Mish's Global Economic Trend Analysis

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US Role in Europe's Refugee Crisis; Migration in Numbers; Dead Baby Syndrome; Australia PM Promotes Hard-Line Stance Posted: 04 Sep 2015 10:33 AM PDT Crisis in Numbers With an influx of 800,000 migrants, per year, and rising steeply, Europe struggles with what to to with the refugees. Here's the Migrant Crisis in Numbers. The EU is struggling to respond to a surge of desperate migrants, thousands of whom have perished in their attempts to seek a better life in Europe. Where are they going and where are they coming from? The largest group of people reaching Europe through the Mediterranean or the western Balkans are Syrians fleeing a civil war, but there are also many from Eritrea and Afghanistan, as well as Kosovo and Nigeria. EU Migrants Italy Greece Hungary EU rules require refugees apply for asylum in the country in which they first arrive. That is unworkable because nearly all the refugees first arrive in peripheral countries. Dead Baby Syndrome Pictures of mass migration camps did not change sympathies much, but an image of a small child washed up on shore did. For similar reasons, that's why all the hunger donation sites always use an image of a single child for their poster campaigns. With that and other images, German chancellor Angela Merkel sought to shame the UK into taking more refugees. EU Leaders Soften Stance The Financial Times reported EU Leaders Soften Stance on Migrants Amid Harrowing Images. EU leaders began to soften their resistance to sharing the burden of Europe's migrant crisis, spurred by its harrowing images of human misery, as Brussels prepared a plan to quadruple the number of asylum seekers member states must accept. The shifting stance remained uneven, with some countries in eastern Europe, particularly Hungary, insisting those fleeing the war-torn Middle East and north Africa were still not welcome in Europe and should remain in stable neighbouring countries such as Turkey. Viktor Orban, Hungarian prime minister, said the crisis was "a German problem". But France said it would now support a push for mandatory quotas on the number of asylum seekers member states would be required to take in. It will make joint proposals with Germany in the coming days. Jean-Claude Juncker, the European Commission president, will next week call for EU countries take in 160,000 migrants from Greece, Italy and Hungary, a fourfold increase on the 40,000 proposed less than two months ago. The most outspoken critic of mandatory relocations has been Mr Orban who has come under intense criticism for erecting a razor-wire fence on his country's border with Serbia, which has become a major crossing point for Syrians and other refugees fleeing the region. But German chancellor Angela Merkel, who has put intense pressure on other European leaders to be more forthcoming, again laid down the gauntlet, saying all of the EU must be willing to take in more refugees, something that in the past has fallen on only a handful of countries. Trapped in Budapest The Guardian reports Hundreds Set Off From Budapest on Foot . The curious thing about Orban's detainment policy is the refugees do not want to stay in Hungary. They want to go to Germany. Would Germany be happy if Orban decided to send them on their way? Of course, Juncker wants to force Hungary to accept more. Let Them All In Giles Fraser says the Christian thing to do is "Let Them All In". Bizarre Ideas Al Arabiya reports Egypt Billionaire Offers to Buy Island for Refugees. Egyptian billionaire Naguib Sawiris has offered to buy an island off Greece or Italy and develop it to help hundreds of thousands of people fleeing from Syria and other conflicts. The telecoms tycoon first announced the initiative on Twitter. "Greece or Italy sell me an island, I'll call its independence and host the migrants and provide jobs for them building their new country," he wrote. He is going to provide jobs for them? food? Housing? Australia Says Send Them Back At the other end of the extreme, Abbott Urges EU to Follow Australia's Hardline Migrant Policy Tony Abbott has urged Europe to follow Australia's hardline asylum policy and begin "turning back boats" as a way to stop drownings at sea and smash people-smuggling operations. "It's obviously a crisis right now on the borders of Europe," Mr Abbott, Australia's prime minister, said on Friday. "I think a lot of people right around the world are looking at what we've done and said, 'well, if Australia can stop the people-smuggling trade, if Australia can end deaths at sea, perhaps we can learn from them'." The comments were criticised by human rights advocates, who warn that Australia's harsh policies force refugees to flee to countries less able to cope with a humanitarian crisis, violate human rights and undermine UN refugee conventions. Mr Abbott was responding to publication of photographs of the body of Aylan Kurdi, the three-year-old Syrian boy washed up on a Turkish beach, and chaotic scenes of migrants in Europe, which is struggling to deal with an influx of asylum seekers fleeing war-torn Syria.  When Mr Abbott was elected in September 2013 he deployed the Australian navy to turn boats back into Indonesian waters and began resettling refugees in Cambodia, one of Southeast Asia's poorest countries. After a bitter debate at its annual conference, Labor supported the controversial "turn back" policy in July. Infinite Demand for Free Services Those who say "let them all in" are good-hearted fools. There is unlimited demand for free services. If countries let them all in, half of Africa would move to Europe. And along with the influx of refugees (none of them with jobs), crime and resentment would build. Unemployment in Greece and Spain is over 20%. Greece is extremely short of funds in case no one noticed. Where is Greece going to put the refugees? At what cost? Who pays? US Role One thing reporters fail to mention is the US role in this mess. US policy created ISIS. Arguably the EU should sue us for damages. What's needed is a stable Syria. Instead, witness scenes like this one. Russia Presence in Syria Fox News reports US Monitoring Reports Russia has Stepped up Syria Presence. The White House and State Department said Thursday that it was monitoring reports that Russia is carrying out military operations in Syria's civil war on behalf of President Bashar al-Assad, with both warning that such actions would further destabilize Syria's perilous situation. "Russia has asked for clearances for military flight to Syria," a U.S. official was quoted as telling Britain's Daily Telegraph, "[but] we don't know what their goals are ... Evidence has been inconclusive so far as to what this activity is." Russian military involvement in Syria, if confirmed, would add a new layer of complexity to a war that has killed an estimated 220,000 people and displaced over 4 million, according to United Nations estimates. The conflict has facilitated the rise of the ISIS terror group, drawn in the United States as the head of a coalition launching airstrikes against ISIS, as well as the trainer and supplier of rebel groups who are asked to fight a three-way battle against Assad and ISIS. Reflections on Destabilizing Syria The US claims: "Russia is destabilizing Syria". That's a hoot. The US is at the heart of a crisis that has displaced over 4 million people. As with Iraq, the US thought it could overthrow a government with no repercussions. So much for another brutal lesson in "nation building" madness. Mike "Mish" Shedlock 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.

