luni, 15 iulie 2013

Seth's Blog : Clients vs. customers

 

Clients vs. customers

You need to choose.

Customers hear you say, "here, I made this," and they buy or they don't buy.

Clients say to you, "I need this," and if you want to get paid, you make it.

The customer, ironically, doesn't get something custom. The key distinction is who goes first, who gets to decide when it's done.

The provider is rarely better than the clients he is able to attract. On the other hand, the creator often gets the customers she deserves.

       

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duminică, 14 iulie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Expect Another "Bad Bank" Bailout in Spain; Humorous Details of Sareb's Property Assets

Posted: 14 Jul 2013 11:58 AM PDT

Spain's bad bank, Sareb, has plans to unload 45,000 distressed properties in five years, over 7,500 of them in 2013.

In theory it is easiest to dump more properties in the beginning because there are likely some relative bargains for the early property hunters.

The actual results are laughable. Sareb unloaded 550 home in January-March, then and only anther 150 in the next two months, a grand total of 700 through June 1.

Humorous Details of Sareb's Property Assets  

Here are some excerpts (translated) from Guru'sBlog report Havoc in the Bad Bank (SAREB).

  • The bad bank has 400,000 real estate assets but tens-of-thousands of the properties have no address. 
  • It's difficult to value a home when you don't know where it is.
  • Investigators have discovered cases where as many as 150 loans have the same property as collateral.
  • There are no keys to 107,000 properties.
  • Many supposedly empty flats are occupied.
  • Under the chairmanship of Belén Romana, Sareb had planned to sell 45 thousand properties in the first 5 years, about 7,528 in 2013. Until June 1, Sareb had managed to sell 700 properties (550 in the first 3 months).
  • Sareb has sold so few properties because it wants and needs to sell them for more then they are worth.

Expect Another Bad Bank Bailout

Guru concludes (translation slightly modified)...

Clearly the pace of sales is very far below the business plan. With estimated operating costs of 1.7 billion euros (management costs over the interests of balance financed 92% with debt), one does not have to be a whiz to guess that unless some fantasy book scene happens, Sareb losses in 2013 will be hundreds of millions of euros.

Sareb is not solvent. Sometime before 2014, the Bad Bank will have to raise capital for accounting purposes.

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

Seth's Blog : The ludicrousness of embarrassed

 

The ludicrousness of embarrassed

I understand why we may have evolved to have the automatic, out-of-control feeling of embarrassed in some situations.

But is it useful?

Has being embarrassed ever helped you accomplish anything useful? We can (and should) work to eliminate it from our emotional vocabulary. If it's worth doing, it's worth not being embarrassed about. And if it's not worth doing, don't do it.

One reason to avoid doing something is because it leads to embarrasment. A better reason is because it's not the right thing.

 
    

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sâmbătă, 13 iulie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Defense Department Pleads For Money It Does not Need, Then Looks For Ways to Spend; 650,000 Defense Employees Furloughs Started Monday

Posted: 13 Jul 2013 10:13 AM PDT

The Washington Post has some interesting details of emails sent by Defense Information Systems Agency (DISA) contracting and budget officers to their colleagues.

"Our available funding balances remain large in all appropriations — too large to spend" just on small supplemental funds often required by existing contracts, the June 27 e-mail said. DISA's budget is $2 billion.

"It is critical in our efforts to [spend] 100% of our available resources this fiscal year," said the e-mail from budget officer Sannadean Sims and procurement officer Kathleen Miller. "It is also imperative that your organization meets its projected spending goal for June. . .
"

The Washington Post reports ...
In these days of sequester and downsizing and such, that policy seems a bit out of place. (Although it could be seen as a stimulus effort.)

[The emails] appears to contradict a September 2012 memo from the Pentagon's undersecretary for acquisition Frank Kendall, and comptroller Robert Hale, who urged that "spending money primarily to avoid reductions in future budget[s]" is not the way to go.

A DISA spokesperson e-mailed to say that these e-mails are "common practice among government agencies" and that many congressional "financial and procurement timelines . . .are designed to ensure that agencies" spend 80 percent of their funds before the last two months of the fiscal year, or by August 1.

The June 27 e-mail laid out an aggressive and detailed spending timetable to achieve that goal, but acknowledged the parlous budgetary times in which we live. "Due to the furlough schedule, exceptions to our schedule will be on a case-by-case basis . . ."
650,000 Defense Employees Furloughs Started Monday

With thanks to the budget sequester, Defense furloughs started July 8, with some 650,000 workers off one day each week through September 21. The result is a 20% pay cut.

Expect Republican hypocrites to howl about the job losses while being totally unconcerned about any other cuts that might also cause job losses.

