Mish's Global Economic Trend Analysis

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• Nigel Farage: Escape Euro Prison!
• It's So Secret, Even the Fed Does Not Know Who It's Lending To
• Cameron Pledges to "Fight from Within"; Two-Thirds of Voters Agree with Refusal to Sign Treaty, Nearly 50% Want to Leave EU; Better to Let Them "Do Their Own Thing" says Cameron

Nigel Farage: Escape Euro Prison! Posted: 11 Dec 2011 06:22 PM PST When it comes to humor from politicians (in a good sense), Nigel Farage is right at the top of the list. His opening line had me laughing out loud. Link if YouTube video does not play: Escape Euro Prison! Partial Transcript RT: Britain has no to tighter controls leaving Euro countries to sort themselves out and the UK is being pushed further aside. Farage: Well let's hope so ... Cameron said can we have some small concessions. Sarkozy told him to take a running jump. On the face of it I should be cheering David Cameron and say isn't it marvelous, the British prime minister has finally stood up and said something. ... But we are still members of the union, wae are still bound by all its legislation, and yet what's perfectly clear is henceforth we will have no influence whatsoever. And actually what I am getting from journalists all over Europe is Britain is now despised. So I think what will happen now, bank in the United Kingdom is we are about to launch into a very big national debate about whether we should be members of this union at all. RT: If these countries are going to push on, can the 17 Euro nations solve this by themselves? Farage: Listen. The word "solve" implies there is some easy solution. There isn't. The Euro is a misconstruction. Countries like Greece and Portugal should never have joined it in the first place. RT: Are you saying this could lead to a split in the union? Farage: I think what we saw, in the early hours of this morning was the biggest split in the European Union in fifty years. The UK has been a member of this thing since 1973 and we are a big economy, we're an important country, and whether David Cameron knows it or not, what he did last night was the first step towards the exit door. RT: How easy would it be for those countries to convince their populations about facing tighter controls? What would the people think about all of this? Farage: Believe you me. If we were to put this Euro package to the electorate of Greece, of Portugal, of Ireland, of Italy, of Spain, they would all say no. .... These electorates find themselves trapped inside an economic prison that is called the Euro. Their democracy has been stripped from them. My fear is the kind of civil disobedience and civil disorder that you have already sen on the streets of Greece will multiply. ... If you are stuck in a bad marriage, the best thing to do is end the marriage and start again. I see no hope at all for the Greek economy, stuck inside this economic prison that is called the Euro. ==================== Farage is 100% correct. If the UK is being push aside (and it is), Cameron should embrace being shoved aside and let Merkozy fend for themselves. Thus, Cameron needs to put UK membership in the EU up for public vote, smashing the ball straight down Sarkozy's throat. 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.

It's So Secret, Even the Fed Does Not Know Who It's Lending To Posted: 11 Dec 2011 04:13 PM PST Some might think the Fed would care where dollar swaps to Europe go. However, if the Fed cares, it doesn't know. Bloomberg reports No One Telling Who Took $586 Billion in Swaps With Fed Condoning Anonymity. For all the transparency forced on the Federal Reserve by Congress and the courts, one of the central bank's emergency-lending programs remains so secretive that names of borrowers may be hidden from the Fed itself. As part of a currency-swap plan active from 2007 to 2010 and revived to fight the European debt crisis, the Fed lends dollars to other central banks, which auction them to local commercial banks. Lending peaked at $586 billion in December 2008. While the transactions with other central banks are all disclosed, the Fed doesn't track where the dollars ultimately end up, and European officials don't share borrowers' identities outside the continent. The lack of openness may leave the U.S. government and public in the dark on the beneficiaries and potential risks from one of the Fed's largest crisis-loan programs. The European Central Bank's three-month dollar lending through the swap lines surged last week to $50.7 billion from $400 million after the Nov. 30 announcement that the Fed, in concert with the ECB and four other central banks, lowered the interest rate by a half percentage point. "Increased transparency is warranted here," given the size of the Fed's aid and current pressures on European banks, said Representative Randy Neugebauer, a Texas Republican who heads the House Financial Services Subcommittee on Oversight and Investigations. Whether the U.S. should make disclosure of the recipients a condition of the swap lines is "probably a discussion we need to have," possibly in a hearing that includes Fed Chairman Ben S. Bernanke, Neugebauer said. Michelle Smith, a Fed spokeswoman, said there is "no formal reporting channel" for the identities of borrowers from other central banks, which are the Fed's only counterparties on the swap lines and assume any credit risk. "U.S. taxpayers have never lost a penny" on the program, she said. Might I point out that US taxpayers never lost a cent on Fannie Mae and Freddie Mac either, until of course they lost $200 billion and counting. Fundamental Problem Joseph Stiglitz, a Nobel Prize-winning economist who led President Bill Clinton's Council of Economic Advisers, said the "fundamental problem" is that capital markets need information to work properly, yet the Fed is saying, "we believe in capital-market discipline without information." "It would be very useful to see" those names, said Stiglitz, a professor at Columbia University in New York. With the dollar auctions of foreign central banks shielded from disclosure, "what we have now is a very partial picture." If banks are in such dire straits that they would be at risk if everyone knew they were using the discount window, then they are also in such dire straits the Fed ought not be lending to them in the first place. Actually, the problem is more fundamental. There should not be a Fed at all. Banks might then think twice about being so freaking leveraged. 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.

