Japan Manufacturing PMI Shows Output and News Orders Down at Accelerated Rate

Economic conditions in Japan continue to accelerate to the downside as PMI signals sharpest deterioration in operating conditions since April 2011

Key Points:

Output and new orders down at accelerated rates
New export business decreases at sharpest rate in 15 months
Average costs fall to greatest extent since November 2009

July data from Markit/JMMA showed manufacturing output falling at the sharpest rate in 15 months, as both new orders and new export business decreased at accelerated rates.



After adjusting for seasonal factors, the headline Markit/JMMA Purchasing Managers’ Index™ (PMI™) posted 47.9 in July, down from 49.9 in June, a level indicative of a moderate deterioration in operating conditions. Moreover, the latest index reading was the lowest in 15 months. All three market groups registered a worsening of business conditions, with investment goods producers noting the steepest deterioration.

Japanese manufacturing production declined for a second successive month in July, and at an accelerated rate. The overall reduction in factory output reflected lower levels of incoming new business, according to survey respondents. The pace of reduction in new work was solid, and the steepest since April 2011. New export orders also decreased in July, for the fourth month running, with the rate of reduction the fastest in 15 months. Companies mentioned demand weakness in China, Europe and the United States.

It should be very clear now that the global economy in aggregate is back in recession, yet other than my call on July 11, 2012 Case for US and Global Recession Right Here, Right Now there has been scant attention to this possibility in media reports.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Decrease in the Increase

The countdown clock has begun:

• How soon until Rahm and McCompStat start tooting their own horn about homicides being down in July 2012 as compared to July 2011?
  

We don't think we quite reached last years total of 55. And even if we broke 50 (making July the worst month of the year), we expect them to playing this one up shortly.

We figure it'll be in the evening papers at the latest.

Off Duty OK After Weekend Crash

They certainly kept this one under wraps:

• Passengers in a car that crashed on the Kennedy Expressway this weekend, killing a 23-year-old woman, screamed for the driver to slow down before the accident, but the Northwest Side man just keep speeding through traffic, prosecutors said today.

  Pavlo Lulak, 24, had a blood-alcohol content of .207, more than twice the legal limit, when he crashed his 2006 Mitsubishi Lancer near the Armitage Avenue exit after a night of drinking at a party and a nightclub, prosecutors said today. Killed was Maryana Holovii, 23, of west suburban Medinah, who was sitting on the lap of one of Lulak's six other passengers in the back seat of the car.

• After the club, Lulak and the people he was with got into his car, with Holovii sitting in the lap of another passenger who was sitting behind Lulak. Lulak got on the expressway, and "was speeding and driving erratically," prosecutors said.

  "The passengers in the car screamed at (him) to slow down, but he refused," prosecutors said.

  The car went into the far left lane, then cut off an off-duty Chicago police officer who was driving in the middle, lane, hitting the officer's SUV in the front bumper and sending the blue Mitsubishi out of control about 4:20 a.m. Sunday.

We can't find any reports of the off-duty CPD being injured, but being involved, even peripherally in a horrific crash like this has to take a toll. Hope you're doing OK Officer.

Peterson Trial

The prosecution almost blew it during opening statements:

• Less than five minutes into the prosecution's opening statement, Peterson's legal team demanded a mistrial after State's Atty. James Glasgow told jurors that Peterson offered a co-worker $25,000.
  
  Defense attorneys cut Glasgow off before he could complete his sentence and, with the jury sent out of the courtroom, argued that prosecutors should not be allowed to mentioned Peterson's alleged attempt to hire a hit man to kill Savio since they never notified the defense that they planned to use such evidence.
  
  Judge Edward Burmila sustained the objection, prompting defense attorney Steve Greenberg to demand a mistrial.
  
  "We would ask for a mistrial because it's so prejudicial," he said. "I hate to bring it (the trial) to a screeching halt, but we've got a jury in the box and what are you supposed to say to them? That this was a big mistake?"

The Tribune says Stacy Peterson's family was pleased with how the first day went, but Peterson is on trial for the death of wife #3, Kathleen Savio, so Stacy's family has zero to do with any of this. Based on the coverage, the defense is poking so many holes in a circumstantial case, this thing wouldn't float in the empty bathtub Savio supposedly drowned in. But we'll see how it goes.

DEA Screws Up

Evidently, it's not enough that the ATF is "walking" over 2,000 guns over the border into Mexico, now the DEA is getting civilians killed. And that's not all (linked article is a long read, but worth your time):

• The phone rang before sunrise. It woke Craig Patty, owner of a tiny North Texas trucking company, to vexing news about Truck 793 - a big red semi supposedly getting repairs in Houston.

  "Your driver was shot in your truck," said the caller, a business colleague. "Your truck was loaded with marijuana. He was shot eight times while sitting in the cab. Do you know anything about your driver hauling marijuana?"

  "What did you say?" Patty recalled asking. "Could you please repeat that?"

  The truck, it turned out, had been everywhere but in the repair shop.

  Commandeered by one of his drivers, who was secretly working with federal agents, the truck had been hauling marijuana from the border as part of an undercover operation. And without Patty's knowledge, the Drug Enforcement Administration was paying his driver, Lawrence Chapa, to use the truck to bust traffickers.

  At least 17 hours before that early morning phone call, Chapa was shot dead in front of more than a dozen law enforcement officers - all of them taken by surprise by hijackers trying to steal the red Kenworth T600 truck and its load of pot.

  In the confusion of the attack in northwest Harris County, compounded by officers in the operation not all knowing each other, a Houston policeman shot and wounded a Harris County sheriff's deputy.

Thanks to the DEA screw up, an informant ends up getting blasted and cops end up shooting cops. Nothing like a half-assed operation to instill the public with confidence in the federal 3-letter-agencies.

In Case You Missed It...

...and everyone did since the media in the United States hasn't said a word about it:

• BAGHDAD (AP) — Britain will help the Iraqi government dispose of what's left of deposed Iraqi dictator Saddam Hussein's chemical weapons, still stored in two bunkers in north of Baghdad, the British embassy in Baghdad announced Monday.

  The British Defense Ministry will start training Iraqi technical and medical workers this year, an embassy statement said. The teams will work to safely destroy remnants of munitions and chemical warfare agents left over from Saddam's regime. He was overthrown in 2003 following an American-led invasion.

  Saddam stored the chemical weapons near population centers so that he could access them quickly, despite the danger to his civilian population.

  Most of Iraq's chemical weapons were destroyed by military forces in 1991 during the first Gulf War or by U.N. inspectors after the fighting. The inspections halted just before the invasion.

  Iraq is a party to the U.N. Chemical Weapons Convention and must get rid of the remaining material, according to terms of the pact.

But remember, no blood for oil, war under false pretenses, Bush lied, etc. All figments of our collective imagination evidently.

And The Loony Left Says???....

ESM Banking License? Not Happening as Merkel Allies Harden Opposition

So far it's been nothing but hot air and no action from ECB president Mario Draghi after he pledged to do whatever it takes to save the euro.

One of the highly-touted ideas as of late has been a ESM banking license. However, the idea is not really new, and has been shot down repeatedly already. Nonetheless eurocrats like Jean-Claude Juncker, chairman of the eurogroup, keep bringing the idea up as if the answer will change. 

It won't. Bloomberg reports Merkel Allies Harden Opposition to Granting ESM Bank License

German Chancellor Angela Merkel’s coalition rejected granting the permanent euro rescue fund access to European Central Bank liquidity via a banking license, as the Finance Ministry said it saw no need for any such move.

The rules of the European Stability Mechanism don’t provide for refinancing through the ECB, the ministry in Berlin said today in an e-mailed response to questions. The ministry isn’t holding talks on the topic nor are secret meetings taking place on such proposals, it said.

