Mish's Global Economic Trend Analysis |
- Man Works 1 Day for Chicago, Goes on Extended Leave for 15 Years, Gets $158,000 Annual Public Pension at Taxpayer Expense, Now Working for Hedge Fund
- Hidden Losses, Lack of Liquidity at Spanish Banks; No Bidders for State Owned CAM
- Bizarro World Inflation; About that 2011 Hyperinflation Call ...
- Hello Global Recession
- Asia Bloodbath Follows US Selloff on Wednesday; Europe Bloodbath Follows Asia Bloodbath; US Futures Red for Thursday
Posted: 22 Sep 2011 06:27 PM PDT If you need evidence on how corrupt self-serving unions and union officials can be, then please consider Ex-labor chief's 1-day rehire nets $158,000 city pension A retired Chicago labor leader secured a $158,000 public pension — roughly five times greater than what a typical retired public-service worker in the Windy City receives — after being rehired for just one day of active duty on the city payroll, local news reports said.The tribune reports ... The pension came on top of Gannon's union salary, which had grown to more than $240,000. He now draws the pension while working for a hedge fund, Grosvenor Capital Management, that does work with public pensions, including the Teachers Retirement System of Illinois. The firm also was one of Mayor Rahm Emanuel's largest campaign contributors.Chicago Teacher's Pensions Massively Underfunded Care to see the results Gannon presided over? Please consider Interactive Map of Public Pension Plans; How Badly Underfunded are the Plans in Your State? Illinois has the worst public pension plans in the country as of April 2010. I am sure it is still true today. See link for more details. Gannon says "I am extremely proud of my many years of service to the city of Chicago" I believe he means one day of service for which he will collect $4 million for ripping off taxpayers for his own personal gain. Yes, that is something to be damn proud of. For Dennis Gannon to go on leave after 1 day shows this was all planned from the outset. Moreover, by granting the leave, the corrupt Streets and Sanitation Department went along with it all the way. Any guesses as to how many bribes and payoffs were associated with this chain of events? It is time to end public unions entirely and all the associated graft. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Hidden Losses, Lack of Liquidity at Spanish Banks; No Bidders for State Owned CAM Posted: 22 Sep 2011 01:38 PM PDT The following translations are quite choppy, but the gist should be easy to understand. No one believes the Bank of Spain regarding potential writeoffs on banks it has taken over, especially CAM. CAM has 40% Delinquency Rate, Risk of 17.5 Billion Euros Exposure to CAM brick is around 17,500 million with a 40% default 2011-09-21Big Banks Not Willing to Bid on CAM The bank of Spain wants to auction off CAM. No one wants it. Banks ask to exclude bad assets for a bid on the CAM 2011-09-21Bank of Spain Changes Conditions on Auction to Sell CAM Bank of Spain Changes Conditions on Auction to Sell CAM 2011-09-20For ease in understanding I flipped the order of those articles. Note that even with guarantees, and a change in conditions, no one wants to bid on CAM. Here is one more concern. Three Savings Banks Hid Losses of 2.5 Billion Euros Three Savings Banks in Spain Hid Losses of 2.5 Billion Euros 2011-09-20Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Bizarro World Inflation; About that 2011 Hyperinflation Call ... Posted: 22 Sep 2011 08:04 AM PDT Time has run out for that 2011 hyperinflation call made by numerous people. Hyperinflation is not synonymous with all-time low yields across the entire US treasury curve. Yield Curve as of 2011-09-21 It seems hyperinflationists forgot to factor in the possibility the Euro, the British Pound, and the Yen (yet to come), just all may be far worse hiding places than the US dollar. Not in Love With Dollar It's not that I am in love with the dollar. Indeed I am not. I like gold. Historically, gold does well in periods of deflation and periods of credit stress. I also point out that gold fell from $850 to $250 from 1980 to 2000 with inflation every step of the way. Gold is decidedly not a hedge against inflation in any practical sense. As measured by credit (and numerous other factor) the US is back in deflation now. I offered strong proof in Yes Virginia, U.S. Back in Deflation; Inflation Scare Ends; Hyperinflationists Wrong Twice Over. As a followup please see Bernanke's Waterloo; Midst of Deflationary Collapse or Brink of Inflationary Disaster? 12 Specific Recommendations Don't Get Hung Up on the Term "Deflation" I get emails nearly every day about prices. I also get emails nearly every day about money supply. Here's the deal:
