vineri, 1 ianuarie 2016

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Millions of Foreign Visitors Overstay Visas: Precisely How many? No One Seems to Know; Does Obama Care?

Posted: 01 Jan 2016 03:01 PM PST

In the wake of terrorist activity in Europe and mass shootings in San Bernardino, Calif., that left 14 people dead and 22 wounded, some may be wondering: Are we tracking those in the US on Visas, and if so, how?

The answer, despite Federal laws that require tracking visa entrants, is the U.S. Doesn't Know How Many Foreign Visitors Overstay Visas.
The question from the congressman to the Obama administration official was straightforward enough: How many foreign visitors overstay their visas every year?

The reply was simple too, but not in a satisfying way. "We don't know," the official said.

The testy exchange during a recent congressional hearing between Representative Mark Meadows, Republican of North Carolina, and Alan Bersin, the assistant secretary for international affairs at the Department of Homeland Security, highlights what some law enforcement officials call a critical weakness in the United States foreign visa program.

Nearly 20 years ago, Congress passed a law requiring the federal government to develop a system to track people who overstayed their visas. After the attacks of Sept. 11, 2001, an entry and exit tracking system was seen as a vital national security and counterterrorism tool, and the 9/11 Commission recommended that the Department of Homeland Security complete a system "as soon as possible." Two of the 9/11 hijackers, Satam al-Suqami and Nawaf al-Hazmi, had overstayed their visas.

Since then, the federal government has spent millions of dollars on the effort, yet officials can only roughly estimate the number of people in the United States illegally after overstaying visas.

One widely cited statistic, from a 1997 report by the Immigration and Naturalization Service, puts the number of people who overstay their visas at 40 percent — which now would mean about 4.4 million of the estimated 11 million undocumented residents in the United States. Numerous lawmakers, including the Republican presidential candidates Marco Rubio and Ted Cruz, have used that figure when trying to describe the scope of the problem. But even that number has never been conclusively substantiated.

Federal agencies have not provided a new report to Congress on overstays since 1994, despite the congressional mandate.

In early 2013, Janet Napolitano, then the secretary of Homeland Security, testified before Congress that the agency planned to issue a report on overstay rates by December 2013. The agency did not follow through because officials said they did not have confidence in the quality of the data. Mr. Bersin said last month that the report would be issued in the next six months.

In 2004, lawmakers passed legislation that required Homeland Security officials to accelerate their efforts to create an automated biometric entry and exit data system.

Congress repeated its demand for a biometric exit system in 2007 and set a deadline for 2009. But the deadline passed, with the department putting into place only a handful of pilot programs.

Since then, the department has continued to struggle to meet this requirement. A 2013 report by the Government Accountability Office said the Department of Homeland Security had more than one million "unmatched" arrival records, meaning that those records could not be checked against other information showing that the individuals had left the country, but again the department could not offer a precise number.

Despite the call by some lawmakers for an exit system, airports and the airline industry have balked because it would cost airlines $3 billion, according to a 2013 Homeland Security estimate. The Department of Homeland Security issued regulations in 2008 requiring airports to collect biometric exit information, but carriers have largely ignored the regulation, and there have been no sanctions.
Questions Abound

  • What will the US do if someone doesn't leave who is supposed to? Ignore the problem hoping it goes away? Issue alerts? Round up the illegals and deport them?
  • What about the presumed 4.4 million already here on expired visas?  
  • Is the US prepared for a Trump-like deportation proposal?
  • Is the US comfortable with an Obama-like welcome with no background checks?

Uncomfortable Questions

The above questions are uncomfortable, but must be asked.

Unless there is a comprehensive and workable overall plan, a biometric program will not do much in and of itself but add to expenses and increase delays.

This visa issue further compounds the issue of illegal aliens. Hillary prefers to label the illegals "undocumented".

Those here with expired visas were documented, and they entered the US legally. Both groups are now here illegally, so let's not mince words. The term "illegal" applies in both cases.

Political correctness aside, those who wish to differentiate might consider the phrase "illegal, undocumented alien" as the most accurate description for those who entered the US illegally, with no documents.

Popularity of Trump

Part of the popularity of Donald Trump is that he at least has some semblance of plan. That he doesn't care who his plan offends likely helps his campaign. Whether or not the plan is truly workable doesn't matter for now.

