast nearly 2 billion votes in favor, hoping to curb the power of GE’s CEO in the boardroom.

    In November 2017, the three index fund firms unanimously backed the pay packages at beauty products company Coty Inc, one of the worst performers in the Russell 3000 index after losing 72% of its value in the three years ended in 2018. The nearly $500,000 in tuition payments for executives’ children – an unusual perk – came as part of pay packages that ranged from $3 million to $12 million. The Florida State Board of Administration was one of the few dissenters to vote against Coty’s pay arrangements.

    The large index funds also backed the re-election of Coty Chairman Lambertus Becht, who received a special $3.6 million payout for his work on the company’s $12.5 billion acquisition of Procter & Gamble’s beauty business in 2016. Top proxy adviser Institutional Shareholder Services said Becht’s total compensation of $4.6 million “significantly exceeds market norms for non-employee director pay.” Other major investors voted in favor of Becht’s re-election, but some dumped Coty’s stock as it struggled to digest the acquisition.

    Spokespeople for PG&E, General Electric and Coty declined to comment for this story.

    It’s rare in proxy voting for a majority of investors in a company to oppose executive pay packages. Even in such cases, BlackRock usually supports management. In 2018, among the 57 companies in the Russell 3000 that failed to win a majority of investor support for their pay plans, BlackRock sided with management about 60% of the time, according to consulting firm Semler Brossy and company voting records.

    BlackRock supported rich pay packages for directors at Clovis Oncology, who each earned about $500,000 a year despite the firm’s modest market capitalization of $1.4 billion. That’s twice the typical pay of directors at the 500 largest U.S. companies by revenue, according to Equilar. Vanguard and State Street sided against BlackRock. In all, 58% of votes cast were against a proposal to ratify director pay. Clovis, which declined to comment, responded by cutting director pay by one-quarter after taking into account the low support and investor feedback, the company said in its 2019 proxy.

    Switch Inc CEO Rob Roy received nearly $100 million in compensation in 2017 when he took the Las Vegas-based data center operator public. The following year, BlackRock backed the election of three directors on Switch’s compensation committee who had awarded Roy his big pay package. State Street backed two of them. Vanguard voted against all three on the compensation committee.

    “The awards are unusual, and the complete lack of performance-vesting criteria heightens concern,” proxy advisory firm ISS wrote in a May 2018 research report. Each of the three Switch directors received 97% of votes cast.

    Switch shares lost about two-thirds of their value in the 15 months after its October 2017 initial public offering. Switch and CEO Roy declined to comment.

    ALL ABOARD FOR AN $84 MILLION PAYOUT

    In one case, BlackRock noted concerns about a big payout to an executive but voted for it anyway.

    In February 2017, legendary railroad executive Hunter Harrison demanded $84 million in upfront money to join CSX Corp as CEO. BlackRock balked at the size of the payment and cited investor concerns about Harrison’s health, according to a June 2017 BlackRock report on proxy voting. Before investors voted on his pay package, a Wall Street Journal story detailed how an undisclosed medical condition forced Harrison to work from home, breathing with the help of an oxygen machine.

    BlackRock, which owned a 6% stake in the rail firm, put aside its concerns and supported the pay package, which received 93% support from all investors. Vanguard, with a 7% stake, and State Street, with around 4%, also voted in favor. Several months later, in December 2017, Harrison died.

    CSX adopted a rule requiring its next CEO to submit to a physical examination. The resolution that prompted that change at CSX was filed by Virginia attorney John Fishwick Jr., and it was adopted by the company before any vote. He said he was surprised none of the big fund managers stepped up with their own proposal. CSX declined to comment on Harrison’s pay.

    “These funds talk a big game, using a lot of flowery language,” Fishwick told Reuters in a phone interview. “I have not seen that they’ve done much.”
    FRIENDS LANG KAMI

  2. #122
    From GQ online ...

    Why Rich Guys Get Richer Off of Debt—While the Rest of Us Can Get Crushed by It

    Drew Magary on how debt is still a grift for the well-off ten years after the financial crash.

    By Drew Magary

    October 10, 2019

    I am in debt. Hundreds of thousands of dollars in debt, to be a touch more specific about it. Four years ago, I took out a home equity loan, signed on the dotted line, and agreed to pay it off over the span of three decades. So far, I’ve been able to make my payments without much trouble, provided I don’t fire off a tweet down the line saying Hitler had some good ideas and thus sabotage my earning potential forever and ever. I am paying down my debt and enjoying my renovated home, just as the system intended.

    But the system does not work this way for everyone. Hardly. Just as there is a massive income gap in America today, there is also a massive debt gap. There are people whose lives have been destroyed by student loans and have been forced to serve out their existences in de facto peonage to those loans. And then you have rich fuckers like Jared Kushner and his father-in-law taking on millions upon millions in debt (and that’s just the debt we know of) while still sitting pretty (at least, for now). I'm in the middle—just a chump who doesn’t understand a single thing about the physics of debt beyond the standard bank loan my wife and I have currently taken out.

    The catch is that I’m not REALLY in the middle. The system works for me as intended, but only because I make a nice amount of money. For people of lesser means, the system suffocates them instead of working the way it's supposed to, as it currently is for me. For people with obscene wealth, debt appears to be a cute little toy to play with. A luxury. For the poor, it can be an unbearable burden. So what I wanted to figure out was why this is. Beyond the obvious effects of income disparity, why are millions of Americans getting obliterated by relatively small debts while the rich can over-leverage themselves into infinity, seemingly without consequence if they fail?

