Central Perk: Mish's Global Economic Trend Analysis

miercuri, 3 octombrie 2012

Mish's Global Economic Trend Analysis

Romney Wins Debate #1 Hands Down; Style Over Substance; Tweedledum vs. Tweedledee
French Economy Implodes
IMF Ready to Plunder Spain; IMF's Latest Trojan Horse Offer; English-to-English Translations
Another Good Services ISM; Outlier or Strengthening Economy?

Romney Wins Debate #1 Hands Down; Style Over Substance; Tweedledum vs. Tweedledee

Posted: 03 Oct 2012 08:59 PM PDT

I watched the entire debate between President Obama and Mitt Romney tonight. As an independent voter, I have to say this was not even close.

Romney won the debate easily. He was confident, poised, respectful of Obama, and was willing to look at the president instead of the floor.

In contrast, president Obama kept looking down, kept shaking his head, and posture-wise seemed as if he was ashamed to be on the stage with Romney.

Style Over Substance

I still have to ask: Did either candidate really say anything we did not already know?

The answer is "not really". Obama kowtowed to unions and teachers. Romney kowtowed to the military. Did anyone expect otherwise?

We still do not know what differences there are, if any, between Obamacare and Romeneycare.

In terms of sound-bites, however, it was a blowout. Romney delivered, Obama didn't.

If you are an Obama supporter who sees it differently, then you are playing mind-over-matter political cheerleading.

In the pre-debate chatter Republicans stressed the debate would be about substance over style. It turns out there was no substance at all, rather a blowout of style over non-style.

Substance? What Substance?

We still do not know what budget cuts Romney will make. We just know that amazingly Romney will not cut Medicare.

Well, actually we do not know anything except that by some miraculous growth estimate, Romney pledges to not cut Medicare while raising military spending.

If you believe that, you may as well believe Obama's last pledge "Change You Can Believe In".

Bear in mind, president Obama never promised change. He only promised "change you can believe in".

People believed. Some still do. Some even believe Romney.

There Is No Choice

On the CNBC pre-debate show, Ron Paul said there is little difference between the two political parties.

Paul is of course correct. So is my friend Pater Tenebrarum who on September 28 stated There Is No Choice.

We have previously pointed out that there is actually no choice at all for the US electorate at the upcoming presidential election. This is because in terms of the policies they support, it is nigh impossible to differentiate between the two candidates. We were not just making an unsupported assertion – we offered proof, by showing a video in which they speak for themselves. If one cannot rely on their own words to represent what they stand for, what should one rely on?

Tweedledum vs. Tweedledee

Here is the video Pater referred to: Romney Obama the Same?

Bear in mind, I said the same thing as Pater on numerous occasions.

November 11, 2011: Not your grandfather's Republican Party; President Obama and Mitt Romney are Nearly One and the Same!
February 12 2012: Obama Seeks to Prove He is More Like Romney; Obama vs. Romney - What's the Difference?
April 24, 2012: Does it Matter if Obama Beats Romney?

These kind of discussions tend to get me in hot water, but I really do not care. Play the video and see for yourself.

Two Great Pretenders

Tonight it was amusing to watch president Obama cite all of the things he agreed with Romney on, while watching Romney do a much better job at pretending there were big differences.

To be sure, there are some differences. Romney pledges to blow more money on military spending than Obama. Can he deliver? Probably not. At least let's hope not.

On the other side of the fence, it was sickening to watch Obama pledge to waste more money on education. However, it was even more sickening watching Romney pledge to do the same thing in a different way.

If Republicans really believed in smaller government, we would have it. How many years were they in control of both houses and the white house and fail to deliver?

Obama pledged to close Guantanamo and stop torture. Did He? In practice, is Obama much different than Dick Cheney?

Will The Debate Matter?

The only pertinent question is "will the debate matter?"

I rather doubt it. Neither Romney nor Obama really said anything of substance. In spite of a pathetic performance by the president, Romney did not deliver a knockout blow.

Unless minds change, and change dramatically (and I doubt they do) a stumbling performance by Obama will likely be good enough.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/

French Economy Implodes

Posted: 03 Oct 2012 03:55 PM PDT

As expected, at least in this corner, the French economy has started to implode. Service sector business activity is dropping at fastest rate since October 2011.

More importantly, the Markit Composite PMI sports the steepest rate of contraction since March 2009 with job losses accelerating at the fastest pace in 33 months and output plunging at the fastest rate in 42 months.

Key points:

Final Markit France Services Activity Index at 45.0 (49.2 in August), 11-month low.
Final Markit France Composite Output Index at 43.2 (48.0 in August), 42-month low.

Summary:

French service providers reported a steeper decrease in business activity during September. The latest fall in activity reflected a considerable drop in incoming new work. Companies adjusted staffing levels down accordingly, leading to an accelerated drop in employment. Input prices rose at a sharper rate but output charge discounting gathered pace, highlighting a deepening squeeze on companies' margins. Future expectations meanwhile dipped into negative territory for the first time since February 2009.

The seasonally adjusted final Markit France Services Business Activity Index – which is based on a single question asking respondents to report on the actual change in business activity at their companies compared with one month ago – posted 45.0 in September, down from 49.2 in August. The latest reading pointed to a marked rate of contraction in activity and the fifth decline in the past six months.
The seasonally adjusted final Markit France Composite Output Index – which measures the combined output of the manufacturing and service sectors – registered 43.2 in September, down from 48.0 in August. The latest reading was indicative of a substantial decline in activity and the steepest rate of contraction since March 2009.

