Mish's Global Economic Trend Analysis

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• What Is California Attempting to Hide?
• Gold ETF Liquidates 300 Tons of Gold This Year; Reflections on Momentum Trading
• Merkel Pins Cameron in Corner; Will Cameron Bury His Head in the Sand, Pretending to Not Notice?

What Is California Attempting to Hide? Posted: 21 May 2013 12:21 PM PDT An interesting article on a recently passed law in California came my way today regarding Obamacare secrecy in California. Please consider California exchange granted secrecy. A California law that created an agency to oversee national health care reforms granted it broad authority to conceal spending on the contractors that will perform most of its functions, potentially shielding the public from seeing how hundreds of millions of dollars are spent. The degree of secrecy afforded Covered California appears unique among states attempting to establish their own health insurance exchanges under President Barack Obama's signature health law. An Associated Press review of the 16 other states that have opted for state-run marketplaces shows the California agency was given powers that are the most restrictive in what information is required to be made public. It's routine in government to keep bids secret until contracts are awarded, so one vendor does not get an unfair advantage over others. After a bid is awarded, contracts generally become fully public. In setting up the California exchange, lawmakers gave it the authority to keep all contracts private for a year and the amounts paid secret indefinitely. "Except for the portion of a contract that contains the rates of payment, contracts entered into pursuant to this title shall be open to inspection one year after their effective dates," reads the code specifying what exchange records are exempt from public disclosure. According to agency documents, Covered California plans to spend nearly $458 million on outside vendors by the end of 2014, covering lawyers, consultants, public relations advisers and other functions. Other exchange records that are allowed to be kept secret include those that reveal recommendations, research, strategy of the board or its staff, or those that provide instructions, advice or training to employees. Minutes of the board meetings also are exempt from disclosure. So what does California have to hide? More specifically what do the legislators (especially California Assembly Speaker John Perez, D-Los Angeles) have to hide? Contracts awarded to the non-low bidder? Contracts awarded to friends and family of legislators? Kickbacks? With $458 million on outside vendors by the end of 2014, there are plenty of non-legitimate reasons for wanting to keep everything a secret. With all the secrecy it's hard to say precisely who is covering up for whom, or why, but one thing is crystal clear: This secrecy is good for someone on the take and bad for taxpayers. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 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.

Gold ETF Liquidates 300 Tons of Gold This Year; Reflections on Momentum Trading Posted: 21 May 2013 08:46 AM PDT Investors in the Gold ETF - GLD liquidated 300 tons of the metal this year. The reason? People are tired of losing money watching gold sink while the S&P soars. Tom Lydon, the editor of ETF Trends, says the disposal of over 600,000 pounds of gold so far this year "amazing" and "incredible." Click on above link for a video interview with Lydon. Gold vs. S&P 500 GLD data by YCharts Reflections on Momentum Trading Since late 2012 the S&P 500 has been on a nonstop rise, while gold has gone the other way. People have thrown in the towel on gold in favor of momentum trading in stocks. It seems nearly everyone is a momentum trader now, one of the consequences of inept central bank bubble-blowing policy. Louise Yamada says it's Time for Gold Bulls to Abandon Hope.  See my response in Wild Swings in Gold and Silver; Time to Give Up Hope? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com  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.

Merkel Pins Cameron in Corner; Will Cameron Bury His Head in the Sand, Pretending to Not Notice? Posted: 20 May 2013 11:59 PM PDT UK prime minister, David Cameron, promised to hold a referendum on whether Great Britain should remain in the EU, but only on two conditions. The first condition, that Cameron be re-elected as prime minister is iffy enough. The second condition, that Cameron renegotiate the Lisbon Treaty, I said would never happen. And it won't. German Chancellor Angela Merkel sealed the fate on that score as Berlin plans to streamline EU but avoid wholesale treaty change. Berlin is drawing up plans for treaty changes to streamline decision-making in the eurozone, while stopping short of any wholesale renegotiation that would allow the UK to repatriate powers from Brussels. Although Angela Merkel, German chancellor, has expressed her desire to keep the UK inside the EU, the move being discussed in Berlin would thwart a plan by David Cameron, UK prime minister, to piggyback on eurozone reforms to renegotiate the British relationship with Brussels. Mr Cameron had hoped to exploit renewed interest in Berlin for wholesale EU treaty changes as a way to renegotiate the UK's membership terms. But Berlin's strategy for a new, narrowly focused treaty could force the UK premier into a repeat of the dilemma he faced in December 2011, when Mr Cameron rejected the fiscal compact treaty but most other EU countries went along without him. Senior German officials acknowledged that they were isolated on treaty change, which is fraught with political landmines in several countries – particularly France, which would probably require a national referendum if major changes were made to EU law. The timing of treaty changes remains a matter of debate but it could come as early as next year, after elections to the European parliament in May. The way ahead is due to be discussed at a summit next month. Pinned in the Corner The sooner Merkel proceeds with her strategy, the better for everyone involved, especially UK citizens. Merkel has effectively preempted Cameron's strategy in a way he cannot realistically deny. Since there is now no possible hope of wholesale renegotiation (not that there ever really was in the first place), there is no reason for the UK to avoid a referendum now. Will Cameron bury his head in the sand like an ostrich once again? We will find out shortly. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 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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