Month: June 2017

Market demand for the dirtiest of fossil fuels is plummeting worldwide, according to industry data published Tuesday, even as President Donald Trump has made reviving the long-struggling U.S. coal mines the bedrock of his administration’s energy policy.

The BP Statistical Review of World Energy shows global coal production fell by more than 6 percent last year. That’s the largest decline in the history of BP’s survey, which the British energy company has issued annually for more than six decades.

It is the second straight year that coal demand has declined. Production at U.S. coal mines fell by 19 percent. China’s coal production fell by nearly 8 percent.

On the whole, coal’s share of global energy consumption fell to 28 percent, the lowest since 2004.

The numbers reflect the trend of nations shunning coal in favor of cheaper, cleaner ways of producing electricity — chiefly natural gas, wind and solar.

Trump announced earlier this month he will withdraw the United States from the Paris climate accord. The agreement signed by 195 nations in 2015 aims to decrease global carbon emissions in an effort to head off the worst predicted effects of global warming, including worsening storms, catastrophic droughts and city-drowning sea level rise.

As Trump doubles down on coal, the rest of the world appears headed in the opposite direction.

Renewable energy made big gains, growing 14 percent in 2016. More than half that growth came for new wind turbines. China, where the government in investing hundreds of billions in green energy programs, overtook the United States as the world’s largest producer of renewable energy.

With coal’s demise, growth in planet-warming carbon emissions has flattened even as global demand for energy continues to rise. CO2 emissions from energy consumption increased by only 0.1% in 2016. Since 2014, the average emissions growth has been the lowest over any three-year period since the early 1980s.
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Uber’s embattled CEO Travis Kalanick announced Tuesday that he is taking a leave of absence from the company for an unspecified amount of time.

He made the announcement to employees over email saying he needed to mourn the loss of his mother, who died in a boating accident last month. He also said he need to learn to become a better leader.

Kalanick’s announcement came as former U.S. attorney general under former President Barack Obama released a list of recommendations for the company. One of those included removing Kalanick from certain responsibilities and giving them to a chief operating officer.

Eric Holder, whose firm, Covington & Burling LLP, as well as a second firm, Perkins Cole, conducted separate looks into Uber’s corporate culture after charges of sexual harassment made by a former employee, Susan Fowler. She claims her charges were not taken seriously.

Holder’s firm also said Uber should hold senior managers more accountable and should improve diversity.

Uber reportedly did make changes after Fowler’s allegations, including starting a 24-hour employee hotline and firing 20 after Perkins Cole investigated complaints about sexual harassment, bullying and other workplace problems.

Other recommendations included limiting alcohol at work parties and forbidding intimate relationships between employees and bosses.

Uber was controversial from the start as it turned the taxi market in hundred of cities upside down. At its peak, it was valued at more than $70 billion.
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The Trump administration is proposing to curb the authority of the consumer finance watchdog created following the economic crisis as it drives toward easing restrictions on banks and financial institutions.

The Treasury Department issued Monday the first part of a review that was ordered by President Donald Trump in one of his earliest acts as president.

The report reviewing the Dodd-Frank financial oversight law also urges changes to rules for banks that were put in place under the 2010 law. The law aimed to restrain banks – which received hundreds of millions in taxpayer bailouts – from the kind of misconduct that many blamed for the crisis.

The law was enacted by President Barack Obama and Democrats in Congress to tighten regulation after the 2008-09 financial crisis that sparked the Great Recession that cost millions of Americans their jobs and homes.

Trump, however, has called Dodd-Frank a “disaster” that has crimped lending, hiring and the overall economy. He promised to do “a big number” on it.

“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth, and to create opportunities for all Americans to benefit from a stronger economy,” Treasury Secretary Steven Mnuchin said in a statement Monday.

The report outlines what it calls core principles of financial regulation – including overhauling the Consumer Financial Protection Bureau and having more “efficient” bank rules.

The CFPB oversees the practices of companies that provide financial products and services, from credit cards and payday loans to mortgages and debt collection. It has been a prime target of Republican lawmakers, who accuse it of regulatory overreach.

The new report urges Congress to remove the agency’s authority to supervise banks and financial companies, returning that power to other federal and state regulators, respectively. And it proposes enabling the president to remove the CFPB director at will without citing a cause for firing. That’s the subject of a battle now in federal court.

