Central Perk

luni, 28 aprilie 2014

Seth's Blog : Taking your time doesn't scale

Taking your time doesn't scale

When you send a hand-written letter to your best friend on the occasion of her wedding, you don't rush the note.

When a long-term patient needs to hear your plan on how she will beat the cancer you just found, you don't rush the meeting.

When your best customer just discovered that his critical shipment is totally messed up, you don't rush the phone call.

The problem is this: we've scaled the number of contacts, of patients, of Christmas card recipients, of Twitter followers, of email correspondents, of investors, of backers, of Kickstarter supporters, of readers, of correspondents, of co-workers, of... we've scaled it all.

And the one thing we can't do is scale our ability to take time.

So, this year, when you sent out 500 cards, of course you didn't take the time to handwrite each one with a personal note. How could you? And recently, when you sent a blast to 500 donors announcing a matching grant, you didn't personalize each note and leave out the people you told personally, because, hey, it's a huge list... how could you?

Treat different people differently. You decided to get bigger, but you won't be able to treat everyone the way you used to. That was your decision, and it's one of the costs of bigger.

Treating different people differently is the only way you've got to be able to take your time with the few, because, alas, you can no longer take your time with everyone. And if you can't live with that, get smaller!

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duminică, 27 aprilie 2014

Mish's Global Economic Trend Analysis

Progressives Plan Huge Illinois Tax Hikes; Union Member on the "Fair Tax" Proposal

Posted: 27 Apr 2014 09:00 PM PDT

Via email, Ben VanMetre at the Illinois Policy Institute mentions huge tax hikes that Progressives are angling for. The tax hikes are so steep and so universal that even thinking union members are against the hikes.

From VanMetre

State Sen. Don Harmon and advocates for his progressive tax proposal argue that the progressive income tax will provide tax relief for Illinois' middle class.

Not only is the argument not true, but the progressive income tax was never about tax relief. The proof of that is in the numbers.

Under Illinois law, the individual income tax rate will be 3.75% in 2015. Under the progressive tax-hike plan introduced by Sen. Harmon — and endorsed by A Better Illinois — a higher 4.9% applies to income earned after $12,500.

Under Harmon's proposal, anyone with a taxable income of more than $22,000 will see their overall state tax bill increase. That plan targets Illinois' working- and middle-class residents.

So why didn't Harmon use the sunset rate (3.75%) for $12,500 in his rate structure?
The answer: because part of the progressive tax hike scheme is about making as much of the temporary tax hike permanent as possible while still calling it "tax relief."
And that's true for all of the popular progressive tax plans instructed in Illinois recently:

• State Rep. Naomi Jakobsson's plan makes permanent the 5% rate on income earned above $36,000.
• The Center for Tax and Budget Accountability's plan makes permanent the 5% rate on income earned above $5,000.
• Sen. Harmon's plan makes permanent nearly all of the 5% rate on income earned above $12,500.

It's time for taxpayers in Illinois to know the truth about the progressive income tax. It's not about tax relief — it's about making the temporary tax hike permanent and further increasing taxes on the middle class.

Ben VanMetre
Senior Budget and Tax Policy Analyst

"Unfair" Tax details

Everyone who makes more than $12,500 will see huge tax increases. Supposedly this is "fair".

Illinois Union Member on "Fair Tax" Proposal

Live in Illinois and want to fight the proposed tax hike?

If so visit unfairillinois.com today and complete three simple steps to stop Springfield's middle-class money grab.

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

US Plans Sanctions on Putin's Inner Circle, Russia's Third Largest Lender, and Gazprom

Posted: 27 Apr 2014 10:25 AM PDT

Today the US announced more sanctions on individuals, businesses, banks and Gazprom. The one person not targeted is Putin, the alleged perpetrator of the crisis.

Bloomberg reports U.S. Plans to Hit Putin Inner Circle With Sanctions.

Deputy White House National Security Adviser Tony Blinken pledged "news for Monday" on sanctions as the focus on the ground in Ukraine turned to a team of international observers seized by pro-Russian separatists. Among those that may be hit are Russia's third-largest lender, OAO Gazprombank, development lender Vnesheconombank, and Igor Sechin, the chief executive officer of OAO Rosneft (ROSN), according to people familiar with developments. Sechin is a confidant of the Russian president.

