Saturday, 30 June 2012

Mish's Global Economic Trend Analysis


Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Time-Lapse Interactive Graph Shows Stunning Rise in Anti-Euro Sentiment in Italy

Posted: 29 Jun 2012 12:09 PM PDT

The rise of the Five Star Movement in Italy is the number one happening in Europe right now and mainstream media has not even begun to cover it in any depth. The movement is led by an Italian comedian, Beppe Grillo.

Main Rules for the Five Star Movement

  • Not be an elected politician prior to 5 Stelle
  • Commit to stay in charge for no longer than 2 terms
  • Commit to take a minimum salary and give the rest back to the community
  • Post a public platform on the internet
  • Be willing to hold a public debate on the platform

Beppe Grillo's personal position, not a mandate for the Five Star Movement is "Get out of the Euro and default on debt"

For more on the Five Star Movement please see Six Reasons Why Italy May Exit the Euro Before Spain; Ultimate Occupy Movement

Time-Lapse Interactive Polls

Following are some time lapse polls of the Five Star Movement and other political parties in Italy. Please give the graphs extra time to load.

The polls are from data gathered by data gathered by Termometro Polico (one on the best Italian poll-makers according to a friend who sent me the link.) The important poll is in tab number four.

Explanations and Comments on the graphs appear below.

For now, please click on tab number four. You may also wish to go to the link above for additional information (in Italian).


Graphs courtesy of Termometro Polico via tools from Tableau Software.

Explanations and Comments

The following comments are from Lorenzo, who lives in Italy. He is the person who sent me the link to Termometro Polico.
Hello Mish

In the first and third chart, red=centre-left (PD+Idv+Sel+others), blue= centre-right (PdL+Lega+Others), and yellow = 5 star movement. PdL = Former Prime Minister Berlusconi's party.

The third tab shows that a centre-left plus center (green) coalition could win the election, albeit with a relatively small margin. There is a catch however: (centre-left and centre-right) do not currently exist, except as theoretical coalitions rather than political parties.

Right now PDL and PD support the Monti government, while all the other parties that they commonly ally with (Lega, IDV, SEL, etc) do not. The two main parties (PD and PDL) scorn each other but are "forced to go along", while the minor parties in both "coalitions" bad-mouth them and Monti's government to attract the resentment created by Monti's taxes reforms.

This makes it pretty hard to predict the shape the two coalitions will take and how the voters' choices will change according to it. The situation is pretty fluid right now.

Italian politics is hard to make sense of for somebody used to a simple two-parties system situation.

Lorenzo
Coalition Building

For more on the difficulty of building a coalition in Italy, please see comments from Andrea in my post Reader from Italy Explains Why Early Elections Might Lead to "Deadlock".

Andrea is a reader who is from Italy but now lives in France. The pertinent section is labeled "Explaining Italian Politics".

Five Star Movement September 2011 vs. June 2016

This simple graph below shows the stunning rise of the Five Star Movement



Implications of the rise in popularity of the Five Star Movement from 3.7% in September 2011 to 20.6% in June 2012 are both massive and obvious. Yet mainstream media in the US and Europe have essentially ignored the phenomena.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Japanese Manufacturing Output Falls for First Time in 2012

Posted: 29 Jun 2012 09:22 AM PDT

The short term effect of Japanese stimulus following the earthquake and tsunami has now worn off. All Japan has to show for that stimulus is a bigger pile of debt, proving once again the Broken Window Fallacy.

In the real world, Japan has a debt-to GDP ratio of 225% and rising. Japan's export machine has stalled. So has Japanese manufacturing in general.

Markit reports Japanese manufacturing output falls for first time in 2012 to date
June data pointed to the first month-on-month reduction in manufacturing output since December 2011, as both new business and new export orders fell. Backlogs of work decreased as a result, while employment growth eased to only a marginal rate. On the price front, factory gate charges fell further in June, in response to a first reduction of average costs in 20 months.



After adjusting for seasonal factors, the headline Markit/JMMA Purchasing Managers' Index™ (PMI™) dipped fractionally below the neutral 50.0 threshold in June, to post its lowest reading in seven months.

Commenting on the Japanese Manufacturing PMI survey data, Alex Hamilton, economist at Markit and author of the report said:

"June data suggest that Japan's manufacturing sector upturn is fading into mid-year, with output and new business falling simultaneously for the first time since December 2011.

Growth in the year to date has been supported by earthquake-related reconstruction projects. The latest survey findings indicate that the boost from these efforts is starting to ebb, however, with investment goods producers noting a particularly sharp fall in output during June. This bodes ill for growth heading into the second half of the year, especially given the fragility of demand in external markets – highlighted by an accelerated fall in new export business during June."
Japan Doubles Sales Tax

The AP reports Lawmakers in Japan OK hike in sales tax
Japan's lower house voted Tuesday to double the country's sales tax to 10 percent over three years in a bid to rein in a bulging national debt as an aging population burdens the country's social security system.

The vote, however, shook Prime Minister Yoshihiko Noda's grip on power because of strong opposition from a group within the ruling party led by power broker Ichiro Ozawa that believes the tax hike will weaken the economy. Ozawa and his supporters have threatened to bolt the Democratic Party over the tax issue.

The bill passed easily by a vote of 363-96, with support coming from the two biggest opposition parties. The bill must still pass the less powerful upper house to become law, which is expected.

It calls for raising the sales tax from 5 percent to 8 percent in 2014, and then to 10 percent in 2015.

Even Noda's government projects the tax hike will take only a modest bite out of Japan's deficit. The Cabinet Office forecasts that doubling the sales tax will boost revenues by ¥13.5 trillion ($170 billion) annually by 2015. Japan currently runs a deficit of about ¥45 trillion ($563 billion) a year.