The CFPB’s structure and broad regulatory powers have led to “abuses and excesses,” and hindered consumer choice and access to credit, the report says.

The Treasury report comes a few days after the Republican-led House approved sweeping legislation to undo much of Dodd-Frank, repealing about 40 of its provisions. That was passed on a largely party-line vote of 233-186, but is unlikely to clear the Senate in its current form.

The administration’s report is narrower in scope and ambition than the House-passed legislation. It could provide a blueprint for regulators to rewrite the Dodd-Frank rules, as Trump continues to fill out his team of top financial overseers.

Mnuchin said in separate congressional testimony Monday that he expects to be able to work with the regulators on 70 to 80 percent of the proposed changes. But Congress would need to pass legislation to actually revamp the law – for example, to change the CFPB’s authority.

Among the banking rules, the new report focuses closely on the so-called Volcker Rule, established by Dodd-Frank to generally bar banks from trading for their own profit instead of for customers. The idea behind the rule was to prevent high-risk trading bets that could imperil federally insured deposits.

The report proposes exempting from the rule banks with less than $10 billion in assets and those that have over $10 billion with few trading assets. The House legislation would repeal it altogether.

So-called living wills, the plans that big banks must submit to regulators detailing how they would reshape themselves in the event of failure, should be required every two years instead of the current annual mandate, the report says.

Aaron Klein, a Treasury Department official in the Obama administration, said the proposed changes were unlikely to achieve the economic growth Trump is seeking.

“The financial regulatory system isn’t what is stopping 3 percent economic growth,” said Klein, now a fellow at the Brookings Institution. “If you’re looking in the wrong place, you’re not likely to find the answer.” Better for the administration to find ways to promote investment in the U.S., he suggested.

Klein said the changes proposed for the CFPB would inject more politics into financial regulation. He did see some positive ideas, however, such as increased coordination among financial regulators.

Bank industry groups, which had consulted with Mnuchin and other Treasury officials as they prepared the report, expressed approval of it Monday.

Looking outside Dodd-Frank, the report calls for a task force to reconsider the Community Reinvestment Act, a 1977 law designed to monitor banks’ practices in low-income and minority communities, such as new branch openings. Regulators can fine or sanction banks under the law when they find patterns of discrimination.

The law is widely promoted by Democratic lawmakers and community and civil rights groups.
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Britain’s descent into political crisis just days before Brexit talks begin has sapped confidence among business leaders and infuriated bosses who were already grappling with the fallout from the vote to leave the EU.

The failure by Prime Minister Theresa May to win a parliamentary majority in last week’s election has pushed the world’s fifth largest economy towards a level of political uncertainty not seen since the 1970s.

May called the election to secure a mandate for her vision of a “hard Brexit” – driving down migration by taking Britain out of the single market and the customs union. Instead, she got a hung parliament in which no single party has a majority. Business leaders demanded a re-think.

“The U.K. has had a reputation, earned over the generations, for stability and predictability in its government,” a senior executive at a multi-national company listed on the London FTSE 100 told Reuters on condition of anonymity. “That reputation in 12 months has been destroyed, truly destroyed. First by Brexit and now through this election.”

A survey by the Institute of Directors (IoD) found only 20 percent of its nearly 700 members were now optimistic about the British economy over the next 12 months, compared with 57 percent who were quite or very pessimistic.

The IoD survey, taken after the election, found a negative swing of 34 points in confidence in the economy from its previous survey in May.

“It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could — if not addressed immediately — be disastrous for the U.K. economy,” said Stephen Martin, director general of the IoD.

The collapse in confidence, which follows a short-term drop after last year’s Brexit vote, coincides with a slowdown in the wider economy that has taken hold since the start of this year, as rising inflation pushes up the price of goods.

Figures from credit card firm Visa showed British consumers turned more cautious even before the shock election result, with households cutting their spending for the first time in nearly four years last month.

The Confederation of British Industry (CBI) warned there was now a risk businesses would cut back on investment which has largely held up since last year’s Brexit vote.

And the trade group that represents manufacturers, the EEF, said its members were having to navigate the most uncertain political territory in Britain for decades.

Both groups called on the government to rethink its approach to Brexit, saying the country needed tariff-free access to the single market and a steady flow of migrant workers.

