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nuggets of financial self-defence
Financial blog on news and global macroeconomic themes regarding the world economy. The blog's primary focus pertains to inflation, deflation, and hyperinflation, especially currencies, gold, silver, crude, oil, energy and precious metals. Other macro discussion topics include interest rates, China, commodities, the US dollar, Euro, Yuan, Yen, stagflation, emerging markets, politics, Congressional and statewide policy decisions that affect the US and global markets.
Zaktualizowano: 1 godzina 3 min. temu

Verge of War: Ukraine's Foreign Minister says "We are Ready to Fight"; Russia holds Military Exercises on Border

1 godzina 13 min. temu
Tensions in Ukraine took another step for the worse today as Russia held military exercises on the border and Ukraine's foreign minister responded "We are Ready to Fight Russia"
Andriy Deshchytisa said Russia’s decision Thursday to launch the military exercises “very much escalates the situation in the region.”

Talking to The Associated Press in Prague, Deshchytisa says his country has been taught a lesson by Russia’s annexation of Ukraine’s Crimean Peninsula. He says “having this experience, we will now fight with Russian troops if ... they invade Ukraine.”

He says “Ukrainian people and Ukrainian army are ready to do this.”Russia holds Military Exercises on Border

The Financial Times reports Russia Plans Military Exercises After Mounting Ukraine Unrest.
Russia has announced military exercises on the border of Ukraine, hours after Kiev sent in its army to flush out armed pro-Russian rebels in the east of the country raising fears about the worsening crisis.

As tensions on the ground escalated, the war of words between Moscow and Kiev also intensified. Russia’s President Vladimir Putin warned Ukraine there would be consequences for sending its armed forces into the volatile east to oust separatists from government buildings and checkpoints. Ukraine’s acting president Oleksandr Turchynov retaliated on national TV, accusing Russia of “co-ordinating and supporting killer terrorists”.

The two leaders’ remarks came shortly after Ukraine’s army began a big security offensive against the separatist stronghold city of Slavyansk on Thursday, making good on its vow to crack down on armed rebels holding public buildings in the country’s east.

But there were reports that Ukrainian troops had withdrawn from a checkpoint north of Slavyansk they had taken over earlier in the day and pro-Russian separatists had moved back in and began to strengthen the position with sandbags.

Tensions have been rising in eastern Ukraine after the tortured body of a local politician – allied to Kiev – was discovered in a river near Donetsk.Obama Warns Russia Sanctions ‘Teed Up’

For sake of completeness, meaningless red line talk comes from president Obama who warns, Sanctions ‘Teed Up’
Mr Obama said that it was “a matter of days, not weeks” before new sanctions would be levelled on Russia unless it took decisive steps to reduce the tensions in eastern Ukraine.

The new round of US sanctions is likely to target more of the business figures around the Russian leader Vladimir Putin as well as potentially some banks or state-owned companies. US officials have said that the broader, sectoral sanctions that the White House now has the power to impose are only likely if there is an explicit Russian military intervention in eastern and southern Ukraine.

Danylo Lubkivsky, Ukraine’s deputy foreign minister, said on Thursday that it was time to impose new sanctions on Russia. Speaking on a visit to Washington, he said he still hoped for a diplomatic resolution to the crisis, but he insisted that “Russia has already crossed a new red line, so we need to impose further economic pressure on the Kremlin”.

Zbigniew Brzezinski, the former US national security adviser, said that events in Ukraine were quickly spinning out of control. “I fear we are stumbling into a crisis which is unpredictable,” he said. “But I still think there is a residual chance for reaching some sort of accommodation.”I still suspect cooler heads will prevail. Let's hope so. Perhaps it would help if Ukraine repeated its offer of amnesty to rebels who lay down their weapons now.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

French Telecom Company Does Biggest Junk Bond Sale Ever; Bidding Wars for Junk; AOL Flashback

19 godzin 5 min. temu
With central bankers globally suppressing interest rates, the search for yield elsewhere is on. One of the places investors have turned is speculative junk bond offerings.

Please consider French Company Does Biggest Junk Bond Sale Ever.
Numericable (NUM), which provides cable and internet service in France and other European markets, sold a record amount of high-yield bonds Wednesday with some priced in dollars and others in euros.

It's sold $7.78 billion and €2.25 billion in notes that yield 5% or more, according to a statement from Altice, the multinational telecom group that owns Numericable. Altice issued $2.9 billion and €2.1 billion in bonds that yield more than 7%.

Numericable will use the proceeds to finance its acquisition of rival cable company SFR.

Overall, the deal represents the largest sale of high-yield debt on record, according to Dealogic. It surpassed Sprint's $6.5 billion debt sale in September.
Dollar Equivalent Junk

All told Altice issued 10.68  billion in dollar denominated bonds and 4.35 billion in euro denominated bonds. The grand total in dollar equivalent junk is an amazing $16.69 billion.

Bidding Wars for Junk

$10.89 billion of that went to buy out a rival company at an undoubtedly absurd price due to bidding wars.

The New York Times has some bidding war info in Numericable Raises $10.9 Billion in Junk Bond Offering.
The battle for SFR pitted two French billionaires against each other: Martin Bouygues, who runs the diversified industrial group that bears his name, and the French entrepreneur Patrick Drahi, who since 2002 has built Altice into a global operation with cable and cellphone assets in Europe and the Caribbean.

Bruno Lasserre, the president of the Autorité de la Concurrence, has said that the French competition watchdog would conduct a “thorough review” of the Numericable-SFR combination, but that review is not expected to preclude the deal.

Altice also raised an additional €4.15 billion in junk bonds to help finance its purchase of a larger stake in Numericable ahead of the SFR merger. Altice is buying an additional 34.6 percent stake in Numericable, giving it a 74.6 percent stake in the unit.Reflections on AOL

These are the kinds of deals that mark the top of markets. Recall the merger of AOL and Time Warner in 2000.

Check out this New York Times report from January 11, 2000: MEDIA MEGADEAL: THE OVERVIEW; AMERICA ONLINE AGREES TO BUY TIME WARNER FOR $165 BILLION; MEDIA DEAL IS RICHEST MERGER.
America Online, the company that brought the Internet to the masses, said yesterday that it had agreed to buy the largest traditional media company, Time Warner, for $165 billion in what would be the biggest merger in history and the best evidence yet that old and new media are converging.

By agreeing to give up its independence in return for an ample premium on its stock price, Time Warner is acknowledging that the Internet is central to its music, publishing and TV businesses and that its own efforts to create online operations have been lackluster.

The deal, which was negotiated with such secrecy that it took the industry by surprise, also brought a new realization about the extraordinary stock-market values that America Online and other Internet companies have reached the last 18 months. Although analysts have long predicted that the stars among the Internet upstarts would wind up part of larger media empires, the deal indicates that it could be the Internet companies that do the buying and the old media that sell out.

