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duminică, 7 septembrie 2014

Mish's Global Economic Trend Analysis

Marine Le Pen Ahead of Hollande in France Presidential Poll; Le Pen Blames EU for Crisis in Ukraine

Posted: 07 Sep 2014 12:10 PM PDT

French president Francois Hollande's term does not end until 2017, but for the first time ever Marine Le Pen's Front National party is on top in head-to-head polling.

Her father, Jean-Marie Le Pen once shocked France by taking Front National to round two in the 2002 election, but was defeated by incumbent president Jacques Chirac who obtained 82% of the votes.

The Financial Times reports Poll shows Le Pen beating Hollande in presidential run-off

Marine Le Pen, leader of France's far-right National Front, would beat struggling incumbent François Hollande in a run-off election for the French presidency, according to a new poll.

The unprecedented finding came as a fresh blow to Mr Hollande at the end of a week in which he suffered a cascade of bad news, including the publication of a lacerating book by Valérie Trierweiler, his former partner.

A poll for Ifop, published on Friday, showed that Ms Le Pen would beat Mr Hollande by 54-46 per cent if they were matched today in the decisive second round of the presidential election. The next election is due in 2017.

The survey confirmed an earlier poll showing Ms Le Pen leading all other contenders of left and right in the first round. But it was the first time she had been shown ahead of a mainstream candidate in the second round – a scenario regarded to date as unrealistic.

The Ifop poll followed another on Friday by TNS-Sofres giving Mr Hollande an all-time low approval rating of just 13 per cent.

Mr Hollande's 13 per cent approval rating compared with the 20 per cent floor hit during his term by Mr Sarkozy, who was shown by the Ifop poll beating Ms Le Pen in a presidential vote by 60-40 per cent.

Mr Hollande has little choice but to try to tough out his demoralising slump in the hope that his reform policies will finally revive the stalled economy, the root source of his problems. But his opponents scent blood.

"Inexorably, one senses the moment is coming when François Hollande finds himself completely paralysed," commented the rightwing daily Le Figaro, which published the latest polls.

Le Pen Blames EU for Crisis in Ukraine

Please consider Crisis in Ukraine is 'all EU's fault' – France's Marine Le Pen.

"The crisis in Ukraine is all the European Union's fault. Its leaders negotiated a trade deal with Ukraine, which essentially blackmailed the country to choose between Europe and Russia," Le Pen told Le Monde daily in an interview.

"The European Union's diplomacy is a catastrophe," Le Pen told RT's Sophie Shevardnadze in an exclusive interview in June. [See Marine Le Pen: EU robbed us of all liberties, we should fight to get them back]

"The EU speaks out on foreign affairs either to create problems, or to make them worse."

"Ukraine's entry into the European Union; no need to tell fairy tales: Ukraine absolutely does not have the economic level to join the EU," Le Pen told RT.

In her fresh interview with Le Monde, the National Front leader had a positive attitude towards Russian President Vladimir Putin and the economic model he builds.

"I have a certain admiration for the man [Putin]. He proposes a patriotic economic model, radically different than what the Americans are imposing on us," said Marine Le Pen.

Citing "admiration" for Putin is probably not going to play well with French voters.

And her assertion "The crisis in Ukraine is all the European Union's fault" is certainly wrong given the role the US played at Maidan, leading to the overthrow of Viktor Yanukovych, former Ukraine president.

Nonetheless she is correct regarding European Union's diplomacy being a "catastrophe". So is EU agricultural policy, tax policy, and countless other policies.

2017 is a long way away. Much can happen between now and the next election for both Hollande, and Le Pen. Will Hollande even survive that long?

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

Under Pressure From Democrats, Obama Delays Immigration Action Until After Midterm Elections

Posted: 07 Sep 2014 12:03 AM PDT

In June, President Obama promised executive action on immigration.

He lied.

With polls showing a mere 26% Approval Rating for Obama's Immigration Reform Policies, the president bowed to political pressure from his own party and delayed his immigration cram-downs until after the mid-term elections.

Please consider Obama to Delay Executive Action on Immigration.

