Mish's Global Economic Trend Analysis

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• Egyptian Police Disappear in Widespread Chaos, Vigilantes Defend Homes; Egypt Video With a Message "We Will Never be Silenced!"
• Egypt Closes Banks, Stock Market; Protests Spread to Saudi Arabia, Jordan; Saudi King Backs Mubarak; Reflections on Misguided US Policy
• Creative Art of Bullish Excuses: Stock Market Still "Good to Go"; Hook Has Been Set
• Mubarak's Acts of Cowardice; Obama Calls Mubarak for 30-Minutes; Cell Service, Internet Total Shutdown; Anarchy in Cairo; How Long can Mubarak Last?

Egyptian Police Disappear in Widespread Chaos, Vigilantes Defend Homes; Egypt Video With a Message "We Will Never be Silenced!" Posted: 29 Jan 2011 08:14 PM PST Here is another video to consider, with video credit to Tamer Shaaban. It has close to 400,000 views when I saw it. I like one protester's message in the video ... "We will not be silenced. Whether you are a Christian, whether you are a Muslim, whether you are an atheist, you will demand your goddamn rights, and we will have our rights one way or the other! We will never be silenced! If the embed above does not play, here is a link: http://www.youtube.com/watch?v=ThvBJMzmSZI&sns=fb Egyptian Police Disappear in Widespread Chaos, Looting Spreads,Vigilantes Defend Homes Please consider Egypt vigilantes defend homes as police disappear Egyptians armed with guns, sticks, and blades have formed vigilante groups to defend their homes from looters after police disappeared from the streets following days of violent protests. Banks, junctions and important buildings previously guarded by the police and state security were left abandoned Saturday and civilians have quickly stepped in to fill the void. "There are no police to be found anywhere," said Ghadeer, 23, from an upscale neighborhood. "Doormen and young boys from their neighborhoods are standing outside holding sticks, razors and other weapons to prevent people from coming in." Police withdrew from the streets when the army was sent in to take over security in Cairo. Witnesses have since seen mobs storming supermarkets, commercial centers, banks, private property and government buildings in Cairo and elsewhere. Egyptians have called for army intervention to bring back law and order. Saturday, many protesters changed: "No to plundering and no to destruction. Dozens of shops across Egypt have painted display windows white to hide contents and discourage looting. A cash machine was broken in an upscale neighborhood, witnesses said. "They are letting Egypt burn to the ground," said Inas Shafik, 35. Several government buildings were set ablaze during days of protests against President Hosni Mubarak's 30-year rule. They were often left to burn without the intervention of authorities. Islamic leaders have in the meantime called on people to join vigilante groups to protect their homes themselves. Yet, scenes of looting appeared to spread from upscale parts of Cairo to downtown and poorer areas as well. Some 700 prisoners escaped in Fayoum, south of Cairo, and killed a senior police officer, sources said. Another senior police officer was also kidnapped in Damietta, a witness said. "They are torching down the prisons. Our lives and property are at risk. Get out of the way," one shopper shouted, echoing the anxieties of many as they raced to stock up at supermarkets. Others stayed penned inside their homes for fear of what they said were marauding gangs in some areas. Friday, looters broke into the Egyptian Museum -- home to the world's greatest collection of Pharaonic treasures -- and destroyed two pharaonic mummies, said Zahi Hawass, Egypt's top archaeologist. In walled-off estates on the outskirts of Cairo, private security locked down gates and refused to let people in. Ghadeer said: "The looters want to plunder and the government is washing its hands clean of any responsibility." 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.

