Chart of the day: [URL="http://www.zerohedge.com/news/europes-economic-implosion-one-chart"]Monthly exports to Europe[/URL]
[quote]Following consecutive monthly gains, Exports to Europe dropped a massive $4.0 billion in April, the largest monthly decline dating back to January 2005, including a $2.8 billion drop to the EU alone. In particular, Exports to Germany declined $0.4 billion in April and are now only up about 0.2% over the past year. Overall, Exports to Europe are now down 2.7% from April 2011, the first yearly decline since February 2010.[/quote]The current cliff-diving trend is deeper than any seen in the depths or the 2008-2009 crisis, or perhaps better, "in the 2008-2009 opening acts of the unfolding global-debt crisis". But gotta love the next bit of spin (in the SMRA article linked via ZH) - instead of calling it what it is, namely an "exports collapse", we have
[quote]The [U]easing of export growth[/U] does not bode well for US economy.[/quote]Oh, that sounds *so* much nicer ... I suddenly feel positively giddy about the implied "resumption of robust export growth on its previous natural exponential trend."

Not that trends [URL="http://globaleconomicanalysis.blogspot.com/2012/06/12-reasons-us-recession-has-arrived-or.html"]here in the U.S.[/URL] or [URL="http://www.nytimes.com/2012/06/22/business/daily-stock-market-activity.html?_r=1&ref=business"]elsewhere[/URL] are significantly better. That's what happens when global "leaders" spend every waking moment dancing around the real issues (too much debt which has been masquerading as prosperity, too little investment in real-economic output and sustainable growth) and instead rely on propaganda and money-printing to magically solve deep-rooted problems.

One small bright spot amidst - in fact a consequence of - the global slowing is plunging oil prices. Here in the US in early spring gas prices looked likely to soar to near-record highs in the $4.50-5.00/gallon range this summer ... in the past month they have instead dropped around 10% back to the ~$4 level.

Mish has fun with the latest "confidence building" [URL="http://globaleconomicanalysis.blogspot.com/2012/06/laugh-of-day-stress-tests-spanish-banks.html"]lies out of Spain[/URL].


[URL="http://www.reuters.com/article/2012/06/22/us-usa-stockton-bankruptcy-idUSBRE85L04L20120622?feedType=RSS&feedName=domesticNews"]Grim prospects for Stockton as bankruptcy looms[/URL]: [I]SAN FRANCISCO (Reuters) - A costly mess, including court battles with employees and lenders that could stretch over years, is likely to await Stockton, California, if it cannot reach a last-minute deal with creditors and becomes the largest U.S. city ever to file for bankruptcy.[/I]
[quote]"A Chapter 9 bankruptcy proceeding is complicated, expensive, time-consuming and uncertain," said James Spiotto, a lawyer and municipal bankruptcy specialist at the Chapman and Cutler law firm in Chicago. "More likely than not, you're not going to get your desired result."

Stockton on Wednesday provided an initial outline of what a "bankruptcy budget" might look like for the city of 292,000 as a June 25 deadline for mediation talks with bond holders, employee unions and others approaches. The city proposes to stop payments on much of its debt and impose wage and benefit cuts including the elimination of all retiree healthcare benefits after a one-year transition period.

Stockton has already slashed its workforce sharply in recent years, cutting the police force by 25 percent, the fire department by 30 percent, and all other departments by more than 40 percent.