President Barack Obama will delay executive action on immigration until after the midterm elections, White House officials said Saturday, a bow to political pressure from Democrats in tough Senate races who had complained the action could hurt their campaigns.

The delay breaks Obama's promise, broadcast from the Rose Garden in June, that he would act on his own by summer's end to fix as many problems of the immigration system as the law allows.

Now, White House officials say the president will act by the end of the year.

The official added: "The president is confident in his authority to act, and he will before the end of the year.

The executive action had been widely expected to ratchet back deportations and possibly offer work permits to people in the U.S. illegally, perhaps millions. It might also include administrative changes pushed by companies that would produce more legal visas for people seeking to work in the U.S.

On Saturday, Scott Brown, a Republican who is running for the Senate in New Hampshire, and has used immigration to challenge his opponent, Sen. Jeanne Shaheen, denounced the White House's move as cynical.

"President Obama's decision to delay executive action to grant amnesty to illegal immigrants until after the election is of little comfort to people like myself who believe in the rule of law," he said. "Make no mistake: President Obama plans to grant amnesty, it's just that he will cynically wait until after the election so as not to harm Senate Democrats like Jeanne Shaheen."

Senate Minority Leader Mitch McConnell (R., Ky.), who faces a tough challenger this fall, also denounced the move.

"What's so cynical about today's immigration announcement is that the president isn't saying he'll follow the law—he's just saying he'll go around the law once it's too late for Americans to hold his party accountable in the November elections," he said.

Voter Opinions

For a look at voter opinions, please see 26% Approval Rating for Obama's Immigration Reform Policies.

Democrats and Republicans alike disapprove of Obama's immigration plan.

A mere 26% of voters approve Obama's plans, and an even smaller 24% think the president has the legal authority to grant amnesty to these illegal immigrants without Congress' approval. And his own party does not approve of his plan.

Will that stop him? Of course not. He will do as he pleases after the election.

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

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Seth's Blog : Different kinds of broken systems

Different kinds of broken systems

From healthy to toast...

Something is broken, we know it's broken, we can fix it right away and we'll learn from it.

It's broken, we know it's broken, we fixed it, don't worry, but we learned nothing, it will break again, I'm just doing my job.

It's broken, we know it's broken, but we don't think we can afford to fix it.

It's broken, but we don't know it's broken.

It's not broken (it is, but we're not willing to admit it).

It's broken, we may or may not know it's broken, but mostly, we don't care enough to try to fix it, to learn how we could fix it better or even to accept help from people who care.

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sâmbătă, 6 septembrie 2014

Mish's Global Economic Trend Analysis

China Banking Crisis "Almost" Certain Says Senior International Economist; Global Banking Crisis "Is" Certain Says Mish

Posted: 06 Sep 2014 10:16 AM PDT

The Sydney Morning Herald warns about a 'clear and present danger': Australia to be Hit as Chinese Economy Unravels

Speaking at a conference on Thursday, the federal government's former top resources forecaster Quentin Grafton said the iron ore price was unlikely to recover quickly, leading to a painful downturn in the Australian economy in 2015.

"This isn't about doom and gloom, it's about looking at the risk and numbers. It's a clear and present danger," Mr Grafton said.

He said the Reserve Bank of Australia should prepare for a difficult ride as the overpriced property market and high dollar created a challenging economic environment as coal and iron ore prices dropped.

Mr Grafton's comments join an increasingly vociferous choir of concern about the Chinese economy, with investor fears stoked by a Chinese residential property market that is experiencing its worst slump on record.

The average price of new homes has been falling in China for months, with the rate of decline accelerating from June (0.5 per cent) to July (0.8 per cent), sending tremors through the economy. It dropped another 0.6 per cent in August, bringing the average to $US1737 per square metre.

Property market issues are of critical concern for the Chinese economy and global investment community, as the property sector is a key economic driver that contributed 15 per cent of China's 2013 gross domestic product.

China's property market woes are directly linked to the Australian economy as Chinese residential property construction is a leading consumer of iron ore, which accounts for $1 of every $5 of Australian exports.

