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Seth's Blog : What kind of media counts?

What kind of media counts?

The Department of Justice has decided, apparently, not to prosecute Wikileaks for leaking information because the prosecutors would have a "New York Times problem." In other words, because Wikileaks worked with a media entity that counts, they have to be treated seriously.

Amazon soon will have more new self-published books for sale than books that went through the old process. Do these self-published books matter? Are the reviews from readers 'real' or should they be ignored?

Many actors would rather do a low-rated cable show that doesn't pay well than appear on a YouTube video that is seen by millions. Because the former counts.

Columnists for famous newspapers look down at bloggers, even bloggers with more readers and impact than they have.

In live theatre, a revue out of town that gets a well-deserved standing ovation nightly doesn't count as much as a Broadway show, even one that's frankly pretty bad.

Of course, television didn't used to count, not if you were a radio star. And cable didn't count, not if you were a network sitcom star...

Sure there are fake reviews, fake followers and fake views. Sure, there's a huge amount of unreadable, unwatchable, unshareable stuff being published in the curationless media of our time. But eventually, the truth will out, quality will be shared (or at least interesting will be shared) and our definition of what counts will change.

The question for you is which line to get on... the line waiting to get picked or the line to start now?

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Mish's Global Economic Trend Analysis

Wine Country Conference May 1st & 2nd, 2014; Nothing Like It!
Two Choices to Deal With "Collective Theft"
Spain Raids Social Security Reserve Fund to Meet Deficit Targets; New Rules Compound Deficit Woes for Spain, Italy
Simmering in a Pot of Misery
Auto Lending Standards Plunge: New Car Loans Average 110% LTV; Used Car Loans 133% LTV with 55% Subprime! Repossessions Up Sharply

Wine Country Conference May 1st & 2nd, 2014; Nothing Like It!

Posted: 05 Dec 2013 11:11 PM PST

I am pleased to announce the second annual Wine County Conference, to be held May 1st & 2nd, 2014.

We have an exciting lineup of speakers for this year's conference.

John Hussman: Founder of Hussman Funds, Director of the John P. Hussman Foundation which is dedicated to providing life-changing assistance through medical research
Steen Jakobsen: Chief Economist of Saxo Bank
Stephanie Pomboy: Founder of MacroMavens macroeconomic research
David Stockman: Ronald Reagan's budget director, best-selling author, former Managing Director of The Blackstone Group
Mebane Faber: Co-founder and the Chief Investment Officer of Cambria Investment Management
Jim Bruce: Producer, Director, and Writer of Money For Nothing: Inside the Federal Reserve
Chris Martenson: Reknown speaker and founder of Peak Prosperity
Mike "Mish" Shedlock: Investment advisor for Sitka Pacific and Founder of Mish's Global Economic Trend Analysis

In addition, we expect confirmation from a number of other highly respected fund managers and speakers. This year's event is two days and will include additional "break-out" groups.

For speaker bios, please check out Wine Country Conference Speakers.

Story Behind the Event

For the story behind the story, please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs. Following a raffle in 2012, I launched Wine Country Conference to raise additional money for medical research.

Last year's event was a huge success, raising close to $500,000 (counting matching funds, the raffle, and other donations). Proceeds went for ALS (Lou Gehrig's Disease) research and the Les Turner ALS foundation.

This Year's Cause: Autism

$100,000 of the money raised last year came from a generous matching grant from the John P. Hussman Foundation.

Some of us in the industry who have done well are making an effort to give something back. John Hussman is at the very top of that list.

One of John's kids has severe autism. This year, all net proceeds will go to support autism programs.

Conference Details

For further details about the 2014 conference, please see Wine Country Conference May 1st & 2nd, 2014

Nothing Like It!

This event is not just another "come and hear someone talk" kind of thing. Attendees and their significant others can expect an educational, fun, and relaxed time.

Last conference, we arranged wine tours. They were a big hit. We will do so again. One of the wine estates we visited had a Bocce Ball court. On a couple of miracle shots, I won both games I played.

