| Tired of the Bears? Get Bearcrow! Posted: 14 Dec 2014 05:58 PM PST This is a non-economic comedy post, but I think you will enjoy it. In the video below, I take a big swing at the Chicago Bears football team and secondarily Obamacare. Watch the video to see the tie-in. Best Played Full Screen - Control in Bottom Right of VideoLink if video does not play: Meet BearCrow. If you like this video, please pass it on!Dysfunctional BearsVideo was produced before Chicago Bears offensive coordinator Aaron Kromer admitted he was the source of a Cutler " absolutely killed" the bears comment. Kromer issued a tearful apology late last week. In the past few weeks there have been reports of locker room fights, talk of " buyer's remorse" about Cutler, and now a blubbering offensive coordinator crying in the locker room. Select Still Captures From VideoJay Cutler Wanted "Sacked or Alive"  Introducing BearCrow - Guaranteed to Cure Your "BWA"  Buy Our Sister Product "BearNausea" ... "You've Got Mail"  More Inside a "Ding Dong" Than Cutler's Head  BearCrow Supports Local Schools  Buy BearCrow - Do It For The Kids  "BWA" Recognized Disease Under Obamacare  Dr. N.E. Thingoes Sure to Prescribe BearCrow and BearNausia  Hot Off the Press Announcement  Phone Operators Standing By  Mish Production  Film Credits- Mish: Script, Props, Announcer
- Friend Kathy: Phone Operator
- Neighbor Mike: Afflicted with and Cured of "BWA"
- Mike's son Cole: Top Investigator Homer Sherlock
- Mike's son Noah: Support the Kids
- Liz, my Wife: Videographer
- Friend MaryBeth: Stage Assistant
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Draghi About to Quit ECB? Posted: 14 Dec 2014 05:32 PM PST Rumor has it that Draghi is so fed up with German opposition to everything he wants to do with stimulus and sovereign debt bond buying that he is about to leave the ECB. The Fiscal Times asks Why the Hell Does Mario Draghi Want to Leave the ECB Now!? What would happen to Europe's prospects for recovery if Mario Draghi left his job as president of the European Central Bank? Would Draghi's plans to implement an ambitious policy of monetary stimulus get bulldozed by German inflation hawks and others favoring continued austerity across the Continent?
Even a week ago there seemed little reason to ask such questions. Not anymore. Draghi appears set to leave Frankfurt and return to his native Italy the first chance he gets.
This could be as soon as January, depending on a variety of circumstances in Frankfurt and Rome, according to well-placed sources who include a prominent private investor and a senior journalist in Rome. "Draghi wants out, fed up and stymied by Berlin," one of these sources wrote in a note just before the weekend. In a subsequent message: "I am hearing from several [official] sources that he is entirely fed up with the monetary politics he confronts."
Some observers in Italy reckon that Draghi thinks he has done all he can at the ECB. But it's some and some on this point.
"There are others here who say Italy now needs a president who can reassure Europe as to the direction of Italian reform policies," my journalist colleague in Rome tells me. "Draghi rates high in this respect."
Why would Draghi cash in a position of considerable international influence to take up the figurehead presidency of a mid-sized European power?
Again, no simple answers. Contrary to appearances, Draghi may have concluded recently that he won't prevail against his austerian adversaries, some sources suggest. It is more likely that, as everyone has already concluded, he recognizes that there are no promising alternatives to succeed Giorgio Napolitano, who is expected to step down as president early next year. "Draghi's a last resort for Italian politicians," in the estimation of one informed source.
For his part, Draghi denies that he has any presidential ambitions—or any plans to pack up in Frankfurt, for that matter. But my sources advise that we assign these assertions zero credibility. Draghi went home in mid-November to deliver a speech on ECB policy to students at the University of Rome, and the occasion was widely taken to be a toe in the water prior to a full-dress presidential candidacy.
