Mish's Global Economic Trend Analysis |
- China Manufacturing PMI Treads Water
- Election Jackpot Scratch and Sniff: LA Proposes Free Lottery Tickets if You Vote; Romney Says Obama Worse Than Expected
- Argentinian Peso in Massive Slide; Argentina’s Bonds Decline on Plan to Offer Local-Law Swap
| China Manufacturing PMI Treads Water Posted: 20 Aug 2014 10:41 PM PDT Chinese manufacturing is once again treading water, barely above contraction according to the HSBC Flash China Manufacturing PMI. Key points
 click on chart for sharper image Comments Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said ... "The HSBC Flash China Manufacturing PMI moderated to 50.3 in August, down from 51.7 in July. Both domestic and external new orders rose at slower rates compared to the previous month. Meanwhile, disinflationary pressure returned as input and output prices contracted over the month. Today's data suggest that the economic recovery is still continuing but its momentum has slowed again. Therefore, industrial demand and investment activity growth will likely stay on a relatively subdued path. We think more policy support is needed to help consolidate the recovery. Both monetary and fiscal policy should remain accommodative until there is a more sustained rebound in economic activity." Mish Translation of Comments China PMI has gone nowhere. The last uptick Qu raved about is now in the ashcan. Thus, Qu wants more "policy support" AKA loose money from the China central bank to "consolidate the recovery". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 20 Aug 2014 01:33 PM PDT Turnout in some Los Angeles elections is so low that LA Considers Giving Citizens Lottery Tickets if they Vote. With as few as 8% of registered voters showing up to vote in some recent elections, the Los Angeles Ethics Commission has urged the City Council to consider improving turnout with a lottery pilot program. No actual vote would be required, but those participating would have to show up at the polls to participate. There was no decision on what the grand prize for participating in the democratic process. "Maybe it's $25,000, maybe it's $50,000," Ethics Commission President Nathan Hochman told The Los Angeles Times. "That's where the pilot program comes in—to figure out what...number and amount of prizes would actually get people to the voting box."Is there any data that says it matters how people vote? Speaking of which, look at the pathetic choices in the last presidential election. Romney vs. Obama how did it matter? Romney Says Obama Worse Than Expected The laugh of the day is Mitt Romeny Claims Obama Worse Than Even I Expected. It's easy enough to cite failures of Obama. There are dozens of them. But at no point in the interview did Romney say what he would have done differently. For starters, Obamacare is Romneycare no matter how much he tried to distance himself from that simple fact. Would Romney have given arms to Syrian rebels like Hillary proposed? Would the US be at war with Iran now since Iranian sanctions did not do a damn thing? Would we be at war with Russia? Economic war with China? In what ways would anything be different under Romney? Might Things Under Romney Actually Be Worse? On the military front, I suspect we would be in more wars. We would also be in more trade wars if Romney did what he said with China. Would anything on immigration have passed in a split Congress? In what ways, others than birth control, abortion, and the like, would anything be different under Romney? "None of the Above" Is it time to consider adding "none of the above"as an option on every ballot? And if "none of the above" wins, should we just do away with the office? That would actually give people a reason to vote. The problem with such proposals is the only safe politicians will be in gerrymandered districts. Some propose term limits. But how does that help in a district that votes overwhelmingly for the same political party every year, and the candidates are all clones of each other? "If voting changed anything they'd make it illegal" That phrase has been attributed to Mark Twain, but more likely it belongs to anarchist Emma Goldman. You can pay people to vote, but what we really need is non-gerrymandered, real choices, not politicians owned by party demagogues, not politicians bought and owned by special interests. Given the Supreme Court ruled corporations are people, and given special interest groups bribe politicians with huge campaign contributions, I don't see any impetus for reform unless and until there is campaign finance reform and non-gerrymandered districts. Nonetheless, I keep hoping. I have voted in every national election since the age of 18. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Argentinian Peso in Massive Slide; Argentina’s Bonds Decline on Plan to Offer Local-Law Swap Posted: 20 Aug 2014 11:48 AM PDT In June, the US Supreme Court ruled that Argentina Cannot Selectively Default on a small group of hold-outs demanding full payment on otherwise restructured government bonds. The problem with the ruling is that if Argentina pays the vulture fund full value, it will have to pay all the bondholders full value, and that would wreck the country again. In the future, bond agreements will force everyone to go along with a majority decision. In the meantime, US courts ruled Argentina must negotiate will all the parties, including the vulture funds that own roughly 8% of Argentine debt and demand full payment on it. The ruling meant, and banks enforced, the all or none principle. Argentina defaulted on all the bonds, not because it wanted to, but because US courts forced that outcome. Local-Law Swap In an attempt to circumvent the ruling, Argentina will swap the bonds in question for new bonds. It will then hope to pay the 92% according to the prior workout agreement, leaving the vulture funds in limbo. With that backdrop it will be easier to understand today's Bloomberg report Argentina's Bonds Decline on Plan to Offer Local-Law Swap. Argentina's bonds sank to a two-month low after the government said it plans to pay foreign-currency notes locally to sidestep a U.S. court ruling that blocked payments and caused its second default in 13 years.Intermediaries Now Gone The trustee and primary intermediary was Bank of New York Mellon Corp. Kiss that intermediary goodbye. Bondholders can get payment directly from Argentina's central bank. The fact that debt is above average valuation of the past five years looks promising. The article suggests Argentina will be shut out of the credit markets. Is that necessarily the case? After all, Argentina is going out of its way to pay 92% of the bondholders who agreed on the initial restructuring. Nonetheless, Bloomberg reports "U.S.-based investors may be wary of taking part in the swap over concern they will be held in contempt of court, according to Casey Reckman, an economist at Credit Suisse." If so, it's ridiculous. In fact, the Supreme Court ruling is ridiculous. When you make risky bets, some of them work, some of them don't. The idea that bondholders or even certain bondholders can never take losses is idiotic, yet that is what the court ruled. Argentinian Peso in Massive Slide Inquiring minds may be interested in how the Argentinian Peso has been holding up under the circumstances. Peso vs. US Dollar  Since late 2007, the peso has fallen from 3.02 to the dollar to 8.32 to the dollar. That's a decline of 63.7%. Question of Reserves Argentina has about $29 billion in foreign currency reserves. Is that enough? The Wall Street Journal discussed the issue the other day in Argentine Bonds Fall Further as Talks Stall. Investors are more focused than ever on Argentina's reserves, which the central bank uses to defend its currency and fund imported goods.As noted above, US courts ruled the holdouts must be paid in full, or nobody paid at all. Yet, if Argentina paid the holdouts, it would trigger $120 billion in other claims, and Argentina only has $29 billion in reserves. Inane US court ruling? I think so. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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