"We will be looking to designate people who are in his inner circle, who have a significant impact on the Russian economy," Blinken said on CBS's "Face the Nation" program today. "We'll be looking to designate companies that they and other inner-circle people control. We'll be looking at taking steps as well with regard to high-technology exports to their defense industry. All of this together is going to have an impact."

Representatives of the 28 European Union nations will also meet tomorrow to widen a list of people subject to asset freezes and travel bans, an official from the bloc said yesterday. The sanctions will target 15 Russians in positions of power, another diplomat said. Both asked not to be identified because of the sensitivity of the matter.

"What we will hear about in the coming days is an expansion of existing sanctions, measures against individuals or entities in Russia," U.K. Foreign Secretary William Hague told Sky News television today. "Already we have seen more than $60 billion of capital flight out of Russia so far this year, and serious falls in the Russian stock market. So no one should underestimate the impact on Russia and Russia's own interests of continued escalation of this crisis."

In the wake of those capital outflows and a credit-rating downgrade by Standard & Poor's, Russia's central bank unexpectedly raised its key interest rate to 7.5 percent on April 25. The ruble has lost almost 9 percent this year against the dollar, the second-worst performance among 24 emerging currencies tracked by Bloomberg after Argentina's peso.

Sechin may be among those facing travel bans and asset freezes tomorrow, according to a U.S. official familiar with the situation. Executives at Gazprombank are preparing for possible sanctions, two people with knowledge of the deliberations said last week, while Vnesheconombank is taking precautionary measures, according to a person familiar with talks at the lender.

U.S. Senator Bob Corker of Tennessee, the top Republican on the Foreign Relations Committee, called on President Barack Obama's administration to impose sanctions on four of Russia's largest banks and OAO Gazprom (OGZD), the country's gas-export monopoly.

"It's going to be more effective if everybody signs on and everybody's committed," Obama told a news conference today in Putrajaya, Malaysia. "We're going to be in a stronger position to deter Mr. Putin when he sees that the world is unified and the United States and Europe is unified, rather than this is just a U.S.-Russia conflict."

The planned EU moves are not set to include broader trade, financial and economic measures against Russia, known as "stage three" sanctions. Hague said work on those is continuing.

It's not clear why striking back at friends and associates of someone who allegedly committed a crime should be legal, but legalities do not stop this president, nor have they stopped any president.

That aside, if Gazprom is shut off from the world, then what's the point of Russia delivering any gas to Europe?

Things can get out of hand in a hurry if the US keeps turning the screws. Desperate people do desperate things. Of course, that is exactly what some warmongers want.

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

Seth's Blog : The most difficult work many professionals do...

The most difficult work many professionals do...

is getting someone else to agree with their point of view and take action.

The second most difficult work professionals do is developing a point of view in the first place.

• Email to a friend •

sâmbătă, 26 aprilie 2014

Mish's Global Economic Trend Analysis

Number of New Mortgage Loans in Spain Down 33% From Year Ago

Posted: 26 Apr 2014 02:38 PM PDT

Those who think the Spanish economy is poised to turn around need only take one look at mortgage loans to see reality.

Via translation from La Vanguardia please consider New Mortgages Drop 33% in February, 46 Consecutive Months of Declines

New mortgages for home purchases fell in February by 33% over the same month in 2013. This marks 46 months of declines according to data released today by the National Statistics Institute (INE).

The average amount of these loans reached 102,443 euros, 0.8% less than in January and only up 1.1% from a year earlier.

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

Ukraine PM Accuses Russia of Wanting WWIII; Kiev Forces Block Rebel Town; Russia Issues Downbeat Economic Statement

Posted: 26 Apr 2014 08:56 AM PDT

Ukraine and Russia remain in the spotlight this weekend. Here are the top stories.

Russia hiked interest rates 50 basis points on Friday accompanied with a warning about inflation and a sluggish economy.
Russian Markets Have Worst Week Since Crimea.
Ukraine's acting prime minister accused Russia of wanting to start WWII.
Ukraine forces barricade the rebel stronghold of Slavyansk

Russia Issues Downbeat Economic Statement

The World Politics Journal notes Russia's central bank issues a downbeat statement on the Russian economy.

On Friday, April 25th, Russia's central bank raised its benchmark interest rate by 50 basis points to 7.5 per cent, giving higher inflation risks as a reason behind its decision.

'The probability of inflation exceeding the 5% target at the end of 2014 has increased substantially', the Russian central bank said in a statement.

Annual inflation stood at 7.2 per cent as of Monday, April 21st. However, the central bank estimates that inflation would not exceed 6 per cent by the end of 2014.

