Mish's Global Economic Trend Analysis

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• 800 Finnish Dairy Workers Furloughed Due to Russia Sanctions, Others Fired; Brussels to Buy Fruit with Public Money
• Alarming Failure of French Economy; Expect Serious Tremors in September
• US to Supply Kurds with Russian Arms via CIA

800 Finnish Dairy Workers Furloughed Due to Russia Sanctions, Others Fired; Brussels to Buy Fruit with Public Money Posted: 11 Aug 2014 07:48 PM PDT It's a "small price to pay" for 800 Finnish Dairy Workers Furloughed Due to Russia Sanctions. "Valio, the largest Finish producer of dairy products, will involuntarily furlough part of its workforce from its factories that produce exports to Russia.  This was stated in a company press release. The restructuring will affect (the following) Finnish divisions of Valio:  The factories in Haapavesi (Oltermanni cheese), Seinajoki (Valio butter), Vantaa (Viola melted cheese), and the warehouse in Lappeenranta.  The company will reevaluate employment contracts with all employees of these divisions.  "Some employees (by preliminary estimates, 800 people) may be involuntarily furloughed until the situation is fully clarified, and with some employees, temporary employment contracts will not be extended", states the press release." Will Finnish dairy suck this up as a "small price to pay" for national pride? If so, Rah Rah Sis Boom Bah. Go Finland! Where is Spanish National Pride? Please consider the behavior of Spanish peach and nectarine growers, completely unwilling to pay a "small price" for the sake of international peace. No doubt you will be totally disgusted with the extremely unpatriotic behavior of Spanish farmers who demanded and received an offer from Brussels to Buy Fruit with Public Money After the Russian Embargo. Spanish farmers, especially peach and nectarine growers have reason for optimism. After last Thursday's announcement of a Russian embargo of fresh produce from the EU, USA, Canada and Australia Union, Brussels has announced that apply exceptional measures for these sectors. In a statement, the European Commission announced that it will "introduce measures to support sectors of peach and nectarine EU, in particular by increasing the volumes of fruit eligible for withdrawals and free distribution." Although the decision is not final and is scheduled to meet with the various affected countries Thursday, the official approval will occur in the coming weeks. After a more than two-hour meeting, farmers have left very satisfied and have been met. Tejerina recalled that the Government had agreed to the removal of 10,000 tons of peaches and apricots, which are designed to last used for humanitarian aid or processing. Thus, the government will request the EC "extend that far removed in terms of volume and in terms of sectors affected fruit." How About Them Apples? Inquiring minds are no doubt asking How About Them Apples? That's a damn good question. And unlike the unpatriotic Spanish apricot and peach growers, the Polish "Puls Biznesu" newspaper called for a show of support for Poland's apple producers, urging people to eat more apples and to drink cider. If Poles don't eat 3-4 times as many apples as before, then prices will crash. But hey, as you all know, it's a small price to pay. Who cares if history says sanctions don't work? Who cares if a recession ensues? I encourage everyone to wrap themselves in the flag of the US singing right along with the Finnish dairy workers "Rah Rah Sis Boom Bah It's a Small Price to Pay". The "small price to pay" advocates will cheer every step of the way until  they are the ones who have to pay the "small price". In that regard, expect Finnish dairy workers to quickly renounce their "small price" Small Price I encourage everyone to read my previous discussions on the absolute silliness of the "small price" theory. "Small Price to Pay" Scathing Anti-West Editorial in German Handelsblatt; Reader Emails on "Small Price to Pay" 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.

Alarming Failure of French Economy; Expect Serious Tremors in September Posted: 11 Aug 2014 12:19 PM PDT Les Echo discusses the Alarming Failure of French Economy. GDP for the second quarter will be released Thursday, and it does not look good. Industrial production declined in the second quarter, foreshadowing very low GDP growth. It's a moment of truth for the government. It will need to revise its deficit forecasts. All major industry sectors experienced a decline in their production. And building continues to dive. Housing starts are at their lowest for fifteen years, a shortfall of 0.4 percent of GDP this year. Consumer spending has held up, the French having spent an additional 1% between April and June than in the previous three months. This is the only pleasant surprise since the beginning of the year. But it is due to heating costs, which rose in the spring following a mild winter. Dembik Christopher, an economist at Saxo Bank, says "Economic stagnation in France is a safe bet for 2014." France is not alone in Europe. The situation is worse in Italy, which has fallen into recession, but that is no consolation to the French executive. Without growth, the entire budget equation becomes insoluble. Especially as the low inflation kills off the anti-deficit plan. Once known growth in the second quarter, the government will have to revise its forecast for 2014 (1%) and 2015 (1.7%), leading to a greater than 3.8% of GDP deficit in 2014, significantly in excess of the 3% threshold agreement for 2015. Standoff with the European Commission, and also with Germany, will lead to serious tremors in September. 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.

US to Supply Kurds with Russian Arms via CIA Posted: 11 Aug 2014 09:38 AM PDT The story in Iraq gets more bizarre by the day. Kurdish territory in Iraq are the only pro-American territory left. Yet the US worries it will splinter off into Kuridistan. Apparently it's better to have a raging civil war as long as the country stays together in one theoretical piece. This is where the story gets really bizarre. To avoid the appearance of the US giving arms to the Kurds, instead the US will give the Kurds Russian-made arms via the CIA. Excuse me for asking, but what about sanctions on Russia? While pondering that question, please consider US to directly arm Kurdish peshmerga forces in bid to thwart Isis offensive. The Obama administration has announced it will arm the militia forces of Iraqi Kurdistan, to prevent the fall of the final bastion of pro-US territory in Iraq. The weaponry is said to be light arms and ammunition, brokered not through the department of defense – which supplies Baghdad and its security forces with heavy weaponry – but the Central Intelligence Agency, which is better positioned to supply the Kurdish peshmerga with Russian-made guns like AK-47s that the US military does not use. The CIA declined to comment. The idea of arming the Kurds has been the subject of weeks of internal deliberation and official silence by Barack Obama's foreign policy advisers. It is a fateful step in Iraq's current crisis, one that risks facilitating the long-term disintegration of Iraq. Several administrations over decades have refrained from arming the peshmerga due to concerns about reprisals from Saddam Hussein and his successors. US officials have demurred for days when asked about the deliberations. The danger is that arming the peshmerga will facilitate a permanent fragmentation of Iraq, something the Kurds consider a national aspiration. Several disputed and multi-ethnic cities in northern Iraq complicate any peaceful cleavage, as do major oil holdings in both Kurdish and contested territory. The Peshmerga used the June disintegration of Iraqi Army forces running from Isis as an opportunity to seize disputed areas like oil-rich Kirkuk. Heaven forbid a stable pro-US country with oil reserves might come out of this. Who could possibly want that? 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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