But it still must find a way to close a $26 million gap in its $162 million budget for the fiscal year beginning July 1 -and people involved in the mediation sessions consider a bankruptcy filing to be all but inevitable.[/quote]
[B]Friday Funnies:[/B]

Examining the meme of which the Spanish finance minister's recent "Spain is not Greece" comment is part, ZeroHedge has produced a handy-dandy online quick reference guide:

[URL="http://www.zerohedge.com/news/definitive-lesson-new-normal-european-geography"]The Definitive Lesson In "New Normal" European Geography[/URL]: [I]For your definitive documented "X is not Y" atlasing needs.[/I]

NYT piece on allegations of mass-scale economic data fudging in China .. Shocking, just shocking. [/sarc]

[url=www.nytimes.com/2012/06/23/business/global/chinese-data-said-to-be-manipulated-understating-its-slowdown.html?_r=1&pagewanted=2&hp]Chinese Data Mask Depth of Slowdown, Executives Say[/url]
[quote]Many Chinese economic indicators already show a slowdown this spring, with fixed-asset investment growing at its weakest pace in May since 2001. The annual growth rate for industrial production has edged below 10 percent, while electricity generation was up only 3.2 percent in May from a year earlier and up only 1.5 percent in April.

The question is whether the actual slowdown is even worse. Skewed government data would help explain why prices for commodities like oil, coal and copper fell heavily this spring even though official Chinese statistics show a more modest deceleration in economic activity.Manipulation of official statistics would also provide a clue why some wholesalers of consumer goods and construction materials say sales are now as dismal as in early 2009.

Keeping accurate statistics for internal use by policy makers while releasing less grim figures to the public and financial markets may also help explain why China’s central bank suddenly and unexpectedly cut interest rates earlier this month.

Studies by Goldman Sachs and other institutions over the years have strongly suggested that Chinese statisticians smooth out the quarterly growth figures, underreporting growth during boom years and overstating growth during economic downturns.

And Chinese officials have raised questions in the past about the reliability of Chinese economic statistics. An American diplomatic cable released by WikiLeaks shows that [u]Li Keqiang, widely expected to become premier of China this autumn, said in 2007 that he regarded China’s broad measures of economic growth as “ ‘man-made’ and therefore unreliable.”[/u][/quote]
That's a polite way of saying "they're total BS".
[quote]Mr. Li told an American diplomat that he looked instead to three indicators that he described as less likely to be fudged: electricity consumption, volume of rail cargo and the disbursement of bank loans.

Jonathan Sinton, a China energy specialist at the International Energy Agency, said he had not heard of false data in China’s electricity sector, and he doubted it would be feasible at the five biggest electricity generation companies that together produce half of China’s electricity.[/quote]
What a blinkered twit our Mr. Sinton is .. his statement in effect amounts to claiming "why, that would be tantamount to price fixing by the 5 largest sellers of commodity X in market Y ... and we know that sort of stuff never happens."
[quote]“If there is a problem, it is going to be located in the smaller producers,” he said, cautioning that even these producers would eventually have to submit accurate information to reconcile fuel, electricity and financial accounts.[/quote]
Uh - only if the folks to whom they provide the data are not in on the fudging. "Why, that would be like bank regulators in country X ignoring or downplaying bad loan data for the banks ... and we know that sort of stuff never happens."
[quote]Stephen Green, a China economist at Standard Chartered Bank, said that the Chinese economy was still likely to recover this autumn as extra bank lending started to stimulate spending.[/quote]
Another sell-side clown ... "because the main problem with China has been a dearth of bank lending, dontchaknow." And it's not like consumers there may have taken on too much debt in their now-deflating housing bubble. Just like in the US and Europe, the cure for a debt hangover is ... more debt.
[quote]But a survey of Chinese manufacturing purchasing managers, released on Thursday by HSBC and Markit and conducted independently of the government, gave the second-gloomiest reading for their businesses since March 2009. Only November of last year was worse, when many small and medium-size businesses faced a brief but severe credit squeeze.[/quote]
Ha, "brief but severe" ... you ain't see nothing yet.

Best comment about this was from a ZH reader:
[i]
"So... It turns out that our lying economists are now accusing their lying economists of lying. Which either means that our lying economists aren't lying or are lying."
[/i]
My vote is that all countries' official economists are both lying and not lying ... they lie about their own household, but they are far more critical and objective about their neighbors' households. So if you want the truth or at least something close to it, ask "what are our economic/political/financial rivals saying about us?"

