Central Perk: 11 oct. 2015

duminică, 11 octombrie 2015

Mish's Global Economic Trend Analysis

IMF Fears $3 Trillion Credit Crunch; Lagarde Says "IMF Credibility at Stake", Calls for US to Give China More Voting Power

Posted: 11 Oct 2015 08:56 PM PDT

IMF head Christine Lagarde says "IMF credibility is at stake". She blames the US for that development, and calls on US to give more voting power to China to solve the problem.

Link if video does not play: "IMF Credibility at Stake"

Credibility?

I have a simple question: Precisely what credibility does the IMF have?

To address my simple question, please consider the ZeroHedge report This Is How The IMF "Predicted" China's Slowdown

As the following chart compiling the IMF's various quarterly economic forecasts over the past 5 years clearly shows, what the IMF had actually forecast, was a constant hockeystick rebound in China growth starting in 2011... until 2014 when the monetary fund finally gave up.

Credibility Recovery

In a "credibility boosting" exercise Zerohedge comments ...

"The IMF's forecast of China's growth after the fact is now so negative, it is well below the consensus projections, as the IMF is all too happy to boast ..."

Ta-Da!

The IMF's credibility has been magically restored by impressive revisionist history. But as we see today, that credibility is once again at stake.

3 Trillion Credit Crunch Coming Up

Meanwhile, please note the IMF is concerned that a $3 Trillion Corporate Credit Crunch Looms as Debtors Face Day of Reckoning.

Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world.

Emerging market companies have "over-borrowed" by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF's Global Financial Stability Report.

This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF's twice yearly report.

Mercy!

Q. How did this happen?
A. The answer of course is corporations took on insane amounts of debts precisely as central banks and the IMF wanted them to do.

Q. Why did the IMF and central banks encourage this debt?
A. To help stimulate the global economy.

Q. Did it work?
A. Obviously not.

Q. So why do they think still more debt will fix a problem caused by debt?
A. You tell me.

Mish Proposal

If the IMF wants China in the name of credibility, please let them have it.

In return, I ask one simple thing: The US cuts off all IMF funding, as it should have done long ago.

Mike "Mish" Shedlock

TPP and Free Trade Canadian Style

Posted: 11 Oct 2015 10:57 AM PDT

As I have commented before alleged "free trade" agreements are anything but. We now have confirmation from Canada as to what it took for other signatories to agree to the monstrosity of TPP.

Reader TB passed along Alan Guebert's Free Trade's Cheap Talk is Big Money.

These easy-to-find challenges to NCBA's silly Trans-Pacific cheerleading point to several underlying myths at the heart of Big Ag's rock-ribbed belief that free trade is the past, current, and future salvation of American farms and ranches.

One myth is that all U.S. farm and ranch profits are tied directly to free trade. The Obama White House made that connection again Oct. 5 when it noted "roughly 20 percent of all farm income in the United States," is "provided" by "exports."

True, but farm income is not farm profit. If it were, U.S. net farm income would have risen when ag exports rose from $141 billion in 2013 to $152 billion in 2014. Instead, U.S. net farm income fell from $135 billion to $126 billion in that period.

Another myth about free trade is that trade agreements are about freedom to export. In truth, most trade deals "specify who will be protected from international competition and who will not," explains the Economic Policy Institute in its overview of the TPP.

Clear evidence comes from America's giant neighbor, Canada, whose ag minister announced his dairy and poultry farmers will be compensated for "any losses" caused by TPP before the deal was even signed. It confirms Nobel Prize-winning economist Joseph Stiglitz's long-held belief that free trade deals are "managed trade agreements, tailored for corporate interests…"

American farmers and ranchers know this in their bones but not their hearts. They are farmers and ranchers, not exporters. Big Agbiz — Cargill, JBS, Smithfield, ADM and the like — are global buyers and sellers who, when able to play both sides of any trade-leveled playing field the world over, rarely lose.

Maybe that's why the Big Boys aren't saying squat about the TPP; they got everything they demanded during negotiations. Now they want you to pressure Congress to pass it for them and their shareholders.

In fact, they're betting on it and, already, their bets are paying off.

Related Posts

Mike "Mish" Shedlock

Seth's Blog : Peak Mac

Peak Mac

The Grateful Dead hit their peak in 1977. Miles Davis in 1959, Warhol perhaps ten years later. It's not surprising that artists hit a peak—their lives have an arc, and so does the work. It can't possibly keep amazing us forever.

Fans say that the Porsche arguably hit a peak in 1995 or so, and the Corvette before that. Sears hit a peak more than a decade ago. It's more surprising to us when a brand, an organization or a business hits a peak, because the purpose of the institution is to improve over time. They gain more resources, more experience, more market acceptance... they're not supposed to get bored, or old or lose their touch. If Disney hadn't peaked, there would never have been a Pixar. If Nokia and Motorola hadn't peaked, there never would have been a smart phone.

One reason for peaking turns out to be success.

Success means more employees, more meetings and more compromise. Success means more pressure to expand the market base and to broaden the appeal to get there. Success means that stubborn visionaries are pushed aside by profit-maximizing managers.

An organization that seeks to continue its success, that wants to keep its promises to customers, employees and investors needs to be on alert for where the peak lies, and be ready to do something about it. And the answer isn't more meetings or more layers of spec.

I got my first Mac in 1984. I was a beta tester for the first desktop publishing program (ReadySetGo) and I've used a Mac just about every day for the last thirty years. It occurred to me recently that the Mac hit its peak as a productivity tool about three years ago.

Three years or so ago, the software did what I needed it to. The operating system was stable. Things didn't crash, things fit together properly, when something broke, I could fix it.

Since then, we've seen:

Operating systems that aren't faster or more reliable at running key apps, merely more like the iPhone. The latest update broke my RSS reader (which hasn't been updated) and did nothing at all to make my experience doing actual work get better.

Geniuses at the Genius Bar who are trained to use a manual and to triage, not to actually make things work better. With all the traffic they have to face, they have little choice.

Software like Keynote, iMovie and iTunes that doesn't get consistently better, but instead, serves other corporate goals. We don't know the names of the people behind these products, because there isn't a public, connected leader behind each of them, they're anonymous bits of a corporate whole.

Compare this approach to the one taken by Nisus, the makers of my favorite word processor. An organization with a single-minded focus on making something that works, keeping a promise to users, not investors.

Mostly, a brand's products begin to peak when no one seems to care. Sure, the organization ostensibly cares, but great tools and products and work require a person to care in an apparently unreasonable way.

It's always tricky to call a peak. More likely than not, you'll be like the economist who predicted twelve or the last three recessions.

The best strategy for a growing organization is to have insiders be the ones calling it. Insiders speaking up and speaking out on behalf of the users that are already customers, not merely the ones you're hoping to acquire.

Most Apple parables aren't worth much to others, because it's a special case. But in this case, if it can happen to their organization, it can happen to yours.

[/rant]