Egypt Closes Banks, Stock Market; Protests Spread to Saudi Arabia, Jordan; Saudi King Backs Mubarak; Reflections on Misguided US Policy Posted: 29 Jan 2011 02:42 PM PST One sure way to get people fired up is to shut down the stock market and all the banks, thereby denying citizens access to their money. Yet, that is exactly the desperate course of action chosen by Egyptian President Hosni Mubarak. Protests have now spread to Saudi Arabia, and Jordan. So far however, the protests in Saudi Arabia are of a peaceful nature, mostly related to government response to flooding. Recent history suggests that may change at any moment into something far more significant. In a move that can easily backfire, the Saudi king defended Mubarak and offered support. Meanwhile, in Jordan, the pace of protests have now picked up as opposition supporters have held rallies in Amman and called for the resignation of Jordan's prime minister. Egyptian Bourse, Banks to Close Bloomberg reports Egyptian Bourse, Banks to Close Tomorrow on Unrest The Egyptian bourse will be closed tomorrow after thousands of protestors congregated in central Cairo for a fifth day and President Hosni Mubarak ignored demands to resign. Banks will also be shut, State TV said. "No one expected this to take place and at such a fast sequence of events," said Mohamed Radwan, head of international sales at Cairo-based Pharos Holding for Financial Investment. "The critical time frame for the market is from now until the implementation of economic and democratic reforms demanded by the people." Soldiers, backed by armored carriers and tanks, are guarding banks and government buildings in the capital after acts of looting and theft yesterday. Forty people were killed and another 1,100 people were injured yesterday and today in the clashes that have swept major cities including Cairo, according to the Egyptian Health Ministry. The government of Prime Minister Ahmed Nazif resigned today at Mubarak's request. Domino Effect Bloomberg reports Saudi Stocks Decline Most Since May as Egyptians Defy Curfew Saudi Arabian shares retreated the most since May on concern political unrest could spread in the Middle East after Egyptian protesters clashed with police and the North African country's president refused to resign. The Tadawul All Share Index tumbled 6.4 percent, the most since May 25, to 6,267.22 at the 3:30 p.m. close in Riyadh. All but one of the 146 shares fell. Saudi Basic Industries Corp., the world's largest petrochemical maker, slumped 7.5 percent. Savola Azizia United Co., a food producer with subsidiaries in Egypt, dropped 10 percent, the maximum fluctuation allowed in a single trading session. "There is a lot of worry looming among investors that we're going to see a domino effect across the region," said Amro Halwani, a trader at Shuaa Capital PSC in Riyadh. "That is pushing investors away from equities and straight into cash. It is panic selling across the board." Mubarak appoints leaders as protests rage MarketWatch reports Mubarak appoints leaders as protests rage Mubarak appointed his intelligence chief, Omar Suleiman, vice president and named former civil aviation minister Ahmed Shafik prime minister. Shafik was charged with setting up a new government. The appointment of the 74-year-old Suleiman may signal that Mubarak won't run again in presidential elections in September. But the appointments of Suleiman and Shafik didn't slow protestors' demands for Mubarak's resignation or immediately satisfy the Obama administration. "The Egyptian government can't reshuffle the deck and then stand pat," U.S. State Department spokesman P.J. Crowley wrote Saturday on Twitter. "President Mubarak's words pledging reform must be followed by action." Protests Call for Ouster of Jordanian Prime Minister Anti-government action in Jordan picked up and Jordanian Protesters Say Prime Minister Must Go Taking their cue from Tunisia and Egypt, an estimated 3,000 Jordanians marched through the streets after Friday prayers, demanding the resignation of Prime Minister Samir Rifai and calling for political and economic reforms. They warned corrupt Arab leaders would face the same fate as ousted Tunisian President Zine El Abidine Ben Ali. Peaceful protests were also held in the cities of Irbid, Karak, Maan, and Diban, AFP reported. Jordan has a population of six million, 70 percent of whom under the age of 30. Official unemployment is running at about 14 percent, but other estimates put joblessness at 30 percent. The government says it is pumping around $500 million into the economy to improve the people's standard of living. Peaceful Protests in Saudi Arabia In Saudi Arabia, Dozens of protesters arrested in Jeddah Dozens of protesters have been arrested in Saudi Arabia's second biggest city after they protested against the weaknesses of infrastructure of Jeddah. The protests were triggered on Friday after floods swept through the city, killing at least four people, and raising fears of a repeat of the deadly 2009 deluge, in which more than 120 people lost their lives. On Wednesday, torrential rains caused flooding that swept away cars and downed electric lines in Jeddah. The oil-rich kingdom lacks the basic necessary systems and structures