Central Perk

sâmbătă, 2 iulie 2011

Weekly Address: Cutting the Deficit and Creating Jobs

Your Daily Snapshot for
Saturday, July 2, 2011

Weekly Address: Cutting the Deficit and Creating Jobs

President Obama addresses the need to reduce the nation’s deficit while creating jobs across the country and wishes Americans a happy Fourth of July.

Watch the video.

Weekly Wrap Up

The Economy and the Debt Limit: Speaking at his press conference on Wednesday, the president announced that “Now is the time to go ahead and make the tough choices.”

Twitter Town Hall: President Obama will hold a Twitter town hall at the White House next Wednesday, July 6 at 2 p.m. EDT use the hashtag #AskObama to get your question in.

Weekly Address: President Obama discussed the vital role of advanced manufacturing in strengthening our economy and creating good, middle-class jobs.

West Wing Week: “Magic Mountains and Volcanoes,” robots, and your guide to everything the President did this week.

Honoring Secretary Gates: President Obama and Vice President Biden attended the Armed Services farewell tribute in honor of Defense Secretary Robert Gates, one of the longest serving Secretaries of Defense in U.S. history.

#YoungAfrica: The First Lady has returned from her trip to Africa, and we’ve posted two more videos from her visits to local community centers.

Afghanistan In-Depth: Curious about the details of the Afghanistan draw down? Check out this half-hour in-depth discussion where we answered your questions.

Sports Shout-Outs: The Colorado Rapids took time to thank our Twitter followers and Facebook fans for the work they are doing for military families and the Seattle Storm thanked our followers/fans for the work they’re doing to keep kids healthy.

Video: The President and Community Leaders: Check out behind the scenes video of President Obama dropping by a Community Leaders Briefing and discussing his experience as a community organizer on the South Side of Chicago.

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Seth's Blog : The overwhelming fear of being wrong

The overwhelming fear of being wrong

She didn't vote because she was afraid her candidate would lose.

He complains that the blog is being published too often and doesn't want to read some of the posts if he's not going to be able to keep up with all of them.

They don't want to buy insurance for their business because the policies are too complicated and they might buy the wrong one.

The family doesn't travel by plane any more because the whole endeavor is filled with apparent pitfalls.

He doesn't want to buy the book because he might not like it. It's better to waste two or three hours doing something he's certainly not going to like instead.

She calls a meeting and then another meeting because it's easier than committing and just saying 'no'. Or 'yes.'

Better not to hire a coach or go to a therapist or even pick a doctor, because you might discover that you've been doing something wrong.

They sell more wine in places where there aren't so many wines to choose from, because complicated selection processes make it easier to buy nothing.

It's far easier to be guy #8. Not your fault.

Almost every marketer I know underestimates how widespread this fear is. It is the lone barrier almost every product and service has to overcome in order to succeed.

• Email to a friend •

vineri, 1 iulie 2011

Mish's Global Economic Trend Analysis

Government Shutdown in Minnesota: 23,000 of 36,000 State Employees Furloughed; Ohio Privatizes Prisons; Pennsylvania Slashes School Funding
Spain vs. Germany 10-Year Bond Spread; Reflections on "Contagion" Theory
Manufacturing ISM Weaker Than it Looks; Digging Into the Numbers; Inventory Restocking Accounts for Much of the Rise
China PMI Lowest Since February 2009, on Verge of Contraction; 18-Month Low in Europe; US ISM Unexpectedly Rises; US an Outlier?
Plan to Spoon-Feed Greece to Death; Greece to Receive Another $124 Billion in Small Bites, Details Postponed; 33% Chance of Italy Debt Downgrade

Government Shutdown in Minnesota: 23,000 of 36,000 State Employees Furloughed; Ohio Privatizes Prisons; Pennsylvania Slashes School Funding

Posted: 01 Jul 2011 08:41 PM PDT

In what we should all hope happens at the national level, Minnesota Shuts Down after failing to pass a balanced budget by the June 30 deadline.

Minnesota's state government began a broad shutdown on Friday going into the July 4th holiday, after Democratic Governor Mark Dayton and Republican legislative leaders failed to reach a budget deal.

Parts of the government had already begun to shut down on Thursday ahead of the midnight budget deadline, including some websites and dozens of highway rest stops on one of the biggest travel days of the year.