France and Italy are building support for a previously floated plan to allow the permanent backstop to wield unlimited firepower courtesy of the ECB, Germany’s Sueddeutsche Zeitung newspaper reported today, citing a European Union official it didn’t name. Leading ECB governing council members are among those who now back the idea, the newspaper said.

Lawmakers from all three parties in Merkel’s coalition immediately repudiated the suggestion. It is a “dangerous attempt” to bypass the ban on the central bank financing states directly, said Hans Michelbach of the Bavarian Christian Social Union. The Free Democratic Party’s Rainer Bruederle told Die Welt newspaper such a mechanism is a “wealth-destroying weapon,” while Norbert Barthle of Merkel’s Christian Democratic Union said it won’t happen.

“Those who try to circumvent their own rules through the back door lose their legitimacy in the eyes of the public,” Michelbach said in an e-mailed statement. “Financing debt by means of the printing press leads to growing inflation dangers.”

One would hope this message would sink through the thick heads of the eurocrats, but it probably won't.

 OK Mario, ball is in your court. What are you going to do?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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100,000 Workers in Spain Will Not be Paid Because Regional Government of Catalona is Broke

The crisis in Spanish regional governments continues to escalate. El Pais reports Catalona Will Not Pay Hospitals or Private Centers and 100,000 workers are affected.

This month, the Government of Catalona cannot tackle  payments owed to hospitals, schools, residences, social organizations, and children in care centers and workshops. These are the services provided by entities, public and private, funded by the Government but managed not depend on it.

The move affects up to 7,500 associations and some 100,000 workers, according to the third sector.

The news that the Government could not meet its commitments this month was confirmed on Monday after several days of negotiations with the affected entities. Sources from the Departments of Health and Welfare explained ten days ago it "could not meet the payments this month." Welfare, however, has ensured that other non-contributory pensions paid or the minimum income.

The federations that warn-grouped after an emergency meeting with Social Welfare that many of them are on the verge of "collapse" in a situation "unprecedented". And is that the default is added to other cuts that have affected the sector this year, as 56% of the budget on labor market policies.

The Catalan Association of Relief calculated that 63% of companies cannot meet the payroll this month. To alleviate this choke, Acra has asked for help from families, proposing that advance a couple of months of contributions.

This is not the first time that the Government is obliged to defer payment of the concerts. It happened last September when he could only address 65% of the amount and the rest was paid by the end of the year.

The idea that Spain can avoid a complete sovereign bailout seems pretty absurd at this point. The solution, of course, is a combination of default, a eurozone exit, work rule reform, and pension reform, but so far there is no rational discussion of those ideas at the highest levels.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Recent Gold Hype Sounds Like Grade-School Chant; Five Non-Hype Reasons to Own Gold

Reader David emailed a link to GATA, SHAKA ZULU, And The Coming Gold/Silver STORM! with a note "please see fit to write about this!!!"

The article is by Bill Murphy, the Gold Anti-Trust Action Committee (GATA) chairman. Here are the key snips.

To get right to the point, three quality sources told me three weeks ago that the gold and silver markets were going to take off in August and I have been pounding the table on such ever since.

It is time for things to happen. As you know by now, I have been jumping up and down for fireworks to happen in August. We shall see. All I can say is that what has been brought to my attention over last three week period from the "best of" sources all points to the same conclusion. It will be nitty gritty time SOON. Perhaps that “soon” is “now” the way gold has traded the past three days.

If what I think I know is correct, it will be time to pour it on our adversaries and send them running for the hills.

Grade-School Chant

As I read that, I was wondering what exactly I was supposed to comment on. Murphy has three sources, all unnamed. 

Worse yet, Murphy will not even state what the news is. The entire posts smacks of the playground chant "I know something you don't know, a ha, and a hen, and a ho ho ho."

There is no story here, there is not even a rumor. There is only a rumor of a rumor. I am commenting because I was asked.

Seasonality

Murphy has at least one thing going for his call: seasonality. August is generally (but not always) a good time to buy gold.

If nothing happens, Murphy will be on his bull horn complaining of manipulation, singing the same tired chant about gold shorts suppressing the price of gold.

Manipulations

Is the gold market manipulated?  A better question is "what isn't?" Certainly the Fed manipulates interest rates. The LIBOR scandal proved banks acted to manipulate LIBOR. The rating agencies manipulated pure garbage into AAA rated securities.

Nearly everything is manipulated to some degree. However, I do not believe it is possible to manipulate prices for decades against the long-term trend.

If there has been an effort to suppress the price of gold it certainly has failed miserably. Gold has gone from $250 to $1900 and is now $1620.

Yet, every time gold declines the conspiracy clowns scream manipulation as if the price can never go down ever. Now they are singing playground chants.

Five Reasons to Own Gold

There are plenty of reasons to own gold without all the needless hype.

1. Gold is a nice insurance policy against a currency crisis and I think one is coming. When or what country kicks things off that crisis, I don't know, but I suspect it is more likely to be the Japan, Italy, or some other country in Europe as opposed to the US.
2. Gold, contrary to popular myth, is actually a great hedge against deflation in the senior currency (clearly the US dollar).
3. Physical gold is a currency that is not someone else's liability and cannot be printed electronically.
4. Central banks (not just the Fed) have been pouring on the liquidity as the global economy moves from one crisis to another. Odds strongly favor more coordinated central bank liquidity moves, and those liquidity moves tend to benefit gold in the long-haul.
5. Should the world return to a gold standard with a 100% gold-backed dollar, $1600 an ounce will likely look like an extreme bargain. 

GATA would be wise to stop the needless hype and instead concentrate on fundamentals because "I know something but I ain't sayin' what" is sure a silly thing for anyone to be banking on.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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A Happy Ending

This popped up on the radar a few days ago:

• A suspect was shot and critically wounded during a home invasion Wednesday night in the South Side’s Grand Crossing neighborhood.

  Police were questioning several people Thursday morning in connection with the crime.

  Four or five people broke into a home in the 1400 block of East 73rd Street around 9:45 p.m. Wednesday, police said.

  Police News Affairs [...] said one of the suspects was shot in the head, and was taken in critical condition to Stroger Hospital of Cook County. [Police] could not confirm that the homeowner had shot him.

That's because the homeowner didn't shoot him. His accomplices did.

And the story got even better yesterday:

• A 16-year-old boy died today, four days after he was accidentally shot during a home invasion authorities say he was involved in.

  Douglas Bufford, 16, of the 7200 block of South East End Avenue, was declared dead atJohn H. Stroger Hospitalat 1:55 p.m. today, according to the Cook County medical examiner's office.

  [...] Earlier, police said between four or five males forced their way into the home and announced a robbery, police said.
  
  One of the group accidentally shot a fellow attacker, 16, in the back of the head, police said.

Hahahahahahahaha! That's fantastic. In fact, it's so funny, we're going to laugh again - HAHAHAHAHAHAHAHA!

Sixteen and he's part of a crew doing home invasions? Good riddance to bad rubbish.

Hey Garry, homicide or no? Because we're charging the accomplices.

ZING!!!

Garey McKee at Police Limit lands another one:


There's probably a few years worth of material on CompStat meetings alone.

Let's Build an Airport!

Illinois is broke, Quinn is about to call a special session to gut pensions across the state, and you know Rahm is just waiting to follow his lead. So why would anyone want to spend extra money?

• Susan Shea has a message to all the opponents and pessimists who don’t think the South Suburban Airport ever will be built near Peotone.

  “To the naysayers, this is it. The FAA would not tell us this is the preferred place. This is where it’s going to be,” Shea said. “... It’s going to be such an economic engine for the community out there, for the state. It is going to happen. It’s just a matter of when. It’s not a matter anymore of if.”

