Wednesday, September 10, 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Will Tears and Promises Save the Day for the "No" Vote for Scotland? Lesson for Ukraine: Voting is Better than Civil War

Posted: 10 Sep 2014 11:55 AM PDT

A recent poll showed support for a "Yes" vote for Scotland independence went into the lead for the first time, overcoming a 20 percentage-point deficit.

This set off a flurry of activity including ...

  1. An emotional "I would be heartbroken" plea by UK prime minister David Cameron
  2. A tearful speech by former prime minister Gordon Brown
  3. Fearmongering tactics by both sides
  4. Promises of more political independence for Scotland

Did it work?

"No" Vote Leads 53-47 Excluding 10 Percent Undecided

In the wake of the above tactics Scottish Independence Support Fades.

When taking into account all respondents, 42 percent said they would vote Yes, up 1 point, and 48 percent said they would vote No, unchanged. Ten percent said they were undecided how they would vote in the Sept. 18 referendum.

With 10 percent undecided this vote can still go either way.

Gordon Brown Close to Tears

The Telegraph reports Gordon Brown Close to Tears in Emotional Defence of UK-wide NHS.
Gordon Brown came close to tears as he spoke about his daughter's death in a passionate speech rallying against the SNP's healthcare "lie".

The former prime minister's voice cracked as he cited how NHS [National Health Services] staff saved his sight and nursed his baby daughter in hospital as he professed a "love" for public health care.

In a surprisingly personal address to Labour activists in Glasgow, Mr Brown used his NHS connections to dismiss the idea that Scotland's health service is slipping towards privatisation under Westminster rule.

In 2002, while Mr Brown was Chancellor, his baby daughter Jennifer Jane died in an Edinburgh hospital. She was just 10 days old.

"I love Scotland. I love the National Health Service. I was born into the National Health Service. I grew up in the National Health Service," Mr Brown said.

The issue, played up increasing over the last month by the Yes campaign, is considered one of the key reasons why Labour voters appear to be switching en masse from No to Yes.
Spotlight on Socialized Healthcare

To help explain the above tearjerker speech, consider the following Obamacare analogy: Part of the "Yes" campaign was a claim that the Torries, would end UK's version of Obamacare.

Scotland is predominately Labour. In general, Scottish voters do not like the Torries or prime minister David Cameron. They do want socialized healthcare, and they also want more independence, especially on fiscal issues.

More Power to Scotland and England

No party in power is willing to give it up. Yet, the Torries in England want to do something to help keep Scotland in the UK.

The solution is to give everyone more power. How does that work?

The Financial Times explains Tory MPs to demand more powers for England.
Conservative politicians are mobilising to demand a proper settlement for English voters after the three main political parties pledged to hand more powers to the Scottish parliament.

John Redwood said more than 100 colleagues were backing his campaign to ensure that England was also given more powers – and even its own parliament separate to Westminster – as part of the settlement promised this week by all three party leaders in an attempt to convince Scots to reject independence in next week's referendum.

"We need English votes for English issues and well over 100 of my colleagues think we need to do something for England," said the former Welsh secretary.

"Yes or No, we are going to have a different country after 2016. If Scotland stays in, it is going to be a looser federation and there has got to be a strong English government to match a strong Scottish government. There has to be fairness in this settlement."

The push comes amid mutterings of discontent among many Tories over their leadership's decision to offer the Scots greater devolution in return for staying part of the UK. With all three parties this week pulling together in a last-ditch No campaign, those tensions began to surface on Wednesday during Prime Minister's Questions.
Cameron's "Heartbroken" Plea

Let's wrap up the independence tactics with a look at Cameron's Impassioned Plea to Voters.
On a hastily arranged campaigning visit to Edinburgh, Mr Cameron confronted the prospect of a Yes vote and said that such a verdict "would have to be respected by the rest of the United Kingdom".

Just as Gordon Brown appeared tearful at a No rally on Tuesday, Mr Cameron seemed upset during moments in his speech. "I would be heartbroken if this family of nations was to tear apart."

