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miercuri, 24 iulie 2013

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Will You Watch Today at 12:55 PM ET?

America works best when we grow our economy from the middle-out, not the top-down. We're strongest when we're all in this together, when everybody has a shot at opportunity.

So when President Obama speaks from Knox College, Illinois today, he'll be speaking about that vision -- and what we need to do to rebuild the cornerstones of middle-class security.

Click here to watch that speech at 12:55 PM ET.

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Seth's Blog : The future is messy...

The future is messy...

and the past is neat.

It's always like that.

That's because the people who chronicle the past are busy connecting the dots, editing what we remember and presenting a neat, coherent arc. We can publish the history of Roman Empire in 500 pages, but we'd need ten times that to contain a narrative of the noise in your head over the last hour.

Even viral videos are easy to describe after they happen. But if these experts are so smart, how come they can never predict the next one?

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Mish's Global Economic Trend Analysis

China Manufacturing PMI Declines at Quickest Pace Since Last August
99% Believe the Economic Situation in Spain is Bad; How Much Worse Can This Get?
About that Austerity in Spain: There Isn't Any
Scranton Needs 117% Property Tax Hike to Balance Budget; Simple Truth: Scranton is Bankrupt
Fools Say "Sell the Gold Rally"

China Manufacturing PMI Declines at Quickest Pace Since Last August

Posted: 23 Jul 2013 08:50 PM PDT

The HSBC Flash China Manufacturing PMI shows China Manufacturing PMI Declines at Quickest Pace Since Last August.

Key points

Flash China Manufacturing PMI™ at 47.7 (48.2 in June). Eleven-month low.

Flash China Manufacturing Output Index at 48.2 (48.6 in June). Nine-month low.

PMI, Production, Exports

Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:

"The lower reading of the July HSBC Flash China Manufacturing PMI suggests a continuous slowdown in manufacturing sectors thanks to weaker new orders and faster destocking. This adds more pressure on the labour market. As Beijing has recently stressed to secure the minimum level of growth required to ensure stable employment, the flash PMI reinforces the need to introduce additional fine-tuning measures to stabilise growth."

Fine Tuning Needed?

Regarding Hongbin Qu's comment that "China needs to introduce additional fine-tuning measures to stabilise growth".

Mish says "please be serious".

China is supposedly growing at 7-8%. Such growth is not sustainable with or without "additional fine tuning".

Belief in central planners runs high. Such belief is foolish.

We do not need fine tuning, we need to eliminate fine tuners.

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

99% Believe the Economic Situation in Spain is Bad; How Much Worse Can This Get?

Posted: 23 Jul 2013 06:33 PM PDT

According to the latest Eurobarometer, 99% believe that the economic situation in Spain is bad.

Via Google translate from La Vanguardia.

79% of Spanish unemployment considered as the main problem of the country and 99% believe that the economic situation in Spain is bad, according to the latest Eurobarometer survey published today. In comparison, 51% on average in the European Union (EU) believes that the main challenge for the country is 72% unemployment and the economic situation is bad.

Regarding the future, almost half of the Spanish respondents, 46%, believes that the country's economic situation will remain the same over the next twelve months, compared to 15% who think it will improve and 37% who think it will be worse.

62% do not believe that the economic crisis has already had its biggest impact on the labor market and therefore the economy is recovering slowly, and, on the contrary, they think that "the worst of the crisis is yet to come".

How Much Worse Can This Get?

The good news is 99% negative consensus has little room to drop.

However, 15% think the economy will improve, 37% think it will worsen, and 46% think it will remain the same. 2% don't know.

That score can worsen, and it probably will.

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

About that Austerity in Spain: There Isn't Any

Posted: 23 Jul 2013 11:23 AM PDT

I have long contended there is little austerity in Spain and there certainly isn't much reform either. I now have some numbers to back that up.

Via Mish-modified Google-translation from El Economista, please consider personnel costs rise despite full state salary freeze.

Despite the 5% snip in public salaries in 2010, the subsequent wage freeze in 2011, the elimination of extra pay in 2012 and the current freeze in Administration salaries, the overall payroll became cheaper by a only 2.1% year-over-year to December last year.

The budget of expenses and monthly payments, which has been updated recently by the General Comptroller of the State Administration (IGAE), casts doubt on the effectiveness and / or proportionality of adjustments labor.

For example, until the end of May, the state paid 14.17 million euros to its temporary staff, an increase of 9.5% over last year.

This upward trend in payments to temporary staff is constant from the beginning of this exercise. since, January 31, 2013, these state payments increased 21.3 percent (4.13 million total) about 3.4 million higher than the same month a year earlier.

It may seem paradoxical, but in the last two two years, the State Administration has virtually the same costs for temporary staff. What it cut one year, it added back the next, in nearly the same amount.

