Central Perk: 29 sept. 2013

duminică, 29 septembrie 2013

Mish's Global Economic Trend Analysis

Posted: 29 Sep 2013 03:31 PM PDT

The AP comments How budget showdowns could squeeze the US economy. The story is nearly all hype. Let's take a look.

Q. What exactly will happen within the next days and weeks?

A. The most urgent deadline is for Congress and the White House to agree to keep funding the government after the current budget year ends Monday. Otherwise, some of the government would have to shut down. The House and Senate are considering bills to fund the government past the deadline. But House Republicans want to cut off funding for President Barack Obama's health care law as a condition of passing the spending measure. Senate Democrats and the White House have balked. Unless one side essentially blinks, a partial shutdown of the government will occur.

Mish: That is accurate so far.

Q. What about the federal borrowing cap? First of all, what is it?

A. It's a legal limit on how much debt the government can pile up. The government accumulates debt two ways: It borrows money from investors by issuing Treasurys. And it borrows from itself, mostly from Social Security revenue.

Mish: It's important to note there is no social security fund whatsoever. Every penny and then some has been borrowed and spent. Here comes the hype.

Q. What if Congress can't agree to raise the cap in time?

A. It could be disastrous. No longer authorized to borrow, the government would have to pay its bills only out of the revenue it gets from taxes and fees. This would force the government to immediately slash spending by 32 percent, the Bipartisan Policy Center estimates. Most analysts think the government would delay paying each day's bills until it had accumulated enough money to pay them all.

Even worse, the government could miss interest payments on Treasurys, triggering a first-ever default by the U.S. government. U.S. Treasurys are held by banks, governments and individuals worldwide. Ultimately, a prolonged default could lead to a global financial crisis.

At the same time, Social Security and other benefit payments would be delayed. Government contractors might not be paid and would likely lay off workers. Paychecks for military personnel could be delayed.

The government actually reached its borrowing limit back in May. Since then, the Treasury has taken a variety of measures to avoid exceeding it. But the cash generated by those measures will run out sometime between Oct. 22 and Oct. 31, the nonpartisan Congressional Budget Office estimates.

The date isn't exact because it isn't possible to foresee precisely how much revenue the government will receive and when.

Mish: The following AP statement is preposterous "Most analysts think the government would delay paying each day's bills until it had accumulated enough money to pay them all."

I am not aware of any analysts who have stated the government would delay paying all bills until it could pay them all.

Moreover, the suggestion that "the government could miss interest payments on Treasurys, triggering a first-ever default by the U.S. government" is equally nonsensical. US treasuries would be the last thing that would go unpaid.

Q. Will the economy escape harm if both deadlines are met?

A. Probably. But even brinksmanship can have consequences. The last major fight over the borrowing cap, in the summer of 2011, wasn't resolved until hours before the deadline. Even though the deadline was met, Standard & Poor's issued the first-ever downgrade of long-term U.S. credit. That, in turn, led to a 635-point plunge in the Dow Jones industrial average the next day.

In August that year, consumer confidence plummeted to its lowest level since April 2009, when the economy was in recession. Spending at retail stores weakened.

"The fallout nearly caused the fragile economic recovery to stall," says Mark Zandi, chief economist at Moody's Analytics.

Mish: The report goes on and on blaming everything but hornet attacks on what happened in 2009. I call it's ridiculous speculation at best. And the hype continues ...

Q. All this sounds pretty scary. Why aren't financial markets panicking?

A. Stock prices have fallen in six of the past seven days, partly because of the looming deadlines. But the price declines have been modest. Many investors likely feel they have seen this movie before and know how it ends: with another last-minute deal.

"After several rounds of fiscal brinksmanship ... markets may be somewhat desensitized to the headlines," Alec Phillips, an economist at Goldman Sachs, wrote in a note to clients.

Mish: It's not scary at all, but the AP sure did its best to make it sound that way.

A partial shutdown would hardly be disastrous. In fact I welcome such a shutdown as noted in Government Shutdown is a Fantastic Idea.

Fantastic Idea

If you think that a government shutdown is a fantastic idea (I sure do), then please contact your elected representatives and let them know.

But don't expect anything to come of it. After all, the money will last until the end of October, and that is a long time in politics.

Of course, to keep the government running now, the treasury is already borrowing against Social Security funds that are already spent! That's how absurd the setup is.

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

Giant Deadly Hornets Kill Dozens In China; Venom Dissolves Flesh and they Can Spray It

Posted: 29 Sep 2013 11:22 AM PDT

I have received hundreds of emails regarding my post Attack of the "Digger Bees".

Many suggested getting an EpiPen® (epinephrine) Auto-Injector‎ for Liz and we will do that.

