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GDP Hits Air Pocket: Recession Warning or False Alarm?

So, the truth is the US is sliding down. Well what next Leaderless?

Naked Capitalism
By Yves Smith
26 June 2014

In case you managed to miss it, the GDP revision yesterday morning was stunningly bad. The contraction was 2.9%, revised downwards from 1%. This was both the biggest fall since the fourth quarter of 2008, when GDP fell by 8.9%, and the largest revision of the second GDP estimate since the inception of this report, in 1976.

The Washington Post gave a good overview:

But this recovery has a way of moving out of reach just when we think we’re getting close. The International Monetary Fund and the Federal Reserve have already pushed back their forecasts for liftoff from the grinding economy to next year. The new reading of first quarter GDP could move the ball even farther. A 3 percent annual growth rate is starting to seem like the promise made by the White Queen in “Alice in Wonderland”: Jam tomorrow and jam yesterday, but never jam today.

Particularly disturbing in this revision was the downgrade in consumer spending. The American shopper was supposed to be the bright spot in this recovery, reliably trudging to the malls and filling their online shopping carts despite government shutdowns and wintry snowstorms. Consumer spending jumped 3.3 percent at the end of last year, and the data initially showed a similarly strong increase during the first quarter. Wednesday’s release showed the cracks in that pillar.

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China to Set Yuan Clearing Banks in Luxembourg, Paris

The noose tightens around the Necks and Nuts of these parasites.

There you go, the contestants have been selected:

"Paris and Luxembourg, as the two financial centers battle with London to become the leading European offshore yuan-trading city."

Interesting Frankfurt was not mentioned.

image source

By Dow Jones Business News
29 June 2014

In its continued push to make the yuan a global currency, China's central bank said Sunday it plans to designate clearing banks for its currency in Paris and Luxembourg, as the two financial centers battle with London to become the leading European offshore yuan-trading city.

The People's Bank of China announced the move in two separate statements Sunday. It didn't say when it would designate the clearing banks.

The French and Luxembourg central banks said Sunday they had signed agreements with PBOC allowing for greater cooperation in the oversight of their domestic yuan market.

The weekend moves are the latest salvos in the race to win a major share of business in cross-border transactions in the Chinese currency. Singapore and Sydney are also vying for a significant share of the global yuan market, which is expected to expand rapidly along with China's fast-growing economy.

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Putin Slams US $9 Billion Fine Against French BNP As "Blackmail" For Russian Warship Deal

Here we go again. Yet another nation impaled by the Hegemony crooks of US Dreamland. How much longer will the world tolerate the US?

Makes the timing of the announcement by China of Paris as a Yuan trading hub all the more interesting , given other announcements in the offering.

Zero Hedge
By Tyler Durden
1 July 2014

Recall that about a month ago we reported that shortly after France was stunned to see its largest bank slammed by its bestest buddy, the US, with a record $9 billion fine, "France responded to the fine by announcing it will train hundreds of Russian seamen to operate the French-Made Warship", the Mistral. In other words, for all the angry rhetoric of sanctions against Russia, France was merely the latest country to admit that it too can't exist without Russian business (not to mention natural gas) even if, or especially if, it means incurring US wrath which is taken out on its banking institutions. After all, if the US is engaging in scorched earth tactics France needs a stable trade partner, especially if it is one who turns on the gas, so to speak.

As a reminder, this is what all the commotion is about:

However, it turns out that was only a small part of the story.

Earlier today, when speaking to Russian diplomats in Moscow, Vladimir Putin accused the U.S. of blackmailing France to scrap a contract to sell Russia Mistral warships by offering to cut a record $8.97 billion fine against BNP Paribas. From Bloomberg:

France’s largest bank agreed to plead guilty in court documents yesterday to processing almost $9 billion in banned transactions involving Sudan, Iran and Cuba from 2004 to 2012. The company will be temporarily barred from handling some U.S. dollar transactions.

French President Francois Hollande has refused to cancel a contract to sell two Mistral-class helicopter carriers to Russia in the face of criticism from the U.S.

“We know about the pressure which our U.S. partners are applying on France not to supply the Mistrals to Russia,” Putin told Russian diplomats in Moscow today. “And we even know that they hinted that if the French don’t deliver the Mistrals, they would quietly get rid of the sanctions against the bank, or at least minimize them,” he said without naming BNP Paribas.

“What is that if not blackmail?” Putin said.

Well it is blackmail, but what's worse it shows to what depths the US will fall when it fails to get its way in the international arena even with its so-called allies, which under Obama, is essentially always.

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Court Rules That New York Towns Can Ban Fracking

Political judgments have all too often been proven false and naive.

How refreshing to see a Judge respect the rights and common sense of the people not to endanger and risk the local ecology and essential clean water supplies of the people. This is a vote for Democracy. You won't see that from a Politician.

Residents of Dryden smile, with Helen Slottje and Earthjustice’s Deborah Goldberg and Kathleen Sutcliffe, after the high court argument in Albany. Photo credit: Earthjustice

30 June 2014

Many other cities and towns in New York have been waiting for today’s decision to establish bans or moratoriums of their own. The victory also gives legal authority to the more than 170 New York municipalities that have passed measures against fracking in their communities. Today’s decision will also serve as inspiration for a growing number of localities in Colorado, Ohio, Texas, Pennsylvania and California that are hoping to stop the controversial drilling practice.