Another factor evident here is Prime Minister Matteo Renzi. One, sources say he appears to think he can make more use of Draghi in Frankfurt than at home. Two, there are indications he doesn't want a figure of Draghi's weight and international stature crowding into his picture frame.
The weakness of other candidates—Romano Prodi, a former prime minister, and Giuliano Amato, a former interior minister and now a member of the constitutional court—again comes into play. Even with the failed speech and Renzi's probable resistance in view, a source in Rome concludes, "If Draghi opens the door it won't be difficult to reach the needed consensus. He'll get it if he wants it." Draghi's "Small" Tactical Retreat Ahead of QEThe Financial Times discusses Draghi's Tactical Retreat Ahead of QE.The ECB made some statement changes ahead of the much ballyhooed QE program expected next year, so much so that it appears the ECB does not have any real target. But there is a difference between a "small" tactical retreat and being so fed up that Draghi is about to leave. So which is it? I picked up the above links from ZeroHedge Mario Draghi: Goodbye ECB, Hello Italian Presidency?I offered my own opinion on a possible move of ECB president Mario Draghi back to Italy way back on November 13. Next Phase: Currency Wars, Deflation, Yuan PlungePlease consider Next Phase in Currency Wars: Yen Plunge, Yuan Devaluation, and "Tidal Wave of Westbound Deflation". Deflation Shockwave Thesis
- Next phase of currency wars is underway.
- Abe will "do whatever it takes" to produce inflation in Japan.
- Abe will soon "lose control of the situation".
- Yen sinks to 145 to US dollar.
- China will respond by devaluing Yuan.
- "Tidal Wave of Deflation" heads West.
- US brands China a "currency manipulator"
- Global currency crisis ensues
- Gold soars
Points 1-6 from Albert Edwards at Society General. I added points 7-9.
It may play out this way, but if so, perhaps it takes longer than March. I will give a big tip of the hat to Edwards if it plays out that way within a couple of years (whether or not my points 7-9 happen).
My only disagreement with Edwards is on a tangential issue. The problem in the eurozone is not Mario Draghi or Germany.
Draghi cannot do "whatever it takes" to spur credit and inflation because the primary problem in the eurozone is structural, with the euro itself. A key secondary problem is productivity issues between member states. The secondary issue cannot be resolved (except at the expense of Germany and the Northern states) if every country remains on the Euro.
There is little Draghi can do to spur credit creation in Europe given the above constraints, productivity issues, bank leverage, the Maastricht Treaty, and increased infighting among member states, some of which want to violate the treaty and others not.
Draghi's Next Move - Back to Italy?
Neither Draghi, nor Germany, nor any Asian countries will be pleased by Japan's attempt to boost exports by driving down the Yen. This will make it all the more frustrating for Draghi. Calls will mount for Draghi to "do something".
I suggest Draghi might just quit, then head back to Italy, perhaps as next president, perhaps to run for prime minister. If Draghi is smart, he will get out of the way before crisis hits rather than during the next crisis.
Currency Crisis Coming Up
When China reacts (and China will react if the Yen hits 145 to the dollar, perhaps before that point), the US will scream and the protectionists in Congress will call on Obama to label China a "currency manipulator".
Political necessity ensures the largest screams will not be about Japan, but about China, when China reacts to pressure from Japan.
Labeling China a currency manipulator would of course make matters much worse, but that is precisely what I expect from Congress should China devalue. Global trade would then collapse amidst competitive currency debasement. Finally, under such a scenario, gold would likely soar. Albert Edwards pinged me with a comment agreeing with points 7-9 regarding currency manipulation, a global currency crisis, and gold. Everyone is guessing of course. But Keynesians, led by Paul Krugman are all screaming for still more stimulus even though it clearly wrecked Japan. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Hugo Salinas Price Asks Mexico for Silver Coin to Calm the National Tantrum Posted: 14 Dec 2014 10:36 AM PST My friend, Hugo Salinas Price is on a mission to get Mexico to adopt a silver coin as legal currency. It's a mission I endorse 100%. His plea to the government in Mexico was written in Spanish but I asked Hugo for a translation. In English, please consider A Silver Coin that is Money To Calm the National Tantrum in Mexico. When a baby is having a tantrum because he's tired or sleepy, the best thing to get baby to forget what bothers him is by distracting him with anything you may have at hand: a pair of glasses, a rattle, or a bunch of keys.
