| Yen has Longest Stretch of Weekly Losses Since 1989; Shorts Decrease Bets; Lovin' Deflation Posted: 19 Jan 2013 06:42 PM PST Lovin' Deflation Once again the spotlight is on the Yen. Please consider Japan Learned to Love Deflation in Wage Malaise Facing BOJ A decade and a half after Japan slumped into deflation, the central bank is set to signal its strongest effort yet to reverse the trend. The biggest challenge may be that the nation has come to rely on falling prices.
More than 80 percent of respondents in a Bank of Japan survey released this month who noticed rising prices last year said it was bad. More than a third of those who said prices fell were happy about it. Even so, the BOJ next week will adopt the government's desired 2 percent inflation target, according to 21 of 23 economists surveyed by Bloomberg News.
Japan last had 2 percent annual inflation in 1997, when Toyota Motor Corp. unveiled the Prius hybrid and the yen sank as as low as 130 per dollar. Prices have fallen in 10 of 15 years since, according to data compiled by Bloomberg.
While deflation helps savers, younger generations are hit by stagnant wages and diminished incentives for borrowing. Increased Debt Not Solution to Global Problems It's a world gone mad when central banks act as if increased debt is the answer to every problem. Japan has had increased national debt for over two decades and they certainly are not better off because of it. 80% in the survey are against higher prices. Who doesn't like a bargain? The problem is not falling wage. The problem is falling wages when one is loaded up in debt. The 80% are correct, the bank of Japan and the Japanese government are wrong. Longest Stretch of Weekly Losses Since 1989; Shorts Decrease Bets Bloomberg reports Yen Slides to Lowest Since 2010 Amid Bets on BOJ; Euro Advances The yen weakened beyond 90 to the dollar for the first time in 31 months amid speculation the currency will slide further as the Bank of Japan and the government work aggressively to spur economic growth.
The Japanese currency continued its longest stretch of weekly losses since 1989 amid bets the BOJ will decide to conduct open-ended asset buying to stoke inflation. The central bank meets Jan. 21-22.
"The open-ended thing is a little bit of a new twist to the policy easing we're expecting from Japan, and it's started to gain traction," Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage, said in a telephone interview. "That's what I'm attributing the latest leg lower in the yen to. The market is starting to fine-tune its expectations as to what we'll see from policy makers over there."
Currency Bets
Futures traders trimmed for a fifth straight week their bets that the yen will decline against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 65,727 on Jan. 15, versus net shorts of 74,096 a week earlier.
Speculators reversed their euro bets for a third week, wagering the shared currency will rise against the U.S. dollar. Net longs totaled 7,315 on Jan. 15, versus net shorts of 8,035 a week earlier and net longs of 5,126 the week before that. Complacency in Face of Falling Values It is certainly interesting to note that shorts have decreased bets on the falling Yen for a fifth week. Frequently (and wrongly) traders increase bets and leverage when trades are going their direction. If anti-yen sentiment is unwinding in the face of this continued drop, that can easily be a sign the Yen is still not ready for a bounce. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Federal Court of Appeals Upholds Stripping of Collective Bargaining Rights of Public Unions; Union-Busting is a Godsend Posted: 19 Jan 2013 08:26 AM PST Those looking for excellent news in the midst of a clearly-souring global economy can find it in Wisconsin. I am pleased to report Federal appeals court upholds Wisconsin Gov. Scott Walker's restrictions on public unions A federal appeals court on Friday upheld Wisconsin Gov. Scott Walker's contentious law stripping most public workers of nearly all of their collective bargaining rights in a decision hailed by Republicans but not undoing a state court ruling keeping much of the law from being in effect.
The decision marks the latest twist in a two-year battle over the law that Walker proposed in February 2011 and passed a month later despite massive protests and Senate Democrats leaving for Illinois in a failed attempt to block a vote on the measure.
The law forced public union members to pay more for health insurance and pension benefits, which Walker said was needed to address a budget shortfall. It also took away nearly all their bargaining rights.
Walker and Republican Senate Majority Leader Scott Fitzgerald, who fought for passage of the bill, called the ruling a win for Wisconsin taxpayers.
"As we've said all along, Act 10 is constitutional," Walker said in a statement, referring to the law's official designation.
