31 Aralık 2014 Çarşamba

Ebola Smackdown: World Bank Takes On the WHO

Could the World Bank have handled the Ebola outbreak in West Africa better?
Let's begin 2015 with an important and hard-hitting brand of analysis the IPE Zone is known for by now. The outbreak of Ebola in the countries of Liberia, Sierra Leone and Guinea has raised several questions about how the international system responds to pandemics with potentially global consequences. We hear it all the time nowadays: if the international system understood the potential extent of the problem, would early action have helped reduce thousands of needless deaths cause by the outbreak in West Africa? In particular, the United Nations' World Health Organization (WHO) has come under fire for its belated response and early skepticism about the outbreak. TIME's "Persons of the Year" feature on Ebola fighters is representative of the criticism that has been leveled at the WTO:
One skeptic—perhaps the most influential and thus the most disastrous—was WHO, the health arm of the U.N. Underfunded and overly bureaucratic, WHO is, in the eyes of its many critics, woefully inadequate in dealing with rapidly emerging threats like Ebola. Worse perhaps, the agency’s local representatives are notoriously jealous of their turf and prerogatives. At this same critical moment, WHO offices in West Africa turned away a team of experts from the CDC working in Guinea, insisting that their help was not needed, says CDC director Dr. Thomas Frieden. The CDC, a large and very well-regarded public-health agency, is unsurpassed in its capacity for action, maintaining some 2,000 field workers in 60 countries around the world. Those workers in turn can often summon resources from the U.S. to smother epidemics in their infancy abroad.
Now, an unlikely critic of the WTO during the continuing crisis has been the World Bank. Students of international organizations often forget that the World Bank and IMF are actually part of the United Nations system. See here and the following:
The International Monetary Fund (IMF) and the World Bank are institutions in the United Nations system. They share the same goal of raising living standards in their member countries. Their approaches to this goal are complementary, with the IMF focusing on macroeconomic issues and the World Bank concentrating on long-term economic development and poverty reduction.
Given his background in epidemics, current World Bank President, Korean-American Jim Yong Kim is refloating the idea of creating a rapid response of outbreak specialists. Since the idea was shot down earlier by the WHO, it is interesting that it's being taken up again at the World Bank. After all, this is similar to Kim's previous international experience handling HIV/AIDS at the WHO (which he now criticizes):
The World Bank, headed for the first time by a [medical] doctor, wants to create a cadre of outbreak specialists who could be sent anywhere to end deadly epidemics. A similar idea, floated by a World Health Organization panel three years ago in the wake of the swine flu pandemic, didn’t get enough support. The WHO says the idea might not be practical and countries should ideally have the capacity to respond themselves..

Kim, who previously headed the WHO’s HIV/AIDS department, has voiced publicly his opinions on Ebola more than a dozen times in op-eds, speeches, statements, media briefings and in webcasts detailing the World Bank’s response and what needs to be done. He’s also been critical of the initial global response, describing it as “late, inadequate and slow.” 
The worry is that internecine warfare among ostensible UN sister agencies will further damage the WHO's ability to respond:
“There is a genuine risk that governments will use the Ebola outbreak as a basis for further undermining the WHO’s authority, which would simply be disastrous,” Kamradt-Scott said. The health agency had been subjected to “extensive budget cuts” as part of a reform process, he said. “While this doesn’t entirely explain why the organization was slow to respond to the outbreak, it has certainly had an impact on the WHO’s operational response. Rather than erode the organization’s capacity further, Ebola should be a wakeup call that we can’t have global health security without appropriate investment.”

A letter co-authored by Kamradt-Scott backing WHO and endorsed by almost 100 public health workers, academics and researchers in international relations is slated for publication in the Lancet medical journal on Jan. 10, he said.
There are two things I wish to point out here that place me more with the University of Sydney's Adam Kamradt-Scott on the dangers of further damaging the WHO. First, the World Bank has already been criticized a lot for "mission creep." From long-term development it has moved into areas such as emergency lending (a la the IMF)...and now emergency response to global pandemics? This is a longstanding worry. From the September/October 2001 issue of Foreign Affairs:
By now, its mission has become so complex that it strains credulity to portray the bank as a manageable organization. The bank takes on challenges that lie far beyond any institution's operational capabilities. The calls for greater focus through reform seem to produce little beyond conferences and consternation, since every program has a dedicated constituency resisting change. To counter these problems, the countries that own the bank -- its shareholders -- need to elaborate a worthwhile and suitably modest agenda. The views of emerging-market countries, which have shared in the bank's successes as well as its failures, should count a great deal; they are the ones who have lived the lessons of the past decades. Policymakers should consider a broad array of options, including devolving some of the bank's functions to new institutions or redistributing them to existing ones. But whatever the remedy, it is time to redefine the bank's unwieldy mission.
Second, and perhaps more importantly from an operational standpoint, the World Bank is already undergoing a tumultuous process of reform to "rationalize" its operations. Staffers have already (sort of) gone on strike. Since the downsizing effort was begun at Kim's request, it will doubtlessly strike many at the World Bank as unfair that Kim is seeking to defund their World Bank projects to fund one of his pet projects--the rapid response team.

Bottom line: the idea of a disease outbreak rapid response team may make good sense, but housing it at the World Bank risks not only further "mission creep" but also goes against the very spirit of reform that it is undergoing to focus on core missions. Just because something is happening in "developing" countries does not make the World Bank the UN's authoritative body on everything that happens there. The WHO needs to be helped--not further harmed by friendly fire--at the point in time.

NY Theater

My family and I have spent the past several days in New York City enjoying some theater (and fine dining). We much enjoyed A Gentleman's Guide to Love and Murder. But the revival of Cabaret with Emma Stone as Sally Bowles and Alan Cumming as the Emcee was amazing. It is open only for a few more months. I strongly recommend you see it if you can.

Bluff of the Day: Germany Warns "Greece is No Longer of Systemic Importance For the Euro"

In the obvious bluff of the day, Euro zone No Longer Obliged to Rescue Greece, Merkel Ally Says.

Actually, the eurozone was never obliged to rescue Greece, and in fact did not rescue Greece. Rather the EU and Troika rescued European banks holding Greek bonds.

Here's the actual bluff.
In an interview with Rheinische Post newspaper published on Wednesday, Michael Fuchs also said Greek politicians could not now "blackmail" their partners in the currency bloc.

"If Alexis Tsipras of the Greek left party Syriza thinks he can cut back the reform efforts and austerity measures, then the troika will have to cut back the credits for Greece," he said.

"The times where we had to rescue Greece are over. There is no potential for political blackmail anymore. Greece is no longer of systemic importance for the euro."
Blackmail Potential

Curiously, there was little potential for blackmail years past when Greece ran a primary account deficit (Greece needed money from Europe to stay afloat), but now Greece has a tiny current account surplus (not counting interest payments).

Countries with current account surpluses are not dependent on foreigners to finance debt. This makes it all the more likely Greece can tell the Troika "go to hell".

Of course, Tsipras has made all kinds of pledges that would kill the surplus if carried out, but since when do politicians keep promises?

More than likely a default would wreck the Greece economy, but so does interest on €245 billion in "bailouts" for years if not decades to come. Tsipras may easily decide he has nothing to lose.

Ironically, if his economic proposals were better, Greece would indeed have everything to gain and nothing to lose by cramming this straight down the EU's throat.

Eurozone Financial Stability Contribution Weights

CountryGuarantee Commitments (EUR) MillionsPercentage
Austria€ 21,639.192.78%
Belgium€ 27,031.993.47%
Cyprus€ 1,525.680.20%
Estonia€ 1,994.860.26%
Finland€ 13,974.031.79%
France€ 158,487.5320.32%
Germany€ 211,045.9027.06%
Greece€ 21,897.742.81%
Ireland€ 12,378.151.59%
Italy€ 139,267.8117.86%
Luxembourg€ 1,946.940.25%
Malta€ 704.330.09%
Netherlands€ 44,446.325.70%
Portugal€ 19,507.262.50%
Slovakia€ 7,727.570.99%
Slovenia€ 3,664.300.47%
Spain€ 92,543.5611.87%
Eurozone 17€ 779,783.14100%

The above table from European Financial Stability Facility

I posted the above table on Monday in Snap Elections in Greece; 3-Year Bond Yield Tops 12%; Potential Cascade! Who Has the Upper Hand?.

Here's a second table I created today to put a potential €245 billion default into proper perspective based on percentage liabilities.

Responsibility in Euros

CountryPercentageGreek Debt Responsibility
Austria2.78%6.79875
Belgium3.47%8.49317
Cyprus0.20%0.479465
Estonia0.26%0.62671
Finland1.79%4.3904
France20.32%49.79527
Germany27.06%66.308515
Greece2.81%6.88009
Ireland1.59%3.88913
Italy17.86%43.75651
Luxembourg0.25%0.611765
Malta0.09%0.221235
Netherlands5.70%13.96451
Portugal2.50%6.12892
Slovakia0.99%2.42795
Slovenia0.47%1.151255
Spain11.87%29.076355
Eurozone 17100%245

The idea that Greece is responsible to cover its own default is of course ridiculous, so mentally spread Greece's €6.88 billion liability to the other countries.

Italy's responsibility would rise by a little over €1 billion while Spain's liability would rise by a little under €1 billion. Germany would need to pick up about €2 billion, and France about €1.5 billion etc.

Where is Spain going to come up with €30 billion? Italy €45 billion? France €51 billion?

The simple answer is they aren't. So, does the ECB print the money in violation of rules and pass it out?

If not, who's bluffing whom regarding "systemic importance" of Greece?

The irony of the day is that Greece was no systemic threat to the eurozone until the Troika foolishly threw  €245 billion at Greece hoping to prevent a default.

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

30 Aralık 2014 Salı

A.P.C. Top, Size Small




Classic gray A.P.C. cotton flannel top. 3 pockets, square neck with two buttons, darts at the bust, fabric gathered at the cuffs, slight a-line shape. Love this shirt, and in great condition, I just haven't worn it much recently.

Size: small. Laying flat, measures 14" from shoulder seam to seam, 18.5" across the bust, 21.5" across the bottom hem. 24.5" long.

Paid: $120 on sale? Asking: $50 + $5 shipping.

Listing ends: January 6.