The dropping demand and oversupply issues have caused the iron ore price to drop to a five year low. It is currently hovering around $US84.38 a tonne.

The next historic low would take a significant slide to $76 a tonne, a rate not seen since September 2009.

Commodity Producer Countries Will Be Hit Hard

I have been discussing the same setup for quite some time. One of the first on this train has been Michael Pettis at China Financial Markets.

China is going to slow, without a doubt, and commodity producer countries such as Australia and Canada will take a hit.

China Banking Crisis 'Almost Certain'

Here's an article that caught my eye, not for what it said, but rather for what it dis not say.

Please consider China banking crisis 'almost certain', warns economist Gabriel Stein.

China's financial system is "almost certain" to face a full blown banking crisis according to a senior international economist.

Gabriel Stein, of economic consulting firm Oxford Economics, told a Sydney audience on Tuesday that Chinese authorities were understating the extent of bad loans on their banks' books and faced tough choices in dealing with the potential bank failure.

"We don't know when there will be a China banking crisis and how it will play out but it is almost certain there will be one," said Mr Stein, a professor at the University of London who served as chief economist at consulting firm Lombard Street from 1991 to 2012.

"We do think the financial risks are high. Bad loans are understated.

"If you compare to 20 years ago, credit growth had been the same and the Chinese authorities owned up to about 30 per cent of non-performing loans in the banking system. They currently claim its one per cent"

Global Banking Crisis is Certain

Gabriel Stein is an optimist.

Remove the word "almost" in the above paragraphs and and replace it with nothing. Next, remove the word "China" and replace it with the word "global" and you have the true state of affairs.

Here Goes ...

"The global financial system is certain to face a full blown banking crisis. We don't know when there will be a global banking crisis and how it will play out, but it is certain there will be one."

With the Fed, ECB, Bank of Japan, Bank of China, Bank of England, and virtually every central bank on the planet all engaged in emergency tactics of some sort, with loans made that cannot possibly be paid back, with Japan off the deep-end in Abenomics, with covenant-lite junk bonds again on the rampage in the US and starting to gear up in Europe, with derivatives and unfunded liabilities in the trillions of dollars, and with the ECB recklessly pursuing ways to stimulate lending amidst major structural flaws with the euro, how the hell can there not be a global financial crisis of some sort?

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

Time to Give the Middle Class a Chance

Featured

Weekly Address: Time to Give the Middle Class a Chance

In this week's address, the Vice President discusses our continued economic recovery, with 10 million private-sector jobs created over the past 54 months. Yet even with this good news, too many Americans are still not seeing the effects of our recovery.

As the Vice President explains, there's more that can be done to continue to bolster our economy and ensure that middle-class families benefit from the growth they helped create, including closing tax loopholes, expanding education opportunities, and raising the minimum wage.

Click here to watch this week's Weekly Address.

Seth's Blog : Crucial elements for the placebo effect

Crucial elements for the placebo effect

Placebos, used ethically, are powerful tools. They can cure diseases, make food taste better and dramatically increase the perceived quality of art. They can improve the way teachers teach, students learn and we judge our own safety.

Not all placebos work, and they don't function in all fields. Here are some things that successful placebos have in common:

They do best when they improve something that is difficult to measure objectively.

Does this stereo sound better than that one? Is your headache better today than it was yesterday? How annoying was it to wait for the bus in this new bus shelter?

Sometimes the outcome is difficult to measure objectively because it's abstract, but sometimes it's because it's personal.

If you claim that a new driver makes a golf ball go further, a simple double-blind test is enough for me to know if your claim is legitimate, and if it's not proven, it's significantly harder for me to buy in, which of course is the key to the placebo effect working.

If I tell a teacher something about his students, and that knowledge causes the teacher to take a more confident approach, test scores will go up. But what the placebo did was change the teacher (hard to measure), which, by extension, changed the test scores.

Straining credulity is a real danger, one that denudes the effect of placebos.

