| Spain's Budget Deficit Already Exceeds Maximum for Entire Year; Path of Convergence Posted: 31 Aug 2012 10:08 PM PDT Spanish unemployment rate is 25% and rising. Youth unemployment is 52.9% and rising. Meanwhile Spanish budget deficits are such that Spain will need more austerity. I keep wondering what it will take for this setup to blow sky high in riots. Via Google Translate from Libre Mercado central government deficit already exceeds the maximum provided for the year The central government posted a deficit of EUR 48,517,000 through July in terms of national accounts, the 4.62% of GDP, representing an increase of 25.8% compared to last year, according to data provided by the Secretary of State Budgets, Marta Fernandez Currás. The deficit figure exceeds the new limit has assumed the state, which has risen to a point, to 4.5%, for the extra year he gave Brussels to Spain to reduce the deficit to 3%.
The deficit through July was a result of payments stood at 100.694 million euros, up 9.8%, while revenues totaled 52.177 million euros, representing a fall of 1.8%. On a comparable basis, net of transfers to regional governments and social security, among other authorities, the deficit stood at 4.12% of GDP. Humorous Comment of the Day "We are on the path of convergence required by Brussels," said Currrás, recalling that the deficit is an annual target, so the balance recorded until July continues to be a reference. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| China, Germany to Settle More Trade in Yuan, Euros; What's That Mean for Gold, the Dollar? Posted: 31 Aug 2012 01:30 PM PDT Inquiring minds note China, Germany Plan to Settle More Trade in Yuan, Euros. Germany and China plan to conduct an increasing amount of their trade in euros and yuan, the two nations said in a joint statement after talks between Chancellor Angela Merkel and Chinese Premier Wen Jiabao in Beijing on Thursday.
"Both sides intend to support financial institutions and companies of both countries in the use of the renminbi and euro in bilateral trade and investments," said the text of the statement.
It also said that both parties welcomed investments in China's interbank bond market by German banks and supported the settlement of business in the yuan by German and Chinese banks and the issuance of yuan-denominated financial products in Germany. Announcement Mean Anything? That's the announcement, and I have no doubt people who do not understand trade math will trump this up as if it's news of big significance. Well, it's not. The announcement is a common sense function of math. There is more bilateral trade between Germany and China, so fundamentally it makes sense that this agreement would be worked out. Indeed, mathematically, the markets would eventually force such an agreement. If Germany goes back to the Deutschmark, then one should expect bilateral trade between the countries to be in Deutschmarks and Yuan. The only relevance to the dollar is if Germany is taking away US trade with China. If not, the announcement is a meaningless function of math. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Brussels Pushes for Another "All Powerful" Banking Committee, Headed by ECB, In Spite of Objections by ECB and Germany Posted: 31 Aug 2012 10:19 AM PDT Once nannycrats grab on to an idea, they never relinquish it. Eurobonds are the perfect example. Many other ideas float around despite numerous objections in key places. Some of these ideas involve creation of more commissions and more working groups. Here is a sampling of commissions and groups that I am aware of. - The European Commission is headed by president José Manuel Barroso
- The European Council is headed by president Herman Van Rompuy
- The Euro Group is headed by president Jean-Claude Juncker
- The European parliament president is Martin Schulz
- Numerous other committees set policy on trade, energy, and nearly everything else under the sun.
Barroso now wants another new commission, this one under the ECB with the task of being the "all powerful" banking supervisor. As envisioned, Barroso's plan would create a 23-member board: a national representative from each eurozone country plus six independent members, including its chair and vice-chair. No doubt there will be dozens if not hundreds of staff members all intent on expanding their own power. The Financial Times has more details in Brussels pushes for wide ECB powers The European Central Bank would be given sweeping authority over all 6,000 eurozone banks under a plan being drawn up by the European Commission, putting Brussels on a collision course with Germany and the ECB itself, which have urged a more decentralised first step towards "banking union".
The plan, agreed at a meeting this week between top aides to José Manuel Barroso, commission president, and Michel Barnier, the EU's senior financial regulator, would strip existing national supervisors of almost all authority to shut down or restructure their countries' failing banks, giving those powers to Frankfurt.
The German government has resisted centralising all supervisory powers with the ECB, however, arguing that Frankfurt should be left to deal with just the eurozone's 20-25 largest banks. National supervisors would then be left as independent and co-ordinating agencies for smaller banks.
Some senior ECB officials had taken a similar view in closed-door consultations with Brussels, EU officials said, though Mario Draghi, the ECB chief, is more sympathetic to the commission's view.
Germany's objections also stem from a desire to keep national control over smaller, politically connected regional savings banks.
Despite the resistance, Mr Barroso this week decided to adopt the more ambitious proposal advocated by the commission's internal market directorate, drafters of the plan, which argued a narrower approach would disappoint financial markets.
Splitting responsibility could complicate the next steps in creating a banking union: setting up a eurozone-wide deposit guarantee scheme and bank bailout fund. If only large banks were covered by those schemes, depositors could flee smaller banks for more secure larger ones, officials argued. To become law, all 27 nations must agree. Barroso hopes for a summit before the end of the year. In addition to unanimous approval for such a position, I would point out that ceding power to Brussels is a change so sweeping that Germany would require a national referendum, just as with the eurobonds idea. Nannycrats do not care about such issues, they just plow ahead, then blame Germany when it will not go along. Speaking of which, I highly suspect Merkel has taken a partial stance out of political expediency. Perhaps she thinks she can avoid a referendum by limiting authority to only the largest banks. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Bad News For Super-Models: Computer-Generated Fashion Models Better Than Real Thing; Fashion Questions of the Day Posted: 31 Aug 2012 08:36 AM PDT Here is an easy prediction: Price of fashion models in advertizements is going to collapse, if indeed the industry survives at all. Why should retailers pay for fashion models when an advertizing department can generate models with the perfect height, weight, breast size, nationality, and complexion for whatever designs they want to promote? Bad News For Super-Models MarketWatch describes the setup in 5 computer-generated sales pitches 
To save on costs—and perhaps assembly time—Swedish retailing giant IKEA created computer-generated images of its furniture for the new catalog, rather than hiring a photographer. By next year, a quarter of the scenes depicted in IKEA's print and online advertising will be digitally drawn rather than photographed, The Wall Street Journal reported last week. In fact, IKEA says it is able to better depict its products with computer images than actual photography.
IKEA is not alone. Hollywood filmmakers increasingly create characters—and not just special effects—with CGI animation. And some fashion lines are finding that it's less expensive to create the perfect specimen digitally than to track down America's Next Top Model. These computer-generated realities may be cheaper, more appealing, and more versatile than the genuine articles. Related Ideas The MarketWatch article also discussed simulated driving of cars, movie special effects, and 3-D dream homes. Special effects are nothing new. New car models come out only once a year. And I believe most people want real images of homes, not simulated models. In contrast, clothing changes four times a year, with each season, and also varies by weight, height, size, nationality, skin color, age, etc. Fashion Questions of the Day Do I care if the person wearing a sweater in a printed image is generated or real? Why would I? How would I know in the first place? Supermodels on magazine covers may or may not go away due to importance of name recognition, but every modeling job on down is likely to be eliminated over time. Virtual models simply have too many advantages for real models to compete effectively. This in turn will pressure wages of even the super-models. Looking for a career? Fashion modeling is not a good choice. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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