Education Moment: The Man with 26 Million Students
Zach Sims, a college dropout founded Codecademy, a website which enables users to learn six popular programming languages, via a simple interface, for free. Codecademy is three years old now, and Sims has 26 million students.
US Special Forces in Mariupol?
The rebel attack on Mariupol, Ukraine is underway as noted earlier today in Attack on Mariupol Begins; 7,000-8,000 Ukrainian Forces Nearly Encircled in Northern Cauldron; US Sends Army Trainers.
Disinformation regarding the attack is running rampant, even bordering on the outright ridiculous.
For example, a reader sent me a link to Ukraine@War, a UK website that made these claims regarding Mariupol:
The reader who sent the link asserted "You wanted photos, satellite images, twitter feed posts, etc....so here you go".
The entire website was nothing but allegations. The site has maps with claims like "this is where Russians launched their attack".
It's preposterous.
I prefer actual evidence of things. For example, please consider this image of a Ukrainian reporter in Mariupol asking a soldier a question.
Mariupol Soldier
Who is this man? Where is he from?
The curious thing about that soldier, hiding his face, is that he responded to a Ukrainian reporter's question, in English with: "Out of my face! Out of my face please!" right at the 2:34 mark in the following video.
Video - Out of My Face
link if video does not play: Mariupol Soldier Responds "Out of My Face"
Background
The rebels have claimed since last June that US special forces were active in Mariupol. They even claimed to have killed one of them by sniper fire. We now have strong evidence, and it doesn't even come from the rebels.
The soldier in the video could be a mercenary, but that's illegal unless approved by the US government.
Out of My Face Discussion
A Discussion headline reads American mercenary/possible US Special Forces filmed in Mariupol, Ukraine today.
"The accent is clearly a Brooklyn or Jersey accent. Possibly Boston but definitely New England based. The cap, uniform and ammo belt is standard US Special Forces or 'Academi' mercenary outfitting. The soldier is Carrying an AKS-74 with folded buttstock and also has a handmade titanium silencer, rubberized grip and magazine with the bracket."
Anyone in the military recognize that equipment?
Targeted Attack
Vehicles destroyed in the early footage suggest a targeted attack on a known location.
Were those vehicles of the Special Forces by any chance?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Disinformation regarding the attack is running rampant, even bordering on the outright ridiculous.
For example, a reader sent me a link to Ukraine@War, a UK website that made these claims regarding Mariupol:
- "This is done by RUSSIAN rocket launchers, with RUSSIAN rockets, by soldiers speaking RUSSIAN, running RUSSIAN flags on their vehicles and with RUSSIAN emblems on their sleeves..."
- Russian Major-General Vyaznikov is relocating his HQ to Soledar, Ukraine.
The reader who sent the link asserted "You wanted photos, satellite images, twitter feed posts, etc....so here you go".
The entire website was nothing but allegations. The site has maps with claims like "this is where Russians launched their attack".
It's preposterous.
I prefer actual evidence of things. For example, please consider this image of a Ukrainian reporter in Mariupol asking a soldier a question.
Mariupol Soldier
Who is this man? Where is he from?
The curious thing about that soldier, hiding his face, is that he responded to a Ukrainian reporter's question, in English with: "Out of my face! Out of my face please!" right at the 2:34 mark in the following video.
Video - Out of My Face
link if video does not play: Mariupol Soldier Responds "Out of My Face"
Background
The rebels have claimed since last June that US special forces were active in Mariupol. They even claimed to have killed one of them by sniper fire. We now have strong evidence, and it doesn't even come from the rebels.
The soldier in the video could be a mercenary, but that's illegal unless approved by the US government.
Out of My Face Discussion
A Discussion headline reads American mercenary/possible US Special Forces filmed in Mariupol, Ukraine today.
"The accent is clearly a Brooklyn or Jersey accent. Possibly Boston but definitely New England based. The cap, uniform and ammo belt is standard US Special Forces or 'Academi' mercenary outfitting. The soldier is Carrying an AKS-74 with folded buttstock and also has a handmade titanium silencer, rubberized grip and magazine with the bracket."
Anyone in the military recognize that equipment?
Targeted Attack
Vehicles destroyed in the early footage suggest a targeted attack on a known location.
Were those vehicles of the Special Forces by any chance?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Attack on Mariupol Begins; 7,000-8,000 Ukrainian Forces Nearly Encircled in Northern Cauldron; US Sends Army Trainers
Yesterday, DNR (Donetsk People's Republic) president Alexander Zakharchenko issued this statement on a ceasefire:
"There will no longer be any attempts to speak about a ceasefire from our side. We will now see how Kiev reacts. Kiev doesn’t currently understand that we can advance in three directions simultaneously".
Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian provides a DNR perspective that he has seen.
Jacob writes ...
Today Zakharchenko announced the battle for Mariupol is underway. Also, to the North the Debaltsevo cauldron is closing and 7,000 to 8,000 Ukrainian forces will be trapped (encircled).
Here are some images and text regarding the attack on Mariupol from Colonel Cassad.
Colonel Cassad writes ... "This morning our forces continued their attempts to sever an exit path for the Debaltsevso-Group of Ukrainian forces. Encirclement failed so far, but according to reports, our artillery began to pound the main road leading from Debaltsevo to Svetlodarsk."
That paragraph is in reference to the about-to-be trapped Ukrainian forces around the city of Debaltsevo (the Debaltsevo cauldron).
Red Alert: Rocket Fire Could Signal New Offensive on Mariupol
From Stratfor: Red Alert: Rocket Fire Could Signal New Offensive on Mariupol.
Link if video does not play: Attack on Mariupol
Major Offensive
In contrast to the analysis from Stratfor, it seems to me the major offensive started yesterday with the warning from DNR president Alexander Zakharchenko "Kiev doesn’t currently understand that we can advance in three directions simultaneously."
The intent of Zakharchenko is to take and hold the entire Donetsk region. And it appears he will be able to do just that unless the US intervenes in a major way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
"There will no longer be any attempts to speak about a ceasefire from our side. We will now see how Kiev reacts. Kiev doesn’t currently understand that we can advance in three directions simultaneously".
Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian provides a DNR perspective that he has seen.
Jacob writes ...
Background for Zakharchenko's "no more ceasefires" statement stems from rebel disappointment back in August when Moscow forced the rebels to the negotiating table in Minsk, Belarus. The rebels gave up some territory around Mariupol at a time when Ukraine army was retreating, and in complete disarray.Attack on Mariupol Begins
This could have been a great opportunity for Kiev to come to its senses and accept a political solution.
However, the Ukraine side openly and repeated stated that the so-called ceasefire was just a tactical move prior to building up the forces and going back on the offensive. Then Kiev announced a 4th wave build-up of 50,000-100,000 troops.
In that context, Zakharchenko is telling the world that the Ukrainians blew their second chance, and there will be no more opportunities because all Kiev has done is move to strengthen its forces. Zakharchenko’s patience has run out especially considering nonstop bombardment of rebel-held cities.
Enough is enough.
Today Zakharchenko announced the battle for Mariupol is underway. Also, to the North the Debaltsevo cauldron is closing and 7,000 to 8,000 Ukrainian forces will be trapped (encircled).
Here are some images and text regarding the attack on Mariupol from Colonel Cassad.
Colonel Cassad writes ... "This morning our forces continued their attempts to sever an exit path for the Debaltsevso-Group of Ukrainian forces. Encirclement failed so far, but according to reports, our artillery began to pound the main road leading from Debaltsevo to Svetlodarsk."
That paragraph is in reference to the about-to-be trapped Ukrainian forces around the city of Debaltsevo (the Debaltsevo cauldron).
Red Alert: Rocket Fire Could Signal New Offensive on Mariupol
From Stratfor: Red Alert: Rocket Fire Could Signal New Offensive on Mariupol.
Reports of heavy rocket artillery firing on the eastern parts of the city of Mariupol, Ukraine, as well as a statement made by a separatist leader, indicate the potential preparation of an offensive on the city. While this would be a significant escalation and an indicator of Russian intent to push further into Ukraine, potentially forming a much-rumored land connection to the northern border of Crimea, there are also several indicators required for such an offensive that are currently still missing.Mariupol Video
The attack comes days after the Russian forces secured the Donetsk Airport, important in defending the right flank of any offensive westward. It also comes days after Lt. Gen. Ben Hodges, commander of U.S. Army forces in Europe, came to Ukraine and publicly announced that a small number of U.S. Army trainers would be arriving in Ukraine. While any large-scale offensive would have been considered and planned for much longer, the decision of the United States to send Lt. Gen. Hodges could have affected the dynamic of internal Russian calculations.
In any event, we do not yet know Russia’s strategic intentions. This could simply be an attempt to signal the danger Russia could pose to their negotiating partners in the west. It could be an attempt to extend the pocket they hold modestly. It could, finally, be the opening of an offensive toward Crimea.
The Russian position in Crimea is untenable. Crimea is easily isolated should Ukranian forces strengthen or Western forces get involved. Russia holds Crimea only to the extent that the West chooses not to intervene, or to the extent that it extends a relatively wide and robustly defended land bridge from Russia to the Crimea. Crimea and the Sevastapol naval facilities are of strategic importance to Russia and the decision to hold these facilities but not extend their power makes diplomatic sense, though it is not militarily rational. Either Russia can build the geographical structure to support Crimea, or it becomes a permanent weak point in the Russian position. The Russians do not want a massive confrontation with the West at a time of economic dysfunction, yet at the same time, having made the decision to hold Crimea, they will not have a better moment for consolidation.
This is an ongoing conversation in Moscow. It is not clear that it is over. The artillery may simply be a minor probe or it could be the preface to an assault. We know that there has been a significant increase in Russian presence in the pocket, but it does not seem to us that the Russians are logistically ready for a major offensive yet.
Taking Mariupol is a first step to a broader offensive. It is also an end in itself, anchoring the southern flank in the city, though may not even be that. However, the MLRS barrages on Mariupol open the door to multiple avenues of exploitation and have clearly moved the fighting to a new level, not so much in intensity, but in raising serious questions of strategic intention.
Link if video does not play: Attack on Mariupol
Major Offensive
In contrast to the analysis from Stratfor, it seems to me the major offensive started yesterday with the warning from DNR president Alexander Zakharchenko "Kiev doesn’t currently understand that we can advance in three directions simultaneously."
The intent of Zakharchenko is to take and hold the entire Donetsk region. And it appears he will be able to do just that unless the US intervenes in a major way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Prince Michael of Liechtenstein Warns "QE a Sign of Helplessness, Will Not Reach Economy"; Prince Michael vs. Martin Wolf
I received an interesting email today from Geopolitical Information Service (GIS) regarding statements made by Prince Michael of Liechtenstein on European QE by the ECB.
Let's compare and contrast what Prince Michael has to say with what economic writer Martin Wolf had to say, also from today.
QE a Sign of Helplessness, Will Not Reach Economy
Please consider European QE Funds Will Not Reach the Economy by Prince Michael of Liechtenstein.
In contrast, Financial Times writer Martin Wolf says "Nobody knows whether ECB’s QE will work but it is a start at least."
Actually, I am quite certain it will not work, and is in fact exactly the wrong thing to do. But let's dig deeper into Martin Wolf's thesis as outlined in Draghi’s Bold Promise to do What it Takes for as Long as it Takes.
Wolf: Pity Mario Draghi, president of the European Central Bank. He is seeking to lead the eurozone to monetary water. Unfortunately, the beast has many heads: some long for a drink; others insist a drink would be bad for all. Yet the ECB has to try. Letting deflation take hold would be far more dangerous.
