Mish's Global Economic Trend Analysis

"We Are Going To Kill The Dollar" Says Obama Senior Official; When, How, Asks Mish
Hard Times: Dijon France Sells Half of Prized Wine Collection to Help Those Appealing for Social Aid
France "Totally Bankrupt" Says Labour Minister; Inappropriate or Inaccurate?
Iceland Wins! "Icesave" Lawsuit Dismissed, Court Orders EC and EFTA to Pay Costs

"We Are Going To Kill The Dollar" Says Obama Senior Official; When, How, Asks Mish

Posted: 28 Jan 2013 10:56 PM PST

Infowars posted an interesting clip of a Kyle Bass interview regarding the fate of the US dollar. Let's take a look at the video.

Here's the article reference: Senior Obama Official: "We Are Going To Kill The Dollar".

Kyle Bass ...

"How do you solve a problem when you are running a 10% fiscal deficit. You are not going to get growth in the absence of private sector demand. So the government's idea now is we are going to export our way out of this. When I asked a senior member of the Obama administration last week, 'how are we going to grow exports if we do not allow nominal wage deflation?', and he just said we're going to kill the dollar. It's a dead answer but that's where we're headed".

How Realistic the Clip?

That video clip makes good copy. But how realistic is it?

Before answering, let me state that I am a Kyle Bass fan. Moreover, I do not doubt the conversation took place. However, I have to wonder about how serious the person was who said it, and I also have to wonder about how much influence that person has.

Nonetheless, let's assume the statement was not made jokingly. Let's also assume the person who made it can actually influence policy. Is that enough?

The answer is no, it isn't. QE is up to the Fed, not administration officials. Moreover, the QE point is moot, because if QE alone could destroy the dollar, the dollar would already be destroyed.

Spending money in large enough size could indeed sink the dollar, but that takes an act of Congress.

Problems do not stop there. For the US dollar to truly "be destroyed", the US would have to undertake actions well beyond those of the central banks and governments of Japan, China, UK, and Eurozone.

Japan seems dedicated right now to sink the yen. Will the US be more dedicated than Japan? Than China? than the UK? Maybe (let's even assume the US is more dedicated). In enough size to destroy? With this Congress? Will Obama be around long enough?

Those last three questions is an area where reasonable assumptions have to stop.

So, even with the many favorable assumptions I have made, color me skeptical on the notion the US is going to "destroy" the dollar vs. other fiat currencies any time soon.

However, given enough time, and at varying rates, all the central banks will destroy their currencies relative to gold.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

I am hosting an economic conference in April, in Sonoma.
Please click on the image below for details.

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Hard Times: Dijon France Sells Half of Prized Wine Collection to Help Those Appealing for Social Aid

Posted: 28 Jan 2013 06:48 PM PST

Fresh on the heels of France's labour minister stating "France is a Totally Bankrupt State" comes news the city of Dijon needs to sell its prized wine collection to help those "appealing for social aid."

Please consider L'austérité à la française: city sells prized wines.

The city of Dijon has just sold off half of its prized municipal wine cellar to help fund local social spending – including a bottle of 1999 Burgundy knocked down at auction for €4,800 to a Chinese buyer.

In total, the capital of the Burgundy region raised €151,620 from the "historic sale" of 3,500 bottles that were part of a collection built up since the 1960s, it announced in a statement on Monday.

President François Hollande's Socialist government has spent most of its first eight months in office earning a reputation for ramping up taxes on the rich to cover the country's budget deficit.

But Mr Hollande has warned local authorities that they must also shoulder some of the burden by accepting a spending squeeze as the government seeks to cut €60bn by 2017.

François Rebsamen, the Socialist mayor who ordered Sunday's auction, explained: "We have overall a good budget this year, but the social action spending of the city just keeps going up. There are more and more of our co-citizens who are appealing for social aid."

The top attraction was a bottle of Vosne-Romanée Cros Parantoux, premier cru de 1999. Placed on a reserve of €1,000, it sold for almost five times that price.

