Central Perk

luni, 18 august 2014

Seth's Blog : Who named the colors?

Who named the colors?

We did.

It's not a silly question. It has a lot to do with culture and crowds and the way we decide, as a group, what's right and what's not.

A quick look at some colors confirms that there is no algorithm, no accepted pattern for color names. They range from short and obscure (puce) to long and obvious references, like cotton candy.

No color has a name until a significant group accepts that name. You can start calling the sky, "gluten," but it's not going to be useful until others do as well.

That's what mass, cultural-shifting marketing does. It creates an idea or a label or a habit or a discussion and enables it to become a building block of our culture.

No one who invents a name for a color is applauded or instantly successful. It never works right away. And then, person by person, it starts to stick. The first person leaps, and leaps again, and persists, inventing something we sooner or later all decided we needed all along.

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duminică, 17 august 2014

Mish's Global Economic Trend Analysis

What States are the Biggest Job Winners and Losers in the Recovery?

Posted: 17 Aug 2014 09:01 PM PDT

The Deloitte University Press has a very interesting, and comprehensive study on job gains and losses, by type of job, and state by state.

The biggest winners are states involved in energy production, finance, or healthcare. The biggest losers are states that did not recover from the real estate bust, or lost population due to emigration.

With that overview, let's dive deeper into the Geography of Jobs.

Only now, as we reach the fifth anniversary of the end of the recession, has employment in the United States finally regained its pre-recession peak. The national story of slow recovery obscures the more complicated regional picture: As is the case during most business cycles, the pace of recovery has been very uneven among the states. At present, only 16 states plus the District of Columbia have employment rates at least one percent higher than they had prior to the start of the recession.

Among the states that have experienced the highest overall employment gains are the beneficiaries of expanding energy production. Among the states where employment remains substantially below pre-recession levels are those states most affected by the bursting of the housing bubble and those with declining manufacturing employment.

click on chart for sharper image

Only 16 states and the District of Columbia are at least one percent above their pre-recession employment levels. For more than half of these states (North Dakota, Texas, Alaska, Utah, Colorado, Oklahoma, Montana, West Virginia, and Louisiana), expanding energy production has played a key role in driving employment growth. The District of Columbia and the other employment-gaining states can attribute their total employment growth to increases in a variety of sectors, most notably health services and leisure and hospitality.

Four of these states (North Dakota, Colorado, Texas, and South Dakota) and the District of Columbia also had among the highest proportional increases in population due to inflows of people from other states between 2010 and 2013 (net domestic migration) as people moved to where the jobs were. Texas alone added more than 400,000 people from other states (1.5 percent of its 2013 population) during this period.

The recession was significantly more severe for the states that fall at the bottom of the job recovery rankings; these states continued to lose jobs well after the end of the recession. Job creation did not pick up in Nevada and New Jersey until the beginning of 2011 and did not pick up in Alabama and Maine until the middle of 2011. It took until the middle of 2012 for employment to begin to grow in New Mexico.

Population also migrated away from the states at the bottom of the job recovery rankings: Of those in the bottom 10, New Jersey, Maine, New Mexico, Connecticut, Michigan, Rhode Island, and Illinois all lost population to domestic migration.

Currently only North Dakota, the District of Columbia, and Oklahoma have more construction workers than they did in December 2007. Two of the states in the bottom 10 for employment recovery, Nevada and Arizona, were the hardest hit by the bursting of the housing bubble: At present, construction employment in Nevada is 51 percent below, and in Arizona is 42 percent below, their December 2007 construction employment levels. The other three states that remain at the bottom in terms of employment recovery—Alabama, New Mexico, and New Jersey—all have construction employment losses at least five percentage points higher than the national average.

The report takes a detailed look at mining, construction, and manufacturing gains and losses.

Mining is of course a net overall gain, while hard-hit manufacturing states were slow to recover.

Here are a few of my own conclusions, not from the report:

California no doubt benefited from Silicon Valley in spite of an overall hostile business environment and tax setup
Illinois was hit with a series of misguided tax hikes to the point Caterpillar threatened to leave the state. Illinois has no redeeming features to offset high taxes and other mistakes.
D.C. benefited from national politics and lobbying.
In general, red vs. blue is not the name of the game, but rather "what have you done for me lately".

