Mish's Global Economic Trend Analysis

Turkey Demands More Money From EU, Vows Not to Become 'Concentration Camp' for Migrants
Merkel Seeks to "Europeanise" Border Controls; Emergency EU Meeting Called
Does the Sum of the Parts Equal the Whole?

Turkey Demands More Money From EU, Vows Not to Become 'Concentration Camp' for Migrants

Posted: 21 Oct 2015 06:29 PM PDT

The problem with paying bribes, is the request for more money never stops.

I discussed the bribe setup on October 16, in Bargaining With the Devil: Germany Bribes Turkey With Aid Package, EU Sidelines Highly Critical Report on Turkey's Free Speech Record.

In return for holding more refugees, Turkey demanded ...

€3bn in fresh funds
Unblocking about five chapters in Turkey's EU membership negotiations
Visa-free access for 78 million Turks to the Schengen border-free area by 2016

Merkel was prepared to go along with that request, but things have changed already.

Turkey's 'Concentration Camp'

Shortly after meeting with Merkel, Turkey upped its monetary demand and placed other demands as well.

Turkish Prime Minister Ahmet Davutoglu now says Turkey Should Not Become 'Concentration Camp' for Migrants.

Turkey wants fresh funding from the European Union in exchange for stopping migrants streaming to Europe but should not be expected to turn itself into a "concentration camp" for refugees, Prime Minister Ahmet Davutoglu said on Monday.

Both President Tayyip Erdogan and Davutoglu, whose AK Party faces a general election on Nov. 1, are keen to avoid any impression of weakness in dealing with European nations they say have only just realized Turkey's value in the migrant crisis and are digging in their heels on the funding issue.

"We can't accept this idea that 'we've given this to Turkey, and Turkey is satisfied, so all migrants should stay in Turkey'," Davutoglu said in an interview on Turkey's Ahaber TV. "Nobody should expect Turkey to become a country housing all migrants, like a concentration camp."

EU leaders at a summit in Brussels last week said they had agreed on a migration "action plan" with Ankara, and German Chancellor Angela Merkel said the figure of 3 billion euros ($3.4 billion) had been discussed.

But a day after meeting Merkel in Istanbul, Davutoglu said that sum would have come from "IPA" funds - money already earmarked for Turkey as an EU membership candidate - and that Ankara wanted fresh cash in a sum to be reviewed each year.

"The 3 billion euro IPA fund proposal is no longer on the table as we have said we will not accept it," Davutoglu said.

"As for fresh resources, we're talking about a 3 billion euro amount in the first stage. But we don't want to fixate on this because the requirements may go up, and the assessment for this would need to be done annually."

Merkel on Sunday offered Turkey the prospect of support for faster progress on its bid to join the EU, as well as an accelerated path to visa-free travel for Turks, a priority for many in the nation of 78 million.

In return, she expected Turkey to agree more quickly to take in migrants sent back by the EU, under so-called "readmission agreements" that Davutoglu has said he would sign up to only if there is progress on liberalizing the visa regime.

Population of Germany, France, UK

If the EU admitted Turkey, it would replace Germany as the most populous country in the EU.

Islam in Turkey

Wikipedia reports ...

97.8% of the population identifies as Muslim, but only 23% is really religious. Most Muslims in Turkey are Sunnis, forming about 72%, and Alevis of the Shia denomination form about 25% of the Muslim population.

Although Turkey was secularized at the official level, religion remained a strong force at the popular level. After 1950 some political leaders tried to benefit from popular attachment to religion by espousing support for programs and policies that appealed to the religiously inclined. Such efforts were opposed by most of the state elite, who believed that secularism was an essential principle of Kemalist Ideology. This disinclination to appreciate religious values and beliefs gradually led to a polarization of society. The polarization became especially evident in the 1980s as a new generation of educated but religiously motivated local leaders emerged to challenge the dominance of the secularized political elite.

By 1994 slogans promising that a return to Islam would cure economic ills and solve the problems of bureaucratic inefficiencies had enough general appeal to enable avowed religious candidates to win mayoral elections in Istanbul and Ankara, the country's two largest cities.

What the Hell is Merkel Doing?

The Daily Beast reports Merkel Wants Turkey in the EU to Win Re-Election

This week, the German chancellor Angela Merkel visited Turkey. There she announced that she will push to accelerate Turkey's accession to the European Union. That is pretty surprising statement from a politician who was elected ten years ago, in 2005 on the promise that Turkey would never join the EU. In May 2010 Merkel went even further and ruled out the possibility of Turkey becoming member of the European club.