The budget impasse means that some 23,000 of the roughly 36,000 Minnesota state employees will be furloughed, and state parks and campgrounds will be closed ahead of what is usually their busiest stretch of the year for the Independence Day holiday.

All but the most critical state functions will be suspended while the spending impasse continues into the new fiscal two-year period that starts on Friday, which would make the 2011 shutdown much broader in scope than one in 2005.

NJ Cuts Aid to Local Governments, Family Planning

Controversial Governor Chris Christie signed a $29.7 billion budget, averting a government shutdown, after slashing $900 million using his line-item veto authority from the budget Democrats had presented to him.

"I will not give in to the Democrats' tax-and-spend agenda no matter how many times they and their allies and special interests demagogue me for refusing to do so," Christie told the Associated Press. "

The new budget adds $150 million in public school financing, and includes $447 million in funding for some of the state's poorest districts. Among the items cut by Christie were $139 million in aid to local governments, $50 million allocated for crime-fighting initiatives, $7 million for an AIDS drug distribution program, and $3.8 million for Senate and Assembly staff salaries.

Ohio Privatizes Prisons, Sets Plan to Abolish Estate Tax

Ohio Governor John Kasich signed a $55.8 billion budget hours before the midnight deadline, closing an estimated $8 billion deficit without raising state taxes. He used his line-item veto power to eliminate spending on a number of initiatives, including economic development and funding for certain special needs programs.

As part of the plan, the state will privatize five prisons, but the governor vetoed a proposal that would have given the state first choice on repurchasing prisons after they are sold to private parties.

Pennsylvania Budget Slashes Funding for Schools

Pennsylvania Governor Tom Corbett enacted a $27.15 billion state budget, which reduces spending more than $1 billion from the current fiscal year and includes severe cuts to higher and basic education.

Corbett, a Republican whose party controls both houses of the state legislature, signed the budget within an hour of Pennsylvania's midnight deadline for the 2012 fiscal year, which starts July 1.

The governor said the spending plan streamlines government, includes no tax increase and places limits on local property tax increases.

Any property-tax increase above the rate of inflation must be approved by local voters, the governor said.

Praise for Privatizing Prisons

Special praise goes to Ohio Governor John Kasich for privatizing prisons. California desperately needs to do the same. If things go well, Ohio's plan could be and should be a model for other states.

It is time to eliminate massive salaries and pension benefits of prison workers, most of whom are currently way overpaid and equally uneducated with nothing more than high school diplomas.

Hopefully transit workers will be next.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Spain vs. Germany 10-Year Bond Spread; Reflections on "Contagion" Theory

Posted: 01 Jul 2011 10:29 AM PDT

Here is an interesting chart and commentary courtesy of Steen Jakobsen, Chief Economist at Saxo Bank from Steen's Chronicle It's all Greek to me!

The back and forth of headline risks continues to drive this market between risk-on and risk-off to the huge frustration of investors as visibility seems to get worse and worse by the day.

There are still a number of event risks in the pipeline for the rest of June and into July, but the main point remains the same: We continue to only see political solutions based on buying time ("extend and pretend") and attempting to us liquidity to deal with a problem of solvency.

Spread between 10 year Government yield in Germany and Spain

click on chart for sharper image

I will once again reiterate that the main risk for Spain is not "contagion" from Greece but more the internal domestic issues coming to the fore: High unemployment, local states budget deficits rising and to some extent unaccounted for, the continued risk to bank stress test vis-à-vis housing markets and overall the funding issues for banks which are a Europe-wide issue.

Contagion or Just the Same Problem Elsewhere?

The spread is now down to 2.35 with the rally in European bonds in the wake of Greek bailout news, but nothing has changed in Spain, Portugal, Ireland, or Greece.

The contagion theory is that one country is sick and it spreads. However, Ireland, Portugal, Greece and Spain are already sick as a rabid dog. They cannot become infected, because they are already infected.

Furthermore, the IMF, ECB, EU medicine of throwing good money after bad is not the cure.

Ironically, France and even Germany are now at risk because of silly policies designed to prevent the unpreventable.

Plan to Spoon-Feed Greece to Death

The original Greek bailout was 110 billion Euros, now it takes another $85 billion (and counting). When the fire sale of Greek assets does not bring in enough money, the banks and IMF will place even harsher terms on Greece.

The revised plan is to spoon-feed payments to Greece in 12 billion-euro bites while demanding "progress". This will ensure Greece is sucked dry (at fire sale prices) of any government assets worth owning by the time the "bailout" is over.