It's a nice report. Inquiring minds may wish to take a closer look.

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

Brain Drain and Capital Flight: 64% of Wealthy Chinese Plan to Leave China

Posted: 17 Aug 2014 11:55 AM PDT

Massive pollution, especially unbreathable air, lack of educational opportunities, food, safety, and corruption are some of the reasons behind a recent poll that shows a whopping 64% of wealthy Chinese plan to leave the country.

The Wall Street Journal calls it The Great Chinese Exodus.

Today, China's borders are wide open. Almost anybody who wants a passport can get one. And Chinese nationals are leaving in vast waves: Last year, more than 100 million outbound travelers crossed the frontiers.

Most are tourists who come home. But rapidly growing numbers are college students and the wealthy, and many of them stay away for good. A survey by the Shanghai research firm Hurun Report shows that 64% of China's rich—defined as those with assets of more than $1.6 million—are either emigrating or planning to.

The decision to go is often a mix of push and pull. The elite are discovering that they can buy a comfortable lifestyle at surprisingly affordable prices in places such as California and the Australian Gold Coast, while no amount of money can purchase an escape in China from the immense problems afflicting its urban society: pollution, food safety, a broken education system. The new political era of President Xi Jinping, meanwhile, has created as much anxiety as hope.

First-generation businessmen—the ones who powered China's economic rise—now dream of a secure retirement. That means legal safety in places like the U.S. and Canada.

Last year, the U.S. issued 6,895 visas to Chinese nationals under the EB-5 program, which allows foreigners to live in America if they invest a minimum of $500,000. South Koreans, the next largest group, got only 364 such visas. Canada this year closed down a similar program that had been swamped by Chinese demand.

Beijing makes a crucial distinction between ethnic Chinese who have acquired foreign nationality and those who remain Chinese citizens. The latter category is officially called huaqiao—sojourners. Together, they are viewed as an immensely valuable asset: the students as ambassadors for China, the scientists, engineers, researchers and others as conduits for technology and industrial know-how from the West to propel China's economic modernization.

In 1989, when the Tiananmen Square massacre triggered an outflow of traumatized students and shattered the Party's image among overseas Chinese communities, the Overseas Chinese Affairs Office kicked into high gear with a propaganda campaign to repair the damage. It proved highly successful.

But China's cross-border political activities are creating unease. Consider Australia—one of the most popular destinations for Chinese students, emigrants and tourists, and a country where Mandarin Chinese is now the second-most widely spoken language after English.

"Chinese Australians are being lectured, monitored, organized and policed in Australia on instruction from Beijing as never before," wrote John Fitzgerald of Swinburne University of Technology, one of the country's foremost China experts, in an article published by the Asan Forum, a South Korean think tank.

In the U.S., a vigorous debate has broken out in academic circles about the role on American campuses of Confucius Institutes, which are sponsored by the Chinese government and offer Mandarin-language classes, along with rosy cultural views of China.

China must be exceedingly careful not to leave too many fingerprints on its political activities offshore. For a start, it has an official policy of noninterference in the internal affairs of other countries. But it also puts established overseas Chinese communities at risk by raising the issue of their national loyalties. That is particularly true in Southeast Asia, where the Chinese of a previous era were often viewed with suspicion as a communist fifth column.

Still, the sheer volume of China's outbound travel these days, and its massive economic impact, gives it new leverage. In the global market for high-end real estate, Chinese buying has become a key driver of prices. According to the U.S. National Association of Realtors, Chinese buyers snapped up homes worth $22 billion in the year ending in March.

Australia called a parliamentary inquiry to find out whether local households were being priced out of the market by Chinese money. (The conclusion: not yet.)

The Chinese government has no desire to slow the flow of students. Its attitude is simple: Why not have the Americans or Europeans train our brightest minds if they want to? President Xi's own daughter went to Harvard.

As always with China, the numbers awe. In his memoirs, Zbigniew Brzezinski, the former national security adviser, recalls a meeting between President Jimmy Carter and Deng. Human rights were on Mr. Carter's agenda, and he started needling the Chinese leader about Beijing's tight emigration policies. "Fine. We'll let them go," Deng snapped. "Are you prepared to accept 10 million?"