In 1796, when homeopathy was first developed, we knew very little about atoms, molecules and the scientific method. As a result, the idea behind these potions was sufficiently sciencey that it permitted many people to convince themselves to become better. Today, informed patients find it can't possibly work, so it doesn't. The same thing is true for astrology, which was 'invented' before Copernicus.

Twenty years ago, audiophiles actually paid $495 for a digital alarm clock that made their stereos sound better. It faded fast, mostly because it was embarassing to admit you'd bought ridiculous magic beans like these. But today, $100 usb cables continue to be sold, because, maybe, just maybe, something is going on here. We're not sure we actually know enough about dielectrics and the skin effect to be sure.

Argue all you want about whether or not you want to be buying or selling placebos, but it's quite likely that the right placebo with the right story can dramatically increase certain outcomes.

If you want to improve performance, the right placebo is often the safest and cheapest way to do so. The opportunity is to find one that's likely to work, and to market it in a way that's ethical and effective.

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vineri, 5 septembrie 2014

Mish's Global Economic Trend Analysis

Lessons on Hornets and Bears; Ukraine Ceasefire a Victory for Common Sense

Posted: 05 Sep 2014 11:38 AM PDT

If you are looking for something to gag on today, please consider the Bloomberg View by Leonid Bershidsky Ukraine's Cease-Fire Is Putin's Victory.

...As for Russian President Vladimir Putin, he has secured a ringside seat and may settle down with a bowl of popcorn. Any outcome suits him as long as Ukraine struggles to get out of its impasse alone. He will be happy to see the Lugansk and Donetsk regions turn into a frozen-conflict zone, precluding Ukraine's further integration into NATO and the European Union, and equally pleased to have them gain broad autonomy from Kiev and a veto on major political decisions. A military solution suits him, too, since the West has refused to engage him except in the form of ineffectual sanctions.

Make no mistake about it: The ceasefire is a victory for Putin, a vindication of his aggression and duplicity. I just hope it ends the bloodshed.

Victory for Common Sense

While one can claim this is a victory for Putin, one should rightfully gag over Bershidsky's comment regarding "aggression and duplicity."

The US and EU fomented this crisis and now apologists for failed US policy don't like the results: Russia annexed Crimea and Ukraine may splinter.

Had this ceasefire not have been agreed to, rebels would have taken Mariupol. The city is now surrounded by rebel forces.

Let's accurately label the ceasefire for what it is:

A triumph of common sense over warmongers
A defeat of misguided US intervention policy
A defeat of those poking sticks at bears and hornets

It's also a victory for free trade given sanctions have been disastrous. Europe is back in recession and absurd sanctions are partially to blame.

Bloomberg has an appropriate example just today: Europe's Pears Rot as Putin Retaliation Pushes Down Price.

Lessons Yet to Be Learned

I don't know if this ceasefire will stick or not. But if it does stick, it will be because Ukraine gives in over US objections.

It's more up to Ukraine than anyone else. The rebels have made their demands known and I highly doubt they back down unless they get most of what they want.

The US ought to consider such outcomes before it goes poking sticks at bears that may bite, and hornets that sting.

Hornets and Bears

The US stirred up a hornets nest in Iraq. The end result is the destruction of Iraq and the formation of ISIS. The US now has another war to fight.

In Ukraine, the US helped incite the Maiden uprising.

Victoria Nuland, US ambassador to Ukraine stirred up trouble with her recorded comment "F*ck the EU" regarding US-EU differences of opinion on how to handle Ukrainian protests.

Those protests, stirred up by the US, eventually led to the ouster of then president Viktor Yanukovych. For a short while the US was thrilled with that result.

Historically, every time the US meddles in the internal affairs of other countries, it backfires. Vietnam is a perfect example. So are past CIA actions that led to the overthrow of the shah of Iran.

Yet here we go again, poking sticks at bears, recklessly seeking to move NATO on Russia's front door, not only against the wishes of Russia but also against the wishes of the Eastern half of Ukraine as well.

This time the bear did not back off, it bit off a piece of Ukraine. Now Bershidsky whines this is "vindication of Putin's aggression and duplicity."

No, it's more of a reflection on stupid US policy of poking sticks at hornets and bears, then getting the EU to foolishly go along for the ride.