Unis Tunic Tank, Size 2



Crappy photos, but great tank from indie brand Unis. Stretchy silk (90% silk, 10% spandex), long and lean, boat neck. Electric blue with a dark navy/black geometric pattern. Worn only a few times, finally accepting that it doesn't fit me!

Size: 2. Measures 15.5" across the bust, 17.5" across the bottom hem, 27" long.

Asking: $20 + $5 shipping in the US.

Listing ends: January 6.

Lina Rennell Silk Blouse, Size S/M




Silk blouse from sustainable indie line Lina Rennell. Graphic black, white, beige, and rust-colored pattern. V-neck, very short sleeves, seam down the front, curved hem that's a bit longer in the back, loose fit. Great top that I just haven't worn much recently.

Size: S/M. Measures 21.5" across the bust, 18.5" across the waist, and 20" across the bottom hem. 25" long.

Good used condition, a bit of pilling on the silk but otherwise no marks or stains.

Paid: $100 on sale? Asking: $25 + $5 shipping in the US.

Listing ends January 6.

Vermont Throws in the Towel on Inane Single-Payer "Medicare for All" Proposal; Live and Let Die; Why Does Single-Payer "Work" in Europe?

Proponents of the single-payer healthcare idea who tout the idea such a system will save money need only look at Vermont to see reality.

Vermont Governor Peter Shumlin, a single-payer advocate, threw the single-payer idea on the ash heap of history admitting what any sensible person knew from the onset:

  • The plan would cost far more than estimated
  • The plan would quickly become insolvent
  • Massive tax increases would be required
  • Coverage would decline for many

MainWire explains in Lessons for Maine in Vermont’s Failure.
Last Wednesday, Vermont Governor Peter Shumlin announced that he was abandoning his plan for a single-payer health care system for the state, finally admitting in an unexpected news conference that it is “not the right time.”

As one most liberal states in the nation, Vermont has faced years of internal pressure to adopt government-run health care. Shumlin made single-payer health care a major feature of his recent re-election campaign, and until last week, seemed to be blazing a trail towards the first single-payer system in the U.S.

His plan, which was designed partly by controversial Obamacare architect Jonathon Gruber, would have pushed for a single-payer – the state of Vermont – to pay health care costs, instead of private insurance companies. Nearly every Vermonter would have been required to be insured under “Green Mountain Care,” a state-run agency funded primarily through taxes rather than insurance premiums.

The cost for Green Mountain Care was estimated to be approximately $2.6 billion, an astounding $300 million more Vermont’s entire budget for FY 2015. The state would have needed an overwhelming 11.5% payroll tax on businesses and a new sliding-scale income tax of up to 9.5% just to get the program off the ground. Given that Vermont already boasts a top income tax rate of 8.95%, a 6% sales tax and 8.5% corporate income tax, these new taxes would have made Vermont the highest taxed state in America, by a significant amount.

Even with those new taxes, Shumlin’s administration predicted that Green Mountain Care would be drawing a deficit by at least 2020, meaning additional revenue or tax increases would be needed in the near future.

Supporters assert that despite the huge tax increases, a single-payer system is ideal and could actually save money. They maintain that a single-payer system would lower health care spending by way of decreased administrative costs, discounts for buying bulk insurance, and lower reimbursement rates for hospitals.

However, there’s plenty of evidence to suggest that none of the above would or could happen in America. Medicare and Medicaid (government insurers already in existence) do not have significantly lower administrative costs. Large insurance companies already buy in bulk and purchase more plans than entire countries that utilize the single-payer system. And while slashing reimbursement rates may sound good for taxpayers, it would also mean drastic pay cuts for hardworking doctors, nurses, receptionists, and technicians. No politician in their right mind would ever cut health care reimbursements, or at least not to the point where taxpayers would see any benefit.

Another major issue that Vermont encountered is the level of coverage to provide in a single-payer system. Instead of having consumers purchase health insurance based upon their needs or income, the single-payer model favored by Vermont forces everyone to pay for the same amount coverage, regardless of health care requirements. With all citizens reduced to a single coverage level, Vermont was faced with the catch-22 of choosing between a low or high coverage level, and deciding whether they wanted to decrease or increase coverage for many of their residents.

In the end, Vermont chose platinum level coverage for all, reasoning it wasn’t fair to force anyone to decrease the quality of their insurance plan. While this was a polite gesture, it was nonetheless an expensive compromise, and a definite factor in the plan’s eventual failure.
Proponents of "Medicare for All" Rally

In spite of the obvious ridiculousness of "Medicare for All", Politico notes that proponents refuse to throw in the towel.
Advocates of a single-payer plan said Shumlin should not be able to cast aside Act 48, the 2011 law that called for the creation of Green Mountain Care, without repealing it. A group planned to hold a rally in front of the statehouse on Thursday to protest his decision.

“The governor’s misguided decision was a completely unnecessary result of a failed policy calculation that he pursued without Democratic input,” the group Healthcare Is a Human Right Campaign said in a statement.
Gruber Poison

Shumlin's plan was designed partly by Obamacare architect Jonathon Gruber. Thus, it's no wonder the plan was overoptimistic in what it could achieve.

Gruber is an admitted liar who will stop at nothing to get universal healthcare. As I noted on November 11, Gruber stated "Stupidity of American Voter" Needed to Pass Obamacare.

For his lies and deceit, he was paid $400,000 by the Obama administration. Vermont also paid the liar.

From Politico ....
Gruber, now infamous for his blunt assessments of the Affordable Care Act and his remarks about “stupid” voters, was until recently a state consultant. Days after the election, video emerged of him dismissing criticism of Vermont’s plan in 2011 by asking, “Was this written by my adolescent children, by any chance?” State officials said they would cut off his contract.
Activists in California, Hawaii, New York, Illinois, Washington, Massachusetts, Ohio, Oregon and Pennsylvania still pursue their fantasy.
Vermont’s outcome is a “small speed bump,” said New York Assembly member Richard Gottfried, who’s been pushing single-payer bills for more than 20 years. Gottfried has been introducing his New York single-payer bill every year since 1992. The cause is “not for the faint of heart.”

Why Does Single-Payer "Work" in Europe?

Proponents of single-payer say countries in Europe proves the model works. But what does "work" mean?

The answer is enormous taxes, control of doctors' salaries, control of nurses' salaries, control of drug costs, etc., etc. In other words, government-run everything is why the model appears to work.

In the US, control of all of that is impossible, thankfully. When accurate assessments of tax hikes are imputed, no one wants to pay.

Single-payer advocates in the US don't want any controls even though US citizens are the most obese in the world and the most resistant to "rationing".

People expect the "free lunch" that liars like Gruber promise.

Live and Let Die

"Medicare for all" cannot and will not work in the US because the US is not willing to become France or Sweden. Meanwhile, government interference in the free markets has given the US the worst of possibilities.

The solution is not "medicare for all" with government controls over everything but to live-and-let-die.

Massive amounts of money in the US are wasted keeping people alive for another six months or less, in great pain. This holds true even for those without insurance.

Heck, it even holds true for the already dead!

Terri Schiavo Case

Let's not forget the Terri Schiavo Case. By any practical measure, Terri Schiavo was dead. She had no functioning brain. Yet it took a 7 year battle for her husband to get the right to remove her feeding tube.

George Bush signed legislation to keep her alive. in 2003 Florida Governor Jed Bush signed "Terri's Law" forcing the state to keep a dead woman breathing against the wishes of her husband.

Once someone is terminal, without proper insurance, nothing other than comfort drugs should be given. And in regards to drugs, the US has the highest prescription drug prices in the world because of import restrictions.

Obamacare will not let insurers charge more for smokers or obese. There are many healthcare cost items a free market could solve.

At what point do we say "you get food, comfort care, and pain relievers" but that's it? 

Instead, we suffer with the worst of both systems, unwilling to become France or Sweden for tax purposes, unwilling to ration health-care based on life expectancy, and willing to pay the highest costs in the world thanks to very poorly written legislation.

It's time to scrap the whole damn thing and start all over.

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

1000% Inflation in Venezuela?

Those looking for hyperinflation can find it in Venezuela. Here's the question of the day: How bad is Venezuelan inflation and how bad can it get?

Bloomberg reports Venezuelan 1,000% Inflation Seen by BofA Without Weaker Bolivar
Venezuela President Nicolas Maduro, set to announce a new currency system today, needs to devalue the bolivar or risk inflation passing 1,000 percent as soon as next year, according to Bank of America Corp.

Under the current system, Venezuela’s overvalued bolivar means that the government effectively sells the dollars it gets from oil exports at a discount, compelling policy makers to print extra currency to cover domestic spending needs. Currency controls that limit Venezuelans’ access to dollars have spawned a black market in which the greenback fetches 172 bolivars, compared with officially sanctioned exchange rates that range from 6.3 to about 50 bolivars per dollar.

“If we don’t see a large adjustment of the exchange rate, we’re almost certain to have triple-digit inflation and I wouldn’t be surprised to see the economy veering into four-digit annual inflation,” Francisco Rodriguez, the chief Andean economist at Bank of America, said by phone from New York on Dec. 28, before Maduro scheduled his announcement. The government “needs to print money to finance the deficit and it is running a deficit because its revenues in bolivars are too low.”

Maduro said in televised speeches earlier this month that he saw no need to cut the government subsidies that leave gasoline selling for 6 cents a gallon, and that he will keep a 6.3 bolivar-per-dollar fixed exchange rate for priority imports.

The most recent official data is that annual inflation in Venezuela was 63 percent in August, the fastest in the world. A more up-to-date estimate based on the depreciation of the bolivar on the black market is 183 percent, according to Steve Hanke, a professor of applied economics at Johns Hopkins University and director of the Troubled Currencies Project at the Cato Institute.

The bolivar weakened 42 percent on the black market in the fourth quarter, according to data from dolartoday.com, outpacing even the 29 percent decline in the Russian ruble. Both currencies have been pressured by declines in price of oil, which makes up 95 percent of Venezuela’s exports and is the country’s principal source of hard currency.

With no access to international capital markets and falling revenue from oil sales, Maduro is dependent on loans from allies or on printing more money to plug his growing budget deficit.

“If they continue with their social welfare and income redistribution programs, they’ll be forced to run the printing press at an ever accelerating rate,” Hanke said. “There is tremendous pressure on them to keep spending and their sources of financing have dried up.”