Mish: There's that nonsense about price deflation once again. A complete deflation rebuttal is below.
Wolf: So the ECB has decided to purchase €60bn of assets a month until at least September 2016. Above all, the purchases will continue until the bank sees a “sustained adjustment” in the path of inflation consistent with its aim of achieving inflation rates “below, but close to, 2 per cent” over the medium term. ...This is akin to Mr Draghi’s 2012 pledge to do “whatever it takes” to save the euro. This time the ECB says it will buy some €1tn of assets, which is 10 per cent of eurozone GDP and a similar proportion of gross public debt. Above all, it will keep going until it hits its target. ... The crucial point is that the ECB has set a benchmark against which cessation of the programme must now be justified.
Mish: The crucial point is the stupidity of it all. Interest rates close to zero% did not fix the problem, or cause inflation. How in hell will interest rates going a few basis point lower fix anything? Here's the deal: The ECB cannot fix eurozone structural problems. And there are numerous problems to be sure. Add Prince Michael of Liechtenstein to the small list of people who realize the complete foolishness of the ECB's action.
Wolf: Failure to achieve the ECB’s objective would devastate its credibility.
Mish: Credibility? What credibility? Prepare to be devastated.
Wolf: The eurozone might soon find itself coping with populist governments of the left or right utterly opposed to the policies imposed upon them. That way surely lies a far bigger disaster.
Mish: Populist policies are on the way because political leaders would not make the necessary reforms nor write off debt that cannot possibly be paid back.
Wolf: Nobody knows whether this action will work. But at least it is a start.
Mish: Actually, no one can realistically "know" much of anything about the future except outside of basic mathematical truisms and the fact we will all eventually die. That said, we can be quite certain, the ECB's plan is indeed ridiculous as explained further below. Curiously, not even Wolf claims it will work. Yet, he calls it a "start". A start to what?
Wolf: That is far from a complete solution to the eurozone’s woes. But it is a welcome effort to keep the eurozone show on the road.
Mish: What road is that? To Oblivion?
Debate Over
Eurozone Structural Problems
The problems in Europe are insurmountable, and well understood by many, but apparently not Wolf.
What the hell good would even €5 trillion in QE do to fix those?
What good would it do if the ECB bought every bond from every country and pushed rates to zero across the board? How would it fix any structural problem?
Michael Pettis, Steen Jakobsen, Prince Michael, Mervyn King, Mish vs. Wolf
Once again, and with reasonable logic instead of Wolf's unrealistic hope...
Mervyn King: More QE will not help the world.
Steen Jakobsen (Others): "Lower Interest Rates May Reduce Consumption". Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management both agreed.
I wrote about Steen's theory in Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph, a rebuttal to Bloomberg author Barry Ritholtz, also in favor of massive QE.
Deflation Fighting Silliness
Let's once again review my Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"
I also strongly suggest Wolf consider Deflationary Spiral Nonsense; Keynesian Theory vs. Practice; Eurozone Policymakers Concerned About Falling Prices.
For a third take on the insanity of fighting consumer price deflation, please see Deflation Bonanza! (And the Fool's Mission to Stop It).
Problem is Debt
The problem with the global economy in general is debt. You cannot cure a debt-deflation problem via attempts to force more debt into the system. It is axiomatic the cure cannot be the same as the disease.
I have emailed Wolf before but he does not have the courtesy to respond no matter how politely I express things.
I will email Wolf again but do not expect a reply. At any rate, I am pleased to see the list of people willing to speak out on the ridiculousness of QE is growing in unexpected places.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Let's compare and contrast what Prince Michael has to say with what economic writer Martin Wolf had to say, also from today.
QE a Sign of Helplessness, Will Not Reach Economy
Please consider European QE Funds Will Not Reach the Economy by Prince Michael of Liechtenstein.
The European Central Bank’s decision to introduce a programme of Quantitative Easing (QE) is not a win-win situation but rather an expression of helplessness ... that politicians in European Union countries are not prepared to address the necessary reforms, writes Prince Michael of Liechtenstein.It Won't Work, "But It's a Start"
Necessary basic reforms are crucial in Europe if it is to restore global competitiveness, increase productivity and get the unemployed back to work. This includes reducing the share of national and local government in the economy. This will reduce the overheads of the national economy and reduce the deficit. Deregulation of laws which are too stringent such as labour and competition law, would enhance activities and ease innovation and job creation.
The 2008-2009 banking crisis saw the US focus on re-establishing the equity basis of the banks to a level which allowed the banks to lend to business. Europe instead chose the path of stress tests. In a simplified way we can say that if a bank reduced its loan portfolio to business, instead of increasing its sound equity basis, it could also pass the stress test. It also means that banks are reluctant to lend more money to business. This prevents new money trickling into the economy.
Zero to negative interest rates are also destroying savings and reducing personal retirement provisions. Pensions have been hit hard. This situation has been exacerbated by the fact that government pension schemes are insufficiently financed.
The real problem with the QE programme of buying sovereign bonds is that it takes the pressure for reform off the politicians. The ECB has already helped several European governments buy time so they can carry out reforms. Most of them – and especially France – have failed to use this opportunity.
It seems unlikely that these irresponsible attitudes will change with QE.
In contrast, Financial Times writer Martin Wolf says "Nobody knows whether ECB’s QE will work but it is a start at least."
Actually, I am quite certain it will not work, and is in fact exactly the wrong thing to do. But let's dig deeper into Martin Wolf's thesis as outlined in Draghi’s Bold Promise to do What it Takes for as Long as it Takes.
Wolf: Pity Mario Draghi, president of the European Central Bank. He is seeking to lead the eurozone to monetary water. Unfortunately, the beast has many heads: some long for a drink; others insist a drink would be bad for all. Yet the ECB has to try. Letting deflation take hold would be far more dangerous.
Mish: There's that nonsense about price deflation once again. A complete deflation rebuttal is below.
Wolf: So the ECB has decided to purchase €60bn of assets a month until at least September 2016. Above all, the purchases will continue until the bank sees a “sustained adjustment” in the path of inflation consistent with its aim of achieving inflation rates “below, but close to, 2 per cent” over the medium term. ...This is akin to Mr Draghi’s 2012 pledge to do “whatever it takes” to save the euro. This time the ECB says it will buy some €1tn of assets, which is 10 per cent of eurozone GDP and a similar proportion of gross public debt. Above all, it will keep going until it hits its target. ... The crucial point is that the ECB has set a benchmark against which cessation of the programme must now be justified.
Mish: The crucial point is the stupidity of it all. Interest rates close to zero% did not fix the problem, or cause inflation. How in hell will interest rates going a few basis point lower fix anything? Here's the deal: The ECB cannot fix eurozone structural problems. And there are numerous problems to be sure. Add Prince Michael of Liechtenstein to the small list of people who realize the complete foolishness of the ECB's action.
Wolf: Failure to achieve the ECB’s objective would devastate its credibility.
Mish: Credibility? What credibility? Prepare to be devastated.
Wolf: The eurozone might soon find itself coping with populist governments of the left or right utterly opposed to the policies imposed upon them. That way surely lies a far bigger disaster.
Mish: Populist policies are on the way because political leaders would not make the necessary reforms nor write off debt that cannot possibly be paid back.
Wolf: Nobody knows whether this action will work. But at least it is a start.
Mish: Actually, no one can realistically "know" much of anything about the future except outside of basic mathematical truisms and the fact we will all eventually die. That said, we can be quite certain, the ECB's plan is indeed ridiculous as explained further below. Curiously, not even Wolf claims it will work. Yet, he calls it a "start". A start to what?
Wolf: That is far from a complete solution to the eurozone’s woes. But it is a welcome effort to keep the eurozone show on the road.
Mish: What road is that? To Oblivion?
Debate Over
Eurozone Structural Problems
The problems in Europe are insurmountable, and well understood by many, but apparently not Wolf.
- No fiscal union
- Wildly differing social agendas of member states
- Wide variances in productivity
- Wage discrepancies
- Retirement benefit discrepancies
- One size fits all monetary policy
- To make treaty changes every eurozone country must agree
- Target2 imbalances
What the hell good would even €5 trillion in QE do to fix those?
What good would it do if the ECB bought every bond from every country and pushed rates to zero across the board? How would it fix any structural problem?
Michael Pettis, Steen Jakobsen, Prince Michael, Mervyn King, Mish vs. Wolf
Once again, and with reasonable logic instead of Wolf's unrealistic hope...
Mervyn King: More QE will not help the world.
Steen Jakobsen (Others): "Lower Interest Rates May Reduce Consumption". Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management both agreed.
I wrote about Steen's theory in Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph, a rebuttal to Bloomberg author Barry Ritholtz, also in favor of massive QE.
Deflation Fighting Silliness
Let's once again review my Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"
I also strongly suggest Wolf consider Deflationary Spiral Nonsense; Keynesian Theory vs. Practice; Eurozone Policymakers Concerned About Falling Prices.
For a third take on the insanity of fighting consumer price deflation, please see Deflation Bonanza! (And the Fool's Mission to Stop It).
Problem is Debt
The problem with the global economy in general is debt. You cannot cure a debt-deflation problem via attempts to force more debt into the system. It is axiomatic the cure cannot be the same as the disease.
I have emailed Wolf before but he does not have the courtesy to respond no matter how politely I express things.
I will email Wolf again but do not expect a reply. At any rate, I am pleased to see the list of people willing to speak out on the ridiculousness of QE is growing in unexpected places.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Rebels Advance Towards Mariupol; 15,000 Ukraine Troops Risk Encirclement in North; Kiev Lies Pile Up; New Maps
Kiev Lies Pile Up
Major advances were made by rebels in the last couple of weeks. A claim made by Kiev that Ukraine recaptured the airport in Donetsk is a now proven lie.
And the lies pile up. For example, on January 21, the BBC quoted President Petro Poroshenko "Russia has more than 9,000 soldiers and 500 tanks, heavy artillery and armoured personnel carriers in Eastern Ukraine".
How can you hide 500 tanks and heavy artillery from US spy satellites? The answer is you cannot. And if those vehicles were actually in Eastern Ukraine, the US would have complained about it long ago.
On January 19, the Russian Activist reported 382 Russian soldiers killed in Ukraine during last three days.
"Respected Russian human rights activist Elena Vasilieva has announced that 382 Russian soldiers have been killed in Ukraine during the last three days."
There were no pictures or names. The above sentence was the entire article.
Sadly, people believe nonsense like this USA Today report:
There could be as many as 15,000 Russian troops in Ukraine, many of them deployed there without official documents", said Valentina Melnikova, head of the Committee of Soldiers' Mothers.
Reader Jacob Dreizin (a US citizen who speaks Russian and reads Ukrainian) had this to say about Valentina Melnikova:
The Telegraph, the Washington Post, the Daily Mail, and even respectable places like The Guardian have all carried such stories.
Lies repeated often enough get believed.
That does not mean I believe everything Putin has to say. I surely don't. Both sides lie. The first casualty of war is the truth.
But the preponderance of easily disputed lies is from Kiev. Yet, few in western media are willing to call President Poroshenko on them.
Ukrainian Dead Understated
Looking for accurate reporting of Ukrainian dead soldiers? Don't expect that out of Kiev either. CounterPunch explains in Ukraine’s Lower Class Military.
Let's step through a succession of maps, from August 2014, from September 2014, and one from the last two days.