See Plan to Spoon-Feed Greece to Death for a discussion.

Portugal, and Ireland should make note of the process. The same "bailout" plan will be used on them unless they tell the IMF and EU to go to hell.

Plan to Suck Greece Dry Will Backfire

The plan is to suck Greece dry, not to bailout Greece, but rather to bailout the banks that to lent Greece.

However, the plan will backfire. Greece will default anyway, and the ultimate cost will be higher to Greece and the banks that lent to Greece. European taxpayers will be asked to foot the bill.

Notice how silly this has gotten. Had Greece simply defaulted a year ago, the cost may have been haircuts of $50 billion or so. Now $282 billion (and counting) has been invested to "save Greece". Another $124 billion was approved today, details to be finalized later.

I ask again: Does Greece look or feel saved?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Manufacturing ISM Weaker Than it Looks; Digging Into the Numbers; Inventory Restocking Accounts for Much of the Rise

Posted: 01 Jul 2011 09:05 AM PDT

Inquiring minds are digging into June 2011 Manufacturing ISM Report On Business® to better understand the unexpected rise in PMI from 53.5 to 55.3.

Manufacturing at a Glance

click on chart for sharper image

Inventory Replenishment

For all the excitement over the 1.8 point rise, much of it is restocking inventories in the wake of the tsunami.

I called the ISM within minutes of the release to find out what portion of the overall 1.8 point rise could be attributed to inventories rising 5.4 points and what portion to customer inventories rising 7.5 points.

I also asked what portion of the inventory rise could be attributed to the tsunami. Finally, I asked what portion could be attributed to the class "Fabricated Metal Products" because that is the bucket for auto parts.

However there is only one person taking such calls at the ISM and her phone is probably ringing off the hook. I did not yet hear back.

Some of the answers came from elsewhere. From Goldman Sachs as posted on Zero Hedge.

BOTTOM LINE: The ISM beats expectations and rises in June. The details of the report, however, were weaker than the headline as more than half of the headline increase was due to an increase in inventories

The Institute for Supply Management (ISM) rises unexpectedly in June, up 1.8 points to 55.3. As the median forecast and ourselves had looked for a decline, this is clearly an encouraging upside surprise. The composition of the report, however, was on the weaker side. Specifically, a sharp increase in the inventories index (from 48.7 to 54.1) explained 1.1 points of the 1.8 increase in the headline index. If anything, an increase in inventories is a negative for future activity. The remaining 0.7 point of the headline increase was due to small increases in new orders (by 0.6 point to 51.6), production (by 0.5 point to 54.5), supplier deliveries (0.6 point to 56.3) as well as a more sizable increase in employment (1.7 points to 59.9).

Details

New orders barely rose and flirt with contraction.
Backlog of orders is in contraction for the first time.
Imports dropped 3.5 points and flirt with contraction.
Prices paid dropped along with commodity prices and most likely will drop again next month.

US ISM an Outlier

Earlier this morning I asked China PMI Lowest Since February 2009, on Verge of Contraction; 18-Month Low in Europe; US ISM Unexpectedly Rises; US an Outlier?

Scorecard

China on Verge of Contraction
Germany 17-Month Low
Europe 18-Month Low
Italy, Ireland, Spain, Greece in Contraction
US ISM Rises

US an Outlier?

I believe the US is an outlier. Manufacturers are gearing up following the Japanese tsunami, expecting a second-half revival that will not come.

The partial answers to my ISM questions help confirm my thoughts. If I hear from the ISM, I will post an addendum.

Addendum - Reply from ISM:

The PMI is an equally weighted composite of New Orders, Production, Employment, Supplier Deliveries, and Inventories (inputs to Manufacturing). Customer Inventories is tracked separately to add to the overall insights, but is not factored into the PMI.

We did not receive any commentary from our respondents indicating that the "Japan effect" is driving Inventories.

Since it is equal weighted of five components, the effect of inventories is 5.4 divide by five, or 1.08 (1.1) of the overall 1.8 rise as noted by Goldman Sachs.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

China PMI Lowest Since February 2009, on Verge of Contraction; 18-Month Low in Europe; US ISM Unexpectedly Rises; US an Outlier?

Posted: 01 Jul 2011 07:21 AM PDT

Still more signs the weakening recovery is all but over come from China where the private and government reported manufacturing PMIs are are verge of contraction.

