Mish's Global Economic Trend Analysis

ALS Update; I Still Need Your Help; Money Contributions From 22 Countries!
Mr. "Lie When It's Serious" Juncker Tells Another Whopper: "I Don’t Envisage, Not Even for One Second, Greece Leaving the Euro Area"; Two More Days of Hopefully Futile Coalition Talks on a "Government of Personalities"
200,000 Lose Unemployment Benefits This Week, Nearly Half From California
No Deal: Greek Moderate Left Party says "No Government Possible"; Chart Explains Why Deal Is Now Impossible
Five European Central Bankers Discuss Greek Eurozone Exit; Lies and Half-Truths from German Finance Minister; Message to Greek Politicians "No New Concessions"
California Deficit Soars to $16 billion; Governor Brown Threatens Public Education Unless He Gets "Temporary" Tax hikes; How Brown Ruined California in His First Term; Four Point Solution

ALS Update; I Still Need Your Help; Money Contributions From 22 Countries!

Posted: 14 May 2012 10:28 PM PDT

In case you missed it, back on April 2, 2012 I reported My Wife Joanne Has ALS, Lou Gehrig's Disease.

In that post, I announced I was running a raffle for the benefit of the Les Turner ALS Foundation. Please read the post if you have not yet seen it.

Many people have asked for an update, so here goes.

Raffle ticket purchases and contributions have come in from 22 countries around the world.

Countries Making Donations

Australia
Belgium
Canada
Chile
China
Estonia
France
Germany
Ireland
Japan
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Panama
Singapore
South Africa
Spain
Sweden
Switzerland
United Kingdom

Approximately $209,000 has been raised so far of which $9,000 has been cash contributions, not raffle ticket purchases.

In addition, two corporate sponsors have kicked in $10,000 each. Sitka Pacific was a corporate sponsor (half mine) and GoldMoney was a corporate sponsor.

Given half of raffle ticket proceeds go to raffle winners, and half to the Les Turner ALS foundation, the approximate total raised for ALS research is about $130,000.

The Les Turner ALS foundation is thrilled with those results, but I am disappointed. I have about 46,000 subscribers to my blog feed, but a mere 997 raffle tickets have been sold as of Sunday.

I never expected to sell the allotted number of 30,000 raffle tickets, but the state of Illinois required us to pick a number so I purposely picked a high one. However, I did hope to raise $1 million in lottery tickets, half going to ALS research.

Over the years many people has asked me to put up a tip jar. I refused. I have always thought the best information is free. That philosophy has served me well. I have never asked for anything, but I am asking now.

If information from this blog, for free, 4-5 posts a day (for 7 years!) has made you money or kept you out of trouble, is a mere $200 too much to ask in return? If it is, then please do not make a donation.

If it is not, then please help.

If times are tough, and they may very well be, then please consider a cash donation of $10 or more. Every bit helps.

I am also disappointed in lack of response from corporate sponsors. Where is Google? Apple? Sony? I emailed all three.

So a big tip of the hat to GoldMoney for stepping up to the plate.

If you wish to buy a raffle ticket or make a donation, please click on this link to Support the Les Turner ALS Foundation.

Thanks
Mish

Mr. "Lie When It's Serious" Juncker Tells Another Whopper: "I Don’t Envisage, Not Even for One Second, Greece Leaving the Euro Area"; Two More Days of Hopefully Futile Coalition Talks on a "Government of Personalities"

Posted: 14 May 2012 04:42 PM PDT

Those looking for a bit of humor in the European debacle can find it in statements from Jean-Claude Juncker, head of the eurozone finance ministers.

Juncker says "I don't envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda. We have to respect Greek democracy."

Bear in mind this statement comes from the same man who said "When it becomes serious, you have to lie."

Also bear in mind Juncker's support for a Troika installed puppet government in Greece, after Greek Prime Minister George Papandreou proposed putting bailout measures to a vote.

Notice that bailout measures went to a vote anyway.

Two More Days of Hopefully Futile Greek Negotiations

The Financial Times reports Greece set for further coalition talks

Greece's president is set to resume coalition talks on Tuesday with the country's political leaders in another attempt to avoid a fresh general election after a meeting on Monday evening ended without agreement.

President Karolos Papoulias has another 48 hours to persuade politicians to join a national unity government according to the constitution or face having to call another election.

Mr Venizelos said after the meeting he had supported the president's proposal for a "government of personalities" with backing "from as many political parties as possible" to implement further reforms agreed in return for a second €174bn bailout.

"The situation is very difficult and I'm not optimistic, but we must try every possible solution," Mr Venizelos said.