to drain water out of the residential areas during a heavy rainfall. Given infrastructure is this bad, I have a simple question: What the hell is Saudi Arabia doing with all the oil money it receives? I also have an answer: It is going into the pockets of billionaire sheiks who have more money than they possibly know what to do with. The same could be said for multi-billionaires everywhere. Saudi Protest Video Saudi king vows support for Mubarak Inquiring minds are likely pondering the wisdom of this action: Saudi king vows support for Mubarak Saudi Arabia's King Abdullah ensures Mohamed Hosni Mubarak of his support amid nationwide protests against the Egyptian president's three-decade-long rule. In a Saturday telephone conversation with Mubarak, Abdullah Ibn Abdulaziz Al Saud described the popular movements as "tampering with Egypt's security and stability in the name of freedom of expression," AFP reported. The Saudi king branded the protesters as "intruders" and said, "Saudi Arabia stands with all its power with the government and people of Egypt." The comments came after a Human Rights Watch report lambasted Riyadh earlier in the week for mistreatment of women, foreign labor and the Kingdom's Shia minority. There is widespread approval among Arabs for the ouster of Egyptian President Hosni Mubarak. Offering support to someone who is clearly despised does not seem like a prudent move to me. Reflections on Decades of Misguided US Policy President Obama is attempting to play this from both sides as best he can. For more details on his phone conversations with Mubarak, please consider Mubarak's Acts of Cowardice; Obama Calls Mubarak for 30-Minutes; Cell Service, Internet Total Shutdown; Anarchy in Cairo; How Long can Mubarak Last? Egypt Calls in Army, Imposes Curfew; Mubarak Orders Ministers to Resign; US Puts Egypt Aid Under Review; Will the US Get this one Right? It's important to note that I am not talking about mistakes in current US policy but rather misguided policy decisions over the decades. We supported a corrupt Shah of Iran and look at the results. We supported Iraq on the hopelessly flawed theory "the enemy of my enemy is my friend." There are pictures of Rumsfeld shaking hands with Hussein. We gave chemical weapons to Iraq. Our intelligence do not see the takeover of the US embassy in Iran coming. Our CIA trained Bin Laden to fight Russia in Afghanistan. Now we are hunting Bin Laden and fighting in Afghanistan. We have wasted trillion of dollars in both Iraq and Afghanistan and all we have to show for it is more enemies. Contrast that that with our actions in Tunisia. We did not spend a dime, nor did our intelligence efforts even see it coming. Yet, in Tunisia, a protest by the people overthrew overthrew Tunisian strongman Zine el Abidine ben Ali. Wall of Fear Comes Down The La Times reports Fearless protesters challenge regimes around Middle East Reporting from Tunis, Tunisia — A wall of fear has come down. All across the Arab world, people living under the thumb of repressive leaders are rising up against the rulers who once seemed omnipotent. They are using the Internet to network and spread the word. They are watching themselves on satellite television. They are drawing strength from the hyperactive energy of the frustrated young people dismissed and discarded by their governments. It is a contagious spirit. "It's like a transition moment in the Arab world," said Mohammad Abou Rouman, a political researcher at the University of Jordan, in Amman, where protests erupted Friday. "It's the influence of the Tunisian domino, and it will not stop. It will go to other Arab states." The uprisings are having a ricochet effect across the Arab world. People are watching the events unfolding on television and Facebook and identifying with the people in the streets. "I was with my friends on Facebook, and we encouraged each other," said Dali ben Salem, a 25-year-old intern in pharmacy in Tunis. "The solidarity helped me to face the fear." And whether or not Egyptian President Hosni Mubarak manages to survive what one analyst called a political "tsunami" that is enveloping the Arab world, things will never return to normal, analysts said. War of the Future How much money did the US spend on misguided missile programs and misguided missile defense systems, only to be defeated by a group of hijackers with razor blades? Is there more of a threat from a suitcase bomb or a missile? How much money do we waste keeping troops in 140 countries where they are mostly not wanted? Please remember Bin Laden's primary objection to the US was that US troops were on sacred Arab soil. So why do we do it? What has it brought us but misery? We have caused countless trillions of dollars of destruction in Iraq, and in Afghanistan. Sadly, the war in Afghanistan is no more winnable than the War in Vietnam. Quiet revolutions by the people are the war of the future, and the only kind of war that makes any sense. Please note that Tunisia did not cost US taxpayers a dime. We should not have wasted a dime to get rid of Hussein either. Iraq was not a threat to the US. Simply put, it was a matter for the Iraqi people to settle, not us. 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.

