Central Perk: 16 mar. 2015

luni, 16 martie 2015

Mish's Global Economic Trend Analysis

Obama Goes After UK, Australia, the World for "Constant China Accommodation"; US Influence Clearly Waning
Banco Madrid Files Bankruptcy Following Money Laundering Charges, Accounts Frozen
Dollar Shortage Revisited; Is Japan Zimbabwe? Who's in Control? World Gone Mad
Putin Prepared to Use Nukes to Keep Crimea; Wild Rumors of Putin Missing Debunked
Wage Growth vs. Economic Theory

Obama Goes After UK, Australia, the World for "Constant China Accommodation"; US Influence Clearly Waning

Posted: 16 Mar 2015 07:56 PM PDT

Constant China Accommodation

A major spat between the US and the UK broke out last week with the Obama administration attacking UK prime minister David Cameron and the UK for Britain's decision to join AIIB, a new China-sponsored financial institution that allegedly could rival the World Bank.

In particular, Obama accused David Cameron of "Constant China Accommodation".

The Obama administration accused the UK of a "constant accommodation" of China after Britain decided to join a new China-led financial institution that could rival the World Bank.

The rare rebuke of one of the US's closest allies came as Britain prepared to announce that it will become a founding member of the $50bn Asian Infrastructure Investment Bank, making it the first country in the G7 group of leading economies to join an institution launched by China last October.

Thursday's reprimand was a rare breach in the "special relationship" that has been a backbone of western policy for decades. It also underlined US concerns over China's efforts to establish a new generation of international development banks that could challenge Washington-based global institutions. The US has been lobbying other allies not to join the AIIB.

Relations between Washington and David Cameron's government have become strained, with senior US officials criticising Britain over falling defence spending, which could soon go below the Nato target of 2 per cent of gross domestic product.

A senior US administration official told the Financial Times that the British decision was taken after "virtually no consultation with the US" and at a time when the G7 had been discussing how to approach the new bank.

"We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power," the US official said.

US Pressure, Self-Serving Statement

In a self-serving if not downright idiotic statement, a US official claimed "Large economies can have more influence by staying on the outside and trying to shape the standards it adopts than by getting on the inside at a time when they can have no confidence that China will not retain veto powers."

I do not believe it's possible to ever have more influence on the outside than in. And certainly had the US, UK, other European nations, and Australia all gotten together on the inside, the position of the US is downright idiotic.

The US pressured Australia to not join the group. Australia initially relented, but now has had second thoughts.

Australia Shifts Stance

Please consider Australia Shifts Stance on China-Led Development Bank

Australia may overturn its opposition to joining the China-led Asian Infrastructure Investment Bank after the UK opted to sign up to the institution against the wishes of Washington.

The rethink by one of America's key allies — alongside Japan and South Korea — that has not yet applied to join the $50bn bank before the March 31 deadline will further irk Washington, which is already angered by the UK 's move to become the AIIB's maiden G7 member.

"I note that the UK has indicated an intention to sign up for the negotiations, the New Zealanders before Christmas signed up for the negotiations, the Singaporeans likewise, the Indians likewise," said Tony Abbott, Australia's prime minister.

"We're looking very carefully at this and we'll make a decision in the next week or so," he told The Australian newspaper.

The UK's move last week to join the AIIB has reopened the debate over whether Australia's national interests lie with bolstering economic ties with China or deferring to the concerns expressed by its key military ally, the US.

"The UK joining the bank has given a good pretext for the government to rethink its original decision," said Kerry Brown, director of the China Studies Centre at Sydney university. "There is a feeling it acted as a bit of a poodle of the US and it should take a more independent stance."

France, Germany, Italy Join AIIB

Finally, please consider Europeans Defy US to Join China-Led Development Bank.

France, Germany and Italy have all agreed to follow Britain's lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.

The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.

Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position.

The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards.

US Influence Clearly Waning

Clearly US influence on global financial matters is seriously eroded. I happen to think that is a good thing. Yet, please do not consider it an endorsement of AIIB, on which I have no opinion.

"We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power."

What about constant accommodation of a waning power?

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

Banco Madrid Files Bankruptcy Following Money Laundering Charges, Accounts Frozen

Posted: 16 Mar 2015 07:03 PM PDT

A bank run on Banco de Madrid following money laundering charges did the bank in today.

The Wall Street Journal reports Banco de Madrid Files for Bankruptcy After Parent Accused of Money Laundering.

Banco de Madrid SA, the Spanish unit of an Andorran lender accused of laundering money for organized-crime groups, has filed for protection from its creditors, Spain's central bank said Monday.

Banco de Madrid has been hit by substantial client withdrawals, the central bank said, which has impacted the ability of the lender to "meet its obligations in a timely matter."

