Mish's Global Economic Trend Analysis |
- Mish with Gordon Long: Video Interview on the Troubles in Illinois and Greece
- Tax Revenue Collapses in Greece; Government Denies Capital Controls; Citizens Pull €2bn in Three Days
- CPI Jumps 0.4% on Gasoline Prices, Still Flat From Year Ago; Debt Deflation Dynamics
Mish with Gordon Long: Video Interview on the Troubles in Illinois and Greece Posted: 18 Jun 2015 07:35 PM PDT A week ago, Gordon Long at Macro Analytics interviewed me for the third time on Financial Repression. Long made the interview available today. The subject this time is Illinois pensions and turmoil in Greece. I believe a minimum of seven Illinois cities are in serious and immediate trouble, unable to meet current obligations. Numerous others cities are in serious trouble over pensions eventually. We also discussed Greece. I stated, as I have on my blog, that it appears Greece is stringing the Troika along, purposely giving Greek citizens time to pull deposits. Today we learned Tax Revenue Collapses in Greece; Government Denies Capital Controls; Citizens Pull €2bn in Three Days. Link if video does not play: Mish Comes Out Swinging on State of Illinois, Public Pensions and Greece. Previous Interviews with Gordon Long
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Posted: 18 Jun 2015 08:40 AM PDT Knowing that a default is now inevitable, Greek citizens made a decision to stop paying taxes. The result was foreseeable: Greek Government Suffers Collapse in Revenue in May. The Greek government suffered a collapse in revenue in May after companies and individuals delayed filing tax returns amid fears that emergency levies were imminent in order to secure a deal with bailout creditors.Capital Controls? On one hand, we have an official denial. Please recall the expression: "Never believe anything until it's officially denied". On the other hand, it makes sense for Greece to allow citizens to pull cash as long as the ECB does not remove ELA. Sooner or later, either the ECB or the Greek government will impose capital controls. I suspect it will be the ECB that forces the issue. Meanwhile, my oft-repeated message takes on increased urgency: "Get your money out of Greek banks while you still can!" Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
CPI Jumps 0.4% on Gasoline Prices, Still Flat From Year Ago; Debt Deflation Dynamics Posted: 18 Jun 2015 07:43 AM PDT The headlines on today's CPI jump of 0.4% are all over the map. If you want a slant one way or another you can find it. For example:
In reality, this is pretty much an expected jump due to rising gasoline prices. The above Bloomberg headline is all the more interesting because the Bloomberg Consensus Estimate was nearly spot on at 0.5%. I have been mocking economists' estimates for most of the year, but it seems to me they got this one correct. The entire consensus range was reasonable for a change. From Bloomberg Econoday: Just about all the readings in the May consumer price report point to very soft price pressures with the overall monthly gain, at plus 0.4 percent, and the ex-food ex-gasoline core gain, at only plus 0.1 percent, at or near the low-end of the Econoday forecasts.Year-Over-Year CPI Debt Deflation Dynamics Year-over-year prices are benign, but the CPI ignores asset inflation in stocks, land, homes, bonds, etc. On that basis, inflation is hardly benign. Moreover health-care is hardly benign, and probably under-reported. Finally, one can and should question food substitution and other anomalies that suppress the stated rate. The real problem though is asset inflation. When various bubbles pop, rate hikes by the Fed are going to come much slower than economists expect. Even after the housing bust, few economists understand the dynamics of debt-deflation, bubbles popping, and the overall burden of debt itself. Round after round of counterproductive QE created asset bubbles, but most economists (including the Fed) will not see the problem until those bubbles pop. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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