    To figure this all out, I took a crash course in econ basics from two people, which is two more people than I usually ask about such matters. The first is a close friend of mine, whom I will refer to as Jeremy here. Jeremy works in finance and asked me to keep his real name and his company anonymous so he doesn’t get fired. The second is associate economics professor Damon Jones, of the University of Chicago Harris School of Public Policy. Together, these two gentlemen explained to me why this system is the way it is, and why all debtors are not created equal. But before we can sort out how all this works, we have to go back in time a bit [Wayne’s World KOOKALOO KOOKALOO sound effect] to understand how our current loaning system came to be.

    “I think a key question is: why should society penalize people taking a risk and failing?” Jeremy said to me. Yep, that was what I wanted to know. To show me, Jeremy started to talk feudalism. “This is a very dramatic example, but I think it's useful. There was a time before the United States was formed where if you were to borrow money from like the feudal lords and failed, they had things called debtors’ prisons. If you couldn't pay back the money, by hook or by crook, the feudal lord was going to extract from you one way or another. That had a very chilling effect on people's appetite to take risk. (Old) Europe was a much more hidebound society. There was a culture of being punished for failure. So I think that if you think of it in those terms, it explains how we got to where we are.”

    It’s true. Debtors’ prisons lasted well past the feudal era, but were eventually outlawed in the U.S. nearly two centuries ago. And yet, it still took until 1983 for the Supreme Court to rule that debtors couldn’t be jailed merely for being in hock. I’m sure that President Trump’s Supreme Court lapdogs will flush that ruling down the toilet days from now, but our present system was basically intended to democratize debt.

    But this is a system devised and overseen by humans, and humans have a tendency to create monsters out of their own inventions. In fact, according to the ACLU, going to jail for debt is happening to Americans all over again. Companies and and the politicians they control are pioneering ways of taking advantage of the debt system, and of the people trying to partake in it.

    “The American Dream involves buying a single family home,” Professor Jones told me. “One way to help facilitate that is to subsidize and make homeowner loans available to as many people as possible.”

    That sounds good! Houses for everybody! BUT WAIT…

    “These companies are going to compensate for that by raising the raising interest rate, and so that can backfire,” Jones continues. “They may drive interest rates so high that you price out a lot of people from the ability to afford a home.” And avoiding home ownership may be the SMART move, because as Jones notes, “Very low income people tend to have subprime borrowing, so interest rates potentially are more likely to be predatory.”

    That subprime usury was the impetus for the economy cratering in 2008, and the Trump administration has feverishly chipped away at the protections that were established in the wake of that crash, laying the groundwork for predatory lenders to swoop in once more.

    Indeed, if you have a super high credit score, the average interest rate on a personal loan falls between 10-13 percent. If you have a shitty credit score, that average interest rate triples. If taking out a loan is “renting money,” as Jeremy put it, your rent is too damn high if you’re struggling and too damn low if you are not.
    FRIENDS LANG KAMI

  3. #123
    ^ (Continued from above)

    But wait! We’re not done tilting the playing field. Professor Jones says that, “At a higher income level, there are ways to disperse that burden (of debt) a little bit more.” In other words, you can have other people borrow money for you. Perhaps you’ve heard of leveraged buyouts, a nasty and ought-to-be-banned practice in which a company can take out a debt to buy another company and then offload that debt ONTO the new company, inflating the value of their own portfolio while the asset is then stripped and left to rot from within.

    That’s not a personal loan. You can engineer this sort of disaster and still come out of it with a squeaky clean credit rating. According to Jones, “If you are borrowing and then the company that goes bankrupt, it may not reflect on your record as it would if you had individual debt. When some airline goes bankrupt, the CEO isn’t going to have trouble finding getting a loan at the bank. Reputationally you take a hit, but people are able to rebound at that level peacefully.”

    That's a key difference. You have a lot more freedom when the financial risks you take are ones made with other people’s money, and you can do so if you're a wealthy fella. You also have access to various tools to help strategize your debts and manage them. You have lawyers who know bankruptcy laws well or can negotiate debts down to smaller amounts. You have friends and colleagues and perhaps a rich uncle willing to lend you money at a decent rate or go in on a promising investment with you. You can spot investment ventures that will easily outpace your interest rate (like, say, the Chicago Cubs), so that your loan pays for itself and then some. You likely have a better education and can therefore more easily discern if you’re being scammed by a lender or by the investment venture in question. Hell, you're probably too white to be targeted by predatory lenders at all.

    The freedom doesn't end there. Jeremy notes that you can form an LLC to borrow money, in which case your business becomes its own collateral, just like a home you’ve taken out a mortgage on. The bank then comes and takes all your car washes if you fail, but they don’t take YOU. And they don’t clean out the rest of your personal assets. At that level, debt becomes elastic, and there are multitudes of soft, downy cushions to catch you if you fall.

    Jeremy says, “Debt allows you to do more than you could” with just your own resources. This is very much a good thing, but it is far more applicable to the Warren Buffets of the world than to the masses. As such, people at large are encouraged to pursue the kind of debt elasticity they can't really afford, and thus they have bigger eyes for debt than their bank accounts can withstand. When the President himself cries out that he loves debt, he’s encouraging you to follow his muse. Predatory lending practices are more than happy to sell you on the FREEDOM of debt in order to imprison you.

    I asked Jeremy, does the current system entice people to over-leverage themselves more than they ought to, particularly student debt?

    “Totally, yes.”

    For those same masses, debt becomes less an opportunity than a need. You need a place to live? Debt. You need a car? Debt. You need to go to school so you can get a decent job? Debt. You sick? Hoo shit, you got debt coming your way. “A lot of people have debt for health care,” Jones told me. “And so you have to borrow in order to live. That is less of an investment approach and more about survival.”

    It will not shock you to learn that lower income people tend to have more medical debt, not just because they lack the capital, but also because their maladies cripple their ability to pay off whatever they’ve borrowed to treat it in the first place. “It's not just the debt that is hurting you,” Jones says, “but the event that led to the need for that debt.”

