Central Perk

luni, 22 decembrie 2014

It started with boats, but over the centuries, it is practiced everywhere... we establish cultural rights of way, a hierarchy of precedence about who gets to go first. We need a default because we can't always have a discussion about who goes next in the moment.

Motorboats, for example, are generally expected to veer out of the way of a sailboat (instead of the other way around). This makes sense, of course, because they have more options and can recover more easily.

That's one way to prioritize who gets to go first: the small over the big, the one who needs it over the one would could handle the interruption. It's annoying for the motorboat, but vital for the sailboat.

Lately, we seem to be making some new decisions about right of way that change this perspective. That cars ought to have right of way over pedestrians and bicycles. That huge corporations have right of way over individuals. That the authorities have the right of way over the presumed innocent, and that the marketer's infinite need-for-attention has right of way over quiet and privacy.

What would happen if the default was that roads are for pedestrians and bicycles unless otherwise stated, and what would happen if pleasing corporations was seen as an exception in the priorities of those that regulate them?

[There's no right answer in issues of societal right of way, there is nothing but compromises and judgment calls. At either extreme, everything breaks down, and so the question is: where do you want us to be? Where do you draw the line? Is it up to us?]

It's possible to argue that roads are more efficient when bikes don't clog them up, and that our illusion of security increases when the default is to know everything about everyone. Most of all, that corporations are more profitable when they don't have to worry about the people who don't fit their model.

It doesn't seem like much of a cost to ask individuals to get out of the way, until, all at once, we realize just how expensive it was to totally prioritize power and efficiency over humanity and justice.

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duminică, 21 decembrie 2014

Mish's Global Economic Trend Analysis

OPEC Blames Speculators, Non-OPEC Countries, US Frackers for Oil Price Crash

Posted: 21 Dec 2014 02:21 PM PST

OPEC is pointing the finger at speculators as well as Non-OPEC countries, but especially US shale producers for the crude price crash.

Let's explore that idea in a series of charts. But first let's take a look at the allegation.

The Wall Street Journal reports Gulf Oil Exporters Blame Non-OPEC Producers for Glut.

Gulf oil officials on Sunday defended OPEC's decision last month to keep its production ceiling intact, blaming producers outside of the group for the glut of oil on the market that has depressed prices.

Speaking at an energy conference in Abu Dhabi, Saudi Oil Minister Ali al-Naimi blamed a lack of coordination from producers outside the Organization of the Petroleum Exporting Countries—along with speculators and misleading information—for the slump.

OPEC officials have singled out American shale producers as a particular problem. U.S. oil production has soared as a result of the shale boom, reducing OPEC exports to the U.S.

Non-OPEC producers "will realize that it is in their interests to cooperate to ensure high prices for everyone," Mr. Naimi said.

OPEC December Monthly Oil Market Report

Are US shale frackers really to blame for the price crash?

Let's take a look using OPEC's own data. Please consider charts and other analysis from the OPEC December Monthly Oil Market Report.

OPEC vs. Non-OPEC Supply

Non-OPEC oil supply is estimated to grow by 1.72 mb/d in 2014 to average 55.95 mb/d.

In November, OPEC crude oil production averaged 30.05 mb/d, according to secondary sources, a decrease of 0.39 mb/d over one month earlier.

OECD Americas

OECD Americas' oil production is estimated to increase by 1.54 mb/d in 2014 to average 19.67 mb/d, the highest among all non-OPEC regions, indicating an upward revision of 10 tb/d from the previous MOMR. Strong estimates for both the US and Canada constitute the main factor behind expected supply growth, while heavy declines are seen in Mexico.

US

Developing Countries

Russia

Russia's oil supply is estimated to increase by 0.05 mb/d in 2014 to average 10.56 mb/d, an upward revision of 20 tb/d from the previous MOMR. Production reached a record 10.67 mb/d in November as per preliminary data, an upward revision of 80 tb/d in 4Q14, with current production data for October and November indicating higher-than-expected output. Russia's production is expected to average 10.58 mb/d in 4Q14, an increase of 60 tb/d from 3Q14. Based on preliminary oil production by companies in November, not only was output not reduced, but there was an increase in volume. However, it is anticipated marginal barrel output in Russia for 2015 could decline y-o-y, given the impact of sanctions, low prices and lack of large projects expected to come online. Nevertheless, the approval of a tax overhaul by the Russian parliament, reducing crude export duty from its current 59% to 42% in January, could encourage oil producing companies in Russia to produce more.

