Mish's Global Economic Trend Analysis |
- Montebourg Responds, Cites Normandy Landings and Barack Obama
- Greek Official Sends 2000 Cases of Fraud and Embezzlement of Public Money to Authorities, Zero Results
- Germany Warns Against "Silvio the Savior" (And That May Backfire); Fake Horse Race Odds Get Around Blackouts
- Reader Asks Me to Prove "Inflation Benefits the Wealthy" (At the Expense of Everyone Else)
| Montebourg Responds, Cites Normandy Landings and Barack Obama Posted: 20 Feb 2013 08:46 PM PST The amusing story of a letter from the CEO of Titan, regarding the unproductive nature of French workers, continues. For background please see Incredible Letter from CEO of Titan to France Minister of Industrial Renewal, Blasting French Unions and USA: "How Stupid Do You Think We Are?" I was pleased to beat all major English press outlets to the story and was able to do so because the letter from Titan to Montebourg was in English, but in image form, and posted on a French news site. Today I have Montebourg's response EXCLUSIVE Titan Montebourg promises' redoubled zeal, French customs also posted on Les Echo. However, Montebourg's response is in French and in image form. If a reader cares to submit an accurate translation, I will gladly post it. I expect it will be humorous. Anyone willing? Here is a Google translation of the Les Echos article, but it only gives a brief description of Montebourg's response. 'Les Echos' have obtained a copy of the Minister's response recovery productive vitriolic letter addressed to him by Maurice Taylor, CEO of Titan International. Arnaud Montebourg denounces the remarks "ridiculous than offensive," talks about La Fayette, the Normandy landings and Barack Obama. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 20 Feb 2013 04:36 PM PST Reader "Lefteris" from Greece writes ... Hi Mish, Batting Zero for Two Thousand From Google Translate Rakitzis: "I Sent 2000 Cases to Court and Not One Verdict" Mr. Rakitzis said that in 8 years in his position he sent to Justice 2000 cases of which not one decision has been rendered.Culture of Impunity Politicians on the take have no interest in strengthening the law that defines embezzlement of money in the public sector under 72,000 euros, a misdemeanor. Extortion, graft, and fraud is seen as a benefit of public "service". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 20 Feb 2013 12:45 PM PST Italians head to the polls on February 24-25 to replace the technocrat government of prime minister Mario Monti. Pier Luigi Bersani, who heads the centre-left Bene Commune (Common Good) coalition was considered a shoo-in a few short weeks ago, at least in the Chamber (the lower house of parliament). It's all up in the air now as Silvio Berlusconi, head of the centre-right Il Popolo della Libertà (the People of Freedom) has staged a massive rally in the polls (now blacked out). Berlusconi has been on a rampage lately blaming Germany and Chancellor Angela Merkel for the unemployment problems in Italy. It's a populist message that is resonating well with voters. Beppe Grillo's Movimento 5 Stelle (Five Star Movement) has been largely ignored in the Italian press, yet Grillo has been wildly popular at rallies. Grillo has a chance to come in second, and I would not be surprised by a first place finish. Mario Monti, who heads the centrist Con Monti per l'Italia (With Monti for Italy) coalition, is running a very distant 4th. "Fare per Fermare il Declino" (literally "Act to Stop the Decline", acronym FiD), is a primarily Libertarian party founded less than a year ago but until a recent stumble had been gaining enough steam to possibly overtake Monti. For further analysis of FiD and the other parties, please see European Reader Offers Insights on Upcoming Italian Election Poll Blackouts Officially, pollsters cannot post poll results in a blackout period before the election. That blackout period started February 9. Here is a snapshot of the polls on February 8.  Those results are misleading because they do not include undecided voters, and the undecided vote is a whopping 20-25 percent! With such little difference between Berlusconi and Bersani, and with huge rallies for Beppe Grillo and Berlusconi, any outcome is possible. Will Grillo take votes from Berlusconi or Bersani (or both). If enough of both I could even envision a win. If he takes more votes from Bersani, then Berlusconi is likely to win. From my experience, late deciders break in a massive way for one candidate or the other (and in the US election I predicted for Obama). Here, it appears against Bersani (to who is more uncertain). Fake Horse Race Odds Get Around Blackouts Adding more confusion rather than clarity, Yahoo!News reports Fake horse racing blog dodges Italy's election polls blackout A blog appears to have found a way around a publishing ban on polls in the two weeks before the vote by writing up the results of pretend "underground horse races", which appear to reflect each party's standing.It is difficult to say if those are official polling results or fictional. Assuming the polls are accurate (not an assumption I am ready to make), it is still difficult to know how undecided voters were handled. Germany Warns Against Berlusconi Of potentially more importance, Berlin Warns Italians against Berlusconi Here are a few examples from the story. German Finance Minister Wolfgang Schäuble reportedly said (but later denied) "Silvio Berlusconi may be an effective campaign strategist, but my advice to the Italians is not to make the same mistake again by re-electing him." Polenz, a senior member of Chancellor Angela Merkel's Christian Democrats, said: "Italy needs political leaders who stand for the future. Berlusconi is certainly not one of them." One Italian bank even went so far this week as to issue a report arguing that a Berlusconi election would almost certainly force the country to apply for emergency bailout aid from the EU. Mediobanca, Italy's largest investment bank, wrote that "a last-minute Berlusconi victory would scare the market sufficiently to put pressure on the spread." "Silvio the Savior" In Italy, the