Central Perk: 10 ian. 2016

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Mish's Global Economic Trend Analysis

Merkel Cancels Davos Trip, Warns Refugee Sex Offenders Part of Organized Crime
Mexico Blames China for "Frankly Perverse" Currency Wars Then Joins Mad Intervention Party
Unusual Sacrifice; Price of a Deal; Together for Yes

Merkel Cancels Davos Trip, Warns Refugee Sex Offenders Part of Organized Crime

Posted: 10 Jan 2016 09:52 PM PST

In response to growing pressure over the over the mass sexual assaults and robberies that took place in Cologne on New Year's Eve, Angela Merkel cancelled her regular trip to the global leaders' gathering in Davos according to the Financial Times.

Merkel's justice minister warned that the attackers are members of an organized crime network that coordinates via smartphones and social networks.

Lovely.

Well at least they did not blow up Berlin.

Mike "Mish" Shedlock

Mexico Blames China for "Frankly Perverse" Currency Wars Then Joins Mad Intervention Party

Posted: 10 Jan 2016 02:39 PM PST

One-Way Trip Lower

Every rally in the Mexican peso vs the US dollar has failed since 2001. The Peso is now worth about half what it was fourteen years ago.

In April of 2001, it took 8.91 Mexican pesos to buy 1 US dollar. Now it takes 17.92. That's a decline of just over 50%.

"Perverse" Currency Wars

A slide in the price of oil and a perception the US economy is relatively strong are as much to blame for the recent slide in the peso as China.

Nonetheless, the Financial Times reports Mexico Warns of China Triggering 'Perverse' Currency Wars

Chinese market turmoil and the renminbi's fall to a four-year low against the US dollar risks the prospect of "perverse" currency wars, Mexico has warned.

"There is real concern that, in the face of the deceleration of the Chinese economy, the public policy response will be to start a round of competitive devaluations," said Luis Videgaray, finance minister.

He called that prospect "frankly perverse" because copycat devaluations would leave everyone in the same position and would not really alter anything. Mexico's peso floats freely, but the central bank has been auctioning dollars in recent months to shore up the currency.

"Frankly Perverse"

Mexico warns "frankly perverse" copycat devaluations won't accomplish anything.

I agree.

However, Mexico should take this under advisement: History shows it's equally perverse to expect currency intervention actions to work.

Mike "Mish" Shedlock

Unusual Sacrifice; Price of a Deal; Together for Yes

Posted: 10 Jan 2016 01:20 PM PST

Unusual Sacrifice

Spain saw an unusual outcome on Saturday: A politician sacrificed himself for the good of his cause.

Background for this development stems from regional elections in Spain where separatists came away with a majority, but could not decide on a president.

The two pro-independence factions are the Popular Unity Candidacy (CUP) and Junts pel Si. CUP is a far-left, fiercely anti-capitalist party that rejects Catalan membership of both the EU and Nato. Junts pel Si is a more business-friendly secessionist group.

Artur Mas' Junts pel Si party received far more votes in the regional election, holding 62 of the 135 seats in the Catalan parliament. But CUP refused to back Mas and 62 is not a majority. Nor could the non-separatists muster a majority.

One day before new elections would have been forced, Mas stepped aside and announced a deal with CUP.

I commented on that outcome in Pro-Independence Spanish Parties Strike Deal to Form Government, New Catalan Election Called Off; Rajoy in Hot Seat.

Price of Deal Disclosed

The decision by Artur Mas to step aside came with a price. Via translation from El Economista, here are the terms of the deal.

Members of the CUP may not vote in parliamentary affairs in any way that is contrary to the process of independence
Two anti-capitalist CUP parliamentarians must join Junts pel Si and vote along with it.
CUP must let Artur Mas pick the president.
CUP had to admit mistakes in its belligerent position against pel Yes Junts regarding the independence process.
CUP must to renew its commitment to the parliamentary group in order to realize a step change and assume their rightful criticism in the negotiating process. The relay in the parliamentary group will be held immediately after full investiture.

Very Good Deal for Separatist Movement

I have no idea what point five means. For the pro-independence movement, though, it appears to be great deal all around.

Had a new election been held, the separatists may not have even won. In the last election, the separatist forces did not get a majority of the votes even though they got a majority of seats in the Catalan parliament.

New President Announced

As a result of point number three above, a new president has been named: Carles Puigdemont, mayor of the provincial city of Girona.

The Financial Times reports Catalonia to Elect New Leader as Divisions with Madrid Deepen.

Catalonia's pro-independence parties agreed to elect a new regional president at the weekend, as part of a last-minute deal that is expected to accelerate the region's push for independence and raise pressure on leaders in Madrid to end Spain's post-election political deadlock.

Carles Puigdemont, the new president, was set to be confirmed in his post during a special session of the Catalan parliament on Sunday night.

Mr Puigdemont will have an explicit mandate to lead Catalonia towards secession from Spain over the next 18 months. His government is tasked with in effect setting up a state within the state, by creating a separate Catalan central bank, tax authority, social security system and possibly even the nucleus of an independent military.

Mr Puigdemont, a former journalist and the current mayor of the provincial city of Girona, will enjoy what looks to be a solid parliamentary majority to implement that plan.

Together for Yes

Junts pel Si and CUP have merged forces in a way that will strengthen the independence movement. And that merger comes at a time the central government is more fragmented than ever.

In fitting irony of the unusual decision of a politician to step aside for the good of the cause, Junts pel Si translates as "Together for Yes".

Mike "Mish" Shedlock.

Damn Cool Pics

27 Benefits of Harvesting & Eating Wild Venison [Infographic]

Posted: 10 Jan 2016 05:32 PM PST

There are so many reasons why hunting for deer meat is beneficial not only for the environment but for our well being and health. We have narrowed it down to 27 benefits of harvesting and eating wild venison and have created a really cool infographic to better illustrate the long lasting debate of venison vs beef.

Click on Image to Enlarge.