We don't know what they're going to allow the second watch people to carry and what will be stored off site. We're sure plenty of readers would like to give or receive advice.
The NATO summit coming to Chicago later this month will give a $128 million short-term boost to the city’s economy, according to a projection released by the head of the host committee Monday.
That does not count any long-term benefits of raising Chicago’s profile.
City officials and Mayor Rahm Emanuel insisted Monday that taxpayers will not be on the hook for a single dime of the $55 million cost of the summit.
And guess who agrees this is bullshit?
Summit critics called the projection inflated and said other summits end up costing cities money when juries award protestors judgements against over-reaching police departments.
“Oh what a joke — I wish I was smoking what they’re smoking,” said Andy Thayer, an organizer with the Coalition Against NATO/G8. “You look at the history of these summits and cities usually end up paying out millions of dollars because of the excesses of city officials on protestors.”
But don't listen to Andy. How about the entire government of Canada?
Wait....so it isn't the teachers, firefighters, cops and other city workers sucking the budgets dry?
Here's the deal.Excess Reserves Then and Now
1. The Fed can control money supply but it will have no control over interest rates (or anything else).
2. The Fed can control short-term interest rates, but then it would have no control over money supply (or anything else).
That is the full and complete extent of the Fed's "control". Note that neither price stability nor unemployment is in either equation. The reason is the Fed controls neither.
The result of all the recent Fed printing is a big yawn, otherwise known as excessive reserves as the following chart shows.
Excess Reserves of Depository Institutions
Does that chart look like the Fed is in control? If so, control of what?
Spain is rapidly approaching a liquidity impasse. Markets are nervous because it’s not clear how the government will finance its budget deficit and the rollover of its maturing bonds. To meet its financing needs, the Spanish government needs the confidence of foreign and domestic investors.Earth to Feldstein
Building investor confidence during this process requires a plan to avoid a Greek-style default.
One part of such a plan is to negotiate access to the European Stability Mechanism, the €700bn fund created to protect member governments from default. But if the refinancing shortfall from private sources is very large, Spain will need to supplement the funds from the ESM.
Raising those additional funds by increasing taxes would push the Spanish economy into a deeper recession and would weaken the supply-side incentives needed to stimulate long-term growth.
An alternative emergency approach would be to mandate, on a temporary basis, bond purchases by Spanish households and businesses. Here’s how such a plan might be implemented.
The Spanish government could use the income tax system to levy a temporary “lending surcharge” on individual incomes. In exchange for those surcharge payments, the households would receive an interest-bearing government bond with a maturity of five to 10 years. A similar surcharge could be levied on businesses based on corporate profits or the businesses’ value added.
The Spanish government should therefore move quickly to enact such a plan before it is overcome by its current liquidity problems.
Illinois plans to sell $1.8 billion of general-obligation debt tomorrow as its relative borrowing costs may increase by almost a quarter.More Sideline Cash Nonsense
The tax-exempt deal for the state, rated lowest by Moody’s Investors Service, includes a 10-year segment that underwriter Jefferies & Co. plans to offer to investors at 1.85 percentage points above benchmark AAA securities, according to a person familiar with the sale.
Illinois’s last general-obligation sale was on March 13 for $575 million, with 10-year securities priced to yield 1.51 percentage points above benchmark tax-exempts, according to data compiled by Bloomberg. That’s 0.34 percentage points below tomorrow’s tentative pricing plan, or a difference of 22.5 percent.
The state has the lowest-funded pension in the U.S., with assets equal to 45.5 percent of projected obligations, Bloomberg data show. Its backlog of unpaid bills to vendors and Medicaid obligations is more than $9 billion.
Investors should get more yield than 1.85 percentage points given those fiscal challenges, John Mousseau, a portfolio manager at Vineland, New Jersey-based Cumberland Advisors, which has $1.2 billion of municipal debt. It doesn’t own Illinois general-obligation bonds.
“The state’s debt should be trading even cheaper,” Mousseau wrote in a report released today. “At some point it is a buy. Not yet.”
Spain’s government and its banks are discussing a new scheme to segregate problematic property loans into one or more asset management companies to relieve the burden on struggling lenders, according to officials and bankers.Can One-Winged Pigs Fly?
The “bad bank” scheme is the latest attempt by the centre-right government of Mariano Rajoy, prime minister, to avoid an international rescue programme of the sort required by Greece, Ireland and Portugal.