Filing for creditor protection will allow depositors and other creditors "equal treatment."

Deposits of up to €100,000 ($104,970) a client are protected by Spain's deposit-guarantee fund, the central bank said. Banco de Madrid held €674.7 million in customer deposits as of September 2014, according to data from Spain's banking association AEB.

he Spanish lender said it had undergone a "sharp deterioration in its economic and financial situation" in recent days after its parent company was named a "primary laundering concern" by the U.S. government. Banco de Madrid had over €6 billion in assets under management before the intervention, according to news releases published by the bank in recent months.

The lender had 15,000 clients and 21 offices in major cities such as Madrid and Barcelona as of March 11, a spokeswoman said Monday. The bank targeted high-net worth clients with deposits above €500,000, she added.

Goodbye Bank Madrid

Guru Huky says Goodbye Bank of Madrid. Operations Suspended

Huky comments ...

"Banco de Madrid, will be the first bankrupt entity to see in action at our brand new Deposit Guarantee Fund which guarantees the first €100,000 depositors have in a financial institution in trouble."

Looking at financial numbers Huky concludes "Oh, well, [Banco de Madrid] is a technically bankrupt zombie with a negative net worth of €1.637 billion."

Anyone who had over €100,000 in deposits probably lost it.

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

Dollar Shortage Revisited; Is Japan Zimbabwe? Who's in Control? World Gone Mad

Posted: 16 Mar 2015 09:57 AM PDT

This post is a followup on the alleged US dollar shortage thesis as well as further discussion of the Yuan, and the Yen.

Let's start with a recap of the US dollar debate, after which I will tie up some loose ends.

US Dollar Margin Call Shortage Thesis

On March 8, ZeroHedge commented The Global Dollar Funding Shortage Is Back With A Vengeance And "This Time It's Different".

ZeroHedge wrote "The last time the world was sliding into a US dollar shortage as rapidly as it is right now, was following the collapse of Lehman Brothers in 2008. As we discussed back then, this systemic dollar shortage was primarily the result of imbalanced FX funding at the global commercial banks, arising from first Japanese, and then European banks' abuse of a USD-denominated asset-liability mismatch, in which the dollar being the funding currency of choice, resulted in a massive matched synthetic 'Dollar short' on the books of commercial bank desks around the globe: a shortage which in the aftermath of the Lehman failure manifested itself in what was the largest global USD margin call in history."

No Shortage Thesis

On March 11, I replied to the above idea with Is There a US$ Shortage? Will it Sink the Global Economy? Again?

"I do not believe there is a dollar shortage or even a synthetic dollar shortage. More importantly, a dollar shortage certainly did not cause the crash in 2008. Excess debt and speculation caused the crisis in 2008. Any alleged or apparent dollar shortage was a result, not a cause of the crash."

Demand for Dollars

It's amusing to discuss currency shortages given all the central banks are or have been flooding the markets with currency in an inane attempt to cure a debt problem by forcing more debt into the system.

I discussed this on Monday in Draghi's Goal: Higher inflation and Negative Yields; ECB's Asset Purchases to Outstrip Supply 3-1; Is There a Catch?

That interest rates are negative in Germany for every duration from one month through six years (only two basis points from seven) speaks for itself. There is no demand for loans relative to supply of euros from the ECB.

Same as 2008 or Opposite?

The US dollar index is at roughly the same level as in 1998, also 1988 (not shown). The peak in 1985 was 164.72. The peak in 2001 was 121.21.

Lehman Bankruptcy

On September 15, 2008, Lehman filed for bankruptcy. The dollar bottom was in April of 2008, at 71.33.

At that time, anti-US$ sentiment was massively in vogue.

The Schiff's of the world were screaming hyperinflation. Today, US hyperinflationists are thoroughly discredited and in hiding.

Today, nearly everyone loves dollars and hates gold. Dollar swaps that were not in place then, are in place now. All things considered, conditions are nearly the opposite of 2008.

Acting Man Chimes In

Pater Tenebrarum at the Acting Man blog contributed to my reply. Then on March 12, Tenebrarum did his own followup: The Dollar Squeeze – How Problematic Is It?

"The visible currency effects (such as a soaring dollar exchange rate and funding gaps, see below) are usually mainly a consequence, not a cause of crisis conditions. Of course, the recent rise in the dollar was initially triggered by perceptions of monetary policies between the US and other currency areas diverging – everybody expects the Fed to hike rates, while rates are being lowered everywhere else. It should be added to this that there are of course feedback loops at work: the stronger the dollar becomes, the more difficult it will be for dollar debtors abroad to service their debt, so any future crisis situation will tend to feed on itself. Note in this context that if a debtor has hedged his dollar exposure, the associated currency risk has not disappeared – it has merely been shifted to his counterparty."

