Central Perk

duminică, 12 aprilie 2015

Mish's Global Economic Trend Analysis

Credit Crunch Underway: Can Recession Be Far Behind?

Posted: 12 Apr 2015 09:59 PM PDT

Credit Crunch Underway

Last week, Alexander Giryavets of Dynamika Capital L.L.C. pinged me with an article he had written on Recessionary Level in Credit Conditions.

His article was based on data from the March Credit Managers' Index by the National Association of Credit Management. The report is pretty damning.

First, let's take a look at some NACM snips. Emphasis in italics is mine. Following the NACM snips and some NACM explanations, we will return to a chart from Giryavets.

From the March NACM Credit Managers Report:

Combined Sectors [Manufacturing and Service]

There is quite obviously some serious financial stress manifesting in the data and this does not bode well for the growth of the economy going forward. These readings are as low as they have been since the recession started and to see everything start to get back on track would take a substantial reversal at this stage. The data from the CMI is not the only place where this distress is showing up, but thus far, it may be the most profound.

The combined score is getting dangerously closer to the contraction zone and has not been this weak in many years (going back to 2010). It is sitting at 51.2 and that is down from the 53.2 noted last month.

The most drastic fall took place with the unfavorable factors that indicate the real distress in the credit market. It has tumbled from 50.5 to 48.5 and that is firmly in the contraction zone—a place this index has not been since the days right after the recession formally ended. The signal this sends is that many companies are not nearly as healthy as it has been assumed and that there is considerably less resilience in the business sector than assumed.

The breakdown of the two index categories proves instructive. The category of sales slid to 57.9 and that is a far cry from the 65.7 that was notched back in October of last year. These numbers have been in the high 5 0s and 60s for the last year and now the slide is accelerating. The new credit applications category actually improved from 54.5 to 57.4, but when one combines this reading with the one for amount of credit extended, you get a n even more miserable story than one would assume. The latter reading went from 52.1 to a very troubling 46.1. There may be more applications for credit, but there is not all that much getting issued and that indicates that much of the new credit being requested is coming from companies that are not in a position to get that credit.

The real damage is showing up in the unfavorable categories. By far the most disturbing is the rejection of credit applications as this has fallen from an already weak 48.1 to 42.9. This is credit crunch territory—unseen since the very start of the recession. Suddenly companies are having a very hard time getting credit. The accounts placed for collection reading slipped below 50 with a fall from 50.8 to 49.8 and that suggests that many companies are beyond slow pay and are faltering badly. The disputes category improved very slightly from 48.8 to 49, but is still below 50. This indicates that more companies are in such distress they are not bothering to dispute; they are just trying to survive. The dollar amount beyond terms slipped even deeper into contraction with a reading of 45.5 after a previous reading of 48.4. The dollar amount of customer deductions slipped out of the 50s as i t went from 51.8 to 48.7. The only semi-bright spot was that filings for bankruptcies stayed almost the same—going from 55.0 to 55.1. This is the one and only category in the unfavorable list that did not fall into contraction territory and that suggests that there are big, big problems as far as the financial security of these companies are concerned.

Manufacturing Sector

The damage this month is pretty widespread and the manufacturing sector took a hit as well as the service sector. The combined index slipped from 53.7 to 51.6 and that is getting uncomfortably close to the contraction zone. The index of favorable factors remains in acceptable territory with a reading of 55.6 after one of 57.9 la st month, but for the bulk of the last year these readings have been in the 60s and trending in a far more positive direction is the case right now. The index of unfavorable factors is where the damage really starts to manifest as the overall score slipped from 50.9 to 48.9 and that marks the first time the combined reading has been this low since 2010, although it must be pointed out that these readings have not been all that high for quite a while — bouncing along in the low 50s for the past couple of years.

The new credit applications category stayed roughly the same as last month with a slight rise from 56.7 to 58.6, but as pointed out in the narrative above, this is not really good news as the amount of credit extended slipped badly from 49.4 to 45.1. The fact is that companies that are not all that creditworthy are trying to get credit and they are not getting much attention.

As stated earlier, the real concerns start to manifest with the unfavorable categories. The rejections of credit applications fell out of the 50s with a resounding thud—going from 50.3 to 43.8. There is most definitely a credit crunch underway and it is now easy to determine what the prime factor is. There are many companies seeking credit that are too weak and there is obviously an abundance of caution showing up in those that issue that credit.