Not even Deng could have imagined the human torrent his "open door" reforms would eventually unleash. Try 100 million—and counting.

There is much more in the article including a video interview of political scientist James Jiann Hua To by WSJ's Deborah Kan. James To is author of 'Qiaowu: Extra-Territorial Policies for the Overseas Chinese', a book on how the Chinese government is using propaganda campaigns abroad to ensure loyalty from overseas Chinese.

At $146, I doubt he sells many copies. Instead, inquiring minds may wish to consider a Q&A on Qiaowu Writing China: James Jiann Hua To, 'Qiaowu: Extra-Territorial Policies for the Overseas Chinese'.

For a discussion of the impact of Chinese capital flight on the US housing market, please consider $22 Billion in California Homes Sold to Chinese All-Cash Buyers; "Beginning of Tidal Wave" says NAR Chief Economist.

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

Seth's Blog : Escalators, elevators and the ferry

Escalators, elevators and the ferry

Escalators make people happy. They're ready when you are, there is almost never a line, and you can see progress happening the entire time.

Elevators are faster, particularly for long distances, but we get frustrated when we just miss one, and we often wonder when the next one is coming, even after a few seconds. (That's why lobbies have mirrors, to give you something to do when you're waiting).

The ferry schedule, invented by Cornelius Vanderbilt, is a third way to deal with transport. Instead of having each boat turn around the minute it arrived, he guaranteed when it would leave. We can build our day around a schedule...

What do you offer your clients?

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sâmbătă, 16 august 2014

Mish's Global Economic Trend Analysis

It's Different This Time: Humans Need Not Apply; Two Possible Solutions

Posted: 16 Aug 2014 02:32 PM PDT

On August 7, I wrote about "McCashier" Your $15.00 Per Hour McDonald's Worker Replacement.

Sure. You can make $15 an hour at McDonald's, at least in Seattle. You just have to perform better than this machine.

Many commented along the lines of "What's the big deal? It's only a cashier. There are more cooking jobs that cannot be replaced."

For example reader Chris commented ...

A McDonalds worker isn't a "cashier." The person who works the front end doesn't just take orders and money. The person who works up front also fills drinks for drive thru. They clean the restrooms and dining areas. They help assemble food if needed(dropping fries.) Does the machine do all those things? If it doesn't then it isn't really replacing anything or more cost effective then a person. There is usually 2-3 people in the back assembling food and 2 people up front taking orders, handling money, assembling trays with ordered food, preparing drinks for drive thru, etc., etc. You could get the kiosk and the stupid burger machine and still have more than enough work for those 5 people.

Really? What about robot cooks, robot greeters, and even robot waiters?

Robot Cooks, Greeters, Waiters

The Times of India reports Robots Greet, Cook and Deliver Dishes at this Restaurant in China.

It's more teatime than Terminator — a restaurant in China is electrifying customers by using more than a dozen robots to cook and deliver food. Mechanical staff greet customers, deliver dishes to tables and even stir-fry meat and vegetables at the eatery in Kunshan, which opened last week.

"My daughter asked me to invent a robot because she doesn't like doing housework," the restaurant's founder Song Yugang told AFP.

Two robots are stationed by the door to cheerfully greet customers, while four short but humanoid machines carry trays of food to the tables.

In the kitchen, two large blue robots with glowing red eyes specialize in frying, while another is dedicated to making dumplings.

Song told the local Modern Times newspaper that each robot costs around 40,000 yuan ($6,500) — roughly equal to the annual salary of a human employee.

"The robots can understand 40 everyday sentences. They can't get sick or ask for vacation. After charging up for two hours they can work for five hours," he added.

Robot Waiters

A restaurant in China is electrifying customers by using more than a dozen robots to cook and deliver food. (AFP Photo)

Robot Cooks

This photo taken on August 13, 2014, shows a robot cooking vegetables in a kitchen of a restaurant in Kunshan. (AFP Photo)

Humans Need Not Apply

Many people sent me a link to Humans Need Not Apply.

The 15 minute video is well done and very thought provoking. It's well worth your time to play it.

Is It Different This Time?

The gist of the video is that "It's Different This Time", that no matter what your job is, your job is in jeopardy.