Ruling party veteran Ozawa, who has often criticized Noda and controls a bloc in the ruling party, has suggested he may leave the party and take as many lawmakers as he can with him to form a new one. If 54 or more lawmakers join Ozawa, Noda's party would lose its majority in the key lower house.
Japan is in a very tight situation. The US will find itself in a similar situation down the road if it listens to misguided economists hell-bent on getting government to waste more money.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Laughable Text of EU "Memorandum of Understanding"; ESM Not Been Ratified Yet Already Requires Changes; How Much ESM Firepower Is There?

Posted: 29 Jun 2012 12:00 AM PDT

Futures are flying over a "breakthrough" that supposedly will lower borrowing costs for Italy, Spain, and Ireland.  The "breakthrough" is a modification to the terms of the ESM to allow "the possibility" to recapitalize banks directly.

Amusingly, the existing ESM agreement has not even been ratified. The agreement is still on hold in Germany (numerous other countries have yet to ratify as well).

Yet the "Memorandum of Understanding" worked out at the summit today appears to require changes to the ESM.

Other ambiguous statement from the eurogroup committee are simply laughable. Here is the complete text. Emphasis added in places.
EURO AREA SUMMIT STATEMENT - 29 June 2012 -

• We affirm that it is imperative to break the vicious circle between banks and sovereigns. The Commission will present Proposals on the basis of Article 127(6) for a single supervisory mechanism shortly. We ask the Council to consider these Proposals as a matter of urgency by the end of 2012. When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly. This would rely on appropriate conditionality, including compliance with state aid rules, which should be institution-specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding. The eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally.

• We urge the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status.

• We affirm our strong commitment to do what is necessary to ensure the financial stability of the euro area, in particular by using the existing EFSF/ESM instruments in a flexible and efficient manner in order to stabilise markets for Member States respecting their Country Specific Recommendations and their other commitments including their respective timelines, under the European Semester, the Stability and Growth Pact and the Macroeconomic Imbalances Procedure. These conditions should be reflected in a Memorandum of Understanding. We welcome that the ECB has agreed to serve as an agent to EFSF/ESM in conducting market operations in an effective and efficient manner.

• We task the Eurogroup to implement these decisions by 9 July 2012.
ESM Under Review by German Constitutional Court

Bear in mind that ESM ratification in Germany has already been delayed subject to Review by German Constitutional Court
Germany's highest court asked the country's president on Thursday to delay ratification of the permanent euro bailout fund, the European Stability Mechanism, and the fiscal pact into law next week. If he complies, the move could delay the implementation of the ESM by several weeks in the latest setback for Chancellor Angela Merkel.

The Constitutional Court, anticipating challenges to the legislation, wanted more time to review documents. German President Joachim Gauck, hardly three months in office, was already faced with an important decision. If he complied with the request from Karlsruhe, at least one piece of legislation proposed by Chancellor Merkel and her coalition government -- the permanent bailout fund known as the European Stability Mechanism (ESM) -- would undoubtedly be delayed. The ESM was originally scheduled to come into force on July 1, 2012.
More Challenges Coming

The proposed changes will put German taxpayers (eurozone taxpayers in general) at more risk. Thus, it's safe to say that more challenges to the ESM are coming.

However, let's assume for the moment that Finland, Austria, Germany, and the Netherlands accept more taxpayer risk. (Admittedly that's quite an assumption).

Is this a euro-saving breakthrough?

Van Rumpoy Calls Summit a "Breakthrough"

Please consider EU Leaders Ease Debt-Crisis Rules on Spain in Merkel Retreat
After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels today, leaders of the 17 euro countries dropped the requirement that governments get preferred creditor status on crisis loans to Spain's blighted banks, European Union President Herman Van Rompuy said. Banks can also be recapitalized directly with European bailout funds rather than being channeled through governments, he said.

Merkel left the summit, which continues at 10 a.m., without addressing specifics of the agreements. She said there were decisions on "future measures within the framework of our methods that we will have through" Europe's two rescue funds. "I think we will have a successful conclusion."

The euro rose to as high as $1.2628, the strongest since June 21. Euro-area finance ministers will enact today's deal at a meeting on July 9, Van Rompuy said, calling the accord a "breakthrough."
Breakthrough? Really? How Much Firepower is Needed?

Bloomberg reports ...

  1. The EU's two rescue funds may only amount to about 20 percent of the outstanding debt of Italy and Spain, limiting its ability to lower the nations' borrowing costs.
  2. The EU's two rescue mechanisms, the European Financial Stability Facility and the yet-to-start ESM, may have 500 billion euros ($621 billion) available for purchases.
  3. Italy and Spain have about 2.4 trillion euros combined of outstanding bonds, bills and loans.

For now, the market is pleased with this non-breakthrough. Let's see how long it lasts. I suspect not long.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.




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Friday, 29 June 2012

Mish's Global Economic Trend Analysis


Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Germany Blinks After All-Night Fight; Italy and Spain Still Not Happy; For Now, Futures Are

Posted: 28 Jun 2012 09:23 PM PDT

It's a love-fest in Asia futures once again, but will it hold on Friday or through the weekend?

One thing's for sure, sentiment was so sour about this 19th summit, that any bit of good news stood a decent chance of temporarily igniting the market.

You can actually credit German chancellor Angela Merkel for that sour sentiment because she repeatedly stated Germany would not give in. The latest reports suggest Germany did blink, but not enough to please Italy, Spain, and France.

