Central Perk

luni, 15 aprilie 2013

Mish's Global Economic Trend Analysis

Is Merkel in "Cloud-Cuckoo Land" or Simply a Hypocrite? How About a Chameleon?
Deposit Insurance: Lauren Lyster Interviews Mish at Wine Country Conference
First Quarter Petroleum Usage Charts: Total Distillates, Gasoline, Jet Fuel, Fuel Oil
Gold, Silver Hammered; End of the Precious Metals Bull Market? What's Next?
Demographics in Pictures: Peak Earning (and Peak Spending Years)

Is Merkel in "Cloud-Cuckoo Land" or Simply a Hypocrite? How About a Chameleon?

Posted: 15 Apr 2013 08:54 PM PDT

Today my spotlight is not on the implosion in Spain, Portugal, France, Cyprus, or Italy.

Rather, my focus is on a statement made by Paul Krugman that "senior German officials are living in Wolkenkuckucksheim - cloud-cuckoo land."

Please consider Double Standards: Europeans Are Right to Be Angry with Merkel

Chancellor Angela Merkel has tenaciously insisted that austerity is the only way out of the crisis for ailing EU countries. She doesn't practice what she preaches in Germany, though, which makes growing anger toward her understandable.

The question is not about whether Krugman is right when he almost obsessively labels Merkel "dim-witted" and writes that "senior German officials are living in Wolkenkuckucksheim -- cloud-cuckoo land."

No, it is not the know-it-alls from abroad who spark doubts. It is Merkel's own policies here at home that prove the error of the measures she champions for the ailing economies of Southern Europe -- and feed the suspicion that the outrage directed at the German taskmaster is wholly justified.

Hypocritical Examples

Merkel insists German deposits are sacrosanct. Cypriot deposits are not.
Merkel insists stimulus measures are out of the question for club-med states, but they were not out of the question for Germany in 2009.
In regards to fiscal stimulus, when the financial crisis threatened Germany, "Merkel allotted €1.5 billion to a car-scrapping bonus plan. More than half a million used cars were crushed by the junk press, and 600,000 new cars were purchased, each of them subsidized by €2,500 in government funds."
Merkel was a huge supporter of nuclear energy until the German population wasn't in the aftermath of the nuclear disaster in Japan.

Merkel the Chameleon

Economically speaking, it's easy enough to make the case that it is Krugman who is in "Cloud-Cuckoo Land" and that Merkel is simply a hypocrite.

However, Merkel is so good at changing the color of her spots, I propose chameleon is an equally good description.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Deposit Insurance: Lauren Lyster Interviews Mish at Wine Country Conference

Posted: 15 Apr 2013 06:08 PM PDT

I have another interview to present from the Wine Country Conference. This is an interview of me by Lauren Lyster of Yahoo! Finance regarding FDIC deposit insurance.

I did not discuss deposit insurance in my presentation, however, deposit insurance was the focus of a five minute interview with Lauren Lyster.

You can play the interview at the Daily Ticker site Don't Depend on Bank Deposit Insurance: Mike Shedlock

SitkaPacific Capital Management's Mike Shedlock, who is also the author of the Global Economic Analysis blog, says the Cyprus fiasco is an example of what can happen in a banking system that really can't guarantee everything it's promised. He argues these are issues that exist in the U.S. banking system too.

"Here in the U.S. we have something like $3 trillion worth of monetary base, with $50 trillion worth of money out there that's lent on that monetary base," Shedlock told The Daily Ticker on the sidelines at the Wine Country Conference in Sonoma. "So how are we going to pay this all back? We can't."

Shedlock argues that deposit insurance - guaranteed by the FDIC for accounts up to $250,000 - can't possibly cover all bank deposits.

"The whole idea of insurance... is fraudulent," he says.

Shedlock points to New Zealand, which does not promise to insure depositors, as a better system.

Depositors may be forced to figure out if the banks they put their money in are solvent. Shedlock says the current system creates "moral hazard."

I have gone on record stating that FDIC will be honored, up to the stated limits. If necessary, the Fed will print money to paper over losses.

However, amounts in excess of FDIC will not be honored.

Those not wanting to trust FDIC at all may be seeking alternatives. Given global happenings, I cannot really fault anyone for that attitude.

I presented some ideas regarding deposit insurance in Five Alternatives to FDIC "Insured Deposits".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

First Quarter Petroleum Usage Charts: Total Distillates, Gasoline, Jet Fuel, Fuel Oil

Posted: 15 Apr 2013 01:05 PM PDT

Here are some first quarter 2013 petroleum usage charts from Tim Wallace. The charts all show first quarter usage in 2013 as compared to first quarter usage in prior years.

click on any chart for sharper image

Petroleum Usage Q1 2013

Gasoline Usage Q1 2013

Jet Fuel Usage Q1 2013

Fuel Oil Usage Q1 2013

Residual Fuel Oil Usage Q1 2013

Tim Wallace writes ...

