Mish's Global Economic Trend Analysis

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• ESM Banking License? Not Happening as Merkel Allies Harden Opposition
• 100,000 Workers in Spain Will Not be Paid Because Regional Government of Catalona is Broke
• Recent Gold Hype Sounds Like Grade-School Chant; Five Non-Hype Reasons to Own Gold

ESM Banking License? Not Happening as Merkel Allies Harden Opposition Posted: 31 Jul 2012 10:58 AM PDT So far it's been nothing but hot air and no action from ECB president Mario Draghi after he pledged to do whatever it takes to save the euro. One of the highly-touted ideas as of late has been a ESM banking license. However, the idea is not really new, and has been shot down repeatedly already. Nonetheless eurocrats like Jean-Claude Juncker, chairman of the eurogroup, keep bringing the idea up as if the answer will change.  It won't. Bloomberg reports Merkel Allies Harden Opposition to Granting ESM Bank License German Chancellor Angela Merkel's coalition rejected granting the permanent euro rescue fund access to European Central Bank liquidity via a banking license, as the Finance Ministry said it saw no need for any such move. The rules of the European Stability Mechanism don't provide for refinancing through the ECB, the ministry in Berlin said today in an e-mailed response to questions. The ministry isn't holding talks on the topic nor are secret meetings taking place on such proposals, it said. France and Italy are building support for a previously floated plan to allow the permanent backstop to wield unlimited firepower courtesy of the ECB, Germany's Sueddeutsche Zeitung newspaper reported today, citing a European Union official it didn't name. Leading ECB governing council members are among those who now back the idea, the newspaper said. Lawmakers from all three parties in Merkel's coalition immediately repudiated the suggestion. It is a "dangerous attempt" to bypass the ban on the central bank financing states directly, said Hans Michelbach of the Bavarian Christian Social Union. The Free Democratic Party's Rainer Bruederle told Die Welt newspaper such a mechanism is a "wealth-destroying weapon," while Norbert Barthle of Merkel's Christian Democratic Union said it won't happen. "Those who try to circumvent their own rules through the back door lose their legitimacy in the eyes of the public," Michelbach said in an e-mailed statement. "Financing debt by means of the printing press leads to growing inflation dangers." One would hope this message would sink through the thick heads of the eurocrats, but it probably won't.  OK Mario, ball is in your court. What are you going to do? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

