Mish's Global Economic Trend Analysis

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• 24% of Small Businesses Not Hiring Because They May Not Be In Business a Year From Now; 76% Simply Don't Need More Employees
• Farage: Globalist Troika Driving Greece Towards Violent Revolution; Godfrey Bloom calls Eurobonds "Pathway to Hell" like Subprime Mortgages
• Obama Wants Cheaper Pennies and Nickels; Why Not Do Away With Both?
• Euro Area Q4 'Flash' GDP at -0.3% q/q, First Negative Reading Since Q2 2009

24% of Small Businesses Not Hiring Because They May Not Be In Business a Year From Now; 76% Simply Don't Need More Employees Posted: 15 Feb 2012 05:43 PM PST The question of the day is "Why Aren't Small Businesses Hiring?" Most of the answers should be obvious, but let's take a look at a recent Gallup Poll on Hiring to confirm. 85% of those surveyed -- are most likely to say the reasons they are not doing so include not needing additional employees; worries about weak business conditions, including revenues; cash flow; and the overall U.S. economy. Additionally, nearly half of small-business owners point to potential healthcare costs (48%) and government regulations (46%) as reasons. One in four are not hiring because they worry they may not be in business in 12 months. Negative Surprises That 76% have no need for more employees is not at all surprising. Who wants to hire in this environment? Healthcare costs are a genuine concern. We have heard that story time and time again. That nearly half cite healthcare costs should not be surprising. One number however, did stand out. Edge of a Precipice That 24% cannot and will not hire because they fear going out of business within a year says quite a lot. Bear in mind this is in spite of the fact that "economic confidence is approaching its highest levels in the last four years. U.S. small-business owners are also about as optimistic about their business and their future hiring as they've been at any point during that time." This economy is on the edge of a precipice and few see it. 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.

Farage: Globalist Troika Driving Greece Towards Violent Revolution; Godfrey Bloom calls Eurobonds "Pathway to Hell" like Subprime Mortgages Posted: 15 Feb 2012 08:48 AM PST European parliament member Nigel Farage blames Troika for the violence and destruction in Greece. Link if video does not play: Farage: Globalist Troika Driving Greece Towards Violent Revolution "Violence and destruction in Greece that you saw on Sunday is being caused directly because people have had their democratic rights taken from them. What else can they do? If I was a Greek citizen I would have been out there joining those protests. I would be out there trying to bring down this monstrosity that has been put upon those people. .... Greece being driven into the ground and quite frankly when it comes to chaos, you ain't seen nothing yet." Money-Printing, Central Banking Scammers Belong in Prison Godfrey Bloom, member of European parliament compares Eurobonds to subprime debt and a pathway to hell. Link if video does not play: Money-Printing, Central Banking Scammers Belong in Prison 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.

Obama Wants Cheaper Pennies and Nickels; Why Not Do Away With Both? Posted: 15 Feb 2012 07:54 AM PST Thanks to the Fed, pennies and nickels are now nearly worthless, except en masse, and except for the metal content of them (at least for now). Please consider Obama wants cheaper pennies and nickels. The U.S. Mint is facing a problem -- especially during these penny-pinching times. It turns out it costs more to make pennies and nickels than the coins are worth. And because of that, the Obama administration this week asked Congress for permission to change the mix of metal that goes to make pennies and nickels, an expensive recipe that has remained unchanged for more than 30 years. To be precise, it cost 2.4 cents to make one penny in 2011 and about 11.2 cents for each nickel. Given the number of coins that the mint produces -- 4.3 billion pennies and 914 million nickels last year alone, those costs add up pretty quickly: a little more than $100 million for each coin. But even though Treasury has been studying new metals since 2010, it has yet to come up with a workable mix that would definitely be cheaper, and it has no details yet as to what metals should be used or how much it would save to do so. Even if a cheaper metal can be used, it might not take the cost of a penny down to less than a penny. Just the administrative cost of minting 4.3 billion pennies costs almost a half-cent per coin by itself, leaving precious little room to make a penny for less than a cent, no matter the raw material used. The raw material cost of the metals used in a current penny is only about 0.6 cents per coin, according to prices quoted on the London Metal Exchange, and a breakdown of a penny's composition from the mint. The mint paid 1.1 cents on average for the metal used in a penny in 2011, but that is the cost of ready-to-stamp blanks from the supplier, not raw material traded on commodity markets. Treasury spokesman Matt Anderson said Treasury has the authority to stop making the dollar coins on its own, but it can't change the mix of metals in pennies without permission. As for the suggestion of some that the penny be abandoned altogether, Anderson said only "that is not a proposal we have put forward." Pennies are a nuisance and to a lesser degree, so are nickels. Rounding up every transaction to the nearest nickel or dime should be easy enough, and there is no legitimate reason to not do precisely that. There would be a step-up in productivity if people did not have to deal with the damn things. 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.