The primary alternative seems to be blanket amnesty for those already here combined with no background checks on refugees coming in.

Is there a middle ground somewhere? or not?

Mike "Mish" Shedlock

California Referendum Would Force Politicians to Wear Logos of Donors

Posted: 01 Jan 2016 10:59 AM PST

In California, citizens can propose a referendum on anything if they gather enough signatures.

John Cox, a wealthy attorney who made a fortune in real estate, is tired of politicians who are bought and owned by corporate interests.

He is putting up $1 million to gather signatures for a referendum that would Force Politicians to Wear Donor Logos.
A wealthy Republican wants to require unprecedented transparency in California by forcing state politicians to plaster their suits and dresses with the logos of their top 10 donors -- and voters fed up with those politicians may actually get the chance to vote on the idea in November.

The unusual dress code is offered in a proposed ballot initiative that backers say likely will be cleared for signature collection within the next week or two. Then, 365,880 valid signatures will have to be submitted for a spot on the ballot.

Initiative sponsor John Cox, an attorney who owes his fortune to real estate, says he doesn't foresee a challenge in the threshold, which is relatively low due to poor 2014 voter turnout. Cox says he expects a boost from popular anti-establishment sentiment reflected in the presidential race.

Cox says he's seeking the endorsements of GOP presidential front-runner Donald Trump and Democratic candidate Sen. Bernie Sanders, both of whom have rallied passionate supporters in part by denouncing their rivals as indentured servants to corporations and other wealthy donors.

"It's going to be immensely popular," Cox says. "We have a system under which people who want something from government fund the campaigns of the people who make those decisions. In any other solar system that would be considered corrupt."

"It actually would raise some fascinating issues if it were to be applied," says George Washington University law professor Jonathan Turley. "Politicians could challenge the law as applied in how the determination is made of the top donors when most money may come from individuals," he says, as "lobbyists often donate as individuals rather than as representatives of their companies or clients."

Timothy Zick, a law professor at the College of William and Mary, is more skeptical of the initiative's ability to survive a legal challenge. The idea, he says, "strikes me as a textbook case of invalid compulsory speech."

But Cox says he can't imagine who would want to have their name on any such lawsuit, and says that finding donor information online is too arduous.
Cut out the Middleman

I have commented on more than one occasion about waste inherent in the current system.

Since lobbyists write virtually every piece of legislation, my sarcastic proposal was to cut out the middlemen by directly electing lobbyists. At least we would have some bit of honesty.

Cox's referendum would accomplish nearly the same thing.

Truth in Lending Extension

Although Fed members are appointed, not elected, how about JP Morgan, Citigroup, Bank of America, and National Association of Realtors (NAR) logos on Janet Yellen and Ben Bernanke?

Mike "Mish" Shedlock

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Seth's Blog : Expectations



Expectations

Lower the expectations that you'll find an easy way out.

Raise your expectations for what you can contribute.

Lower your expectations for how effective that next shortcut is going to be. 

Raise your expectations about what technology can do for you if you patiently push it.

Lower your expectations about how an angry fight can help you win something you care about.

Raise your expectations for how much consistent daily action can transform your status quo.

Lower your expectations of finding a fairy godmother.

But raise them about the power of concrete goals that keep you from hiding.

{Level up. Everything I write about hinges on the idea that we are capable beings. Capable of making decisions, of taking responsibility, of raising and lowering our expectations.

As we move into a new year, today's a perfect day (in many countries, a legal holiday) dedicated to thinking about levelling up, about what it means to make new choices about what we will do next.

That's why today is a good day to tell you that we've opened applications for the fourth session of the altMBA workshop. 

altMBA alumni work at companies large and small, unknown and famous, but what what they all have in common is that they've made a choice. They've acknowledged that they are capable of levelling up, and they have.

You will learn to see differently and more important, to help others take action.

It's your turn. I hope you'll take a look before our deadline on Wednesday.}

Happy new year.

       

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joi, 31 decembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Expect a Huge Jump in Layoffs in 2016; Eye on Initial Unemployment Claims: Have they Bottomed?

Posted: 31 Dec 2015 12:53 PM PST

I have a watchful eye on initial unemployment claims. They have been trending higher (unexpectedly of course) since mid-October.