Cameron Pledges to "Fight from Within"; Two-Thirds of Voters Agree with Refusal to Sign Treaty, Nearly 50% Want to Leave EU; Better to Let Them "Do Their Own Thing" says Cameron Posted: 11 Dec 2011 07:47 AM PST The political rift between the UK Prime Minister David Cameron (Conservative) and the Deputy Prime Minister Nick Clegg (Liberal Democrat) widened into a public feud over Cameron's refusal to sign the Merkozy accord. The Deputy Prime Minister says U.K. Coalition Breakup Over EU Would Cause Economic 'Disaster' U.K. Deputy Prime Minister Nick Clegg said a breakup of the coalition government would spell "economic disaster" for Britain while saying he was "bitterly disappointed" by last week's European Union summit. Prime Minister David Cameron's refusal to back a 27-nation pact to tighten budget rules may leave the U.K. "isolated and marginalized within the European Union," Clegg told the British Broadcasting Corp.'s "Marr" program today. Still, he said "it would be even more damaging for us as a country if the coalition government was now to fall apart. It would create economic disaster." By refusing the join the planned fiscal accord, Cameron strengthened that wing of his Conservative party who want Britain to leave the EU. He also caused the biggest rift with his coalition partners since both parties campaigned on opposite sides of a May referendum on overhauling Britain's voting system. A poll by Survation for the Mail on Sunday today showed that almost two-thirds of voters said Cameron was right to back out of the EU accord, while 48 percent said Britain should leave the EU altogether. A poll by ComRes, carried out just before the summit for the Independent on Sunday, showed 52 percent of Britons say the euro crisis is an ideal opportunity for the U.K. to leave the EU. Clegg said that Cameron had been placed in a "difficult position" at the Dec. 8 to Dec. 9 EU meeting because he faced "intransigence" from France and Germany. Nevertheless, he added that the government should now "fight, fight and fight again" for Britain's interests within the EU. Not Good Enough Cameron told reporters following the all-night talks that "what was on offer just wasn't good enough for Britain. It's better to allow those countries to do their own thing on their own." Paddy Ashdown, a former Liberal Democrat leader, today criticized the move, saying Cameron's decision "doesn't make it easier" to get the U.K. through the economic crisis. "Cameron has acted as the leader of the Conservative Party and not the prime minister of Great Britain," he told Sky News. Simple Math Let me point out some simple math to Paddy Ashdown: Two-thirds of voters approve of Cameron's decision not to sell the UK down the river. Thus Cameron not only acted as Conservative leader, but rather for all of the UK. Moreover, I might point out, Cameron should go one step further and call for a referendum to leave the EU. Let the voters decide. Better to Let Them "Do Their Own Thing" Here is a fitting tribute to Cameron's statement "what was on offer just wasn't good enough for Britain. It's better to allow those countries to do their own thing on their own." Link if video does not play: "It's Your Thing" by The Isley Brothers Fight, Fight, Fight Again Within the EU Rah, Rah, Sis Coom Bah, Cameron wants to "Fight from Within!" Yeah that's the spirit. Episode number Five from the British Sitcom Yes Minister explains why. Episode Five: The Writing on the Wall Sir Humphrey: Minister, Britain has had the same foreign policy objective for at least the last five hundred years: to create a disunited Europe. In that cause we have fought with the Dutch against the Spanish, with the Germans against the French, with the French and Italians against the Germans, and with the French against the Germans and Italians. Divide and rule, you see. Why should we change now, when it's worked so well? Hacker: That's all ancient history, surely? Sir Humphrey: Yes, and current policy. We had to break the whole thing [the EEC] up, so we had to get inside. We tried to break it up from the outside, but that wouldn't work. Now that we're inside we can make a complete pig's breakfast of the whole thing: set the Germans against the French, the French against the Italians, the Italians against the Dutch. The Foreign Office is terribly pleased; it's just like old times. Hacker: But surely we're all committed to the European ideal?  Sir Humphrey: [chuckles] Really, Minister.  Hacker: If not, why are we pushing for an increase in the membership? Sir Humphrey: Well, for the same reason. It's just like the United Nations, in fact; the more members it has, the more arguments it can stir up, the more futile and impotent it becomes. Hacker: What appalling cynicism. Sir Humphrey: Yes... We call it diplomacy, Minister. 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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