Mish's Global Economic Trend Analysis

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• For the "What Did You Expect Them to Say?" File
• Ukraine Begins Offensive Against "Parasites"; Who Really Broke the Ceasefire? Journalist Prosecution
• Radical Stupidity: Academics Endorse $20,000 Income for Everyone, Working or Not

For the "What Did You Expect Them to Say?" File Posted: 01 Jul 2014 07:44 PM PDT Following a record $9 Billion Fine yesterday (See French Bank BNP Paribas Pleads Guilty Criminal Conspiracy Charges; Anyone Headed to Prison?), BNP came out swinging today saying no problem. Dividends, No Problem DealBook reports "BNP Paribas Is Confident It Can Absorb the Blow of a Record Fine" A day after their bank was handed a record penalty by the United States authorities for violating sanctions laws, officials at BNP Paribas struck a confident note on Tuesday about the bank's future, insisting it would be able to continue meeting the needs of most customers and had "ample" capital to absorb an $8.9 billion fine. The chief financial officer, Lars Machenil, said in a conference call with analysts that the penalties, which included a partial suspension of BNP's ability to process payments in dollars, would not endanger its capital cushion. The bank also said it would be able to offer the same dividend this year as it did last year — 1.50 euros a share, or about $2.05. Without the penalties, the bank said it would have paid dividends of around €2 a share. Well, what did you expect them to say? If the fine caused a problem would they have admitted it? Of course, if $9 billion would have hurt BNP much, regulators would not have fined them as much. Former ECB president Jean-Claude Trichet got into the act ahead of time stating a $10 billion fine would pose "risks for the global financial system". Had Trichet stated that a $5 billion fine posed risks, would the fine have been $4 billion? 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.

Ukraine Begins Offensive Against "Parasites"; Who Really Broke the Ceasefire? Journalist Prosecution Posted: 01 Jul 2014 11:22 AM PDT Ukraine president Petro Poroshenko vows to rid the country of "parasites" and launched a major offensive against the rebels. In doing so, he went against his own advice as well as the advice of German and French leaders says Russian President Vladimir Putin. Reuters reports Ukraine Forces Attack Rebel Positions, Putin Growls. Ukrainian forces struck at pro-Russian separatist bases in eastern regions with air and artillery strikes on Tuesday after President Petro Poroshenko announced he would not renew a ceasefire but go on the offensive to rid Ukraine of "parasites". His decision quickly drew fire from Russian President Vladimir Putin who said Poroshenko had disregarded the advice of himself and German and French leaders. Putin said Poroshenko would now have to bear full responsibility for veering off the road to peace. Concrete Steps Poroshenko said in his early morning statement that Ukraine had not seen "concrete steps for de-escalating the situation, including strengthening controls on the border". Actually, that statement by Poroshenko is a blatant lie. Yesterday Putin Made Significant Last Minute Concessions following unreasonable demands by Ukraine. Specifically, Putin agreed "Ukrainian border guards be granted access to those crossing points from the Russian side as observers for joint control of the border, and that observers from the [Organisation for Security and Co-operation in Europe] also be admitted to those crossing points from the Russian side." That should have been enough because it was the only thing Russia could directly control. Who Violated the Ceasefire? A week ago I reported Rebels Down Ukraine Helicopter in Ceasefire Violation. Western media reported numerous instances of rebels breaking the ceasefire. But did Ukraine ever honor one? Reader Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian had some comments on the "ceasefire" yesterday. Hello Mish From the time that this bizarre unilateral "ceasefire" was declared until its expiration today, dozens of civilians have been killed and many more wounded by Ukrainian government shelling. The government even shelled a fully operational coal mine for no discernible reason, killing a female employee on the surface and forcing an evacuation of the facility. At the same time, Kiev continued to further deploy its forces in the rebel areas, moving up large numbers of additional tanks. In response, the rebels continued their attacks. In short, the "ceasefire" was mostly a PR stunt to show the West that Mr. Poroshenko tried to be "reasonable" before going all-in with bombs. What comes next will be bloody. In the Slaviansk area, the Ukrainian army has already been using everything from white phosphorous to flechette rounds. Just like Moscow, Kiev has been testing the waters of international opinion, slowly upping the ante to see what it can get away with. In line with this, the Ukrainians have pushed the envelope by bombarding several Russian border/customs posts (causing damage and injuries) and even sending patrols across the border, one of which ran into mechanical difficulties and had to leave an armored personnel carrier behind.  All of this has been very well documented in the Russian and even the Ukrainian press, as well as some of the European media, but almost completely ignored here in the U.S. While it may be that these incidents are simply mistakes made in the context of Kiev slugging it out with rebels near the border, it nonetheless shows (at a minimum) that the Ukrainians have been very careless in their operations. Almost none of this is being reported in the U.S. mainstream media. Our reporters sit in Kiev and prefer to carry "facts" from Ukrainian nationalist blogs and army press conferences. Then we come to the recent U.S. State Department press conference at which the spokeswoman seemed to question or discount the United Nations' tally of refugees pouring out of the war zone. This was simply laughable, but it is symptomatic of the total, do-whatever-you-want cover that Uncle Sam is providing Kiev. All the best, Jacob There you have it: Two sides of the story, and a few simple questions. Did anyone negotiate (or even state) terms of the ceasefire? Were the rebels supposed to allow Ukrainian military helicopters do whatever they wanted, including move military equipment and personnel under guise of a ceasefire? Was the ceasefire nothing but a PR stunt stunt all along? Prosecution of Journalists If you think the US news reporting is accurate, I invite you to read a very important article on a completely different front: How Blackwater Survived Iraq Probes Of Being "Above The Law" - By Threatening To Kill Investigators Please click on and read the above article. Perhaps it will change your mind regarding coverups and outright prosecution of journalists for telling the truth. 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.

