Mish's Global Economic Trend Analysis |
- Dallas Fed Proposes Ending "Too Big To Fail", Urges Removal of Failed CEOs, Breakup of Banks
- Steen Jakobsen on CNBC Squawk Box on the lack of European reforms, the French economy, elections, intervention in the bond markets, and gold
- Mish on Capital Account May 1: Discussion of Europe, Austerity, Paul Krugman, Jobs, and the Greenspan Contrarian Indicator (GCI)
- China Manufacturing "Expands" at Faster Pace; China Manufacturing "Contracts" 6th Consecutive Month; Confused by Conflicting Headlines?
Dallas Fed Proposes Ending "Too Big To Fail", Urges Removal of Failed CEOs, Breakup of Banks Posted: 02 May 2012 09:53 PM PDT Richard Fisher, governor of Dallas Fed wants to end "Too Big To Fail" and Urges Removal of CEOs of Bailed-Out Banks The Federal Reserve Bank of Dallas said taxpayer aid to failing banks should come only after the voiding of all employment and bonus contracts and the removal of chief executive officers and boards of directors.End Too Big to Fail Now Please consider the Dallas Fed Slideshow Why We Must End Too Big to Fail – Now Concentration Intensifies the Impact of MistakesClose But Not Quite Correct I have one major disagreement with the proposal. Fisher said "taxpayer aid to failing banks should come only after the voiding of all employment and bonus contracts ..." I say taxpayer aid to banks should never happen. Banks and bondholders should take the hit. However, it is refreshing to see this kind of talk. It would be a major step in the right direction. Unfortunately, Bernanke is against it. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 02 May 2012 12:15 PM PDT Saxo Bank chief economist Steen Jakobsen was on CNBC Squawk Box on the lack of European reforms, the French economy, elections, and intervention in the bond markets, commodities in general, and gold and copper specifically. Select Quotes From Above Video
Unwarranted Optimism? I am in general agreement with most of Steen's views. However, unlike Steen, I am not bullish on copper or base metals in general. My reasons are as described in 12 Predictions by Michael Pettis on China; Non-Food Commodity Prices Will Collapse Over Next Three to Four Years; Nails in the Hard Landing Coffin? Whether or not Europe comes out of this recession with a bang or a whimper is entirely dependent on whether or not there are any structural reforms in the next two years or not, and whether or not the eurozone even survives. The good scenario in my opinion is a breakup of the Eurozone. The quicker that happens the quicker Europe bottoms and the sharper the rebound (but only if accompanied by sufficient reforms). If the public sector remains above 50% of the French GDP (currently about 56%), don't look for a recovery in France. Color me skeptical about a huge recovery in Europe with socialists in control, no real reforms implemented, and most importantly, aging demographics that will place still more burdens on European taxpayers unless there is dramatic pension reform. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 02 May 2012 09:48 AM PDT Once again it was a pleasure to be on Capital Account with Lauren Lyster Tuesday afternoon. We discussed Europe, austerity measures, Paul Krugman, whether or not the Fed could create jobs, and the Greenspan Contrarian Indicator. Link if video below does not play: Mish Tackles Paul Krugman and the Greenspan Contrarian Indicator (GCI) . For more on the GCI, Please see Contrary Indicator Alert: Greenspan Says U.S. Stocks 'Very Cheap,' Likely to Rise I have a lot of fun doing these. I do not come in until after the 6 minute mark but Lauren had some excellent comments before I came on. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 01 May 2012 11:45 PM PDT China manufacturing is reported to be in contraction and expansion simultaneously. The Chinese government reports expansion. The HBSC PMI says China is in contraction for the 6th consecutive month. Obviously this is impossible, so the question is "who to believe?" China Manufacturing Expands at Faster Pace Bloomberg reports China's Stocks Rise Most in Two Weeks on Manufacturing, Fee Cut China's stocks rose the most in two weeks after manufacturing expanded at a faster pace and the nation's two stock exchanges said they will cut trading fees by 25 percent to attract investors.China Manufacturing Contracts 6th Consecutive Month Markit reports China Manufacturing Sector Operating Conditions Deteriorate at Marginal Rate April data pointed to further reductions in manufacturing output and new business, although rates of decline were marginal in both cases. Consequently, companies remained cautious with regards to hiring, highlighted by the index measuring trends in manufacturing employment reaching its lowest level in 37 months.Cyclical Trough Coming Up? What is with these perpetually bullish comments on Markit? I am seriously at a loss here. For months on end we heard nonsense about no recession in Europe, followed by no recession in Germany, followed by calls for a short recession. Then the bottom fell out days ago as noted in Eurozone Manufacturing PMI Hits 34 Month Low; German Manufacturing Hits 33 Month Low; Orders Drop Steeply Across the Board. Absurd Predictions Here we are again with preposterous predictions of a cyclical bottom in China. I do not know what the next quarter will bring, or even the next several quarters, but these guys are not on the ball nor are they in left field. Frankly, they are not even in the ballpark. If China GDP posts a cyclical bottom at 8.1% I will eat my hat. I believe, along with Michael Pettis at China Financial Markets that China will "average" 3.5% GDP or less for the rest of the decade. For details, including two bets Pettis made with The Economist please see 12 Predictions by Michael Pettis on China; Non-Food Commodity Prices Will Collapse Over Next Three to Four Years; Nails in the Hard Landing Coffin? If China growth slows to 3.5% or lower on average, the bottom will be far less, perhaps even negative. Regardless, the idea that China's GDP will bottom at 8.1% is absurd. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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