duminică, 21 iulie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Idiocy vs. Common Sense in Detroit; Judge Rules Bankruptcy Invalid; What's Next?

Posted: 21 Jul 2013 11:22 AM PDT

On Friday, a Michigan Circuit Judge Rosemarie Aquilina ruled Detroit bankruptcy is unconstitutional.
On Friday, a circuit court judge in Ingham County ruled that Detroit's federal bankruptcy filing violated a part of Michigan's constitution that protects union pensions. She ordered it withdrawn, a day after Detroit became the largest U.S. city in history to file for chapter nine bankruptcy.

Judge Rosemary Aquilina also said the filing did not honor President Barack Obama's work for the city, who she said "took [Detroit's auto companies] out of bankruptcy." Aquilina said she would send a copy of her order to Obama.

"It's cheating, sir, and it's cheating good people who work," the judge told assistant Attorney General Brian Devlin. "It's also not honoring the (United States) president, who took (Detroit's auto companies) out of bankruptcy."

The Detroit News reported "attorneys representing the pension boards hurried into Aquilina's court to ask for a restraining order" on July 18, but Michigan Gov. Rick Snyder (R) and Detroit's emergency manager Kevin Orr "beat them by a few minutes" in filing for bankruptcy. The filing did not deter lawyers for union pension boards, who can use "court maneuvers to slow down federal bankruptcy proceedings."
Idiocy

The whole point of bankruptcy court is to resolve debt issues that cannot be paid. It is impossible for Detroit to meet its pension obligations and the only way to resolve the issue is in bankruptcy court.

Common Sense

In a common sense position, Michigan Governor Says Detroit's Bondholders Part of Bankruptcy
Governor Rick Snyder of Michigan said today that the bondholders of the city of Detroit should expect to be "part of the process" of the largest municipal bankruptcy in U.S. history

"Realistically, if you step back, if you were lending to the city of Detroit in the last few years, didn't you understand there were major issues and problems?" Snyder, a Republican, said on the CBS's "Face the Nation" today. "Look at the yields they're obtaining compared to other bonds. They were getting a premium."

The plight of city pensioners is "one of the other tragic situations" in the Detroit bankruptcy, Snyder said on CBS. He said that during discussions with creditors, "no one" wanted to represent retirees, so he has asked the federal judge in the case to assemble a group of retirees to speak for them.

Pension Funding

"Short-term through the end of the year, there won't be any change," Snyder said. "Beyond that, the real question also is, to the degree those pension plans are funded, that they're our assets, that they are not part of this process."

"It's the unfunded piece, and there's a terrible history there of mismanagement and poor investment that should get aired out in public and should be part of this discussion," Snyder said on CBS.
In contrast to the idiotic circuit court ruling, the statements by governor Snyder represent a fresh breath of common sense.

1. Bondholders knowingly took risks so they must take a haircut.
2. The funded assets of the pension plan cannot be touched
3. Bankruptcy court will resolve the unfunded portion

What's not to like about that?

And in regards to point number three, I would hope the burden falls on the highest pension beneficiaries (most likely city officials, police, firefighters) but also taking into account length of service, rather than something like 50% haircuts across the board.

What's Next?

I expect the circuit court ruling will be overturned with prejudice, the pension plans will take a huge haircut, boldholders will take some haircut, and the overall fairness of the final decision as to how pension haircuts will be applied is up in the air.

Many other cities will follow Detroit's lead.

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

I don't normally do this

 

Hey everyone,

I don't usually write emails like this, and we don't usually send messages like this to this list. But I just finished reading the draft of a speech the President plans to deliver on Wednesday, and I want to explain why it's one worth checking out.

Eight years ago, not long after he was elected to the United States Senate, President Obama went to Knox College in his home state of Illinois where he laid out his economic vision for the country. It's a vision that says America is strongest when everybody's got a shot at opportunity -- not when our economy is winner-take-all, but when we're all in this together.

Revisiting that speech, it's clear that it sowed the seeds of a consistent vision for the middle class he's followed ever since. It's a vision he carried through his first campaign in 2008, it's a vision he carried through speeches like the one he gave at Georgetown University shortly after taking office that imagined a new foundation for our economy, and one in Osawatomie, Kansas on economic inequality in 2011 -- and it's a vision he carried through his last campaign in 2012.

Watch that history here and see why this moment is so important.

All of these speeches -- Knox College, Georgetown, Osawatomie -- make clear that since day one, the President has had one clear economic philosophy: The American economy works best when it grows from the middle-out, not the top-down.