Stay an extra day and golf or travel. I did. The conference hotel is a fun place in and of itself.

Unlike many other conferences, you will have easy access to speakers.

Want to chat with me, Steen, John, or anyone else at the conference? You will have an easy chance.

Not only do we have an excellent lineup of speakers, you will have an opportunity to meet with them, have intimate discussions on important investment topics, with a lot of fun on the side, including wine tours and great wine.

There's nothing like it in the investment business. And your money goes to a great cause! What can be better?

Register Now for Discount

As was the case last year, we offer a $200 "early bird" discount through the end of December, for those who register early. Please Register Now!

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

Two Choices to Deal With "Collective Theft"

Posted: 05 Dec 2013 06:49 PM PST

Public union sap is once again oozing from the mouths of economic illiterates and union supporters who just don't understand reality.

Today's sap is brought to you courtesy of the Bloomberg article Pension Threats in Illinois, Detroit Rattle Government Workers. Here are a few sappy comments.

Bev Johns, a retired 67-year-old retired special-education teacher, sat before Illinois lawmakers and asked why they hated teachers. "You are punishing people who devoted their lives to educating children," Johns told a committee in Springfield on Dec. 3. "You are harming individuals who have educated children, worked long hours, paid for materials out of their pocket and often fed and clothed children."
Randi Weingarten, the president of the American Federation of Teachers, which represents 1.5 million workers, told reporters in Washington yesterday. "The unraveling of that social contract is an unraveling of democracy."
Charles Craver, a labor law professor at George Washington University in Washington in a telephone interview, whines "I can't remember any period when I think workers are so threatened."
William Jones, a labor historian at the University of Wisconsin-Madison offers the sappiest sap of them all. "How will municipalities recruit teachers, firefighters and trash collectors if the pensions aren't secure?"

Spare me the Sap

I am sick of watching taxes go up year in and year out so that overpaid, underworked, public union workers can get taxpayer sponsored pensions and pay well beyond what private industry gets.

That sounds harsh. And it is. But it's also reality.

Reality

Cities are broke
Taxpayers are broke
Public union workers don't care to understand the above two points

As I said before, I sympathize. I do. And I also offered a simple solution.

Before unions drive cities into bankruptcy and states into default on pension obligations, The unions ought to get together with city and state officials and work out a plan. And the plan I have in mind would protect the benefits of the majority of union workers.

From my April 23, 2012 post Public Unions Bankrupt Illinois: Unpaid Bills Top $9 Billion as Comptroller Reports "State Treading Water"; Mish's Eight-Point "Bold" Plan to Save Illinois

Mish's Eight-Point "Bold" Plan to Save Illinois

Immediately kill public defined benefit plans going forward
End collective bargaining of public unions
Scrap prevailing wage laws
Tax at an 85% rate all defined benefits above $80,000
Claw back all pension-spiking
Lower corporate tax rates to previous levels to attract businesses.
Set long-term pension plan assumptions at 5% or the 30-year Treasury rate, whichever is lower (currently 3%).
Default, if necessary on pension benefits above a certain level, whatever it takes to make the state solvent within 10 years, using conservative pension plan assumptions.

The $80,000 cap is a suggested starting point for discussion. It may be higher or lower based on point number eight.

Now that's a bold plan, and a badly needed one at that. My proposal is universal. Unions everywhere should seize the opportunity.

But they don't. Instead we have to suffer listening to the sap from every union corner and their supporters.

Collective Bargaining vs. Collective Theft

William Jones, a self-defined labor historian at the University of Wisconsin-Madison wonders "how will municipalities recruit teachers, firefighters and trash collectors if the pensions aren't secure".

Is he really serious?

I suggest Jones is delusional. Either that, or Jones is a historian who does not understand history - recent history.

If there was open bidding right now instead of collective theft (commonly called collective bargaining), people would line up for miles for public service jobs at half the pay even if there were no benefits.