Military Operations August 10-25
click on any map for sharper image
The above from August 26: Ukraine Offensive in Donetsk and Lugansk Fails
On August 26, I also posted Jane's Defense vs. Colonel Cassad: Someone Seriously Wrong.
Jane's Defense had made the claim Ukrainian Military Moves to Endgame.
My sources accurately challenged that claim.
Military Operations August 25 - September 1
The above from September 3: Ceasefire or Not?
Military Operations January 19-21
Note that many white areas on the previous maps are now pink (totally in rebel control). The hashed pink areas are recent rebel advancements (neither side controls completely). In the South note the march on Mariupol.
NATO Commander Visits Wounded
Here is a video of Ben Hodges, U.S. commanding general of NATO ground forces, visiting wounded/crippled Ukrainian soldiers in the hospital and giving them cheap little trinkets/mementos. Some of it is in English.
Link if video does not play: Ben Hodges Visits Troops.
This is what it boils down to ... Get drafted, lose an arm (or die), get a NATO trinket worth about $2.
Update From Jacob Dreizin
Colonel Cassad reports a rare setback for the rebels today. Jacob Dreizin comments ...
"A convoy of rebel towed antitank guns was shelled by Ukranian artillery near the town of Adveevka west of Donetsk airport, with 30-40 estimated dead and wounded. With a figure that high, it means all of the equipment was destroyed as well. Colonel Cassad makes the point that the rebels actually report their losses, whereas the Ukrainians don't."
Mariupol Next?
Dreizin had also reported that supply lines to Mariupol have been cut. A key bridge far west of the city in Ukraine-held territory has been blown up.
Interfax-Ukraine claims Train Movement on Damaged Bridge to Mariupol Restored.
Sad Quest for Symbolism
NATO and the US seriously underestimated the lengths Russia would go to stop the march of NATO eastward.
I have to wonder, how much longer Mariupol will last. Did Ukraine spread itself too thin trying to capture the Donetsk airport? I think so. And for what? Symbolism?
The entire war is nothing but a sad war for symbolism. Ukraine was never really one united country in the first place. Politicians create these messes by failure to take political, cultural, and religious differences into consideration when they draw maps.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Major advances were made by rebels in the last couple of weeks. A claim made by Kiev that Ukraine recaptured the airport in Donetsk is a now proven lie.
And the lies pile up. For example, on January 21, the BBC quoted President Petro Poroshenko "Russia has more than 9,000 soldiers and 500 tanks, heavy artillery and armoured personnel carriers in Eastern Ukraine".
How can you hide 500 tanks and heavy artillery from US spy satellites? The answer is you cannot. And if those vehicles were actually in Eastern Ukraine, the US would have complained about it long ago.
On January 19, the Russian Activist reported 382 Russian soldiers killed in Ukraine during last three days.
"Respected Russian human rights activist Elena Vasilieva has announced that 382 Russian soldiers have been killed in Ukraine during the last three days."
There were no pictures or names. The above sentence was the entire article.
Sadly, people believe nonsense like this USA Today report:
There could be as many as 15,000 Russian troops in Ukraine, many of them deployed there without official documents", said Valentina Melnikova, head of the Committee of Soldiers' Mothers.
Reader Jacob Dreizin (a US citizen who speaks Russian and reads Ukrainian) had this to say about Valentina Melnikova:
Mish,Lies Repeated Often Enough Get Believed
There have been a large number of these "Russian soldiers killed in Ukraine" stories in the Western press since last spring or summer. As a whole, they tend to confuse Russian soldiers with any and all Russians killed in Ukraine.
Yes, there have been a lot of Russians, Cossacks, and Chechens who have crossed the border to join the rebel militia. Several hundred of them have been killed, and in most cases, their bodies have been shipped back, funerals held, etc.
That does not mean that they were serving with the Russian army at the time of death.
What's really confusing to the Western press, is that the Russian groups keeping track of the deaths include all Russian citizens killed in Ukraine in their tallies.
As for actual Russian military deaths in Ukraine, it seems there were maybe several dozen of those, mostly from last August. But it was nowhere near the "thousands of Russians and hundreds of Russians tanks" claimed by Kiev. President Petro Poroshenko's claims are out-of-this-world nonsense.
Valentina Melnikova is totally off her rocker. Her group lost all credibility back in the early 2000s, when it inflated Russian deaths in Chechnya by a factor of three or four.
The allegedly widely respected Elena Vasilieva has claimed that entire Russian brigades have been wiped out in Ukraine. Keep in mind that a brigade is at least 2000 men. Of course, if 2000 bodies came back to one Russian base (or simply disappeared from one base), it would be all over social media in a split second. The western press has broadcast her claims with no questions and no sanity check. It is a disgrace.
Regards,
Jacob
The Telegraph, the Washington Post, the Daily Mail, and even respectable places like The Guardian have all carried such stories.
Lies repeated often enough get believed.
That does not mean I believe everything Putin has to say. I surely don't. Both sides lie. The first casualty of war is the truth.
But the preponderance of easily disputed lies is from Kiev. Yet, few in western media are willing to call President Poroshenko on them.
Ukrainian Dead Understated
Looking for accurate reporting of Ukrainian dead soldiers? Don't expect that out of Kiev either. CounterPunch explains in Ukraine’s Lower Class Military.
Recently, there appeared on the Internet an electronic database with photo-documents of Ukrainian military personnel killed in the war in eastern Ukraine. The documents include passports, military IDs, drivers’ licenses, personal files and credit cards. Some papers are half-burned, while others are untouched, as if nothing has happened to their owners. The documents were found with the dead bodies of these people in several areas of the Donbass region of eastern Ukraine, near the towns of Saurovka and Illovaisk, close to the cities of Donetsk, Lugansk and Gorlovka. The papers were published at the suggestion of the search teams so that the relatives of those killed could finally find out about their fate of their loved ones. As it happened, the majority were still officially listed as missing. They were also not included in the statistics of losses of the Ukrainian army.Ukraine Maps
The dead soldiers are from the 30th Mechanized Brigade of the Ukrainian armed forces, which in August was sent by its command into a crazy, suicidal mission.
The brigade was ordered to attempt a breakthrough that could lead to capturing the cities of Lugansk and Donetsk by the time of Independence Day in Ukraine, August 24.
In scanning the scanned papers of the dead soldiers, one can clearly see a social portrait of the soldiers of the Ukrainian army. It is ordinary people who were killed on the soil of Donbass. Soldiers and junior officers were mostly from peasant backgrounds.
We are often told that everyone is equal in death, but as we clearly see in this example, this is not the case. President Poroshenko, who is directly responsible for the catastrophic losses of the Ukrainian army and the death of civilians in Donbass, hypocritically mourns killed journalists in Paris on January 11 while in Donetsk, innocent people continue to die.
Children of Ukrainian politicians and oligarchs are not lying dead in the lands of Donbass. They enjoy a life full of fun and joy. They don’t fear forced military conscription. The petty, provincial bourgeoisie can relax and pay a bribe so their sons will not be drafted into the army. The corrupt generals cover for such ‘business as usual’.
Let's step through a succession of maps, from August 2014, from September 2014, and one from the last two days.
Military Operations August 10-25
click on any map for sharper image
The above from August 26: Ukraine Offensive in Donetsk and Lugansk Fails
On August 26, I also posted Jane's Defense vs. Colonel Cassad: Someone Seriously Wrong.
Jane's Defense had made the claim Ukrainian Military Moves to Endgame.
My sources accurately challenged that claim.
Military Operations August 25 - September 1
The above from September 3: Ceasefire or Not?
Military Operations January 19-21
Note that many white areas on the previous maps are now pink (totally in rebel control). The hashed pink areas are recent rebel advancements (neither side controls completely). In the South note the march on Mariupol.
NATO Commander Visits Wounded
Here is a video of Ben Hodges, U.S. commanding general of NATO ground forces, visiting wounded/crippled Ukrainian soldiers in the hospital and giving them cheap little trinkets/mementos. Some of it is in English.
Link if video does not play: Ben Hodges Visits Troops.
This is what it boils down to ... Get drafted, lose an arm (or die), get a NATO trinket worth about $2.
Update From Jacob Dreizin
One of the leading rebel sources claims that the operation to close the Debaltsevo "pocket" has begun. If closed from its northern-most edge, this would trap as many as 15,000 Ukrainian soldiers and militia as well as some of Kiev's heaviest artillery.Second Update
Also, one or more Ukrainian mortar shells landed next to some kind of bus or trolley in Donetsk this morning. The footage looks pretty bad. At least 8 civilians were killed, 7 of them inside that vehicle, and another 13 are in the hospital. "They are all Charlie", I'm sure.
Massive Ukrainian shelling of Gorlovka continues. Over 100 civilians have been reported killed there since the weekend.
Colonel Cassad reports a rare setback for the rebels today. Jacob Dreizin comments ...
"A convoy of rebel towed antitank guns was shelled by Ukranian artillery near the town of Adveevka west of Donetsk airport, with 30-40 estimated dead and wounded. With a figure that high, it means all of the equipment was destroyed as well. Colonel Cassad makes the point that the rebels actually report their losses, whereas the Ukrainians don't."
Mariupol Next?
Dreizin had also reported that supply lines to Mariupol have been cut. A key bridge far west of the city in Ukraine-held territory has been blown up.
Interfax-Ukraine claims Train Movement on Damaged Bridge to Mariupol Restored.
Sad Quest for Symbolism
NATO and the US seriously underestimated the lengths Russia would go to stop the march of NATO eastward.
I have to wonder, how much longer Mariupol will last. Did Ukraine spread itself too thin trying to capture the Donetsk airport? I think so. And for what? Symbolism?
The entire war is nothing but a sad war for symbolism. Ukraine was never really one united country in the first place. Politicians create these messes by failure to take political, cultural, and religious differences into consideration when they draw maps.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
"World Running Out of Positive-Yield Bonds"
In the wake of ECB's €60 billion a month QE madness (see "QE already Working" Says IMF Lagarde; Ho-Hum Details Announced; Gold the Place to Be), one might be wondering what it may do to European bond yields.
German 10-Year Bond Yield
click on chart for sharper image
Since September of 2013, yield on the German 10-year bond has plunged from around 2% to 0.367%.
ECB Risks German Bonds Mismatch Exceeding 100 Billion Euros
With €720 billion annual asset purchases, a huge portion of the bonds the ECB buys will be German.
Bloomberg explains ECB Risks German Bonds Mismatch Exceeding 100 Billion Euros.
In honor of the world running out of government sugar (a preposterous notion to be sure), I offer the following musical tribute.
Link if video does not play: Homer Simpson Cannot Get Enough.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
German 10-Year Bond Yield
click on chart for sharper image
Since September of 2013, yield on the German 10-year bond has plunged from around 2% to 0.367%.
ECB Risks German Bonds Mismatch Exceeding 100 Billion Euros
With €720 billion annual asset purchases, a huge portion of the bonds the ECB buys will be German.
Bloomberg explains ECB Risks German Bonds Mismatch Exceeding 100 Billion Euros.
[Of the 60 billion monthly asset purchases], about 45 billion euros probably would be sovereign debt, according to a central bank official, equating to more than 100 billion euros of German securities this year, based on purchases being conducted in proportion to euro-zone members’ contributions to the ECB’s capital. That would shrink the tradable market for German bonds in a year when the debt agency already planned to reduce the amount of conventional bonds outstanding by 8 billion euros.Just Can't Get Enough
“It’s going to cause a huge shock to the supply-demand balance in the European government-debt market,” Anthony Doyle, investment director at M&G Group Plc in London, said before the ECB’s decision was announced. “We might not be too far off the German bund market looking like the Swiss one, with a negative yield out to 10 years. It’s pretty crazy.”