Venezuela’s M2 money supply, a measure of the amount of bolivars in the economy that includes bank notes in circulation as well as retail savings, rose by 64 percent in the past 12 months. That is three times as fast as any other country tracked by Bloomberg.
Curious Headline

The Bloomberg headline "Venezuelan 1,000% Inflation Seen by BofA Without Weaker Bolivar" is rather curious given a weaker bolivar and Venezuelan inflation go hand in hand.

In isolation, the headline makes little sense.

However, the article explains Venezuela is bleeding foreign reserves in an effort to defend the official exchange rate and also to provide subsidies.

Selling gasoline at 6 cents a gallon is ridiculous. Can anyone really get gas at that price? If so, how much?  Black market siphoning of gas to sell at higher rates elsewhere has to be going on.

Regardless, and as I have pointed out before, foreign reserves and hard cash from oil sales are the only things preventing a total collapse in the bolivar.

Once reserves are gone, there will not be merchandise in stores at any price, let alone the nonsensical official rate of 6.3 bolivars per dollars.

The black market rate of 172-per-dollar vs. the official rate of 6.3-per-dollar is a decline of 96.34%. That's not as bad as Zimbabwe, but Maduro is surely trying.

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

The Japan That Can't Save

Japanese seniors do exercises and draw down savings.
Modern Japanese have a reputation for being polite to a fault. Despite being eliminated from the group stages of this year's World Cup, Japanese football astounded the world by cleaning up after the national team's (rather disastrous) matches. Yet always apologizing for slights the rest of us hardly notice and very rarely saying "no" to anyone has its drawbacks. In 1989, LDP bigwig Shintaro Ishihara and Sony chairman Akio Morita dropped a political-economic bombshell on this image of a reticent Japan with their book The Japan That Can Say No. Calling for equality with the US on the world stage, it certainly recalls Chinese political and business leaders now calling for the same.

At the end of the 2014, we are now being bombarded with yet another astounding blow to the global image of Japan. For decades and decades, they were a nation of savers. In turn, all these savings were plowed into investing into the nation's gargantuan export machine. In recent years, of course, Japan has run chronic trade deficits chiefly due to its ban on nuclear power forcing it to import much energy. It has also shifted much production from high-cost Japan to lower-cost manufacturing sites in the Asia-Pacific via "Factory Asia." Chronic trade deficits have thus led to a sizable current account deficit. Moreover, personal savings have been on the wane as aging Japanese draw down on their savings to sustain them during their retirement years. Add in the super-sized budget deficits the government is deliberately running via Abenomics and what you have is Japan's first-ever negative savings rate:
Japanese drew down savings for the first time on record while wages adjusted for inflation dropped the most in almost five years, highlighting challenges for Prime Minister Shinzo Abe as he tries to revive the world’s third-largest economy. The savings rate in the year through March was minus 1.3 percent, the first negative reading in data back to 1955, the Cabinet Office said. Real earnings fell 4.3 percent in November from a year earlier, a 17th straight decline and the steepest tumble since December 2009, the labor ministry said today.
The dissaving Japan...the dissolute Japanese?! If we were talking about the US then nobody would raise an eyebrow, but Japanese is a whole 'nother ballgame. Contrast Japan's current situation with that in the mid-Seventies:
The savings rate, which the Cabinet Office calculates by dividing savings by the sum of disposable income and pension payments, peaked at 23.1 percent in fiscal 1975. As Japan’s population ages, its growing ranks of elderly are tapping their savings, according to the Cabinet Office. Consumers also ran down savings to make purchases ahead of a sales tax-increase in April, the first since 1997.

The report offers perspective on a debate of decades ago over Japan’s trade surplus with the U.S., which caused periodic bouts of tension between the military allies. While respective savings rates have moved in opposite directions, the U.S. still had a $56 billion deficit with Japan in the first 10 months of 2014, U.S. government data show.
The export-led Japan we knew of massive trade surpluses, high savings and high investment has truly bitten the dust. As its population dwindles due to depopulation, so does the image we hold of it from long ago. Japan Inc, we hardly knew ye:
Japan had the highest household saving rate in the OECD in the 1960s until it fell to the lowest. After all, an aging population draws down savings and Japan is the fastest-aging country in the world; its population has been shrinking for a decade...

Since their debt crisis in the early 1990s, the Japanese have been reluctant to borrow on a large scale. So, unless wages rise sustainably, it's hard to see how household spending can. Without more domestic demand, firms are reluctant to raise wages and invest, which is why they still hold substantial cash. 
As the saying goes, be careful what you ask for.

29 Aralık 2014 Pazartesi

Last call: Acne Wool Pants, Size 38 (6)





100% wool "Lee" gabardine pants from Acne. Beautiful plum color, slim/straight fit. Flat front, zip and tab closure. One back slit pocket. Unlined, but not itchy. I had the hem slightly lowered to make them more ankle-length (I'm 5'6"). Not the best styling photos, above, but great pants that just don't fit as well anymore.

Condition: Worn three or four times, in great condition with no major marks, stains, or pilling.

Size: 38, or 6. Laying flat, measures 15.5" across the waist, 7" across the leg opening, 26" inseam, 11.5" rise, 36.5" in total length.

Retailed for $290, asking $40 + $5 shipping in the US.

Listing ends: January 5.

Leave any questions in the comments section. Thanks!

Last call: Ter et Bantine Top, Size 42 (6)


Stretchy wool top by Italian designer Ter et Bantine, carried at Maryam Nassir Zadeh and other boutiques. 100% wool asymmetrical top in a taupe. Rolled fabric at the hem and sleeves, dropped shoulder seams, fitted sleeves, cool neckline. Fits long and lean, stretchy, not itchy. Excellent condition, worn once or twice.

Size: 42 in Italian sizes, which here is about a 6. I'm a 4 and fits me with a bit of room. 17" across the bust, 15" around the waist, and 16.5" across the hem. 26.5" in length.

Paid: $100 on sale, retailed for $300+. Asking: $25 + $5 shipping in the US.

Listing ends: January 5.

Leave any questions in the comments section, thanks!

Last call: Wren Sweater Dress, Size M



Wool sweater dress from Wren. 90% wool, 10% cashmere. Navy and beige stripes, with an asymmetrical detail. Ribbed cuffs at the sleeves and the bottom hem. Short enough that it can also be worn as a sweater/tunic. Good condition, only worn a few times. 

Size: M, but fits more like a small. Measures 31” in length, 19” from pit to pit and across the bottom, and 16” across the waist.

Originally retailed for $200+, asking $18+ $5 shipping.

Listing ends: January 5.

Isabel Marant Etoile Glenside Jacket





Glenside Drawstring Jacket by Étoile Isabel Marant, size 40. In excellent condition, worn a handful of times. Description from La Garçonne: Mid-weight cotton canvas jacket with large patch pockets & drawstring details. Drawstring neckline. Dropped shoulders. Long sleeves with snap epaulets at cuffs. Covered button front placket. Drawstring waist. Large patch pockets at hips. Flap pockets at chest. Seam detail throughout. Fully lined. Length hits below hips. Relaxed fit. Color: Craie. 61% Cotton, 39% Linen.  Chest measures 20", length is 31", and sleeve length is  22". 


Asking: $130.00 shipped within the U.S. 

Gmail Dead in China, All Google Products Blocked; Reserve Currency Silliness Review

Access to Gmail in China was difficult, but not impossible. Workarounds included Outlook, Apple Mail, and third-party Gmail hosts.

Starting last Friday, the "Great Firewall" became nearly impenetrable as China’s Censors Took Final Step in Blocking Gmail.
In the six months since Google’s mail service Gmail was blocked in mainland China, users had been able to access it using third-party email applications such as Microsoft Outlook or Apple Mail.

Beijing now appears to have closed the loophole, completely shutting down access to Gmail behind the so-called Great Firewall. Google data showed Gmail appeared to have been walled off starting Friday. Google spokesman Taj Meadows acknowledged the drop in traffic and said Monday that “there’s nothing wrong on our end.”

Google clashed with Beijing in 2010 after the company decided to stop censoring its Internet search results in China. Google shifted most of its Chinese operations to Hong Kong as a result, and it has been hard since then to access the company’s services on the mainland.

As with Google search functions, Gmail users will now have to access the application through virtual private networks or other censorship circumvention channels, putting the email service on par with Facebook and Twitter in the eyes of Beijing censors.
Reserve Currency Silliness

China has no sizable bond market, no floating currency, few political freedoms, no freedom of speech, massive censorship, and questionable property rights, yet every week I see some article promoting the idea that the yuan will soon replace the dollar as world's reserve currency.

The idea is laughable. Lack of a bond market in sufficient size is enough to kill the notion.

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

Snap Elections in Greece; 3-Year Bond Yield Tops 12%; Potential Cascade! Who Has the Upper Hand?

Despite fearmongering by Greek prime minister and the EU, prime minister Antonis Samaras fell 12 votes short of a needed majority to elect a new Greek President.

As a result, snap elections will be held on January 25.
Stavros Dimas, a former EU commissioner, captured 168 votes in Monday’s decisive third presidential ballot,12 short of the required three-fifths majority after a weekend of frantic backroom politicking failed to round up additional votes from independent lawmakers and small opposition parties.

A sombre-looking Mr Samaras said in a televised statement: “It’s time for voters to do what parliament couldn’t — end uncertainty and restore stability so that we can continue with reforms and make a decisive exit from the bailout.”

“Be optimistic and cheerful, austerity will soon be over,” said Alexis Tsipras, Syriza’s firebrand leader, as he left parliament after the vote. “The Samaras government which looted society and decided to take further austerity measures is finished.”

Along with the IMF and the European Commission, the ECB played a key role in overseeing the four year €245bn bailout of Greece. “The ECB holds the key,” said Greek finance minister Gikas Hardouvelis in an interview with Greece’s To Vima newspaper on Sunday. He added: “This key can easily and abruptly turn off bank funding and strangle the Greek economy in a split second.”

Commenting on Monday’s vote, Wolfgang Schäuble, Germany’s finance minister, said in a statement: “We want to give Greece further support on its path of reform, helping it to help itself. If Greece chooses another way, it will be difficult. New elections will not change any of the agreements made with the Greek government. Any new government must keep to the contractual agreements of its predecessor.”

