| China Manufacturing Deteriorates Modestly, Demand "Weaker than Expected" Posted: 02 Mar 2014 10:28 PM PST The HSBC Purchasing Managers' China PMI Index shows modest deterioration of business conditions in February. 
Key points
- Both output and new orders decline for the first time since July 2013
- Payroll numbers are cut at fastest rate since March 2009
- Solid reduction of output charges
Chinese manufacturers signalled reductions of both output and new business in February, leading to a moderate deterioration of overall operating con ditions. As a result, firms cut their staffing levels again in February and at the quickest pace in nearly five years. Meanwhile, input costs and output charges both declined at their fastest rates in eight months.
After adjusting for seasonal factors, such as the recent Chinese New Year festival, the HSBC Purchasing Managers' Index™ (PMI™) posted at 48.5 in February, up fractionally from the earlier flash reading of 48.3 , and down from 49.5 in January. This signalled a moderate deterioration in the health of the Chinese manufacturing sector.
February data signalled the first contractions of both output and new orders at Chinese manufacturers since July 2013. The rates of decline were moderate in both cases, and were linked by panellists to weaker-than-expected client demand.
New business from abroad also declined over the month, and at a modest pace that was little-changed from January. Lower output requirements and fewer new orders led to a fourth successive monthly fall in staffing levels at Chinese goods producers in February. Furthermore, the rate of job shedding was the quickest since March 2009.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Kerry Heads to Ukraine; McCain Proposes U.S. Missiles in Czech Republic Posted: 02 Mar 2014 04:06 PM PST In a symbolic but otherwise useless move, Kerry Heads to Ukraine as West Seeks Response to Russia Threat. U.S. Secretary of State John Kerry is traveling to Ukraine today as western leaders seek to respond to Russia seizing control of the eastern European country's Black Sea region of Crimea.
Kerry will travel to Kiev to offer support to Ukrainian leaders, U.S. officials said yesterday.
"The secretary will reaffirm the United States' strong support for Ukrainian sovereignty, independence, territorial integrity, and the right of the Ukrainian people to determine their own future," Jen Psaki, a Kerry spokeswoman, said in an e-mailed statement.
Khrushchev's Gift
Crimea was given to Ukraine by Russia in 1954 by then-Soviet leader Nikita Khrushchev. People who identified themselves as ethnic Russian comprise 59 percent of Crimea's population of about 2 million, with 24 percent Ukrainian and 12 percent Tatar, according to 2001 census data. McCain Proposes U.S. Missiles in Czech RepublicProving once again he is a war-monger extraordinaire, senator John McCain told Time Magazine "We Are All Ukrainians". In response to reports of a Russian takeover in parts of Crimea, Arizona Senator John McCain said on Friday, "We are all Ukrainians," before calling for swift U.S. economic aid to Ukraine, condemnation of Russia at the United Nations, sanctions against Russian officials and the installation of U.S. missiles in the nearby Czech Republic. Anyone who thinks more US missiles in Europe is the answer to this problem is seriously deranged. And like all fake budget cutter hypocrites, McCain will not want to hike taxes to pay for those missiles either. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| States Circumvent Food Stamp Cutbacks; Draconian Cuts "Much Ado About Nothing" Posted: 02 Mar 2014 12:41 PM PST Flashback December 10, 2013: In Close Inspection of Alleged "Draconian" Cuts in Food Stamp Program I noted Mother Jones, the Nation, and the Daily Koz whined about "draconian" cuts in the food stamp program. Close scrutiny showed the "draconian" cuts amounted to $4 billion in a close to $80 billion program. I further commented I actually doubt we will ever see those "cuts" in the first place. Flashback January 29, 2014: Disgusting Compromise on $956B Farm Bill; In Spite of Massive Howls, No Actual Cuts in Food Stamps. Proving that neither party really wants to do anything about escalating costs of anything, in typical D.C. compromise action, the House Passes $956B Farm Bill in a bipartisan vote.
Speaker John Boehner (R-Ohio), and Majority Leader Eric Cantor (R-Va.), and Minority Leader Nancy Pelosi (D-Calif.) all voted for the bill.
Democrats are howling over miniscule cuts in SNAP (food stamps). For example, an inane headline on the Daily Koz reads House passes food stamp-slashing farm bill.
Supposedly there will be $8.6 billion in devastating food stamp cuts. Even if that happens it is less than a 1% cut in an economy that is supposedly in recovery.
Contrary to Popular Belief, No Cuts in Food Stamps
Will there be any cuts? I rather doubt it. In the "too stupid to make up category", this is how they determined the cuts.
The bill finds $8.6 billion in savings by requiring households to receive at least $20 per year in home heating assistance before they automatically qualify for food stamps, instead of the $1 threshold now in place in some states.
Amazing!
Now what do you think will happen? If you can't figure it out, I will tell you. States will give $20 per year in home heating assistance to everyone currently getting $1 per year in annual home heating assistance.