The city said in its statement that 80 per cent of the proceeds would go towards funding the community social action programme. But the rest would pay for the cost of the auction – and to help replenish the now somewhat depleted municipal cellar.

Two-Time Shot at Best

For the curious minded, the buyer of the bottle of Vosne-Romanée Cros Parantoux was a "mysterious Chinese" named Wang Dongming, who waited patiently for the bottle to go under the hammer at the end of the auction.

Dijon just sold half its wine collection. Thus, Dijon can at best conduct one similar auction of the same size. Then what? Precisely what does the city sell then to help those "appealing for social aid"?

One final question: Does this look like a recovery?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

France "Totally Bankrupt" Says Labour Minister; Inappropriate or Inaccurate?

Posted: 28 Jan 2013 01:39 PM PST

Sometimes the truth comes from the strangest of places (like ranking government officials). I must say it's refreshing to see a bit of honesty, even if it is immediately denied elsewhere.

Please consider France 'totally bankrupt', says labour minister Michel Sapin.

France's labour minister sent the country into a state of shock on Monday after he described the nation as "totally bankrupt".

Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage.

"There is a state but it is a totally bankrupt state," Mr Sapin said. "That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective."

Pierre Moscovici, the finance minister, said the comments by Mr Sapin were "inappropriate".

Inappropriate or Inaccurate?

Forced to select one of those two choices, one would have to vote for inappropriate. However, it would be better yet to admit the truth, which labour minister Sapin clearly did.

Unfortunately, finance minister Moscovici was not content to step aside, allowing citizens to decipher the meaning of the word "inappropriate". Instead, he fired off a set of three blatant lies: "France is a really solvent country. France is a really credible country, France is a country that is starting to recover."

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Iceland Wins! "Icesave" Lawsuit Dismissed, Court Orders EC and EFTA to Pay Costs

Posted: 28 Jan 2013 10:09 AM PST

Iceland is in an economic recovery thanks to its decision to not bailout banks at taxpayer expense during the great financial collapse. Iceland's decision upset the UK and Netherlands. Both countries foolishly decided to reimburse its depositors, then sue Iceland to pay.

The story goes back to 2010 and I have commented many times on Iceland and Icesave and how Iceland was doing the right thing.

Here are a couple links on Icesave if you need to refresh your memory.

Iceland Wins in Court

Here is an image clip of page 36 of the court decision completely exonerating Iceland.

.

The decision was delivered in open court in Luxembourg on 28 January 2013. Congratulations to Iceland.

EFTA

The EFTA is the European Free Trade Surveillance Authority.

The European Free Trade Association Surveillance Authority performs the executive role of the European Commission in the countries of the European Free Trade Association (EFTA) which are part of the European Economic Area (EEA).

The authority is tasked with ensuring laws and regulations are properly enacted by members, challenging them before the EFTA Court if necessary. The Authority has its headquarters in Brussels (Belgium) and its working language is English. Enterprises and individuals can, however, address the Authority in any official EEA language.

I picked this story up from the Daily Kos article Icesave: Today Iceland Learns Whether It Gambled Right On Refusing A Repayment Deal With The British.

Not only did Iceland win, but the European Commission which intervened has to pay all costs and all the money spent by the British and Dutch is unrecoverable. Wow!

Congratulations to Iceland!

Here is a link to Iceland won the Icesave issue. The article is in Icelandic, translation by Google.

Justice was served in the end, but it took a lot of trials and tribulations to get there. The Icelandic parliament voted twice to make Icelandic citizens responsible. The matter only went to referendum in the first place when Iceland's President, Ólafur Ragnar Grímsson insisted upon a referendum.

Voters rejected the first referendum by a 93 to 7 percent margin. Yet, Prime Minister Johanna Sigurdardottir vowed to make the referendum "obsolete".

For the amazing gall of the Icelandic prime minister in this regard, please see Iceland Rejects IceSave; Does No Mean No?

Once again, congratulations to Iceland (or rather Icelandic citizens, certainly not a Parliament that attempted to overturn a 93% no vote).

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mish's Global Economic Trend Analysis

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