sâmbătă, 20 august 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


End of the End of Colonel Qaddafi; "Decisive Battle to Liberate Tripoli Started"; Rebels Encircle Tripoli; Rats Flee Sinking Ship

Posted: 20 Aug 2011 10:37 PM PDT

Colonel Qaddafi's days as dictator of Libya are numbered, not in months but perhaps days. Bloomberg reports Libyan Rebels Launch Offensive to Seize Tripoli
"The decisive battle to liberate Tripoli started," Abdel Hakim Belhaj, a rebel brigade commander, said in an interview with Al Jazeera. "I would like to tell our families inside the capital that we are coming and call upon Qaddafi's troops to abandon their weapons tonight and to join us to get rid of Qaddafi and his regime."

Rebel Control

"Rebels are now controlling Zlitan, and they are located near Wadi Kam," said the council spokesman, Munir Mohammed. There was no independent confirmation of the reports of the rebel operations in the valley or in Zlitan.

Rebels also said they have taken Zawiya, west of the capital, and Ghariyan to the south.

Libyan Oil Minister Omran Abu Kraa headed to Tunisia rather than returning to his country after a trip to Italy, the state- run Tunisian news agency TAP said. Shokri Ghanem, Libya's former top oil official, defected to join the rebels, according to a June 1 statement from the rebel Transitional National Council.

The rebels announced on Aug. 19 that they had control of the oil refinery at Zawiya and shut its supply to Tripoli while almost encircling the outskirts of the capital. Rebels took the main square in Zawiya, the Associated Press reported yesterday. Qaddafi's forces remain in the eastern part of the city, the news service said.
Rats Flee Sinking Ship

The New York Times reports Heavy Fighting Reported in Tripoli; Rebels Encircle City
For the first time in months, witnesses in Tripoli reported heavy fighting across the capital late Saturday night, even as rebel forces claimed to have encircled the city by taking major towns to its east, west and south.

"We are coordinating the attacks inside, and our forces from outside are ready to enter Tripoli," said Anwar Fekini, a rebel leader from the mountainous region in western Libya, speaking by telephone from Tunis. "If you can call any mobile number in Tripoli, you will hear in the background the beautiful sound of the bullets of freedom."

"The rebels are fleeing like rats, to the mountains," Colonel Qaddafi said.

He gave no indication of where he might be speaking from, a topic of increasing speculation in recent days as rumors have swirled of his preparing to flee, or perhaps having already left Libya. If Colonel Qaddafi's location remained unknown, it became increasingly clear Saturday that even his most senior aides were making exits of their own.

The Tunisian state news agency reported Saturday that Libya's oil minister, Omran Abukraa, had defected to Tunisia, after leaving Tripoli on what was ostensibly a business trip abroad. If confirmed, his defection would be the third of a senior government official in the past week.

Abdel Salam Jalloud, a former Qaddafi deputy, was reported to have defected Friday. A senior security official, Nassr al-Mabrouk Abdullah, flew to Cairo with his family on Monday.
This is the "End of the End of Colonel Qaddafi" and a new beginning for Libya. The question is "a beginning of what?" At this stage there are far more questions than answers.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


European Roundup: Germany Nixes Eurobonds Once Again, So Does EU President Herman Van Rompuy; Belgium Wants Eurobonds and Bigger Bailouts

Posted: 20 Aug 2011 07:38 PM PDT

This weekend Belgium finance minister came out in support of Eurobonds. He may as well have come out in support of the "Great Pumpkin" theory.

Belgium and the PIIGS (Portugal, Ireland, Italy, Greece, Spain) may want Eurobonds but if Germany, France, Finland and other countries don't want them it is not going to happen. The vote must be unanimous.

Interestingly, EU President Herman Van Rompuy just nixed Eurobonds but a rumors of an EU Eurobond feasibility study ignited a rally on Friday in Europe. That rally faded quickly in the US.

Here is a weekend roundup of European news starting with a look at what's not going to happen.