OPEC

Total OPEC crude oil production dropped in November to average 30.05 mb/d, according to secondary sources, down by 0.39 mb/d from the previous month. Production from, Iraq increased, while crude oil output mainly in Libya, Saudi Arabia and Kuwait fell. According to secondary sources, OPEC crude oil production, not including Iraq, stood at 26.69 mb/d in November, down by 0.44 mb/d over the previous month.

OPEC Thousands of Barrels a Day

World Supply vs. OPEC Supply

Preliminary data indicates that the global oil supply decreased 0.19 mb/d in November 2014 to average 92.69 mb/d. Non-OPEC supply experienced growth of 0.20 mb/d, while OPEC crude oil production decreased by 0.39 mb/d. The share of OPEC crude oil in the global supply declined to 32.4% in November. This estimate is based on preliminary data for non-OPEC supply, estimates for OPEC NGLs and OPEC crude oil production from secondary sources.

Singling Out US and Speculators is Ridiculous

Let's dismiss the notion speculators are responsible. Speculators, don't take delivery of significant amounts of oil (if any at all) and they don't set prices, but they can swing day-to-day volatility and perhaps exaggerate trends in both directions for a while.

Ultimately this is a supply-demand issue.

US production is up by 1.45 million barrels a day since a year ago.

Total world supply is about 93 million barrels a day. The increase in US production amounts to 1.56% of global supply. Singling out the US is absurd.

There are 12 OPEC countries vs. the rest of the world. Those 12 OPEC countries represent 32.4% of global supply.

In total, there are over 200 countries that produce oil according to the US Energy Information Administration (EIA).

An EIA chart (2012 data) will help put things in better perspective.

Countries and Producers Act Independently

It should be pretty easy to spot the problem. Countries as well as oil producers in those countries act independently.

Thus, Saudi Oil Minister Ali al-Naimi's statement "Non-OPEC producers will realize that it is in their interests to cooperate to ensure high prices for everyone" is laughable.

Every country in the world wants the other countries to be the ones to cut supply. Cooperation is not going to happen. OPEC cannot even agree among its own members.

For further discussion, please see What's Behind the Plunge in Oil? Winners and Losers? Boon to Spending or Recessionary?

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

Europe in Wonderland

Posted: 21 Dec 2014 02:10 AM PST

If you don't have the money, spend it anyway, says the Ukrainian government.

Of course, that's no different than the philosophy of any other country, including the US.

In this case, however, Ukraine borders on default.

Please consider Ukraine Can't Scrimp on Military Spending as S&P Rating Cut.

Ukraine's president, speaking a day after the nation's junk credit rating was cut further, said next year's budget mustn't cut corners on military spending and should account for the possibility of an invasion.

"The war made us stronger, but has crushed the economy," Poroshenko said. "There's one article of spending that we won't save on and that's security.

Ukraine is finalizing next year's fiscal plan amid a new cease-fire in the conflict that's ravaged its industrial heartland near Russia's border. As its economy shrinks and reserves languish at a more than 10-year low, it's also racing to secure more international aid to top up a $17 billion rescue. Standard & Poor's said Dec. 19 that a default may become inevitable, downgrading Ukraine's credit score one step to CCC-.

With official forecasts putting this year's contraction at 7 percent, the government needs $15 billion on top of its bailout to stay afloat, according to the European Union.

The European Union and the U.S. are discussing $12 billion to $15 billion in aid to Ukraine and "there needs to be a Russian contribution to the package," Pierre Moscovici, the 28-nation bloc's economy commissioner, said at a Bloomberg Government event this week in Washington. A decision is needed in January, he said.

War Has Made Us Stronger

Ukraine president says "War has made us stronger".