[QUOTE=ewmayer;302788]That doesn't make him wrong on this. Nice ad hominem, though ... allow me to "add homonym".

(Actually a homophone, but that ruins the quip).[/QUOTE]

[QUOTE]If young Americans knew what was good for them, they would all be in the Tea Party.[/QUOTE]Right!</sarc>

[QUOTE]A second problem is that today's Western democracies now play such a large part in redistributing income that politicians who argue for cutting expenditures nearly always run into the well-organised opposition of one or both of two groups: recipients of public sector pay and recipients of government benefits. [/QUOTE]See how that language conveniently leaves the status of corporate welfare ambiguous.

[QUOTE]The present system is, to put it bluntly, fraudulent. There are no regularly published and accurate official balance sheets. Huge liabilities are simply hidden from view.
Not even the current income and expenditure statements can be relied upon in some countries. No legitimate business could possible carry on in this fashion.

[/QUOTE]
True about the first bit. But the last line - like every frickin' American BB bank. What rock does Ferguson live under. Ever heard of mark to myth?


[QUOTE]The last corporation to publish financial statements this misleading was Enron.[/QUOTE]
Yeah and Lehman? "Na na na na na na. I can't hear you."

[QUOTE=garo;303208]True about the first bit. But the last line - like every frickin' American BB bank. What rock does Ferguson live under. Ever heard of mark to myth?[/QUOTE]

Ever since more-or-less all of the TBTF banks became official or unofficial wards of the state (or perhaps it was more the government becoming officially a hostage of the banks) it is a fair question as to whether they are "legitimate businesses" in the sense that could survive without ongoing government subsidy and failure-to-prosecute. Remember that it was the US congress which pushed through the FASB mark-to-market accounting rule suspensions in the spring of 2009. So now the government and its cabal of Preferred Financial Racketeering Organizations all run their books in similarly fraudulent fashion.

I agree that Ferguson could have been more explicit about this toxic pas de deux.

Oh you will never find him criticising private companies and - horror of horrors - banks. I will bet you $1000 that he considers Citi and BofA and Goldman legitimate businesses and the federal govt devil spawn.

Barry had some interesting posts on his blog today about how the govt has actually shrunk under Obama - since FY 2010 because 2009 was Bush's budget.

[QUOTE=garo;303308]Oh you will never find him criticising private companies and - horror of horrors - banks. I will bet you $1000 that he considers Citi and BofA and Goldman legitimate businesses and the federal govt devil spawn.

Barry had some interesting posts on his blog today about how the govt has actually shrunk under Obama - since FY 2010 because 2009 was Bush's budget.[/QUOTE]
Do you mean that Citi, BofA, Goldman et all, are NOT the legitimate federal govt? :surprised

Longtime readers of the MET thread series may recall the stories several years ago about broke states - like my home state of California - borrowing billions per year from the federal government to cover the shortfalls in their unemployment funds exposed by the Great Recession. That story has been flying along under the national mainstream-media radar for most of the time since then. Columnist Dan Walters of the Sacramento Bee has an update:

[URL="http://www.sacbee.com/2012/06/22/4580807/dan-walters-unemployment-fund.html"]Dan Walters: Unemployment fund deficit typifies profligacy[/URL]
[quote]California's Unemployment Insurance Fund, or UIF, ran out of money 3 1/2 years ago as the worst recession since the Great Depression tightened.

Ever since, with benefits to jobless workers far outstripping revenue from payroll taxes, the state has been borrowing money from the federal government to maintain weekly checks, averaging nearly $300 a week, to hundreds of thousands of recipients.

The UIF now owes the feds well over $10 billion and has to pay more than $300 million a year in interest. But with its budget plagued by chronic deficits, the state can't afford the interest payments so it has borrowed the money from the Disability Insurance Fund, which has a balance exceeding $2 billion.

While the UIF is financed by employer-paid payroll taxes, the DIF gets its money from payroll taxes on employees.

The Legislature's new budget includes another $300 million-plus loan from the DIF to pay the interest on the UIF's debt.