"The dot-com guys have sort of won," said David B. Readerman, an analyst with Thomas Weisel Partners, a San Francisco brokerage firm. "AOL was able to serve up its stock and buy Time Warner, walking away with incredible media assets."

With a market value of $342 billion, based on yesterday's closing stock prices, the combined corporation would be the fourth-most-valuable company in the country, after Microsoft, General Electric and Cisco Systems. And its stock market value would roughly be equal to the gross domestic product of Mexico.
Broken Marriage

Flash Forward January 10, 2012: The New York Times had a Revised Take on the AOL Time Warner Merger.
On Jan. 10, 2000, the Internet service company AOL and the media giant Time Warner announced that AOL would buy Time Warner for more than $160 billion in the largest merger in corporate history.

However, the new company, AOL Time Warner, did not live up to its potential. The merger occurred at the height of the “dot-com bubble,” a time when AOL’s value was grossly inflated. Its stock price plummeted within a few years of the merger, causing huge losses for AOL Time Warner. Furthermore, the AOL and Time Warner divisions remained at odds with each other and did a poor job integrating their products.

In 2009, Time Warner decided to spin off AOL as its own company again, ending their ill-fated relationship. But, as The Times noted, “the merger between AOL and Time Warner will likely remain a prominent part of both companies’ legacies, rather than becoming a historical footnote. After all, more than $100 billion in shareholder value was wiped out.”

In 2011, AOL bought The Huffington Post, the news, aggregation and commentary Web site, for $315 million.

“To call the transaction the worst in history, as it is now taught in business schools, does not begin to tell the story of how some of the brightest minds in technology and media collaborated to produce a deal now regarded by many as a colossal mistake,” Tim Arango wrote in a New York Times article on the 10th anniversary of the merger.

The merger between Time Warner and AOL was among several examples of increased concentration of media ownership in the first decade of the 21st century — a topic that aroused debate about media deregulation and the impact of conglomerated media on information and entertainment.The ludicrous bidding war for SFR in which Numericable lost (by winning) will not go down as the worst deal ever, but it may go down as the worst junk bond deal ever.

The bidding war for SFR is exactly the kind of nonsense the easy money policies of the Fed and central banks in general have fostered.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

New Home Sales Plunge 14.5%; It's Not the Weather; Steen Jakobsen on Consensus vs. Reality

śr., 23/04/2014 - 19:59
The Census Bureau report New Residential Sales Report shows sales of new single-family houses in March 2014 were at a seasonally adjusted annual rate of 384,000.

  • Sales are 14.5 percent below the revised February rate of 449,000
  • Sales are 13.3 percent below the March 2013 estimate of 443,000
  • Median sales price was $290,000 vs. $260,900 in February, $257,500 in March of 2013
  • Average sales price was $334,200 vs. $318,900 in February, $300,200 in March of 2013
  • Median sales price was up 11.5% from last month, 12.6% from year ago
  • Average sales price was up 4.8% from last month, 11.3% from year ago
  • New houses for sale was 193,000
  • Supply is 6.0 months at the current sales rate

Sales by Region (Month-Over-Month, Year-Over-Year)

Northeast +12.5% MOM, -22.9% YOY
Midwest    -21.5% MOM, -17.7% YOY
South        -14.4% MOM, -03.8% YOY
West         -17.7% MOM, -27.9% YOY
Total         -14.5% MOM, -13.3% YOY

It's Not the Weather

USA Today noted "Harsh winter weather helped hold down sales in February and may have in March as well."

Also note: "Economists had predicted an annual rate of 450,000 for March, according to the median forecast in Action Economics survey."

My question: If sales decline was weather related, then why were sales up in the Northeast?

I suggest the Fed managed to blow another housing bubble, especially in California and the West where sales are down the most. With rising rates, people are priced out of the market.

Steen Jakobsen on Consensus vs. Reality

Steen Jakobsen, chief economist at Saxo Bank tweeted "Housing tanks again - according to consensus housing should add 0.5%-0.8% to GDP in the US in 2014"



Steen: "Consensus is looking for 0.5% to 0.8% positive GDP from housing. Pity the opposite is happening ... and that on a day when 100% of economists in recent survey by Jim Bianco see US rates higher in six months! Yes, 100%."

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Einhorn Shorts "Cool Kid" Bubble Tech Stocks

śr., 23/04/2014 - 17:20
Greenlight Capital hedge fund manager Einhorn Shorting Tech as ‘Cool Kid’ Stocks Show Bubble.
Greenlight Capital Inc., the $10.3 billion hedge-fund firm run by David Einhorn, said it was betting against a group of technology stocks as evidence grows of a bubble.

“There is a clear consensus that we are witnessing our second tech bubble in 15 years,” the New York-based firm said in a quarterly letter to clients today.

Greenlight said that companies it’s betting against may fall by at least 90 percent “if and when the market reapplies traditional valuations,” according to the letter, a copy of which was obtained by Bloomberg News.

Greenlight cited initial public offerings of technology firms that have “done little more than use the right buzzwords and attract the right venture capital” as evidence of how far along the current bubble is.

Greenlight, best known for wagering on a decline in Lehman Brothers Holdings Inc. before the bank collapsed in 2008, said it was betting against a group of stocks because it reduces the potential of a single investment becoming too costly. The firm didn’t identify the individual companies.

Greenlight questioned whether technology companies would be able to keep their highly skilled employees if they stopped giving them large amounts of equity. The firm said it was hard to ignore the future dilution of shares that result from paying employees in stock.

“Once again, certain ‘cool kid’ companies and the cheerleading analysts are pretending that compensation paid in equity isn’t an expense because it is ‘non-cash’,” Greenlight wrote. Valuations are without a doubt back in bubble land. The only open question is whether the time is finally ripe for shorting.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

China Manufacturing Output and New Orders Contract Once Again

śr., 23/04/2014 - 06:59
Chinese manufacturing remains in contraction for 2014. Output and new orders were down for the 4th consecutive month, but at a slightly reduced pace according to the HSBC Flash China Manufacturing PMI.



Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co - Head of Asian Economic Research at HSBC said:

The HSBC Flash China Manufacturing PMI stabilised at 48.3 in April, up from 48.0 in March. Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident as both new export orders and employment contracted. The State Council released new measures to support growth and employment after the release of Q1 GDP. Whilst initial impact will likely be limited, they signalled readiness to do more if necessary. We think more measures may be unveiled in the coming months and the PBoC will keep sufficient liquidity.

There is a massive expectation that China will step on the gas at any time now to improve conditions. I rather doubt it, unless there is a far bigger, disorderly breakdown.