The fact remains that Italy, Spain, and France all want something that is virtually impossible. They demand actions that are against the German constitution. Simply put, it's not going to happen.

Meanwhile, let's tune in to what has the futures all excited.

All Night Fight

Please consider the Financial Times report Eurozone officials in all-night aid fight
German officials gave their clearest indication to date that they were prepared to intervene to shore up Italian and Spanish borrowing costs, saying eurozone leaders should use existing powers with their €440bn rescue fund for short-term help.

After weeks of insisting they would not budge on short-term measures, the sudden German acquiescence led to a flurry of activity in Brussels, where EU leaders gathered for the latest in a series of high-stakes summits intended to solve the crisis.

Unexpectedly, senior officials from all 17 eurozone finance ministries met on the sidelines of the summit to weigh emergency plans for Rome and Madrid which focused on using the rescue fund to buy Italian and Spanish bonds to reverse the recent spike in yields.
That certainly isn't much.
Indeed this next snip seems far more meaningful in a negative sense.
The political stakes for Mr Monti also rose on Thursday. Giorgio Napolitano, the Italian president and a strong Monti backer, said that political support for his technocratic government was slipping – an implicit warning to European leaders that Mr Monti needed to return from Brussels with assistance.

"Conflicts and political polemics among the forces that support this government are increasing," Mr Napolitano said a written statement.
Euro Surges After EU Leaders Renounce Seniority

Since the Financial Times does not have the rest of the story, let's look elsewhere.

In a move that will put still more risk on German taxpayers, and also what likely has the futures market excited (until the next problem hits), Euro Rises After EU Leaders Renounce Spain Loan Seniority reports Bloomberg.
The euro surged the most this year after European leaders agreed to drop the condition that emergency loans to Spanish banks give their governments preferred creditor status.
No Problems Solved

In isolation, renouncing seniority is certainly net positive for bond yields in Spain and Italy. However, it does not solve a single structural problem. Moreover, that move it is certain to raise ire of some in Germany and Finland who will have to bear the risk.

If this is all the summit produces (other then the expected fluff to agree to agree to do something five years from now), expect whatever gains  (if any) that come from this maneuver to be fleeting. 

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Monti Threatens to Halt the Game of Marbles Unless he Gets the Big Green One; Hollande Threatens to Remove Marbles as Well; EU Summit Deadlocked

Posted: 28 Jun 2012 06:35 PM PDT

Conditions at the EU summit are breaking down more than expected thanks to a position taken by Italian Prime Minister Mario Monti. Acting like a spoiled brat in a game of marbles, Monti refuses to let anyone else play unless he gets the big green marble he wants.

In less colorful terms, Bloomberg explains Monti Withholds EU Growth Pact Approval Unless He Gets Interest Rate Relief.
Italian Prime Minister Mario Monti may block the 120 billion-euro ($149 billion) growth initiative announced by European Union President Herman Van Rompuy without an effort to reduce its borrowing costs, two Italian officials said.

Italy is withholding its official endorsement as it pushes for collective action at an EU summit in Brussels to push down its bond yields, said the officials who spoke on the condition that they not be named.
EU Summit Gridlocked

Euroskeptics will be pleased to note the summit is gridlocked, at least for the moment. How do we know this? Easy. EU President Herman Van Rompuy said "talks weren't gridlocked" and will continue through the night and later today.

Moreover, Hollande threatened to temporarily remove his marbles from the game as well.

Please consider this snip from Demands for Bond-Buying Agreement Roil European Summit
French President Francois Hollande said Italy and Spain ought to receive support from the euro area's firewall funds and that their yields are still too high after the efforts they've made to reform their economies. Spain's 10-year yields breached 7 percent and Italy auctioned 10-year securities at the highest yields since December yesterday.

Hollande said the growth remarks "aren't enough" and that he'll withhold endorsement of an EU fiscal pact, which was endorsed by his predecessor, Nicolas Sarkozy in December, at least until the end of the two-day summit.

"The euro zone cannot stay in the current circumstance, without a budgetary union and even more without a banking union," Hollande told reporters.
Since German chancellor Angela Merkel will not agree to a banking union or a budgetary union, the EU summit is for sure deadlocked. It will remain deadlocked until Monti and Hollande change their opinions, effectively putting their marbles back in the game.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Eurozone Retail Sales Drop 8th Month; Italy, France are Down; Germany Retail Sales Up, Outlook Down

Posted: 28 Jun 2012 01:25 PM PDT

German retail sales bounced back for the second month, but not enough to prevent the aggregate eurozone sales from falling for the eighth consecutive month.
Summary of June findings:

The Eurozone retail sector remained in contraction mid-way through 2012, according to PMI® data from Markit. Sales fell on a month-on-month basis for the eighth successive month – the third-longest sequence in the survey history – and purchases of new goods by retailers declined at the second-fastest pace on record. That said, the rate of decline in sales slowed sharply during the month.



Germany, France, Italy Sales

The key sentence is "purchases of new goods by retailers declined at the second-fastest pace on record."

Will inventory liquidation continue or will retail sales rebound? Liquidation can only go so far, but that does not mean sales will rebound in a meaningful way. There is certainly no reason to expect a rebound in sales, but data seldom runs in a straight line.

Much depends on Germany. Yet, in spite of a two month rebound in sales, Germany alone could not pull aggregate sales up to even.

Italy Remains a Disaster Zone

Individually, Italy Retail Sales remain a disaster zone.
June sales were down sharply on levels seen in the corresponding month one year ago, which firms linked to lower consumer purchasing power and greater uncertainty over the economic outlook. The annual rate of contraction was, however, slower than May's series record.