Tenebrarum provides many charts in his explanation. I caution that it's not light reading to say the least. Then again, money in general is nearly always a complex read.

$9 Trillion Stress Test

On March 11, Ambrose Evans-Pritchard at the Telegraph chimed in with Global Finance Faces $9 Trillion Stress Test as Dollar Soars.

Contrary to popular belief, the world is today more dollarized than ever before. Foreigners have borrowed $9 trillion in US currency outside American jurisdiction, and therefore without the protection of a lender-of-last-resort able to issue unlimited dollars in extremis. This is up from $2 trillion in 2000.

The result is that the world credit system is acutely sensitive to any shift by the Fed. "Changes in the short-term policy rate are promptly reflected in the cost of $5 trillion in US dollar bank loans," said the BIS.

The BIS paper's ominous implications are already visible as the dollar rises at a parabolic rate, smashing the Brazilian real, the Turkish lira, the South African rand and the Malaysian Ringitt, and driving the euro to a 12-year low of $1.06.

The dollar index (DXY) has soared 24pc since July, and 40pc since mid-2011. This is a bigger and steeper rise than the dollar rally in the mid-1990s - also caused by a US recovery at a time of European weakness, and by Fed tightening - which set off the East Asian crisis and Russia's default in 1998.

Emerging market governments learned the bitter lesson of that shock. They no longer borrow in dollars. Companies have more than made up for them.

"The world is on a dollar standard, not a euro or a yen standard, and that is why it matters so much what the Fed does," said Stephen Jen, a former IMF official now at SLJ Macro Partners.

Mr Jen said Asian and Latin American companies are frantically trying to hedge their dollar debts on the derivatives markets, which drives the dollar even higher and feeds a vicious circle. "This is how avalanches start," he said.

BIS data show that the dollar debts of Chinese companies have jumped fivefold to $1.1 trillion since 2008, and are almost certainly higher if disguised sources are included. Among the flow is a $900bn "carry trade" - mostly through Hong Kong - that amounts to a huge collective bet on a falling dollar. Woe betide them if China starts to drive down the yuan to keep growth alive.

I have no problems with the above. However, close scrutiny shows conditions are opposite of the conditions ahead of the Lehman crisis. In 2007-2008 there was a flight out of dollars. Now everyone seems to want them. How times change.

Tightening More Urgent?

Pritchard continues ...

The most recent Fed minutes cited worries that the flood of capital coming into the US on the back of the stronger dollar is holding down long-term borrowing rates in the US and effectively loosening monetary policy. This makes Fed tightening even more urgent, in their view, implying a "higher path" for coming rate rises.

That last paragraph makes no sense to me. But rather than plant the same idea in anyone's head, I simply asked Tenebrarum what he made of it.

Tenebrarum replied ""It can't be right. It has things the wrong way round. A stronger dollar is akin to a tightening, not a loosening of policy, in the sense that it will pressure import prices and that prices in the economy at large will adjust to that with a lag - precisely what usually happens when monetary policy becomes less accommodating. If you look at short term rates, you will see they keep hitting new highs for the move (1, 2, 3, 5 year yields). It is actually the market perception that tightening is underway that causes the dollar to move higher.""

Speculator Dollar Shorts

Let's now take a look at speculator positions on US dollar bets. On the futures market, for every long there is a short, but let's look at who is long and who is short, and by how much.

Charts are courtesy of SentimenTrader.

Hedgers are the commercial traders including market makers like JP Morgan. The market makers take the opposite side of speculators such as hedge funds. The number of contracts in numerous currencies is at all time high levels.

US Dollar Hedgers

Euro Hedger Positions

Canadian Dollar Hedgers

Yen Hedgers

Extreme Opposite of Conditions in 2007

Not only are the positions opposite that of the start of the crisis in 2007, the magnitude of the bets is enormous. The motto appears to be bet with leverage. Hedge funds that win on such bets win big. If they lose, well, it's typically OPM (other people's money).

That does not mean a reversal is guaranteed. Hedgers after all, hedge (and that is why JP Morgan never was hurt being allegedly short silver all the way up to its high near $46).

But given that speculators and hedge funds (in spite of their name) don't often hedge, the above charts show there is fuel for a massive reversal.

Five Reasons for Dollar Strength

ECB and Bank of Japan are now QE king and Queen
Nearly everyone believes the Fed will hike
US 10-Year interest rates are close to 2%, elsewhere they are close to zero percent
US stock market has been a one way bet
Currency speculators (shown in the above charts), have a huge bet on the dollar

If any of those conditions change, and especially if there is a cascade of reasons, a reversal in the fate of the US dollar will be enormous.

This is not a timing mechanism, but rather an observation there is potential for this alleged "dollar shortage" thesis to start looking like a "euro shortage" event.