While Friday's 2-1 ruling by a panel of the 7th Circuit could influence the state appeals court and others hearing the cases, it's not binding, said Paul Secunda, a Marquette University law professor. It certainly doesn't signal the end of the legal fights, he said, and it could be appealed to the full federal appeals court and the U.S. Supreme Court.
"The public unions will fight until every one of their arguments are considered in full," Secunda predicted.
The law in question prohibits most public employees from collectively bargaining on anything except wages. It also requires public unions to hold an annual election to see whether members want the organization to continue to exist, and it bars unions from automatically withdrawing dues from members' paychecks.
Walker specifically exempted public safety unions from the law's effects, however. He said he didn't want to risk police and firefighters going on strike in protest of the law's provisions.
The appeals court upheld the law in its entirety Friday. The judges said the state was free to draw a line between public safety and other unions. The state had a rational basis to protect the public safety unions and the law didn't explicitly discriminate against other public worker unions based on their political leanings, the court said.
"Distinguishing between public safety unions and general employee unions may have been a poor choice, but it is not unconstitutional," the opinion said. Poor Choice Indeed Let's review that last sentence above "Distinguishing between public safety unions and general employee unions may have been a poor choice, but it is not unconstitutional," the opinion said. I agree. It was a poor choice to exclude public workers. The way to rectify that poor choice is to pass another law, including public safety workers as well. I strongly endorse ending all collective bargaining "rights" of public unions. No "Right" to Collective Bargaining For starters there is no "right" to collective bargaining. I made the case at the height of the Wisconsin battle on March 21, 2011 in Collective Bargaining neither a Privilege nor a Right The battle cry from Wisconsin is a union complaint that their "right" to collective bargaining has been taken away. Nothing could be further from the truth. You cannot take away something that does not exist and never did.
Please consider this simple sentence straight from the Declaration of Independence.
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."
Public unions take away those "unalienable rights" via collective bargaining arrangements.
Five Ways Collective Bargaining Tramples Various Unalienable Rights
- Collective bargaining agreements take away the right of individuals to pursue a career of their dreams void of union affiliation
- Collective bargaining agreements force individuals into organizations against the free will of those members
- Collective bargaining agreements force union dues out of members who do not even want to belong
- Collective bargaining agreements dictate what members can and cannot do with their free time.
- Collective bargaining agreements even dictate what non-members can and cannot do with their free time!
I list examples for those five points in my article. Collective bargaining is no bargain for anyone. It is a curse on taxpayers. FDR agrees. Inquiring minds are reading snips from a Letter from FDR Regarding Collective Bargaining of Public Unions written August 16, 1937. All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.
The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.
Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.
A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable. The biggest socialist president in the history of the US even agrees there is no place for collective bargaining of public unions, and he states the case very well. Anyone who reads that logical explanation by FDR and disagrees, is a member of a union, has a family member in a union, or simply has a non-functioning mind. I call on governor Scott Walker to rectify the law as passed. Excluding public safety workers was a bad idea, and he knows it. So why did he do it? He barely won the first election (winning the recall by much more) and probably would not have won if he took on all the unions at once. For more on public union slavery, coercion, bribery, and scapegoating please see ... Union-Busting is a Godsend Actual Wisconsin results prove Union-Busting is a "Godsend"; Elimination of Collective Bargaining is the Single Best Thing one Can do for School Kids It's time to implement national right-to-work laws and put an end to public union collective bargaining nationally. I salute governor Scott Walker for leading the way. Now he needs to follow through. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Massive Fraud in Spain Threatens Entire Government of Prime Minister Mariano Rajoy; Protestors in Madrid Shout "Resignation" Posted: 19 Jan 2013 12:26 AM PST I am piecing together a story of fraud and corruption involving the highest levels of Spanish government. My unnamed sources think it could bring down Prime Minister Mariano Rajoy. However, the news articles I have (primarily in Spanish) are particularly choppy. The brief background story is "black money" (under the table fraud or bribes) was paid monthly to top Partido Popular (PP) party leaders. PP is the party of prime minister Rajoy. Amounts ranged from 5,000 to 15,000 euros per month, between executive secretaries, public officials and other members of the PP. Top party officials were aware of, approved, or were part of the scheme. Ex-Treasurer Hides €22 million in Swiss Account Starting with an article in English, the Irish Times reports Ex-treasurer of Spain's PP had €22m in Swiss bank The beleaguered government of Mariano Rajoy has been embarrassed by revelations that its party's former treasurer had a bank account in Switzerland containing up to €22 million.