That lie is so stupid my dead grandmother knows it from the grave. The evidence is a CCC- debt rating, a step or so above above default, with default imminent.

The story gets even stranger.

To avoid default, Ukraine needs a "Russian contribution to the package" according to Pierre Moscovici, the economic policy commissioner for the European Commission.

Amazing Irony

Europe and the US have crippling sanctions on Russia for the conflict in Ukraine, yet the EC wants Russia to bail out Ukraine while accusing Russia of invading Ukraine.

Icing on the wonderland-cake is the Russian Ruble has plunged nearly 50% this year, but Ukraine needs money from Russia to fight Russia.

Is this complete lunacy or what?

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

Seth's Blog : Daily

Daily

There's a fundamental difference between the things you do every day, every single day, and the things you do only when the spirit moves you.

One difference is that once you've committed to doing something daily, you find that the spirit moves you, daily.

Rather than having a daily debate about today's agenda, you can decide once that you will do something, and then decide every single day how to do it.

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sâmbătă, 20 decembrie 2014

Mish's Global Economic Trend Analysis

Evolution of YouTube: Will it Supplant Mainstream TV, Vanish, Evolve, or Languish?

Posted: 20 Dec 2014 01:23 PM PST

What will become of YouTube?

It started from nowhere about 10 years ago as an idea with no revenue and no content, then pretty quickly lots of content coupled with a plethora of copyright infringement lawsuits.

Today, YouTube gets 300 million hours of watching every day. Top content producers have millions of followers and make millions of dollars.

But where to from here?

New Play Button

The New York Times tackles that question in a fascinating story YouTube's Chief, Hitting a New 'Play' Button.

The article is about Susan Wojcicki, the chief executive of YouTube, how she got her start, and in turn how Google got its start. Wojcicki was Google's 16th employee, and she is still with Google.

The Times notes Smosh, a pair of 20-something lip-syncing comedians, have roughly 30 million subscribers to their various YouTube channels. PewDiePie, a 24-year-old Swede who provides humorous commentary while he plays video games, has a following of similar size.

"Every day, one billion people around the world watch more than 300 million hours of videos on YouTube. In November, 83 percent of Internet users in the United States watched a video on YouTube, according to comScore. In contrast successful network television shows like 'NCIS: New Orleans' or 'The Big Bang Theory' average a little more than half that in weekly viewership."

I'm at the other end of the extreme. I watch very little TV. In fact, I have never even heard of 'NCIS' or 'Big Bang'

It's a fascinating success story for 46-year old Ms. Wojcicki, one of the most powerful media executives in the world.

Where To Next?

We can all speculate, but "where-to from here" is unknown. Not even Wojcicki knows.

"Things are always changing. Part of being successful here is being comfortable with not knowing what's going to happen," said Wojcicki.

One thing for sure is that You-Tube will evolve. Expect more internet content, not less. Also expect more forays by Google into TV-land material.

From what we have seen so far, Wojcicki is still the right person to lead the way.

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

Seth's Blog : Who let the air out of the balloon?

Who let the air out of the balloon?

Music, newspapers, books... most forms of media were exciting, high-pressure hothouses, environments with hits and winners and action and impact.

Many players in these industries are now trying to figure out where all the zing went. The mattering seems to have left. Where did it go?

It turns out that the air didn't get let out, the balloon disappeared.

Balloons have pressure because there's only one tiny opening. Scarce shelf space. Only room for one newspaper. Only forty titles on the Billboard chart. It's that opening that creates the environment that allows pressure to exist, that pulls the rest of the balloon taut.

But the opening is wide open now. The market has been offered infinity. Instead of a narrow, scarce selection of hits, those that consume media can have all of it, all the time. The long tail plus bite-sized pieces plus constant snacking.

A few generations ago, Gone With The Wind played at the only movie theater in town--every night for a year. Forty years ago, books stayed on the bestseller list for a year or more. Fifteen years ago, the front page ad on Yahoo was sold out for years in advance. Buying the one and only ad on the 'front page of the internet' was a no-brainer, a bargain at any price. Today, of course, there isn't a front page you can buy an ad on. No spot next to the cash register at the biggest chain of bookstores, either.

