| "Honorable Returns" and "Social Requirements"; More on Gift Cards Posted: 23 Nov 2012 06:26 PM PST Earlier today I received a nice email from Mike "In Toyko" Rogers regarding my post Do Gift Cards Make Any Sense? Is it Time to Ban Christmas Presents Altogether? Mike writes ... Hi Mish,
In Japan, even though Christmas gift giving is not customary, we do have a custom called "O-Kaeshi" (Honorable Return).
What "O-Kaeshi" means is that when you receive a gift, then you are obligated to give one back. The Japanese take it to extremes as when a gift is given then another is returned and then another given back for the one that was given back and the cycle continues.
I have put my foot down and told my wife and our friends to "Stop!"
It's really absurd when a Japanese visits a foreign country and then feels obligated to buy some souvenir junk for the folks back at home (I mean, how many Hawaii refrigerator magnets - that are made in China - do we really need?)
When I tell the Japanese that we are to "stop it" (and I can because I have an executive position at work) they seem to always be relieved. Cultural and social pressures are not to be under-estimated.
Anyway thinking that you have to buy presents for the aunt you don't like or cologne for the uncle you don't even really know not only a waste of money, but philosophically inane.
It's Better to buy gold or silver for the immediate family for yourself.
Thanksgiving is a better holiday than Christmas away because, at least, there's no "socially required" gift giving.
Mike More on Gift Cards Reader "EM" writes ... Hello Mish,
The one circumstance under which gift cards make sense for both buyer and seller is if the card is offered at a discount to face value.
For example, I have long been using my local coffee ship's gift card in lieu of cash there because I can buy a $100 card for $86. When it runs low, I just add another $100, again at a cost discount of 14%. The store owner gets more of my business than otherwise because I spend more when I feel I'm getting good value, and I enjoy the discount and the convenience of not having to worry about having cash in pocket.
Aside from this usage, though, gift cards are a complete racket.
Cheers,
EM Mike and EM are both correct. That said, I will point out there is nothing wrong with gift giving as long four conditions hold. - Exchanging gifts is genuinely mutual as opposed to a social necessity or obligation
- The act of exchanging is not an emotional chore
- No one is financially burdened
- The gifts are appreciated and generally usable
I wonder what percentage one or more of the above is violated. I also wonder when it will be commonplace to discount gift cards. Although I seldom see gift card discounting now, I suspect it will not be long before the practice is rampant. Once one major store offers discounts, the others will all follow. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 
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| Eurozone PMI In Steep Decline as Services Suffers Worst Month Since Mid-2009 Posted: 23 Nov 2012 09:12 AM PST With the markets giddy over the " success" of people spending more money than they can afford on gifts that make little practical sense, other inquiring minds note the Markit Flash Eurozone PMI® shows Eurozone sees ongoing steep decline as services suffers worst month since mid-2009. Key Points
Flash Eurozone PMI Composite Output Index at 45.8 (45.7 in October). Two-month high.
Flash Eurozone Services PMI Activity Index at 45.7 (46.0 in October). 40-month low.
Flash Eurozone Manufacturing PMI at 46.2 (45.4 in October). Eight-month high.
Flash Eurozone Manufacturing PMI Output Index at 45.9 (45.0 in October). Two-month high.
The Markit Eurozone PMI® Composite Output Index was little-changed in November according the flash estimate, up fractionally from 45.7 in October to 45.8. October's reading had been the lowest since June 2009 and, for the fourth quarter of 2012 so far, PMI data suggest the strongest contraction of output since the second quarter of
2009.
PMI vs. GDP
Summary
Activity has now fallen in 14 of the last 15 months, with the exception being a marginal increase seen in January. Output fell sharply in both the manufacturing and service sectors and, while the former saw the rate of contraction ease slightly, the latter saw business activity fall at a rate not seen since July 2009.
The ongoing drop in output reflected a further steep deterioration in new business, which fell at one of the fastest rates seen since mid-2009. A sharper
rate of decline in the services sector was partly offset by manufacturers reporting that their rate of loss of new orders had eased slightly to the weakest for eight months.
The plight of the service sector was also highlighted by companies' expectations for activity in the year ahead dropping to the lowest since March 2009. Sentiment dropped especially sharply in Germany, but improved slightly in France.
Forward-looking indicators in the manufacturing sector also pointed to ongoing weakness in the coming months. The amount of goods purchased for use in production fell steeply, causing stocks of purchases to contract at the same pace as the
near-three year record seen in October. Service Activity Plunges in Germany The Markit Flash Germany PMI® shows Sharpest fall in services activity for almost three-and-a-half years, but manufacturing downturn eases in November. Key Points
Flash Germany Composite Output Index(1) at 47.9 (47.7 in October), 2-month high.
Flash Germany Services Activity Index(2) at 48.0 (48.4 in October), 41-month low.
Flash Germany Manufacturing PMI(3) at 46.8 (46.0 in October), 2-month high.
Flash Germany Manufacturing Output Index(4) at 47.7 (46.3 in October), 2-month high.
Summary
November data indicated that the combined output of the German private sector dropped at a broadly similar pace to that seen in the previous month. However, this masked divergent trends in the performance of the manufacturing and service sectors, with the former posting a slower drop in output compared with October while the latter registered its fastest contraction since June 2009.
Another overall reduction in German private sector output reflected an ongoing contraction in new business volumes. Lower levels of new work have now been recorded in 15 of the past 16 months. Manufacturers and service providers indicated broadly similar rates of decline but, as with output, there was a divergence in momentum compared with that seen in October. Service providers posted the steepest decline in new business for three months, while the drop at manufacturers was the slowest since March. The latest drop in new export orders received by manufacturers was the least marked for six months, which some firms linked to support from stronger demand in China.
Shrinking new business volumes in the service sector contributed to a steep drop in expectations for activity over the next 12 months. The index measuring service providers' business expectations was the lowest since March 2009.
German private sector employment dropped at the sharpest pace since January 2010. A softer fall in manufacturing staffing levels was offset by the most marked decrease in services jobs for three-and-a-half years. Meanwhile, backlogs of work in the German private sector dipped for the seventeenth successive month in November, suggesting an ongoing lack of pressure on operating capacity.
Comment
Commenting on the Markit Flash Germany PMI® survey data, Tim Moore, Senior Economist at Markit said:
"The picture emerging from November's survey is that the Germany economy will end the year with a whimper rather than a bang, as troubles in the eurozone continue to weigh on domestic business and consumer confidence. ... November's survey suggests that the near-term outlook remains bleak for both manufacturers and service providers. Stocks of purchases across the manufacturing sector, which can be a useful barometer of confidence in the demand outlook, dropped at the steepest pace for three years – despite a slower fall in new work. Meanwhile, in the service economy, the year-ahead outlook was reported as the weakest since March 2009. The survey panel noted widespread worries that client budgets will be cut in 2013, alongside expectations that the euro area crisis will further undermine the German recovery." Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 
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