The Mexican people are tired and angry, and they are having a great tantrum. It is impossible to correct or eliminate in short order the causes of their anger. What we need is to distract the angry population with some good news that will catch the popular attention and imagination.
For nine years I attempted to convince the Federal Congress of Mexico to approve legislation that would monetize the "Libertad" silver ounce, which is minted by the Mexican Mint; the coin would then have value for a given number of Mexican pesos, by means of a quote on the part of our Central Bank. The quote would be a floating quote, somewhat higher than the value of the silver ounce on the international markets, and would increase with increases in the value of silver on the markets, but never fall (in Mexican pesos value) if the price of silver should fall.
My efforts did not meet with success, but the project gathered quite a bit of support in the Congress, both on the part of Federal Congressmen as well as on the part of Federal Senators. An insignificant dispute between the PRI and the Leftist PRD caused the PRD to withdraw its support, which the PRI required to pass the legislation. .... Hugo's Silver Currency Idea ExplainedFor a detailed explanation of how Hugo's silver currency proposal would work, please see Silver, liquid and illiquid, the 'modified open mint' and gold & silver as parallel monetary systems by Hugo Salinas Price. Role of Gold in Trade For a discussion of trade imbalances and the role of gold, please see Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold's Honest Discipline RevisitedMike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Consumer Price Deflation for 15 Consecutive Months in Spain, CPI Now -0.4 Percent Posted: 14 Dec 2014 08:50 AM PST Spain is in the midst of consumer price deflation going on 15 months. Inflation is -0.4% and falling. El Confidential reports Deflation is Cast in the Spanish Economy ... and No Disasters (For Now).  It is rare to see publications looking at the bright side of deflation, but here you have it. Via translation ... The data speak for themselves. And leave no shadow of doubt about the collapse of prices. The Consumer Price Index (CPI) ended in November yoy at -0.4%. But what is more important: far from having touched the ground, continue to fall in the coming months. Func considers in particular that the CPI will end 2014 at -0.8%. In the first two months of 2015, the index will continue to plummet to -1% in February. A general fall in prices over a significant period of time constitutes deflation.
If the analysis is done taking into account not only the IPC, which covers only the rate of change in consumer purchases - but all the prices that influence inflation (as producer prices), the result is likewise significant.
Core inflation, which excludes from the calculation energy and food products, in November stood at -0.1%.
The upside is a recovery of purchasing power. And indeed, according to Social Security, pensions have earned 713 million in purchasing power this year because they were up 0.25%, when the CPI in November to November stood at -0.4%. Therefore, a gain of 0.65% purchasing power. Between 2013 and 2014, the government estimated the gain purchasing power of pensions was 2.085 billion euros. Also, wages have risen agreement 0.6% above the CPI.
Deflation positively influences the competitiveness of the Spanish economy. While the HICP in Spain stood at -0.5% yoy, the HICP in the euro zone is 0.3%. The favorable price differential Spain continues to consolidate. HICP vs. US CPIHICP is the Harmonized Consumer Price Index. It differs from the US CPI as follows. The HICP differs from the US CPI in two primary aspects. First, the HICP attempts to incorporate rural consumers into the sample while the US maintains a survey strictly based on the urban population. In actuality, the HICP does not fully incorporate rural consumers since it only uses rural samples for creating weights; prices are often only collected in urban areas.
The HICP also differs from the US CPI by excluding owner-occupied housing from its scope. The US CPI calculates "rental-equivalent" costs for owner-occupied housing while the HICP considers such expenditure as investment and excludes it. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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