Government is supposedly too big everywhere except when it's not.

My Take On the Cuts

The defense department should have thought twice about those memos telling departments to spend every cent they had right before the sequester kicked in.

Then again, perhaps 650,000 furloughs is just a tiny down payment for what needs to happen to a very bloated military sector.

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

Strengthening our Economy by Passing Bipartisan Immigration Reform

Here's What's Happening Here at the White House
 
 
 
 
 
 
  Featured 

Weekly Address: Strengthening our Economy by Passing Bipartisan Immigration Reform

President Obama discusses how a large, bipartisan majority in the Senate voted to pass comprehensive immigration reform, which would add a big boost to our economy, strengthen Social Security, and modernize our legal immigration system to make it more consistent with our values. He calls on Congress to pass this commonsense bill quickly so that we can fix our broken immigration system and keep America strong for years to come.

Watch this week's Weekly Address.

President Obama discusses how a large, bipartisan majority in the Senate voted to pass comprehensive immigration reform, which would add a big boost to our economy, strengthen Social Security, and modernize our legal immigration system to make it more consistent with our value.

 
 
  Top Stories

Watch the West Wing Week here.

A More Efficient Government: On Monday, the President laid out his plan for building a better, smarter, and faster government during his second term.

Over the last four years, the Administration has already made great progress on one of President Obama’s first priorities after taking office: bringing a government built for the 20th century into the 21st century. On Monday, the President highlighted some of the new technologies and innovations that are already making a positive impact on Americans across the country – including data analytics and internet and mobile apps used by FEMA to help survivors of natural disasters locate recovery centers and apply for financial assistance. The President also discussed Data.gov, a project from the Open Data Initiative, which gives Americans access to government data for the first time ever.

Kids’ State Dinner: Winners of Epicurious’ second annual Healthy Lunchtime Challenge spent their Tuesday at the White House for the Kids’ State Dinner, hosted by First Lady Michelle Obama.

While at the White House, the 54 children ate lunch with the First Lady – and the President even stopped by for a surprise visit!

Honoring Fallen Firefighters: Last week nineteen firefighters were killed battling the Yarnell Hill fire, and on Tuesday, Vice President Biden traveled to Prescott Valley, Arizona to honor the heroes. Joined by Cabinet secretaries, Arizona Governor Jan Brewer, members of Congress, and family members of the fallen firefighters in Prescott Valley, Arizona, the Vice President spoke of the sacrifices the firefighters and their families made, saying,

“These men were some of the strongest, most disciplined, tenacious, physically fit men in the world – an elite unit in every sense of that phrase. Their motto to me sums them up better than anything I can think of: Duty, Integrity, Respect. They saw their jobs not as jobs but as a duty – a duty to their fellow citizens. They understood what few do: that integrity is measured by whether you respond to the needs of your neighbors when you know you are one of the few… who has the capacity to respond.” 

Talking Immigration Reform: Members of the Congressional Hispanic Caucus traveled across town on Wednesday to discuss immigration reform with President Obama and Vice President Biden at the White House. During the meeting the President released a White House report—The Economic Benefits of Fixing Our Broken Immigration System. The report explains the how significant it is for our country and our economy to act now and pass comprehensive immigration reform.

National Medals of Arts and Humanities: The White House was flooded with talented recipients of the 2012 National Medals of Arts and Humanities on Wednesday. The honorees, including people like George Lucas, the director of Star Wars, and Kay Ryan, the sixteenth U.S. Poet Laureate, joined President Obama in the East Room of the White House where he spoke of their accomplishments.

“The work that we honor today, the lifetime achievement of these artists and these scholars, reminds us that the human imagination is still the most powerful tool that we have as a people. That’s why we celebrate their creativity and the fundamental optimism, the notion that if they work that hard somebody will actually pay attention. That’s why we have to remain committed to the dreamers and the creators and innovators who fuel that progress and help us light the way ahead, because our children, our grandchildren deserve to grow up in a country where their dreams know no bounds and their ambitions extend as far as their talents and hard work can take them."

Loyola Ramblers: The 1963 champion Loyola University Chicago Ramblers men’s basketball team spent their Thursday visiting President Obama at the White House to celebrate the 50th anniversary of their Division I title and the historic steps they took to advance the civil rights movement.

During the regional semifinals that year, the Ramblers played Mississippi State in what became known as the Game of Change. Ramblers coach George Ireland started four African American players, despite unwritten rules preventing more than two African-Americans to start the game. And, although the rules also banned the opposing team, Mississippi State, from playing in games with integrated teams, Mississippi State players ignored their governor’s order to forfeit the game. The Ramblers’ 61-51 victory was significant in helping end segregated basketball in America.