Some executives hoped the political paralysis would lead to a ‘softer Brexit’, with access to markets prioritized over a clamp down on immigration.

“Here we are again: another bolt from the blue, a political earthquake that we didn’t think used to happen in the U.K.,” CBI Director General Carolyn Fairbairn said at a conference hosted by the Resolution Foundation. “But I do think there are opportunities in this, and it is an opportunity to refocus back on the economy to talk about jobs, growth, future prosperity.”

Having slid to its lowest for nearly two months against the dollar on Friday, the pound fell broadly again on Monday.

Left in limbo

Business executives warned the political uncertainty could be felt across a wave of sectors.

Leaders of the drugs industry warned of the hazards of government limbo at a critical time for the highly regulated sector as companies seek clarity on the rules that will govern their business after Brexit.

Andy Bruce, the CEO of Lookers, one of Britain’s biggest car dealerships, said the lack of a clear result meant the highly successful industry had now entered “uncharted waters” in terms of how many new cars it could sell.

And Martin Sorrell, CEO of WPP, the world’s largest advertising agency, told Reuters he feared increased economic uncertainty, which meant “weak investment and postponement of decision making.”

“Now it seems that we could have no deal because of the short time fuse and lack of decisive government decision making, or a soft Brexit, the latter with more movement and membership of the single market,” he said.

Bankers, at the heart of London’s huge financial center, cautioned of the impact on takeover activity.

“So long as uncertainty is there I don’t see that as particularly positive for M&A in the short term,” Karen Cook, chairman of investment banking at Goldman Sachs said at the Reuters Global M&A summit.

Gareth Vale, marketing director at recruitment group Manpower, said its clients were very apprehensive, and had not yet fully grasped the impact that Brexit would have.

“I think the uncertainty around Brexit, and more recently the general election, has created a sense of almost inertia, which has prevented them from considering some of the bigger seismic shifts that are on the horizon.”
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The Trump administration has a backup plan to keep the government from defaulting on its financial obligations even if Congress misses an August deadline to raise the debt limit, Treasury Secretary Steven Mnuchin told a congressional panel Monday.

Mnuchin had previously set an August deadline for the federal government to avoid a catastrophic default. Mnuchin said he still prefers that Congress increase the government’s authority to borrow before lawmakers leave on a five-week break in August.

However, he said he is “comfortable” that the Treasury Department can meet the government’s financial obligations through the start of September. Private analysts say Mnuchin probably has even greater leeway.

“If for whatever reason Congress does not act before August, we do have backup plans that we can fund the government,” Mnuchin said without elaborating. “So I want to make it clear that that is not the timeframe that would create a serious problem.”

The federal government technically hit the debt limit in March, but Treasury has been using accounting steps known as “extraordinary measures” to avoid a default.

Shortly before Mnuchin testified, a Washington think tank projected that despite the slowdown in revenues, the government will have enough cash to pay its bills until October or November.

The Bipartisan Policy Center says that revenue results from this month’s quarterly tax payments could clarify the deadline, but for now it forecasts that Mnuchin has sufficient maneuvering room to keep the government solvent into the fall. The policy center says a big Oct. 2 payment into the military retirement trust fund could trigger default.

As of Friday, the Treasury had a cash balance of $148 billion, down from $204 billion a month ago. The national debt is nearly $20 trillion, including money owed to several federal programs.

Vote on debt limit

Raising the debt limit has become a politically-charged vote in Congress, even though economists believe that an unprecedented default would be catastrophic for the economy. Republicans, who control Congress and the White House, are struggling to come up with a strategy to raise the debt limit, with some GOP members demanding spending cuts in exchange for their vote.

But since Republicans have many members who simply refuse to vote for a debt increase, GOP leaders such as Speaker Paul Ryan of Wisconsin may have no choice but to seek help from Democrats, who are demanding that any debt limit hike be “clean” of GOP add-ons.

Lawmakers are trying to deal with the debt limit while at the same time a House panel is beginning work on spending bills to fund the government.

Republicans controlling the House are taking the first steps to approve President Donald Trump’s big budget increase for veterans’ health care and the Pentagon.