China needs to rebalance, and will. Slower and slower GDP growth will generally be the norm, most likely for years to come, perhaps interrupted by an occassional unsustainable spurt here or there.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Amazing Surge in Middle-Aged Folks Moving in With Parents

śr., 23/04/2014 - 00:49
Moving back home with parents is not just for millennials. A large number of those aged 50 to 64 are moving back home, for economic reasons, not for providing care to aged parents.

The LA Times reports Moving in with Parents Becomes More Common for the Middle-Aged
At a time when the still sluggish economy has sent a flood of jobless young adults back home, older people are quietly moving in with their parents at twice the rate of their younger counterparts.

For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents' homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.

The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.

"The numbers are pretty amazing," Wallace said. "It's an age group that you normally think of as pretty financially stable. They're mid-career. They may be thinking ahead toward retirement. They've got a nest egg going. And then all of a sudden you see this huge push back into their parents' homes."

Many more young adults live with their parents than those in their 50s and early 60s live with theirs. Among 18- to 29-year-olds, 1.6 million Californians have taken up residence in their childhood bedrooms, according to the data.

Though that's a 33% jump from 2006, the pace is half that of the 50 to 64 age group.

The surge in middle-aged people moving in with parents reflects the grim economic reality that has taken hold in the aftermath of the Great Recession.

Long-term unemployment is especially acute for older people. The number of Americans 55 and older who have been out of work for a year or more was 617,000 at the end of December, a fivefold jump from the end of 2007 when the recession hit, according to the Bureau of Labor Statistics.

Those in their 50s move in only as a last resort. Many have exhausted savings. Some have jobs but can't shoulder soaring rents in areas such as Los Angeles or San Francisco.The Fed thinks higher inflation is the answer. So does the ECB. One has to be lost in academic fantasyland to hold that view.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

ECB Threatens Negative Interest Rates; Bank of NY Mellon Threatens Charging for Euro Deposits

wt., 22/04/2014 - 19:37
ECB president Mario Draghi has been making lots of noise recently about cutting interest rates because the euro is too strong and banks aren't lending enough.

Realistically, there's not much room to cut with rates already at a rock-bottom .25 percent.

Some suggest negative interest rates are just the ticket to spur lending. Should that happen, the Bank of New York Mellon Eyes Charging Clients for Euro Deposits.
Bank of New York Mellon said it was considering charging clients for depositing euros if the European Central Bank decides to cut key interest rates below zero.

The potential move by the world’s biggest custody bank comes after Mario Draghi, president of the ECB, said last week that the region could require “further monetary stimulus” to offset a strengthening euro.

“If the eurozone were to go to negative rates that would actually present the opportunity for us to charge for deposits and we are giving that very serious consideration,” Todd Gibbons, BNY Mellon’s chief financial officer, said on a conference call as the bank unveiled its first-quarter earnings.Reflections on Forcing Banks to Lend

For starters, banks lend when they believe they have creditworthy customers and lending is worth the risk.

An attempt to make banks lend to non-creditworthy customers is not only foolish but reckless. How many times do we have to march down that path to prove it?

Banks Should be Banks

Moreover, and as I have commented before, banks should be banks. I see nothing at all wrong with banks charging a slight fee for deposits.

Banks ought not be lending demand deposit accounts in the first place. The practice is fraudulent. Thus, it is natural for banks to charge for safekeeping of such deposits.

If the ECB forces banks into a corner where they have to start charging for deposits, arguably the system will be better off for it.

However, I cannot endorse the blatant manipulation of interest rates that has led to the low rates we see now. Interest rate manipulation does harm holders of interest-bearing accounts such as CDs who receive paltry returns for their investments.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Inane Step in Wrong Direction: Germany Plans to Lower Retirement Age for Some Workers From 65 to 63

wt., 22/04/2014 - 03:10
With people living longer and longer, and with Germany forcing higher retirement ages on Greece and Spain, lowering the retirement age in Germany for any set of workers makes no sense whatsoever. Yet, that is exactly what's slated to happen.

Wrong Signal

The Financial Times reports Germany Attacked Over Plan to Cut Retirement Age.
Speaking to national paper Die Welt, Günther Oettinger, German EU commissioner, said that Germany’s plans to allow longer-serving employees to retire at the age of 63 sent the “wrong signal” at a time when countries like Greece, Spain and Portugal are struggling to introduce tough labour market reforms.

“We expect Greeks to work longer for less pay,” said Mr Oettinger. “They are now wondering that Germany is going in the other direction.”

Warning that the eurozone’s largest economy faces a skills shortage, the EU energy commissioner said that politicians should start to talk instead about a retirement age of 70 and help equip people with professional training for a longer working life.

Greece and Spain have agreed to raise their retirement age from 65 to 67, while Portugal recently pushed its retirement age up to 66.

Under draft laws set to come into effect in July, people who have worked at least 45 years since the age of 18 will be allowed to retire at 63 with a full state pension. The official age of retirement in Germany is in the process of being raised from 65 to 67.

Economists at Deutsche Bank estimate the total cost of the coalition’s pension reforms will total €230bn by 2030 and have warned that the burden of paying for people in retirement will fall on the country’s younger generation.Demographically Speaking

From a demographic standpoint, with fewer and fewer workers supporting retirees whose lifespan  and medical costs continually rise,  the change is as puzzling as it is ludicrous.

Note: 

Some people reported the Greenwald interview Youtube link in a previous post "was taken down". I am  not sure why but I found a replacement: Greenwald Interview:

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Chinese Court Seizes Japanese Ship to Settle WWII Dispute

pon., 21/04/2014 - 19:37
Tensions between China and Japan escalated once again, this time over a grudge dating back to WWII.

The Financial Times reports Japanese Ship Seized in WWII Claims Dispute.
A Chinese court has seized a Japanese cargo ship over legal claims related to the second world war as escalating tensions between the two countries spill into the realm of commerce.

Japan was quick to denounce the confiscation of the vessel, warning it could have a “chilling effect on all Japanese companies doing business in China”. It is the first time a Chinese court has ordered the seizure of Japanese assets in relation to second world war.

The incident underlines strained relations between China and Japan, who have recently sparred over a string of disputed islands that some analysts say is the most dangerous faultline in Asia. Extensive economic ties between the two countries have so far served to stabilise the relationship.

The Shanghai Maritime Court seized the Baosteel Emotion at a port near Shanghai at the weekend, it said on its website. The ship belongs to Japanese conglomerate Mitsui OSK Lines and had been ferrying Australian iron ore to China’s flagship steel mill Baosteel.

Japan has consistently argued that the peace treaties it signed after the war exempt it from having to pay compensation to individuals or companies in former enemy countries. But China and South Korea, which nurse the strongest resentment over Japan’s often brutal imperial expansion, counter that the agreements only cover government-to-government reparations, leaving private groups free to sue for damages.