The big news is access to credit. It is suddenly very hard to get and this looks like the situation that existed at the start of the recession in 2008 [2007 actually]. The overall economy didn't look all that bad in late 2008, except that there was a dearth of credit and that soon led to business failures and struggles.

Service Sector

As was the case last month, the majority of the damage was seen in the service sector and this month it is going to be hard to blame it all on the weather or some other seasonal factor. The combined index is teetering right on the edge of contraction as it has slipped from 52.6 to 50.9. The index of favorable factors fell from 56.4 to 55.2 and just as with manufacturing, the big issue was access to credit. The sales category was not affected all that much from last month, but is down from much of the last year. It has fallen from 57.9 to 56.9. Again we see a hike in the new credit applications category as it moved from 52.1 to 56.2 and again this is far from good news given that amount of credit extended slipped from 54.8 to 47.2. The pattern is the same whether one is discussing the manufacturing or service side—too many seeking credit that are not going to get what they are seeking—either because there are doubts as to their credit status or because those issuing credit are in a very cautious mood.

The overall unfavorable reading has been above 50 for several years and in some months, the reading was nearly mid-50s. That is no longer the case as the numbers slipped from 50.1 to 48.0. The details illustrate the problems just as they do for manufacturing. The rejections of credit applications is as miserable as it has been since the depths of the recession—going from 45.9 to 42.0. These are very bad readings and it will take a good long while to climb out of this mess. The accounts placed for collection category is weak as well—going from 49.9 to 48.1, but at least the fall wasn't as dramatic as with some of the other readings. The disputes category fell out of the 50s with a reading of 49.4 following last month's reading of 50.4. The dollar amount beyond terms improved a little but still remained in the 40s—going from 44.7 to 45.1. The dollar amount of customer deductions went from 54.8 to 48.7 and that was a sharp drop. The filings for bankruptcies went from 54.9 to 55.0 and that was one of the very few positive readings this month.

March 2015 versus March 2014

The year-over-year trend remains miserable and seems to be getting worse and thus far nearly all the blame can be laid at the feet of credit access. There is just not a lot of confidence in those that are doing the credit offerings these days.

NACM Favorable and Unfavorable Factors

click on chart for sharper image

This is somewhat counterintuitive, but negative unfavorable scores are not a good thing. "When survey respondents report increases in unfavorable factors, the index numbers drop, reflecting worsening conditions."

Recessionary Credit Conditions

Inquiring minds may wish to read Recessionary Level in Credit Conditions by Alexander Giryavets.

The charts in Giryavets' article are in his words "shifted and rescaled" so one can see how much of subcomponent movement can be explained by index movement.

Some may find those charts hard to follow, so I asked Giryavets for a simple chart of the overall index, credit extended, rejection of credit, and dollar amount beyond terms. He graciously created that chart for us, shown below.

Combined Index, Amount of Credit Extended, Credit Rejected, Dollar Amount Beyond Terms

click on chart for sharper image

Start of recession is denoted by vertical red line, end of recession by vertical green line.

Can Recession Be Far Behind?

NACM data only goes back to 2002. Also data prior to 2006 is not seasonally adjusted, while data from 2006 and later is seasonally adjusted.

In the entire series since 2002, the only other time we have seen deep plunges in amount of credit extended and rejection of credit applications was deep in the middle of the last recession. Those are apples to apples comparisons, both seasonally adjusted.

Although comparisons between seasonally adjusted numbers and unseasonably adjusted numbers are technically invalid, if anything that would have led to more volatility between comparisons, not less.

This is still more supporting evidence that a recession is on the way. Heck, we may even be in the start of one right now, just as everyone is expecting rate hikes.

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

Former Fed Governor Thomas Hoenig Says US Banks Undercapitalized; Unsafe, and Unsound Banks

Posted: 12 Apr 2015 12:42 PM PDT

In another round of "stress" tests last month, the Fed said Big Banks Pass Muster.

Anyone who has been following stress tests in US or Europe knows full well, the tests were in reality "stress free".

Confirmation of the undercapitalized state of US banks comes from former Fed Governor Thomas Hoenig. He served as chief executive of the Tenth District Federal Reserve Bank, in Kansas City, for 20 years. Rules limit terms to 20 years. Hoenig is now vice chairman of the Federal Deposit Insurance Corporation.