ECB buying will be carried out in line with the capital key, Draghi said, which is a measure roughly in proportion to the size of each nation’s economy. Adjusted for non-euro-region central banks, that works out as a 25.6 percent share for Germany, according to calculations based on data on the ECB’s website.
If the ECB purchases about 450 billion euros of sovereign bonds over 10 months, about 115 billion euros would be earmarked for German debt. The exact amount has yet to be officially specified because the ECB plans to include debt of agencies and European institutions, as well as asset-backed securities and covered bonds in its purchases. As of Dec. 31, Germany had 1.16 trillion euros of tradable securities.
Finding Sellers
The difficulty for the ECB may be flushing out sellers and getting them to buy other assets instead. Banks and insurers need Germany’s AAA securities to bolster their balance sheets and pension funds mop up bunds to match their liabilities. In a low-growth environment with scant inflation, investors are sticking with bonds, particularly when the ECB is levying charges on its overnight deposit facility.
Meanwhile, supply is shrinking. The German debt agency plans to sell 147 billion euros of conventional bonds this year, compared with redemptions of 155 billion euros, according to its outlook published in December. As much as 14 billion euros of inflation-linked bonds, which are also eligible for ECB purchase, will also be issued.
“Global central banks are petrified of deflation,” said M&G’s Doyle, whose firm oversees the equivalent of about $389 billion. “The real effectiveness of QE is through the portfolio-rebalancing effect. The world is running out of positive-yielding government bonds.”
In honor of the world running out of government sugar (a preposterous notion to be sure), I offer the following musical tribute.
Link if video does not play: Homer Simpson Cannot Get Enough.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Housing Affordability: How Does the US compare to Canada, China, Australia, Japan, Ireland, UK
Congratulations to Hugh Pavletich and Wendell Cox (co-authors) of the 11th Annual Demographia International Housing Affordability Survey 2015, for another excellent job.
The survey shows ...
"For the second year in a row, the United States had the most affordable housing among major metropolitan markets, with a moderately affordable Median Multiple of 3.6. Canada (4.3) Ireland (4.3), Japan (4.4), the United Kingdom (4.7) , and Singapore (5.0) had seriously unaffordable housing.
Three national markets were severely unaffordable, with Median Multiples of 5.1 or above. These included China (Hong Kong), with a Median Multiple of 17.0, New Zealand, at 8.2 and Australia at 6.4."
Housing Affordability - Major Markets
click on chart for sharper image
The problem with the above chart is Hong Kong is so far off the scale, that everything else looks OK in comparison.
So, don't be fooled by such distortions. My suggestion to the authors: A logarithmic chart may help.
The following table will put things in better perspective.
Housing Affordability Rating Categories
Anything over 4.1 is "seriously unaffordable" or worse. From a metro-area perspective things look even worse.
Housing Affordability by Nation
Given that anything over 5.1 is "severely unaffordable", cities do not get a blue ribbon for being 10 points better than Hong Kong.
Demographia does not cover China proper. However, The Economist does. The Economist China Index of Housing Affordability, which covers 40 cities of China shows the overall housing affordability multiple was 8.6.
Affordability by Major Metro Area
Methodology
The Demographia International Housing Affordability Survey uses the “Median Multiple” (median house price divided by gross annual median household income) to assess housing affordability. The Median Multiple (a house price to income ratio) is widely used for evaluating urban markets, and has been recommended by the World Bank and the United Nations and is used by the Joint Center for Housing Studies, Harvard University.
The "Median Multiple" measure may be the best way, but it's far from perfect as I am sure the authors would admit. A simple chart on major metro area affordability may explain.
Affordable Major Metro Markets
Major Metro Questions
At the other end of the extreme, crack-shacks in Vancouver can sell for $1,000,000. For an amusing test, please see Crack Shack or Mansion Game
Inquiring minds may also wish to investigate Vancouver B.C. vs. Donegal Ireland Real Estate: What Will $890,000 Buy?
Ten Least Affordable Major Metro Areas
All Markets
Although I once visited Ireland and took many outstanding images on the trip, years ago, I know little about Limerick to comment.
In contrast, I do know a bit about Rockford, Illinois. It's about 90 minutes away.
Rockford is an economically depressed area in serious trouble. In fact, I have reason to believe the city is headed for bankruptcy. As facts come in, I will post on them.
The same questions I posed about Detroit, I ask about Rockford. The only difference is no one has heard much about Rockford or other Illinois bankrupt cities ... yet.
Spotlight on Canada
Do any Canadians readers care to comment about this?
"Canada's most affordable market again was Moncton (NB), with a Median Multiple of 2.2. Both Saint John (NB ) and Fredericton (NB) had Median Multiples of 2.5. Other affordable markets included Windsor (ON), at 2.8 and Charlottetown (PEI), at 2.9."
Given that Windsor and Detroit share a border crossing, I believe I know the answer, but if I get some choice comments, I will post them.
While on the subject, here's an interesting bar bet question: If you are in Detroit, headed due south, what is the first country you hit?
Here's the key to the answer: "Windsor is located directly south of the city of Detroit."
Canada High End
Land-Use Chicken Egg
The Demographia authors point out "no major metropolitan market without urban containment policy has ever been rated with severely unaffordable housing in 11 years."
I have to ask: Which came first, containment or lack of land? Is there more usable land around LA or San Antonio? Is Detroit affordable because it has no land use restrictions or are there no land use restrictions in Detroit because no one wants to live there?
In my view it is overly simplistic to place the majority of the blame on land use restrictions, even if restrictions are a major problem in some areas.
Much More To See
There's much more in the 59-page report. Give it a look. Just don't expect perfection, especially in regards to affordability of places where nearly everyone wants out but lacks the means to escape.
That aside, compiling data for all the major metro areas in the world is not an easy task. All in all, Hugh Pavletich and Wendell Cox did an outstanding job, once again. Their work is much appreciated.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
The survey shows ...
"For the second year in a row, the United States had the most affordable housing among major metropolitan markets, with a moderately affordable Median Multiple of 3.6. Canada (4.3) Ireland (4.3), Japan (4.4), the United Kingdom (4.7) , and Singapore (5.0) had seriously unaffordable housing.
Three national markets were severely unaffordable, with Median Multiples of 5.1 or above. These included China (Hong Kong), with a Median Multiple of 17.0, New Zealand, at 8.2 and Australia at 6.4."
Housing Affordability - Major Markets
click on chart for sharper image
The problem with the above chart is Hong Kong is so far off the scale, that everything else looks OK in comparison.
So, don't be fooled by such distortions. My suggestion to the authors: A logarithmic chart may help.
The following table will put things in better perspective.
Housing Affordability Rating Categories
Anything over 4.1 is "seriously unaffordable" or worse. From a metro-area perspective things look even worse.
Housing Affordability by Nation
Given that anything over 5.1 is "severely unaffordable", cities do not get a blue ribbon for being 10 points better than Hong Kong.
Demographia does not cover China proper. However, The Economist does. The Economist China Index of Housing Affordability, which covers 40 cities of China shows the overall housing affordability multiple was 8.6.
Affordability by Major Metro Area
- Hong Kong's Median Multiple of 17.0 was the highest recorded (least affordable) in the 11 years of the Demographia International Housing Affordability Survey
- Vancouver once again was second only to Hong Kong, with a Median Multiple of 10.6.
- Housing affordability in Sydney deteriorated to a Median Multiple of 9.8
- San Francisco and San Jose each rated 9.2.
- Melbourne had a rated 8.7
- London (Greater London Authority) 8.5.
- Three other markets had Median Multiples of 8.0 or above, including San Diego (8.3), Auckland (8.2) and Los Angeles (8.0).
Methodology
The Demographia International Housing Affordability Survey uses the “Median Multiple” (median house price divided by gross annual median household income) to assess housing affordability. The Median Multiple (a house price to income ratio) is widely used for evaluating urban markets, and has been recommended by the World Bank and the United Nations and is used by the Joint Center for Housing Studies, Harvard University.
The "Median Multiple" measure may be the best way, but it's far from perfect as I am sure the authors would admit. A simple chart on major metro area affordability may explain.
Affordable Major Metro Markets
Major Metro Questions
- Do you want to live in Detroit?
- Send your kids to Detroit schools?
- Are the houses that make up the median price survey livable at all?
At the other end of the extreme, crack-shacks in Vancouver can sell for $1,000,000. For an amusing test, please see Crack Shack or Mansion Game
Inquiring minds may also wish to investigate Vancouver B.C. vs. Donegal Ireland Real Estate: What Will $890,000 Buy?
Ten Least Affordable Major Metro Areas
All Markets
Although I once visited Ireland and took many outstanding images on the trip, years ago, I know little about Limerick to comment.
In contrast, I do know a bit about Rockford, Illinois. It's about 90 minutes away.
Rockford is an economically depressed area in serious trouble. In fact, I have reason to believe the city is headed for bankruptcy. As facts come in, I will post on them.
The same questions I posed about Detroit, I ask about Rockford. The only difference is no one has heard much about Rockford or other Illinois bankrupt cities ... yet.
Spotlight on Canada
Do any Canadians readers care to comment about this?
"Canada's most affordable market again was Moncton (NB), with a Median Multiple of 2.2. Both Saint John (NB ) and Fredericton (NB) had Median Multiples of 2.5. Other affordable markets included Windsor (ON), at 2.8 and Charlottetown (PEI), at 2.9."
Given that Windsor and Detroit share a border crossing, I believe I know the answer, but if I get some choice comments, I will post them.
While on the subject, here's an interesting bar bet question: If you are in Detroit, headed due south, what is the first country you hit?
Here's the key to the answer: "Windsor is located directly south of the city of Detroit."
Canada High End
Land-Use Chicken Egg
The Demographia authors point out "no major metropolitan market without urban containment policy has ever been rated with severely unaffordable housing in 11 years."
I have to ask: Which came first, containment or lack of land? Is there more usable land around LA or San Antonio? Is Detroit affordable because it has no land use restrictions or are there no land use restrictions in Detroit because no one wants to live there?
In my view it is overly simplistic to place the majority of the blame on land use restrictions, even if restrictions are a major problem in some areas.
Much More To See
There's much more in the 59-page report. Give it a look. Just don't expect perfection, especially in regards to affordability of places where nearly everyone wants out but lacks the means to escape.
That aside, compiling data for all the major metro areas in the world is not an easy task. All in all, Hugh Pavletich and Wendell Cox did an outstanding job, once again. Their work is much appreciated.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
China Manufacturing Flat-Lining In Slight Contraction
It's pretty much the status quo for the HSBC Flash China Manufacturing PMI report.
Key Points
When a rise from 49.6 to 49.8 puts you at a high (with 50 being the break-even point between contraction and expansion), you cannot possibly be moving fast.
Flat-lining in slight contraction is the best phrase to describe the current state of affairs in China. The following charts show just that.
click on chart to show sharper image
China's manufacturing PMI has hovered in a range just under and just above the 50 expansion-contraction line since mid-2011.
Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: ...
“The HSBC China Manufacturing PMI rose to 49.8 in the flash reading for January, up from 49.6 in December. Domestic demand improved marginally while external demand remained solid. The labour market weakened and prices fell further. Today's data suggest that the manufacturing slowdown is still ongoing amidst weak domestic demand. More monetary and fiscal easing measures will be needed to support growth in the coming months.”