Ministers had decided they had no need of an Irish-style bad bank. But economists say the crisis is so dire that weak banks will need further recapitalisation of about €100bn.
Government officials insist that the scheme should not be called a bad bank, because it will not be a bank and participating lenders will be able to park assets in it only if they have set aside sufficient bad loan provisions, independently valued.
The scheme is being developed by Luis de Guindos, economy minister, and is in line with a recommendation by the International Monetary Fund.
Just when Derrick Rose was on the brink of alleviating fears that he would be unable to fully recover from a nagging ankle injury, he tore the anterior cruciate ligament in his left knee, making an impressive playoff victory seem more like a loss and all but dashing the Bulls’ title hopes.
Rose landed awkwardly after a jump stop and fell to the floor with 80 seconds left in the Bulls’ 103-91 victory over the Philadelpha 76ers in Game 1 of their first-round NBA playoff series at the United Center. The team later announced that Rose had torn his ACL and will miss the rest of the postseason. It’s the sixth injury Rose has suffered this season.
A four-car chartered train carrying about 40 train buffs derailed Sunday morning on the elevated CTA tracks near State and 14th Street in the South Loop, though no one was injured.
A Green Line train carrying 60 to 70 passengers was trapped behind the chartered train, the CTA said.
All but two of those aboard the trains walked down a nearby walkway to the nearest train station.
François Hollande, the Socialist candidate for the French presidency, has claimed support from across Europe for his demand for a growth plan, saying it was not up to Germany to decide what action should be taken in the face of the eurozone crisis.Election Posturing?
With opinion polls predicting he will beat President Nicolas Sarkozy in the run-off vote a week on Sunday, Mr Hollande has stepped up his insistence that he would not ratify the European fiscal discipline treaty without a renegotiation to add a package of growth measures.
In a television appearance on Thursday night, Mr Hollande said: “It is not for Germany to decide for the rest of Europe. I’m getting lots of signals, direct and indirect, from other governments, even if they are conservative.”
Mr Hollande was delighted on Wednesday when Mario Draghi, governor of the European Central Bank, also called for a growth pact to accompany the austerity measures being implemented across Europe, including in France.
But he has made it clear that his growth prescription differs markedly from the market-oriented structural reforms envisaged by Mr Draghi – and endorsed by Ms Merkel.
His immediate demands are for common European project bonds, an increase in investment by the European Investment Bank, better targeting of underused European structural funds and the introduction of a financial transaction tax, all measures Mr Hollande’s camp believes can win widespread backing, including from Germany.
This month, we learned that the Pentagon has increased the price tag for the F-35 by another $289 million -- just the latest in a long string of cost increases -- and that the program is expected to account for a whopping 38 percent of Pentagon procurement for defense programs, assuming its cost will grow no more.What Happened?
How bad is it? A review of the F-35's cost, schedule, and performance -- three essential measures of any Pentagon program -- shows the problems are fundamental and still growing.
Although the plane was originally billed as a low-cost solution, major cost increases have plagued the program throughout the last decade. Last year, Pentagon leadership told Congress the acquisition price had increased another 16 percent, from $328.3 billion to $379.4 billion for the 2,457 aircraft to be bought. Not to worry, however -- they pledged to finally reverse the growth.
The result? This February, the price increased another 4 percent to $395.7 billion and then even further in April. Don't expect the cost overruns to end there: The test program is only 20 percent complete, the Government Accountability Office has reported, and the toughest tests are yet to come. Overall, the program's cost has grown 75 percent from its original 2001 estimate of $226.5 billion -- and that was for a larger buy of 2,866 aircraft.
The total program unit cost for each individual F-35, now at $161 million, is only a temporary plateau. Expect yet another increase in early 2013, when a new round of budget restrictions is sure to hit the Pentagon, and the F-35 will take more hits in the form of reducing the numbers to be bought, thereby increasing the unit cost of each plane.
A final note on expense: The F-35 will actually cost multiples of the $395.7 billion cited above. That is the current estimate only to acquire it, not the full life-cycle cost to operate it. The current appraisal for operations and support is $1.1 trillion -- making for a grand total of $1.5 trillion, or more than the annual GDP of Spain. And that estimate is wildly optimistic: It assumes the F-35 will only be 42 percent more expensive to operate than an F-16, but the F-35 is much more complex.
The F-35 isn't only expensive -- it's way behind schedule. The first plan was to have an initial batch of F-35s available for combat in 2010. Then first deployment was to be 2012. More recently, the military services have said the deployment date is "to be determined." A new target date of 2019 has been informally suggested in testimony -- almost 10 years late.