Establishment Survey +173K Jobs, Private Jobs +140,000; Unemployment Rate 5.1% Posted: 04 Sep 2015 08:20 AM PDT Initial Reaction The establishment survey came in a weaker than expected 173,000 job. The Bloomberg Consensus estimate was 223,000 jobs. However, the preceding two months were revised up by 44,000 and wages were strong. Bloomberg provides a nice summation of the strengths and weaknesses. The headline may not look it but there's plenty of strength in the August employment report. Nonfarm payrolls rose only 173,000 which is at the low-end estimate, but the two prior months are now revised up a total of 44,000. The unemployment rate fell 2 tenths to 5.1 percent which is below the low end estimate and the lowest of the recovery, since April 2008. And wages are strong, with average hourly earnings up 0.3 percent for a 2.2 percent year-on-year rate that's 1 tenth higher than July. Debate will definitely be lively at the September 17 FOMC! Private payroll growth proved very weak, at only 140,000. Government added 33,000 jobs vs July's 21,000. Manufacturing, held back by weak exports and trouble in energy equipment, shed a steep 17,000 jobs followed by a 9,000 loss for mining which is getting hit by low commodity prices. A plus is a 33,000 rise in professional & business services and a respectable 11,000 rise in the temporary help subcomponent. This subcomponent is considered a leading indicator for long-term labor demand. Retail rose 11,000 with vehicle dealers, who have been very busy, adding 2,000 jobs following July's gain of 11,000. Seasonality, especially the timing of the beginning of the school year, always plays an outsized role in August employment data which are often revised higher. Policy makers are certain to take this into consideration at this month's FOMC. There's something for everybody in this report which won't likely settle expectations whether the Fed lifts off or not this month. Revisions The employment change for June revised up from +231,000 to +245,000, and the change for July revised up from +215,000 to +245,000. Incorporating revisions, employment has increased by an average 221,000 per month over the past 3 months. Wages Average hourly earnings for all employees on private, nonfarm payrolls rose by 8 cents in August, following a 6-cent gain in July. Hourly earnings are up 2.2 percent over the year. In August, average weekly hours of all employees edged up 0.1 hour to 34.6 hours. BLS Jobs Statistics at a Glance Nonfarm Payroll: +173,000 - Establishment Survey Employment: +196,000 - Household Survey Unemployment: -33,000 - Household Survey Involuntary Part-Time Work: +158,000 - Household Survey Voluntary Part-Time Work: -131,000 - Household Survey Baseline Unemployment Rate: -0.2 to 5.1% - Household Survey U-6 unemployment: -0.1 to 10.3% - Household Survey Civilian Non-institutional Population: +220,000 Civilian Labor Force: -41,000 - Household Survey Not in Labor Force: +261,000 - Household Survey Participation Rate: +0.0 to 62.6 - Household Survey August 2015 Employment Report Please consider the Bureau of Labor Statistics (BLS) Current Employment Report. Total nonfarm payroll employment increased by 173,000 in August, and the unemployment rate edged down to 5.1 percent. Job gains occurred in health care and social assistance and in financial activities. Manufacturing and mining lost jobs. Unemployment Rate - Seasonally Adjusted Nonfarm Employment Click on Any Chart in this Report to See a Sharper Image Nonfarm Employment Change from Previous Month by Job Type Hours and Wages Average weekly hours of all private employees rose by 0.1 hours to 34.6 hours (from a downward revision of 34.5 hours last month) . Average weekly hours of all private service-providing employees was flat at 33.4 hours. Average hourly earnings of production and non-supervisory private workers rose $0.05 at $21.07. Average hourly earnings of production and non-supervisory private service-providing employees rose $0.06 at $20.88. For discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution? Birth Death Model Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back. Table 15 BLS Alternate Measures of Unemployment click on chart for sharper image Table A-15 is where one can find a better approximation of what the unemployment rate really is. Notice I said "better" approximation not to be confused with "good" approximation. The official unemployment rate is 5.1%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6. U-6 is much higher at 10.3%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years. Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job. 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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