marți, 23 octombrie 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Spanish Home Loans Plunge 28.5% to Record Lows; Brussels Revises Spain’s Deficit Upward to 9.4% of GDP

Posted: 23 Oct 2012 12:48 PM PDT

The implosion in Spain continues, with the budget deficit heading in reverse, now revised up to 9.4% of GDP. [Correction: 9.4% was upward revision for 2011. The upward revision for 2012 is "only" 7.3%]

Spain's original deficit target for 2012 was 4.4%, then revised to 5% then 5.3%. Yet another revision brought the target all the way up to 6.3%. So how is Spain doing? A few flashbacks will explain.

On April 10 I optimistically wrote Inconsistencies in Spain's Budget Suggest Deficit will be 7% not 5.3%

"I have been saying for what seems like forever that Spain would not makes its budget. It won't, and we have a starting point for how bad it might get."

Indeed "starting point" was the operative phrase as 7% was reached by June.

On June 26, I wrote Spain Has Budget Deficit of 3.41% of GDP Through May (Not Counting Regional Governments); Target for Entire Year was 3.5%

That brief moment of 7% did not last long.

On September 21 I wrote Spain's Fiscal Deficit 8.56% of GDP in First Half; Impossible Second Half Targets.

That did not last long either.

Brussels Revises Spain's Deficit Upward to 9.4% of GDP

Today we learned from El Pais English edition that Brussels Revises Spain's Deficit Upward to 9.4% of GDP
The European Union's statistics office, Eurostat, on Monday said it had revised Spain's public deficit for last year upward from 8.5 percent of GDP to 9.4 percent to reflect state injections of capital into nationalized banks.

That put Spain on a par with Greece and only behind Ireland, whose shortfall was 13.4 percent of GDP, in the EU. In contrast the average deficit in the EU fell to 4.4 percent of GDP, down from 6.5 percent in 2010, while the shortfall in the euro zone declined to 4.1 percent from 6.2 percent. Seven countries in the EU had deficits above the bloc's ceiling of 3 percent of GDP.

Eurostat also revised the deficit for Spain for 2010 upward from 9.3 percent to 9.7 percent to reflect unpaid bills by the public administrations. "The increase in the deficit for 2010 is mainly due to the previously unrecorded unpaid bills in the state and local government sub-sectors," Eurostat said. "The increase in the deficit for 2011 is mainly due to the reclassification of capital injections by the central government in Catalunya Caixa Bank, NCG Bank and Unnim Bank."
Optimistic Nonsense

The article continues with blatantly optimistic nonsense from the IMF and even more absurd statements from Spanish officials.

"Given the weak state of the Spanish economy, which is expected to contract 1.5 percent this year and 1.3 percent next year, the IMF has thrown doubt on the government's ability to meet its deficit-reduction target for this year and the following, which is 4.5 percent of GDP. The IMF believes Spain will not be able to meet the 3-percent target until 2017, although the government has pledged to do so by 2014."

The IMF targets are ridiculous enough, but Spain's likelihood of achieving its government pledge of 3% by 2014 are simply laughable.

Spanish Home Loans Plunge 28.5% to Record Lows

Also from El Pais English edition, please consider Home loans granted drop to record lows
The number of home loans granted by lenders in Spain fell to their lowest levels on record in August as tight credit conditions and high unemployment continued to depress the mortgage market despite a fall in prices.

According to figures released Monday by the National Statistics Institute (INE), the number of loans disbursed fell 13.1 percent from July and 28.5 percent from August 2011 to 21,106, the lowest figure since the INE began compiling the current series in 2003.

According to official figures released last week, house prices have fallen 25 percent from their peaks at the start of 2008. Experts reckon they will have to fall more to clear an estimated pile of 670,000 new housing units built up over a decade-long boom that came to an abrupt halt around the start of 2008.

Apart from a lack of liquidity, the country's banks are also grappling with a jump in loan defaults as the country slipped back into recession. Non-performing loans in the banking sector hit a record high of 10.5 percent of total lending in August.
Reflections on Non-Performing Loans

With non-performing loans at 10.5% expect more bank bailouts while noting that Spain's injection of capital into banks is the reason for the latest jump in debt-to-GDP ratios.

The sane thing to do would be to simply let failed banks fold, but instead governments bail out the banks at taxpayer expense.

Finally, the official stats of a mere 25% drop in home prices since the peak, are a believable as the tooth fairy.

Addendum: 

That 9.4% was an upward revision for 2011.
Reader Bran informs me that 2012 is only up to 7.3% but various officials still claim for 6.3%.

From Libre Mercado: Montoro contradicts the compliance deficit in 2012

"Finance Minister Cristobal Montoro claims in Congress that Spain will reduce the deficit to 6.3% of GDP in 2012, but communicates to Brussels to be located at 7.3%."

With first-half deficit of 8.56% the target of 6.3% is of course impossible.

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


Saturated Fat: McDonald's to Revisit 'Dollar Menu'; Reflections on Same Store Sales and Commercial Real Estate

Posted: 23 Oct 2012 09:53 AM PDT

McDonald's is facing lean times, not just in the US, but globally.

Earlier this year, McDonald's shifted from a 'Dollar Menu' to an "Extra Value Menu" which Chief Executive Don Thompson said didn't "resonate as strongly" with consumers.

One reason? There was no value in it, except for McDonald's.

The Wall Street Journal reports Amid Falling Profit, McDonald's to Revisit 'Dollar Menu'
McDonald's Corp. reported a 3.5% decline in third-quarter earnings as sales slowed more dramatically than expected because of a sluggish economy and a disappointing marketing campaign.