Hello Mish

Here are separate charts for Total Distillates, Gasoline, Kerosene Jet Fuel, Fuel Oil (diesel, etc.) and Residual Oils.

Total distillates usage is at a level seen in 1998, and not much higher than 1996.

Gasoline usage is at a 2002 level. The drop from the peak year of 2007 is now 8.3%, quite dramatic.

Kerosene Type Jet Fuel is now lower in demand than 1992 and is 21.9% lower than the peak in 2001.

Distillate Fuel Oil usage which include such things as diesel and heating oils is now all the way back to 1996 levels, down 17.6% from the 2007 peak.

Once again that there can be little proof of major economic recovery, and more importantly, although we have apparently reached a bottom it is well off of historical levels.

Recall that president Obama said he would reduce our carbon emissions 15% by 2015. He may succeed, not because of "alternative" methods, but rather from demand destruction.

Tim

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Gold, Silver Hammered; End of the Precious Metals Bull Market? What's Next?

Posted: 15 Apr 2013 10:51 AM PDT

After drifting slowly lower for months, gold has been crushed in the past few days as the following chart shows.

Gold Daily

click on any chart for sharper image

Gold 30 Minute

Silver is pretty much the same story as gold.

Silver Daily

Silver 30 Minute

This certainly is a steep correction, but does this mark the end of the gold and silver bull markets, and the everlasting triumph of paper currency backed by nothing?

Before you decide let's look at a historical chart courtesy of Sharlynx Gold.

Gold 1974-1979

click on any chart for sharper image

After Nixon closed the gold window, gold soared from $35 to nearly $200 in late-1974. Gold then dropped almost to $100 in mid-1976. Was the gold bull market over following a near 50% plunge?

The answer is no. Gold topped $250 in 1978 before falling back to under $200 in the same year. Was the gold bull market over then?

Hardly, gold then blasted to $850 in 1980. Was the gold bull market finally over? Yes it was, for nearly 20 years until it bottomed near $250 in 1999.

My point regards the volatile nature of bull markets, nearly any bull market.

What's Next?

Is the gold bull market over now for another 20 years? While no one including me can say what happens next, fundamentally I see no reason to believe the gold bull market is over.

There is no indication central banks have anything under control. There is no indication central banks are going to stop flooding the world with paper. Indeed, there is every indication they are going to escalate their printing of paper.

That said everyone must do their own due diligence and assess market conditions before making investment decisions. The last thing you want to do is go into any market with leverage or greater than your risk tolerance and panic out of a good investment at the wrong time.

If you are investing in gold, it's important to understand why! It's also important to understand your risk tolerance, timeframes, and the volatile nature of bull markets.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Demographics in Pictures: Peak Earning (and Peak Spending Years)

Posted: 15 Apr 2013 12:29 AM PDT

Here is a nice theme from reader "BC" regarding peak earning years that I merged into a single chart.

Peak Earning Years

click on chart for sharper image

The above chart shows what is happening to employment in age groups 35-44 (blue), 45-54 (red), and the combined effect 35-54 (green).

Those in age group 35-54 are in their peak earning and spending years. This is the period where people upgrade houses and have a need for larger cars as family sizes grow. Between 34-44 family sizes reach peak. Expenses hit maximum when kids graduate from high school and head to college.

Telling Statistics

Employment in age group 35-44 peaked just prior to the 2001 recession.
Employment in age group 45-54 peaked right at the start of the 2007 recession.
Employment in age group 34-54 peaked just after the housing bubble burst.

Earning power for boomers has peaked. Yet as a whole, boomers are unprepared for retirement.
The effect on spending and GDP should not be hard to figure out.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Damn Cool Pics

Crazy Historical Inventions
Abandoned Steam Ship Transformed into Giant Street Art Gallery
Youtube Sensations - Where Are They Now? [Infographic]
Top Casinos for celebrities around the world

Crazy Historical Inventions

Posted: 15 Apr 2013 11:56 AM PDT

Crazy and cool inventions from the past.

Abandoned Steam Ship Transformed into Giant Street Art Gallery

Posted: 15 Apr 2013 11:36 AM PDT

For over three decades, the Duke of Lancaster sat on the banks of the River Dee in north Wales, slowly rusting away. To anyone who saw her, the ship was little more than another abandoned maritime relic, but that was before the DuDug project intervened – and artists turned what had become a giant eyesore into a colorful open-air art gallery.

Read full story >>

Youtube Sensations - Where Are They Now? [Infographic]

Posted: 15 Apr 2013 10:42 AM PDT

In celebration of Psy taking the crown for producing the first video to hit and surpass one billion views online the folks at vixy.net have put together this infographic with a compilation of the greatest youtube video sensations and viral videos and where they are now.