Still, for many years China discouraged any claims by its citizens against Japan, whether for forced labour, sexual slavery or asset seizures. Former premier Zhou Enlai explicitly rejected the prospect of any Chinese wartime claims, in return for assurances of Japanese development aid and investment. As a result, Chinese activists have had to pursue claims in Japanese courts.

“Overall China is dissatisfied with Japan, so a lot of matters have re-emerged,” said Shen Dingli, an expert in Northeast Asian geopolitics at Fudan University in Shanghai. “In the past they might have discouraged suits like this but now they don’t stand in the way.”

Last year, South Korean courts ruled against Japanese corporations in two landmark cases involving Koreans forced into labour for the Japanese war effort.
Trade wars, currency wars, and beggar-thy-neighbor tactics are hallmarks of deflationary times. When the global economy is good and jobs plentiful, age-old disputes like these seldom surface.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Japan Trade Deficit Largest in History; Imports Soar, Exports Barely Up In Spite of Collapsed Yen

pon., 21/04/2014 - 07:37
Those who think a collapsing currency is a sure-fire way to increase exports need to rethink their beliefs.

Despite a falling Yen, Japan Posts Largest-Ever Trade Deficit.
The gap between the value of Japan’s exports and that of its imports grew by more than two-thirds in the 12 months through March, to Y13.7tn ($134bn), according to government data released on Monday. It was the third consecutive fiscal year of deficits, the longest streak since comparable records began in the 1970s.

Toyota, Hitachi and other large Japanese companies have enjoyed soaring profits as a result of the weaker yen, which has fallen by a fifth against other major currencies since November 2012.

But the improvement has come less from increased exports than from flattered exchange rates on overseas sales. Japanese export volumes have barely risen and the yen value of goods shipped to foreign markets has increased much more slowly than the value of imports.

Exports actually declined slightly by volume in January-March compared with the previous quarter, by 0.2 per cent on a seasonally adjusted basis, according to calculations by Credit Suisse, even as imports grew by 4.5 per cent.

A steady outflow of Japanese manufacturing jobs to lower-cost countries and declining competitiveness in some sectors, such as consumer electronics, has limited the power of a cheap yen to lift exports.

Overall Japanese exports increased 0.6 per cent by volume last fiscal year, Monday’s data showed, leading to a 10.8 per cent rise by value in light of the weaker yen. Imports rose 2.4 per cent by volume and 17.3 per cent by value.Energy Imports

Japan has 50 nuclear reactors. Every one of them is offline. Abe wants to bring them back online, but the Financial Times reports "analysts think that at most 12-15 of the reactors will ultimately be restarted."

Abenomics

A falling Yen and rising energy imports, coupled with a slowdown in China and tax hikes in Japan suggest Abenomics is going to be a dismal failure unless the goal is to goose stock prices rather than goose the economy.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Glen Greenwald Wins Pulitzer Prize for Exposing NSA Spy Scandal; His Reaction on Video; My Reaction: Greenwald and Snowden are Heroes

pon., 21/04/2014 - 05:28
A big round of well deserved applause for Glen Greenwald is in order for willing a Pulitzer Prize for public service. Greenwald says the announcement was "really gratifying."

Please consider Glenn Greenwald Reacts To Pulitzer Prize
Glenn Greenwald told CNN's Brian Stelter on Sunday that receiving the Pulitzer Prize for public service was "really gratifying."

On Monday, Greenwald and other journalists at The Guardian and The Washington Post were awarded the Pulitzer for their reporting on the National Security Agency. The big question as the awards approached was whether the Pulitzer Prize committee would recognize their work, and they did just that.

On Sunday's "Reliable Sources," Greenwald told Stelter that he was having lunch with his phone on the table when the announcement came, and described his reaction.

"I think there was an expectation that the committee had to recognize the reporting in one way or another, and the question was going to be how," said Greenwald. "To learn that it was the public service award and that it was given to The Guardian and to The Washington Post for the work that we had done was really gratifying, because I think that is the ideal that we always tried to fulfill, which is doing the reporting in public service."

Congressman Peter King, like other critics of Greenwald, reacted to the news less kindly, calling the win a "disgrace." When asked about King's condemnation of the award, Greenwald said it was "an enormous badge of honor." He compared it to the reactions of those who called for prosecuting Daniel Ellsberg and The New York Times for releasing the Pentagon Papers. Greenwald and Snowden are Heroes

Glen Greenwald and Edward Snowden are heroes. Those looking for cowardly disgrace can find it in the reactions of President Obama, Senator John McCain, Congressman Peter King, and numerous other legislators who have no idea what the constitution even says.



In the above video, Pulitzer Prize winner Glenn Greenwald joins Brian Stelter for an exclusive interview.

Congratulations to Greenwald, the Guardian, and the Washington Post.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

"Low Inflation has Positive Impact and Helps Spain's Competitiveness" Says Economy Minister

nie., 20/04/2014 - 21:06
Luis de Guindos, Spain's Economy Minister, sings the praises of low inflation.

Via translation from El Economista, please consider Economy Minister Says Deflation Has "Positive Impact".
James Daniel, Spain's mission advisor to the IMF, said that inflation close to zero in the country increases the burden of debt and real interest rates and difficult to reduce unemployment.

Daniel's words contradict the perception Luis de Guindos, the Spanish Minister of Economy and Competitiveness, who also said today at a press conference that low inflation "is having a positive impact" and help the country's competitiveness.

Guindos noted noted that, far from being a threat, "the low level of inflation is allowing Spain win competitiveness."

However, he recognized that low inflation could become a "problem" if it lasts "long" and affects the process of deleveraging in the Spanish economy. The minister expects inflation to fluctuate in the coming months at around 0.5%.Guindos had it correct until that last sentence. Low inflation, or deflation is never a problem. Rather the buildup of debt that cannot be serviced is the problem.

Since the buildup of debt is the problem, inflationary solutions that encourage people and businesses to expand debt cannot possibly be the solution.

Falling wages have had a positive effect on Spain's competitiveness, so much so that France is bitching about the invasion of Spanish builders undercutting French firms in price.

For discussion, please see Deflation Will Return: Europe First, Then US; Global Supply Arbitrage.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Illinois Madness Never Stops; House Committee Wants Taxpayers to Spend $100 Million on Barack Obama Library

sob., 19/04/2014 - 21:27
Illinois is broke. Its public pension plans are the most troubled in the nation.

Illinois passed massive "temporary" tax hikes to fix the pension problem, but that did not make a dent in  the problem.

Nonetheless, ideas to waste more taxpayer money are always on the table. Here's a recent example.

$100 Million for Barack Obama Library

Today, the Illinois Policy Institute reports by email ...
An Illinois House Committee wants taxpayers to pay $100 million for a Barack Obama library. Somehow, House Speaker Michael Madigan thinks this is an appropriate use of funds despite the state’s more than $100 billion pension crisis and $6.6 billion in unpaid bills.

