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Economic Outlook

Helicopter Money Comes To Canada: Ontario Pledges "Basic Income Experiment"

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Posted by Tyler Durden - ZeroHedge ZeroHedge

on Tuesday, 08 March 2016 09:23

imagesEarlier today, we explained why so-called “helicopter money” can’t save the world when ZIRP, NIRP, and QE have all failed to revive global demand and boost inflation.

The reason: QE is helicopter money. That is, we’ve been doing this for 8 years and it hasn’t worked yet. 

Some readers were reluctant to buy this rationale, but the fact is, just because the bank intermediary failed to do its part for Main Street doesn’t thereby mean this entire experiment isn’t still a farce. Think about the mechanics of it: 1) the government prints a liability (a bond), 2) that liability is sold to a primary dealer, 3) the central bank buys that government liability with yet another liability (dollars) that the government also prints.

That’s a scam. It’s deficit financing with one (very tenuous) degree of separation. The fact that the middlemen (the banks) didn’t pass along the benefits to you doesn’t make the mechanics of it any less ridiculous.

But if that’s helicopter money “v.1,” Main Street thinks it didn’t work out so well. Banks recovered, Jamie Dimon and Lloyd Blankfein became billionaires, financial assets soared, and everyday people got....continue reading HERE



Economic Outlook

Saudi Arabia—a Failing Kingdom

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Posted by John Mauldin - Mauldin Economics

on Monday, 29 February 2016 16:36

Screen Shot 2016-02-29 at 3.31.58 PMTo say that Saudi Arabia is on the verge of its most significant change in decades is not an exaggeration.

Inside Saudi Arabia—a Failing Kingdom you will learn:

  • How the House of Saud could collapse in four years… and what it means to the region and the globe.
  • Why the Saudi government is considering an IPO of its crown jewel—after it helped drive oil prices down.
  • Why OPEC is defunct and may never return to its glory days.
  • How the Saudis' policies are empowering ISIS.
  • What Middle Eastern oil policies mean for the future of the US shale industry… and why it matters to you.

 

...continue reading HERE 



Economic Outlook

Refugee Crisis Escalates: Greece Pulls Ambassador to Austria; Macedonia Announces Border Controls; 15,000 Trapped in Greece

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Posted by Mike "Mish" Shedlock - Global Economic Trend Analysishedlock - Global Economic Trend Analysis

on Thursday, 25 February 2016 12:53

100,000 refugees have entered Greece since the beginning of the year compared to 5,000 a year ago.

Where can they go? On February 16, Austria announced it will take at most 80 a day. Just this week Macedonia reduced the number of refugees allowed to transit through its territory to about 1,000 a day.

At least 15,000 are trapped in Greece, a country without resources to deal with them. In response to the growing crisis, Greece Withdraws Ambassador to Austria.

Athens withdrew its ambassador to Austria on Thursday in a sign of the mounting acrimony between EU countries over the bloc's failed refugee policies, a fight that increasingly risks destroying the continent's passport-free travel zone.

In a statement announcing the decision, Greece's foreign ministry accused the Austrian government of taking unilateral action outside of EU rules and recent agreements by capping the number of asylum seekers that it would accept across its southern border.

The move by Vienna has angered several member states, particularly Germany, which believe it was a direct violation of principles agreed by Werner Faymann, Austria's chancellor, at recent EU summits.

While Vienna is capping the number of daily asylum applications it accepts at 80, it is freely allowing as many as 3,200 refugees a day to pass through Austria en route to Germany -- even after agreeing not to do so at the most recent EU summit.

Despite anger in Athens and Berlin, Vienna has hastily put together a group of EU and non-EU allies along the so-called "Western Balkans route", most of whom met in Vienna on Wednesday to agree policies that could constrict tens of thousands of refugees in Greece indefinitely. Neither Germany nor Greece was invited to the Vienna meeting.