  The airport project is under Shea’s watch as director of the aeronautics division for the Illinois Department of Transportation. The project was among several infrastructure topics discussed Friday during a meeting of the Chicago Southland Economic Development Corp. at Glenwoodie Golf Course in Glenwood.

  Construction of the airport would take three years, but she declined to say when it may begin.

"Director of Aeronautics Division of the Illinois Department of Aviation?" That's a hell of a business card. And she's sure that she is going to get a few billion dollars from a state that's already something like $80 billion in the hole in order to fund an airport that every major carrier has said they don't want and have no plans to use.

But evidently, certain Illinois politicos need the donations from construction companies and connected contractors would provide.

Joliet Shootings

Joliet PD getting busy lately:

• A 35-year-old Lockport man was transported this morning to a Joliet-area hospital for treatment of gunshot wounds received when he allegedly aimed his vehicle at Joliet police.
  
  The early morning shooting came less than 24 hours after Joliet Police shot a 29-year-old Crest Hill man who allegedly pointed a gun at them.
  
  The two men, who are former Joliet residents, were being kept under guard this morning at a Joliet-area hospital, according to prepared statements released today by Joliet Police. No police were injured and the wounds were termed "non-life-threatening." No police were injured.

That's always good to hear - no police injured.

To our suburban brothers, good luck and well done.

Another Mole Gets Tape

Well lookie here:

• The dirty deal went down just before Christmas 2010 in the car of a Bridgeport developer, the feds say.
  
  Inside the car were Joseph Mario Moreno, who had just been voted out of his job as a Cook County commissioner, and Michael DiFoggio, a Bridgeport developer who — from all appearances — wanted a garbage transfer station to be located in the Town of Cicero and was willing to cut a few corners to do it.
  
  Just months before, Moreno had been appointed to a Town of Cicero local business assistance committee by Cicero President Larry Dominick. It was a plum appointment that came with free health insurance.
  
  Moreno wanted more, though, authorities allege. He was willing to assist DiFoggio to get what he wanted from the Town of Cicero — but at a price, federal prosecutors allege.
  
  Inside his car, DiFoggio passed an envelope to Moreno, allegedly containing $5,000 cash.
  
  DiFoggio even had better news for Moreno, telling him that another $5,000 was on its way, the feds allege.

Bridgeport, wires, Outfit connections, private clubs.

This one could be good....very good.

Shades of 2006: That's What Australia Housing Bubble Looks Like From US Perspective

The Australia housing market did not bust when it should of and the delay is going to be painful. The bigger the bubble, the bigger the crash, and the Australia bubble is bigger than we saw in the US.

On a timeline basis, Australia is about where the US was in 2006, essentially  a state of denial.

Developers are offering massive incentives such as cars, furniture, and vacations to move homes while chanting the ever-popular "now is a great time to buy a house" mantra.

Gifts Galore

The Age reports Gifts galore boost flagging unit sales

Developers are slashing apartment prices and handing out tens of thousands of dollars in incentives - including rebates, cars, furniture and holidays - to lure buyers into Melbourne's new-unit market.

While many industry players say the offers are good news for buyers, others worry that the discounting could fuel a "race to the bottom" that could harm property values.

"There's no question there are a lot of apartments under construction, so everyone's trying to attract attention to get people to inquire about theirs," said Robert Pradolin, general manager at developer Australand.

"It's probably a very good time to buy because there are a lot of incentives around, but buyers still need to be really careful that they are picking a place based on its location, quality and who the developer is."

In one case, Maxx Apartments announced a "massive St Kilda apartments sale" in a series of large advertisements. The promotion saw $121,000 cut from the cost of a two-bedroom flat and the price of a $415,000 one-bedroom unit reduced by 18 per cent.

Late last year, a $65,000 Mercedes was offered to the first buyer of one of four luxury apartments that remained unsold in a Brighton development. Rubicon Pacific used the teaser despite already dropping prices by $150,000 to $200,000 on apartments first listed at up to $1.3 million.

Other developers have followed suit, launching campaigns that provided $5000 to $20,000 rebates on top of the $13,000 available to first home buyers before July 1. Some have tried to lure investors with offers of guaranteed rental income for up to five years.

Agency Castran Gilbert said the offer of a holiday for two to Palm Cove for buyers in the Brunswick West development Portez led to a 50 per cent spike in inquiries.

No Auction Bidders

Similar to the US condo bust in which bidders vanished overnight, The Age notes Empty auctions: 'op shop' listings

What if you put your house up for auction but nobody turned up? Not even the neighbours for a stickybeak?

Well, that happened at the weekend, with agents from Hocking Stuart and Buxton real estate left standing alone in the pouring rain.

Auctioneers put their hammers away for two houses in Elwood, with the owners deciding to cancel at the last minute due to no interest at all. In all, eight auctions were put off.

Inner west agent Craig Stephens, managing director Jas H Stephens, said it was "rare to have no one rock up" to an auction, but he has noticed an increasing number of buyers waiting to negotiate after auction.

"It's definitely a buyers market at the moment and those buyers are being a bit fickle," he said. "But good houses in good streets still sell and some property is being sold one or two weeks after auction."

He said many vendors were holding off, with a pick up in listings for auctions in late September and early October. "It looks as though there could be a pick up in supply in the second half of the year," he said.

Hocking Stuart agent David Sullivan said the owner of its property that had zero attendees did not want to comment. Buxton did not return calls.

This is how downturns major start: price wars, incentives, and still no bidders. Given that it's only 2006, Australia has a long way to the bottom.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Eurozone Retail Sales Sink 9th Month; 17th Month of Contraction in Italy; Margins Collapse in France; Germany Barely Above Contraction

Eurozone retail sales continue to dive and not even Germany is immune. German manufacturing has been in contraction off-and-on, and retail sales are once again on the verge contraction as well.

Let's take a look at some reports.

Italy Retail Sales Slump Extends to 17th Month

Markit reports Downturn in retail sales continues in July

Summary:

July data pointed to a further reduction in activity in the Italian retail sector, with sales down markedly both on the month and compared with levels one year ago. The rates of decline in employment, purchasing activity and inventories all accelerated, while profitability continued to deteriorate sharply. Cost pressures, however, eased to the weakest in 20 months amid stronger competition between suppliers.

The downturn in Italy’s retail sector extended to a seventeenth month in July. Furthermore, the rate of contraction in like-for-like sales accelerated from the previous month and was marked. This was signalled by the seasonally adjusted Italian Retail PMI® posting 40.7, down from 41.7 in June.

Italian retailers generally fell short of their targets set for July.

Employment levels continued to fall during July, extending the ongoing sequence of contraction to 55 months. Moreover, after slowing to the weakest in eight months during the preceding survey period, the rate of job shedding accelerated and was
marked overall.

Sales Fall Sharply in France

Markit France PMI shows Record Drop in Retail Margins

French retailers encountered another tough month in July. Sales fell at a sharper rate on both a monthly and an annual basis, while margins were squeezed to the greatest extent in the survey history. The pace of job shedding accelerated [fastest rate in nearly three years], while retailers scaled back their purchasing of goods and lowered their inventories.

The headline Retail PMI® remained below the 50.0 no-change mark for a fourth successive month in July. At 46.7, down from 48.9 in June, the index signalled an acceleration in the monthly rate of decline in sales.

Gross margins in the French retail sector continued to decline in July. Moreover, the latest fall was the sharpest in the history of the survey. Panellists indicated that margins were squeezed by the need to engage in substantial discounting and promotional activity in the face of an increasingly competitive trading environment.