The abundance of choice feels like a good thing for those that want a choice. But yes, someone got rid of the balloon. All the economics are changing, as are consumption patterns, and they're shifting faster that the mindsets of those that create and publish.

Stop looking for the balloon. It's gone.

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vineri, 19 decembrie 2014

Mish's Global Economic Trend Analysis

Russia Not Selling Gold, It's Buying; Reflections on Extremely Sloppy Reporting

Posted: 19 Dec 2014 07:24 PM PST

On December 17, ZeroHedge asked Will Putin's Next Step Be To Sell Gold?

On December 18, ZeroHedge answered his own question wrongly with Russia Has Begun Selling Its Gold, According To SocGen.

I did not believe that when I saw it yesterday, and I sure don't today after viewing a few charts from Nick at Gold Charts "R" Us.

Russia Gold Reserves Up 600,000 Ounces for November

In US dollar terms, Russia's gold reserves are worth about $0.4 billion less.

Russia Gold Reserves in US Dollars

Of course, Russia may have started selling in December, but that's not precisely what happened either.

Gold Chat Debunks Russia Selling Gold Rumor

Please consider this snip from the December 19 Gold Chat article ZH fail on Soc Gen fail on Russia selling its gold.

As is common in internet land, people pick up stuff by others without doing basic drilling down to the source. The reason you have to do this is because people often misinterpret the source. Other times the source is wrong.

ZH quote the following from Soc Gen: "It appears possible that the Central Bank of Russia has started to sell off some of its gold reserves in December, with some sources reporting that official gold reserves dropped by $4.3 billion in the first week of the month."

Now that is a very specific figure, $4.3b. It seems that Soc Gen got it from this Business Insider republication of a Vesti Finance article which said "On Thursday, the Central Bank of Russia announced that gold reserves dropped by $US4.3 billion in just one week, reports Vesti Finance."

However, if we check the [Vesti] source link [using Google Translate] we get the following:

"Russia's international reserves for the week from November 28 to December 5, decreased from $ 420.5 billion to $ 416.2 billion, the central bank said on Thursday. ... For the previous week, from 21 to 28 November, gold reserves increased from $ 420.4 billion to $ 420.5 billion. On November 14th the size of gold reserves stood at $ 420.6 billion, on November 7 - $421,400,000,000 rubles."

Now the decrease they are talking about is $4.3b in total reserves but the headline mistakenly assumes it is all gold. The gold specific figures they mention show completely different numbers.

Link Sloppiness

This this precisely what happens when you are sloppy with links.

My major criticism is not that ZeroHedge posted something inaccurately, but that he frequently fails to link to stories.

On many occasions ZeroHedge states things like "Bloomberg says" and I spend 15 minutes looking and cannot find anywhere Bloomberg said anything remotely close to what was being attributed.

I realize sometimes there is no link. On such occasions, I will say something like via email, no link available.

In this case it appears the source of this misrepresentation was Business Insider who also got the story amazingly wrong.

On December 12, Business Insider reported Russia Is Fighting Its Financial Problems By Selling The Gold They Have Been Hoarding.

Russia is finally using all that gold they have been hoarding.

On Thursday, the Central Bank of Russia announced that gold reserves dropped by $US4.3 billion in just one week, reports Vesti Finance.

Which isn't all that surprising. ....

In the third quarter alone, Russia added more gold to its reserves than any other nation, according to the Telegraph. And over the last decade, Russia has tripled its gold stocks, according to data from the World Gold Council.

Until recently, Russia hasn't dipped into these enormous reserves.

But now that the ruble is getting pummelled following the decline in oil prices and sanctions imposed on Russia's economy by the West, Russia's central bank is apparently selling off some of its gold reserves to fight inflation and the ruble's decline.

Business Insider Sloppy Reporting

Russia is not selling gold, rather the US$ value of its international reserves fell by $4.3. Billion. Here is the opening sentence "Russia's international reserves for the week from November 28 to December 5, decreased from $ 420.5 billion to $ 416.2 billion, the central bank said on Thursday."