Undercapitalized, Unsafe, and Unsound

Hoenig's opinion should carry some weight. And a New York Times Editorial citing Hoenig sounded an alarm today regarding Unsafe and Unsound Banks.

After the latest round of bank stress tests last month, the Federal Reserve announced that, by and large, the nation's biggest banks would all be able to withstand another crisis without requiring bailouts.

This month, Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, released data that contradict the Fed's conclusions.

In the face of Mr. Hoenig's challenge, the Fed would do well to recall a chapter from its recent history. Before the financial crisis, when Alan Greenspan, then chairman of the Fed, was insisting all was well with the banks, one Fed governor, the late Edward Gramlich, warned of mounting risks. He was ignored.

At issue this time around is the level of bank capital, which reflects the amount of loss a bank can endure before failing (or, if the bank is "too big to fail," requiring a bailout). According to the Fed's main measure, capital at the eight largest American banks averaged 12.9 percent of assets at the end of 2014, well above required regulatory minimums.

In contrast, Mr. Hoenig's calculations show that capital at those same banks averaged only 4.97 percent at the end of 2014.

In a recent speech, Mr. Hoenig noted that under American accounting rules, derivative holdings add $300 billion to the balance sheets of five top banks — JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs and Morgan Stanley. Under international rules, the holdings would add $4 trillion.

History favors Mr. Hoenig's approach. Gains and losses on derivatives may be offsetting when the economy is stable, but in the financial crisis American taxpayers were forced to hand the banks tens of billions of dollars to make good on derivative bets gone bad. In a healthy system, the banks would hold enough capital to ensure that doesn't happen again. Do they now? Fed officials seem to think so. They should think again.

Thomas Hoenig on State of US Banks

Let's take a look at April 2 statements by Thomas Hoenig in the FDIC Release of Fourth Quarter 2014 Global Capital Index.

For the largest U.S. banking firms, the average tangible equity capital ratio – known inversely as the leverage ratio – is 4.97 percent (column 8). In other words, each dollar of assets is funded with 95 cents of borrowed money.

The largest regional and community banks, shown in the last three rows of column 8, have tangible capital ratios ranging from 7.57 to 8.85 percent. That is, they operate with between 1.5 and 1.7 times more funding from their ownership than G-SIBs do.

"The Global Capital Index illustrates how financial resiliency is still sorely lacking," Vice Chairman Hoenig said. "The sector of the financial industry with the greatest concentration of assets is the least well capitalized. Plainly put, it operates with the largest amount of borrowed, or as we say, leveraged funding, and thus it is the least well prepared to absorb loss. Yet the primary measure of capital – the risk weighted measure (column 3) -- makes the largest firms appear relatively more stable than they really are. The reality is that with too little owner equity funding individual firms, the industry as a whole also is undercapitalized and should one firm fail, the industry continues to be vulnerable to contagion and systemic crisis. It follows that the lack of adequate tangible capital remains among the greatest impediments to successful bankruptcy and resolution."

The ratios of Tier I capital to risk-weighted assets for all banks (column 3), largest to smallest, are above 10 percent and some of the largest have ratios of more than 15 percent. "This higher capital ratio is achieved by reducing on-balance sheet assets by a pre-assigned risk weight and excluding off-balance sheet assets, such as derivatives. This measure is misleading and overstates the strength of these firms' balance sheets. No other industry is allowed to make these kinds of adjustments," Vice Chairman Hoenig said. "The tangible leverage ratio provides a more accurate measure of assets and risks than the balance sheet reported under either GAAP or Basel."

Banks Not Well Capitalized

Banks are "well capitalized" in the US only by ignoring derivatives. European banks are "well capitalized" by treating all sovereign debt, including Greece, Spain, Portugal, as if it was risk-free.

The reality is banks are undercapitalized globally.

And although taxpayers were forced to cover losses, they shouldn't have been. The notion that bondholders should never take losses is absurd.

The Fed assumes "derivatives are risk free because they net out". Hoenig doesn't buy that argument and neither do I.

A currency crisis awaits.

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

Seth's Blog : The noise in our head (and artificial intelligence)

The noise in our head (and artificial intelligence)

One common insightful definition of AI: Artificial Intelligence is everything a computer can't do yet. As soon as it can, we call it obvious.

