Central Perk

sâmbătă, 13 august 2011

Mish's Global Economic Trend Analysis

Spain Cannot Pay €26 Billion Defense Budget, Effectively Issues IOUs to Keep Within Stated Austerity Measures
Border Attacks: Spanish Farmers Threaten to Block Border with France; Global Trade Wars Yet Another Sign of Deflation
Numerous Spanish Towns Face Bankruptcy
U.S. Circuit Judge Upholds Right of Two US Citizens, Tortured in Iraq, to Sue Former Defense Secretary Rumsfeld for Torture
Numerous Spanish Towns Face Bankruptcy
UK Chancellor, Italy Economy Minister Propose "Outright Fiscal Union" and Common Bonds

Spain Cannot Pay €26 Billion Defense Budget, Effectively Issues IOUs to Keep Within Stated Austerity Measures

Posted: 13 Aug 2011 10:05 PM PDT

If you need proof that Spain cannot possibly stay within austerity limits mandated by the ECB, please consider the following Google Translation (modified by me for readability) of an article on El Pais: Defense Department Renegotiating a 26 Billion Debt it Cannot Afford to Pay

If the homeowner stops paying the mortgage, the bank will not hesitate in foreclosure. But if the Ministry of Defence does not pay the installments of a battleship, a tank or a fighter, who will dare to seize?

The situation may seem surreal, but it is real.

Principle Programs

The overall bill called special programs of weapons - 19 weapons systems that mostly incorporate new technologies - totals 30 billion, around 3% of Spanish GDP, of which Defence has so far paid just under 5 billion.

Companies should be paid the remaining 26 billion in installments through 2025, but defense officials themselves acknowledge that this is impossible without a drastic increase in the budget, which is unthinkable that Spain has set a priority to reduce the deficit 6% at the end of this year and 3% in 2013 (with 2010 data, the deficit of all government is 9.2% of GDP).

Already in 2011 the Ministry of Defence has been in serious trouble to meet their obligations.

It's a cyclical problem but the situation is worse in the future. Defence sources said they would not have enough money even if there were no additional expenditures through 2025.

In his appearance before Congress last October to present the budget this year, Secretary of State for Defence, Constantino Mendez , already referred to in the starkest terms the policy has led to this situation. "We should not have purchased weapons we are not going to use for scenarios of confrontation that do not exist and, more seriously, with money that we did have then and do not have now."

Is US Really Any Different?

Look at those Spanish tanks, ships, planes, and submarines. Is Spain preparing for an invasion from France? Portugal? Italy via the Mediterranean Sea?

The US military budget situation is similar but the amounts are orders of magnitude greater.

Is the US threatened by Canada or Mexico? Cuba via the Gulf of Mexico?

If not, "We should not have purchased weapons we are not going to use for scenarios of confrontation that do not exist and, more seriously, with money that we did have then and do not have now."

Stupid Wars and US Sponsored Torture

In a stupid war that should never have been fought, US citizens were tortured in Iraq with tactics approved by Donald Rumsfeld.

For an explanation as to how that happened please consider U.S. Circuit Judge Upholds Right of Two US Citizens, Tortured in Iraq, to Sue Former Defense Secretary Rumsfeld for Torture.

Is WWII Coming Again?

What pray tell are countries doing with all these needless weapons? Preparing for another WWII?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Border Attacks: Spanish Farmers Threaten to Block Border with France; Global Trade Wars Yet Another Sign of Deflation

Posted: 13 Aug 2011 06:56 PM PDT

In an "eye for eye, tooth for tooth" retaliation to French farmers throwing Spanish produce in the streets, Spanish farmers have threatened to "look for French interests and cause the most damage possible."

Courtesy of Google Translate and my friend "Bran" who emails nearly every day from Spain, please consider Spanish farmers threaten to block border with France

Agrarian Association of Young Farmers in Catalonia announced Friday that blocked the return of French tourists to their country by cutting the road to La Jonquera response to the boycott of Gallic producers and recent attacks on trucks from transporting fruit Peninsula and vegetables.

Asaja coordinator in Catalonia, Albert Castelló, has said that already run out of patience, "eye for eye, tooth for tooth," and said it is absurd to continue with good words and wait for action by governments.