 

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Seth's Blog : Basting the turkey

 

Basting the turkey

The Lone Ranger turned out to be one of the biggest movie flops in history. The movie (before marketing) cost more than a quarter of a billion dollars to make.

Here's the thing: thousands of people touched this project. From the dozens of well-paid and ostensibly talented executives to the marketing and the make up and the foley folks—this wasn't a random accident, it was the output of a deliberate effort.

Each of these people got handed a turkey, and some money, along with instructions on how to somehow improve it, promote it or otherwise dress it up. Alas, no one had the guts and the leverage to say, "stop."

Basting the turkey might sound like your job description, but ultimately, we're known by the projects we get involved in. Saying "no" or even "stop" is the hallmark of the professional you want on your team.

 
    

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vineri, 12 iulie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Problems in Italy Go On (and On and On); Coalition on Verge of Collapse, Every Economic Statistic Heads Wrong Way

Posted: 12 Jul 2013 12:52 PM PDT

With a fragile coalition that is barely hanging on by a thread, a new battle over tax hikes and a stick it to the rich mentality is about to set in.

Needing revenue to meet its budget deficit targets, Italy's Finance Undersecretary Says Budget Crunch May Require More From Rich.
Italian Finance Undersecretary Pier Paolo Baretta said the government is considering shifting the tax burden to the wealthy in order to satisfy demands for broad-based fiscal easing and meet its 2013 deficit target.

"The truth is we've got a real bottleneck of issues to deal with" this year, Baretta said yesterday in an interview in his office in Rome. In order to raise funds, Italy is seeking spending cuts and may limit the tax deductions higher-income households take on medical visits and other expenses, he said.

Prime Minister Enrico Letta is bracing for a tax-policy showdown that threatens to destabilize his two-month-old parliamentary coalition. Lawmakers in Letta's alliance have demanded tax cuts and spending measures that, taken together, total more than 7 billion euros ($9 billion). That's more than Italy can afford as its recession deepens, Baretta said.

Letta, 46, is squeezed between his allies' calls for stimulus and his commitment to European Union allies to bring the budget deficit below 3 percent of gross domestic product. Baretta, a member of Letta's Democratic Party who serves under Finance Minister Fabrizio Saccomanni, is helping identify options for savings and additional revenue. The final decisions will be made by Letta's Cabinet in September or October.

Silvio Berlusconi, the three-time premier and a partner in Letta's coalition, has pushed for the abolition of property taxes on primary residences, which would cost the state about 4 billion euros annually. Other members of the coalition have called for the cancellation of an increase to the value-added tax planned for Oct. 1. Postponing the VAT increase by three months would cost the government about 1 billion euros.

Italy's Parliament Shut Down By Berlusconi Over Court Ruling

The Huffington Post reports Italy's Parliament Shut Down By Berlusconi's People Of Freedom Party Over Court Ruling
Silvio Berlusconi's party boycotted a summit of Italy's fragile coalition government and blocked parliamentary activity on Wednesday in protest against a supreme court decision to fast track a ruling that could ban him from public office.

Legislative activity in both chambers of parliament was suspended for a day because of the protest by Berlusconi's People of Freedom (PDL) party, one of the two main partners in Enrico Letta's left-right coalition government.

The court decision has aggravated tension in the squabbling coalition which was already under fire for the slow pace of reforms desperately needed to boost recovery from the worst recession since World War Two.

Beppe Grillo, leader of the populist 5-Star Movement which stunned Italy by winning an unprecedented quarter of the vote in a February election, said Italy was heading for catastrophe because of the government's failure to take extraordinary measures to tackle the economy.

He said Italy was like a pressure cooker "on the verge of blowing up" and called on President Giorgio Napolitano to call an election as soon as possible.

The supreme court was forced to issue an unusual statement defending its decision on Tuesday to hear Berlusconi's final appeal on July 30 against a tax fraud conviction. The 76-year-old media magnate's lawyers had not expected a ruling until late in the year.

The court will rule on whether to uphold a four-year jail term and five-year ban on holding public office for complicity in tax fraud at Berlusconi's Mediaset television empire.

Every Economic Statistic Heads Wrong Way

The Globe and Mail reports In Italy, desperation as every statistic heads the wrong way.
In the past two quarters, for instance, hirings in Greece have exceeded firings, even though the economy remains in recession. French manufacturing has apparently stopped contracting and Spanish unemployment, the highest in the Western World, has fallen a bit.

The exception is Italy. Almost every number is going in the wrong direction and a sense of desperation is hitting everyone from retailers and cabinet ministers, who have gone begging to the European Union for job-creation funds, to consumers and manufacturers, whose factory output has fallen by a quarter since the European crisis started in 2008.

