Central Perk

sâmbătă, 18 iunie 2011

Mish's Global Economic Trend Analysis

Bin Laden "Halo Effect" Vanishes; U.S. Economic Confidence Plunges in Early June; Expectations Worsening
Brown Vetoes California Budget, Pledges to Move Heaven and Earth for Tax Hikes; Lawmakers Face Loss of Salary
Mad Scramble to Prevent the Unpreventable and Contain the Uncontainable

Bin Laden "Halo Effect" Vanishes; U.S. Economic Confidence Plunges in Early June; Expectations Worsening

Posted: 18 Jun 2011 03:17 PM PDT

A quick surge of optimism after Bin Laden was killed has completely vanished according to a recent Gallup Poll. Please consider U.S. Economic Confidence Plunges in Early June

A sharp deterioration in the jobs outlook and six straight weeks of Wall Street declines sent Americans' confidence in the U.S. economy plunging to an average of -35 during the week ending June 12 -- a decline of nine percentage points from two weeks ago, and six points worse than it was in the same week a year ago. Economic confidence is now approaching a 2011 weekly low.

Economic confidence reached its peak so far this year at -18 in February and then generally declined through the week ending April 24, when it reached -39 as gas prices surged and economic activity slowed. Economic confidence improved to -25 during the week after Osama bin Laden's death and coincident with the "rally effect" in President Obama's approval rating. However, Americans have become more pessimistic about the economy in early June, with confidence reverting to late April levels.

Economic Expectations Worsening

Thirty percent of Americans said the U.S. economy is getting better last week -- down from 37% during most of May and near the low for the year. This is five points below the reading for the same week in 2010.

Look for unemployment to rise as the economy spirals towards another recession.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Brown Vetoes California Budget, Pledges to Move Heaven and Earth for Tax Hikes; Lawmakers Face Loss of Salary

Posted: 18 Jun 2011 02:58 PM PDT

On Thursday, California Governor Jerry Brown vetoed a Democratic sponsored budget that used doubtful techniques to paper-over a $10 billion deficit. As a result, California legislators face a potential loss of salary.

Please consider Brown Vetoes California Budget Without Tax Extension

California Governor Jerry Brown vetoed a budget lacking the tax extensions he sought less than 24 hours after it was passed by the Democrat-controlled Legislature, continuing a stalemate over a $10 billion deficit.

Brown, a Democrat who pledged to solve California's fiscal malfunctions without gimmicks and accounting tricks, said the budget sent to him yesterday used legally suspect techniques to paper over the shortfall.

"The budget I have received is not a balanced solution," Brown said today in a statement. "It continues big deficits for years to come and adds billions of dollars of new debt. It also contains legally questionable maneuvers, costly borrowing and unrealistic savings. Finally, it is not financeable and therefore will not allow us to meet our obligations."

The veto means California, the biggest issuer of municipal debt in the U.S., faces the start of its fiscal year July 1 without a budget that would let the state borrow from Wall Street to pay bills. Democrats, who don't command enough votes to override Brown's veto, said it's now up to Brown to find a compromise with Republicans who oppose his tax plan.

Democrats were able to pass their plan with a simple majority, thanks to a November voter initiative that lowered the threshold from two-thirds. Lawmakers faced the loss of salary and per-diem pay for every day they failed to meet a June 15 deadline for passing a spending plan.

Controller John Chiang, who issues state paychecks, hasn't said whether the budget approved yesterday is enough to meet that requirement. The law's language requires legislators to send the governor a balanced budget; it doesn't say it must be enacted to clear that threshold.

"We clearly met the obligation to pass an on-time budget," Assembly Speaker John Perez, a Los Angeles Democrat, told reporters today.

Brown Pledges to Move Heaven and Earth

Please consider Brown Pledges to Seek Republican Tax Votes After Vetoing California Budget

California Governor Jerry Brown, who failed to win Republican support of tax extensions in six months of negotiations, said he'd "move heaven and earth" in another attempt after vetoing a budget lacking the provision.

Brown, a Democrat who pledged to solve California's fiscal malfunctions without gimmicks, didn't say how he'd get the Republican backing needed to pass his plan. His budget veto was the first in state history.

"I'm going to do everything I can, I'll move heaven and earth, to get those votes," Brown told reporters yesterday in Los Angeles.

Brown wants lawmakers to bridge the deficit by extending tax and fee increases that are set to expire June 30, to avert deeper spending cuts to schools and public safety. The governor needs to persuade at least two Republicans in each legislative chamber to back his plan before it can pass.

Without a budget by July 1, Controller John Chiang can't pay lawmakers or the more than 1,000 legislative workers and gubernatorial appointees. They would get any money owed once the spending plan is signed.

Chiang also can't pay vendors who sell goods and services to the state, or send subsidies to community colleges, health clinics, foster-care parents, nursing homes and daycare centers.

Republicans have jockeyed for concessions on spending levels, cuts to government pensions and business and environmental regulations in exchange for their support to put Brown's tax extensions on a statewide ballot.