Targets set for June were missed by the majority of firms, with a lack of confidence among clients and unfavourable weather conditions among the reasons cited by those that registered lower-thanexpected sales. Although the narrowest for three months, the gap between actual and planned sales remained considerable.

As was the case in each of the previous two survey periods, retailers were downbeat with regards to the prospects of achieving July targets. In fact, the overall degree of sentiment in June was one of the most negative in the series history, matching that recorded last December.
Markets turn on extreme sentiment, yet sentiment can remain extreme for long periods of time. Here is an accurate assessment by Markit economist Phil Smith.
"Retail PMI data for June continue to underline the effects that decreasing real wages, rising tax burdens and greater job insecurity are each having on Italian households' willingness and ability to spend. High street sales were again down markedly on the month, leading to further reductions in profitability and employment in the sector. Rates of decline were slower in June, though, given that this came on the back of some of the worst months trading in the series history, this was by no means a cause for celebration."
Retailer Purchasing Falls at Record Rate in France

Inventory reduction is underway in France as Purchasing Falls at Record Rate
French retailers reported a slower decrease in sales during June. The latest drop was only modest and much weaker than in the preceding two months. However, the performance over Q2 as a whole has been the worst since the inception of the survey in 2004, as trading has suffered in the face of difficult economic conditions. With retailers attempting to prevent an unwanted build-up of inventories, the value of goods purchased for resale fell at a series-record rate. Meanwhile, intense competitive pressures led to another marked drop in gross margins, while retail sector employment decreased at an accelerated pace.

Jack Kennedy, Senior Economist at Markit and author of the France Retail PMI, said: "The French retail sector continued to struggle in June, as the tough economic climate led to another drop in sales. The failure to rebound from May's severe weakness, when trading was impacted by a run of public holidays and the presidential election, underlines the strong headwinds facing retailers amid depressed consumer purchasing power and high unemployment. The overall sales performance over the second quarter has been the weakest since the survey began in 2004, and it was therefore no surprise to see accelerated falls in both purchasing and employment during June as retailers went into retrenchment mode."
Germany Retail Sales Up, Outlook Down

Markit reports Stronger increase in German retail sales, but outlook is reported as weakest for 2½ years
German retailers indicated a further rebound in monthly sales in June, with the pace of expansion reaching a three-month high. At 52.4, up from 50.7 in May, the seasonally adjusted Germany Retail PMI was above the neutral 50.0 value for the second month running. The latest reading pointed was above the long-run survey average (49.9) and indicated to a moderate increase in month-on-month retail sales in Germany. Some firms linked the improvement to better weather conditions and higher consumer spending as a result of the European Football Championship in June.

First drop in goods ordered for resale in nine months

Retailers in Germany responded to worries about the outlook for sales by reducing the value of goods ordered for resale at their stores in June. This was the first reduction since September 2011 and in turn contributed to the slowest accumulation of stocks of goods for resale so far in 2012.
In spite of highly unusual reports of higher sales due to "better weather" as well as higher sales because of football (soccer) championships, Markit reports ...
Actual sales in June were generally lower than expected, as has been the case in each of the past three months. Moreover, German retailers signalled a marked degree of pessimism about the outlook for their sales in one month's time. The balance of firms expecting to reach their targets in July is the lowest for two-and-a-half years. Anecdotal evidence widely cited concerns about the impact of weakening domestic economic conditions, alongside uncertainty related to the euro area crisis, as the main factors leading to downbeat sentiment in the retail sector.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Obamacare Upheld; What Should Romney, Republicans Do?

Posted: 28 Jun 2012 10:53 AM PDT

Today the Supreme Court ruled in favor of Obamacare by a 5-4 margin. Here is the Full Text of the Supreme Court Ruling.

Romney has promised to overturn the ruling, saying "ObamaCare was bad policy yesterday, it's bad policy today."

That statement makes Romney a hypocrite as the Financial Times notes.

"Obamacare places the government between you and your doctor," said Mr Romney, who championed a similar plan while governor of Massachusetts but says he opposes its expansion at a federal level.

Why wasn't it bad policy in Massachusetts?

Obama Chimes In

Here are some quotes from a press conference of President Obama as reported by The Guardian.

  • "Whatever the politics, today's decision was a victory for people all over this country"
  • "It should be pretty clear by now that I didn't do this because it would be good politics."
  • "Today I am as confidence as ever, that when we look back five years from now, or 10 years from now, or 20 years from now, we will be better off because we had the courage to pass this law and keep moving forward."

Clearly, Obamacare was not good politics.

The president took no questions to which the Guardian commented "What was interesting is that Obama – for the first time in a while – offered an unapologetic defense of the healthcare reforms. That's going to make for a different approach in the presidential campaign."

Small Likelihood of Overturning Obamacare

Even if Romney were to win, he would be extremely challenged to overturn Obamacare outright.

Senate filibuster rules are such that Democrats will easily be able to block it. Besides, Democrats have a majority in the Senate and do not even need a Filibuster move to block changes.

Given the Supreme Court ruled Obamacare is a tax, there would be some scope for Republicans to trash it in the once a year Reconciliation Process that limits Congressional debate. After all, that is how the bill passed in the first place.

Still, to use reconciliation, Republicans will have to elect Romney, hold the House and take control of the Senate. Is that likely?

Justice Robert's Opinion
Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation's elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.
Pragmatically Speaking

We can debate all day whether or not the Supreme Court made the correct ruling. However, such debate is useless. It will not change a thing.

Like it or not, the Supreme Court ruled that we are stuck with Obamacare unless Congress changes it.

Pragmatically speaking, it would be more beneficial to have discussions on how to improve healthcare rather than howling at the moon against it.