Initial Claims 2015



Econoday economists were surprised by the jump.
Initial jobless claims unexpectedly jumped 20,000 to 287,000 in the December 26 holiday week, the highest level since the July 4 holiday week. The Econoday consensus expected an increase of 3,000 to 270,000. The 4-week moving average was up 4,500 to 277,000 in the December 26 week, the highest since the July 18 week. The level of continuing claims increased 3,000 to 2.198 million in the December 19 week. The seasonally adjusted insured unemployment was unchanged at 1.6 percent in the December 19 week. It should be noted that readings in this report can be volatile during the holiday weeks.
Long-Term Perspective



A long-term chart shows the claims are still at historic lows dating all the way back to the 1970s. Does that imply there is little cause for concern?

Let's look at the chart another way.



That chart shows recessions sometimes start with year-over-year changes still negative and sometimes not. Moreover, there is a tremendous amount of noise as evidenced by huge swings that did not lead to recession.

Low claims in and of themselves are pretty inconclusive even though huge spikes tend to mark recessions.

Where to in 2016?

Jobs have been strong, but some of us believe part-time jobs and Obamacare artifacts have skewed the numbers. Regardless, jobs are a hugely lagging indicator, even if you believe the numbers.

Since there was a burst of seasonal hiring, it stands to reason there will be a burst of seasonal firing.

With corporate profits under pressure from rising wages, and with many big box retailers struggling, upcoming layoffs are likely to be huge.

Recent PMI reports provide clues as to where things are headed:


Manufacturing is in an outright recession, and services are weakening.  It stands to reason, jobs will follow.

We will find out in the January jobs report, to be released Friday, February 5, 2016.

Mike "Mish" Shedlock

Chicago PMI Crashes, New Orders and Backlogs Plunge to May 2009 Level; Service Economy Headed for a Slowdown?

Posted: 31 Dec 2015 10:48 AM PST

The Unexpected Strikes Chicago Again

It was another disastrous month for the Chicago PMI. Economists expected a bounce back from last month's unexpected dip into negative territory. Instead the numbers reflect what's best described as a two-month crash.

The Econoday Consensus Estimate was a guess of 50 in a range of 48 to 53. The actual reading of 42.9 was far below any economist's estimate.
The December Chicago PMI tumbled to a reading of just 42.9, down 5.8 points. The reading was a fresh 6-1/2 year low and the seventh contraction this year. It also was far below expectations of a breakeven reading of 50.

The biggest contributor to the decline was a 17.2 point plunge in order backlogs, to 29.4, marking their eleventh consecutive month in contraction. December's reading was the lowest since May 2009. The index also was depressed by ongoing weakness in new orders, which contracted at a faster pace, down 5.3 points to 38.8, the lowest level since May 2009. Both production and employment fell into contraction.

The only component to expand at a faster pace was supplier deliveries, although some companies noted that the rise was influenced more by logistics issues during the holiday season and in preparation for Chinese New Year on February 8. The PMI continued to feel the ill effects of general sluggish demand and lower energy prices, which have left their mark on Chicago area companies, along with the stronger U.S. dollar. Moreover, well above normal temperatures has impacted many businesses that rely on cold weather.
Ahead of the release this is what Econoday had to say:
The Chicago PMI is a one of a kind, a regional report that tracks the whole scope of the economy, at least for Chicago. Big swings are the norm but one isn't expected for December with the consensus calling for what would be a small 1.3 point gain for this index to dead even 50, which is about where this index has been trending.
Chicago PMI Index vs. ISM



It does not appear to me the index has been trending around 50 as Bloomberg suggests. The three jumps above 50 are counter-trend in a series that has been weakening for about a year.

Service Economy Headed for a Slowdown?

The Chicago PMI is a bit different because it contains a mix of both manufacturing and service companies. That makes matters worse given economists generally consider the service economy to be in good shape.

Last month when the PMI dipped for the 6th time in 10 months (now 7th time in 11 months), I asked the question Service Economy Headed for a Slowdown?

Here is the pertinent snip: 
Bloomberg proposes the volatility of the report should limit its impact on the month's outlook.

I suggest volatility is a sign of a trend change as well as underlying weakness. And the backlog of orders, one place where there has been consistent contraction for 10 months, does not bode well for future hiring needs.