The design was born in the late 1980s in the Defense Advanced Research Projects Agency (DARPA), the Pentagon agency that has earned an undeserved reputation for astute innovation. It emerged as a proposal for a very short takeoff and vertical-landing aircraft (known as "STOVL") that would also be supersonic. This required an airframe design that -- simultaneously -- wanted to be short, even stumpy, and single-engine (STOVL), and also sleek, long, and with lots of excess power, usually with twin engines.The Dustbin Awaits
President Bill Clinton's Pentagon bogged down the already compromised design concept further by adding the requirement that it should be a multirole aircraft -- both an air-to-air fighter and a bomber. This required more difficult tradeoffs between agility and low weight, and the characteristics of an airframe optimized to carry heavy loads. Clinton-era officials also layered on "stealth," imposing additional aerodynamic shape requirements and maintenance-intensive skin coatings to reduce radar reflections. They also added two separate weapons bays, which increase permanent weight and drag, to hide onboard missiles and bombs from radars. On top of all that, they made it multiservice, requiring still more tradeoffs to accommodate more differing, but exacting, needs of the Air Force, Marine Corps, and Navy.
Finally, again during the Clinton administration, the advocates composed a highly "concurrent" acquisition strategy. That meant hundreds of copies of the F-35 would be produced, and the financial and political commitments would be made, before the test results showed just what was being bought.
This grotesquely unpromising plan has already resulted in multitudes of problems -- and 80 percent of the flight testing remains. A virtual flying piano, the F-35 lacks the F-16's agility in the air-to-air mode and the F-15E's range and payload in the bombing mode, and it can't even begin to compare to the A-10 at low-altitude close air support for troops engaged in combat. Worse yet, it won't be able to get into the air as often to perform any mission -- or just as importantly, to train pilots -- because its complexity prolongs maintenance and limits availability.
Establishing air superiority in today’s complex global security climate requires the unprecedented capabilities and versatility that only the F-35 Lightning II can offer.To show you what incredible liars the defense industry has, Lockheed Martin has the gall to claim "economies of scale".
And the F-35’s strong global partnership and broad industrial base ensures affordability through economies of scale while delivering thousands of technology sector jobs around the world.
Visit our partners
Northrop Grumman
BAE Systems
Pratt & Whitney
McCain was presented with the Wing Coin and Chairman’s Award by Brig. Gen. Kurt Neubauer, 56th Fighter Wing Commander, and Charley Freericks, Chairman of Fighter Country Partnership’s board of directors. The award was given in recognition of McCain being a champion of Luke during his years of public service.Spirit of Idaho
Neubauer thanked McCain for speaking at the gathering of more than 250 Fighter Country Partnership members and guests at the annual meeting. He noted the 27,000 sorties, 35,000 hours of flight, the training of 350 new pilots and 400 crew chiefs that took place at Luke in 2009. He told the crowd that Luke trains 95 percent of all the fighter pilots for the Air Force, and has deployed 600 down range to 17 different countries.
Idaho citizens are second to none in their enthusiastic support for the men and women of our Armed Forces and for their military missions. Hosting the F-35 Lightning II Joint Strike Fighter would be a great way to continue that tradition while helping to secure the future of Mountain Home Air Force Base and Gowen Field. That’s to say nothing of the thousands of great jobs and economic opportunities that having the F-35s here would create. C.L. "BUTCH" OTTER, GOVERNORGreed, Graft, Public Unions
Unionized workers on strike against Lockheed Martin Corp (LMT.N) over healthcare benefits and pensions are prepared for a long work stoppage, a top union official said on Tuesday as the company said it would be able to keep operations running.The F-35 program deserves to be scrapped because of cost overruns, inept design specs, and poor test results. Yet 3,650 union ingrates were arrogant enough to walk off the job demanding still more money to build this boondoggle.
Nearly 3,650 union workers walked off the job on Monday at the Fort Worth, Texas, plant where Lockheed builds the new F-35 fighter plane and at two military bases where it is tested.
Paul Black, president of the local chapter of the International Association of Machinists and Aerospace Workers (IAM), said three earlier strikes in 1984, 2000 and 2003 lasted from two to three weeks, and union leaders have warned workers the current dispute could take longer to settle.
Workers in the union voted overwhelmingly on Sunday to hit the picket line rather than accept the company's "best and final offer," which called for an end to the defined benefits pension that current workers receive and a switch to a retirement account similar to a 401(k).