Belgium adds to call for euro bonds, bigger bailout

Reuters reports Belgium adds to call for euro bonds, bigger bailout
Pressure on Germany and France to take radical action on the euro zone debt crisis mounted on Friday, as financial markets sagged further and Belgium added its support to calls for the region to issue debt jointly.

Belgian Finance Minister Didier Reynders said the bloc should issue common euro bonds and expand its bailout fund to calm repeated market selloffs of government bonds and bank shares of vulnerable debtor countries.

But Reynders' call in the Financial Times for the euro zone had to prove it had "deep pockets" underlined increasing fears among euro zone governments that they would be unable to reassure investors that euro zone banks are safe without drastic action by the 17-nation bloc.

Merkel repeated her criticism of proposals for euro zone bonds, telling a rally of her Christian Democrats this was a "slippery slope" that would probably leave everyone worse off.

"Euro bonds would not allow any rights at all to intervene to force discipline on others," she said.

French Prime Minister backed her view, writing in an editorial published in daily Le Figaro that common euro zone bonds without further fiscal consolidation could threaten France's triple-A credit rating.
EU President Opposes Common Euro Bonds

Inquiring minds note that EU President Van Rompuy Opposes Common Euro Bonds
European Union President Herman Van Rompuy ruled out issuing common bonds as a cure for the debt crisis, saying any joint borrowing should wait until European economies and budgets are better aligned.

With three countries drawing financial aid and national debts ranging from 6.6 percent of gross domestic product in Estonia to 142.8 percent in Greece, this is the wrong time to set up a single borrowing agency, Van Rompuy, 63, said in an interview broadcast on Belgium's RTBF radio today.

"We could have euro bonds on the day when there is genuine budgetary convergence, the day when everyone is in balance or virtually in balance," he said.
12th of Never

The day everyone is in balance is the 12th of never. It's not going to happen.

Rumors that the EU commission was studying Eurobonds ignited a faded rally in Europe on Friday. For details, please see Yet Another 2.5 Hours, 2.3% Hour Rally, This Time on Silly Rumors Eurobonds Back in Play

Germany Rebuffs Renewed Euro Bond Debate

The future of Eurobonds is with Germany. Here is the present as well as the projected future: Germany rebuffs renewed euro bond debate
BERLIN | Sat Aug 20, 2011 12:28pm EDT

Germany on Saturday rebuffed renewed calls that euro zone countries should issue joint euro-denominated bonds and have a joint finance minister, arguing that would only be possible if fiscal policy were collective already.

"As long as we don't collectivise financial policy we also cannot have a uniform interest rate level. The different rate levels are the incentive to run a solid economy or the punishment if you are not running it properly," Finance Minister Wolfgang Schaeuble, speaking at his ministry's open day.

"So the question is, how do we manage to promote political integration step by step. We cannot collectivise interest rates," Schaeuble said, referring to proposals that the euro currency bloc should issue common euro bonds.

Germany has led resistance to calls that the euro currency bloc should issue common euro bonds and expand its bailout fund to calm repeated market selloffs of government bonds and bank shares of vulnerable debtor countries.

Der Spiegel magazine reported finance ministry calculations that showed issuing joint euro bonds would cost Germany billions of euros each year.
Anyone paying any attention to Eurobond rumors that do not include support from Germany is wasting their time. Eurobonds also need support from French President Nicolas Sarkozy. Eurobonds do not have that support neither.

As it stands, both Chancellor Angela Merkel and finance minister Wolfgang Schaeuble oppose Eurobonds. I suspect the former is out of political expediency. Merkel realizes she does not have the votes.

Until this setup changes, Eurobonds are dead, no matter how many others support them.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Bank of England Regulator Argues "Banks Need to Take More Risks" to Underpin Economy; Revisionist Roosevelt History

Posted: 20 Aug 2011 11:54 AM PDT

In case you need additional proof that more regulators is the last thing we need, please consider Banks 'should take more risk' argues BoE executive director
Banks should be allowed to take more risk to underpin the recovery in spite of the lasting damage caused by the financial crisis, a leading regulator has suggested.