Creative Art of Bullish Excuses: Stock Market Still "Good to Go"; Hook Has Been Set Posted: 29 Jan 2011 11:06 AM PST While reading more on the Egyptian riots in a Bloomberg article, I found this nice quip on global equity prices. European stocks retreated this week as escalating protests in Egypt and an unexpected drop in the U.K.'s gross domestic product offset accelerating U.S. economic growth in the fourth quarter. Next Plc, Britain's second-biggest clothing retailer, slumped 7 percent this past week as the U.K. economy shrank. "Some of the European data was weak and the U.K's gross domestic product was lower than expected, although the message on the U.S. economy is still okay to good, which should support equity markets going forward," said Simon Maughan, co-head of European equities at MF Global UK Ltd. Creative Art of Bullish Excuses That statement from Simon Maughan is just the kind of "BS" I talked about in Market Participants "Learn the Wrong Lesson" from Bernanke; Conflicts of Interest in "Stay the Course" Advice. It is more than a stretch to suggest global equities will be fine on the basis of the US economy alone, especially when there should be huge concerns about the imbalanced, stimulus-fed US economy and the unbalanced global economy in general, especially overheating in India and China, and property bubbles in the UK, China, and Australia. Moreover, Maughan did not mention valuation, or risks. He was simply looking for any excuse to say "buy stocks". I do not know whether the stock market goes up or down from here, but his statement is absurd from many angles, especially valuation. Hook Has Been Set If stocks do head down now, a hook has been set. That "hook" is blaming this all on Egypt, with a message "buy the dip". One of these "quick, little dips" will be neither quick, nor little. Whether this is the one, remains to be seen. 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.

