Mish's Global Economic Trend Analysis |
- Reflections on Meaning of "Last Minute"; The Most Productive Workers on the Planet
- Market Yawns as Greek Debt Deal Finalized; Deal? What Deal? Why Does it Even Matter?
- Cameron's Foolish Bluster; Monti Asks Cameron for Up-or-Down Vote on UK Membership in EU
- Five Star Movement (Eurosceptic) Surges into Second Place in Italian Polls
| Reflections on Meaning of "Last Minute"; The Most Productive Workers on the Planet Posted: 26 Nov 2012 10:31 PM PST Progress on the alleged fiscal cliff has been non-existent. Obama wants tax hikes on the wealthy, Republicans want to close loopholes. With little possibility of a breakthrough on the fiscal cliff until the "last minute", inquiring minds are likely wondering what the term "last minute" precisely means. I can help. Please consider the Wall Street Journal article Obama Calls Boehner, Reid on 'Fiscal Cliff'. President Barack Obama called House Speaker John Boehner and Senate Majority Leader Harry Reid over the weekend to discuss the fiscal cliff, as staff-level negotiations have moved slowly and produced no visible signs of progress on how to avoid the tax increases and spending cuts due take effect in January.Expect Definition to Change Two weeks away would be December 10, which I suggest is far too early to be considered "last minute". As supporting evidence, I present the online Congressional Calendar for December.  Green is Senate in Session. Orange is House in Session. The green hashed bars are TBD "to be determined". Note the Congressional calendar does not include Saturday or Sunday. Schedule Not Finalized Out of curiosity, I called the office of the House majority leader Eric Cantor and was told the Congressional schedule for December will not be finalized until Friday, November 30. Thus, we will not know the semi-final definition of "last minute" until then, but right now the preliminary estimate is no sooner than Friday, December 14. Bear in mind, should December 14 (or whatever day Congress adjourns for the year) come and go without a Fiscal Cliff deal, assume that "last minute" will be redefined to mid-January 2013 when leaders of both parties will be anxious to roll back some of the tax hikes, referring to the rollbacks as "tax cuts". Reflections on Our Hard-Working Congressional Representatives While waiting for the final definition of "last minute", inquiring minds just might want to take a look at other months in the Congressional Calendar to see how frequently our representatives are at work for us. Here are some sample months to consider.  Shock and Awe Some people are probably shocked by this. I was not only shocked by appalled. Indeed, my very first reaction was "My God! Look at how horrendously overworked our representatives are!" No doubt, many of you had the exact same initial reaction. That strenuous schedule coupled with hard work explains many things, such as why we have 73,608 pages of tax code piling up month after month year after year.  click on chart for sharper image US Congress: The Most Productive Workers on the Planet The results speak for themselves: US Congress collectively has the most productive workers on the planet. These horribly-overworked souls are so dedicated to churning out mind-numbing pages of legislation that any clear-thinking individual should be able to quickly spot the need to reduce the number of hours Congress is in session. Thus, I propose Congress be in session no more than three days per month. Should that fail to dramatically reduce total the number of pages of Congressional bills, I further propose limiting Congressional sessions to alternating months. If this sounds backwards, you just are not thinking clearly. Everyone knows nothing gets done until the "last minute" anyway, and this clever proposal will massively increase the percentage of time worked at the "last minute" while also reducing the sheer volume of pages of legislation produced, hopefully to a readable number. Perhaps Congress would even find the time to read the bills they sponsor. So please call your representatives and tell them you support "Mish's Proposal to Reduce Congressional Sessions" but only after they reduce the number of pages in the tax code to 15. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More  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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| Market Yawns as Greek Debt Deal Finalized; Deal? What Deal? Why Does it Even Matter? Posted: 26 Nov 2012 06:44 PM PST At long last Euro zone, IMF agree on Greece debt deal. Euro-zone finance ministers, the European Central Bank and the International Monetary Fund reached a deal early Tuesday in Brussels that is expected to see them release more financial aid to Greece.Deal? What Deal? How the hell can there be a deal when the news clearly states the Eurogroup is prepared to consider various measures? What kind of deal is that? Why Does it Even Matter? Let's assume for the moment that all of what the EU has considered actually happens. You still have to be nuts to think this makes the situation stable. Supposedly "government debt is now targeted to fall to 124% of gross domestic product by 2020". This will be just another missed target in a long series of missed targets, not that 124% is remotely sustainable in the first place. Yawn  The market seems to have had enough of these games. The euro barely moved on the non-news. 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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| Cameron's Foolish Bluster; Monti Asks Cameron for Up-or-Down Vote on UK Membership in EU Posted: 26 Nov 2012 05:34 PM PST I frequently disagree with Financial Times writer Wolfgang Münchau, especially on keeping the eurozone and EU intact. Today, I largely agree (but sometimes for opposite reasons) with Münchau's take in Britain's bluster serves the eurozone well. Münchau: The singular importance of the budget negotiations, and of British prime minister David Cameron's insistence on an EU budget freeze, lies in what they reveal about the future of the EU itself. A frozen budget means that the EU is stuck with what it does. Forget the Agenda 2020, or any other pretence at growth-enhancing policies. What the fraught budget negotiations tell us is that the process of European integration – at the level of the EU – is largely completed. In that sense it matters little