I have stated that over the long haul, technology creates jobs, but there are periods of creative destruction where the opposite happens. For example: How many millions of jobs did the internet revolution create? Did they all vanish?

No they did not vanish, and they all won't.

Yet, we are in a creative destruction phase where computers take jobs away. Will this change? I don't know the catalyst, but historically speaking, it always has.

What about the meantime? And for those who think the setup is permanent, the problem has even more severe implications.

Many readers have written this is why we need a "guaranteed income", not a guaranteed minimum "living wage". Let's quickly dispense with such nonsense.

Pay people to do nothing and you promote doing nothing. Do we have enough energy resources to give everyone on the planet, a guaranteed "living income"?

The answer is no, we don't.

Reflections on Productivity

The natural state of affairs because of increased productivity over time is an increased standard of living, more free, time, and falling prices.

Productivity and technological breakthroughs are inherently price-deflationary.

Enter the Fed and central banks in general. Central banks are hell bent on producing 2% or more inflation in a deflationary world.

That is the source of the battle over "living wages".

The problem is money does not go far enough, rather than people do not make enough. Realistically, no one in their right mind should care if wages fall, if increased productivity makes prices fall faster.

But central banks do not want prices to fall. Nor do those who control the assets (the banks, the bureaucrats, and the already wealthy) want prices to fall.

So, with the Fed promoting inflation, bureaucrats promoting higher and higher minimum wages, and with the Fed holding interest rates artificially low, corporations have every incentive to replace workers with robots at a Fed-induced artificially high rate.

Two Possible Solutions

The solution is not higher minimum wages. The solution is not a tax on robots like Paul Krugman wants. The solution is not a guaranteed income.

The solution is to eliminate the Fed, eliminate fractional reserve lending, and give the free market a chance to create jobs at its own pace, without all this government and central bank interference.

The alternative "solution" and not one I support, is to kill off a lot of needless people by starting WWIII.

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

Rebels Inflict Heavy Damage on Ukrainian Military Vehicles; Anti-Putin Sanction Alliance Crumbles

Posted: 16 Aug 2014 11:22 AM PDT

Contrary to the unsubstantiated rumor (most likely a complete fabrication) that Ukraine Destroyed a Russian Convoy, the rebels have inflicted serious damage on the Ukrainian military machine. And unlike the zero-proof offered by Ukraine, I have a few videos to show.

Descriptions from Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian.

Video 1: Stepanovka

Translated Text from Video URL:

"The defeat of Ukrainian troops in Stepanovka part 1. In Stepanovka Ukrainian army left dozens of pieces of equipment, a large quantity of ammunition, classified material. Locals said that the Ukrainian officers fatten when their soldiers were starving. In the Ukrainian army thrives drunkenness and panic."

Dreizin Synopsis 1:

Destroyed or abandoned Ukrainian equipment in/near Stepanovka in the south, the first of two Stepanovka videos. The first couple of minutes are very interesting, with lots of destroyed or abandoned equipment and milia carting off captured munitions and rummaging through stuff. Then a funky local man who tells the cameraman about how the Ukrainian officers didn't take care of their men and darted off leaving their men stranded, how the Ukrainians all drink heavily, how their morale is low and they panic during any kind of battle, and how they don't want to engage the militia up-close. Also you can see a stack of grad rockets on the ground around 5:50 and then again around 7:20.

But the most memorable quote is from around 7:18 to 7:52, as follows ...

"In the Stepanovka area, guys are jumping to go into battle, to kill the enemy even with bare hands. In particular, in the assault units that captured Stepanovka, there are very many volunteers from Semyonovka [a town near Slaviansk that was largely destroyed by Ukrainian shelling], who are just burning with a thirst for vengeance for the acts of genocide that the fascists waged there. I think that for Ukrainian soldiers, it's really best not to run into these guys. This is the mindset the Ukrainian army is fighting."

Video 2: Stepanovka

Translated text from the video URL "In Stepanovka Ukrainian army left dozens of pieces of equipment, a large quantity of ammunition, classified material. Showing the shocking footage of the deceased in the fire department of a Ukrainian paratroopers."

Dreizin Synopsis 2:

Destroyed or abandoned Ukrainian equipment near Stepanovka in the south, the second of two Stepanovka videos. This video is more interesting, much more equipment here, best part starts around 2:50.