100,000 Workers in Spain Will Not be Paid Because Regional Government of Catalona is Broke Posted: 31 Jul 2012 09:14 AM PDT The crisis in Spanish regional governments continues to escalate. El Pais reports Catalona Will Not Pay Hospitals or Private Centers and 100,000 workers are affected. This month, the Government of Catalona cannot tackle  payments owed to hospitals, schools, residences, social organizations, and children in care centers and workshops. These are the services provided by entities, public and private, funded by the Government but managed not depend on it. The move affects up to 7,500 associations and some 100,000 workers, according to the third sector. The news that the Government could not meet its commitments this month was confirmed on Monday after several days of negotiations with the affected entities. Sources from the Departments of Health and Welfare explained ten days ago it "could not meet the payments this month." Welfare, however, has ensured that other non-contributory pensions paid or the minimum income. The federations that warn-grouped after an emergency meeting with Social Welfare that many of them are on the verge of "collapse" in a situation "unprecedented". And is that the default is added to other cuts that have affected the sector this year, as 56% of the budget on labor market policies. The Catalan Association of Relief calculated that 63% of companies cannot meet the payroll this month. To alleviate this choke, Acra has asked for help from families, proposing that advance a couple of months of contributions. This is not the first time that the Government is obliged to defer payment of the concerts. It happened last September when he could only address 65% of the amount and the rest was paid by the end of the year. The idea that Spain can avoid a complete sovereign bailout seems pretty absurd at this point. The solution, of course, is a combination of default, a eurozone exit, work rule reform, and pension reform, but so far there is no rational discussion of those ideas at the highest levels. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Recent Gold Hype Sounds Like Grade-School Chant; Five Non-Hype Reasons to Own Gold Posted: 31 Jul 2012 02:08 AM PDT Reader David emailed a link to GATA, SHAKA ZULU, And The Coming Gold/Silver STORM! with a note "please see fit to write about this!!!" The article is by Bill Murphy, the Gold Anti-Trust Action Committee (GATA) chairman. Here are the key snips. To get right to the point, three quality sources told me three weeks ago that the gold and silver markets were going to take off in August and I have been pounding the table on such ever since. It is time for things to happen. As you know by now, I have been jumping up and down for fireworks to happen in August. We shall see. All I can say is that what has been brought to my attention over last three week period from the "best of" sources all points to the same conclusion. It will be nitty gritty time SOON. Perhaps that "soon" is "now" the way gold has traded the past three days. If what I think I know is correct, it will be time to pour it on our adversaries and send them running for the hills. Grade-School Chant As I read that, I was wondering what exactly I was supposed to comment on. Murphy has three sources, all unnamed.  Worse yet, Murphy will not even state what the news is. The entire posts smacks of the playground chant "I know something you don't know, a ha, and a hen, and a ho ho ho." There is no story here, there is not even a rumor. There is only a rumor of a rumor. I am commenting because I was asked. Seasonality Murphy has at least one thing going for his call: seasonality. August is generally (but not always) a good time to buy gold. If nothing happens, Murphy will be on his bull horn complaining of manipulation, singing the same tired chant about gold shorts suppressing the price of gold. Manipulations Is the gold market manipulated?  A better question is "what isn't?" Certainly the Fed manipulates interest rates. The LIBOR scandal proved banks acted to manipulate LIBOR. The rating agencies manipulated pure garbage into AAA rated securities. Nearly everything is manipulated to some degree. However, I do not believe it is possible to manipulate prices for decades against the long-term trend. If there has been an effort to suppress the price of gold it certainly has failed miserably. Gold has gone from $250 to $1900 and is now $1620. Yet, every time gold declines the conspiracy clowns scream manipulation as if the price can never go down ever. Now they are singing playground chants. Five Reasons to Own Gold There are plenty of reasons to own gold without all the needless hype. Gold is a nice insurance policy against a currency crisis and I think one is coming. When or what country kicks things off that crisis, I don't know, but I suspect it is more likely to be the Japan, Italy, or some other country in Europe as opposed to the US. Gold, contrary to popular myth, is actually a great hedge against deflation in the senior currency (clearly the US dollar). Physical gold is a currency that is not someone else's liability and cannot be printed electronically. Central banks (not just the Fed) have been pouring on the liquidity as the global economy moves from one crisis to another. Odds strongly favor more coordinated central bank liquidity moves, and those liquidity moves tend to benefit gold in the long-haul. Should the world return to a gold standard with a 100% gold-backed dollar, $1600 an ounce will likely look like an extreme bargain.  GATA would be wise to stop the needless hype and instead concentrate on fundamentals because "I know something but I ain't sayin' what" is sure a silly thing for anyone to be banking on. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Damn Cool Pics

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• Hottest Female Athletes on the 2012 U.S. Olympic Team
• Gun Ownership Around the World [Infographic]
• Is College Still Worth It? [Infographic]
• The Kitty Knight Rises And Kitty Of Steel
• People With Most Memorable Names In The 2012 London Olympics
• Plastic Surgery Gone Wrong
• Scion FR-S - Bringing the Sport Back to the Car [Infographic]

Hottest Female Athletes on the 2012 U.S. Olympic Team Posted: 31 Jul 2012 04:40 PM PDT Here is a list of the hottest U.S. female athletes at the 2012 Olympics in London. Diana Lopez Hometown: Sugar Land, TX Sport: Taekwondo Misty May-Treanor Hometown: Costa Mesa, CA Sport: Beach Volleyball Reed Kessler Hometown: Armonk, NY Sport: Equestrian Kara Patterson Hometown: Vancouver, WA Sport: Track & Field Jen Kessy Hometown: San Juan Capistrano, CA Sport: Beach Volleyball Amanda Furrer Hometown: Spokane, WA Sport: Shooting Jessica Hardy Hometown: Long Beach, CA Sport: Swimming Lauren Wenger Hometown: Long Beach, CA Sport: Water Polo Amy Rodriguez Hometown: Lake Forest, CA Sport: Soccer Corey Cogdell Hometown: Eagle River, AK Sport: Shooting Nicole Ross Hometown: New York, NY Sport: Fencing Jordan Larson Hometown: Hooper, NE Sport: Volleyball Aly Raisman Hometown: Needham, MA Sport: Gymnastics Heather Mitts Hometown: St. Louis, MO Sport: Soccer Dana Vollmer Hometown: Granbury, TX Sport: Swimming Candace Parker Hometown: Naperville, IL Sport: Basketball Logan Tom Hometown: Salt Lake City, UT Sport: Volleyball Julie Zetlin Hometown: Bethesda, MD Sport: Rhythmic Gymnastics Kara Goucher Hometown: Duluth, MN Sport: Track & Field Hope Solo Hometown: Richland, WA Sport: Soccer Morgan Beck Hometown: Coto De Caza, CA Sport: Volleyball Chloe Sutton Hometown: Roseville, CA Sport: Swimming Alex Morgan Hometown: Diamond Bar, CA Sport: Soccer Natalie Coughlin Hometown: Vallejo, CA Sport: Swimming Lolo Jones Hometown: Des Moines, IA Sport: Track & Field Via Complex