Once again, I am indeed sympathetic to those at the bottom of the pole. But please spare me the sap that higher taxes are "for the kids". They aren't.

Higher taxes are 100% for public union workers who in general are overpaid and under-worked as compared to the private sector.

If you are a public union worker, please don't write and tell me about how deserving you are, etc., etc., etc., because here is my answer in advance.

Time to Face Reality

Unions can face reality or not.

If unions don't face reality, they can and should expect the "Detroit Solution" as detailed in Lesson for Union Dinosaurs: Detroit Bankruptcy Judge Rules Public Pensions Haircuts OK; Unions Whine City Got "Absolutely Everything"

I propose unions take a vote and work out genuine pension reforms that will protect those with the smallest pensions.

I even offered a starting point for negotiation in my November 15, 2013 post Mish Template for Fair Public Union Pension Settlement

Negotiated Settlements

The fairest possible thing to do is sit down at the table and negotiate a settlement.

I suggest, those with the least pension benefits get the smallest cuts, and those with the most benefits get the biggest cuts.

Indeed, if unions were smart, the majority could come to negotiated terms with a starting point along the lines of

No cuts in benefits for the bottom 30%
Small cuts in benefits for the next 30%
Big cuts in benefits for the top 40%, on a sliding scale

Such a negotiated settlement would be the fairest thing for everyone, pensioners and taxpayers alike.

However, my starting point may not be possible. When pension plans are exceptionally low-funded, even those on the bottom rung may need to take some hit.

The next fairest thing is bankruptcy. And although bankruptcy is fair to the taxpayer (assuming no tax hikes), bankruptcy is not likely to be very fair to those on the bottom rung.

Two Choices!

At this point, unions have two choices.

Negotiation ahead of bankruptcy
Negotiation in bankruptcy court

Bitching to Mish or About Mish, Not an Option

Notice that whining about history, praying for massive tax hikes, complaining to state legislatures, and bitching to Mish are not viable options.

I suggest unions should pick door number one for the simple reason door number two is probable pension cuts across the board. In contrast door number one allows weighting to protect those at the bottom end of the totem pole.

Unfortunately, union membership is highly unlikely to ever see the light because union management and those on the upper end of things will do better in court, and those folks will fight all the way to a "Detroit Solution".

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

Spain Raids Social Security Reserve Fund to Meet Deficit Targets; New Rules Compound Deficit Woes for Spain, Italy

Posted: 05 Dec 2013 11:26 AM PST

Monetary magic of borrowing money from trust funds allegedly helps Spain come closer to meeting its budget deficit targets reports Eurointelligence.

Please consider The raiding of Spain's "pensions piggybank"

Spain drew €5bn from the Social Security reserve fund on Monday, reported Europa Press, and will draw an additional €428M on account of income tax before the end of the month. Presumably this is to help attain the year's deficit target.

Commentators present this as "raiding the piggybank" of the pension system. Europa Press writes that, in 2012-2013, €23.6bn will have been drawn from the fund, bringing it down to €53.7bn. The original €77bn had been gradually accumulated over the previous decade. For comparison, Spain's pension outlays are slightly over €100bn a year or roughly 10% of GDP, so the pension [reserve] fund even at its peak was only enough to cover about 9 months' worth of pensions.

Another source of public consternation has been the fact that 97% of the reserve fund is invested in Spanish public debt, up from 55% in 2008, as described by Expansión earlier this year. Before the crisis sovereign spreads were minimal and the fund was diversified among various Eurozone member states, but in 2009 the government of PM Zapatero started trading higher-rated debt for Spanish debt and the process of rebalancing into Spanish debt was nearly complete by the end of 2012.

Spain Budget Allegedly on Track

On October 29, the Wall Street Journal reported Spain In Line to Meet 2013 Deficit Target

Spain's Budget Ministry Tuesday said the euro zone's fourth-largest economy is in line to meet its 2013 deficit target, after the preliminary government budget deficit stood at 4.8% of gross domestic product between January and August.