Overall, for both (1) and (2), the narrator is describing the abandoned weapons, the tactical situation, and the human situation. In part (2) from 3:09-3:21, the narrator says that a militia burial party has already been to that particular spot, and along with a priest has taken the remains of 40 Ukrainians killed there and buried them nearby.

Video 3: Lugansk

Dreizin says "Warning! This may kill your appetite" Video URO description says "Consumed column Lviv airmobile brigade APU by the people's militia".

Dreizin Synopsis 3:

Dreizin describes this as the remains of a convoy of Ukraine's 95th Airmobile Brigade. I question the recentness of the video based on rotting flesh.

Video 4: Marinovka

Video URL Customs post with Russia "Marinovka" August 14, 2014

Dreizin Synopsis 4:

These militiamen are touring the captured border post of Marinovka, one of the points that plugs the western flank of the new cauldron in the south. They are obviously really happy, and the tall guy with the beard and mustache even finds the occasion to shout out his own paraphrase of an excerpt from Pushkin's "Ruslan i Liudmila" at around 0:22-0:25 (roughly translated as "It now smells like Russia here".)

Anti-Putin Sanction Alliance Crumbles

As the war rages on, and sanctions mount, support for those sanctions is now being reconsidered. Zero Hedge provides a nice synopsis in "Anti-Putin" Alliance Fraying: Germany, Slovakia, Greece, Czech Republic Urge End To Russian Sanctions

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

Everyone Should Be Able to Afford Higher Education

Featured

Weekly Address: Everyone Should Be Able to Afford Higher Education

In this week's address, with schools getting ready to open their doors again over the next few weeks, the President talked directly to students and parents about the importance of preparing for an education beyond high school.

In today's economy, some higher education continues to be the surest ticket to the middle class, but for too many families across the country, paying for higher education is a constant struggle. The President and First Lady know this first hand -- they only finished paying off their student loans 10 years ago -- and that's why they have made it a priority to help make college more affordable for families.

They have taken action to reform student loans, expand grants and college tax credits, help make loan payments more manageable, and have proposed plans to make sure colleges also do their part to bring down costs. And just this week, as part of the President's Year of Action, the administration announced a new series of commitments to support students who need a little extra academic help getting through college.

Click here to watch this week's Weekly Address.

Seth's Blog : Skinny, sad and pale

Skinny, sad and pale

On the first 100 pages of the new, thick issue of Vanity Fair, there are about 95 full page ads. Those ads feature, best I can count, 108 people. Of these, 24 of the people are some combination of not-sad and not-ghostly and not-skinny. The other 84 send precisely the same signal: Brands like ours feature people like this.

Here's the thing: green lights aren't green because there's something inherently go-ful about the color green. A long time ago, green got assigned to go, red to stop, and that's the semiotics of traffic.

The same is true for this class of luxury goods. There's nothing about too thin, too pale and really sad that implies that people will want to buy an expensive good, and in fact, there is probably data that shows that happy people actually lead to more sales. But these ads are about labeling and fitting in and sending a coherent signal. "Brands like ours advertise in places like this with ads like this."

In the tech world, ads featuring fonts like Myriad Pro and Helvetica send a similar signal. Creative people fall into the trap/use this shortcut of fitting in all the time, because so many other elements of their work feel risky, they choose to do what feels safe when the committee starts making ads.

And we make the same risk-averse decisions when we decide which trade shows to show our wares, what sort of stock photos to put on our website and alas, what sort of entrepreneurs we invest in. Culturally driven choices, not based on fresh analysis or actual impact.

We confuse the size of a diamond with how big a commitment of love the groom is making. We assume that movie characters that smoke cigarettes are more heroic or brooding. Or that how famous a college is has something to do with the future potential of those that attend. Executives assert that office size and inaccessibility are actually correlated with power...

Part of the art of making change happen is seeing which cultural tropes are past their prime and having the guts to invent new ones.

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vineri, 15 august 2014

Mish's Global Economic Trend Analysis

Let's Play "Telephone"!
Ukraine President Claims Russia Invaded Ukraine, and Ukraine Destroyed Russian Military Convoy
France Finance Minister "I Refuse to Raise Taxes to Close any Budget Gaps"; "Rethinking" the USA

Let's Play "Telephone"!

