Mish's Global Economic Trend Analysis

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• 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 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.

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 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.

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 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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