This is part or the whole of an extensive stash of bottles recovered in the 010th District the other day. All filled with human waste and no doubt whatever extra fecal matter the ne'er-do-wells were able to pick up on the parkways. Counts range from 100 to 500 bottles recovered depending on the rumor you believe.Now if only Rahm would see the light about McJersey's bullshit. Or is he waiting for a NATO "incident" to pull the trigger on this "reinventing" of the wheel?
Mothballed for a decade, the Joliet Correctional Center could be temporarily reopened to serve as a detention facility for those arrested for serious offenses during the May 20-21 NATO summit.
Cook County Sheriff Tom Dart says his first choice was to use Division 3 at Cook County Jail before the once-empty division had to be filled with detainees over the last two months.
A less desirable alternative was to put up tents in the yard at Cook County Jail.
But, Dart said the solution that makes the most sense is Joliet, the hulk of a prison facility mothballed in 2002.
The woman Mayor Rahm Emanuel plucked from Denver to serve as Chicago’s No. 2 education person is resigning — the fourth high-ranking departure from Chicago Public Schools in recent weeks.
The 5:50 p.m. Friday emailed confirmation of rumors that Chief Education Officer Noemi Donoso was on her way out was immediately seized on by Chicago Teachers Union officials as an indication of the “chaos on Clark Street,’’ where CPS is headquartered.
“Donoso’s departure is an unwelcome signal of instability on the education side and yet another example of the chaos on Clark Street,’’ Chicago Teachers Union President Karen Lewis said in a statement. “It appears that anyone who knows anything about teaching and learning has a short shelf life at CPS.’’
Shortshanks went through something like a dozen Chiefs-of-Staff during his tenure. The average shelf life was around 2 years before they left for lucrative private sector and lobbying jobs elsewhere - their reward for putting up with 24 months of Daley's insanity. Rahm is just around a year in office and his CPS team has lost something like 4 top tier members since he took over.
25 April 2012Europe Faces Japan Syndrome
Perhaps the most memorable comment Mario Draghi made to the European Parliament today was the need for a euro area Growth Pact, but he did draw comfort from the results of the ECB’s latest Bank Lending survey.
Draghi made reference to the fact that the balance of firms tightening credit conditions had fallen (from 35% in January to 9%). However, that it is not to say that credit conditions are actually easing, just that they are no longer tightening at the same rate as in January.
Not only are credit conditions still tightening, albeit at a slower rate, but importantly the ECB’s latest Bank Lending survey shows credit demand collapsing. This is not something that Mario Draghi mentioned to the European Parliament at all.
Europe (minus Germany) looks more like post-bubble Japan each month.Live with the Consequences Indeed
The long-feared credit crunch has mutated instead into a collapse in DEMAND for loans. Households and firms are comatose, or scared stiff, in a string of countries.
Demand for housing loans fell 70pc in Portugal, 44pc in Italy, and 42pc in the Netherlands in the first quarter of 2012. Enterprise loans fell 38pc in Italy. The survey took place in late March and early April, and therefore includes the second of Mario Draghi’s €1 trillion liquidity infusion (LTRO).
The ECB said net demand for loans had fallen "to a significantly lower level than had been expected in the fourth quarter of 2011, with the decline driven in particular by a further sharp drop in financing needs for fixed investment." Demand fell 43pc for household loans, and 30pc for non-bank firms.
This slump in loan demand is more or less what happened during Japan’s Lost Decade as Mr and Mrs Watanabe shunned debt. Zero interest rates did nothing. The Bank of Japan was "pushing on a string" (though it never really launched bond purchases with any serious determination).
The credit squeeze is entirely predictable – and was widely predicted – given that banks must raise their core Tier 1 capital ratios to 9pc by July to meet EU rules, or face nationalisation. (The pro-cyclical folly of this beggars belief: by all means impose higher buffers, but not during a recession, and not by letting banks slash their balance sheets. The US at least forced its banks to raise capital, an entirely different policy since it does not lead to a lending crunch.)
The IMF said last week that Europe’s banks would slash their balance sheets by €2 trillion – or 7pc – by next year. This amounts to an economic shock. The Fund said deleveraging on this scale at a time of sharp fiscal tightening risks a "bad equilibrium".
Or one analyst said, the LTRO lets northern banks dump their bond holdings onto Club Med banks. The renationalisation of the eurozone financial system goes a step further.