"Californians deserve a budget that stands the test of time, and that requires the real reforms that they are demanding -- meaningful pension reform, a spending limit and business- regulation relief for job creation," said Senator Bob Dutton, the Republican minority leader from Rancho Cucamonga.

It will be interesting to see what Chiang rules on those paychecks. If legislators forfeit salaries, who will cave in first, Republicans or Democrats?

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

Mad Scramble to Prevent the Unpreventable and Contain the Uncontainable

Posted: 18 Jun 2011 10:08 AM PDT

EU and ECB officials are scrambling like fools to come up with a "voluntary" solution to the Greek problem that will not trigger a default and spread contagion.

Please consider Juncker warns of contagion

Contagion from the Greek debt crisis could spread to at least five other European countries - including Belgium or even Italy - if it is not cautiously managed, the head of the eurozone group warned Saturday.

Jean-Claude Juncker told the German daily Sueddeutsche Zeitung that demanding that private creditors contribute to the next Greek bailout package could be considered a "default" by ratings agencies - and that would have extreme consequences for Europe as a whole.

Juncker, the prime minister of Luxembourg who also chairs the 17 eurozone finance ministers, was quoted as saying that a Greek bankruptcy "could prove contagious for Portugal and Ireland, and then also for Belgium and Italy because of their high debt burden, even before Spain."

"We are playing with the fire," he told the paper.

His comments came a day after Moody's warned it may reduce Italy's Aa2 credit rating over concerns about the country's ability to increase growth and reduce its public debt, one of the highest in Europe. The warning followed a similar move by Standard and Poor's, which cut its ratings outlook for Italy's debt from stable to negative.

European officials will hold talks with the private sector - mostly banks, insurance companies and pension funds - and they will make a "substantial contribution" to a second bailout for Greece, Merkel said, according to the news agency DAPD.

But neither Merkel nor German Finance Minister Wolfgang Schaeuble have given an estimate of the private sector contribution they hope to achieve. Schaeuble told the German daily Boersen Zeitung the contribution must be "substantial, measurable and reliable" so that the burden of a new Greek aid package does not fall solely on taxpayers.

Juncker stressed that cutting spending and raising taxes alone was unable to revive Greece's economy, and called for a loosening of EU rules to give Greece more direct financial assistance for investments that would spur growth.

Contagion is Certain

The EU is too late. Containing the uncontainable is impossible. Contagion is a certainty.

"Substantial Contribution" Nonsense

Merkel does not want the burden to fall solely on taxpayers, instead wanting banks to contribute an undefined "substantial" sum.

Why should taxpayers contribute anything? Taxpayers did not created this mess. Taxpayers did not force banks to lend to Greece. Taxpayers did not stuff their balance sheets with Greek debt.

Taxpayers did not want the ECB to buy Greek and Irish debt. Taxpayers had no say in letting Greece join the EU.

Can-Kicking Concoction

It will be interesting to see what the rating agencies say about the solution the can-kickers concoct this weekend because it is virtually impossible to structure a debt rollover in a voluntary way.

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

Damn Cool Pics

Lioness Takes A Nap On Top Of Handler
Great Roman Empire Sand Sculpture Exhibition in Russia
Mercedes-Benz World View Suspended 2
The real story behind the road sign

Lioness Takes A Nap On Top Of Handler

Posted: 17 Jun 2011 11:45 PM PDT

Shanta, a lioness who lives who lives at the Cedar Cove Feline Sanctuary in Kansas, is seen here dozing on her handler, Steve. But really, if a lion is using you as bedding, I don't think that you can legitimately claim to be her "handler". The relationship has been reversed at some point.

Great Roman Empire Sand Sculpture Exhibition in Russia

Posted: 17 Jun 2011 10:27 PM PDT

Estate "Kolomna" in Moscow from May 11 to October 03 is hosting an exhibition of sand sculptures, "The Great Roman Empire", as well as works by winners of the annual world championship of sand sculptures "Masterpieces of Italian Sculpture".

The Roman-German battle

Caesar and Cleopatra

The Capitoline Wolf

Roman waggon race

Wine making holiday

Patheon of Gods

The Colosseum

Rebellion led by Spartak

Award for originality: Ferrari and the Gorgon

The sculpture 'Dreaming about Italy was awarded the first place

Smile of Leonardo da Vinci and Mona Lisa

Source: mir-na-karte.livejournal

Mercedes-Benz World View Suspended 2

Posted: 17 Jun 2011 09:52 PM PDT

This spectacular display, called View Suspended II, has just been unveiled at Mercedes-Benz World in Surrey, UK. The piece, consisting of 3200 parts, was created by Dutch artist Paul Veroude.

Nick Fry, Mercedes GP Petronas CEO, was on hand for the official opening and said, "It is fantastic to see View Suspended II here at Mercedes-Benz World. Formula 1 is a sport watched by over 580 million people worldwide annually, so to be able to see a racing car in this way is something very special and a unique look at the heart of the sport."