Monday, September 28, 2015

Last Call For Glencore's Core Meltdown

You're probably not familiar with Swiss mining conglomerate Glencore, but China's economic slowdown is a disaster for the commodity giant, and it's tanking big time.

Anglo–Swiss commodity and mining behemoth Glencore saw its shares slip another 26 percent on Monday with analysts stressing that the weakness is likely to be felt across the entire sector.

London-listed shares of Glencore briefly hit 69 pence in morning trade Monday. It was on course for its worst intraday move on record with shares tumbling 75 percent year-to-date and 85 percent since its flotation in 2011. The U.K. FTSE 350 mining index hit its lowest level since 2008 on the back of Glencore's fall.

Weaker commodity prices and softening Chinese demand have put the brakes on the formerly formidable rise the sector enjoyed over the last decade, but analysts have highlighted that Glencore's main problem is actually its debt load.

"Mining companies gorged themselves on cheap debt in a race to grow production following the Chinese stimulus that occurred in the wake of the (global financial crash)," a team of Investec analysts, led by Hunter Hillcoat, said in a note on Monday morning.

"The consequences are only now coming home to roost, as mines take a long time to build."

Investec said that Glencore had a "higher debt base" than its peers and a "lower-margin asset base," adding that its debt levels would still be above its rivals despite an intense period of restructuring over the next five years.

In other words, Glencore bet the company on commodity prices going up.  The opposite happened in oil and then in metals and everything else and went deep into debt doing so, playing the Too Big To Fail Casino.  But in the end, the house always wins, and now the question is what happens to the commodities market should Glencore go belly up.

A lot of banks gave Glencore a lot of money to invest in mining.  If these banks don't get paid back, well, we're looking at the kind of counter-party mess the banks got into in 2007.

Keep an eye on this one, folks.  It has the potential to really get ugly.

Elizabeth Warren Understands BLM

The junior senator from Massachussetts is one of the few high profile Democrat who actually seems to understand the Black Lives Matter movement, as Wesley Lowrey points out.

In a Sunday speech on racial inequality, Sen. Elizabeth Warren (D-Mass.) called for broad policing reform — including de-escalation training and body cameras for all police officers — and likened the current Black Lives Matter movement to the civil rights movement that won black Americans the right to vote in the 1960s. 
"None of us can ignore what is happening in this country. Not when our black friends, family, neighbors literally fear dying in the streets." Warren said. "This is the reality all of us must confront, as uncomfortable and ugly as that reality may be. It comes to us to once again affirm that black lives matter, that black citizens matter, that black families matter." 
In the address, a copy of which was provided to The Washington Post prior to her delivery, Warren draws direct parallels between the civil rights movement and the current anti-police-brutality movement, and it sought to link issues on economic inequality with systemic racism. She traces racial economic inequality, citing inequities in the housing system, as well as decrying restrictions to voting rights. 
"Economic justice is not — and has never been — sufficient to ensure racial justice. Owning a home won’t stop someone from burning a cross on the front lawn. Admission to a school won’t prevent a beating on the sidewalk outside," Warren declared. "The tools of oppression were woven together, and the civil rights struggle was fought against that oppression wherever it was found — against violence, against the denial of voting rights and against economic injustice." 
Warren's address, delivered at the Edward Kennedy Institute in Boston, was perhaps the most full-throated endorsement to date by a federal lawmaker for the ongoing protest movement, and it drew immediate praise from some of the most visible activists. 
"Senator Warren's speech clearly and powerfully calls into question America's commitment to black lives by highlighting the role that structural racism has played and continues to play with regard to housing discrimination and voting rights," said DeRay Mckesson, a prominent activist who said he hopes to meet with Warren to further discuss racial injustice. "And Warren, better than any political leader I've yet heard, understands the protests as a matter of life or death — that the American dream has been sustained by an intentional violence and that the uprisings have been the result of years of lived trauma."

Born out of the unrest in Ferguson, Mo., after the police shooting of Michael Brown last summer, the current protest movement has upended the efforts of Democratic presidential candidates to reach out to black voters. The three candidates have faced protests and interruptions at some of their campaign events. Both former Maryland governor Martin O'Malley and Sen. Bernie Sanders (I-Vt.) have met with some of the most visible activists, and former secretary of state Hillary Rodham Clinton and Mckesson have agreed to meet soon.
The activists have called for a host of police reform measures, including body cameras, de-escalation training, special prosecutors in cases of police killings and a review of police union contracts. 
"It is a tragedy when any American cannot trust those who have sworn to protect and serve," Warren said. "This pervasive and persistent distrust isn’t based on myths. It is grounded in the reality of unjustified violence."