This Wednesday, almost five years after the financial crisis fueled a devastating recession, and two years after a debate over whether or not America would pay its bills that harmed our recovery, the President will return to Knox College to kick off a series of speeches that will lay out his vision for rebuilding an economy that puts the middle class and those fighting to join it front and center. He'll talk about the progress we've made together, the challenges that remain, and the path forward.

And over the next several weeks, the President will deliver speeches that touch on the cornerstones of what it means to be middle class in America: job security, a good education, a home to call your own, affordable health care when you get sick, and the chance to save for a secure, dignified retirement. They will include new ideas and new pushes for ideas he has discussed before. They'll outline steps Congress can take, steps he'll take on his own, and steps the private sector can take that benefit us all.

The point is to chart a course for where America needs to go -- not just in the next three months or even the next three years, but a steady, persistent effort over the long term to restore this country's basic bargain for the middle class.

Why now? Well, we've made important progress with the Senate passing comprehensive immigration reform and will continue to work with the House to push to get that enacted into law. But the President thinks Washington has largely taken its eye off the ball on the most important issue facing the country. Instead of talking about how to help the middle class, too many in Congress are trying to score political points, refight old battles, and trump up phony scandals. And in a couple of months, we will face some more critical budget deadlines that require Congressional action, not showdowns that only serve to harm families and businesses -- and the President wants to talk about the issues that should be at the core of that debate.

As I was reading through his draft, I was reminded what drives this President to work so hard. I hope you'll watch this video showing the context of the last eight years and then tune in on Wednesday to find out. I don't think you'll be disappointed.

Thank you,

Dan

Dan Pfeiffer
Senior Advisor to the President
The White House

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Seth's Blog : Principles for responsible media moguls

 

Principles for responsible media moguls

If you run a media company (and you do--you publish regularly on all sorts of social media, don't you?) then it's worth two minutes to consider some basic groundrules, listed here for you to embrace or reject:

  1. Establish your standard for truth, and don't vary it. Are you okay reporting rumor or innuendo in order to get attention? How about rushing to judgment so you can beat everyone else to the punch? People will put up with a lot as long as you don't become inconsistent.
  2. What's your content to noise ratio? Will you choose to fill 'air time' by vamping, interviewing irrelevant passers by and generally wasting minutes merely because you have minutes or paper or bits to spare? (I heard a podcast last week that took 14 minutes to get a fifteen-second point across).
  3. How will you honor, protect or expose those that give you money? Do your bosses, advertisers and customers benefit or suffer because of their relationship with you?
  4. Will you amplify fear? If your readers eat it up, will you make more of it?
  5. How often are you comfortable saying, "ditto"?
  6. Will you raise the bar or lower it? If a crank yells "fire" in the crowded moviehouse, will you loudly report that there might just be a fire, will you ignore the troll or will you call him out and push us back to some standard of normalcy?
  7. Is it more important to you to have ever more readers/watchers, or would you prefer to have a deeper interaction with those you've already got? Hard to do both at the same time.
  8. Is your work designed to stand the test of time, or is it only for right here and right now?
  9. Who, precisely, are you trying to please? They don't offer a Pulitzer for most of what we do, so if not the judges, then who?
  10. When you get to the point where you're merely saying it because it's your job or because it's expected, will you stop?
       

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sâmbătă, 20 iulie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Drones are a Major U.S. Export and they Perpetuate War

Posted: 20 Jul 2013 06:10 PM PDT

Tired of perpetual war? So am I but US drone policy ensures perpetual war is her to stay. Blatant military waste is here to stay as well, and the all but useless F-35 project is a prime example.

Those are my opinions, but they also the opinions of guest writer Robert Taylor.

What follows is a well-stated guest-post courtesy of Robert Taylor and PolicyMic. I dispense with my normal indented block-quote style for this post.

Drones Are Becoming a Major U.S. Export, and They Kill Democracy in Every Nation They're Shipped To

President Obama's drone warfare policy is thankfully finally being discussed in the mainstream media. While the president's claimed authority to suspend the Fifth Amendment and order assassinations with no judicial oversight, even on American soil, is a disturbing outrage, the sale and spread of drone technology by the U.S. around the world also deserves attention.
According to the Los Angeles Times, the United Arab Emirates plans to purchase $179 million worth of drones from General Atomics. The purchase still needs approval from Congress and it is yet unclear whether they will buy surveillance drones or if it will also include the weaponized Reaper drones. What is clear, however, is that this development highlights the continuing growth of the influence of defense contractors, the spread of weapons that help governments tyrannize their citizens, and the dangers of America's permanent warfare state that has made the military-industrial-complex perhaps the most pervasive aspect of American society.