Many pointed out that "digger bees" are not bees but rather wasps. That is something I knew but did not mention in my post.

I responded to some individuals that I like bees, and even have a "humble bumble" home for bumblebees, and I put out nests for mason bees.

With that backdrop, some of you may be interested in Giant Deadly Hornets Kill Dozens And Injure Hundreds In China.

Deadly hornets have killed at least 28 people in China following a string of recent attacks that have injured hundreds.

A number of tragic cases have been reported, including a mother and son who died after being surrounded by a killer swarm.

A man who tried to help them suffered kidney failure after the giant hornets chased him for 200 metres and stung him repeatedly on the head and legs, The Mirror reported.

In the city of Ankang alone, 18 people have died from the stings, while a further 212 people have been injured health official Zhou Yuanhong told Associated Press.

Experts are blaming the vicious attacks on Asian giant hornets, which terrifyingly grow up to 5cm in length. The mammoth insects also wield a stinger in excess of 6mm long.

The natural predators have jaws powerful enough to chew through regular protective bee suits and their venom, which they can spray, dissolves human flesh.

If their venom lands in the eyes, the eye tissue will melt, according to a National Geographic documentary.

Japanese Hornet Documentary

The documentary is a lengthy 45 minutes, but some may find it interesting. Link if video above does not play: Japanese Hornet Documentary.

Those giant "hornets" look like giant yellow-jackets to me. But yellow-jackets and paper wasps look alike. About.Com explains differences in a report on Wasps, Yellowjackets, and Hornets.

The vast majority of bees and wasps in our world pose no threat to people. Most prefer to go about their business, parasitizing or preying on other insects. The social wasps of the family Vespidae, however, can be a downright nuisance. Vespid wasps include paper wasps, yellowjackets, and hornets, all of which will defend their homes vigorously should we disturb them. Worse yet, they have a tendency to build their homes in the places we like to spend our time, so there's a good chance you'll encounter them.

Paper wasps, yellowjackets, and hornets are all masters of papermaking. In spring, the queen constructs a new nest by gathering wood fibers and turning them into a papery pulp, from which she builds a home. Paper wasps build open, umbrella-shaped nests, often found suspended from eaves or window casings on the outside of your home. Hornets are famous for their massive, enclosed nests which can be seen hanging from tree branches or other sturdy perches. Yellowjackets also make enclosed nests, but theirs are found below ground. Care should be taken to check for yellowjacket nests before using string trimmers or lawn mowers.

All the paper wasps, yellowjackets, and hornets produce new colonies each year in temperate climates; only the mated queens survive the cold winter months, tucked away in sheltered places. The queen emerges in spring, chooses a nest site, and builds a small nest in which she lays the first eggs. Once the first generation of workers matures, these wasps will expand the nest for succeeding generations. In late summer or fall, the old queen dies, and a new one mates before her siblings die off. The old nest usually degrades over the winter.

Behavioral Differences Between Wasps, Yellowjackets, and Hornets

True Bees

The above table neglected bees.

Honeybees, bumblebees, and mason bees, etc., go after pollen. The things you see flying around at picnics, garbage cans, and especially sweets and sodas are yellow-jackets. They are an outright nuisance, and can be deadly.

As far as "dissolving flesh" goes, I can actually attest to that. On one hand I was stung three times and skin was gone in all three places. Other stings were simple swollen and itchy for over a week.

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

Seth's Blog : The secret of the five top

The secret of the five top

The person who invented the banquet table, the round table for ten, wasn’t doing it to please those at the banquet or even the banquet organizer. He did it because this is the perfect size for the kitchen and the servers. The table for ten is a platonic ideal of the intersection of the geometry of bread baskets, flower arrangements and salad dressing. Bigger and you couldn’t reach, smaller and there’s no room.

But, here’s the thing: the table for ten isolates everyone at it. You can’t talk to your left without ignoring your right, and you can’t talk across the table without yelling. And so, the very thing you’ve set up to engage the audience actually does the opposite. This is even true if you're taking nine people out for dinner--ten at a table undermines what you set out to do.

Worse, if you’re brave enough to have a speaker or a presentation at your banquet, you’ve totally undermined your goals. Half the audience is looking in the wrong direction, and there are huge circles of empty white space that no microphone can overcome.

In my experience--I’m sharing a hugely valuable secret here--you score a big win when you put five people at tables for four instead. Five people, that magical prime number, pushes everyone to talk to everyone. The close proximity makes it more difficult to find a place for the bread basket, but far, far easier for people to actually do what they came to do, which is connect with one another.

Thousands of speeches later, I can tell you that the single worst thing an organizer can do to her event is sit people at tables for ten.

If you want to let the banquet manager run your next event, by all means, feel free. Just understand that his goals are different from yours.