Opinion polls at the weekend gave Syriza a lead of 3-4 percentage points over Mr Samaras’s centre-right New Democracy party, but pollsters say it is unclear whether this would be sufficient to ensure an outright majority at election.
Yields Soar

Greek stock and bond markets reacted with disapproval. The Athens stock market fell about 10% and Yield on the 3-year note sailed above 12%.



On August 24, yield on the 3-Year note fell to an absurdly low 3.14%. Today it sits at 12.15%.

 Potential Cascade to Spain, Italy

To prevent default on  €50 billion or so of Greek bonds, the Troika gave Greece a €245 billion bailout, a sum that will be impossible for Greece to ever pay back.

Yet, German finance minister Wolfgang Schäuble insists "new elections will not change any of the agreements made with the Greek government."

Either Germany changes its tune, or Greece may default on €245 billion. The following table shows what may happen.

Eurozone Financial Stability Contribution Weights

CountryGuarantee Commitments (EUR) MillionsPercentage
Austria€ 21,639.192.78%
Belgium€ 27,031.993.47%
Cyprus€ 1,525.680.20%
Estonia€ 1,994.860.26%
Finland€ 13,974.031.79%
France€ 158,487.5320.32%
Germany€ 211,045.9027.06%
Greece€ 21,897.742.81%
Ireland€ 12,378.151.59%
Italy€ 139,267.8117.86%
Luxembourg€ 1,946.940.25%
Malta€ 704.330.09%
Netherlands€ 44,446.325.70%
Portugal€ 19,507.262.50%
Slovakia€ 7,727.570.99%
Slovenia€ 3,664.300.47%
Spain€ 92,543.5611.87%
Eurozone 17€ 779,783.14100%

The above table from European Financial Stability Facility

Who Has the Upper Hand?

Supposedly, Greece is responsible for 2.81% of its own default, quite illogical to say the least. Its portion would have to be spread out accordingly.

Spain's portion of a Greek default (not counting the extra spread) would be  would be 11.87%.

Where is Spain supposed to get €29 billion or Italy €44 billion?

Yes, the IMF and EU could ruin Greece. But if Greece wants to play hardball, it actually has the upper hand.

One way or another, sooner or later, a significant portion of that €245 billion bailout (not of Greece, but of bondholders) will not be paid back.

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

28 Aralık 2014 Pazar

China's Zombie Factories Provide Illusion of Work and Prosperity; Rebalancing Chinese Style

China has zombie malls and even zombie cities, so zombie factories can hardly be a surprise. And as the malinvestments pile up, so do unrealized shadow bank losses.

The Financial Times reports China Zombie Factories Kept Open to Give Illusion of Prosperity.
In the shadow of a group of enormous smokestacks and abandoned foundries, a peeling sign welcomes visitors to the Wenxi Steel Industrial Park.

Highsee stopped paying its 10,000 employees six months ago. Local officials estimate the plant supported indirectly the livelihood of about a quarter of Wenxi county’s population of 400,000. Highsee was the biggest privately owned steel mill in Shanxi, accounting for 60 per cent of Wenxi’s tax revenues. For those reasons, the local government was reluctant to allow the company to go out of business, even though it had been in serious financial difficulties for several years.

“By 2011 Highsee was already like a dead centipede that hadn’t yet frozen stiff with rigor mortis,” says one official who asks not to be named because he was not authorised to speak to foreign reporters. “More than half the plant shut down, but it was still producing steel even though its suppliers wouldn’t deliver anything without cash up front and it was drowning in debt.”

In the past month alone Chinese media have reported on at least nine large steel mills that appeared to be suspended in limbo after halting production but which are forbidden from going formally bankrupt.

“There are large numbers of companies across China that should go bankrupt but haven’t done so,” says Han Chuanhua, a bankruptcy lawyer at Zhongzi Law Office, a Beijing legal practice. “The government doesn’t want to see bankruptcy because as soon as companies go bust, unemployment spikes and tax revenues disappear. By stopping companies from going bankrupt, officials are able to maintain the illusion of local prosperity, economic growth and stable taxes.”

The outstanding volume of non-performing loans in the Chinese banking sector has increased 50 per cent since the beginning of 2013, according to estimates from ANZ, the Australian bank, but the sector-wide NPL ratio remains extremely low, at just over 1.2 per cent.

In private, however, senior Chinese financial officials admit the real ratio is almost certainly much higher, obscured by local governments trying to prop up companies.
Rebalancing Chinese Style

As part of China's rebalancing effort, growth must slow (or an even bigger crash will come later), and shadow banking losses recognized. So far, all we see is the slowdown in growth.

Even then, China recently cut interest rates hoping to keep the illusion alive (as some might see it), or smooth the transition (as others might see it).

Regardless how one sees it, these closures are at the back end of a collapse in commodity prices as China moves from an investment (malinvestment) driven pattern of growth, to a consumer-driven pattern of growth.

The transition will not be easy. The SOEs (state-owned-enterprises), the regional governments, and all those who got wealthy from the prior boom will not let go easily.

Nor it seems will the central government. Failure to recognize absurdly high deposit rates are proof enough.

For a look at unsound deposit rates, please see Chinese Banks Hemorrhaging Deposits, 1st Quarterly Drop Since 1999; Banks Offer iPhones, Even Cars for Large Deposits.

For more on rebalancing implication, please see Pettis on Strains in China's Banking System; Avoiding the Fall.

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

Emily Factor Shirt from Beklina, Size 4



Beautiful button-down shirt from LA-based designer Emily Factor, bought from Beklina a few seasons ago but only worn once and in perfect condition. Amazing handprinted pattern in shades of blue and black with a bit of purple, green, and gray, somewhere between a landscape and tie-dye. Super soft lightweight cotton, with buttons down the front and at cuffs covered in the same fabric. Seams down the front and back, curved hem. Ethically made in the United States; machine wash cold. I love this shirt it just doesn't fit me.

Size 4. Laying flat, measures 15" across the shoulders, 18" across the bust, 15.5" across the waist, and 17" across the bottom hem. 26" long sleeves, 24" long.

Paid: $150 on sale (was originally $200+). Asking: $55 + $5 shipping in the US.

Listing ends: January 4.

Contact me at sarahseidman [at] gmail with any questions. Thanks!

Reduced: Daniela Gregis Wool Jacket










Rare boiled wool jacket by the distinctive brand Daniela Gregis. Fits like an extra small. This is a one-owner jacket purchased in 2012. It has been worn very little. Comes with a scarf to wear a myriad of ways. Features the iconic "holes" (see pic), allowing you to be playful with the scarf. It has two pockets. Light pilling through out but I'm not so sure some of that already existed when it was new . . . due to the nature of the fabric. All-in-all, very good condition with no stains or odors. Comes from a smoke-free home. 

All photos are of actual jacket. 

$150, includes shipping within the US. Will ship outside US for extra. 

Reduced: Hazel Brown Cropped Trousers




Pair of 100% heavy linen trousers by Hazel Brown. Made in LA. Size 2. Please reference Hazel Brown sizing if you are not familiar. These have the look -- and even resembles the feel -- of wool. One owner. The waist has been professionally tailored and taken in and now measures about 27"-28". The rise is high at about 11". Inseam is cropped at about 21". Really great condition with no flaws or odors. Comes from a smoke-free home. 

$45, includes shipping within the US. Will ship outside US for extra. 


Thanks for your interest!

Reduced: Elm Dress, Size S







New, without tags Elm Design dress. Size S. Purchased for an event last year but didn't end up wearing it. Icelandic design, handmade in Peru. Made of 96% pima cotton and 4% lycra. Comes from a smoke-free home. 

Purchased new for $240
Asking $50, includes shipping within the US. Will ship outside US for extra. 


Thanks for your interest!

SOLD North Face Black Jacket / Parka











North Face Women's Jacket/Parka.  Black.  Very warm but still fairly lightweight so it is comfortable for outdoor activities.  Nylon shell with insulation.  Tons of pockets and removable hood (see last 2 pics).  Worn 6 times tops so is in great condition!  SIZE XSMALL.

Measures: 20.25" Armpit To Armpit (measured across back lying flat - keep in mind this is insulated)/ 24" Shoulder to Bottom Length.       

BUY HERE FOR $150 (US Shipping Included)

Listing ends in one week.  Buyer must pay Paypal fees.  Please email themchenryoutdoor at gmail with any questions.  Thanks!  If you are an international buyer, please let me know what country in the description so you can be quoted a shipping rate.

Spain to Issue €55 Billion in New Debt, 72% to Roll Over Existing Debt; Interest Rate Perspective

Spain's regional and local governments are struggling to pay back debts. The central government has not made much progress either.

El Economista reports 72% of Treasury Issuance in 2015 to Refinance CCAA and Municipalities.

Of estimated €55 billion debt increase for 2015, 72 percent of that amount will be to regional governments and municipalities through new mechanisms created to ease the burden of regional debt and also provide liquidity to local authorities for other policies (through the Fund Management, targeting the most indebted and Economic Promotion Fund for sustainable investments).

The €55 billion debt increase announced Friday is the same as last year, but is €8 billion superior to that which was announced last September.

Debt Increase Year by Year

Guru Huky has some interesting charts in his post Spain will Increase National Debt by €55 Billion.

.

Since 2008, Spanish debt has increased by €600 billion.

Guru notes "Since 2012 we had a tax increase that completely screwed the middle class of this country. And yet we continue with a cruising speed of new debt generation of more than €50 billion a year."

Interest Rate Perspective



click on chart for sharper image

In spite of the fact that yield on the 10-year government bond is a record low 1.67%, Spain tacks on more debt year after year.

For comparison purposes, the yield on 10-Year US notes is 2.25%.

Like Japan, Europe cannot stand higher interest rates.

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

Wolverine x Samantha Pleet Artist Boots size 8






A pair of stunning Wolverine 1000 Mile x Samantha Pleet two-toned booties in black and aubergine.  Dresses up or down with ease.  These boots look just as fantastic with a dress as they do with pants.   I'm only selling these because I really need an 8.5. Worn approximately six times.  Vibram soles added for longevity.  Minimal wear on the leather and on the heels.

Size 8 and true to size
Best for 7.5/8

Asking $155 with US shipping included.  Will ship in original box.  PayPal only.

E-mail nikoshkopa{at)gmail.com with questions.

Serious buyers only.  Please leave your e-mail address in the comments section only if you are truly interested.

Listing ends January 4, 2015 but willing to end the listing earlier and ship before the new year.