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

Nonfarm Payrolls 142,000; Unemployment 6.1%; Employed +16K; Labor Force -64K

Posted: 05 Sep 2014 08:42 AM PDT

Initial Reaction

The payroll survey shows a net gain of 162,000 jobs vs. an expectation of 230,000 jobs. This broke a six-month string of +200,000 jobs.

Digging into the details, things look far worse.

The household survey shows a gain in employment of only 16,000. This is the fourth month in the last five that the household survey was substantially weaker than the headline number.

The average employment gain in the past five months is 125,200 vs. an average gain in jobs over the same period of 230,800 per month.

Is a trend forming? If so, it doesn't bode well. That said, the household survey is volatile and over time the data series merge. The question now is which one is right? At turns, the household survey tends to lead.

The labor force fell by 64,000. Those not in the labor force increased by 268,000. The unemployment rate fell by 0.1% thanks to a decline in the labor force greater than the rise in employment.

BLS Jobs Statistics at a Glance

Nonfarm Payroll: +142,000 - Establishment Survey
Employment: +16,000 - Household Survey
Unemployment: -80,000 - Household Survey
Involuntary Part-Time Work: -234,000 - Household Survey
Voluntary Part-Time Work: -136,000 - Household Survey
Baseline Unemployment Rate: -0.1 at 6.1% - Household Survey
U-6 unemployment: -0.2 to 12.0% - Household Survey
Civilian Non-institutional Population: +206,000
Civilian Labor Force: -64,000 - Household Survey
Not in Labor Force: -268,000 - Household Survey
Participation Rate: -0.1 at 62.8 - Household Survey

Additional Notes About the Unemployment Rate

The unemployment rate varies in accordance with the Household Survey, not the reported headline jobs number, and not in accordance with the weekly claims data.
In the past year the working-age population rose by 2,270,000.
In the last year the labor force rose by 524,000.
In the last year, those "not" in the labor force rose by 1,745,000
In the past year, the number of people employed rose by 2,189,000 (an average of 182,417 a month)

Please note that over the course of the last year, the working-age population rose by more than the number of people employed. In normal times, the unemployment rate would have gone up slightly. Instead, the unemployment rate fell from 7.2% to 6.1%.

Over 100% of the decline in unemployment in the past year is due to people dropping out of the labor force, rather than strength in the economy!

August 2014 Employment Report

Please consider the Bureau of Labor Statistics (BLS) July 2014 Employment Report.

Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate was little changed at 6.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services and in health care.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted

Nonfarm Employment January 2003 - August 2014

click on chart for sharper image

Nonfarm Employment Change from Previous Month by Job Type

Hours and Wages

Average weekly hours of all private employees has been flat for six months at 34.5 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours.

Average hourly earnings of private workers rose $0.06 to $20.68. Average hourly earnings of private service-providing employees rose $0.06 to $20.47.

For discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I keep this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.

Table 15 BLS Alternate Measures of Unemployment

click on chart for sharper image

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 6.1%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 12.0%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Labor Force Factors

Discouraged workers stop looking for jobs
People retire because they cannot find jobs
People go back to school hoping it will improve their chances of getting a job
People stay in school longer because they cannot find a job
Disability and disability fraud

Were it not for people dropping out of the labor force over the past several years, the unemployment rate would be well over 9%. Some of those dropping out genuinely retired. However, millions retired involuntarily. That is, they needed to retire and collect social security because they had no job and no income. Such folks are no longer in the labor force even if they want a job. The falling unemployment rate is very deceiving, painting a picture of improvement that simply does not exist.

A gallup survey on the economy better reflects how the average Joe feels: 38% Think Economy Getting Better, 56% Say Worse.

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

duminică, 7 septembrie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Your website on Google (now with social data and audit)

Seth's Blog : Different kinds of broken systems

Different kinds of broken systems

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sâmbătă, 6 septembrie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Time to Give the Middle Class a Chance

Seth's Blog : Crucial elements for the placebo effect

Crucial elements for the placebo effect

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