And so, self-driving cars and devices that can beat us at chess don't really think, they're just doing something by rote (really really fast).

One reason we easily dismiss the astonishing things computers can do is that we know that they don't carry around a narrative, a play by play, the noise in their head that's actually (in our view) 'intelligence.'

It turns out, though, that the narrative is a bug, not a feature. That narrative doesn't help us perform better, it actually makes us less intelligent. Any athlete or world-class performer (in debate, dance or dungeonmastering) will tell you that they do their best work when they are so engaged that the narrative disappears.

I have no idea when our computer overlords will finally enslave us, but it won't happen because we figured out a way to curse them with a chattering monkey.

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sâmbătă, 11 aprilie 2015

Mish's Global Economic Trend Analysis

Legacy Skills and Capital; Sugar and Steel; Turning TPP to TP

Posted: 11 Apr 2015 08:16 PM PDT

In response to Readers Question Free Trade; Does Nonreciprocal Free Trade Cost Jobs? Paul Krugman "Was" Right!, reader Ken is wondering about legacy capital and the destruction of capital.

Ken writes ...

Hi Mish

I really enjoy your explications of economic ideas, and I think the world really needs them, since many are so economically illiterate.

I do have a question about free trade and loss of capital. My father and uncle both trained at Detroit's illustrious technical high school. My dad went on to college and became a physiology researcher and professor, my uncle developed a state of the art machine shop making rocket engine parts.

When job and factory loss occurs there is also loss of the physical capital of the legacy tools and machines, and not all of them are worthy of obsolescence. In addition there is the loss of human capital embodied in persons and organizations.

Here I am thinking of institutions such as the famed Detroit technical high school, and of individual trained personnel such as the senior master machinist who has years of experience and detailed practical knowledge that can only be relayed in person from a master machinist to a developing journeyman machinist.

I recognize that there is radical technological innovation ongoing, but there still must be some value in this legacy capital. I would be interested if you might address this consequence of free trade in your writing.

Thanks,

Ken

Legacy Capital Disappears Over Time

As technology advances, the value of legacy capital depreciates at varying rates, but skills can change from being very needed to completely obsolete quite fast, even overnight.

Is there any legacy capital left for ability to use a slide rule? I suspect none at all. I have that skill and it is totally useless other than as a conversation piece.

My freshman year in college in an engineering curriculum, knowledge of how to use a slide rule was important. And the better you could use one, the more likely you were to arrive at the correct answer.

One semester later, skill in using slide rules was rendered totally useless. Texas Instruments came out with small hand-held engineering calculators that made the slide rule obsolete, overnight. Having a good slide rule and knowing how to use it was needed one semester, but on day one of the next semester having an engineering calculator was a requirement.

Robots are now doing much machine work. Boeing recently replaced highly skilled riveters with robots that do a far better job with fewer errors. See KUKA Systems develops robotic riveting system for Boeing 777 wide-body fuselage assembly.

Is there legacy capital for highly skilled airplane riveters? The answer is pretty clear: Except for niche applications, need for that skill just vanished.

Over time all sorts of skills become obsolete or relegated to small niches. Horse riding is a good example of niche use. Horse riding skills are needed for jockeys at the racetrack, wild west shows, recreational uses, and perhaps some ranching functions. Unlike the slide rule there is still some demand for horse riding and training, but not like in 1840.

Someday, and sooner than most think, truck driving skills will be of limited use, perhaps even no use at all. Right now, truck driving skills are still valuable.

With that let's return to free trade and tie up some loose ends.

Sugar Lobby

Please consider Powerful US sugar lobby stands between Australian cane growers and a sweet trade deal.

It's the kind of political power Australian agricultural industries can only dream of.

America's sugar producers continue to benefit from government subsidies, import quotas and tariffs, despite the vehement opposition of the influential American business lobby and the agreement of numerous free trade deals, including one with Australia in 2005.

It's long been a sore point for Australian cane growers, who hope the Trans-Pacific Partnership (TPP) will bring change.

But while business is optimistic, other political observers in Washington DC say Australia will be lucky to win any concession on sugar.

Scott Miller, from the pro-trade Washington think-tank the Centre for Strategic and International Studies, said the "political intensity" of the US sugar lobby is "unrivaled" and he's blunt about the prospects for change in the TPP.