31 Aralık 2014 Çarşamba

Ebola Smackdown: World Bank Takes On the WHO

Could the World Bank have handled the Ebola outbreak in West Africa better?
Let's begin 2015 with an important and hard-hitting brand of analysis the IPE Zone is known for by now. The outbreak of Ebola in the countries of Liberia, Sierra Leone and Guinea has raised several questions about how the international system responds to pandemics with potentially global consequences. We hear it all the time nowadays: if the international system understood the potential extent of the problem, would early action have helped reduce thousands of needless deaths cause by the outbreak in West Africa? In particular, the United Nations' World Health Organization (WHO) has come under fire for its belated response and early skepticism about the outbreak. TIME's "Persons of the Year" feature on Ebola fighters is representative of the criticism that has been leveled at the WTO:
One skeptic—perhaps the most influential and thus the most disastrous—was WHO, the health arm of the U.N. Underfunded and overly bureaucratic, WHO is, in the eyes of its many critics, woefully inadequate in dealing with rapidly emerging threats like Ebola. Worse perhaps, the agency’s local representatives are notoriously jealous of their turf and prerogatives. At this same critical moment, WHO offices in West Africa turned away a team of experts from the CDC working in Guinea, insisting that their help was not needed, says CDC director Dr. Thomas Frieden. The CDC, a large and very well-regarded public-health agency, is unsurpassed in its capacity for action, maintaining some 2,000 field workers in 60 countries around the world. Those workers in turn can often summon resources from the U.S. to smother epidemics in their infancy abroad.
Now, an unlikely critic of the WTO during the continuing crisis has been the World Bank. Students of international organizations often forget that the World Bank and IMF are actually part of the United Nations system. See here and the following:
The International Monetary Fund (IMF) and the World Bank are institutions in the United Nations system. They share the same goal of raising living standards in their member countries. Their approaches to this goal are complementary, with the IMF focusing on macroeconomic issues and the World Bank concentrating on long-term economic development and poverty reduction.
Given his background in epidemics, current World Bank President, Korean-American Jim Yong Kim is refloating the idea of creating a rapid response of outbreak specialists. Since the idea was shot down earlier by the WHO, it is interesting that it's being taken up again at the World Bank. After all, this is similar to Kim's previous international experience handling HIV/AIDS at the WHO (which he now criticizes):
The World Bank, headed for the first time by a [medical] doctor, wants to create a cadre of outbreak specialists who could be sent anywhere to end deadly epidemics. A similar idea, floated by a World Health Organization panel three years ago in the wake of the swine flu pandemic, didn’t get enough support. The WHO says the idea might not be practical and countries should ideally have the capacity to respond themselves..

Kim, who previously headed the WHO’s HIV/AIDS department, has voiced publicly his opinions on Ebola more than a dozen times in op-eds, speeches, statements, media briefings and in webcasts detailing the World Bank’s response and what needs to be done. He’s also been critical of the initial global response, describing it as “late, inadequate and slow.” 
The worry is that internecine warfare among ostensible UN sister agencies will further damage the WHO's ability to respond:
“There is a genuine risk that governments will use the Ebola outbreak as a basis for further undermining the WHO’s authority, which would simply be disastrous,” Kamradt-Scott said. The health agency had been subjected to “extensive budget cuts” as part of a reform process, he said. “While this doesn’t entirely explain why the organization was slow to respond to the outbreak, it has certainly had an impact on the WHO’s operational response. Rather than erode the organization’s capacity further, Ebola should be a wakeup call that we can’t have global health security without appropriate investment.”

A letter co-authored by Kamradt-Scott backing WHO and endorsed by almost 100 public health workers, academics and researchers in international relations is slated for publication in the Lancet medical journal on Jan. 10, he said.
There are two things I wish to point out here that place me more with the University of Sydney's Adam Kamradt-Scott on the dangers of further damaging the WHO. First, the World Bank has already been criticized a lot for "mission creep." From long-term development it has moved into areas such as emergency lending (a la the IMF)...and now emergency response to global pandemics? This is a longstanding worry. From the September/October 2001 issue of Foreign Affairs:
By now, its mission has become so complex that it strains credulity to portray the bank as a manageable organization. The bank takes on challenges that lie far beyond any institution's operational capabilities. The calls for greater focus through reform seem to produce little beyond conferences and consternation, since every program has a dedicated constituency resisting change. To counter these problems, the countries that own the bank -- its shareholders -- need to elaborate a worthwhile and suitably modest agenda. The views of emerging-market countries, which have shared in the bank's successes as well as its failures, should count a great deal; they are the ones who have lived the lessons of the past decades. Policymakers should consider a broad array of options, including devolving some of the bank's functions to new institutions or redistributing them to existing ones. But whatever the remedy, it is time to redefine the bank's unwieldy mission.
Second, and perhaps more importantly from an operational standpoint, the World Bank is already undergoing a tumultuous process of reform to "rationalize" its operations. Staffers have already (sort of) gone on strike. Since the downsizing effort was begun at Kim's request, it will doubtlessly strike many at the World Bank as unfair that Kim is seeking to defund their World Bank projects to fund one of his pet projects--the rapid response team.

Bottom line: the idea of a disease outbreak rapid response team may make good sense, but housing it at the World Bank risks not only further "mission creep" but also goes against the very spirit of reform that it is undergoing to focus on core missions. Just because something is happening in "developing" countries does not make the World Bank the UN's authoritative body on everything that happens there. The WHO needs to be helped--not further harmed by friendly fire--at the point in time.

NY Theater

My family and I have spent the past several days in New York City enjoying some theater (and fine dining). We much enjoyed A Gentleman's Guide to Love and Murder. But the revival of Cabaret with Emma Stone as Sally Bowles and Alan Cumming as the Emcee was amazing. It is open only for a few more months. I strongly recommend you see it if you can.

Bluff of the Day: Germany Warns "Greece is No Longer of Systemic Importance For the Euro"

In the obvious bluff of the day, Euro zone No Longer Obliged to Rescue Greece, Merkel Ally Says.

Actually, the eurozone was never obliged to rescue Greece, and in fact did not rescue Greece. Rather the EU and Troika rescued European banks holding Greek bonds.

Here's the actual bluff.
In an interview with Rheinische Post newspaper published on Wednesday, Michael Fuchs also said Greek politicians could not now "blackmail" their partners in the currency bloc.

"If Alexis Tsipras of the Greek left party Syriza thinks he can cut back the reform efforts and austerity measures, then the troika will have to cut back the credits for Greece," he said.

"The times where we had to rescue Greece are over. There is no potential for political blackmail anymore. Greece is no longer of systemic importance for the euro."
Blackmail Potential

Curiously, there was little potential for blackmail years past when Greece ran a primary account deficit (Greece needed money from Europe to stay afloat), but now Greece has a tiny current account surplus (not counting interest payments).

Countries with current account surpluses are not dependent on foreigners to finance debt. This makes it all the more likely Greece can tell the Troika "go to hell".

Of course, Tsipras has made all kinds of pledges that would kill the surplus if carried out, but since when do politicians keep promises?

More than likely a default would wreck the Greece economy, but so does interest on €245 billion in "bailouts" for years if not decades to come. Tsipras may easily decide he has nothing to lose.

Ironically, if his economic proposals were better, Greece would indeed have everything to gain and nothing to lose by cramming this straight down the EU's throat.

Eurozone Financial Stability Contribution Weights

CountryGuarantee Commitments (EUR) MillionsPercentage
Austria€ 21,639.192.78%
Belgium€ 27,031.993.47%
Cyprus€ 1,525.680.20%
Estonia€ 1,994.860.26%
Finland€ 13,974.031.79%
France€ 158,487.5320.32%
Germany€ 211,045.9027.06%
Greece€ 21,897.742.81%
Ireland€ 12,378.151.59%
Italy€ 139,267.8117.86%
Luxembourg€ 1,946.940.25%
Malta€ 704.330.09%
Netherlands€ 44,446.325.70%
Portugal€ 19,507.262.50%
Slovakia€ 7,727.570.99%
Slovenia€ 3,664.300.47%
Spain€ 92,543.5611.87%
Eurozone 17€ 779,783.14100%

The above table from European Financial Stability Facility

I posted the above table on Monday in Snap Elections in Greece; 3-Year Bond Yield Tops 12%; Potential Cascade! Who Has the Upper Hand?.

Here's a second table I created today to put a potential €245 billion default into proper perspective based on percentage liabilities.

Responsibility in Euros

CountryPercentageGreek Debt Responsibility
Austria2.78%6.79875
Belgium3.47%8.49317
Cyprus0.20%0.479465
Estonia0.26%0.62671
Finland1.79%4.3904
France20.32%49.79527
Germany27.06%66.308515
Greece2.81%6.88009
Ireland1.59%3.88913
Italy17.86%43.75651
Luxembourg0.25%0.611765
Malta0.09%0.221235
Netherlands5.70%13.96451
Portugal2.50%6.12892
Slovakia0.99%2.42795
Slovenia0.47%1.151255
Spain11.87%29.076355
Eurozone 17100%245

The idea that Greece is responsible to cover its own default is of course ridiculous, so mentally spread Greece's €6.88 billion liability to the other countries.

Italy's responsibility would rise by a little over €1 billion while Spain's liability would rise by a little under €1 billion. Germany would need to pick up about €2 billion, and France about €1.5 billion etc.

Where is Spain going to come up with €30 billion? Italy €45 billion? France €51 billion?

The simple answer is they aren't. So, does the ECB print the money in violation of rules and pass it out?

If not, who's bluffing whom regarding "systemic importance" of Greece?

The irony of the day is that Greece was no systemic threat to the eurozone until the Troika foolishly threw  €245 billion at Greece hoping to prevent a default.

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

30 Aralık 2014 Salı

A.P.C. Top, Size Small




Classic gray A.P.C. cotton flannel top. 3 pockets, square neck with two buttons, darts at the bust, fabric gathered at the cuffs, slight a-line shape. Love this shirt, and in great condition, I just haven't worn it much recently.

Size: small. Laying flat, measures 14" from shoulder seam to seam, 18.5" across the bust, 21.5" across the bottom hem. 24.5" long.

Paid: $120 on sale? Asking: $50 + $5 shipping.

Listing ends: January 6.