The LTRO "carry trade" is already revealing the sting in its tail in any case since the banks are by now underwater on a lot of bonds. What happens if and when they need to sell those bonds to cover debts falling due over the next year?
Until the ECB conducts monetary policy with proper energy, calls for "Growth Compacts" from governments amount to humbug. The ECB needs to do its own work.
We all know why it will not do so: because Hayekian romantics at the Bundesbank hold sway, and none of the other governors dare say boo. Live with the consequences.
As if Basel III weren’t enough of a headache, big European banks face a deadline of June 30 from the European Banking Authority to increase their core Tier-1 capital ratios to 9%, equivalent to raising €115bn in equity.Is That All Bad News?
In theory, banks can meet this by retaining profits, raising equity or shrinking assets. But with equity markets all but closed to banks and earnings falling, a crash diet to reduce their bloated balance sheets is the only realistic option.
Analysts expect that the great bank deleveraging of 2012 could see as much as $2 trillion to $3 trillion of assets trimmed from European banks’ balance sheets – or about 5% of total assets – with damaging consequences not only for the banking industry but for the fragile European economy.
Here is a rough guide to some of the inevitable consequences – some deliberate, some unintended and some obscure – of this deleveraging on the investment banking industry.
Death of profits, jobs and banks
The most obvious impact of deleveraging will be the devastation it will wreak on the profits of investment banks. In 2006, Goldman Sachs posted a return on equity of 33% and its core leverage – assets divided by equity – was 29 times. Fast forward to the first nine months of this year, and its return on equity was 3.7% with leverage of 14 times. Not because it has radically shrunk its balance sheet (yet) but because it has more than doubled its equity.
The same process will play out across the industry, where the combination of an increase in the cost of business driven by regulation is colliding with a downturn in activity. This will choke off profits, with JP Morgan forecasting that average ROE for the industry will fall to just 8% next year. That’s in line with research by Financial News that shows average pretax ROE in the first nine months of this year was 12% (or about 8% net).
Structurally lower profitability has already prompted banks such as Credit Suisse and UBS to slash their fixed income trading activities. While the thousands of job cuts seem harsh, they are often in the low single digits in terms of overall headcount. As more banks grasp the nettle in 2012, they will pull out of entire business lines, cutting 10% or 20% of their staff – or pull out of investment banking altogether.
The Promised LandBanks Should Be Banks, Not Hedge Funds
In all of this, there is some good news. For those banks that can survive the rigours of deleveraging without having to pull out of entire regions or businesses while retaining a profitable operation, there is a Promised Land on the other side. Overcapacity in the investment banking industry will be whittled away to leave a smaller number of bigger and (relatively) more profitable global banks whose scale will increasingly play to their advantage.
Bankers talk of JP Morgan, Deutsche Bank, Goldman Sachs and perhaps one other – maybe Bank of America Merrill Lynch, Barclays Capital or Citi – emerging stronger than ever. At the same time there will be a larger number of product and sector specialists, which will drop the “me-too” approach of the past decade.
In this new world, with a realistic price for risk and credit and less competition, margins can only go one way: up.
A quarter of middle-class Americans are now so pessimistic about their savings that they are planning to delay retirement until they are at least 80 years old -- two years longer than the average person is even expected to live.Job Insecurity, Debt Weigh on Retirement Confidence, Savings
It sounds depressing, but for many it's a necessity. On average, Americans have only saved a mere 7% of the retirement nest egg they were hoping to build, according to Wells Fargo's latest retirement survey that polled 1,500 middle-class Americans.
While respondents (whose ages ranged from 20 to 80) had median savings of only $25,000, their median retirement savings goal was $350,000. And 30% of people in their 60s -- right around the traditional retirement age of 65 -- that were surveyed had saved less than $25,000 for retirement.
As a result, many people aren't in a hurry to quit their day jobs.
Three-fourths of middle-class Americans expect to work throughout retirement. And this includes the 25% of Americans who say they will "need to work until at least age 80" before being able to retire comfortably.
Today, only 14 percent of Americans age 25 and older are confident that they will have enough money to retire comfortably, according to a recent survey by the Employee Benefit Research Institute (EBRI). Another recent survey, by Wells Fargo, reported that a quarter of middle-class Americans now plan to postpone retirement until they are at least 80 years old -- longer than many of them are expected to live. For Americans facing an uncertain financial future, 80 is the new 65.Crazy to Plan Retirement Past Life Expectancy?