"Sugar, I'd hold out no hope for," Mr Miller said.

"The United States has had a sugar protection scheme since about 1794, and that will probably continue through my lifetime."

It's notable that on Capitol Hill, even some who advocate for free trade and support the Trans-Pacific Partnership believe sugar concessions are a bridge too far.

The US Chamber of Commerce represents major sugar manufacturers including Mars, and the Chamber's Asia director Catherine Mellor says protection policies are unfair and don't make economic sense.

"It's raised the cost of sugar in the US and we've lost 30,000 jobs - 30,000 jobs out of Chicago have gone because sugar manufacturers have left the United States to go to Canada so that they can import sugar," she said, calling on American leaders to show courage in tackling sugar subsidies and tariffs in the Trans-Pacific Partnership negotiations.

Free Trade Agreement?

After 5 years of wrangling TPP is nowhere close to a free trade agreement.

What about Steel?

Looking for more tariffs that likely will not go away? If so, consider steel. Here's a Google search I did for Steel Tariffs.

Scroll down the list and look for recent listings. You will find a bunch of complaints for and against the US and EU.

Steel Tariffs Won't Save Jobs

A decent article to consider is the accurate assessment in July of 2014 by Forbes contributor Tim Worstall who says Why Steel Tariffs Won't Save Jobs. The article even mentions TPP.

The latest round of steel tariffs are a classical, sui generis, example of how politics really works. Larded with a great deal of rhetoric about how this will save jobs, make America great again and possibly improve the flavour of Mom's apple pie the reality is that it protects some number of politically important jobs at the cost of more, less politically important, jobs elsewhere in the economy.

Now with trans-Pacific and trans-Atlantic trade talks missing deadline after deadline, Washington is slapping new tariffs on steel imports. This election-year gift to U.S. steel giants and their unions will raise prices for other U.S. firms, handicap domestic energy production and alienate trading partners world-wide.

On Friday the Commerce Department imposed duties on hundreds of millions of dollars in annual trade with South Korea and eight other countries, including India, Vietnam, Turkey and Taiwan. As punishment for allegedly dumping steel into the U.S. market at unfair low prices, South Korea's exporters will face tariffs of about 10% to 16%, while smaller players from other countries face rates up to 118%.

Essentially, what is being repeated is the mistake of the Bush steel tariffs back a decade or so.

As a result of a Section 201 ("safeguard") investigation brought at the behest of the U.S. steel industry, President Bush in March 2002 imposed tariffs on imports of certain steel products for three years and one day. The tariffs, combined with other challenges present in the marketplace at the time and in the months that followed, boosted steel costs to the detriment of American companies that use steel to produce goods in the United States. The resulting negative impact included job losses for thousands of American workers.

200,000 Americans lost their jobs to higher steel prices during 2002. These lost jobs represent approximately $4 billion in lost wages from February to November 2002.

One out of four (50,000) of these job losses occurred in the metal manufacturing, machinery and equipment and transportation equipment and parts sectors.

More American workers lost their jobs in 2002 to higher steel prices than the total number employed by the U.S. steel industry itself (187,500 Americans were employed by U.S. steel producers in December 2002).

Steel Analysis

Does the above sound reasonable? It does to me.

Why? Because US auto and other US manufacturers that use steel in any form had to pay higher prices for it than foreign competition. People bought foreign cars that were better and cheaper.

We saved steel jobs but at far greater expense of other jobs.

Turning TPP to TP

Obama's Trans-Pacific Partnership is not a step in the right direction. It would serve a better use as toilet paper.

For further analysis, please see my article that started this chain of posts: Obama's Trans-Pacific Partnership Fiasco vs. Mish's Proposed Free Trade Alternative; How Will TPP Function in Practice?

I repeat for the third time ...

I am in favor of free trade. An excellent free trade agreement would consist of precisely one line of text. I propose the following agreement: "All tariffs and all government subsidies on all goods and services will be eliminated effective June 1, 2015."

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

Introducing "Spot" the Robo-Dog

Posted: 11 Apr 2015 01:07 PM PDT

Here's a robot gadget that I would actually like but mainly for a reason that I challenge readers to guess.

While watching the video below, in which no robots were harmed in spite of being kicked, think of some reasons for "Spot" the robo-dog made by Boston Dynamics.