The obvious reason why Merkel wants to appease Turkey is another promise she made: that Germany would host 800,000 refugees. Refugees reacted so enthusiastically that they started to come in the thousands. When even the Christian Social Union, the sister party of Merkel's Christian Democratic Union in Bavaria, started revolting, Merkel quickly realized that this might not have been the best decision to win the next election.

The subsequent plan was then to spread the refugees over the member-states of the EU. This plan too was hardly welcomed by many European countries. Four countries voted against the plan, but were forced to take their part of the quota for refugees. Everybody knows that the European plan will quickly need to be updated as refugees keep coming. It seems improbable that Merkel can push a new plan through. The only possible way to stop the flow of refugees is to convince Turkey to keep them there and stop them from traveling on to Europe.

Is That Merkel's Plan?

If that indeed is the plan, it was not well thought out. Between 2 and 2.5 million Syrian refugees are in Turkey. And there are another 75 million Turks that just may decide they would rather be in Germany.

Merkel's plan to take 800,000 refugees was amazingly short-sighted from the start. And the plan to pay bribes to Turkey will not work either. In fact, the bribe scheme appears to have blown sky high before it was even tried.

So it's back to the drawing board with Merkel calling an emergency meeting hoping to "Europeanise" Border Controls as noted earlier today.

This update wraps up some loose ends while pointing out additional features of the "no-win" position that Merkel brought upon herself voluntarily.

Mike "Mish" Shedlock

Merkel Seeks to "Europeanise" Border Controls; Emergency EU Meeting Called

Posted: 21 Oct 2015 11:19 AM PDT

Emergency EU Meeting Called

Animosity over millions of migrants entering the EU has finally reached the crisis stage. In an emergency meeting this weekend, called by German chancellor Angela Merkel, EU Leaders to Hammer Out Continental Response to Migrant Crisis.

European leaders will hold an emergency summit this weekend in an attempt to bring order to the tide of migrants crossing the western Balkans.

The hastily arranged meeting in Brussels comes after weeks of tit-for-tat border closures in Hungary, Slovenia and Croatia, which have led to thousands of migrants being stranded in increasingly difficult conditions in southeastern Europe.

The crisis has triggered a dramatic deterioration of relations between governments in the region, with Slovenian prime minister Miro Cerar attacking Croatia's handling of the situation. Slovenia this weekend called in the army to help cope with the influx, sparking concern among diplomats in Brussels.

At the meeting on Sunday, Ms Merkel is expected to push for increased efforts to "Europeanise" border controls. The chancellor believes that unless the influx is brought to a halt, finding a solution to where refugees will be resettled or relocated will be nearly impossible.

In an effort to ease the pressure, German chancellor Angela Merkel will meet leaders from nine other countries on the so-called "western Balkans route", which has become the main route for people trying to reach Europe.

Brussels's plans involves a potential "structural" resettlement programme early next year. Officials will look at basing the proposals on recommendations from UNHCR, which has called on the EU to take in up to 200,000 people from refugee camps in countries such as Turkey and Lebanon.

This mass resettlement will come on top of the agreed "relocation" of 160,000 asylum seekers from Italy and Greece to other EU countries, which was introduced after a fierce diplomatic bust-up between Berlin and its eastern neighbours.

Berlin has attempted to toughen its stance on refugees and is considering using military transport aircraft to ferry unsuccessful asylum seekers back to their homelands in a bid to win over an increasingly sceptical German public.

The eight EU member states set to attend the summit are Austria, Bulgaria, Croatia, Greece, Hungary, Romania and Slovenia, along with Germany, which is still the favoured destination for most people heading to Europe. Non-EU countries including Macedonia and Serbia will also attend the meeting.

Migration Path

Border Controls

Germany-Austria
Germany-Switzerland
Germany-Czech Republic
Austria-Slovenia
Austria-Slovakia
Austria-Hungary
Slovenia-Croatia

Closed Borders

Hungary-Slovenia
Hungary-Croatia
Hungary-Serbia
Turkey-Bulgaria

Merkel Seeks to "Europeanise" Border Controls

Catchy phrases like "Europeanise border controls" won't do a damn thing. What the hell does "Europeanise" border controls even mean? I doubt if the Chancellor herself has any idea.

