Mish's Global Economic Trend Analysis |
- Delinquencies and Defaults in Spain Hit 13%, a 50-Year Record
- Obama's Message On NSA Translated
- Greece Will Default in May Without Another Bailout or Change in Terms
- Canada Housing Bubble: Far Too Late for Warnings; Rule of Predictions
Delinquencies and Defaults in Spain Hit 13%, a 50-Year Record Posted: 17 Jan 2014 06:23 PM PST Looking for evidence of a recovery in Spain? So am I, but I sure don't see any. Via translation from La Vanguardia, please consider Bank Defaults Hit Record 13% in November. Delinquency ratio of banks, savings banks, cooperatives and credit institutions operating in Spain rose again in November to 13.08%, a level not seen since the data began to be collected, over 50 years.Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Obama's Message On NSA Translated Posted: 17 Jan 2014 12:12 PM PST Earlier today, President Obama gave a long-awaited and long-winded speech on the NSA. The Washington Post has the transcript. Here are my thoughts: Obama says we need more "balance" between security and liberty. The president would "not dwell on Mr. Snowden's actions or his motivations". I will. Edward Snowden is a national hero who should be given immunity from prosecution and welcomed back to the US. Instead of praising Snowden, the president says "the sensational way in which these disclosures have come out has often shed more heat than light, while revealing methods to our adversaries that could impact our operations in ways that we might not fully understand for years to come." I suggest the revelations by Snowden shed an immense amount of light into the downright scary surveillance tactics of the NSA. Obama says "I consulted with the Privacy and Civil Liberties Oversight Board, created by Congress. I've listened to foreign partners, privacy advocates and industry leaders. My administration has spent countless hours considering how to approach intelligence in this era of diffuse threats and technological revolution." That's completely believable. However, Obama failed to say "But heck, the discussion was meaningless, because I did what I wanted in the first place." Obama promised "reformed procedures" and "greater transparency to protect privacy". And here's a humorous statement: "I've made clear to the intelligence community that unless there is a compelling national security purpose, we will not monitor the communications of heads of state and government of our close friends and allies." In short, we will not monitor communications of foreign leaders unless we will. How comforting. I can sum up President Obama's entire speech up in a simple easy to understand graphic courtesy of reader "California Banker". "Trust Me!" (Just as you did with Obamacare). I promise "Change You Can Believe In!" (You can believe all you want, but there won't be any changes). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Greece Will Default in May Without Another Bailout or Change in Terms Posted: 17 Jan 2014 10:49 AM PST Cash flow analysis shows Greece is in serious trouble again in spite of having a current account surplus. Specifically, Greece needs a change in payback terms or another bailout or it will default in August, if not May. I use the words "will default" imprecisely. The only way Greece is making loan payments now is with money from the Troika. The scam works like this: bailout money is allegedly given to Greece, but Greece cannot really touch it. Instead the money goes right back to the Troika for interest and capital payments, with perhaps a miniscule portion finally getting to Greece. Realistically, Greece defaults on every payment already. Greece Bailout Cash Flow Even this game is in trouble now as Greek Cash Flow Charts show. Just two days before New year 2014, Antonis Samaras told his People that Greece would leave its bailout programme next year without needing a third aid package. "In 2014 we will make the big step of exiting the loan agreement," said the Greek PM in a nationally televised address. "In 2014, Greece will venture out to the markets again [and] start becoming a normal country… There will be no need for new loans and new bailout agreements".The major point of the primary current account surplus is that Greece now obtains as much in tax revenues as it needs to finance current debt (not counting interest and debt repayments to the Troika). If Greece can remain in a state of surplus, it can tell the Troika to go to hell, declare the bailout debt null and void, and shed its onerous debt burden. I suggest Greece should do just that. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Canada Housing Bubble: Far Too Late for Warnings; Rule of Predictions Posted: 17 Jan 2014 12:35 AM PST A recent parade of articles discusses the prospects of a pending Canadian housing bust. For example, The Globe and Mail reports Bank CEOs 'should be worried' about real estate. Ed Clark, Toronto-Dominion Bank's outspoken chief executive officer, is playing the contrarian card one more time, publicly arguing that he and his fellow bank CEOs should be cautious about the country's heated real estate market.The only thing I am confused about is why Ed Clark isn't concerned about a "full-blown bust". Pater Tenebrarum at the Acting Man blog notes Carney's Legacy: Canada's Credit and Housing Bubble. Tenebrarum quickly asks "How Long Before it Bursts?" Energizer Bunny Over the course of the past five years, every time I thought a major Canadian housing correction was coming, none did. Canadian housing has been like the "Energizer Bunny", going and going and going. Nonetheless the housing bust calls keep on coming. Short Notice The Financial Times reports Canada housing: On short notice. In the past five years, while other big developed economies have been suffering through the financial crisis, the average Canadian home price has risen 38 per cent to C$389,119 (US$355,000), according to data from the Canadian Real Estate Association. This has been driven in part by Toronto, where a condominium boom has driven prices to record highs.Rule of Predictions No one knows for sure precisely when any bubble will burst. I got the US housing bubble correct but missed Canada by a mile. I got the 2007 stock market bubble on the nose, but on this go around called a top on February 3, 2013: Extreme Sentiment: Barron's Cover "Get Ready for Record Dow - We Told You So"; Top Call. Here is the cardinal rule of predictions: Make enough calls and sooner or later you are going to look ridiculous. Even those who get things correct often look ridiculous at intermediate stages. I discussed a prime example of getting the call perfect but looking ridiculous along the way in Bubble Valuation Blues; GMO 7-Year Outlook for U.S. Stocks is Negative. Leverage Works Both Ways Make a play on major macro calls too early with leverage and you are wiped out. Had Paulson been a year early, he would have been fried to a crisp and we probably would never have heard about him. In general, you only hear about the successes, never the failures. The safest thing to do with bubbles is avoid investing in them at all, either way. There is no rule that says "one has to play the game". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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