China's official manufacturing PMI data showed the index falling to 50.9 in June from 52.0 in May -- the third consecutive month of slowing in the manufacturing sector. The slowdown was consistent with the private HSBC PMI, which slipped to an 11-month low of 50.1 in June, from 51.6 in May.

"This lower-than-expected PMI reading will further depress markets which have been increasingly worried about a hard landing in China in the past two months," said BOAML economist Lu Ting.

US ISM Unexpectedly Rises

In a snapback of weaker than expected manufacturing ISM reports recently, U.S. ISM Manufacturing Index Unexpectedly Rose in June

The Institute for Supply Management's factory index unexpectedly rose to 55.3 in June from 53.5 the prior month, the Tempe, Arizona-based group said today.

Economists projected the gauge would drop to 52, according to the median forecast in a Bloomberg News survey. Estimates of the 77 economists ranged from 49 to 55.

Other figures today showed manufacturing growth is slowing from China to Europe. China's factory index fell in June to the weakest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the slowest pace in 17 months, while Italy, Ireland, Spain and Greece contracted.

Scorecard

China on Verge of Contraction
Germany 17-Month Low
Europe 18-Month Low
Italy, Ireland, Spain, Greece in Contraction
US ISM Rises

US an Outlier?

I believe the US is an outlier. Manufacturers are gearing up following the Japanese tsunami, expecting a second-half revival that will not come.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Plan to Spoon-Feed Greece to Death; Greece to Receive Another $124 Billion in Small Bites, Details Postponed; 33% Chance of Italy Debt Downgrade

Posted: 01 Jul 2011 06:26 AM PDT

The cost to keep Greece afloat keeps rising. The latest deal, not yet finalized says Greece to Receive Up to $124 Billion in New Aid

Greece may receive as much as 85 billion euros ($124 billion) in new financing, including a contribution from private investors, in a second bailout aimed at preventing default and ending the euro-region's debt crisis, according to an Austrian Finance Ministry official.

Euro-area nations and private investors will contribute 70 percent of that aid, with the International Monetary Fund offering the rest, Thomas Wieser, head of the ministry's economic policy and financial markets department, said at a briefing late yesterday in Vienna. European Union finance chiefs also hold a conference call tomorrow to free up a 12 billion- euro payment overdue from the original rescue.

The new bailout program, which should run from mid-2011 for three years, has to be "imagined as a cash-on-delivery agreement," Wieser said, adding that the dates of paying out installments haven't yet been set.

"Before every payment there will be a discussion of the finance ministers to see if the program is on track and whether the Greeks are still doing their part," Wieser said.

The first payment under the new program will probably take place in September, and may be of a similar size to the 12 billion-euro July installment, he said.

Plan to Spoon-Feed Greece to Death

The original bailout was 110 billion Euros, now it takes another $85 billion (and counting). When the fire sale of Greek assets does not bring in enough money, the banks and IMF will place even harsher terms on Greece.

Notice the plan to spoon-feed payments to Greece in 12 billion-euro bites while demanding "progress". This will ensure Greece is sucked dry (at fire sale prices) of any government assets worth owning by the time the "bailout" is over.

Portugal, and Ireland should make note of the process. The same "bailout" plan will be used on them unless they tell the IMF and EU to go to hell.

33% Chance of Italian Debt Downgrade

CNBC reports Italy still faces debt risk despite austerity

Risks remain to Italy's plans to reduce its massive public debt despite new austerity measures, mainly due to weak economic growth prospects, ratings agency Standard & Poor's said on Friday.

Italy's cabinet on Thursday approved an austerity package worth some 47 billion euros ($66.55 billion) that is aimed at shielding the country from the Greek debt crisis and eliminating the budget deficit in 2014.

Ratings agencies S&P and Moody's have warned they may cut Italy's credit rating because of its inability to pass reforms to bring down its debt mountain. S&P has an A-plus long-term rating on Italy and the country is rated Aa2 by Moody's.

Following the unveiling of the government's austerity package, S&P said it maintained its view that there is a roughly one in three chance that its ratings on Italy could be lowered within the next 24 months.

Italy remains vulnerable due to its massive public debt of around 120 percent of gross domestic product (GDP) and its chronically weak economic growth -- the most sluggish in the euro zone over the last decade

Eurozone Delays Decision on New Greek Bailout

The New York Times reports Eurozone Delays Decision on New Greek Bailout

Eurozone finance ministers have canceled a crisis meeting planned for Sunday because they need more time — as much as two more months — to nail down the details of a second bailout for Greece, officials said Friday.