Similarly, spending on senior positions in May 2012 was 29.7 million euros. It is now 29.86 million euros, an increase of 0.5%.

According to the General Comptroller, remuneration to civil servants decreased 2% from a year earlier.

However, despite this saving palpable in payrolls of officials, the State has not been able to lower their personnel costs, since payments until May totals amounted to EUR 10.184 million (10.139 million last year) , an increase of 45 million, representing an increase of 0.4%.

When Keynesian clowns point to Spain and say "austerity doesn't work", ask them "where is the austerity?" Also ask "where is the labor reform?" Then ask "where is the pension reform?"

Then kindly point out there is little to no austerity, and little to no reform, but there has been massive tax hikes, exactly the wrong thing to do.

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

Scranton Needs 117% Property Tax Hike to Balance Budget; Simple Truth: Scranton is Bankrupt

Posted: 23 Jul 2013 09:25 AM PDT

Those looking for the next city to go bankrupt should consider the possibilities in Scranton.

The Pennsylvania Economy League projects Scranton could be looking at $18 million deficit, 117 percent tax hike in 2014.

Scranton taxpayers could face a 117 percent increase in taxes next year as the city's finances continue to spiral out of control.

A new analysis by the Pennsylvania Economy League projects an $18 million deficit for 2014, an amount so massive it outpaces the approximate $17 million the struggling city collects annually in just property taxes.

Though council members did not extensively discuss the PEL letter Thursday, council Finance Chairman Frank Joyce said after the meeting, "The tax increase they (PEL) recommend is far too expensive for taxpayers to handle."

Mr. Joyce suggested that perhaps the city could refinance debt to implement a financial maneuver called a "scoop," in which higher debt service payments due next year are scooped out of the budget and swapped with lower payments due in future years. The city implemented such a scoop for the 2013 budget by refinancing debt to have lower debt-service this year than it otherwise would have had, Mr. Joyce noted.

"The city's definitely going to need help," Mr. Joyce said. "Maybe we can refinance debt to lessen the tax impact through a scoop. It may be viewed by some as kicking the can down the road, but it may prove to the state that we need a (countywide) sales tax."

Inane Discussion

PEL's proposal to raise property taxes is absurd. So are proposals for a countywide tax to bail out Scranton.

City bureaucrats and the PEL can hem and haw and piss and moan, but can-kicking exercises, "scoops", and tax hikes will only make the problem worse.

It's time for Scranton to face the simple truth. It is bankrupt.

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

Fools Say "Sell the Gold Rally"

Posted: 22 Jul 2013 11:02 PM PDT

Lee Munson of Portfolio LLC says "Sell the gold rally".

The question for investors and speculators alike is if gold has at long last marked the end of a wrenching nearly two-year pullback from the 2011 highs over $1,900. Lee Munson of Portfolio LLC says any rally marks a chance to make a graceful exit from their positions.

"Investors are confusing the fact that [gold] holds its value super long, hundred-year periods of time versus inflation versus making actual growth," Munson says in the attached video. "It just holds its value. That's not a reason to hold anything."

Those who quibble with that analysis, parsing the numbers to maximize the apparent returns of gold versus stocks are missing the point. Gold has worked over shorter periods as a speculative vehicle but the die hard goldbugs have seen minimal returns at best and dramatically underperformed stocks.

Since 1940 adjusted for inflation the only period over which gold has outperformed stocks is 2000 - 2010; and that lead is slipping fast. History suggests gold is extremely volatile in shorter terms but dramatically lags U.S. equities for the truly committed gold enthusiasts.

Munson has simple advice for gold investors enjoying the terrific rally from the recent lows. Sell. "Exit out of the trade. Get serious. Get real."

Disingenuous or Clueless?

I do not profess to know what the price of gold will be at any time, but Munson seems to think he does, so much so that he screams sell after a measly rally.

Munson is certainly clueless about the fundamentals of gold.

If you don't understand the fundamental driver (and it's not jewelry or central bank selling) please consider Plague of Gold Bears Now Say "Gold Unsafe at Any Price"; What's the Real Long-Term Driver for Gold?

Gold outperformed between 2000 and 20010 for a reason. And that reason is global central bank debasement of currency. Gold also outperformed in the late 70s for the same reason, but it did get ahead of itself.

Additional Reading

Cash, Bonds, Equities, or Gold?

You have to put your money somewhere (and somewhere includes cash).

This is not about being a "die hard gold bug". This is about understanding the case for gold as it exists now.

The fundamentals of gold are strong, yet sentiment is so extreme that bears says "gold is unsafe at ANY price". Now Munson says this puny rally is a chance to exit.

With sentiment this extreme in the face of strong fundamentals and a rally, I like my chances here.

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