Spain is seeking to cut its budget deficit to 6.5% of GDP this year from 6.8% of GDP last year, excluding the impact of the banking bailout.

"Our budget targets are perfectly compatible with economic recovery," said deputy Budget Minister Marta Fernández-Currás.

Spain's government didn't provide budget deficit numbers for the first eight months of 2012. Ms. Fernández Currás said this is because recent changes in accounting methods so Spain complies with EU practices make last year's data non-comparable.

EU Probes Spanish Officials as Concerns Rise Over Budget Data

It seems EU officials (with good reason) are highly skeptical of official pronouncements. After all, and in spite of the fact that Spain's deficit targets were reduced at least three times in three years, Spain has not yet met a single target.

On November 5, Bloomberg reported EU Probes Spanish Officials as Concerns on Budget Data Escalate

European Union officials made an extraordinary visit to Spain in September that signals escalating concern about the reliability of the country's budget data.

EU statisticians ordered a so-called ad-hoc visit, a procedure reserved for urgent issues, to assess whether regional officials are complying with recommendations after failing to report all the unpaid bills they had accumulated in 2011, Tim Allen, a Luxembourg-based press officer for the statistics agency Eurostat, said in an e-mail. The visit included meetings with officials from Valencia and Madrid regions.

Eurostat raised concerns about Spanish data in April following at least two "upstream dialog visits," the second of four levels of checks the agency has on member states' statistical reporting.

September's visit signaled a shift in gear to the second-most serious intervention. Ad-hoc visits are triggered by urgent issues regarding the quality or the methods used to produce the data, which only can be resolved with a face-to-face meeting, according to the agency Web site.

Deficit Revisions

Valencia posted a budget deficit equivalent to 5 percent of GDP in 2011 after initially reporting a shortfall of 3.68 percent, according to the Budget Ministry. Madrid's deficit was 1.96 percent compared with 1.13 percent initially reported. That helped to push the country's public sector deficit that year to 8.9 percent, the Budget Ministry said in a May 2012 statement. The final figure was revised later to 9.6 percent.

Eurostat officials checked the early warning systems being used by the Madrid region to avoid any future deficit deviations, a spokesman for Madrid's regional budget and economy department said in an e-mailed statement.

Spain, Italy Warned About New Budget Rules

On November 15, the BBC reported EU warns Spain and Italy over their budget plans

The European Commission, the European Union's executive arm, has warned Spain and Italy that their draft budgets for 2014 may not comply with new debt and deficit rules.

It also said French and Dutch plans only just passed muster.

Non-complying countries may have to revise their tax and spending plans before re-submitting them to national parliaments. It is the first time the Commission has done this.

Budgetary surveillance

Spain's draft 2014 spending plans were "at risk of non-compliance", said the Commission, as the country does not envisage returning to EU financial norms until 2016 at the earliest.

Other countries at risk of breaking EU finance rules included Finland, Luxembourg and Malta.

Heavily indebted countries that received EU bail-outs at the height of the financial crisis - Ireland, Cyprus, Portugal and Greece - were not included in the review.

If Spain meets it budget deficit target this year, it will likely do so by some sort of accounting gimmickry or purposeful under-reporting of regional debt.

Expect the same thing multiple times in 2014, because Spain will have to not only catch up with its 2013 revised deficit shortfalls, but also comply with new rules that likely take away some sleight of hand budget gimmickry.

By the way, it's important to note that 97% of what's left of the reserve fund is invested in Spanish government debt. Think that investment won't ever take a haircut?

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

Simmering in a Pot of Misery

Posted: 05 Dec 2013 09:43 AM PST

A Gallup survey shows rising European joblessness is accompanied by falling living standards as Nearly Half of Younger Southern Europeans Underemployed

In 2013, nearly half of 15- to 29-year-olds in six southern European countries are underemployed -- meaning they are either unemployed or working part time but wanting full-time work.