German Retail Sales on Verge of Contraction

Markit reports German Retail PMI hits three-month low during July

The recent rebound in German retail sales faded in July, with like-for-like sales rising only marginally since the previous month. At 50.3, down from 52.4 in June, the seasonally adjusted Germany Retail PMI signalled the slowest expansion in the current three-month period of growth.

German retailers indicated that their actual sales fell short of their initial plans in July, and by the greatest margin since January. Anecdotal evidence mainly cited weaker than anticipated underlying consumer demand. July data indicated that retailers are downbeat about their prospects for reaching sales targets in one month’s time. The degree of negative sentiment was the most marked since that recorded in December 2009.

Eurozone Retail Sales Sink 9th Month

Markit reports Eurozone retail sales fall for ninth month running in July

Key points:

Revenue downturn continues at faster rate
Near-record drop in gross margins
Wholesale price inflation strengthens



Eurozone retail sales fell on an annual basis for the fourteenth successive month in July. The rate of contraction was little-changed from June’s sharp pace, and much faster than the long-run average for the survey. Sales fell rapidly in Italy, extending the current sequence of decline to two-and-a-half years. France also posted a steep fall, the fifth in successive months. Sales were up compared with a year earlier in Germany, and at the fastest rate since March.



Retailers cut back on staffing in July. The current period of job shedding now stretches to four months, and the rate of reduction accelerated to a 32-month record. French and Italian retailers reduced their workforces on average, with the steeper decline posted among the latter. Italian retailers have shed staff every month since January 2008. In contrast, German retailers raised headcounts for the twenty-sixth successive month.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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51% of Germans Believe Germany Better Off Outside Eurozone, 71% Favor Greece Leaving; Implications on Constitutional Court Ruling

A recent poll says 51 percent of Germans now believe Germany would be better off without the euro.

The Emnid poll for the Bild am Sonntag mass circulation weekly showed 51pc of Germans believed Europe's top economy would be better outside the 17-country eurozone. Twenty-nine percent said it would be worse off, AFP reports.

The survey also showed that 71pc of Germans wanted Greece to leave the euro if it did not live up to its austerity promises.

Economy Minister Philipp Roesler told Bild am Sonntag there were "considerable doubts whether Greece is living up to its reform promises."

Implications on Constitutional Court Ruling

That poll, with only 29% believeing the euro is a good thing, suggests that if the German constitutional court forced Merkel to put the euro to a referendum, that Germany would vote to leave the eurozone.

On September 12, the German constitution court is expected to rule on the ESM as well as the fiscal treaty chancellor Angela Merkel signed in March.

Is it any wonder ECB president Mario Draghi is loathe to do anything but talk before the court meets?

Should the court rule both are OK, eurocrats like Jean-Claude Juncker will immediately seek to change what the ESM can do, including the use of leverage.

Let Voters Decide

Given that Germany is better off outside the eurozone, and the eurozone is arguably better off without Germany, hopefully, the constitutional court will say it's time to put all of this to voters, including whether Germany should stay in the eurozone.

Unfortunately, I expect the court will OK both the ESM and the Merkozy treaty, but give further warnings to Merkel and the ECB that 500 million euros is the limit.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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First, Flash Mob, Now Flash Rob

A phenomena that we first heard of down in Florida and Atlanta has worked it's way up here:

• A mob of more than 20 teenagers descended on a trendy Wicker Park shop on Saturday and made off with more than $3,000 worth of jeans.

  CBS 2′s [...] reports the incident was caught on store surveillance cameras, and the owner posted the video on YouTube.

  Luke Cho said he hopes the images help police find the robbers, or maybe even shame the parents of the teens enough that they’ll turn the kids in.

Shame? Bwahahahahahaha! Pardon our laughter, but here it comes again:

• BWAHAHAHAHAHAHAHAHAHAHA!!!

There's even video:



The mob forced the doors in order to flee. No word on if they worked over the manager who locked the doors. But outnumbered 20-to-1, maybe locking yourself in with the animals isn't the smartest course of action. Look for reinforced "sally ports" to be the new redecorating model for stores - only three people allowed in at a time.

Ride to Remember

Took place on a beautiful Sunday:

• Motorcyclists and bicyclists are both participating in rides today to honor and remember Chicago police officers who died in the line of duty.

  This morning, the Ride to Remember kicks off at 10 a.m. at the Harrison District Police Headquarters, 3151 W. Harrison St., and heads to the Gold Star Families Memorial across from Soldier Field. The ride was started as an annual event in 2005 by detectives from what was then Area 4, the Harrison Police Area, as a fundraiser for the Chicago Police Memorial Foundation, according to organizers.

  This year, about 1,000 motorcycle riders were expected to participate.

And the associated bike event:

• This afternoon at 1:30 p.m., the Pedal for the Police ride, also benefiting the foundation, starts at from Chicago Police Headquarters, in conjunction with a long-distance bike ride sponsored by the Illinois Concerns of Police Survivors, the Cycle Across Illinois. The bike event also will end at the memorial.

Couldn't have asked for a better day for it.

We See Cameras...EVERYWHERE

But this has nothing to do with revenue:

• The map the city of Chicago is sending out with its “request for proposals” shows just how extensive coverage by cameras designed to catch speeders around parks and schools could be — if the city ever exercises all its options.

  Not to worry, city officials say: Aldermen mandated that cameras go up in only 50 to 300 locations for now.

  “By ordinance, we are limited to placing these cameras in only 20 percent of the 1,500 possible Children’s Safety Zones — that’s only 300 camera [sites] citywide,” said Pete Scales, spokesman for the city’s Department of Transportation. “We expect to only have about 50 of those up and running next year.”

Really? Have you seen the map?

Holy crap! If you believe this isn't solely about the revenue, we have a bridge in Brooklyn for sale.

Peterson About to Win in Court

Not just criminally, but on the civil front once all is said and done:

• They have no eyewitnesses, no confession and no DNA to show ex-Bolingbrook cop Drew Peterson killed Kathleen Savio — only disputed secondhand statements and conflicting autopsy reports.

  That limited, sometimes contradictory, circumstantial evidence means Will County prosecutors are going to have a hard time convincing jurors the now 58-year-old Peterson murdered his third wife, legal experts say.

  “I think it’s really going to be tough for the state,” said attorney Paul DeLuca, a former prosecutor in Cook and DuPage counties now in private practice.

Will County taxpayers are most likely going to get soaked should Peterson be cleared. Every day this psycho has been in jail (and yes, we believe he killed both wives), is going to be viewed as a day served to settle a political vendetta. They've even passed a "hearsay law" that flies in the face of hundreds of years of precedent in order to present what has to be the weakest murder case in Illinois history.

Still, they might luck out. We just doubt it at this point.

Jesse Jr Has an Ulcer

At least, that's how we interpret the press release:

• Rep. Jesse Jackson Jr. is at the Mayo Clinic in Minnesota “for extensive inpatient evaluation for depression and gastrointestinal issues,” according to a statement from Jackson sent late Friday by Rochester, Minn.-based Mayo.
  
  Jackson’s whereabouts have been a mystery since he went on medical leave June 10. The statement issued Friday said the congressman “has arrived at Mayo Clinic,” but did not say where he came from.

"where he came from"? Mars we always assumed.

But it seems like Jackson Jr is having stress related issues in regard to being the subject of a House Ethics investigation that is all but assured of resulting in some sort of censure along with his buddy being picked up by the Feebs and most likely flipping on certain fund raising improprieties. Not to mention the complete meltdown of his personal life. And election that could go either way since he hasn't been around to campaign in almost two months.

Dude has issues all right.