Service sector activity declined in response to a further fall in new business during September. The rate of contraction in new work accelerated to the fastest in five months, with anecdotal evidence pointing to lacklustre demand conditions and clients delaying decisions on projects. Combined with a steeper decline in new orders in the manufacturing sector, overall new business across the French private sector fell at the steepest rate for 41 months.

Reduced workloads prompted French service providers to make further cutbacks to employment during September. The rate of job shedding accelerated to the sharpest for 33 months, with panellists indicating that staffing levels were lowered in response to declining activity and as part of cost-cutting efforts. Composite data signalled the sharpest reduction in employment since December 2009.

Right On Time

If that does not accurately describe implosion, what does? Looking for who or what to blame? Look no further than inane work rules and regulations made worse by the socialist government of president François Hollande.

On June 16, in "France Has At Most Three Months Before Markets Make Their Mark" I wrote ...

If socialists take control of both houses in French parliament as expected, president François Hollande would have free rein to carry out his stated policies such as hire more public workers, raise taxes on the rich, and Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It"

Well, three months have passed and the French economy is clearly imploding and Hollande has not even fully followed up on his economically insane promise regarding layoffs, but he has pressured companies to not do so, and he has also massively raised taxes (a splendidly stupid thing to do in recession).

You reap what you sow, and the implosion of France is now underway. Odds of France making its budget projections are in my estimation close to zero, but time will tell.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/

IMF Ready to Plunder Spain; IMF's Latest Trojan Horse Offer; English-to-English Translations

Posted: 03 Oct 2012 10:34 AM PDT

IMF chief Christine Lagarde says IMF ready to help Spain.

The International Monetary Fund stands ready to help Spain in multiple ways if Madrid seeks its aid, IMF chief Christine Lagarde said in a newspaper interview published on Wednesday.

"If Spain wants it, we could help in diverse ways, for example by simply auditing and monitoring reforms negotiated with its European partners without the IMF participating in financing," Lagarde told French daily Le Figaro.

"But we could also play a role in financing," she added.

Reflections on Translations

I frequently translate articles from Spanish, German, Italian and other languages. However, the biggest syntactical changes occur in seldom-offered elsewhere, yet, badly-needed English-to-English translations.

As a public service announcement, the Mish translation of the above statements by Lagarde is the same as the title of this post "IMF Ready to Plunder Spain".

IMF Trojan Horse

Any time the IMF offers money or help, it is an offer best refused. I have written about this before and offer this 2010 flashback To Ireland With Love

Mentally cross out "Ireland" and write in "Spain".

The IMF was not out to "help" Ireland. Rather the IMF was out to plunder Ireland for the benefit of banks in the UK, Germany, and France. The same Trojan Horse setup applies today.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/

Another Good Services ISM; Outlier or Strengthening Economy?

Posted: 03 Oct 2012 09:09 AM PDT

For the second consecutive month the Non-Manufacturing ISM surprised to the upside.

In September, the NMI™ registered 55.1 percent, indicating continued growth in the non-manufacturing sector for the 33rd consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

Index	Sept	Aug	Percentage Point Change	Direction	Rate of Change	Trend in Months
NMI™/PMI™	55.1	53.7	1.4	Growing	Faster	33
Business Activity/Production	59.9	55.6	4.3	Growing	Faster	38
New Orders	57.7	53.7	4	Growing	Faster	38
Employment	51.1	53.8	-2.7	Growing	Slower	2
Supplier Deliveries	51.5	51.5	0	Slowing	Same	2
Inventories	48.5	52.5	-4	Contracting	From Growing	1
Prices	68.1	64.3	3.8	Increasing	Faster	3
Backlog of Orders	48	50.5	-2.5	Contracting	From Growing	1
New Export Orders	50.5	52	-1.5	Growing	Slower	3
Imports	50	49.5	0.5	Unchanged	From Contracting	1
Inventory Sentiment	65	67	-2	Too High	Slower	184

Last month I was asked if the services ISM changed my view of recession. I wanted to see the jobs report first. The household survey had horrendous results for the second month.

Household Survey

In September the number of people employed fell by 119,000.
In the last two months, the number of people employed fell by 314,000!
In the last year, the civilian population rose by 3,695,000. Yet the labor force only rose by 971,000.
In September Civilian Labor Force fell by 368,000.
In September those "not" in the labor force increased by 581,000 to a record 88.921 million
In August, those "not" in the labor force increased by 348,000 to 88,340,000 a record at the time

Thus in the last two months those "not" in the labor force increased by 929,000. This is not demographics!

Since then data has been generally poor, but mixed. Home prices give further indication of a bottoming process. Yet, Durable Goods Orders Ex-Transportation "Unexpectedly" Drop, Down Third Month, July Revised Lower

Moreover, US CEOs Sharply Reduce Expectations for Economic Outlook, Hiring; Third Largest Plunge in 6-Month Expectations in History.

Curiously, even with this strong services ISM, employment is weakening although still positive.

All in all, it is the ISM numbers that seem out of sync with most of the rest of the data, especially household survey numbers.

Once again, let's see what Friday brings, but this time, one solid month will not convince me in light of other weakening data.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/

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