Unis Tunic Tank, Size 2



Crappy photos, but great tank from indie brand Unis. Stretchy silk (90% silk, 10% spandex), long and lean, boat neck. Electric blue with a dark navy/black geometric pattern. Worn only a few times, finally accepting that it doesn't fit me!

Size: 2. Measures 15.5" across the bust, 17.5" across the bottom hem, 27" long.

Asking: $20 + $5 shipping in the US.

Listing ends: January 6.

Lina Rennell Silk Blouse, Size S/M




Silk blouse from sustainable indie line Lina Rennell. Graphic black, white, beige, and rust-colored pattern. V-neck, very short sleeves, seam down the front, curved hem that's a bit longer in the back, loose fit. Great top that I just haven't worn much recently.

Size: S/M. Measures 21.5" across the bust, 18.5" across the waist, and 20" across the bottom hem. 25" long.

Good used condition, a bit of pilling on the silk but otherwise no marks or stains.

Paid: $100 on sale? Asking: $25 + $5 shipping in the US.

Listing ends January 6.

Vermont Throws in the Towel on Inane Single-Payer "Medicare for All" Proposal; Live and Let Die; Why Does Single-Payer "Work" in Europe?

Proponents of the single-payer healthcare idea who tout the idea such a system will save money need only look at Vermont to see reality.

Vermont Governor Peter Shumlin, a single-payer advocate, threw the single-payer idea on the ash heap of history admitting what any sensible person knew from the onset:

  • The plan would cost far more than estimated
  • The plan would quickly become insolvent
  • Massive tax increases would be required
  • Coverage would decline for many

MainWire explains in Lessons for Maine in Vermont’s Failure.
Last Wednesday, Vermont Governor Peter Shumlin announced that he was abandoning his plan for a single-payer health care system for the state, finally admitting in an unexpected news conference that it is “not the right time.”

As one most liberal states in the nation, Vermont has faced years of internal pressure to adopt government-run health care. Shumlin made single-payer health care a major feature of his recent re-election campaign, and until last week, seemed to be blazing a trail towards the first single-payer system in the U.S.

His plan, which was designed partly by controversial Obamacare architect Jonathon Gruber, would have pushed for a single-payer – the state of Vermont – to pay health care costs, instead of private insurance companies. Nearly every Vermonter would have been required to be insured under “Green Mountain Care,” a state-run agency funded primarily through taxes rather than insurance premiums.

The cost for Green Mountain Care was estimated to be approximately $2.6 billion, an astounding $300 million more Vermont’s entire budget for FY 2015. The state would have needed an overwhelming 11.5% payroll tax on businesses and a new sliding-scale income tax of up to 9.5% just to get the program off the ground. Given that Vermont already boasts a top income tax rate of 8.95%, a 6% sales tax and 8.5% corporate income tax, these new taxes would have made Vermont the highest taxed state in America, by a significant amount.

Even with those new taxes, Shumlin’s administration predicted that Green Mountain Care would be drawing a deficit by at least 2020, meaning additional revenue or tax increases would be needed in the near future.

Supporters assert that despite the huge tax increases, a single-payer system is ideal and could actually save money. They maintain that a single-payer system would lower health care spending by way of decreased administrative costs, discounts for buying bulk insurance, and lower reimbursement rates for hospitals.

However, there’s plenty of evidence to suggest that none of the above would or could happen in America. Medicare and Medicaid (government insurers already in existence) do not have significantly lower administrative costs. Large insurance companies already buy in bulk and purchase more plans than entire countries that utilize the single-payer system. And while slashing reimbursement rates may sound good for taxpayers, it would also mean drastic pay cuts for hardworking doctors, nurses, receptionists, and technicians. No politician in their right mind would ever cut health care reimbursements, or at least not to the point where taxpayers would see any benefit.

Another major issue that Vermont encountered is the level of coverage to provide in a single-payer system. Instead of having consumers purchase health insurance based upon their needs or income, the single-payer model favored by Vermont forces everyone to pay for the same amount coverage, regardless of health care requirements. With all citizens reduced to a single coverage level, Vermont was faced with the catch-22 of choosing between a low or high coverage level, and deciding whether they wanted to decrease or increase coverage for many of their residents.

In the end, Vermont chose platinum level coverage for all, reasoning it wasn’t fair to force anyone to decrease the quality of their insurance plan. While this was a polite gesture, it was nonetheless an expensive compromise, and a definite factor in the plan’s eventual failure.
Proponents of "Medicare for All" Rally

In spite of the obvious ridiculousness of "Medicare for All", Politico notes that proponents refuse to throw in the towel.
Advocates of a single-payer plan said Shumlin should not be able to cast aside Act 48, the 2011 law that called for the creation of Green Mountain Care, without repealing it. A group planned to hold a rally in front of the statehouse on Thursday to protest his decision.

“The governor’s misguided decision was a completely unnecessary result of a failed policy calculation that he pursued without Democratic input,” the group Healthcare Is a Human Right Campaign said in a statement.
Gruber Poison

Shumlin's plan was designed partly by Obamacare architect Jonathon Gruber. Thus, it's no wonder the plan was overoptimistic in what it could achieve.

Gruber is an admitted liar who will stop at nothing to get universal healthcare. As I noted on November 11, Gruber stated "Stupidity of American Voter" Needed to Pass Obamacare.

For his lies and deceit, he was paid $400,000 by the Obama administration. Vermont also paid the liar.

From Politico ....
Gruber, now infamous for his blunt assessments of the Affordable Care Act and his remarks about “stupid” voters, was until recently a state consultant. Days after the election, video emerged of him dismissing criticism of Vermont’s plan in 2011 by asking, “Was this written by my adolescent children, by any chance?” State officials said they would cut off his contract.
Activists in California, Hawaii, New York, Illinois, Washington, Massachusetts, Ohio, Oregon and Pennsylvania still pursue their fantasy.
Vermont’s outcome is a “small speed bump,” said New York Assembly member Richard Gottfried, who’s been pushing single-payer bills for more than 20 years. Gottfried has been introducing his New York single-payer bill every year since 1992. The cause is “not for the faint of heart.”

Why Does Single-Payer "Work" in Europe?

Proponents of single-payer say countries in Europe proves the model works. But what does "work" mean?

The answer is enormous taxes, control of doctors' salaries, control of nurses' salaries, control of drug costs, etc., etc. In other words, government-run everything is why the model appears to work.

In the US, control of all of that is impossible, thankfully. When accurate assessments of tax hikes are imputed, no one wants to pay.

Single-payer advocates in the US don't want any controls even though US citizens are the most obese in the world and the most resistant to "rationing".

People expect the "free lunch" that liars like Gruber promise.

Live and Let Die

"Medicare for all" cannot and will not work in the US because the US is not willing to become France or Sweden. Meanwhile, government interference in the free markets has given the US the worst of possibilities.

The solution is not "medicare for all" with government controls over everything but to live-and-let-die.

Massive amounts of money in the US are wasted keeping people alive for another six months or less, in great pain. This holds true even for those without insurance.

Heck, it even holds true for the already dead!

Terri Schiavo Case

Let's not forget the Terri Schiavo Case. By any practical measure, Terri Schiavo was dead. She had no functioning brain. Yet it took a 7 year battle for her husband to get the right to remove her feeding tube.

George Bush signed legislation to keep her alive. in 2003 Florida Governor Jed Bush signed "Terri's Law" forcing the state to keep a dead woman breathing against the wishes of her husband.

Once someone is terminal, without proper insurance, nothing other than comfort drugs should be given. And in regards to drugs, the US has the highest prescription drug prices in the world because of import restrictions.

Obamacare will not let insurers charge more for smokers or obese. There are many healthcare cost items a free market could solve.

At what point do we say "you get food, comfort care, and pain relievers" but that's it? 

Instead, we suffer with the worst of both systems, unwilling to become France or Sweden for tax purposes, unwilling to ration health-care based on life expectancy, and willing to pay the highest costs in the world thanks to very poorly written legislation.

It's time to scrap the whole damn thing and start all over.

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

1000% Inflation in Venezuela?

Those looking for hyperinflation can find it in Venezuela. Here's the question of the day: How bad is Venezuelan inflation and how bad can it get?

Bloomberg reports Venezuelan 1,000% Inflation Seen by BofA Without Weaker Bolivar
Venezuela President Nicolas Maduro, set to announce a new currency system today, needs to devalue the bolivar or risk inflation passing 1,000 percent as soon as next year, according to Bank of America Corp.

Under the current system, Venezuela’s overvalued bolivar means that the government effectively sells the dollars it gets from oil exports at a discount, compelling policy makers to print extra currency to cover domestic spending needs. Currency controls that limit Venezuelans’ access to dollars have spawned a black market in which the greenback fetches 172 bolivars, compared with officially sanctioned exchange rates that range from 6.3 to about 50 bolivars per dollar.

“If we don’t see a large adjustment of the exchange rate, we’re almost certain to have triple-digit inflation and I wouldn’t be surprised to see the economy veering into four-digit annual inflation,” Francisco Rodriguez, the chief Andean economist at Bank of America, said by phone from New York on Dec. 28, before Maduro scheduled his announcement. The government “needs to print money to finance the deficit and it is running a deficit because its revenues in bolivars are too low.”

Maduro said in televised speeches earlier this month that he saw no need to cut the government subsidies that leave gasoline selling for 6 cents a gallon, and that he will keep a 6.3 bolivar-per-dollar fixed exchange rate for priority imports.

The most recent official data is that annual inflation in Venezuela was 63 percent in August, the fastest in the world. A more up-to-date estimate based on the depreciation of the bolivar on the black market is 183 percent, according to Steve Hanke, a professor of applied economics at Johns Hopkins University and director of the Troubled Currencies Project at the Cato Institute.

The bolivar weakened 42 percent on the black market in the fourth quarter, according to data from dolartoday.com, outpacing even the 29 percent decline in the Russian ruble. Both currencies have been pressured by declines in price of oil, which makes up 95 percent of Venezuela’s exports and is the country’s principal source of hard currency.

With no access to international capital markets and falling revenue from oil sales, Maduro is dependent on loans from allies or on printing more money to plug his growing budget deficit.

“If they continue with their social welfare and income redistribution programs, they’ll be forced to run the printing press at an ever accelerating rate,” Hanke said. “There is tremendous pressure on them to keep spending and their sources of financing have dried up.”