Andrew Haldane, executive director of financial stability at the Bank of England, argued that banks have over-reacted and are now suffering from "acute risk aversion".

This aversion has pushed up the cost of credit and "may be retarding the recovery".

Departing from current thinking, Mr Haldane suggested regulators now allow banks to operate with weaker finances to encourage lending.

Specifically, he indicated that banks could reduce the amount of loss-bearing capital they hold from around 10pc to 7.5pc.

"Setting regulation to boost risk-taking may feel like a radical departure," he said. But, drawing parallels with the Great Depression, he pointed out that President Franklin Roosevelt relaxed bank regulation in 1933.
Foolish Thinking and Revisionist History

More risk will mean more losses.

The world is flooded with overcapacity in nearly everything except energy. Encouraging more production and expansion in this environment when overspent boomers heading into retirement are not about to go on a spending spree is a mistake.

Moreover most of these comparisons to the 1930's are nonsensical. FDR did so many stupid things, some of which were blatantly illegal if not treasonous including confiscation of gold, forced crop burning, and the National Industrial Recovery Act (NIRA) of 1933 that was found unconstitutional.

However, and as is typically the case, various stimulus efforts in the 30's (numerous "CCC" type programs) died out by 1937 and the economy went back into recession. Of course Keynesian clowns now argue a pissy tightening action "caused" the relapse, when then as now, stimulus ran its course.

Contrary to popular fantasy, the unemployment picture following Roosevelt's policies is not as rosy as is often cited.

Here is a table from Wikipedia on Franklin D. Roosevelt

Unemployment (% Labor Force)
Year Lebergott Darby
1933 24.9 20.6
1934 21.7 16.0
1935 20.1 14.2
1936 16.9 9.9
1937 14.3 9.1
1938 19.0 12.5
1939 17.2 11.3
1940 14.6 9.5
1941 9.9 8.0
1942 4.7 4.7
1943 1.9 1.9
1944 1.2 1.2
1945 1.9 1.9


Derby counts Works Progress Administration (WPA) workers as employed, Lebergott as unemployed.

Of course you can have 100% employment if the government employed everyone.

War Recovery vs. Austrian Economic Theory

Unemployment did not really drop until 1941 or 1942. WWII started with the invasion of Poland in September 1939.

It was war that started the recovery, not the policies of Roosevelt. That statement may sound contrary to Austrian economics but it's not.

Destruction of productive capacity and assets is always a net loss. War is never a good thing in this regard. To believe otherwise is to believe in the Broken Window Fallacy.

However, the US was the only major country that did not suffer major losses in production capacity. Following WWII, the US became the growth engine of the world, further fueled by war-weary soldiers who returned home and started families, kicking off the "baby boom" and all of its ramifications.

Europe followed eventually, but no one in their right mind could suggest that WWII or wars in general are a good thing for stimulating economies.

Saddled with the Failed Policies of FDR

Today we are saddled with the consequences of Roosevelt's inept actions.

  • There is no gold standard to act as a trade moderator or to impose spending restraints.
  • Unions have bankrupted cities and states.
  • Trillions of dollars of public pension promises that cannot and will not be met.
  • Government is bloated at every level: city, county, state, federal


Finally, this is not 1939 in terms of demographics, in terms of public debt, or in terms of private debt. To suggest otherwise displays incompetence. In general, to expect anything but incompetence, greed, corruption, or graft from regulators is a mistake.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Private Consumption in Portugal Plunges 3.4%, Biggest Drop in 30 Years; Expect Rest of Europe to Follow

Posted: 20 Aug 2011 01:08 AM PDT

Courtesy of Google translate, please consider Private consumption in Portugal is suffering the biggest drop in 30 years
The indicator of private consumption in Portugal in July recorded a fall of 3.4% compared to the homologous months of 2010, the lowest since data collection began in 1978.

According to the Bank of Portugal (BOP), this was the eighth consecutive month in which the pointer just in negative territory, which has been deteriorating gradually since December 2010.