More Easing to Support Growth?
How much more easing can the world even take? The answer depends on how much bigger current asset bubbles can get. And no one knows the answer to that.
Regardless, all this "easing" at this point is counterproductive. It will lower consumption in Europe for reasons explained by Steen Jakobsen, chief economist at Saxo Bank in "ECB About to Make Biggest Mistake in History".
Michael Pettis at China Financial Markets echoed the same views in regards to both China and Europe as noted in Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Key Points
- Flash China Manufacturing PMI at 49.8 in January (49.6 in December). Two-month high.
- Flash China Manufacturing Output Index at 50.1 in January (49.9 in December). Three-month high.
When a rise from 49.6 to 49.8 puts you at a high (with 50 being the break-even point between contraction and expansion), you cannot possibly be moving fast.
Flat-lining in slight contraction is the best phrase to describe the current state of affairs in China. The following charts show just that.
click on chart to show sharper image
China's manufacturing PMI has hovered in a range just under and just above the 50 expansion-contraction line since mid-2011.
Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: ...
“The HSBC China Manufacturing PMI rose to 49.8 in the flash reading for January, up from 49.6 in December. Domestic demand improved marginally while external demand remained solid. The labour market weakened and prices fell further. Today's data suggest that the manufacturing slowdown is still ongoing amidst weak domestic demand. More monetary and fiscal easing measures will be needed to support growth in the coming months.”
More Easing to Support Growth?
How much more easing can the world even take? The answer depends on how much bigger current asset bubbles can get. And no one knows the answer to that.
Regardless, all this "easing" at this point is counterproductive. It will lower consumption in Europe for reasons explained by Steen Jakobsen, chief economist at Saxo Bank in "ECB About to Make Biggest Mistake in History".
Michael Pettis at China Financial Markets echoed the same views in regards to both China and Europe as noted in Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Revised Greek Default Scenario: Liabilities Shifted to German and French Taxpayers; Bluff of the Day Revisited
Dr. Eric Dor, director of IESEG School of Management in Lille, has an update on bank exposure to Greek debt liabilities.
The numbers are roughly in line with figures I have posted earlier, but the breakdowns and other details are interesting.
The above table from Exposure of European Countries to Greece by Dr. Eric Dor, IESEG School of management.
Exposure of European Banks
The exposure of European banks to Greek public and private debt is most interesting.
Nearly all the liabilities have been shifted from banks to the public. For example the exposure of German banks to the Greek public sector is now limited to $181 million.
German Bank Claims on Greek Public Sector
The exposure of French banks to the public sector of Greece is now limited to $102 million.
French Bank Claims on Greek Public Sector
The exposition of European banks to the private sector of Greece excluding banks is also very limited, even if it recently increased for German banks, for which it amounts to $7.885 billion.
The exposure of German banks to Greek banks amounts to $5.702 billion. Their other potential exposure to Greece amounts to $2.912 billion in the form of derivatives, guarantees extended and credit commitments.
German Bank Claims on Greek Private Sector
The exposure of the French banks to the private sector of Greece excluding banks is limited to $1.646 billion.
French and German banks dumped their exposure to Greece on to the public by dumping assets and also via the EFSF.
Bluff of the Day Revisited
Taxpayers in general, not banks are the ones at risk if Greece defaults. This explains the Bluff of the Day: Germany Warns "Greece is No Longer of Systemic Importance For the Euro".
It's pretty clear Greece is still of systemic importance. What Merkel really meant is this: "German banks now have limited concerns if Greece defaults. Instead, it's German taxpayers who are at risk."
As Steen Jakobsen chief economist of Saxo Bank in Denmark explains "Euro is Not a Good Idea and ECB About to Make Biggest Mistake in History" .
Steen's rationale is supported by Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management. For details, please see Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph.
Gold the Place to Be
Today, ECB president Mario Draghi put taxpayers still more at risk with QE policies that cannot possibly work as noted in "QE already Working" Says IMF Lagarde; Ho-Hum Details Announced; Gold the Place to Be.
Gold in Euros
Nick at Gold Charts "R" Us provides this chart.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
The numbers are roughly in line with figures I have posted earlier, but the breakdowns and other details are interesting.
| IESEG | Bilateral loans | Guarantees on the borrowings of EFSF to fund its loans | Implicit share of TARGET2 claims of the Eurosystem | Implicit share in the SMP holdings of bonds by the Eurosystem | Total |
|---|---|---|---|---|---|
| Austria | 1.555 | 4.235 | 1.198 | 0.574 | 7.562 |
| Belgium | 1.942 | 5.291 | 1.512 | 0.725 | 9.470 |
| Cyprus | 0.11 | - | 0.092 | 0.044 | 0.247 |
| Estonia | - | 0.39 | 0.118 | 0.056 | 0.564 |
| Finland | 1.004 | 2.735 | 0.767 | 0.368 | 4.873 |
| France | 11.389 | 31.02 | 8.651 | 4.148 | 55.209 |
| Germany | 15.165 | 41.308 | 10.981 | 5.266 | 72.72 |
| Greece | - | - | - | - | - |
| Ireland | 0.347 | - | 0.708 | 0.340 | 1.395 |
| Italy | 10.008 | 27.259 | 7.511 | 3.602 | 48.380 |
| Latvia | - | - | 0.172 | 0.083 | 0.255 |
| Luxembourg | 0.14 | 0.381 | 0.124 | 0.059 | 0.704 |
| Malta | 0.051 | 0.138 | 0.040 | 0.019 | 0.247 |
| Netherlands | 3.194 | 8.699 | 2.443 | 1.171 | 15.507 |
| Portugal | 1.102 | - | 1.064 | 0.510 | 2.676 |
| Slovakia | - | 1.503 | 0.471 | 0.226 | 2.200 |
| Slovenia | 0.243 | 0.717 | 0.211 | 0.101 | 1.272 |
| Spain | 6.65 | 18.113 | 5.394 | 2.587 | 32.744 |
| Total | 52.9 | 141.8 | 41.709 | 20 | 256.409 |
The above table from Exposure of European Countries to Greece by Dr. Eric Dor, IESEG School of management.
Exposure of European Banks
The exposure of European banks to Greek public and private debt is most interesting.
Nearly all the liabilities have been shifted from banks to the public. For example the exposure of German banks to the Greek public sector is now limited to $181 million.
German Bank Claims on Greek Public Sector
The exposure of French banks to the public sector of Greece is now limited to $102 million.
French Bank Claims on Greek Public Sector
The exposition of European banks to the private sector of Greece excluding banks is also very limited, even if it recently increased for German banks, for which it amounts to $7.885 billion.
The exposure of German banks to Greek banks amounts to $5.702 billion. Their other potential exposure to Greece amounts to $2.912 billion in the form of derivatives, guarantees extended and credit commitments.
German Bank Claims on Greek Private Sector
The exposure of the French banks to the private sector of Greece excluding banks is limited to $1.646 billion.
French and German banks dumped their exposure to Greece on to the public by dumping assets and also via the EFSF.
- German taxpayers are responsible for $41.3 billion via the EFSF, with Target2 liabilities of another $11 billion.
- German taxpayers are responsible for $31 billion via the EFSF, with Target2 liabilities of another $8.7 billion.
Bluff of the Day Revisited
Taxpayers in general, not banks are the ones at risk if Greece defaults. This explains the Bluff of the Day: Germany Warns "Greece is No Longer of Systemic Importance For the Euro".
It's pretty clear Greece is still of systemic importance. What Merkel really meant is this: "German banks now have limited concerns if Greece defaults. Instead, it's German taxpayers who are at risk."
As Steen Jakobsen chief economist of Saxo Bank in Denmark explains "Euro is Not a Good Idea and ECB About to Make Biggest Mistake in History" .
Steen's rationale is supported by Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management. For details, please see Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph.
Gold the Place to Be
Today, ECB president Mario Draghi put taxpayers still more at risk with QE policies that cannot possibly work as noted in "QE already Working" Says IMF Lagarde; Ho-Hum Details Announced; Gold the Place to Be.
Gold in Euros
Nick at Gold Charts "R" Us provides this chart.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
"QE already Working" Says IMF Lagarde; Ho-Hum Details Announced; Gold the Place to Be
Today, ECB president Mario Draghi announced his much awaited QE program that will allegedly save Europe from the imaginary perils of price deflation. See Deflation Bonanza! (And the Fool's Mission to Stop It).
Stocks are up a bit, the dollar is up a bit, the yen is up a bit, and gold is up a bit. Oil is down a bit.
The details are more or less along the lines most thought, not the celestial "big bang" that everyone hoped.
ECB QE Press Release
Here are a few snips from the ECB Press Release on Asset Purchases.
Digging a little deeper, here are Six Key Elements of ECB Decision.
The above courtesy of Marc Chandler of Marc to Market via TalkMarkets.
Any Surprises?
Given that most believed an open ended program is coming, that announcement was hardly earth-shattering.
Nonetheless the ECB is playing with fire. Instead of taking all the risk or making each national central bank take all the risk, it incorporated "risk sharing". And it's pretty clear the ECB took most of the risk.
Expect challenges from Germany.
Reactions
Global market reactions are pretty moot so far. The biggest move is in the currencies. The Euro dropped to a new low vs. the US dollar and the Swiss franc.
US Dollar vs. Euro
The US dollar is back to a level last seen in October of 2003. Parity was last seen in November 2002.
"QE already Working"
Just ahead of the announcement IMF director Christine Lagarde said on a panel at Davos, QE Already Working.
"To a point you can say that it has already worked," Lagarde said on a panel in Davos. "If you look at currency variation and where the euro is at the moment, you can't deny that there is expectations there that QE is about to come and is announced and will be significant."
Apparently Lagarde thinks trashing a currency means the move is working. Hmm. How long ago was it that Lagarde and various monetarists thought the key to saving the world was forcing the US dollar lower.
Here's the other side of the story. Consumers in the eurozone will see prices rise. US exports to Europe will decline.
More importantly, if this is another one of those "whatever it takes moments", where do you want to be? The inflated stock market? Bonds with negative yield? How about gold?
Gold in Euros
The above chart is yesterday's gold close divided by the current movement in euros. Roughly multiply the right scale by 100 to get gold price in euros.
In November something changed big time. I suggest belief in central banks is fading. Gold in all currencies has been rising. Today gold is up again even though the dollar is up significantly.
And in euros, gold is up roughly 22.8% from the November low.
Where Do You Want To Be?
So where do you want to be if the ECB continues QE indefinitely until it reaches its inflation target of 2%. Bonds yielding 0% or even negative percent?
If you look under the covers you will discover Central Banks are as Impotent as Obama. Gold is the place to be.
Addendum:
Nick at Gold Charts "R" Us provided a better chart than the one I posted above from Stockcharts.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Stocks are up a bit, the dollar is up a bit, the yen is up a bit, and gold is up a bit. Oil is down a bit.
The details are more or less along the lines most thought, not the celestial "big bang" that everyone hoped.
ECB QE Press Release
Here are a few snips from the ECB Press Release on Asset Purchases.
Six Elements of Decision
- ECB expands purchases to include bonds issued by euro area central governments, agencies and European institutions
- Combined monthly asset purchases to amount to €60 billion
- Purchases intended to be carried out until at least September 2016
- Programme designed to fulfil price stability mandate
The programme will encompass the asset-backed securities purchase programme (ABSPP) and the covered bond purchase programme (CBPP3), which were both launched late last year. Combined monthly purchases will amount to €60 billion. They are intended to be carried out until at least September 2016 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.