Mr Cameron's speech to financial services workers in a modern office block was in a controlled environment, once again avoiding the risk of a street confrontation with Yes supporters.

Mr Cameron also repeated his warning that Scotland would be worse off with potentially higher taxes and lower public spending if it left the union.

His visit coincided with separate speeches by Ed Miliband, Labour party leader, and Nick Clegg, deputy prime minister and leader of the Liberal Democrats.

Mr Miliband told an audience he wanted "to make the case about why I think the right thing to do is to vote for No. And for Scotland to stay in the United Kingdom, head, heart and soul".
Cameron's Appeal to Financial Service Workers

Inquiring minds may be wondering why Cameron appealed to financial services workers. The answer is he was appealing to his own group. That set of voters tends to be conservative.

The financial services workers are afraid they will lose their jobs if more services head to London in the wake of a "Yes" vote.

Voting Better than Civil War

Regardless of how one feels about the campaign tactics that include fearmongering, tears, and heartbroken pleas, the entire process is sure a hell of a lot better than the civil war in Ukraine.

The genuine heartbreaks in Ukraine including death and property destruction are many orders-of-magnitude greater than any alleged heartbreaks over Scotland.

There easily could have been a peaceful solution in Ukraine if following the Maidan overthrow, there would have been votes for each of Ukraine's regions. Instead, and following the advice of the US and EU, Kiev Poked Sticks at Bears and Hornets.

Without a doubt, this is a very sad lesson for Ukraine. Ironically, the civil war may lead to the exact same political independence solution.

And given the proposed Catalan independence vote (see Scotland Independence Frustrates Spain Prior to Catalonia Referendum), this is a lesson for Spain as well.

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

World Growth vs. Copper with 3-Month Lag; Iron Sinks to 5-Year Low; US Will Not Decouple

Posted: 10 Sep 2014 12:32 AM PDT

Copper is frequently cited as a leading indicator of economic activity because of its widespread use in many sectors of the economy, from homes and factories, to electronics and power generation and transmission.

For that reason, some call it "Dr. Copper".

Inquiring minds may be wondering what copper has to say about future economic growth. The following charts will explain.

World Growth vs. Copper



Copper Daily Chart



The above charts courtesy of Steen Jakobsen, chief economist at Saxo Bank.

Iron Ore Down 38% this Year

China is slowing and its property bubble is under severe pressure. But it's not just copper that is under pressure.

Iron has taken a big hit, and iron producers are under severe stress.

Reuters reports Iron Ore Price Plunge Claims First Australian Casualty.
Plunging iron ore prices have dealt their first blow in Australia, sending fledgling miner Western Desert Resources Ltd into administration after it failed to reach a deal with bankers over its debt.

Western Desert was caught out by a move by the world's top four iron ore producers to flood the market with low-cost supply, outpacing Chinese demand growth for the steel-making ingredient and slashing iron ore prices by 38 percent this year.

UBS estimated that even at present iron ore prices, smaller producers Atlas Iron Ltd, Gindalbie Metals Ltd and Grange Resources are all under water.

Iron ore, which is priced in U.S. dollars, has sunk to a five-year low of $83.60. Australian miners have felt the impact even more as the Australian dollar has risen 5 percent against the U.S. dollar in that time.

China imported 8.5 percent more iron ore in August than a year earlier, but imports for the year are expected to grow by only 49 million tonnes, well below the volume of extra supply, according to Australia's official forecaster.
Expect China to Surprise on the Downside

Iron is under pressure even with rising demand from China. What happens if future demand disappoints?

I have been stating for quite some time that China is on the verge of a major slowdown and base metals would be affected, and so would the currencies of major commodity exporters like Australia and Canada.

China cannot and will not grow at 7% a year as most expect. The consequences of that have yet to be felt.

US Will Not Decouple

Finally, those who think the US will decouple from this global mess are just as wrong as those who thought China would decouple from the global economy in 2008.

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

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