Stay Classy

You got to love when the family member of the dead ends up in jail - circle of life we suppose:

• On the night that former Chicago Public Schools basketball star Michael Haynes was gunned down, his younger brother allegedly threatened to shoot four people, according to police.

  Brian Haynes, 21, appeared in bond court Saturday and faces four counts of home invasion with the discharge of a firearm, Chicago Police said Saturday.

  A Cook County judge ordered Haynes held in lieu of $250,000 bail, according to the Cook County Sheriff’s office.

This article described the victim as the neighborhood "meal ticket," not as brother or son. That's kind of sad.

We also are confused by the fact that his brother (the deceased) was 22 and just starting Division I college? We used to assume that college players started college at 18, 19 if they sat a year. Twenty-two means a completely different body structure and in many cases, mental approach to any sport. Twenty-two is pretty much a semi-pro level.

JCPenney to Eliminate All Checkout Clerks, Instead Using RFID Chips and Self-Checkout; End of JCPenny? How Many Jobs At Risk?

By 2014 JCPenney PLans to Eliminate All Check-Out Clerks, and instead use self-checkout machines and RFID chips.

Struggling retailer JCPenney is making some big changes that will affect customers and its clerks. The store is getting rid of its check-out counters.

CEO Ron Johnson said it will remove check-out counters in stores and replace them with a system that won't require clerks. It's all part of an effort to return the department store chain to profitability.

Shoppers will be able to use self check-out machines, similar to those found in grocery stores.

JCPenney is also planning to replace traditional bar codes on price tags with high-tech radio frequency identification, or "RFID" chips to make purchases faster.

Johnson told "Fortune" magazine he hopes to phase out check-out counters by 2014.

End of JCPenny?

My first thought was a question: Will this work?

A move to entirely self-service is a risky bet-the-company type of move.

Given that many large grocery stores have both self-checkout and manned checkout lanes, I suspect in reality that JCPenny will not go big-bang with this concept but instead will use a series if trials to see how customers respond.

How Many Jobs At Risk?

I personally loathe self-checkout but it's not my opinion that counts. If there are enough who think like me, and JCPenny does go big-bang, this move will the death of JCPenny.

However, If I am wrong, then note that JCPenny has 1100 stores so we are talking about the elimination of lots of jobs. Also note that if the move by JCPenny is successful, other stores will follow.

Finally, even if this ends up as a half-way measure, we are talking about the elimination of tens of thousands of jobs if other stores follow suit.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Foreigners Dump Nearly €80 Billion in Spanish Debt; Haircuts Come After More Dumping

Through the first half of the year, foreigners reduced Spanish debt by Nearly €80 Billion as banks in Spain gobbled up more of the toxic garbage.

Foreign investment in Spanish public debt has decreased by €78.168 billion in the first six months of the year, standing at  €203.271 billion euros, compared to  €281.439 billion which reached the end of 2011. This is a break of 27.7% over last year.

The largest decreases were recorded in February and March, at nearly €25 billion each month.

Analysts note that Spanish financial institutions that are supporting strongly the Treasury issues and thus raising their level of debt thanks to interventions by the ECB.

Contrary to popular belief, the LTRO and other ECB financing programs that allowed Spain to accumulate more Spanish bonds is not a favor to Spain but rather a favor to foreigners who are now unloading the debt.

Just as happened with Greece, as soon as foreigners dump enough Spanish debt, haircuts on the bonds will come.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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A Hero...Again

The right place at the right time:

• A Chicago Police officer who performed cardiopulmonary resuscitation on a 21-month-old boy who had stopped breathing is being lauded for helping out on the Skyway this afternoon.

  The officer, Edward Paukula, has about 17 years on the force, according to Pat Camden, a spokesman for the Chicago Police union.

  The baby was in the backseat of a vehicle traveling on the Skyway near 89^th Street at 12:24 p.m. when family members noticed that the child was not breathing, according to a police News Affairs statement.

  They stopped the vehicle and found the baby unresponsive, but the child's father turned to see a Chicago Police vehicle driving in his direction and flagged down the officer, the statement said.

  The police officer cautiously removed the baby from the vehicle, gently laying him on the pavement, and began to perform CPR, the statement said.

The baby regained consciousness and was taken to the hospital for treatment and observation. This isn't the first time the Officer has been in the hot seat:

• But Pakula is no stranger to being a “hero cop.'' He was hailed for saving the lives of residents in a burning South Side apartment building in November of 1999, according to a 1999 Chicago Tribune story.

Well done Officer.

Charity Ballgame

One week from today:

Chicago Fire Department Bravest
vs
Chicago Police Department Finest

13th Annual Charity Baseball Classic

Wrigley Field
Sunday, August 5th, 2012
Gates open at 1:30pm
Game starts at 3:00pm

Tickets: Advance purchase $5, Day of game $10

To purchase tickets online via Paypal visit: www.thechicagofix.com

All proceeds benefit the Chicago Fire Department Gold Badge Society
and the Chicago Police Department Memorial Park.

Another "Decrease in the Increase"

Evidently, McDownisUpisDown has the same team working for him that Obama has on the economic front:

• The White House chose to focus on the positive when it comes to GDP estimates released Friday.

  The estimates found economic growth slowed to 1.5 percent last quarter - down from 2 percent the previous quarter and 4.1 percent in the fourth quarter of 2011 -- but the chairman of President Obama's Council of Economic Advisers said that at least it's still growing.

The economy is still growing, just slower.

They're still killing each other on the south and west sides, just slower.

Word is that Obama is rolling out "CompStat Hope & Change" next week. And after that, a new strategy/policy.

Federal Bankruptcy Court Lets Stockton, California Cut Retiree Health Care Benefits; Flood of City Bankruptcies Coming

In a welcome, common sense ruling, Court lets Stockton, Calif. cut retiree health care

A federal bankruptcy judge on Friday cleared the way for Stockton, California to cut health care benefits for retirees while it is in bankruptcy proceedings.

Stockton is seeking Chapter 9 protection from its creditors and said that it would cut retiree health benefits while it reorganizes. Retired employees sued to stop those cuts.

Judge Christopher Klein on Friday issued a temporary order denying the bid to stop the benefit cuts, and he said a formal decision was on its way.

Stockton's attorneys had argued that bankruptcy law gave the city wide latitude on how to spend its revenue while it prepares a plan to restructure its finances.

"For the reasons explained in the forthcoming decision of this court, the Application for Temporary Restraining Order and Preliminary Injunction or in the Alternative for Relief from Stay is DENIED," Klein wrote.

Flood of City Bankruptcies Coming

This is a good start for what needs to happen. The next step needs to be huge clawbacks on promised benefits, preferably top down, so that those with the highest pension benefits bear the brunt of the hit. 

As soon as cities realize this is the way out, a flood of bankruptcies will be on the way.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Schäuble Rejects ECB Help for Spain; Full Bailout Still Coming

As any clear-thinking person should have expected, Schäuble rejects ECB help for Spain

Berlin - For days, it is speculated that the European Central Bank (ECB) is planning, together with the bailout fund EFSF Spanish government bond buy - so come back to Spain to cheaper capital. The "Sueddeutsche Zeitung" According to the euro countries willing to support this approach . Federal Finance Minister Wolfgang Schäuble (CDU), but has now dismissed the reports in an interview with the newspaper "Welt am Sonntag".

"No, at this speculation is not true," Schäuble said the newspaper. The Finance Minister said it was already a sufficiently large aid package for Spain have been laced.

The 100-billion-euro package to recapitalize Spanish banks also close an emergency aid of 30 billion €. "The short-term financial requirements of Spain is not so great", said Schäuble, "the painfully high interest rates - but the world will not, if you have to pay for some bond auctions a few percent more."