Posted: 15 Aug 2014 10:43 PM PDT

Anyone recall the campfire game Telephone?

In the game of Telephone, someone, typically sitting around the campfire, whispers a phrase to the next person who in turn whispers the phrase to the next person until the message is passed to the final person who reports what he heard.

Inevitably, the final result is nothing like what the first person said.

I have a modern day prime example as well as a Mish boy scout example to report. Let's start with the modern day example.

Telephone!

Telephone Part 1: BBC reports "Around a dozen Russian light tanks have been seen heading for the Ukrainian border, as a Russian aid convoy remains parked near the frontier. The BBC saw the tanks early on Friday morning, but there was no confirmation that they were going to Ukraine."

Telephone Part 2: The Guardian reports "a column of 23 armoured personnel carriers, supported by fuel trucks and other logistics vehicles with official Russian military plates, travelling towards the border near the Russian town of Donetsk – about 200km away from Donetsk, Ukraine."

Telephone Part 3: Lithuanian Foreign Ministry Says Russia Invaded Ukraine with 70 Pieces of Military Equipment

Telephone Part 4: Ukraine President Claims Russia Invaded Ukraine, and Ukraine Destroyed Russian Military Convoy

Thanks to reader Sergey for the first three links. I picked up and reported part 4 earlier, doubting the story from the moment I read it.

Mish Telephone Experience

I know full well how bullsheet like this spreads. It all goes back to the game of Telephone. Every listener (in this case writer) has a strong temptation to embellish the story to gain readership. This is how 12 becomes 40, becomes 70.

I learned an early lesson. In boy scouts, I purposely changed a message to something totally unrelated to what I actually heard. I never did it again because a counselor embarked on a binary chop method to figure out where the story went wrong.

Fortunately for me, the counselor stopped two people short.

Regardless, this is precisely how bullsheet spreads, and I now try hard not to be part of it.

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

Ukraine President Claims Russia Invaded Ukraine, and Ukraine Destroyed Russian Military Convoy

Posted: 15 Aug 2014 01:29 PM PDT

Here's the unbelievable claim of the day: Ukraine Attacks Russian Military Convoy, Says President.

Moscow's stand-off with Kiev intensified dramatically on Friday night after the Ukrainian government said it had blown up a Russian military convoy inside its territory, news that sparked a flurry of diplomatic activity to try to defuse the deepening crisis.

Just hours after a Russian humanitarian aid convoy of 270 white military trucks, some of which were empty, pulled up in the town of Kamensk-Shakhtinsky near Ukraine's border, Kiev said it had launched an artillery strike against a separate column of some two-dozen Russian military vehicles that had crossed into its territory under the cover of darkness.

In a phone call with British prime minister David Cameron on Thursday evening, details of which emerged on Friday, Ukraine's president Petro Poroshenko confirmed a Russian military convoy had entered Ukraine but said most of it had been "eliminated" in an artillery strike.

Russia on Friday night denied Ukraine's claim that it had "destroyed" part of a Russian military convoy on Ukrainian territory. The convoy that allegedly crossed the border into Ukraine did not exist, and such statements based on fantasy and assumptions should not be seriously discussed, the defence ministry said in a statement carried by state media.

The Russian foreign ministry accused Ukraine of threatening to use force against its humanitarian aid mission and of sharply stepping up hostilities "with the apparent aim of cutting off the path the convoy should take from the border to Lugansk under the agreement with Kiev."

Which Side to Believe?

I am willing to change my mind on which side to believe as soon as evidence comes in.

If "some two-dozen Russian military vehicles" were mostly "eliminated", how about some pictures please?

It should be a simple matter to take a few pictures of destroyed equipment and a few more pictures of soldiers in Russian uniforms.

And where is US satellite evidence? For that matter, where precisely did this strike occur?

Destroyed and Captured Equipment

My sources indicate we are soon going to see some images of destroyed and captured equipment of a completely different nature.

I will have a new map of major military operations and a new video out shortly.

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

France Finance Minister "I Refuse to Raise Taxes to Close any Budget Gaps"; "Rethinking" the USA

Posted: 15 Aug 2014 11:40 AM PDT

Not only is support for sanctions in Europe crumbling, so is support for alleged austerity. I say alleged because there really hasn't been any austerity.