Link if video does not play: Introducing Spot.

Spot is a four-legged robot designed for indoor and outdoor operation. It is electrically powered and hydraulically actuated. Spot has a sensor head that helps it navigate and negotiate rough terrain. Spot weighs about 160 lbs.

I think "Spot" will eventually be a big hit for security purposes. In such a mode it would be equipped with a video camera, voice, heat-seeking ability, etc.

Robo-Dog as Animal Deterrent

We have a 1 acre property with huge gardens. Our property is close to a forest preserve. Deer are extremely problematic. They eat nearly everything unless I take other measures.

One bite off the top of a lily and it will not flower in the current year. Repeat bites and it will not survive at all.

I believe a robo-dog like spot roaming the property from dusk to dawn would keep deer and other animals away.

Meanwhile for all you gardeners with a deer problem, I suggest "Mish's Brew".

Mish's Brew

You can find deer repellants at garden shops for about $30 a quart. One quart will fill a two or three gallon container perhaps three times.

The list of ingredients typically says something like "putrefied eggs and garlic extract". $30 seems like a huge price for something so simple.

I thought that I could make that myself. I tried and did. My brew works even better, with fewer clogs than the commercial mix.

Mish's Brew Recipe

In a blending bowl, add one egg and a half cup of "stuff". The "stuff" is combination of garlic powder, onion powder, powdered curry, and powdered cinnamon. Use whatever stuff you like, but it needs to be pure powdered ingredients, not something like garlic salt. If it has salt in it, it will harm or kill your plants.

Anyway take about a half cup of "stuff" whose primary ingredient is garlic powder, add an egg and a couple cups of water. Blend really well for two minutes. The better the blend and the finer the powder, the fewer the sprayer clogs.

Next add a few tablespoons of liquid dish-washing detergent such as Dawn, and a bit more water. Add the detergent later in the mixing process to reduce foaming. Blend another minute or more. The longer the better.

Using a funnel, pour the mix in equal portions in two "strong" quart plastic bottles. Orange juice bottles are better than a milk bottle. I have Mish's Brew eat through the latter.

Fill the quart bottles up with water and shake. Now you have concentrate. Half of that quart bottle is enough to fill a three gallon sprayer.

Choose a sprayer with a metal tip, not the plastic ones. Metal tips clog less frequently and are easier to unclog if the do get clogged.

Again, I have had far better clogging results with my mix than the commercial stuff.

The dish-washing detergent is a wetting agent and the egg acts like a glue that will dry on and stay on. Choose your powdered stuff with care. Sometimes the generic store brand in bulk is the finest powder you can get.

You can also try garlic juice instead of powdered stuff. A cup of juice instead of "stuff" will suffice, and it will clog even less than powders. I am using liquid juice now, with a bit of cinnamon and curry powder added in.

Mish's Brew Really Stinks!

Mish's Brew improves with age. It really stinks! Imagine rotten eggs infused with concentrated garlic.

Don't spray on a windy day.

The smell in the garden will go away within hours, but the brew will stop deer up to a month, even with rains. Whenever you see deer munching again, it is time to spray again.

The critical time to spray is springtime: now. Deer are very hungry and plants are sprouting up. I spray more in Spring and early Summer than other times. Also, if you have flowering shrubs that deer like (viburnums) spray in late autumn so deer do not eat the flower buds. One late spray on shrubs will last the entire winter.

Aging works well. Mish's brew improves the longer it sits, but you can also use it immediately. Don't use Mish's Brew on vegetables or anything you intend to eat!

I have never had my brew harm any plant with two possible exceptions: Clematis and yews. I have seen yew discoloration but I am not positive it is related to my mix or if it was caused by something else. On a couple occasions, it seemed to adversely affect my clematis vines. I will not again spray my clematis vines (and they do not seem to be a deer favorite anyway).

Other than that, I have seen no problems caused by the mix, but please note the mix does not stick well to tulip leaves (nor does the commercial mix). Tulip leaves are very waxy and it runs right off. Tulips and Lilies are among the favorite choices for deer.

No need to spray daffodils, alliums, peonies, bleeding hearts, monks hood, or lamb's ear. Deer also do not touch some groundcovers such as vinca, lamnium, and pachysandra.

Judge from your own experience. Many plants are questionably labeled "deer-resistant".