Alexis Tsipras, the leader of Syriza, the radical leftwing coalition that rejects the terms of Greece's international bailout, refused to participate in Monday's talks. "We're not going to join in selective meetings of political leaders ... The circle of contacts provided for by the constitution has been completed," he said.

Jean-Claude Juncker, the Luxembourg prime minister who heads the group of eurozone finance ministers, sharply criticised other EU leaders for "threatening" Greece with expulsion from the single currency, saying the will of Greek voters must be respected.

"I don't envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda," Mr Juncker said angrily at a news conference. "We have to respect Greek democracy."

He added he would be open to debating easing terms of the €174bn bailout, including extending dates to hit fiscal and economic reform targets by a year, something that has been anathema to several leaders in Germany, the European Central Bank and the European Commission.

Maria Fekter, the outspoken Austrian finance minister, went so far as to suggest Greece may have to leave the EU, since there is no legal provision for leaving the euro without exiting the union.

"Greece would have to reapply and then we would have membership negotiations and look very closely whether Greece would be able to become a member at all," said Ms Fekter. "We look much more closely than when they joined the euro."make full repayment on the bond, which was issued under UK law, to avoid future legal action by holdout investors, the official said.

Lies Everywhere

Junker's statement about willingness to negotiate changes in bailout terms is of course a blatant lie aimed at keeping Greece in the Eurozone.

Also note the lie from Maria Fekter about Greece having to leave the EU if it exits the eurozone. Given that numerous countries are in the EU without being in the Eurozone, the UK is a prime example, Fekter's statement is complete nonsense.

That said, perhaps Greece is better of not being in the EU as well. Certainly the UK would be better off telling the EU where to go.

"When it becomes serious, you have to lie."

Indeed Juncker and and others have proven lies are the norm.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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200,000 Lose Unemployment Benefits This Week, Nearly Half From California

Posted: 14 May 2012 02:31 PM PDT

The grim situation in California is about to get grimmer as Unemployment Benefits Go Bye-Bye

More than 200,000 long-term jobless Americans will lose their unemployment checks this week, when eight states roll off the federal extended benefits program.

Nearly half of them live in California, and the rest reside in Florida, Illinois, North Carolina, Colorado, Connecticut, Pennsylvania and Texas.

The federal extended benefits program has provided the jobless with up to 20 weeks of unemployment checks after they've run through their state and their federal emergency benefits, which together last up to 79 weeks.

But the extended benefits program is expiring throughout the country as the economy improves. To be eligible for these benefits, a state must show that its unemployment rate is at least 10% higher than it was in at least one of the past three years.

Already, 25 states have rolled off the extended benefits program, with 15 of them exiting last month alone. But more unemployed folks will be affected by this week's cessation than April's, when about 135,000 people saw their payments end.

The jobless have been able to collect up to 99 weeks of benefits for much of the Great Recession and its aftermath. But after multiple extensions, Congress in February passed a law that starts phasing out this unprecedented lifeline.

Starting later this year, the maximum number of weeks the jobless can collect unemployment benefits will be reduced to as little as 40 weeks in states with jobless rates below 6% and to as many as 73 weeks where unemployment tops 9%.

Long Term Unemployed

The chart shows a drop of about 1.5 million off the long-term unemployment rolls. Yet, about 5.1 million are still long-term unemployed.

Moreover the numbers are probably much worse than they look as some of that drop is a result of fraudulent disability claims. For details please see TrimTabs on Debt and Disability Claims: How Much Debt Does it Take to Generate $1 in GDP? Disability Fraud vs. Expiring Unemployment Benefits Revisited.

Given a total of 335,000 have lost or about to lose unemployment benefits, I expect to see another jump in fraudulent disability claims. Those of retirement age might also select "forced retirement" in order to collect social security benefits.

As noted above, California bears the brunt of this wave of benefit expulsions, and that will exacerbate the state's fiscal problems. For details, please see California Deficit Soars to $16 billion; Governor Brown Threatens Public Education Unless He Gets "Temporary" Tax hikes; How Brown Ruined California in His First Term; Four Point Solution.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

No Deal: Greek Moderate Left Party says "No Government Possible"; Chart Explains Why Deal Is Now Impossible

Posted: 14 May 2012 09:04 AM PDT

The talks still continue but good news is on the horizon as yet another political party, the Democratic Left, has backed out of the Unity coalition.

Please consider Greece's moderate left says no government possible

The moderate Democratic Left party in Greece says it will not join pro-bailout parties in a coalition without the more radical far-left Syriza.