Full Bailout Still Coming

Schäuble is saying the right things. For starters, ECB backdoor bailouts of Spain are likely against the German constitution. Even if they weren't, why should German taxpayers accept the risk of any of these leveraged proposals that have been circulated, and recirculated?

It's important to understand that the near-7% current market rate does not affect interest on prior bonds (only the current value of them). However, high rates do reflect the interest Spain would have to pay to float new bonds or rollover existing ones.

Thus, high rates reflect extreme stress and are unsustainable for the long-term, but they are not an immediate killer for Spain.

Regardless, Spain is deep in recession and there is no way it can meet its deficit targets. A full bailout of Spain is a certainty.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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The Promoted (Updated to 31)

Alphabetical:

• Barker, Thomas
  Barney, Dean R
  Cato III, Ernest
  Ciccola, Dominick
  Davey, Thomas
  Delpilar, David
  Durham, Shenetta
  Finley, Allen
  Flores, Jorge
  Folino, John
  Foster, John
  Gaffney, Thomas
  Heard, Andrea
  Kochan, Mark
  Lee, Allen G
  Lorenz, Richard
  Mata, Ricardo
  McCauley, Meghann
  Meador, William
  Mihajlov, Robert
  Mohammad, Khalil
  Moreth, Michael
  Mullenix, Curtis
  Perez, Albert
  Plovanich, Michael
  Powell, Roger
  Rigan, Kristopher
  Senner, Andrew
  Stewart, Andrew
  Triantafillo, James
  Wantuck, Michelle

Don't have Units of Assignment, but it'd be nice to see if Patrol is adequately represented.

UPDATE: We're missing a name or two. Who's got 'em?

UPDATE: We got 30 names - that sounds correct.

UPDATE: 31. Late addition or someone who got passed over for some reason.

Rahm Shuffles Another Deck

First, Rahm out-and-out lied about hiring another 1,000 cops. He disbanded units that were already working the streets and claimed he meant he was "redeploying" another thousand cops, which was another lie.

Now he's raiding the suburbs for jobs that already exist:

• U.S. Rep. Joe Walsh (R-Ill.) says Motorola Mobility’s decision to relocate to Chicago from Libertyville is another example of Mayor Rahm Emanuel raiding the suburbs to help city.

  As WBBM Newsradio [...] reports, Walsh says it bothers him that Emanuel seems to be taking jobs from suburbs and bringing them to the city.

It should bother a lot of people because Rahm isn't creating jobs. He isn't even fostering an environment where jobs might be created. He's dragging in suburbanites (3/4 of the employees to be moved live outside of Chicago) and hoping they eat lunch downtown, by gas downtown and pay downtown parking rates or use the CTA. Libertyville is more than a little irritated and justifiably so.

Any idea what type of subsidies may have been promised to Motorola for the move?

5 Killed in 12 Hours

Stuff like this has to have McCompStat pulling his hair out. We can't react to any of this:

• On Thursday, Haynes was shot dead in the street while trying to stop two guys from the neighborhood from a fight over a stolen necklace near 116th and Vincennes, less than a block from his home. The 22-year-old was one of five men who were shot and killed over 12 hours in Chicago. So far this year, there have been 302 murders, a 30 percent increase from 2011. In the spring, the number of murders was 66 percent higher than the previous year.

There's that "decrease in the increase" again, none of which helps Rahm. And on a Thursday?

Who has the number of shooting victims. That would be a telling statistic. So would the clearance rate.

Sergeant List Out

The promotion list is out; 30 names. Will list with our regular postings later.

Sharp Decline in Earnings and Revenue Estimates; Chart Explains Four Major Waves of Earnings Growth

For the first time in three years, US Quarterly Earnings are Poised to Drop.

Third-quarter earnings of Standard & Poor's 500 companies are now expected to fall 0.1 percent from a year ago, a sharp revision from the July 1 forecast of 3.1 percent growth, Thomson Reuters data showed on Thursday.

That would be the first decline in earnings since the third quarter of 2009, the data showed.

Earnings in the tech sector are now expected to rise only 5.8 percent — less than half the forecast of 13.1 percent growth, according to an estimate at the start of the month, Thomson Reuters data showed.

The materials sector is forecast to see an earnings drop of 11.4 percent for the third quarter, worse than the forecast of a 3.3 percent decline at the start of July, Thomson Reuters data showed. Slumping commodity prices and reduced demand from China have hurt that sector.

Sales Look Worse Than Earnings

While earnings performance has held up so far for the second quarter — with results in from about half of the S&P 500 companies — revenue has looked much gloomier.

Just 41 percent of companies have beaten revenue estimates, the lowest since the first quarter of 2009 and only the fourth time in the past 10 years that the beat rate was under 50 percent.

Revenue growth is expected to have increased just 1.2 percent for the second quarter, Thomson Reuters data showed.

Don't Worry Companies Will Still "Beat the Street"

 In spite of those downgrades, history suggests corporations will still "Beat the Street".
even in 2008 and 2009 the majority of firms beat estimates. Here is the way the process works:

• Corporations give analysts "tips" regarding profit expectations.
• Those profit expectations are purposely low.
• Wall Street analysts lower estimates, if necessary, as the quarter progresses such that corporations can "beat the street".
• If corporations are going to miss and need an extra penny, they change tax assumption or make other "one time" adjustments as necessary.
• Corporations beat the street by a penny with "pro-forma" (after adjustment) reporting.

Percentage of Companies that "Beat the Street"



click on chart for sharper image

The last time companies failed to "beat the street" was third quarter of 1998. At the earnings trough in third quarter of 2008, 58% of companies in the S&P 500 still managed to "beat the street".

The above chart from Understandings Earnings Estimates by James Bianco on the Big Picture Blog.

Corporate Profits

Inquiring minds may be interested in charts of corporate profits.

click on any chart for sharper image

Corporate After-Tax Profits As Percent of Real GDP



Four Major Waves of Earnings Growth

1. A stunning rise in corporate profits as a percent of GDP started when Nixon closed the gold window, effectively ending the last semblance of the gold standard. In response, the trade deficit soared as did an exodus of manufacturing jobs. 
2. A second massive rise in corporate profits began with the Greenspan Fed-sponsored internet bubble culminating in 2000 with a liquidity push out of misguided fears of a Y2K crash.
3. The third big jump in corporate earnings started in 2001 when the Greenspan Fed (followed by the Bernanke Fed), ignited housing and debt bubbles of epic magnitude. Financial profits soared at the expense of the greater fool going deep in debt buying houses right before the housing bust.
4. In 2009, the Bernanke Fed slashed interest rates across the board, clobbering those on fixed income, to bail out banks. A side-effect was lower interest rates on corporate bonds which also  added to corporate profits.

Bubbles Don't Benefit Real Economy

Government sponsored repatriation tax holidays along the way also added to corporate profits, as did the Fed paying interest on Excess reserves now sitting at about $1.5 trillion parked at the Fed.

Little of this benefited the real economy or produced any lasting jobs. Housing and finance jobs collapsed in the global financial crisis and are not coming back. Nor is another internet boom on the horizon.

With each crisis, the shrinking middle class has suffered at the expense of banks and corporations able to export jobs and capital. Small US Corporations not able to get the same tax benefits as GE, Apple, Google, Microsoft, etc., have not benefited from Fed policy.

Four Solutions

1. End fractional reserve lending
2. Return to the gold standard
3. End the Fed and its bubble-blowing policies 
4. Revise corporate tax policy so as to not give breaks to corporations that export jobs and hold profits overseas. US-based small manufacturers are at a huge disadvantage to corporations like GE that pay negative tax.