And that is not all that far-fetched. Events in Greece or Spain can change things in a hurry. Investors who believe the ECB has everything under control,may find out otherwise.

In fact, I guarantee you things are not under control anywhere: Not in the US, not in Europe, not in China, not in Japan.

Is Japan Zimbabwe?

Having discussed the dollar and euro in depth, let's turn the spotlight on the Yen for a moment. Axel Merk asks Is Japan Zimbabwe?

The other day, when I was on a panel discussing unsustainable deficits in the U.S., Eurozone and Japan, the risk of inflation and Zimbabwe style hyperinflation came up. When asked about the difference about Japan and Zimbabwe, I quipped that there isn't any. My co-panelists were all over me, arguing Japan is different. Notably that Japan could not possibly go broke because, unlike Zimbabwe, it's an advanced economy. The argument being that Japan produces goods the world wants.

To be clear: Zimbabwe and Japan are not the same. But are they really that different? Zimbabwe not only had a much weaker economy, but also much weaker institutions. But the old adage that something unsustainable won't last forever may still hold.

The difference between Zimbabwe and Japan – and Europe and the U.S. for that matter – is that advanced economies have more control over their destiny. However, all these regions have made commitments they cannot keep by continuing business as usual. A weak country may simply implode. A strong country has choices. The preferred choice these days appears to be to kick the proverbial can down the road.

The path an advanced economy with unsustainable finances takes is in many ways a cultural and political question. Unsustainable government finances tend to be accompanied with unsatisfied citizens that have seen their standard of living erode, either because inflation has eaten away their purchasing power or because the government has taken away benefits. Such an environment is fertile ground for populist politicians to be elected. In the U.S., this may be the rise of the Occupy Wall Street or Tea Party movements. In Japan, a populist prime minister is in power.

What officials have in common is that they rarely blame themselves, but seek to shift blame on the wealthy, a minority group or foreigners. It's no co-incidence that Abe wants to abandon Japan's pacifist constitution; if Japan were able to balance its books, I allege that odds of such a discussion would be much lower. Similarly, by the way, Ukraine would not be in its current mess if it were able to balance its books. Japan unlike Ukraine, though, has well functioning government institutions.

Inflation is a slow motion form of default. The "advantage" of inflation, as long as it doesn't turn into hyperinflation, is that it is less prone to the so-called "contagion." In a default the risk is that many solvent players are drawn into insolvency as a house of cards implodes.

The reason why a government default tends to start out as a slow motion locomotive before it falls off a cliff is because stakeholders want to buy time. In the Eurozone debt crisis, for example, risk-averse investors were caught off guard when they realized their peripheral Eurozone debt was not risk free. By now, everyone should know these securities are not risk free which reduces the risk of contagion, as these assets have mostly moved away from financial institutions to those that can bear the risk. No one is going to cry if a hedge fund loses money; similarly, if the International Monetary Fund (IMF) loses money, the losses are 'socialized'.

Back to Japan: Japan can continue on its current course as long as the market lets it. It's impossible to predict if and when the market might lose confidence. The Eurozone debt crisis has shown that sentiment can switch rather suddenly, even for countries with fairly prudent long-term debt management, such as Portugal or Spain. It may be naïve at best to think that there will be plenty of warning should market sentiment shift.

What we do know is that central bank actions have masked risks. Risky assets don't appear risky anymore. But of course they are still risky. So when volatility surges – for whatever reason, investors might flee with a vengeance.

A default, by the way, is not the end of the world. While the socio-economic impact on a country may be severe and a default may cause institutions to fail, especially those that own debt of the defaulting country, the reset button of default doesn't affect everything. Government institutions may survive and so may many manufacturers. Japan induced hyperinflation to hit the reset button after World War II. Who says this can't happen again?

Yen Shortage?

A curious thing happens in hyperinflations. It actually appears to leaders of countries in such circumstances that there is a shortage of currency. After all, money doesn't buy anything. They need to print more and more of it to purchase anything, with obvious results.

The current COT position is such there could be a different kind of demand for Yen. Which comes first? I don't know and neither does anybody else.

That said, way back in 2005 I made a couple of statements that seemed absurd at the time.

The US would experience deflation, not hyperinflation
Japan would go into hyperinflation before the US

The US did go into deflation, depending on how one measures it. My definition is credit marked to market. On a CPI basis (a very flawed but widely used measure) the US also went into deflation.

My many times stated proposal still holds: The US will go in and out of deflation a number of times over the next decade.

I discussed deflation at length in 2008, in Humpty Dumpty On Inflation

I remember that title well because I have referred to it many times. Curiously, that post started with a discussion by Axel Merk.

Here we go again, this time with a discussion on the Yen.

Who's in Control?

