Macron’s reputation on the line with French government’s flagship reform

Thu, 2017-08-31 05:39

PARIS: French President Emmanuel Macron’s government is set to unveil Thursday what is intended to be one of his signature economic reforms aimed at creating jobs and underlining his business-friendly credentials.
Before his election in May, the 39-year-old centrist vowed repeatedly to take on the country’s powerful trade unions by overhauling highly protective and rigid labor regulations.
On Thursday, in an announcement that is keenly awaited by both business groups and his leftwing opponents, his government will publish planned changes that are set to be approved by parliament in September.
The measures are expected to curb the power of unions, limit severance pay and allow bosses to negotiate many working terms and conditions directly with their employees.
In an interview published on the eve of the announcement, Macron said the overhaul had to be “ambitious and efficient enough to continue to bring down mass unemployment.”
“We are the only major economy in the European Union that has not defeated mass unemployment for more than three decades,” he told Le Point magazine.
Thursday’s unveiling is a crucial test for Macron’s domestic agenda as he seeks to encourage entrepreneurship in France, where the unemployment rate of 9.5 percent is almost double that of its large European rivals.
He warned last week that the French “hated reforms” and tried to avoid them as long as possible.

The move is set to bring the first demonstrations against his government, with the CGT trade union, France’s biggest, and the new political party France Unbowed set to mobilize their supporters on September 12 and 23.
Reaction from other trade unions will be crucial as Macron seeks to avoid a major confrontation following often-violent demonstrations last year against labor changes made by his predecessor, Francois Hollande.
During discussions with the unions which began in May, only the Communist-backed CGT has opposed the changes outright, with the more moderate CFDT and the hard-left FO so far signalling their willingness to negotiate.
The reforms come at a time when Macron’s approval ratings are falling sharply, signalling the end of the honeymoon he enjoyed with the French public following his election.
Recent polls showed that only around 40 percent of French voters are satisfied with his performance in office, with the fall attributed by analysts to a mix of communication problems and political missteps.
The influential head of the employers’ confederation Medef, Pierre Gattaz, has urged Macron to be bold with the labor market changes, which have been drawn up in secrecy.
“This labor law will be bellwether of Emmanuel Macron’s presidency and his desire to really reform,” Gattaz said Tuesday, echoing the views of many economists.
The changes will be unveiled in five presidential decrees on Thursday which will then be voted at the end of September by parliament, where Macron’s Republic on the Move party has a large majority.

Radical leftist Jean-Luc Melenchon, who finished fourth in this year’s presidential election and heads the France Unbowed party, has called for a mass march against what he describes as “social welfare coup d’etat.”
The labor overhauls are likely to provide fresh ammunition for opponents of Macron who accuse the former investment banker of pandering to business owners with his program, which also includes cuts to taxes and public spending.
“Macron, president for the rich?” asked a front-page headline in the left-leaning Liberation newspaper this week which focused on research showing that his proposed income tax cuts would mainly benefit the wealthy.
Critics of the labor code changes argue that they risk giving too much power to company owners who could force employees into longer hours or shorter holidays, for example.
At present, French labor law is enshrined in the national labor code, a red book which runs to around 3,000 pages covering everything from health and safety to contract law and pensions.
Macron’s aim is to vastly simplify the code, enshrining basic employment protections in law but leaving companies, trade unions and employees to negotiate much of the rest — instead of requiring bosses to abide by terms negotiated by unions for the whole industry.
Michael Zerbib, the general manager of an engineering company with a staff of 60, told AFP this week that his chief hope was that the law would be made simpler for small businesses like his.
“For years we’ve been promised a simplification of the rules. But all we’ve seen is increasing complexity!” he said.

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British PM says no plans to quit

Thu, 2017-08-31 05:05

LONDON: British Prime Minister Theresa May insisted she would lead the Conservative Party into the next general election, in interviews broadcast Thursday.
Her announcement followed reports that she was preparing to stand down when Britain leaves the European Union in 2019.
She told Sky News television there was “absolutely no basis for those reports whatsoever. I’m in this for the long term.”
May called a snap general election in June, hoping to extend the center-right Conservatives’ slim majority and strengthen her hand going into the Brexit negotiations.
But the gamble backfired, she lost her majority and is now propped up by the support of Northern Ireland’s Democratic Unionists.
Asked by the BBC if it was her intention to lead the Conservatives into the next election — scheduled for 2022 — she replied: “Yes. I’m here for the long term.
“And it’s crucial. What me and my government are about is not just delivering on Brexit. We are delivering a brighter future for the United Kingdom,” she said, during a visit to Japan.
“It is my intention not just to deliver a good Brexit deal for the UK but also to ensure that ‘global Britain’ can take its place in the world, trading around the world and that we deal with those injustices domestically that we need to do to ensure that stronger, more global but also fairer Britain for the future.”
May could face a tricky time at the annual Conservative Party conference in September.
Some MPs are bristling about her handling of the general election campaign, which saw the party blowing the massive opinion poll lead it held over the Labour main opposition.

