Mish's Global Economic Trend Analysis

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• Help Stop Special Interest Groups and Unions From Buying Politicians; Vote Yes On Proposition 32
• Greek State Tries to Stem Neo-Nazi Rise; True Finns Surge in Election Polls
• Eurozone Steepest Contraction Since June 2009; Unwarranted Hope and Reflections on Panic! Economists Can Neither Think Nor See
• Japanese Exports Sink 3rd Month; Flash China Manufacturing PMI Shows Output down at Sharpest Rate in Ten Months

Help Stop Special Interest Groups and Unions From Buying Politicians; Vote Yes On Proposition 32 Posted: 20 Sep 2012 06:09 PM PDT In general, if union leaders and organizers are raising money for some political purpose, I am against the proposal (and vice versa). In the case at hand, public unions are raising money to defeat proposition 32, so it is nearly automatic that I would be for it. And I am. But what is California proposition 32? Proposition 32 Vote Yes on Proposition 32  if you want to ... Prohibit corporations and unions from giving to candidates Prohibit the deduction of political money from worker paychecks, making all political contributions truly voluntary Prohibit contractors from giving to politicians who approve their contracts Please consider the following You-Tube video on prop 32. Unions of course are fighting this tooth-and-nail. In general that is all you need to know. Opponents claim there are loopholes that allow contributions to super-PACs. If so, it is relatively even-handed although arguably not perfect. Nothing stops unions or corporations or anyone else from voluntarily giving money to PACs. The biggest gripe of the SEIU and unions is point number two. Point number two is thus the biggest strength of the proposal. It is long past the time to rein in public unions and I look forward to the time the entire notion of collective bargaining for public unions goes into the ashcan of history where it belongs. 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.

Greek State Tries to Stem Neo-Nazi Rise; True Finns Surge in Election Polls Posted: 20 Sep 2012 02:17 PM PDT Euroskeptics have surged once again in Finland according to reader JT who writes ... Hello Mish The message of the True Finns, the Finnish anti-bailout, anti-euro party in the local elections is crystal clear: They do not think it makes any sense to cut local services due to budget deficits and at the same time, shovel billions to bail out Southern Europe. That message is resonating. According to the latest poll, True Finns are going to more than triple their support, going from about 5% to at least 17%. Final numbers could be even higher due to the fact that the polling company, Taloustutkimus Oy, is owned by a member of the largest party, Kokoomus (National Coalition in English), and his polls have consistently underestimated True Finns popularity. Will anything change even if True Finns win big? Probably not. The six other governing parties have not changed their policies at all despite the popularity of True Finns. Here is the link to the surge of the True Finns. You can probably google translate it. http://yle.fi/uutiset/perussuomalaisille_tulossa_jattivoitto_kuntavaaleissa/6303417 JT True Fins Become Giant in Municipal Elections Via Google Translate of the link sent by JT, please consider True Finns Become Giant in Municipal Elections Yle News fresh municipal election survey, the basic Finnish vote for 17.2 percent of the respondents, and the party treble the last municipal elections, voting prey. The biggest loser would be center, but would have to lose all the other parties except the Greens. The True Finns has risen from the previous, August AWARD measurement of almost one and a half percentage points. The National Coalition Party is still the most popular by 21.5 per cent. SDP was measured at 19.9 and 15.9 per cent in the center of the readings. August SDP has risen by 1.2 percentage points. The Conservative Party's popularity has dropped to 1.2 and 0.7 percentage points of the city center. Finland Polls KOK - National Coalition Party PS - True Finns SDP - Social Democrat Party KSEK - Centre Party Support for True Finns dropped as low as 5% but is now back to being the third largest party again, with a good shot at moving higher. Rise of Neo-Nazis in Greece Things of a far more ominous nature are picking up steam in Greece. The Raw Story reports Greek State Tries to Stem Neo-Nazi Rise. Following its unprecedented election to parliament, Greece's neo-Nazi group Golden Dawn has been engaged in 'law and order' crackdowns and solidarity gestures that have boosted its popularity, alarming the state. Tightly regimented and dressed in black T-shirts stamped with the meander, an ancient Greek motif, Golden Dawn is also suspected of orchestrating a rising trend of racist violence against foreigners, legal or otherwise. The group's ratings have risen to over 10 percent in recent opinion polls. "It's a strategy reminiscent of Italian neo-fascism in the '70s," she said. The self-styled nationalist party, which campaigned in June elections with pledges to "scour the country clean", has capitalised on the perception that undocumented migration has been allowed to run rampant. It has benefited from judicial inertia and a suspiciously soft-handed response by police, who usually fail to arrest Golden Dawn members even when under direct attack by them. And it has exploited anger towards Greece's political system which is blamed by most people for the country's economic ills. "It's a new phenomenon that is very dangerous for the parliamentary system," said Yiannis Mavris, a political analyst whose polling institute Public Issue recently recorded the party's rating at "nearly double" its score at the last election, where it picked up over 425,000 votes. Golden Dawn "is here to stay," Mavris said. A former police unionist who is now a lawmaker recently warned the ruling coalition that planned pay cuts to police "would send 300,000 families directly to Golden Dawn." 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.