Syriza is refusing to attend coalition talks because it will not back any government which supports austerity measures demanded by the EU and IMF.

The Greek president has summoned the four main parties for last-ditch talks in an effort to avoid new elections.

"No unity government can emerge," Fotis Kouvelis, head of the Democratic Left party, told Greek television.

"A government without Syriza would not have the necessary popular and parliamentary backing."

Chart Explains Why Deal Is Now Impossible

Here is a nice chart from the article that highlights the situation. Annotations in purple by Me.

The Independent Greeks are willing to form a coalition, however please note 7 Conditions For Coalition Government

The head of Greece's nationalist Independent Greeks party Sunday set seven conditions--including annulment of the country's loan deal--for his party's participation in a coalition government, even as Greece scrambles to resolve a weeklong political deadlock following inconclusive polls last week.

Speaking less than an hour after a meeting with Greece's president, Panos Kammenos said any coalition partners would also have to agree to immediately expand the country's exclusive economic zone, set up a special committee to re-examine the size of Greece's official debt--which Kammenos disputes--and press the case of German war reparations from the World War II, among other things.

"The president of the republic said he would share our proposals with the heads of the other parties," Kammenos said. "If these seven proposals are accepted, at that point we will see if a coalition government is possible with the other parties."

Kammenos, who polled fourth in last Sunday's elections and won 10.6% of the vote, reaffirmed his opposition to the loan memorandum and the austerity measures associated with it.

Two Votes Short

Those conditions leave the Unity coalition two vote short of a majority. Unless a couple of elected representatives switch parties, a new vote will take place. It is highly likely Syriza will get enough votes from the left to form a government.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Five European Central Bankers Discuss Greek Eurozone Exit; Lies and Half-Truths from German Finance Minister; Message to Greek Politicians "No New Concessions"

Posted: 14 May 2012 07:58 AM PDT

A small dose of reality has set in for a group of European central bankers: Euro Officials Begin to Weigh Greek Exit as Euro Weakens.

Greece's possible exit from the euro moved to the center of Europe's financial-crisis debate, rattling markets as authorities in Athens struggled to form a government.

Meetings brokered by Greek President Karolos Papoulias were set to continue today after Syriza, the leading anti-bailout party, rejected a unity government following inconclusive elections May 6. That moved the country closer to a new vote, with at least five European central bankers broaching the once-taboo topic of its exit from the euro.

Euro finance ministers meeting today in Brussels may discuss the bailout for Greece, as well as the situation in Spain, where the government last week made a fourth attempt to clean up banks. Getting German Chancellor Angela Merkel to weaken her demand that debt cutting be the core of the crisis response will be a key objective of new French President Francois Hollande when the two meet tomorrow in Berlin.

The euro fell for the 10th day in 11, weakening 0.4 percent to $1.2872 at noon in Brussels, the lowest in three months.

No New Concessions

The euro finance ministers, known collectively as the eurogroup, will convene in Brussels at 5 p.m. local time.

The European Commission isn't considering easing the terms of the joint bailout for Greece from the EU and the International Monetary Fund, EU spokesman Amadeu Altafaj said, denying a report by Athens-based Real News.

Message to Greek Politicians "No New Concessions"

Greek Unity-Clown proponents Evangelos Venizelos, leader of Pasok party, and Antonis Samaras, leader of the centre-right New Democracy party, keep promoting the idea of a "Unity" government that will renegotiate the terms of the bailout. Clearly they are liars.

If the eurocrats, Germany, and IMF were to agree to negotiate new terms, that would be now, not after Greece kisses the Troika's ass with a "Unity Pledge".

Given the statement from the EU on concessions, Syriza party leader Alexis Tsipras would be a fool to agree to a "Unity" government. Actually, he would be a fool anyway because no one can possibly believe meaningful concessions are coming, promised or not.

Lies and Half-Truths from German Finance Minister

German finance minister Schaeuble Says If Greeks Had Own Currency It Would Devalue.

The devaluation claim is certainly true enough, but it is also obvious.

Here is Schaeuble's blatant lie: "The advantages for the Greeks [to stay in the eurozone] are greater, but it will be strenuous".

Chancellor Angela Merkel will host French President Francois Hollande in Berlin tomorrow after his election on a platform of a switch away from the chancellor's focus on austerity. Hollande wants to reopen the European Union's budget treaty to include measures to spur economic growth.

"I think Hollande knows that the fiscal pact can't be renegotiated," Schaeuble said.