Gun Ownership Around the World [Infographic] Posted: 31 Jul 2012 12:16 PM PDT Late July 16, news broke of a brazen shooting that left two dead and 23 wounded after two people opened fire at a crowded barbecue in east Toronto. The murders made headlines around the world and kicked off renewed debate on gun crime in urban areas. By the end of the week, the debate reached a new level after a lone gunman entered a Colorado movie theatre and shot 70 people — killing 12 and wounding 58. The massacre sparked responses at every level of politics — up to Barack Obama and Mitt Romney — on if the government should step in with new regulations, or if stricter gun laws would have stopped the Colorado shooter. With this in mind, The National Post takes a look at gun ownership around the world compared with the rate of firearms-related deaths.

Is College Still Worth It? [Infographic] Posted: 31 Jul 2012 11:27 AM PDT A question sparking debates as tuition rates spiral out of control and unemployment for college grads hits record levels. Is a college degree worth it? For many the value of a degree is not just the earnings impact over a lifetime but the experiences and personal development that occur during these years. Maturing into a focused, passionate learner can help you find opportunities for career progression. With work taking up almost half of your waking hours each day, don't you want to spend your career working at a meaningful, empowering job? We do! Because if you love your job, magical things start to happen that are worth much more than your paycheck. Then the pay is just an added bonus. Our infographic below attempts to work through this important topic and weigh the pros and cons of going to college. Click on Image to Enlarge. By DegreeJungle.com "Is College Still Worth It"

The Kitty Knight Rises And Kitty Of Steel Posted: 31 Jul 2012 12:10 AM PDT Cat blogger Sweet Furr decided to dress her cats Cooper and Pancake up as the caped crusaders. I would watch this movie. As feline fans of the cape crusaders, Cooper and Pancake have thought about becoming superhero symbols themselves last Halloween. Surely, they could use their superpower of utter cuteness to fight crime. It's just too bad that they couldn't find magical glasses or masks to conceal their true identities. So they decided to hang up their capes, sit back and enjoy the true Dark Knight rise along with the up and coming Man of Steel.

People With Most Memorable Names In The 2012 London Olympics Posted: 30 Jul 2012 09:46 PM PDT These athletes not only have the honor of participating in this year's games but they have the funniest, most interesting, and coolest sounding names too. Yoo Suk Kim The worst part of being Yoo-Suk Kim is when people want to cheer for you. Destinee Hooker Jack Buttland Dong Dong Sarah Hammer Aye Aye Aung Queen Underwood Amina Bakhit Kathryn Fudge Jack Bauer Amit Kumar Amit Kumar Victoria Poon Hope Solo Hulk Soccer, Brazil. Fanny Babou Ole Magnus Bakken Zbigniew Bartman Karen Cockburn Romain Buffet German Sanchez Sanchez Lars Boom Sara Radman Yoshie Takeshita Liam Tancock James Honeybone Storm Uru Phillipp Boy Kelsey Titmarsh Chris Brown Via Buzzfeed

Plastic Surgery Gone Wrong Posted: 30 Jul 2012 09:22 PM PDT Altering your body through plastic surgery can be a very risky endeavor, but most of all it can be extremely embarrassing.

Scion FR-S - Bringing the Sport Back to the Car [Infographic] Posted: 30 Jul 2012 09:08 PM PDT In preparation for the arrival of the Scion FR-S this June, we've put together this handy infographic to let you know how Scion is bringing sport back to the car. Trace the DNA of the FR-S, a ride descended from Toyota's motorsport heritage. Get familiar with the stats and features that make the FR-S so unique. Pick the color that's perfect for you. Preview "The Scion Speedster," a FR-S concept car by Cartel Customs. Is it even possible to not be excited yet? Click on Image to Enlarge. Via: Scion.com

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