Mish's Global Economic Trend Analysis

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• Update on Sweden (from Sweden); Another Look at the UK "In Isolation"
• European Disunion Blog Makes Solid Case for Ron Paul
• Home Prices in Spain Drop 14 Consecutive Quarters; Banks Stuck with Major Losses Not Marked to Market; Expect Conditions to Worsen

Update on Sweden (from Sweden); Another Look at the UK "In Isolation" Posted: 17 Dec 2011 05:44 PM PST Following the Merkozy summit, much was written regarding the UK "Standing Alone". While it's true that Sweden, Hungary, and the Czech Republic did not say "No" to the Merkozy agreement, the fact remains they did not say yes. Moreover, it's just a matter of time Sweden does say "No", according to reader Kenneth from Sweden who offers this interesting political opinion. Kenneth writes .... In spite of what was reported immediately following the Merkozy proposal announcement, the Swedish position has not changed. Rather, Swedish political parties are taking time to think about how they will react. They have even yet not got the detailed draft from the EU (should come within a week). The greatest opposition party, the socialdemokrats have said NO from the start, and so have the other smaller opposition parties also said. And with the government in minority, the case should be closed. Sweden underwrites the treaty that it is OK for the EURO countries, but NOT valid for Sweden. So Sweden stays outside the treaty in practical manner. Of course no one knows what happens in politics till March. But the socialdemokrats have stated categorically NO, and without socialdemokrats on the bandwagon Sweden will stay outside. The socialdemokrats opinion is that it would be a way to take us back doors in to the EURO area, and the Swedish people has voted NO to the EURO in referendum 2003. Besides that UK is not alone, Hungary has already stated that they will not participate, and the Czech Republic has said that they will take time to take a decision. So there are now four countries that eventually will not go along with the treaty. And then you have Finland which IS a Euro country. Kenneth In a second follow-up email Kenneth noted "Recent polls show that at least 80% of the Swedish people should vote NO to the EURO today. So the socialdemokrats can win votes with their categorical NO to the treaty." As I have said, support for this treaty is rapidly disintegrating in numerous ways and in numerous places. For details, please see ... Portuguese Socialists Threaten "Economic Atomic Bomb"; Fitch Sets France Rating Outlook to Negative; Head of French Central Bank Attacks UK and Rating Agencies   France in Recession; Italy in Recession; Poles Protest; Credit Agricole Quits Commodity Business; Poetic Irony and Credit Crunch Math   Crumbling of Comprehensive Solution No. 4; Treaty "Legally Doubtful"; Cracks and Splinters Everywhere; Repeated "Pet Lies" by EC President Van Rompuy Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

European Disunion Blog Makes Solid Case for Ron Paul Posted: 17 Dec 2011 08:08 AM PST Support for Ron Paul turns up in interesting places, such as the UK-based European Disunion Blog. Don't want endless foreign wars, but do want a strong military for defense? Vote Ron Paul. Do want bankers to be subjected to greater scrutiny and accountability? Vote Ron Paul. Don't want the government to tow the line of corporate interests? Vote Ron Paul. Do want to be allowed to say and think what you will - even do what you will - provided that it does not harm or infringe upon the rights of others? Vote Ron Paul. Ron Paul is the only candidate who does not accept donations from big business - his campaign is funded entirely by individuals. Yet it forms policy from a conservative outlook: pragmatic, rather than idealistic, with any reforms carefully considered before implementation, with a strict doctrine of fiscal prudence to boot. In short, it is the perfect blend for individualistic yet reasoned and cash-strapped America. That is a rock-solid case in two short paragraphs. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Home Prices in Spain Drop 14 Consecutive Quarters; Banks Stuck with Major Losses Not Marked to Market; Expect Conditions to Worsen Posted: 17 Dec 2011 02:12 AM PST The Spanish banking system is in far worse shape than most realize because of unrealized losses related to Spain's imploded housing bubble. Various austerity measures and tax hikes to bail out French and German banks will greatly exacerbate this problem. Please consider Spain Banks Face 43% Price Fall on Repossessed Homes Spanish home prices fell for the 14th consecutive quarter as unemployment surged and a drop in mortgage lending crimped demand for property. The average price of houses and apartments dropped 7.4 percent in three months ended Sept. 30 from the same period a year earlier, according to the National Statistics Institute in Madrid. Repossessed houses in Spain are worth 43 percent less on average than the valuations assigned on the mortgages for the properties, according to Fitch Ratings. Price declines range from 20 percent to 58 percent, analysts Juan David Garcia and Carlos Masip in Madrid wrote in a report analyzing 8,235 properties funded by loans from banks including Banco Santander SA (SAN) and Bankia SA. The mortgages are in asset-backed securities with high loan-to-value ratios. Spanish Unemployment Rate Spain's Unemployment Rate is 22.8% and rising.  Austerity measures in Spain will force down home prices, force up the unemployment rate, and force up losses on Spanish banks. As I have noted before, Spain needs to restructure work rules, make it easier to fire people (which will eventually make it easier to hire people), get rid of government workers, lower taxes, and implement various reforms. Unfortunately, the Merkozy agreement demands many counterproductive austerity measures and tax hikes that will crucify Spain in the short-term. Banking losses will soar, GDP will plunge, and deficits will rise. The same setup applies to Portugal and Greece. Thus, the idea there will be no more sovereign debt losses will soon be smashed on the hard rocks of reality.  Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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