Central Perk

luni, 3 ianuarie 2011

The Year in Photos: 2010

Your Daily Snapshot for
Monday, Jan. 3, 2011

The Year in Photos: 2010

Pete Souza, Director of the White House Photography Office, introduces a new photo gallery of his favorite shots from 2010, including some previously unreleased photos.

View more behind-the-scenes photos.

President Obama and daughters play in the snow

"Another snowstorm blanketed Washington for the second time in a few days. Because it was a Saturday, I hung around the White House thinking that the President might venture out in the snow with his daughters. Here they are playing in the Rose Garden in the midst of the storm." - Official White House Photographer Pete Souza

Seth's Blog : It's just better ketchup

[You're getting this note because you subscribed to Seth Godin's blog.]

It's just better ketchup

In a discussion on why Heinz has such high market share for ketchup in the Pittsburgh area, one commenter posts, "It's just better ketchup. Their other products may be closer in quality to the competition, but for Ketchup nobody compares. When you go to a restaurant and they have a different kind, it feels you are eating at some cheap cafeteria."

This is really telling, but probably not the in the way Matt intended.

Heinz doesn't make better ketchup. Heinz makes better Heinz ketchup. There's a huge difference.

If you define ketchup the way most people do, you define it as, "the ketchup I grew up with." Or to be more specific, "the ketchup my mom served me, the one that I was allowed to serve myself when I turned three..."

One thing that marketers do is sell us a feeling, not a set of molecules or bits. When you spend $3 on a bottle of ketchup, that's what you're buying. And Matt and the rest of us are so brainwashed we rationalize it as 'better ketchup.'

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duminică, 2 ianuarie 2011

Mish's Global Economic Trend Analysis

First Time On Record US Credit Spreads Drop Below Global Corporate Debt; Thoughts On Relative Value
Australia Heads For Economic Crunch; Similarities Between Australian and Chinese Stock Markets; Global Property Bubble Cycles
Sunday Funnies 2011-01-02 Good Luck Kid

First Time On Record US Credit Spreads Drop Below Global Corporate Debt; Thoughts On Relative Value

Posted: 02 Jan 2011 06:29 PM PST

The love affair with US corporate bonds continues unabated. Please consider U.S. Yield Spreads Fall Below Rest of the World

For the first time on record, investors are demanding a smaller premium to own U.S. corporate bonds than global company debt.

Bondholders require 166 basis points more yield to hold U.S. investment-grade company debt instead of Treasuries, compared with an average 169 basis-point spread worldwide, according to Bank of America Merrill Lynch data. At the height of the credit crisis in December 2008, companies had the disadvantage of having to pay about 150 basis points more to lure U.S. investors to their bonds than borrowers seeking buyers elsewhere in the world.

"With the strong stimulus package and QE2, I expect 2011 to be a relatively strong economy and corporate bonds tend to do pretty well in that environment," Brynjolfsson, who oversees $362 million, said Dec. 3 on Bloomberg Television. "Even if corporate yields rise a little bit it's likely spreads tighten, which corporate bond managers like to see."

I did not think corporate bond buyers were compensated for the risk in October, and I still do not feel that way now.

In October, people were plowing into IBM and Walmart 3-year bonds at .7% because treasuries were yielding less. 3-year treasuries are now 1%. This is the silliness of buying relative value when there is no value at all.

US corporate bonds may be a relative value, but who should care? Is there any value in them? I think not but those speaking their book argue otherwise.

By the way, I am often presented with the argument that IBM is less likely to default than the US government. This is my response: If the US defaults (which I highly doubt), you sure will not want to be in any US denominated bonds.

All of this relative bargain positioning, including PIMCO's love affair with Municipal bonds, is economic madness.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Australia Heads For Economic Crunch; Similarities Between Australian and Chinese Stock Markets; Global Property Bubble Cycles

Posted: 02 Jan 2011 12:25 PM PST

The party is over in Australia. Many anti-dollar investors and Pollyannas living down under just don't realize it yet. Nonetheless, Australia faces an economic crunch as family finances collapse under the burden of record debts, rising interest rates and utility bills.

Please consider Australians sinking under debt burden

With banks warning they will be forced to raise mortgage rates by 0.50 per cent in 2011 and Sydney rents forecast to rise by between $160 and $190 a month, according to analysts Residex, householders look set to suffer.

Repossessions and tenant evictions are expected to rise sharply. "It's going to be tough" said Shane Oliver, chief economist at AMP Capital. "Families face many rising costs and while most people have slowed their borrowing, our debt is still growing and that's a big problem."

Despite more cautious spending in recent months, household debt is still up by 5.8 per cent on a year ago and a recent survey by Westpac found only about 20 per cent of people thought paying off debts was the best use of their money. Most households in the US, UK and much of Europe are still busily paying down their borrowings, particularly unsecured debts such as personal loans and credit cards.