Venezuela’s M2 money supply, a measure of the amount of bolivars in the economy that includes bank notes in circulation as well as retail savings, rose by 64 percent in the past 12 months. That is three times as fast as any other country tracked by Bloomberg.
Curious Headline

The Bloomberg headline "Venezuelan 1,000% Inflation Seen by BofA Without Weaker Bolivar" is rather curious given a weaker bolivar and Venezuelan inflation go hand in hand.

In isolation, the headline makes little sense.

However, the article explains Venezuela is bleeding foreign reserves in an effort to defend the official exchange rate and also to provide subsidies.

Selling gasoline at 6 cents a gallon is ridiculous. Can anyone really get gas at that price? If so, how much?  Black market siphoning of gas to sell at higher rates elsewhere has to be going on.

Regardless, and as I have pointed out before, foreign reserves and hard cash from oil sales are the only things preventing a total collapse in the bolivar.

Once reserves are gone, there will not be merchandise in stores at any price, let alone the nonsensical official rate of 6.3 bolivars per dollars.

The black market rate of 172-per-dollar vs. the official rate of 6.3-per-dollar is a decline of 96.34%. That's not as bad as Zimbabwe, but Maduro is surely trying.

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

The Japan That Can't Save

Japanese seniors do exercises and draw down savings.
Modern Japanese have a reputation for being polite to a fault. Despite being eliminated from the group stages of this year's World Cup, Japanese football astounded the world by cleaning up after the national team's (rather disastrous) matches. Yet always apologizing for slights the rest of us hardly notice and very rarely saying "no" to anyone has its drawbacks. In 1989, LDP bigwig Shintaro Ishihara and Sony chairman Akio Morita dropped a political-economic bombshell on this image of a reticent Japan with their book The Japan That Can Say No. Calling for equality with the US on the world stage, it certainly recalls Chinese political and business leaders now calling for the same.

At the end of the 2014, we are now being bombarded with yet another astounding blow to the global image of Japan. For decades and decades, they were a nation of savers. In turn, all these savings were plowed into investing into the nation's gargantuan export machine. In recent years, of course, Japan has run chronic trade deficits chiefly due to its ban on nuclear power forcing it to import much energy. It has also shifted much production from high-cost Japan to lower-cost manufacturing sites in the Asia-Pacific via "Factory Asia." Chronic trade deficits have thus led to a sizable current account deficit. Moreover, personal savings have been on the wane as aging Japanese draw down on their savings to sustain them during their retirement years. Add in the super-sized budget deficits the government is deliberately running via Abenomics and what you have is Japan's first-ever negative savings rate:
Japanese drew down savings for the first time on record while wages adjusted for inflation dropped the most in almost five years, highlighting challenges for Prime Minister Shinzo Abe as he tries to revive the world’s third-largest economy. The savings rate in the year through March was minus 1.3 percent, the first negative reading in data back to 1955, the Cabinet Office said. Real earnings fell 4.3 percent in November from a year earlier, a 17th straight decline and the steepest tumble since December 2009, the labor ministry said today.
The dissaving Japan...the dissolute Japanese?! If we were talking about the US then nobody would raise an eyebrow, but Japanese is a whole 'nother ballgame. Contrast Japan's current situation with that in the mid-Seventies:
The savings rate, which the Cabinet Office calculates by dividing savings by the sum of disposable income and pension payments, peaked at 23.1 percent in fiscal 1975. As Japan’s population ages, its growing ranks of elderly are tapping their savings, according to the Cabinet Office. Consumers also ran down savings to make purchases ahead of a sales tax-increase in April, the first since 1997.

The report offers perspective on a debate of decades ago over Japan’s trade surplus with the U.S., which caused periodic bouts of tension between the military allies. While respective savings rates have moved in opposite directions, the U.S. still had a $56 billion deficit with Japan in the first 10 months of 2014, U.S. government data show.
The export-led Japan we knew of massive trade surpluses, high savings and high investment has truly bitten the dust. As its population dwindles due to depopulation, so does the image we hold of it from long ago. Japan Inc, we hardly knew ye:
Japan had the highest household saving rate in the OECD in the 1960s until it fell to the lowest. After all, an aging population draws down savings and Japan is the fastest-aging country in the world; its population has been shrinking for a decade...

Since their debt crisis in the early 1990s, the Japanese have been reluctant to borrow on a large scale. So, unless wages rise sustainably, it's hard to see how household spending can. Without more domestic demand, firms are reluctant to raise wages and invest, which is why they still hold substantial cash. 
As the saying goes, be careful what you ask for.

29 Aralık 2014 Pazartesi

Last call: Acne Wool Pants, Size 38 (6)





100% wool "Lee" gabardine pants from Acne. Beautiful plum color, slim/straight fit. Flat front, zip and tab closure. One back slit pocket. Unlined, but not itchy. I had the hem slightly lowered to make them more ankle-length (I'm 5'6"). Not the best styling photos, above, but great pants that just don't fit as well anymore.

Condition: Worn three or four times, in great condition with no major marks, stains, or pilling.

Size: 38, or 6. Laying flat, measures 15.5" across the waist, 7" across the leg opening, 26" inseam, 11.5" rise, 36.5" in total length.

Retailed for $290, asking $40 + $5 shipping in the US.

Listing ends: January 5.

Leave any questions in the comments section. Thanks!

Last call: Ter et Bantine Top, Size 42 (6)


Stretchy wool top by Italian designer Ter et Bantine, carried at Maryam Nassir Zadeh and other boutiques. 100% wool asymmetrical top in a taupe. Rolled fabric at the hem and sleeves, dropped shoulder seams, fitted sleeves, cool neckline. Fits long and lean, stretchy, not itchy. Excellent condition, worn once or twice.

Size: 42 in Italian sizes, which here is about a 6. I'm a 4 and fits me with a bit of room. 17" across the bust, 15" around the waist, and 16.5" across the hem. 26.5" in length.

Paid: $100 on sale, retailed for $300+. Asking: $25 + $5 shipping in the US.

Listing ends: January 5.

Leave any questions in the comments section, thanks!

Last call: Wren Sweater Dress, Size M



Wool sweater dress from Wren. 90% wool, 10% cashmere. Navy and beige stripes, with an asymmetrical detail. Ribbed cuffs at the sleeves and the bottom hem. Short enough that it can also be worn as a sweater/tunic. Good condition, only worn a few times. 

Size: M, but fits more like a small. Measures 31” in length, 19” from pit to pit and across the bottom, and 16” across the waist.

Originally retailed for $200+, asking $18+ $5 shipping.

Listing ends: January 5.

Isabel Marant Etoile Glenside Jacket





Glenside Drawstring Jacket by Étoile Isabel Marant, size 40. In excellent condition, worn a handful of times. Description from La Garçonne: Mid-weight cotton canvas jacket with large patch pockets & drawstring details. Drawstring neckline. Dropped shoulders. Long sleeves with snap epaulets at cuffs. Covered button front placket. Drawstring waist. Large patch pockets at hips. Flap pockets at chest. Seam detail throughout. Fully lined. Length hits below hips. Relaxed fit. Color: Craie. 61% Cotton, 39% Linen.  Chest measures 20", length is 31", and sleeve length is  22". 


Asking: $130.00 shipped within the U.S. 

Gmail Dead in China, All Google Products Blocked; Reserve Currency Silliness Review

Access to Gmail in China was difficult, but not impossible. Workarounds included Outlook, Apple Mail, and third-party Gmail hosts.

Starting last Friday, the "Great Firewall" became nearly impenetrable as China’s Censors Took Final Step in Blocking Gmail.
In the six months since Google’s mail service Gmail was blocked in mainland China, users had been able to access it using third-party email applications such as Microsoft Outlook or Apple Mail.

Beijing now appears to have closed the loophole, completely shutting down access to Gmail behind the so-called Great Firewall. Google data showed Gmail appeared to have been walled off starting Friday. Google spokesman Taj Meadows acknowledged the drop in traffic and said Monday that “there’s nothing wrong on our end.”

Google clashed with Beijing in 2010 after the company decided to stop censoring its Internet search results in China. Google shifted most of its Chinese operations to Hong Kong as a result, and it has been hard since then to access the company’s services on the mainland.

As with Google search functions, Gmail users will now have to access the application through virtual private networks or other censorship circumvention channels, putting the email service on par with Facebook and Twitter in the eyes of Beijing censors.
Reserve Currency Silliness

China has no sizable bond market, no floating currency, few political freedoms, no freedom of speech, massive censorship, and questionable property rights, yet every week I see some article promoting the idea that the yuan will soon replace the dollar as world's reserve currency.

The idea is laughable. Lack of a bond market in sufficient size is enough to kill the notion.

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

Snap Elections in Greece; 3-Year Bond Yield Tops 12%; Potential Cascade! Who Has the Upper Hand?

Despite fearmongering by Greek prime minister and the EU, prime minister Antonis Samaras fell 12 votes short of a needed majority to elect a new Greek President.

As a result, snap elections will be held on January 25.
Stavros Dimas, a former EU commissioner, captured 168 votes in Monday’s decisive third presidential ballot,12 short of the required three-fifths majority after a weekend of frantic backroom politicking failed to round up additional votes from independent lawmakers and small opposition parties.

A sombre-looking Mr Samaras said in a televised statement: “It’s time for voters to do what parliament couldn’t — end uncertainty and restore stability so that we can continue with reforms and make a decisive exit from the bailout.”

“Be optimistic and cheerful, austerity will soon be over,” said Alexis Tsipras, Syriza’s firebrand leader, as he left parliament after the vote. “The Samaras government which looted society and decided to take further austerity measures is finished.”

Along with the IMF and the European Commission, the ECB played a key role in overseeing the four year €245bn bailout of Greece. “The ECB holds the key,” said Greek finance minister Gikas Hardouvelis in an interview with Greece’s To Vima newspaper on Sunday. He added: “This key can easily and abruptly turn off bank funding and strangle the Greek economy in a split second.”

Commenting on Monday’s vote, Wolfgang Schäuble, Germany’s finance minister, said in a statement: “We want to give Greece further support on its path of reform, helping it to help itself. If Greece chooses another way, it will be difficult. New elections will not change any of the agreements made with the Greek government. Any new government must keep to the contractual agreements of its predecessor.”