Some are calling it "the new retirement." But it really should be called "the no retirement."
And senior citizens aren't alone. Nuclear reactors are experiencing some of the same woes: Retirement age is fast approaching or already in the rearview mirror, but there is a lot less money in the nest egg than anticipated.
At the 44 US nuclear reactors that have already received license extensions, 60 is the new 40. And even when those reactors reach the end of their working lives, they may not be able to move on to the final stage. According to a recent article in The New York Times, the operators of 20 US nuclear reactors -- including some with licenses that expire soon -- do not have sufficient funding for prompt dismantling. If these reactors can't keep working, their owners "intend to let them sit like industrial relics for 20 to 60 years or even longer while interest accrues in the reactors' retirement accounts."
Is it crazy for someone to delay his retirement past the age he can expect to live? Sure, but that's essentially what the nuclear industry plans to do with many of its reactors. And it should not come as a surprise that the NRC has no problem with this plan. After all, we're talking about a regulatory agency that issues 40-year licenses for a process that creates a radioactive waste problem lasting tens of thousands of years.
Five people were wounded as they were apparently waiting for a CTA bus this afternoon in the South Shore neighborhood on the South Side.
The shooting happened in the 7900 block of South Jeffery Boulevard, said Police News Affairs Officer [...].
Preliminary reports stated the victims were standing at the corner when someone approached on foot and opened fire, striking them. The gunman then fled in a minivan, said Police News Affairs [...].
Rumors also abound about an immigration march the first week of May, the regular communist rabble around May Day, and spontaneous wildcat parades on tap all month.
The Chicago Police Department also released a statement:
In their "advanced" estimate of the first quarter 2012 GDP, the Bureau of Economic Analysis (BEA) found that the annualized rate of U.S. domestic economic growth was 2.20%, down more than three-quarters of a percent from the fourth quarter of 2011. The vast bulk of the downturn was in commercial activities, with both fixed investments and inventories lowering the headline number substantially. Consumer spending on both goods and services improved slightly, and the ongoing contraction in governmental spending moderated somewhat. The BEA's bottom-line "real final sales" improved about a half-percent to an annualized growth rate of 1.61% -- hardly robust and certainly not the kind of numbers we would expect to see nearly three years into a recovery.Doug Short at Advisor Perspectives has some interesting charts in his post GDP Q1 Advance Estimate Disappoints at 2.2%.
Once again the BEA has used "deflaters" that will strain the credibility of the public, especially if they buy gasoline. To correct the "nominal" data into "real" numbers the BEA assumed that the annualized inflation rate during 1Q-2012 was 1.54%. As a reminder, lower "deflaters" cause the reported "real" growth rates to increase -- and once again very low seasonally adjusted BEA inflation "deflaters" have been the headline number's best friend. If the raw "nominal" numbers were instead "deflated" by using the seasonally corrected CPI-U calculated by the Bureau of Labor Statistics (BLS) for the same time period, nearly the entire headline growth rate vanishes -- and the resulting growth rate would have been a minuscule 0.08% with "real final sales" contracting.
And real per capita disposable income actually shrank during the quarter shrank at an annualized -0.27% rate (from $32,699 per capita to $32,677 per capita) -- and it remains lower than it was 5 quarters ago. -- even using the BEA's optimistic "deflaters." Real-world households likely felt the pinch even more.
This morning Spain released labour market statistics for Q1. Seasonally adjusted, the unemployment rate rose to 23.6% from 23.1% in Q4 last year (Figure 1). We think that the labour market's deterioration is likely to continue over the next 3-4 quarters. We look for unemployment to peak at nearly 26% in H1 2013, before slowly starting to decline.Depression in Spain
Beyond cyclical lags, the Spanish labour market trend, to a large extent, is a reflection of the hangover from a boom-bust in the construction sector, which for many years has been an important source of employment growth (Figure 2). It seems that the adjustment in the construction sector's employment is close to an end: it now contributes c.10% to total employment, in line with the long-term average pre the housing sector boom.
However, we think that the unemployment rate is likely to stay elevated for a while and that it will decline only slowly as the economy likely starts to grow in H2 2013. There are at least two reasons for our view: 1) fiscal consolidation will negatively affect consumers' spending, economic activity and consequently employment; 2) As we pointed out in Spain: Assessing the fiscal and labour market reforms, we think that Spain needs better "active labour market policies" that can address long-term unemployment (Figure 3) and the retraining of young (in some cases) low-skilled unemployed workers (Figure 4).click on chart for sharper image
Fastest drop in retail sales since April 2010 as year-and-a-half run of growth comes to an end.French Retail Sales Plunge at Record Pace
Key points:
- Retail PMI falls sharply in April
- Steepest decline in margins for two years...