In President Dwight Eisenhower's famous farewell address, he warned the public about the threats that a large armaments industry posed to democratic process, constitutional liberties, and peace. Since then, the U.S. economy has been largely dominated by the perpetuation and exportation of weapons technology and a state of virtual perpetual war all over the globe.

Fifty years later, the U.S. is by far the world's largest weapons dealer in the world and spends more money on "defense" than nearly the rest of the world combined. All around the world, many of the most cruel and vicious states receive their means of maintaining their iron fists from the U.S. government.

American tanks and tear gas help quell protests in Bahrain, Tunisia, Saudi Arabia and all throughout the Middle East. U.S. fighter jets are a staple of many militaries in countries where a large majority of their populations live in unbelievable poverty. The cluster bombs used to flatten southern Lebanon and the white phosphorous mercilessly dropped on the Gaza Strip by Israel might as well be draped in the stars and stripes. Even the much-maligned Iranian government received nuclear technology from the CIA.

It is only natural and predictable that the U.S. government's latest militarized technology is beginning to be exported.

The problem stems from America's foolish embrace of a foreign policy based on empire and global dominance, perpetual war, and the corporatist economics of "defense contractors."

The Pentagon's new F-35 program is the perfect example. While DC politicians play politics over a "sequester," the F-35 project will cost $1.5 trillion yet has performed so poorly in recent tests that the Pentagon has simply lowered the standards. It is big, bulky, and would be great against the Imperial Japanese Air Force, but it is completely useless in a world where enemies are increasingly stateless, decentralized and fighting fourth-generation warfare. Over-promising and under-delivering are staples of Pentagon contractors.

The reason that these programs are so popular in Washington is simple corporatism and politics. As even Lockheed-Martin notes, the F-35 would provide over 100,000 jobs in 47 states, spread out to hit nearly every congressional district. The incentive for perpetuating these monstrosities is enormous.

Unfortunately, the F-35 program is the rule not the exception. The bipartisan ideology of an interventionist foreign policy dominates DC, and weapons contractors spend millions lobbying for more weapons sales and wars that bring billions in returns; a self-licking ice cream cone of rent-seeking corporations and political power.

The military-industrial-complex is the perfect example of Frederic Bastiat's "broken window fallacy" and the problems with government intervention into the economy. What is seen are the engineering wonders of massive military hardware and millions of jobs hitched to the Pentagon and its contractors. What is unseen, however, is the wealth that could've been created serving people's actual wants and needs in the free marketplace that was instead forcibly extracted from the people by the state and handed out to politically-favored corporations.

For example, 85%-90% of large military contractors' profits come from government contracts. Each U.S. household pays over $1,000 per year in taxes to pay for the military-industrial-complex. The "shock and awe" 2003 carpet bombing of Baghdad might as well have been a Lockheed promotional video.

While the defenders of this military Keynesianism claim that this policy helps create inventions and technologies, there is actually very little useful spillover into the private sector. If people really wanted this national security state and weaponry, they wouldn't need to be forced to pay for it.
Unfortunately, from my libertarian perspective, it is very easy to highlight the horrors that unchecked state power unleashes but, very difficult to come up with answers and solutions. We can't un-invent drone technology, nuclear weapons and stealth fighters. But taking Lockheed-Martin, Northrop Grumman and General Atomics off of welfare would be a good start.

What we can do is make it loud and clear as frequently as possible that we are sick and tired of a policy of empire, perpetual war, and corporatism that allows this system to exist. Our liberties, prosperity and peace depend upon it.

End Taylor

I don't know about you, but I sick and tired of a policy of empire, perpetual war, and corporatism.

I also agree with Taylor that "taking Lockheed-Martin, Northrop Grumman and General Atomics off of welfare would be a good start".

If you are a supporter of drones, the F-35 program, or US defense policies in general, hopefully the guest post by Taylor changes your mind.

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

Damn Cool Pics

Damn Cool Pics


McDonald’s Happy Meals for Horror Film Fans

Posted: 19 Jul 2013 07:59 PM PDT

This is what they would look like. Not for kids.




















Via newtclements

Confirming Rich Cordray to Lead the CFPB

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

Weekly Address: Confirming Rich Cordray to Lead the CFPB

In this week’s address, President Obama discusses the Senate’s confirmation of Rich Cordray as Director of the Consumer Financial Protection Bureau. The CFPB is an independent watchdog set up to protect families from irresponsible behavior in the financial sector – one that puts mortgage lenders, student lenders, payday lenders, and credit reporting and debt collection agencies under greater scrutiny, while providing the American people a place to get some measure of justice if they don’t play by the rules.