Opinion polls at the weekend gave Syriza a lead of 3-4 percentage points over Mr Samaras’s centre-right New Democracy party, but pollsters say it is unclear whether this would be sufficient to ensure an outright majority at election.
Yields Soar

Greek stock and bond markets reacted with disapproval. The Athens stock market fell about 10% and Yield on the 3-year note sailed above 12%.



On August 24, yield on the 3-Year note fell to an absurdly low 3.14%. Today it sits at 12.15%.

 Potential Cascade to Spain, Italy

To prevent default on  €50 billion or so of Greek bonds, the Troika gave Greece a €245 billion bailout, a sum that will be impossible for Greece to ever pay back.

Yet, German finance minister Wolfgang Schäuble insists "new elections will not change any of the agreements made with the Greek government."

Either Germany changes its tune, or Greece may default on €245 billion. The following table shows what may happen.

Eurozone Financial Stability Contribution Weights

CountryGuarantee Commitments (EUR) MillionsPercentage
Austria€ 21,639.192.78%
Belgium€ 27,031.993.47%
Cyprus€ 1,525.680.20%
Estonia€ 1,994.860.26%
Finland€ 13,974.031.79%
France€ 158,487.5320.32%
Germany€ 211,045.9027.06%
Greece€ 21,897.742.81%
Ireland€ 12,378.151.59%
Italy€ 139,267.8117.86%
Luxembourg€ 1,946.940.25%
Malta€ 704.330.09%
Netherlands€ 44,446.325.70%
Portugal€ 19,507.262.50%
Slovakia€ 7,727.570.99%
Slovenia€ 3,664.300.47%
Spain€ 92,543.5611.87%
Eurozone 17€ 779,783.14100%

The above table from European Financial Stability Facility

Who Has the Upper Hand?

Supposedly, Greece is responsible for 2.81% of its own default, quite illogical to say the least. Its portion would have to be spread out accordingly.

Spain's portion of a Greek default (not counting the extra spread) would be  would be 11.87%.

Where is Spain supposed to get €29 billion or Italy €44 billion?

Yes, the IMF and EU could ruin Greece. But if Greece wants to play hardball, it actually has the upper hand.

One way or another, sooner or later, a significant portion of that €245 billion bailout (not of Greece, but of bondholders) will not be paid back.

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

28 Aralık 2014 Pazar

China's Zombie Factories Provide Illusion of Work and Prosperity; Rebalancing Chinese Style

China has zombie malls and even zombie cities, so zombie factories can hardly be a surprise. And as the malinvestments pile up, so do unrealized shadow bank losses.

The Financial Times reports China Zombie Factories Kept Open to Give Illusion of Prosperity.
In the shadow of a group of enormous smokestacks and abandoned foundries, a peeling sign welcomes visitors to the Wenxi Steel Industrial Park.

Highsee stopped paying its 10,000 employees six months ago. Local officials estimate the plant supported indirectly the livelihood of about a quarter of Wenxi county’s population of 400,000. Highsee was the biggest privately owned steel mill in Shanxi, accounting for 60 per cent of Wenxi’s tax revenues. For those reasons, the local government was reluctant to allow the company to go out of business, even though it had been in serious financial difficulties for several years.

“By 2011 Highsee was already like a dead centipede that hadn’t yet frozen stiff with rigor mortis,” says one official who asks not to be named because he was not authorised to speak to foreign reporters. “More than half the plant shut down, but it was still producing steel even though its suppliers wouldn’t deliver anything without cash up front and it was drowning in debt.”

In the past month alone Chinese media have reported on at least nine large steel mills that appeared to be suspended in limbo after halting production but which are forbidden from going formally bankrupt.

“There are large numbers of companies across China that should go bankrupt but haven’t done so,” says Han Chuanhua, a bankruptcy lawyer at Zhongzi Law Office, a Beijing legal practice. “The government doesn’t want to see bankruptcy because as soon as companies go bust, unemployment spikes and tax revenues disappear. By stopping companies from going bankrupt, officials are able to maintain the illusion of local prosperity, economic growth and stable taxes.”

The outstanding volume of non-performing loans in the Chinese banking sector has increased 50 per cent since the beginning of 2013, according to estimates from ANZ, the Australian bank, but the sector-wide NPL ratio remains extremely low, at just over 1.2 per cent.

In private, however, senior Chinese financial officials admit the real ratio is almost certainly much higher, obscured by local governments trying to prop up companies.
Rebalancing Chinese Style

As part of China's rebalancing effort, growth must slow (or an even bigger crash will come later), and shadow banking losses recognized. So far, all we see is the slowdown in growth.

Even then, China recently cut interest rates hoping to keep the illusion alive (as some might see it), or smooth the transition (as others might see it).

Regardless how one sees it, these closures are at the back end of a collapse in commodity prices as China moves from an investment (malinvestment) driven pattern of growth, to a consumer-driven pattern of growth.

The transition will not be easy. The SOEs (state-owned-enterprises), the regional governments, and all those who got wealthy from the prior boom will not let go easily.

Nor it seems will the central government. Failure to recognize absurdly high deposit rates are proof enough.

For a look at unsound deposit rates, please see Chinese Banks Hemorrhaging Deposits, 1st Quarterly Drop Since 1999; Banks Offer iPhones, Even Cars for Large Deposits.

For more on rebalancing implication, please see Pettis on Strains in China's Banking System; Avoiding the Fall.

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

Emily Factor Shirt from Beklina, Size 4



Beautiful button-down shirt from LA-based designer Emily Factor, bought from Beklina a few seasons ago but only worn once and in perfect condition. Amazing handprinted pattern in shades of blue and black with a bit of purple, green, and gray, somewhere between a landscape and tie-dye. Super soft lightweight cotton, with buttons down the front and at cuffs covered in the same fabric. Seams down the front and back, curved hem. Ethically made in the United States; machine wash cold. I love this shirt it just doesn't fit me.

Size 4. Laying flat, measures 15" across the shoulders, 18" across the bust, 15.5" across the waist, and 17" across the bottom hem. 26" long sleeves, 24" long.

Paid: $150 on sale (was originally $200+). Asking: $55 + $5 shipping in the US.

Listing ends: January 4.

Contact me at sarahseidman [at] gmail with any questions. Thanks!

Reduced: Daniela Gregis Wool Jacket










Rare boiled wool jacket by the distinctive brand Daniela Gregis. Fits like an extra small. This is a one-owner jacket purchased in 2012. It has been worn very little. Comes with a scarf to wear a myriad of ways. Features the iconic "holes" (see pic), allowing you to be playful with the scarf. It has two pockets. Light pilling through out but I'm not so sure some of that already existed when it was new . . . due to the nature of the fabric. All-in-all, very good condition with no stains or odors. Comes from a smoke-free home. 

All photos are of actual jacket. 

$150, includes shipping within the US. Will ship outside US for extra. 

Reduced: Hazel Brown Cropped Trousers




Pair of 100% heavy linen trousers by Hazel Brown. Made in LA. Size 2. Please reference Hazel Brown sizing if you are not familiar. These have the look -- and even resembles the feel -- of wool. One owner. The waist has been professionally tailored and taken in and now measures about 27"-28". The rise is high at about 11". Inseam is cropped at about 21". Really great condition with no flaws or odors. Comes from a smoke-free home. 

$45, includes shipping within the US. Will ship outside US for extra. 


Thanks for your interest!

Reduced: Elm Dress, Size S







New, without tags Elm Design dress. Size S. Purchased for an event last year but didn't end up wearing it. Icelandic design, handmade in Peru. Made of 96% pima cotton and 4% lycra. Comes from a smoke-free home. 

Purchased new for $240
Asking $50, includes shipping within the US. Will ship outside US for extra. 


Thanks for your interest!

SOLD North Face Black Jacket / Parka











North Face Women's Jacket/Parka.  Black.  Very warm but still fairly lightweight so it is comfortable for outdoor activities.  Nylon shell with insulation.  Tons of pockets and removable hood (see last 2 pics).  Worn 6 times tops so is in great condition!  SIZE XSMALL.

Measures: 20.25" Armpit To Armpit (measured across back lying flat - keep in mind this is insulated)/ 24" Shoulder to Bottom Length.       

BUY HERE FOR $150 (US Shipping Included)

Listing ends in one week.  Buyer must pay Paypal fees.  Please email themchenryoutdoor at gmail with any questions.  Thanks!  If you are an international buyer, please let me know what country in the description so you can be quoted a shipping rate.

Spain to Issue €55 Billion in New Debt, 72% to Roll Over Existing Debt; Interest Rate Perspective

Spain's regional and local governments are struggling to pay back debts. The central government has not made much progress either.

El Economista reports 72% of Treasury Issuance in 2015 to Refinance CCAA and Municipalities.

Of estimated €55 billion debt increase for 2015, 72 percent of that amount will be to regional governments and municipalities through new mechanisms created to ease the burden of regional debt and also provide liquidity to local authorities for other policies (through the Fund Management, targeting the most indebted and Economic Promotion Fund for sustainable investments).

The €55 billion debt increase announced Friday is the same as last year, but is €8 billion superior to that which was announced last September.

Debt Increase Year by Year

Guru Huky has some interesting charts in his post Spain will Increase National Debt by €55 Billion.

.

Since 2008, Spanish debt has increased by €600 billion.

Guru notes "Since 2012 we had a tax increase that completely screwed the middle class of this country. And yet we continue with a cruising speed of new debt generation of more than €50 billion a year."

Interest Rate Perspective



click on chart for sharper image

In spite of the fact that yield on the 10-year government bond is a record low 1.67%, Spain tacks on more debt year after year.

For comparison purposes, the yield on 10-Year US notes is 2.25%.

Like Japan, Europe cannot stand higher interest rates.

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

Wolverine x Samantha Pleet Artist Boots size 8






A pair of stunning Wolverine 1000 Mile x Samantha Pleet two-toned booties in black and aubergine.  Dresses up or down with ease.  These boots look just as fantastic with a dress as they do with pants.   I'm only selling these because I really need an 8.5. Worn approximately six times.  Vibram soles added for longevity.  Minimal wear on the leather and on the heels.

Size 8 and true to size
Best for 7.5/8

Asking $155 with US shipping included.  Will ship in original box.  PayPal only.

E-mail nikoshkopa{at)gmail.com with questions.

Serious buyers only.  Please leave your e-mail address in the comments section only if you are truly interested.

Listing ends January 4, 2015 but willing to end the listing earlier and ship before the new year.