In accepting hefty taxpayer dollars for this venture, President Barack Obama is setting himself apart from his recent predecessors, former presidents Bill Clinton and George W. Bush.

Clinton’s library, located in Little Rock, Ark., was funded solely through private donations, according to the Clinton Foundation. Clinton’s “$165 million facility was built entirely through private funds. It’s just a fact,” said Jordan Johnson, a spokeswoman for the Clinton Foundation.

Likewise, Bush’s library, located at Southern Methodist University in Dallas, was also funded through private donations.

The Barack Obama Foundation, tasked with planning the development of Obama’s presidential library, has yet to determine the site of the future library. In fact, the foundation’s board of directors is receiving proposals through June 16 and does not intend to announce its final decision until 2015. The Illinois House Committee's $100 million proposal will now go to the full House.

On its website, the Barack Obama Foundation defines its mission as developing a presidential library that “reflects President Obama’s values and priorities throughout his career in public service.” Interestingly enough, the first value listed is “expanding economic opportunity.” But more than 600,000 Illinoisans woke up today and didn’t have a job to go to, and thousands more face underemployment. To them and many others, it’s clear the president has fallen short on accomplishing his goal of “expanding economic opportunity” to the Land of Lincoln, where he launched his political career as a state senator 18 years ago.

Obama’s staff expects the library to cost $500 million or more. And the costs won’t stop there. The day-to-day operations and maintenance of the United States’ 13 presidential libraries cost taxpayers $75 million in fiscal year 2013 alone.

This figure strikes an interesting contrast. Illinois politicians, who are demanding that we extend the 2011 tax hike so that “draconian” spending cuts in public and human services do not go into effect – are attempting to subsidize a monument in dedication to the legacy of the most prolific fundraiser in history – on the backs of poor and middle-class families in Illinois.

Jane McEnaney
Manager of Government AffairsIllinois Madness Never Stops

In March, House Speaker Michael Madigan proposed 3% surcharge on income over $1 million

Also this year, progressives argued for a blank check proposal for more tax hikes. For details, please see Picking-Your-Pocket Numbers: How Much More Will You Pay?

Now the legislature wants to waste $100 million for a Barack Obama Library.

In Illinois, the madness never stops.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

"Insatiable" Idiocy from the Economist on What to Do About Russia; Warmongers Can't Think

sob., 19/04/2014 - 00:33
In "Insatiable" the Economist says "The cost of stopping the Russian bear now is high—but it will only get higher if the West does nothing".

Economist: Mr Putin has used the Ukrainian crisis to establish some dangerous precedents. He has claimed a duty to intervene to protect Russian-speakers wherever they are. He has staged a referendum and annexation, in defiance of Ukrainian law. And he has abrogated a commitment to respect Ukraine’s borders, which Russia signed in 1994 when Ukraine gave up nuclear weapons. Throughout, Mr Putin has shown that truth and the law are whatever happens to suit him at the time.

Mish: What a bunch of one-sided hypocritical nonsense. The US and EU have shown the that truth and the law are whatever happens to suit them at the time. The US has a drone policy that has killed or injured thousands of innocent victims, including children. The US had no pretext for invading Iraq but did so anyway. Warmongers now sabre-rattle Iran. The EU removed elected leaders in Greece and Italy and replaced them with technocrats. The US fomented events in Ukraine by helping overthrow Viktor Yanukovych. President Ronald Reagan promised Russia NATO would stay away from Eastern Europe. Apparently it's OK for citizens to overthrow the elected government in Ukraine in violation of the constitution, but it's not OK for citizens in Crimea to do the same. Russia did not take a bite out of Ukraine as depicted by the Economist. Rather, a section of Ukraine voted overwhelmingly to return to Russia. Once again, I am not proposing two wrongs make a right, rather I am proposing this is none of our business.

Economist: The West needs to show Mr Putin that further action will be costly. So far, its rhetoric has marched far ahead of its willingness to act—only adding to the aura of weakness. Not enough is at stake in Ukraine to risk war with a nuclear-armed Russia. And European voters will not put up with gas shortages, so an embargo is not plausible. But the West has other cards to play. One is military. NATO should announce that it will hold exercises in central and eastern Europe, strengthen air and cyber defences there and immediately send some troops, missiles and aircraft to the Baltics and Poland. NATO members should pledge to increase military spending.

Economist: Another card is sanctions, so far imposed on only a few people close to Mr Putin. It is time for a broad visa ban on powerful Russians and their families. France should cancel the sale of warships to Russia. A more devastating punishment would be to cut Russia off from dollars, euros and sterling. Such financial sanctions, like those that led Iran to negotiate over its nuclear programme, would deprive Russia of revenues from oil and gas exports, priced in dollars, and force it to draw on reserves to pay for most of its imports. They would be costly to the West, especially the City of London, but worth it. Impose them now, and give Mr Putin reason to pause. Do any less and the price next time will be even higher.

Not Our Battle

For starters, this is not our battle. Moreover, Europe is tired of our heavy meddling in it. (see European Countries Resent US Hectoring Tone).

If Crimea prefers to associate with Russia rather than the Ukraine, it is absolutely none of our business. Let the people involved, sort it out for themselves.

Warmongers Can't Think

France cutting off military sales to Russia would hurt France and help Russia - No one needs any more military junk. Pray tell, what does Russia need more warships for? Indeed, the idea is so silly, Russia should cancel the orders right now.

Putting missiles in Poland and Baltics is counterproductive. Precisely what problem would that address?

Here's the irony: The Economist says "Not enough is at stake in Ukraine to risk war with a nuclear-armed Russia." OK. Then what are the missiles for?

At best, the proposal is a waste of money all around. And who is going to pay for it?

Further proving that warmongers cannot think, The Economist notes "European voters will not put up with gas shortages, so an embargo is not plausible." Amusingly, the Economist then continues with proposals to cut Russia off from dollars, euros and sterling, as if Russia would not retaliate.

If extreme sanctions are put on Russia, then Russia will cut off all gas to Europe and likely default on all foreign denominated bonds.

How come idiots cannot see consequences of their proposals? Because they are idiots, that's why. No one wins from idiocy. Unfortunately, idiocy abounds.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Ukraine Accord Broken Already; Key Uninvited Group to Peace Party Doesn't Like the Deal; Reflections on Hubris

pt., 18/04/2014 - 22:27
Immediately after the 4-player Ukraine accord announcement yesterday (See Ukraine Talks End in Accord; What About the Key Missing Player?) I commented ...
Lots of Questions

This accord raises more questions than answers.

  • Did anyone consult the separatists?
  • Who is going to enforce the agreement?
  • Is there a single voice, or even a small group of voices who can speak for the separatists?

If the separatists are acting on their own, then unless Russia or someone else can convince the separatists to lay down their arms, the accord may break down.

