Mish's Global Economic Trend Analysis |
| Chris Christie Provides Perfect Setup for Saturday Night Live Posted: 18 Nov 2012 05:38 PM PST Those looking for late Sunday evening humor can certainly find it in this short YouTube clip of New Jersey governor Chris Christie. Link if video does not play: Chris Christie on Twinkies At a recent news conference, Christie was asked a question about Twinkies. He responded ... "Really, seriously, you're not asking me about Hostess Twinkies are ya? What's the next question? I'm on Saturday Night Live enough. You think you're getting me behind this microphone having me talk about Twinkies? This is a setup man, I know it. You people are the worst. This is a setup. I am not answering questions on Twinkies. No, no, no, no, no, no. It's bad that I even said the work Twinkie from behind this microphone. You are not getting me to do that, no way." That is so obvious, it almost appears as if Christie was trying to make the opening skit of Saturday Night Live. In case you are not familiar with the Twinkies story, please consider Hostess to Liquidate if Bakers' Strike Continues Through Thursday; End of Twinkies Hours Away? The bottom line is the union would not give into demands and the company filed a motion last Friday to liquidate. Shutting down the company will mean the loss of 18,500 jobs (less any jobs picked up by buyers of brands Twinkies, Ding-Dongs, Wonder Bread, Ho-Ho's etc.) There is plenty of blame to go around, including untenable wages and benefits, leveraged debt, untenable management salaries etc. However, the enabling factor behind the debt is loose monetary policy by the Fed coupled with fractional reserve lending. Factor in unions and corrupt management and there is no way the company could make it without huge concessions from the union. Still, it is difficult to have much sympathy for those who vote to have no job in these trying times. The union will likely see pension benefits slashed by 50% or more when handed over to the Pension Benefit Guarantee Corporation (PBGC). The PBGC is of course US taxpayers who should not have to pick up any of this tab at all (but they will). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 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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| Nightmare Scenarios for Obama's 2nd Term Posted: 18 Nov 2012 10:07 AM PST Last week I was interviewed by Constantine von Hoffman for a CBS news article regarding economic nightmares for Obama's 2nd term. Calculated Risk was interviewed as well. His nightmare scenario is war, specifically noting the rise of Golden Dawn. Eight people were interviewed for the CBS article but the organization was maddening. Specifically, there is no way to see all 8 viewpoints of people interviewed at once. You have to click through pages one at a time. I was curious enough to do it, Calculated Risk gave up after the second click. In a clear effort to generate clicks, articles like this are an extreme turn-off and actually counterproductive. That no readers emailed me with a link to this article says no one bothered clicking through all the pages. I talked to von Hoffman about numerous things, only one was mentioned in the article. Many of my points were of the nature of things I think should happen (and would benefit the global economy over the long run if they did), but most economists would disagree. Mish Nightmare Scenario
I mentioned all of those things and more. The first four are things that I actually believe need to happen (and the sooner the better) to prevent a global nightmare! Unfortunately, most economists want to kick the can down the road still more. For a discussion of the fiscal cliff, please see Misdiagnosing the Fiscal Cliff; Shrill Voices and Economic Nonsense; Tyranny of Balanced Budgets A breakup of the eurozone is inevitable in my opinion. For a detailed explanation why, please see Spain's Unpleasant Choice: Accept Lower Wages and Still Higher Unemployment, Leave the Euro and Default.The sooner a breakup happens the better. Delays end up like Greece. In regards to China, please consider "China Rebalancing Has Begun"; What are the Global Implications? Michael Pettis on China Rebalancing, Chinese Price Deflation, and Spain Exit from Euro; Target 2 Revisited. Note that can-kicking in Greece has led to the rise of the Golden Dawn party. Expect the same to happen in Spain if the agony lasts long enough. Essentially, my nightmare scenario is more can-kicking exercises until the entire global economy blows up in a currency crisis and radical parties like Golden Dawn gain prominence everywhere, fueling political as well as economic violence. Addendum I had war in the Mideast with spiking oil prices as part of my nightmare scenario that I mentioned to von Hoffman. I simply forgot to mention it when I typed this post up earlier today. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 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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