Mubarak's Acts of Cowardice; Obama Calls Mubarak for 30-Minutes; Cell Service, Internet Total Shutdown; Anarchy in Cairo; How Long can Mubarak Last? Posted: 29 Jan 2011 01:23 AM PST The situation in Egypt has gone from bad to worse. Cairo is in a state of near-anarchy and Egyptian President Hosni Mubarak's cowardly disruptions to the internet and cell phones have made things worse. Egyptian citizens unable to get news on the internet or cell phones have only one place to get it now, the street. President Obama called Mubarak in a 30-minute phone call. Obama's message was "Ultimately, the future of Egypt will be determined by the Egyptian people." If that was a hint, Mubarak did not get it. Instead, Cairo is in flames as protesters have turned more defiant. Mubarak Orders Crackdown, With Revolt Sweeping Egypt The New York Times reports Mubarak Orders Crackdown, With Revolt Sweeping Egypt With police stations and the governing party's headquarters in flames, and much of this crucial Middle Eastern nation in open revolt, President Hosni Mubarak of Egypt deployed the nation's military and imposed a near-total blackout on communications to save his authoritarian government of nearly 30 years. Friday's protests were the largest and most diverse yet, including young and old, women with Louis Vuitton bags and men in galabeyas, factory workers and film stars. All came surging out of mosques after midday prayers headed for Tahrir Square, and their clashes with the police left clouds of tear gas wafting through empty streets. By nightfall, the protesters had burned down the ruling party's headquarters in Cairo, and looters marched away with computers, briefcases and other equipment emblazoned with the party's logo. Other groups assaulted the Interior Ministry and the state television headquarters, until after dark when the military occupied both buildings and regained control. At one point, the American Embassy came under attack. Six Cairo police stations and several police cars were in flames, and stations in Suez and other cities were burning as well. Office equipment and police vehicles burned, and the police seemed to have retreated from Cairo's main streets. Brigades of riot police officers deployed at mosques, bridges and intersections, and they battered the protesters with tear gas, water, rubber-coated bullets and, by day's end, live ammunition. Cairo in Near-Anarchy The Washington Post reports Cairo in near-anarchy as protesters push to oust president The Egyptian capital descended into near anarchy Friday night, as the government sent riot police, and then the army, to quell protests by tens of thousands of demonstrators determined to push President Hosni Mubarak from office. By the end of the day-long battle, the protesters were still standing and the police were nowhere to be seen. It remained unclear late Friday night what role the Egyptian military might play. Mubarak, a former air force officer, draws much of his strength from the military, and any decision by the armed forces to withdraw support would mean the certain end of his reign. But unlike the police, which unleashed an arsenal of weapons against the demonstrators, the military did not take any immediate action, and protesters gleefully welcomed the soldiers' arrival in a thundering of personnel carriers. Protesters were honking their horns in celebration and roaming freely through central parts of the city late in the evening, in defiance of a strict curfew. The night air was thick with black smoke, and the sounds of explosions, gunshots, sirens, cries and occasional cheers echoed through the darkness. Success in ousting Mubarak would be a remarkable achievement for a group of demonstrators who have no charismatic leaders, little organization, and few clear objectives beyond removing this nation's autocratic president and other members of his ruling clique. Before this week, few thought a mass anti-government movement was possible in Egypt, a country that has little experience with democracy. But after Friday's protests, the campaign to oust Mubarak only seems to be gathering strength. The Washington Post has a stunning set of 57 Egypt Riot Images, some of the best I have seen yet. Here are a few of them. Jan. 29, 2011 In this photo released by China's Xinhua News Agency, demonstrators climb up armored vehicles at Square Tahrir in Cairo, Egypt early Saturday. Cai Yang / AP A protester burns a picture of Egypt's President Hosni Mubarak during clashes in Cairo on Jan. 28, 2011. Amr Abdallah Dalsh / Reuters Egyptian protesters face anti-riot policemen in Cairo on Friday, Jan. 28, 2011. The riots escalated throughout the day. Victoria Hazou / AP Army tanks line up in Tahrir Square in Cairo. Peter Macdiarmid / Getty Images Thousands of protesters gather in Tahrir Square despite a curfew. Peter Macdiarmid / Getty Images Egypt Cuts Off Most Internet and Cell Service The New York Times reports Egypt Cuts Off Most Internet and Cell Service Autocratic governments often limit phone and Internet access in tense times. But the Internet has never faced anything like what happened in Egypt on Friday, when the government of a country with 80 million people and a modernizing economy cut off nearly all access to the network and shut down cellphone service. The shutdown caused a 90 percent drop in data traffic to and from Egypt, crippling an important communications tool used by antigovernment protesters and their supporters to organize and to spread their message. Vodafone, a cellphone provider based in London with 28 million subscribers in Egypt, said in a statement on its Web site that "all mobile operators in Egypt have been instructed to suspend services in selected areas." The company said it was "obliged to comply" with the order. Egypt, to an unprecedented extent, pulled itself off the grid. Obama Calls Mubarak, Talks 30-Minutes Bloomberg reports Obama Tells Mubarak He Must Stick to Pledge of Egyptian Reforms President Barack Obama told Egyptian President Hosni Mubarak last night he must live up to promises he made about political, social and economic reforms following the fourth day of anti-government demonstrations across Egypt. Obama delivered the message in a 30-minute phone call between the two leaders that followed public remarks by Mubarak in which he asked the country's government to resign and pledged to fight poverty, speed economic and social changes, and promote civil liberties and democracy. In a televised address to the Egyptian people just after midnight Cairo time, Mubarak said he asked his ministers to resign and promised that the new government would speed reforms and promote civil liberties. He defended his response to widespread demonstrations, which has included ordering the army to help police impose a 6 p.m. to 7 a.m. curfew by sending armored vehicles and tanks into the streets. Obama responded that "this moment of volatility has to be turned into a moment of promise." He also called on the Egyptian government to end the blocking of the Internet, including social networking sites that protesters have used to organize. "Ultimately, the future of Egypt will be determined by the Egyptian people," Obama said. "Governments have an obligation to respond to their citizens." At the White House, Obama said the Egyptian protestors were exercising "universal" rights to peaceful assembly and association, free speech and "the ability to determine their own destiny. "These are human rights," he said. "And the United States will stand up for them everywhere." Mubarak's Acts of Cowardice Shutting down the internet is an act of cowardice. Firing all your ministers while pledging reform is an act of cowardice. So is ordering Vodafone to shut down cell phone usage. Sending tanks into the street is certainly an act of cowardice. Not only are those acts of cowardice, they have backfired. People are in open defiance of curfews. After all, they have no way to get the news but see it themselves in the streets. By the way what is a tank supposed to do anyway? Is it really going to fire on the people? Check out that first image again. Protesters are crawling all over those tanks and armored vehicles. As I see it, the only thing tanks can possibly do is get people stirred up. Yet, the only thing holding Mubarak's corrupt regime together is the military. Mubarak came up from the military so there is some loyalty there. However, the military has some genuine support from the people (unlike the despised state police), and I doubt the military will want to lose that support. How long the military will support Mubarak is the key question at this point. I suspect not long if these riots continue. 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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Your Weekly Address: Out-Innovating, Out-Educating, and Out-Building Our Competitors