It has also warned that if they attack at the border now and the end of the month "automatically go looking French interests and cause the most damage possible." He called on the Catalan police to be "gatekeepers" and to defend the interests of Catalan and Spanish when these attacks occur, as has ensured that the security forces do Gauls.

Asaja has hit back against the Government for its "immobility" when taking concrete steps to defend the interests of local producers, which this week have been suffering more attacks on the border.

The European Commission has indicated it has not been formally informed of the latest attacks of French farmers against trucks carrying fruits and vegetables from Spain, but has made clear that it condemns "all sorts of illegal and destructive action" and has reminded France that European Union countries should take steps to ensure the free movement of goods.

Hallmarks of Deflationary Times

Trade wars are hallmarks of deflationary times. Disputes between farmers in Spain and farmers in France are a case in point. When there are ample jobs, everyone is happy. When not, people blame their neighbors.

Bear in mind more austerity is coming to Spain, France, Italy, and Greece. A massive European recession is on the way, complete with rising unemployment and civil unrest, and ECB president Jean-Claude Trichet wants to hike rates. It is economic madness.

To be fair, the market should set interest rates not Central Banks.

Where would the market set rates for Europe?

I do not know, nor does anyone else, especially central bankers. However, I do know "one size does not fit all" when it comes to interest rates when countries have widely varying fiscal conditions and problems.

As one of the founding fathers of the Euro, Trichet is in a mess of his own making.

For more on the mess in Spain, please see Numerous Spanish Towns Face Bankruptcy.

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

Numerous Spanish Towns Face Bankruptcy

Posted: 13 Aug 2011 06:54 PM PDT

I inadvertently deleted this post from earlier today. Here it is again.

The Spanish economic implosion continues. Various austerity measure in Europe and rate hikes by ECB president Jean-Claude Trichet will make matters worse. Some town mayors readily admit bankruptcy. Others will follow.

Please consider Spanish towns face funding crisis, rack up debts

In this hillside town, topped by a medieval castle and surrounded by olive groves, the 120 municipal workers haven't been paid since May. Police have new orders not to use their patrol cars unless they get word of a traffic accident or a crime in progress.

The town pool is closed for the summer despite temperatures over 104 (40 Celsius) in the shade. Fees for the public day-care center have doubled. Water bills will soon go up 33 percent and local business owners are seething over €9 million ($12.7 million) in unpaid bills owed by the town hall, much of it to them.

Spain's 8,115 municipalities are being hit by a crushing revenue hangover from a nearly two-decade building boom that went bust in 2008. Officials in Moratalla believe they are the first in Spain to publicly declare their town is on the verge of going broke — and that the only way out is an unprecedented program of drastically reducing services while boosting local taxes and fees in an austerity drive that could last eight years.

Moratalla and its mammoth debt "are the mirror image of a lot of towns" that have not yet fully admitted the extent of their dire financial circumstances, said Deputy Mayor Juan Soria. "These are hard measures, but they're necessary and I think we have to reinvent ourselves because we've lived beyond our means and we have to lower expectations."

Many towns are struggling to meet payroll, can't fire workers because of public service employment rules, are frequently making late payments to the health care system and are trying to delay or restructure debt they took on for costly infrastructure projects.

The nation could be next in line for a bailout after Greece, Ireland and Portugal — and some in Moratalla say the example of their town shows Spain will need help from the European Union, despite pledges by federal officials that Spain won't need a bailout.

In Moratalla, population 8,500, Soria cringed at the idea of merging with a neighboring town, but said his community is functioning in constant crisis mode. Two weeks ago, Moratalla's two gas stations stopped filling the tanks of municipal vehicles when the owners lost all faith the town would ever pay €120,000 ($170,000) in outstanding fuel bills.

"They have told us that they don't know when, how or even if they are going to be able to pay us," said Jose Antonio Martin, who owns one of the gas stations. He is convinced the town needs a bailout from the regional government of Murcia, though it has debt problems of its own.

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

U.S. Circuit Judge Upholds Right of Two US Citizens, Tortured in Iraq, to Sue Former Defense Secretary Rumsfeld for Torture

Posted: 13 Aug 2011 01:34 PM PDT

Thankfully, a US circuit court has upheld the rights of Donald Vance (a US Navy veteran) and Nathan Ertel, both US citizens, to sue former Defense Secretary Donald Rumsfeld for torture.

The "crime" for which they were tortured: The pair accused an Iraqi firm of bribery and corruption.