All things considered, the Chicago PMI is a warning that the service economy may be on its last legs.
Reflections on the Weather

This month, Bloomberg relies on the old standby: the weather.

Damn that weather. It's always too hot, too cold, or too right. This month it was too pleasant.

Heading into the reports, it's pretty clear the economists did not know the Chicago weather was too good, otherwise they would have lowered their forecasts.

Economists only learned Chicago's weather was too good following the PMI release today. Amazingly, economists don't even know about massive snowstorms until economic reports come out weeks later.

Sorry State of Chicago

Weakening services coupled with the biggest property tax hike in history will not do wonders for the Chicago economy.

For more on the sorry state of affairs in Chicago and the state of Illinois as a whole, please see ...


Mike "Mish" Shedlock

Seth's Blog : Fighting entropy



Fighting entropy

It's not easy to run a supermarket. Low margins, high rents, perishable products... Even A&P, once dominant, is now gone.

My new favorite supermarket, by a large margin, is Cid's. 

It's not that he's in a perfect location, or that his store has the advantage of no competition.

How does he do it? Fair prices, great stuff where you least expect it, a staff that cares...

He's in the store, every day. And his son is too.

My only theory is this: He fights mediocrity every single day.

He regularly refuses to compromise when compromise might be easier in the short run.

Mostly, he cares. A lot.

Entropy and the forces of mediocrity push hard. People who care push back.

       

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miercuri, 30 decembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


NSA Spied on Israeli Prime Minister During US-Iran Nuclear Negotiations

Posted: 30 Dec 2015 01:28 PM PST

In an unexpected confirmation of what every thinking person realized upfront, the Guardian reports US 'spied on Binyamin Netanyahu during Iran nuclear deal talks'
Despite Barack Obama's promise to curtail eavesdropping on allies in the wake of the Edward Snowden revelations about the scale and scope of US activities, the National Security Agency's (NSA) surveillance included phone conversations between top Israeli officials, US congressmen and American-Jewish groups, according to the Wall Street Journal.

The White House did not confirm or deny the report. Ned Price, spokesman for the National Security Council, said on Wednesday: "We are not going to comment on any specific alleged intelligence activities. As a general matter, and as we have said previously, we do not conduct any foreign intelligence surveillance activities unless there is a specific and validated national security purpose. This applies to ordinary citizens and world leaders alike."

Relations between Obama and Netanyahu have often been described as strained. The NSA reports allowed Obama administration officials to peer inside Israeli efforts to turn Congress against the Iran deal, the Wall Street Journal said.

The surveillance allegedly revealed how Netanyahu and his advisers had leaked details of the US-Iran negotiations, which they learned through Israeli spying operations. Last March, Israel denied reports that its security forces spied on the negotiations between Tehran and major powers over Iran's nuclear capacities.
Security Threats

Who constitutes a validated national security threat? The answer is anyone and everyone still breathing.

Mike "Mish" Shedlock

A "Mish Together" January 5, 2016

Posted: 30 Dec 2015 12:22 PM PST

Chris Temple, a friend of mine, and author of the National Investor newsletter is passing my way (Crystal Lake, Illinois) on his annual snowbird trip from Wisconsin to Florida.

I know Chris as a fellow panelist at several Chicago Area Natural Resources conferences.

I invited him over for dinner, but after some discussion, we elected to open the invite to anyone who is in the area and wants to come for dinner, or just drinks and appetizers for those who prefer something light.

Date: Tuesday, January 5, 2016
Time: 7:00 PM
City: Crystal Lake, Illinois
Place: Village Squire Restaurant - 4818 Northwest Highway - Crystal Lake, Illinois

For those who want to come a bit earlier, Chris and I will be at the bar at 6:30 PM.

There are several Village Squire locations. Pick the one in Crystal Lake. Here's a Google Map.

If you can make it, please: Send an Email Confirmation.

After dinner, there is a nearby karaoke bar for those who want to sing or have further discussion over drinks.

It should be a fun evening. You can ask questions about anything that is on your mind.