Gold Chat ended with ...

"Editor's Note: Earlier it was reported that the Central Bank's gold reserves decreased by $4.3 billion, quoting Vesti Finance. However, in actuality, it is international reserves assets that have decreased — not gold. Appropriate changes have been made."

Now how hard was that fact checking Soc Gen and ZH?

ZeroHedge messed up another gold story as well. Please consider the December 17 Gold Chat article Zero Hedge fail on undocumented gold supply story

This kind of nonsense is precisely why I am meticulous with links. I want others to carry the same standard.

Bloomberg is also terrible. In fact, mainstream media is horrendous in general.

Many mainstream media news outlets only link to themselves. And when that happens there is no way to check the facts. Then nonsense like this happens. I rest my case.

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

Spain to Abolish Rent Controls; 20,000 Small Businesses May Close; Good Thing or Not?

Posted: 19 Dec 2014 12:54 PM PST

Abolition of rent controls in Spain this month has prompted some landlords to increase fees by tens of thousands of euros. The Guardian claims Spanish rent changes 'could close 20,000 small businesses'.

Is this a good thing? Ponder that question for a moment, but also consider a few snips from the article.

Up to 20,000 small Spanish businesses could be forced to close when rent controls are abolished at the end of this month, according to the self-employed workers union. Many of the closures will be emblematic shops that shape the urban landscape in cities such as Madrid, Granada and Barcelona.

The Camisería Hernando has been in business since 1857 and has occupied the same shop on Madrid's Gran Vía for 50 years but is closing after the rent shot up from €3,000 to €30,000 a month.

Barcelona has already lost a toy shop and a secondhand bookstore that have been a feature of the old part of the city for more than a century. Both premises have been occupied by retail clothing chains. Other gems such as the modernista Monge stamp shop and the Quiles grocery are also under threat as the city succumbs to an influx of chain stores.

Local government officials have refused to intervene to preserve the city's heritage but local artists and intellectuals are taking the case of Monge to court. While some landlords have been prepared to negotiate affordable rent hikes, many shops are in buildings owned by banks and funds that simply notify the shopkeepers of the impending rise.

"About 60% of the 200,000 affected businesses have been able to negotiate a rise of around 35%," César García, of the self-employed workers union, said. "But most of the rest have received a letter telling them the rent is going up by thousands of euros and that it's not negotiable."

"We're closing after 72 years," said Susana Esnarriega, owner of Así, a doll shop on Madrid's Gran Via. "The landlord is giving us till Epiphany to get out but he hasn't even made us an offer."

Good Thing or Not?

Is this a good thing?

That's a somewhat misleading question because I was not specific.

Did I mean a good thing that 20,000 small businesses may close, or that rent controls will be abolished? Then again, does it really matter which question I meant? Let's start with rent controls and work our way through.

Without a doubt abolishing rent controls is a good idea. Government interference in the free market is never a good thing.

Will rents soar really from €3,000 to €30,000 a month? I rather doubt it, except perhaps in rare cases of a superb high-traffic location.

And in such cases, if an owner can really collect that much in rent, then yes, it is a very good thing the existing store closes. A new store would have to generate lots of income and create a lot of jobs to be able to pay that kind of rent.

Fear-Mongering

The closing of stores is in and of itself neither a good nor bad thing, but more productive uses of capital are always a good thing. In this case, if stores close and new ones open (which is what one would expect if rents go up) then yes, that's a very good thing.

The fear-mongering 20,000 store guesstimate by the small business association is highly questionable. But the more stores that close, the faster the Spanish economy is likely to grow as the land-owners will make better use of their land.

This was a superb decision by Spain to abolish rent controls. France and Italy should take note of such free-market reforms, because it's going to work.

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

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luni, 22 decembrie 2014

Seth's Blog : Right of way

Right of way

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duminică, 21 decembrie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Daily

Daily

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sâmbătă, 20 decembrie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Who let the air out of the balloon?

Who let the air out of the balloon?

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vineri, 19 decembrie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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