Until the cost of robo-dog is incredibly cheap (I suspect it will be some day), Mish's Brew will guard my gardens, not robo-dog.

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

Damn Cool Pics

Pablo Picasso's Art Through The Ages

Posted: 10 Apr 2015 09:15 PM PDT

Pablo Picasso was just never satisfied with staying the same because he knew that in order to create great art, you have to evolve as an artist.

Seth's Blog : Five steps to digital hygiene

Five steps to digital hygiene

Washing your hands helps you avoid getting sick.

Putting fattening foods out of your reach helps you stay slim.

And the provocations and habits you encounter in the digital world keep you productive (or drive you crazy):

Turn off mail and social media alerts on your phone.
Don't read the comments. Not on your posts or on the posts of other people. Not the reviews and not the trolls.
De-escalate the anger in every email exchange.
Put your phone in the glove compartment while driving.
Spend the most creative hour of your day creating, not responding.

Each habit is hard to swallow and easy to maintain. Worth it.

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vineri, 10 aprilie 2015

Mish's Global Economic Trend Analysis

Incredible Tornado Footage from Illinois, Yesterday
Phone Tax Scam by "Officer Melvin" Allegedly with IRS
France vs. Sydney Australia Property: What Will $600k to $1M Buy?

Incredible Tornado Footage from Illinois, Yesterday

Posted: 10 Apr 2015 04:05 PM PDT

A tornado touched down yesterday in McHenry Illinois, less than 10 miles from where Liz and I live. Tornadoes hit multiple locations.

Here is some incredible footage of a tornado tipping a truck over and debris flying everywhere. This footage is near Rochelle, Illinois.

"Tornado developed west of I-39 and widened as it moved toward the highway. The tornado entered it's wedge stage while crossing the highway and doing significant damage. The tornado then moved away toward the Fairdale community where at least one fatality has taken place and destruction took place. This large tornado churned across a long track and the National Weather Service will survey the damage starting tomorrow. Footage shot by Tyler Olson of Live Storms Media."

Link if video does not play: 4-9-15 Rochelle, Illinois Tornado.

More Tornado Footage

"Around 7pm, we began documenting a tornado forming near the Rochelle, IL area. We briefly lost visual while positioning closer to the tornado, but began filming again when we had visual of the massive tornado. We continued to follow and document the tornado the northeast until it dissipated south of Belvidere, IL at ~7:40pm CDT."

Link if video does not play: Rochelle to Kirkland, IL Complete Tornado Footage

Footage of Homes Being Demolished

Watch a huge tornado directly hit huge grain bins. I am surprised they survived the hit. With debris flying everywhere, some nearby homes didn't.

Link if video does not play: Rochelle, Illinois Tornado April 9 2015

Thanks to reader Mark for the links.

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

Phone Tax Scam by "Officer Melvin" Allegedly with IRS

Posted: 10 Apr 2015 12:31 PM PDT

It is tax season and that means it's time for tax fraud and tax fraud scams. Today I received a voice mail allegedly from "officer Melvin" with the IRS.

"We have received a legal petition notice against you concerning a tax division. So before we file a case against you, and before you get arrested, kindly call us back on our callback number. The number to reach me is 202-684-6608. I repeat 202-684-6608. Do not disregard this message. Do return the call. Again, this is officer Melvyn Betchett with the Internal Revenue service. Thank you and have a great day."

Here is the WAV file if you wish to hear the short 33 second fraud scheme:
Tax Fraud WAV File.

The file may or may not play automatically. It did not for me. Instead I saw this box when I hit the forward arrow to attempt to play.

The download did work, and Windows Media Player played it automatically just fine. Here is the sharable link if you wish to download the file:

https://drive.google.com/file/d/0B4QF4MBBMA0kT2diSnFZOXM1Tjg/view?usp=sharing

The IRS sends bills. The IRS does not make phone calls threatening arrest, or ask for your bank account number or debit card number.

I notified the authorities. You can do so at the Treasury Inspector General IRS Impersonation Site.

Hopefully, the audio will allow the authorities to catch crook "Melvin" soon enough.

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

France vs. Sydney Australia Property: What Will $600k to $1M Buy?

Posted: 10 Apr 2015 10:49 AM PDT

Here's an article that came my way from reader Robert who lives in Australia.