Your Daily Snapshot for Saturday, Jan. 29,  2011   Your Weekly Address: Out-Innovating, Out-Educating, and Out-Building Our Competitors   The President discusses his visit to a company in Manitowoc, Wisconsin and how it exemplified his agenda for America to “win the future” spelled out in the State of the Union Address. Watch the video.   Weekly Wrap-Up Quote: "We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. We need to take responsibility for our deficit, and reform our government. That’s how our people will prosper.  That’s how we’ll win the future." --President Obama, as he outlined his vision for continuing to grow the economy during Tuesday's State of the Union. Watch it here. Open for Questions: Part of the Administration's efforts to engage the public around the State of the Union included opportunities for citizens to ask questions of senior White House officials, as well as President Obama and Vice President Biden. YouTube interview with the President Yahoo! interview with the Vice President Policy panel following the State of the Union Economy roundtable with Austan Goolsbee, Chairman of the Council of Economic Advisers Foreign Policy roundtable with Denis McDonough, Deputy National Security Advisor Education roundtable with Secretary of Education Arne Duncan Healthcare roundtable with Secretary of Health and Human Services Kathleen Sebelius @Pfeiffer44: White House Communications Director Dan Pfeiffer is now on Twitter. Follow @pfeiffer44 for updates and opportunities to ask him your questions. White House to Main Street: The President visits Manitowoc, WI to highlight innovation, American manufacturing, and the future of a clean energy economy. West Wing Week Video: "To Build Stuff and Invent Stuff" Secretary Chu on Innovation: Secretary of Energy Steven Chu holds an online town hall, answering questions about how clean energy fits into the President's innovation agenda. Supporting our Military Families: The First Lady and Dr. Biden meet with military families, and discuss how the Administration continues to support the ones at home. New Alerts: Janet Napolitano, Secretary of the Department of Homeland Security, announces a new system for alerts to replace the old color-coded system. It's Mentoring Month: The First Lady delivers the keynote address at the National Mentoring Summit. January is National Mentoring Month; visit Serve.gov to get involved. Voices of Health Care: We continue our series highlighting Americans who have benefited from the Affordable Care Act. See how health reform has helped James, Janine, and Jim. A Digital Bridge: To follow up on the state visit from Chinese president Hu Jintao, White House foreign policy advisers hold a long-distance web conference with a team of bloggers in Beijing. Get Updates Sign Up for the Daily Snapshot  Stay Connected     Facebook Twitter YouTube Flickr iTunes         This email was sent to e0nstar1.blog@gmail.com Manage Subscriptions for e0nstar1.blog@gmail.com Sign Up for Updates from the White House Unsubscribe e0nstar1.blog@gmail.com | Privacy Policy Please do not reply to this email. Contact the White House The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111

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Bill James and you

The guy who revolutionized baseball stats had a simple insight: past performance is a good indicator of future performance.