The EU's migration chief, Dimitris Avramopoulos, warned on Thursday that the bloc had 10 days to improve the situation "or else there is risk the whole system will completely break down".

Even the French and the Belgians have engaged in verbal sparring after Belgium's decision to impose border controls on its frontier with France. Belgium is concerned it could face an influx of refugees due to an imminent move by the French authorities to clear part of Calais' so-called "jungle" migrant camp.

Mr Tsipras said Greece would block an agreement at a refugee summit on March 7 that "does not ringfence an obligatory sharing of the responsibility and burden [of the refugee issue] among the member states in a proportional way".


Whole System Broken Down

I don't need 10 days to report the obvious: The whole system has already broken down.

The biggest problem at the moment is actually Greece. By letting all refugees in, even though passages to the North are severed, Greece is the problem child, not Austria, nor Hungary, nor Macedonia.

At the expense of its own citizens, with money it dos not have, Greece bears the brunt of the refugee crisis. The smart thing for Greece to do would be to close its own border just as Hungary did.


Border Control Map

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Larger Image

The above map is from the BBC on January 25. I added the blue anecdotes that show additional blockages since then.

Blockage Math

 

  • In 56 days, starting January first, 100,000 have entered Greece primarily from Turkey. That's 1,786 a day.
  • As the temperatures climb, the count will rise if Greece does nothing to stop the flow.
  • Macedonia reduced the number of refugees allowed to transit through its territory to about 1,000 a day.
  • 15,000 are already trapped in Greece and that number will rise by at least 786 a day. In one month, that's another 23,580.
  • If Germany refuses the pass through from Austria, the maximum flow would decline to 80 per day, and the trapped rate would rise from 786 a day to 1,706 per day (51,180 a month).

Not Broken Yet Thesis Recap

Don't worry. We are told the system is not broken yet. Greece says there's still 10 days to fix the problem.

Meanwhile, Greece has vowed to veto any solution that does not spread the refugees around, while Austria has called a summit of countries sympathetic to more blockages.


Related Articles

February 16, 2016: "Just Say No": Austria Announces Daily Quotas on Refugees: Yearly Flow Reduced to 37,500 from 1,000,000.

February 18, 2016: Pass Thru Politics: EU Says Austria's Refugee Quotas Violate Geneva Convention; In Praise of Austria.



Economic Outlook

U.S. Inflation: Prepare for 4% (or more!)

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Posted by Ned W. Schmidt

on Monday, 22 February 2016 08:38

Last we visited on the subject of U.S. inflation (November, 2015) we wrote,

"Using those simplistic numbers suggests that U.S. inflation as measured by the [headline] CPI could rise to an annual rate of about 4% ..."

That possibility is now increasingly likely given recent rise in U.S. inflation. This view is reaffirmed by recent data. If an error exists in this projection, it is to underestimate potential for inflation in U.S. to rise.

40537 a

Analyzing the state of U.S. inflation begins with the median CPI produced monthly by Federal Reserve Bank of Cleveland. What is the median CPI? To calculate the headline CPI for any particular month the rate of change is calculated for each of the components of the CPI such as energy, food, and housing. Headline CPI is then calculated by weighting each of those components to produce a weighted average. Median CPI is that rate of change for which half of the components had a higher rate of change and half had a lower rate of change. It divides a ranking of the component rates of inflaton in half. The median is less impacted by extreme changes in the prices for anycomponent which can in someways distort the weighted average CPI.

In top chart is plotted the year-to-year percentage change for the median CPI. Two observations are worthy of mention. These observations suggest that expectations of higher U.S. inflation are reasonable and likely to be correct. First, the latest observation exceeds the previous high. Second,in January the year-to-year percentage change rose to the highest level since 2009.



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Economic Outlook

Don’t Fall for the Government Fake-Out

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Posted by Connecting the Dots - Mauldin Economics

on Tuesday, 16 February 2016 08:50

Washington, DC is pretty proud of the employment numbers it has been pumping out. Most recently, the Labor Department reported that the US unemployment rate dropped to 4.9% in January.