Euro Area Q4 'Flash' GDP at -0.3% q/q, First Negative Reading Since Q2 2009 Posted: 15 Feb 2012 07:15 AM PST Via email from Barclays Capital : Euro Area Q4 'Flash' GDP at -0.3% Quarter Over Quarter Eurostat has estimated that euro area GDP contracted by 0.3% q/q in Q4 in its "flash" form (BC & consensus: -0.4% q/q). This is the first negative reading since Q2 09 (-0.2% q/q), and the most negative since Q1 09 (-2.7% q/q). As we have already pointed out in our earlier comment (Euro area Q4 GDP wrap-up: Divergent news but still looking for -0.4% q/q for the euro area), today's outturn is the result of a diverging trend vs expectations. On the negative side, we estimate (because we have applied our own seasonal adjustment to the published non-seasonally adjusted data) that the Greek GDP fell by 5.1% q/q, much more strongly than our -1.0% q/q forecast, and the Netherlands also dropped by a severe -0.7% q/q (BC & consensus: -0.3% q/q). Italy also came in below expectations (-0.1pp) at -0.7% q/q. On the bright side, Germany (-0.2% q/q, vs -0.4% q/q expected) and particularly France (+0.2% q/q, vs -0.2% q/q projected) came in stronger than expected. After pencilling in the actual GDP levels for France and the Netherlands, and the quarterly changes from the eurostat release for the other countries (using FSO for Germany), our tracking estimate is at -0.358% q/q, thus close to the rounding point. Beyond the fact that we don't have any precise information about the exact quarterly change for other large economies (Germany, Italy, Spain) - where decimal places can play a significant role - we would like also to highlight that Ireland should also be considered a significant source of uncertainty. Due to the usual volatility of its GDP quarterly path, it could almost make the overall aggregation sway one way on its own. We currently expect Irish Q4 GDP to fall by 0.7% q/q (after -1.9% q/q in Q3 and +1.4% q/q in Q2). Although, we don't have any details at this stage, we draw from the countries that have released expenditure breakdowns (France, the Netherlands, and only broad indications in the case of Germany) that investment is likely to have been the main source of upside surprise vs our forecast. One explanation for this could be that, despite the loss of confidence of businesses, which reportedly (notably by the PMIs) troughed in Q4, we believe that relatively clement weather (compared to what we have experienced so far in Q1) may have notably boosted construction investment. The confidence negative feedback loop might also have impacted businesses less than we feared. Actual Q4 GDP prints [after Q3] Euro area: -0.3% q/q (BC & consensus: -0.4% q/q) [after +0.1% q/q]. Germany: -0.2% q/q (BC: -0.4% q/q, consensus: -0.3% q/q) [after +0.6% q/q revised up from +0.5% q/q]. France: +0.2% q/q (BC: -0.2% q/q, consensus: -0.1% q/q) [after +0.3% q/q]. Italy : -0.7% q/q (BC & consensus: -0.6% q/q) [after -0.2% q/q]. Spain : -0.3% q/q (already released as flash) [after 0.0% q/q]. Netherlands : -0.7% q/q (BC & consensus: -0.3% q/q) [after -0.4% q/q revised down from -0.2% q/q]. Belgium : -0.2% q/q (already released as flash) [after -0.1% q/q]. Austria : -0.1% q/q (BC : -0.2% q/q) [after +0.2% q/q]. Finland : 0.0% q/q (BC: -0.3% q/q) [after +0.9% q/q]. Contracting Economies Germany, Spain, Italy, Netherlands, Belgium, Austria, [Portugal and Greece]. Not Contracting Yet Economies Finland, France Europe is clearly in recession and that recession will accelerate to the downside as various austerity measures and tax hikes kick in. As I said yesterday in EU to Punish Spain for Delaying Austerity Measures; European Job Losses Accelerate ... Signs point to a deep and lengthy recession, not the shallow recession forecast by economists. I seriously wonder what the heck they are looking at. 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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