Hopefully the answer to that question is obvious. No one. This is clearly uncharted territory with competitive currency debasement ending (for now) in the US but taken over by the ECB and Bank of Japan.

Odds of a Greece default are huge, and in my opinion rising. Is the ECB and eurozone prepared? They say they are, I think they are mistaken. With 691 Trillion Dollars of Derivative Bets , how can anyone believe any central bank is in control of anything?

US GDP is not quite 18 trillion. Derivatives are roughly 38 times US GDP.

Imagination Sets In

These numbers defy my imagination. Yet ...

ECB president Mario Draghi thinks we need more euros.
Prime Minsiter Shinzo Abe and the Bank of Japan think we need more Yen
Janet Yellen and the Fed have concluded the world does not need more dollars (at least for now).

And people are dumping gold for dollars because the Fed is "tightening"

It's truly a world gone mad.

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

Putin Prepared to Use Nukes to Keep Crimea; Wild Rumors of Putin Missing Debunked

Posted: 16 Mar 2015 09:52 AM PDT

Putin resurfaced today following wild rumors on March 13 after he failed to appear at some expected meeting.

Back from hiatus, Putin says he was Ready to Put Nuclear Weapons on Alert in Crimea Crisis.

Vladimir Putin was ready to put Russia's nuclear weapons on alert last year during Russia's annexation of Crimea.

"We were ready to do this," Mr Putin said in comments shown as part of a Russian state TV documentary on the one-year anniversary of Crimea's annexation.

"[Crimea] is our historical territory. These are our Russian people there. We couldn't abandon them and leave them in danger."

Mr Putin said that Moscow had been prepared to use any military means necessary to defend Crimea against "the nationalists" in Kiev and their "puppet masters": the US government.

He said Russia's interests in Crimea and the surrounding region would always outstrip those of its western partners.

"You are where? Thousands kilometres away?" Mr Putin said, addressing the US in the broadcast. "We are right here. This is our land . . . We were ready for the worst possible scenario."

Mr Putin, who has not appeared in public since March 5, was the star of Crimea: Return to the Motherland, a two-and-a-half-hour documentary that paid heavy homage to Mr Putin and his role in Russia's annexation of Crimea last year.

Putin Missing Rumors

I had written what follows for a post on Saturday but considered the theories so ridiculous I did not bother. Now that Putin is back, let's take a look at what was circulating.

Here's a summation of rumors regarding the "missing" Putin taken from the Financial Times article Russia in a Spin as its Main Man Goes Missing.

Rumor 1: On Twitter, critics of the president have been tweeting morbid jokes and memes under the hashtag "Putin is dead", while Russian bloggers and pundits pore over the official Kremlin website looking for discrepancies in Mr Putin's alleged work schedule.

Rumor 2: Andrei Illarionov, a former adviser to Mr Putin now based in Washington, claimed in a blog post that Mr Putin had fallen victim to a palace coup and fled abroad. There was no link to the alleged blog.

Rumor 3: Konstantin Remchukov, an influential Moscow editor, alleged that the state-owned oil company Rosneft's chairman Igor Sechin was about to get the boot, indicating that a big government shake-up was looming.

Rumor 4: In Switzerland, the news outlet Blitz.ch ran a report claiming that Alina Kabaeva, a former gymnast and Duma deputy who has been linked romantically with Mr Putin, had given birth to a child this week in Switzerland's Italian-speaking region of Ticino, suggesting that the Russian president had taken time off for a "baby mission".

Mr Putin was last seen in public on March 5 at a Moscow meeting with Matteo Renzi, Italy's prime minister. In subsequent days, the Kremlin cancelled a series of important engagements, including with the leaders of Kazakhstan and Belarus.

Perhaps he was sick. Or tired. Or preparing a documentary on Crimea. If anyone in Washington is paying Illarionov for his advice, they are fools.

Small Price Theory

Those who propose the Crimea annexation cannot be allowed to stand, need to reconsider their "small price to pay" thesis because it now clearly involves nuclear war.

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

Wage Growth vs. Economic Theory

Posted: 16 Mar 2015 12:25 AM PDT

If economists were right, wage growth and inflation would be soaring. After all, the Phillips Curve states that decreased unemployment in an economy will correlate with higher rates of inflation [and higher wage growth].

Let's explore that thesis.

Average Hourly Earnings Percent Change From Year Ago

Civilian Unemployment Rate

Let's hone in on that theory, this time with three charts.

Average Hourly Earnings Percent Change From Year Ago - Detail

Civilian Unemployment Rate - Detail

CPI Detail

If Economists Were Right

The Phillips Curve theory is so preposterous, I wonder why anyone still believes it. Even those who disbelieve the theory (at long last), still wonder why the theory went wrong.