“Town by town, New Yorkers have taken a stand against fracking. Today’s victory confirms that each of these towns is on firm legal ground,” said Helen Slottje, an Ithaca-based attorney whose legal research inspired New York’s local fracking ban groundswell and who was honored with the 2014 Goldman Environmental Prize. “The oil and gas industry tried to take away a fundamental right that pre-dates even the Declaration of Independence: the right of municipalities to regulate local land use. But they failed. The anti-fracking measures passed by Dryden, Middlefield and dozens of other New York municipalities are fully enforceable.”

In response to the court’s 5-2 decision, John Armstrong of Frack Action and New Yorkers Against Fracking said, ”We applaud the court for once again affirming the right of New Yorkers to ban fracking and its toxic effects from their communities. As Chief Judge Lippman said, you don’t bulldoze over the voice of the people. But water and air contamination don’t stop at local boundaries, and Governor Cuomo must ban fracking statewide to protect our health and homes from the arrogant and inherently harmful fracking industry.”

The case in Dryden has attracted nation wide attention and taken on special significance. More than 20,000 people from across the country and globe sent messages to the town board, expressing support for the town through the course of its nearly three-year legal battle. An Earthjustice video depicting the town’s fight has garnered more than 80,000 views. 

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Nicolas Sarkozy becomes first former French president to be taken into police custody as he is quizzed over corruption

If the French can arrest an ex President for corruption, when can it start for both Bushes, Cheney, both Clintons, Biden, Obama, Greenspan, Paulson, Emmanuel, Obama and Agency heads, plus so many more for cover ups. Then Gitmo can take them all for Water Boarding.

Former French president Nicolas Sarkozy, who is being held in police custody as investigators question him over corruption allegations

  • Former leader held for questioning over suspected 'influence peddling'
  • Becomes the first former French president to be taken into police custody
  • Arrived at investigators' offices in Nanterre, western Paris this morning
  • Is suspected of seeking inside information into probe of his 2007 election campaign
  • Politician has always denied any wrongdoing in a string of investigations
  • Had indicated he would try and be re-elected as president in 2017

Mail Online
By Peter Allen
and Jennifer Newton
1 July 2014

Nicolas Sarkozy today became the first former French president to be held in police custody as detectives questioned him over corruption allegations.

The 59-year-old arrived at the offices of the judicial police in Nanterre, the west Paris suburb, shortly after 8am.

He was placed 'garde a vue' - a legal term meaning he is a suspect at the centre of a major criminal enquiry.

It relates to so-called 'influence peddling' - effectively trying to interfere with those investigating him over a range of corruption enquiries.

Mr Sarkozy's lawyer, Thierry Herzog, and two judges were taken into custody for questioning yesterday in relation to the same investigation.

Both Mr Sarkozy and Mr Herzog are suspected of trying to pervert the course of justice through their contacts in the judiciary.

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Here are the countries showing early warning signs for banking crises

Asia, China, Brazil and even Switzerland have problems and need watching.

Not again... Reuters/Kai Pfaffenbach

By Max Nisen
29 June 2014

The central bank for Central Banks just sent out a warning that markets have gotten excessively euphoric in spite of some worrying fundamentals.

The red flag comes from the Bank of International Settlements annual report on the state of the world’s economy. The report, which was released today, acknowledges that the global economy is broadly improving, with most of the world returning to solid growth. But is also includes (PDF) an analysis of which countries and regions have the most worrisome early warning indicators for a domestic banking crisis. The indicators aren’t a surefire way to predict a crisis, but have been fairly reliable in the past.

History shows that when the difference between a country or region’s credit-to-GDP ratio and the long-term trends of that ratio exceeds 10%, it indicates a pretty rapid accumulation of debt and is usually followed by serious strain on a banking system within 3 years. When residential property prices start rising above their long term trends, that often points to a credit boom and comes two to three years ahead of a crisis. And all it would take is a 250 basis points increase in short term money market rates to push debt servicing ratios in many booming economies upward. These ratios tend to rise rapidly a year or two before a crisis.

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Five Chinese weapons that India should fear: report

China and India watch each other as wary big dogs.

One wonders how India sees all this developing and whether it is a real threat to be countered. Big guns usually hunt big game.

Two DH-10 mobile-road missile launchers. (Internet photo)

Want China Times
30 June 2014

After reviewing five Indian weapons systems that China should fear on the battlefield, Kyle Mizokami, a defense expert from San Francisco has followed up by discussing five Chinese systems that could pose a threat to the Indian military.

In an article for the Washington-based National Interest magazine, Mizokami said that the China's WU-14 hypersonic glide vehicle is the deadliest of the five weapons systems. With the ability to travel between 3,840 and 7,680 miles an hour, the Wu-14 is simply too fast and too difficult for the Indian military to intercept. "A hypersonic weapon launched from Xinjiang, western China and traveling at Mach 7 could reach Bangalore in 20 minutes, and Delhi in less than 10," said Mizokami.

China's future aircraft carrier is the second weapons system which the Indian military should fear, according to the expert. Quoting from the Tokyo-based Diplomat, Mizokami said that China's future carrier is going to be larger than the Liaoning, the nation's first carrier. It still remains unknown whether the carrier will be nuclear-powered, Mizokami said, however the new vessel will probably be capable of carrying a total 50 aircraft.

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