Mish's Global Economic Trend Analysis |
- Pimco CEO says "Europe is Kicking the Can, Bondholder Haircut Coming"
- Streaming Error
- Eddie & JoBo Show - WLS 890 - 8:05 PM Saturday - I 'm on Discussing Governor Quinn Recall
- Chinese Bank Lending Spree Continues; $75 Billion New Loans First Week in January Alone; Inflation Gone Amuck
- Hello Mayor Daley ... About Your Plan to Poach Business from Oregon and Other States: No Business Owners in Their Right Mind Would Move to Illinois
| Pimco CEO says "Europe is Kicking the Can, Bondholder Haircut Coming" Posted: 15 Jan 2011 08:26 PM PST Pimco co-CEO Mohammed El-Erian says European Bond Investors Must Accept Losses "The main issue right now is the integrity of the eurozone is getting weaker and weaker as we delay the problem," El-Erian tells CNBC. "They are simply kicking the can down the road."In regards to Europe, El-Erian is not saying anything I did not say a year ago. In regards to Munis, he brings up several factors. 1. Rate Risk 2. Default Risk 3. Differentiation I certainly agree. However, even if one can navigate number 3 (and I expect PIMCO to be able to do just that), you still have rate risk and you have something he did not mention, sentiment. While sentiment will certainly impact rates, if several major municipalities blowup, or even if people think they might, there could be a massacre in munis across the board. I see little reason to invest in munis until that happens. In the meantime, default risk is unappreciated in general, even though I disagree with Meredith Whitney who I believe overstates the problem. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To scroll Thru My Recent Post List 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. 
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| Posted: 15 Jan 2011 08:26 PM PST In reference to Eddie & JoBo Show - WLS 890 - 8:05 PM Saturday - I'm on Discussing Governor Quinn Recall ... Unfortunately there was a streaming error with the audio on WLS 980. WLS did not point to the live feed but a prior show. I am told this was only the second time it happened. I may be able to get an MP3 of my segment. If so I will post it. I was on 18 minutes. Time went by very quickly. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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. 
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| Eddie & JoBo Show - WLS 890 - 8:05 PM Saturday - I 'm on Discussing Governor Quinn Recall Posted: 15 Jan 2011 03:47 PM PST I received an email moments ago from Eddie Volkman at WLS AM 890 Chicago asking me to be on for a live 18-20 minute segment tonight. The discussion will be on Governor Quinn, the tax hikes, how those tax hikes will impact the state of Illinois, and what we can do about it. Hey Mike...Click here to listen live Call in 312-591-8900 Or text "WLSAM" to 68683 or tweet to @wlsam890 Tune in, it should be fun. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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. 
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| Posted: 15 Jan 2011 11:10 AM PST China wants to rein in inflation, or so it says. It also wants 10% growth per year as far as the eye can see. It does not want to float the Yuan, and it does not want to hike interest rates. Nor does China want to do anything about credit gone amuck. In other words, China wants the proverbial "free lunch". Given there is no free lunch, China is overheating. Please consider China bank loans near 500 billion yuan in January Chinese banks continued their lending frenzy in the beginning of the year, doling out 500 billion yuan ($75.6 billion) in new loans in the first week of January alone, putting fresh pressure on the central bank to tighten policy to put a lid on inflation.Rampant, Understated Inflation 7.5 trillion yuan is about 1.14 trillion US dollars. You are not going to have that kind of credit expansion, while building entirely vacant cities in the process. China's official inflation is 5%. Unofficially, estimates are 10% as noted in China's Foreign Exchange Reserves Jump by Record $199 Billion; Cost Push Inflation from China? Don't Count On It! However, that does not count increases in home prices. It is an enormous mistake to ignore property bubbles, as the US found out, and as China, Australia, Canada, and the UK are going to find out. China's Vacant Cities In case you missed it, please consider Amazing Satellite Images Of The Ghost Cities Of China on the Business Insider. "There's city after city full of empty streets and vast government buildings, some in the most inhospitable locations. It is the modern equivalent of building pyramids. With 20 new cities being built every year, we hope to be able to expand our list going forward."More Vacant China City Stories
China property bubble will overheat until it implodes. In the meantime, regardless of what China reports on the CPI, inflation remains a huge problem. Once again, those looking for inflation can find it in China, not the US, where consumer credit is contracting. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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. 