The stock market doesn't follow that rule, but an awful lot of human performance traits do.

The question one must ask before ignoring the past performance rule (if you're doing a job interview, say) is, "what am I replacing the Bill James rule with?" We need to understand how we're predicting the future if we're abandoning the idea of using the past as a guide.

If you believe that pleasant interviewing skills, a good handshake or the right outfit are a better predictor of future performance than what the person has actually shipped in the past, I think it's worth pointing out that you're nuts.

And if you're the one who's hoping to be interviewed one day, it seems as though the best way to market yourself isn't with a slick resume or the right suit. No, the most reliable form of self marketing is to have a long history of stunningly great work, shipped.

 

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Mish's Global Economic Trend Analysis

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• Egypt Calls in Army, Imposes Curfew; Mubarak Orders Ministers to Resign; US Puts Egypt Aid Under Review; Will the US Get this one Right?
• Ping-Pong Seasonal Madness In Weekly Jobs Claims; How to Predict Whether the 4-Week Moving Average Will Rise or Fall
• Gallup Poll: 41% of Unemployed Think a Job Offer Will Come Within 4 Weeks; 57% Would Accept a Job Under $24,000

Egypt Calls in Army, Imposes Curfew; Mubarak Orders Ministers to Resign; US Puts Egypt Aid Under Review; Will the US Get this one Right? Posted: 28 Jan 2011 04:32 PM PST The violence in Egypt continues to escalate with more protests, fire bombs, and buildings set ablaze. Protesters burnt the headquarters of Egyptian President Hosni Mubarak's ruling party to the ground. The US embassy was also attacked, but so far, those protesters have been turned back. President Mubarak imposed curfews, however, those curfews were ignored. When shutting down the internet failed, Mubarak's next step was to bring in the army. Egypt Calls In Army as Protests Rage The New York Times reports Egypt Calls In Army as Protests Rage After a day of increasingly violent protests throughout Egypt, President Hosni Mubarak ordered the military into the streets to reinforce police struggling to contain riots by tens of thousands of Egyptians that posed one of the most serious challenges to his long and autocratic rule. The president also imposed an overnight curfew nationwide, but demonstrators defied the order, remaining in the streets of the capital, setting fire to police cars and burning the ruling party headquarters to the ground. As smoke from the fires blanketed one of the city's main streets along the Nile, crowds rushed the Interior Ministry and state television headquarters, but the military moved into the buildings to establish control. Protesters also tried to attack the American Embassy. Calling out the military is a signal of how dramatically the situation had spiraled out of control after four days of demonstrations. The army, one of the country's most powerful and respected institutions, prefers to remain behind the scenes and has not been sent into the streets since 1986. But the police, a much reviled force prone to violent retribution against anyone who publicly defies the state, appeared unable to quell the unrest despite a heavy-handed response that included beatings of protesters and the firing of a water cannon at Nobel laureate Mohamed ElBaradei. In several cases in the capital and elsewhere, the police were forced to back down by throngs of protesters. In one of the most arresting scenes of the day, in Alexandria, protesters snatched batons, shields and helmets from the police. Honking cars drove up and down a main street, holding police riot shields and truncheons out the windows as trophies. In both Cairo and Alexandria, some army patrols were greeted with applause and waves from the crowds — a seemingly incongruous response from demonstrators who say they want to bring down the president. But many people support the army for its success in shocking the Israeli Army with a surprise attack in 1973 and for its perceived reluctance, at least in the past, to get involved in politics. As the chaos continued, it appeared some Egyptians might be taking steps on their own to stop any destruction. An Al Jazeera correspondent, who had spoken by phone to eye witnesses at the National Museum, said that thousands of protesters had formed a "human shield" around the museum to defend from possible looting of antiquities, though there were no confirmed reports that such looting had begun. Violent Clashes on the Streets of Cairo The NYT has a 21-image Slideshow of the Violent Clashes on the Streets of Cairo. Here are 3 of the 21 images. Tahrir Square on Friday night. Internet and cellphone connections have been disrupted or restricted in Cairo, Alexandria and other places, cutting off social-media Web sites that had been used to organize protests and complicating efforts by the news media to report on events on the ground. Credit: Peter Macdiarmid/Getty Images The unrest in Egypt — fueled by frustrations over government corruption, economic stagnation and a decided lack of political freedom — came after weeks of turmoil across the Arab world that toppled one leader in Tunisia. Credit: Scott Nelson for The New York Times The protests across Egypt have underscored the blistering pace of events that have transformed the Arab world, particularly among regimes that have traditionally enjoyed the support of successive administrations in Washington. Credit: Mohamed Omar/European Pressphoto Agency Mubarak Orders Ministers to Resign The people clearly want the Egyptian president to resign, instead, Mubarak Orders Ministers to Resign. President Hosni Mubarak of Egypt appeared on television late Friday night and ordered his government to resign, but backed his security forces' attempts to contain the surging unrest around the country that has shaken his 28-year authoritarian rule. He did not offer to step down himself and spent much of the short speech explaining the need for stability, saying that while he was "on the side of freedom," his job was to protect the nation from chaos. Secretary of State Hillary Rodham Clinton, reading a prepared statement, called Friday on Egypt's government to "restrain the security forces" and said that "reform is absolutely critical to the well-being of Egypt." "We urge the Egyptian authorities to allow peaceful protest and to reverse the unprecedented steps it has take to cut off communications," she said, apparently referring to interruptions in Internet and cellphone connections in some cities. She also urged that protesters "refrain from violence and express themselves peacefully." After her comments, the State Department issued a travel alert cautioning Americans against all nonessential trips to Egypt in the next month. Images of the lowly challenging the mighty have been relayed from one capital to the next, partly through the aggressive coverage of Al Jazeera. Social networking sites like Facebook and Twitter have given the protesters a potent weapon, enabling them to elude the traditional police measures to monitor and curb dissent. But various regimes have fallen back on a more traditional playbook, relying on security forces to face angry demonstrators on the streets. U.S. Puts Egypt Aid Under Review Bloomberg reports U.S. Toughens Stance on Mubarak; Puts Egypt Aid Under Review "The people of Egypt are watching the government's actions, they have for quite some time, and their grievances have reached a boiling point and they have to be addressed," White House press secretary Robert Gibbs told reporters in Washington. The U.S. will be looking at its "assistance posture" toward Egypt, Gibbs said. "For the U.S., any effort on our part to provide support for Mubarak is going to be read in Egypt as support for a crackdown and support for an undemocratic regime," said Steven Cook, a fellow at the Council on Foreign Relations in Washington. "We need to be forward looking for this." More than 80 percent of U.S. aid to Egypt, or $1.3 billion, is in the form of military assistance, according to data supplied by the U.S. State Department. With President Barack Obama in power, military aid has stayed unchanged and economic assistance has been cut to $250 million from $411 million in 2008 with the phasing out of democracy-linked programs. The amount of money Egypt receives from the U.S. is exceeded only by Afghanistan, Pakistan and Israel, based on the State Department's budget request for the current fiscal year. After four days of demonstrations, the top U.S. diplomat for the first time said the U.S. was "deeply concerned" about the crackdown by security forces and police. Clinton was the highest U.S. official in the administration to speak on the matter today. "These protests underscore that there are deep grievances within Egyptian society and the Egyptian government needs to understand that violence will not make these grievances go away," Clinton read out in a statement in Washington. "We think that moment needs to be seized." Clinton urged the Egyptian government to "reverse the unprecedented steps it has taken to cut off communications." Clinton still referred to Egypt, without naming Mubarak, as an "important partner" in the Middle East. The US is in a very tough spot and has to guess how this will play out. If President Mubarak survives, the US does not want to alienate him. If he doesn't survive (and I bet he doesn't regardless of the short-term outcome), the US does not want to alienate those who take over. Such thinking explains the careful statements by Hillary Clinton calling Egypt an important partner, not President Mubarak an important partner. Look at the military and other aid we pour into the region (Egypt, Afghanistan, Pakistan, Israel, Saudi Arabia, Yemen, Iraq, Kuwait) in a hypocritical attempt to be on all sides of multiple fences simultaneously, shaking hands with dictators one day, invading their country the next. Has it been worth it? How? The wars in Iraq and Afghanistan were a complete waste of trillions of dollars. We failed to capture Bin Laden, did not make the region more stable, and made more enemies than before the wars started. Maybe we will get this one right, but history suggests otherwise. 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.