The entry into force of some austerity measures that Portugal should apply to return for the loan of 78,000 million euros was granted the EU and the International Monetary Fund (IMF) have affected the contraction in household consumption Lusas.
Translation of that last paragraph is a bit choppy, but essentially the 78 billion "bailout" loans coupled with forced austerity measures is to blame for the massive plunge in private consumption.

Expect Rest of Europe to Follow


Contraction in Greece is arguably factored in (although hugely rising deficits are not). More importantly, worsening conditions in Spain and especially Italy are not accounted for.

The ECB forced Italy into various austerity measures in return for providing a backstop to Italian debt. That backstop has worked for now (it won't last), driving 10-year Italian government bond yields down from well over 6% to 5%, still a mighty spread vs. Germany.

Low growth for Italy is penned in. It will not happen. Expect a plunge in Italian GDP and personal consumption.

If Italy, Spain, Greece, and Portugal contract (all but Italy are already), spillover into France and Germany is a given.

Moreover, even France has pledged some budget tightening. Expect more social unrest and a huge recession in Europe because both are on the way. Germany will not be immune.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Damn Cool Pics

Damn Cool Pics


International Photography Award Winners 2011

Posted: 19 Aug 2011 09:15 PM PDT

The International Photography Award winners and finalists have been announced and as usual, they're downright impressive. The IPAs are sponsored by the Lucie Foundation , whose mission is to discover innovative photography, honor great photographers, and promote photography in general. This year, they received 8,000 submissions. A whopping 70 jurors judged these submissions. Here are 41 of some of the best winning photos.

"5th Ave. Fix"
Lorin Crosby



"Five Minutes in Santa Fe"
Michael Crouser



"Burning Peak"
Rafael Rojas




" Magic World"
Name: Adam Balcerek, Poland



"Noorderlicht, Spitsbergen, Norway"
Philip Harvey



"A Night in Tahrir Square"
Jacopo Quaranta



"Friends"
Joanna Borowiec


"Nouakchott opus incertum"
Philippe Bernard



"Afghan Heroin: Not for Export"
Thomas Stanworth



"Gatorade Natural"
Brian Kuhlmann



"Our Oceans Aren't The Only Ones In Danger"
Adam Taylor



"Agent Orange"
Ed Kashi



"Go, My Beauty"
Gordon Welters


"Pastoral Scene"
Nikolas Despiniadis



"Black River"
Michael Mullady



"Guantanamo: If the Light Goes Out"
Edmund Clark



"Pure Blood"
Ximena Etchart



"Buddies"
Serhat Demiroglu



"Gulf Oil Spill"
Daniel Beltra



"Remote Control"
Claudio Allia



"Chicago"
Ball & Albanese



"Heinz"
Maurice Heesen



"Strange Things Are Smoking"
Karen Divine



"Cold Places"
Sue Flood


"Innocence"
Claudio Allia



"Surplus"
Michael Krebs


"Desertic City"
Joanne Pouzenc



"Tibetan Monastery Kitchens"
Marrigje De Maar



"Docklands"
Rafal Krol



"Under Water Lilies"
William Scully



"Drough and Flooding Rains"
Melissa Powell



"Let Them Eat Cake"
John Wright


"Warsaw Chopin Airport"
Kacper Kowalski



"Langstrand"
Ulrike Klumpp



"Where Ships Were Born"
Paul Alexander Knox



"ELEMENTARZ"
Karolina Karlic



"Wild Card (1)"
Russ Lamoureux



"Geezz"
Lennette Newell



"Yangtze - The Long River"
Nadav Kander



"Nazi Americana"
Julie Platner



"Our Oceans Aren't The Only Ones In Danger"
Adam Taylor



Kurt Cobain's Daughter is All Grown Up

Posted: 19 Aug 2011 03:19 PM PDT

Kurt Cobain and Courtney Love's daughter turns 19 next week and in this new photoshoot, Frances Bean Cobain is looking gorgeous than ever!

Designer and photographer Hedi Slimane posted these photographs of Frances on his website, showing her in glorious black and white. By the way, I do not condone smoking, but this picture is just too cool!