"Unlike the rest of the world, Australia has slipped back into its old habits," said Steve Keen, professor of economics at the University of Western Sydney. "We're spending ourselves right back into trouble. With so much extra debt to service, we don't need interest rates to reach anything like the 9.6 per cent they hit in 2008.

"We may find repossessions spiking much more quickly than they did two years ago."

Weekly Living Costs Up $100

Real estate has peaked and so has the shopping center economic model based on the strong Australian dollar. There is no reason here to like either Australian equities or the Australian dollar. Strong commodity prices will no longer help Australia.

Australian real estate has already been hit by rising interest rates and with Weekly living costs up $100, more rate hikes may be coming.

FAMILIES face cost-of-living increases that could drain the weekly budget by up to $100 this year.

New data shows Australians are being levelled with record expenses for basic services and Sydney residents are some of the hardest hit in the country.

After floods that have wiped out crops in Queensland and NSW, fruit and vegetable prices are predicted to rise by up to 50 per cent.
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Any hope the strong Australian dollar would shield motorists from increases in fuel prices have been dashed - global oil prices are tipped to hit record highs.

This year's price increases will compound the cost pressures already inflicted on households.

The trio of utility costs alone represents an extra yearly burden of about $1000 - or $20 a week - for an average household of four, while grocery bills are set to rise on average by $50 a week, based on a weekly bill of $150.

Housing affordability has taken another dive, with industry figures showing the largest annual decrease in a decade.

A report by the Real Estate Institute of Australia showed the proportion of income required to meet loan repayments increased 5.8 per cent to 34.8 per cent over last year, a 10-year high.

Additionally, the amount of rent people are paying has increased by 18.6 per cent in Sydney over three years, above the national average.

The Bureau of Statistics also identified health costs, communications services and petrol prices as having risen sharply over the year.

$AORD - Australian Stock Market Index Monthly

$AORD - Australian Stock Market Index Weekly

$SSEC - Shanghai Stock Market Index Weekly

Both the Australian stock market and the Chinese stock market have been weak. This is in spite of the fact that commodities have been on fire. Both countries have had overheating economies led by real estate bubbles.

It will be interesting to see how the Reserve Bank of Australia handles this. Failure to hike rates would hurt the Australian dollar and increase the price of imports while hiking rates further will crush the real estate bubble.

China's problem is far more complex. For more on China please see

There are no good solutions when the central bank lets real estate bubbles get out of hand as has happened in the US, China, Australia, Canada, Ireland, Spain, the UK and numerous other places.

The difference so far is the US, Ireland, and Spain property bubble have popped, while those in Australia, Canada, and China are just now facing the pressure.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Sunday Funnies 2011-01-02 Good Luck Kid

Posted: 02 Jan 2011 03:33 AM PST

For a look at problems for the new year, please see Ten Economic and Investment Themes for 2011

Whisper of a Thrill - Earth Song - By Thomas Newman

To get your mind off those problems, at least for a moment, please play this:

Link if the embedded video does not play: http://www.youtube.com/watch?v=NFq42IibUeY

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Seth's Blog : That's not the way we do things about here

[You're getting this note because you subscribed to Seth Godin's blog.]

That's not the way we do things about here

Please don't underestimate how powerful this sentence is.

When you say this to a colleague, a new hire, a student or a freelancer, you've established a powerful norm, one that they will be hesitant to challenge.

This might be exactly what you were hoping for, but if your goal is to encourage innovation, you blew it.

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sâmbătă, 1 ianuarie 2011

Mish's Global Economic Trend Analysis

In Praise of Volunteer Fire Departments (Do we really need paid union fire departments anywhere? What about police?)

Posted: 01 Jan 2011 12:33 PM PST

In response to "Crash Tax" Ripoff Expands in California and New York I received an email from "MB" a 20 year career police officer and firefighter who writes ...

Hello Mish

I have been an avid reader of your blog for the last. I place great value on your economic analysis particularly in regards to the dangers of unbridled debt accumulation. I am a police officer and firefighter with more than 20 years of service behind me. I am a member of a union though I am definitely not a union proponent. Our pension is entirely funded by member contributions. The city I work for has not contributed a dime to it in over 17 years.

There is no doubt that some police and fire unions are very insensitive to the strains they place on taxpayers. I for one do not believe in government taking from others to pay for my retirement. Considering that you read numerous accounts of greedy union bosses, I can understand some of your less than flattering characterizations of those in my profession.

Though I absolutely agree that charging accident victims for emergency response is double dipping the taxpayer, your comments insisting that anyone could competently do my job on whim to get out of property taxes is ludicrous. If one of your loved ones was trapped in a burning building or held by a violent criminal, would you be content have your neighbor the tax attorney try to save them?

Happy New Year
MB

Trapped Loved Ones

I expected a lot of flak over that post, yet that mild rebuttal was all that came in. Let's start with "MB's" final question: "If one of your loved ones was trapped in a burning building or held by a violent criminal, would you be content have your neighbor the tax attorney try to save them?"