The article compares the price of entire "castles" in various cities in France to 1-3 bedroom units in or near Sydney, Australia.

The term castle appears to be somewhat of a misnomer, but certainly the French properties are "castles" compared to the single units.

The US word would more likely be estate or mansion rather than castle.

Please consider 10 French Castles are Cheaper than Sydney Units.

Notes

I show text and images of 4 of the 10 comparisons in the article.
The first image in each set is the price of the entire building in France.
The second image in each set is the price for a single unit in Australia.
The prices appear to be Australian dollars, not US dollars.
The conversion rates from euros in each French listing is inaccurate.

For example the first image below says €422,940 or $597,184. My calculation says AU $654,070 or $502,060 US dollars. The rest of the images are similarly wrong.

Picardie France — $597,184 (€422,940)

This picture-perfect five-bedroom mansion in Picardie near the town of Abbeville is less than 200kms from Paris. It is on more than 6000sq m of land and features a billiard room and grand cellar.

Cronulla Australia — $620,000+

Poitou France — $667,146 (€472,500)

There are nine bedrooms in this grand chateau in the Poitou Charentes region of south western France. It has 1610sq m of landscaped gardens, ceiling medallions, a rotunda dining room, a conservatory and a circular kitchen.

Campsie Australia — $689,000+

In the heart of Campsie on Sixth Ave, a three-bedroom unit in this plain Jane unit block has parking, built-in wardrobes and two balconies.

Vienne France — $732,801 (€519,000)

This elaborate chateau near Vienne has 14 bedrooms, seven reception rooms, a pool, a chapel, a kitchen garden a double-length drawing room and library all on a 1.4ha estate.

Zetland Australia — $760,000+

Picardie France — $972,833 (€689,000)

Just 138kms from Paris, this manor house in La Fere has nine bedrooms, a wine bar, disco, cinema, library and cellar inside, and out the back there is a pool, pool house, sauna, nine-hole golf course and petanque area.

Elizabeth Bay Australia — $999,000+

With a million-dollar price tag, this one-bedroom apartment, has no parking and no balcony, but the Elizabeth Bay apartment on Onslow Ave is all about location, location, location.

Mish Comments

$1,000,000 for one bedroom, no parking, and no balcony vs. a 9 bedroom manor house with a pool, pool house, sauna, nine-hole golf course and petanque area.

I had to look that up. Pétanque (French pronunciation: [petɑ̃k] is a form of boules where the goal is to throw hollow metal balls as close as possible to a small wooden ball called a cochonnet (literally "piglet") or jack, while standing inside a starting circle with both feet on the ground. The current form of the game originated in 1907 in La Ciotat, in Provence, France.

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

Damn Cool Pics

Full Camel In A Giant Oven

Posted: 10 Apr 2015 12:06 PM PDT

In Xinjiang in northwest China, a 450kg (990lb) camel was coated in a lurid yellow marinade before it was lowered by crane into a 6m-tall tandoor kiln.

via people.com

The Rock's Insane Diet Has Him Eating 10 Pounds Of Food A Day

Posted: 10 Apr 2015 11:43 AM PDT

Dwayne "The Rock" Johnson takes everything to the next level even his diet. It's recently been revealed that he consumes up to 10 pounds of food a day in order to maintain his physique.

Meal 1:

10 oz cod
2 whole eggs
2 cups oatmeal

Meal 2:

8 oz cod
12 oz sweet potato
1 cup veggies

Meal 3:

8 oz chicken
2 cups white rice
1 cup veggies

Meal 4:

8 oz cod
2 cups rice
1 cup veggies
1 tbsp fish oil

Meal 5:

8 oz steak
12 oz baked potato Spinach salad

Meal 6:

10 oz cod
2 cups rice Salad

Meal 7:

30 grams casein protein
10 egg-white omelet
1 cup veggies
1 tbsp omega-3 fish oil

Notes:

► "I do cardio 4–5 a.m., then take 4–6 scoops of Optimum's Amino Energy."
► "After cardio I eat breakfast [Meal no. 1]."
► "After breakfast I hit the iron for 90 minutes."
► "Post-workout I have 60 grams Optimum Nutrition's Platinum Hydrowhey with 15 grams of glutamine."
► "Thiry minutes later I consume 32 oz of Gatorade.

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