    Free time is also key to debt. If you're wealthy, you not only have access to all these tools for better managing your debt, but you can make that management part of your vocation, if not all of it. And it's a respectable vocation, arguably the most lucrative one in America today. Jeremy illustrates an example where some hedge fund dude can essentially spend all day overseeing his debts and investments, whereas a hairdresser trying to earn a living has to, you know, cut hair, and therefore doesn’t have as much time or energy to go scouting out potentially lucrative real estate deals. “I gotta use my hands,” he says of our hypothetical beautician. “There is a kind of a ceiling on what's reasonable that I can actually do.”

    That is a true and generally acceptable aspect of the system at work. As Jeremy notes, we shouldn’t be a country that dramatically penalizes people for taking risks. And for the wealthy, we don’t. Ah, but for people who took the almost mandatory gamble on a college loan only to find themselves perennially in the red, and for Pennsylvania parents who were threatened to have their kids ripped from them (what is it with this country’s fetish for family separation?) because they couldn’t pay off a fucking student lunch debt, and for Florida felons who are now denied suffrage if they're delinquent in paying fines, those dramatic punishments are creeping back into the framework. And the punishment is far harsher for those taking on debt as a matter of need than those taking on debt to realize some grand business vision. America is heading back toward the Feudalistic system of debt punishment. I can’t believe I’m making sincere warnings about Feudalism the way wingnuts do when Bernie Sanders talks about free health care, but here we are.

    And that is where my lesson in economics comes to an abrupt end. Everyone should be free to take risks, and everyone should be held equally accountable should those risks backfire, especially if they are not risks that our society has essentially made obligatory. I would say one way to level the system is to make all the obligatory expenses that currently goad you into debt—housing, education, health care—cost-free by raising taxes on the rich who love debt so. Only someone above my pay grade—and above Jeremy’s, and above Professor Jones’—can make that happen. But, as it stands now, that someone is a man reluctant to change a system that, as far as he can see, offers him endless financial possibilities thanks to the miracle of freewheeling loans.
    FRIENDS LANG KAMI

  4. #124
    The Uber-Rich Molly Munger Wants a Wealth Tax

    By: Associated Press - @inquirerdotnet

    AP / 05:20 AM October 23, 2019

    When the grand vacation homes of Newport Beach were empty on a beautiful Memorial Day weekend, Molly Munger decided it was time for the U.S. to consider taxing wealth.

    As her family’s boat moved through the harbor a few years ago, Munger, whose father is a billionaire investor, saw that many of her neighbors’ houses were sitting dark and vacant.

    She knew why: The owners now controlled enough money to holiday at one of their several other luxury homes.

    It didn’t sit right, she said.

    “It’s just too much to watch that happen at the top and see what is happening at the bottom,” said Munger, 71, a California civil rights lawyer whose father, Charlie, built his fortune as vice chairman of Warren Buffett’s firm Berkshire Hathaway.

    “Isn’t it a waste when beautiful homes on the beach are empty for most of the summer?”

    Munger is now among a handful of billionaires and multimillionaires making a renewed push for the government to raise their taxes and siphon away some of their holdings.

    As Democratic presidential candidates debate a new tax on wealth rather than on incomes, this group of uber-rich people is urging them on.

    “I believe in free markets.

    I’m the daughter of a capitalist.

    But not Darwin-like free, unregulated and red in tooth and claw,” Munger said.

    The chief argument from these tycoons, financiers, and scions is that the government could spend their money more effectively than they could on their own by improving schools, upgrading infrastructure and protecting the environment.

    It challenges a long-standing belief among many politicians and economists that lower taxes on corporations and investment incomes are the most efficient way to deliver growth and spread wealth down the income ladder.

    The idea also is a direct challenge to the reputed billionaire in the White House, Donald Trump, who once backed a wealth tax but in 2017 enacted a dramatic tax cut that favored the rich.

    Twenty people, including one who remained anonymous, signed on to a letter this summer essentially asking to be taxed more.

    The group included financier George Soros, Facebook co-founder Chris Hughes and heiress Abigail Disney, and others often involved in liberal causes.

    Bill Gates, the world’s second-richest person, didn’t sign it but has since said he “wouldn’t be against a wealth tax” on a net worth that roughly exceeds $100 billion.

    While Democrats have long pushed for higher taxes on the top income tiers, the current debate goes further whether to impose annual taxes on what people own, not just on what they earn.

    Massachusetts Sen. Elizabeth Warren has endorsed a wealth tax on holdings above $50 million that could potentially raise as much as $2.75 trillion over 10 years.

    Vermont Sen. Bernie Sanders’ tax would start at $32 million.

    At last week’s presidential debate, South Bend Mayor Pete Buttigieg, Minnesota Sen. Amy Klobuchar and former Texas Rep. Beto O’Rourke, expressed openness to levying a wealth tax, while Tom Steyer argued for higher taxes on his own $1.6 billion fortune.

    There were some detractors: Tech entrepreneur Andrew Yang argues wealth taxes in other nations have failed to raise enough revenues.

    Former Vice President Joe Biden criticized Warren and Sanders’s plans as “demonizing wealth” and argued instead for focusing on income taxes and raising the rates charged on earnings from investments.

    Biden’s view is backed by many in the economic establishment, even those who say they support using the tax code to counter income inequality.

    Larry Summers, the former treasury secretary, and Harvard University president argues a wealth tax is essentially unworkable.

    The richest Americans would find ways to avoid it, making it difficult to implement and unlikely to break the hold on politics by powerful companies and rich donors, he said Friday at a panel on wealth taxes at the Peterson Institute for International Economics in Washington.