Of course not. I never implied I would. That does not mean I want to pay union salaries or wages either. I certainly would not be opposed to having trained sheriffs respond to someone being held by a violent criminal. And I would not mind having someone from a volunteer fire department respond to an accident or fire.

73% of Firefighters are Volunteers Already

According to the National Volunteer Fire Council, 73 percent of firefighters in the United States are members of Volunteer Fire Fighters.

I fail to see why 95% or even 99% percent of them could not be. Perhaps some would not do it for property tax reductions. Perhaps it depends on what one's property taxes are. Perhaps not. Those 73% right now get nothing at all!

Let's look at it another way. How many would do it for tax rebates plus $500 a month tax free to both state and federal government?

With unemployment at 10% and underemployment at 20%, I bet I could fill every fire department in the country.

Would those people require training? Of course they would. Moreover, we would need a phase-in transition period to get to an all-volunteer state. I would not want all rookies, nor would anyone else. Thus, we could not get to 99% overnight. Could we get there in 5-7 years? Yes, we could.

Pensions

MB claimed "Our pension is entirely funded by member contributions".

No, it's not. It is 100% funded by taxpayers. Taxpayers pay 100% of police and firefighters' salary. Police and firefighters put some of their salary into a pension plan (percentage widely varies by city), but the source of the money is the taxpayer.

"MB's" particular case may be different, but most often the city (taxpayers) contribute the vast majority of what goes into these plans. Even in cases where the police and firefighter contributes 100%, it is important to recognize that money that comes from taxpayers who pay police and fire salaries.

Finally, if one took the typically paltry union-member contributions and totaled them up, it would come to far less than the untenable pension benefits that have been promised. That is exactly the source of the pension underfunding right now.

Certainly, not every plan is overly generous. Perhaps "MB's" plans is one of them. However, in cases where cities are in financial trouble, the very first place to look for reasons why is untenable wage and benefit packages of public union workers in general (not just police and fire).

My statements do not imply in any way, shape, or form, those police and fire officers are anything but dedicated, hard-working, employees. I suspect most of them are.

I only make the case the plans (in general), are far too generous and have bankrupted numerous cities.

Comments From My Blog

Docberg Writes ...

We had a volunteer department in my home town in its pre-yuppie invasion days, and they were highly trained and very effective. When I was a city administrator, I had both a volunteer fire department and a volunteer rescue squad. Both were staffed with some highly motivated and competent people. But, this was not in California.

Ron Writes ...

Ditto on the volunteer firefighters. We have had them in our community for years and I never felt like we were at a disadvantage. These people donate their time and money to serve their community. They go through extensive training.

I salute all of the volunteer firefighters in our country thank them for their service.

BB Writes ...

Mish - local volunteers are the best 1st responders out there!

When I was 16, my best bud from down the road was T-boned as he
turned into my driveway. The local farmer, volunteer, and 1st responder
was the first adult person on the scene. He ripped the door off the cracked
up Ford Ranger like tinfoil, and administered CPR/1st aid to my buddy.

These volunteers get no union, no pension, no pay.

When I was 29 I woke up at 3am writhing in pain with what I thought
was an appendix bursting. 1st responder? Volunteer EMT/firefighter from
the farm 1/4 mile to the north of me. We cut and split wood every year
together for the last 2 years, as well as hunting the same property together.

My point? know your neighbors because you will depend on them to survive.

Dedicated fire professionals do not want to hear they can be replaced by volunteers, but clearly they can.

Can police officers be replaced by volunteers? In some instances, quite easily. A prime example would be traffic direction duties at events and games. I bet many volunteers would gladly direct traffic for a couple of free tickets to games or concerts. There certainly is no reason to pay police to do those duties, often on overtime.

Can on-call volunteers replace police in a shootout? For the sake of argument let's assume no. However, I bet I could get many Libertarians to say "why not?" Either way, there is nothing that implies the need for unions or excessive pension benefits to the point cities are going bankrupt.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

New Year's Eve Celebration Images From Around The World

Posted: 01 Jan 2011 02:09 AM PST

Here are six of 30 New Year's Eve Celebration Images from around the world.

London

Sydney

Munich

Vienna

New York City

Rio de Janeiro city, Brasil

Happy New Year!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Your Weekly Address: The New Year

Your Daily Snapshot for
Saturday, Jan. 1, 2011

West Wing Week: Mailbag Day New Year's Edition

The President resolves to do all he can to get the economy growing and create jobs, and encourages Republicans to embrace their new responsibility to govern.

Watch the video.

luni, 3 ianuarie 2011

The Year in Photos: 2010

Seth's Blog : It's just better ketchup

It's just better ketchup

More Recent Articles

duminică, 2 ianuarie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : That's not the way we do things about here

That's not the way we do things about here

More Recent Articles

sâmbătă, 1 ianuarie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Your Weekly Address: The New Year

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luni, 3 ianuarie 2011

More Recent Articles

duminică, 2 ianuarie 2011

More Recent Articles

sâmbătă, 1 ianuarie 2011

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