France Rebels Against Austerity

Please consider France Rebels Against Austerity as Europe's Recovery Collapses by Ambrose Evans-Pritchard.

Eurozone strategy is in tatters after economic recovery ground to a halt across the region and France demanded a radical shift in policy, warning that austerity overkill is driving Europe into a depression.

Growth slumped to zero in the second quarter, with Germany contracting by 0.2pc and France once again stuck at zero. Italy is already in a triple-dip recession.

Michel Sapin, France's finance minister, sent tremors through European capitals with a defiant warning that his country would no longer try to meet its deficit targets and would not inflict further damage on its economy by tightening into the downturn. "I refuse to raise taxes to close any budget gaps," he said.

Growth is too weak in Europe and inflation is too low. We must therefore stop reinforcing the causes of this depression," he told RTL television.

"We must face the figures in front of us with realism. The truth is that, contrary to the forecasts of the International Monetary Fund and the [European] Commission, growth has broken down, both in France and in Europe."

Cause of the Depression

Sapin's statement "We must therefore stop reinforcing the causes of this depression" is correct.

Unfortunately, both Sapin and Pritchard are clueless about austerity and the cause of France's woes.

Austerity means (or at least should mean), cutting government spending, not hiking taxes to maintain ridiculous levels of government spending. Speaking of which, government spending accounts for a whopping 57% of French GDP.

Depression Hell

France desperately needs to cut government spending and burn thousands (if not tens of thousands) of regulations.

Instead, Pritchard wants the ECB to print more money. Sapin wants France to spend more money. It's a pair made in depression hell.

"Rethinking France"

Yesterday, in Time for a Rethink, I made these statements.

Time for a Rethink

Sapin wants a rethink. I certainly agree. It's time for France to ...

Rethink agricultural subsidies
Rethink high tax rates
Rethink work rules
Rethink countless regulations
Rethink government spending that accounts for 57% of GDP
Rethink Hollande
Rethink socialism

Actually, it's time for France to rethink everything that isn't working. In turn, that means France needs to rethink everything, because as best as I can tell, nothing is working properly.

"Rethinking USA"

Reader "Friendly Guy" complained about the fetid, foul-smelling US and proposed the following.

"Friendly Guy" says the US should ...

Rethink agricultural corn subsidies
Rethink low tax rates
Rethink work rules and the few vacation days employees receive
Rethink countless lack of banking regulations
Rethink government spending that accounts for a large part of GDP
Rethink Obama
Rethink capitalism

Every country should become like the fetid U.S. of A.

"Friendly Guy" is on to something, but in the opposite sense on all but two points 1 and 6, assuming I have his tone correctly. Here is his list with my comments.

The US should ...

Rethink agricultural corn subsidies: Yes, it should eliminate them.
Rethink low tax rates: Yes, it should lower taxes and cut government spending to make it possible.
Rethink work rules and the few vacation days employees receive: Yes, the government should get out of the way of regulations except when it comes to health, safety, fraud, and property rights.
Rethink countless lack of banking regulations: Yes it should eliminate all regulations except those whose only purpose is to prevent fraud. And speaking of fraud, we need to get rid of fractional reserve lending and absurd accounting methods.
Rethink government spending that accounts for a large part of GDP: Yes, we need to reduce government spending to the bone, pass national right-to-work laws, eliminate forced collective bargaining, and scrap Davis Bacon and all prevailing wage laws.
Rethink Obama: Obviously
Rethink capitalism: No. There is nothing to rethink. We should actually try it for a change.

Possibly I have "Friendly Guy's" tone wrong and we are in perfect agreement, but his sarcasm makes me think otherwise.

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

luni, 18 august 2014

Seth's Blog : Who named the colors?

Who named the colors?

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duminică, 17 august 2014

Mish's Global Economic Trend Analysis

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Seth's Blog : Escalators, elevators and the ferry

Escalators, elevators and the ferry

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Mish's Global Economic Trend Analysis

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Everyone Should Be Able to Afford Higher Education

Seth's Blog : Skinny, sad and pale

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sâmbătă, 16 august 2014

vineri, 15 august 2014

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