I will explain the reasons in a moment. First, please consider the Bloomberg article that brought the ridiculous Phillips Curve theory into the spotlight once again: If Economists Were Right, You Would Have a Raise by Now.

Six years into the U.S. expansion, the link between falling unemployment and rising wages -- once almost as basic to economic theory as supply and demand -- seems to be coming unhinged.

The disconnect is puzzling to people like Colorado Governor John Hickenlooper. With one of the best growth rates among the 50 states, a population that's younger and better educated than the nation's and a jobless level that's fallen further and faster than the national average, Colorado seems to have everything going for it.

Yet the rise in the state's median wage since the recession ended in mid-2009 has averaged just 1.1 percent a year, based on data from the federal government's Current Population Survey. That's no better than the lackluster 1-percent-to-2-percent national pace. What gives?

"The whole notion that wage growth has been lagging job growth -- that's the crux of the problem here," Hickenlooper said in an interview. "We're working very hard to figure out why."

Divergence Pronounced

The divergence is even more pronounced at the state level. Wages aren't growing faster in states with lower, sometimes substantially lower, jobless rates than the nation's. They're also not rising nearly as fast as they did at similar points in the past. In fact, the link between state unemployment rates and wages, which weakened during the 1990s and 2000s expansions, is fraying still further this time around.

"If we think unemployment is going to continue to fall, we can't assume, as we once could, that that's going to bring wage growth with it," said Matthew Notowidigdo, an economist at Northwestern University in Evanston, Illinois, who specializes in state labor markets.

The break in the bond "has got to make you wonder whether any of the traditional economic policy tools can work as well as they used to."

What Went Wrong

Inflation is understated
Unemployment is understated
Global wage arbitrage still matters
Robots matter

1. Economists are 100% clueless as to how to measure inflation. Monetary inflation does not always manifest itself in the form of higher consumer prices. Therefore, the CPI is an absurd measure. The CPI ignores asset bubbles (stocks, bonds, land, housing, etc). Given that economists and central banks have a perfect track record of never spotting asset bubbles until after they pop, it's no wonder inflation looks benign. Bear in mind this discussion comes from a confirmed deflationist. Economists who cannot spot inflation now are simply brain dead. My off the cuff guess is that 90% of them are indeed brain dead.

2. Unemployment is what it is. By definition, I cannot argue with the number. But I can argue with the idiocy of a definition that discounts disability fraud, students continuing education because they cannot find a job, people so discouraged they drop out of the labor force, and those who retire not because they want to, but rather because unemployment benefits ran out and they need to collect Social Security to survive.

3. Wages in China are rising. But wages in other places aren't. So, price pressures remain.

4. Robots take jobs left and right. And the higher the minimum wage and the lower the cost of capital, the more industries are likely to fire workers and replace them with hardware and software robots. For this point, blame legislatures for higher minimum wages and blame the Fed for suppressing borrowing rates.

Nearly Every Mainstream Economic Theory Wrong

I started to write nearly every mainstream economic theory is suspect. I changed the subtitle to wrong because there is not a single mainstream theory that takes into consideration asset bubbles instead of a fatally flawed CPI as a measure of inflation.

Add to that, misinterpretation of GDP and unemployment, and it's no wonder that many theories behave so badly in practice.

Economists cling to fatally flawed ideas. Garbage in - Garbage Out is the general rule of thumb.

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

Damn Cool Pics

Women Reveal What They Really Think About Everything
This Man Makes Six Figures A Year Pretending To Be Alan From The Hangover
Fight for Your Right to Compensation with a Personal Injury Lawyer [Infographic]

Women Reveal What They Really Think About Everything

Posted: 16 Mar 2015 12:07 PM PDT

Have you ever wondered what kind of thoughts really go through a woman's mind? Well, you're about to find out.

This Man Makes Six Figures A Year Pretending To Be Alan From The Hangover

Posted: 16 Mar 2015 11:40 AM PDT

Thaddeus Kalinoski let himself go after his marriage fell apart and he began to notice something strange. He looked in the mirror and realized he looked just like Zack Galifianakis' character Alan from "The Hangover." He then left his job in Philadelphia and headed for Las Vegas. Now he makes over $200,000 and parties with beautiful women every single day.

Which one is which?

Thaddeus met the cast of The Hangover

Fight for Your Right to Compensation with a Personal Injury Lawyer [Infographic]

Posted: 16 Mar 2015 09:24 AM PDT

This is an infographic about personal injury law and how you can protect your rights to compensation. Personal injury refers to injuries incurred to the body, emotions and mind.

Click on Image to Enlarge.

Via: ColoradoPersonalInjuryLawyer.com

9 Simple Tips For Making An About Us Page That Works For Your Brand - Moz Blog

9 Simple Tips For Making An About Us Page That Works For Your Brand

Posted on: Sunday 15 March 2015 — 23:28

Posted by Ben.Austin

This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of Moz, Inc.