However, I suspect Romney will keep howling at the moon even though he was in favor of essentially the same moon when he was governor of Massachusetts.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Bankia Valued at EUR -13.635 Billion; Spain Becomes Sole Owner, Shareholders Totally Wiped Out; Entire Bankia Board Resigns

Posted: 28 Jun 2012 12:34 AM PDT

Five days ago we heard from the Bank of Spain that Spanish banks only need between €16bn and €62bn in new capital.

For details, see Laugh of the Day: Stress Tests Show Spanish Banks Only Need Between €16bn and €62bn in New Capital; ECB to Accept BBB- Rated Debt (One Step Above Junk) as Collateral

In the same report we also heard that the three largest bank groups do not need any capital at all. Bear in mind that was allegedly in a "stress" scenario.

Today we learned that Bankia is Valued at EUR -13.635 Billion
The seven banks that founded Bankia be left out of the shareholders of the entity and the State will be made with one hundred percent of the group's parent, Bank Savings Financial (BFA), the latter having a negative value of 13.635 million euros According to the assessment commissioned by the state.

After the assessment, the FROB becomes the sole owner of BFA.

Thus, the seven savings banks that created the group, Caja Madrid, Bancaja, La Caja de Canarias, Caja de Avila, Laietana Caixa, Caja Segovia and Caja Rioja, stay out of the shareholders.

Finally, BFA proceed to recapitalize its subsidiary, Bankia, with an injection of 12,000 million euros. He will do through a capital increase in which existing shareholders will have preferential subscription rights. It is expected that the capital increase in Bankia be completed during October.

The European Commission today gave its approval temporary nationalization and recapitalization of the matrix BFA waiting for Spain to send to Brussels a restructuring plan of the institution in the next six months.
I strongly suspect that a valuation of -13.635 billion euros is on the wildly optimistic side.

Entire Bankia Board Resigns

Here is an amusing picture from the El Pais article The assessment shows a group of Bankia 13.635 billion hole



El Pais reports ...
The group Bankia worthless. Worse, his assessment is negative, -13.635 billion euros. That is the appraisal on the face of nationalization has been presented today to the board of the entity, sources of such advice. That means that the conversion of the 4.465 million of preferred shares of Bank Savings Financial (BFA) results in 100% nationalization of the matrix and, indirectly, 45% of Bankia, but the assessment does not directly affect the bank quoted. The BFA board of directors resigned en bloc.

The seven savings banks that are BPA was created without any equity in the state, leaving them no future dividends to be used for social work . The entities concerned are Caja Madrid, Bancaja, La Caja de Canarias, Caja de Avila, Laietana Caixa, Caja Segovia and Caja Rioja. The seven contributed to its financial business BFA and are now nothing more than the assets of the work were marginalized social integration.
Did they all retire with full pensions?

Looking back, Bankia has provided more laughs than I remembered.

May 7, 2012: Spain to Spend €7bn-€10bn (It Doesn't Have), Bailing Out Bankia, the Nation's 3rd Largest Bank; Liar, Liar Pants on Fire

May 9, 2012: Audit Shows Spain's Bankia Short 3.5 Billion Euros; PP says "We Must Help Bankia, It Has Deposits for 10% of GDP"

May 10, 2012: Spain Nationalizes BFA and 45% of Bankia; No Bid for CatalunyaCaixa, Bank Worth Less Than Zero; Der Spiegel: Germany Fears "Bottomless Pit"
The implosion in Spanish banks continues. On Wednesday, Spain nationalized BFA, the 8th nationalization since the start of the crisis.

After sinking 3 billion into CatalunyaCaixa, Spain tried to privatize the mess but there were no offers at zero euros. Clearly CatalunyaCaixa bank is worth less than zero.

Meanwhile Der Spiegel reports "Bundesbank has no idea of what is happening in Spanish banks". Mish readers do. The Spanish banking system is without a doubt bankrupt.
Emphasis added.
Today we see that Bankia and the entire group is worth less than zero.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.




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Thursday, 28 June 2012

Mish's Global Economic Trend Analysis


Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Merle Hazard Song - US Racing Towards Fiscal Cliff; Submit Lyrics For Merle's Next Song For Fame (Certainly Not Fortune)

Posted: 27 Jun 2012 09:05 PM PDT

I received an email this morning from "Merle Hazard" about his latest song. It's one of his best.

US Racing Towards Fiscal Cliff



If the video does not play, or if you wish to submit lyrics or ideas for his next song, please click on A Q-and-A, Plus a Ditty and Contest as U.S. Races Toward the 'Fiscal Cliff'

Merle Explains ...
Though I'm a country singer, I also love surf-style music. The only thing wrong with the genre is that these songs are always -- of course -- about surfing, as well as teenage romance and drag races. There should be more on macro-economic topics and political economy. So I'd like to do another one like 'Fiscal Cliff,' but I'm out of ideas. I'm hoping NewsHour audience might help. I have in mind a song contest. Submit a topic, a key phrase, or a whole lyric. Whatever you like. The Making Sen$e team and I will jointly select the winner. Assuming we get a good idea or two, I will turn it into an original song. There is no money involved, as the market for econ surf songs is somewhere between inactive and inconceivable. But the winner will garner Internet fame on Making Sen$e, perhaps even go viral, and will in any case earn a heart-felt thank-you from me. At the very least, you should have fun and a story to tell.
This is clearly a way to get free publicity for Making Sen$se as well as free ideas for a new song, but hey, I don't mind as long as a good song comes out of it.

I asked for a song about the pension crisis, pointing Merle to my post Stockton CA Bankrupt; Unions (Not Housing Bust) Primarily to Blame; Pension Death Trap for Cities; What's the Solution?