That debt appears to have stabilized, due to slight improvements in the economy that generate more payroll taxes, but not enough to pay the interest.

Nevertheless, the Legislature ignored Gov. Jerry Brown's proposal to raise payroll taxes slightly, about $50 per employee per year, to cover interest payments and repay the DIF – probably because he also wanted to tighten unemployment eligibility.

The feds, however, are not ignoring the situation. They want their money back, and are penalizing California for its tardiness in repaying its UIF debt by incrementally raising taxes on employers by about $300 million this year, and prospectively twice as much next year.

The UIF situation is a mini-version of the state's much larger budget imbroglio and also mirrors the state's public pension problem – politicians making long-lasting spending decisions with little or no thought to long-term fiscal consequences.

Eleven years ago, when the economy was doing well and the UIF had a $6.5 billion balance, then-Gov. Gray Davis and the Legislature, bowing to union pressure, nearly doubled the program's benefits to a maximum of $450 a week.

A year earlier, they had squandered most of a one-time budget revenue windfall on permanent tax cuts and new spending, and two years earlier they had sharply increased pension benefits for roughly the same reasons.[/quote]

Bailouts for Greece, Portugal, and Ireland are ongoing. I would like to say they were completed, but realistically, Greece will need cash infusions indefinitely and the jury is still out re Portugal. I think perhaps Ireland might just be able to keep away from the public trough unless a major economic problem develops. But what about the rest of the nations in trouble?

Spain is getting €100 billion of which they publicly say they need €63 billion right now. The nation as a whole is sinking into a quagmire of unemployment amid the housing bubble collapse. The overall prognosis is so negative that many of the Spanish jobless are moving elsewhere in the EU to find jobs. Even with the banks bailed out, the Spanish Govt is boxed into a corner unable to move by 7% interest rates on one side and the economy on the other. It is just a matter of time before they have no option but to request bailout money. The amount they need is about €1 trillion euros though I think they will make much ado about requesting roughly half this amount hoping things will improve in a couple of years.

And that gets us to one of the jokers in the deck. Cyprus is on the verge of requesting a bailout. Speculation is rife that it will be a request for €10 billion, but from studying their economy, that is not going to be enough over the long term. It would have to at least double to €20 billion to tide them over for the next 5 years presuming the Euroconomy stays in the potty as it seems to be headed.

DarJones

[url=http://globaleconomicanalysis.blogspot.com/2012/06/stockton-ca-files-bankruptcy-largest.html]Stockton, CA, becomes largest US city ever to file for bankruptcy[/url]

That same Mish piece also features a 2nd article about Poughkeepsie NY offering summer jobs to unemployed youth for - get this - over $50/hour under a Federal stimulo
-spendo-job-create-iferous grant program. The common theme? Spending other people's money is oh-so-easy.


[url=http://www.bloomberg.com/news/2012-06-27/barclays-said-to-be-nearing-libor-settlement-with-fsa-cftc.html]Barclays PLC agrees to pay wrist-slap "naughty, naughty" fine[/url] for {allegedly} rigging the [url=http://en.wikipedia.org/wiki/Libor]LIBOR[/url], used to set interest rate on many $trillions in debt instruments per year.

[QUOTE=ewmayer;303530][url=http://www.bloomberg.com/news/2012-06-27/barclays-said-to-be-nearing-libor-settlement-with-fsa-cftc.html]Barclays PLC agrees to pay wrist-slap "naughty, naughty" fine[/url] for {allegedly} rigging the [url=http://en.wikipedia.org/wiki/Libor]LIBOR[/url], used to set interest rate on many $trillions in debt instruments per year.[/QUOTE]More on this one [URL="http://www.bbc.co.uk/news/business-18621354"]at the BBC[/URL]

[QUOTE=the Beeb]Other big names believed to be under investigation include Citigroup, JP Morgan, Deutsche Bank, HSBC and Royal Bank of Scotland.[/quote]