opposite is happening. Spiegel reports Berlusconi's Faithful: 'Only Silvio Can Save Italy' Adoration of Berlusconi in Italy remains widespread. In the parallel universe occupied by his followers, there is no room for doubt about Berlusconi and lines are clearly drawn. Silvio is good and the others are bad. Election Predictions It's difficult to judge from this side of the Atlantic, but things do not look good for a viable center-left coalition. At best, Bersani will win the Chamber and lose the Senate. That would likely result in a hung parliament. Anti-German sentiment in Italy is high already. The entrance of German politicians into the battle may fuel that sentiment in a major way. It is conceivable "Silvio the Savior" pulls off a stunning upset win in both the Chamber and Senate, but a Senate victory would still require a coalition (no party will come close to a majority). In theory, Movimento 5 Stelle and Silvio Berlusconi could form a nice anti-Euro coalition and put the Euro to a vote, but given the anti-political party platform of Movimento 5 Stelle it's hard to see that coalition forming. Indeed it may be difficult if not impossible for any party to form a Senate coalition if Monti's party does poorly enough (as I expect it will). The most likely outcome once again is a hung parliament, and the next most likely outcome may very well be a return of Silvio Berlusconi (rather than a weak center left coalition of some sort that most seem to expect). Regardless, Berlusconi is no savior (nor is there one to be found in the entire group). There are no good outcomes for Italy. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Reader Asks Me to Prove "Inflation Benefits the Wealthy" (At the Expense of Everyone Else) Posted: 20 Feb 2013 01:20 AM PST In response to Top 1% Received 121% of Income Gains During the Recovery I received a couple of emails from readers that I would like to share. Reader "Gordon" wondered how it was possible for a group to get 121% of income gains. Here is the example I sent Gordon. Mary, Tom, and Joe work for the XYZ Corporation. They are the only three employees. Mary's salary rose from $100,000 to $200,000. Tom and Joe were informed of hardships in the corporation and their salaries fell from $100,000 to $80,000 each. In the above example, net salaries rose by $60,000. Mary's salary rose by $100,000 (more than 100% of the total). Quantifying Inequality Reader "Z" writes ... "Inequality in the US has been rising since the 80s. How do you justify your theory that inflation benefits the wealthy? Not qualitatively, quantitatively." First, let's take a look at inflation as measured by the CPI (any alternative measure of inflation would suffice for this example). CPI Percent Change From Year Ago  click on any chart for sharper image Except for a brief period in 2009, price inflation has been positive. The question is "Who Benefited?" I claim it is those with "first access to money" namely banks and the already wealthy. A few charts courtesy of Doug Short at Advisor Perspectives will prove my point. Nominal US Household Incomes  From the above chart it appears the average and median household income has been growing nicely since 1967. If that's what you believe, think again. Real US Household Incomes  In "real" (CPI-adjusted) terms, 50% of households are no better off than they were in 1988. Let's dig a litter deeper. Growth in Real Household Income by Quintile  The above chart shows percentage income growth by quintile since 1967. Since 1988, the bottom, 4th and middle quintiles (a combined 60% of households) have negative real income growth. The next chart shows the same thing in a different way. Real Household Income by Quintile  No matter what your timeframe, only the top quintile did well. And from 1980 until 2000 the top 5% got the lion's share of income gains. Ponder on that for a bit, then consider the following charts on total net worth. Nominal Total Net Worth  Real Total Net Worth  Total net worth includes stocks, bonds, real estate, pensions, etc. I cannot precisely quantify quintiles but we all know (at least we should) who has the assets and who doesn't. The top 5 or 10% have most of the assets, the next 15% or so are OK and nearly everyone else is asset poor and high in debt. Millionaire Households The Wall Street Journal has some interesting stats on the Millionaire Population. According to the Chicago-based Spectrem group, there are now 8.6 million households in the U.S. with a total net worth (minus principal residence) of $1 million or more. There are now 1,078,000 households worth $5 million or more and about 107,000 people worth $25 million or more.Household Net Worth  Chart from Spectrem Group There are about 114 million households. Of that number 8.6 million (7.5%) have a net worth of $1 million or more. 37 million households have a total net worth of $100,000 or more. Thus, 77 million households (67.5%) have a net worth less than $100,000. Counting underwater houses, I suspect most of them live paycheck to paycheck and have minimal if not negative net worth. So who did inflation benefit? The answer is those with assets and those with first access to money: the banks and the already wealthy. The poor do not have assets, they have debt. In spite of the often-heard mantra that "inflation wipes away debt", I suggest otherwise. Income typically does not keep up with expenses, and most have too few assets to inflate. The poor (last on the credit totem pole) overpay for their assets with cheap credit given to them at precisely the wrong times (as happened right before the housing bust). Inflation Clobbers Those on Fixed Income In case you missed it, please consider Hello Ben Bernanke, Meet "Stephanie", my response to a reader on fixed income attempting to live on Social Security plus interest on a $16,000 CD. If routine price inflation did not benefit the banks and the wealthy at the expense of everyone else, we probably would not have it. The word that best describes the process is "theft". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More  |
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