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| Posted: 15 Jan 2011 12:34 AM PST Mayor Daley had a plan to persuade businesses to come to Illinois. Unfortunately for Illinois, it was a horrendously executed plan. Mayor Daley forgot to lift a finger in the last election against Governor Quinn. Now Daley is whining. This is a piss poor time to be whining about higher taxes. Had Daley made any appropriate remarks regarding tax hikes by Quinn before the election, Illinois would have had a different governor. About That Plan ... Oregon Live reports So much for Chicago talk of poaching Oregon business In the wake of the Measure 66 and 67 tax increases approved by Oregon voters a year ago, Chicago Mayor Richard Daley quickly said he'd be recruiting Oregon businesses to move to his own supposedly more business-friendly city.Blatant Lies By Governor Quinn The Daily Herald notes that On the campaign trail, Gov. Pat Quinn told voters he'd veto any income tax hike that would raise Illinois' rate over 4 percent. I believe this is one of the fastest proven lies political history. Sales Taxes Illinois has a middle of the road sales tax, at least until you consider various local surtaxes. Here is a nice table from Wikipedia.  Home Rule With "Home Rule" Illinois has the top sales tax rate in the nation. With that, inquiring minds might be wondering about "Home Rule". To help explain, please consider the following snip courtesy of the Illinois Department of Revenue. Depending upon the location of the sale, the actual sales tax rate may be higher than the fundamental rate because of home rule, non-home rule, water commission, mass transit, park district, and county public safety sales taxes.Lovely, isn't it. Note that sales taxes may rise because of home rule or non-home rule. Businesses moving into Illinois just might beware of moving into cities or counties with high "Home Rules". Which places might that be? Well Mayor Daley's Cook County of course, but it could be anywhere. Gasoline Taxes January 2011  Diesel Taxes January 2011  Gasoline and Diesel Charts courtesy of the American Petroleum Institute. Truckers, Take The South Central Route As a courtesy to my trucker friends, it appears avoiding fillups in California, Illinois, Indiana, New York, and Pennsylvania is of paramount concern.  My advice to Wisconsin would be to drop Diesel taxes to match Missouri's 41.7 in order to secure the Northern fillup route. Any trucker going cross country and filling up in Illinois, Indiana, New York, or Pennsylvania is clearly nuts. Truckers probably know this, but state legislatures don't. Property Taxes Fiscal insanity goes beyond massive personal income and corporate tax hikes. Cities in Illinois have among the highest property taxes in the nation. I pay over $14,000 a year on a home I think I could sell for $600,000. Bear in mind about four years ago I challenged the assessment (and won), which reduced my taxes to about $12,500. My taxes are now back up to over $14,000. Does anyone think property valuations have risen in the last four years? Gubernatorial Bribery, Corruption - Elect, Indict, Repeat Illinois Issues Online is asking Will democracy, Illinois style, ever change? Illinois' reputation for corruption is well-documented. Nine men have served as governor in the past 50 years. Two — Democrat Otto Kerner and Republican George Ryan — were convicted of crimes they committed while in office. (Ryan is appealing his conviction.) Democrat Dan Walker also was imprisoned after he left office, but for crimes unconnected to his tenure as governor. And Republican William Stratton was indicted for tax evasion in connection to his use of campaign funds, but he was ultimately acquitted.Culture of Corruption That article is from 2007 and is clearly out of date. Blagojevich was convicted on one of 24 counts so add Blago to the convicted list. He stands retrial on 23 deadlocked charges after a Judge Refuses to Overturn Rod Blagojevich Conviction. That story is as of October 27, 2010. How Blago escaped conviction on 23 other charges is quite a mystery to me. The official score is 3 out of the last 10 Illinois governors were convicted of crimes while in office and a 4th convicted after he left. A 5th was charged and acquitted. Can any other state match that? About That Corporate Tax Hike Illinois hiked its corporate tax rate to 7% from the current 4.8%. Several people sent emails stating that 7% did not sound so bad. However, they failed to consider that Illinois collects from all businesses a 2.5 percent "personal property replacement tax". As a result of the decision, small businesses will now be paying a tax rate of 7 percent, up from the current 4.8 percent. However, added together with the 2.5 percent personal property replacement tax Illinois mandates, business owners' tax burden will now reach 9.5 percent.No Business In Their Right Mind Would Move To Illinois If you were a business owner would you want to move to Illinois in the face of huge corporate tax hikes, a whopping 67% personal income tax hike, massive property taxes, and a tax prone political liar as governor? For every incoming business (they will all be trumped up), there will be dozens of corporate downsizings, and several complete exoduses (with little to no fanfare). Illinois desperately needs jobs. However, a culture of corruption and high taxes is driving them away. What You Can Do About It If you are fed up with corruption, vote buying, and massive tax hikes then you need to take a stand. Campaign To Recall Illinois Governor Pat Quinn Underway My Campaign To Recall Illinois Governor Pat Quinn Is Underway I have exciting news this morning. I am launching a campaign to recall Illinois governor Pat Quinn.Call To Action I wrote the above call to action post on Sunday, January 9, 2011. Since then I have had over 200 volunteers (up from a hundred a couple days ago). I have 10 web designers, 3 lawyers (up from 1), and numerous business owners volunteer as well. Work on a website is underway. I have secured the appropriate domain names. One business owner who employs about 100 people graciously volunteered services of his legal department. This is going to be a long slug, no doubt about it. Yet other than leave the state, there is little else we can do. I do need business owners to contact their legislative representatives and pressure them to sign the petition to Recall Quinn. There are 118 state representatives and 59 state senators. To get started, all we need are 20 reps (10 each party), and 10 senators (5 each party), before we start the signature gathering process. Please contact your representatives and get them on board. In the meantime, please email Recall Governor Pat Quinn Today (RecallQuinnToday@gmail.com) and lend your support to the effort to save the state of Illinois from Quinn's fiscal recklessness. Please state in the email what you can do to help. If you live in Illinois or have friends in Illinois, please email this article to them. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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. 
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