There will be miniscule (if any) savings at all at the federal level, and small increases at the state level. States Make End Run Around Food Stamp CutsFlash Forward March 2, 2014: States Make End Run Around Food Stamp Cuts. Connecticut and New York have found a way around federal budget cuts that played a central role in the massive farm bill passed this month: bump up home heating assistance a few million bucks in return for preserving more than a half-billion dollars in food stamp benefits.
The moves by Connecticut Gov. Dannel P. Malloy and New York Gov. Andrew Cuomo -- with the possibility that more governors could follow -- cheer social service advocates who say the deep recession and weak economic recovery have pounded low-income workers and the unemployed who rely on heating assistance and food stamps.
An order by Malloy will spend about $1.4 million in federal energy aid, increasing benefits for 50,000 low-income Connecticut residents from $1 to $20 so they do not lose $112 in monthly food stamp benefits. It will preserve about $67 million in food stamp benefits. New York will spend about $6 million more in federal Low Income Home Energy Assistance Program funding to maintain food stamp benefits totaling $457 million. Cuts Much Ado About NothingThat there would be no cuts in food stamps was the easiest call I have ever made. Yet, we had to put up with incessant and ridiculous whining from democrats about ridiculously small cuts, even if they happened, when it was clear all along they wouldn't happen. We also had to put up with Republicans pretending they were doing something about spending when they knew (or should have known) they weren't. Since the time of Shakespeare seldom has there been so Much Ado About Nothing and from both political parties to boot. This is how I ended my January 29 commentary: Oh! The Horror!
Republicans and Democrats alike should both be ashamed, not only for doing virtually nothing, but also for howling at the moon as if they did. Question of the Day Republicans either didn't see this coming, or they did see it coming and simply didn't care. Which is worse? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Tighter Capital Controls in Ukraine, Transaction Limit About $100; New Head of Ukraine's Navy Defects After 1 Day Posted: 02 Mar 2014 11:48 AM PST Intent on stopping 'destabilizing forces' (runs on the bank), Ukraine's Privatbank Limits Cash Withdrawals, Loans. Ukraine's largest commercial bank, Privatbank, announced temporary limits on cash withdrawals for its account holders and suspended writing new loans, saying in a statement the measures were intended to stop those undermining the political situation in the country.
"A temporary limit on withdrawals… is needed to stop the forces that are working to destabilize the situation [and] are using the cash for [their] sabotage," the bank said in a statement. The bank didn't clarify which political forces it was referring to.
The bank first announced withdrawal limits of 1,000 hryvnia ($103) a day at both automated teller machines and in over-the-counter transactions. However, shortly after publishing this statement, the bank removed the statement amid fresh discussions about whether to increase the limit.
A bank spokesman declined to say what new parameters were under discussion.
Privatbank said it was suspending all its credit lines issued to both private and corporate customers, including credit cards. It said it would no longer accept debit cards from other banks in the Crimea. Head of Ukraine's Navy Defects After 1 DayThe BBC reports New head of Ukraine's navy defects in Crimea. The newly appointed head of Ukraine's navy has sworn allegiance to the Crimea region, in the presence of its unrecognised pro-Russian leader.
Rear Admiral Denys Berezovsky was only made head of the navy on Saturday, as the government in Kiev reacted to the threat of Russian invasion.
Admiral Berezovsky appeared in Sevastopol before cameras alongside Sergiy Aksyonov, the pro-Russian politician elected by Crimea's regional parliament as local prime minister.
Mr Aksyonov announced he had given orders to Ukrainian naval forces on the peninsula to disregard any orders from the "self-proclaimed" authorities in Kiev.
Sunday, he said, would go down in history as the birthday of the "navy of the autonomous republic of Crimea".
The admiral then pledged to "strictly obey the orders of the supreme commander of the autonomous republic of Crimea" and "defend the lives and freedom" of Crimea's people.
Admiral Berezovsky was later sacked by interim Ukrainian Defence Minister Ihor Tenyukh and a treason case launched against him. It's rather bizarre that the new head of Ukraine's government could not manage to pick a loyal person to head the navy. Russia just may take over Crimea for a long time to come. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Russian Troops Surround Two Military Bases in Crimea; Kerry Warns Russia Could be Expelled from G8 Posted: 02 Mar 2014 10:27 AM PST In a live update feed Guardian reports Ukrainian and Russian troops in standoff at Crimean military base. Summary- Russian troops have surrounded at least two military bases in Crimea and approached others seeking to gain access or get hold or their weapons. There were reported to be about 150 Russian troops and more than 20 military vehicles outside the Perevalnoe base, where there was a tense standoff. Ukrainian soldiers drove a tank up to the inside gates of the base in response and around 15 of them lined up against the gate.
- The Ukrainian prime minister, Arseny Yatsenyuk, said Russia has declared war on Ukraine and that it is not just a threat from Moscow. He warned: "We are on the brink of disaster".