    Summers estimates that changes to the income tax could raise more than $2 trillion over 10 years from the top earners, but he doubts that a wealth tax would curb the influence of the richest Americans.

    But the economists who developed the idea dispute the notion that tax avoidance is an unbreakable law of nature.

    Wealthier Americans paid taxes in the past when tax avoidance was viewed as freeloading, said Emmanuel Saez, an economist at the University of California at Berkeley whose work has drawn attention to the wealth tax as a fix for worsening inequality.

    “The tax system reflects the values of society,” he said.

    The top 1% of Americans hold nearly 40% of the country’s wealth, while the bottom 50% of Americans effectively control none of it, according to the World Inequality Database, an index Saez helped develop.

    Many in the wealthiest sliver of that top 1% pay lower rates than most Americans because of how their income gets taxed, according to his calculations.

    Ian Simmons is among the well-off declaring they’re ready to pay more.

    Simmons runs an investment fund called the Blue Haven Initiative with his wife, Liesel Pritzker Simmons.

    The 43-year-old joined the effort to recruit other moneyed families to support a wealth tax in the June letter.

    The idea of taxing a relatively steady base of trillions of dollars felt consistent with Simmons with what he first learned at the Harvard University introductory economics class taught by Martin Feldstein, who was President Ronald Reagan’s economic adviser.

    “This is really a conservative position about increasing the stability of the economy in the long term and having an efficient source of taxation,” he said.

    Simmons’ family money came in part from mail-order retailer Montgomery Ward, which opened in 1872, an innovation aided by the U.S. Postal Service.

    The Hyatt hotel chain that helped form his wife’s family fortune was aided by the government’s construction of the interstate highway system.

    That’s part of the reason he supports a wealth tax – because his family’s fortune stems in part from government programs, echoing Warren’s key argument for her tax plan.

    When Simmons called the retired real estate developer Robert Bowditch this year to endorse the idea, the 80-year-old did the math on what it would mean for his own lifestyle.

    He figured it would cut into some of his charitable giving, but the returns would be much greater because the public would be able to decide in a democratic fashion on how the money would be spent.

    “Charitable giving by itself simply cannot provide enough money to support public goods and services, such as public education, roads and bridges, clean air,” Bowditch said.

    “It has to be done by taxes.”

    Rich people have had limited success as advocates for tax hikes.

    In 2011, billionaire Buffett’s declaration that he paid a lower tax rate than his employees spawned President Barack Obama’s proposal to raise rates on people making more than $1 million.
    The so-called “Buffett rule” fizzled in Congress.

    In 1999, when Trump was mulling a presidential bid for the Reform Party, he proposed a one-time tax of 14.25% on fortunes above $10 million, saying at the time that it could eliminate the national debt.

    “It’s a win-win for the American people,” Trump said then.

    Asked if the president still supports the idea, the White House did not respond.
    FRIENDS LANG KAMI

  5. #125
    The tragic face of global migration

    By: Randy David - @inquirerdotnet

    Philippine Daily Inquirer / 04:50 AM October 27, 2019

    Barely getting any attention in the national media is the report about the grisly death of 39 people (8 women and 31 men), believed to be Chinese nationals, who appear to have been trapped inside a refrigerated trailer truck in an industrial zone in Essex, England. This has been a trending topic on Chinese social media since Oct. 22 when the frozen bodies were found by the Essex police. The initial reports, viewed by 800 million people and commented upon by 40,000 netizens, attest to the global newsworthiness of this tragedy.

    The full picture of what happened is not yet available. But the details provided by daily police reports reveal a familiar pattern of human smuggling usually associated with desperate migrants fleeing from poverty-stricken and war-torn societies in the Middle East and North Africa. Prosperous and economically resurgent China, which yearly sends out millions of cash-laden tourists to various parts of the world, is scarcely known nowadays as a source of economic refugees.

    As one netizen wryly notes, echoing a common one-dimensional belief in China’s progress: “Life in China is quite good now. Why are people still choosing to be smuggled? Do they think everything is free in other countries?” Indeed, the last time something like this happened was 19 years ago, when 58 Chinese nationals died from suffocation inside a container van in the port of Dover, also in the United Kingdom. The Dover-to-Calais route, across the English Channel, links the British Isles to France and the rest of Europe, and is a favored route among travelers.

    One cannot know how many attempts at human trafficking, employing long-haul cargo trucks and sealed container vans, have been successfully carried out in the last two decades. This latest incident shows that other more circuitous routes are now being used for the same purpose. Tracking data from a GPS device mounted on the rented refrigerated van, in which the 39 victims were trapped, indicate that the route taken was the sea crossing between Bruges in Belgium and Essex County in Southeast England. Essex is only about 40 miles from London.

    The same GPS tracking information shows that the trailer made two trips between the United Kingdom and Europe, using the same route, from Oct. 16 to Oct. 22, the day the cargo of 39 human beings was illegally shipped to England. The question that is baffling investigators is whether the first trip was a dress rehearsal for the second, or was carrying another batch of illegal migrants.

    Whoever is behind this heinous business clearly has the capability to tap services in at least four countries: Britain, Ireland, Belgium and France. Consider this: The trailer was rented from a trailer rental company based in Ireland. It was picked up by a truck driver from Northern Ireland and transported from Dublin (Ireland) to North Wales (United Kingdom), and from there to Europe (possibly Dunkirk in Northern France). From Dunkirk, it passed through Lille, another city in Northern France, before proceeding to nearby Bruges in the Flemish region of Belgium. The migrants may have been picked up and loaded into the trailer van somewhere in France or Belgium.

    On its return trip, the trailer shipped out of Zeebrugge in Belgium on Tuesday afternoon, Oct. 22, and arrived shortly after midnight in the port of Purfleet in Essex, England. After clearing customs and immigration, the driver brought the trailer containing his human cargo to the nearby Waterglade Industrial Park, where the journey was supposed to culminate. It was there that the 39 dead bodies were discovered a few hours later.