Radical Stupidity: Academics Endorse $20,000 Income for Everyone, Working or Not Posted: 01 Jul 2014 01:29 AM PDT If you made less than $20,000 annually, but were guaranteed $20,000 whether you worked at all, would you work? Most wouldn't. And it should be obvious why: People like free time and they would gladly take more of it if they got paid for doing nothing (about $9.61 per hour). Academic Wonderland Academics in wonderland need some remedial education because they have not figured out what should be blatantly obvious. Please consider Guaranteed $20K income for all Canadians endorsed by academics. A group of academics and activists is trying to drum up interest in an ambitious plan to provide every Canadian with a guaranteed minimum level of income — whether or not they have a job. Rob Rainer, a campaign director for the Basic Income Canada Network, envisions a country where everyone is assured a minimum of $20,000 annually to make ends meet. "For many of us, we think the goal is no one should be living in poverty," Rainer said at a conference on the issue over the weekend at McGill University. "That's essentially what we're striving to achieve." More than 100 speakers and participants were on hand for the conference, which focused on the merits of a guaranteed minimum income that would either replace or exist alongside existing social programs. The idea is hardly new — the Canadian and Manitoba government conducted an experiment with the issue in the 1970s — but it has enjoyed a resurgence lately. Switzerland is expected to hold a non-binding referendum this fall on whether to guarantee every citizen an annual income of $35,900 Cdn. And in the United Sates, the idea has supporters on both sides of the political spectrum. "The idea is not new, it's not really radical," Rainer said, pointing out that seniors and families with children receive a form of guaranteed income from the government. "Where it does become more radical is when you get into the area of the working age population, and the idea that people should receive some income whether they are in the labour market or not. That's a fairly radical idea in our culture, because most of us were brought up to believe that in order to survive you have to work." Radical Stupidity None of these geniuses have bothered to work out the tax implication math and the consequences of huge numbers of people who would prefer to watch TV, play games, or go fishing rather than work if the economic payback was the same. Actually, because of transportation and meal costs, people working a $9.61 per hour job would be far worse off than those getting $9.61 for those sitting at home watching TV. How many illegal aliens would such a scheme attract? And why would it stop at $20,000? It wouldn't and couldn't. Companies would have to hike the minimum wage to $30,000 or $40,000 to attract any workers. Prices would go up accordingly, and the inflation aspects of a guaranteed "living income" would immediately make $20,000 too little to live on. Someone with a 7th grade education should be able to figure this out. But academics in wonderland, with no common sense, and no real world experience can't. 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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