The Russian economy expanded 1.3 per cent in 2013, the slowest pace of growth since a 2009 recession. For comparison, the economy grew by 3.4% in 2012. The Bank of Russia said in a downbeat statement on the economy: 'Labour productivity growth is sluggish, while fixed capital investment continues to contract because of declining profits in the real sector, limited access to long-term financing in both international and domestic markets, as well as low producer and consumer confidence.

The Russian central bank predicts that the country 'will continue to witness a downward trend in economic growth' in 2014, adding 'Amid economic uncertainty and declining producer confidence there is a strong probability of a reduction in fixed capital investment. Combination of slower growth in real wages and a decline in household lending growth rates will have a dampening effect on consumer activity'.

Russian Markets Have Worst Week Since Crimea as S&P Cuts Rating

Bloomberg reports Russian Markets Have Worst Week Since Crimea as S&P Cuts Rating.

Russian bonds and stocks suffered their worst weekly rout since mid-March as the truce forged to ease tension in eastern Ukraine unraveled, fueling concern that President Vladimir Putin faces stiffer international sanctions.

Benchmark ruble bond yields climbed to the highest since March 14, prompting the Finance Ministry to abort plans to return to the local debt market on April 23, two days before Standard & Poor's cut Russia's credit rating to one level above junk. The central bank's surprise half-point interest-rate increase yesterday failed to stem the ruble's weekly retreat, the biggest among 24 emerging markets after South Africa's rand.

"The past few days have been particularly painful for Russian fixed income," Benoit Anne, the London-based head of emerging-market strategy at Societe Generale SA, said by e-mail yesterday. The failed debt auction "badly damaged investor confidence. In addition, the geo-political situation continues to deteriorate with a war of words and a tougher rhetoric employed between various parties," he said.

The Micex Index (INDEXCF) dropped 5.6 percent for the week, the most since the period ended March 14, the last trading day before the Crimean referendum that paved the way for Putin to annex the Black Sea peninsula. The yield on government bonds due February 2027 jumped 29 basis points yesterday to 9.65 percent, extending the weekly increase to 65 basis points, following the central bank's move to raise its key rate to 7.5 percent.

The ruble suffered its steepest weekly retreat against the dollar since the five days ended March 9, depreciating 1.2 percent to 36.0450 by 9:08 p.m. in Moscow yesterday. The currency, whose three-month implied volatility rose to an almost six-week high, slumped 8.8 percent this year, the most for an emerging-market currency after Argentina's peso.

Ukraine PM Accuses Russia of Wanting WWIII

The Financial Times reports Kiev Forces Blockade Rebel Town as Rhetoric Rises

Ukraine pursued its operation to flush out separatists in the east for a second day on Friday, surrounding the rebel stronghold of Slavyansk, as the interim prime minister accused Russia of "wanting to start a third world war".

Serhiy Pashynsky, acting head of Ukraine's presidential administration, said a decision had been made to blockade Slavyansk – which on Friday was still in the control of the pro-Russian "people's mayor" Vyacheslav Ponomarev – by positioning its security forces around the town.

A Ukrainian military transport helicopter, parked at an airport in nearby Kramatorsk where separatists are barricaded inside the town hall, exploded in a fireball on Friday after being hit by a sniper bullet, dealing a symbolic blow to Kiev's campaign to clear cities of rebels.

Ukraine's interior minister said law enforcement officials were taking a cautious approach in the crackdown, which continued amid fears of an imminent Russian military intervention . "The key principle in the antiterrorist operation . . . is minimising risk for the peaceful population," Arsen Avakov said.

Ukrainian officials described their crackdown as the "second stage" of an operation that began on Thursday. Their deliberation suggests Kiev is trying to avoid casualties that might provoke Russia to retaliate.

However, officials engaged in fiery rhetoric, capping a week that saw tensions between Moscow and Kiev rise to perhaps their highest level since Russia annexed Crimea in March.

"The world has not forgotten [the] second world war," Arseniy Yatseniuk, Ukraine's acting prime minister, said on Friday. "Russia wants to start a third world war."

Ukraine Handling Situation Well

Recent polls support the notion the regions want more political autonomy not outright independence. If that's what the majority want, who I am I to judge differently? I would say the same thing if the regions wanted to rejoin Russia. Simply put, it is not my place or the US's place to judge what is in the best interest of people thousands of miles away, in a place most US citizens could not even find on a map.