- ...despite wholesale price inflation hitting 15-month low
Sharp squeeze on operating margins
Lower sales and strong market competition resulted in a sharp and accelerated decline in margins across the German retail sector. The latest fall in margins was seventeenth in consecutive month and also the steepest for two years.
French retail sales fall at survey-record rate in AprilNote the absurd level of optimism by French retailers.
Key points:
- Sales hit by weak economy and presidential elections
- Targets missed to greatest degree in 18 months
- Margin squeeze continues amid widespread discounting
French retailers reported a sharp reduction in sales during April. The month-on-month fall was the most marked recorded by the survey since data collection started in January 2004. Sales were also down considerably on a year-on-year basis, while previously set plans were again missed. The weak sales performance occurred despite evidence of substantial discounting and promotions among retailers, which resulted in a further steep drop in gross margins.
The headline Retail PMI® plunged to a series-record low of 41.4 in the latest month, from 50.2 in March. The latest reading was below the neutral 50.0 mark for the first time since January and indicative of a steep month-on-month decline.
The extent of the latest failure to meet targets was the greatest for one-and-a-half years. Panelists are nevertheless optimistic that sales will exceed previously set plans in May.
Factors expected by retailers to boost sales over the coming three months include the end of the presidential election, summer weather, promotions and new products.
Key points:
- Retail PMI plunges to 41.3, lowest since November 2008
- All three countries surveyed post lower sales, with record decline in France
- Cost pressures for retailers at 16-month low
Plunging to its second-lowest level on record in April, the PMI hit 41.3, down from 49.1 in March. The latest figure signaled the largest monthly fall in retail sales across the single currency area since the depths of the global financial crisis in November 2008 (40.6).
Eurozone retail PMI figures are based on responses from the three largest euro area economies. For the first time since September 2010, retail sales fell across Germany, France and Italy. The rate of contraction in Germany was the fastest since April 2010, while French retailers posted a survey-record drop as they reported disruption due to the presidential elections. Italy continued to see the steepest overall rate of decline, however, as the pace of contraction reaccelerated to approach the record level posted in January.
The annual rate of decline in Eurozone retail sales was also one of the strongest since the survey started in January 2004. Sales have fallen on an annual basis each month since last June.
Sharp decrease in retail sales leads to survey-record job lossesVindication
Key points:
- Sales fall at second-sharpest annual rate in series history
- Confidence sinks to four-month low
- Cost inflation slowest since December 2010
The seasonally adjusted Italian Retail PMI® – an indicator of month-on-month changes in total retail sales – fell to the greatest extent in survey history in April, dropping from 42.4 in March to 32.8. This sharp and accelerated decrease in high street spending was the second-fastest since December 2008, and extended the current sequence of contraction in the sector to 14 months.
Retailers in Italy sped up their rate of job shedding in April, with staffing levels falling at the fastest
pace since data were first compiled in January 2004. This latest reduction in employment was
primarily attributed by survey respondents to lower sales and rising input costs.
Chris Williamson, Chief Economist at Markit said:This was extremely easy to predict, yet most blew it.
“A slight easing in the rate of decline of the Eurozone service sector was insufficient to offset the first decline in manufacturing output for three months, causing the overall economy to contract again in March.
“With the exception of a marginal expansion seen in January, the economy has been in continual decline since last September. Although the average rate of decline seen over the first quarter eased compared with the final three months of last year, the survey data nevertheless indicate that the region has slipped back into a technical recession.
“The downturn is currently only very mild, however, with gross domestic product probably falling by just 0.2% in the first quarter. Furthermore, with business confidence in the service sector running at a far higher level than late last year, the recession may also be brief.”
I have been critical of Market analysis for months and this is the worst yet.
First they said Germany would prevent a recession, then Germany would decouple, now they suggest this is only a "technical" recession and the "the recession may be mild and brief".
The European recession will be neither mild nor brief. Spain, Portugal, and Greece are in economic depressions with no end in sight. Spain and Italy (the 3rd and 4th largest eurozone markets) are poised for steeper slides. Germany will not be immune to this as I have stated for months on end.
German manufacturing contracted in March and services sector will soon follow. For some reason, Markit economists cannot figure this out.
