Mish's Global Economic Trend Analysis

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Argentina Central Bank Bans Imports Due to Lack of Dollars; Argentina to Apply "Iron Fist" to Those Who Raise Prices Posted: 01 Feb 2014 07:21 PM PST As reserves run dry, demand for dollars soars in emerging market countries, prompting inane economic actions. Via google translation from Libre Mercardo, please consider Argentina Cerntral Bank Bans Imports Due to Lack of Dollars. The fourth day of falling reserves has the Argentine central reeling. This Wednesday reserves fell by 180 million and this month reserves declined by $2 billion. Due to demand and the low level of foreign exchange reserves, the central bank has stopped payment of imports, according to Argentine newspaper La Nacion. "Almost all the customers who went to the bank did so to hoard dollars," claimed the cashier of a national bank to the southern newspaper. "Today almost no imports were approved import" confided the head of the table of a major bank in the nation. Argentina to Apply "Iron Fist" to Those Who Raise Prices Via translation from El Economista, please consider Argentina Threatens to "Get Tough" on Businesses that Raise Prices. Economic war has moved to Argentina. The Argentine government said it will apply an "iron fist" against the shops and businesses that raise prices following the sharp devaluation of the local currency last week, hoping to avoid tripping high inflation in the country. Argentina has one of the highest inflation rates in the world, which in 2013 was around 25% according to private estimates. Prices of products with imported components such as appliances and vehicles rose immediately after the devaluation. Moody's expects a devaluation of the Argentine peso 50% in 2014. Before the devaluation, the Government launched a plan to fix maximum prices on about a hundred products sold in supermarkets. But the incentive is limited and includes products that are hard to find on the shelves. Simple Rules Fix prices too low and there will be no supply. Stores will not sell at a loss. Set prices too high and sellers will come out of the woodwork. For an example of the latter, please see China Abandons Disastrous Cotton Stockpiling Program; Lessons Not Learned; What About Stockpiling Money? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Barcelona to Fine Owners of Empty Homes 100,000 Euros Posted: 01 Feb 2014 11:11 AM PST Via translation from Libre Mercado, the city council of Barcelona, Spain proposes €100,000 Fine on Owners of Empty Homes. The City Council will fine owners of empty homes up to 100,000 euros. The proposal by the City Council commits the government to detect unused homes, starting with the banks. The statement also reflects the Council's commitment to initiate disciplinary proceedings which could end up with three fines "of up to 100,000 euros" if homes remain empty. The municipality of Barcelona draw "Inspection Programs to detect, check and effects pointing this statement, in order to guarantee the right to housing of the population and to address the housing emergency." With this measure, Barcelona joins other municipalities that have already approved the proposal of the PAH as Gerona, Tarrassa or Santa Coloma de Gramenet. Scramble For Renters On To get around this idiotic law, banks and other landlords will either have to tear down houses or quickly dump them at distressed prices. Both of those things will compound the difficulties of already stressed banks. Alternatively, banks, other landlords, and owners of vacations homes will enter a mad scramble to find renters, at any price, to get around the occupancy restriction. An avoidance maneuver of that kind would stress rent prices and rental landlords. Clearly, this is another one of those too stupid to make up ideas. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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