Central Perk: 31 aug. 2013

sâmbătă, 31 august 2013

Mish's Global Economic Trend Analysis

Japan Seeks to Hike Taxes then Waste Money on Stimulus to Make Up for Decline in Spending; Currency Crisis Awaits

Posted: 31 Aug 2013 06:01 PM PDT

Politicians and economic illiterates frequently assume two wrongs make a right. Here is a case in point: Japan panel backs sales tax hike coupled with stimulus.

Japan's government won backing for a controversial decision to raise the national sales tax in 2014 after influential members of a special advisory panel said the step would not threaten economic recovery or business confidence if it was coupled with other stimulus.

Prime Minister Shinzo Abe convened the panel to hear a wide range of views on whether to press ahead with a planned hike in the consumption tax to 8 percent from the current 5 percent in April. Unless Abe changes the plan, the sales tax will be raised to 10 percent in October 2015.

Advocates, including officials at the Ministry of Finance, say raising the tax would be an important first step in trying to lower public debt, which is the worst among industrialized countries at more than twice the size of Japan's economy.

When Japan last hiked the sales tax from 3 percent to 5 percent in 1997, consumer spending tumbled by 13 percent in the quarter after the higher tax went into effect. That was followed by a recession.

Two Wrongs Don't Make a Right

When you cherry pick a panel, and the panel has a pre-determined outcome, the answer always comes out the way you expect.

Thus Abe's blue ribbon panel concluded tax hikes won't hurt. And for good measure, if by some chance they do, the panel suggested wasting those tax dollars on stimulus.

Good grief!

Appearances of Success

Appearances of success are not the same as success.

It is conceivable that such a preposterous plan might "appear" to work for the simple reason Japan's two lost decades might have finally played out on their own accord.

However, that will not make the policy successful in any real sense. Raising taxes and then wasting the money are never good solutions to anything. Two wrongs don't make a right.

Similarly, economists currently praise Abe's move to weaken the Yen. The Japanese economy is strengthening, but what if it was about to anyway?

More importantly, it's way too early to be singing praises anyway. Japan's national debt is still rising (and that is another reason Abe needs to hike taxes).

Currency Crisis Awaits

I still think the Yen is going to collapse, and that will hardly be any good for a nation that imports most of its energy and food.

A currency crisis awaits Japan, and when it happens, those singing the praises of Abe will be forced to reconsider (too late of course).

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

Berlusconi Threatens to Topple Italian Government if Expelled From Senate

Posted: 31 Aug 2013 10:54 AM PDT

Former prime minister Silvio Berlusconi, convicted of tax fraud, Threatens to Topple Letta If Expelled From Senate

Silvio Berlusconi threatened to bring down the Italian government if Prime Minister Enrico Letta's Democratic Party votes to expel the three-time former premier from the Senate.

"We're not available to keep the government going if the left decides to prevent the head of the People of Liberty from remaining in politics," Berlusconi told a rally organized by the Army of Silvio supporters' association late yesterday, according to a statement released by the group.

Letta is struggling to contain tensions that have strained his coalition government since Italy's top court upheld Berlusconi's tax-fraud conviction on Aug. 1. The Democratic Party, the biggest force in the coalition, has said Berlusconi's expulsion from the Senate is required by an anti-corruption law enacted in December 2012.

Berlusconi softened his rhetoric today, saying he "didn't issue an ultimatum" and that he wants the government to continue to govern. Yet in comments broadcast by SkyTG24, he said it's "absurd" to assume that the People of Liberty would remain in Letta's coalition if the Democratic Party forced his removal from the Senate.

What About Never?

Bloomberg notes "The process to strip Berlusconi of his Senate seat may take weeks or months before an eventual vote in the full chamber is called."

The Letta coalition would immediately dissolve if Berlusconi carried out his threat. The best way to make sure he doesn't is to not have a vote. The second best way would be to have a vote and decide that tax fraud is insufficient grounds to expel someone from the Senate in spite of the law.

Either way, there is justice for politicians (and bankers), and there is justice for everyone else.

In general, this is the way it is everywhere, but most countries draw the line at conviction. Italy doesn't.

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

President Obama's Decision on Syria

Saturday, August 31, 2013

President Obama's Decision on Syria

Just now, President Obama laid out the case for a targeted military action against Syrian regime targets as a result of their use of chemical weapons that killed over one thousand people -- including hundreds of children. The President also made clear that this would not be an open-ended intervention, and there will be with no American troops on the ground.