Merkel opened herself up to this mess by ram-rodding through a hugely unpopular proposal to relocate 160,000 asylum seekers from Italy and Greece to other EU countries over the course of a year.

I said that would be woefully short and it was. Now they seek another 200,000 more and it won't stop there.

As it stands, there are over 2 million refugees in Turkey, many of whom are making their way towards the border with Greece.

If the refugees in Turkey make their way to the EU, it's a potential influx of 164,000 a month.

Greece cannot handle the inflow.

Real Solution

The problem will not go away unless and until there is a broad consensus effort to stop all economic refugees while simultaneously removing the refugees' incentive to relocate.

One convenient choke point is the small border between Turkey and Greece. I suggest Greece should block it. That might force Turkey close off its Southern border.

Why do the refugees want to relocate to Germany?

Because Germany offers the most free services, food, and shelter. There is an unlimited demand for free food free shelter, and free services.

And that is the crux of the problem. The EU needs to remove the incentive for economic refugees to relocate to European countries coupled with much tighter border controls.

But Merkel refuses to do that. As it stands, this crisis will be her undoing. As I said the other day, "Peak Merkel" has arrived.

Mike "Mish" Shedlock

Does the Sum of the Parts Equal the Whole?

Posted: 20 Oct 2015 11:56 PM PDT

In a curious event, ZeroHedge reports The September Jobs Report Was Even Worse: U.S. States Lost A Total of 22,000 Jobs.

Zero Hedge noted that the month-over-month total of nonfarm payrolls was -22,000 while the nonfarm total was well over 100,000 nationally.

He posted this chart.

Those numbers match my totals. And as ZeroHedge reports, 28 states lost jobs while 22 gained.

But it's not that simple. From the same data, here is a table of nonfarm payrolls for the last three months.

Nonfarm Payrolls (In Thousands)

Jul States Sum	Aug States Sum	Sep States Sum	Jul National	Aug National	Sep National	Jul-Aug Nat	Aug-Sep Nat	Jul-Aug States	Aug-Sep States
143,071	143,218	143,197	142,093	142,229	142,341	136	112	147	-22

Yes, month over month, states lost 22,000 jobs. But also notice that state totals overall beat national totals by 856,000 jobs.

Which stat do you believe?

I have been aware of this discrepancy for a long time, and have been working on this data with the Michael Lucci and Connor White at Illinois Policy Institute since July.

Here is an email we received from Tyler Downing at the BLS on July 22.

Hello Connor,

Thank you for contacting the Current Employment Statistics (CES) program.

CES independently develops national and state and area employment, hours, and earnings series. Both sets of estimates are based on the same establishment reports; however, CES uses the full establishment survey sample to produce monthly national employment estimates, while CES uses only the state-specific portion of the sample to develop state employment estimates.

State and area estimates use smaller amounts of sample by industry than the national industry estimates. This increases the error component associated with state and metropolitan level estimates. For this reason, aggregating state data to the national level will also sum this error component, resulting in different estimates of U.S. employment, hours, and earnings. Summed state level CES estimates should not be compared to national CES estimates.

Estimates for states and areas are produced using two methods. The majority of state and area estimates are produced using direct sample-based estimation. However, published area and industry combinations (domains) that do not have a large enough sample to support estimation using only sample responses have been estimated using modeling techniques.

Random Results

As noted above, the current state summation actually exceeds the national total, even though the latest month-over-month state total summation is negative.

When I first went through this exercise many months ago, I thought there was a serious issue but concluded there wasn't.

To verify, Michael Lucci and I went through the process of downloading a year's worth of history but the results appeared random.

Double Counting Part-Time Jobs?

This is not a validation of the overall BLS process by any means.

I remain firmly convinced the BLS is double counting part-time jobs. And in a recent phone conversation, a BLS analyst admitted it was possible.

I asked a simple question: Why don't you sort out duplicate social security numbers?

The answer I received was "we would like to but we do not have access to the data for privacy reasons".

A decent sort-merge algorithm could hash this out easily, but only if the BLS had access to SS numbers.

So here we are wondering why the sum of the parts exceeds the whole overall, while we frequently see the opposite effect month over month.

The much-maligned BLS appears to blame, but in actuality, it appears as if the BLS does not have access to the data they need to produce valid numbers.

Are major discrepancies like these better than no numbers at all?

Mike "Mish" Shedlock

Economy News

21.10.15

Mish's Global Economic Trend Analysis

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