Though the unemployment rate is the labor market indicator that typically grabs headlines, underemployment may be almost as damaging to younger people in terms of their own long-term prospects and their countries' labor productivity. Temporary and part-time jobs are those most often available to young people, and they are often the first to be laid off because they lack seniority. Underemployment rates are much lower among southern Europeans aged 30 to 49 (26%) and those aged 50 and older (24%).

Young people in southern Europe almost universally (90%) say it is a bad time to find a job in their communities, versus about two-thirds of young people in western Europe (67%) and eastern Europe (68%). However, at 57%, labor force participation among young southern Europeans is as high as it has been over the last several years, suggesting that those who find themselves out of work do not have the option of leaving the workforce altogether -- to pursue educational opportunities, for example -- until the labor market improves.

What's Needed vs. What Happened

What's needed is work rule reform, easier standards to fire people, fewer government workers, lower minimum wages, less regulation, and less taxation.

What happened was higher taxes thanks to pressure from the IMF, Troika, and EU nannycrats. Economic pundits incorrectly labeled the result as "austerity".

Yes, austerity did not work as implemented, as Keynesian economists predicted. But Austrian economists predicted the same thing.

Raising taxes in the midst of a recession is a downright foolish thing to do, and it happened in spades. The results speak for themselves.

Explosive Mix

Nearly half of young Europeans are simmering in a pot of misery. Something has to give because "austerity" as implemented is not working.

This is going to boil over in a political explosion of some sort, and when it happens, fully expect heads of state to say "no one could possibly have seen this coming".

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

Auto Lending Standards Plunge: New Car Loans Average 110% LTV; Used Car Loans 133% LTV with 55% Subprime! Repossessions Up Sharply

Posted: 05 Dec 2013 12:15 AM PST

U.S. car sales are up. It's easy to explain why: car buyers borrow more as standards loosen

The average loan on a new car climbed to $26,719 in the third quarter, up by $756 from a year earlier, and the most in at least five years, according to data collected by Experian Plc.

Despite borrowing so much more, average monthly payments on new car loans rose only $6 to $458. That is because banks and finance companies were willing to lend at lower rates and grant borrowers more time to repay.

Lenders made 26.04 percent of their loans on new cars to buyers with subprime credit scores, up from 24.84 percent a year earlier, said Experian, which collects car title and financing information to compile its reports. For loans on used cars, the portion to subprime borrowers rose to 54.95 percent from 54.43 percent.

As the lenders made bigger loans, they also extended credit further beyond the value of the vehicles. The average loan-to-value on new cars rose to 110.6 percent, up by 1.17 percentage points. On used cars it rose to 133.2 percent, up by 2.18 percentage points.

Auto lenders often provide loans that exceed the value of cars they are financing because borrowers want cash to pay sales taxes and fees.

Extra-long loans are becoming more common. Some 19 percent of new car loans were made for more than six years, up from 16.4 percent a year earlier.

The percentage of loans 30-days delinquent was down in the third quarter to 2.58 percent from 2.67 percent a year earlier, Experian said.

However, the average loss on loans gone bad jumped to $7,770 in the third quarter from $7,026 a year earlier and repossessions increased sharply, particularly for subprime borrowers.

Used Car Loans 133% LTV with 55% Subprime?!

Excuse me for asking, but didn't we try "lower-and-lower lending standards" once before? How did it work out? Can anyone tell me why it will be different this time?

Repossessions are up sharply, but who cares about that? No doubt the loans are sliced, diced, tranched, and securitized to make them appear as AAA. Pension funds are probably dumping gold to load up on them.

Auto lending, like housing in 2006, appears to be a no-lose proposition.

After all, the Fed is in complete control. Isn't it?

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

vineri, 6 decembrie 2013

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Seth's Blog : What kind of media counts?

What kind of media counts?

More Recent Articles

joi, 5 decembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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Arhivă blog

vineri, 6 decembrie 2013

Fresh Pins for you!

Get More Twitter Followers

Seth's Blog : What kind of media counts?

What kind of media counts?

More Recent Articles

joi, 5 decembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Pagini

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Arhivă blog

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