The ECB will buy bonds issued by euro area central governments, agencies and European institutions in the secondary market against central bank money, which the institutions that sold the securities can use to buy other assets and extend credit to the real economy. In both cases, this contributes to an easing of financial conditions.
With regard to the sharing of hypothetical losses, the Governing Council decided that purchases of securities of European institutions (which will be 12% of the additional asset purchases, and which will be purchased by NCBs) will be subject to loss sharing. The rest of the NCBs’ additional asset purchases will not be subject to loss sharing. The ECB will hold 8% of the additional asset purchases. This implies that 20% of the additional asset purchases will be subject to a regime of risk sharing.
Digging a little deeper, here are Six Key Elements of ECB Decision.
- Starting in March the ECB will buy 60 bln euros a month in national bonds and agency bonds. The amounts will be driven by the “capital key” which corresponds roughly to the size of the economies. That means that Germany, France and Italy will be the largest buyers.
- The risk will remain largely with the national central banks, but the risk of agency purchases will be shared collectively. Agency bonds will amount to 12% of the assets being purchased. The ECB argues that by controlling all the design features and coordinating the purchases, it has “safeguarded the singleness of the Eurosystems’s monetary policy. “ Market participants may disagree.
- The program will run through September 2016, but ECB clearly keeps door open: the purchases “will in any case be conducted until we see a sustained adjustment in the path of inflation.”
- The asset purchased will be investment grade, but “some additional eligibility criteria will be applied in the case of countries under an EU/IMF adjustment program. This is subtle but important. As long as Greece, Cyprus and Portugal are on some program their bonds can be bought. This is also a subtle indication that the old Troika no longer exists. This is part of the signal from the European Court of Justice preliminary ruling and also the signals from the new EC.
- Although the ECB did not cut its official rates, it did remove the 10 bp premium over the main repo rate (MRO) for the new TLTRO facility.
- There is an issuer limit of 33%. This is why Draghi has indicated that Greek bonds could be bought after SMP redemption, which means after July.
The above courtesy of Marc Chandler of Marc to Market via TalkMarkets.
Any Surprises?
Given that most believed an open ended program is coming, that announcement was hardly earth-shattering.
Nonetheless the ECB is playing with fire. Instead of taking all the risk or making each national central bank take all the risk, it incorporated "risk sharing". And it's pretty clear the ECB took most of the risk.
Expect challenges from Germany.
Reactions
Global market reactions are pretty moot so far. The biggest move is in the currencies. The Euro dropped to a new low vs. the US dollar and the Swiss franc.
US Dollar vs. Euro
The US dollar is back to a level last seen in October of 2003. Parity was last seen in November 2002.
"QE already Working"
Just ahead of the announcement IMF director Christine Lagarde said on a panel at Davos, QE Already Working.
"To a point you can say that it has already worked," Lagarde said on a panel in Davos. "If you look at currency variation and where the euro is at the moment, you can't deny that there is expectations there that QE is about to come and is announced and will be significant."
Apparently Lagarde thinks trashing a currency means the move is working. Hmm. How long ago was it that Lagarde and various monetarists thought the key to saving the world was forcing the US dollar lower.
Here's the other side of the story. Consumers in the eurozone will see prices rise. US exports to Europe will decline.
More importantly, if this is another one of those "whatever it takes moments", where do you want to be? The inflated stock market? Bonds with negative yield? How about gold?
Gold in Euros
The above chart is yesterday's gold close divided by the current movement in euros. Roughly multiply the right scale by 100 to get gold price in euros.
In November something changed big time. I suggest belief in central banks is fading. Gold in all currencies has been rising. Today gold is up again even though the dollar is up significantly.
And in euros, gold is up roughly 22.8% from the November low.
Where Do You Want To Be?
So where do you want to be if the ECB continues QE indefinitely until it reaches its inflation target of 2%. Bonds yielding 0% or even negative percent?
If you look under the covers you will discover Central Banks are as Impotent as Obama. Gold is the place to be.
Addendum:
Nick at Gold Charts "R" Us provided a better chart than the one I posted above from Stockcharts.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Central Bank Impotence: ECB as Impotent as Obama
Yesterday, President Obama gave a State of the Union Address that contained a series of proposals for US Congress on raising taxes, free education, and carbon taxes.
I commented Obama Howls at the Moon.
Every Obama proposal is Dead-on-Arrival. Obama may as well fire a spaceship at the sun. The spaceship would melt long before it got there.
Draghi vs. Obama
On Thursday, in just a few hours, ECB president Mario Draghi gets his "moment in the sun". And like Obama who telegraphed his speech in advance, rumor has it ECB Eyes €50bn Monthly Bond Purchases.
So What?
Many may be wondering "Can it possibly matter?"
Actually, it does matter, but only in the negative sense. As Steen Jakobsen chief economist of Saxo Bank in Denmark explains "Euro is Not a Good Idea and ECB About to Make Biggest Mistake in History" .
Steen's rationale, fully explained in a subsequent post is that Lower Interest Rates May Reduce Consumption. That is a proposition that Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management both agree with.
Lacy Hunt pinged me with this thought ...
"Academic research indicates that QE in the US contracted rather than expanded economic activity, just as it did in Japan. Thus, Steen could have made the even stronger case that since it didn’t work in the US or Japan, it will not work in for the ECB."
For a detailed explanation, please see Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph.
Gaming the Reaction
I have no particular insights into what ECB president Mario Draghi will say tomorrow. Yet, I suspect he will attempt some surprise move. Surprise moves seem to be the central bank move of the day.
Regardless, whatever the ECB does, those in Germany will say he did too much. Keynesian and Monetarist clowns will howl he did too little, especially if the initial reaction is bad.
Central Bank Impotence
Here's the deal: Like president Obama, the ECB is impotent. Both bark at the moon. The only thing the ECB can do is make matters worse. Obama cannot do anything at all.
If the initial reaction from Draghi's announcement is good (something I highly doubt), it will die soon enough.
Central bank credibility is blowing up in smoke left and right. It started with "Rabbit Hole Intervention" by the Swiss National Bank. (See Wild Moves in Swiss Franc as Switzerland Abandons Euro Peg; Morals of the Story).
Credibility declined more with the announcement Denmark Announces Currency Peg is "Secure".
Central bank credibility took another plunge today with the surprise rate cut by the Canadian Central Bank. Here's my take: Canadian Recession Coming Up: Yield Curve Inverts Following Unexpected Rate Cut; Loonie at Six-Year Low.
Transparency?
Fancy that. Multiple central bank shocking announcements in short order. What happened to the alleged increase in central bank transparency?
Looking Ahead
Later this year, the Fed is supposed to hike rates. 100% of economists expect just that!
Well, what if the Fed does not hike? Or what if the Fed does not hike as much as the market expects? And what will gold do if that happens?
That's a lot of "what ifs", but since when have 100% of economists ever been right?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
I commented Obama Howls at the Moon.
Every Obama proposal is Dead-on-Arrival. Obama may as well fire a spaceship at the sun. The spaceship would melt long before it got there.
Draghi vs. Obama
On Thursday, in just a few hours, ECB president Mario Draghi gets his "moment in the sun". And like Obama who telegraphed his speech in advance, rumor has it ECB Eyes €50bn Monthly Bond Purchases.
So What?
Many may be wondering "Can it possibly matter?"
Actually, it does matter, but only in the negative sense. As Steen Jakobsen chief economist of Saxo Bank in Denmark explains "Euro is Not a Good Idea and ECB About to Make Biggest Mistake in History" .
Steen's rationale, fully explained in a subsequent post is that Lower Interest Rates May Reduce Consumption. That is a proposition that Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management both agree with.
Lacy Hunt pinged me with this thought ...
"Academic research indicates that QE in the US contracted rather than expanded economic activity, just as it did in Japan. Thus, Steen could have made the even stronger case that since it didn’t work in the US or Japan, it will not work in for the ECB."
For a detailed explanation, please see Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph.
Gaming the Reaction
I have no particular insights into what ECB president Mario Draghi will say tomorrow. Yet, I suspect he will attempt some surprise move. Surprise moves seem to be the central bank move of the day.
Regardless, whatever the ECB does, those in Germany will say he did too much. Keynesian and Monetarist clowns will howl he did too little, especially if the initial reaction is bad.
Central Bank Impotence
Here's the deal: Like president Obama, the ECB is impotent. Both bark at the moon. The only thing the ECB can do is make matters worse. Obama cannot do anything at all.
If the initial reaction from Draghi's announcement is good (something I highly doubt), it will die soon enough.
Central bank credibility is blowing up in smoke left and right. It started with "Rabbit Hole Intervention" by the Swiss National Bank. (See Wild Moves in Swiss Franc as Switzerland Abandons Euro Peg; Morals of the Story).
Credibility declined more with the announcement Denmark Announces Currency Peg is "Secure".
Central bank credibility took another plunge today with the surprise rate cut by the Canadian Central Bank. Here's my take: Canadian Recession Coming Up: Yield Curve Inverts Following Unexpected Rate Cut; Loonie at Six-Year Low.
Transparency?
Fancy that. Multiple central bank shocking announcements in short order. What happened to the alleged increase in central bank transparency?
Looking Ahead
Later this year, the Fed is supposed to hike rates. 100% of economists expect just that!
Well, what if the Fed does not hike? Or what if the Fed does not hike as much as the market expects? And what will gold do if that happens?
That's a lot of "what ifs", but since when have 100% of economists ever been right?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Canadian Recession Coming Up: Yield Curve Inverts Following Unexpected Rate Cut; Loonie at Six-Year Low
Currency wars pick up steam today with still more unexpected central bank actions. Please consider Canadian Central Bank Unexpectedly Lowers Interest Rates.
How much more preemption before the derivative bubble blows sky high? On that question we find out more tomorrow.
US Dollar vs. Canadian Dollar
click on chart for sharper image
Since mid-2011 the "loonie" has lost about 24% vs. the US dollar. However, the dollar is a lot weaker than its Canadian counterpart compared to late 2001.
Canadian Yield Curve Inverts
Blue Ribbon Announcement
Canada wins the blue ribbon for the first G-7 yield curve inversion since central bankers started unleashing competitive "preemptive" rate cuts.
Yield on the Canadian 1-year note, 2year-note, and 3-year note are all inverted (lower than yield on the 1-month note).
In addition, yield on on the 1-year note is inverted with the 2- and 3-year notes.
I smell a Canadian recession (and more surprise actions). A bust of the Canadian real estate bubble, one of the biggest in the world, is also on the way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Canada’s dollar sank the most in more than three years after the central bank unexpectedly cut interest rates, saying crude oil’s collapse will slow inflation and weigh on the economy.Preemptive Steps
The currency reached the weakest level in almost six years after the Bank of Canada reduced economic forecasts and lowered the benchmark rate target to 0.75 percent, from 1 percent, where it’s been since 2010. Government bonds climbed, pushing yields on two-, 10- and 30-year debt to record lows. Crude, Canada’s biggest export, has tumbled more than 50 percent since June amid a global glut.
“They are taking pre-emptive steps,” Thomas Costerg, an economist at Standard Chartered Bank, said in a phone interview from New York. “If oil prices remain under pressure, you could potentially see further cuts. This was not expected, and it’s going to put pressure on the loonie.”
How much more preemption before the derivative bubble blows sky high? On that question we find out more tomorrow.
US Dollar vs. Canadian Dollar
click on chart for sharper image
Since mid-2011 the "loonie" has lost about 24% vs. the US dollar. However, the dollar is a lot weaker than its Canadian counterpart compared to late 2001.