The punishment: The whistle-blowers were arrested, detained, tortured for months, with no access to a judge or lawyers, then ultimately dumped at the Baghdad airport without charge.

Please consider Two American men CAN sue Donald Rumsfeld after 'being tortured by U.S. army in Iraq when they worked for security firm'

Two American men will be allowed to sue former Defence Secretary Donald Rumsfeld over claims that they were unfairly tortured by U.S. troops in Iraq.

The pair argue that their rights of 'habeas corpus' - the legal term for unlawful detention - were violated, and are seeking damages from 79-year-old Rumsfeld, who was succeeded by Robert Gates in December 2007, and unnamed others.

Vance and Ertel had been hired by Shield Group Security, an Iraqi firm who the duo believed were involved in some questionable dealings, including illegal bribery and other corruption activities.

They flagged up their concerns to the U.S. authorities and began co-operating with the Federal Bureau of Investigation - and in early 2006 they were taken into custody and slung into Camp Cropper, the notorious holding facility for security detainees near Baghdad International Airport.

The whistle-blowers claim that they were forced to undergo harsh and prolonged interrogations at the same place Sadam Hussain lived his last years, and they were subjected to physical and emotional abuse.

Among the methods of torture used against them during several weeks in military camps was sleep deprivation and a practice known as 'walling', in which subjects are blindfolded and walked into walls, according to the lawsuit.

The lawsuit alleges Mr Rumsfeld personally participated in approving the methods for use by the U.S. military in Iraq, making him responsible, it argues, for what happened to Mr Vance and Mr Ertel.

In 2003, Mr Rumsfeld instituted a policy that 'encouraged physical coercion and sexual humiliation of Iraqi prisoners in an effort to generate more intelligence about the growing insurgency in Iraq'.

And yesterday a panel of three judges at the U.S. Court of Appeals for the Seventh Circuit in Chicago upheld the decision made by a federal judge in Illinois, voting 2-1.

The verdict paves the way for the lawsuit to proceed, in spite of the best efforts of the U.S. government to have the case thrown out.

U.S. Circuit Judge David Hamilton wrote yesterday: 'There can be no doubt that the deliberate infliction of such treatment on U.S. citizens, even in a war zone, is unconstitutional.'

Countdown-The torture of Don Vance-08-05-2011

Link if the above video does not play: http://www.youtube.com/watch?feature=player_embedded&v=Gd40g1IGma4#at=120

I an sick of war, the US war machine, the trillions of dollars we have wasted on war because idiots like Rumsfeld thought "Iraq had rich targets". I sincerely hope Rumsfeld is tried, convicted, sentenced to prison for life, then buried with Saddam Hussein, someone of like mind.

I commend Donald Vance for refusing to accept bribe money from the US government to not proceed with the lawsuit. It is high time the United States of America prosecutes people for war crimes and torture. Donald Rumsfeld is the perfect place to start.

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

Numerous Spanish Towns Face Bankruptcy

Posted: 13 Aug 2011 11:20 AM PDT

The Spanish economic implosion continues. Various austerity measure in Europe and rate hikes by ECB president Jean-Claude Trichet will make matters worse. Some town mayors readily admit bankruptcy. Others will follow.

Please consider Spanish towns face funding crisis, rack up debts

In this hillside town, topped by a medieval castle and surrounded by olive groves, the 120 municipal workers haven't been paid since May. Police have new orders not to use their patrol cars unless they get word of a traffic accident or a crime in progress.

The town pool is closed for the summer despite temperatures over 104 (40 Celsius) in the shade. Fees for the public day-care center have doubled. Water bills will soon go up 33 percent and local business owners are seething over €9 million ($12.7 million) in unpaid bills owed by the town hall, much of it to them.

Spain's 8,115 municipalities are being hit by a crushing revenue hangover from a nearly two-decade building boom that went bust in 2008. Officials in Moratalla believe they are the first in Spain to publicly declare their town is on the verge of going broke — and that the only way out is an unprecedented program of drastically reducing services while boosting local taxes and fees in an austerity drive that could last eight years.

Moratalla and its mammoth debt "are the mirror image of a lot of towns" that have not yet fully admitted the extent of their dire financial circumstances, said Deputy Mayor Juan Soria. "These are hard measures, but they're necessary and I think we have to reinvent ourselves because we've lived beyond our means and we have to lower expectations."