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After tense talks, UN agrees to renew peacekeepers in Lebanon

The United Nations Security Council unanimously voted to renew the mandate for a peacekeeping mission in Lebanon on Wednesday, following tense negotiations amid US and Israeli criticism that UN troops should do more to stop Hezbollah gaining arms. The UN Interim Force in Lebanon (UNIFIL) – established in 1978 – patrols Lebanon’s southern border with Israel. Washington regards Hezbollah, which supports the Syrian government and has a strong presence in south Lebanon, as a terrorist organization. US Ambassador to the United Nations Nikki Haley said Washington wanted the French-drafted resolution to renew UNIFIL’s mandate to “ensure UNIFIL is doing its job to the fullest extent possible.” After a 2006 war between Israel and Hezbollah, the UNIFIL mandate was expanded to […]

Gold Flash-Crashes Below $1300

After the shenanigans in US mega-tech stocks over the last two days and the seemingly well orchestrated melt-up to pre-J-Hole levels in the dollar, why should anyone be surprised that ‘someone’ decided to try to sell $1.1 billion notional into the Asian open…


Sending Spot Gold back below the Maginot Line of $1300…


Silver followed suit… with 1300 contracts ($115 million notional) dumped at 21:43:30ET


The Dollar Index spiked as precious metals were ‘handled’ – note that in the last 48 hours, no dips in the dollar have been allowed…


Was The Bank of Japan at work again?


The flash crash lows coincided with the oddly-timed spike from Monday (that really had very little in the way of specific catalyst)…

One witty Twitterer asked mischieviously, “Was Kim buying Gold futures ahead of his launch?”

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Khashoggi: resistance to Arab Spring caused chaos and I wish Saudi Arabia would have embraced it

On Tuesday, Saudi writer and media professional Jamal Khashoggi stated that he wished that Saudi Arabia would have embraced the Arab Spring and dealt with it as a real phenomenon rather than claim it was a conspiracy. He stressed that the Saudi regime’s confrontation with the resistance is the real reason behind the current state of chaos that the region is witnessing. In an interview delivered with French radio station Monte Carlo, Khashoggi, who lives in the United States, called for and end to the Gulf crisis soon as possible. He argued that Iran, Saudi Arabia’s strategic rival, is the only beneficiary, and that the Gulf Arab States are currently preoccupied with fighting a “fake international organization” – the Muslim […]

Katrina Commander Slams Harvey Response: ‘Stop Patting Yourselves on the Back’; This is ‘Amateur Hour’

Content originally published at

Lt. Gen. Honore was in charge of the Katrina response in New Orleans 12 years ago and warned CNN’s Eric Burnett that ‘night is coming’ — saying it was going to get a lot worse before it got better.

Honore carefully crafted his words and slammed the response in Houston as being grossly inadequate, disgusted by the fact that they didn’t even have 100 helicopters in the city to do search and rescues. He harkened back to the Katrina rescue plan where the 5th army (engineers) used a ‘significant grid system’ for search and rescue. Now, according to Honore, ‘it looks like no one in Texas ever read the plan.’

“You have to come in big and you’ve got to be there right at the edge of the storm so you can come in as soon as possible and go in and rescue people.

Back during Katrina, Honore said they had 240 helicopters and 40,000 national guard within the first 4 days, orders of magnitude more than what’s on the ground in Texas now.

“They just got 100 helicopters here. Something is significantly wrong with command and control and they need to stop patting each other on the back who are waiting to get rescued.”

“I know I’m sounding critical,” Honore acknowledged as he called for an “Army response to local civil disasters.

“They’ve come upon a time when their mission is too big for the state National Guard — and they need to get the hell over it and bring them in when they have a big mission.”


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Nomi Prins: A Decade Of G7 Central Bank Collusion… And Counting

Authored by Nomi Prins,

Since late 2007, the Federal Reserve has embarked on grand-scale collusion with other G-7 central banks to manufacture a massive amount of money. The scope and degree of this collusion are historically unprecedented and by admission of the perpetrators, unconventional in approach, and – depending on the speech – ineffective.

Central bank efforts to provide liquidity to the private banking system have been delivered amidst a plethora of grandiose phrases like “unlimited” and “by all means necessary.” Central bankers have played a game with no defined goalposts, no clock rundown, no max scores, and no true end in sight.