    The 25-year-old driver of the cab, a freelance hauler, has been arrested and placed in custody. Chances are he may know only so much, given the typically compartmentalized nature of such operations. A human trafficking syndicate with an elaborate network of brokers and facilitators appears to be behind this scheme.

    The breaking news on this tragedy—a macabre metaphor for globalization and its discontents—adds a new twist to this incident. Even as almost all of China has been glued to social media for the latest developments on these so-called “lorry deaths,” an anxious family in Vietnam gets a text from daughter Pham who, on Oct. 3, left for England via China and France.

    The heartbreaking message read: “I’m sorry Dad and Mom. The way I went overseas was not successful. Mom, I love Dad and you so much. I’m dying because I can’t breathe. Mom, I am so sorry, Mom.” This was received at 4:28 a.m. Oct. 23, Vietnamese time (or 10:28 p.m. Oct. 22, British time), when the trailer van must have been at sea, on its way to England.

    The family, according to Pham’s brother, had paid $38,000 for the trip that was supposed to bring her to Britain. The money may have been sourced from pooled savings or from the sale of property or, worse, from loan sharks. What it suggests is that it is not sheer poverty, so much as the quest for a better life, that drives this form of migration. Vietnam is not yet like China, but it is surely one of the better-performing economies in our region.

    Global communication has brought the stark reality of gross inequality — across the world and within countries — to the consciousness of anyone who surfs the internet. That would include, most of all, the world’s young people and the stagnant middle class. What is upon us is not just a new version of the “revolution of rising expectations” of an earlier era. What we are dealing with here is a mood or sensibility that is fueled by a strange blend of anticipation, of faith amid uncertainty, and of recklessness compounded by resentment. It is what drives this generation to protest or to flee.
    FRIENDS LANG KAMI

  6. #126
    Asian stocks rise as China-US trade, Brexit fears recede

    Associated Press / 12:52 PM October 28, 2019

    BEIJING — Asian stock markets followed Wall Street higher Monday as investors looked ahead to a crowded week of corporate earnings, a possible U.S. interest rate cut and other potentially market-moving events.

    Benchmarks in Shanghai, Tokyo and Hong Kong all rose as fears about U.S.-Chinese trade tension and Brexit receded.

    Markets shrugged off soft earnings from U.S. companies including Boeing and Caterpillar. Some 160 more companies are due to announce this week including Alphabet, Apple, Facebook, General Electric and Exxon Mobil.

    The Shanghai Composite Index rose 0.7% to 2,975.60 and Tokyo’s Nikkei 225 gained 0.3% to 22,861.59. Hong Kong’s Hang Seng added 1.2% to 26,989.02.

    South Korea’s Kospi was up 0.4% at 2,095.45 and Australia’s S&P-ASX 200 gained 0.1% to 6,747.90. Taiwan advanced while markets in New Zealand, Singapore and India were closed for holidays.

    On Wall Street, the benchmark S&P 500 index closed Friday within 0.1% of its all-time high on July 26.

    The S&P 500 rose 0.4% to 3,022.55 and the Dow Jones Industrial Average gained 0.6% to 26,958.06. The Nasdaq climbed 0.7% to 8,243.12.

    Investors are looking to the Federal Reserve for another U.S. interest rate cut this week. Central banks in Japan and Canada also are due to announce interest rate decisions.

    The U.S. Treasury is due to report which governments are deemed to manipulate their currencies to boost exports, a designation that can trigger penalties. A watch list issued in May included China, Japan and Germany.

    This will be “one of the most substantial data and event risk weeks of the year,” said Jeffrey Halley of Oanda in a report. “Stock markets and energy will likely be punished should earnings or data from the U.S. or China disappoint.”

    Investor attention shifted to corporate earnings as tension eased after Washington and Beijing resumed negotiations.

    Both sides have imposed tariffs on billions of dollars of each other’s goods. The 15-month-old conflict has battered factories and farmers on both sides and spurred fears the global economy might tip into recession.

    On Monday, Vice President Mike Pence is due to deliver a speech on U.S.-China relations amid tension over protests in Hong Kong.

    Investors expect the Fed to cut its benchmark rate by 0.25% following signs of U.S. economic weakness.

    Also, markets are watching a monthly Chinese manufacturing indicator due out Friday for signs of whether economic growth is weakening further after slowing to a three-decade low in the quarter ending in September.

    On Sunday, the government reported profits at China’s biggest industrial companies declined by a bigger-than-expected 2.1% from a year earlier in the first nine months of 2019. Profit at state-owned companies fell 9.6% while it rose 5.4% at private enterprises.

    In Europe, the other 27 EU governments agreed Friday to grant Britain’s request for an extension to its Oct. 31 deadline to leave the trade bloc. But they failed to settle on how long that delay might be.

    British politicians want to know the length of the delay before deciding whether to hold an early election. The EU, meanwhile, wants to know what Britain plans to do with the extra time.

    ENERGY: Benchmark U.S. crude lost 14 cents to $56.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 43 cents on Friday to close at $56.66. Brent crude, used to price international oils, shed 13 cents to $61.60 per barrel in London. It rose 34 cents the previous session to $61.73.

    CURRENCY: The dollar advanced to 108.75 yen from Friday’s 108.66 yen. The euro gained to $1.1082 from $1.1080./ gsg

  7. #127
    Asian shares mixed after S&P 500 hits all-time high

    Associated Press / 01:29 PM October 29, 2019

    BANGKOK – Shares were mixed in Asia and Chinese benchmarks fell Tuesday after the S&P 500 index closed at an all-time high.

    Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Oct. 29, 2019. Shares were mixed in Asia and Chinese benchmarks fell Tuesday after the S&P 500 index closed at an all-time high. (AP Photo/Ahn Young-joon)

    The rally Monday came at the beginning of a busy week of corporate earnings and economic reports and with investors expecting another interest rate cut by the Federal Reserve.

    Investors have been balancing worries over the impact that the costly trade war between the U.S. and China is having on corporate profits and the global economy against renewed optimism that negotiations that got underway this month could result in some kind of resolution in the conflict.

    “A U.S.-China trade deal, even an interim one, remains the critical macroeconomic event for the year,” Jeffrey Halley of Oanda said in a commentary.

    “Number two is the trajectory of U.S. interest rates, and here the story is getting murky,” he said.

    Japan’s Nikkei 225 index gained 0.5% to 22,970.38, while the S&P ASX/200 edged 0.1% higher to 6,747.10.

    The Hang Seng in Hong Kong lost 0.3% to 26,815.88 and the Shanghai Composite index dropped 0.4% to 2,968.05 after Hong Kong’s leader says the city is at risk of falling into a recession as it enters its fifth month of pro-democracy protests.

    Chief Executive Carrie Lam said Tuesday that if third quarter data due for release on later this week shows negative growth, then the semiautonomous Chinese city’s economy will have entered a technical recession.

    In other markets, South Korea’s Kospi lost 0.2% to 2,089.17. Shares rose in Taiwan, Bangkok and Singapore but fell in Jakarta.

    Traders are awaiting releases of several important U.S. economic reports this week, including the Labor Department’s monthly employment report on Friday. Economists expect a slight increase in the unemployment rate to 3.6% in October from 3.5% in September.

    Monday’s rally on Wall Street extended a recent string of gains in what’s mostly been a solid month for the market.

    The S&P 500 index closed at 3,039.42, around 14 points above its previous record set on July 26 and up 0.6% for the day. It notched that milestone after weeks of hovering just below its prior high.

    Investors have been encouraged as most of the companies that have reported quarterly results the past couple of weeks beat Wall Street analysts’ forecasts for earnings growth.

    The Dow Jones Industrial Average gained 0.5% to 27,090.72 but is still about 1% below its record set on July 15.

    The Nasdaq climbed 1% to 8,325.99, while the Russell 2000 index of smaller company stocks picked up 0.9% to 1,571.93.

    Microsoft rose 2.5% after winning a Pentagon contract. Other technology companies also climbed. AT&T led broad gains for communications companies.

    While the market waits for something concrete to emerge from the U.S.-China trade negotiations, investors have been largely playing it safe.

    Despite Monday’s rally, the market could be in for some volatility this week as some 156 companies in the S&P 500 are scheduled to issue their quarterly results this week.

    Google’s parent Alphabet reported results after the close of the market Monday. The company’s revenue exceeded Wall Street expectations but profits fell short. The stock dropped nearly 2% in after-hours trading.

    European markets got a boost Monday after the European Union agreed to give Britain a three-month extension for its planned departure from the 28-member trading bloc. It had been set to leave on Oct. 31. The extension gives both sides more time to make a deal that will cover trade and other issues.

    Traders are awaiting releases of several important U.S. economic reports this week, including the Labor Department’s monthly employment report on Friday. Economists expect a slight increase in the unemployment rate to 3.6% in October from 3.5% in September.

    Benchmark crude oil lost 11 cents to $55.70 a barrel in electronic trading on the New York Mercantile Exchange. It fell 85 cents to settle at $55.81 a barrel on Monday.

    Brent crude oil, the international standard, dropped 5 cents to close at $61.20 a barrel.

    The dollar rose to 108.98 Japanese yen from 108.96 yen on Monday. The euro weakened to $1.1096 from $1.1100. /gsg
    FRIENDS LANG KAMI

  8. #128
    Stocks stumble to more records on conflicting trade reports

    Associated Press / 06:39 AM November 08, 2019

    NEW YORK – In the stock market, it’s all about trade now.

    Stocks were jumping early Thursday after China said both sides in the U.S.-China trade war had agreed to roll back tariffs if their talks progress. But an afternoon report from Reuters citing fierce opposition within the White House to the agreement undercut the enthusiasm, and the majority of the market’s gains evaporated.

    Stocks stumble to more records on conflicting trade reports

    By the end of trading, the S&P 500 was up 8.40 points, or 0.3%, at 3,085.18. It managed to set a record for the second time this week, but it had been on pace for a bigger, 0.7% gain earlier in the day.

    The Dow Jones Industrial Average climbed 182.24, or 0.7%, to 27,674.80 and also set a record. The Nasdaq composite finished just shy of its all-time high after rising 23.89, or 0.3%, to 8,434.52.

    Encouraging reports on the economy and corporate profits have helped drive stocks back to record heights in recent weeks. The U.S. job market remains strong, and the Federal Reserve has cut interest rates three times since the summer to bolster the economy. Earnings for big companies, meanwhile, weren’t as bad in the summer as Wall Street had feared.

    That leaves the U.S. trade war as the wildcard for the global economy, and markets are trading on every whiff of movement about it as a result.

    “It’s not that trade is more important to the market than economic growth or than the Fed,” said Steve Chiavarone, equity strategist at Federated Investors. “It’s that the market has already priced in that picture” of a still solid economy and easier interest rates.

    “What’s left to be determined is trade, and there’s a greater amount of uncertainty because we’ve had head fakes before.”

    President Donald Trump’s trade war has been a top concern for investors since early 2018. Increased tariffs not only raise costs and sap profits for U.S. companies. They also can and have made CEOs hesitant to spend on new factories, expansions and other investments given all the uncertainties about what the rules of trade will be.