That really has been my stance for years. Nothing has changed. People get hung up on the term "deflation". Perhaps I should have made up a new name. After all, the term "stagflation" was invented to explain what Keynesian clowns thought impossible (rising inflation and a recession). Keynesian thinking should have died right then and there. Unfortunately it didn't, and the economy still suffers today because it didn't. Regardless of what you think about the Fed manipulating the yield curve (and they are), the market has to accommodate. For example, the ECB bought and is still buying Italian bonds. Here is the result. Italy 10-Year Government Bond Yield Here is Germany for comparison purposes. Germany 10-Year Government Bond Yield The ECB also bought Greek debt then threw in the towel. Greece 1-Year Government Bond Yield The Fed and ECB can suggest, not mandate. If the market refuses to go along there is little central banks can do about it. Bernanke's Waterloo Here is a snip from Bernanke's Waterloo mentioned above. Hyperinflation is complete silliness at this point. Were it to come, it would be an act of Congress that would create it, not an act of the Fed, and the Fed would probably have to play along. I doubt the Fed would. For all its many faults, the Fed does not want to destroy banks. Hyperinflation would do just that.Reversion to the Mean Nonsense Yet the emails still pour in. Someone even told me collapsing housing prices, the collapsing stock market, etc, was not a result of deflation but rather "reversion to the mean". What about 2-year treasuries at .2%. Let's forget about that. Let's forget about jobs, let's forget about banks not lending (because they can't), let's forget about countless things and conveniently label everything else reversion to to the mean. Imagine the reaction I would get if short-term treasury yields rose to 3% and I called it "reversion to the mean". Bizarro World Definitions Let's not call this deflation. Instead let's label this "banana soup" or "disinflation" as some propose. I am tired of arguing about "definitions". The term "deflation" in and of itself is meaningless. However, the lack of jobs, collapsing housing prices, inability of banks to lend, defaults, competitive currency devaluations, and everything else any reasonable person would equate with deflation are not meaningless. I choose to believe that if vast majority of the symptoms match the disease most would associate with "deflation" we are in it, even if one or two symptoms don't match. You are free to believe otherwise, but please do not tell me I am wrong. I am right, based on my definition: Deflation is a net decrease in money supply and credit with credit marked to market. If you think we are in a period of inflation with 10-year treasury yields at 1.8% and short-term yields frequently negative, then we are. Not on planet earth of course, but on Bizarro World. It's all in the definition. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 22 Sep 2011 07:46 AM PDT If you did not know it before, you should know it now: The global economy is in recession. US Treasury Yield Curve Germany Government Bond Yield Curve UK Government Bond Yield Curve Japan Government Bond Yield Curve Australia Government Bond Yield Curve Brazil Government Bond Yield Curve Charts courtesy of Bloomberg Huge equity market gaps down have a tendency to be bought, but I do not care where the market closes today. Nor do I do care or whether the EU or IMF manages to pull one more preposterous "Greece will not default" attempt out of its tattered hat. These curves are not synonymous with growth and we are not going to see growth either. Germany, Australia, and Brazil curves are inverted. Short-term yields are so low in the US and Japan that there is no room for inversion. No Hiding Places On September 19th I wrote No Hiding Spots Except Despised US Dollar: Equities Red, Metals Red, Energy Red, Grains Red No Hiding Spots Except Despised US DollarCurrencies Today there are indeed no hiding spots. Currencies other than the US dollar and Yen are clobbered. Note in particular the bleak picture in the "hard" currencies of Australia and Canada. There is no reason to believe the Loonie or the Australian dollar will be a safe haven. When China slows (and it will), it will hit the commodity currencies hard. I have been saying that for months. See Michael Pettis: Long-Term Outlook for China, Europe, and the World; 12 Global Predictions for details. Gold, Metals Smashed Commodities across the board are an ocean of red. I still expect gold to hold up well, at least on a relative basis. I could be wrong. There may indeed be no hiding places in this downturn. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 22 Sep 2011 01:50 AM PDT Unless there is a dramatic change in the European markets in the next few hours, there is going to be significant follow-through to the post-FOMC selloff in the US. Here are a few screen shots as of approximately 3:30 AM Central. Asia Pacific Europe US Futures S&P 500 Down 18 points - 1.6% Nasdaq 100 Index Down 31 Points - 1.4% We have seen futures turn around countless times. Unless the ECB or EU has another rabbit in its hat, this one will stick. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
You are subscribed to email updates from Mish's Global Economic Trend Analysis To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
Google Inc., 20 West Kinzie, Chicago IL USA 60610 |