Many towns are struggling to meet payroll, can't fire workers because of public service employment rules, are frequently making late payments to the health care system and are trying to delay or restructure debt they took on for costly infrastructure projects.

The nation could be next in line for a bailout after Greece, Ireland and Portugal — and some in Moratalla say the example of their town shows Spain will need help from the European Union, despite pledges by federal officials that Spain won't need a bailout.

In Moratalla, population 8,500, Soria cringed at the idea of merging with a neighboring town, but said his community is functioning in constant crisis mode. Two weeks ago, Moratalla's two gas stations stopped filling the tanks of municipal vehicles when the owners lost all faith the town would ever pay €120,000 ($170,000) in outstanding fuel bills.

"They have told us that they don't know when, how or even if they are going to be able to pay us," said Jose Antonio Martin, who owns one of the gas stations. He is convinced the town needs a bailout from the regional government of Murcia, though it has debt problems of its own.

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

UK Chancellor, Italy Economy Minister Propose "Outright Fiscal Union" and Common Bonds

Posted: 13 Aug 2011 09:57 AM PDT

Clamoring for a complete Eurozone fiscal union reached a new high this week as UK Chancellor of the Exchequer George Osborne agrees with Italian Economy Minister Giulio Tremonti on the need for a fiscal union and common bonds to save the Euro.

Please consider Italy calls for euro bonds as UK backs fiscal union

Italian Economy Minister Giulio Tremonti stepped up calls for a more coordinated response to the euro zone debt crisis on Saturday ahead of a potentially vital summit between the leaders of France and Germany next week.

Tremonti returned to proposals -- rejected in the past by Berlin and Paris -- for the creation of common euro zone bonds that would effectively make individual governments debt a common burden.

His British counterpart George Osborne, long a supporter from outside the euro zone of more fiscal integration within the currency bloc, went as far as to say that some form of outright fiscal union was now needed.

The austerity package unveiled on Friday, which contained a painful mix of spending cuts and tax increases, was demanded by the ECB in exchange for a commitment to protect Italian bonds but Tremonti said the problem risked spreading unless Europe ended its piecemeal approach to the crisis.

"We would not have arrived where we are if we had had the euro bond," he said.

Osborne said deeper integration had been the inevitable conclusion from the start of the single currency project.

Asked if the only answer for the euro zone was some kind of fiscal union, he told BBC radio: "The short answer is yes."

A new poll for the Bild am Sonntag newspaper on Saturday showed 31 percent of Germans believe the euro will be gone by 2021.

Common Bond Madness

The idea there would not be mess if "only we had common bonds" is madness. Had there been "common bonds" Germany and France would have undertaken all the fiscal problems of Greece, Portugal, Spain, Italy, and Ireland.

Note that French banks are directly under attack. That would have happened sooner if France and Germany bankrolled the rest of Europe.

Then France would have quickly fallen and the result would be where we are today, with Germany essentially bankrolling the problems of the rest of Europe.

Nothing much would have changed except the progression and timing of various countries. Shock waves might have hit Italy and France first (or every European country at once instead of starting with Greece) as the pool of savings in Germany and France was wiped out over time to keep the other European economies afloat.

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

Damn Cool Pics

Tokyo Drift in the Living Room

Posted: 12 Aug 2011 08:33 PM PDT

The rich, it's said, are different than you and I. What seems seems illogical or destructive to us just seems like good fun to those with large bank accounts. Keith Moon, the original drummer for The Who, had a penchant for destroying hotel rooms simply because he could. The owner of this Cobra replica, on the other hand, has a penchant for destroying hardwood floors.

There's no backstory to accompany the video, so we don't know what prompted the driver to serve up fresh donuts in his living room. Laying rubber in such tight confines takes some skill, so we'll give the driver props for only destroying the floors and not the drywall. Enjoy the video below, and we strongly discourage you from trying this at home.

50 Pulitzer Prize-Winning Photographs From The Last 50 Years

Posted: 12 Aug 2011 07:26 PM PDT

"Capture the Moment: The Pulitzer Prize Photographs" is a hair-raising and historical collection of 118 award-winning photos that has toured the nation for more than a decade. The exhibition is currently on display at the Yellowstone Art Museum in Billings, Montana. For more info on these, and other Pulitzer Winning Photos, please see the Pulitzer Home Page.

1962