Ping-Pong Seasonal Madness In Weekly Jobs Claims; How to Predict Whether the 4-Week Moving Average Will Rise or Fall Posted: 28 Jan 2011 12:59 PM PST Weekly unemployment claims have been all over the map recently. Here are the seasonally-adjusted Weekly Unemployment Claims totals for the last 5 weeks. Jan 27, 454,000 Jan 20, 403,000 Jan 13, 447,000 Jan 06, 411,000 Dec 30, 388,000 The first three numbers above are from the current report. I calculated the January 6, number. The December 30 number is from the archives. The reported seasonally-adjusted number on January 6 reporting was 409,000. It was revised up but no one saw that revision. The reason no one can easily spot revisions is the weekly report only gives the latest 3 weeks. I calculated January 6th number from the 4-week moving average, now reported as 428,750. A similar calculation looking at the January 20 Weekly Claims Report shows that December 30, was revised up from 388,000 to 391,000. These are small revisions but even large ones would be hard to spot if you do did not do the math or go to the archives. Computing the Missing Number and Hidden Revisions The 4-week moving average is constructed from the current 4 weeks. However the report only shows 3 weeks. To compute the week not shown, take the 4-week moving average (SA) and multiply by 4. Subtract the last three weeks shown on the report. What remains is the hidden 4th week used to compute the 4-week moving average. Moreover, the difference between that number and was was originally reported for that number is a hidden revision. Gaming the 4-Week Moving Average If you want to pace a bet on whether the 4-week moving average will rise or fall, you need to know the number to beat and how to calculate it. The number to beat is the missing number (as described above), about to roll off. In this case, 411,000. Assuming no revisions, a number higher than 411,000 will cause next week's 4-week moving average to rise. A number below 411,000 will cause next week's 4-week moving average to drop. My guess is the 4-week moving average will rise next week and fall the following week when the January 13 of 447,000 rolls off the report. Clearly, if you are attempting to predict such numbers, it is critical to look at the number about to roll off. What's With The Ping-Pong? Revisions and hidden numbers aside, inquiring minds are asking about the ping-pong. What's happening is most analysts are misinterpreting seasonal data. It is clear that seasonal hiring picked up in October for the Christmas season. This hiring pattern happened one month sooner than normal. Moreover, some of those people were no doubt kept on (not let go in the traditional after-Christmas employee dump). In my opinion this is a one-time effect, not a mad rush by retailers (or anyone else) to hire people. With that in mind, one should have expected, in advance, to see large drops in seasonal claims. Previously, I had commented on the possibility that we might see a couple of hot jobs numbers at the beginning of the year. Certainly the February BLS Jobs Report (for January data) might be impacted by atypical Christmas skew that started early. Also the January data itself is subject to BLS twice-annual revisions. Finally, the BLS is changing the way it does revisions next month, going to quarterly revisions. If you can game all that, good luck. While the trend in unemployment claims is likely getting better. I rather doubt the numbers are as good as most think. Certainly yesterday's reported number of 454,000 may have been impacted by snow, but what about the January 13th number of 447,000? If this was not messy enough already, next week may again have skew because of snow. Regardless, I do not think we can successfully interpret data for a few more weeks until it is clear that skews caused by changes in Christmas season hiring have ended. When it does, I believe we will see improvements in weekly claims, but not enough to get overly excited about or enough to cause anyone to believe a big source of jobs is just around the corner. 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.

Gallup Poll: 41% of Unemployed Think a Job Offer Will Come Within 4 Weeks; 57% Would Accept a Job Under $24,000 Posted: 28 Jan 2011 09:36 AM PST In one of the most overly optimistic survey results I have ever seen, a Gallup poll shows that slightly over 4 in 10 unemployed expect to get a job within 4 weeks. To show how eager people are to work, 57% of those unemployed said they would take a job making $24,000 or less. An additional 20% did not say. Here are some highlights from Unemployed Americans Face Challenging Job Search Despite today's nearly double-digit unemployment rate, 41% of unemployed Americans expect to get a job in the next four weeks. 34% of underemployed have the same expectations with respect to obtaining a full-time job. On average, unemployed workers report that they have spent 27 weeks actively looking for a job. On average, unemployed workers say they have applied for 45 different jobs, while the underemployed, on average, report applying for 19 different full-time jobs. On average, unemployed workers report that they have spent 27 weeks actively looking for a job In their previous job, 48% said they were making less than $24,000 a year. An additional 25% were making $24,000-$60,000 a year. 20% did not offer an opinion. For their next job, 57% of unemployed would accept a job paying less than $24,000 a year. An additional 20% would accept a job paying $24,000-$60,000 a year. 20% did not offer an opinion. Survey Methods and Two Key Questions Unemployed and underemployed results are based on telephone interviews conducted as part of Gallup Daily tracking from Dec. 21, 2010-Jan. 9, 2011, with a random sample of 15,120 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling. Here are the two critical questions: Asked of Unemployed: Do you think that in the next 4 weeks you will have a job? Asked of the Underemployed: Do you think that in the next 4 weeks you will have a job that requires you to work 30 hours or more per week, or not? The questions were perfectly valid and easily understandable. Moreover, 15,120 seems like a decent sample size. Amazing Optimism As of December 2010, there were 14.5 million unemployed. There were an additional 8.9 million working part-time for economic reasons. If 41% of the unemployed got a job in the next 4 weeks, the economy would have to create 5.95 million jobs, either full or part-time. If 34% of the underemployed got a full-time job in the next 4 weeks, the economy would have to create an additional 3.03 million full-time jobs. Those expectations are simply not going to happen. This economy will struggle to generate 5.95 million jobs with an additional 3 million full-time jobs in the next 4-5 years (not weeks). I suspect most of those expecting to find a job quickly were recently unemployed and have no idea what others are going through. It would have been interesting to see how optimism changes over time. Unfortunately, Gallup offered no such breakdown. However, even with the assumption that most of those expecting to find a job quickly are the recently unemployed, I cannot account for such rampant optimism. 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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