The Greek government is to begin seizing money from the bank accounts of suspected tax evaders, Finance Minister Filippos Sachinidis told Skai TV on Thursday.More Capital Flight Coming Up
Sachinidis said that the relevant authorities have been instructed to seize the amount that account holders are suspected of owing to the state. The minister said that this would happen before suspected tax evaders go on trial.
Banks, insurance companies and the stock market will have to submit the full details of transactions by taxpayers so that the ministry can draft a property profile for each person and compare it with the tax statement submitted.
Public and private hospitals to send information about the doctors they employ and their activity.
Private insurance companies as well as social security funds must supply in electronic form all the statements they issue to their clients or beneficiaries for tax purposes, showing the taxpayers’ payments and contributions, while utilities, including cell phone networks, must supply account data such as total annual bills.
Credit card companies will also have to submit data on transactions in Greece for cards issued not just in this country but also abroad.
A Bridgeport man refused to leave City Hall after regular business hours, telling officers it was his "moral obligation" to stop next month's NATO summit, police said.
Jospeh Cohen, 60, was approached by police around 6:30 p.m. Monday and told several times to leave, police said.
Cohen refused, telling the officers “it is my moral obligation not to leave and to stop NATO from coming to Chicago,’’ according to a police report.
Cohen, of the 3300 block of South Halsted Street, was charged with misdemeanor trespassing, police said.
Police said they searched City Hall with dogs Tuesday evening because someone thought they saw Cohen again. But he was not found.
Demonstrators stood outside the mayor’s office to protest police brutality, though most of the alleged cases they cited happened in the suburbs [...].
“What do we have to do for justice? Why do we have to march for justice? Why do we have to get angry for justice? Do we have to riot? Do we have to tear things down?” Aaron Watts said.
Please Aaron, please tear things down. That seems to be all you and your ilk are good at anyway. Destroy, kill, maim, pillage and then blame everybody but the face in the mirror.
And of course, when some reporter actually asks an intelligent question, pointing out the obvious, he gets attacked for it:
The black community, they said, is under siege by violent officers.
But every weekend in Chicago, there are multiple shootings in African American neighborhoods, and most of the gunmen are not the police. So, [CBS 2 reporter Jim] Williams asked this question: “What is a greater threat to the black community, criminals and gang members on the street or Chicago police officers?”
That sparked an angry and emotional response from one of the news conference participants, who called it a “stupid” question.
"under siege"? Last we checked, Cook County Jail had closed at least one wing, maybe two because of a lack of prisoners. Suburban courts shut down their off-business hours because there isn't any backlog any more and Dart still hasn't had to reopen the closed portions of 26th Street. Murders are up and arrest numbers are plummeting across the city and they think they're "under siege?"
But don't worry - the NAACP has an answer:
David Lowery of the NAACP tried to answer it and said, “It’s not a stupid question.”
“The greater damage to the community is black officers and white officers who continue to kill our children because they have the position of power,” he said.
The head of Chicago’s NATO Host Committee said Thursday she was blindsided by the federal government’s decision to create a militarized “Red Zone” in the Loop to protect federal buildings in the run-up to the May 20-21 summit at McCormick Place.
The image of federal agents on downtown streets far from McCormick Place — in battle gear, weapons slung — three weeks before the summit is certain to have a chilling effect on those who live and work in the Loop. It also calls into question Host Committee Executive Director Lori Healey’s oft-repeated message that Chicago will remain “open for business” during the summit.
On Thursday, Healey found herself in the difficult position of having to convince the public that a scary headline that blindsided even her is not an indication that the feds are bracing for weeks of trouble.
Don't worry Lori, we knew you were an incompetent political hack from the word "go" anyway. We couldn't possibly think of you in any lower terms than we already do. Remember the No-lympic bid? We thought that was your finest hour. This might prove to be better though.
And this was absolutely great:
Andy Thayer, a spokesman for the Coalition Against NATO-G-8, accused the federal government of creating the Red Zone to send a “message of intimidation” to protesters expected to descend on Chicago for the summit.
“It’s reminiscent of what happened prior to the Trans-Atlantic Business Dialogue, when the city got all Rambo-ed up as a way of scaring people from exercising their First Amendment rights,” Thayer said.
“If security measures are necessary, there are ways to go about it rather than getting hyper-militarized in a very visible way. It does nothing to stop any violence, but it does send a message of intimidation. This is a political show. It’s not about security.”