Separatists are the key players in this crisis, but it does not appear they were even invited to the table.Ukraine Accord Broken Already

Here we are, one day later and the Financial Times reports Ukraine: The ‘War Without War’ that Rumbles On
In Geneva on Thursday the US, the EU, Russia and Ukraine agreed steps aimed at reducing the tensions. But that agreement is already in danger of unravelling as separatists in the big eastern city of Donetsk refuse to evacuate their headquarters. Any violence risks creating the pretext for a Russian invasion.

While the government in Kiev and much of the west stresses its desire to integrate with Europe, the east remains firmly anchored to Russia by language, culture and history. Many companies are also oriented eastward, above all those working in its Soviet-era agricultural, metallurgy, pipe-making and defence industries – all of strategic importance to Moscow.

“The Russian market is very important, especially for the older, heritage economy,” says Gennadiy Chyzhykov, president of the Ukrainian Chamber of Commerce, who is from Donetsk, now capital of the self-styled “republic” where activists claim to lead the anti-Kiev protests. “We export mainly raw materials and semi-finished goods to Europe, but finished goods, including sweets, to Russia. They share our tastes.”Sentiment

Read that last paragraph above closely. Most of the people in Eastern Ukraine lean towards Russia.

Banning Russian broadcasts, or even forceful military action cannot change that sentiment. Indeed, it can only strengthen it.

Geneva Agreement Does Little to Counter Russian Military Threat

Also consider Geneva Agreement Does Little to Counter Russian Military Threat
Analysts said the fact that US, EU, Russian and Ukrainian foreign ministers managed to agree on a document at all was positive, at a meeting for which expectations had been low.

They agreed illegal armed groups should hand over their weapons, Ukraine should undertake reforms to give more powers to its regions, and a monitoring mission from the Organisation for Security and Cooperation in Europe would be stepped up.

But several steps are difficult to implement, or provide no guarantee that the situation in eastern Ukraine could not escalate. “The wording of the agreement is fine, but when I saw it I immediately thought, how can this actually happen?” said Oleksiy Haran, a Kiev-based political scientist who was visiting Donetsk on Friday.

Most importantly, Russia made no commitment to pull back thousands of troops it has massed on Ukraine’s border. The groups which must agree to hand over their weapons, moreover, were not directly represented in Geneva.
Hubris

Please note the extreme hubris of the four parties that agreed to a solution without consulting the views, wishes, and demands of the key group: the separatists.

Addendum: Russia Moves Troops Back to Ukraine Border

Russia confirms that it moved troops back into the border area with Ukraine, according to this link I picked up from ZeroHedge: Russia confirms troops deployed near Ukraine
A Kremlin spokesman confirmed Friday that Russia has built up its military presence on the Ukrainian border, Agence France Presse reported, as the United States warned that Moscow would face tougher sanctions if it failed to abide by a new international deal on Ukraine.

"We have troops in different regions, and there are troops close to the Ukrainian border. Some are based there, others have been sent as reinforcements due to the situation in Ukraine," spokesman Dmitry Peskov told Rossiya 1 television, AFP reported.

In Washington, Susan Rice, President Barack Obama's national security adviser, was quoted by Reuters as saying that Moscow would face tougher sanctions if it failed to abide by a deal arrived in Geneva a day earlier that held the hope of defusing the stand-off in Ukraine.

She warned Moscow would also face sanctions if it moved to send Russian forces into eastern Ukraine. "Those costs and sanctions could include targeting very significant sectors of the Russian economy," Rice told reporters.

Earlier Friday, armed pro-Russian separatists in eastern Ukraine said they were not bound by the conditions of the international deal until the government in Kiev government quit.

Denis Pushilin, the head of the self-declared Donetsk People's Republic, was quoted by Reuters as telling journalists in the regional capital Donetsk that Russian foreign minister Sergei Lavrov "did not sign anything for us, he signed on behalf of the Russian Federation."Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Ukraine Talks End in Accord; What About the Key Missing Player?

czw., 17/04/2014 - 20:22
Bloomberg reports Treasuries Fall Most in a Month as Ukraine Talks End in Accord
Treasuries fell, pushing 10-year note yields up the most in a month, as talks on the crisis in Ukraine ended with an accord aimed at de-escalating the conflict, damping haven demand.

Talks in Geneva between Russian Foreign Minister Sergei Lavrov, his Ukrainian counterpart, Andriy Deshchytsia, U.S. Secretary of State John Kerry and Catherine Ashton, the European Union’s foreign-policy chief, went on for more than six hours, longer than scheduled.

"The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens,” the four said in a joint statement. “All sides must refrain from any violence, intimidation or provocative actions.”Text of the Joint Statement

Here is the complete Text of Joint Statement on Ukraine
The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens.

All sides must refrain from any violence, intimidation or provocative actions. The participants strongly condemned and rejected all expressions of extremism, racism and religious intolerance, including anti-semitism.

All illegal armed groups must be disarmed; all illegally seized buildings must be returned to legitimate owners; all illegally occupied streets, squares and other public places in Ukrainian cities and towns must be vacated.

Amnesty will be granted to protesters and to those who have left buildings and other public places and surrendered weapons, with the exception of those found guilty of capital crimes.

It was agreed that the OSCE Special Monitoring Mission should play a leading role in assisting Ukrainian authorities and local communities in the immediate implementation of these de-escalation measures wherever they are needed most, beginning in the coming days. The U.S., E.U. and Russia commit to support this mission, including by providing monitors.

The announced constitutional process will be inclusive, transparent and accountable. It will include the immediate establishment of a broad national dialogue, with outreach to all of Ukraine's regions and political constituencies, and allow for the consideration of public comments and proposed amendments.

The participants underlined the importance of economic and financial stability in Ukraine and would be ready to discuss additional support as the above steps are implemented.Defusing the Conflict

The Guardian reports Geneva talks produce agreement on defusing conflict.
The US, Russia, Ukraine and the European Union have agreed a plan aimed at defusing the gathering conflict in eastern Ukraine.

At a meeting in Geneva which began with low expectations but led to seven hours of intense negotiations, foreign ministers agreed a series of "concrete steps" to be taken by all sides. The agreement puts on hold for now at least additional economic sanctions against Russia.

The US secretary of state, John Kerry said the agreement "represents a good day's work" but would have little meaning if it was not followed by action on all sides to calm the situation. He said if the US and EU did not see progress, new sanctions would follow.

The success of the agreement will depend on its implementation. Kerry made it clear that the US would hold Moscow responsible for controlling the pro-Russian protesters, who Putin has portrayed as independent minded Ukrainians. Lots of Questions

This accord raises more questions than answers.

  • Did anyone consult the separatists?
  • Who is going to enforce the agreement?
  • Is there a single voice, or even a small group of voices who can speak for the separatists?