Regarding point number 2, please consider Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold's Honest Discipline Revisited

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Thinking Outside The Box

Chick-fil-A Will Not Back Down

My take: People seem unable to understand some simple logic.
Can my wife say, "I love you, but do not appreciate you being mean to me" all at the same time? Of course! We separate the issue of being mean from her love for me. 
It is just as legitimate for my wife to disagree with homosexuality and still love the person.  The logic of "you must agree with my conduct to prove you love me" is absurd.  We can correct our kids and love them throughout the whole process. 

"You are intolerant if you do not agree with my conduct" is such an immature position. It is not rooted in logic or facts.
1. "Being gay is not morally wrong"; is a proposition. It is either true or false.
2. "Being gay is morally wrong"; is a proposition. It is either true or false.

What makes 1. okay to say, but not 2.?  They are both propositions that are either true or false.  Some believe 1. is true, others believe 2. is true.  Name calling (intolerant, less of a person etc) if one holds the other side only highlights the immaturity of a position (on either side of the debate).  Our first call is to love others, not condemn others.  We can love others and disagree with conduct.

Interesting Read:

All of a sudden, biting into a fried chicken sandwich has become a political statement.

Chick-fil-A, the fast-food chain known for putting faith ahead of profits by closing on Sundays, is standing firm in its opposition to gay marriage after touching off a furor earlier this month.

Gay rights groups have called for a boycott, the Jim Henson Co. pulled its Muppet toys from kids' meals, and politicians in Boston and Chicago told the chain it is not welcome there.

Across the Bible Belt, where most of the 1,600 restaurants are situated, Christian conservatives have thrown their support behind the Atlanta-based company, promising to buy chicken sandwiches and waffle fries next week on "Chick-fil-A Appreciation Day."

The latest skirmish in the nation's culture wars began when Chick-fil-A president Dan Cathy told the Baptist Press that the company was "guilty as charged" for backing "the biblical definition of a family." In a later radio interview, he ratcheted up the rhetoric: "I think we are inviting God's judgment on our nation when we shake our fist at him and say, 'We know better than you as to what constitutes a marriage.'"

That fired up gay rights advocates, including a group that waged a campaign against the company in recent years by publicizing $3 million in contributions that the Cathy family foundation has made to conservative organizations such as the Family Research Council.

"This solidifies Chick-fil-A as being closely aligned with some of the most vicious anti-gay voices in the country," said Carlos Maza of Equality Matters.

A Chicago alderman vowed to block a Chick-fil-A proposed in his district, and Mayor Rahm Emanuel supported him, saying, "Chick-fil-A values are not Chicago values." Boston Mayor Thomas Menino wrote in a letter to Cathy: "There is no place for discrimination on Boston's Freedom Trail and no place for your company alongside it."

In announcing it was pulling its toys, the Jim Henson company said it has "celebrated and embraced diversity for over 50 years." It directed its revenue from the Chick-fil-A toys to GLAAD, a leading gay rights organization.

On the other side of the debate, former Arkansas Gov. Mike Huckabee, a Baptist minister, declared next Wednesday "Chick-fil-A Appreciation Day" to support a business "whose executives are willing to take a stand for the Godly values." Former Pennsylvania Sen. Rick Santorum, who like Huckabee ran for president as a darling of social conservatives, joined the cause along with religious leaders.

"As the son of a dairy farmer who milked many a cow, I plan to 'Eat Mor Chikin' and show my support by visiting Chick-fil-A next Wednesday," the Rev. Billy Graham said in a statement, referring to the slogan in the company's ads, which feature cows urging people to eat poultry.

The Rev. Roger Oldham, spokesman for the Southern Baptist Convention, said many Christians want to support businesses owned by fellow believers, and the loyalty intensifies "when Christians see a fellow Christian being persecuted."

"They will come out of the woodwork when a theologically based position is being politicized by individuals for their own purposes," he said.

The Cathy family has never hid its Southern Baptist faith. Since Dan Cathy's father, Truett, opened the first Chick-fil-A in 1967, the restaurants have been closed on Sundays, and the company refused to reconsider during the 1996 Olympics in Atlanta, sacrificing profits. It also boasts that the Chick-fil-A Bowl is the only college football bowl game with an invocation.

Chick-fil-A posted more than $4.1 billion in sales last year, most of it below the Mason-Dixon Line. Just 14 of its restaurants are in the six states and the District of Columbia where gay marriage is legal. Massachusetts has just two locations, both more than 10 miles from Boston. Illinois, which does not have same-sex marriage, has around a dozen, though only one in Chicago.

The company is well-positioned to come through the criticism relatively unscathed, even if it loses new markets in the North and elsewhere, University of Georgia marketing professor Sundar Bharadwaj said. He said that is because Chick-fil-A basically reflects the politics of its customers.

At a downtown Atlanta Chick-fil-A on Thursday, customers were divided over the company's stance.

"If you're a Christian, you believe in the Bible. The Bible says homosexuality is wrong. (Cathy's) absolutely right," Marci Troutman said over her breakfast.

Her business partner, Steve Timpson, said he chose not to eat at Chick-fil-A: "You've got to be more tolerant if you're going to operate in the wider market in this country."

Nearby, Dustin Keller offered another view of Cathy: "It's his opinion. He's entitled to it. I'm just here to eat."

Spain Is Up To No Good

Let's hope US GDP looks better then Spain's woes: 

Spanish unemployment hit its highest level in the second quarter since the Franco dictatorship ended in the mid-1970s, succumbing to a crisis of confidence among business and consumers that looks likely to escalate as the country's recession drags on.

The jobless rate rose to 24.6 percent from 24.4 percent in the three months to March, the National Statistics Institute said on Friday.

The number of unemployed Spaniards hit 5.7 million, giving the country the highest proportion of people out of work in the European Union.

That figure continues to rise as a government battling to stave off a sovereign bailout piles on fresh austerity measures while the economy shrinks.

"It's another example of the dire position the economy is in, and with the economy unlikely to expand anytime soon, and probably more likely to fall deeper into recession, things are only going to get worse," economist at Capital Economics Ben May said.

Spain's borrowing costs still out of control , seeking large bailout to bring rates down.  Does Europe have enough money?  Will Spain fight through and come out on top? Who better to ask then Spain's budget minister:

Spanish Budget Minister Cristobal Montoro said Thursday that the country is out of cash to pay for public services, heightening fears that it could default on its debts.
"There is no money in the public coffers," he said in a speech to Spain's Parliament. 

This appears to be a far cry from what he said a month ago: Less than a month ago, Montoro told the Spanish parliament that the government would not need a bailout "because it does not need to be rescued."

This tells me Europe continues to be in big trouble. Things must get worse before it gets better.  Too much borrowing.  If Greece was not enough Canada, lets look and learn from the folly of Spain.

Lefties, excessive social spending destroys wealth. How many more examples do you need?
If you love people so much, do what millions of people are doing: earn money and give it away to noble causes.  We all agree meeting others needs is just and noble.  Lets not do it in a way that bankrupts the nation.  When the socialists realize wealth is earned by hard work, learning tough lessons and meeting needs, the world will be a happier place.

Rahm Plays Both Sides

We weren't going to even speak of the recent blow-up about Chick-fil-A and the completely personal beliefs of their Board. It's a bunch of nonsense and we don't really care about it. But this is telling.

Rahm has decided to knock Chick-fil-A for their non "Chicago values:"

• The mayor of Chicago said he will back a plan that would prohibit Chick-fil-A from opening a restaurant because the company’s support of traditional marriage does not represent the values of the Windy City. But a number of religious liberty groups said the ban would be a flagrant violation of the U.S. Constitution.

  “Chick-fil-A values are not Chicago values,” Mayor Rahm Emanuel declared in a statement to Fox News. “They disrespect our fellow neighbors, residents and family members.”