Mike "Mish" Shedlock

Pending Home Sales Decline 0.9%, Well Below Lowest Estimate; About that "Know Before You Owe" Theory

Posted: 30 Dec 2015 11:06 AM PST

Today the NAR released the Pending Home Sales Index, a measure of expected sales on existing homes. The Econoday Consensus Estimate was for a 0.5% rise in a range of 0.0 to 2.4%.

No economist got the sign correct. The index unexpectedly declined 0.9% month-over-month, well below even the lowest economist's estimate.
Pending home sales in November declined for the third time in four months as buyers continue to battle both rising home prices and limited homes available for sale. The pending home sales index was down 0.9 percent but up 2.7 percent from a year ago. Modest gains in the Midwest and South were offset by larger declines in the Northeast and West.

November's dip continued the modestly slowing trend seen ever since pending sales peaked to an over nine year high back in May. NAR said that home prices rose too sharply in several markets, there were mixed signs of an economy losing momentum and waning supply levels all contributed to headwinds in recent months despite low mortgage rates and solid job gains.

The Northeast decreased 3.0 percent but is still 4.3 percent above a year ago. In the Midwest the index rose 1.0 percent and and is now 4.1 percent above November 2014. Pending home sales in the South increased 1.3 percent and are 0.5 percent higher than last November. The index in the West declined 5.5 percent but remains 4.5 percent above a year ago.

Recent History Of This Indicator

Pending home sales are expected to rise a solid 0.5 percent in November vs. a softer 0.2 percent rise in October. The expected gain would point to a badly [needed?] increase for final sales of existing homes which were depressed in November by new disclosure rules and related time delays.
About that "Know Before You Owe" Theory

Ahead of the release, Bloomberg parroted the NAR line that disclosure rules affected November existing home sales.

I wrote about the rule changes on December 22, in Existing Home Sales Plunge 10.5%, NAR Blames "Know Before You Owe"; What's the Excuse for Last Month?

The rule change, dubbed "Know Before You Owe", was a simplification of disclosure rules. It became effective on October 3. I failed to see how a decline in November was related to simplification of rules that actually took effect the previous month.

Bear in mind, that the NAR called a dip in October "disturbing" but in November placed the entire blame on the "Know Before You Owe" rules.

If the rule change theory was correct, delays in November would have pushed into expected closings in December. The Econoday economist guessing a rise of 2.4% probably believed that theory. Instead, we see a plunge.

Of course the index itself could be wrong, so we have to wait for the actual December numbers. But as it sits, the most likely thing is blaming "Know Before You Owe" was simply a bad call.

Today, the NAR blames "home prices that rose too sharply in several markets".  I find that a much better theory, especially if we replace the word "several" with the word "most".

What about the NAR's perpetual "never a better time to buy" thesis? Is the NAR willing to toss that theory on the ash heap of history?

Don't hold your breath.

Mike "Mish" Shedlock

Drastic Action

Posted: 30 Dec 2015 12:28 AM PST

In Misguided Plans to Fix the Fed Part 1: Bernie Sanders I proposed abolishing the Fed. That's something I have stated many times over the past decade.

Nonetheless, reader Harold wonders is that action would be a bit drastic. Harold writes ...
Hello Mish:

Don't you think totally abolishing the Fed is a bit drastic.  Theoretically if they could be stripped of any political influence and let the free market set interest rates their endless bubble production would be muted. I think their function of providing liquidity as a lender of last resort serves a useful function. Wasn't this the original purpose for creating the fed in 1913? I think their function has been bastardized by politicians and they have evolved into a tool of the government and the financiers. Free market capitalism can run the economy otherwise. 

I hope you have a healthy happy New Year.  Thanks for the great commentary.

Harold
Hello Harold. No I don't believe my solution to end the Fed is drastic.

Look at things this way: How can anyone determine the precise amount of steel, of oranges, of oil that the economy should produce?

If you do not think that is possible, then please tell me how a set of jackasses (or geniuses if you prefer) can possibly know where interest rates or the money supply should be?

In practice, the Fed has never once spotted a bubble or bust in advance. Nor does the Fed have any foresight in predicting economic growth. The Fed is perpetually overoptimistic as are economists in general.

Setting the price of orange juice would be far simpler than setting interest rates.

The Fed may have an alleged "function" but the result has been boom-bust cycles of increasing amplitude over time.

Mike "Mish" Shedlock

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