- The US secretary of state, John Kerry, warned that Russia could be expelled from the G8 and face economic sanctions, unless President Vladimir Putin halts his "incredible act of aggression". He also mentioned visa bans, asset freezes and trade isolation as possible steps.
- Nato secretary general Anders Fogh Rasmussen accused Russia of threatening peace and security in Europe by its actions and of violating the UN charter. He called on Russia to "de-escalate".
- Britain and France joined the US in pulling out of preparatory meetings for the G8 economic summit, scheduled to be held in June at the Black Sea resort of Sochi, site of the just-concluded 2014 Winter Olympics.
- Ukraine's parliament has called for international monitors to help ensure the safety of its nuclear power plants.
- There were demonstrations both for and against Russian intervention in Ukraine in Moscow. There were at least 10,000 people at the pro demonstration, according to AP, although reporters said some were ordered to be there. The anti demonstration was much smaller but saw at least 50 people detained by Russian police.
Ukraine Orders Full Military MobilizationThe BBC reports Ukraine Orders Full Military Mobilization. Christian Fraser: "There is a new dilemma for the Ukrainian military, submit to the new authority in Crimea - or else"
In Crimea, Ukrainian soldiers faced off with Russian soldiers surrounding their bases while the Russian army is said to be digging trenches on the border with mainland Ukraine.
US Secretary of State John Kerry has warned Russia could be ejected from the Group of Eight developed nations.
Russian President Vladimir Putin, he said, was "not going to have a Sochi G8, he may not even remain in the G8 if this continues," referring to a planned summit in Russia in June.
"He may find himself with asset freezes, on Russian business. American business may pull back, there may be a further tumble of the rouble.
The UK has joined the US, France and Canada in suspending preparations for the Sochi summit.
Russian soldiers continue to occupy key sites on the Crimean peninsula, including airports and communications hubs, although there has been no actual violence and they have been openly welcomed by some sections of the population.
In the east Ukrainian city of Donetsk, apparent members of the disbanded elite police riot unit Berkut appeared in full uniform at a pro-Russian rally.
Ukraine withdrew coast guard vessels from two ports in Crimea and moved them to other bases in the Black Sea and Sea of Azov.
A Ukrainian army base was surrounded by Russian troops at Perevalnoye, south of the Crimean regional capital Simferopol. An Orthodox priest has arrived in an attempt to mediate.
In Sevastopol, Ukrainian naval officers found their headquarters occupied by Russian troops and were unable to go to work. Ukraine No Match for RussiaThe New York Times reports Ukraine Forces Are Ill Equipped to Take Crimea Back From RussiaCrimea has always been a vital base for the Soviet and then Russian Navy, serving as the headquarters of the Black Sea Fleet, which has controlled the waters off southern Russia since 1783. After a period of tension following Ukraine's independence when the Soviet Union collapsed in 1991, Russia got to keep its base in Crimea on a lease, extended until at least 2042 by the now-ousted president, Viktor F. Yanukovych.
But the Ukrainian military has only a token force in the autonomous region — a lightly armed brigade of about 3,500 people, equipped with artillery and light weapons but none of the country's advanced battle tanks, said Igor Sutyagin, a Russian military expert at the Royal United Services Institute in London. The forces also have only one air squadron of SU-27 fighters deployed at the air base near Belbek.
The Russian takeover of Crimea was relatively easy, in part because the Ukrainian military was careful not to respond to a provocation that would excuse any larger intervention. The military — which has seen its top leader change constantly with the political situation — has also made a point of staying out of the internal political conflict in Ukraine.
The current military chief of staff, Lt. Gen. Mykhailo Kutsyn, was named to the job only on Friday, after Adm. Yuriy Ilyin, 51, was relieved of his post after traveling to Crimea and, reportedly at least, having a heart attack. Admiral Ilyin had only been in the post for a short time himself, appointed by Mr. Yanukovych on Feb. 19 after Col. Gen. Volodymyr Zamana was fired for being unwilling to attack protesters in Kiev. All these changes have been an object lesson for the military to try to stay out of politics and civil unrest.
Even so, Ukraine had no realistic contingency plan for a Russian takeover of Crimea, given the size of the Russian forces legitimately based there, said Mr. Sutyagin, the military analyst. But he also said that he doubted that Russian forces would intervene elsewhere in Ukraine, because Russian forces would be too stretched to control much territory and even in the largely pro-Russia east, Ukrainian forces would be expected to fight back, aided by self-defense militias and partisans.
Steven Pifer, a former American ambassador to Ukraine now at the Brookings Institution, said that if Russian forces tried to move into eastern Ukraine, "there will be some Ukrainian units that will resist, and a flood of people from western Ukraine saying, 'This is my chance to be my grandfather and fight the Communists.' " This could get messy in a hurry if Russian troops advance past the Crimea region. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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