Luis Bárcenas held the treasury post in the conservative Partido Popular (PP) from 2008 until 2009, when he resigned because of an investigation into his part in a massive fraud network. He stepped down from the party in 2010. The inquiry into that case continues and information a Spanish judge has requested from Swiss authorities shows details of an account held under the politician's name which coincides with the time he was managing the PP's finances.
The PP's deputy leader, María Dolores de Cospedal, hinted yesterday at the concern within the party's leadership. "Of course this will cause outrage, how can it not? I'm outraged by it," she said. However, she sought to distant the government from Mr Bárcenas by highlighting that he was no longer in the PP.
Tax evasion
In a further revelation about Mr Bárcenas's finances, his lawyer, Alfonso Trallero, yesterday said he had declared €10 million last year as part of a controversial tax amnesty introduced by the Rajoy government. The amnesty meant tax evaders could declare hidden assets and pay only a 10 per cent fine. PP spokesman Carlos Floriano said more details need to emerge to ensure justice is done. Tip of the Iceberg That story is just the tip of the iceberg El Economista reports " Black money bonuses paid to the dome of the PP during the last twenty years". I presume "dome" means top. Luis Barcenas [former treasurer] would have paid bonuses to black money from the dome of the Partido Popular (PP) for years, as published by the daily El Mundo quoted "five reliable sources" of successive addresses match. The extesorero, that information is distributed on every month with amounts ranging from 5,000 to 15,000 euros between executive secretaries, public officials and other members of the PP unit.
The newspaper [El Mundo] cited information notes that Rajoy took the supplements and never from 2009 Cospedal told I should put an end to a practice that had been common for 20 years. Would mean that the highest levels of PP and all officials who have passed through the address in the last two déccadas were aware of what was happening. therefore the action of the president of Castilla-La Mancha have been a turning point in the case of double pay within party. Protestors in Madrid Shout "Resignation" El Pais reports A thousand people are concentrated along the PP headquarters in Madrid About 1,000 people, divided into two groups, are concentrated from seven in the evening in the vicinity of the PP headquarters in Madrid Genoa Street, protesting political corruption, with a heavy police presence.
The congregation can not approach the PP headquarters as police installed a double security fence two hundred yards, at the confluence of Genoa Street Alonso Martinez Square and the Plaza de Colón.
From there, protesters shout slogans as "Resignation, resignation", "There's the cave of Ali Baba" or "In the envelopes you pay extra"
The concentration has been summoned through social networks emerged yesterday and motivated by news accounts in Switzerland the PP extesorero, Luis Barcenas. "Where is the money, ask the treasurer" and "Where are the sausages PP" are some of the slogans the protesters throwing both the group gathers in the Plaza de Alonso Martinez, as it is formed in the Plaza de Colón. There have been no incidents.
The demonstrators were watched by large numbers of riot police have been deployed in the area at least 35 police vans. The concentration has not been officially communicated to the Government Delegation in Madrid, which considers "illegal" the call and has stated that participants can be identified and punished.
Among the protesters were people of disparate ages for almost three hours in protest showed his anger with shouts like "Government resign" and "shame." Three high school teachers, who wore badges with the slogan 'in defense of public education', say Friday at this time go to the movies but when he learned of the announcement by Facebook, decided to change the plan. "We can not more. Require sacrificing basic rights while spread corruption money in envelopes. It's the last straw, "said one of them irritated. Powder-Keg Potential As protests go, 1,000 is not much of a protest. However, one never knows when the tipping point is reached. Arguably, the most likely outcome is this will all be swept under the rug with everyone turning their heads the other way, perhaps with prosecution of a few token officials. Then again, perhaps this turns into something far more significant. It should. Regardless, if not now, it's bound to happen. Spanish unemployment is 26.6%. Youth unemployment in Spain is an amazing 56.6% It will not take much of a spark to set things off. There is also a powder-keg and constitutional crisis in Spain's Catalonia region to consider (see Catalonia Drafts Declaration of Sovereignty, Announces Vote of Independence, Seeks Self-Determination in 2014) Eventually the lid off the pressure cooker in Spain is going to blow sky-high. Whether or not this story is the spark remains to be seen. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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