For too many online companies the About Us page is the elephant in the room, and often the most awkward thing to write. It's a shame because analytics often shows the page as one of the most frequented on any website. Imagine a ceremonial elephant adorned in his embellished head plate, raising you above your competitors. This could be your About Us page if you show it the care and attention it deserves.

The good news is your about page doesn't require several hundred pounds of vegetation on a daily basis, nor is there any real need for expensive antique rhinestones.

The bad news is crafting the perfect about page is easier said than done. Many find it difficult to strike the right balance between selling themselves to their customers and driving them away with a self-focused approach, which helps explain why the pages are so often neglected.

At Absolute, we're looking to revamp our entire website over the coming months, and in particular we'll be focusing our attention on our about page. We recognize that our page is currently a little on the dull side and while we are researching the topic, I thought it would be great to share nine great, easily applicable techniques we picked up from some of our favorite About Us pages from around the web.

Start by talking about your audience, not yourself

Human nature dictates that we are, first and foremost, concerned with our own problems. While some of us may give to charity or volunteer in our spare time, when it comes to searching for products or services online, we're all about ourselves and what a brand can do for us.

Blog Tyrant is a great example of a blog that is focused on its visitors. The first thing you see when you land on their about page is a video titled "About Me and You." The text that follows is then split into two sections, "About Me" and "About You (The Tyrant Troops)."

Image Source: www.blogtyrant.com

If this frank, upfront style doesn't suit your company there are more subtle ways to become more customer-orientated.

Dedicate your opening sentence(s) to your audience's challenges and objectives. Starting with the very reason they come to your site in the first place is a good way to demonstrate that you have their needs in mind. In our case, for example, it might be a good idea to acknowledge the difficulties marketing managers have in finding an agency that combines creativity with the essential technical skills, which can sometimes be overlooked.
State the facts: If you're still finding it hard to strike a happy medium between highlighting your selling points and plain boasting, then simply present your readers with the facts. This could be anything from your client retention rate to the amount of new products you offer each month to the number of awards you've collected. No one can argue with raw figures.

Let your customers do the talking

When you are thinking of trying out a new hairdresser, dentist or even a fish and chip shop, you don't base your decision on what they say about themselves. You turn to those around you. By including a few glowing (and up-to-date) customer testimonials on your about page, you can create a hub of information.

Be sure to include the customer or client's full name and any relevant details that could add credibility to your testimonials. Better still, include photos of your customers, if possible. It all helps to build trust in your brand.
Include customer-focused awards and accreditations. Perhaps you were voted your area's favorite provider of security products in 2013, or maybe you are part of some authoritative bodies or organisations within your industry. Exploit the instinctive human need to seek reassurance from our peers.

Include different forms of media

Make your about page a feast for the eyes by considering the use of photos, timelines, videos or infographics. If people are going to seek and find your about page, it makes sense to capture their attention for as long as possible, and this is precisely what Moz does. Their timeline incorporates strong image and design while still providing visitors with the key information they need.

Image Source: www.moz.com

Photos don't necessarily need to be of each individual team member. Although individual head shots do help prospective customers visualize your company, head shots of management, photos of you in action at a fundraising event or even images from a work night out (preferably ones that aren't likely to spark legal action), can all add character to your brand.
Videos are a great way of entertaining those with particularly short attention spans and can sum up the feeling of your company in a matter of seconds or minutes. If you don't have extensive time or resources in this area, Vine videos are a great way to add something different to your about page.

Tell your story

Even if your brand doesn't have an interesting story, you can still tell a story. Focus on the things that make you human.

That's precisely what a client of ours, ITS, has done with their About Us page. Unfortunately it's not something we can take credit for personally, but it still embodies everything a great story should have. It starts at the beginning, documenting their modest founding, in 1981 as a 150 square foot shop, all the way to modern day, with plenty of photos along the way. It's great to see the quality of the photos changing through time, almost like a family scrapbook. Customer ratings and social icons make this page even stronger.

Image Source; www.its.co.uk

Don't be afraid of where you have come from. If, eight years ago, your headquarters happened to be your CEO's conservatory, celebrate it. The more that people can identify with you the more trust they'll place in your brand. We have become so desensitized to marketing that a company needs a personal touch to set it apart.
You don't have to tell people everything. If you have been established for 80 years, people don't want to read a year-by-year account of everything that has happened in that time. Therefore, filter information accordingly, mentioning those key elements of human interest, but keep tales of new windows or a change of paper suppliers to yourself.

Include your address and contact details

Many people are still hesitant when it comes to parting with their money over the Internet and are thus keen to know you aren't simply looking to fleece them to make a bit of extra cash.