I did not provide any lyrics or a background melody, so have at it, if you like my topic.

There is a form on the above link to submit ideas. May the best pension song win!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Stockton CA Bankrupt; Unions (Not Housing Bust) Primarily to Blame; Pension Death Trap for Cities; What's the Solution?

Posted: 27 Jun 2012 11:14 AM PDT

The city of Stockton, California, is Bankrupt. It has stopped making bond payments and will become the largest city in the US to seek protection via US bankruptcy law.

The bankruptcy was inevitable.

California law requires blame to be assessed. To be sure there is plenty of blame to go around.

Here are a few paragraphs from the LA Times that explain the setup.
How Stockton found itself so mired in debt can be seen everywhere in the city's core. There is a sparkling marina, high-rise hotel and promenade financed by credit in the mid-2000s, mere blocks from where mothers won't let their children play in the yard because of violence.

During the economic boom, this working-class city with pockets of entrenched poverty tried to reinvent itself as a draw to Bay Area refugees and a popular site for conventions. It offered generous city employee pension plans and benefits.

When the bust came, few places fell as hard as Stockton. The city has the second-highest rate of foreclosures in the country and the second-highest rate of violent crime in the state.

The city made $90 million in drastic cuts from the general fund in the last three years, including reducing the Police Department by 25%, the Fire Department by 30%, and cutting pay and benefits to all employees. There is a state investigation into whether Stockton's financial devastation was entirely due to shortsighted optimism or if there was corruption. The state mediation law requires assigning blame.
Public Union Pensions, a Death Trap for Cities

I added emphasis to the two sentences that explain what really happened and where the blame will be placed. Sure, Stockton politicians made gross errors in its budget. Yet, that is not what did Stockton in.

The thing Stockton could not  correct over time is ever-escalating pension promises and public union salaries. Union pensions wrecked Stockton. The only way to escape the death-grip of inane pension promises is bankruptcy.

Things like parks and marinas are one-time foolishness that can be corrected over time.

Ever-escalating public union wages and pension costs cannot be corrected over time (Indeed they are 100% guaranteed to get worse). Prevailing wage laws that force cities to overpay for every city project cannot be undone over time either.

Both have to be fixed big-bang. The former by bankruptcy, the latter by brute political force, preferably at the national level.

Scapegoating Short-Sighted Optimism

Blame will not be placed where it most belongs. Here is the key sentence: "There is a state investigation into whether Stockton's financial devastation was entirely due to shortsighted optimism or if there was corruption."

Note the two choices.

Political pandering by politicians to unions is not on the list. Nor are pension plans. Nor are public unions salaries.

$51.71-an-Hour Summer Job Program

Let's turn our focus to New York for a second, but the problem described by the New York Post applies to California, New York, and every prevailing wage state. If federal funds are involved, it applies to every state.

Please consider NY's $51.71-an-Hour Summer Job Program
The small Hudson Valley city of Poughkeepsie is now home to some of the best-paying summer jobs ever: $51.71 an hour.

That's right: $51.71 an hour.

The project started off as perfectly sensible. The work involves restoring Fallkill Creek, damaged in last summer's post-Hurricane Irene flooding. To get the job done and put up to 150 unemployed young people to work, the state Labor Department tapped a federal storm-cleanup grant.

Clearing debris and lifting heavy objects isn't easy, but why pay temporary manual laborers the same hourly rate as a skilled employee in a $100,000-a-year full-time job?

The ultimate source of funding for the Fallkill cleanup is a federal National Emergency Grant, whose terms require paying wages at the highest of the federal, state or local minimum wage or at the comparable rates of pay for individuals employed in similar occupations by the same employer.

The state Labor Department decided that this meant the prevailing wage for public-works projects. But "prevailing wage" is a term of art that actually means a pay rate based on collective-bargaining agreements between labor unions and private employers.

For the Mid-Hudson region, the prevailing hourly rate for laborers comes to $51.71 — $30.71 in wages plus $21 in benefits. But the temporary workers on the Fallkill won't be union members, so they'll get the entire amount as a wage, the Labor Department ruled.

If not for the prevailing wage, the Fallkill grant could've provided seasonal employment for 1,000 young people at the minimum-wage rate of $7.25 an hour — which might have gotten the job done sooner, to boot.

Or the state might have employed the same number of people, paid them $10 an hour and saved taxpayers $219,000 a week.

The project illustrates how government all too often works — that is, as wastefully as possible. It also stands as a testament to the power of unions in dictating government wage rates.
Who Benefits From This?

Bear in mind that government spending (even deficit spending, no matter how ill-advised), adds to GDP by definition. It does not matter how little product is actually produced, or even if the results are negative.

In terms of deficit spending, spending power is stolen from consumers and investors because government never allocates resources wisely.

Fixing 1 bridge instead of 10 adds as much GDP if the amount spent is the same.

Want to create 1,000 jobs for the summer or 140? If you are one of the politically well-connected the answer is 140.

Want to bet who got those jobs? My bet is sons and daughters of the politically well-connected. I would like to see a report.

Let's return our focus to California.

University of California Faces Mounting Pension Costs

Here is an interesting article that came my way a few days ago: University of California faces mounting pension costs.
The cost of pensions and retiree health benefits are soaring at the University of California, increasing pressure to raise tuition and cut academic programs at one of the nation's leading public college systems.

The 10-campus system is confronting mounting bills for employee retirement benefits even as it grapples with unprecedented cuts in state funding that have led to sharp tuition hikes, staff reductions and angry student protests.

