Mish's Global Economic Trend Analysis |
- S&P Predicts 20% Drop in Spain's Housing Prices Over Next 4 Years; Bad Bank to Dump Distressed Properties on Market
- April 2013 Manufacturing ISM at a Glance; What do the Numbers Mean?
- Expect ECB to Cut Rates on Friday; Even a "Shock-and-Awe" Cut Won't Help One Bit
- Canada Goes After Bitcoin; Saskatoon Realtor Lists Home Priced in Bitcoins; Is Bitcoin a Money Laundering Machine?
Posted: 01 May 2013 01:05 PM PDT Spain's "bad bank", Sareb to speed up distressed property sales in an ambitious new timetable for liquidation. The bad bank is hoping to sell almost 42,000 housing units in the next five years. This is about half of the properties in its €50 billion (£42.5 billion approximately) portfolio.Cleanup "Advance Stage" Nonsense from IMF To suggest the cleanup of undercapitalized banks is in an "advance stage" is complete nonsense. It only makes partial sense if there is a zero percent probability of haircuts on Spanish sovereign debt. I suggest the probability of haircuts on Spanish government bonds is far greater than 50%. And since Spanish banks are loaded to the gills with sovereign debt, the banks are severely undercapitalized by implication. S&P Predicts 20% Drop in Spain's Housing Prices Courtesy of Mish-Modified google translate from El Economista, please consider S&P predicts that housing in Spain fall by 20% over the next four years. The credit rating agency Standard & Poor's does not see "signs of improvement" in the Spanish property market given the "precarious economic conditions and the heavy weight of the 'stock' of unsold homes," and anticipates that home prices will fall 20% over the next four years.S&P Optimistic I am of the opinion the S&P is overly optimistic about Spain, about France, and about the Netherlands. The European recession is worsening, credit conditions are awful, employment conditions are awful, and there are scant buyers of property because discounts are not large enough and credit is nowhere to be found. None of this remotely takes into consideration the very strong likelihood of a Spanish debt writedown in the next year or so. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
April 2013 Manufacturing ISM at a Glance; What do the Numbers Mean? Posted: 01 May 2013 11:25 AM PDT US Manufacturing as measured by the April 2013 Manufacturing ISM Report On Business® is treading water barely above contraction. Economic activity in the manufacturing sector expanded in April for the fifth consecutive month, and the overall economy grew for the 47th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.ISM at a Glance
Synopsis Manufacturing employment has grown for 43 months. I expect that trend to break next month. Production was up but inventories were way lower. The drop in inventories, in conjunction with a big slowdown in employment, is likely a leading indicator of future production. The positive surprise that does not fit into the above assessment is that new orders grew at a faster rate. Next month may be telling. I expect the new order divergence to resolve to the downside as the global economy and the US economy are both slowing. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expect ECB to Cut Rates on Friday; Even a "Shock-and-Awe" Cut Won't Help One Bit Posted: 01 May 2013 09:59 AM PDT Eurozone inflation collapsed to 1.2% in the latest report, from an expected print of 1.6%. Given the ECB has an inflation target of 2%, rate cut calls range all the way from a cut of 25 basis points to a cut of 75 basis points. With the current rate at .75%, a 75 basis point to 0% is very unlikely. A cut of 25 or 50 basis points is almost certain but even 50 basis points won't do much good. Steen Jakobsen, chief economist at Saxo Bank writes via email: Calls for cut in ECB rate by 25 bps from 75 bps to 50 bps. We see 25 bpsInvestors Fooling Themselves Echoing the opinion of Steen, please consider Investors may be fooling themselves about an ECB rate cut High hopes ride on the European Central Bank, which is set to make its latest monetary policy announcement on Thursday. Despite the fact that poor economic data continues to flow out of the euro zone, investors seem convinced that the euro area is a fleeting concern, and certain that the ECB will cut rates from their current level of 0.75% in order to relax credit.Shock and Awe? Consensus is for a 25 basis point cut. I would not at all be surprised by a "shock-and-awe" announcement of 50 basis points. However, cuts of any size will not help because the problems in the eurozone are structural: Structural Issues
Anyone who thinks that even a 75 basis point cut would solve those issues is not thinking clearly. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Posted: 01 May 2013 12:37 AM PDT Is Bitcoin a Money Laundering Machine? Bitcoin trumpets itself as being totally anonymous. Facts speak otherwise. New Bitcoin World tackles the issue in Can code and competition build a better Bitcoin? Everyone from the mainstream media to Wikileaks to the now-disbanded hacker collective LulzSec has trumpeted Bitcoin as "anonymous." But the truth is that researchers have long since proven it's anything but — since every bitcoin transaction appears on a public ledger distributed to everyone in the network (called the "block chain"), tracking bitcoins back to individuals is often trivial.Saskatoon Realtor Lists Home Priced in Bitcoins Just in time for tax season, the Canada Revenue Agency says BitCoins aren't tax exempt. Originally designed as a virtual currency alternative to conventional money, the cash value of a BitCoin jumped from under $50 US to above $250 and back earlier this month, as speculators flooded the market after awareness of them grew.If you think the anonymity of bitcoin will hide what you are doing, you probably better think twice. And the more popular bitcoin gets, the more government will be asking questions. If bitcoin gets big enough, governments will do far more than ask questions, they will demand an accounting of every transaction, where the money went, and whether taxes were properly paid. For more on bitcoins please see Mish Interview With "Bitcoin Jesus" Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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