But Rahm has decided to embrace a different organization that promotes religious values in the public square, supports traditional marriage, and marches against violence, especially on Monday nights:

• Mayor Rahm Emanuel on Wednesday welcomed the army of men dispatched to the streets by Farrakhan to stop the violence in Chicago neighborhoods.

Oh yeah, they are also openly racist, anti-Semitic, have taken money from terrorists and their religious beliefs include stoning gay people to death. Must be their "Chicago values."

RIP Officer Bostic-Jones

Cook County lays one of their own to rest:

• Hundreds of mourners were at a West Side church today for the funeral of a Cook County correctional officer who was fatally struck by a hit-and-run driver as she was on her way to work last week.

  Nikkii Bostic-Jones of Plainfield was killed on July 18 as the 12-year-veteran officer was walking across California Avenue near 29th Street to begin her overnight shift at the maximum security division of the jail.

Godspeed Officer.

Simple Solution

Some of our readers caught it:

• this has been happening in 010 since our new commander showed up and more recently that she appointed her super hack Cynthia white to do her dirty work. XO white has called officers at home at 2 pm telling them their time for 1st watch that night is denied (less than 8 hours notice). After you say I can't make it in, I'm in another state or no babysitter she says I'll get a cr if you don't show up tonight and hangs up. Even better the commander had Cynthia come into roll call and have the audacity to ask for curfews because we're down more than 50% from last year. Well last year we had a capt in EV who we respected and treated us well for the activity we gave him. Does she really think that officers are gonna produce numbers and generate activity for them when they are constantly screwing with people? It's sad that she wonders why the activity has dropped so low from last year.

Um, don't answer the phone? Hello?

She's wrong, she's violating the Contract, and she's on a power trip to make up for the fact she ought to be in prison. Get the CR# Cynthia - it'll be hilarious answering your "allegations" since there aren't any you can hang your hat on. And the hostile workplace environment lawsuit to go with the counter CR allegations of abusing your position? Priceless. You're handing the officers every bit of evidence they'll need to cash in.

Burke Scared?

Is the heat finally catching up with Aldercreature Burke?

• Inspector General Joe Ferguson has already gone toe-to-toe with former Mayor Richard M. Daley and Mayor Rahm Emanuel. Now, he’s taking on the City Council’s most powerful alderman.

  Ferguson went public Thursday with a jurisdictional dispute that’s been simmering in private for weeks: the decision of Finance Committee Chairman Edward M. Burke (14th) to deny Ferguson access to databases related to the city’s $100 million-a-year workers’ compensation program for civilian employees.

  Burke’s staff is refusing to release that information on the grounds that: so-called “duty disability” is governed by state law, not city ordinance; that Ferguson’s investigative powers are limited to misconduct; and that the Finance Committee staffers who administer the worker’s comp program fall under the jurisdiction of the City Council’s own inspector general.

Once someone starts nitpicking over jurisdiction and who is allowed to see what, we're pretty sure they've gotten a hold of something good. Maybe that one thread that's the start of unraveling a whole bunch of good stuff.

Hey Feds? You're already looking at Ed's brother. Can you spare a couple investigators to look at what Ferguson is uncovering? We assume you have overreaching investigative authority over everything.

Hey, do you thing these investigations are originating at Rahm's behest to break Burke and remove the last check to unlimited mayoral power? It's no secret that Rahm and Burke had a rough go of it and Burke's brother is already under investigation for state scholarship abuses. If only there was a Rahm/Washington/federal authority connection that would tie it all together.

Housing Headwinds: US Birthrate Lowest in 25 Years as Twenty-Somethings Postpone Having Babies

Boomer demographics and postponement of marriage on account of student debt and poor finances are two of the key reasons that I long-ago stated the housing recovery would be slow for a decade.

Declining birthrates now show that is indeed what is happening.

First, please consider a short snip from my July 25 post "Actual" New Home Sales First 6 Months of 2012 vs. Prior Years; Reflections on the Housing Recovery

Reflections on the Housing Recovery

Even with today's reported decline, new home sales have likely bottomed on an annual, cumulative-total basis.

However, don't expect much in terms of recovery.
Debt overhang is immense, and student debt is particularly problematic. Lack of jobs coupled with high student debt is capping family formation. Kids out of college are deep in debt and holding off getting married, starting families, and therefore buying houses.

Moreover, home sizes will trend lower and price recovery will be anemic because of boomer demographics. Retired boomers looking to downsize have few buyers able or willing to buy.

Bank-owned real estate (REOs) and shadow inventory are hugely underestimated. That too will pressure prices and sales.

The good news is home sales will add to GDP.

The more realistic news is structural headwinds are immense, demographics are poor, and job prospects for college graduates are poor. The bottom in new home sales may be in, just don't expect anything close to a normal housing-led recovery, because it's not going to happen.

Twenty-Somethings Postpone Having Babies

USA Today picked up on that theme in their article Americans put off having babies amid poor economy

Twenty-somethings who postponed having babies because of the poor economy are still hesitant to jump in to parenthood — an unexpected consequence that has dropped the USA's birthrate to its lowest point in 25 years.

As the economy tanked, the average number of births per woman fell 12% from a peak of 2.12 in 2007. Demographic Intelligence projects the rate to hit 1.87 this year and 1.86 next year — the lowest since 1987.

The less-educated and Hispanics have experienced the biggest birthrate decline while the share of U.S. births to college-educated, non-Hispanic whites and Asian Americans has grown.

The effect of this economic slump on birthrates has been more rapid and long-lasting than any downturn since the Great Depression.

Many young adults are unemployed, carrying big student loan debt and often forced to move back in with their parents — factors that may make them think twice about starting a family.

"The more you delay it, the more you delay the possibility of a second or third child," says Stephanie Coontz, director of research and public education at the Council on Contemporary Families. "This is probably a long-term trend that is exacerbated by the recession but also by the general hollowing out of middle-class jobs. There's a growing sense that college is prohibitively expensive, and yet your kids can't make it without a college degree," so many women may decide to have just one child.

Unexpected by Whom?

I am amused by the phrase "unexpected consequence" in the opening paragraph of the above article. I have to ask "unexpected by whom?"

Flashback January 11, 2010:
Reflections on Boomer Demographics, Household Formation, the Hoax Economy, Dead Batteries

Effect On Household Formation

Think of the effect on household formation if people under 30 will continue to suffer disproportionately higher joblessness. How pray tell will student loans be paid back let alone anyone start buying homes?

We will not only have structurally high unemployment for a decade, but we will have structurally low household formation. More people in their early to mid-30's will be living at home, sharing homes or sharing apartments.

The impact on home prices and demand for goods to furnish those homes is surely not priced into any existing economic models on housing starts, home prices, or the stock market.

Harsh Reality of Structurally High Unemployment
 
2010 was not the first time I used student debt, household formation, and structural unemployment in that context.

Indeed, my post Structurally High Unemployment For A Decade dates back to August 18, 2009.  Here is a key snip.

In the Incredible Shrinking Boomer Economy I noted a harsh reality quote of Bernanke:

"It takes GDP growth of about 2.5 percent to keep the jobless rate constant. But the Fed expects growth of only about 1 percent in the last six months of the year. So that's not enough to bring down the unemployment rate."

Pray tell what happens if GDP can't exceed 2.5% for a couple of years? What about a decade (or on and off for a decade)?

If you have come to the conclusion that we are going to have structurally high unemployment for a decade, you have come to the right conclusion.

US Birthrate

click on chart for sharper image 

Economists were surprised by that chart but they should not have been. If anything, the surprise should have been that it's not worse. Looking ahead, it probably will be.

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