If the separatists are acting on their own, then unless Russia or someone else can convince the separatists to lay down their arms, the accord may break down.

Separatists are the key players in this crisis, but it does not appear they were even invited to the table.

In the meantime, let's see if it holds. It might. And if it does hold, then Russia probably got what it wanted out of the agreement.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Putin Threatens Military Intervention in Ukraine; Obama's Hypocritical Response

czw., 17/04/2014 - 18:01
In his strongest message yet to Ukraine, the EU, and US, Putin says Russia ready to act in Ukraine
Russian President Vladimir Putin has warned of his readiness to deploy troops in eastern Ukraine if diplomatic efforts fail to resolve the escalating crisis there.

The threat came as foreign ministers from Russia, Ukraine, the US and EU were meeting in Geneva to find ways to ease the tension.

Speaking in a live television phone-in hours after the first deadly clash between pro-Russia protesters in the eastern region and Kiev’s security forces, Mr Putin said he hoped for a political resolution to the crisis but warned that the campaign for Ukraine’s May 25 presidential election was “being run in an absolutely unacceptable way”.

“The Federation Council granted the president the right to use military force in Ukraine,” he said in response to one of 2m questions submitted to him. “I really hope that I do not have to exercise this right and that we are able to solve all of today’s pressing issues with political and diplomatic means.”

But he added: “If everything continues like this, then of course we cannot recognise as legitimate what is happening and what will happen after May 25.”

Mr Putin called on Kiev to withdraw its forces from southeastern Ukraine and engage in dialogue on the country’s future with pro-Russia protesters in the region.

Mr Putin signalled that he might be ready for a pragmatic solution. Despite repeating Moscow’s scathing rejection of Ukraine’s interim government as illegitimate, he said: “We need to come to agreement with those who view themselves as the authorities in Ukraine. But they need to behave reasonably.”

US President Barack Obama said in an interview on Wednesday that Mr Putin was supporting “at minimum, non-state militias” in Ukraine.Obama's Hypocrisy 

Two wrongs don't make a right but it's certainly fair to point out the "US is supporting, at minimum, non-state militias in Syria". How many other places?

We only like intervention when we do it.

Assuming one believes that Russia is indeed directly supporting militias in Ukraine (something that is arguably debatable), at least Russia has a vested interest given that it borders Ukraine.

Russia fears US missiles and military buildups in Eastern Europe, as well it should. After all, the US did renege on promises not to expand NATO into Eastern Europe.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Talk of Bloodless Coup in Donetsk; European Countries Resent US Tone; Low Hopes for Peace Talks; War, What Is It Good For?

czw., 17/04/2014 - 08:13
Another bloodless coup in Ukraine is underway. This time, it's in the Donetsk region.

Should it come to that ending, it would be the third Ukrainian coup in a matter of months (counting the ouster of former president Viktor Yanukovych followed by the coup in Crimea).

Talk of Bloodless, Passive Coup in Donetsk

Please consider Kiev’s Weak Grip on East Falters.
Moscow is only an hour ahead of Donetsk but the inflammatory descriptions emanating from Russia over events in eastern Ukraine on Wednesday were much further distanced from reality.

As President Vladimir Putin was talking of his neighbouring country as being “on the brink of a civil war”, in Slavyansk the conflict was far more psychological than physical. Apart from the occasional fly-past by a single fighter jet and two helicopters, Kiev’s forces kept a low profile throughout the day in the area northeast of Donetsk, where militias and locals have seized or set up vigils at government buildings in several towns and cities.

Rather than civil war, the scene resembled a sort of bloodless, passive coup. “I am a citizen of the Soviet Union,” said one of the mysterious and heavily armed “green men” wearing military camouflage without insignia.

The man refused to give his name but admitted that, like others around him, he had travelled up from Semfiropol in Crimea – the autonomous republic annexed by Russia in March and now already switched to Moscow’s time zone. Many of his comrades sported the black and orange striped ribbon adopted by pro-Russian forces.

All along the main route from Donetsk, and in several adjacent town centres, local people have created and manned an increasing number of makeshift barricades of tyres, often topped by the flags of Russia and the “Donetsk Republic”.

But despite the government’s angry denunciations of the seizures of police offices, administrative buildings and other property, there have been few attempts by local authorities to prevent them and Kiev’s hold on the east appears to be weaker than ever. Despite orders several weeks ago to stop broadcasting Russian television, local people said the channels had been back on air in the Donetsk region since earlier this week.

Easterners who reject calls for a referendum on creating an autonomous republic in Donetsk, a federation or union with Russia – views which opinion polls until recently suggested remained in the a minority – are for the time being keeping their heads down.Polls Show Majority in Donetsk Prefer Alliance with Russia

In spite of all the talk, the government in Kiev seems unable or unwilling to take Donetsk by force. Why should it?

Polls suggest a majority in Donetsk would vote for a federation or union with Russia. You cannot win over hearts and minds with force.

European Countries Resent US Hectoring Tone

The Financial Times reports EU Sanctions Push on Russia Falters Amid Big Business Lobbying.
Europe’s resolve to impose tough sanctions on Moscow is cracking under corporate lobbying, as companies warn governments that any retaliation from the Kremlin could cost them dearly.

Diplomats fear that talks in Geneva on Thursday between the US, Russia, Ukraine and the EU will prove fruitless in tackling the crisis over the occupation of local government buildings in eastern Ukraine by pro-Russian militants. If the talks fail, EU leaders are expected to meet next week to discuss broad economic sanctions against Moscow.

But even before such a meeting, the fissures between countries are evident. “Are the member states united on this? No. Are they willing to die for Ukraine? I don’t think so,” a senior European official said, noting that sanctions would demand a consensus from the 28-member bloc.  

European countries have resented the US’s hectoring tone on the need for sterner measures against Russia, when the EU’s trade relationship is almost a dozen times bigger than America’s.

On one side of the European debate, the Baltic nations and Poland favour strong action against Moscow, while accepting that Russian retaliation could be painful. On the other, Italy and Germany are more reticent about sanctions, partly because of lobbying from their leading companies. Sanction Scorecard

  • Germany: BASF lobbying against sanctions
  • Italy: Energy company Eni lobbying against sanctions
  • UK: BP lobbying against sanctions. BP has a 20 per cent stake in Rosneft, the state-controlled oil company.
  • Cyprus and UK: Both concerned abut financial sector risks
  • US Business Groups: lobbying against sanctions
  • Obama: Wants sterner sanctions
  • Poland, Baltic Nations: Want sterner sanctions

Low Hopes for Peace Talks

Given the reaction from Ukraine and the huge disunity regarding sanctions, it should not be any surprise that Expectations Low as Ministers Hold Ukraine Peace Talks.
As the tense stand-off in eastern Ukraine continues, the main protagonists will meet on Thursday to try to find a diplomatic solution.