For now, it appears Ukraine is handing the situation well.

A blockade may take a while to work, but anything that acts to reduce tensions is welcome.

Talk of World War III, is likely just that, talk. At least let's hope so.

Finally, with the Russian economy crumbling, rash escalation of sanctions may be counterproductive.
Russia may easily decide to shut off gas to Europe if pressured enough.

Instead, this may quietly blow away by November in the absence of serious policy mistakes by one side or another. In that regard, excessive US pressure is unlikely to help.

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

Damn Cool Pics

This Is How You Celebrate 420 The Right Way

Posted: 25 Apr 2014 07:54 PM PDT

Every year 4/20 is a huge holiday for pot smokers so if you're going to party on 4/20 you better make sure you do it right.

Congress Needs to Act on Minimum Wage

Featured

Weekly Address: Congress Needs to Act on Minimum Wage

In this week's address, the President highlights small business owners across the country acting to raise wages for their workers, and calls on Congress to give America a raise so more hard-working Americans have the opportunity to get ahead.

Click here to watch this week's Weekly Address.

vineri, 25 aprilie 2014

Mish's Global Economic Trend Analysis

Top Tier Chinese Cities Discounting Property; Beijing Prices and Volume Down 11 Straight weeks
Reader Question on Shadow Banking and Gold Buying in China
Merkel Tiptoes Through the Tulips; Russia Debt Cut to One Notch Above Junk; Is Anyone in Control?

Top Tier Chinese Cities Discounting Property; Beijing Prices and Volume Down 11 Straight weeks

Posted: 25 Apr 2014 02:03 PM PDT

The Australia Macro Business Blog notes Tier 1 Chinese Cities Discounting Property

Prices and volumes are falling in Beijing and real estate agents are started to drum up sales by delisting homes listed at high prices. Lots of homes listed online now show price cuts, and volumes have picked up recently from depressed levels. Total listings are down about 50% in some parts of Beijing due to listings being removed.

Online Prices Falling Everywhere; Real Estate Agents Cut Prices 30% (网上随处可见降价房北京中介三成房源进入降价通道)
"Two weeks ago the price fell 200,000 yuan," "6 hours ago the price fell 100,000 yuan," …… Yesterday, the sites of real estate companies show homes in the east, south and west Third Ring large area, about thirty percent of listings are marked with The green arrow indicates the listings with price cuts have almost quadrupled since the period before Spring Festival. Such a situation from two weeks since the beginning of April, the city is currently at this largest second-hand housing sales real estate agent are starting to tell homeowners who ask for high listing prices, "no." Every home exceeding the average price for the area is being persuaded one by one to cut their asking price, otherwise they will be removed from the website, "off the shelf."

Reporter survey found that many hot spots in the district, real estate agencies have taken as much as 40% of the properties off the market, resulting in an eyeful of lower prices online.
In Guangzhou, developers only paid a premium of 1.4% on the "star plots" at a recent government land auction. In Beijing, prices and volume have been sliding for 11 straight weeks.

Hugh Pavletich posted the following links as comments to the above article.

Housing projects in China in limbo due to debt-ridden developers

Does China's Q1 GDP Figure Rule Out A Hard Landing?

New Zealand's Bubble Economy Is Vulnerable

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

Reader Question on Shadow Banking and Gold Buying in China

Posted: 25 Apr 2014 11:28 AM PDT

Reader Jason pinged me with a MarketWatch article Will China Drop Gold Next? by writer Craig Stephen.

Stephen notes that for the first time, Chinese demand topped 1,000 tonnes, reaching 1,176 tonnes after a 41% year-on-year gain, not including central-bank buying and that "investors have done well in the past with a simple strategy of buying what China was buying."

Stephen also cautioned about a "worrying explanation" that "a big chunk of China's gold demand is the spectacular growth in China's shadow banking, for which that the government is now trying to apply the brakes."

If so, Stephen claims that "raises the possibility of a gold crunch, depending on how the People's Bank of China flushes out the yuan carry trade by orchestrating a weakening in the Chinese currency."

Does the Story Make Any Sense?

Reader Jason wonders "if the story makes any sense."

The answer is "Yes" and "No".

Given what happened with copper, no one should be surprised if shadow banking operations in China used gold for the same purpose. But does that mean or imply a "possibility of a gold crunch"?

For that, the answer is no.

Shadow Banking Demand Story a Big "So What?"