At the Fed’s instigation, central bankers built policy on the fly. Their science experiment morphed into something even Dr. Frankenstein couldn’t have imagined. Confidence in the Fed and the U.S. dollar (as well as in other major central banks globally) has dropped considerably, even as this exercise remains in motion, and even though central bankers have tactiltly admitted that their money creation scheme was largely a bust, though not in any one official statement.

Cracks in the Facade

On July 31, 2017, Stanley Fischer, vice chairman of the Fed, delivered a speech in Rio de Janeiro, Brazil. There, he addressed the phenomenon of low interest rates worldwide.

Fischer admitted that “the effects of quantitative easing in the United States and abroad” are suppressing rates. He also said there was “a heightened demand for safe assets affecting yields on advanced-economy government securities.” (Actually, there’s been heighted demand for junky assets, as well, which has manifested in a bi-polarity of saver vs. speculator preference.) What Fischer meant was that investors are realizing that low rates since 2008 haven’t fueled real growth, just asset bubbles.

Remember, Fischer is the Fed’s No. 2 man. He was also a professor to former Fed Chair Ben Bernanke and current European Central Bank President Mario Draghi. Both have considered him to be a major influence in their economic outlook.

The “Big Three” central banks — the Fed, the European Central Bank and the Bank of Japan — have collectively held rates at a zero percent on average since the global financial crisis began. For nearly a decade, central banks have been batting about tens of trillions of dollars to do so.

They have fueled bubbles. They have amassed assets on their books worth nearly $14 trillion. That’s money not serving any productive, real-economy purpose – because it happens to be in lock-down.

In his speech, Fischer channeled Bernanke, Yellen and other major central bank leaders who, having been so enthusiastic about the possibilities, later intimated that low rates and massive asset buying and/or holding programs alone aren’t enough to stimulate economic growth. Which begs the question, why they’ve continued for so long.

As this policy was propagated by the Fed, Fischer essentially admitted that the Fed caused low interest rates globally while failing to achieve the growth it promised.

With a decade of failed policy experiments behind us, why should we have faith that the Fed — or any other central bank — has any clue about what to do next? The answer is simple. We shouldn’t.

As Fischer went on to tell the Financial Times on August 15, 2017:

“It took almost 80 years after 1930 to have another financial crisis that could have been of that magnitude. And now after 10 years everybody wants to go back to a status quo before the great financial crisis. And I find that really, extremely dangerous and extremely shortsighted. One can understand the political dynamics of this but one cannot understand why grown, intelligent people reach the conclusion that [you should] get rid of all the things you have put in place in the last 10 years.”

In other words, why should we hope that a 10-year global “solution” to instill long-term financial stability and economic growth, even as it’s been repeatedly touted as such, should do what central bankers said it will? The answer again is, we shouldn’t.

The Winners and Losers

Since the global financial crisis, the biggest G7 winners have been the Big Six US banks that profited from access to cheap money. They benefitted from central bank purchases of their securities that exaggerated the value of the remaining securities on their books. They used “printed” or electronically crafted money to stockpile cash and fund buybacks of their own shares and pay themselves dividends on those shares. By producing and distributing artificial money, central bankers distorted reality in global markets. Multi-national banks were co-conspirators in that maneuver.

After the Big Six banks passed their latest round of stress tests, they began buying even more of their own shares back. The move elevated their stock prices further. The largest U.S. bank, JP Morgan Chase, announced its most ambitious program to buy back its own shares since the 2008 crisis, $19.4 billion worth. Citigroup followed suit with a $15.6 billion buy-bank plan.

The Fed’s all-clear was just another version of quantitative easing (QE) for banks. Instead of buying bonds via QE programs, the Fed greenlighted banks to further speculate in their own stocks, creating more artificiality in the level of the stock market. In all, US banks have disclosed plans to buy back $92.8 billion of their own stock to say thank you to the Fed for the “A.” That was piling on to their existing trend; according to S&P Dow Jones Indices, “Stock repurchases by financial companies in the S&P 500 rose 10.2% in the first quarter [of 2017] and accounted for 22.2% of all buybacks.”

More ominous than that was another clear sign that a decade of money-conjuring collusion helped the same banks that caused the last crisis. Proof came in the form of a letter to the U.S. Senate banking committee from Thomas Hoenig, the vice-chairman of the U.S. Federal Deposit Insurance Corp. (FDIC), the government agency in charge of guaranteeing people’s deposits. He wrote that in 2017, U.S. banks used 99% of their net earnings toward purchases of their own stock and paying dividends to shareholders (including themselves).

They thus legally manipulated markets in plain sight by pushing their own share prices up with cheap money availed to them by the central bank that is supposed to regulate them.

As of this year, global debt levels stood at 325% GDP, or about $217 trillion. The $14 trillion of assets the G-3 central banks held on their books is equivalent to a staggering 17% of all global GDP. The European Central Bank (ECB), Bank of Japan (BOJ) and Bank of England are still buying collectively $200 billion worth of assets per month.