Despite fears the new round of unrest might scupper the quest, the foreign ministers of Russia and Ukraine will hold their long-awaited encounter in Geneva, along with their US and EU counterparts.

Expectations for the meeting remain low, given the different agendas of the two sides, with the US seeing a chance to boost the legitimacy of the government in Kiev, while Russia is calling for radical constitutional reform in Ukraine.

Russia is sticking to its demands of “federalisation” and military neutrality for Ukraine – first laid out in a proposal a month ago.

The paper demands that Ukraine undergoes a foreign-mediated process of constitutional reform that must happen before the next presidential election. This must result in a federal structure and military neutrality for the country, give Russian the status as second official language and recognise Crimea’s departure from Ukraine.Best Deal Ukraine Can Get

The best chance for Ukraine to hold on to Donetsk may very well be acceptance of the Russian proposal.

While pondering the above thought, here is a song that expresses my point of view rather well.

War, What Is It Good For?



Absolutely nothing!

This is not our fight, so let's not make it one.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Austerity In Spain? Where? Public Debt Threatens to Exceed 100% of GDP in 2014

czw., 17/04/2014 - 03:29
EL Pais reports Spanish Public Debt Threatens to Exceed 100% of GDP in 2014

Via translation
General government debt accumulated through February was 987.945 billion euros, an amount that represents 96.5% of gross domestic product (GDP). This represents a new record in the amount of money the state, communities, and the municipalities have to return to financial institutions and investment funds. In February alone, the government liabilities increased by 8.130 billion, up 8% from the previous month.

The debt problem is not just that you have to pay, but the difficulty to stop the frenzied pace to growing-has risen from 37% of GDP in 2007 to 96.5% seven years later.

If this pace continues, the liabilities of the government would scale up to 110% of GDP, an unknown dimension in the last century. Since the early twentieth century, when Spain had to attend entrained war debts of Cuba, the barrier was not exceeded 100%, according to the historical series of the IMF. The debt ended 2013 at 94% of GDP.

The threat that public debt exceeds the red line of 100% of GDP grows as government is unable to decisively reduce the public deficit. The 2014 budget is expected to be in the red by 60.7 billion, 5.8% of GDP.

In addition, the Executive will launch a new section of the Autonomous Liquidity Fund (FLA), liquidity to support to the regions, totaling 23 billion, representing about two-points of GDP. In total, the public debt will grow by about 80 billion, eight points of GDP during 2014. The level of liability of public institutions would reach 104% compared to 98.9% government projection earlier this year.Treasury Raises Less Than Expected Despite tax Increases

Compounding the spending problem, Treasury Raises Less Than Expected Despite tax Increases

Via translation from Libre Mercado
The Ministry of Finance announced 17 of every 100 workers are employed directly in government up 20% from levels 2007, when the ratio was 14%.

Speaking in net terms, the crisis has wiped out 3.6 million jobs in the private sector but has just reduced the workforce of 136,000 public employees. What does this mean? In essence, that 97% of the labor destruction has taken the private sector, while the government has just 3% of the course setting.

The situation is even more poignant when we realize the increase in spending on handpicked advisers. In 2013, the Ministries have triggered the eventual disbursement of staff salaries by 7.5%. Also the salaries of senior management have risen in 2013. Adding up all the costs of the central administration staff, we see that in 2013 an increase of 0.8% was recorded.

Although tax revenue was 37.8% of GDP and was in line with the historical average, the total outlay of the government in 2013 exceeded 44.4% of GDP. Grants have remained almost intact compared to 2012, while the total personnel costs assumed 900 billion euros.

To keep afloat these structures spending taxpayers in crisis have taken numerous tax increases. However, the resulting fiscal balance has not kept pace than projected by the Treasury:

  • The tax on winnings from lottery has raised less than half of schedule in 2013.
  • The 10% surcharge on excise duty on alcohol has not generated the expected returns, 70% lower than expected.
  • Income tax collection has a gap of 6% vs expectations.
  • The indirect quintessential tax generated 5% less than estimated by Treasury.

In sum, the income tax office have been 4.21% lower than projected. However, it is important to note that the number of taxpayers who pays this revenue has declined significantly as a result of mass unemployment and the destruction of businesses.Austerity In Spain? Where?

The biggest things Spain needs to do are cut public spending and public employment, and lower taxes. Instead, it raised taxes on those with real jobs.

It should be no surprise that revenues don't meet expectations and public spending has not declined.

In spite of all the howls from misguided Keynesians and Monetarists over alleged austerity, the approach Spain took is not "austerity", rather it is economic insanity.

By the way, debt does not "threaten" to exceed 100% of GDP, it is a near-certainty.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Kategorie: Najnowsze feedy

Ukraine Separatists Seize Six Armored Personnel Carriers, Parade Them in Two Towns

śr., 16/04/2014 - 20:17
Pro-Russia forces in eastern Ukraine intensified their defiance against Kiev on Wednesday, seizing half a dozen armored vehicles and parading them through towns of Kramatorsk and Slavyansk.

The Financial Times reports Pro-Russia forces intensify defiance in eastern Ukraine
The escalating tension, a day after Kiev launched special operations against the separatists, prompted Nato to bolster its military presence on its eastern border, Anders Fogh Rasmussen, the alliance’s secretary-general announced on Wednesday.

Hundreds of local people in the centre of Kramatorsk cheered the vehicles and the roughly 100 militia men on them as they drove on to nearby Slavyansk. The defence ministry said the troops were guarded by “people in uniforms who have no relation to Ukraine’s armed forces”.

The crowd cheering the pro-Russia forces cried “Donbas, Donbas”, referring to the region of Donetsk, as they chatted excitedly and took photos on their phones. Some locals said the forces were troops from Kiev that had switched sides. More likely, they were more of the “green men” militants who took control of a series of government buildings in the region in recent days. There was no sign of struggle.

Unidentified armed militants had seized the mayor’s office in Donetsk, a large regional capital where pro-Russia separatists nearly two weeks ago seized the regional government building, news agencies reported on Wednesday. It was not immediately clear whether the group was allied with separatists that have in past days seized about 10 regional government buildings in eastern Ukrainian cities.

Meanwhile, Prime Minister Arseniy Yatseniuk told the cabinet that a newly formed “constitutional commission” would swiftly draft constitutional changes delegating more governing power from Kiev’s central government to regional legislatures and administrations.

Konstantin Dolgov, the Russian foreign ministry’s human rights representative, was quoted as saying: “To all appearances, events [in Ukraine] are beginning to develop under the worst-case scenario.” Earlier, Russian prime minister Dmitry Medvedev claimed Ukraine was close to “civil war”.

The comments from Moscow heightened concerns that any bloodshed resulting from attempts by the Kiev authorities to retake control of eastern Ukrainian cities could prompt direct military intervention by Russia. Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
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