whether the UK, for example, stays inside or not. In formally leaving the EU, there would be no need for the UK to give up on any existing rights, including the right to take up work and residence in the EU and, of course access to the single market – whatever that is worth. The terms of a withdrawal from the EU are freely negotiable. Even now, it does not feel that different, apart from the temperature, whether you are in Britain inside the EU, or in Norway outside the EU. Mish: From the point of view of the EU, Münchau is largely correct. The EU can blunder along in its creation of an economic nannyzone with or without the UK, but not with or without Germany. However, from the point of view of the UK, it would be better for the the UK to leave. The UK does not need inane EU agricultural subsidies, inane financial regulations, inane work rules, or this endless bickering over rules and budgets that the EU nannyzone requires of member states. Münchau: Today's EU has two important functions left. Some readers may find my list shockingly short. The first is that it provides the institutions and legal framework for the eurozone to muddle through to a solution of its crisis. I am not saying that the eurozone will necessarily achieve that goal. There is a non-trivial probability that it will not. The banking union could be a first step towards a single market for finance at eurozone level. Ultimately, I would also expect a single market for labour and for services, all at eurozone level. If there is a fiscal union, its budget will end up not only bigger than the EU's, but also different in composition – to fulfil the purpose of macroeconomic stabilisation. Mish: I advise betting on the "non-trivial probability" things do not work out as Münchau sees. Ironically, the more "success" the EU has on achieving one-size fits none "nannyrules" for everything under the sun, the lower the overall growth in the region because the bureaucracy, financial taxes, agricultural rules, etc., are generally headed in the wrong direction. Münchau:The EU's second important function is to serve as a waiting room for member states who are not yet in the eurozone, but are willing to enter it at some point in the future. In the end, it does not matter whether the outs leave the EU formally, linger compliantly on the fringes or whether the eurozone leaves them. A messy divorce of some sort will take place, at some point, possibly still quite a few years away. It could take numerous forms. A formal separation is only one of several possibilities. But it is not sustainable for a group of permanent outsiders to enjoy permanent co-decision rights, even though the EU is endlessly patient when it comes to accepting transitional arrangements. The reality is that there is no sustainable biosphere that is outside the eurozone, but inside the EU. Mish: There is a big difference between the UK sitting on the fence and the Czech Republic, Denmark, or Sweden sitting on the fence. The difference is the UK's size and ability to make waves. However, let's assume Münchau is correct, that "there is no sustainable biosphere that is outside the eurozone, but inside the EU". Given there is very little chance of the UK joining the eurozone, the sooner the UK leaves the EU, the better. Since that is what Münchau implies (assuming he agrees the UK will not join the eurozone), we are largely in agreement. Münchau: By insisting on an EU budget freeze, Mr Cameron is ultimately doing the eurozone a favour. By undermining the EU, he provides further incentives for the eurozone to grasp its collective interest. I support him. Mish: Not quite. Cameron sits like a wimp on a fence unable to do what needs to be done, nor will he even put the matter to a vote. Monti Presses Cameron for EU Referendum Most likely to the shock and horror of the bulk of nannycrats, Monti presses Cameron for EU referendum. Italy's prime minister has publicly urged David Cameron to call a decisive referendum on "the fundamental question" of whether Britain should remain in the EU. Wimping Along Cameron has not yet figured out there will only be positive ramifications to jettisoning the nannycrats instead of attempting to influence them. Compromise is silly with so many major differences including the overall budget, financial transaction taxes, agricultural subsidies, tariffs in general, and work rules. Here is the problem as I stated in Pin the Tail on the Scapegoat. Losing by WinningCameron's Self-Serving Policies Cameron will not do what polls suggest or even what his own party wants. Why? Like most politicians, Cameron is acting in his own self-interests hoping to offend the fewest number of people. The risk is Labor wins the next election anyway, making an exit impossible. Worse yet, the next prime minister could conceivably sell the UK down the river by agreeing to implement financial transaction taxes and imposing other nannycrat idiocies. What Cameron really needs to do is not only call for a referendum, but also encourage people to vote to kiss the nannycrats goodbye. 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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| Five Star Movement (Eurosceptic) Surges into Second Place in Italian Polls Posted: 26 Nov 2012 10:09 AM PST Reader Andrea who is from Italy but now lives in France writes ... Hi Mish, Here is a link to a web site that produces charting polls for Italian elections. Click on the tab "I quattro poli". It shows a polynomial regression of the four major political parties.Top Four Parties  Polling data appears to be from mid-October, not June as shown on the slidebar. A deadlock in parliament following the next election may mean re-appointment of Mario Monti but the surge for the Five Star Movement is encouraging. For more on M5S and founder Beppe Grillo, please see Six Reasons Why Italy May Exit the Euro Before Spain; Ultimate Occupy Movement. Main Rules for the Five Star Movement
Beppe Grillo's personal position, not a mandate for the Five Star Movement is "Get out of the Euro and default on debt". From Andrea in the above link ... Five Star Movement candidates have been able to get almost everywhere between 10 and 20% of votes, sometimes even more, all without a single minute of TV advertising or a single advertising page on newspapers.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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