In the wake of that buying, noncash instruments – crypto currencies and hard assets like gold, unrelated to the main G-7 monetary system – have become increasingly attractive on the fear that in another major downturn or crisis, central banks and private banks will retract cash and liquidity from their customers.

In that likely event, banks will protect themselves and turn to governments and central banks again. In the absence of some sort of outside central bank benchmark, like a modern gold standard or use of currency basket benchmarks like the IMF’s Special Drawing Rights (SDR), currency wars will continue to be fought.

With rates hovering between zero and negative in some countries, there would be little to no room to maneuver in the face of another crisis. Thus – another thing has become increasingly clear: Central bankers have demonstrated gross negligence regarding the consequences of their monetarily omnipotent actions.

If rates were to rise higher in the US (and I don’t think we’re in for more than another 25 basis points, this year which is under last year’s Fed forecast) so would the cost of servicing that debt. That would hurt companies domestically and abroad, induce more defaults and a rush by the banks involved in derivatives associated with that debt to concoct more toxic assets. The vicious cycle of central bank bailouts would reverberate again. 

Savers and pensioners are getting close to no interest on their nest eggs. Depositors are paying banks to house their money through fees that offset negligible interest. Small businesses have to jump through hoops to get loans for expansion purposes. Wages are stagnant. Ultimately, big banks had played the system — and us — again, this time with central banks helping to fund them. The threat of an even larger collapse looms as stock markets and global debt have been propelled higher.

As we approach the ninth anniversary of the collapse of one of my former employers, Lehman Brothers, and the 10th anniversary of the beginning of central bank collusion into the financial crisis, there has been – no change – in global G7 central bank monetary policy.

Jackson Hole offered a different spin on the same old verbiage, indicating that a bit of nipping here, means a lot of tucking somewhere else. Janet Yellen took what could be her last hoorah to craft her legacy as potential Fed Chair nominee and current Trump National Economic Council Director, Gary Cohn, awaits his possible turn. And if it’s not him, it’ll remain her, or someone else that will perpetuate more of the same policies.

While speaking to the monetary policy glitterati at central bank base-camp, Yellen declared any dialing back of regulatory reform measures for banks should be “modest.” She said, “The evidence shows that reforms since the crisis have made the financial system substantially safer.” There was no mention of the unprecedented decade of easy money bolstering the financial system – that makes it appear – solvent.

For all the cheap cash offered up, much at the expense of taxpayers who will bear the burden of the associated debt this enabled, and the bank fraud it plastered over, it will be ordinary citizens who will pay the price – yet again.  In the era of money fabrication and monetary policy collusion, a decade of ongoing “emergency” procedure spells an eventual recipe for disaster.

Big US banks are bigger than before the crisis. They float atop a life-raft, among other things, of $4.5 trillion Fed asset book, as part of a total $14 trillion G7 central bank asset book. Yellen’s speech was code for preserving the status quo and central bank elasticity high. As for Cohn’s sentiment on the matter? Well, he feels the same. So does Trump. So did Obama.

Take the composite of all that and what are you left with? Ongoing G7 central bank monetary policy collusion, zero percent interest rates globally, unlimited QE potential, and major asset bubbles.

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North Korea warns Japan of ‘imminent self-destruction’

Thu, 2017-08-31 04:54

SEOUL: Nuclear-armed North Korea has warned Tokyo against “imminent self-destruction” for siding with Washington, as tensions soar after Pyongyang fired a missile over Japan.
The North set off global alarm Tuesday when it fired an intermediate-range missile over the Asian island nation, triggering condemnation from world leaders including the US and Japan.
Japanese Prime Minister Shinzo Abe denounced the launch as an “unprecedented, serious and grave threat” and agreed with US President Donald Trump to “further strengthen pressure against North Korea.”
The North’s official KCNA news agency decried the former colonial power in a commentary, saying: “Japan has now come out with its sleeves rolled up in supporting its master’s anti-DPRK war moves.”
The allies’ “military nexus” had become a “serious threat” to the Korean peninsula and Japan was “unaware” it was “accelerating self-destruction,” the statement late Wednesday said.
It made a specific reference to US forces being based in Hokkaido — the island that the North’s missile flew over.
“The DPRK’s toughest countermeasures include a warning to Japan going wild, being unaware of its imminent destruction,” and blindly following the US, it added.
Pyongyang has warned of more similar tests to come.
The authorities in North Korea are highly nationalistic and promote resentment of the US and Japan as part of their claim to legitimacy.
KCNA said earlier that the missile launch was timed to mark the 107th anniversary of the “disgraceful” Japan-Korea treaty of 1910, under which Tokyo colonized the Korean peninsula.

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