The UC system, including medical centers and national laboratories, is scrambling to shore up its pension fund as it prepares for a wave of retirements and tackles a roughly $10 billion unfunded liability.

"The regents made a serious error and the Legislature made a serious error by not putting money aside for 19 years while accumulating this obligation," said Robert Anderson, a UC Berkeley economist who chairs the system's Academic Senate. "Now we have to pay for it."
Notice the self-serving attitude and blame-placing by Robert Anderson, essentially whining that taxpayers did not dole out enough money to give him his expected benefits.

What benefits are we discussing? The article explains.
The UC system faces spiraling pension costs for 56,000 current retirees and another 116,000 employees nearing retirement.

As of May, there were 2,129 UC retirees drawing annual pensions of more than $100,000, 57 with pensions exceeding $200,000 and three with pensions greater than $300,000, according to data obtained by The Associated Press through a state Public Records Act request.

The number of UC retirees collecting six-figure pensions has increased by 30 percent over the past two years, according to Californians for Fiscal Responsibility, an advocacy group that has analyzed UC pension data.

Topping the list is Marcus Marvin, a retired professor of dentistry and public health at UCLA, who receives an annual pension of $337,000.

If UC President Mark Yudof, 67, serves for seven years, he would receive an annual pension of $350,000 — in addition to regular benefits he accrues through the UC Retirement Plan, according to university documents.

The university caps employee pensions at the IRS limit of $250,000, but that ceiling does not apply to the "supplemental retirement benefits" promised to Yudof.
With inane pension benefits like that, is it any wonder the system went unfunded?

Those benefits cannot and will not be paid. The system is bankrupt. Sadly, young kids graduating from college tens or hundreds of thousands of dollars in debt are bankrupt as well. However, student loans cannot be discharged in bankruptcy.

Students are the one who have paid the highest price for our corrupt education system. Nothing is done "for the kids". It is all done for grossly overpaid administrators and public union employees.

School tuition has to be ridiculously high to support $350,000 a year pension plans for life.

What's the Solution?

  1. The immediate solution is bankruptcy. Expect to see more cities file. However, longer-term structural problems must also be addressed.
  2. Untenable pension contracts need to be tossed out by the courts and benefits reduced. Every taxpayer not on the public dole should cheer bankruptcy, not resist it.
  3. End defined benefit pension plans for public union workers.
  4. End collective bargaining for public union workers. Governor Scott Walker in Wisconsin has proven that can be done.
  5. Scrap Davis-Bacon and all state prevailing wage laws.
  6. Institute national right-to-work laws. 
  7. Merit pay for teachers
  8. More competition from accredited online schools to drive education costs way down
  9. Scrap student loan programs that only benefit administrators and educators, not the kids.

It's time to stop overpaying for all government-sponsored services including but not limited to police, fire, prison-workers, and education. The vicious, self-serving grip that unions and their political supporters have on this nation has to end. Governor Walker partially paved the way in Wisconsin. Other states must follow through. At the national level, we desperately need right-to-work laws while ending prevailing wages.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Laugh of the Day: "No Risk of Housing Bust" says Australia Central Banker

Posted: 27 Jun 2012 08:40 AM PDT

"No Risk of Housing Bust"

In case you need some humor today, please consider No risk of housing bust: RBA
Australia is not at danger of a collapse in the housing market, a top central banker says, again playing down concerns that Australia could suffer price falls like those seen in the United States or parts of Europe.

Speaking at a mortgage conference, Reserve Bank assistant governor Guy Debelle said he was more concerned about the outlook for the European Union and the uncertainty that was causing globally.

Asked about fears of a housing collapse in Australia, Mr Debelle said there was no oversupply of housing in the country, households were well able to manage their debt levels and mortgage arrears remained very low.

"This (housing risk) is not something that keeps me awake at night," he added.
No Oversupply?

For years I have had people emailing me that a housing bust was impossible because there was a critical shortage of houses in Australia.

I calmly point out we heard the same story in the US for years as well. Of course, in the midst of a bubble, no one wants to hear any rational explanations.

Thus, a few days ago I had to laugh at this Bloomberg headline: Vanishing Households Undercut Claim of Australia Shortage
Australia has almost 1 million fewer households than assumed in government forecasts of a housing shortage, raising doubts about a supply shortfall cited as the main reason the nation will avoid a U.S.-style crash.

The Pacific nation had 7.8 million households, data released yesterday from the 2011 Census showed. That compared with estimates of 8.7 million as of June 2010, according to the latest figures used by the National Housing Supply Council, a group created by the government in May 2008 to monitor housing demand, supply and affordability. Australia's population also grew by 300,000 less than previously estimated, to 21.5 million.

"There's been a bit of a disconnect between the estimates between the census points and the actual census data," said David Cannington, Melbourne-based economist at Australia & New Zealand Banking Group Ltd. (ANZ) "My feeling is that some of the underlying housing demand numbers will be revised down."

Home prices across Australia have seen quarterly declines since the beginning of 2011 as global economic uncertainty and fears of overpaying for properties in the English-speaking world's most unaffordable housing market kept buyers sidelined.

Dwellings in Australia cost 6.7 times the average annual income as of the third quarter of 2011, Illinois-based consulting company Demographia said in a report in January.

The increase in the number of people living in group households and in apartments and townhouses backs this up, said David Collyer, campaign manager at tax reform advocacy group Prosper Australia.

"Young adults have gone back home with mum and dad, or are sharing houses," said Collyer, who argues that Australia has an oversupply of housing based on statistics showing water usage and new building data. "Household sizes have gone up even more than people think, and the oversupply of housing will be revealed to be even worse than we thought."