Here are comments from Pater Tenebrarum at Acting Man, via email

This story is a big 'so what'?

That China buys a few hundred tons more or less is completely irrelevant to the gold price. People continue to make the fundamental mistake of confusing gold with an industrial commodity. You can see it already in the very first sentences: "Investors have done well in the past with a simple strategy of buying what China was buying. So earlier this year, things were looking up for gold when it was revealed that China had swept past India to become the world's biggest buyer in 2013."

It is completely irrelevant if Chinese gold imports 'swept past India's'. The most relevant factor in gold pricing are macroeconomic drivers and reservation demand. The total gold supply amounts to something close to 180,000 tons by now - which means that the total global gold demand is also for 180,000 tons.

In what way does a few hundred tons here or there matter? The answer is "it doesn't".

I have covered this type of question before. Please see Plague of Gold Bears Now Say "Gold Unsafe at Any Price"; What's the Real Long-Term Driver for Gold?.

Also read I suggest an interview on Gold Switzerland with Robert Blumen: "What's really key for the price formation of gold?"

Time and time again, you hear talk of demand in India or China going up or down as if it is meaningful. It isn't. You also hear about the price of physical gold vs. paper gold. I suggest you ignore that talk as well.

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

Merkel Tiptoes Through the Tulips; Russia Debt Cut to One Notch Above Junk; Is Anyone in Control?

Posted: 25 Apr 2014 09:52 AM PDT

Citing the tense geopolitical situation between Russia and Ukraine, the S&P Cut Russia Debt Rating to Step Above Junk and warned further downgrades may come.

S&P cut Russia's rating one step to BBB-, it said in a statement today. The grade, on par with Brazil and Azerbaijan, has a negative outlook. S&P last downgraded Russia in December 2008. Russia's currency and bonds fell.

"The tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects," S&P said in the statement.

The downgrade was expected by investors and won't significantly change their behavior, Russian Economy Minister Alexei Ulyukayev told reporters today.

Russian President Vladimir Putin told reporters in St. Petersburg yesterday that "sanctions are not effective in the contemporary world and are not bringing the desired outcome."

"The decision is partially expected -- Russia is almost in recession, even without sanctions," Dmitry Dorofeev, a money manager at BCS Financial group, said by phone.

S&P said it may lower the rating further "if tighter sanctions were to be imposed on Russia and further significantly weaken the country's net external position."

Threats of More Sanctions

The Financial Times reports Angela Merkel Warns Russia it Faces Further Sanctions.

"I spoke to the Russian president this morning and made clear again that on the one hand Ukraine has taken a whole series of steps to implement the Geneva accord but on the other side I see no Russian backing for the accord which would of course have an effect on the separatists in Ukraine," Ms Merkel said.

The German chancellor made it clear that any additional measures would be an extension of the current financial sanctions, not the introduction of full-blown trade sanction, which include energy.

Merkel Tiptoes Through the Tulips

By making it clear the threats do not involve full-blown trade sanctions, Merkel effectively chose meaningless tiptoe steps that cannot possibly accomplish much. Then again, a full blown trade war will not accomplish much either, except perhaps quickly sink Europe back into recession.

If Russia shuts off gas to Europe, everyone loses. Merkel knows that, so does UK Prime minister David Cameron.

The only person who doesn't know or doesn't care is president Obama.

Is Russia in Control of the Separatists?

Merkel stated "Russia has the power, or could have the power, to bring the separatists on to a peaceful path of discussions about the constitution and preparations for elections".

Is that necessarily true? One can make a case that Russia spawned these uprisings. Some claim Russia even supplied the weapons.

But does that mean Russia is in control of the situation?

Recall that Denis Pushilin, the head of the self-declared Donetsk People's Republic, told journalists in regards to the now broken peace accord, that "Russian foreign minister Sergei Lavrov did not sign anything for us, he signed on behalf of the Russian Federation."

The only thing Russia clearly has control over, is whether or not to invade if Ukraine responds with more force.

And if Russia does invade, the Ukrainian army will be no match. Let's hope it does not come to that.

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

luni, 28 aprilie 2014

Seth's Blog : Taking your time doesn't scale

Taking your time doesn't scale

More Recent Articles

duminică, 27 aprilie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : The most difficult work many professionals do...

The most difficult work many professionals do...

More Recent Articles

sâmbătă, 26 aprilie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Damn Cool Pics

Damn Cool Pics

Congress Needs to Act on Minimum Wage

vineri, 25 aprilie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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