    Momentum has been moving toward a deal, at least an incremental one that prevents conditions from getting worse.

    Altogether, the improvements mean the worries about a possible recession that dominated markets just a few months ago are diminishing. That in turn has more on Wall Street confident that this bull market for stocks, which already is the longest on record, can keep going.

    More than a dozen companies joined the lengthy parade of those reporting stronger profits for the latest quarter than analysts expected.

    Qualcomm jumped 6.3% after it reported both revenue and earnings that topped Wall Street’s forecasts, and Ralph Lauren surged 14.7% for the biggest gain in the S&P 500 following its own better-than-expected results.

    Companies are no longer getting the benefit of the first year of lower tax rates, and they’re also contending with a slowing global economy weighing on their sales. But the S&P 500 is on track to report a drop of 2.5% in third-quarter earnings per share from a year earlier, versus the 4% that analysts initially expected, according to FactSet.

    In a sign of increased optimism about the economy, the yield on the 10-year Treasury climbed to 1.92% from 1.81% late Wednesday. It has risen sharply over the last five weeks and is close to its highest level since the start of August.

    The jump in yields helped send bank stocks, whose profits benefit from higher rates for mortgages and other loans, to some of the market’s biggest gains.

    Other market leaders included oil companies and others that Wall Street calls “cyclical” stocks because their profits are so closely tied to where the economy is in its growth-and-recession cycle.

    Energy stocks jumped 1.6% for the largest gain among the 11 sectors that make up the S&P 500, and financial stocks climbed 0.7%.

    It’s a turnaround from a few months ago, when utilities and other so-called “defensive” areas led the way.

    On the losing side were several companies that focus on travel, which sank after reporting weaker-than-expected quarterly results. TripAdvisor plunged 22.4%, and Expedia Group plummeted 27.4%.

    In overseas markets, Germany’s DAX returned 0.8%, France’s CAC 40 rose 0.4% and the FTSE 100 in London added 0.1%. Japan’s Nikkei 225 rose 0.1%, the Hang Seng in Hong Kong climbed 0.6% and the Kospi in South Korea was close to flat.

    Benchmark crude oil rose 80 cents to settle at $57.15 a barrel. Brent crude oil, the international standard, rose 55 cents to $62.29 a barrel. Wholesale gasoline rose 1 cent to $1.64 per gallon. Heating oil declined 1 cent to $1.92 per gallon. Natural gas fell 6 cents to $2.77 per 1,000 cubic feet.

    Gold fell $26.00 to $1,464.20 per ounce, silver fell 59 cents to $16.97 per ounce and copper rose 6 cents to $2.72 per pound.

    The dollar rose to 109.31 Japanese yen from 108.93 yen on Wednesday. The euro weakened to $1.1048 from $1.1069.
    FRIENDS LANG KAMI

  9. #129
    No alternative to multilateralism

    By: Bill Morneau, Heng Swee Keat, Josh Frydenberg, Sri Mulyani Indrawati - @inquirerdotnet

    04:05 AM November 05, 2019

    CANBERRA — Since the creation of the Bretton Woods system 75 years ago, countries have been coming together in pursuit of global public goods, giving rise to both the international trading system and a global financial safety net.

    It is to this multilateral approach that we owe our shared success. The free flow of trade, investment and ideas has helped lift more people out of poverty than ever before. And the world’s growing middle classes are now broadening the opportunities for further exchange of goods, services and innovation.

    By underwriting global economic and political security, the multilateral system allows both big and small countries to fulfill their potential. As beneficiaries of this system, we all have a responsibility to safeguard the institutions that have underpinned our economic prosperity. We must now work together to forge a consensus on pressing global challenges.

    Rising trade tensions are one such challenge. While we acknowledge that legitimate issues must be addressed, we worry that the risks of collateral damage are growing. Uncertainty over the global outlook is contributing to a slowdown in trade and manufacturing activity. Financial-market volatility and currency instability are on the rise, amid declining capital flows to emerging economies. Deteriorating global trade conditions are affecting investor confidence, business spending and productivity. Risks remain tilted to the downside, and the World Bank and the International Monetary Fund continue to revise downward their economic growth forecasts.

    We need to reverse course, and that requires acting collectively. The first step is to support the rules-based multilateral system. While respecting each country’s domestic priorities, we need to protect free and open markets, because that is what will ensure stronger growth and greater prosperity for all. We should not resort to unilateralism and protectionism. Pursuing confrontation instead of dialogue will only exacerbate risks, erode confidence and weaken the prospect of global economic recovery. Compromise is key to achieving win-win outcomes and mutual trust.

    Multilateralism relies on the core principles of nondiscrimination, predictability and transparency. We abide by these principles because we know they work. In 2008, policymakers from around the world—especially those from the G-20 countries—came together to safeguard the global economy. Leaders took decisive and coordinated action that was widely acknowledged to have boosted consumer and business confidence, thereby driving the first stages of the recovery. The G-20 then went on to implement reforms aimed at promoting financial stability, through strengthened regulation and coordinated oversight.

    More recently, G-20 leaders responded to growing concerns about corporate tax avoidance. In November 2015, member states agreed on a strategy to ensure that multinational profits are taxed in the country where economic activity occurs. This consensus demonstrated a commitment to fairness, transparency and accountability in addressing a complex cross-border challenge. In the current global environment, we need much more of this type of leadership and cooperation.

    There are legitimate concerns that the multilateral system is struggling to manage the complexity of today’s global economy. We need to take an honest look at our trading system, reform governance of our multilateral institutions and develop a cooperative agreement on digital taxation.

    These are separate issues, but they must be dealt with in the same way: through multilateral dialogue and consensus-building. The overarching goals must be to reduce incentives for unilateral action and build respect for international norms and laws.