This is exactly what we needed to hear from Hillary, Bernie and O'Malley, and haven't so far: somebody in the Democratic Party finally admitting full stop that police violence against black lives is part and parcel of America's continuing structural racism, racism designed to denigrate those lives as something less than American, less than human, somebody finally saying police are the problem, and not blaming the victims of this deadly brutality.

The most important part of Warren's speech was separating economic justice from racial justice. Hillary Clinton and especially Bernie Sanders still refuse to separate the two, still buying into the proven fallacies of black respectability politics, that black people have to "act a certain way" in order to somehow avoid structural racism that exists all around us, that we have to be "one of the good ones" or we somehow deserve getting shot and killed by police, and that if we "behave" that we'll somehow not be singled out for summary execution.

If Senator Warren finally forces the Democratic candidates to confront this fantasy head on and put the blame on the nation's police departments, to start national police reform, that will be a start. She at least understands this and more importantly isn't afraid to say it.  There need to be more white voices saying this.

If she announced her candidacy, of the Democrats running I'd be very inclined to support her.

Bush, Whacked?

A brutal story this morning in the Washington Post about Jeb Bush indicates that his donors are threatening to jump ship unless he turns things around in October.

Jeb Bush is entering a critical phase of his Republican presidential campaign, with top donors warning that the former Florida governor needs to demonstrate growth in the polls over the next month or face serious defections among supporters.

The warnings, expressed by numerous senior GOP fund­raisers in recent days, come as Bush and an allied super PAC are in the early stages of an aggressive television ad campaign they say will help erase doubts about his viability.

But Bush continues to battle against a steady decline in the polls, sinking to fifth place at just 7 percent in a national NBC News/Wall Street Journal poll released Sunday and similarly languishing in the early-voting states of Iowa and New Hampshire.

The warnings from top donors come as Wisconsin Gov. Scott Walker’s exit from the race re­focused the battle within the GOP’s establishment wing as one between Bush and his former protege, Sen. Marco Rubio (R-Fla.). Right now, the momentum appears to be behind Rubio, who has jumped ahead of Bush in most polls. At least a third of the bundlers who signed up to raise money for Walker have switched their allegiance to Rubio, while a smaller number have gone with Bush, according to people familiar with the discussions.

Bush also is facing fresh scrutiny for comments that critics say bear echoes of remarks Mitt Romney made during his 2012 GOP presidential bid, part of a pattern of awkward statements that Bush or his campaign have had to clarify.

The real problem is that last part.  Republicans clearly are backing political outsiders, and there's just no way that Jebby here can portray himself as anything other than the establishment's top candidate, a living reminder of the failures of the last two Bushes in Iraq and with the economy.  The Tea Party views him with nothing but contempt.  The smarter money is shifting to Rubio on the establishment side, and while Rubio is trailing Trump, Carson, and Fiorina, at least he's not, you know, Jeb Bush.

And let's face it, Jeb's political instincts are even worse than Romney's.

Former Florida Gov. Jeb Bush (R) says Americans will miss outgoing Speaker John Boehner (R-Ohio).

I admire John Boehner greatly, he’s a great public servant,” the GOP presidential candidate said on “Fox News Sunday.” 
“He left at the apex of his time in service to the country with the pope speaking in Congress. I think people are going to miss him in the long run because he’s a person that is focused on solving problems.”

That may be true, but backing Orange Julius, the least popular Speaker of the House in my lifetime, probably isn't a good idea.

Even among Republicans, Boehner's image tilted negative. While 37 percent reported favorable impressions of him, 42 percent were unfavorable. Those mixed reviews reflect the divisions within the Republican Party he led in Congress, as strident conservative factions regularly voiced distrust of party leadership. In late 2013, Pew Research surveys found Boehner with far more negative ratings among Republicans identifying with the tea party movement than non-tea party Republicans.

Still, Jeb has more money than anyone else so you can't count him finished (John McCain after all came back from the dead.)  The problem is that money isn't helping him.

We'll see how long that money sticks around.


Related Posts with Thumbnails