Canadian Yield Curve Inverts
- 30-year: 2.044% (Today's Low 1.998%)
- 10-Year: 1.426% (Today's Low 1.366%)
- 05-Year: 0.791% (Down 19 basis points, an 18% decline)
- 03-Year: 0.590% (Down 27 basis points, a 31% decline)
- 02-Year: 0.560% (Down 29 basis points, a 34% decline)
- 01-Year: 0.580% (Down 34 basis points, a 37% decline)
- 01-Month: 0.640% (Down 22 basis points, a 26% decline)
Blue Ribbon Announcement
Canada wins the blue ribbon for the first G-7 yield curve inversion since central bankers started unleashing competitive "preemptive" rate cuts.
Yield on the Canadian 1-year note, 2year-note, and 3-year note are all inverted (lower than yield on the 1-month note).
In addition, yield on on the 1-year note is inverted with the 2- and 3-year notes.
I smell a Canadian recession (and more surprise actions). A bust of the Canadian real estate bubble, one of the biggest in the world, is also on the way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Job Site of the Future: Unmanned Bulldozers and Drones for Routine Construction
Why pay an expensive bulldozer driver for foundation work when a drone from the sky paired with an unmanned bulldozer on the ground can compute 3-D plans and do the job better and faster?
Construction workers move over. You are next to be unneeded, unwanted, and unloved.
The Wall Street Journal reports Drones’ Next Job: Construction Work.
"We think this is the future job site," said Akinori Onodera, president of the Komatsu.
The future comes fast these days. Most likely, this will be routine in a few years or so.
Meanwhile, the Fed (central banks in general), and governments are hell-bent on policies that are guaranteed to make matters worse.
Low interest rates to finance such operations, coupled with rising minimum wage demands provides maximum leverage for drones, unmanned vehicles, hardware robots, and software robots to replace humans far quicker than otherwise would happen.
Further Review
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Construction workers move over. You are next to be unneeded, unwanted, and unloved.
The Wall Street Journal reports Drones’ Next Job: Construction Work.
Construction-equipment maker Komatsu Ltd. has plans to solve a potential shortage of construction workers in Japan: Let drones and driverless bulldozers do part of the work.Job Site of the Future
Tokyo-based Komatsu said Tuesday it plans to use unmanned aircraft, bulldozers and excavators to automate much of the early foundation work on construction sites.
Under Komatsu’s plans, U.S.-made drones would scan job sites from the air and send images to computers to build three-dimensional models of the terrain. Komatsu’s unmanned bulldozers and excavators would then use those models to carry out design plans, digging holes and moving earth.
The drones, made by San Francisco startup Skycatch Inc., and construction equipment would move along largely preprogrammed routes. The goal is to automate the construction site, leaving humans to program the machines and then push a button to send them to work. Human operators would also monitor progress and can jump in to take control of a machine if necessary.
Companies have started employing automated trucks and other equipment at mines in recent years, but Komatsu’s program appears to be one of the most ambitious plans to automate work in a setting as dynamic as a construction site.
The Skycatch drones are programmed to automatically fly over a set area and use sensors to collect data on the terrain below. The drones even return to ground stations and swap in new batteries when power is running low.
"We think this is the future job site," said Akinori Onodera, president of the Komatsu.
The future comes fast these days. Most likely, this will be routine in a few years or so.
Meanwhile, the Fed (central banks in general), and governments are hell-bent on policies that are guaranteed to make matters worse.
Low interest rates to finance such operations, coupled with rising minimum wage demands provides maximum leverage for drones, unmanned vehicles, hardware robots, and software robots to replace humans far quicker than otherwise would happen.
Further Review
- August 5, 2013: Message to 5.7 Million Truck Drivers "No Drivers Needed" Your Job is About to Vanish; Time Marches On, Fed Resistance is Futile
- October 4, 2013: Never Has Arrived; The Last Mile
- June 23, 2014: Robot Truck Convoy Tests in Nevada; Driverless Trucks Before Cars, and Before the End of the Decade
- November 14, 2014: Businesses Moving Too Quickly to Robots? Will 1 in 3 Jobs Vanish by 2025?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Obama Howls at the Moon
During the last dozen years or so, the only State of the Union Addresses I failed to watch were because I was on the road. On Tuesday, I purposely missed one.
Why Bother?
We all knew in advance what Obama would say. He leaked it out in pieces long in advance. That took most of the drama out of things right up front.
Icing on the #WhoCares cake is the answer to this question: How could it possibly matter?
Lamest of Lame Ducks
President Obama is the lamest of lame ducks. His ideas are headed for the ash heap of history.
We all knew those going in. The only thing we did not know was how blatant the lies would be.
Lie of the Day
To find the lies of the day, I just finished reading Obama's State of The Union Address.
The primary lie was easy to spot. In case you missed it, here it is: "In two weeks, I will send this Congress a budget filled with ideas that are practical, not partisan. And in the months ahead, I’ll crisscross the country making a case for those ideas."
No doubt Obama will crisscross the country. That can be believed.
The lie is in regards to "ideas that are practical, not partisan". Supposedly taxes on the wealthy, free education, and cutting carbon pollution are "practical, not partisan".
That's two lies actually. All three proposals are all partisan, and not a single one of them is practical.
I did not disagree with everything Obama said. For example, I do think we should talk with Cuba and Iran. Beyond that, there is little to like and much to dislike.
Free Trade is Fair Trade
I certainly would not give the president "trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but fair."
Instead, I would simply propose cutting all tariffs and be done with it, regardless of what any other nation does. Free trade is fair trade. And on that score many Republicans are worse than the president.
Senator Rand Paul offered this response.
Rand Paul Response
Link if video does not play: Rand Paul Responds to Obama's State of the Union Address.
President Obama howled at the moon with partisan, impractical proposals that are dead on arrival in Congress.
Looking for nonpartisan, practical ideas? Please play the above video.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Why Bother?
We all knew in advance what Obama would say. He leaked it out in pieces long in advance. That took most of the drama out of things right up front.
Icing on the #WhoCares cake is the answer to this question: How could it possibly matter?
Lamest of Lame Ducks
President Obama is the lamest of lame ducks. His ideas are headed for the ash heap of history.
- Raise taxes: Dead on arrival
- Free Education: Dead on arrival
- Environment fearmongering: Dead on arrival
We all knew those going in. The only thing we did not know was how blatant the lies would be.
Lie of the Day
To find the lies of the day, I just finished reading Obama's State of The Union Address.
The primary lie was easy to spot. In case you missed it, here it is: "In two weeks, I will send this Congress a budget filled with ideas that are practical, not partisan. And in the months ahead, I’ll crisscross the country making a case for those ideas."
No doubt Obama will crisscross the country. That can be believed.
The lie is in regards to "ideas that are practical, not partisan". Supposedly taxes on the wealthy, free education, and cutting carbon pollution are "practical, not partisan".
That's two lies actually. All three proposals are all partisan, and not a single one of them is practical.
I did not disagree with everything Obama said. For example, I do think we should talk with Cuba and Iran. Beyond that, there is little to like and much to dislike.
Free Trade is Fair Trade
I certainly would not give the president "trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but fair."
Instead, I would simply propose cutting all tariffs and be done with it, regardless of what any other nation does. Free trade is fair trade. And on that score many Republicans are worse than the president.
Senator Rand Paul offered this response.
Rand Paul Response
Higher taxes, more spending, and bigger government.Rand Paul Video
President Obama just revealed that is what he has in store for Americans in 2015.
But you and millions of your fellow Americans sent a loud and clear message to President Obama in November.
It's time to lower taxes, not raise them. It's time to reduce spending, not increase it. It's time to shrink government, not grow it.
I'm ready to answer the call and lead the fight for our conservative principles.
Tonight, I responded to President Obama's State of the Union address by outlining my vision for our great nation. Please take a moment and watch the video below.
Link if video does not play: Rand Paul Responds to Obama's State of the Union Address.
President Obama howled at the moon with partisan, impractical proposals that are dead on arrival in Congress.
Looking for nonpartisan, practical ideas? Please play the above video.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Rebels Advance: Near Collapse of Ukraine Positions Near Lugansk; The Big One
In Graves Waiting For Bodies: Major War Escalation in Ukraine; In 5 Weeks Ukraine Out of Money I stated ...
Reader Jacob Dreizin, a US citizen who speaks Russian and read Ukrainian informs me that "The battle for the Donetsk airport is over. The rebels expelled Ukraine's most elite units from their last redoubts in the new terminal building."
That statement was immediately challenged. For example, Reuters reported Sunday afternoon that Ukrainian troops retake most of Donetsk airport from rebels.
Then that statement was challenged. Yahoo!News reported Ukraine, Rebels Both Claim to Control Donetsk Airport.
Meanwhile Fox News reported Ukraine Rebels Claim They Control Donetsk Airport After Heavy Fighting.
First Casualty of War
As they say, the first casualty of war is the truth. Disinformation is everywhere. So whom to believe?
I place faith in reports I get from reader Jacob Dreisin, Colonel Cassad, and others who have been right far more often than mainstream media. Colonel Cassad has called this better than Jane's Defense.
See my August 26, report Jane's Defense vs. Colonel Cassad: Someone Seriously Wrong
in which Jane's Defense wrote "Ukrainian Military Moves to Endgame".
Brief synopsis: Jane was seriously wrong.
Not everything Dreisin says is 100% accurate. But the same can be said about me. Until proven otherwise, I trust my sources, and they have some significant news.
Ukraine Airport Synopsis
Most of my reports come from Dreizin, so let's tune in. Dreisin writes ...
The above is from yesterday. Today Jacob says ...
Moments ago I asked Jacob if I transcribed Forced Conscription: Ukraine to Mobilize 200,000 Armed Forces properly. He responded "yes". He also added ...
This all ties in with Ukraine to Mobilize 200,000 Armed Forces; Hyperinflation on the Way?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Reader Jacob Dreizin, a US citizen who speaks Russian and read Ukrainian informs me that "The battle for the Donetsk airport is over. The rebels expelled Ukraine's most elite units from their last redoubts in the new terminal building."
That statement was immediately challenged. For example, Reuters reported Sunday afternoon that Ukrainian troops retake most of Donetsk airport from rebels.
Then that statement was challenged. Yahoo!News reported Ukraine, Rebels Both Claim to Control Donetsk Airport.
Meanwhile Fox News reported Ukraine Rebels Claim They Control Donetsk Airport After Heavy Fighting.
First Casualty of War
As they say, the first casualty of war is the truth. Disinformation is everywhere. So whom to believe?
I place faith in reports I get from reader Jacob Dreisin, Colonel Cassad, and others who have been right far more often than mainstream media. Colonel Cassad has called this better than Jane's Defense.
See my August 26, report Jane's Defense vs. Colonel Cassad: Someone Seriously Wrong
in which Jane's Defense wrote "Ukrainian Military Moves to Endgame".
Brief synopsis: Jane was seriously wrong.
Not everything Dreisin says is 100% accurate. But the same can be said about me. Until proven otherwise, I trust my sources, and they have some significant news.
Ukraine Airport Synopsis
Most of my reports come from Dreizin, so let's tune in. Dreisin writes ...
Ukrainian forces have been cleared from every single building and built-up area within the airport complex. They may be still holding on to some of the open area at the edges. Reports of Kiev being in control of the airport is total spin. U.S. media passes along whatever Kiev's mouthpieces say.May Be "The Big One"
The hero defenders of the airport, known as "cyborgs" in the Ukrainian press for their supposedly superhuman characteristics, were all either killed or retreated several days ago from the new terminal building.
