Central Perk: 29 oct. 2011

sâmbătă, 29 octombrie 2011

Mish's Global Economic Trend Analysis

Treaty of Debt - An Eye Opening Video on the ESM Bailout Mechanism
Chanos Interview: China Slowdown Just Beginning
Absurd Comment of the Week; Peter Principle in Action
Spain's Unemployment "Unexpectedly" Rises to 21.52%; Expect Market Focus to Shift from Greece to Portugal, Spain, Italy

Treaty of Debt - An Eye Opening Video on the ESM Bailout Mechanism

Posted: 29 Oct 2011 03:14 PM PDT

Inquiring minds are interested in the terms of the European Stability Mechanism (ESM) accord scheduled to replace the EFSF. The following video highlights the key sections of the proposed treaty.

Link if video does not play: Treaty of debt (ESM) - stop it now!

There are comments on The Telegraph article A German view of the bailout deal which is where I found the video.

Key Details of ESM Accord

Article 8 says "Authorized Capital stock 700 billion Euros"
Article 9 says "ESM members irrevocably and unconditionally undertake to pay capital calls on them within 7 days"
Article 10 allows the ESM board of governors to "change the authorized capital and amend article 8 accordingly"
Article 27 says ESM shall enjoy "immunity from every form of judicial process". Thus the ESM can sue member countries but no one can challenge it. No governments, parliament or any other body or laws apply to the ESM or its organization.
Article 30 says "Governors, alternate governors, directors, alternate directors, the managing director and staff shall be immune from legal process with respect to acts performed by them (...) and shall enjoy inviolability in respect of their official papers and documents"

There are no independent reviewers and no existing laws apply. Thus Europe's national budgets will be in the hands of one single, unelected body that is accountable to no one and immune from all legal actions.

Is this the future of the EU or will the German supreme court and other governments put an end to it?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Chanos Interview: China Slowdown Just Beginning

Posted: 29 Oct 2011 02:21 PM PDT

Jim Chanos Says China Slowdown has just begun.

There is not much new in the video actually. I just happen to think he is correct.

The link came in an email I played while stuck in an airport on a plane delay back to Chicago.

URL if video does not play: http://www.macrobusiness.com.au/2011/10/chanos-china-slowdown-just-beginning/

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

Absurd Comment of the Week; Peter Principle in Action

Posted: 29 Oct 2011 08:55 AM PDT

The absurd comment of the week goes to Larry Summer for his statements on the irony of the financial crisis.

The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending. Most policy failures in the United States stem from a failure to appreciate this truism...

Anyone who thinks the cure is the same as the disease (as Larry Summers clearly does) is incompetent (at best).

I found the reference when Zerohedge posted the Summers link with no comment. I suspect the Summers comment was so asinine that ZH did not even see a need to state it. Because he did not comment, I will.

Peter Principle in Action

Larry Summers may be one of the best examples of the Peter Principle that you can ever find.

However, I suspect a case can be made that Summers did not rise to his level of incompetence, that he was never competent in any position, ever, and that he got where he is out of sheer luck, birthright, bribery, or some combination thereof.

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

Spain's Unemployment "Unexpectedly" Rises to 21.52%; Expect Market Focus to Shift from Greece to Portugal, Spain, Italy

Posted: 29 Oct 2011 12:32 AM PDT

With news of a "voluntary" haircut on Greek bonds of 50%, it's time to look ahead to the next big trouble spots. By measure of 10-Year government bond yields, Portugal at 11.8%, Italy at 6.02%, and Spain at 5.51% (as compared to Germany at 2.18%), Portugal, Italy, and Spain clearly have critical issues.

Moreover, the economic data from Spain is continuously awful. For example Spain's Unemployment "Unexpectedly" Rises to 21.52%

The number of unemployed persons increased by 144,700 in the third quarter, bringing the total number of unemployed amounted to 4,978,300 people, according to Labour Force Survey (EPA) released today by the National Statistics Institute (INE). Spain has not seen such a high unemployment rate since the fourth quarter of 1996.

Austerity measures and economic reforms in the "Club-Med" Euro states are much needed. However, the short and intermediate-term effect will not be good for sovereign debt yields, budget targets, or GDP.