Spending bill

At stake is an $89 billion spending bill for the Department of Veterans Affairs and Pentagon construction projects that’s scheduled for a preliminary panel vote on Monday. The bill would give the VA a 5 percent budget hike for the budget year beginning in October as the agency works to improve wait times and correct other problems.

The Defense Department, meanwhile, would receive a $2 billion, 10 percent increase for military construction projects at bases in both the U.S. and abroad.

“This legislation includes the funding and policies necessary to deliver on our promises to our military and our veterans,” said House Appropriations Committee Chairman Rodney Frelinghuysen, a Republican from New Jersey.

Republicans are still struggling to come up with a broader budget that would dictate spending levels for other agencies. Trump has proposed sharp cuts to many domestic agencies and foreign aid as a means to pay for increases for the military. But many GOP lawmakers have already signaled that they disagree with Trump.

Under Washington’s arcane budget rules, lawmakers are first supposed to pass an overall fiscal blueprint called a budget resolution before tackling the annual round of spending bills. This year, that budget plan is also the key to unlocking action later this year on legislation to overhaul the tax code, a top GOP priority.

Instead, Republicans are split into three camps on spending: defense hawks who want even more money for the military than proposed by Trump; pragmatists who are defenders of domestic programs; and conservatives who agree with Trump’s plan to cut domestic agencies and deliver the proceeds to the Pentagon.

For now, those GOP divisions have meant an impasse for Trump’s overall budget and tax agenda.
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Israel will reduce electricity supplies to the Gaza Strip after the Palestinian Authority limited how much it pays for power to the enclave run by Hamas, Israeli officials said Monday.

The decision by Israel’s security cabinet is expected to shorten by 45 minutes the daily average of four hours of power that Gaza’s 2 million residents receive from an electricity grid dependent on Israeli supplies, the officials said.

The West Bank-based Palestinian Authority (PA) blamed Hamas’ failure to reimburse it for electricity for the reduction in power supplies.

But PA spokesman Tareq Rashmawi coupled that explanation with a demand that Hamas agree to Palestinian President Mahmoud Abbas’ unity initiatives, which include holding the first parliamentary and presidential elections in more than a decade.

“We renew the call to the Hamas movement and the de facto government there to hand over to us all responsibilities of government institutions in Gaza so that the government can provide its best services to our people in Gaza,” he said.

Hamas spokesman Fawzi Barhoum said Israel and the Palestinian Authority “will bear responsibility for the grave deterioration” in Gaza’s health and environmental situation.

Any worsening to Gaza’s power crisis — its main electrical plant is off-line in a Hamas-PA dispute over taxation — could cause the collapse of health services already reliant on stand-alone generators, many of them in a poor state of repair, said Ashraf al-Qidra, spokesman for the Health Ministry in Gaza.

Israel charges the PA 40 million shekels ($11 million) a month for electricity, deducting that from the transfers of Palestinian tax revenues it collects on behalf of the Authority.

Israel does not engage with Hamas, which it considers a terrorist group.

Last month, the Palestinian Authority informed Israel that it would cover only 70 percent of the monthly cost of electricity that the Israel Electric Corporation supplies to the Gaza Strip.

At the security cabinet session late on Sunday, ministers decided that Israel would not make up the shortfall, the officials said.

“This is a decision by [Abbas] … Israelis paying Gaza’s electricity bill is an impossible situation,” Israeli Public Security Minister Gilad Erdan said on Army Radio.

Israeli military and security chiefs backed the move, despite concern Hamas could respond by increasing hostilities with Israel.

Hamas seized control of the Gaza Strip from Abbas’s Fatah movement in 2007, and several attempts at reconciliation, most recently in 2014, have failed. Hamas has accused Abbas of trying to turn the screw on them to make political concessions.
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Work longer hours. Get fewer benefits. Retire years later. Those are the ingredients of the bitter medicine Brazilians are being asked to swallow as a cure for the country’s moribund, overregulated economy.

It would be a tough sell under any conditions, but it’s even harder because few trust the politicians trying to pour it down their throats. And a wave of corruption scandals that threaten to topple even the president could water down, if not sink, any cure.

President Michel Temer finds himself in a dilemma: He needs the economic reforms to boost his credibility — and perhaps even to avoid being ousted over a flurry of corruption allegations. But his credibility and that of his allies is so low that few Brazilians trust them to do what’s necessary to expand the job market and get people back to work.