If you don't want to disclose your full address, at least state your city or town. Potential customers are not so likely to get in touch if you're less than forthcoming about your location. After all, what else might you be holding back?
Make certain your contact details are up to date. It sounds obvious, but having an out-of-date telephone number or email address could not only lose you a sale but might also send alarm bells ringing.
Your contact details should also include social handles and skype details if applicable.

Cut out the jargon

Writing in acronym-infested jargon might make you feel clever at the time, but it's boring and it's cold. People won't remember you. What they really want when they land on your about page is to learn, in simple unambiguous terms, precisely what you do.

Write conversationally. There is no best way to write. The style you adopt will depend on your company, but make an effort to write in a way that makes your content, and your site, feel accessible and friendly. The Adventurists site offers a great example of this. Their about page serve its intended purpose and is quite enjoyable to read. More to the point when they talk about "mobile phones tagged with twattery about which restaurant serves the best mocha-latte-frappeshite", you find yourself agreeing with them, even if their greater aim of getting youto cross the sub-continent in a three wheeled lawnmower powered tin isn't likely to happen anytime soon.
Don't name your about page some obscure name like, Our Ethos, or The Journey. People are looking for an About Us page, so give them one. Come up with a name that is too vague and people may miss you completely.

Ask for other peoples' opinions

Don't be afraid to ask employees, friends, peers, even clients, what makes you stand out as a business. When you have worked somewhere for a long time, it is tough to see your brand the way customers might see it. An objective opinion can help.

When you have decided on what makes you stand out, be sure to make this a focus.
If your peer search becomes more like soul-searching because you find there is actually nothing different about your company, despair not. Don't try and force something that isn't there. Instead, turn it around and focus on what makes your audience unique.

Make sure it reflects your company

In our quest for the perfect about page, we came across some really extravagant examples. Some had really impressive videos, special features or high tech designs. All of those examples were extremely applaudable, but will only really work if this fits in with the rest of your website, your industry and your company as a whole. It's easy to lose sight of who you are in your mission to create the best page possible.

Even if your website isn't overly visual, you can still include photos, just make sure they follow the same format as the rest of your website. If your site focuses on boxy shapes and bold colors, then keep this theme running throughout your images. Just as with your marketing, the key is to be succinct. Maintaining a consistent look and feel automatically gives your brand more authority.
The same goes applies for tone. Remember, in today's multi-platform society, your website may not be someone's first interaction with you, with visitors often reading an article or coming across a tweet beforehand. In that sense, an about page is almost like a meeting point, an amalgamation of everything that makes your brand who you are.

Test it!

There is no magic formula for about pages. If there were, you probably wouldn't be 2,000 words into this blog. A good way to treat the process of creating such a page, then, is as a work in progress.

Don't be afraid to make amendments. Spend a fair amount of time checking your analytics for traffic volumes, bounce rate and visit duration on the page. Tweak the odd sentence, add images, chop them out, introduce a video, etc, based on what the data tells you.
Make sure the page is accessible across all devices. It makes no sense to spend all this time creating an amazing page that is only visible to a small percentage of your audience, which is roughly what will happen if you ignore mobile and tablet users. Whether you have responsive design or a dedicated mobile site, test the performance of the page continually.

Of all the pages we looked at, our favorite is the one below, from Macmillan. Their About Us section is actually split into different pages, but the initial page makes use of video, explains briefly and simply what they do, includes contact details, testimonials and, most important, thanks people for their continued support.

Those readers who then want to learn more, as undoubtedly many will, can do so via links directing them to images of the team, as well as facts, figures and corporate partnership details. It might not be as flashy or as up to date as some, but it's what best represents them and that's the point.

Image Source: www.macmillan.org.uk

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Seth's Blog : The one who makes things worse

The one who makes things worse

Every committee or organization has at least one well-meaning person who is pushing to make things more average.

"On behalf of the masses, the uncommitted, the ones who don't care, we need to dumb this down, smooth out the edges and make it more average. We need to oversimplify it, make it a bit banal, stupid even. If we don't, then some people won't get the joke, won't be satisfied, or worse, complain."

And, by amplifying the voice of the lizard brain, he gets under our skin and we back off, at least a little. We make the work a little more average and a little worse.

This is the studio executive who demands a trite plot, with the usual stereotypes and tropes, played by the usual reliable actor types.

This is the record producer who wants the new song to sound a whole lot like the last song.

This is the NGO executive who fears that the new campaign will offend some minor donors...

Yes, it's true that the remarkable, edgy stuff we wanted to make wasn't going to be embraced by everyone. But everyone is rarely the point any more.

In the service of honest communication, perhaps the one who makes things worse should acknowledge that this is what he does for a living. That way, if we want things to be a little more average, we'll know who to ask.