Spain and Portugal are accidents waiting to happen (sooner rather than later), and judging from bond yields alone, it is safe to add Italy to that mix.

The euphoria of a "settlement" (that fixes nothing) in regards to the crisis in Greece will soon give way to the massive number of even larger problems elsewhere in the Eurozone.

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

Seth's Blog : Questions for a new entrepreneur

Questions for a new entrepreneur

A few things came up over coffee the other day. His idea is good, his funding is solid, there are many choices. Some of the questions that don't usually get asked:

Are you aware of your cash flow? The thing about a fish in the stream is that it doesn't care if the water is six inches deep or a foot deep. As long as it never (ever) goes to zero, it's fine. What's your zero point? What are you doing to ensure you get to keep swimming?

Are you trying to build profit or equity? A business that builds a brand, a footprint, a standard and an audience might end up being worth millions (witness Tumblr, which has many millions of value but zero profitabilty). On the other hand, a business with no exit value at all might spin off plenty of profit (consider the local doctor's office). It would be great if you could simultaneously maximize both the value of your company and the profit it produces (in the short run), but that's unlikely.

What's your role? Do you want to be a freelancer, an entrepreneur or a business owner? A business owner is the boss, but it's a job, a place that is stable and profitable. An entrepreneur is an artist of sorts, throwing herself into impossible situations and seeking out problems that require heart and guts to solve. Both are fine, but choose.

Are you trying to build a team? Some business owners want to minimize cost and hassle. Others are trying to forge a culture, to train and connect and lead.

Which kind of risk is okay with you? There's financial risk, emotional risk and brand risk (among others). Are you willing to put your chips on the table daily? How about your personal reputation?

And finally, and most important, why? Why are you doing this at all?

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Weekly Address: We Can’t Wait to Create Jobs

Your Daily Snapshot for
Saturday, October 29, 2011

Weekly Address: We Can't Wait to Create Jobs

President Obama says that we can’t wait for Congress to take action to grow the economy and create jobs and highlights actions he took to help families refinance their mortgages, put veterans to work, and lower the cost of student loans.

Watch the video.

President Barack Obama tapes the weekly address, and a video for National Veterans Network, in the White House Library, Oct. 28, 2011. (Official White House Photo by Lawrence Jackson)

Weekly Wrap Up

Here's what happened this week on Whitehouse.gov:

Helping Homeowners After Republicans in the Senate blocked the jobs bill yet again, President Obama hit the road with a new message, “We Can’t Wait." The President decided to take executive action to create jobs and put money back in the pockets of Americans. While in Las Vegas, the President announced steps to make it easier for homeowners to refinance their mortgages, helping responsible borrowers with little or no equity in their homes take advantage of today’s low mortgage rates.

Modifying Student Loans On a snowy day in Colorado, President Obama announced a new effort that will help borrowers better manage their student loan debt. He said he will move forward with A “Pay As You Earn” program that will reduce monthly payments for more than 1.6 million people. Starting in 2014, borrowers will be able to reduce their monthly student loan payments from 15 percent to 10 percent of their discretionary income.

Hiring Veterans The Obama Administration challenged each of the 8,000 Community Health Centers around the country to hire one veteran, effectively opening up 8,000 jobs to our unemployed veterans. These health centers, which provide primary care services in typically underserved areas, are a major piece of President Obama’s historic health care reform law.

We The People On Wednesday, President Obama’s top education advisors issued the first response to a petition created through the online petition site, We The People. The response addressed the petition “Taking Action to Reduce the Burden of Student Loan Debt”. The Administration recognized the high cost of education and moved forward to reduce monthly loan payments for more than 1.6 million people. The online tool that allows Americans to voice their opinions to the government has had around 755,000 people use the platform to create or sign more than 12,400 petitions.

Tonight Show The President flew to L.A. to appear on the Tonight Show with Jay Leno. The two talked about Libya, the withdrawal of troops from Iraq, and reality television -- including a show on C-SPAN called ‘Congress.’

West Wing Week: Check out your video guide to everything that happened at 1600 Pennsylvania Avenue.

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