Temer’s future is unclear

Congress — and action on the reforms — has all but come to a halt in recent weeks after a recording emerged in which Temer apparently endorses the payment of hush money to a former lawmaker imprisoned on money laundering and corruption charges. He has also been accused of accepting bribes. He denies wrongdoing, but he could soon face formal charges.

The country’s political and business class has been distracted, when not terrified, by a stream of revelations about bribery, kickbacks and general corruption centered on the national oil company, Petrobras, that has led to the jailing of dozens of the country’s elite. The politicians also face an impending deadline: next year’s October elections.

“The only thing that appears certain is that the reform agenda has been compromised,” said Silvio Campos Neto, an economist at Tendencias, a Sao Paulo-based consultancy. “The survival of this government is uncertain, and this has a negative impact on the resumption of investments.”

Reforms are a must

Business leaders and top economists argue that reforms are needed to convince investors to start pouring money again into Latin America’s largest economy, which is tentatively emerging from a deep recession.

They’ve been backing Temer’s proposed reforms that would lengthen the legal work day, let agreements negotiated between employees and bosses override some labor laws and allow companies to outsource more work and hire temporary workers for longer — potentially reducing the number of jobs with full benefits.

Temer also wants workers to contribute longer before they receive pension benefits. Many public workers in Brazil now can retire at age 54 with nearly full benefits. The reforms would set a minimum retirement age for the first time in Brazil, at 65 for men and 62 for women.

Approval rating under 10 percent

The proposed cuts are one reason Temer’s approval rating is below 10 percent in many polls, giving him no political leverage beyond the doors of congress, where his nervous allies hold a majority.

Unions staged an April 28 general strike that brought much of the country to a halt, and they promise more action.

If Temer doesn’t listen, “we will once again stop Brazil and then maybe Brasilia will hear the voice of the people,” said Joao Cayres, director of the Central Workers Union, which represents over 7 million people.

Business-minded economists argue that current labor laws discourage hiring. And the generous benefits for retirees are taking an increasing chunk of the country’s gross domestic product.

“The economy won’t collapse if Congress fails to approve the reforms, but its recovery will be slow and full of uncertainty,” said Ricardo Ribeiro, of Sao Paulo’s MCM Consultancy.

Temer won’t step down

 Temer, who denies wrongdoing, argues he can still deliver the reforms.

 At a meeting of business leaders on May 30, he insisted the economy was “on the right track” and promised to leave “the house in order” for the next president.

Two days later, he got a rare piece of good news: The country’s gross domestic product expanded by 1 percent in the first quarter of this year as compared to the last quarter of 2016 thanks in part to bumper harvests of soy and corn.

It was the first time GDP had grown after eight consecutive quarters of contraction, ending Brazil’s worst recession in decades. The economy has been dragged down in large part by a slump in global prices for its commodities.

Ruling favors Temer

Temer also notched a victory last week when Brazil’s top electoral court voted narrowly to reject allegations of illegal financing in the 2014 presidential campaign. He could have been ousted if it had ruled otherwise.

Risk consultancy Eurasia said Temer’s breaks wouldn’t be enough to get the existing pension reform measure through. “A stripped-down version of it is likely, although even then close to a toss-up,” wrote Christopher Garman, head of Brazil analysis for the group.

Some 14 million Brazilians are unemployed, or 13.7 percent of the workforce, up from 10.9 percent at the same period last year.

Thousands of public workers are not being paid on time, or at all. Among them are the chorus, orchestra and ballet at the Municipal Theatre of Rio de Janeiro. They plan to ask theater-goers for donations of canned food and household goods as they enter for the season-opening opera “Carmina Burana.”

Ballet dancer has backup plan

Renata Gouveia, a 19-year-veteran ballet dancer at the company, spends her nights making truffles to sell and is designing and selling her own dancewear.

“Out of something terrible, I’m trying to take out the positive, working in things I never saw myself doing,” she said.

“Talk that the economy is improving is “a joke,” said Jose Augusto, a 53-year-old handyman who came to the Ministry of Labor in Rio de Janeiro recently looking for work. “In order to hit the restart button, Brazil needs to employ its workers first. We are millions.”

“Our politicians are shameless thieves,?” added Augusto. “Everything’s rotten, starting with the president and all of the congressmen.”
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