That is a lie as well and we will find out soon enough. Given the Crushing Defeat for Merkel's CDU Party in German Elections last weekend, Hollande will press even harder for what he wants: Eurobonds and a weakening of austerity measures.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

California Deficit Soars to $16 billion; Governor Brown Threatens Public Education Unless He Gets "Temporary" Tax hikes; How Brown Ruined California in His First Term; Four Point Solution

Posted: 14 May 2012 06:57 AM PDT

California, like Greece is perpetually in fiscal trouble. Overoptimistic revenue forecasts coupled with spending $2 billion more than expected has California in a deep hole. Governor Jerry Brown has the same non-solution as ever, hike taxes.

Brown wants a "temporary" (as in seven years) tax hike. Given we all know there are no such things as temporary tax hikes in California (seven years is permanent enough in the first place), and also given the California school budget needs an axe, I say let him.

Please consider California deficit has soared to $16 billion, Gov. Jerry Brown says

Gov. Jerry Brown announced on Saturday that the state's deficit has ballooned to $16 billion, a huge increase over his $9.2-billion estimate in January.

Lawmakers and others were hoping that a rebounding economy would help the state avoid steep cuts to social services. But revenue in April, the most important month of the year for income taxes, fell far short of expectations, leading to a shortfall of at least $3 billion in the current fiscal year.

The state has also spent $2.1 billion more than expected, according to the controller, further worsening California's financial health.

Advocates involved in budget discussions say they expect deeper cuts to social services than Brown originally proposed in January. Union officials are also in negotiations with administration officials about ways to reduce state payroll costs, an issue that wasn't on the table earlier this year.

Brown has said there will be even deeper cuts, mostly to public education, if voters do not improve tax hikes in November. He is seeking a quarter-cent increase in the state sales tax for four years and a seven-year hike on incomes of $250,000 or more that will range from 1 to 3 percentage points. He says the measure would raise $9 billion in the upcoming budget year.

Tax Hikes, Public Unions, and Union Sympathizers Hand-in-Hand

Whenever tax hikes are on the table, union supporters are at the front of the line demanding them.

Yahoo!News has additional details in California facing higher $16 billion shortfall

Under Brown's tax plan, California would temporarily raise the state's sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more. Brown is projecting his tax initiative would raise as much as $9 billion, but a review by the nonpartisan analyst's office estimates revenue of $6.8 billion in fiscal year 2012-13.

Supporters of the "Schools and Local Public Safety Protection Act of 2012" say the additional revenue would help maintain current funding levels for public schools and colleges and pay for programs that benefit seniors and low-income families. It also would provide local governments with a constitutional guarantee of funding to comply with a new state law that shifts lower-level offenders from state prisons to county jails.

A second tax hike headed for the November ballot is being promoted by Los Angeles civil rights attorney Molly Munger, whose initiative would raise income taxes on a sliding scale for nearly all wage-earners to help fund schools.

Anti-tax groups and Republican lawmakers say both tax increases will hurt California's economic recovery. State GOP Chairman Tom Del Beccaro has embarked on a statewide campaign to discuss alternatives to Brown's tax hikes.

The governor is expected to propose a contingency plan with a list of unpopular cuts that would kick in automatically if voters reject tax hikes this fall. In January, he said they would result in a K-12 school year shortened by up to three weeks, higher college tuition fees and reduced funding for courts.

Expect to hear Armageddon chants from public unions immediately if not sooner.

How Brown Ruined California in His First Term

Bear in mind that Governor Brown helped ruin California with public union collective bargaining rights in his first stint as governor, in the 70's.

The Educational Employment Relations Act of 1976, established collective bargaining in California's public schools and community colleges
The Ralph C. Dills Act of 1978 established collective bargaining for state government employees
The Higher Education Employer-Employee Relations Act of 1979, extended collective bargaining to the state university system.

California schools and taxpayers are perpetually in the hole because of Brown's idiocy decades ago.

Four Point Solution

Fixing the problem is easy to describe, but hard to implement given all the union sympathizers who want to further wreck the state.

California needs to end collective bargaining of public unions
California needs to claw back promised pension benefits
California needs to end all defined benefit plans for public employees
California needs to scrap prevailing wage laws that have crucified cities

Raising taxes will just cause the exodus of more corporations and highly salaried workers as noted in California Tax Revenues Plunge; Businesses Exit "Taxifornia" in Droves; Piecing Together the Jobs-Picture Puzzle

Taxed to Death

If Brown continues to suck up to the public unions responsible for the mess California is in, expect still more businesses to leave, expect the unemployment rate to rise, and expect a continued plunge in revenue.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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Monday, May 14, 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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