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.

Two Presidents in the White House: Former President George H.W. Bush joined President Obama at the White House on Monday to honor the 5,000th Daily Point of Light Award winners. This award recognizes Americans that serve their communities in unique ways. At the event, President Obama announced his plan to continue President Bush’s legacy: a new Presidential Memorandum on expanding national service. The President’s initiative will help Americans become more engaged in service by tapping the full resources of the federal government.

Immigration Reform: Spanish-language television anchors from around the country were offered a unique opportunity on Tuesday – the chance to visit the White House with behind-the-scenes access and interview President Obama. After attending briefings surrounding issues important to Latinos, the reporters spoke with President Obama about the importance of comprehensive immigration reform. “Immigration is always difficult – it always has been in this country,” said President Obama. “But what’s also been true is that this is the thing that separated America from every other country on Earth. It’s part of what makes us special, and we have to continue that tradition by passing comprehensive immigration reform.” 

Protecting Americans: After blocking a vote on his nomination for two years, the Senate confirmed Richard Cordray as director of the Consumer Financial Protection Bureau on Tuesday. President Obama spoke from the East Room on Wednesday about the significance of Cordray’s role – one that looks out for the financial interests of every day Americans. The President noted the accomplishments already made by the CFPB and said that with a leader in place, the Bureau would be well equipped to continue protecting consumers. 

"Today, if you want to take out a mortgage or a student loan or a payday loan, or you’ve got a credit reporting agency or debt collector who’s causing you problems -- maybe they're not playing by the rules, maybe they're taking advantage of you -- you have somewhere to go.  The CFPB has already addressed more than 175,000 complaints from all across the nation, giving people an advocate who is working with them when they're dealing with these financial institutions that may not always be thinking about consumers first."

Health Care Refunds: President Obama spoke from the White House on Thursday to discuss the Affordable Care Act. This year, 8.5 million Americans will receive a refund from their health insurance company, thanks to a rule that requires insurance companies spend at least 80 percent of their customers’ premiums on medical care, instead of administrative costs. “So this is just an example of how the Affordable Care Act is doing what it’s designed to do: deliver more choices, better benefits, a check on rising costs, and higher quality care,” the President said. “That’s what it was designed to do, and we’re already seeing those effects take place.” 

President Obama discusses Trayvon Martin: The President surprised the White House Press Corps today with an appearance in the Briefing Room to talk about Trayvon Martin and the verdict in the trial following the teenager's death. "Watching the debate over the course of the last week, I thought it might be useful for me to expand on my thoughts a little bit," the President said:

"You know, when Trayvon Martin was first shot I said that this could have been my son.  Another way of saying that is Trayvon Martin could have been me 35 years ago.  And when you think about why, in the African American community at least, there’s a lot of pain around what happened here, I think it’s important to recognize that the African American community is looking at this issue through a set of experiences and a history that doesn’t go away."

 

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Seth's Blog : Sort & search

 

Sort & search

Search is powerful, essential and lucrative. Google demonstrated just how much value can be created when you let people easily find what they want.

Sort, on the other hand, is easily overlooked and something that most of us can can work with.

For example, the way a restaurant sorts the wines on the wine list at will have a dramatic impact on what people order. If you list the cheap wines first, people will probably end up spending less. And when your wine list migrates to an iPad and you let the diner sort by price, popularity and other indicators, consumption patterns will instantly change.

Hotels.com, Zagats, Kayak and hundreds of other sites let you sort by quality, ranking and price. Not only does this change the way we choose, it also changes the behavior of the those being ranked! Once a metric for ranking becomes popular (or the default) then those being ranked will work to make their ranking go up. No surprise. Then how come Airbnb.com doesn't let users rank places by the quality of their reviews? It would cost them close to nothing, but it would dramatically change how hard a location works to earn good ratings.

When someone encounters what you make, you must make a choice about the order of what's on offer, and you also make the choice as to whether or not you'll let the user sort by other attributes. Typepad doesn't provide me with a way to let you sort the posts on this blog by popularity, but it would certainly change how you consumed it if they did.

Alphabetical, numerical and first-come sorts by default are primarily a copout. They imply that a simple search is what the user is after, but that's almost never the case. Users want you to build information into the order of things. When we have the guts (and tech) to provide relevant sorting, we present a point of view and train our users as well as our providers.

When we rank people, or the products we create, we have the opportunity to not only change the way people select, we can also change what we make.

       

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