Click on Image to Enlarge.

Via vixy

Top Casinos for celebrities around the world

Posted: 15 Apr 2013 10:35 AM PDT

To celebrities, the world can be a playground and where better to enjoy the most popular games than some of the world's top casinos?! Undoubtedly, destinations such as Las Vegas and Atlantic City are popular with celebrities such as Ben Affleck, Matt Damon, Bruce Willis and more but when it comes to taking casino play global, there are plenty of other top casino destinations attracting celebrities further afield.

Justin Timberlake, Andy Roddick and Maria Sharapova, for example, have taken a liking to Melbourne's Crown Casino. Unsurprising with a main floor boasting a third of a mile in length. According to sources Andy Roddick has been known to taken advantage of the private poker rooms. For more understated sophistication celebrities flock to a favourite casino destination of the rich and famous; Monte Carlo, Monaco. Also known for hosting F1, Monte Carlo is a magnet for international superstars. For a casino destination with a bit of spice, jetsetters have also been know to descend upon one of The Caribbean's many casino strips including Aruba and The Bahamas. And finally, celebrities in the know have also been visiting the most up and coming casino destination actually totaling a higher revenue than Las Vegas; Macau.

But you don't need to lead the jet set lifestyle in order to enjoy some world class casino games. Simply visit Lucky Nugget where you will find Blackjack, Poker, Slots and more at the touch of a button. Without an airplane in site visitors can be whisked away to the glamorous world of the casino through the convenience of a computer, tablet or mobile phone and can often benefit from sign-up bonuses and payout odds that are likely to create more winners than any high rolling casino ever could so who knows- perhaps those winnings could go towards your next trip.

President Obama Speaks on the Explosions in Boston

Your Daily Snapshot for
Monday, April 15, 2013

President Obama Speaks on the Explosions in Boston

This evening, President Obama made a statement about today’s explosions at the Boston Marathon.

He explained that he had been briefed by his homeland security team, members of whom are continuing to monitor the situation as it unfolds, and that he had "directed the full resources of the federal government to help state and local authorities protect our people, increase security around the United States as necessary, and investigate what happened."

"The American people will say a prayer for Boston tonight," he said. "And Michelle and I send our deepest thoughts and prayers to the families of the victims in the wake of this senseless loss."

Watch the full statement, or read it below.

Statement by President Obama

Today's statement from President Obama:

Good afternoon, everybody. Earlier today, I was briefed by my homeland security team on the events in Boston. We’re continuing to monitor and respond to the situation as it unfolds. And I’ve directed the full resources of the federal government to help state and local authorities protect our people, increase security around the United States as necessary, and investigate what happened.

The American people will say a prayer for Boston tonight. And Michelle and I send our deepest thoughts and prayers to the families of the victims in the wake of this senseless loss.

We don’t yet have all the answers. But we do know that multiple people have been wounded, some gravely, in explosions at the Boston Marathon.

I’ve spoken to FBI Director Mueller and Secretary of Homeland Security Napolitano, and they’re mobilizing the appropriate resources to investigate and to respond.

I’ve updated leaders of Congress in both parties, and we reaffirmed that on days like this there are no Republicans or Democrats -- we are Americans, united in concern for our fellow citizens.

I’ve also spoken with Governor Patrick and Mayor Menino, and made it clear that they have every single federal resource necessary to care for the victims and counsel the families. And above all, I made clear to them that all Americans stand with the people of Boston.

Boston police, firefighters, and first responders as well as the National Guard responded heroically, and continue to do so as we speak. It’s a reminder that so many Americans serve and sacrifice on our behalf every single day, without regard to their own safety, in dangerous and difficult circumstances. And we salute all those who assisted in responding so quickly and professionally to this tragedy.

We still do not know who did this or why. And people shouldn’t jump to conclusions before we have all the facts. But make no mistake -- we will get to the bottom of this. And we will find out who did this; we'll find out why they did this. Any responsible individuals, any responsible groups will feel the full weight of justice.

Today is a holiday in Massachusetts -- Patriots’ Day. It’s a day that celebrates the free and fiercely independent spirit that this great American city of Boston has reflected from the earliest days of our nation. And it’s a day that draws the world to Boston’s streets in a spirit of friendly competition. Boston is a tough and resilient town. So are its people. I'm supremely confident that Bostonians will pull together, take care of each other, and move forward as one proud city. And as they do, the American people will be with them every single step of the way.

You should anticipate that as we get more information, our teams will provide you briefings. We're still in the investigation stage at this point. But I just want to reiterate we will find out who did this and we will hold them accountable.

Thank you very much.