Eurozone Steepest Contraction Since June 2009; Unwarranted Hope and Reflections on Panic! Economists Can Neither Think Nor See Posted: 20 Sep 2012 11:00 AM PDT The global recession which started in Europe, is strengthening led by further declines in the eurozone. Markit reports Eurozone sees steepest contraction since June 2009 despite downturn easing in Germany. Key Points Flash Eurozone PMI Composite Output Index at 45.9 (46.3 in August). 39-month low. Flash Eurozone Services PMI Activity Index at 46.0 (47.2 in August). 38-month low. Flash Eurozone Manufacturing PMI at 46.0 45.1 in August). Six-month high. Flash Eurozone Manufacturing PMI Output Index at 45.5 (44.4 in August). Five-month high. The Markit Eurozone PMI® Composite Output Index fell from 46.3 in August to 45.9 in September, according to the preliminary 'flash' reading, based on around 85% of usual monthly replies. The index therefore signalled that the private sector economy contracted for the twelfth time in the past 13 months, with the rate of decline accelerating slightly to reach the fastest since June 2009. The September reading rounds of the weakest quarter since the second quarter of 2009, with the average PMI reading for the third quarter at 46.2, down from an average of 46.4 in the second quarter. Markit (Flash) Eurozone PMI and GDP Manufacturing and services saw similarly steep rates of decline in September. However, while manufacturing output fell at the slowest rate since April, the service sector saw the largest drop in activity since July 2009. The faster rate of decline in output reflected an accelerated rate of loss of new business – the largest monthly fall since May 2009. France saw output and new orders both fall at the fastest rates since April 2009, with rates of decline accelerating markedly in both manufacturing and services. Employment fell for the ninth consecutive month across the Eurozone, dropping at the fastest rate since January 2010. The rate of job losses in services was the highest since November 2009 and steeper than the cut seen in manufacturing, which was the lowest for five months. While only a marginal fall in employment was seen in Germany, French payroll numbers were cut at the fastest rate since November 2009, and elsewhere across the region employment showed the largest monthly fall since July 2009. Unwarranted Hope Markit senior economist Chris Williamson was hoping moves by the ECB would spur confidence: "We had hoped that the news regarding the ECB's intervention to alleviate the debt crisis would have lifted business confidence, but instead sentiment appears to have taken a turn for the worse, with businesses the most gloomy since early-2009 due to ongoing headwinds from slower global growth. This gloom is clearly reflected in headcounts falling at the fastest rate since January 2010 as companies seek to adjust to weaker demand." The recent moves by the ECB and Fed were hardly confidence-inspiring. Rather, they were a sign of Panic! Things are deteriorating rapidly, more austerity is coming to Spain and Italy. France is hiking taxes and fees like mad, as well as considering plans to prohibit businesses from firing employees, and economists are expecting or hoping interest rate cuts will inspire confidence! Economists Can Neither Think Nor See Not only are such economists unable to think, they cannot even see what 20 years of monetary and fiscal stimulus did for Japanese "confidence", which is to say nothing at all. However, lower interest rates and fiscal stimulus did leave Japan a confidence-eroding mountain of debt in its wake. Japan is now hooked on low interest rates, a mere rise of one percentage point would consume all revenues. Is that supposed to inspire confidence? Nonetheless, Bernanke and Draghi have vowed to keep doing what they are doing until it works, and economists are hoping it will. It's pure insanity. 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.

Japanese Exports Sink 3rd Month; Flash China Manufacturing PMI Shows Output down at Sharpest Rate in Ten Months Posted: 20 Sep 2012 12:28 AM PDT As the global recession deepens, bad news in Asia continues to mount. China and Japan are leading the Asia-Pacific decline. The HSBC Flash China Manufacturing PMI™ is negative once again with Output down at Sharpest rate in Ten Months. Key Points Flash China Manufacturing PMI™ at 47.8 (47.6 in August). 2-month high. Flash China Manufacturing Output Index at 47.0 (48.2 in August). 10-month low. PMI Production Japanese Exports Sink 3rd Month The Financial Times reports Japan suffers steep fall in exports. Japan recorded another steep fall in exports in August, highlighting the vulnerability of the nation's finances amid persistently high imports of fuel. Thursday's government data showed that shipments slipped almost 6 per cent from a year earlier to Y5tn ($64bn), the third monthly fall in a row, while imports were 5.4 per cent lower at Y5.8tn. The resulting trade deficit of Y754bn was among the widest since last March, when the Fukushima crisis led to the staggered closure of the country's nuclear reactors. Adjusted for seasonal variations, Japan has recorded trade deficits in each of the 18 months since the earthquake and tsunami, after decades of more or less uninterrupted surpluses. Now, as the government edges towards a gradual phasing-out of nuclear power, increasing its reliance on imported fossil fuels, many expect these deficits to linger. Provisional data from the ministry of finance showed that in August shipments to western Europe fell by 28 per cent from a year earlier, thanks to big falls in exports to Germany (18 per cent) and the UK (42 per cent). Exports to China, meanwhile, posted their third successive decline. August's 10 per cent fall was only slightly better than a 12 per cent slump in July. Trade Deficits for 18 Months Japan has been in a trade deficit position, seasonally adjusted, for 18 months. Territorial disputes with China are likely to cause further economic damage. Should China withhold rare earth elements from Japan, the result could be crippling. Rare earths are used in cell phones, computers, bombs, DVD, batteries,  catalytic converters, and numerous other devices. For now, Japan still has a current account surplus in spite of an ongoing trade deficit, but that situation will not last forever. When it ends, Japan will need external financing of its mountain of debt, or it will end up turning to the printing presses. I remain bearish on the Yen, but I am not able to put a specific time frame on when Japan's serious issues start to matter. 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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