That’s an eight-year low going back to the 2008–2009 Financial Crisis.

The actual number of new jobs was a little on the light side, at 151,000 versus the expected 190,000, but most of the Wall Street crowd was impressed with the +0.4% monthly increase in wages.

Image 1 20160216 CTD

....read more HERE

 



Economic Outlook

Atlanta Fed Sees Far Weaker Than Expected Q1 GDP

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Posted by John Rubino - DollarCollapse.com

on Tuesday, 02 February 2016 07:15

Another Monday, another set of "surprisingly" bad economic numbers. A few representative headlines:

China manufacturing prices decline for 18th straight month
Oil prices fall 5% on bad China data, OPEC uncertainty
Global factories parched for demand, need stimulus
Junk bonds suffer a rare negative return in January
US consumer spending softens, savings hit 3-year high
US manufacturing weak again in January
China official PMI misses in January, Caixin PMI shows contraction
Japanese bond yields continue to collapse

There's more, but you get the (very dark) picture. And thanks to the Atlanta Fed's GDPNowprogram we can see in real time how these numbers translate into current-quarter GDP growth. Apparently the US is looking at yet another weak stretch in which economists (represented by the Blue Chip consensus) are gradually forced to admit that they've wildly overestimated our ability to manage our debt.

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GDP growth matters for a couple of reasons. First, an economy that's borrowing a lot of money (as all the major ones are) has to generate large amounts of new wealth or it sinks ever-deeper into a hole that eventually leads to a 1930s-style depression. 1.3% growth does not come close to stopping the expansion of debt/GDP. So every quarter like the current one brings a debt-driven collapse that much closer.

Second and far more interesting in the near-term, slow-growth/high-debt countries eventually conclude that their only remaining option is massive currency devaluation. Europe and Japan are already there, and are aggressively ramping up their own currency war offensives. The US, if history is any guide, will soon (either this year or as part of the next administration's "first 100 days" political offensive) decide that a too-strong dollar is standing in the way of "progress" and will start looking for ways to devalue.

Then the real fun begins -- at least for goldbugs. For holders of dollars it won't be nearly as pleasant. Here's the Canadian version of what's coming for US investors, though the US chart will be steeper and will go on for years instead of months:



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Economic Outlook

2016: Surprises and Scenarios

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Posted by John Mauldin - Mauldin Economics

on Monday, 18 January 2016 06:20

Bank Credit Analyst: Stuck in a Rut
Friedman: Italian Debt Crumbles
Bremmer: Transatlantic Breakdown
Lewitt: The Great Unwinding
Kass: No-Growth Stagflation
Zervos: Spoos & Blues
Jensen: Liquidity Crisis Ahead
Weldon: Currency Wars
A Few Final Thoughts
Hollywood (Florida), Cayman Islands, and Surprises

“The expected rarely occurs and never in the expected manner.”

                                                             – Vernon A. Walters

“The fundamental nature of exploration is that we don't know what’s there. We can guess and hope and aim to find out certain things, but we have to expect surprises.”

                                                            – Charles H. Townes

160117-01

I see it every December and January: in the flurry of economic and political forecasts, someone says we ought to “expect a surprise.”

Phrases like this drive the writer part of me crazy. A surprise, by definition, is something you don’t expect, so telling us to expect one makes no sense. They might as well say, “Expect the warm water to be cold.” The words don’t go together that way.

The analyst part of me, though, knows what they really mean: not that we should expect a particular unforeseeable event, but that we should recognize the probability that we will be surprised in some way, at some point.

In fact, that prediction is almost always realized. I can guarantee you’ll get surprised this year. I can’t guarantee what specific events will surprise you, but I can make some educated guesses, as I did last week in “Economicus Terra Incognita.” Today we’ll go a step further and look at some of the “surprises” others are seeing in their crystal balls.



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