While the President was clear on the need for action, he announced he would seek Congressional authorization for the use of force.

Watch the President’s statement now in his own words:

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Commemorating Labor Day

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Commemorating Labor Day

President Obama discusses Labor Day and reflects on the contributions of the working men and women in our country. The President says that by recommitting ourselves to the values of working Americans and coming together with common purpose, we can ensure that everyone who works hard has a chance to get ahead.

Click here to watch this week's Weekly Address.

Top Stories

50^th Anniversary of the March on Washington: On Wednesday, President Obama spoke from the Lincoln Memorial at the “Let Freedom Ring” Ceremony, which commemorated the 50^th anniversary of the March on Washington. President Obama was joined by former Presidents Bill Clinton and Jimmy Carter, along with members of the King family, civil rights leaders, and other dignitaries. Thousands converged from across the country to join in this historic event. In his remarks, President Obama honored the heroes that marched in 1963, but stressed that while the nation has come far in the past fifty years, there is still work to be done.

But we would dishonor those heroes as well to suggest that the work of this nation is somehow complete. The arc of the moral universe may bend towards justice, but it doesn’t bend on its own. To secure the gains this country has made requires constant vigilance, not complacency.

In recognition of the historic March on Washington, Administration officials wrote blog posts reflecting on what the civil rights movement meant for the country, the urgency of continuing that march, and what lies ahead.

For more information, check out six videos that capture our favorite moments of the President with icons of the Civil Rights Movement.

“The Powerbroker” Screening: A day before the President spoke at the Lincoln Memorial, First Lady Michelle Obama hosted a screening of “The Powerbroker: Whitney Young’s Fight for Civil Rights,” a documentary detailing the life and achievements of the civil rights leader. The First Lady also spoke to a group of students who attended the screening.

The thing I want you all to remember, as you watch this film, is that we are here because of that struggle. I'm here because of that struggle. And even though you may think you have some struggles, your paths are a whole lot easier because of the work these men and women did.

Women’s Equality Day: Tuesday was Women’s Equality Day, which commemorates the passage of the 19^th Amendment and celebrates advocates like Susan B. Anthony, Elizabeth Cady Stanton, and Ida B. Wells, who devoted their lives to ensuring that women would have a voice in democracy. In advance of Women’s Equality Day, the President visited Seneca Falls, New York during his college affordability bus tour, where the first Women’s Right Convention was held in 1848. President Obama presented the Women’s Rights National Historic Park with a copy of the Lilly Ledbetter Fair Pay Act of 2009, the first bill he signed into law, which makes it easier for women to bring forward pay discrimination claims.

Medal of Honor Ceremony: Also on Tuesday, the President presented the Medal of Honor to Army Staff Sgt. Ty M. Carter. Carter was one of 53 Americans stationed at a remote outpost in Afghanistan when it came under attack by more than 300 Taliban fighters. The President recognized Carter’s courage and strength, both on the battlefield and in speaking openly and honestly about his struggle with Post-Traumatic Stress.

ATF Director Sworn-In: Vice President Joe Biden swore-in B. Todd Jones as Director of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) on Thursday. The Vice President also announced two new executive actions to reduce gun violence, building on the gun violence reduction plan he and the President presented at the beginning of this year.

Appointment of new U.S. Special Envoy for Sudan and South Sudan: On Wednesday, President Obama appointed Ambassador Donald Booth as the new U.S. Special Envoy for Sudan and South Sudan. Ambassador Booth will play a vital role in supporting peace between these two nations.

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Seth's Blog : "Get this over with" vs. ...

"Get this over with" vs. ...

"Get something started."

When you walk into a fast food restaurant, the stated, measured, delivered-on goals are to get the transaction over with as cheaply and quickly as possible. The cashier, the fry cook, everyone is rewarded on running the line just a little faster and just a little more efficiently.

On the other hand, when you are the first time client at a contractor, a bank or even a resort, everyone on the staff ought to be focused on getting something started, not over with. A relationship that might last for many stays. An engagement that might lead to conversations that spread. Trust that might surface new opportunities for both sides. It's not about spending more time, it's about caring enough about the interaction and the other person that you're focused on this person, not the throughput level.

You can't do both at the same time.