    To restore lost confidence, our multilateral system needs newfound strength to withstand the complexity of our current circumstances. Harking back to its emergence as a global player during the 2008 global financial crisis, the G-20 needs to continue to build mutual understanding and cooperation, so that it can uphold and support multilateral problem solving in the event of another economic crisis.

    This is not something that one or two countries can do alone. All of us must play a role in restoring the multilateral system that has contributed so much to our shared growth and prosperity over the past 70 years.

    Our collective determination and wisdom can return the global economy to a more positive path. As senior ministers, we speak out to affirm that we will use all our energies to encourage cooperation on the global challenges we face
    together. — Project Syndicate

    * * *

    Josh Frydenberg is treasurer of Australia and deputy leader of the Liberal Party. Heng Swee Keat is deputy prime minister and finance minister of Singapore. Sri Mulyani Indrawati is finance minister of Indonesia. Bill Morneau is finance minister of Canada.
    FRIENDS LANG KAMI

  10. #130
    Stocks slip as uncertainty reigns in US-China trade talks

    Associated Press / 07:11 AM November 12, 2019

    NEW YORK — U.S. stocks mostly fell on Monday as uncertainty continues to hang over U.S.-China trade talks, or at least over investors’ perception of them.

    The stock market has been rallying for five weeks in part on optimism that the United States and China are nearing a stopgap deal to calm their dispute. But President Donald Trump said over the weekend that reports about U.S. willingness to lift tariffs were “incorrect,” only two days after a Chinese official said both sides agreed to rollbacks if talks progress.

    Stocks dropped as soon as trading began Monday, and the S&P 500 lost as much as 0.6% from its record level, though indexes pared their losses as the day progressed.

    By the end of trading, the S&P 500 was down 6.07 points, or 0.2%, at 3,087.01. The Nasdaq composite slipped 11.04, or 0.1%, to 8,464.28.

    The Dow Jones Industrial Average was an outlier and eked out another record, in large part because of a big gain for Boeing. It added 10.25 points, or less than 0.1%, to 27,691.49.

    A still-strong job market, interest-rate cuts by the Federal Reserve and better-than-expected corporate earnings in the summer have all contributed to a nearly 9% leap for the S&P 500 since late August. The market’s focus, though, has lately seemed to revolve only around the state of U.S.-China trade negotiations.

    Stocks in the financial and energy industries have been generally rising since Trump said last month that the U.S. and China were negotiating “Phase One” of a trade deal. But these so-called “cyclical” stocks, whose profits are closely tied to the economic cycle, were among Monday’s losers. Such sudden snaps in movement are frustrating for investors who prefer looking at the longer term.

    “The market is myopically focused on the next minute,” said Michael Liss, senior portfolio manager at American Century Investments.

    “If I own Chevron or Total, which I do, and we don’t get a ‘Phase One’ signing before the end of the year, I’m not going to sell those stocks,” he said. “I just don’t think that over a three- or five-year time frame, oil demand is going to be dented because of that” even if it “flies in the face of everyone selling cyclicals because we don’t have a trade deal.”

    The next hints on progress in negotiations with China may come Tuesday, when Trump is scheduled to deliver a speech on trade and economic policy at the Economic Club of New York.

    Monday’s best-performing stocks were real-estate investment trusts, which rose 0.2% for the biggest gain among the 11 sectors that make up the S&P 500. The group pays relatively big dividends, and investors have flocked to them and away from “cyclical” stocks when worries are high that the trade war will hurt the economy.

    Boeing soared 4.5% after it said it hopes to resume deliveries of its 737 Max jet next month.

    On the losing end were energy stocks, which had some of the market’s sharpest losses as the price of oil weakened. Cabot Oil & Gas dropped 3.4%, Occidental Petroleum lost 3% and Marathon Oil fell 3%.

    Bond markets were closed in observance of Veterans Day.

    Low interest rates have been a big driver for the stock market’s rally, and the market’s spotlight on Wednesday will shine on Capitol Hill where Fed Chairman Jerome Powell will give testimony about the economy. Most investors expect the Fed to keep interest rates on hold for now after cutting them three times since the summer.

    Later this week, the Labor Department will also give updates on inflation at both the consumer and wholesale levels. On Friday, economists expect a government report to show that retail sales returned to growth in October. That would bolster expectations that the economy can keep driving higher as strong consumer spending makes up for manufacturing declines caused by the trade war.

    Earnings season is close to complete, and nearly 90% of the companies in the S&P 500 have reported their profits for the July-through-September quarter, according to FactSet. Results have been weak due in part to the slowing global economy, with earnings per share down 2.4% from a year earlier, but they haven’t been as bad as Wall Street had forecast.

    Asian stock markets fell. Hong Kong’s Hang Seng slid 2.6% as tensions intensified between police and political protesters. China’s Shanghai Composite index declined 1.8%, Japan’s Nikkei 225 lost 0.3% and South Korea’s Kospi dropped 0.6%.

    European markets were mixed. Britain’s FTSE 100 index slipped 0.4%, France’s CAC 40 added 0.1% and Germany’s DAX lost 0.2%.

    Benchmark crude oil fell 38 cents to settle at $56.86 a barrel. Brent crude oil, the international standard, fell 33 cents to $62.18 a barrel. Wholesale gasoline fell 2 cents to $1.61 per gallon. Heating oil declined 1 cent to $1.91 per gallon. Natural gas fell 15 cents to $2.64 per 1,000 cubic feet.

    Gold fell $5.80 to $1,455.50 per ounce, silver fell 2 cents to $16.76 per ounce and copper fell 2 cents to $2.66 per pound.

    The dollar fell to 109.04 Japanese yen from 109.15 yen on Friday. The euro strengthened to $1.1034 from $1.1024.
    FRIENDS LANG KAMI


 
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