Italy matters because it is the euro zone's third-biggest economy, with a gross domestic product about 20 per cent bigger than Canada's. Its national debt load, at €2-trillion ($2.7-trillion), is Europe's biggest. Jobs are vanishing by the minute. Youth unemployment is 40 per cent; it's 50 per cent in southern Italy, to the delight of crime syndicate recruiters. Confederscenti, the Italian retailers' association, says that three shops close for every one opening. Parts of some of Italy's normally vibrant cities are becoming retail deserts.

On May 31, Bank of Italy Governor Ignazio Visco said the recession "threatens to erode social cohesion." He is evidently worried that Rome could burn like Athens did in the infamous riots of 2012.

According to a recent report by economics professor Paolo Manasse of the University of Bologna published on the economists' Voxeu.org site, unit labour costs in Italy rose by 35 percentage points between 2000 and 2012. In Germany, the equivalent figure was three percentage points. Over the same period, Italian labour productivity gains were 14 points lower than Germany's. No wonder Italian industrial production is collapsing, to Germany's benefit.

Mr. Manasse's conclusion: "It's currently very trendy in Italy to blame Angela Merkel, Mario Monti, the euro and austerity measures for the current recession. … [But its persistence] is the legacy of more than a decade of a lack of reforms in credit, product and labour markets, which suffocated innovation and productivity growth and resulted in wage dynamics that were completely decoupled from labour productivity."

Italy Services PMI

Wrapping up this report on Italy let's take a look at the latest Markit/ADACI Italy Services PMI®.
June sees sharpest decrease in business activity for three months

Services PMI



Summary:

June PMI data signalled accelerated declines in both business activity and employment at Italy's service providers, while the level of incoming new work in the sector again fell markedly.

Business activity in Italy's service sector decreased at a faster pace in June, as highlighted by the seasonally adjusted Markit/ADACI Business Activity Index – which is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago – falling further below the 50.0 nochange mark, from 46.5 in May to 45.8. This was its lowest reading since March, and one that was indicative of a substantial rate of contraction.

Firms sometimes linked lower output to a lack of incoming new business, which in June fell for the twenty-sixth consecutive month. Although less sharp than in the preceding survey period, the rate of decline in new business was nevertheless still marked relative to the historical standards of the survey.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Portuguese Stew: 10-Year Bond Yield Spikes to 7.84%; Portugal's President Once Again Pleads for "National Salvation" Agreement

Posted: 12 Jul 2013 10:32 AM PDT

Yield on the Portugal 10-Year Bond soared as high as 7.84% before settling at 7.51%, up a significant 61 basis points. 



President Once Again Pleads for "National Salvation" Agreement

On account of action in the bond market Portugal President Urges Quick Party Accord.
President Anibal Cavaco Silva said he wants Portugal's two ruling parties and main opposition group to quickly reach an agreement of "national salvation" and implement a bailout program as the nation's bond yields surge.

"Talks between the political parties should be concluded in a very short period of time," the president's office said in a statement on its website. Silva met with the party leaders yesterday to explain the terms of such an agreement and all showed willingness to start discussions as soon as possible, according to the statement.

"The Socialist Party is available to start a dialogue with all the political parties," party leader Antonio Jose Seguro told parliament today. The Socialists have ruled out the possibility of supporting or taking part in any government resulting from the current distribution of seats in the assembly and Seguro reaffirmed calls for renegotiating aid package terms.

The Socialists have voted alongside the governing coalition on certain key policy decisions including the European Stability Mechanism treaty, the fiscal compact and the country's budget framework law. The party led Coelho's Social Democrats by 12 percentage points in a poll published today and has called for early elections.

Silva, who has the power to dissolve parliament, said on July 10 that "the start of the process that leads to elections should coincide with the end of the financial aid program" in June 2014. The Social Democrats and the conservative CDS party now have a majority in parliament and the government's term ends in 2015.
Zero Percent Chance Crisis Ends in June 2014

There is no chance the Portugal's financial aid program ends in June of 2014 as purportedly expected. Portugal is going to need another bailout and the bond market recognizes that fact.

Interest on the bailout loan is 3.2%. At current yields Portugal would effectively be locked out of regular bond markets to finance its debt.

Given another bailout is coming, demand for Portuguese bonds slumped.

Pot of  Portuguese Stew

Recent bail-in talk, for which Germany opposes has likely exacerbated the situation (see German Officials Liken EU Banking Power Proposal to "Nazi Enabling Acts"; What Germany Can Expect; What About the UK?)

This pot of Portuguese Stew is about to boil over.

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