"We face softening demand, heightened competition and rising costs in many of our markets," Chief Financial Officer Pete Bensen said. In a weaker economy, customers tend to stop getting extras like drinks and desserts and premium items like Angus burgers, which all offer higher profits to McDonald's. Plus, they may not go out to eat as frequently.

Wall Street analysts were expecting an increase in per-share profit for the quarter, not a decline.

"We're going back to talk of the Dollar Menu," Mr. Thompson said.

He said the chain is losing momentum world-wide, with sales at restaurants open at least 13 months falling so far in October compared with the same time last year. Such same-store sales are a key indicator of restaurant chains' strength, and McDonald's hasn't seen declines by that measure since April 2003.

"It's been very rare that we've ever seen all of our major markets experiencing the impact of these kind of global economies at the same time," the CEO said.
Saturated Fat

The entire fast food industry is loaded with saturated fat. I am not talking about the food itself (which of course much of it is fat and nutritionless carbs), but rather the sheer saturation of restaurants everywhere you look, all competing for the same customers.

Over the years, I have frequently asked a question that goes something like this: "How many more Pizza Huts, McDonald's, nail salons, WalMarts ... do we need?"

My conclusion long ago was not many. Nonetheless, stores kept going up. And as long as they were, they hired workers (even if most of them were part-time).

Reflections on Same Store Sales 

Now what? Now cannibalization of same-store-sales from each other is the norm.

With part-time jobs becoming more-and-more the norm (for a detailed discussion, please see Obama Slashes Four Hours Off Definition of "Full-Time" Employment), with kids graduating from college with no jobs but monstrous debt, and with boomers retiring with insufficient savings, where is the store growth going to come from?

Heck, where are customers going to come from to support existing stores?

McDonald's cautioned that its margins are being hit with the effects of higher food and business expenses, and lower consumer confidence, and that its rivals in the U.S. are turning up the heat with revamped menus and marketing campaigns.

With cannibalization and intense competition the norm, with stores everywhere you look, is it any wonder companies are struggling with same store sales? I think not (and I am talking industry-wide, not just McDonald's). Actually, the only wonder is why this did not happen before.

Commercial Real Estate

Here are some questions to ponder: Where else is there to build, that makes sense to build from a risk-reward scenario? Will more stores result in more jobs or will cannibalization of jobs follow cannibalization of customers? What about store overall profit levels?

I think the answers to those questions are pretty obvious. One only need think of the questions to have serious doubts about job and earnings growth going forward.

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


Damn Cool Pics

Damn Cool Pics


How McDonald's Canada Makes their World Famous Fries [Video]

Posted: 23 Oct 2012 06:46 PM PDT


Did you know that McDonald's World Famous Fries are made from whole potatoes harvested mainly from farms in New Brunswick, Alberta, and Manitoba? Watch and see exactly how our fries get made, from the farm to the fryer.




The Addams Family Then and Now

Posted: 23 Oct 2012 04:50 PM PDT

Many of the Addams family stars continue to grace our screens today but are almost unrecognisable when not disguised as their famous characters. This is how you can expect them to look now…



Anjelica Huston (Morticia Addams)


Raul Julia (Gomez Addams) - died in 1994


Judith Malina (Granny)


Jimmy Workman (Pugsley Addams)


Christina Ricci (Wednesday Addams)


Christopher Lloyd (Uncle Fester Addams)


Joan Cusack (Debbie Jellinsky)


Kaitlyn/Kristen Hooper (Pubert Addams)


David Krumholtz (Joel Glicker)


Dana Ivey (Margaret Alford)


Dan Hedaya (Tully Alford)


Christine Baranski (Becky Martin-Granger)


Peter MacNicol (Gary Granger)


Mercedes McNab (Amanda Buckman)


Carol Kane (Granny)


Carel Struycken (Lurch)


Cute Japanese Cosplay Girls

Posted: 23 Oct 2012 12:40 PM PDT

Here comes a new collection of amazing cosplays! These girls look very cute and their cosplays suit them very well










































































































25 Places That Are Actually Real but Don't Look So

Posted: 23 Oct 2012 10:01 AM PDT

These places may look like something out of a fantasy novel, but they are, in fact, very real.


















































Source: buzzfeed


Halloween Story: Escape the Jam Factory [Infographic]

Posted: 23 Oct 2012 09:03 AM PDT

Hear that mad cackling in the distance at night? That scraping against your bedroom window when you've turned out the light? It's Halloween, returning for yet another night of candle-lit graveyards, ghastly costume parties and horror movie bonanzas. Halloween – originally "All Hallows' Evening" – occurs on October 31 and is nowadays celebrated in countries around the world. The hordes of grinning pumpkins and bed sheet-clad ghosts point to the holiday's origins: pagan harvest festivals and feasts in honour of the dead. Soon there'll be trick-or-treating monsters knocking on your door and demanding chocolate, so while you wait, get in the mood with this infographic.

Can you escape the Jam Factory – home of Obergine's terrifying offices – before dawn? The only way to find out is to have a go – or maybe a run. After all, learning is more fun when you flee for your life…

Click on Image to Enlarge.
Via obergine


Cat Fail and Win Compilation [Video]

Posted: 22 Oct 2012 07:33 PM PDT


Russian YouTuber Ignoramusky is famous for his cat obsessed videos. His latest compilation of 'Cat Special Forces' features cats who attempt dangerous jumps and tricks, and ultimately fail.