They will, however, hold a video conference on Saturday to sign off on a new loan installment that will keep Greece from bankruptcy over the summer.

"It would have been too ambitious to get the deal (on a second package of rescue loans) done by Sunday," said a eurozone official. Several key aspects of a new bailout, such as the contribution of banks and other investment funds, are still up in the air — although eurozone leaders said last week that there will be new financing for the struggling country.

Plan to Suck Greece Dry Will Backfire

The plan is to suck Greece dry, not to bailout Greece, but rather to bailout the banks that to lent Greece. That plan is still not finalized.

However, the plan will backfire. Greece will default anyway, and the ultimate cost will be higher to Greece and the banks that lent to Greece. European taxpayers will be asked to foot the bill.

Notice how silly this has gotten. Had Greece simply defaulted a year ago, the cost may have been haircuts of $50 billion or so. Now $282 billion (and counting) has been invested to "save Greece".

Does Greece look or feel saved?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Damn Cool Pics

James Garrison Loses a Record-Breaking 313lbs on Extreme Makeover
AutoWed Wedding Vending Machine
Fail Compilation June 2011
Phuket Nightlife
China Opens World's Longest Sea Bridge
Before and After Animal Rescue Pictures

James Garrison Loses a Record-Breaking 313lbs on Extreme Makeover

Posted: 01 Jul 2011 11:17 AM PDT

A year a go he was just shy of 700lbs, had a hernia and was staring death in the face. But with the help of TV trainer Chris Powell, James, from Fort Worth, Texas, lost an astonishing 313lbs in a single year.

The loss was a record for Powell, who stars in ABC's Extreme Makeover: Weight Loss Edition, and it has no doubt changed 26-year-old James' life.

Sourcee: dailymail

AutoWed Wedding Vending Machine

Posted: 01 Jul 2011 11:08 AM PDT

Created by Concept Shed, this coin-operated wedding machine can walk couples through the entire wedding, vending machine style. It can dispense plastic wedding rings, personalized receipts, and plays out the traditional wedding march. Couples can select the type of union they're entering and key-in their names to get personalized receipts that include a discount voucher for auto-divorce.

Fail Compilation June 2011

Posted: 30 Jun 2011 10:47 PM PDT

The fail compilation of June is online. Started in 2009 and since then the best collection of fails on the net. It takes time to find the best collection of fails but the result is worth it. I hope you will all like, favorite, bla bla this video. If you liked this video and you're new, maybe you should consider a subscription. I won't dissapoint you.

Phuket Nightlife

Posted: 30 Jun 2011 10:00 PM PDT

Here's an interesting series of photos taken on the streets of the beach resort Patong at night on the popular tourist and backpacker destination of Phuket Island, Thailand.

They show the lively nightlife area around Bangla Road, the hawkers and hookers, the taxi drivers, touts and tourists. All thrown together these pictures make for some interesting viewing.

The striking point about Thai pimple-coverer is that 70% of its prostitutes have recently been known as men. And it's not always that easy to recognize between real girls and former guys.

The picture of a night life won't be completed without sellers ready to sell any product at a relatively low price and drivers of open cabs. There are millions of cab drivers. Their number actually exceeds the number of tourists. A journey to such a cab will cost you around 10 dollars.

Source: akterpnd.livejournal

China Opens World's Longest Sea Bridge

Posted: 30 Jun 2011 09:33 PM PDT

China has unveiled the world's longest sea bridge, which stretches a massive 26.4 miles – five miles further than the distance between Dover and Calais and longer than a marathon.

The Qingdao Haiwan Bridge, completed earlier this week, links the main urban area of Qingdao city, East China's Shandong province, with Huangdao district, straddling the Jiaozhou Bay sea areas.

The road bridge, which took four years and cost a cool £5.5billion to build, will be open for use in the New Year and is almost three miles longer than the previous record-holder, the Lake Pontchartrain Causeway in Louisiana.

Source: dailymail

Before and After Animal Rescue Pictures

Posted: 30 Jun 2011 03:02 PM PDT

Here are a few pictures of the cats and dogs who have undergone amazing transformations since their rescue, definitely proof that a rescue is but a diamond in the "ruff."

32 reasons why you should adopt a rescue animal.