As more Australians live with friends or parents to combat falling affordability, the number of vacant dwellings rose to 934,471 in the 2011 census from 830,376 in 2006.
Housing Shortage With 934,471 Vacant Homes

Allegedly there is a housing shortage with close to a million vacant homes.

At the peak of every bubble there always appears to be a shortage. There appeared to be a shortage of Florida condos in 2005 as well.

The nutcases really believed Florida needed more condos. The nutcases at the RBA now believe "no risk of housing bust" in Australia, right in the midst of what I believe will be a decade-long implosion. What a hoot.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Monti Lashes out at Germany; Merkel Hardens Position; Reader from Italy Explains Why Early Elections Might Lead to "Deadlock"

Posted: 27 Jun 2012 01:43 AM PDT

Merkel Hardens Position

The EU summit is a day away and pre-summit bickering is so intense that it will be difficult if not impossible to get any major agreements.

Two days ago, in a speech in German parliament, Bloomberg reported Merkel Hardens Resistance to Euro-Area Debt Sharing
Chancellor Angela Merkel hardened her resistance to euro-area debt sharing to resolve the region's financial crisis, setting Germany on a collision course with its allies at a summit of European leaders this week.

Merkel, speaking to a conference in Berlin today as Spain announced it would formally seek aid for its banks, dismissed "euro bonds, euro bills and European deposit insurance with joint liability and much more" as "economically wrong and counterproductive," saying that they ran against the German constitution.

"It's not a bold prediction to say that in Brussels most eyes -- all eyes -- will be on Germany yet again," Merkel said. "I say quite openly: when I think of the summit on Thursday I'm concerned that once again the discussion will be far too much about all kinds of ideas for joint liability and far too little about improved oversight and structural measures."

"There must not be an imbalance between liability and control," she said today. "For instance, we would do a European deposit insurance immediately if it doesn't lead to common liability but to improved oversight possibilities and standards."
Monti Lashes out at Germany

In response to his own falling support as much as his displeasure with Merkel, Monti lashes out at Germany ahead of summit
Italy's technocratic prime minister's frustration with Germany surfaced in a combative speech to parliament, saying he would not go to Brussels to "rubber-stamp" pre-written documents and was ready to extend the two-day summit until Sunday night if needed to reach agreements before markets reopen on Monday.

Speculation over the fate of his government has become so feverish in Rome that officials were forced to deny that the prime minister had threatened to resign if he were to leave Brussels without success.

Singling out Jens Weidmann by name, Mr Monti said the Bundesbank president had "badly misunderstood" his proposal to deploy eurozone rescue funds to bring down the borrowing costs of countries such as Italy and Spain that had honoured obligations to implement reforms and bring down their budget deficits.

Italy on Tuesday was forced to borrow at 4.71 per cent for two-year bills, its highest level since December, and will face a testing auction on Thursday of up to €5.5bn in five and 10-year bonds.

Italian officials said they were extremely concerned how markets might react Monday if the Brussels talks fail to break new ground. The summit was heading towards "complete uncertainty", Mr Monti said.

Mr Monti is said by aides to be furious with Mr Berlusconi's recent anti-European tack which is seen as undermining Italy ahead of the summit. Mr Berlusconi reportedly repeated on Tuesday that it would not be a bad thing if Germany exited from the euro.
Explaining Italian Politics

Reader Andrea who is from Italy but now lives in France, has some observations and comments on Italian politics in response to Monti Threatens to Resign if No Eurobonds; Specter of Early Elections
Hi Mish,
I have a few comments on your article.

First: Former prime minister Silvio Berlusconi made a third call for a euro exit, this time asking Germany to exit if the ECB will not print.

Berlusconi has a certain ability in "feeling" what people wants to hear and use it as his message. In my opinion he is testing the public opinion. I expect he will run polls to check if his anti-euro stance is allowing his party to increase consensus. In this case, I strongly believe that he will raise the level of his anti-euro stance given he has nothing to lose as his party is in freefall.

Second: Monti's days are indeed numbered because he will step down at the end of legislature (spring 2013) and he will not seek for renewal of his mandate in the new one.

However, his term could be even shorter. There could be early elections before the natural term.

In the Italian constitution, the President of the Republic appoints the prime minister, but the appointment must get Parliamentary approval. If a PM resigns or loses majority approval, a search is on to find another person. If parliament cannot find a coalition leader with sufficient votes, the only choice left is to call early elections.

Berlusconi's PDL party has the numbers to make Monti step down and to not allow any new majority. He may do just that.

Berlusconi is increasingly uncomfortable in supporting Monti. So are others. Government bond yields are back at very high levels and now Monti is losing popular support. Backing Monti has cost PDL to lose a lot of votes.

However, with early elections, a dangerous competitor like Beppe Grillo's Movimento 5 Stelle (Five Star Movement) will not have enough time to present candidates everywhere. Thus, Berlusconi might also use a poor EU summit as reason to withdraw support to Monti, given the side benefit of holding elections before the Five Star Movement grows stronger.

Third: the most likely outcome of the next election in Italy is a deadlock, assuming recent polls are accurate.

The reason is the electoral law. The current electoral law gives additional representatives and senators to the "coalition" that scores first. Coalition is the key term. Even if Grillo's Five Star Movement wins as a party, he will be politically isolated whereas the center-left can form a coalition.

However, additional share is given on national basis for the Chamber of Representatives and on regional basis for the Senate. For this reason, the Senate will most likely be fragmented with no majority at all. To govern, you need majority on both.

What would happen then? Very hard to guess.

Best regards,
Andrea
For more on the Five Star Movement and Beppe Grillo's plan to dump the euro, please see ....


Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.


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