All Ukrainian counterattacks have failed with heavy losses. The rebels have also largely taken the town of Peski north of the airport. This is (was) a major base for Ukrainian artillery hitting Donetsk. I will let you know when the entire town is fully under control of the rebels.
The rebels are also reportedly preparing to storm the town of Adveevka, near the airport. It's another major artillery base.
The above is from yesterday. Today Jacob says ...
Rebel chatter reports near-collapse of Ukrainian positions all along the front north/northwest of Lugansk city. This may be the big one that we've anticipated. It is more slow-motion, step-by-step than what happened in August, but it's happening nonetheless.Assault on Lisichansk and Severodonetsk
But first...
Another (minor) Ukrainian counterattack against the airport grounds failed today. There is footage available of some of the dead and prisoners. Two of the prisoners claimed on camera that they were told that the new terminal building was in Ukrainian hands, and that they were initially just sent to pick up wounded. Then after they set out, they were told of their real mission. Amazing, just amazing.
Back to the rebel advance...
Rebel forces are making considerable progress northeast of Pervomaisk (northwest of Lugansk) in a possible armored breakthrough to Lisichansk far to the north, which they abandoned in early August.
Rebels are also moving from the Pervomaisk direction northeast to Krymskoe. Large Ukrainian forces in the area are at risk of being surrounded. Will keep you posted.
Also, fighting is still ongoing in Peski north of the airport. Ukrainians have taken heavy losses there and it's not looking good for them.
Moments ago I asked Jacob if I transcribed Forced Conscription: Ukraine to Mobilize 200,000 Armed Forces properly. He responded "yes". He also added ...
A very reliable rebel source claims Kiev expects an assault against Lisichansk and Severodonetsk imminently. This would be an advance by the rebels of something like 30-40 kilometers through many thousands of Ukrainian forces. Importantly, they would have to cover their flanks which probably means advancing northeast all the way from Krymskoe to the Russian border.This All Ties In
This is potentially huge. Also there is much talk of an imminent move against Mariupol, though this could be a feint for a dash further west, who knows.
This all ties in with Ukraine to Mobilize 200,000 Armed Forces; Hyperinflation on the Way?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Forced Conscription: Ukraine to Mobilize 200,000 Armed Forces; Hyperinflation on the Way?
The war in Ukraine is going so well for Kiev that .... Ukraine will force 200,000 more into the army.
Reader Steven writes...
Ukraine is down to five weeks of currency reserves. The only way to pay these soldiers is to print Hryvnia, constantly dwindling in value.
Seeds Sown
The Hryvnia is down 48% vs. the US dollar since the end of 2013 (nearly 50% in just over a year). That is not hyperinflation material, but the seeds are sown.
Even if some sort of bailout does come, if Ukraine blows it all on war (which sure seems to be the pledge), the decline in the Hryvnia is far from over.
And if Ukraine does not get another bailout, the Hryvnia is toast. Pension promises will be worthless.
For what?
Smart Decisions
Those fleeing Ukraine for Prague or elsewhere in Europe are the smart ones.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
According to military prosecutor Anatoly Matios, there will be three waves of mobilization in 2015. The overall plan is to call 200,000 Ukrainians into military service.Thoughts From Europe
Ukraine will begin on January 20, 2015 with 50,000 reservists and conscripts. There will be mandatory training at training centers. The next wave of fighters will be directed to the ATO (Anti-Terrorist Operation) Zone until March 2015.
"Azov" and "Kiev" fighters will also join ATO on a rotation basis.
Reader Steven writes...
Hello MishHyperinflation on the Way?
The 50,000-100,000 reserve call-up is for ATO (Anti-Terrorist Operations), what they call the war in eastern Ukraine. These future soldiers will generally be from 25-60 years old.
Call-ups impact nearly every family in Ukraine. My girlfriend's son-in-law is a reserve officer. Her ex-husband is a retired officer who has already been called.
Interestingly, he is absolutely pro-Russian, but accepts his position as an artillery trainer where he personally does not shoot at the "enemy" to keep his pension.
Her son, a 19-year-old who recently dropped out of school, is suddenly eligible for the special call-up beginning today. Her best friend's son, mid 30's, came to Prague illegally to escape this "draft". He was sitting in my flat a couple days ago. He used to work in Poland, but the Poles have dramatically tightened up to avoid an onslaught of Ukrainian workers.
Steven
Ukraine is down to five weeks of currency reserves. The only way to pay these soldiers is to print Hryvnia, constantly dwindling in value.
Seeds Sown
The Hryvnia is down 48% vs. the US dollar since the end of 2013 (nearly 50% in just over a year). That is not hyperinflation material, but the seeds are sown.
Even if some sort of bailout does come, if Ukraine blows it all on war (which sure seems to be the pledge), the decline in the Hryvnia is far from over.
And if Ukraine does not get another bailout, the Hryvnia is toast. Pension promises will be worthless.
For what?
Smart Decisions
Those fleeing Ukraine for Prague or elsewhere in Europe are the smart ones.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Bloomberg Editorial Board Loses Mind
A Bloomberg editorial on what the ECB needs to do is rather amusing. The article headline, albeit true in and of itself, contradicts the body of the article. Let's take a look.
ECB Cannot Save Europe
The Bloomberg editorial board says Not Even Mario Draghi Can Save Europe Now.
I certainly agree with that title. Had that been the entire article in and of itself, I would have said "the Bloomberg editorial board gets it".
Unfortunately, the editors didn't stop with the headline. Instead the editors proposed "The ECB needs to surprise financial markets with a bigger-than-expected announcement."
It gets better ...
The board says Draghi should go for outright shock and awe. .... He could say that monetary policy, as he understands it, includes the option of "helicopter money" -- and that the bank would shortly begin sending out checks to every EU citizen.
Such a scheme would be illegal of course. But hey, that's no problem.
Legal or not, helicopter money would be a frontal repudiation of the monetary conservatism that Germany's government and others have sought to impose on the bank.
Not even Draghi can save Europe, but let's do illegal things anyway to prove it. Wow.
Eurozone Structural Problems
The problems in Europe are insurmountable, and well understood by many.
What the hell good would even €5 trillion in QE do to fix those?
What good would it do if the ECB bought every bond from every country and pushed rates to zero across the board? How would it fix any structural problem?
More QE Will Not Help the World, says Mervyn King
I seldom agree with central bankers, especially when they hold that position. On occasion, however, once outside their official role, they regain some sense of sanity.
For example, More QE will not help the world, says Mervyn King.
Saxo Bank chief economist Steen Jakobsen made the claim the other day that QE was actually counterproductive.
Here is Steen's actual statement: "Lower Interest Rates May Reduce Consumption".
That may sound shocking, but his rationale is sound. Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management both agreed.
Grand Experiment Failure
I wrote Steen's theory in Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph, a rebuttal to Bloomberg author Barry Ritholtz, also in favor of massive QE.
Instead of repeating myself again, I simply ask the editorial board and Ritholtz to "Read, Then Think!"
Deflation fighting efforts ruined Japan, but somehow deflation fighting is supposed to cure Europe?! It makes no sense. Nonetheless, people believe central bank parroting instead of thinking on their own.
Deflation Fighting Silliness
Let's once again review my Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"
I also strongly suggest the editorial board review Deflationary Spiral Nonsense; Keynesian Theory vs. Practice; Eurozone Policymakers Concerned About Falling Prices.
For a third take on the insanity of fighting consumer price deflation, please see Deflation Bonanza! (And the Fool's Mission to Stop It).
Problem is Debt
The problem with the global economy in general is debt. You cannot cure a debt-deflation problem via attempts to force more debt into the system. It is axiomatic the cure cannot be the same as the disease.
Bloomberg, please go back to the drawing board.
Next Time .... Think!
Link if video does not play: The Blues Brothers - Aretha Franklin.
The ECB, central bankers in general, the Bloomberg editorial board, Monetarists, and Keynesians, all need to step back and "Think!" about what they are trying to do (and why it cannot possibly work).
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
ECB Cannot Save Europe
The Bloomberg editorial board says Not Even Mario Draghi Can Save Europe Now.
I certainly agree with that title. Had that been the entire article in and of itself, I would have said "the Bloomberg editorial board gets it".
Unfortunately, the editors didn't stop with the headline. Instead the editors proposed "The ECB needs to surprise financial markets with a bigger-than-expected announcement."
It gets better ...
The board says Draghi should go for outright shock and awe. .... He could say that monetary policy, as he understands it, includes the option of "helicopter money" -- and that the bank would shortly begin sending out checks to every EU citizen.
Such a scheme would be illegal of course. But hey, that's no problem.
Legal or not, helicopter money would be a frontal repudiation of the monetary conservatism that Germany's government and others have sought to impose on the bank.
Not even Draghi can save Europe, but let's do illegal things anyway to prove it. Wow.
Eurozone Structural Problems
The problems in Europe are insurmountable, and well understood by many.
- No fiscal union
- Wildly differing social agendas of member states
- Wide variances in productivity
- Wage discrepancies
- Retirement benefit discrepancies
- One size fits all monetary policy
- To make treaty changes every eurozone country must agree
- Target2 imbalances
What the hell good would even €5 trillion in QE do to fix those?
What good would it do if the ECB bought every bond from every country and pushed rates to zero across the board? How would it fix any structural problem?
More QE Will Not Help the World, says Mervyn King
I seldom agree with central bankers, especially when they hold that position. On occasion, however, once outside their official role, they regain some sense of sanity.
For example, More QE will not help the world, says Mervyn King.
More monetary stimulus will not help the world economy return to strong growth, former Bank of England governor Mervyn King said, days before the European Central Bank is expected to decide whether to embark on a massive bond-buying programme.Pettis, Jakobsen Chime In
"We have had the biggest monetary stimulus that the world must have ever seen, and we still have not solved the problem of weak demand. The idea that monetary stimulus after six years ... is the answer doesn't seem (right) to me," he added.
Saxo Bank chief economist Steen Jakobsen made the claim the other day that QE was actually counterproductive.
Here is Steen's actual statement: "Lower Interest Rates May Reduce Consumption".
That may sound shocking, but his rationale is sound. Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management both agreed.
Grand Experiment Failure
I wrote Steen's theory in Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph, a rebuttal to Bloomberg author Barry Ritholtz, also in favor of massive QE.
Instead of repeating myself again, I simply ask the editorial board and Ritholtz to "Read, Then Think!"
Deflation fighting efforts ruined Japan, but somehow deflation fighting is supposed to cure Europe?! It makes no sense. Nonetheless, people believe central bank parroting instead of thinking on their own.
Deflation Fighting Silliness
Let's once again review my Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"
I also strongly suggest the editorial board review Deflationary Spiral Nonsense; Keynesian Theory vs. Practice; Eurozone Policymakers Concerned About Falling Prices.
For a third take on the insanity of fighting consumer price deflation, please see Deflation Bonanza! (And the Fool's Mission to Stop It).
Problem is Debt
The problem with the global economy in general is debt. You cannot cure a debt-deflation problem via attempts to force more debt into the system. It is axiomatic the cure cannot be the same as the disease.
Bloomberg, please go back to the drawing board.
Next Time .... Think!
Link if video does not play: The Blues Brothers - Aretha Franklin.
The ECB, central bankers in general, the Bloomberg editorial board, Monetarists, and Keynesians, all need to step back and "Think!" about what they are trying to do (and why it cannot possibly work).
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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